RE:VERY CuriousJonny2fingers,
Scorpio Gold's buyout of Elevon's 30 percent interest and paying off that debt gives Scorpio Gold clear title to the two gold mines, and IMHO, increases the probability of an acquisition by Americas Silver. I bought back my Scorpio Gold position because I figured that Scorpio Gold was the most likely acquisition target.
Now the question is are the debentures worth more than SGN stock at its current price.
Congrats to all who rolled the dice and bought this stock!
Here are the details:
Vancouver, January 28, 2019 - Scorpio Gold Corporation ("Scorpio Gold" or the "Company") (TSX-V: SGN) is pleased to announce a non-brokered private placement offering (the "Private Placement") of secured convertible debentures (each, a "Debenture") for gross proceeds of up to US$6,000,000. The Company intends to use the net proceeds from the Private Placement for the Buyout (as defined below) and for general working capital purposes.
Each Debenture will have an issue price of US$1,000, a term of three years from the date of issuance and will bear interest at a rate of 10% per annum, payable semi-annually, which, subject to regulatory approval, may be paid in common shares of the Company ("Shares") at the option of the Company or the holder of the Debenture. The Debentures will be secured by a security interest subordinate to all existing and future senior indebtedness of Company, including any future senior indedebtness in connection with the construction of a new processing plant at the Mineral Ridge Project.
Each Debenture is convertible into Shares at the option of the holder at any time prior to maturity at a conversion price of US$0.08 per Share (the "Conversion Price"), which is equivalent to 12,500 Shares for each US$1,000 principal amount of Debentures, subject to adjustment in certain circumstances. Debentures must be converted in minimum amounts of US$1,000. The Company will have the option on maturity, subject to regulatory approval, to repay any portion of the principal amount of the Debentures in cash or by issuing and delivering to the holders of the Debentures such number of Shares equal to the principal amount of the Debenture divided by the Conversion Price.
Prior to the issuance of the Debentures, the Company will complete a 2:1 consolidation of its Shares (the "Share Consolidation"). The Company intends to seek shareholder approval of the Share Consolidation at a special and general meeting of its shareholders to be held on February 27, 2019.
The closing of the Private Placement is subject to certain conditions including, but not limited to, the acceptance of the TSX Venture Exchange (the "Exchange"), the completion of the Share Consolidation, and the concurrent completion of the Buyout (as defined below). The Debentures and Shares issued upon conversion thereof will be subject to a four month hold period from the date of issuance of the Debentures in accordance with applicable securities laws and, if required, the policies of the Exchange. A finder's fee within Exchange policy guidelines may be paid in Debentures in connection with the Private Placement.
The Company intends to use US$3,000,000 of the proceeds of the Private Placement to fund (i) the settlement of the loan advanced from Waterton Precious Metals Fund II Cayman, LP (the "Lender") to Scorpio Gold, pursuant to the terms of a senior secured credit agreement among the Company, its subsidiaries and the Lender, which was originally announced in the Company's press release dated August 17, 2015 (the "Credit Facility"), (ii) the termination of a gold and silver supply agreement dated May 18, 2011 among the Company, Scorpio Gold (US) Corporation ("Scorpio Gold US"), Mineral Ridge Gold, LLC ("Mineral Ridge Gold") and an affiliate of the Lender; and (iii) the purchase of the 30% membership interest of Elevon LLC ("Elevon") in Mineral Ridge Gold (which holds the Mineral Ridge Project) and the termination of an operating agreement dated March 10, 2010 between Scorpio Gold US and Elevon, (collectively, the "Buyout"). Scorpio Gold has entered into a non-binding letter of intent with the Lender in connection with the Buyout, and intends to enter into definitive agreements with the Lender and its affiliates in connection with the Buyout on or prior to the closing of the Private Placement. Additionally, the Company and the Lender have entered into a further binding forebearance agreement in respect of the Credit Facility, pursuant to which the Lender has extended the maturity date of the Credit Facility to March 4, 2019. The Company intends to close the Private Placement and the Buyout on or about March 4, 2019.
The securities being offered have not been, and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any applicable securities laws of any state of the United States and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent of such registration or an applicable exemption from such registration requirements. This press release does not constitute an offer for sale of, or a solicitation of an offer to buy, the securities, nor will there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale is not permitted, including, but not limited to, the United States ("United States" and "U.S. person" are defined in Regulation S under the U.S. Securities Act).
About Scorpio Gold Corporation
Scorpio Gold holds a 70% interest in the producing Mineral Ridge gold mining operation located in Esmeralda County, Nevada with joint venture partner Elevon