TORONTO, ONTARIO--(Marketwired - Oct. 8, 2015) - Silver Bear Resources Inc. ("Silver Bear" or the "Company") (TSX:SBR) is pleased to announce that the Company's major shareholders, A.B. Aterra Resources Ltd. ("Aterra") and Inflection Management Corporation ("Inflection"), have agreed to supply the Company with loans in the aggregate principal amount of C$11,220,000
(the "Financing") to address the Company's immediate financial needs.
The Financing has been negotiated on an arm's-length basis, following
the significant time spent by management of the Company approaching
potential investors, private equity groups, investment funds,
corporations and investment banks in an effort to obtain additional
funding to develop the
Mangazeisky Silver Project. It is the
view of the Company's management and directors that the Financing will
enable Silver Bear to maintain its development activities at site as
they seek the remaining project financing.
Silver Bear's CEO, Graham Hill commented:
"We are very thankful for the continued support from our major
shareholders Aterra and Inflection. This support most importantly allows
Silver Bear to complete its feasibility studies, and continue
construction and development momentum of the
Mangazeisky Silver Project, while evaluating and negotiating our final project financing options."
As part of the first tranche of the Financing, Silver
Bear has issued unsecured contingent convertible promissory notes to
each of Inflection and Aterra in the principal amount of
C$3,300,000 and C$2,310,000, respectively, for a total of C$5,610,000 (together, the "Contingent Convertible Notes"), which notes will mature and will be due and payable on December 31, 2015.
As part of the second tranche of the Financing, Silver Bear has agreed
to issue an unsecured convertible promissory note to Inflection in the
principal amount of
C$5,610,000 (the "Inflection Convertible Note"), which note will have a maturity date and be due and payable on December 31, 2015.
Details of the terms of the Contingent Convertible Notes, the
Inflection Convertible Notes and the Financing, generally, are discussed
The Company intends to use the gross proceeds from
the Financing to finance further pre-construction and development of the
Mangazeisky property and for general working capital purposes.
(i) First Tranche - Contingent Convertible Notes
The Contingent Convertible Notes pay no interest and
are not convertible until such time as the Company obtains minority and
disinterested shareholder approval (as required by Multilateral
Protection of Minority Security Holders in Special Transactions ("MI
61-101") and under the TSX Company Manual) for the payment of interest
thereon and conversion of the Contingent Convertible Notes
(collectively, the "Loan Conversion Shareholder Approvals"). If the
Contingent Convertible Notes receive the Loan Conversion Shareholder
Approvals, the notes will bear interest at a rate of 15% per annum and
be convertible into common shares of the Company ("Common Shares") at an
exercise price of
C$0.075 per Common Share, for a total
of 74,800,000 Common Shares being issuable, assuming no interest is
accrued on the Contingent Convertible Notes.
The Toronto Stock Exchange
(the "TSX") has conditionally approved the issuance of the Convertible
Promissory Notes, subject to, among other things, receipt of the Loan
Conversion Shareholder Approvals. The Company intends to call and hold a
special meeting of its shareholders on
October 30, 2015
(the "Meeting") to seek the required Loan Conversion Shareholder
Approvals. Provided the Loan Conversion Shareholder Approvals are
received, all interest accrued under the Contingent Convertible Notes
will be convertible into Common Shares on the same terms as the
principal amount. The number of Common Shares that could be issued under
the Contingent Convertible Notes in lieu of payment of interest,
assuming the Loan Conversion Shareholder Approvals are received, and
that the notes were issued on
September 30, 2015, is 2,828,055 Common Shares.
In connection with the Financing, the Company also proposes to amend the maturity date for the US$7 million unsecured non-convertible promissory notes issued to Aterra and Inflection in March 2015 (the "March 2015 Promissory Notes"), from September 16, 2015 to December 31, 2015, in order to provide the Company additional time to pay the outstanding principal and accrued interest under the March 2015 Promissory Notes. On September 28, 2015, the Company obtained TSX conditional approval to extend the maturity date of the March 2015 Promissory Notes to December 31, 2015, but such approval is subject to, among other things, receipt of the Loan Conversion Shareholder Approvals at the Meeting.
Both Inflection and Aterra are insiders and related parties of Silver Bear. Mr. Boris Granovsky, a director of the Company is also a director of Aterra. Mr. Alexey Sotskov,
a director of the Company is also a director of Inflection.
Accordingly, the Contingent Convertible Notes are considered a "related
party" transaction pursuant to MI 61-101. The Company is relying on the
exemptions available under sections 5.5(c) and 5.5(g) of MI 61-101 from
the formal valuation and minority shareholder approval requirements. The
Contingent Convertible Notes were approved by the board of directors of
Silver Bear with Mr.
Alexey Sotskov and Mr. Boris Granovsky abstaining from participating in the vote.
(ii) Second Tranche - Inflection Convertible Note
When issued, the Inflection Convertible Note will
bear interest at a rate of 15% per annum and be convertible into Common
Shares at an exercise price of
C$0.045 per Common Share,
for a total of 124,666,667 Common Shares assuming no interest has
accrued on the Inflection Convertible Note at the time of conversion.
All interest accrued under the Inflection Convertible Note will be
convertible into Common Shares on the same terms as the principal. The
number of Common Shares that could be issued under the Inflection
Convertible Note in lieu of payment of interest, assuming that
disinterested shareholder approval is received at the Meeting, that the
note is issued on
October 30, 2015, and that the conversion price is C$0.045
per share, is 3,125,205 Common Shares. The Inflection Convertible Note
will also have an upwards ratchet, so that if the Company issues new
Common Shares prior to maturity of the Inflection Convertible Note at a
price greater than
C$0.045, the conversion price under the Inflection Conversion Note will increase to that greater price.
The Company obtained TSX conditional approval for the issuance of the Inflection Convertible Note on September 28, 2015,
but such approval is subject to, among other things, receipt of
disinterested shareholder approval at the Meeting for the issuance of
the Inflection Convertible Note.
Since Inflection is an insider of the Company, the
Inflection Convertible Note is considered a "related party" transaction
pursuant to MI 61-101. The Company is relying on the exemptions
available under sections 5.5(c) and 5.5(g) of MI 61-101 from the formal
valuation and minority shareholder approval requirements. The Inflection
Convertible Note was approved by the board of directors of Silver Bear
with Mr. Alexey Sotskov abstaining from participating in the vote.
The Financing will be conducted on a non-brokered
basis. No fee is payable by the Company in respect of the issuance of
securities under the Financing.
Resulting Share Ownership
The following table sets out the maximum number of
Common Shares issuable to each of Inflection and Aterra in connection
with the proposed transactions, on a non-diluted basis, using the
161,327,017 Common Shares issued and outstanding as of the date hereof,
and assuming no interest under any instrument is converted to Common
Number and Percent (non-diluted) of Common Shares
Name of Insider
Common Shares Issuable
upon conversion of the Contingent Convertible Notes
Common Shares Issuable
upon conversion of the Inflection Convertible Note
Conversion of Contingent Convertible Notes and Inflection Convertible Note
Common Shares (25.5% - basic)
||44,000,000 Common Shares or 27.27% of the currently issued and outstanding Common Shares
||124,666,667 Common Shares or 77.27% of the currently issued and outstanding Common Shares(1)
||209,843,138 Common Shares or 58.16% of the then issued and outstanding Common Shares
Common Shares (25.08% - basic)
||30,800,000 Common Shares or 19.09% of the currently issued and outstanding Common Shares
||71,268,579 Common Shares or 19.75% of the then issued and outstanding Common Shares
- Assumes conversion at C$0.045 per share.
- Assumes all instruments are actually converted. If
so, 360,793,684 Common Shares would then be issued and outstanding on a
non-diluted basis (and assuming no exercise of warrants).
- Assumes no payment of Common Shares in lieu of
interest. The maximum number of Common Shares that could be issued in
lieu of interest on the Contingent Convertible Notes is 2,828,055 and in
respect of the Inflection Convertible Note (assuming an
October 30, 2015 issue date and C$0.045 conversion price) is 3,125,205 Common Shares.
About Silver Bear
Silver Bear (TSX:SBR) is focused on the development of its wholly-owned Mangazeisky Silver Project,
covering a licence area of ~570 sq. km that includes the high grade
Vertikalny deposit (amongst the highest grade silver deposits in the
world) located 400 km north of Yakutsk in the
Republic of Sakha (Yakutia) within the Russian Federation. The Company was granted a 20-year mining licence for the Vertikalny deposit in September 2013 and completed a Preliminary Economic Assessment in February 2014. The Feasibility Study, scheduled for completion in 2H 2015, is contracted to Tetra Tech in the UK
with SRK and ERM as subcontractors for the mining and environmental
studies respectively. Other information relating to Silver Bear is
available on SEDAR at
www.sedar.com as well as on the Company's website at www.silverbearresources.com.
This release and subsequent oral statements made by
and on behalf of the Company may contain forward-looking statements,
which reflect management's expectations. Wherever possible, words such
as "intends", "expects", "scheduled", "estimates", "anticipates",
"believes" and similar expressions or statements that certain actions,
events or results "may", "could", "would", "might" or "will" be taken,
occur or be achieved, have been used to identify these forward-looking
statements. Although the forward-looking statements contained in this
release reflect management's current beliefs based upon information
currently available to management and based upon what management
believes to be reasonable assumptions, Silver Bear cannot be certain
that actual results will be consistent with these forward-looking
statements. A number of factors could cause events and achievements to
differ materially from the results expressed or implied in the
forward-looking statements. Such risk factors include, but are not
limited, to the possibility that necessary regulatory approvals are not
received or other conditions to completion of the Financing are not
satisfied, the possibility that we have to allocate proceeds to other
uses or reallocate proceeds significantly differently among the
anticipated uses, and to risk factors identified by Silver Bear in its
continuous disclosure filings filed from time to time on SEDAR. These
factors should be considered carefully and prospective investors should
not place undue reliance on the forward-looking statements.
Forward-looking statements necessarily involve significant known and
unknown risks, assumptions and uncertainties that may cause Silver
Bear's actual results, events, prospects and opportunities to differ
materially from those expressed or implied by such forward-looking
statements. Although Silver Bear has attempted to identify important
risks and factors that could cause actual actions, events or results to
differ materially from those described in forward-looking statements,
there may be other factors and risks that cause actions, events or
results not to be as anticipated, estimated or intended. There can be no
assurance that forward-looking statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such statements. Accordingly, prospective investors
should not place undue reliance on forward-looking statements. These
forward-looking statements are made as of the date of this release, and
Silver Bear assumes no obligation to update or revise them to reflect
new events or circumstances, unless otherwise required by law.
President and Chief Executive Officer
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