Noront refuses Wyloo loan, opts for private placement
Ring of Fire nickel developer Noront Resources has turned down a loan from potential suitor Wyloo Metals and will instead opt for a private placement financing.
Noront will place 21.66-million shares at $0.283 each to raise gross proceeds of about $6.1-million.
Noront has an “immediate need for funding”, the company said in a statement on Friday, noting that the proceeds would address its near-term working capital commitments, with the remaining funds to be used to advance its portfolio of properties.
At the end of last month, 23%-shareholder Wyloo announced its intention to make an offer for Noront and indicated that it would make available a $5-million convertible loan to its takeover target.
Noront, however, said that its board, with the input of external advisers, had determined that additional debt without an ability to repay that in the near term, was not advisable for a development company that did not generate operating revenue.
Regarding the proposed offer, Noronto also pointed out that Wyloo was not permitted to start a takeover bid until an independent valuator completed a formal valuation.
Pursuant to an investor rights agreement between Noront and Wyloo, Wyloo would be entitled to acquire common shares to maintain its pro rata equity interest in the company calculated on a partially-diluted basis. If Wyloo exercises its top-up right in full, an additional 12.53-million shares would be issued to Wyloo Canada for additional gross proceeds of $3.5-million.
Baosteel Resources also has a top-up right, which if exercised in full, could result in the issuance of an additional 1.96-million shares for $0.55-million.
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