United Silver Corp. ("USC" or the "Company") (TSX:USC)(OTCQX:USCZF)
and Hale Capital Partners ("Hale" or the "Lender") are pleased to
announce that, subject to final approval from the Toronto Stock
Exchange (the "TSX"), they have successfully closed their
previously announced financing transaction. USC is now in a
position to begin its four-year exploration and development plan to
test the mineralization of the South Vein and Alhambra Vein at
depth and along the east/west strike extensions of the veins.
In the financing transaction, USC issued to Hale a convertible
note (the "Convertible Note") in the principal amount of
USD$6,300,000 (being the Canadian equivalent of $6,332,760.00,
based on the Bank of Canada noon rate on January 31, 2012)
evidencing a loan the proceeds of which were advanced by Hale
pursuant to the Convertible Note and a securities purchase
agreement (the "Securities Purchase Agreement") entered into among
a wholly owned subsidiary of Hale, as agent and initial purchaser,
and USC. USC also issued to Hale 5,040,000 common share purchase
warrants (the "Warrants"). Hale will have the right at any time to
convert any or all of the principal owing under the Convertible
Note into common shares ("USC Common Shares") of USC at a
conversion price of USD$0.50 (being the Canadian equivalent of
$0.50, based on the Bank of Canada noon rate on January 31, 2012)
per USC Common Share. In addition, Hale will have the right at any
time to convert any or all of the accrued and unpaid interest that
USC has elected (provided that USC has satisfied certain conditions
set out in the Convertible Note) to add to the principal amount of
the Convertible Note ("PIK Interest"). The conversion price with
respect to PIK Interest will be an amount equal to the "market
price" (as defined in the Toronto Stock Exchange Manual) on the
applicable interest payment date, subject to the approval of the
TSX in each instance. Each whole Warrant will entitle the holder to
acquire one USC Common Share at an exercise price of US$0.42 (being
the Canadian equivalent of $0.42, based on the Bank of Canada noon
rate on January 31, 2012) per USC Common Share for a period of four
years from the date of issuance.
If the principal amount of the Convertible Note is fully
converted, Hale would hold 12,600,000 or 14.4% of the total number
of issued and outstanding USC Common Shares. In the event that all
of the Warrants are also exercised, Hale's holdings would increase
to 17,640,000 or 19% of the total number of issued and outstanding
USC Common Shares. As the number of USC Common Shares issuable to
Hale in respect of PIK Interest, if any, is contingent, in part,
upon future values and share prices, the number of USC Common
Shares which Hale may acquire should it exercise its conversion
rights in respect thereof cannot be determined at this time.
None of the Convertible Note, the Warrants or the USC Common
Shares that may be issued upon conversion or exercise,
respectively, of these securities, have been registered under the
United States Securities Act of 1933, as amended (the "1933 Act"),
or the securities laws of any state of the United States, and may
not be offered or sold in the United States absent registration or
an applicable exemption therefrom under the 1933 Act and the
securities laws of all applicable states.
Under the terms of the Securities Purchase Agreement, USC is
required to appoint to its board a person mutually agreed upon with
Hale and to permit an observer from Hale to attend its Board
meetings, subject to conditions.
Hale has filed an early warning acquisition report on SEDAR. A
copy of the report may be obtained by contacting Martin Hale at
(212) 751-8228.
USC intends to use the net proceeds from the financing for
exploration and development and working capital purposes. The loan
proceeds will allow USC to continue its exploration and development
drifting, bulk sampling and test mining on the South Vein. USC
proposes to mill ore from the bulk sampling and test mining under a
milling JV agreement with New Jersey Mining Company and to refine
it under a contract with Formation Metals at its refinery located
less than three miles from the mill. USC intends to use cash
generated from operations, including the bulk sampling and test
mining activities, to fund an extensive surface and underground
drilling program to test the mineralization of the entire Crescent
property and develop a property-wide mine plan without further
equity raises and dilution.
Hale may or may not purchase or sell securities of the Company
in the future on the open market or in private transactions,
depending on market conditions and other factors material to Hale's
investment decisions and reserves the right to dispose of any or
all of its securities in the open market or otherwise, at any time
and from time to time and to engage in hedging or similar
transactions with respect to the securities.
ABOUT UNITED SILVER CORP.
USC is a vertically integrated mining company with operations in
Idaho, USA. It has earned, through development and operations, an
80% interest in the Crescent Silver Mine project in Idaho's
prolific Silver Belt - directly between two of the world's
historically largest silver producing properties, the Sunshine and
Bunker Hill mines. USC also offers a full suite of mining services
including contract mining and mine machine repair and fabrication
services to silver miners in the district. USC's common shares
trade on the Toronto Stock Exchange under the symbol "USC". For
more information about USC, please visit:
www.unitedsilvercorp.com.
ABOUT HALE CAPITAL PARTNERS
Based in New York City, Hale Capital Partners has established
itself as a leading private equity firm focused on strategic
investments in public companies and their subsidiaries. Hale
Capital Partners' team is comprised of seasoned private equity
veterans and entrepreneurs, who bring not only deep domain
expertise but also hands-on operating experience to help build
highly successful companies. Hale Capital Partners' mining
portfolio spans all stages of mine development from exploration to
commercial production.
Hale's contact information is as follows:
Hale Capital Partners, L.P.
570 Lexington Avenue, 49th Floor
New York, NY 10022
Attn: Martin Hale, CEO and Portfolio Manager
ON BEHALF OF UNITED SILVER CORP.
Graham Clark, Chairman and Interim CEO
FORWARD-LOOKING STATEMENTS: This press release contains
forward-looking statements, which address future events and
conditions, which are subject to various risks and uncertainties.
Forward-looking statements in this press release include statements
about USC's intended use of the net proceeds and that they will
enable USC to continue its exploration and development activities,
its proposal to mill ore under a milling agreement with New Jersey
Mining Company and refine it under a contract with Formation
Metals, its intent to use cash from operations to fund an extensive
surface and underground drilling program and that it can develop a
property-wide mine plan without further equity raises and dilution.
These forward-looking statements are based on the expectations and
opinions of the Company's management on the date the statements are
made. The assumptions used in the preparation of such statements,
although considered reasonable at the time of preparation, may
prove to be imprecise and, as such, undue reliance should not be
placed on forward-looking statements. These assumptions include
management's assumption that the net proceeds of the financing,
together with revenue from operations, will generate sufficient
cash flow to fund the budget and that the price for metals will
continue to make the Company's activities economically feasible.
Actual results may differ materially from those currently
anticipated due to a number of factors beyond the Company's
control. These risks and uncertainties include the risks inherent
in the Company's activities and the risks identified in the
Company's periodic disclosure filings on the SEDAR website
maintained by the Canadian Securities Administrators. The Company
expressly disclaims any intention or obligation to update or revise
any forward-looking statements whether as a result of new
information, future events or otherwise.
The TSX has not reviewed and does not accept responsibility for
the adequacy or accuracy of the content of this news release.
Contacts: CHF Investor Relations Cathy Hume (416) 868-1079
x231cathy@chfir.com
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