Cabral Gold Inc (TSX-V:CBR) said it has entered into an agreement with Paradigm Capital Inc, on behalf of a syndicate of investment dealers including Cormark Securities Inc, Research Capital Corporation, and Roth Canada Inc, under which the agents have agreed to offer for sale on a "best efforts" marketed basis, an aggregate of up to 16,130,000 units from the treasury of the company, at a price of $0.31 per unit for total gross proceeds to the company of up to approximately $5 million.
The company said the net proceeds from the offering will be primarily used for exploration and development activities, and general working capital purposes.
Each unit in the offering will consist of one common share of the company and one-half of one common share purchase warrant of the company. Each whole warrant will entitle the holder to acquire one common share from the company at a price of $0.50 each for a period of 24 months after the closing of the offering.
READ: Cabral Gold says drilling results from Cuiú Cuiú gold district further indicate high-grade corridor of mineralization
In addition, the company has granted the agents an over-allotment option to purchase up to an additional 15% of the units of the offering on the same terms exercisable at any time up to 30 days following closing, for market stabilization purposes and to cover over-allotments, if any.
Cabral Gold said the agents will be paid on closing a cash commission equal to 6.0% of the gross proceeds of the offering (including on any exercise of the over-allotment option), subject to a reduced cash commission equal to 3.0% in respect of any sales of units to purchasers on a president's list provided by the company to the agents.
The company shall also issue to the agents that number of compensation options as is equal to 6.0% of the units issued under the offering (including on any exercise of the over-allotment option), subject to a reduced number of compensation options equal to 3.0% in respect of any sales of units to purchasers on a president's list provided by the company to the agents, each exercisable for one common share at $0.31 for a period of 24 months after closing.
Closing of the offering is expected to occur on or about June 15, 2022, and is subject to certain conditions including, but not limited to, the receipt of all necessary corporate and regulatory approvals, including the approval of the TSX Venture Exchange and the applicable securities regulatory authorities.
The units to be issued under the offering will be offered by way of a short form prospectus in the provinces of British Columbia, Alberta, Manitoba and Ontario, and may be offered in the United States on a private placement basis under an exemption from the registration requirements of the US Securities Act of 1933, as amended, and applicable state securities laws, and in jurisdictions outside of Canada and the United States, in each case in accordance with all applicable laws provided that no prospectus, registration statement or similar document is required to be filed in such jurisdiction.
The securities being offered have not been, nor will they be, registered under the US Securities Act, and such securities may not be offered or sold within the United States absent registration under US federal and state securities laws or an applicable exemption from such US registration requirements.
Term Loan
Cabral Gold also said it has entered into an agreement for a term loan with Alan Carter, president and chief executive officer of the company, under which Dr Carter will provide short-term financing to the company by way of an unsecured term loan of up to $1,500,000. The term loan will be advanced to the company as required and will bear interest at a rate of 10% per annum.
The parties intend that interest on the term loan be repayable in common shares subject to TSX Venture Exchange approval. A total of $250,000 of the term loan will be repayable within 90 days following advance of funds and the balance plus applicable interest will be repayable on or before December 31, 2022.
If the company repays the $250,000 contemplated above plus an additional $250,000 prior to December 31, 2022, the maturity date of the term loan may be extended from December 31, 2022, until March 31, 2023, at the option of the c. If the maturity date is so extended, the interest rate will increase to 12.5% retroactively to the date of initial advance on any amount not repaid by December 31, 2022.
The proceeds received from the term loan will be used for advancement of the company's Cuiú Cuiú project and for working capital and general corporate purposes.
Revised resource estimate
Cabral Gold also said it plans to release a NI 43-101 technical report for the Cuiú Cuiú property in Q4 2022 which would incorporate drill holes completed up to the end of Q3 2022.
The NI 43-101 report is expected to include; a revised resource estimate for the MG gold deposit, maiden resource estimates for the MG and PDM gold-in-oxide blankets, and a maiden resource estimate for the Machichie gold target. Additionally, the current Central resource estimate, which includes both oxide and basement resources, is expected to be updated using revised gold prices and cost estimates, as well as some revisions to existing wireframe models based on recent drilling.
The drilling program at Central will not be sufficiently advanced by the end of Q3 2022 to justify a fulsome new wireframe resource model. That is not expected until mid-2023, the company said.
Cabral Gold also plans to complete a Preliminary Economic Assessment (PEA) focused on exploitation of the unconformable gold-in-oxide blankets and oxidized saprolite basement at MG, PDM and Central, utilizing revised and maiden resources. The PEA work is expected to commence immediately following the completion of the Q4 2022 technical report.
The company said it has retained SLR Consulting (Canada) Ltd. (SLR) of Toronto. SLR will prepare the Q4 2022 NI 43-101 technical report and both the new and revised resource estimates. It will also oversee the forthcoming PEA process.
Heap-leach metallurgical test work on oxide material is nearly completed at Kappes Cassiday & Associates in Reno, Nevada. The final report is expected to be available in June 2022.
In light of the current market, management has elected to temporarily suspend Cabral Gold's regional reconnaissance drilling program and focus its efforts and resources on advancing the company's short- to medium-term objectives of updating the resource estimate, and demonstrating the economic potential of the gold-in-oxide mineralization at Cuiú Cuiú. As a result, the number of rigs on site will be reduced from five to three, with a corresponding reduction in staffing.
Cabral Gold is a junior resource company engaged in the identification, exploration and development of mineral properties, with a primary focus on gold properties located in Brazil.
The company has a 100% interest in the Cuiú Cuiú gold district located in the Tapajós Region, within the state of Pará in northern Brazil. Two gold deposits have so far been defined at Cuiú Cuiú and contain 43-101 compliant Indicated resources of 5.9 million ton (Mt) at 0.90 grams per ton (g/t) - 200,000 ounces - and Inferred resources of 19.5Mt at 1.24 g/t - 800,000 ounces.
The Tapajós Gold Province is the site of the largest gold rush in Brazil's history producing an estimated 30 to 50 million ounces of placer gold between 1978 and 1995. Cuiú Cuiú was the largest area of placer workings in the Tapajós and produced an estimated 2 million ounces of placer gold historically.
Contact the author at jon.hopkins@proactiveinvestors.com