Resource Capital, which is managed by Continuation Investments, a firm associated with the Rothschild family, will provide financing in two stages.
An initial $1.5-million private placement will be divided evenly between Auspex and Vestor, and the financing firm will contribute an additional US$4 million through a convertible loan facility.
In the private placement, Auspex will issue 2.5 million units at 30 cents each. A unit consists of one share and half of a share purchase warrant.
Each whole warrant will be exercisable for two years at 35 cents per share.
For its part, Vestor will issue 1.9 million units at 40 cents per unit, with the warrants exercisable for two years at 46 cents per share.
Units of both Auspex and Vestor will be subject to a holding period of four months, until June 18.
In late January, Auspex and Vestor announced their intention to merge to form one company, the name of which has yet to be determined. Vestor shareholders will receive one share of the amalgamated company for each share held, whereas shareholders of Auspex will receive 0.75 of a share of the amalgamated company for each held.
The US$4-million convertible loan facility will mature on Dec. 31, 2002. The amalgamated company will be permitted to prepay the outstanding balance of the loan at any time. Resource Capital reserves the right to re-advance the prepaid amount in order to purchase shares. The loan will not be convertible during the first year; however, it will be convertible into shares of the amalgamated company at 40 cents during the second year, at 50 cents in the third year, and at 60 cents thereafter, until the loan matures.
The new company will have a one-time option to force a conversion of all or part of the loan facility drawn down, provided its 30-day average closing price is at a 100% premium to the applicable conversion price.
Interest on the loan facility will be 2.5% over the the London Interbank Offered Rate and will be payable semi-annually in cash or shares at the discretion of the amalgamated company.
Resource Capital will also have the right to appoint one nominee to the new company’s board of directors, provided he holds at least a 5% fully diluted interest in the company.
Auspex reports that the feasibility study at Aljustrel is on schedule, with diamond drilling due for completion by mid-summer. Steffen, Robertson & Kirsten has been retained to calculate minable reserves, and metallurgical test work is in progress.
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