Mining company First Mexican Gold (FMG) entered into an arrangement with Isatis Capital Group of Montreal to secure a credit facility loan for up to $10 million.
The credit facility will have a maturity of 48 months, with an option for FMG to terminate the loan at 36 months with a 2% penalty on remaining funds owed. It will be secured by a universal deed of hypothec over FMG assets, including, but not limited to, its property in Mexico. The loan will have an interest rate of 8% and will consist of interest-only payments for the first 14 months of its tenure. The loan, at the discretion of the lender(s), will be convertible to 99.9 gold bullion as a vehicle of re-payment with 12 months advanced notice and contained within a formal offtake agreement.
The credit facility will be made available to FMG through the issuance of secured and convertible notes maturing at 48 months, relying on rule 506 (c) of Regulation D promulgated under the Securities Act, 1933 as amended.
Funds will be used to bring the Karen Zone into operational mineral extraction, as well as general working capital. Permitting consisting of land use change and environmental impact studies will begin immediately upon receipt of funds.
The financing will be contingent on market conditions and regulatory approval in the U.S. and Canada.
“It has been a very long and protracted number of years with many possible funding disappoints. This funding solution enables FMG to move forward aggressively on long developed property plans while maintaining 100% control and vested interest of the Guadalupe property and the Karen zone while offering the opportunity to deliver enhanced shareholder value to our long suffering, faithful shareholders,” said Jim Voisin, president and CEO of FMG. “I look forward to moving the project forward.”
In conjunction with the facility, FMG will issue 10,000,000 shares and distribute 4,700,000 options exercisable at five cents to employees, consultants and directors as per its existing option plan.
