Merc Completes $7 Million Private Placement of Secured Notes with Participation from Osisko
TORONTO, Jan. 20, 2012 /CNW/ – Merc International Minerals Inc. (“Merc“) (TSX Venture: MRK) is pleased to announce that it has completed an offering of secured notes (“Notes“) for an aggregate principal amount of $7 million (the “Offering“). Among others, Osisko Mining Corporation and Northfield Capital Corporation participated in the Offering.
The net proceeds from the sale of the Notes will be used by Merc (i) to post letters of credit (“LC”) totalling $5 million in favour of Aboriginal Affairs and Northern Development Canada to secure Merc’s obligation spend up to $5 million to reclaim three sites in the Northwest Territories (the “Sites“) following the closing by Merc of the acquisition of the mineral claims and leases comprising the Colomac Mine (the “Acquisition“) as disclosed in Merc’s press release dated December 15, 2011; and (ii) for general working capital purposes.
Upon completion of the reclamation work in accordance with reclamation plans for the Sites, or Merc completing reclamation work having a value of at least $5 million, Merc is entitled to the return of the LC’s posted as security.
David Wiley, CEO of Merc, commented, “Securing the Notes is a major step towards closing the acquisition of Colomac. We wish to express our appreciation to the Note holders for their support and we look forward to closing the Acquisition in the near future.”
The Notes pay interest at a rate of 12% per annum, compounded monthly, are payable in cash at maturity on July 20, 2013, and are secured by a general security agreement on the real and personal property of Merc. Merc may prepay the Notes without penalty, provided that any interest owed to the date of prepayment is also paid to the Note holders. An insider of Merc purchased $2 million of the Notes.
In connection with the issuance of the Notes, the Note holders will be issued an aggregate of 3 million Merc warrants (the “Warrants“) conditional upon the closing of the Acquisition on or prior to February 18, 2012. If the closing of the Acquisition does not occur prior to February 18, 2012 the funds received from the offering will be returned to the investors and Merc will not issue the Warrants. Each Warrant will entitle the holder to acquire one additional common share at an exercise price of $0.35 per share until July 20, 2013.
The securities issued pursuant to the secured note offering are subject to a hold period expiring on May 21, 2012. In connection with the secured note offering, Merc paid finders’ fees of $225,000.
About Merc International Minerals Inc.
Merc is a Canadian-based exploration company focused on acquiring and developing gold mineral properties in the Northwest Territories. Its primary land position covers approximately 242,000 acres in the Indin Lake Gold Camp, located approximately 200 kilometres north of Yellowknife, Northwest Territories.
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.
This news release contains “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, information with respect to Merc’s financings, the completion of the Acquisition, the return of the LC funds and the use of proceeds. Generally, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “expects”, or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “does not anticipate”, or “believes” or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might”, or “will be taken”, “occur”, or “be achieved”. Forward-looking information is based on the opinions and estimates of management at the date the information is made, and is based on a number of assumptions and is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Merc to be materially different from those expressed or implied by such forward-looking information, including risks associated with the exploration, development and mining such as economic factors as they effect exploration, future commodity prices, changes in foreign exchange and interest rates, actual results of current exploration activities, government regulation, political or economic developments, environmental risks, permitting timelines, capital expenditures, operating or technical difficulties in connection with development activities, employee relations, the speculative nature of gold exploration and development, including the risks of diminishing quantities of grades of reserves, contests over title to properties, and changes in project parameters as plans continue to be refined as well as those risk factors discussed in Merc’s management discussion and analysis for the year ended July 31, 2011, available on www.sedar.com. Although Merc has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. Merc does not undertake to update any forward-looking information, except in accordance with applicable securities laws.