The company said it will used the proceeds to pay the final US$1.6 million payment owed to Canagold Resources Ltd. [TSX-CCM, OTCBB-CRCUF-OTC], to complete the acquisition of the Fondaway Canyon project in Nevada under the terms of an option agreement. Fondaway Canyon is one of two projects that the company gained an option to acquire three years ago from Canarc. The other was the Dixie Comstock property, which is also located in Churchill County, Nevada.
Fondaway hosts an inferred resource of 1.5 million ounces of gold and an indicated resource of 550,800 ounces.
Getchell said the debentures will mature three years from the date of the grant and will bear interest at 11% annually, non-compounding. In addition to the interest on the debentures, lenders will receive that number of non-transferable common share purchase warrants which is equal to the aggregate purchase price paid by the lender divided by $0.10.
Each warrant will entitle the holder to purchase one additional common share for $0.10 each for three years from the closing date of the debenture financing. Getchell said 50% of each lender’s warrants will vest on closing of the debenture financing and the remaining 50% will vest 14 months after closing. Unvested warrants will be cancelled in the event that the company prepays the debenture in full prior to vesting.
Getchell said it may at any time, following the date that is six months after the issue date, at the company’s option, prepay in cash the then outstanding principal amount of the debentures and any accrued interest, in whole or in part.
The company also aims to raise up to $150,000 from a supplemental offering of a non-brokered private placement to individuals wanting to invest, but who are unable to participate in the debenture financing. It will consist of 1.5 million units priced at 10 cents each.
Getchell shares were active Monday, easing 5.0% to $0.095. The shares trade in a 52-week range of 54 cents and $0.085.
Fondaway Canyon is an advanced stage gold property. The land package contains 170 unpatented lode claims and has a history of previous surface exploration and mining in the late 1980s and early 1990.
Getchell President Mike Sieb said the acquisition of Fondaway Canyon give the company a foundation to build on. The property contains multiple exploration targets that remain untested.
The characteristics of the gold mineralization support the company’s plan to evaluate the potential for both open pit bulk tonnage and underground mining.
The Dixie Comstock property is situated 17 kilometres northeast of Fondaway Canyon on the eastern flank of the Stillwater Range.
The property hosts a low-sulfidation, epithermal gold system localized along a moderately dipping range-front normal fault.