Roxgold Inc.

Roxgold Inc.

October 06, 2011 10:25 ET

Roxgold Announces Closing of $20 Million Subscription Receipt Offering



Roxgold Inc. (TSX VENTURE:ROG) ("Roxgold") is pleased to announce that, further to its press release of September 21, 2011, it has completed the sale of 23,530,000 subscription receipts (the "Subscription Receipts") on a bought deal private placement basis with a syndicate of underwriters led by Cormark Securities Inc. (the "Lead Underwriter") and including Fraser Mackenzie Limited, GMP Securities L.P., PI Financial Corp., and Pope & Company Limited (the "Underwriters") at a price of $0.85 per Subscription Receipt for aggregate gross proceeds of $20,000,500 (the "Offering"), pursuant to an underwriting agreement between Roxgold and the Underwriters dated October 6, 2011. The Subscription Receipts were issued pursuant to a subscription receipt indenture dated October 6, 2011 (the "Subscription Receipt Indenture") among Roxgold, the Lead Underwriter and Computershare Trust Company of Canada. The Offering was completed in connection with Roxgold's proposed acquisition of the remaining interest in the Yaramoko, Bissa West and Solna projects (the "Projects"), a group of advanced stage exploration properties located in Bukina Faso, West Africa, from Riverstone Resources Inc. (the "Transaction"). The Transaction, which is subject to customary closing conditions, including the delivery of documents transferring title to the Projects, the receipt of third party and regulatory approvals, and the accuracy of representations and warranties, is expected to close in October 2011. The TSX Venture Exchange has confirmed that, pursuant to its rules and policies, it will not require approval from Roxgold's shareholders in connection with the Transaction.

In consideration of the services rendered by the Underwriters in connection with the Offering, the Underwriters will receive from Roxgold a cash fee equal to 6.0% of the gross proceeds of the Offering (the "Cash Commission"), for a total of $1,200,030. Roxgold has paid to the Underwriters 50% of the Cash Commission at the closing of the Offering, with the balance payable upon satisfaction of the Escrow Release Conditions (as defined below) on or before the Escrow Deadline (as defined below). As additional compensation, the Underwriters were issued broker warrants (the "Broker Warrants") exercisable to acquire that number of common shares of Roxgold (the "Common Shares") as is equal to 6.0% of the aggregate number of Subscription Receipts issued pursuant to the Offering. Each Broker Warrant entitles the holder thereof to acquire one Common Share at a price of $0.85 until October 6, 2013, but shall only be exercisable upon satisfaction of the Escrow Release Conditions on or before the Escrow Deadline.

The gross proceeds of the Offering, less 50% of the Cash Commission and expenses of the Underwriters, were deposited into escrow pursuant to the Subscription Receipt Indenture.

Pursuant to the terms of the Subscription Receipt Indenture, each Subscription Receipt issued in connection with the Offering shall be deemed to be exercised, without payment of any additional consideration and without further action on the part of the holder thereof, for one Common Share upon satisfaction of the following escrow release conditions, as set out in the Subscription Receipt Indenture (the "Escrow Release Conditions"), which include, among other things, (i) all conditions to the closing of the Transaction having been satisfied or waived other than the payment of the cash portion of the purchase price under the Transaction, and (ii) Roxgold having provided the Underwriters with copies of the duly executed transfer documents relating to the Projects, as well as certain other reports and an opinion.

Pursuant to the terms of the Subscription Receipt Indenture, if the Escrow Release Conditions are not satisfied on or before 5:00 p.m. (Toronto time) on November 30, 2011 (the "Escrow Deadline"), the escrow agent shall return to each holder of Subscription Receipts the aggregate offering price of the Subscription Receipts held by that holder plus the pro rata portion of interest or other income earned on the escrowed funds (less any applicable withholding tax). To the extent that the escrowed funds (plus accrued interest) are not sufficient to make such payments to the holders of the Subscription Receipts, Roxgold will contribute such amounts as are necessary to satisfy any shortfall.

The net proceeds of the Offering will be used to fund the cash component of the consideration payable to Riverstone Resources Inc. in connection with the Transaction and, as to the balance, for continued exploration of the Projects and for general working capital purposes.

All of the securities of Roxgold issued under the Offering are subject to a hold period which will expire on February 6, 2012 in accordance with applicable Canadian securities laws.

The securities described herein have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States unless registered under the Act or unless an exemption from registration is available.

This news release contains forward-looking information regarding the anticipated timing of completion of the Transaction, the deemed exercise of the Subscription Receipts, the release of the escrowed funds and the planned purposes for the net proceeds of the Offering. This information is based on information currently available to Roxgold and there is no assurance that actual events or results will meet the expectations as expressed herein. Forward-looking information is based on the assumption that all conditions to the Transaction and Offering will be met or waived and all necessary approvals obtained. Since forward-looking information is based on assumptions and addresses future events and conditions, by its very nature forward-looking information involves inherent risks and uncertainties. Actual results relating to, among other things, completion the Transaction, the deemed exercise of the Subscription Receipts, the release of the escrowed funds, and the planned purposes for the net proceeds of the Offering, could differ materially from those currently anticipated in such statements for many reasons such as: changes in demand and prices for minerals; delays in obtaining approvals, litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; technological and operational difficulties encountered in connection with the activities of Roxgold and Riverstone Resources Inc.; and other matters discussed in this news release. This list is not exhaustive of the factors that may affect Roxgold's forward-looking information. These and other factors should be considered carefully and readers should not place undue reliance on Roxgold's forward-looking information. Roxgold does not undertake to update any forward-looking information that may be made from time to time by it or on its behalf, except in accordance with applicable securities laws.

This news release includes certain "forward looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. Without limitation, statements regarding potential mineralization and resources and reserves, exploration results, and future plans and objectives of Roxgold are forward looking statements that involve various degrees of risk. The following are important factors that could cause Roxgold's actual results to differ materially from those expressed or implied by such forward looking statements: changes in the world wide price of mineral commodities, general market conditions, risks inherent in mineral exploration, risks associated with development, construction and mining operations, the uncertainty of future profitability and the uncertainty of access to additional capital.

Neither 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.

Contact Information

  • Roxgold Inc.
    Robert Sibthorpe
    President, CEO, and Director
    (604) 638-0979

    Roxgold Inc.
    Al Fabbro
    (604) 351-8850