LONDON (Alliance News) - SolGold PLC on Friday said it has entered into an agreement to issue shares to Maxit Capital LP to raise funds for the ongoing exploration and development of the Cascabel project in Ecuador.
Maxit can subscribe for a maximum of 238.5 million shares in SolGold, or a maximum stake of 19.9%, before October 6 and is entitled to include any third parties designated by itself or SolGold.
Notably, SolGold said the issue price "will be determined by Maxit, acting reasonably" by notifying the company in writing. SolGold will have to find the proposed issue price "satisfactory" before the shares are issued, but the miner said it expects the price to be a premium to current levels.
Solgold shares were trading up 24% on Friday morning at 3.83 pence per share following the announcement, hitting a high of 4.18p. The stock closed Thursday at 3.075p.
Maxit will have to propose the issue price no later than five days before the offer closes on October 6.
Alongside SolGold's approval of an issue price, the offering is conditional on Maxit's due diligence and on the receipt of all required regulatory approvals.
Although the issue price has not yet been set, SolGold said the agreement with Maxit was for a USD20.0 million placing, adding that net proceeds would be used for working capital and ongoing work at Cascabel, in which SolGold holds an 85% stake.
Under the agreement, Maxit will be entitled to receive a "success fee" of 6.0% of the gross funds raised on completion, and SolGold will issue warrants to Maxit over a number of shares equal to 6.0% of the shares issued under the placing, implying the maximum would be 14.3 million shares.
They can be exercised in a 24-month period and half of the warrants will be exercisable at 14.0 pence and the other half will be priced at 28.0 pence - 4.5 times and 9.1 times higher than the closing share price on Thursday, respectively.
If all 238.5 million shares are issued, they would represent 25.0% of the current issued share capital and around 20.0% of the enlarged issued share capital.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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SolGold (SOLG)