PMI Gold Corp said it entered an agreement with Jesup & Lamont Securities Corp of New York to raise US$20 million via an issue of senior convertible promissory notes to investors and institutional buyers.
Closing is expected on or before March 17 2009. A unique feature of the placement is that the principal and interest are convertible into gold bullion at 110 percent of the one week average closing price of an ounce of gold on the New York Mercantile Exchange at the time of closing.
The investors will also receive a total of 10 million warrants exercisable at US$0.50 for two years to purchase a common share of the company.
The money raised will be used to repay the financing facility entered into with Trafalgar Capital Specialized Investment Fund in July 2008 for US$3.5 million to fund the pre-production development costs to bring the Kubi gold project into production, and for general working capital purposes.