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VANCOUVER, July 22, 2016 /CNW/- Eco Oro Minerals Corp. ("Eco Oro" or the "Company") (TSX: EOM) is pleased to announce that it has entered into an investment agreement (the "Agreement") with Trexs Investments, LLC (the "Investor"), an entity managed by Tenor Capital Management Company, L.P., with respect to an aggregate investment in the Company of US$14 million (the "Investment"). Pursuant to the Agreement, the proceeds of the Investment will be used by the Company to fund the Company's arbitration with the Government of Colombia under the Free Trade Agreement between Canada and Colombia (the "Arbitration").
"With this investment, Eco Oro will be completely funded to the extent we are unable to resolve the dispute amicably with the Government of Colombia and, instead, decide to move forward with arbitration," said Mark Moseley-Williams, President and Chief Executive Officer of the Company. "Now the Company will be able to maintain its obligations for the foreseeable future as it continues discussions with the Government of Colombia while protecting the interests of shareholders."
The Investment, which is subject to customary terms and conditions, is going to occur in two tranches. The first tranche ("Tranche 1"), which closed concurrently with the execution of the Agreement, is for US$3 million and the second tranche ("Tranche 2") is for US$11 million. The Company has issued 10,608,225 common shares, which represents 9.99% of the Company's issued and outstanding shares, to the Investor pursuant to Tranche 1.
The Company will call a meeting of its shareholders to obtain shareholder approval for the issuance of common shares pursuant to Tranche 2. Pursuant to Tranche 2, the Company will issue 84,590,427 common shares, which will result in the Investor owning an aggregate of 49.99% of the Company's issued and outstanding shares and an unsecured convertible note in the principal amount of US$7 million (the "Note"). In the event that shareholder approval is not obtained, Tranche 2 will consist of the Note and secured contingent value rights (the "CVR"), entitling the Investor to 51% of the gross proceeds of the Arbitration.
Pursuant to the Agreement, the Investor has appointed one nominee on the board of directors of the Company.
The Note has an interest rate of 0.025% per annum and a maturity date of June 30, 2028, subject to early repayment in certain circumstances, including if the Company receives any proceeds pursuant to the Arbitration or if the Arbitration is terminated or discontinued. The Note may be repaid without penalty or converted into common shares of the Company at any time at the election of the Company. The number of shares to be issued upon conversion of the Note is based on the market price of the common shares of the Company at the time of conversion.
As noted above, in the event that shareholder approval is not obtained with respect to Tranche 2, the Company will be required to issue the CVR to the Investor instead of common shares. The CVR will be secured and will entitle the Investor to 51% of the gross proceeds of the Arbitration. The CVR is subject to events of default, covenants and restrictions on the business of the Company customary for an investment of this nature.
The securities set forth herein have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act") or any U.S. state securities laws, and securities of the Company may not be offered or sold in the United States absent registration or any applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
Eco Oro Minerals Corp. is a publicly-traded precious metals exploration and development company with a portfolio of projects in Colombia. Eco Oro has been focused on its wholly-owned, multi-million ounce Angostura gold-silver deposit, located in northeastern Colombia. Eco Oro is committed to further advancing the Angostura Project in a socially and environmentally responsible manner that will be beneficial for all stakeholders.
The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.
Certain statements in this news release are "forward-looking" within the meaning of Canadian and United States securities legislation. They include statements with respect to the closing of the Investment, the use of proceeds of the Investment, the Arbitration, the Company's ability and plans for advancing the Angostura Project, future announcements relating thereto, and the funding of the Company and ability of the Company to meet its obligations. Forward-looking statements are necessarily based upon the current belief, opinions and expectations of management that, while considered reasonable by the Company, are inherently subject to significant business, economic, competitive, political and social uncertainties and other contingencies. Many factors could cause the Company's actual results to differ materially from those expressed or implied in the forward-looking statements. These factors include, among others, the Company`s ability to satisfy the conditions to the closing of Tranche 1 and Tranche 2, the Company`s ability to obtain shareholder approval of Tranche 2, the timeliness and success of regulatory approvals, availability of capital and financing, the cost of arbitration, general economic, market or business conditions, as well as other risk factors set out under the heading "Risk Factors" in the Annual Information Form dated March 11, 2016, which is available on SEDAR at www.sedar.com. Investors are cautioned not to put undue reliance on forward-looking statements due to the inherent uncertainty therein.
SOURCE Eco Oro Minerals Corp.
For further information: please visit the Company's website at www.eco-oro.com or contact: Anna Stylianides, Executive Chairman of the Board, Tel: +1 604 682 8212, Cel: +1 604 617 9231, TF: + 1 855 682 8212