Ely Gold Royalties is a Vancouver-based, emerging royalty company with development assets focused in Nevada and Quebec
Ely Gold Royalties announced that the TSX Venture Exchange has conditionally accepted for filing the Company’s agreement with 2176423 Ontario, a company controlled by Eric Sprott, providing with a $6.0 million revolving line of credit.
Pursuant to the Financing terms, the LOC is available to the Company, as and when required, until November 29, 2021 (the “Maturity Date”). Interest on principal outstanding under the LOC will bear interest at 10.0% per annum, with undrawn amounts of the LOC carrying a stand-by fee of 2.5% per annum, compounded monthly and payable quarterly. The LOC is secured by a registered security interest over all of the Company’s assets, subordinate only to existing prior encumbrances.
In connection with the LOC, the Company has issued to the Lender 16,216,215 non-transferrable loan bonus warrants (the “Bonus Warrants”). Each Bonus Warrant is exercisable, up to the Maturity Date, to purchase one common share of the Company (each a “Bonus Warrant Share”) at an exercise price of C$0.37 per Bonus Warrant Share. Based on the Company’s current capital structure, such number of Bonus Warrant Shares would represent 14.0% of the Company’s issued and outstanding shares and, taken together with Sprott’s existing direct and indirect holdings on a partially-diluted basis, would represent 20.76% of the voting shares of the Company. The Lender has agreed not to exercise Bonus Warrants if such exercise would result in Sprott’s direct and indirect holdings of the Company’s outstanding voting shares being in excess of 19.9% based on the then-current outstanding shares of the Company.
Ely Gold expects to use the proceeds of the LOC principally for the acquisition of additional producing or near-term producing royalties as well as to prioritize its long-term capital management.
In connection with the Financing, the Company will issue 300,000 non-transferrable common share purchase warrants (each a “Finder’s Warrant”) to Medalist Capital Ltd., an arm’s length registered dealer. Each Finder’s Warrant will be exercisable to purchase one common share of the Company (each a “Finder’s Warrant Share”) at an exercise price of C$0.37 per Finder’s Warrant Share for a term of three (3) years.
The Bonus Warrants, Bonus Warrant Shares, Finder’s Warrants and Finder’s Warrant Shares will be subject to a four-month hold period running from November 30, 2019. The Exchange’s acceptance remains subject to the payment of customary filing fees and the filing of an Exchange Form 2C1 Declaration by Sprott.
Source: Company Press Release