VVC Exploration Corporation (“VVC” or the “Company”) (TSX-V:VVC) announces the following:
Private Placement Financing
VVC is raising up to CA$2.0 million (US$1.5 million) in a non-brokered private placement of units of the Company at a price of CA$0.05 per Unit. Each Unit consists of one common share and one-half of one common share purchase warrant entitling the holder to purchase one additional common share of the Company for a period of three years, at an exercise price of CA$0.06 per share. The Company will pay a Finder's Fee, not to exceed 7% of the aggregate amount raised by the Finder, which fee may be paid in cash or by the issuance of up to 2,800,000 common shares and 1,400,000 warrants.
The Company expects to close the Private Placement in February 2020.
Debt Financing – 5-Year Note
VVC is also raising up to US$7.5 million in a 5-Year Note Debt Financing, with a Par Value of US$8.4 million, on a non-brokered private placement basis, with a Final Closing expected on April 30, 2020, with 2 possible earlier Closings. Each $100,000 unit (Par Value $112,00) comprises (i) one Promissory Note of US$112,000 Par Value and (ii) 200,000 VVC share purchase warrants ("Warrants") to purchase VVC shares at the greater of the Market Price at time of Closing or CA$0.06 expiring five years following the first Closing. Twelve Percent (12%) interest on the Par Value to start accruing on March 31, 2021, and to be payable quarterly with first payment due on June 30, 2021.
A Finder's Fee of up to 4% may be paid to qualified arm's-length person instrumental in introducing investors to the Company. In addition, the Finders could receive 25,000 Warrants for every Unit subscription received before February 28, 2020 and 12,500 Warrants for every Unit subscription received thereafter.
The total number of warrants to be issued to the investors and to Finders must not exceed the allowable amount under TSXV Policy 5.1 which will depend on the Market Price at each Closing. However, it is unlikely that the number of warrants to be issued at each Closing will exceed the said limits.
Other
Net proceeds of both Financings, after paying the general costs of the issue and the cash portion of the Finder's Fee, will be used for (i) the development of a Pilot Mine at the Company’s Gloria Copper Project in Chihuahua, State, Mexico, (ii) all Pilot Mine start-up costs, including but not limited to equipment, construction, supervision, and community activism, (iii) maintenance fees, permitting fees, exploration and option payments on all of the Company’s current and future mining projects, and, (iv) current accounts payable, (v) current general administrative expenses in Canada and in Mexico, and (v) working capital.
Only Accredited Investors can participate in these Financings. Both Financings are subject to the acceptance of TSX Venture Exchange ("TSXV").
Risk Factors
The Company’s business involves a variety of operational, financial and regulatory risks that are typical in the natural resource industry. The plans for the Company's proposed Pilot Mining Operation, including the economic case for it, have been prepared internally by the management team. No independent National Instrument 43-101 (NI 43-101) compatible Feasibility Study (FS), Pre-Feasibility Study (PFS), Preliminary Economic Assessment (PEA) or other economic assessment has been carried out on the project, and therefore, there is no independent confirmation that the project will be economic.
The Company is exposed to price risk with respect to commodity price movements and volatilities, in particular, the variability of copper prices.
The Company will attempt to mitigate these risks and minimize their effect on its financial performance, but there is no guarantee that the Company will be profitable in the future, and investment in the Financing should be considered speculative.
The Corporation is subject to many other risk factors that are more fully described in the "Financial Instruments and Risk Management" section and the "Business Risks" section of its Management's Discussion & Analysis (MD&A) which are prepared quarterly in conjunction with its Financial Statements and filed on SEDAR (www.sedar.com).
