Toronto, Ontario--(Newsfile Corp. - January 31, 2015) - Ecuador Gold & Copper Corp. (TSXV:
EGX) (the "Company"), is pleased to announce that it has closed a
non-brokered private placement debenture offering (the "Debenture
Offering") raising aggregate gross proceeds of US$490,000 through the
issuance of senior secured convertible debentures (the "Debentures").
Aura International Services Ltd. ("Aura") has subscribed for US$395,000
together with certain other smaller shareholders of the Company under the
Debenture Offering.
The Company also wishes to announce that it has made
arrangements to settle an aggregate of up to $1,012,961 in outstanding debt (the
"Debt") owed to creditors in connection with up to $892,461 owing for
drilling, exploration, and consulting as well as up to $120,500 owing for
management and director services provided to the Company. The Company is
proposing to settle the Debt by issuing an aggregate of up to 11,255,122 common
shares (the "Debt Shares") of the Company at a deemed price of C$0.09 per
Debt Share. All Debt Shares issued to settle the Debt will be subject to a four
month hold period and the issuance of the Debt Shares will be subject to
approval of the TSX Venture Exchange.
Each Debenture bears an interest of 12% per annum with the
principal amount and interest due and payable on November 28, 2015 (the
"Maturity Date") unless converted into units (the "Units") of the
Company at a price of C$0.06 per Unit on or before the Maturity Date. Each Unit
is comprised of one common share and one-half common share purchase warrant
(each whole warrant a "Warrant") of the Company. Each Warrant entitles
the holder to acquire one additional common share of the Company at an exercise
price of C$0.10 per share for 24 months following the date of issuance. In
addition, the Company also wishes to announce that it has granted 500,000
incentive stock options to one of its directors which is exercisable at $0.10
per share and valid until January 30, 2020. The Company's Stock Option Plan
allows for the issuance of up to 10% of the total issued and outstanding share
capital in the form of incentive stock options. As a result of this grant, the
Company has a total of 14,233,819 stock options issued, representing 5.7% of the
total issued and outstanding share capital not including the Debt Shares.
Aura presently owns 129,063,587 common shares of the Company,
representing 51.3% ownership. Accordingly, Aura is a control person of the
Company under applicable securities laws and is therefore also a related party
to the Company. Consequently, the sale of Debentures to Aura is a related party
transaction, which is intended to be carried out under exemptions from the
requirements of Multilateral Instrument 61-101 - Protection of Minority
Security Holders in Special Transactions ("MI 61-101"). Under the
Debenture Offering, the Company is relying upon exemptions from the formal
valuation requirements and minority shareholder approval requirements of MI
61-101 under sections 5.5(b) and 5.7(1)(b) thereof, respectively. The Company is
not aware of any valuation of the Company or its mineral properties. The Company
is entitled to rely upon the exemption under section 5.5(b) because it is listed
only on the TSX Venture Exchange and not one of the specified markets listed
therein. Likewise, the Company is entitled to rely on the exemption under
section 5.7(1)(b) because:
(a) no securities of the issuer are listed or quoted on the
Toronto Stock Exchange, the New York Stock Exchange, the American Stock
Exchange, the NASDAQ Stock Market, or a stock exchange outside of Canada and the
United States other than the Alternative Investment Market of the London Stock
Exchange or the PLUS markets operated by PLUS Markets Group plc;
(b) at the time the transaction is agreed to, neither the fair
market value of the securities to be distributed in the transaction nor the
consideration to be received for those securities, insofar as the transaction
involves interested parties, exceeds C$2,500,000;
(c) the issuer has one or more independent directors in respect
of the transaction who are not employees of the issuer; and
(d) at least two-thirds of the directors described in
subparagraph (c) approve the transaction.
Since Aura has acquired a total of US$395,000 under this
Debenture Offering, if Aura were to convert such amount of Debentures as well as
the Warrants included in the Units and the other convertible securities of the
Company held by Aura, then Aura would (assuming an exchange rate of
C$1.1958/USD) hold approximately 176,991,824 common shares of the Company
representing 59.1% ownership of the Company, on a partially diluted basis.
The proceeds of the Debenture Offering are being used for the
Company's Condor Gold Project, in-country working capital in Ecuador, and as
additional working capital of the Company. All securities issued under the
Debenture Offering will be subject to a statutory four-month hold period from
the date of issuance.
About Ecuador Gold and Copper Corp.
Ecuador Gold and Copper Corp. is a Canadian exploration and
mining company focused on the Condor Gold Project located in the Province of
Zamora-Chinchipe in southern Ecuador. The Company is currently listed on the TSX
Venture Exchange under the symbol "EGX". For additional information, please
visit us at www.ecuadorgoldandcopper.com.
For further information please contact:
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