RYE PATCH ANNOUNCES ACQUISITION OF THE FLORIDA CANYON GOLD MINE, RELEASE OF ESCROWED FUNDS AND CONVERSION OF SUBSCRIPTION RECEIPTS, AND CREDIT AGREEMENT FOR US$27 MILLION CREDIT FACILITY
Further to its news releases dated May 25, 2016, and June 16, 2016, Rye Patch Gold Corp. (RPM.V) has completed its acquisition of the Florida Canyon gold mine located in Pershing county, Nevada, received the escrowed proceeds and converted the subscription receipts under its $49.1-million private placement completed in June, and signed a credit agreement for a $27-million (U.S.) credit facility for the redevelopment of the mine.
Florida Canyon Mine Acquisition
The Company acquired the Florida Canyon gold mine (with the Standard gold mine) from ADM‑Gold Co., Ltd. (“ADM-Gold”) and others for total consideration payable in cash, shares, warrants and/or debt of approximately US$23 million (the “Purchase Price”), including contingent payments and subject to adjustment for outstanding liabilities. Of the Purchase Price, US$15 million was payable at closing in cash, subject to approximately US$6.8 million being held back in an escrow account pending settlement of certain liabilities, and US$3 million was satisfied by the issuance of 20 million common shares of the Company to ADM‑Gold which are subject to a 4‑month hold period expiring on November 29, 2016. The remaining US$5 million of the Purchase Price is contingent consideration payable by the Company in cash and securities within 60 days of commencement of commercial production at the Florida Canyon gold mine by Rye Patch as operator, as further described in the Company’s news release dated May 25, 2016.
Release of Escrowed Private Placement Proceeds and Conversion of Subscription Receipts
Immediately prior to the completion of the Acquisition, the escrowed proceeds from the Company’s Cdn$49.1 million private placement of subscription receipts (“Subscription Receipts”) completed in June 2016 were released following satisfaction of the escrow release conditions. A portion of the net proceeds (after payment of agents’ commissions) was used to pay the Purchase Price under the Acquisition and to discharge certain liabilities at the Florida Canyon gold mine. In addition, the Subscription Receipts were converted on a one‑for‑one basis into 223,247,242 common shares of the Company. The common shares are subject to a hold period expiring on October 17, 2016.
Upon conversion of the Subscription Receipts, the Company paid the balance of the 5% agents’ commission and also issued a total of 11,162,362 agents’ warrants (the “Agents’ Warrants”) to Macquarie Capital Markets Canada Ltd., Canaccord Genuity Corp., Dundee Securities Ltd. and GMP Securities L.P. Each Agents’ Warrant is exercisable for one common share of the Company for a two‑year term from date of issue at an exercise price of Cdn$0.22 per common share. The Agents’ Warrants, and the common shares underlying the Agents’ Warrants, are subject to a four‑month hold period expiring November 29, 2016.
Macquarie Bank Credit Facility
Also immediately prior to the completion of the Acquisition, the Company entered into a credit agreement (the “Credit Agreement”) with Macquarie Bank Limited (“Macquarie Bank”) for a US$27 million credit facility (the “Credit Facility”) for the Company’s wholly owned U.S. subsidiary, Rye Patch Mining U.S. Inc. (“Rye Patch U.S.”). The Credit Facility will assist Rye Patch U.S. in financing the costs of the redevelopment of the Florida Canyon gold mine.
Upon closing of the Credit Facility, Rye Patch U.S.’s obligations under the Credit Facility will be guaranteed by the Company and certain material subsidiaries. In addition, Macquarie Bank will have a first ranking security interest over all of the properties and assets of the Company and its material subsidiaries, including the Florida Canyon mine property and assets as well as shares of the subsidiary companies that hold the property and assets.
Upon the signing of the Credit Agreement, Rye Patch issued to Macquarie Bank 16,224,545 warrants, each warrant being exercisable for one common share of the Company for a five‑year term from date of issue at an exercise price of Cdn$0.22 per common share. The warrants, and the common shares underlying the warrants, are subject to a four‑month hold period expiring November 29, 2016.