Financing News..Sep 10, 2007 08:30 ET
Mountain Lake Arranges Convertible Note Financing With Sprott Asset Management
Private Placement of 2-Year Convertible Notes With a Face Value of $2,000,000
HALIFAX, NS--(Marketwire - September 10, 2007) - Mountain Lake Resources Inc. (TSX VENTURE: MOA) ("Mountain Lake" or the "Company") is pleased to report it has arranged a private placement debt financing through Sprott Asset Management Inc. ("Sprott") of 2-year limited recourse convertible notes with an aggregate face value of $2,000,000 (the "Notes") that will be placed with a group of the Sprott managed investment funds.
The Notes will bear an annual interest coupon rate of 7% per annum, payable annually. The Notes, including any accrued interest, are convertible at the election of the Company at any time after the first year into common shares of Etruscan Diamonds Ltd. ("Etruscan Diamonds"), a corporation incorporated under the Federal laws of Canada and partially owned by the Company, at a conversion price of $2.00 per share of Etruscan Diamonds.
The Company will deposit into escrow a total of 1,000,000 common shares of Etruscan Diamonds as security for repayment to the noteholders (the "Collateral Security"). In the event of default in repayment or the failure of the Company to convert the principal and accrued interest into common shares of Etruscan Diamonds, then the noteholders' sole recourse against the Company will be limited to the Collateral Security, and the noteholders will not have any further recourse against the Company or its other assets for any deficiency. The Company owns an additional 4,250,000 shares of Etruscan Diamonds, all of which are unencumbered.
The funds will be used to finance the Company's 2007 and 2008 exploration and development programs, and general working capital purposes. The Notes are subject to the acceptance of the TSX Venture Exchange.