San Gold Corporation (TSX:SGR) (OTCQX:SGRCF) today announced the closing of the first tranche of a private placement offering of senior secured convertible notes. At the first closing, San Gold issued US$23,750,000 aggregate principal amount of Notes to institutional subscribers.
 

The Notes will bear interest with an annual coupon of 11 per cent and represent direct senior secured obligations of San Gold. The Notes have a term of three years, are due at maturity, and are redeemable at a declining premium. Each Note is convertible into common shares of San Gold at the option of the holder at a price of US$0.2545 (currently CDN$0.28) per share at any time while the Notes remain outstanding, subject to certain anti-dilution provisions. The Notes will not be listed for trading on the Toronto Stock Exchange or any other exchange. In addition, San Gold entered into financial offtake agreements with each of the subscribers for Notes whereby such subscribers would receive settlement payments based on 40% of the gold production from San Gold’s Rice Lake operation for a period of three years.
 

San Gold anticipates that it will determine whether or not to seek formal approval for the second tranche of the offering in the next few months. The second tranche of the placement for an additional US$36,250,000 principal amount of Notes and US$5,000,000 of Common Shares of San Gold, is subject to various conditions, including regulatory, stock exchange and shareholder approval and San Gold’s requirement for additional funds.
 

The proceeds from the offering will be used to fund continued development of San Gold’s mineral properties, in particular the Rice Lake Complex, and for general working capital purposes.
 

“We are extremely pleased to complete this financing on the heels of a very challenging market period. This placement significantly strengthens the Company’s balance sheet. It gives us the confidence to advance capital projects associated with the integration of our Rice Lake and Hinge/007 mines and optimize our mine plan to improve margins across all aspects of the Company,” said Ian Berzins, San Gold’s President, CEO and Chief Operating Officer.
 

All Notes issued are subject to a four month hold period.
 

Fairfax Securities Corporation D/B/A Jett Capital Advisors LLC acted as agent for the offering.
 

The securities referred to in this news release have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from the U.S. registration requirements. This news release does not constitute an offer for sale of securities for sale, nor a solicitation for offers to buy any securities. Any public offering of securities in the United States must be made by means of a prospectus containing detailed information about the company and management, as well as financial statements.
 

About San Gold
 

San Gold is an established Canadian gold producer, explorer, and developer that owns and operates the Rice Lake Mining Complex near Bissett, Manitoba. The Company employs more than 420 people and is committed to the highest standards of safety and environmental stewardship.