Emerita Resources (TSXV: EMO) has entered into a credit agreement to further advance its Iberian Belt West Project in Spain. The arrangement is said to support the company during a difficult equity market.
The credit agreement will see Nebari Natural Resources Credit Fund II provide up to US$15.0 million in funding over three tranches, the funding from which will be used for further exploration and drilling, as well as the advancement of study work and environmental permitting. The first tranche under the program, the only tranche in which Emerita is required to draw upon, is for US$6.0 million in funding, with tranche two and three for US$4.5 million each.
“This transaction with Nebari gives Emerita access to up to USD$15M of non-dilutive capital in a challenging equity environment for resource companies and allows the Company to maintain the momentum in developing its ongoing Spanish projects. [..] There are several short-term and medium-term milestones which we expect to achieve that we believe will add value to Emerita shareholders,” commented Emerita CEO David Gower.
Interest on the loan will be equal to the three-month term SOFR reference rate, subject to a floor rate of 4.00%, plus 11.50% per annum. Funds borrowed under the credit facility will have a maturity of 48 months from the close of the first tranche of the facility.
Warrants are also to be issued in connection with the financing, with the first tranche to see 100% warrant coverage, with warrants to be priced at a 25% premium to the lower of the equities market price and the 20-day volume weighted average price. The second and third tranches meanwhile will have 25% warrant coverage, with warrants to also be priced at a 25% premium.
9.96 million warrants with an exercise price of $0.825 are also to be issued, which expire 48 months after the date of issuance.
The credit facility is to be guaranteed by Emerita’s subsidiary, Emerita Resources Espana SL, which will transitioned to a first lien senior security on the IBW project and all related assets and working capital assets upon receipt of an exploitation concession for the IBW project.
Emerita Resources last traded at $0.66 on the TSX Venture.
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