Mr. Dev Shetty reports
FURA ANNOUNCES OVER-SUBSCRIBED CAD$30.92 MILLION PRIVATE PLACEMENT AND ACQUISITION OF AUSTRALIAN SAPPHIRE MINING PROJECT
Fura Gems Inc.'s non-brokered private placement offering of up to 121.5 million common shares of the company for gross proceeds of up to $30,375,000 that was previously announced on May 15, 2019, has been oversubscribed by Lord of Seven Hills Holdings FZE. The company has entered into an option agreement to acquire 100-per-cent interests in two mining permits (EPM 25973 and EPM 25978) and three mining licences (ML 70419, ML 70447 and ML 70451) for a sapphire mining project in Queensland, Australia.
Dev Shetty, president and chief executive officer of Fura, commented:
"We are pleased with the response to our capital raise and we believe that securing this funding will significantly accelerate our plans in Colombia and Mozambique and move the company along the path to revenue generating mining operations. In addition, our anticipated entry into sapphire gemstone mining in Australia represents the final leg of Fura's journey to hold properties containing deposits of all the big three coloured gemstones (being rubies, emeralds and sapphires). We believe this approach adds value to both the gemstone industry and our shareholders. Although the sapphire project in Australia is already a producing mine, we intend to more clearly delineate the deposit during the second half of this year and scale up operations in 2020."
The company has entered into a subscription agreement with Seven Hills pursuant to which Seven Hills agreed to subscribe for 123.66 million common shares of the company at a price of 25 cents per share for gross proceeds of $30,915,000. This represents an increase of 2.16 million common shares of the company and an additional $540,000 of gross proceeds. The closing date for the offering was also extended to Aug. 2, 2019.
Seven Hills is a marketing agent for the supply of high-grade manganese ore and has an investment division which invests and handles a diversified investment portfolio across the industry. Seven Hills is incorporated under the laws of Fujairah Free Zone Authority, Fujairah, United Arab Emirates.
As a result of the number of common shares that the company intends to issue to Seven Hills under the offering, and Seven Hills acting jointly or in concert with Gaurav Gupta, a beneficial shareholder of Fura and one of its directors, the company must obtain disinterested shareholder approval for:
- The creation of each of Seven Hills, the sole shareholder of Seven Hills and Gaurav Gupta's wholly owned company, Sesa Global Inpex FZE, as a control person (as that term is defined under TSX Venture Exchange Policy 1.1 -- Interpretation), in accordance with the applicable policies of the TSX-V;
- Seven Hills' participation in the offering as a related-party transaction pursuant to Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions.
The company has set Aug. 2, 2019, as the date on which the company's annual general and special meeting will be held. The company intends to receive majority support from disinterested shareholders for each new control person and the related-party transaction at the meeting. To the best knowledge of the company's management, only Seven Hills, the Seven Hills shareholder and Sesa will be excluded from voting their shares at the meeting for each new control person and the related-party transaction.
The net proceeds of the offering are expected to be used for: (i) the advancement of Fura's Coscuez emerald project in Colombia and ruby assets in Mozambique; (ii) the closing of the acquisition first announced on July 26, 2018, of a 100-per-cent interest in ruby prospecting licence 5572L in the Montepuez district of Cabo Delgado province in Mozambique; (iii) the closing of the merger of ruby assets transaction first announced on July 16, 2018, respecting the company's acquisition of (A) 75 per cent of the issued shares of Montepuez Minerals Pty. Ltd., which owns a 70-per-cent interest in mining licence 5030L, and an 80-per-cent interest in mining concession 8921C; and (B) a right to earn a 65-per-cent interest in mining concession 8955C under a joint venture agreement; and (iv) general corporate purposes.
The closing date of the offering is expected to occur on or about Aug. 2, 2019, and remains subject to receipt of all necessary regulatory approvals, including the approval of the TSX-V. Fura is not paying any finders' fees in connection with the offering. The common shares of the company issued pursuant to the offering will be subject to a regulatory hold period of four months and one day.
Fura has entered into an option agreement dated June 26, 2019, with Richland Resources Ltd. Pursuant to the agreement, Fura has been granted an option valid until July 31, 2019, to acquire from Richland Resources Ltd.: (i) all of the issued shares of the vendor's wholly owned subsidiary, Richland Corporate Ltd., and (ii) all of the vendor's loans to Richland Corporate. Richland Corporate owns 100 per cent of Capricorn Sapphire Pty. Ltd., which in turn holds all of the licences that make up the Capricorn sapphire project in Queensland, Australia.
The aggregate purchase price pursuant to the agreement is as follows:
- $150,000 in cash paid to the vendor as an option fee payment, $25,000 payable upon signing the agreement and the remaining $125,000 payable within seven days thereafter;
- $185,000 (U.S.) in cash to the vendor on the closing of the acquisition;
- 4,859,825 common shares of the company issued to the vendor on the closing of the acquisition;
- $90,000 (U.S.) in cash to the vendor on the closing of the acquisition for certain expenses in respect of the project incurred by the vendor;
- Such number of common shares of the company issued to the vendor equivalent to $150,000 (Australian) based on the Canadian dollar/Australian dollar exchange rate published by the Bank of Canada on the day immediately before the closing of the acquisition, divided by the lower of (i) the 30-day volume-weighted average traded price per common share of Fura (calculated to the nearest one-100th of one cent) on the TSX-V on the day before the closing of the acquisition; and (ii) the closing share price of Fura's shares on the date before the issue of Fura's shares to the vender, to partially refund the vendor for financial assurance deposits of $371,911 (Australian) lodged by the vendor on behalf of Capricorn Sapphire;
- 18 months after closing of the acquisition, Fura is to pay the vendor a further $221,911 (Australian) in cash (less any environmental liability claims made against the financial assurance deposits by the relevant government authorities), being the refund of the balance of the financial assurance deposits.
The common shares of the company issued to the vendor in connection with the acquisition will be subject to a regulatory hold period of four months and one day from the closing of the acquisition.
The vendor is liable to pay a termination fee of $400,000 in the event that: (i) the vendor's board of directors does not unanimously recommend the acquisition to the vendor's shareholders or withdraws its unanimous recommendation and the vendor's shareholders do not approve the acquisition; or (ii) the vendor breaches the exclusivity provisions as summarized in the agreement.
Fura is liable to pay a termination fee of $400,000 to the vendor if it breaches its covenant not to enter into any potential alternative transaction involving sapphire mining in Australia or any other transaction or action that could prevent the parties from consummating the acquisition.
The acquisition is an arm's-length transaction for the purposes of the policies of the TSX-V and is subject to the approval of the TSX-V. Fura is not paying any finders' fees in connection with the acquisition. The closing of the acquisition is subject to the satisfaction of customary conditions precedent on or before the Oct. 31, 2019, long-stop date, including, inter alia, the vendor's shareholders' approval, receipt of customary Bermuda Monetary Authority authorizations, completion of the renewals of ML 70419 and ML 70447, approval of the TSX-V, approval of the Alternative Investment Market, and the provision of applicable legal opinions concerning the title to the licences.
About Fura Gems Inc.
Fura Gems is a gemstone mining and marketing company, which is engaged in the mining, exploration and acquisition of gemstone licences. Fura's headquarters is located in Toronto, Canada, and its administrative headquarters is located in the Almas tower, Dubai.
Fura is engaged in the exploration of resource properties in Colombia and owns a 76-per-cent interest in the Coscuez emerald mine in Boyaca, Colombia. Fura is also involved in the exploration and mining of rubies in Mozambique through its 80-per-cent effective interest in four ruby licences (4392, 3868, 3869 and 6811).
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