Major Precious Metals Corp has announced a definitive funding agreement, in which L1 Capital Global Opportunities Master Fund, part of the L1 Capital Group, will invest up to C$6 million in the company in the form of face-value convertible debentures.
The company said it will receive net proceeds of up to C$5.4 million from the convertible debenture issuance, less applicable closing costs.
“The net proceeds from this innovative financing with L1 Capital gives further support to our ongoing evaluation of the resource potential at the Skaergaard Palladium and Gold Project,” Major Precious Metals CEO Tony Williams said in a statement.
READ: Major Precious Metals completes over 8,400 meter resource definition program at Skaergaard project in Greenland
Under the terms of the agreement, an initial C$3.15 million has been funded with the issuance of a second convertible debenture, for gross proceeds to the company of up to C$2.25 million, contemplated and to be completed on the date that is 180 days after the closing of the first tranche. There are no assurances that the second tranche will be completed as indicated, or at all.
Each convertible debenture issued will have an 18-month term from the date of issuance. The face value of each convertible debenture is to be paid in 14 equal monthly instalments starting after the four-month anniversary of the date of issuance of each convertible debenture.
The repayment of the face value may be paid in cash or common shares of Major Precious Metals at the discretion of the company at a price per share equal to 90% of the arithmetic average volume weighted average prices (VWAP) of the shares for the five trading days chosen by the investor during the 20-day trading day period before the date that is the applicable monthly instalment date.
The investor will be entitled to convert the convertible debentures, in whole or in part, into shares over the term of the applicable convertible debenture at a conversion price equal to $0.40, representing a 30% premium to the closing VWAP on the day before the agreement has been signed.
Also, as part of the first tranche, Major Precious Metals has agreed to issue 6,034,482 common share purchase warrants exercisable for company shares for a period of 60 months at an exercise price of $0.325.
The company has also agreed to pay the investor a 3% financing fee, payable in fee shares, of the face value of each convertible debenture under the first tranche and second tranche, due upon closing of each such tranche. Major Precious Metals has issued 362,069 fee shares to the investor in connection with the closing of the first tranche.
All securities issued under the agreement will be subject to a hold period of four months and a day.
As well, the company said it has recently completed its Phase 1 diamond drilling program on its Skaergaard project in Greenland.
Major Precious Metals also noted that it has completed demobilisation from site and is now coordinating the secure transportation of over 11,000 core and channel samples gathered from the summer program to the ALS Global Laboratory in Ireland for assay testing.
It added the results from this work will determine the next steps needed to demonstrate the full potential for economic extraction of the resources at Skaergaard.
Major Precious Metals is a Canadian mining company advancing exploration of its flagship Skaergaard project in eastern Greenland, which contains one of the world's largest palladium and gold deposits outside the major platinum group metals (PGM) producing areas of Russia and South Africa.
Contact Sean at sean@proactiveinvestors.com