Ecuador Gold Announces Closing of US$840,000 Debenture Offering

December 17, 2014 6:24 PM EST | Source: Ecuador Gold and Copper Corp.

Toronto, Ontario--(Newsfile Corp. - December 17, 2014) - Ecuador Gold & Copper Corp. (TSXV: EGX) (the “Company”), is pleased to announce that it has closed a non-brokered private placement debenture offering (the “Debenture Offering“) raising aggregate gross proceeds of US$840,000 through the issuance of senior secured convertible debentures (the “Debentures“). Aura International Services Ltd. (“Aura”) has subscribed for US$675,000 together with certain other smaller shareholders of the Company under the Debenture Offering.

Each Debenture bears an interest of 12% per annum with the principal amount and interest due and payable on November 28, 2015 (the “Maturity Date”) unless converted into units (the “Units”) of the Company at a price of C$0.05 per Unit on or before the Maturity Date. Each Unit is comprised of one common share and one-half common share purchase warrant (each whole warrant a “Warrant”) of the Company. Each Warrant entitles the holder to acquire one additional common share of the Company at an exercise price of C$0.10 per share for 24 months following the date of issuance.

Aura presently owns 129,063,587 common shares of the Company, representing 52.1% ownership. Accordingly, Aura is a control person of the Company under applicable securities laws and is therefore also a related party to the Company. Consequently, the sale of Debentures to Aura is a related party transaction, which is intended to be carried out under exemptions from the requirements of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). Under the Debenture Offering, the Company is relying upon exemptions from the formal valuation requirements and minority shareholder approval requirements of MI 61-101 under sections 5.5(b) and 5.7(1)(b) thereof, respectively. The Company is not aware of any valuation of the Company or its mineral properties. The Company is entitled to rely upon the exemption under section 5.5(b) because it is listed only on the TSX Venture Exchange and not one of the specified markets listed therein. Likewise, the Company is entitled to rely on the exemption under section 5.7(1)(b) because:

(a)

no securities of the issuer are listed or quoted on the Toronto Stock Exchange, the New York Stock Exchange, the American Stock Exchange, the NASDAQ Stock Market, or a stock exchange outside of Canada and the United States other than the Alternative Investment Market of the London Stock Exchange or the PLUS markets operated by PLUS Markets Group plc;
  
(b)

at the time the transaction is agreed to, neither the fair market value of the securities to be distributed in the transaction nor the consideration to be received for those securities, insofar as the transaction involves interested parties, exceeds C$2,500,000;
  
(c)

the issuer has one or more independent directors in respect of the transaction who are not employees of the issuer; and
  
(d)

at least two-thirds of the directors described in subparagraph (c) approve the transaction.
   

Since Aura has acquired a total of US$675,000 under the Debenture Offering, if Aura were to convert such amount of Debentures as well as the Warrants included in the Units and the other 15,841,255 common share purchase warrants of the Company held by Aura, then Aura would (assuming an exchange rate of C$1.1482/USD) hold approximately 168,155,892 common shares of the Company representing 58.0% ownership of the Company, on a partially diluted basis.

The proceeds of the Debenture Offering are being used with 80% for the Company’s Condor Gold Project and in-country working capital in Ecuador, and the remainder as additional working capital of the Company. All securities issued under the Debenture Offering will be subject to a statutory four-month hold period from the date of issuance.

About Ecuador Gold and Copper Corp.

Ecuador Gold and Copper Corp. is a Canadian exploration and mining company focused on the Condor Gold Project located in the Province of Zamora-Chinchipe in southern Ecuador. The Company is currently listed on the TSX Venture Exchange under the symbol “EGX“. For additional information, please visit us at www.ecuadorgoldandcopper.com.

For further information please contact:

Jeanny So Glenn Laing
CHF Investor Relations President and Chief Executive Officer
Telephone: (416) 868-1079 Telephone: (647) 865-3101
Email: jeanny@chfir.com Email: glaing@ecuadorgoldandcopper.com
   

Cautionary Note

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Not for distribution to U.S. Newswire Services or for dissemination in the United States. Any failure to comply with this restriction may constitute a violation of U.S. securities laws.

info