Baru Gold Announces US $1.5 Million Convertible Loan Financing for Sangihe Gold Mine Production
Baru Gold Corp. (TSXV:BARU) | (OTC:BARUF) ("BARU" or the "Company") is pleased to announce it has entered into a convertible loan agreement with Mercer Street Global Opportunity Fund, LLC, a fund managed by Mercer Street Capital Partners, LLC, a Miami-based institutional fund manager (together, "Mercer"), to raise net proceeds of US$1,500,000 ($1.94 Million Canadian) to fund the development and construction of the Sangihe gold mine in Indonesia, and for general working capital. Terry Filbert, Chairman and CEO of Baru Gold, commented, "The Company's ability to raise these funds in this challenging market is a testament to the merits of the Sangihe project. We are pleased to be able to carry on with construction and production plans; and we look forward to the commencement of our previously announced drilling program where we intend to extend and increase the resource base at the Binebase and Bawone target areas. The additional capital will allow us to work towards the ultimate goal of sustained cashflow for the Company."
The convertible loan will raise net proceeds of US$1,500,000 (the "Convertible Loan") from the aggregate principal amount of US$2,000,000 subject to an original discount of approximately 25%. The terms of the convertible loan agreement are as follows: (i) the outstanding principal obligations and interest shall be calculated monthly, and shall be repaid to the Subscriber in eighteen (18) equal monthly installments, in advance, commencing 180 days following the closing date, until the obligations are fully repaid; (ii) the Company shall pay interest on any overdue amount (including interest on interest) at and interest rate of 18% per annum until the overdue amounts are paid in full; (iii) in the event that the principal amount of US$1,500,000 has been fully paid within one (1) year from the closing date, a discount of approximately 10% of the principal amount and interest shall apply to the total repayment amount where the aggregate amount due shall be reduced to US$1,800,000. The Debentures have a maturity date of the 2nd anniversary of the closing date and bear an interest rate of 16.67% prepaid from loan proceeds on the closing date.
Commencing on the four (4) month anniversary of the closing date: (i) the principal of the Convertible Loan shall be convertible into common shares of the Company at the conversion price of CDN$0.05/US$0.0384 per common share and (ii) subject to prior TSX Venture Exchange approval, interest shall be convertible at a conversion price based on the previous trading day close prior to the announcement of the interest conversion..
A total of 15,000,000 transferable warrants of the Company shall also be issued to the lender that may be exercised over a two (2) year term having a warrant exercise price of CDN$0.0675/US$0.05.
The Convertible Loan is secured against the Company's equity interest in its wholly owned subsidiary, Sangihe Gold Corporation, that holds through a wholly owned Indonesian subsidiary, the Company's interests in the Sangihe Gold Project. The use of proceeds from the Offering shall be used for the development of the Sangihe Gold Project and general working capital purposes. There are no finder's fees payable.
ABOUT SANGIHE GOLD PROJECT
The Sangihe Gold Project ("Sangihe") is located on the Indonesian island of Sangihe, off the northern coast of Sulawesi. Sangihe has an existing National Instrument 43-101 inferred mineral resource of 114,700 indicated and 105,000 inferred ounces of gold, as reported in the Company's "Independent Technical Report on the Mineral Resource Estimates of the Binebase and Bawone Deposits, Sangihe Project, North Sulawesi, Indonesia" (May 30, 2017). Readers are cautioned that mineral resources that are not mineral reserves do not have demonstrated economic viability. The Company intends to proceed to production without the benefit of first establishing mineral reserves supported by a feasibility study.
The Company's 70-percent interest in the Sangihe-mineral-tenement Contract of Work ("CoW") is held through PT. Tambang Mas Sangihe ("TMS"). The remaining 30-percent interest in TMS is held by three Indonesian corporations. The term of the Sangihe CoW agreement is 30 years upon commencement of the production phase of the project.
The Company intends to proceed to production without the benefit of first establishing mineral reserves supported by a feasibility study. The Company cautions readers that the any production decision made by the Company will not be based on a NI 43-101 feasibility study of mineral reserves that demonstrates economic and technical viability and as such, there may be involved increased uncertainty and various technological and economic risks such as the interpretation of drill results; the geology, grade and continuity of mineral deposits; the possibility that future exploration, development or mining results will not be consistent with our expectations; commodity and currency price fluctuation; failure to obtain adequate financing; regulatory, recovery rates, refinery costs, and other relevant conversion factors, permitting and licensing risks; general market and mining exploration risks and production and economic risks related to design and engineering, manufacturing, technological processes and test procedures and the risk that the project's output will not be salable at a price that will cover the project's operating and maintenance costs.
ABOUT MERCER STREET CAPITAL PARTNERS, LLC
Mercer Street specializes in providing innovative debt and equity investments to publicly-listed companies across the globe.
ABOUT BARU GOLD CORPORATION
Baru Gold Corp. is a dynamic junior gold developer with NI 43-101 gold resources in Indonesia, one of the top ten gold producing countries in the world. Based in Indonesia and North America, Baru's team of mining and finance professionals boasts extensive experience in starting and operating small-scale gold and coal assets. With strong retail and institutional shareholder support, Baru is positioned to become Indonesia's next gold producer.
Frank Rocca, BAppSc.(Geology), MAusIMM, MAIG, CPI-KCMI, Chief Geologist of Baru Gold Corp. is the Qualified Person as defined under NI 43-101 who has reviewed and approves the content of this release.
Per: "Terry Filbert"
Terry Filbert, Director
President & CEO
info@barugold.com
+1-206-890-8285
For investor contacts more information, please contact:
Kevin Shum
Investor Relations
kevin@jeminicapital.com
647-725-3888 ext 702
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.
Certain statements in this News Release, which are not historical in nature, constitute "forward looking statements" within the meaning of that phrase under applicable Canadian securities law. These statements include, but are not limited to, statements or information concerning future work programs, results and timing of any work programs, the Company's performance or events as of the date hereof. These statements reflect management's current assumptions and expectations and by their nature are subject to certain underlying assumptions, known and unknown risks and uncertainties and other factors which may cause actual results, performance or events to be materially different from those expressed or implied by such forward looking statements. Those risks include the interpretation of drill results; the geology, grade and continuity of mineral deposits; the possibility that future exploration, development or mining results will not be consistent with our expectations; commodity and currency price fluctuation; failure to obtain adequate financing; regulatory, recovery rates, refinery costs, and other relevant conversion factors, permitting and licensing risks; general market and mining exploration risks and production and economic risks related to design and engineering, manufacturing, technological processes and test procedures and the risk that the project's output will not be salable at a price that will cover the project's operating and maintenance costs. Forward-looking statements should not be construed as investment advice. Readers should perform a detailed, independent investigation and analysis of the Company and are encouraged to seek independent professional advice before making any investment decision. Accordingly, readers should not place undue reliance on any forward-looking statement. Except as required by applicable securities laws, the Company disclaims any obligation to update or revise any forward looking statements to reflect events or changes in circumstances that occur after the date hereof.
