Otso Gold Corp (CVE:OTSO) (OTCMKTS:FIEIF) announced Friday it has closed over C$3.7 million worth of convertible debentures to progress the company’s Otso mine through to anticipated production in 2020.
The Vancouver-based firm’s Otso mine near the town of Raahe in Finland is fully built, permitted, and has infrastructure in place in preparation for production to begin.
The debentures include a US$1.5 million investment from PFL Raahe Holdings LP supported by an agreement by Lionsbridge Capital Pty Ltd, which manages Otso, to purchase the debentures from Pandion under certain conditions.
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The closing of the convertible debenture financing is a “significant step” in progressing the company and an achievement in the current economic climate, according to Otso’s CEO Brian Wesson.
“The company now can continue towards production and ensure it is sufficiently capitalized to weather the current market challenges and continue its progress,” Wesson told shareholders in a statement. “The receipt of a joint funding solution between Lionbridge's management team and Pandion is a significant vote of confidence for the company and testimony to Otso Gold's future."
Under the terms of the agreement, the debentures will mature in three years at a 10% annual interest rate. The net principal amount is convertible into shares of Otso after the first anniversary of issuance at either C$0.10 or a 20% discount to the closing market price, whichever amount is greater.
The debentures carry an original issue discount that sees every C$1,000 invested have a maturity value of C$1,250.
Otso said it is currently working on finalizing a longer-term funding solution and expects to have more news in the coming week. Earlier in March, Otso said it needs to raise C$17.5 million prior to the start of production.
The Otso mine has two open pits and is expected to process around 2 million tons of ore per year.
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