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Arianne Phosphate Inc. (TSXV:DAN,FWB:JE9N,OTCBB:DRRSF) entered into agreements to raise $7.5 million in four separate transactions: $1.5 Million loan on tax credit receivables, $2.5 Million credit facility with Mercury Financing Corp., $2.5 Million unit offering with each unit to consist of one common share of the Company and one-half common share purchase warrant, and $1 Million offering of flow-through shares.
As quoted in the press release:
Details on the $1.5 Million Tax Credit Loan
Arianne has entered into a loan agreement (the “Loan Agreement”) with a third party lender for a loan in the aggregate amount of $1.5 Million (the “Loan”). In order to secure the Company’s obligations under the Loan and the Loan Agreement, Arianne has accepted to grant a first ranking security on the universality of its receivables from Revenu Québec for the fiscal years ended 2011, 2012 and 2013 estimated to be in the aggregate amount of $2 Million, and which are for the most part comprised of refundable tax credits related to mineral exploration, and better known as the Tax Credits Relating to Resources (the “Tax Credits”).
Under the Loan Agreement, the Loan will bear interest at a rate of 7% per annum and shall be payable only on the earlier of: (i) in the event of a change of control where at least 30% of Arianne’s issued and outstanding shares are acquired, purchased or otherwise owned by a third party, either by way of takeover bid or any other type of transaction having the same result; (ii) following receipt from Revenu Québec of the Tax Credits (such amounts to be deducted from the outstanding balance of the Loan in the event the amount of the Tax Credits received by the Company do not cover the total amount of the Loan); or (iii) February 28, 2014. Additionally, the Company will issue the lender 350,000 non transferable warrants having an exercise price of $1.18 per share and exercisable until 5:00 PM (Eastern time) on February 28, 2014. In connection with this transaction, Arianne paid to the lender a commitment fee of Cdn$30,000.
The transaction has been conditionally approved by the TSX Venture Exchange (the “Exchange”), subject to the Company meeting customary conditions imposed by the Exchange and the filing of duly executed closing documents. The securities issued under the Loan Agreement are subject to a four (4) month hold period ending on November 12, 2013.Details on the $2.5 Million credit facility
The Company has entered into a $2.5 Million credit facility (the “Credit Facility”) with Mercury Financing Corp., the same lenders as the 2012 $10 Million credit facility (see press release of the Company dated September 11, 2012 for more details) and can be drawn on as required by the Company. The terms of the Credit Facility are essentially similar to those of the 2012 $10 Million credit facility. The interest on amounts drawn will be capitalized through to June 30, 2014. Additionally, the Company will issue the lender 1 million non transferable warrants, of which 625,000 warrants have an exercise price of $1.18 per share and 375,000 warrants may be exercised at $1.77 per share. All the warrants are exercisable through December 31, 2015. Lastly, Arianne has agreed to provide the lender with a $0.25/tonne production fee on all phosphate concentrate sales from the Company’s Lac à Paul phosphate project. The production fee can be repurchased at anytime for a lump sum payment of $1.5 Million. In connection with this transaction, Arianne will pay on closing an arrangement fee of Cdn$25,000 to the agent and a commitment fee of Cdn$50,000 to the lender. The closing of the Credit Facility is expected to occur on or about July 29, 2013 and remains subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the Exchange. All securities issued in connection with the Credit Facility will be subject to a four-month hold period from the date of closing.
Details on the $2.5 Million unit offering and $1.0 million flow-through shares offering
The Company has entered into an agreement, on a “best effort basis”, to proceed with a private placement for gross proceeds of up to $3.5 Million (the “Offering”). The Offering consists of the issuance of a maximum of 714,286 flow-through common shares (the “Flow-Through Shares”) at a price of $1.40 per Flow-Through Share for maximum gross proceeds of $1 Million and a maximum of 2,272,728 units (the “Units”) at a price of $1.10 per Unit for maximum gross proceeds of $2.5 Million. Each Unit is comprised of one (1) common share (a “Unit Share”) and one half (1/2) of one common share purchase warrant (each whole warrant a “Warrant”), each Warrant entitling the holder to acquire one (1) common share at a price of $1.45 per share for a period of two (2) years following the closing of the Offering. In connection with the Offering, the Company will pay a cash commission and issue non transferable warrants in accordance with the policies of the Exchange. The Offering is scheduled to close at the same time as the Credit Facility and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the Exchange. All securities issued pursuant to the Offering will be subject to a four-month hold period from the date of closing.
Arianne Phosphate Inc. CEO, Brian Kenny, said:
These transactions are a significant step forward for Arianne and the development of our world-class Lac à Paul phosphate deposit. As we near the final stage of the Feasibility Study, this current round of financing allows us to gear up for the permitting process and undertake other key activities that move the project forward.
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