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TORONTO, Feb. 20, 2019 /CNW/ - Mandalay Resources
Corporation ("Mandalay" or the "Company") (TSX: MND, OTCQB:
MNDJF) announced today, further to its news releases dated
February 11, 2019 and February 12, 2019, that the Company has completed
its underwritten marketed public offering of subscription receipts
(the "Subscription Receipts") at a price of C$0.12 per Subscription Receipt (the "Offering
Price"). A total of 359,400,000 Subscription Receipts were sold for
gross proceeds of approximately C$43M
(the "Public Offering"), which included a partial exercise of the
over-allotment option granted by the Company to the underwriters to
purchase up to an additional 15% of the number of Subscription
Receipts offered pursuant to the Public Offering at the Offering
Price.
Concurrent with the closing of the Public Offering, the Company
has also closed the US$8M convertible
bridge loan (the "Bridge Loan" and collectively with the Public
Offering, the "Financing") from an affiliate of CE Mining Fund III
L.P. ("CE Mining"), an investment fund advised by Plinian Capital
Limited, which is controlled by Brad
Mills, Chairman of Mandalay's board of directors.
The Subscription Receipts were issued pursuant to a subscription
receipt agreement. The gross proceeds of the Public Offering less
50% of the underwriters' commission payable in connection with the
Public Offering (the "Escrowed Proceeds"), are being held in escrow
in an interest bearing account with Computershare Trust Company of
Canada, as subscription receipt
agent. Upon satisfaction or waiver of certain escrow release
conditions (the "Escrow Release Conditions"), including the receipt
of all required shareholder approvals at a special meeting of
Mandalay's shareholders to be held March 29,
2019 (the "Special Meeting"), the remaining 50% of the
underwriters' commission and the underwriters' expenses will be
released to the underwriters, the remaining Escrowed Proceeds will
be released to the Company and each Subscription Receipt will be
exchanged for one common share of the Company (a "Common Share"),
subject to adjustment in certain circumstances.
If the Escrow Release Conditions are not satisfied by
April 30, 2019, holders of the
Subscription Receipts will receive an amount per Subscription
Receipt equal to the Offering Price together with a pro-rata share
of any interest earned on the Escrowed Proceeds. If the Escrowed
Proceeds (plus accrued interest) are not sufficient to make such
payment, the Company will contribute such amounts as are necessary
to satisfy any shortfall.
The Bridge Loan has a term of one year, bears interest at a rate
of 10% and, following the Special Meeting, will be convertible at
CE Mining's option into Common Shares at a price per share equal to
C$0.108, subject to adjustment. If
the Escrow Release Conditions are satisfied, the Bridge Loan will
automatically be converted into Common Shares concurrently with the
exchange of Subscription Receipts for Common Shares. For further
details regarding the terms of the Bridge Loan, please refer to the
Company's February 11, 2019 press
release.
In connection with the closing of the Bridge Loan, the Company
obtained a waiver from HSBC Bank Canada ("HSBC") under the
Company's revolving credit facility with HSBC (the "HSBC
Facility"). HSBC has waived any current breaches of the HSBC Credit
Facility by the Company as well as any failure by the Company to
comply with the financial covenants set out in the HSBC Credit
Facility as at December 31, 2018 and
March 31, 2019. Notwithstanding these
waivers, the Company is not permitted to draw any further amounts
under the HSBC Facility until it is in compliance with the
financial covenants. In addition, from and after the date on which
the Escrow Release Conditions are satisfied or waived, the
aggregate of any undrawn portion of the HSBC Credit Facility (which
is currently US$5 million) plus the
aggregate of the Company's unrestricted cash (as defined under the
HSBC Credit Facility) must at all times be not less than
US$10 million. As a result of this
additional requirement, CE Mining has agreed to amend the terms of
the Bridge Loan such that the amount of the proceeds of the
Financing that the Company must hold in reserve in respect of its
obligations under the senior exchangeable gold bonds issued by Gold
Exchangeable Limited from US$20
million to US$15 million.
The net proceeds of the Financing are intended to fund working
capital requirements (including capital development work at
Costerfield, and tailings upgrade and capital development
requirements at Björkdal), debt restructuring (including
establishing a cash reserve relating to the US$24.1 million principal amount outstanding of
senior exchangeable gold bonds); future planned exploration
activities at high potential areas including at Costerfield, the
Youle lode and deeper hole targets, and the emerging Aurora Zone at Björkdal; and for general
corporate purposes.
About Mandalay Resources Corporation:
Mandalay is a Canadian-based natural resource company with
producing assets in Australia and
Sweden, and care and maintenance
and development projects in Chile.
The Company is focused on growing production at its gold and
antimony operation in Australia,
and gold production from its operation in Sweden to generate near term cash flow.
Forward-Looking Statements:
This news release may contain "forward-looking statements"
within the meaning of applicable securities laws. Readers are
cautioned not to place undue reliance on forward-looking
statements. Actual results and developments may differ materially
from those contemplated by these statements. There can be no
assurance that Mandalay will be able to continue to operate as a
going concern even with the completion of the Financing and
satisfaction of the Escrow Release Conditions. The factors
identified above are not intended to represent a complete list of
the factors that could affect Mandalay. A description of additional
risks that could result in actual results and developments
differing from those contemplated by forward-looking statements in
this news release can be found under the heading "Risk Factors" in
Mandalay's annual information form dated March 29, 2018, a copy of which is available
under Mandalay's profile at www.sedar.com and in the prospectus
supplement filed on February 12, 2019
by Mandalay pursuant to its (final) short form base shelf
prospectus dated February 12, 2018 in
connection with the Public Offering. Although Mandalay has
attempted to identify important factors that could cause actual
actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors
that cause actions, events or results not to be as anticipated,
estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward looking statements.
SOURCE Mandalay Resources Corporation