Toronto, Ontario – Atlanta Gold Inc. (TSXV: ATG; OTCQX: ATLDF) (the “Company”) announces that it has amended the terms of its previously announced (January 31, 2013) private placement of Units consisting of senior secured notes (“Notes”) and warrants to purchase common shares. The maximum size of the financing will be increased by US$1 million to up to US$9 million. Each Unit will consist of US$1.00 principal amount Notes and one common share purchase warrant.
The Notes will bear interest at 10% per annum and the principal will be amortized at 25%, 35% and 40%, which will be repayable in cash installments on August 31, 2014, August 31, 2015 and August 31, 2016, respectively. The Notes will be secured by the limited recourse guarantee of the Company’s subsidiary, Atlanta Gold Corporation (“AGC”), and by a mortgage of AGC’s interest in its Atlanta Project.
Each warrant will entitle the holder to purchase one common share of the Company for C$0.10 per share until August 31, 2016. The Company will have the right to accelerate the expiry date of the warrants if the closing price of the Company’s common shares on the TSX Venture Exchange exceeds C$0.25 for 20 consecutive days on which the Company’s shares trade.
Noteholders will receive an option exercisable until August 31, 2016 to purchase an aggregate of 95.0 ounces of gold at US$1,150 per ounce for each 100,000 Units purchased (US$100,000). Of the total ounces optioned, 23.75 ounces (25%) will vest on August 31, 2014, 33.25 ounces (35%) will vest on August 31, 2015 and 38.0 ounces (40%) will vest on August 31, 2016.
Concept Capital Management Ltd. (“CCM”) has agreed to subscribe for a minimum of US$3 million of the Units in two tranches, conditional upon the Company raising aggregate gross proceeds of not less than US$4.0 million on the closing of the first tranche, which will include a US$1.0 million subscription from CCM and a US$2.0 million subscription from Mr. Eric Sprott. Mr. Sprott has entered into a non-binding letter of intent reflecting his personal intention to purchase a minimum of US$2.0 million of the Units. Closing of the first and second tranches are targeted for completion by mid-June.
Subject to completion of the private placement of Units to CCM, its existing security as holder of the Company’s 6% convertible debenture issued to CCM in December 2011, will be extended to the entire Atlanta property and amended to rank equally with the security to be granted to holders of the Notes.
Net proceeds from the offering will be used for exploration, excavating and test processing of bulk samples, environmental permitting, engineering and development in respect of the Atlanta Project, payment of US$2 million Court award, implementation of the Supplement Plan of Operations and for general working capital purposes.
Completion of the offering is subject to the approval of the TSX Venture Exchange and the execution of definitive documentation. All securities issued under the offering will be subject to a four-month statutory hold period. Certain insiders of the Company may participate in the offering.
“We are pleased to secure a significant portion of the financing for development of the Atlanta Project providing the potential to finance project development without excessive dilution. In our view, the funding commitments from Eric Sprott and CCM validate the quality and value of the Atlanta Project and reaffirm our belief that the Atlanta Project remains undervalued with significant upside potential. We look forward to continued development of the Atlanta Project and the resulting benefits to all interested stakeholders, including the local community and the State of Idaho,” said Ernie Simmons, President and CEO of the Company.
The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended, or any state securities laws and unless so registered, may not be offered or sold in the United States or to U.S. persons except pursuant to an exemption from such registration requirements. This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any offer or sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
About the Company
Atlanta Gold Inc. holds through its 100% owned subsidiary, Atlanta Gold Corporation, leases, options or ownership interests in its Atlanta properties which comprise approximately 2,159 acres (8.74 square kilometres) located 90 air kilometers east of Boise, in Elmore County, Idaho. A long history of mining makes Atlanta very suitable for development of new mining projects. The Company is focused on advancing its core asset, Atlanta, towards mine development and production.
This news release contains forward-looking information and forward-looking statements (collectively “forward-looking statements”) within the meaning of applicable securities laws. All statements, other than statements of historical fact, are forward-looking statements. We use words such as “may”, “intend”, “will”, “should”, “anticipate”, “plan”, “expect”, “believe”, “estimate” and similar terminology to identify forward-looking statements, including with respect to the completion of the private placement financing and the participation of CCM and Mr. Sprott therein. Such are based upon the assumption that the Company will receive the approval of the TSX Venture Exchange, and that definitive documentation will be entered into by the investors in a timely manner such that the financing may be completed within the time permitted by the TSX Venture Exchange. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from those expressed or implied in the forward-looking statements and accordingly, readers should not place undue reliance on those statements. Risks and uncertainties that may cause actual results to vary include, but are not limited to, the Company’s and AGC’s limited financial resources and their ability to raise sufficient funds on a timely basis to fund the capital and operating expenses necessary to carry out its planned initiatives; fluctuations in resource prices and currency exchange rates; changes in general economic conditions and in the financial markets; the imposition of additional penalties against AGC should payment of the penalty imposed by the Court in respect of water treatment not be achieved in the time permitted; as well as other risks and uncertainties which are more fully described in the Company’s annual and quarterly Management’s Discussion and Analysis and in other Company filings with securities and regulatory authorities which are available at www.sedar.com. Should one or more risks and uncertainties materialize or should any assumptions prove incorrect, then actual results could vary materially from those expressed or implied in the forward-looking statements and accordingly, readers should not place undue reliance on those statements. Readers are cautioned that the foregoing lists of risks, uncertainties, assumptions and other factors are not exhaustive. The forward-looking statements contained in this news release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements contained herein or in any other documents filed with securities regulatory authorities, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws.
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