|By Marketwired .||
|April 7, 2014 07:00 AM EDT||
TORONTO, ONTARIO -- (Marketwired) -- 04/07/14 -- EPM Mining Ventures Inc. (TSX VENTURE: EPK) (OTCQX: EPKMF) ("EPM" or the "Company") is pleased to announce that it has entered into a binding term sheet with Extract Capital LP ("Extract") for a US$2.5 million loan ("Extract Loan"). In addition, EPM has entered into a binding term sheet with certain Directors of the Company (the "Directors") for a US$700,000 loan ("Director Loan" and collectively with the Extract Loan, the "Financing"). The Financing will be used by the Company to fund operations and project-related activities for its Sevier Lake Playa Sulphate of Potash Project located in southwestern Utah.
Lance D'Ambrosio, Chief Executive Officer of EPM stated, "This is a very significant financing for the Company. We have created an alternative that minimizes dilution for our shareholders and gives us the funds necessary to continue developing what we believe to be a world-class SOP asset. Most importantly, this will allow us to advance the project and accomplish milestones related to our feasibility and permitting activities."
"This financing provides important liquidity for the company," said De Lyle Bloomquist, a director of EPM and President of the Global Chemical Business of Tata Chemicals Limited. "Tata continues to support the project and will assist in progressing the broader financing strategies to fund the remaining preconstruction milestones and transition the project to its ultimate construction phase."
Under the terms of the Extract Loan, the Company will borrow the principal sum of US$2.5 million issued at a 2% discount to par with a term of 60 months. The Extract Loan will bear interest at a variable rate equal to U.S. 12-month LIBOR plus 650 basis points ("bps") per annum calculated on the outstanding principal on a 360-day/year basis. At the Company's option, it may elect to capitalize monthly interest at a rate of U.S. 12-month LIBOR plus 850 bps. LIBOR shall have a minimum of 200 bps for the purposes of interest rate calculation. Additionally, the Company will issue to Extract 1,500,000 common shares, and 750,000 common share purchase warrants (the "Extract Warrants"). The Extract Warrants shall have an exercise price of $0.36 per share, which is a 100% premium to the volume weighted average price ("VWAP") of the common shares over the twenty (20) days before the date of acceptance of the Extract term sheet, and be exercisable for a period that is 5 years from the closing date of the Extract Loan.
The Company will provide Extract with a production fee of US$1.70/tonne of production of sulphate of potash. The production fee may be repurchased at any time by the Company for a lump sum payment equal to: a) US$250,000 if the Extract Loan is repaid in full on or before 6 months from the closing date; b) US$750,000 if the Extract Loan is repaid after 6 months and on or before 12 months from the closing date; c) US$1,000,000 if the Extract Loan is repaid after 12 months and on or before 18 months from the closing date; and d) US$1,500,000 if the Extract Loan is repaid after 18 months from the closing date. Extract shall receive a 3% arrangement fee at closing and shall be reimbursed by the Company for its transaction related expenses up to a maximum of US$100,000. Extract shall also be entitled to a US$50,000 break fee, if, within 60 days, the closing conditions of the Company have not been met or the Company elects not to execute the definitive loan agreements.
Under the terms of the Director Loan, the Company will borrow the principal sum of at least US$700,000 with a term of 24 months. Interest shall accrue monthly in arrears and shall be computed on a monthly basis at Director's cost of debt capital ("Director's Rate") plus 850 bps per annum of the outstanding loan amount calculated on a 360-day/year basis. The Director's Rate shall have a minimum of 200 bps for calculation of the interest rate. Additionally, the Company will issue the Directors an aggregate of 1,050,000 common share purchase warrants (the "Director Warrants"). The Director Warrants shall also have an exercise price of $0.36 per share and be exercisable for a period that is 2 years from the closing date of the Director Loan.
Lance D'Ambrosio, the Chief Executive Officer and a director of the Company, Daniel Basse, a director of the Company, and Theodore Botts, a director of the Company are participating in the Director Loan. The participation by each of Mr. D'Ambrosio, Mr. Basse and Mr. Botts is considered "related party transaction" for the purposes of Multilateral Instrument 61-101 ("MI 61-101"). However, their participation is not subject to the minority approval and formal valuation requirements under MI 61-101 since there is an applicable exemption from these requirements as neither the fair market value of the subject matter, nor the fair market value of the consideration for the transaction, insofar as it involves the interested parties, exceeds 25% of EPM's market capitalization. Mr. D'Ambrosio, Mr. Basse, and Mr. Botts abstained from voting at the meeting of the board of directors held to approve the Financing.
Following the completion of the Director Loan, Mr. D'Ambrosio will own and control 750,000 warrants, 35,000 common shares, representing approximately 0.05% of the issued and outstanding common shares on an undiluted basis, and 12,174,673 non-voting common shares, representing approximately 33.5% of the issued and outstanding non-voting common shares on an undiluted basis; Mr. Basse will own and control 75,000 warrants, 420,689 common shares, representing approximately 0.5% of the issued and outstanding common shares on an undiluted basis, and 686,306 non-voting common shares, representing approximately 1.9% of the issued and outstanding non-voting common shares on an undiluted basis; and Mr. Botts will own and control 225,000 warrants and 1,594,317 common shares, representing approximately 2.1% of the issued and outstanding common shares on an undiluted basis. The issuance of the warrants to Mr. D'Ambrosio, Mr. Basse and Mr. Botts would not represent a material change in their respective ownership of the Company.
Under the terms of the Financing, the Company will provide a perfected senior security interest in substantially all of the Company's assets. The Financing is anticipated to close on or before April 30, 2014 and is subject to regulatory approval. The securities issued under the Financing will be subject to a four month and a day hold period.
Furthermore, the Company is pleased to announce that it has completed the share repurchase transaction it announced on March 27, 2014. Pursuant to the transaction, the Company repurchased and cancelled 31,370,400 common shares and issued an equivalent number of non-voting common shares. As of the date hereof, there are 76,923,057 common shares and 36,302,832 non-voting common shares. The transaction was effected to assist the Company to achieve its "foreign private issuer" status under applicable United States securities laws. In addition, the Company has also approved certain amendments to its Relationship Agreement, dated September 2, 2011, with Gusiute Holdings (UK) Limited - an indirect wholly-owned subsidiary of Tata Chemicals Limited.
About EPM Mining Ventures
EPM Mining Ventures Inc. is an exploration-stage company focused on specialty fertilizers. Through Peak Minerals Inc., its indirect wholly-owned subsidiary, EPM controls directly or through agreement mineral leases on more than 124,000 acres on its Sevier Lake Playa property in Millard County, Utah. With a brine resource known to contain potassium, magnesium, sulphate, lithium and a suite of other beneficial minerals, EPM is targeting the development and production of specialty fertilizers, including SOP, through the use of a cost-effective solar evaporation process. SOP and other specialty fertilizers are used in the production of high value, chloride-sensitive crops such as fruits, vegetables, and tree nuts. With the recent completion of a Preliminary Feasibility Study, the Company is currently engaged in engineering and analysis designed to support a feasibility study, environmental permitting, and ultimately mineral production.
For more information, please visit our web site at www.epmmining.com.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, information with respect to the Financing and the use of proceeds. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "does not anticipate", or "believes" or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved". Forward-looking information is based on the opinions and estimates of management at the date the information is made, and is based on a number of assumptions and is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of EPM to be materially different from those expressed or implied by such forward-looking information, including risks associated with the exploration, development and mining such as economic factors as they effect exploration, future commodity prices, changes in foreign exchange and interest rates, actual results of current exploration activities, government regulation, political or economic developments, environmental risks, permitting timelines, capital expenditures, operating or technical difficulties in connection with development activities, employee relations, the speculative nature of SOP exploration and development, including the risks of diminishing quantities of grades of resources, contests over title to properties, and changes in project parameters as plans continue to be refined as well as those risk factors discussed in EPM's management discussion and analysis for the year ended December 31, 2012, available on www.sedar.com. Although EPM has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. EPM does not undertake to update any forward-looking information, except in accordance with applicable securities laws.
EPM Mining Ventures Inc.
Chief Executive Officer
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