ECR Minerals Regulatory News (ECR)

9 Feb 2015 07:26

ECR MINERALS plc

(“ECR Minerals”, “ECR” or the “Company”)

AIM: ECR

US OTC: MTGDY

US$750,000 CONVERTIBLE LOAN

LONDON: 9 FEBRUARY 2015 - ECR Minerals plc is pleased to announce the following with reference to the convertible loan facility (the “Facility”) in place with YA Global Master SPV Ltd (the “Investor”), an investment fund managed by Yorkville Advisors Global, LP (as previously announced on 3 September 2014).

The Company and the Investor have agreed to the drawdown by ECR of three further loan tranches (each a “Tranche”) under the Facility, each Tranche being US$250,000 in principal amount for a total of US$750,000. The aggregate net proceeds of the Tranches will be US$690,683. The first of the Tranches (the “First Tranche”) has been drawn down. The second Tranche will be drawn down on or about 2 March 2015 and the third will be drawn down on or about 1 April 2015. The principal terms of the Facility, which are applicable to the Tranches, are described below.

ECR intends to deploy the net proceeds of the Tranches primarily in connection with its gold exploration interests, namely the Itogon gold project in the Philippines and the SLM gold project in Argentina, as well as to support the other activities of the Company, which include the evaluation of a number of potential new investment opportunities.

Drilling at the Itogon gold project in the Philippines is continuing in accordance with ECR’s announcement dated 22 January 2015, and the Company expects to provide an update regarding planned work at the SLM project in Argentina in the near future. Images of the current drilling programme at Itogon may be viewed at:

www.ecrminerals.com/Itogon-drilling-Jan2015

Stephen Clayson, Chief Executive Officer of ECR, commented:

“We are pleased to have secured this funding against a backdrop of straitened financial circumstances for most junior mineral companies. With the funding now in place we can proceed confidently with drilling at the Itogon project, the results of which will we hope demonstrate strong geological potential.

We are also continuing to closely review a small number of potential new opportunities as part of a strategy to assemble a carefully chosen, manageable portfolio of interests in high quality mineral projects, our overriding objective being to secure a prosperous future for ECR and its shareholders.”

Principal Terms of the Facility

The outstanding principal amount of a loan tranche (a “Loan”) drawn down by ECR under the Facility is convertible at the Investor’s option into ordinary shares of the Company of 0.1p (“Ordinary Shares”) on the following terms: (a) at 92.5% of the average daily volume weighted average price (VWAP) of the Ordinary Shares during the 10 trading days preceding the conversion date, conversion on this basis being restricted (unless the Company consents otherwise) to a maximum amount of US$250,000 per calendar month (a limit which applies to all Loans outstanding under the Facility collectively); or (b) at £0.002607 (0.2607p) in the case of the First Tranche or, in relation to any subsequent Tranche or any other subsequent Loan under the Facility, 150% of the average daily VWAP of the Ordinary Shares during the five trading days preceding drawdown of the relevant Loan, conversion on this basis being subject to no maximum amount.

On maturity of a Loan, which shall be two years from the date of drawdown (extendable by up to one year at the option of the Investor) any outstanding principal amount will be mandatorily converted to Ordinary Shares at the closing price of the Ordinary Shares on or immediately prior to the maturity date.

Interest on the outstanding principal amount of a Loan will accrue at 10% per annum, payable in Ordinary Shares at 92.5% of the average daily VWAP of the Ordinary Shares during the 10 trading days prior to the interest payment date. An implementation fee of 7.5% of the principal amount of each Loan is payable to the Investor upon drawdown of the relevant Loan.

The Company is entitled to prepay a Loan in cash, in whole or in part, by making a payment to the Investor equal to the principal amount to be prepaid plus any interest due and an additional amount of 10% of the principal amount to be prepaid. The Facility provides for customary events of default, and following an event of default the outstanding principal amount of a Loan plus interest may in certain circumstances become immediately due and payable in cash. If an event of default has been continuing for at least 30 calendar days, the outstanding principal amount of a Loan may at the Investor’s option be converted in whole or in part to Ordinary Shares at 80% of the VWAP of the Ordinary Shares for the five trading days preceding the date of such a conversion. The drawdown by the Company of the two further Tranches besides the First Tranche is conditional, inter alia, on there being at the relevant time no event of default which is continuing and on certain warranties given by the Company to the Investor being true and accurate by reference to the facts and circumstances then existing.

In the event that the 30 day moving average closing price of the Ordinary Shares falls below the nominal value of an Ordinary Share for a period of five consecutive trading days, the outstanding principal amount of a Loan shall become repayable in cash on a monthly basis over the remaining term of the Loan, with interest also payable in cash. If the closing price of the Ordinary Shares were to subsequently cease to be less than the nominal value of an Ordinary Share for a period of 10 consecutive trading days, the monthly cash repayments would no longer be required and the Loan would revert to being convertible into Ordinary Shares on the prior terms.

With respect to the First Tranche, the Investor has received 21,740,000 warrants, each exercisable to acquire one Ordinary Share for a price of £0.002344 (0.2344p) and valid for three years. In connection with the two further Tranches and with any other subsequent Loan, the Investor will receive a quantity of warrants equal to 25% of the principal amount of such Loan (converted to £) divided by the closing price of the Ordinary Shares on the trading day prior to the date of drawdown, each warrant to be valid for three years and exercisable to acquire one Ordinary Share for a price equal to 125% of the VWAP of the Ordinary Shares on the trading day prior to the date of drawdown.

The Investor and its affiliates, associates, partners and insiders are prohibited under the terms of the Facility from holding a net short position in respect of Ordinary Shares at any time, and from assisting or enabling any other person to do so (including by lending Ordinary Shares).

The Facility is available to the Company for three years from 2 September 2014 and provides a framework for the drawdown by ECR of Loans up to US$10 million in aggregate principal amount. ECR received a Loan under the Facility of US$1.5 million in principal amount in September 2014, of which US$885,712 (plus accrued interest) remains outstanding.

The drawdown of any further Loans besides the Tranches which are the subject of this announcement is by agreement between the Company and the Investor. Neither party is under any obligation to agree to any further Loan.

ABOUT ECR

ECR is a mineral exploration and development company with, among other interests, the right to earn a 50% interest in the Itogon gold project in the Philippines. Itogon is an advanced exploration project located in a gold and copper mining district in the north of the Philippines.

ECR has a 100% interest in the SLM gold project in La Rioja Province, Argentina, the exploration strategy for which is to delineate multiple medium to high grade, low tonnage deposits suitable for advancement to production on a relatively low capital, near term basis.

ECR continues to review potential new investments on a highly selective basis, with a concentration on precious, base and strategic metals projects in Asia and South America.

FORWARD LOOKING STATEMENTS

This announcement may include forward looking statements. Such statements may be subject to a number of known and unknown risks, uncertainties and other factors that could cause actual results or events to differ materially from current expectations. There can be no assurance that such statements will prove to be accurate and therefore actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward looking statements. Any forward looking statements contained herein speak only as of the date hereof (unless stated otherwise) and, except as may be required by applicable laws or regulations (including the AIM Rules for Companies), the Company disclaims any obligation to update or modify such forward looking statements as a result of new information, future events or for any other reason.

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