VANCOUVER, Nov. 19, 2013 /CNW/ - Yellowhead Mining Inc. ("Yellowhead" or the
"Company") (TSX: YMI) announces that it has entered into an investment
agreement (the "Investment Agreement") with Matco Investments Ltd. ("Matco"),
a private investment firm based in Calgary, Alberta, pursuant to which
Yellowhead has issued to Matco an $8 million secured convertible debenture
(the "Debenture") on a private placement basis (the "Matco Financing"). Full
conversion of the debenture into common shares of the Company is subject to
shareholder approval at a special meeting of shareholders to be held on
December 30, 2013.
The proceeds of the Matco Financing will primarily be used to complete the
environmental assessment process for Yellowhead's 100% owned Harper Creek
Project and for general corporate purposes.
Frank D. Wheatley, Yellowhead's CEO, noted that "Yellowhead is extremely
pleased to have reached agreement with Matco to provide the Matco Financing,
as this will allow Yellowhead to move forward with the environmental
assessment process for the Harper Creek Project". Mr. Wheatley added that
"completing the environmental assessment process will represent the next
significant milestone in the development of the Harper Creek Project".
The Debenture has a principal amount of $8,000,000.10, a maturity date of
January 31, 2014 (the "Maturity Date"), bears interest at a rate of 9% per
annum, calculated and payable monthly in arrears, and is secured by a first
ranking security interest on all of Yellowhead's property and assets. All
security will be released and discharged on the earlier of: 1) the automatic
conversion of the Debenture, and 2) repayment of the Debenture together with
The Debenture is, subject to shareholder approval, convertible into 35,555,556
common shares in the capital of Yellowhead at a price of $0.225 per share (the
"Conversion Price"), representing a 50% premium to the closing price of
Yellowhead's common shares on November 18, 2013.
The full conversion of the Debenture into 35,555,556 common shares of
Yellowhead is subject to shareholder approval and Yellowhead has scheduled a
special meeting of shareholders to be held on December 30, 2013 for purposes
of seeking such shareholder approval.
Automatic Conversion. If shareholder approval is
received, then the Debenture will automatically be converted into 35,555,556
common shares of Yellowhead at the Conversion Price, and Yellowhead will pay
to Matco all accrued interest from the date of issue of the Debenture to the
date of automatic conversion. Upon automatic conversion, Matco will own
approximately 35.91% of the issued and outstanding common shares of
Yellowhead. If shareholder approval is not received, then the Debenture
will, subject to earlier voluntary conversion, be repayable in full on the
Maturity Date, together with accrued interest and a funding fee of $250,000.
Voluntary Conversion. Matco has the right, at any time
and from time to time, exercisable from the date of issue of the Debenture to
the earlier of: (i) the date that shareholder approval is obtained; and (ii)
the Maturity Date, to elect to convert up to a maximum of $3,566,250.00 of the
principal amount of the Debenture into 15,850,000 common shares of Yellowhead
at the Conversion Price. If Matco elects to exercise such right in full,
then after conversion, Matco will own approximately 19.99% of the issued and
outstanding common shares of Yellowhead, and the balance of the principal
amount of the Debenture, together with all accrued interest, will be repayable
to Matco on the date of such voluntary conversion.
Appointment of Director
Pursuant to the Investment Agreement, Matco was granted the right to designate
one individual for appointment to the Board of Directors of the Company and
Mr. Ronald Mathison has been appointed a director of the Company effective as
of November 19, 2013. If, between the closing date of the Matco Financing
and the next succeeding meeting of Company's shareholders at which directors
are to be elected, a director of the Company resigns, then the Company will
fill such vacancy with an additional individual nominated by Matco. In
addition, for so long as Matco's proportional interest of common shares of the
Company at the time of the recommendation by the Company of nominees for
election to the Board of Directors is greater than 15%, Matco will have the
right to nominate two individuals of its choosing for election to the Board of
Directors of the Company at all meetings of the shareholders of Company at
which directors are elected.
Matco Pre-Emptive Right
Matco was also granted a pre-emptive right pursuant to the Investment
Agreement. If the Company wishes to issue or pursue an offering of common
shares or securities convertible or exchangeable into common shares of the
Company (collectively, the "Subject Securities") then, for so long as either
the Debenture is outstanding, or the proportional interest ("Proportional
Interest") of Matco at such time is greater than 10% of the outstanding common
shares of Yellowhead, then Matco will have the right (the "Participation
Right"), subject to TSX approval and compliance with applicable legal
requirements, to subscribe for and purchase that number of Subject Securities
obtained when the total number of Subject Securities is multiplied by the
Proportional Interest of Matco at such time, on the same terms and at the same
price that the Company is prepared to issue the Subject Securities to other
prospective purchasers. The Participation Right will expire five years from
the date of closing of the Matco Financing.
About Matco Investments Ltd.
Matco Investments Ltd. is a private investment corporation based in Calgary,
Alberta. Matco is controlled by Mr. Ronald Mathison. Mr. Mathison also serves
on the boards of Calfrac Well Services Ltd., Tesla Exploration Ltd. and
Western Energy Services Corp.
About Yellowhead Mining Inc.
Yellowhead Mining Inc. is a development stage company with a 100% interest in
the Harper Creek copper-gold-silver project located in the North Thompson
region of British Columbia, Canada. The proposed Harper Creek mine will be a
large scale, long life, low cost open pit copper mine, has a NI 43-101
compliant feasibility study, and is currently in the environmental permitting
phase of development.
For more information on Yellowhead and the Harper Creek Project, please visit
Yellowhead's website at www.yellowheadmining.com.
Forward Looking Statements
Except for statements of historical fact, this news release contains certain
"forward-looking information" within the meaning of applicable securities
laws. Forward-looking information is frequently characterized by words such as
"plan", "expect", "project", "intend", "believe", "anticipate", "estimate" and
other similar words, or statements that certain events or conditions "may" or
"will" occur. Forward-looking statements are based on the opinions and
estimates of management at the date the statements are made, and are subject
to a variety of risks and uncertainties and other factors that could cause
actual events or results to differ materially from those anticipated in the
forward-looking statements, including, among others, the accuracy of mineral
grades and related assumptions, inherent operating risks, planned
expenditures, proposed exploration and development at the Harper Creek
Project, operating and economic aspects of the Harper Creek Project, as well
as those risk factors identified in the Company's Annual Information Form
filed under the Company's SEDAR profile. Yellowhead undertakes no obligation
to update forward-looking information if circumstances or management's
estimates or opinions should change except as required by law. The reader is
cautioned not to place undue reliance on forward-looking statements. More
detailed information about potential factors that could affect projected
results is included in the documents filed from time to time with the Canadian
securities regulatory authorities by Yellowhead.
SOURCE Yellowhead Mining Inc.
Ronald Handford, Executive Vice President, Corporate Development 604.681.1709
Ext. 204 Email:firstname.lastname@example.org
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CO: Yellowhead Mining Inc.
ST: British Columbia
-0- Nov/19/2013 19:38 GMT
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