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True North Gems Announces $15.75 Million Strategic Investment by Lenomi Holdings

Mar 25 2013 12:00AM

Marketwire

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VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 03/25/13 -- True North Gems Inc. (TSX VENTURE: TGX) ("True North" or the "Company") is pleased to announce that it will be entering into a best efforts agency agreement (the "Agency Agreement") with Casimir Capital LP ("Casimir"), for a brokered private placement of up to 175,000,000 Class A common shares ("Shares") of True North at a price of $0.09 per Share for aggregate gross proceeds of up to $15,750,000 (the "Transaction").

The subscriber under the private placement will be Lenomi Holdings Limited ("Lenomi"), a private investment company controlled by Joseph Gutnick. The Transaction will occur in three tranches, as described below. The Third Tranche will include the requirement for shareholder approval. Upon completion of the entire contemplated Transaction, Lenomi will hold approximately 45% of the issued and outstanding Shares of True North.

The Company intends to use the net proceeds of the Transaction to advance the development of the Company's Aappaluttoq Ruby Project in Greenland. The financing will cover the majority of Company's anticipated capital expenditure requirements for the Aappaluttoq Ruby Project, and can also be used as general working capital.

Nick Houghton, President and CEO of True North stated "We are pleased that Lenomi Holdings and Joseph Gutnick share our vision for Greenland ruby and we welcome them as a strategic shareholder. The proposed equity transaction complements the previously announced $23 million joint venture funding and $800,000 debt financing transactions and significantly reduces the financial risks associated with development of the Greenland ruby project. In addition, the private placement price represents an attractive premium to True North's recent closing share price in the context of current market conditions."

The Transaction will occur over a four month period and will be completed in three individual tranches:

First Tranche:

Under the terms of a Subscription Agreement between Lenomi and True North, True North has agreed to issue 5,555,555 Shares at $0.09 per Share for gross aggregate proceeds of approximately $500,000 (the "First Tranche"). Close of the First Tranche is expected to take place on or before April 3, 2013 and is subject to receipt of applicable regulatory approvals including approval of the TSX Venture Exchange.

Second Tranche:

For the Second Tranche the Company is proposing to issue approximately 47,701,948 Shares to Lenomi as a private placement at a price of $0.09 per Share, for gross aggregate proceeds of $4,793,175. Once the Second Tranche is completed, Lenomi will hold approximately 19.9% of True North's issued and outstanding Shares. Completion of the Second Tranche is subject to satisfaction of a number of conditions including, but not limited to, regulatory approval. It is anticipated the Second Tranche will close on or before May 5, 2013.

Third Tranche:

In the third tranche (the "Third Tranche"), True North is proposing to issue approximately 121,742,496 Shares to Lenomi on a private placement basis at a price of $0.09 per Share for gross proceeds of $10,956,825. This will enable Lenomi to hold approximately 45% of True North's issued and outstanding Shares. Completion of the Third Tranche is subject to satisfaction of a number of conditions including, but not limited to, regulatory approval and the approval of True North's shareholders. It is anticipated that True North's shareholders will be asked to approve the Third Tranche at True North's annual general meeting of shareholders, to be held before the end of June 2013. Provided shareholder approval is obtained, closing of the Third Tranche is expected to take place on or before July 15, 2013, and in any event no later than August 1, 2013.

The Agency Agreement includes customary provisions for a best efforts agency agreement. The Agency Agreement shall terminate on the earliest of: if applicable, the date on which True North's shareholders do not approve the Third Tranche; the closing of the Third Tranche; and August 1, 2013, unless previously terminated by Casimir. In addition, the Agency Agreement includes non-solicitation, right to match and fiduciary-out provisions during the term of the Agreement. The closing of the Second Tranche and Third Tranche will be subject to Casimir being satisfied with its due diligence, as well as customary provisions in a best efforts agency agreement.

Casimir will receive a cash commission on the sale of the Shares, representing 5% of the aggregate gross proceeds raised, and that number of broker warrants ("Broker Warrants") equal to 3% of the Shares sold in each tranche of the Transaction. Each Broker Warrant shall be exercisable for one Share of the Company at a price of $0.09 at any time up to 36 months after the date of issuance.

Securities issued under the Transaction will be subject to a four month hold period which will expire four months and one day from the date of issuance.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

This document contains "forward-looking information" and "forward-looking statements" (together, "forward-looking statements") within the meaning of applicable securities legislation, which are made as of the date of this document or the document(s) referred to herein. Statements that express predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects", "anticipates", "plans", "projects", "estimates", "intends", "strategy", "goals", "objectives" or variations thereof or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements. Forward-looking statements include, without limitation, statements with respect to: the amount of mineral reserves and mineral resources; the amount of future production over any period; net present value and internal rates of return of the proposed mining operation; capital costs; operating costs; strip ratios and mining rates; and mine life. The forward-looking statements are made based upon certain assumptions which, if untrue, could cause the actual results, performances or achievements of the Company to be materially different from future results, performances or achievements expressed or implied by the forward-looking statements.

These assumptions include, without limitation: the price of gemstone products produced; anticipated costs; the presence of and continuity of gemstones at modeled grades and values; the capacities of various machinery and equipment; the availability of personnel, machinery and equipment at estimated prices; exchange rates; appropriate discount rates; tax rates applicable to the proposed mining operation; financing structure and costs; anticipated mining losses and dilution; gemstone recovery rates; reasonable contingency requirements; and receipt of regulatory approvals on acceptable terms. By their very nature, forward-looking statements involve inherent risks and uncertainties that could cause actual results, performances or achievements to differ materially from those in the forward-looking statements. These include, without limitation: price volatility, discrepancies between actual and estimated production, mineral reserves and resources and metallurgical recoveries, mining operational and development risks, regulatory restrictions (including environmental regulatory restrictions and liability), activities by governmental authorities (including changes in taxation), currency fluctuations, the speculative nature of gemstone exploration, the global economic climate, dilution, share price volatility, competition, loss of key employees; additional funding requirements and defective title to mineral claims or property). This list is not exhaustive. See also, for example, the risks disclosed in the Company's other disclosure documents filed at www.sedar.com, including, without limitation, those disclosed in the Company's management's discussion & analysis. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements, except as otherwise required by applicable securities legislation.

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.



Contacts:
True North Gems Inc.
Nicholas Houghton
President and CEO
604-687-8055 or 1-800-399-8055
info@truenorthgems.com
www.truenorthgems.com





Source: Marketwire


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