First Bauxite Corporation Enters Into Major Financing Arrangement
With Pacific Road Resources Funds to Fund Pre-Feasibility Study at
Bonasika Mining Licence, Guyana
VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 04, 2009) - FIRST
BAUXITE CORP. (TSX VENTURE: FBX) ("First Bauxite" or the "Company") -
First Bauxite is pleased to announce a financing which, when
completed, will be used primarily to fund a pre-feasibility study on
the Bonasika Mining Licence in Guyana, the purchase of a drill rig
and additional drilling on its Bonasika and Waratilla-Cartwright
bauxite licenses in Guyana, and upon receipt of a positive
pre-feasibility study, to fund development and construction of a mine
and processing facilities for the high-alumina refractory grade
bauxite deposits within the Company's mining licences. The Company
has entered into a note purchase agreement with the Pacific Road
Resources Funds (the "Subscribers") providing for financing in two
phases. The Subscribers have agreed to make an initial C$8 million
subscription. Upon completion of a positive pre-feasibility study,
the Subscribers will have an option to make an additional US$20
million investment. Each subscription will, upon execution of final
documentation, provide for the issue to Subscribers of unsecured
convertible notes having a five year term, bearing no interest, which
are convertible into common shares of the Company.
Principal Terms of Financing:
Phase 1
The Subscribers will initially subscribe for convertible notes in the
aggregate principal amount of C$8 million, which notes are
convertible into common shares of the Company at a conversion price
of C$0.83. On the closing: (i) gross proceeds of C$3 million will be
paid to the Company in exchange for the issuance of convertible notes
in the aggregate principal amount of C$3 million; and (ii) gross
proceeds of C$5 million (the "Escrowed Proceeds") and convertible
notes in the aggregate principal amount of C$5 million (the "Escrowed
Notes") will be placed in escrow. Once the Subscribers have obtained,
at their own cost, an independent study of the bauxite market, and
certain other conditions are satisfied, the Escrowed Proceeds will be
released to the Company and the Escrowed Notes will be issued and
delivered to the Subscribers. If the independent study is not
obtained by the Subscribers on or before September 30, 2009, the
Escrowed Notes will not be issued and the Escrowed Proceeds will be
returned to the Subscribers.
The Company will pay to Pacific Road Capital Management Pty Limited
("PRCM"), which manages and advises the Subscribers, a management fee
in the amount of 3.75% of the gross proceeds of the first phase
subscription, payable in cash on the closing, or the release of the
Escrowed Proceeds from escrow, as applicable. The Company will also
pay finders fees to two finders (the "Finders") in the amount of
3.75% of the gross proceeds of the subscription, payable in cash on
the closing, or the release of the Escrowed Proceeds from escrow, as
applicable. The finders will also receive warrants equal to 7% of the
number of common shares issuable upon conversion of the first phase
notes, such warrants being issued in the proportion in which the
notes are issued on closing and released from escrow. If the entire
C$8 million principal amount of notes is converted, the Company will
issue 9,638,555 common shares to the Subscribers.
Upon the closing of the first phase of the financing, the Subscribers
will have the right to appoint one nominee to the Board of Directors
of the Company.
Phase 2
Upon delivery by the Company of a pre-feasibility study demonstrating
the viability of producing and selling refractory calcined bauxite
from the Bonasika mining licence, the Subscribers will have the
option to subscribe for additional convertible notes in the aggregate
principal amount of US$20 million within two months from the delivery
of the pre-feasibility study. The Phase 2 notes will be convertible
into common shares at a conversion price equal to the greater of:
1. the maximum discount permitted by the TSXV, but in any event not
less than a 20% discount to (i) 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 Subscribers exercise their option
to acquire the second phase notes; and
2. C$1.245 (150% of the conversion price for the first phase notes),
provided that,
3. the second phase conversion price will not be greater than C$2.00
per share; and
4. the second phase conversion price will be reduced as necessary to
ensure that the common shares issuable on conversion of the Phase 2
notes will comprise not less than 15% of the Company's common shares
calculated on a fully diluted basis following the issuance of the
Phase 2 notes based on the Phase 2 conversion price; provided,
however, that the Phase 2 conversion price will not be reduced below
the Phase 1 conversion price in which case the Subscribers will have
the right to purchase additional notes on the same terms and
conditions as the Phase 2 notes so that the common shares issuable on
conversion will equal 15% of the Company's issued and outstanding
common shares calculated on a fully diluted basis.
The Company will pay to PRCM a management fee in the amount of 3.5%
of the gross proceeds of the subscription payable in cash on the
closing. The Company will also pay finders fees to the Finders in the
amount of 3.5% of the gross proceeds of the subscription payable in
cash on the closing. The Finders will also receive warrants equal to
7% of the number of common shares issuable upon conversion of the
notes.
Upon completion of the second phase of the financing, the Subscribers
will have the right to appoint additional nominee(s) to the Board of
Directors of the Company proportionate to their percentage holding of
common shares in the Company (calculated on a fully diluted basis
assuming conversion of the Subscribers' notes) and in any event the
Subscribers will be entitled to not less than two directors in total,
although the Company and the Subscribers may agree to appoint a
second nominee prior to the closing of second phase financing.
Participation Right for Future Financings
As long as the Subscribers continue to hold all of the Phase 1 notes
(or common shares issued on conversion) and if applicable the Phase 2
notes (or common shares issued on conversion), the Subscribers will
have the right to participate in future financings by the Company,
and to purchase any amount of securities in such financings subject
to the Company's existing obligations to third parties, for a period
of three years.
Shareholder Approval
The TSX Venture Exchange (the "TSXV") requires shareholder approval
of the proposed transaction because the Subscribers may, under such
financing arrangements, become a new "control person" (holding more
than 20% of the issued and outstanding voting shares) of the Company
for purposes of TSXV policies. The Subscribers may become a control
person of the Company as a result of the issuance of the Phase 1
notes, the issuance of the Phase 2 notes, the conversion of the Phase
1 notes or Phase 2 notes, the exercise of the Subscribers'
participation rights on future financings (as described above) and/or
through market purchases of common shares; the Company will seek
shareholder approval for the Subscribers to become a control person
through any combination of the foregoing, at any time in the future,
by obtaining the written consents of shareholders holding more than
50% of the current issued and outstanding shares of the Company, as
permitted by the policies of the TSXV. The Subscribers and PRCM do
not currently own any shares of the Company and as a result they will
not be voting on the transaction. The Company recommends that
shareholders approve the transaction with the Subscribers.
Closing
Completion of the financing is subject to certain conditions,
including receipt of TSXV approval and all other necessary
shareholder and regulatory approvals.
Yannis Tsitos, President of First Bauxite commented: "First Bauxite
is a company with great growth potential. Securing financing to
advance the development of our licenses in Guyana was a priority
objective in our business plan following the approval of the Bonasika
acquisition by the Exchange and the commencement of resource outline
drilling at the Bonasika refractory grade bauxite deposits in the
autumn of 2008. We are extremely pleased that an international
private equity investor of the calibre of the Pacific Road Resources
Funds has recognized the true value of our company and its projects.
In such difficult economic times, securing a major financing of this
size and phased structure, is a significant milestone that will
enable the company to maintain its momentum, complete the
pre-feasibility study at Bonasika, and further develop its
properties. Most importantly, it is not only about raised funds;
nominees of Pacific Road Resources Funds with significant global
mining experience will become part of our Board, and we are looking
forward to a true partnership that will enhance the value of our
projects and maximize the returns for all of our shareholders."
Paul Espie, Managing Director of PRCM, commented on behalf of the
Pacific Road Resources Funds: "We are pleased to be involved in the
project and associated with the experienced and professional First
Bauxite team. We look forward to advancing their project into
production and positioning First bauxite to become an important
supplier of a high value product to industrial consumers in the
Americas and Europe."
About First Bauxite and Bonasika Mining Licence
First Bauxite Corporation (TSX VENTURE: FBX) 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
world-wide experience in the exploration and mining business across a
number of mineral commodities. The unambiguous mission of First
Bauxite is to become a near term, medium size producer and supplier
of high quality refractory grade calcined bauxite. First Bauxite
controls a very large land package in Guyana's historical coastal
bauxite belt, including the Bonasika Mining Licence, covering
deposits which were drilled in 1940's-60's by ALCAN and which host
near surface deposits of refractory grade bauxite. The Company is
currently drilling the deposits for resource-outline purposes, to
make the historical reserves NI43-101 compliant, and has initiated a
pre-feasibility study to analyse and outline the viability of an
independent mining and processing operation. First Bauxite has
leveraged itself to the metallurgical bauxite business, through an
option agreement with Rio Tinto Alcan, whereby Rio can earn up to 75%
interest in FBX's exploration ground by expending up to US$58 million
in stages. For further information on First Bauxite Corporation,
please visit our corporate website at www.firstbauxite.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 Hilbert N. Shields
President & Director CEO & Director
This document contains certain forward looking statements which
involve known and unknown risks, delays, and uncertainties not under
the corporations 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)
Email: yannis@firstbauxite.com
Website: www.firstbauxite.com
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
