Ely Gold Royalties Inc. (ELY:TSX.V; ELYGF:OTCQB) announced in a news release it closed the transaction for a $6 million revolving line of credit from a company controlled by Eric Sprott, 2176423 Ontario Ltd.
The Canadian royalty firm intends to use the financing primarily to acquire additional producing or near-producing royalties and to "prioritize its long-term capital management," the release noted.
Interest is 10% per annum on principal outstanding, and 2.5% on undrawn amounts, compounded monthly and payable quarterly, the release noted.
The company has "issued to the Lender 16,216,215 non-transferrable loan bonus warrants (the "Bonus Warrants"). Each Bonus Warrant is exercisable, up to the Maturity Date, to purchase one common share of the Company (each a "Bonus Warrant Share") at an exercise price of C$0.37 per Bonus Warrant Share. Based on the Company's current capital structure, such number of Bonus Warrant Shares would represent 14.0% of the Company's issued and outstanding shares and, taken together with Sprott's existing direct and indirect holdings on a partially-diluted basis, would represent 20.76% of the voting shares of the Company. The Lender has agreed not to exercise Bonus Warrants if such exercise would result in Sprott's direct and indirect holdings of the Company's outstanding voting shares being in excess of 19.9% based on the then-current outstanding shares of the Company."
Related to the financing, Ely Gold will issue a 300,000 nontransferrable common share purchase, or finder's, warrants, to Medalist Capital Ltd., a registered dealer. With each, for three years, the holder may purchase, with one finder's warrant share, one common Ely Gold share at CA$0.37.
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