Scorpio Gold Corporation (“
Scorpio Gold” or the
“
Company”) (TSX-V: SGN) announces that further to
its press release dated May 30, 2022 it has closed the two
convertible loan agreements dated May 24, 2022, as amended on
August 4, 2022 (the “
Convertible Loan
Agreements”), with Ianco Holdings Ltd. and Matco Holdings
Ltd. (collectively, the “
Lenders”) pursuant to
which the Company may borrow the aggregate principal amount of up
to US$2,450,000 from the Lenders (the “
Loans”). To
date, the Lenders have advanced an aggregate of US$2,350,000 to the
Company, which amount has been incorporated into the Loans. The
Loans are subject to the final approval of the TSX Venture Exchange
(the “
Exchange”). The remaining $100,000 that may
be borrowed by the Company under the Loans is subject to further
approval of the Exchange. The Company intends to use the proceeds
of the Loans to advance its Goldwedge property and for general
working capital purposes.
Terms of the Convertible
Loans
Pursuant to the terms of the Convertible Loan
Agreements, the Lenders agreed to advance the Loans to the Company
in draws until the maturity date of December 31, 2022 (the
“Maturity Date”), provided that the principal
amount of each Loan advanced does not exceed in aggregate
US$1,225,000. The outstanding principal amount of the Loans bear
interest at a rate of 123/8% per annum, compounding monthly. For
each drawdown under the Loans, the Company will pay to the
applicable Lender a facility fee of US$3,250.
The outstanding principal amount of each Loan
less the facility fees payable are convertible, at the election of
the applicable Lender, into common shares in the capital of the
Company (each, a “Common Share”) at a conversion
price of US$0.06 per Common Share, subject to adjustment, from the
Closing Date until the earlier of: (i) the Maturity Date, and (ii)
the date the entire outstanding principal amount of the applicable
Loan has been repaid. A total of 38,733,333 Common Shares are
issuable on conversion of the outstanding principal amount of
Loans, subject to adjustment. Accrued interest on the Loans is not
convertible into Common Shares.
The Lenders have agreed that they will not
convert the outstanding principal amount of the Loans into Common
Shares if the conversion of such principal amount will result in
either Lender owning or controlling, directly or indirectly, more
than 20% of the total issued and outstanding Common Shares on an
undiluted basis.
The Company has agreed that as long as any
indebtedness remains outstanding under the Convertible Loan
Agreements it will not purchase capital assets with an aggregate
value in excess of US$100,000 without the consent of the Lenders,
such consent not to be unreasonably withheld.
The Loans are equally secured in favour of the
Lenders on a pari passu basis by the present and after-acquired
personal property of the Company and each of the following
subsidiaries of the Company: Scorpio Gold (US) Corporation, Mineral
Ridge Gold, LLC, Goldwedge, LLC and Pinon LLC (collectively, the
“Subsidiaries”), as well as a pledge over each of
the outstanding shares and membership interests of the
Subsidiaries. Guarantees for the Loans will be provided by each of
the Subsidiaries. The Company will deliver security agreements,
pledge agreements and guarantees with respect to the foregoing
security interests to the Lenders.
The Loans and the Common Shares issuable on
conversion of the principal amount of the Loans are subject to a
four-month hold period that commenced on May 24, 2022 and will
expire on September 25, 2022, in accordance with applicable
securities laws and the policies of the Exchange.
For further details regarding the Loans, see the
press release of the Company dated May 30, 2022.
ON BEHALF OF THE BOARD
SCORPIO GOLD CORPORATIONChris
ZergaPresident and Chief Executive Officer
Tel: (775) 753-4778Email:
czerga@scorpiogold.com
Website: www.scorpiogold.com
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Cautionary Note Regarding
Forward-Looking Statements
This press release contains forward-looking
statements with respect to the Company. By their nature,
forward-looking statements are subject to a variety of factors that
could cause actual results to differ materially from the results
suggested by the forward-looking statements. In addition, the
forward-looking statements require management to make assumptions
and are subject to inherent risks and uncertainties, including, but
not limited, the ability of the Company to obtain final Exchange
approval for the Loans. There is significant risk that the
forward-looking statements will not prove to be accurate, that the
management’s assumptions may not be correct and that actual results
may differ materially from such forward-looking statements.
Accordingly, readers should not place undue reliance on the
forward-looking statements.
Generally forward-looking statements can be
identified by the use of terminology such as “anticipate”, “will”,
“expect”, “may”, “continue”, “could”, “estimate”, “forecast”,
“plan”, “potential” and similar expressions. Forward-looking
statements contained in this press release may include, but are not
limited to, the final approval of the Exchange to the Loans and the
anticipated use of funds for the Loans. These forward-looking
statements are based on a number of assumptions which may prove to
be incorrect.
The forward-looking statements contained in this
press release are made as of the date hereof or the dates
specifically referenced in this press release, where applicable.
Except as required by law, the Company does not undertake any
obligation to update publicly or to revise any forward-looking
statements that are contained or incorporated in this press
release. All forward-looking statements contained in this press
release are expressly qualified by this cautionary statement.
Scorpio Gold (TSXV:SGN)
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