Toronto, Ontario--(Newsfile Corp. - August 22, 2019) - Pure Nickel Inc. (TSXV: NIC) (the "Company" or "Pure Nickel") is pleased to announce that Eric Sprott, through 2176423 Ontario Ltd. (a corporation beneficially owned by him), has entered into an investment agreement with the Company pursuant to which Mr. Sprott has agreed to subscribe for a convertible debenture of the Company in the principal amount of $3,000,000, subject to certain terms and conditions (the "Debenture").
The Debenture will have a term of two years and bear interest at a rate of 8% per annum, payable at maturity or on conversion. The Debenture will be convertible into common shares at a price of $0.05 per share for the first 12 months of the term and at $0.10 per share thereafter until maturity. Mr. Sprott shall only be entitled to exercise the Debenture to the extent that Mr. Sprott will own (together with any person acting jointly or in concert with Mr. Sprott), directly or indirectly, not more than 19.9% of the issued and outstanding common shares of the Company immediately following such exercise until such time as shareholders of the Company have approved Mr. Sprott as a control person of the Company in accordance with the requirements of the TSX Venture Exchange (the "TSXV"). The Company will pay a commission of 3% cash and 3% shares at $0.05 per share in relation to the Debenture. The issuance of the Debenture is subject to the approval of the TSXV.
The Company also announces that today it has signed an Amalgamation Agreement (the "Agreement") with Explor Resources Inc. ("Explor") to merge the companies on a 46/54 (Pure Nickel/Explor) basis (the "Transaction"). In connection with the Transaction, Pure Nickel will issue approximately 95,198,612 common shares of Pure Nickel in exchange for all of the issued and outstanding common shares of Explor. As a result, upon completion of the Transaction, the combined company will have approximately 177,891,951 shares outstanding. Upon completion of the transaction and prior to any conversion of the Debenture by Mr. Sprott, current Explor shareholders will have voting control of the merged Company. If Mr. Sprott converts the entire Debenture, he will have a 30% interest in the new company and Pure Nickel shareholders and Explor shareholders will have a 30% and a 40% interest respectively. The completion of the Transaction is subject to all necessary shareholder and regulatory approvals.
Under the terms of the Agreement, the Company has agreed to subscribe for 10,000,000 units of Explor at a price of $0.05 per unit representing a total amount of $500,000. Each unit is comprised of one Explor share and one-half of one common share purchase warrant. Each whole common share purchase warrant will be exercisable into one Explor Share at a price of $0.10 per share for a period of 24 months. The securities that will be issued at the closing of this private placement will be subject to a hold period of four months and one day from closing. Explor intends to use the funds from the private placement to complete the Transaction and for general corporate purposes. The subscription is subject to TSXV approval.
The Company will use proceeds from the issuance of the Debenture to fund the completion of the Transaction and for the advancement of the Timmins Porcupine West Gold Property (the "TPW Property" or "Property"), located in the Timmins Porcupine Mining Camp in Ontario. Mr. R. David Russell will continue as the Chief Executive Officer and President of the new company and Mr. Christian Dupont, of Explor, will become the Vice-President and Chief Operating Officer.
Pure Nickel President and CEO, Mr. R. David Russell, notes: "We are very pleased that Eric continues to back Pure Nickel. Merging with Explor is the second major step in transforming Pure Nickel from nickel focused exploration to an advanced stage gold exploration and development company. We believe the TPW gold property has the potential to be a flagship gold operation for the new company within a two to four-year timeframe."
Company management likes the Timmins Gold Camp and is specifically interested in the TPW Gold Project for the following reasons: