Teddy Bear Valley Mines (CDN) is raising the necessary funds to cover its portion of construction costs at the Holloway gold joint venture in northeastern Ontario.
The company will raise $2 million through a private placement of 7-year convertible debentures. The debentures will carry a coupon of 3% and be convertible into common shares at a $2.60 each.
In addition, Teddy Bear has arranged a $3.4-million credit facility with a merchant bank. The facility consists of allowable drawings of up to $2 million on a secured basis and $1.4 million unsecured. Interest payable on the above drawdowns is 7% and 9%, respectively.
The Holloway joint venture is 85%-owned by Hemlo Gold Mines (TSE), with the remainder held by Teddy Bear. When fully operational, the project is expected to produce 100,000 oz. gold annually. Production is to start next year.
In addition to funding its share of work at the Holloway joint venture, a portion of the funds raised by Teddy Bear will be used to repay the debt owed to a third party. Also, $1 million will be used to acquire and develop additional properties.
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