Klondex Mines Ltd. Announces Closing of C$23 Million Equity Financing
NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Klondex Mines Ltd. (TSX: KDX) ("Klondex", or the "Company") is pleased to announce the closing of its previously announced fully-marketed best efforts private placement (the "Equity Offering") of 16,984,046 units ("Units") at a price of C$1.35 per Unit for gross proceeds of C$22,928,462. A syndicate of agents, led by GMP Securities L.P. and including MGI Securities Inc., RBC Dominion Securities Inc., Fraser Mackenzie Limited and Mackie Research Capital Corporation (collectively, the "Agents") acted as agents under the Equity Offering. Each Unit is comprised of one common share in the capital of the Company (a "Unit Share") and one-half of one common share purchase warrant (each whole common share purchase warrant, a "Unit Warrant"). Each Unit Warrant entitles the holder to purchase one common share at a price of C$1.75 until November 20, 2014. In the event that, following four months and one day after November 20, 2012, the volume weighted average trading price of the Company's common shares on the Toronto Stock Exchange (the "TSX") exceeds C$2.50 for a period of 20 consecutive trading days, the Company may, within five days of such an occurrence, give written notice to the holders of the Unit Warrants of the accelerated expiry of the Unit Warrants, and thereafter the Unit Warrants will expire on the date which is 30 days after the date of the notice to the Unit Warrant holders.
The Company intends to complete its previously announced non-brokered offering of senior unsecured notes (the "Notes") in the principal amount of up to US$7,000,000 (the "Committed Amount") by way of private placement (the "Debt Offering") on or about November 23, 2012. In consideration for making available the Committed Amount, the Company will issue to the subscribers under the Debt Offering up to an aggregate of 525,000 common share purchase warrants of the Company (the "Note Warrants"). Each Note Warrant will entitle the holder to purchase one common share of the Company at a price of C$1.55, subject to adjustment. If, for a period of 20 consecutive trading days prior to the expiry of the respective Note Warrants, the closing price of the Company's common shares on the TSX exceeds C$2.79, the Company may, within 30 days of such an occurrence, give written notice to the holders of the Note Warrants that the Note Warrants will expire on the date which is 30 days after the date of the notice to the Note Warrant holders.
The net proceeds from the Equity Offering are expected to be used for the development of the Fire Creek gold project in Nevada, USA, and ongoing operating and working capital requirements. The net proceeds from the Debt Offering are expected to be used to repay existing indebtedness and for general operating and working capital requirements.
The Unit Shares and the Unit Warrants are subject to a four month plus one day hold period in Canada.
Pursuant to the terms of the Equity Offering, and subject to shareholder approval (which has been obtained) and regulatory approval, the Company has agreed to issue compensation options to the Agents exercisable to acquire up to 1,019,042 common shares of the Company at a price of C$1.35 per common share for a period of 18 months (the "Compensation Options"). The Compensation Options are subject to a four month plus one day hold period.
The maximum number of common shares of the Company issued or made issuable pursuant to the Equity Offering, and the issue of the Compensation Options, and assuming the closing of the Debt Offering, is 27,020,111, representing approximately 57% of the 47,377,415 common shares of the Company issued and outstanding immediately prior to the closing of the Equity Offering and the Debt Offering. If a company listed on the TSX proposes to issue more than 25% of their outstanding listed securities, the TSX requires that such company obtain the approval of the shareholders of the company prior to issuing the listed securities. Pursuant to section 604(d) of the TSX Company Manual, the Company has obtained shareholder approval of the Equity Offering and of the issue of the Compensation Options by way of written consent from shareholders who hold more than 50% of the issued and outstanding common shares of the Company. The total number of common shares of the Company issued to and made issuable to insiders of the Company in a six month period represents less than 10% of the issued and outstanding common shares of the Company, and as a result common shares held by insiders of the Company were not excluded from the shareholder approval required for the issuance of the common shares underlying the Compensation Options. The Equity Offering did not materially affect control of the Company and no new insiders have been created as a result of the Equity Offering.The issuance of the Compensation Options and the Debt Offering will not materially affect control of the Company and no new insider will be created as a result of the issuance of the Compensation Options or the closing of the Debt Offering.
About Klondex Mines Ltd. (www.klondexmines.com)
Klondex Mines is focused on the exploration and development of its Fire Creek gold deposit in North Central Nevada. Fire Creek is a compelling gold mining prospect located in a region of prolific gold production that is near power, transportation, mining infrastructure and several milling facilities. As of November 20, 2012, following the closing of the Equity Offering and the Debt Offering, Klondex had 64.4 million shares issued and outstanding, and 86.7 million shares on a fully-diluted basis (assuming the approval by the TSX of the issue of the Compensation Options).
This news release contains forward-looking statements, including about current expectations as the expected use of proceeds of the Equity Offering and Debt Offering and the expected timing of the closing of the Debt Offering. These forward-looking statements entail various risks and uncertainties, are based on current expectations, are subject to a number of uncertainties and risks, and actual results may differ materially from those contained in such statements. These uncertainties and risks include, but are not limited to, the strength of the global economy; the price of gold; operational, funding and liquidity risks; the degree to which mineral resource estimates are reflective of actual mineral resources; the degree to which factors which would make a mineral deposit commercially viable are present; the risks and hazards associated with underground operations. Risks and uncertainties about Klondex's business are more fully discussed in Klondex's disclosure materials filed with the securities regulatory authorities in Canada and available at www.sedar.com. Readers are urged to read these materials. Klondex assumes no obligation to update any forward-looking statement or to update the reasons why actual results could differ from such statements unless required by law.
On Behalf of Klondex Mines Ltd.
President & CEO
Investor & Media Contact:
Catalyst Global LLC
David Collins, Toni Trigiani
KEYWORDS: North America Canada
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