Gran Colombia closes C$40m private placement
Midtier gold producer Gran Colombia Gold on Thursday announced that it has closed its previously announced nonbrokered private placement of 7.14-million units at a price of C$5.60 apiece for total proceeds of C$40-million.
Each unit comprises one common share and one common share purchase warrant exercisable into a full common share at C$6.50 a share, expiring on February 6, 2023.
Gran Colombia will use a portion of the net proceeds of the private placement to redeem 30%, equivalent to $19.16-million, of the aggregate principal amount outstanding of its 8.25% senior secured gold-linked notes due 2024, reducing the aggregate principal amount outstanding to $44.71-million.
The redemption price will be equal to 100% of the aggregate principal amount of the gold notes redeemed plus the applicable premium calculated in accordance with the provisions of the gold notes indenture, currently estimated to be about 10%.
The balance of the proceeds will be used for general working capital and corporate purposes, including potential repurchases of the company’s listed warrants under its normal course issuer bid.
“We are pleased to see [Eric] Sprott, a well-known gold investor, increase his stake in Gran Colombia to over 10% and to welcome investment from other key strategic and institutional investors,” commented Gran Colombia executive chairperson Serafino Iacono.
“While our operations continue to generate free cash flow, we believe the opportunity to apply a significant portion of the net proceeds of this private placement toward a further deleveraging of our balance sheet creates value for our shareholders, particularly in the current gold price environment, enabling us to reduce our debt service ahead of schedule and preserving for our shareholders the gold premium we would otherwise be paying on the gold notes we intend to redeem,” he added.
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