First Bauxite Corporation
TSX VENTURE : FBX
FRANKFURT : FBI
BERLIN : FBI

First Bauxite Corporation

November 25, 2013 08:33 ET

First Bauxite Corporation Announces Non-Brokered Private Placement

TORONTO, ONTARIO--(Marketwired - Nov. 25, 2013) - First Bauxite Corporation ("First Bauxite" or the "Company") (TSX VENTURE:FBX)(FRANKFURT:FBI)(BERLIN:FBI) is pleased to announce that the Company is proceeding with a non-brokered private placement (the "Private Placement") to Resource Capital Fund V LP ("RCF") for 40,000,000 common shares at a price of $0.125 per common share to raise total proceeds of $5,000,000. The Company anticipates that the Private Placement will close on or about December 5, 2013.

"We are extremely appreciative of the continued financial support from Resource Capital Funds in these demanding capital markets conditions" stated Hilbert N. Shields, President & CEO. "Resource Capital Funds clearly sees the longer term value in First Bauxite and is demonstrating its commitment to our efforts to develop the Bonasika Mine and Processing Plant by offering this private placement at a significant premium to market and generally at terms that are very competitive, in these very difficult current market conditions for junior resource explorers and developers."

The proceeds of the Private Placement are designed to allow the Company to improve its financial position and to proceed with its work programs including: (i) completing the Preliminary Feasibility Study, first announced on February 14, 2013 and June 25, 2013, on the viability of manufacturing ceramic proppants from the bauxites and kaolin hosted by the deposits in our Bonasika Mining License; (ii) proceeding with limited Phase I pre-production work over the Bonasika Mining License, inclusive of haul road and Bonasika 7 pit and waste dump preparation; and (iii) exploring the twenty (20) Prospecting Licenses under application in the areas adjacent to the Bonasika Mining License and the Tarakulli Permission for Geological and Geophysical Survey which hosts the Tarakulli and Canje prospects where historical drilling has indicated metallurgical grade bauxite. The Company believes that these programs will enhance the long-term prospects of the Company and will attract additional investment in the Company from other sources of financing.

The Private Placement remains subject to TSX Venture Exchange approval and the satisfaction of customary closing conditions contained in the subscription agreement between the parties. In addition, a closing condition of the Private Placement is that an RCF partner, Mr. Mason Hills, will be nominated to join the board of directors of the Company. The directors of the Company have unanimously agreed to nominate Mr. Mason G. Hills to the board pending the closing of the Private Placement.

Mr. Mason G. Hills is a Partner at Resource Capital Funds. Prior to joining RCF, Mr. Hills practiced extensively in corporate finance and resources law. In addition, his legal practice included acquisitions, public offerings, corporate and securities regulation, project development and corporate, and project finance acting for mining companies, financial institutions, and government bodies both in Australia and overseas. Currently, Mr. Hills serves on the Board of Directors for Provale S.A., Tarn Drilling Company, LLC and Global Advanced Metals Limited. He has previously served as a Non-Executive Director for a number of public companies listed on the Toronto and Australian Stock Exchanges, including Talison Lithium Limited and Ausdrill Limited. He holds a Bachelor of Economics degree from the University of Western Australia, and a Bachelor of Laws degree with First Class Honors from Murdoch University.

RCF and its affiliates currently hold an aggregate of approximately 17.4% (13,524,211 common shares) of the 77,563,172 outstanding common shares of the Company on an undiluted basis and approximately 31.2% (29,021,255 common shares) of the outstanding common shares on a fully diluted basis (assuming conversion of the convertible notes issued to RCF and the exercise of the warrants issued to RCF and its affiliates pursuant to the 2012 private placement with the Company). Upon the closing of the Private Placement, the Company's share capital will increase to 117,563,172 common shares and the ownership interest of RCF and its affiliates in the Company will be approximately 45.5% on an undiluted basis and approximately 51.9% on a fully diluted basis (assuming conversion of the convertible notes issued to RCF and the exercise of the warrants issued to RCF and its affiliates pursuant to the 2012 private placement with the Company). In addition, RCF holds an option to purchase additional notes from the Company in the aggregate principal amount of U.S.$20 million which will be convertible into common shares of the Company. As the number of common shares of the Company issuable to RCF is contingent, in part, upon future values and share prices, the number of shares that RCF could acquire should it purchase the additional notes and exercise its conversion rights in full cannot be determined as at the date of this press release.

The Private Placement will constitute a related party transaction pursuant to Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101") and TSX Venture Exchange Policy 5.9.

The board of the Company consists of six directors, all of whom are unrelated to RCF and its affiliates, and are otherwise independent as determined pursuant to Part 7 of MI 61-101. The directors reviewed the Company's financial position as advised by the Chief Financial Officer of the Company and considered the current and forecast spending rates and payment of trade payables contained in a budget prepared by management relating to the Company and its subsidiaries to assess the financial health of the Company.

As at November 11, 2013, the Company's current liabilities were $8,118,368 comprising of $118,368 in trade payables, $3,000,000 in convertible notes maturing on June 26, 2014 and $5,000,000 in convertible notes maturing on July 26, 2014. The Company has current assets of $1,749,563 and therefore has a working capital deficit (not including commitments and liabilities triggered by termination events) of $6,368,805. In the event the Private Placement does not close, based on the Company's current and forecasted spending rates and payment of trade payables, the Company will run out of cash in January 2014. In the event there is a default in payment on the notes due in June and July 2014, accelerated default provisions will trigger the obligation to pay an additional $8,000,000 of convertible notes which are currently due in January, 2016. Upon the closing of the Private Placement, the Company will still have a working capital deficit but will have short term liquidity to meet its liabilities as they come due and proceed with its exploration program while it seeks additional sources of financing.

In light of the financial situation of the Company and the opportunity afforded to the Company by the Private Placement, the directors of the Company considered the terms of the Private Placement and the financial status of the Company and resolved unanimously that the Company was in serious financial difficulty; that the Private Placement was designed to improve the Company's financial position and was otherwise in the best interests of the Company. The directors further unanimously resolved that the proposed Private Placement and the terms thereof were reasonable in the circumstances of the Company and, subject to closing conditions in the subscription agreement and the acceptance of the TSX Venture Exchange, the Private Placement was authorized and approved.

In consideration of the financial circumstances of the Company and the determination by the directors, the Company intends to rely upon the "financial hardship" exemptions from the requirements to obtain a formal valuation and minority shareholder approval in Sections 5.5(g) and 5.7(e) of MI 61-101 respectively.

About First Bauxite

First Bauxite Corporation (TSX VENTURE:FBX) is a Canadian natural resource company engaged in the exploration and development of bauxite deposits in Guyana, South America. The Company has its head office in Toronto and is managed by experienced geoscientists and business development professionals with worldwide experience in the exploration and mining business across a number of mineral commodities. The mission of First Bauxite is to become a near term, medium size producer and supplier of high quality refractory grade sintered bauxite. For further information on First Bauxite Corporation, please visit our corporate website at www.firstbauxite.com.

On behalf of the Board of Directors of First Bauxite Corporation

Hilbert N. Shields, President & CEO

Certain statements contained herein constitute "forward-looking statements". Forward-looking statements look into the future and provide an opinion as to the effect of certain events and trends on the business. Forward-looking statements may include words such as "will", "anticipates", "believes", "intends" and similar expressions. These statements include, but are not limited to, statements regarding the approval of the Private Placement by the TSX Venture Exchange, the satisfaction of conditions to closing in the subscription agreement, the ability of the Company to raise future financing and the availability of the exemptions in MI 61-101 that the Company intends to rely upon. These forward-looking statements are based on current expectations and entail various risks and uncertainties. Actual results may materially differ from expectations, if known and unknown risks or uncertainties affect our business, or if our estimates or assumptions prove inaccurate. Factors that could cause results or events to differ materially from current expectations expressed or implied by the forward-looking statements, include, but are not limited to, the effect of capital market conditions and other factors on capital availability; availability of approval of the Private Placement by the TSX Venture Exchange, the satisfaction of conditions to closing in the subscription agreement and the availability of the exemptions in MI 61-101 that the Company intends to rely upon. Readers are cautioned not to place undue reliance on the forward-looking statements contained in this press release. Except as required by law, the Company assumes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or any other reason.

Neither the 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.

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