The previously announced mining services contract entered into with the underground mining contractor has an initial term of four years and includes the provision of a mining fleet and skilled labour force.
As previously announced, in connection with mobilization, African Underground Mining Services Ltd. will make an initial investment in the Company of US$5 million by means of a non-brokered private placement. The private placement will consist of 8,979,286 Roxgold common shares at a price of Cdn$0.70 per share, for gross proceeds of approximately Cdn$6,286,000.
Upon closing of the private placement, AUMSG will hold approximately 3% of the issued and outstanding common shares of the Company on an undiluted basis.
No finders’ fees or commissions will be payable in connection with the private placement. The net proceeds of the offering will be used to partially fund the development and exploration of the Company’s Yaramoko Gold Project in Burkina Faso, West Africa, and for general corporate purposes.
As previously announced, Roxgold will have the option to settle up to US$10 million in payments under the Mining Contract in the form of Roxgold common shares.
The subscription price for each Payment Share will be based on a 5% discount to the volume weighted average price of Roxgold shares on the TSX Venture Exchange for the five trading days following the date of the particular invoice. The proceeds of the sale of the Subscription Shares and the value of services to be provided in exchange for the Payment Shares together represent approximately 50% of the anticipated pre-production underground development capital expenditures.
The proposed issuances of Subscription Shares and Payment Shares are set out in an agreement entered into between AUMS, AUMSG and the Company. The proposed issuances are subject to the prior approval of the TSX Venture Exchange and any Subscription Shares and Payment Shares issued will be subject to a four month hold period from the date of issue.
Roxgold chief operating officer Paul Criddle said: "We are very pleased to welcome AUMSG as a shareholder of Roxgold.
"The alignment of interests between Roxgold and a key contractor bodes well for the smooth operation of the Yaramoko Gold Project, development of which has been progressing very well."
Pursuant to the Equity Investment Agreement, AUMSG will enter into a voting agreement with the Company whereby it will agree that, for a period of two years, it will vote, or provide its consent with respect to, any Subscription Shares and Payment Shares it receives: (i) for each of the Company’s nominees for election to the board of directors at any meeting of shareholders; and (ii) in any matters proposed by shareholders of the Company or by the Company, in accordance with the recommendation of the majority of the Company’s board of directors.
AUMS is a joint venture between Ausdrill Limited, a leading international mining services business, and Barminco Limited, a specialist underground mining contractor. With industry leading safety and training systems along with extensive experience operating underground mines in West Africa, AUMS is uniquely qualified to assist in the development of the Yaramoko Gold Project.
