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American CuMo arranges $25-million (U.S.) financing
2013-12-18 13:11 ET - News Release
Mr. Shaun Dykes reports
AMERICAN CUMO MINING CORPORATION ANNOUNCES PROPOSED $25 MILLION FINANCING
American CuMo Mining Corp. (CuMoCo) intends to undertake a financing to raise up to $25-million (U.S.) through the sale of up to 100 units of its subsidiary, Idaho CuMo Mining Corp. (Idaho CuMo), at a price of $250,000 (U.S) per unit, with each unit consisting of a unsecured and non-transferable promissory note in the principal amount of $250,000 (U.S.), and a right to enter into a silver purchase-and-sale agreement with Idaho CuMo.
The notes would bear interest at a rate of 6 per cent per annum, payable semi-annually on June 30 and Dec. 31, and would have a term of five years. With the consent of the holder of the note, Idaho CuMo could prepay all or any portion of the principal amount outstanding under such note at any time, provided that any prepayment in whole or in part of the note would cause the silver purchase right to immediately expire.
The silver purchase right would be exercisable by the holder within 30 days of completion of a feasibility study and decision by the company to place its CuMo project located in Idaho into commercial production provided that the note had not been repaid in full or in part by the company. Each silver purchase right would, if exercised, require the purchaser to purchase and Idaho CuMo to sell to the purchaser refined silver in an amount equal to 0.5 per cent of the silver (in any form) produced from the CuMo project, up to a maximum of 312,500 ounces of refined silver pursuant to a silver purchase agreement.
If all units under the financing are issued and all silver purchase rights were exercised, Idaho CuMo would be required to sell up to a maximum of 31.25 million ounces of refined silver, which silver would be deliverable from 50 per cent of the silver produced from the CuMo project. Upon exercise of the silver purchase right, the purchaser would pay an upfront cash payment of $250,000 (U.S.) per silver purchase right exercised upon execution of the silver purchase agreement, which payment would be made by way of a set-off against repayment of the principal amount of loans owing by Idaho CuMo to the purchaser. The deposit would be unsecured.
The purchase price for each ounce of refined silver purchased would comprise: a continuing cash payment, being the lesser of the London silver spot price and $5 (U.S.)/ounce, subject to an inflationary adjustment; and a deposit reduction amount, being the amount by which the silver spot price exceeds the continuing payment, paid as a reduction to the deposit and payable until such time as the deposit is reduced to zero.
The term of the silver purchase agreements would continue until the earlier of: the date on which the silver maximum has been delivered to the purchaser; and 40 years (subject to automatic 10-year renewals if the CuMo project is in operation). Any uncredited balance of the deposit at the end of a silver purchase agreement's term would be refunded to the purchaser.
The financing is subject to TSX Venture Exchange approval, and the preparation and approval by the parties of definitive legal documentation.
CuMoCo may pay a cash finder's fee of 5 per cent, in accordance with TSX Venture Exchange policy, in connection with the financing. The funds raised in the financing would be used to continue advancing the CuMo project, including work toward an updated mineral resource estimate, preparing an updated economic analysis, expanded metallurgical testing, infill drilling and environmental baseline studies, as well as for general working capital purposes.
Corporate and CuMo project update
Last week, CuMoCo participated in the 119th Annual Exposition of the Northwest Mining Association, held in Reno, Nev. Interest in the CuMo project from participants was significant. During this time, CuMoCo entered into an agreement with Idaho-based Timberline Drilling Inc., pursuant to which Timberline agreed to purchase all remaining drills, support equipment and inventory owned by CuMoCo. As part of the agreement, CuMoCo agreed to hire Timberline for a 50,000-foot minimum drilling contract over the next three years. With operations in the Western United States and Alaska, Timberline specializes in underground and surface core drilling, and has drilled over 650,000 feet this year with plus-97-per-cent recovery and an industry-leading safety record.
Throughout much of 2013, the CuMo project has been undergoing a supplemental environmental assessment (SEA) process as prescribed under the United States National Environmental Protection Act (NEPA). During the SEA public comment period, the project garnered support from both the Idaho Department of Commerce and Boise County Board of County Commissioners for the completion of the exploration.
CuMo project leaders will continue working with U.S. Forest Service to support the agency's completion of the SEA process. The company anticipates that the SEA may be approved by mid-2014 and drilling to resume on public lands.
We seek Safe Harbor.
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