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Gran Colombia Gold Announces Closing of CA$40 Million Private Placement; Eric Sprott Increases Investment to Approximately 11%; Gran Colombia Announces It Will Redeem 30% of Its 2024 Gold Notes on March 31, 2020

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Gran Colombia Gold Announces Closing of CA$40 Million Private Placement; Eric Sprott Increases Investment to Approximately 11%; Gran Colombia Announces It Will Redeem 30% of Its 2024 Gold Notes on March 31, 2020

 

 

 

 

 

Gran Colombia Gold Corp. (TSX: GCM) (OTCQX: TPRFF) announced today that it has closed its previously announced non-brokered private placement of 7,142,857 Units of the Company at a price of CA$5.60 per Unit for total proceeds of CA$40 million. Each Unit consists of one common share and one common share purchase warrant exercisable into a full common share at CA$6.50 per share expiring February 6, 2023. As of today, Gran Colombia has 60,812,630 common shares issued and outstanding and, including the effect of warrants, stock options and convertible debentures, the total would be 88,710,189 common shares on a fully diluted basis.

 

Gran Colombia also announced today that it will use a portion of the net proceeds of the Private Placement to redeem 30%, equivalent to US$19,162,500, of the aggregate principal amount outstanding of its 8.25% Senior Secured Gold-Linked Notes due 2024 (the “Gold Notes”) (TSX: GCM.NT.U) on March 31, 2020, reducing the aggregate principal amount outstanding to US$44,712,500. The redemption price will be equal to 100% of the aggregate principal amount of the Gold Notes redeemed plus the Applicable Premium calculated in accordance with the provisions of the Gold Notes Indenture, currently estimated to be approximately 10%. Further details, including the actual amount of the Applicable Premium, will be announced later in March as it gets closer to the Redemption Date. The balance of the net proceeds of the Private Placement will be used for general working capital and corporate purposes, including potential repurchases of the Company’s listed warrants (GCM.WT.B) under its normal course issuer bid.

 

Serafino Iacono, Executive Chairman of Gran Colombia, stated, “We are pleased to see Mr. Sprott, a well-known gold investor, increase his stake in Gran Colombia to over 10% and to welcome investment from other key strategic and institutional investors. While our operations continue to generate free cash flow, we believe the opportunity to apply a significant portion of the net proceeds of this private placement toward a further deleveraging of our balance sheet creates value for our shareholders, particularly in the current gold price environment, enabling us to reduce our debt service ahead of schedule and preserving for our shareholders the gold premium we would otherwise be paying on the Gold Notes we intend to redeem.”

 

Prior to completion of the Private Placement, Mr. Sprott owned or controlled 3,260,870 common shares and 3,260,870 warrants of the Company, which represented 6.09% of the issued and outstanding common shares of Gran Colombia on a non-diluted basis and approximately 11.48% on a partially diluted basis. Through the Private Placement, 2176423 Ontario Ltd., a corporation that is beneficially owned by Mr. Sprott, acquired 3,571,429 Units of Gran Colombia at a price of CA$5.60 per Unit for a total investment of CA$20 million. As a result of the Private Placement, when combined with existing holdings, Mr. Sprott beneficially owns or controls 6,832,299 common shares and 6,832,299 warrants of the Company representing 11.24% of the issued and outstanding common shares of Gran Colombia on a non-diluted basis and approximately 20.20% of the issued and outstanding common shares of Gran Colombia assuming only the exercise of the warrants. This represents an increase in the number of common shares held or controlled by Mr. Sprott by 5.15% on a non-diluted basis and by 8.72% on a partially diluted basis. Mr. Sprott has undertaken not to exercise more than 1,784,471 warrants acquired in the Private Placement without prior approval of the Toronto Stock Exchange and until shareholder approval (excluding the votes of 2176423 Ontario Ltd. and its “associates” and “affiliates”, as those terms are defined by the TSX Company Manual) has been received. Gran Colombia intends to seek the requisite approval from shareholders at its annual and special meeting to be held in early June 2020. The Units were acquired by Mr. Sprott for investment purposes. Mr. Sprott has a long-term view of the investment and may acquire additional securities of Gran Colombia including on the open market or through private acquisitions or sell securities of Gran Colombia including on the open market or through private dispositions in the future depending on market conditions, reformulation of plans and/or other factors that Mr. Sprott considers relevant from time to time. 2176423 Ontario Ltd.’s early warning report will appear on Gran Colombia’s profile on SEDAR at www.sedar.com  and may also be obtained by calling Mr. Sprott’s office at (416) 945-3294 (200 Bay Street, Suite 2600, Royal Bank Plaza, South Tower, Toronto, Ontario M5J 2J1).

 

In addition, through the Private Placement, MM Asset Management Inc. on behalf of MMCAP International Inc. SPC acquired 1,785,714 Units of Gran Colombia at a price of CA$5.60 per Unit for a total investment of CA$10 million. Prior to completion of the Private Placement, MMCAP owned or controlled 4,868,431 common shares and CA$18 million of convertible debentures of the Company, which represented 9.09% of the issued and outstanding common shares of Gran Colombia on a non-diluted basis and approximately 15.10% on a partially diluted basis. As a result of the Private Placement, when combined with existing holdings, MMCAP beneficially owns or controls 6,654,145 common shares, 1,785,714 warrants and CA$18 million of convertible debentures of the Company representing 10.94% on a non-diluted basis and approximately 18.42% of the issued and outstanding common shares of Gran Colombia assuming only the exercise of the warrants and convertible debentures beneficially owned or controlled by MMCAP. This represents an increase in the number of common shares held or controlled by MMCAP by 1.85% on a non-diluted basis and by 3.32% on a partially diluted basis. The securities were acquired in the ordinary course of business, for investment purposes only and not for the purpose of exercising control or direction over the Company. Depending on market conditions and other factors, MM Asset, on behalf of MMCAP, may in the future increase or decrease its ownership, control or direction over securities of the Company through open market transactions, private agreements or otherwise.

 

About Gran Colombia Gold Corp.

 

 

Gran Colombia is a Canadian-based mid-tier gold producer with its primary focus in Colombia where it is currently the largest underground gold and silver producer with several mines in operation at its Segovia and Marmato Operations. Gran Colombia is continuing to focus on exploration, expansion and modernization activities at its high-grade Segovia Operations and, through a spin out transaction with Bluenose Gold Corp. announced on October 7, 2019, is progressing toward a major expansion and modernization of its underground mining operations at the Marmato Project.

 

Posted February 6, 2020

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