Auxico Resources closes $1.6-million private placement

Jun 22, 2020

2020-06-22 12:08 ET – News Release

Mr. Pierre Gauthier reports


Auxico Resources Canada Inc. has completed a non-brokered private placement, raising aggregate gross proceeds of $1.6-million in participating convertible debentures.

Each Debenture consists of $1 principal amount of participating, secured, non-redeemable 10% convertible debenture maturing on June 19, 2023, and convertible at the option of the Debenture holder into:

  1. Units of the Company that is equal to the principal amount of each Debenture being converted at a deemed price of $0.10 per Unit. Each Unit is comprised of one common share in the capital of the Company and one warrant. Each Warrant is exercisable into one Share at a price of $0.15 for a period of three years from the date of issuance;
  2. The number of common shares of Central America Nickel Inc. (CAN) (a private company based in Montreal, Canada) at a conversion price of $1.00 per CAN share;
  3. A cash payment equal to the principal amount and an amount corresponding to the interest that such holder would receive if the holder held the Debenture from the date of conversion until the Maturity Date.

Interest at a rate of 10% per annum will be paid to Debenture holders semi-annually in arrears.

In addition, Debenture holders will receive a total of 16% of the net profits generated by Auxico from the sale of tantalum and niobium-bearing ores, to be paid quarterly in arrears; this represents 1% of the profits for every $100,000 principal amount of Debentures (“Participating Feature”). As previously announced in its news release of June 3, 2020, the Company has entered into a joint venture with Kibara Minerals in the Democratic Republic of the Congo in this regard, and Auxico’s share of the profits will be 70%. The Participating Feature well apply to any profits generated for Auxico from this joint venture, as well as from other jurisdictions (such as Brazil). This Participating Feature will expire on the earlier of the conversion of the Debentures into Shares of the Company, and the Maturity Date.

The Company paid finder’s fees of $46,000 in connection with the private placement. The Debentures issued pursuant to the private placement are subject to a four-month hold period in Canada.

The net proceeds of the private placement will be used to begin trading of tantalum and niobium-bearing ores from the Democratic Republic of the Congo and Brazil, as well as for general working capital purposes.

Pierre Gauthier, the chief executive officer, chairman and a director of the Company, purchased 90,000 Debentures ($90,000) through his company, Seed Capital Inc., Mark Billings, the President and a director of the Company purchased 50,000 Debentures ($50,000) through his company, Gestion Marengo Management Inc,, and Kenneth West, a director of the Company, purchased 50,000 Debentures ($50,000). As a result, the Private Placement is a related party transaction (as defined under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”)). The Company relied upon the “Issuer Not Listed on Specified Markets” exemption from the formal valuation and minority shareholder approval requirements, respectively, under MI 61-101.

About Auxico Resources Canada Inc.

Auxico Resources Canada is a Canadian company that was founded in 2014 and based in Montreal. Auxico is engaged in the acquisition, exploration and development of mineral properties in Colombia, Brazil, Mexico and the Democratic Republic of the Congo.

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