TORONTO, Feb. 27, 2012 /CNW/ - Cline Mining Corporation ("Cline" or the "Company") (TSX: CMK) is pleased to announce that it has today issued certain senior secured bonds having a principal amount of US$25 million (the "Bonds"). This Bond issuance is made in connection with the Company's previously announced debt financing whereby the Company entered into a trust indenture (the "Trust Indenture") with Computershare Trust Company of Canada and Marret Asset Management Inc. on behalf of certain investment funds which it advises (the "Lenders"). The Trust Indenture provides for the issuance by the Company of up to US$50 million senior secured bonds to the Lenders provided certain conditions precedent to a draw down have been met.
The Bonds issued today will mature on February 27, 2014 and will bear a coupon of 10% per annum, payable semi-annually in arrears in equal instalments.
In consideration for the Company being permitted to draw down on the commitment of the Lenders' to take up the Bonds (the "Commitment"), the Company issued 1.25 million common share purchase warrants (the "First Draw Warrants") to such Lenders. The First Draw Warrants are exercisable at a price of C$2.49 and will expire on February 27, 2015.
The Company has also notified the Lenders of its intention to draw down on the balance of the Commitment on April 30, 2012 whereby a further issuance of bonds having a principal amount of US$25 million will occur. The Company will also be obligated to issue a further 1.25 million warrants to the Lenders at such time at an exercise price of C$2.49.
Ken Bates, the President and CEO of the Company, commented, "We are eager to expand the New Elk mine in order to meet our targeted production rates. As with any mine expansion plan, capital improvements are required and so the net proceeds from this Bond issuance will provide Cline with a desirable reserve of funds which can be applied towards these objectives. The fact that the Company was permitted to draw down on the Commitment in the midst of a global credit crunch is a strong signal to our investors that Cline will be able to weather any droughts in capital funding and that we will be on course to ramp up production in the near term."
GMP Securities L.P. acted as financial advisor to the Company in connection with the issuance of the Bonds.
About Cline: Cline has significant metallurgical coal property interests in North America with NI 43-101 compliant independent Technical Reports. Cline Mining Corporation is a mine development company focused on the exploration and development of metallurgical steel making coals in Canada and the U.S., iron ore in Madagascar and the Cline Lake Gold Mine Property in northern Ontario, Canada.
CLINE MINING CORPORATION
Ken Bates, President and Chief Executive Officer
This news release may contain forward-looking statements (including "forward-looking information" within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning of the US Private Securities Litigation Reform Act of 1995) relating to, among other things, the Company's future intention to draw down on the Commitment and the future operations of the Company's New Elk coal mine. Information concerning mineral reserve and resource estimates may also be deemed to be forward-looking information in that it reflects a prediction of the mineralization that would be encountered if a mineral deposit were developed and mined. Such statements are based on assumptions, estimates, forecasts and projections made in light of the trends, conditions and expected developments that are considered to be relevant and reasonable in the circumstances at the date that such statements are made. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information. A number of factors and assumptions may cause actual results, level of activity, performance or outcomes of the Company to be materially different from those expressed or implied by such forward-looking statements including the operational forecasts for the New Elk coal mine. More detailed risks are set forth in other public filings of the Company which may be accessed on the Company's profile page at www.sedar.com. Consequently, undue reliance should not be placed on such forward-looking statements. In addition, all forward-looking statements in this news release are given as of the date hereof. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, save and except as may be required by applicable securities laws.
Head office: Brookfield Place, 181 Bay Street, 3rd Floor, Clarkson Gordon Heritage Building, Toronto, ON, M5J 2T3
For further information: