VANCOUVER, Nov. 19, 2013 /CNW/ - Yellowhead Mining Inc. ("Yellowhead" or the "Company") (TSX: YMI) announces that it has entered into an investment agreement (the
"Investment Agreement") with Matco Investments Ltd. ("Matco"), a
private investment firm based in Calgary, Alberta, pursuant to which
Yellowhead has issued to Matco an $8 million secured convertible
debenture (the "Debenture") on a private placement basis (the "Matco
Financing"). Full conversion of the debenture into common shares of
the Company is subject to shareholder approval at a special meeting of
shareholders to be held on December 30, 2013.
The proceeds of the Matco Financing will primarily be used to complete
the environmental assessment process for Yellowhead's 100% owned Harper
Creek Project and for general corporate purposes.
Frank D. Wheatley, Yellowhead's CEO, noted that "Yellowhead is extremely
pleased to have reached agreement with Matco to provide the Matco
Financing, as this will allow Yellowhead to move forward with the
environmental assessment process for the Harper Creek Project". Mr.
Wheatley added that "completing the environmental assessment process
will represent the next significant milestone in the development of the
Harper Creek Project".
The Debenture has a principal amount of $8,000,000.10, a maturity date
of January 31, 2014 (the "Maturity Date"), bears interest at a rate of
9% per annum, calculated and payable monthly in arrears, and is secured
by a first ranking security interest on all of Yellowhead's property
and assets. All security will be released and discharged on the
earlier of: 1) the automatic conversion of the Debenture, and 2)
repayment of the Debenture together with accrued interest.
The Debenture is, subject to shareholder approval, convertible into
35,555,556 common shares in the capital of Yellowhead at a price of
$0.225 per share (the "Conversion Price"), representing a 50% premium
to the closing price of Yellowhead's common shares on November 18,
The full conversion of the Debenture into 35,555,556 common shares of
Yellowhead is subject to shareholder approval and Yellowhead has
scheduled a special meeting of shareholders to be held on December 30,
2013 for purposes of seeking such shareholder approval.
Automatic Conversion. If shareholder approval is received, then the Debenture will
automatically be converted into 35,555,556 common shares of Yellowhead
at the Conversion Price, and Yellowhead will pay to Matco all accrued
interest from the date of issue of the Debenture to the date of
automatic conversion. Upon automatic conversion, Matco will own
approximately 35.91% of the issued and outstanding common shares of
Yellowhead. If shareholder approval is not received, then the
Debenture will, subject to earlier voluntary conversion, be repayable
in full on the Maturity Date, together with accrued interest and a
funding fee of $250,000.
Voluntary Conversion. Matco has the right, at any time and from time to time, exercisable
from the date of issue of the Debenture to the earlier of: (i) the date
that shareholder approval is obtained; and (ii) the Maturity Date, to
elect to convert up to a maximum of $3,566,250.00 of the principal
amount of the Debenture into 15,850,000 common shares of Yellowhead at
the Conversion Price. If Matco elects to exercise such right in full,
then after conversion, Matco will own approximately 19.99% of the
issued and outstanding common shares of Yellowhead, and the balance of
the principal amount of the Debenture, together with all accrued
interest, will be repayable to Matco on the date of such voluntary
Appointment of Director
Pursuant to the Investment Agreement, Matco was granted the right to
designate one individual for appointment to the Board of Directors of
the Company and Mr. Ronald Mathison has been appointed a director of
the Company effective as of November 19, 2013. If, between the closing
date of the Matco Financing and the next succeeding meeting of
Company's shareholders at which directors are to be elected, a director
of the Company resigns, then the Company will fill such vacancy with an
additional individual nominated by Matco. In addition, for so long as
Matco's proportional interest of common shares of the Company at the
time of the recommendation by the Company of nominees for election to
the Board of Directors is greater than 15%, Matco will have the right
to nominate two individuals of its choosing for election to the Board
of Directors of the Company at all meetings of the shareholders of
Company at which directors are elected.
Matco Pre-Emptive Right
Matco was also granted a pre-emptive right pursuant to the Investment
Agreement. If the Company wishes to issue or pursue an offering of
common shares or securities convertible or exchangeable into common
shares of the Company (collectively, the "Subject Securities") then,
for so long as either the Debenture is outstanding, or the proportional
interest ("Proportional Interest") of Matco at such time is greater
than 10% of the outstanding common shares of Yellowhead, then Matco
will have the right (the "Participation Right"), subject to TSX
approval and compliance with applicable legal requirements, to
subscribe for and purchase that number of Subject Securities obtained
when the total number of Subject Securities is multiplied by the
Proportional Interest of Matco at such time, on the same terms and at
the same price that the Company is prepared to issue the Subject
Securities to other prospective purchasers. The Participation Right
will expire five years from the date of closing of the Matco Financing.
About Matco Investments Ltd.
Matco Investments Ltd. is a private investment corporation based in
Calgary, Alberta. Matco is controlled by Mr. Ronald Mathison. Mr.
Mathison also serves on the boards of Calfrac Well Services Ltd., Tesla
Exploration Ltd. and Western Energy Services Corp.
About Yellowhead Mining Inc.
Yellowhead Mining Inc. is a development stage company with a 100%
interest in the Harper Creek copper-gold-silver project located in the
North Thompson region of British Columbia, Canada. The proposed Harper
Creek mine will be a large scale, long life, low cost open pit copper
mine, has a NI 43-101 compliant feasibility study, and is currently in
the environmental permitting phase of development.
For more information on Yellowhead and the Harper Creek Project, please
visit Yellowhead's website at www.yellowheadmining.com.
Forward Looking Statements
Except for statements of historical fact, this news release contains
certain "forward-looking information" within the meaning of applicable
securities laws. Forward-looking information is frequently
characterized by words such as "plan", "expect", "project", "intend",
"believe", "anticipate", "estimate" and other similar words, or
statements that certain events or conditions "may" or "will" occur.
Forward-looking statements are based on the opinions and estimates of
management at the date the statements are made, and are subject to a
variety of risks and uncertainties and other factors that could cause
actual events or results to differ materially from those anticipated in
the forward-looking statements, including, among others, the accuracy
of mineral grades and related assumptions, inherent operating risks,
planned expenditures, proposed exploration and development at the
Harper Creek Project, operating and economic aspects of the Harper
Creek Project, as well as those risk factors identified in the
Company's Annual Information Form filed under the Company's SEDAR
profile. Yellowhead undertakes no obligation to update forward-looking
information if circumstances or management's estimates or opinions
should change except as required by law. The reader is cautioned not to
place undue reliance on forward-looking statements. More detailed
information about potential factors that could affect projected results
is included in the documents filed from time to time with the Canadian
securities regulatory authorities by Yellowhead.
SOURCE: Yellowhead Mining Inc.
For further information:
Ronald Handford, Executive Vice President, Corporate Development
604.681.1709 Ext. 204