P. P. OF $2.5 MILLION GOLD CANYON ANNOUNCES PRIVATE PLACEMENT OF $2.5 MILLION FOR FURTHER WORK ON SPRINGPOLE GOLD PROJECT
Gold Canyon Resources has, subject to regulatory approval, entered into an engagement letter with Pacific International Securities Inc. to undertake a best efforts private placement of 2.5 million units at a price per unit of 80 cents for gross proceeds of $2-million. Each unit shall consist of one common share of the company and one share purchase warrant to purchase an additional common share of the company on or before the second anniversary of the closing date at a price of 95 cents per common share in the first year and at an exercise price of $1.10 in the second year.
The company has agreed to pay the Pacific International Securities a commission of 8 per cent of the gross proceeds of the offering, payable in cash or, at the election of Pacific International, and subject to regulatory approval, units and a corporate finance fee of $15,000 payable in cash on completion of the private placement. Pacific International Securities will also be entitled to receive a broker's option to purchase that number of common shares equal to 15 per cent of the total number of units sold under the brokered private placement on or before the second anniversary of the closing date at an exercise price of 85 cents per share. The engagement with Pacific International Securities expires on May 20, unless otherwise extended by the parties.
The company will also concurrently undertake a non-brokered private place of up to 625,000 units at a price per unit of 80 cents for maximum gross proceeds of $500,000 with certain directors and officers of the Company and certain eligible investors. The non-brokered portion of the private placement will not be subject to the compensation terms agreed to with the agent, but a finders fee of 8 per cent will be paid in cash.
All securities issued with respect to the private placement will be subject to a hold period of four months from the closing date in accordance with the policies of the TSX Venture Exchange and applicable Canadian securities laws and such other further restrictions as may apply under foreign securities laws, if applicable. The private placement is subject to the requisite filings with the TSX Venture Exchange and applicable securities laws.
The net proceeds will be used for a summer, 2004, program and a follow up winter, 2004-2005, program on the Springpole Lake gold project and for general corporate purposes. Gold Canyon is engaged in the acquisition and exploration of mineral and precious metals properties and currently owns and operates the Springpole gold project in the Red Lake mining district of Ontario and its Cordero Gallium project in Humboldt county, Nevada.