Lomiko Metals Inc. (LMR:CA) (LMRMF) has signed an agreement with an undisclosed private lender in Europe for a $5-million convertible loan, subject to TSX Venture Exchange approval. Upon approval, the loan shall be disbursed via a secured and authorized financial intermediary facility provider appointed with the consent of both parties.
The use of proceeds for the loan would be the completion of drilling, resource, metallurgy, graphite characterization and pre-economic assessment (PEA) and estimated completion of 100-per-cent purchase of the La Loutre property.
After completion of the work on the property, Lomiko will seek further equity financing to repay the loan in its entirety and/or seek additional funding structures for prefeasibility and feasibility studies. The loan will bear interest on all amounts outstanding, at a fixed annual interest rate of 4.0 per cent, payable on a yearly basis. The first interest payment is due April 25, 2019. All, or part of the loan principal, may be convertible to common shares at 50 cents per share at the end of the loan period, only when such conversion does not create an equity position of greater than 20 per cent of the company’s issued shares. The investor has no intention of seeking a controlling interest or change of directors or management. At the time of conversion, if the lender becomes an insider of the company, all applicable TSX-V filings will be completed.
The agreement is not considered a binding agreement on either party until a transfer of funds has been approved and completed.
The loan will rank senior to all other indebtedness of company. Further, the tangible and intangible assets of the company, including receivables, ownership of subsidiaries and intellectual property, are considered secondary security.
The transaction is subject to the approval of the TSX Venture Exchange and the Lomiko board of directors.
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