Magna Mining Inc (TSX-V:NICU) said it has closed its previously-announced non-brokered private placement, raising gross proceeds of $20,014,792.20 after issuing 74,128,860 subscription receipts at $0.27 each.
The gross proceeds from the sale will be held in escrow by Computershare Trust Company of Canada, as subscription receipt agent, and released to the company when certain conditions are met, including the satisfaction of all conditions precedent to the closing of Magna Mining’s acquisition of Lonmin Canada Inc (Loncan).
When the escrow release conditions are met, and without the payment of any additional consideration, each subscription receipt will entitle the holder to one common share of the company and one-half of one common share purchase warrant, with each warrant entitling the holder to purchase one additional share at $0.405 each for a period of three years following the date of issue of the warrants.
READ: Magna Mining receives TSX Venture Exchange approval for Denison project acquisition and private placement; appoints David King as senior VP, technical services
Escrowed funds will be released if release conditions are satisfied on or before 120 days following the closing of the offering. If the conditions are not met, the escrowed proceeds, together with interest earned, will be returned on a pro-rata basis to the holders of the subscription receipts which will be cancelled.
Magma Mining said it intends to use the net proceeds to fund the cash component of its purchase of Loncan and for ongoing exploration and development activities at Loncan's Denison Project in the Sudbury region of Ontario, Canada
The company added that certain company insiders took up an aggregate of 19,775,588 subscription receipts under the offering for gross proceeds of approximately $5.3 million.
Additionally, Magna Mining said Hawke's Point Holdings II purchased 18,518,518 subscription receipts for aggregate gross proceeds of approximately $5 million. Magna Mining and Hawke's Point have agreed to enter into an investor rights agreement when the escrow release conditions are met, entitling Hawke's Point to certain customary investor rights provided that it maintains certain ownership thresholds in Magna.
The rights include the right to designate one director for appointment to the board of directors of Magna, the right to appoint a member to a technical steering committee to be formed by Magna, and certain consultation rights, which include providing Hawke's Point with reasonable access to senior management and considering certain recommendations made by Hawke's Point, it added.
Magna Mining is an exploration and development corporation focused on nickel, copper and PGM projects in the Sudbury Region of Ontario, Canada.
Contact the author at jon.hopkins@proactiveinvestors.com