First Bauxite Announces the Arrangement of $5 Million Bridge Loan Facility

 

　　The Bridge Loan is to be advanced in three separate advances: (1) a first advance (the "First Advance") of up to US$2 million, which amount has been paid to the Company; (2) a second advance of up to US$2 million, which is to be available on or after March 1, 2018; and (3) a third advance of up to an amount equal to the undrawn balance, which is to be available on or after April 1, 2018. The Bridge Loan will be repayable in full on the earlier of the demand of RCF VI after an "Event of Default" (as this term is defined in the Loan Agreement); and (2) the date falling 12 months after the date of the First Advance (the "Maturity Date").

 

　　The Bridge Loan would become immediately due and payable in full upon the incurrence, creation or assumption by the Company or any of its subsidiaries of any indebtedness or the establishment, sale or creation of any royalty, metal stream or similar arrangement in connection with financing the Company's Bonasika Bauxite Project (the "Bonasika Project") and the Company's bauxite mining and beneficiation plant in Guyana, in an aggregate amount of more than US$25 million.

 

　　The Company may pay or prepay the Bridge Loan in whole or in part at any time prior to the Maturity Date without penalty or premium. Interest will accrue at a rate equal to 10.0% per annum, which will immediately be increased by 3.5% annually on the occurrence of an Event of Default, all accrued and outstanding interest on the Bridge Loan to be payable on the date of repayment of the Bridge Loan. In consideration for establishing the Bridge Loan, the Company will pay RCF VI an upfront fee of US$150,000 on or before the first advance of the Bridge Loan.

 

　　RCF VI is a "related party" (as such term is defined in Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101") and TSX Venture Exchange Policy 5.9) of the Company: RCF VI, together with Resource Capital Fund V L.P. (collectively, "RCF"), which are under common management by RCF Management LLC, beneficially owns and controls 53,127,984 common shares of the Company (representing approximately 45.19% of the outstanding common shares of the Company) and C$8 million and US$19,422,861 aggregate principal amount of convertible notes. The Bridge Loan is therefore a "related party transaction" (as such term is defined in MI 61-101). In consideration of the financial circumstances of the Company, the Company is relying upon the "financial hardship" exemptions from the requirement to obtain a formal valuation and minority shareholder approval in Sections 5.5(g) and 5.7(e) of MI 61-101 respectively.