-Company also enters into agreement with
subordinated debt holders
DAN: TSX-V (Canada)
JE9N: FSE (Germany)
DRRSF: OTC (USA)
SAGUENAY, QC, March 18, 2021 /CNW
Telbec/ - Arianne Phosphate (the "Company" or
"Arianne") (TSXV: DAN) (OTC: DRRSF) (FRANKFURT: JE9N), a
development-stage phosphate mining company, advancing the Lac à
Paul project in Quebec's
Saguenay-Lac-Saint-Jean region, is pleased to announce that it has
entered into an Agreement with its senior secured lender Mercury
Financing Corp. ("Mercury" or the "Lender") by which the Lender has
agreed to exercise its 26,780,000 warrants that it currently holds,
thereby reducing the amount owed under the credit facility by
roughly $6.6M to $24.9M (the "Loan"). Further, the Lender
has also agreed to extend the Loan under the credit facility for a
period of 5 years and reduce the annual interest rate to 8% from
the previous 15% (the "Loan Extension"). In conjunction with
the amended credit facility, the Lender will receive 32 million
non-transferable share purchase warrants, exercisable at a price of
$0.33 per share for a period of 5
years (the "2021 Warrants"). As well, these warrants will be
subject to a "warrant blocker" provision.
Additionally, Arianne is also please to announce that it has
also entered into Agreements with its subordinate unsecured debt
holders amounting to a total of $5,970,155 whereby these debt holders have agreed
to a conversion of their existing debt into common shares of the
Company at a price of $0.275 per
share (the "Debt Conversion"), representing the volume weighted
average price of Arianne's common shares on the TSX-V for the
previous 30 trading days.
"This is very significant news for Arianne and its
shareholders," said Brian Ostroff,
CEO of the Company. "By addressing this, Arianne has removed
a significant concern of its shareholders and put the Company on a
more solid foundation. This agreement allows Arianne to cut
its overall debt by roughly a third, extend the maturity of its
outstanding loan by a full five years and cut the interest rate
almost in half which, will save the Company close to $3 million a year in interest payments.
This agreement also fully aligns the Company and its lender, as
Mercury through its decision to exercise its warrants, will now
become a major shareholder of Arianne with over a 17% equity
holding."
"This deal comes at an ideal time," added Mr. Ostroff.
"Over the last few years, Arianne has been able to weather a very
difficult macro while many others have not. The Company has
advanced its Lac a Paul project to, what is today, arguably a best
of breed asset. Now, we are seeing a drastic improvement in
the agricultural sector with many grains trading at multi-year
highs and, improved conditions for farmers along with tightness in
markets, has led to a significant increase in the price of
phosphate fertilizers with DAP prices having doubled in the last
year. Arianne should now be very well-placed to take
advantage of its position and advance its project, thus unlocking
substantial returns for its investors and stakeholders."
Highlights of the Agreement with Mercury
- The Lender will exercise 26,780,000 warrants into the Company's
common shares, thereby reducing the credit facility from
$31,496,897 to $24,892,949, a reduction of $6,603,948;
- The credit facility will be extended for a period of 5 years at
an annual interest rate of 8% (down from the previous 15%);
- The 8% annual interest can be paid by the Company, at its sole
option, either in cash or in common shares of the Company (the
"Share Interest Payment") at a price per share equal to the 1-year
volume weighted average price and subject to the rules of the TSX
Venture Exchange (the "TSX-V"), but the Company shall not issue
commons shares resulting in the Lender holding more than more than
19.9% of the issued and outstanding common shares of the Company as
a result of such Share Interest Payment. In such case, the balance
of the interest which may not be paid in common shares shall be
paid in cash;
- The Company will issue the Lender the 2021 Warrants. The Lender
shall not be entitled to exercise 2021 Warrants which would result
in the Lender holding, following such exercise, on a partially
diluted basis, more than 19.9% of the issued and outstanding common
shares of the Company. The Lender shall nevertheless be entitled to
exercise such 2021 Warrants in the event of a transaction involving
the Company, by way of Take-Over Bid (as defined under applicable
Canadian securities legislation) or otherwise, resulting in the
Company ceasing to be a publicly listed issuer on the TSX-V. In the
event of a transaction of the Company resulting in the creation of
a new Control Person (as defined in the policies of the TSX-V) and
requiring the Company to obtain disinterested shareholder approval
in connection with such transaction, the Company shall also request
the approval of its disinterested shareholders in order to remove
the warrant exercise restrictions from said 2021 Warrants, thereby
entitling the Lender to become a Control Person of the Company;
- The Company will increase the buyback purchase price of the
existing production fee granted in favour of the Lender to
$11.25M;
- For as long as the Loan remains outstanding, the Lender shall
have the right to designate a nominee for appointment to the board
of directors of the Company;
- The Company has undertaken to raise additional funds in the
amount of $3M within the 1-year
anniversary of the closing of the transaction and, every
anniversary thereafter for the three subsequent years, for total
cumulative gross proceeds of $12M.
Should the Company not raise additional funds on a yearly and
cumulative basis, the Company shall issue the Lender an additional
5M non-transferable share purchase
warrants (the "Additional Warrants") per year where a funding
milestone has not been met (maximum of 20M non-transferable warrants). Each warrant will
be exercisable at a price per share equal to the market price on
the date such warrants must be issued by the Company and will
expire on the date the amended credit facility expires- for the
first 4 years of the amended credit facility, in the event the
Company has not repaid the Loan in full and the Lender remains the
creditor of the Company in relation to such Loan, the Company shall
grant the Lender an additional annual production fee of
$0.25/tonne , which may be bought
back by the Company for $2.25M, for a
maximum annual additional production fee of $1/tonne (which may be bought back by the Company
for a total amount of $9M).
Conversion of Existing Unsecured Debt
- The holders of $5,970,155 have
decided to convert the debt into the common shares of the Company
at a price of $0.275 per share (the
"Debt Conversion"), representing the volume weighted average price
of Arianne's common shares on the TSX-V for the previous 30 trading
days.
- As a result of the Debt Conversion, the Company will issue a
total of 21,709,655 common shares to such debt holders.
- The Company will cancel 11,028,584 warrants that were
originally issued with the unsecured debt
The Loan Extension and Debt Conversion are expected to close on
or about March 31, 2021. The
completion of these transactions are subject to, notably, the
approval of the TSX-V and the execution of definitive agreements in
relation to each of the Loan Extension and the Debt Conversion. The
2021 Warrants, the Additional Warrants and the common shares of the
Company issued under the Debt Conversion shall be subject to a four
month hold period from their date of issuance.
Qualified Person
Jean-Sébastien
David, P.Geo., Qualified Person by NI 43-101, has approved this
release. Mr. David is also the Company's Chief Operating
Officer.
About Arianne Phosphate
Arianne Phosphate ("Arianne
Phosphate Inc.") (www.arianne-inc.com) is developing the Lac à
Paul phosphate deposits located approximately 200 km north of the
Saguenay/Lac St. Jean area of Quebec, Canada. These deposits will produce a
high-quality igneous apatite concentrate grading 39%
P2O5 with little or no contaminants
(Feasibility Study released in 2013). The Company has 171,688,003
shares outstanding.
Neither TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
Follow Arianne
on:
Facebook: https://www.facebook.com/ariannephosphate
Twitter: http://twitter.com/arianne_dan
YouTube: http://www.youtube.com/user/ArianneResources
Flickr: http://www.flickr.com/photos/arianneresources
Resource Investing
News: http://resourceinvestingnews.com/?s=Arianne
Cautionary Statements Regarding Forward Looking
Information
This news release contains "forward-looking statements"
and "forward-looking information" within the meaning of applicable
securities regulations in Canada
and the United States
(collectively, "forward-looking information"). Forward-looking
information includes, but is not limited to,
anticipated quality and production of the apatite concentrate
at the Lac à Paul project. Often, but not always, forward-looking
information can be identified by the use of words such as "plans",
"expects, "is expected", "budget", "scheduled", "estimates",
forecasts", "intends", "anticipates", or "believes", or the
negatives thereof or variations of such words and phrases or
statements that certain actions, events or results "may", "could",
"would", "might", or "will" be taken, occur or be achieved.
Forward-looking information is subject to known and unknown risks,
uncertainties and other factors that may cause the actual results,
level of activity, performance or achievements of the Company to be
materially different from those expressed or implied by such
forward-looking information, including but not limited to: volatile
stock price; risks related to changes in commodity prices; sources
and cost of power facilities; the estimation of initial and
sustaining capital requirements; the estimation of labour and
operating costs; the general global markets and economic
conditions; the risk associated with exploration, development and
operations of mineral deposits; the estimation of mineral reserves
and resources; the risks associated with uninsurable risks arising
during the course of exploration, development and production; risks
associated with currency fluctuations; environmental risks;
competition faced in securing experienced personnel; access to
adequate infrastructure to support mining, processing, development
and exploration activities; the risks associated with changes in
the mining regulatory regime governing the Company; completion of
the environmental assessment process; risks related to regulatory
and permitting delays; risks related to potential conflicts of
interest; the reliance on key personnel; financing, capitalization
and liquidity risks including the risk that the financing necessary
to fund continued exploration and development activities at Lac à
Paul project may not be available on satisfactory terms, or at all;
the risk of potential dilution through the issue of common shares;
the risk of litigation. Forward-looking information is based on
assumptions management believes to be reasonable at the time such
statements are made, including but not limited to, continued
exploration activities, no material adverse change in commodity
prices, exploration and development plans proceeding in accordance
with plans and such plans achieving their stated expected outcomes,
receipt of required regulatory approvals, and such other
assumptions and factors as set out herein. Although the Company has
attempted to identify important factors that could cause actual
results to differ materially from those contained in the
forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated or intended. There can
be no assurance that such forward-looking information will prove to
be accurate, as actual results and future events could differ
materially from those anticipated in such forward-looking
information. Accordingly, readers should not place undue reliance
on forward-looking information. Forward-looking information is made
as of the date of this press release, and the Company does not
undertake to update such forward-looking information except in
accordance with applicable securities laws.
SOURCE Arianne Phosphate Inc.
