American CuMo closes $1.15-million offering AMERICAN CUMO MINING CLOSES OVERSOLD CONVERTIBLE DEBENTURE OFFERING
American CuMo Mining Corp. has closed its oversubscribed private placement of convertible debentures previously announced on Dec. 8, 2020. Subscriptions were received for a total of 1,150 debentures for total proceeds of $1.15-million. The board of directors of the company unanimously approved the increase in the placement at its meeting held on Jan. 18, 2021.
The debentures have a five-year term, are secured by the assets of the company's subsidiary, International CuMo Mining, and pay interest at a rate of 8.75-per-cent interest per annum, with interest paid in semi-annual instalments. At the investor's discretion, the interest can be accrued and compounded. The debentures are convertible into units of the company at an initial conversion price of five cents per unit at any time following four months and one day from the closing date until the first anniversary on the closing date, and thereafter up to the maturity date (as such date may be extended) at a minimum 10 cents per unit. Each unit will consist of one common share of the company and one common share purchase warrant, with each warrant entitling the holder to purchase an additional common share of the company at a price of 7.5 cents per warrant share for a period of five years from the closing date. Any accrued but unpaid interest under the debentures may also be converted, at the option of the holder, into units at the market price determined at the time the interest becomes payable.
Insiders, being a "related party" of the company (as such term is defined under Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions (MI 61-101)), have subscribed for a total of 111 debentures as follows: Louise Dykes (spouse of the president, chief executive officer and director of the company) for 11 debentures; Trevor Burns (a director of the company) for 50 debentures; Barbara Tambre (vice-president) for 15 debentures; and William Conlin (shareholder communications) for 35 debentures. The company has relied upon the exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101 based on the fact that the fair market value of the related party participation in the CuMoCo offering will not exceed 25 per cent of the company's market capitalization prior to the closing of the CuMoCo offering. The board of directors approved the participation of insiders in the CuMoCo offering with the individual insiders who are directors abstaining from voting on their participation.
The debenture financing will be used to continue development of the CuMo deposit, including smaller-scale ore sorting analysis with the goal of reducing the mill size and thus capital cost while producing the same amount of metal as outlined in the recently filed preliminary economic analysis, starting updated metallurgical testing with the goal of adding tungsten back to the resource base and determining the final mill recovery circuits; beginning the data gathering process for the recently acquired Bleiberg zinc project; working capital; and trades payable.