EPM Mining Ventures Inc. (TSX VENTURE:EPK) (OTCQX:EPKMF) ("EPM" or the
"Company") is pleased to announce that it has entered into a binding term sheet
with Extract Capital LP ("Extract") for a US$2.5 million loan ("Extract Loan").
In addition, EPM has entered into a binding term sheet with certain Directors of
the Company (the "Directors") for a US$700,000 loan ("Director Loan" and
collectively with the Extract Loan, the "Financing"). The Financing will be used
by the Company to fund operations and project-related activities for its Sevier
Lake Playa Sulphate of Potash Project located in southwestern Utah.
Lance D'Ambrosio, Chief Executive Officer of EPM stated, "This is a very
significant financing for the Company. We have created an alternative that
minimizes dilution for our shareholders and gives us the funds necessary to
continue developing what we believe to be a world-class SOP asset. Most
importantly, this will allow us to advance the project and accomplish milestones
related to our feasibility and permitting activities."
"This financing provides important liquidity for the company," said De Lyle
Bloomquist, a director of EPM and President of the Global Chemical Business of
Tata Chemicals Limited. "Tata continues to support the project and will assist
in progressing the broader financing strategies to fund the remaining
preconstruction milestones and transition the project to its ultimate
construction phase."
Under the terms of the Extract Loan, the Company will borrow the principal sum
of US$2.5 million issued at a 2% discount to par with a term of 60 months. The
Extract Loan will bear interest at a variable rate equal to U.S. 12-month LIBOR
plus 650 basis points ("bps") per annum calculated on the outstanding principal
on a 360-day/year basis. At the Company's option, it may elect to capitalize
monthly interest at a rate of U.S. 12-month LIBOR plus 850 bps. LIBOR shall have
a minimum of 200 bps for the purposes of interest rate calculation.
Additionally, the Company will issue to Extract 1,500,000 common shares, and
750,000 common share purchase warrants (the "Extract Warrants"). The Extract
Warrants shall have an exercise price of $0.36 per share, which is a 100%
premium to the volume weighted average price ("VWAP") of the common shares over
the twenty (20) days before the date of acceptance of the Extract term sheet,
and be exercisable for a period that is 5 years from the closing date of the
Extract Loan.
The Company will provide Extract with a production fee of US$1.70/tonne of
production of sulphate of potash. The production fee may be repurchased at any
time by the Company for a lump sum payment equal to: a) US$250,000 if the
Extract Loan is repaid in full on or before 6 months from the closing date; b)
US$750,000 if the Extract Loan is repaid after 6 months and on or before 12
months from the closing date; c) US$1,000,000 if the Extract Loan is repaid
after 12 months and on or before 18 months from the closing date; and d)
US$1,500,000 if the Extract Loan is repaid after 18 months from the closing
date. Extract shall receive a 3% arrangement fee at closing and shall be
reimbursed by the Company for its transaction related expenses up to a maximum
of US$100,000. Extract shall also be entitled to a US$50,000 break fee, if,
within 60 days, the closing conditions of the Company have not been met or the
Company elects not to execute the definitive loan agreements.
Under the terms of the Director Loan, the Company will borrow the principal sum
of at least US$700,000 with a term of 24 months. Interest shall accrue monthly
in arrears and shall be computed on a monthly basis at Director's cost of debt
capital ("Director's Rate") plus 850 bps per annum of the outstanding loan
amount calculated on a 360-day/year basis. The Director's Rate shall have a
minimum of 200 bps for calculation of the interest rate. Additionally, the
Company will issue the Directors an aggregate of 1,050,000 common share purchase
warrants (the "Director Warrants"). The Director Warrants shall also have an
exercise price of $0.36 per share and be exercisable for a period that is 2
years from the closing date of the Director Loan.
Lance D'Ambrosio, the Chief Executive Officer and a director of the Company,
Daniel Basse, a director of the Company, and Theodore Botts, a director of the
Company are participating in the Director Loan. The participation by each of Mr.
D'Ambrosio, Mr. Basse and Mr. Botts is considered "related party transaction"
for the purposes of Multilateral Instrument 61-101 ("MI 61-101"). However, their
participation is not subject to the minority approval and formal valuation
requirements under MI 61-101 since there is an applicable exemption from these
requirements as neither the fair market value of the subject matter, nor the
fair market value of the consideration for the transaction, insofar as it
involves the interested parties, exceeds 25% of EPM's market capitalization. Mr.
D'Ambrosio, Mr. Basse, and Mr. Botts abstained from voting at the meeting of the
board of directors held to approve the Financing.
Following the completion of the Director Loan, Mr. D'Ambrosio will own and
control 750,000 warrants, 35,000 common shares, representing approximately 0.05%
of the issued and outstanding common shares on an undiluted basis, and
12,174,673 non-voting common shares, representing approximately 33.5% of the
issued and outstanding non-voting common shares on an undiluted basis; Mr. Basse
will own and control 75,000 warrants, 420,689 common shares, representing
approximately 0.5% of the issued and outstanding common shares on an undiluted
basis, and 686,306 non-voting common shares, representing approximately 1.9% of
the issued and outstanding non-voting common shares on an undiluted basis; and
Mr. Botts will own and control 225,000 warrants and 1,594,317 common shares,
representing approximately 2.1% of the issued and outstanding common shares on
an undiluted basis. The issuance of the warrants to Mr. D'Ambrosio, Mr. Basse
and Mr. Botts would not represent a material change in their respective
ownership of the Company.
Under the terms of the Financing, the Company will provide a perfected senior
security interest in substantially all of the Company's assets. The Financing is
anticipated to close on or before April 30, 2014 and is subject to regulatory
approval. The securities issued under the Financing will be subject to a four
month and a day hold period.
Furthermore, the Company is pleased to announce that it has completed the share
repurchase transaction it announced on March 27, 2014. Pursuant to the
transaction, the Company repurchased and cancelled 31,370,400 common shares and
issued an equivalent number of non-voting common shares. As of the date hereof,
there are 76,923,057 common shares and 36,302,832 non-voting common shares. The
transaction was effected to assist the Company to achieve its "foreign private
issuer" status under applicable United States securities laws. In addition, the
Company has also approved certain amendments to its Relationship Agreement,
dated September 2, 2011, with Gusiute Holdings (UK) Limited - an indirect
wholly-owned subsidiary of Tata Chemicals Limited.
About EPM Mining Ventures
EPM Mining Ventures Inc. is an exploration-stage company focused on specialty
fertilizers. Through Peak Minerals Inc., its indirect wholly-owned subsidiary,
EPM controls directly or through agreement mineral leases on more than 124,000
acres on its Sevier Lake Playa property in Millard County, Utah. With a brine
resource known to contain potassium, magnesium, sulphate, lithium and a suite of
other beneficial minerals, EPM is targeting the development and production of
specialty fertilizers, including SOP, through the use of a cost-effective solar
evaporation process. SOP and other specialty fertilizers are used in the
production of high value, chloride-sensitive crops such as fruits, vegetables,
and tree nuts. With the recent completion of a Preliminary Feasibility Study,
the Company is currently engaged in engineering and analysis designed to support
a feasibility study, environmental permitting, and ultimately mineral
production.
For more information, please visit our web site at www.epmmining.com.
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.
Forward-Looking Information
This release contains "forward-looking information" within the meaning of
applicable Canadian securities legislation. Forward-looking information
includes, but is not limited to, information with respect to the Financing and
the use of proceeds. Generally, forward-looking information can be identified by
the use of forward-looking terminology such as "plans", "expects", or "does not
expect", "is expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates", or "does not anticipate", or "believes" or variations
of such words and phrases or state that certain actions, events or results
"may", "could", "would", "might", or "will be taken", "occur", or "be achieved".
Forward-looking information is based on the opinions and estimates of management
at the date the information is made, and is based on a number of assumptions and
is subject to known and unknown risks, uncertainties and other factors that may
cause the actual results, level of activity, performance or achievements of EPM
to be materially different from those expressed or implied by such
forward-looking information, including risks associated with the exploration,
development and mining such as economic factors as they effect exploration,
future commodity prices, changes in foreign exchange and interest rates, actual
results of current exploration activities, government regulation, political or
economic developments, environmental risks, permitting timelines, capital
expenditures, operating or technical difficulties in connection with development
activities, employee relations, the speculative nature of SOP exploration and
development, including the risks of diminishing quantities of grades of
resources, contests over title to properties, and changes in project parameters
as plans continue to be refined as well as those risk factors discussed in EPM's
management discussion and analysis for the year ended December 31, 2012,
available on www.sedar.com. Although EPM has attempted to identify important
factors that could cause actual results to differ materially from those
contained in 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 information will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such
information. Accordingly, readers should not place undue reliance on
forward-looking information. EPM does not undertake to update any
forward-looking information, except in accordance with applicable securities
laws.
FOR FURTHER INFORMATION PLEASE CONTACT:
EPM Mining Ventures Inc.
Lance D'Ambrosio
Chief Executive Officer
(801) 485-0223
(TSXV:EPK)
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