Daily News: March 24, 2015

Promerita Leads Inca $1.5MM Convertible Loan

Inca One negotiated the terms of a convertible loan with a group of lenders led by Promerita Financial for gross proceeds of $1.5 million.

The convertible loan will bear interest at a rate of 15% per annum and will be drawn down in three tranches over the next three months of $600,000, $500,000 and $400,000, respectively, with the third tranche at the option of the company. Each tranche of the convertible loan will have a 12-month term and will be subject to a 12-month renewal option, subject to certain conditions. Each will be secured by a pledge of the inventory and related assets of the company’s subsidiary, Chala One S.A.C. The company will pay an arrangement fee of 5% of the proceeds of the convertible loan to Promerita for its role in arranging the Convertible Loan.

In certain circumstances, up to 40% of the outstanding indebtedness under the Convertible Loan will be convertible into common shares of Inca One (Common Shares) at the option of the Lenders at a conversion price of $0.25. The conversion amount will be based on a fixed foreign exchange rate which will result in maximum of 2,987,800 Common Shares issuable upon conversion.

The proceeds of the convertible loan will be used to finance gold ore inventory purchases at the company’s Chala plant in Peru and general working capital purposes.

The convertible loan remains subject to final TSX Venture Exchange acceptance and the execution of definitive agreements. The first tranche of the Convertible Loan is expected to close late March 2015.

Edward Kelly, CEO, states, “We are very pleased to have raised these funds to support growth and to have Promerita join us as a new Canadian financial advisory partner. Promerita has access to significant private capital in North America and Asia, which broadens our investor base, while they also have extensive experience in traditional asset based lending which will help us as we graduate to more conventional lending platforms as the Company matures.”

The company also announces the grant of 2,780,000 incentive stock options to directors, officers, employees and consultants under its stock option plan. The options are exercisable for three years at a price of CAD$0.25 per share.

Canadian-based Inca One is ore processing company with a gold milling facility in Peru, servicing government-permitted small-scale miners.