Thunder Mountain Gold, Inc. (TSX-V: THM; OTCQB: THMG), a junior gold exploration mining company has consummated a US$1.0 million convertible promissory note (the "Convertible Note") as part of the financing agreement with Idaho State Gold Company, LLC an Idaho Limited liability company ("ISGC"). The Closing took place on May 1, 2012 and the Company received US$1,000,000.
The Convertible Note associated with the Project financing provides working capital required to advance the Company's projects and achieve some of its near-term milestones. The Company's President, Eric Jones, said "The Board and management are grateful to our partner - Idaho State Gold - for believing in our vision and ability to achieve our goal of developing the South Mountain Project. We are looking forward to the coming months of project development."
Drafting of the Joint Venture Agreement is underway, following the execution of a Letter of Intent (the "Letter of Intent") with theBoise Idaho-based private equity group, as announced in the Company's April 18, 2012 news release. The Letter of Intent outlines a plan where Idaho State Gold can earn up to a 75% participating interest in the project with an investment of US$18.0 million in the project. The objective of the Joint Venture Agreement will be to advance the South Mountain property toward production, subject to completion of a positive feasibility study on the project.
Prior to its maturity date, the Convertible Note is convertible only upon the occurrence of certain events and during certain periods ("Mandatory Conversion"), and thereafter, at any time at the discretion of ISGC ("Voluntary Conversion"). Mandatory Conversion will occur when the Company and ISGC enter into and consummate a Joint Venture Agreement, and then the entire principal and accrued interest under the Convertible Note will be deemed a capital contribution under any Joint Venture Agreement. The Convertible Note will be secured by a first priority security interest over all of the Company's assets and will pay interest at a rate of 8.00% annually. The Convertible Note is due and payable on or before the earlier of the following dates: (i)June 30, 2012, or (ii) fourteen business days following the date on which the parties mutually agree that they will not finalize a Joint Venture Agreement. If ISGC and the Company do not execute and consummate a Joint Venture Agreement prior to the maturity date of the Convertible Note, then ISGC can voluntarily convert any or all of the unpaid principal and interest due under the Convertible Note. Upon voluntary conversion, ISGC will receive shares of the Company's common stock equal to a conversion price of $0.08 per share.
There were no finder's fees payable in connection with transaction and no registration rights were granted in conjunction with the Convertible Note or securities issuable under the Convertible Note.
The proceeds of the Convertible Note are required to be used for the following purposes:
- general corporate purposes,
- initiation of continued exploration work at the South Mountain project, and
- advancement of the Company's other exploration projects, including Trout Creek, West Tonopah, Iron Creek/ CAS and Clover Mountain
The Convertible Note is subject to the approval of the TSX Venture Exchange.
In addition, the Convertible Note and securities issuable under the Convertible Note, are "restricted securities" under the United States Securities Act of 1933, as amended (the "Act"), and unless so registered, may not be offered or sold in the United Statesexcept pursuant to an exemption from the registration requirements of the Act and applicable state laws.
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