Southern Gold Ltd.said April 1 that it has signed a binding term sheet with certain lenders for aconvertible debt facility totaling A$1.0 million.
The A$1.0 million facility will be available as a single drawdown,repayable by June 30, 2017, with a 2% arrangement fee and an 8% interest rate —payable in cash — calculated semi-annually in arrears.
While the debt is unsecured, it is nominally backed by the issuanceof call options to the lenders — 1,388,888 call options at 32 Australian cents eachand 1,388,888 call options at 40 cents apiece, with all options expiring June 30,2017.
The options will be unlisted and non-transferrable. Proceedsfrom the exercise of the options before the full repayment of the debt will be usedto repay the loan as the exercise of the options in full will raise the debt amountof A$1.0 million.
Southern Gold plans to use the proceeds from the facility tofund diamond drilling and extend JORC resources in preparation for potential undergroundmining at the Cannongold project in Western Australia and to advance its other projects, as well asfor general working capital.
According to the miner, it is now fully funded to advance itsprojects for the next several years with the new facility, the from Metals X Ltd. — its partner in the development of the Cannonproject — and the anticipated cash flow from the Cannon mine, which is expectedat the end of 2016.