2015-05-04 20:55 ET - News Release
Ms. Cathy Hume reports
ECUADOR GOLD ANNOUNCES CLOSING OF FIRST TRANCHE OF DEBENTURE OFFERING AND SHARES-FOR-DEBT AGREEMENTS TOTALING $427,402
Ecuador Gold and Copper Corp. has closed the first tranche of the non-brokered private placement debenture offering, raising total gross proceeds of $67,000 (U.S.) through the issuance of senior secured convertible debentures. The company has received financing for the remaining $333,000 (U.S.) and is in the process of negotiating terms in order to finalize on the remaining amount.
Each debenture bears an interest of 12 per cent per year with the principal amount and interest due and payable on Nov. 28, 2015, unless converted into units of the company at a price of five cents per unit on or before the maturity date. Each unit comprises one common share and one-half common share purchase warrant of the company. Each warrant entitles the holder to acquire one additional common share of the company at an exercise price of 10 cents per share for 24 months following the date of issuance. The proceeds of the debenture offering are being used for the company's Condor gold project, in-country working capital in Ecuador and as additional working capital of the company. All securities issued under the debenture offering will be subject to a statutory four-month hold period from the date of issuance.
In addition, the company has entered into agreements to settle a total of $427,402 in outstanding debt owed to arm's-length creditors in connection with $414,903 owing for drilling, exploration and consulting, as well as up to $12,500 to non-arm's-length management owing for past services rendered and accrued in 2014. The company is proposing to settle the debt by issuing a total of 4,748,912 common shares of the company at a deemed price of nine cents per debt share, which is a significant premium to the market price. All debt shares issued to settle the debt will be subject to a four-month hold period and the issuance of the debt shares will be subject to approval of the TSX Venture Exchange. The debt shares associated with the debt settlement are intended to be issued to preserve cash dedicated to the company's mineral properties, to improve working capital and strengthen the company's balance sheet.
Neither the debenture offering nor the issuance of the debt shares would result in the creation of a new control person.