Condor Gold PLC said on Monday that it raised funds through the issue of unsecured convertible loan notes, while it also intends to launch an open offer to qualifying shareholders to subscribe to new ordinary shares.
The gold exploration company with operations focusing on Nicaragua said it raised £1.0 million through the issue of unsecured convertible loan notes with warrants attached to 18.7% shareholder Galloway Ltd.
Galloway Ltd is wholly owned by Burnbrae Group Ltd, which is subsequently wholly owned by Condor chair Jim Mellon.
Condor also said it intends to launch an open offer providing pre-emptive rights to qualifying shareholders at a subscription price of 15.00 pence per new ordinary share, exchanging six existing ordinary shares held at the record date for one new ordinary share. Shares in Condor Gold fell by 13% to 18.54p each in London on Monday afternoon.
The issue of loan notes and open offer is anticipated to raise up to £4.2 million in funds. The loan notes will automatically convert into new ordinary shares at 15.00p per ordinary share, depending on the open offer raising at least £1.0 million from shareholders excluding Galloway.
‘The company’s La India Project is almost construction ready, with the key permits to construct and operate a mine, a bankable feasibility study completed, a semi-autogenous mill and surface rights purchased. Initial production is targeted at 100,000 ounces of gold per year with an expansion to 150,000 ounces of gold per year,’ said Chair Jim Mellon, seeking to encourage existing shareholders to take up their pre-emptive rights under the open offer.
Condor Gold said it decided to finance company operations via existing shareholders, after seeing a prior offer of equity financing withdrawn and opting against using a secured debt facility. This is after finding equity markets to be difficult currently.
It also highlighted the impact of US sanctions in Nicaragua has delayed financing, as notified on October 27.
The timetable for the open offer is expected to be published next week.
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