Arizona Gold & Silver Inc (TSX-V:AZS, OTCQB:AZASF, FRA:A9J0) announced that it has closed its previously announced strategic private placement with Evolution Mining Gold Operations, raising approximately C$12 million to fund exploration at its Philadelphia Gold-Silver Project in Arizona.
Evolution, a wholly owned subsidiary of Evolution Mining Limited, acquired about 15.1 million units of Arizona Gold & Silver at C$0.80 per unit. Each unit consists of one common share and one-half of a common share purchase warrant, with each full warrant exercisable at C$1 for three years.
Following the investment, Evolution holds approximately 9.9% of Arizona Gold & Silver on a non-diluted basis. Assuming the exercise of all warrants held by Evolution, its ownership would represent approximately 14.1% on a partially diluted basis.
Arizona Gold & Silver plans to use at least 90% of the gross proceeds, or approximately C$10.8 million, to accelerate exploration at the Philadelphia Project in the historic Oatman Mining District. Up to 10%, or approximately C$1.2 million, will be allocated to general and administrative expenses.
“This strategic investment marks an important milestone for Arizona Gold & Silver," the company's CEO Mike Stark said in a statement. “Evolution Mining is a C$23 billion globally recognized gold producer with an outstanding technical reputation. Its investment reflects confidence in our team, our assets, and our long-term vision.”
The companies have also entered into an investor rights agreement that, subject to customary conditions and ownership thresholds, provides Evolution with participation rights in future equity issuances to maintain its pro rata interest and top-up rights in connection with certain dilutive events.
Evolution will also have the right to nominate one director to Arizona Gold & Silver's board, or appoint a board observer instead, and participate in a technical committee in an advisory capacity. The agreement also provides Evolution with a first right of refusal over the sale of a 10% or greater interest in the Philadelphia Project.
Evolution did not own any Arizona Gold & Silver securities before the investment. The company acquired the units for investment purposes and indicated that it may increase or decrease its ownership in the future depending on its assessment of Arizona Gold & Silver's business, prospects, financial condition and capital requirements.
Shares of Arizona Gold & Silver gained nearly 8% on Thursday afternoon.