Margaux Resources Ltd.
TSX VENTURE : MRL

June 26, 2014 08:00 ET

Margaux Resources Ltd. Announces Non-Brokered Private Placement of Convertible Debenture Units and Flow-Through Shares

CALGARY, ALBERTA--(Marketwired - June 26, 2014) -

NOT FOR DISTRIBUTION IN THE UNITED STATES

Margaux Resources Ltd. (TSX VENTURE:MRL) ("Margaux" or the "Corporation") is pleased to announce that it has commenced a non-brokered private placement offering (the "Offering") to raise up to $1,000,000 USD through the issuance of Convertible Debenture Units (as defined below) and $1,000,000 CAD through the issuance of common shares issued on a flow through basis ("Flow-Through Shares") of the Corporation.

Tyler Rice, President and Chief Executive Officer for Margaux stated, "This Offering provides Margaux with a framework to raise a portion of the funds required to satisfy the staged option payments due to Sultan Minerals Inc. (see news release April 1, 2014) related to the 100% acquisition of the Jersey-Emerald Tungsten-Zinc Property in Salmo, BC. The Offering will also fund the initial stages of an extensive drilling campaign with the intent of investigating a Tungsten resource with a view to possible commercial production. We remain confident in the long-term forecast for Tungsten pricing, in particular given continued export quotas on Tungsten out of China, which currently produces over 80% of the world's supply of Tungsten, and potential supply constraints from existing mines that are exhausting economic production grades. Additionally, world supply constraints on Zinc have resulted in increases in the price of Zinc since Margaux entered into the Option Agreement with Sultan Minerals Inc."

"Margaux plans to next update the shareholders on the progress of the work program by the end of the year or earlier, if lab assays can be obtained."

Terms of the Offering are as follows:

  • Treasury offering of units ("Units"), each Unit consisting of one (1) US$1,000 par value Convertible Debenture of the Corporation (the "Debentures"), 2,000 warrants ("Warrants") to purchase common shares ("Warrant Shares") of the Corporation and 3 Rights (as defined below) to purchase additional debentures.
  • Each Debenture will have a par value of US$1,000, bear interest of 1% per annum payable annually on the anniversary of issuance, and will be convertible into common shares (the "Debenture Shares") of the Corporation at a price of CAD$0.50 per Debenture Share at the option of the holder of the Debentures on the business day prior to the Maturity Date.
  • Each purchaser of a Unit shall be granted additional subscription privileges (the "Rights") to purchase an additional US$1,000 par value of debentures (the "Additional Debentures") of the Corporation on each of (i) February 8, 2015, (ii) August 8, 2015; and (iii) December 8, 2015. Each Additional Debenture shall bear interest at a rate of 1.0% per annum and be convertible at a price per share equal to: (i) the price of any financing announced within 30 days prior to the expiration date of the Right, or (ii) in the event the Corporation has not announced any such financing then the conversion price of the Additional Debentures will be equal to the 30 day volume weighted average closing price on the TSX Venture Exchange (the "Market Price") prior to the date of the issuance of the Additional Debentures. The Rights can be exercised early with sixty days written notice to the Corporation.
  • The Corporation may, at its option, subject to providing not more than 60 and not less than 30 days' prior notice, convert the Debentures and Additional Debentures into Debenture Shares at their conversion price, in whole or, from time to time, in part, provided that the Market Price is 140% above the conversion price of the Debentures and Additional Debentures, respectively.
  • The maximum size of the Debenture Offering is up to US$1,000,000 of Units. If all Rights are exercised, the maximum amount of the debentures (including Additional Debentures) issuable pursuant to the Offering will be up to US$4,000,000 in principal value plus an additional CAD$1,000,000 if all Warrants are exercised.
  • The Debentures and Additional Debentures will mature five (5) years after the date of their respective issuance (the "Maturity Date").
  • Each warrant will be exercisable into Warrant Shares at a price of CAD$0.55 per Warrant Share for a period of five (5) years from the Closing Date.

Terms of the Flow-Through Share component of the Offering are as follows:

  • Up to 2,000,000 Flow-Through Shares at a price of CAD$0.50 per Flow-Through Share. The Corporation has agreed to pay a finder's fee of 6% in certain circumstances in connection with the flow-through share component of the Offering.

The proceeds raised from the issuance of the Units and the Flow-Through Shares will be used to pursue the Corporation's ongoing exploration and drilling program at its Jersey-Emerald Tungsten-Zinc Project in Salmo, BC.

This Offering will be offered to accredited investors in British Columbia, Alberta and Ontario and other provinces of Canada and overseas jurisdictions as may be determined by the Corporation.

The initial closing is expected to occur on August 8, 2014 (the "Closing") or such other date as the Corporation may determine.

The securities (including the underlying securities) to be issued pursuant to the Offering will be subject to a four-month hold period from the closing date.

The Private Placement is subject to approval from the TSX Venture Exchange.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities of Margaux in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities to be offered have not been and will not be registered under the United States Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold within the United States or to or for the account or benefit of a U.S. Person absent registration or an applicable exemption from the registration requirements of such Act or laws.

Cautionary Statements

This news release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the forgoing, this news release contains statements concerning the anticipated closing of the Private Placement, the anticipated use of the proceeds of the Private Placement, the anticipated timing of results of the Corporation's exploration program and expectations regarding commodity prices.

Forward-looking statements or information are based on a number of material factors, expectations or assumptions of Margaux which have been used to develop such statements and information but which may prove to be incorrect.
Although Margaux believes that the expectations reflected in these forward-looking statements are reasonable, undue reliance should not be placed on them because Margaux can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. The intended use of the proceeds of the Private Placement by Margaux might change if the board of directors of the Corporation determines that it would be in the best interests of Margaux to deploy the proceeds for some other purpose.

The forward-looking statements contained in this news release are made as of the date hereof and Margaux undertakes no obligations to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

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 news release.

About Margaux Resources Ltd.: Margaux is based in Calgary, Alberta and a publicly traded resource Corporation with oil and gas exploration and production and an option on the Jersey Emerald Tungsten-Zinc Property. The Corporation currently has production from a well in the Jumpbush area in south eastern Alberta and the Jersey Emerald Tungsten-Zinc mining Property, located in southeastern B.C.

Contact Information

  • Margaux Resources Ltd.
    Tyler Rice
    President
    (403) 537-5590
    Suite 1600, 510 - 5th Street SW
    Calgary, AB, T2P 3S2