VANCOUVER, BC / ACCESSWIRE / May 30, 2022 / Scorpio Gold Corporation ("Scorpio Gold" or the "Company") (TSX-V:SGN) announces that it has entered into two convertible loan agreements dated May 24, 2022 (the "Convertible Loan Agreements") with Ianco Holdings Ltd. and Matco Holdings Ltd. (collectively, the "Lenders") pursuant to which the Company may borrow the aggregate principal amount of up to US$2,450,000 under two loans to be advanced by the Lenders (the "Loans"), subject to the completion of certain conditions precedent described in the Convertible Loan Agreements including the approval of the TSX Venture Exchange (the "Exchange"). The Company intends to use the proceeds of the Loans to advance its Goldwedge property and for general working capital purposes.
Terms of the Convertible Loans
Subject to the terms and conditions in the Convertible Loan Agreements, the Lenders will advance the Loans to the Company in draws from the closing date (the "Closing Date") until the maturity date of December 31, 2022 (the "Maturity Date), in such amounts as agreed to between the Lenders and the Company, provided that the principal amount of each Loan advanced does not exceed in aggregate US$1,225,000.
The outstanding principal amount of each Loan will be convertible, at the election of the applicable Lender, into common shares in the capital of the Company (each, a "Common Share") at a conversion price of US$0.06 per Common Share, subject to adjustment, from the Closing Date until the earlier of: (i) the Maturity Date, and (ii) the date the entire outstanding principal amount of the applicable Loan has been repaid.
The outstanding principal amount of each drawdown under the Loans will bear interest at a rate of 123/8% per annum, compounding monthly, not in advance, for the period commencing from the date the applicable Lender advances the draw to the Company until the outstanding principal amount and accrued interest has been repaid or converted into Common Shares, as applicable. Interest shall be due and payable by the Company in cash upon the earlier of: (i) the Maturity Date, and (ii) the date the entire outstanding principal amount of the applicable Loan has been repaid or converted into Common Shares.
For each drawdown under the Loans, the Company will pay to the applicable Lender a facility fee of US$3,250, which will be deducted from the amount of the drawdown and retained by the applicable Lender.
The Loans will be equally secured on a pari passu basis by certain security documents in favour of the Lenders to be provided by the Company and its subsidiaries pursuant to which the Company will provide the Lenders with a security interest in all present and after-acquired personal property of the Company and its subsidiaries.
The Loans and the Common Shares issuable on conversion of the principal amount of the Loans will be subject to a four-month hold period expiring on September 25, 2022, in accordance with applicable securities laws and the policies of the Exchange.
Bridge Loans
As disclosed in the press release of the Company dated April 28, 2022, Ian Dawson and Bruce Dawson, directors of the Company, previously advanced two bridge loans (the "April Loans") to the Company on behalf of the Lenders in the aggregate principal amount of US$450,000.
The Company announces that it has also obtained two additional bridge loans (the "May Loans") on May 18, 2022 and May 20, 2022 from the Lenders in the aggregate principal amount of US$700,000.
The April Loans and the May Loans are payable on demand, accrue interest at a rate of 123/8% per annum compounding monthly, and were evidenced by promissory notes delivered by the Company to the Lenders.
On the Closing Date, the April Loans and May Loans and any interest outstanding thereunder will be incorporated into the Loans as the first and second drawdowns, respectively.