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Ecuador Gold and Copper Corp
Symbol C : EGX
Shares Issued 167,378,541
Close 2013-11-07 C$ 0.08
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Ecuador closes third tranche for $1.1-million (U.S.)
2013-11-08 13:50 ET - News Release
Mr. Glenn Laing reports
ECUADOR GOLD ANNOUNCES CLOSING OF THIRD TRANCHE OF NON-BROKERED PRIVATE PLACEMENT FOR GROSS PROCEEDS OF US$1.1 MILLION
Ecuador Gold and Copper Corp. has closed the third tranche of its non-brokered private placement for gross proceeds of up to $3.25-million (U.S.).
A total of $1.1-million (U.S.) ($1,146,090 (Canadian)) was raised pursuant to the third tranche closing, by the issuance to Aura International Services Ltd. of 14,666,666 units of the company at a price of 7.5 U.S. cents per unit. Each unit comprises one common share of the company and one common share purchase warrant of the company. Each warrant entitles the holder to acquire a share at a price 7.5 U.S. cents per share until Jan. 15, 2014.
Upon closing of the third tranche, Aura owns a total aggregate of 87,730,256 shares and 53,174,585 common shares purchase warrants of the company, representing approximately 44.9 per cent of the issued and outstanding shares of the company on a non-diluted basis, 48.7 per cent on a partially diluted basis after giving effect to exercise of the Aura warrants, and 56.7 per cent on an extended partially diluted basis after giving effect to exercise of all of the warrants held by Aura after completion of the third tranche closing. Prior to the third tranche closing, Aura owned 40.4 per cent of the company's issued and outstanding shares on a non-diluted basis, 44.5 per cent of the company's issued and outstanding shares on a partially diluted basis and 50.9 per cent on an extended partially diluted basis. In exchange for the purchase by Aura of all of the units under the private placement and the exercise of the warrants contained in the units providing aggregate gross proceeds of $6.2-million (U.S.) to the company, Aura will be entitled to nominate up to three directors of the company.
Aura is a related party to the company under MI 61-101 as it is a control person of the company by virtue of its shareholdings in excess of 20 per cent of all issued and outstanding shares of the company. Accordingly, the third tranche closing of the private placement is a related party transaction under MI 61-101.
Effective Aug. 14, 2013, the private placement was unanimously approved by the board of directors of the company. On Oct. 11, 2013, the company also received minority shareholder approval for the private placement pursuant to Multilateral Instrument 61-101 protection of minority security holders in special transactions at a special meeting of the shareholders of the company held on Oct. 11, 2013.
On Nov. 6, 2013, the company agreed to the subscription by Aura of the units pursuant to a subscription agreement containing the customary provisions for the subscription of units of a reporting issuer with such shares comprising the units posted and listed for trading on the exchange.
There has been no formal valuation of the company or its assets to date, as there has not yet been any necessity to do so. The private placement is a transaction that is exempt from the formal valuation requirements under Section 5.4 of MI 61-101 pursuant to subsections 5.5(b) and 5.5(c) of MI 61-101 because:
No securities of the company are listed or quoted on the Toronto Stock Exchange, the New York Stock Exchange, the American Stock Exchange, the Nasdaq Stock Market, or a stock exchange outside of Canada and the United States other than the Alternative Investment Market of the London Stock Exchange or the PLUS markets operated by PLUS Markets Group PLC.
The private placement is a distribution of securities of the company to Aura for cash consideration.
Neither the company nor, to the company's knowledge after reasonable inquiry, Aura has knowledge of any material information concerning the company or its securities that has not been generally disclosed.
The company's management information circular dated Sept. 10, 2013, in respect of the shareholders meeting fully describes the private placement and includes a description of the effect of the private placement on the direct and indirect voting interest of Aura.
Aura purchased all of the units under the third tranche closing. The proceeds of the third tranche closing will be used for exploration and development expenses, and as additional working capital. The units issued are subject to a four-month hold period from the date of issuance.
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