Search Minerals entered into a term sheet with InCoR Holdings on March 6, pursuant to which InCor will provide a secured term loan to the company in the principal amount of $2.5 million.
The loan will have a two-year term and will bear interest at a rate of 22.5% per annum, compounded annually. The loan will be secured by a general security agreement between the parties. The company may pay back the principal plus accrued and unpaid interest on the loan to the lender at anytime after the one-year anniversary of the loan.
Subject to approval of the TSX Venture Exchange, the company will also issue to the lender such number of bonus common shares in the capital of the company equal to $500,000, being 20% of the principal, with pricing of the bonus shares to be based on the market price of the company’s common shares following TSXV approval.
No commission or finder’s fee were paid in connection with the loan. All bonus securities are subject to a hold period of four months and one day from the date of issuance.
The company intends to use the majority of the proceeds of the loan for part of the construction costs of a demonstration plant for rare earth extraction and recovery in connection with the company’s Deep Fox and Foxtrot projects and the remaining portion for working capital requirements.
