Amarillo Gold Announces Gold-linked Credit Facility VANCOUVER, BRITISH COLUMBIA--(Marketwired - Aug. 18, 2014) - Amarillo Gold Corp. (TSX VENTURE:AGC) ("Amarillo" or the "Company") is pleased to announce that it has entered into a gold-linked credit facility (the "Facility"). The purpose of the Facility is to both finance the Company and to consolidate many of the Company's current obligations into a single structure with a repayment scheme that is consistent with a) its continuing development plans on its flagship Mara Rosa project and b) financing conditions in the junior gold equity markets. The creditors of the facility are shareholders of the Company.
Under the Facility, the Company can borrow up to the value of 5,000 ounces of gold. Two components of the facility are defined: An initial tranche of up to 2500 ounces of gold with a reference price of $1285.25/oz (the LBMA PM fix on July 31, 2014) and subsequent tranches, to be filled quarterly, with reference prices based on the LBMA PM fix seven business days prior to the start of the quarter. The subsequent quarterly tranches are to be limited to the value of 270 ounces as calculated from this reference gold price.
The Facility must be repaid on the earliest of: 1) A change of control of the Company; 2) Three months following a declaration of commercial production at Mara Rosa; and 3) July 31, 2019.
The Facility bears a coupon of 12% and interest may be accrued.
In partial consideration of the Facility, the Company will issued 1200 non-transferable common share purchase warrants (the "Warrants") to each Lender for each $1,000 in value advanced in the Initial Drawdown, and 600 Warrants to each Lender for each $1,000 in value advanced in subsequent drawdowns, with each Warrant entitling the holder thereof to acquire one common share in the capital of the Company. Each Warrant has an exercise price of $0.25, being equal to approximately 250% premium over the 20 day VWAP of the Company's common share price as at August 12, 2014. Each Warrant has an expiry date of 36 months from issuance. The Warrants and the common shares underlying the Warrants are subject to a four-month hold period pursuant to Canadian securities laws.
"This Facility consolidates and greatly extends the maturity of our debt. It also provides us with sufficient funding to pursue our goals for the foreseeable future. It does both these things without, apart from the very modest warrant issue, struck well above market, the issuance of equity. We are keenly focussed on preserving and enhancing underlying shareholder value and in this very high cost-of-capital environment for gold developers, we are pleased to have structured a financing mechanism that does not dilute our shareholders in any substantially material way." commented Buddy Doyle, CEO of Amarillo.
A similar facility is now being drafted for creditors of the Company who are also insiders of the Company. Terms are expected to be identical except for the initial gold reference price.
The gold loan and the issuance of the Warrants are subject to the customary final approval conditions of the TSX-V.