Caldas Gold Announces US$90 Million Gold-Linked Senior Secured Note Offering

Caldas Gold (TSXV: CGC) this morning announced the terms for its private placement offering, which is for up to US$90 million of subscription receipts, which will be used to finance the expansion of the firms mining operations at the Deeps Zone at the Marmato Project in Caldas, Colombia. Notably, the receipts will see amortization occur based on the current price of gold.

Subscription receipts are being offered at a price of $1,000 per unit, with each unit containing one senior secured gold linked note along with 200 common share purchase warrants. Each warrant contains an exercise price of $2.75 and an expiry of July 29, 2025.

The notes themselves are interesting in that they are linked to the price of gold. The senior secured notes will have a seven year term, while bearing interest at a rate of 7.5% per annum, paid monthly following the conversion event. The debt will link pari passu to all current and future senior debt of the company.

Beginning in 2021, the company will set aside specified amounts of physical gold into what is referred to as the gold trust account. To be sold off quarterly, proceeds from the sale of gold in this account will be used to amortize the principal of the senior secured notes, with a floor price of US$1,400 per ounce of gold being set. The amount of gold placed into this account begins with 4,286 ounces in the second year, and expands to 13,500 ounces by the fourth year. A total of 64,286 ounces of gold will be deposited in the account through the life of the arrangement, with the company set to benefit from the rising price of gold.

Further, $13.5 million of the initial proceeds are to be placed into an escrow account to fund interest obligations in the first two years of the note while expansion continues on site.

The financing is expected to close by August 26, 2020.

Caldas Gold last traded at $2.33 on the TSX Venture.


Information for this briefing was found via Sedar and Caldas Gold. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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