Published : October 03, 2011
TORONTO, Oct. 3, 2011 /CNW/ - Cline Mining Corporation ("Cline Mining" or the "Company") (News - Market indicators) is pleased to announce that it has entered into a binding term sheet (the "Term Sheet") with Marret Asset Management Inc. ("Marret") on behalf of a syndicate of lenders (the "Lenders") providing for the issuance of up to US$50 million senior secured notes (the "Notes"). The Notes may be issued to the Lenders, at the Company's option, in integral amounts of US$25 million for a maximum of US$50 million at any time prior to the first anniversary of the signing of the Term Sheet subject to completing definitive documentation. The Notes have a maturity date that is two years from the date Cline Mining first exercises its right to issue any Notes to the Lenders and bear a coupon of 10% per annum, payable semi annually in arrears in equal instalments.
In consideration for the Lenders' commitment under the Term Sheet (the "Commitment"), the Company has agreed to issue to the Lenders 7.5 million common share purchase warrants of the Company (the "Commitment Warrants"). Each Commitment Warrant will allow its owner to purchase one common share of the Company at a price of C$1.75 and will expire on the date that is the third anniversary following the execution date of the Term Sheet.
In consideration for drawdowns under the Commitment, the Company covenants to issue to the Lenders 1.25 million common share purchase warrants of the Company for every US$25 million in principal amount of the Notes issued (the "Drawdown Warrants"). The Drawdown Warrants in respect of each Note issuance will be simultaneously issued to the Lenders at the time of such Note issuance, as applicable.
Each Drawdown Warrant will allow its owner to purchase one common share of the Company at a price equal to 120% of the volume weighted average price of the Company's common shares over the previous 10 trading days prior to the date on which formal notification of the Company's request to draw on the commitment was given. The Drawdown Warrants will expire on the date that is the third anniversary from the date of issue.
Ken Bates, the President and CEO of the Company, commented "This transaction provides Cline Mining with additional financial flexibility to withstand uncertainty in the current market environment, ensure a smooth ramp-up and cover any contingencies relating to the New Elk mine."
Closing of the Facility is subject to TSX regulatory approval, satisfactory completion of due diligence investigations, and execution of definitive agreements.
GMP Securities L.P. acted as financial advisor to the Company in connection with the securing of the Facility.
About Cline: Cline has significant metallurgical coal property interests in British Columbia, Canada and in Colorado, U.S.A. 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
Forward-Looking Information
This news release may contain forward-looking statements (including "forward-looking information" within the meaning of applicable Canadian and U.S. securities laws), including without limitation, those regarding the Commitment and the timing and completion of the financing. Such forward-looking statements necessarily involve known and unknown risks and uncertainties that are common to junior mineral exploration companies. These statements are not a guarantee of future performance and undue reliance should not be placed on them. The Company undertakes no obligation to update or revise any forward-looking statements except as required by applicable laws. Copies of the Company's public filings under applicable Canadian securities laws are available at www.sedar.com. The Company further cautions that information contained on, or accessible through, this website is current only as of the date of filing such information and may be superseded by subsequent events or filings.
Head office: Brookfield Place, 181 Bay Street, 3rd Floor, Clarkson Gordon Heritage Building, Toronto, ON, M5J 2T3