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Oceanic Announces Completion of Non-Brokered Convertible Debenture Financing

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Oceanic Announces Completion of Non-Brokered Convertible Debenture Financing

 

 

 

 

 

Oceanic Iron Ore Corp. (TSX-V: FEO) is pleased to announce the completion of a non-brokered financing in an aggregate amount of $1,812,500.

 

The subscribers to the Financing will be issued Series B convertible debentures which will earn interest at a rate of 8.5% per annum over a 60 month term, payable quarterly.

 

The principal amount of the Debentures will be convertible to units (“Unit”) during the Term at the election of the subscriber.  The conversion price during the first year of the term is $0.05 per Unit, increasing to $0.10 per Unit for the remainder of the Term.  Each Unit will consist of one common share of the Issuer and one share purchase warrant of the Issuer, with each whole warrant entitling the holder to purchase one common share of the Issuer at a price of $0.05 per common share, expiring November 29, 2023.

 

The Debentures will be secured with a first ranking charge against the assets of the Issuer, ranking pari-passu with the current secured debenture holders.

 

The Debentures and any Units acquired on conversion thereof are subject to a hold period expiring on March 30, 2019.  No finder’s fees were paid in connection with the Financing.

 

The Issuer intends to use the proceeds of the Financing to fund a revised and re-scoped National Instrument 43-101 Preliminary Economic Assessment in respect of the Issuer’s Hopes Advance Project, as previously announced on November 1, 2018. The Study will revise the profile and production schedule of Hopes Advance in order to reduce the up-front capital required to bring the project to commercial production. The proceeds from the Financing will also be used to fund ongoing negotiations with potential strategic partners, general claims maintenance, and corporate and working capital purposes.

 

 

Insiders of the Issuer were issued Debentures with a principal amount in aggregate of $725,000, and, accordingly, the private placement is a “related party transaction” within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions.  The issuance of Debentures to insiders is exempt from the valuation requirements and the minority approval requirements of MI 61-101 by virtue of the exemptions in sections 5.5(a) and 5.7(a) of MI 61-101, since the fair market value of the consideration for the Debentures issued to insiders did not exceed 25% of the Issuer’s market capitalization.

 

Early Warning Disclosure – Frank Giustra

 

Pursuant to the Financing, Canada Life Ltd., an investment account controlled and directed by Mr. Frank Giustra, acquired a Debenture of the Issuer in the principal amount of $500,000 which is convertible into 10,000,000 common shares and 10,000,000 warrants if converted in the first year.  In addition to the Debenture, Mr. Giustra, directly and indirectly, now owns and/or controls, in aggregate, 7,714,850 common shares, representing 11.24% of the current issued and outstanding common shares of the Issuer and a $200,000 Series A convertible debenture of the Issuer convertible into 2,000,000 common shares and 2,000,000 warrants.  Assuming conversion of both the Series A convertible debenture and the Debenture and the exercise of the underlying warrants, Mr. Giustra would own and/or control, directly and indirectly, 31,714,850 common shares, representing 34.24% of the issued and outstanding common shares of the Issuer on a partially diluted basis.

 

The Issuer has been advised that Mr. Giustra acquired the Debenture for investment purposes and may in the future acquire or dispose of securities of the Issuer, through the market, privately or otherwise, as circumstances or market conditions warrant.

 

Early Warning Disclosure – Steven Dean

 

Pursuant to the Financing, Sirocco Advisory Services Ltd., a corporation owned and controlled by Steven Dean, acquired a Debenture in the principal amount of $115,000. The Debenture is convertible into 2,300,000 units of the Issuer of a price of $0.05 per unit until November 29, 2019 and thereafter into 1,150,000 units of the Issuer at a price of $0.10 per unit until November 29, 2023. Each unit will consist of one common share of the Issuer and one warrant, each warrant entitling the holder to purchase one common share of the Issuer at a price of $0.05 per share from the date of issuance until November 29, 2023.

 

Prior to acquiring the Debenture, the Mr. Dean held, directly and indirectly, or had control or direction over, over an aggregate of 1,239,804 common shares of the Issuer representing approximately 1.81% of the issued and outstanding common shares of the Issuer, 1,641,700 stock options of the Issuer, a Series A Debenture in the principal amount of $33,000 convertible into 330,000 units of the Issuer, each unit consisting of one common share and one warrant of the Issuer, and restricted share units convertible into 333,333 common shares of the Issuer.

 

Mr. Dean would have held, directly and indirectly, or had control or direction over, an aggregate of 3,874,837 common shares of the Issuer, representing approximately 5.44% of the issued and outstanding shares on a partially diluted basis assuming the exercise of the stock options, conversion of the Series A Debenture and exercise of the underlying warrants, and conversion of the restricted share units. 

 

Following acquisition of the Debenture, Mr. Dean holds, directly and indirectly, or has control or direction over, an aggregate of 1,239,804 common shares of the Issuer, representing approximately 1.81% of the issued and outstanding common shares of the Issuer, 1,641,700 stock options of the Issuer, a Series A Debenture in the principal amount of $33,000 convertible into 330,000 units of the Issuer, each unit consisting of one common share and one warrant of the Issuer, restricted share units convertible into 333,333 common shares of the Issuer, and the Debenture convertible into 2,300,000 units of the Issuer of a price of $0.05 per unit until November 29, 2019 and thereafter into 1,150,000 units of the Issuer at a price of $0.10 per unit until November 29, 2023, each unit consisting of one common share of the Issuer and one warrant, each warrant entitling the holder to purchase one common share of the Issuer at a price of $0.05 per share from the date of issuance until November 29, 2023.

 

Mr. Dean would hold 8,474,837 common shares of the Issuer, representing approximately 11.17% of the issued and outstanding common shares on a partially diluted basis assuming the exercise of the stock options, conversion of the Series A Debenture and exercise of the underlying warrants, conversion of the restricted share units and conversion of the Debenture at a price of $0.05 per unit and exercise of the underlying warrants.

 

The Issuer has been advised that Mr. Dean acquired the securities for investment purposes and may in the future acquire or dispose of additional securities of the Issuer through the market, privately, or otherwise, as circumstances or market conditions warrant.

 

Posted November 30, 2018

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