$4MM Mkt Cap: Sage Secures Preproduction Financing for Clavos
TORONTO, ONTARIO--(Marketwire - May 16, 2012) - Sage Gold Inc. (TSX VENTURE:SGX) has executed a non-binding Term Sheet with Waterton Global Value, L.P. ("Waterton") for a $1.0 million principal amount convertible debt financing and has also completed the first tranche of a private placement for gross proceeds of $403,500 through the sale of flow-through share units (the "FT Units") and common share units ( "Units").
The proceeds of the convertible debt and equity financing will be used for preproduction expenses to advance the Clavos gold deposit in Timmins, Ontario including the following:
- the completion of the earn in of the 60% interest
- a new National Instrument No. 43-101 compliant Resource Study
- a Preliminary Economic Assessment
- a new Closure Plan
- working capital
The proposed convertible financing has a term of two years, will accrue interest at an annual rate of 9.5% and is convertible at the holder's option into common shares of Sage at a price of $0.072 per share. The debt will be secured by Sage's 60% interest in the Clavos deposit, and all of the Company's other assets. In connection with the debt, Waterton has been granted a right of first refusal on production financing for Sage's 60% interest in the Clavos project and a gold supply agreement pursuant to which Waterton will purchase Sage's share of gold production from the Clavos deposit at a zero discount to prevailing market prices. The proposed debt is subject to a number of conditions, including the execution of definitive agreements.
Nigel Lees, President and CEO of Sage comments, "We are very pleased to have concluded a Term Sheet with Waterton for the pre-production costs on the Clavos project, especially in a difficult financing environment. We look forward to a mutually beneficial relationship as we work together with Waterton on the future production financing".
Cheryl Brandon, Portfolio Manager at Waterton, stated, " Waterton is pleased to be able to partner with Sage and looks forward to a strong relationship with the management team and advancing the permitted Clavos Gold deposit into production".
Each FT Unit issued pursuant to the FT Unit financing is comprised of one common share of the Company issued as a "flow-through share" under the Income Tax Act (Canada) and one-half of one warrant issued at $0.075 per unit. Each whole warrant is exercisable to purchase one non-flow through common share at a price of $0.10 per share for 18 months from the closing date. Pursuant to this financing Sage issued 900,000 common shares and 450,000 warrants.
Each Unit issued pursuant to the Unit financing consists of one common share of the Company and one half of one common share purchase warrant issued at $0.06 per unit. Each full warrant entitles its holder to purchase one common share at a price of $0.10 for a period of eighteen months following closing. Pursuant to this financing Sage issued 5,600,000 shares and 2,800,000 warrants.
The Finder's Fees paid in respect of the private placement of FT Units and Units comprised of $19,000 in cash (equal to 8% of the gross proceeds from the sale of FT Units and Units which were placed by finders), plus 306,667 Finder's Options, equal to 8% of the number of FT Units and Units which were placed by finders. A total of 40,000 FT Finder's Options are exercisable for units at $0.075 per FT Unit and a total of 266,667 Unit Finder's Options are exercisable for units at $0.06 per unit for a period of 18 months from the closing date. Each unit is comprised of one non flow-through common share and one-half of one warrant, with each whole warrant having the same terms as the original flow through and non-flow through warrants.
The securities issued under the private placement are subject to a four month hold period which expires on September 15, 2012.
The private placement and the convertible debt financing are subject to the final approval of the TSX Venture Exchange (the "Exchange"). The Company has received conditional approval of the private placement from the Exchange.
Sage is in the final stage of completing a 60% earn in interest in the Clavos property and has completed the $3 million dollar expenditure requirement and is required to pay $40,000 in cash and issue $40,000 worth of common shares and replace the $250,000 closure bond to complete the earn in. St Andrew Goldfields (TSX:SAS) and Sage have been working towards completing a joint venture agreement which will govern the operating and financial relationship between the parties after the earn in. Upon completion of the joint venture agreement, Sage will become the operator of the Clavos project.
An updated NI43-101 compliant Resource Study is near completion for the Clavos deposit and will include historical surface and underground drilling as well as Sage's drilling results.
Sage is a mineral exploration and development company which has primary interests in near-term production and exploration properties in Ontario. Its main properties are the Clavos Gold deposit in Timmins and the Lynx deposit and other exploration properties in the Beardmore-Geraldton Gold Camp. Technical reports and information relating to the properties can be obtained from the System for Electronic Document Analysis and Retrieval (SEDAR) website at www.sedar.com and www.sagegoldinc.com.
This release was prepared by management of the Company who takes full responsibility for its contents.
This news release contains certain "Forward-Looking Statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended and "Forward Looking Information" within the meaning of applicable Canadian securities legislation. Some forward looking statements and forward looking information contained in this release are forward-looking and, therefore, involve uncertainties or risks that could cause actual results to differ materially. Such forward-looking statements include comments regarding mining and milling operations, mineral resource statements and exploration program performance. Factors that could cause actual results to differ materially include metal price volatility, economic and political events affecting metal supply and demand, fluctuations in mineralization grade, geological, technical, mining or processing problems, exploration programs and future results of exploration programs, future profitability and production. The Company disclaims any obligation to update forward-looking statements.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
