TORONTO (miningweekly.com) – TSX- and Frankfurt-listed Aquila Resources has closed a private placement and a silver purchase agreement for total funding of $20.75-million with Orion Mine Finance.
The development-stage company, which was focused on developing the 100%-owned Back Forty gold/zinc project, in Michigan's Upper Peninsula, said the proceeds from the transaction would be used to fund the next stage of development at Back Forty, including completing permitting activities, a feasibility study and further exploration.
Under the terms of the transaction, Aquila issued 26.92-million units to Orion – with each unit consisting of one common share and one-half of a three-year warrant to buy one common share at a strike price of $0.19 a share – at a price of $0.13 apiece for gross proceeds of $3.5-million.
Orion also bought 75% of Aquila's life-of-mine silver output from Back Forty for gross proceeds of $17.25-million, subject to a draw-down schedule. Orion would also pay an ongoing price of $4/oz of silver delivered under the streaming agreement.
Aquila would repurchase the existing royalties at Back Forty from Vale Exploration USA and HudBay Minerals for $4-million in cash and $1-million in cash and $225 000 in units – priced at $0.13 a unit – respectively.
Orion now held about 12.2% of the outstanding common shares in Aquila on a basic shares outstanding basis and 18.3% on a partially diluted basis. Orion also acquired the right to participate in any future equity or equity-linked placements to maintain its interest level in Aquila.
Orion also gained the right to nominate one individual for election to the board for 24 months and, thereafter, as long as Orion owned at least 10% of the outstanding common shares.