VANCOUVER (miningweekly.com) – Near-term fertiliser producer Potash Ridge has closed the first tranche of a convertible security financing announced last month, bolstering the balance sheet by about $2.64-million.
The Toronto-based company said it will use the funds of the up to $11.8-million financing to advance its Valleyfield project, in Quebec, and Blawn Mountain project, in Utah, and provides working capital for general corporate purposes for more than 12-months.
The convertible security financing transaction is provided by New York-based asset management firm The Lind Partners.
Lind advanced to Potash Ridge $2.64-million, less a closing fee of $132 000, in return for Potash Ridge issuing an initial convertible security with a face value of $3.17-million. Lind can increase the funding under the first convertible security by a further $871 200 during its two-year term.
In parallel with issuing the convertible security, the Potash Ridge also issued to Lind 6.51-million warrants to acquire common shares, at a strike price of $0.50 each valid for 60 months.
Subject to certain conditions, the funding agreement also provides for the issuance of a second convertible security, in which Lind may fund up to another $6.2-million. Like the first tranche, Lind can also increase the funding under the second convertible security by up to $2.05-million, the company said.
Potash Ridge has the option to buy-back the convertible securities in cash at any time by paying a buy-back premium equal to 5% of the outstanding balance of the applicable convertible security, except that no such premium is payable if the corporation elects to buy back the first convertible security within the first six months of its issuance.
Lind manages several institutional investment funds focused on small- and mid-cap companies publicly traded in Australia, Canada and the UK across the mining, oil and gas, biotech and technology sectors.