The net proceeds of the financing will be utilised by the company on its extraction technology in Asphalt Ridge, Utah
Petroteq Energy, a fully integrated clean technology company with proprietary technology for soil remediation and oil extraction, announces that it has issued to an arm’s length lender a US$750,000 principal amount (including a 20% original issue discount) unsecured convertible debenture, and warrants exercisable for up to 3,676,470 common shares of the Company at US$0.17 per share for 48 months. The debenture has a term of 48 months and bears interest at a rate of 10% per annum payable quarterly. At the option of the holder the principal amount of the debenture is convertible into 3,676,470 common shares of the Company at US$0.17 per share, and at the option of the Company is convertible at US$0.17 per share in the event the closing price of the common shares on the TSXV is above US$0.40 for twenty (20) consecutive trading days, with average daily volume greater than 1,000,000 common shares over such twenty (20) day period. The net proceeds of the above financing will be used by the Company on its extraction technology in Asphalt Ridge, Utah, and for working capital. All securities issued pursuant to the financing are subject to resale restrictions, including, without limitation, a Canadian four-month hold period.
Petroteq’s 2019 strategy, specifically, the Company’s decision in the second and third calendar quarter of 2019 to curtail the Corporation’s productive capacity in an effort to upgrade and add process equipment to ensure a higher level of oil quality and greater production consistency, has resulted in the expected benefits to the Company. Accordingly, Petroteq began ramping back up its production capacity in the fourth calendar quarter of 2019 and Petroteq now anticipates potentially being able to achieve cash flow positive production capacity in the first calendar quarter of 2020. Current production at the facility has sparked new interest for technology licenses and Petroteq is finalizing terms with its first licensing partner.
Petroteq’s 2020 capital investment plan includes approximately US$35 million directed to facility expansion capital. As previously announced, Petroteq will invest these funds to complete the 3,000 barrel per day facility expansion. Subject to capital and funding requirements, Petroteq anticipates completing this project in the middle of 2021 and be able to utilize the increased capacity to realize strong cash flow and reduce non-discretionary field infrastructure, regulatory and corporate costs.
Alex Blyumkin, Chairman of Petroteq, stated, “the 2019 capital investment plan focused on driving efficiencies at our Asphalt Ridge facility from an operational and cost perspective and this focus was driven with an aim to achieve free cash flow in 2020.”
In addition, the Company intends to complete a shares for debt transaction, pursuant to which it will issue an aggregate of 653,846 common shares in satisfaction of US$85,000 of indebtedness currently owed to an arm’s length service provider. The Company determined to satisfy the indebtedness with common shares in order to preserve the Company’s cash for use on its extraction technology in Asphalt Ridge, Utah, and for working capital. All shares issued pursuant to the shares for debt transaction are subject to TSXV approval and will be subject to resale restrictions, including, without limitation, a Canadian four-month hold period.
Source: Company Press Release