Aton Resources Inc. (AAN:TSX-V) has entered into an agreement with shareholder OU Moonrider to borrow up to US$30M. The facility can be accessed through one or more advances and is scheduled to mature on September 1, 2028.
#Interest and repayment terms
Amounts drawn under the facility will carry interest at 12 percent per annum. If principal and accrued but unpaid interest remain outstanding after maturity, those amounts will incur interest at 20% per annum until they are paid.
The borrowing is unsecured and cannot be converted into Aton equity securities. Aton cannot settle either the principal or interest payable under the facility with equity securities. The agreement also provides that no bonus shares or warrants will be issued in relation to the facility or any amounts borrowed under it.
#Related-party transaction status
Moonrider is a control person of Aton. It holds 89,701,789 Aton common shares, representing approximately 66.4% of the Company's 135,073,461 outstanding common shares.
Because of this relationship, the facility is a related party transaction under Multilateral Instrument 61-101 (MI 61-101) and Policy 5.9 of the TSX Venture Exchange. In the absence of applicable exemptions, the transaction would be subject to the valuation and minority approval requirements under those rules.
Aton said the facility is exempt from the MI 61-101 valuation requirements under section 5.5(b), relating to an issuer not listed on specified markets. It is also exempt from minority approval requirements under section 5.7(f), which covers a loan to an issuer with no equity or voting component.
#Board approval and use of funds
Aton's board of directors approved the facility. Tonno Vahk, a Moonrider nominee, abstained from the vote. The board determined that the terms were reasonable commercial terms and were not less advantageous to Aton than terms it could have obtained from an arm's-length party.
Aton said amounts drawn will support further exploration and development work at its Hamama project, as well as general and administrative expenses. The company has not provided a breakdown of the amounts intended for each purpose. The transaction also carries further terms beyond those set out here.
#Aton's Egyptian concession
Aton is focused on its 100% owned Abu Marawat Concession in Egypt's Arabian-Nubian Shield. The concession includes the Hamama deposit in the west, Abu Marawat in the northeast and Rodruin in the south, along with the historic British gold mines at Semna and Sir Bakis.
The Abu Marawat exploitation lease is 57.66 km 2 in size and covers the Hamama West and Rodruin deposits. It was established in January 2024 and has an initial term of 20 years. The concession also contains 255.0 km 2 of exploration areas retained for a further period of 4 years from January 2024.
The company said the concession is near a four-lane highway, a 220kV power line, a water pipeline and the international airports at Hurghada and Luxor.
#Key Takeaways
- Aton has entered into an agreement with OU Moonrider to borrow up to US$30M.
- The facility may be drawn in one or more advances and matures on September 1, 2028.
- Drawn amounts carry interest at 12 percent per annum, rising to 20% per annum on unpaid principal and accrued interest after maturity.
- The facility is unsecured, non-convertible and cannot be repaid with equity securities; no bonus shares or warrants will be issued.
- The related-party transaction qualifies for specified valuation and minority approval exemptions under MI 61-101.
#What has Aton Resources announced?
Aton Resources has entered into an agreement with shareholder OU Moonrider under which it may borrow up to US$30M. The facility may be accessed through one or more advances and matures on September 1, 2028.
#What interest applies to amounts drawn under the facility?
Drawn amounts bear interest at 12 percent per annum. Any principal and accrued but unpaid interest that remains unpaid at maturity will thereafter bear interest at 20% per annum until paid.
#Is the facility secured or convertible into equity?
No. Amounts drawn are unsecured and cannot be converted into Aton equity securities. Neither principal nor interest may be paid in equity securities, and no bonus shares or warrants are issuable in connection with the facility or amounts drawn under it.
#What is the relationship between Aton and OU Moonrider?
Moonrider is a control person of Aton. It holds 89,701,789 common shares, representing approximately 66.4% of Aton's 135,073,461 outstanding common shares. The facility is therefore a related party transaction under MI 61-101 and Policy 5.9 of the TSX Venture Exchange.
#What regulatory approvals or exemptions apply to the facility?
Without exemptions, the facility would be subject to the valuation and minority approval requirements under MI 61-101 and Policy 5.9. Aton said it qualifies for an exemption from the valuation requirements under section 5.5(b) of MI 61-101, identified as the issuer-not-listed-on-specified-markets exemption, and an exemption from minority approval requirements under section 5.7(f), identified as the loan-to-issuer, no-equity-or-voting-component exemption.
#How was the facility considered by Aton's board?
Aton's board approved the facility, with Moonrider nominee Tonno Vahk abstaining. The board concluded that the terms were reasonable commercial terms and were not less advantageous to Aton than terms available from an arm's-length party.
#How does Aton intend to use amounts drawn under the facility?
Aton said drawn funds will be used for further exploration and development activities at the Hamama project and for general and administrative expenses. The company has not disclosed how much would be allocated to either use.
#Where is Aton's project portfolio located?
Aton's principal asset described in the announcement is its 100% owned Abu Marawat Concession in Egypt's Arabian-Nubian Shield. It includes the Hamama, Abu Marawat and Rodruin deposits. The Abu Marawat exploitation lease covers 57.66 km 2, while an additional 255.0 km 2 of exploration areas is retained for a further period of 4 years from January 2024.
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