Atlantic Gold Corporation (TSX-V: AGB) is pleased to announce that the Company, through a wholly owned subsidiary, has completed its $9,000,000 strategic investment in Velocity Minerals Ltd. (TSX-V: VLC) by way of a non-brokered private placement pursuant to an agreement between Atlantic, Atlantic’s subsidiary and Velocity, as originally announced on January 17, 2019.
Pursuant to the Financing, Atlantic subscribed for i) 18,600,000 units of Velocity issued at a price of $0.21 per Unit, for $3,906,000 and ii) $5,094,000 principal amount of secured convertible debentures of Velocity for total consideration of $9,000,000.
Each Unit consists of one common share in the capital of Velocity and one half of one Common Share purchase warrant. Each Warrant is exercisable for an additional Common Share until three years from the date of issuance at an exercise price of $0.25 per Common Share. The Convertible Debentures will earn interest at a rate of 8.5% per annum over a 60-month term, payable semi-annually in cash or Common Shares at the discretion of Velocity. The principal amount of the Convertible Debentures will be convertible to Common Shares during the Term at the election of Atlantic at a conversion price of $0.25. The Convertible Debentures will be secured with a first ranking charge at any time by way of a general security agreement and guarantee from the material subsidiary of Velocity.
Early Warning Disclosure
Prior to the closing of the Financing, Atlantic did not own or have control or direction over any securities of Velocity. Following the closing of the Financing, Atlantic beneficially owns and has control and direction over an aggregate of 18,600,000 Common Shares, representing approximately 19.8% of the issued and outstanding Common Shares of Velocity. Assuming conversion of both the Convertible Debentures and the exercise of the Warrants, Atlantic would own and have control and direction over 48,276,000 Common Shares, representing 39.1% of the issued and outstanding Common Shares of Velocity on a partially diluted basis.
Atlantic completed the Financing for investment purposes. Atlantic will review its holdings in Velocity on a continuing basis and may from time to time and at any time, in its sole discretion, acquire or cause to be acquired additional equity or debt securities or other instruments of Velocity, or dispose or cause to be disposed such equity or debt securities or instruments, through open market transactions, private placements by Velocity and other privately negotiated transactions, or otherwise, in each case in accordance with Atlantic’s obligations to Velocity pursuant to the Investment Agreement and with applicable securities laws.
Atlantic has the right to designate one individual to be nominated and, if elected, to serve as a director of Velocity provided Atlantic holds at least 15% of the issued and outstanding Common Shares, with the number of nominees increasing to two directors if Atlantic holds 30% or more of the issued and outstanding Common Shares. If the size of the board of directors of Velocity is increased or decreased from the current four directors, Atlantic’s nomination rights will be adjusted in accordance with the provisions of the Investment Agreement.
To obtain a copy of the early warning report filed under applicable Canadian securities laws in connection with the subscription for Units and Convertible Debentures above, please see Velocity’s profile on the SEDAR website www.sedar.com.
Atlantic is a well-financed, growth-oriented gold development group with a long-term strategy to build a mid-tier gold production company focused on manageable, executable projects in mining-friendly jurisdictions.
Atlantic is focused on growing gold production in Nova Scotia beginning with its MRC phase one open-pit gold mine which declared commercial production in March 2018, and its phase two Life of Mine Expansion at industry lowest decile cash and all-in-sustaining-costs (as stated in the Company’s news releases dated January 16, 2019 and January 29, 2018).
Atlantic is committed to the highest standards of environmental and social responsibility and continually invests in people and technology to manage risks, maximize outcomes and returns to all stakeholders.
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