Mr. Taj Singh reports
DISCOVERY METALS ANNOUNCES C$25.0 MILLION PRIVATE PLACEMENT WITH C$10.0 MILLION INVESTMENT FROM ERIC SPROTT
Discovery Metals Corp. intends to complete a non-brokered private placement to raise up to $25-million through the issuance of up to 45,454,545 units at a price of 55 cents per unit. Each unit comprises one common share of Discovery and one-half of one common share purchase warrant, with each full warrant exercisable at 77 cents for a period of two years after the date of issuance.
Eric Sprott has agreed to invest $10-million in the private placement on the acquisition of 18,181,818 units. Assuming the private placement is fully subscribed, this investment will result in Mr. Sprott holding approximately 24.4 per cent of Discovery's issued and outstanding common shares, postclosing.
Taj Singh, president and chief executive officer of Discovery, commented: "The strong investment interest in Discovery is a clear reflection of the exposure and leverage that our Cordero project provides to a rising silver price. It is also indicative of the very favourable investment case for silver considering the current gold-silver ratio of 107:1 is markedly higher than the 50-year average of approximately 60:1. Upon completion of this financing Discovery will have over $40-million of cash on its balance sheet -- this positions Discovery as one of the best financed silver exploration companies in the industry and provides the firepower to aggressively advance Cordero and to accelerate our exploration efforts on the surrounding regional property package."
The proceeds of the private placement will be used primarily to finance Discovery's continuing exploration program at its Cordero project and its Coahuila projects. A portion of the proceeds will be used for general working capital purposes.
Discovery anticipates that certain insiders will acquire securities in the private placement. To the extent such insiders participate in the private placement, any such participation would be considered a related-party transaction as defined under Multilateral Instrument 61-101.
Discovery may pay a finder's fee to one or more arm's-length parties who introduce Discovery to investors, in accordance with the policies of the TSX Venture Exchange. Clarus Securities Inc. and Sprott Capital Partners LP are acting as advisers to Discovery and finders for North American investors and Arlington Group Asset Management Ltd. has been engaged to provide advice on the private placement with European and Australasian institutions. The securities issued will be subject to a four-month-and-one-day statutory hold period from the date of issuance. Closing of the private placement remains subject to TSX Venture Exchange approval.
About Discovery Metals Corp.
Discovery Metals is focused on historic mining districts in Mexico. Discovery's flagship is its 100-per-cent-owned Cordero silver project in Chihuahua state, Mexico. The 35,000-hectare property covers a large district that hosts the announced resource as well as numerous exploration targets for bulk-tonnage diatreme-hosted, porphyry-style and carbonate replacement deposits. In addition, Discovery is also exploring multiple high-grade carbonate replacement-style silver-zinc-lead showings in a land package of approximately 150,000 hectares in Coahuila state, Mexico. The landholdings contain numerous historical direct ship ore workings and significant underground development, but no drill testing has ever been carried out on them.
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