Excellon Resources will acquire all the outstanding shares of Otis Gold.
The combined company will be a well-financed precious metals producer with established silver production in Mexico and an attractive gold development project in the United States. The transaction is an initial step in Excellon becoming a larger multi-asset precious metals company.
The combined company will be well financed with $10 million in cash and available funds and is expected to have a market capitalization of approximately C$124 million ($93 million) and will be listed on the Toronto Stock Exchange in Canada. Excellon also intends to apply for a listing on the NYSE American in the U.S.
“The acquisition of Otis Gold represents an exceptional opportunity to further Excellon’s vision of creating wealth. We believe that we are at the dawn of a new bull market in precious metals. The Kilgore deposit multiplies our resource base and increases our precious metal exposure from approximately 50% to over 90%,” said Excellon President & CEO Brendan Cahill._x000D_
Excellon has signed a non-binding term sheet in respect of a $6-million bridge-loan credit facility with Sprott Private Resource Lending II. Proceeds of the facility will be used for, among other things, general working capital purposes relating to Excellon’s projects and ongoing corporate development opportunities.
The facility bears interest at 10% per annum, compounded and payable monthly, and due and payable in full on or before August 28, 2020. In consideration for the facility, Excellon will issue partner alignment shares to Sprott Lending with a value of $180,000 (3% of the principal amount of the facility.
Excellon has agreed to advance Otis Gold a bridge loan in the principal amount of up to C$500,000 ($367,400)in two tranches of $250,000. The proceeds of the loan are to be used by Otis Gold to provide general working capital during the period from the execution of the definitive agreement until closing of the transaction.
The loan shall bear interest at a rate of 10% per annum and shall be repayable in cash or shares, at Excellon’s option, with the conversion price per Otis Gold share being equal to the five-day volume weighted average trading price of the Otis Gold common shares on the TSX Venture Exchange prior to the date of conversion, subject to a minimum price of
PI Financial is acting as financial advisor and Bennett Jones is acting as legal counsel to Excellon. DuMoulin Black is acting as legal counsel to Otis Gold. Cormark Securities is acting as financial advisor to the special committee of the board of directors of Otis Gold.
