Harte Gold Corp. [HRT-TSX; HRTFF-OTC; H40-FSE] closed the previously announced private placement subscription (the strategic investment) by New Gold Inc. [NGD-TSX, NYSE American] in common shares of the company.
In connection with the closing of the strategic investment, 154,940,153 common shares were issued to New Gold at a price of 16 cents per common share, for gross proceeds of $24,790,424.
The company plans to use the proceeds primarily toward accelerated mine development, planned expansion and the scheduled March 31, 2021, US$3.3-million debt payment to BNP Paribas.
In exchange for the waiver of certain rights in connection with the strategic investment, the company issued to ANR Investments BV (Appian) a deferred participation warrant that will allow Appian to acquire up to 55,802,812 common shares at 18 cents per share for a period of 15 months following March 24, 2021.
The Appian deferred participation warrant is not exercisable by Appian, subject to certain exceptions, until March 24, 2022. New Gold has also been granted a warrant which provides New Gold with the right, subject to Appian exercising the Appian deferred participation warrant, to acquire up to 8,314,619 additional common shares at 18 cents per common share in order to maintain its pro rata interest in the company.
The grant of the Appian deferred participation warrant is a related party transaction. The company is exempt from the requirements to obtain a formal valuation or minority shareholder approval in connection with such grant as the fair market value of such grant does not exceed 25% of the company’s market capitalization.
Harte Gold holds a 100% interest in the Sugar Zone Mine located in White River, Ontario. The Sugar Zone Mine entered commercial production in 2019. Production guidance is 60,000 to 65,000 ounces gold for 2021. The company has further potential through exploration at the Sugar Zone property, which encompasses 81,287 hectares covering a significant greenstone belt.