A Chinese investor is to take a 29.9% stake in ECR Minerals PC (LON:ECR) after agreeing to subscribe for 55.4mln shares in the multi-project developer.
Shenyang Xinliaoan Machinery Co will pay 1p for each of the shares – which are subject to a 12 month lock-up agreement – raising £553,564 for ECR.
A £100,000 non-refundable deposit will be paid by Shenyang which will be converted into ordinary shares at 2p each should the subscription not be completed by 31 March.
The company said it would use the cash influx to push ahead with drill programmes at the Avoca and Bailieston gold projects in Australia as well as the SLM gold project in Argentina.
Once Shenyang has completed the subscription, it will be issued with 83mln warrants; of which 55.3mln can be exercised at 2p a pop, while the remaining 27.7mln warrants are exercisable at a price of 5p.
“One of the principal challenges faced by companies such as ECR is in securing investors who are prepared to take a longer term view,” said ECR chief executive Craig Brown.
“We believe the fact that the Investor has agreed to a 12-month lock up with respect to the subscription shares speaks volumes in this regard, and is a real vote of confidence in ECR and its strategy.”
Upon completion of the subscription, Shenyang will be able to recommend up to two directors who may be appointed as members of the ECR board.
The investor will also be granted certain pre-emption rights for as long as it holds over 20% of the company’s shares.
On a separate note, ECR has issued 6.7mln new shares at a price of 1p per shares to certain directors and suppliers in lieu of fees and salary owed to them.
Just over 6.2mln shares have been issued to suppliers and consultants, with 344,000 of those being issued to former director Stephen Clayson for ad hoc consultancy and admin services.
The remaining 4mln or so shares have been issued to current directors William Howell, Ivor Jones and Craig Brown.
Shares closed at 1.15p on Friday.