Discovery Ventures Inc.

Discovery Ventures Inc.

February 24, 2014 09:01 ET

Discovery Ventures Announces Non-Binding Term Sheet for $12 Million


Discovery Ventures Inc. ("Discovery" or "Company") (TSX VENTURE:DVN) is pleased to announce that it has entered into a non-binding term sheet with a third party (the "Lender") whereby, subject to the entry into a definitive binding agreement, the Lender has agreed to provide a $12,000,000 (the "Principal Amount") senior secured term debt facility to Discovery (the "Facility"). The Facility will be provided in two tranches with $5,000,000 (the "First Tranche") available on the execution of the definitive agreement (the "Effective Date") and $7,000,000 (the "Second Tranche") available upon the achievement of certain milestones, including Discovery completing one or more transactions or arrangements to generate aggregate proceeds of not less than $5,000,000, Discovery obtaining receipt of all government permits, authorizations and similar documentation to commence production at its Willa Deposit and the Max Mill facility, and the completion of the refurbishment of the Max Mill such that processing of material from its Willa Deposit may commence.

The Facility matures 24 months from the Effective Date and will accrue interest at a rate of 12.5% per annum. A 5% annual rollover fee on the Principal Amount is payable on maturity for each 12 month period that the Facility is outstanding and a 2% structuring fee on the Principal Amount is payable on the Effective Date. Discovery has agreed to grant the Lender a right of first refusal for any subsequent non-equity financing transaction(s) that may occur before the maturity date of the Facility. Discovery must complete an equity financing (the "Equity Financing") for gross proceeds of at least $2,500,000 on or before the Effective Date. On the Effective Date, Discovery must issue to the Lender: 5,000,000 of its common shares (each, a "Share") and 5,000,000 warrants, with each warrant entitling the Lender to purchase an additional 5,000,000 Shares for a period of three years on the same terms as the Equity Financing.

BayFront Capital Partners Ltd. acted as the sole financial advisor in connection with the Facility and as the sole agent for the proposed Equity Financing.

Discovery anticipates that it will use the First Tranche to complete the acquisition of FortyTwo Metals Inc., a wholly-owned subsidiary of Roca Mines Inc., as previously announced, and the balance for permitting and the refurbishment of the Max Mill. Discovery anticipates that it will use the Second Tranche towards the development of its Willa Deposit.

Discovery is also pleased to announce that over the next quarter, the Company anticipates strategic restructuring of both its management team and board of directors. The changes are expected to add significant leadership, technical expertise and experience to the senior management team, allowing the maximization of the consolidated value of the Willa Project and the infrastructure at the Max Mining Complex.

The Company's President, Akash Patel, commented: "We look forward to the completion of this financing and the announcement of key personnel as major milestones for the Company."

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Akash Patel, President and Director

Discovery Ventures Inc.

Neither the TSX Venture Exchange Inc. nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange Inc.) accepts responsibility for the adequacy or accuracy of this press release.

This press release contains forward-looking information that involve various risks and uncertainties regarding future events. Such forward-looking information can include without limitation statements based on current expectations involving a number of risks and uncertainties and are not guarantees of future performance of the Discovery, such as the terms of the financing in the term sheet and the use of proceeds from the Facility. There are numerous risks and uncertainties that could cause actual results and Discovery's plans and objectives to differ materially from those expressed in the forward-looking information, including: (i) adverse market conditions; (ii) risks inherent in the mineral exploration industry in general; (iii) the ability of Discovery to exercise one or more stages of the option; (iv) inability of Discovery to complete an equity raise of $2,500,000; (v) the inability of Discovery to enter into a definitive agreement with the Lender; or (vi) the TSX Venture Exchange not approving the Facility or the equity financing. Actual results and future events could differ materially from those anticipated in such information. These and all subsequent written and oral forward-looking information are based on estimates and opinions of management on the dates they are made and are expressly qualified in their entirety by this notice. Except as required by law, Discovery does not intend to update these forward-looking statements.

Contact Information

  • Discovery Ventures Inc.

    Investor Relations: Ron Birch
    Toll free: 1-800-910-7711