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Scorpio Gold (TSXV:SGN) has signed a binding letter of agreement with Coral Reef Capital LLC for the issuance of Senior Secured Convertible Notes worth US$3,370,000.
As quoted in the press release:
The Notes will bear interest at 12% per annum and mature 13 months after their issue date, subject to a right of the Company to extend maturity for six months if the Notes are not in default. The Notes will be convertible into common shares of Scorpio Gold at the option of Coral Reef based on a conversion price of US$0.108, per share, being the current US$ equivalent market price of the Company’s shares. In addition, the Company will pay a 2% arrangement fee to Coral Reef and will issue to Coral Reef 31,217,529 common share purchase warrants (the “Warrants”). The Warrants will have an exercise price of US$0.108 and will expire upon maturity of the Notes. However, should the Notes be prepaid in advance of one year, the exercise period of the Warrants will be one year from the date of issuance. The Notes and Warrants will contain a restriction that they may not be converted or exercised to acquire more than an aggregate of 19.99% of the outstanding common shares of the Company unless shareholder approval is first obtained. Coral Reef will be granted two board of director observer positions on closing and, if Coral Reef holds at least 19.99% of Scorpio Gold’s outstanding shares as a result of the conversion of the Notes or the exercise of the Warrants, Coral Reef’s appointed observers will become directors of Scorpio Gold.
The Notes will be subject to customary default/acceleration provisions as well as customary financial covenants including a restriction on maximum capital expenditures and a minimum required level of earnings before interest, tax, depreciation and amortization (EBITDA). The Notes will be secured by the Company’s interest in the Mineral Ridge Mine as well as the Goldwedge property. The issue of the Notes remains subject to definitive documentation, regulatory approvals and other customary conditions.
Click here to read the Scorpio Gold (TSXV:SGN) press release
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