FIRST BAUXITE CORP. ("First Bauxite" or the "Company") (TSX
VENTURE: FBX)(FRANKFURT: FBI)(BERLIN: FBI) is pleased to announce
that, further to its November 16, 2010 news release, it has closed
the first tranche (the "Tranche 1 Financing") of a two tranche
financing (the "RCF Financing"), pursuant to a note purchase
agreement dated as of December 31, 2010 (the "RCF Agreement") with
Resource Capital Fund V L.P. ("RCF"). Gross proceeds of C$8 million
were paid to the Company in exchange for the issuance to RCF of a
convertible note in the aggregate principal amount of C$8 million
(the "Tranche 1 Note").
The Tranche 1 Note is unsecured, bears no interest, and is
convertible into common shares of the Company for a period of five
years from the closing of the Tranche 1 Financing at a conversion
price of C$0.83. If the Tranche 1 Note is converted in full, the
Company will issue 9,638,555 common shares to RCF, representing
approximately 15.4% of the common shares on a fully-diluted
basis.
The net proceeds from the Tranche 1 Financing will be used
primarily to fund the Company's definitive feasibility study (the
"DFS") of the known mineral deposits within the Bonasika Mining
Licence and the Waratilla-Cartwright Prospecting Licence in Guyana
(the "Projects").
The Tranche 1 Note issued to RCF is subject to a four-month hold
period expiring on May 20, 2011. In connection with the Tranche 1
Financing, the Company has agreed to pay to RCF, in cash, an
establishment fee in the amount of C$300,000. Additionally, RCF
will have the right to appoint one nominee to the Board.
The completion of the Tranche 1 Financing remains subject to the
final approval of the TSXV.
Principal Terms of RCF Financing
Tranche 1 & Tranche 2
Following the Tranche 1 Financing, the terms of which are
described above, and upon satisfaction of certain conditions
precedent, RCF will have an option to make an additional US$20
million investment to subscribe for an additional unsecured
convertible note in the aggregate principal amount of US$20 million
(the "Tranche 2 Note"), which Tranche 2 Note will be convertible
into common shares at a conversion price equal to the greater
of:
1. the maximum discount permitted by the TSX Venture Exchange
(the "TSXV"), but in any event not less than a 20% discount to the
volume-weighted average closing price of the Company's common
shares on the TSXV for the 20 trading days preceding the day on
which the RCF exercises its option to acquire the Tranche 2 Note;
and
2. C$1.245 (150% of the conversion price for the Tranche 1
Note),
provided that,
3. the conversion price of the Tranche 2 Note will not be
greater than C$2.00 per share; and
4. the conversion price of the Tranche 2 Note will be reduced as
necessary to ensure that the common shares issuable on conversion
of the Tranche 2 Note will comprise not less than 11.5% of the
Company's common shares calculated on a fully diluted basis
following the issuance of the Tranche 2 Note based on the second
tranche conversion price (the "Tranche 2 Financing").
Use of Funds
The net proceeds from the Tranche 2 Financing will be used
primarily to fund the development and construction of a mine and
processing facilities for the bauxite deposits at the Projects
pursuant to the DFS in accordance with a project development plan,
spending program and budget to be approved by the board of
directors (the "Board"), RCF and Pacific Road Resources Funds
("Pacific Road").
Appointment of Additional Director
In addition to RCF having the right to appoint one nominee to
the Board in connection with the Tranche 1 Financing, provided that
RCF obtains 30% or more of all of the common shares of the Company,
calculated on a fully diluted basis, RCF will have the right to
have one additional director appointed to the Board.
Preferential Rights of Participation
Provided that RCF holds all of the then outstanding Tranche 1
Note and, if applicable, the Tranche 2 Note, or if any such notes
are converted, the underlying securities obtained on conversion, or
holds common shares equal to at least 10% of the outstanding common
shares of the Company, if at any time prior to June 12, 2012 any
additional shares are to be issued by the Company, the Company must
first provide notice of such proposed issuance to RCF and Pacific
Road of the Company's intention to issue additional securities,
including the number of such additional securities to be issued and
the price and other terms and conditions of such additional
securities. Pacific Road (provided they still hold their
pre-emptive right under the Pacific Road Facility (as defined
below)) and RCF shall have the right to purchase up to the full
amount of such additional securities pro rata, based on the common
shares held by them on a fully diluted basis.
Right of First Offer
In the event that RCF desires to sell securities of the Company
held by it, which represent on a fully diluted basis greater than
15% of the common shares to an arm's length party, RCF must first
provide written notice to the Company of its intention to do so.
Following the receipt of such notice, the Company will have 10
business days to determine whether it wishes to purchase, or
designate a third party to purchase, such securities prior to the
sale of such securities by RCF to a third party.
Establishment Fee
In connection with the Tranche 2 Financing, RCF will receive a
cash fee equal to 3.5% of the principal amount of the Tranche 2
Note.
Shareholder Approval
As disclosed in the Company's November 16, 2010 news release,
for purposes of the policies of the TSXV, RCF may, as a result of
the Tranche 1 Financing and the issuance of additional securities
to RCF pursuant to the Tranche 2 Financing or otherwise, become a
new "control person" (holding more than 20% of the issued and
outstanding voting shares) of the Company. Accordingly, the Company
obtained shareholder approval of the proposed transaction, and for
RCF to become a control person, by obtaining written consents of
shareholders holding approximately 60% of the current issued and
outstanding shares of the Company.
Regulatory Approval
The Company has received the TSXV's conditional approval to the
RCF Financing.
Amended Agreement with Pacific Road
In connection with the RCF Financing, the Company has entered
into an amended and restated note purchase agreement (the "Amended
Pacific Road Agreement") with Pacific Road to amend and restate the
terms of the original note purchase agreement (the "Original
Agreement") entered into between the parties on June 12, 2009, as
previously announced pursuant to the Company's June 4, 2009 news
release, as amended, with respect to a two phase convertible loan
facility of up to $28 million (the "Pacific Road Facility"). The
Company closed the first phase of the Pacific Road Facility,
comprised of C$8 million principal amount of unsecured convertible
notes (having a five year term, bearing no interest), which notes
are convertible into common shares of the Company at a conversion
price of C$0.83, on June 29, 2009 and July 24, 2009, respectively.
Pursuant to the Original Agreement, Pacific Road retained an option
to make an additional US$20 million investment to subscribe for
additional convertible notes in the aggregate principal amount of
US$20 million (the "Phase 2 Financing"). The Company has entered
into the Amended Pacific Road Agreement to ensure that the rights
granted to Pacific Road conform with the rights granted to RCF
pursuant to the RCF Agreement.
Material changes to the Original Agreement include the
following: (i) the delivery of the DFS by the Company to Pacific
Road as the trigger for the Phase 2 Financing by Pacific Road,
rather than the delivery of a pre-feasibility study; (ii) to
provide that the Phase 2 conversion price will be reduced as
necessary to ensure that the common shares issuable on conversion
of Pacific Road's Phase 2 notes will comprise not less than 11.5%
of the Company's common shares calculated on a fully diluted basis
(as compared to 15% in the Original Agreement); and (iii) Pacific
Road has agreed to cause one of its two nominees on the Board to
resign upon appointment of the RCF director and a mutually
acceptable 7th director to act as independent chair of the Board
and Pacific Road will retain the right to have one director
appointed to the Board; Pacific Road will have the right to appoint
a second director if Pacific Road holds 30% or more of the common
shares of the Company, calculated on a fully diluted basis, and in
the event that RCF ceases to be entitled to a director, and Pacific
Road exercises the Phase 2 Financing in whole or in part, then
Pacific Road will have the right (as under the Original Agreement)
to appoint that number of nominees which results in representation
of Pacific Road on the Board that is at least proportional to the
total number of common shares held by Pacific Road calculated on a
fully diluted basis.
Additionally, pursuant to the RCF Agreement and the Amended
Pacific Road Agreement, if either RCF or Pacific Road does not
exercise in full its right to purchase additional notes of the
Company in the aggregate principal amount of US$20,000,000, the
other party will have the right to purchase additional notes, up to
a maximum aggregate principal amount of the notes purchased, as
between RCF and Pacific Road, of US$40,000,000.
About First Bauxite
First Bauxite Corporation (TSX VENTURE: FBX)(FRANKFURT:
FBI)(BERLIN: FBI) is a Canadian natural resources company engaged
in the exploration and development of bauxite deposits, through
resource discovery and mining within a niche industrial market. The
company has its head-office in Vancouver and its current assets in
Guyana, South America and is managed by experienced geoscientists
and business development professionals with worldwide experience in
the exploration and mining business across a number of mineral
commodities. The mission of First Bauxite is to become a near term,
medium size producer and supplier of high quality refractory grade
sintered (calcined) bauxite. First Bauxite controls a large land
package in Guyana's historical coastal bauxite belt, including the
Bonasika Mining License and the Waratilla-Cartwright Prospecting
License, covering deposits which were drilled in 1940's-60's by
ALCAN and which host near surface deposits of refractory grade
bauxite. The Company has recently completed a Feasibility Study
over the Bonasika Project and announced its results on July 29,
2010. The Feasibility Study defines and confirms the viability of
an operation based on sequential mining of the three (3) bauxite
deposits located on the Bonasika Mining License by open-pit, truck
and excavator mining, with the mined ore trucked for processing at
a central wash plant facility located less than 2 km from the
Bonasika 1 & 2 pits. The wash plant concentrate will be
transported 23 km to the sintering plant and load out facilities at
Sand Hills. The Mine will operate at a production rate of 298,500
metric tons ("tonnes") of raw, dry bauxite per year or 1,148 tonnes
per day, the wash plant will produce 162,232 tonnes of washed
bauxite concentrate and the two vertical pressurised shaft kilns
will produce 100,000 tonnes per year of sintered bauxite final
product. The Company drilled two bauxite deposits within the
Waratilla Prospecting License.
The NI 43-101 compliant Geological Resource outlined in the UWC
deposit now called the Bonasika 6, was reported in the Bonasika
Feasibility Study. Resource definition drilling of LWC deposit now
called the Bonasika 7 deposit was closed off in October 2010
despite the deposit still being open to prepare a NI 43-101
compliant Geological Resource estimate. First Bauxite has
additional upside potential to the metallurgical bauxite business,
through an option agreement with Rio Tinto Mining and Exploration
Ltd, whereby Rio can earn up to 75% interest in the Company's
exploration ground by expending up to US$58 million in stages. The
Company also recently acquired all of the issued and outstanding
shares of Bauxite Corporation of Guyana Inc. ("BCGI") and
accordingly, 100% of its interest in the contiguous Tarakuli and
Tarakuli North-West Prospecting Licenses in Northeast Guyana, which
host an historical inferred bauxite resource of significant size
and quality. For further information on First Bauxite Corporation,
please visit our corporate website at www.firstbauxite.com.
About Resource Capital Fund V L.P.
Resource Capital Fund V L.P. is one of several successive
private equity funds under the Resource Capital Funds ("RCF")
umbrella which has a mandate to make investments in mining
companies and projects across a diversified range of commodities
and geographic regions. Since its inception in 1998, RCF has
invested in over 80 companies with projects in 35 countries
relating to over 30 different commodities. RCF is a long-term
investor that has facilitated the development of a number of mining
projects and the growth of a number of mining and minerals related
companies that are recognized in the market place. For further
information on Resource Capital Funds, please go to their website
at www.resourcecapitalfunds.com.
About Pacific Road Resources Funds and Pacific Road Capital
Management Pty Limited
The Pacific Road Resources Funds are private equity funds
investing in the global mining industry. They provide expansion and
buyout capital for mining projects, mining related infrastructure
and mining services businesses located throughout resource-rich
regions of the world. The Pacific Road Resources Funds are managed
and advised by Pacific Road Capital Management Pty Ltd ("PRCM").
The PRCM team, located in Sydney, Australia, San Francisco and New
York, USA, is comprised of experienced mining investment
professionals that have extensive knowledge and experience in the
mining and infrastructure sectors, including considerable
operating, project development, transactional and investment
banking experience.
For further information on the Pacific Road Resources Funds and
PRCM, please go to their website at www.pacroad.com.au.
On behalf of The Board of Directors of First Bauxite
Corporation
Ioannis (Yannis) Tsitos, President & Director
Hilbert N. Shields, CEO & Director
This document contains certain forward looking statements which
involve known and unknown risks, delays, and uncertainties not
under the Company's control which may cause actual results,
performance or achievements of the Company to be materially
different from the results, performance or expectation implied by
these 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.
Contacts: First Bauxite Corporation Ioannis (Yannis) Tsitos
President & Director 604-806-0916 604-806-0956 (FAX)
www.firstbauxite.com
First Bauxite Corporation (TSXV:FBX)
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