Resource Capital Fund V L.P. Acquires Shares of First Bauxite Corporation

VANCOUVER, Jan. 20 /CNW/ - Resource Capital Fund V L.P. ("RCF V") reports that, in connection with the first tranche closing (the "Tranche 1 Financing") of a two tranche financing pursuant to a note purchase agreement between RCF V and First Bauxite Corporation (the "Company") dated as of December 31, 2010 (the "RCF Agreement"), the Company has issued to RCF V a convertible note in the aggregate principal amount of C$8 million (the "Tranche 1 Note"). Gross proceeds of C$8 million were paid to the Company in exchange for the issuance of the Tranche 1 Note.

The Tranche 1 Note is unsecured, bears no interest, and is convertible into common shares of the Company for a period of five years from the closing of the Tranche 1 Financing at a conversion price of C$0.83. If the Tranche 1 Note is converted in full, the Company will issue 9,638,555 common shares to RCF V, which together with the securities currently owned by RCF V will represent approximately 19.41% of the common shares of the Company, assuming no other options, warrants or convertible securities are exercised or converted and no other common shares are otherwise issued by the Company.

The RCF Agreement contains the following material terms:

Tranche 1 & Tranche 2

Following the Tranche 1 Financing, and upon satisfaction of certain conditions precedent, RCF V will have an option to make an additional US$20 million investment to subscribe for an additional unsecured convertible note in the aggregate principal amount of US$20 million (the "Tranche 2 Note"), which Tranche 2 Note will be convertible into common shares at a conversion price equal to the greater of:

1.     the maximum discount permitted by the TSX Venture Exchange (the "TSXV"), but in any event not less than a 20% discount to the volume-weighted average closing price of the Company's common shares on the TSXV for the 20 trading days preceding the day on which the RCF V exercises its option to acquire the Tranche 2 Note; and
 
2.     C$1.245 (150% of the conversion price for the Tranche 1 Note),

provided that,

3.     the conversion price of the Tranche 2 Note will not be greater than C$2.00 per share; and
 
4.     the conversion price of the Tranche 2 Note will be reduced as necessary to ensure that the common shares issuable on conversion of the Tranche 2 Note will comprise not less than 11.5% of the Company's common shares calculated on a fully diluted basis following the issuance of the Tranche 2 Note based on the second tranche conversion price (the "Tranche 2 Financing").

Appointment of Directors

RCF V will have the right to appoint one nominee to the Board in connection with the Tranche 1 Financing, and provided that RCF V obtains 30% or more of all of the common shares of the Company, calculated on a fully diluted basis, RCF V will have the right to have one additional director appointed to the Board. 

Preferential Rights of Participation

Provided that RCF V holds all of the then outstanding Tranche 1 Note and, if applicable, the Tranche 2 Note, or if any such notes are converted, the underlying securities obtained on conversion, or holds common shares equal to at least 10% of the outstanding common shares of the Company, if at any time prior to June 12, 2012 any additional shares are to be issued by the Company, RCF V will have a right to purchase additional securities on a pro rata basis to current ownership.

Right of First Offer

In the event that RCF V desires to sell securities of the Company held by it, which represent on a fully diluted basis greater than 15% of the common shares to an arm's length party, RCF V must first provide written notice to the Company of its intention to do so. Following the receipt of such notice, the Company will have 10 business days to determine whether it wishes to purchase, or designate a third party to purchase, such securities prior to the sale of such securities by RCF V to a third party. 

Establishment Fee

In connection with the Tranche 1 Financing, the Company paid to RCF V, in cash, an establishment fee in the amount of C$300,000.

The RCF Agreement contains other standard representations, warranties and covenants on the part of RCF V and the Company common to such transactions.

The securities were acquired for investment purposes. RCF V will evaluate its investment in the Company from time to time and may, based on such evaluation of market conditions and other circumstances, increase or decrease its shareholdings in the Company as circumstances require.

For further information and to obtain a copy of the early warning report filed under applicable Canadian securities laws in connection with the transactions hereunder, please see the Company's profile on the SEDAR website at www.sedar.com.


SOURCE Resource Capital Fund V L.P.

For further information:

Ross Bhappu
Resource Capital Fund V L.P.
1400 Sixteenth Street, Suite 200
Denver, CO 80202
Telephone: (720) 946-1444

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Resource Capital Fund V L.P.

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