Besra closes CAD10 million exit financing, satisfying final condition precedent to Proposal to Creditors

Auckland, New Zealand: 18 November 2016 – Besra Gold Inc. (“Besra” or the “Company”) has today closed its long-anticipated CAD10million exit financing, thus satisfying the remaining condition precedent to the Amended Proposal approved by creditors pursuant to the Bankruptcy and Insolvency Act (Canada) (the “BIA Proceedings”).

Pursuant to a Securities Purchase Agreement between Besra and Pangaea Holdings Limited (“Pangaea”) Pangaea was issued a secured convertible note (the “Convertible Note”) convertible at a conversion price of CAD0.01 into one common share (each a “Common Share” and, collectively, the “Common Shares”)) of Besra and one-third of a warrant to purchase Common Shares of Besra, each whole warrant entitling Pangaea to purchase one Common Share at an exercise price of CAD0.02 for a term of five years from the date of issuance. The Convertible Note matures on November 17, 2021, unless earlier converted in accordance with its terms. The Convertible Note is convertible at the option of Pangaea or converts automatically upon the earlier of the maturity date or the date of listing of the Common Shares on one or more specified stock exchanges. Interest on the Convertible Note is at the rate of 5% per annum payable annually in cash or in Common Shares at a rate of CAD0.01 per Common Share. The obligations of the Company under the Convertible Note are secured by a general security agreement over the company’s assets and by share pledge arrangements to be instituted within 45 days of closing over the Company’s interest in the Bau Gold Project in Malaysia and the Bong Mieu and Phuoc Son mines in Vietnam.

Pangaea also was issued warrants to purchase 333,333,333 Common Shares at an exercise price of CAD0.02 for a term of five years from the date of issuance.

In order to vest Pangaea with voting control of the Company pending conversion of the Convertible Note, Pangaea was issued Common Shares representing 50.1% of the voting rights of Besra’s issued and outstanding Common Shares. Such Common Shares have been deposited with an escrow agent pursuant to a common share escrow agreement which provides Pangaea with the voting rights in respect of such shares but not economic or other rights in respect thereof. Further, as Common Shares are issued to Pangaea, whether by conversion of the Convertible Note or otherwise, Common Shares subject to this escrow arrangement will be redeemed for a nominal amount such that the escrowed Common Shares will not cause Pangaea’s voting rights to exceed 50.1%. All remaining Common Shares subject to such escrow arrangement will be redeemed for a nominal sum upon conversion or repayment of the Convertible Note in its entirety.

Pursuant to a placing commission letter, the Company paid to Pangaea CAD500,000 in respect of the transactions contemplated by the Securities Purchase Agreement and, upon the revocation of applicable cease trade orders, the Company will issue to Pangaea 90 million Common Shares and warrants to purchase up to 30 million Common Shares on the same terms described above.

The net proceeds from the exit financing will be used to settle the cash portion of claims and expenses incurred under the BIA Proceedings, to repay the debtor in possession loan that was advanced to the Company under the BIA Proceedings and certain outstanding secured promissory notes, to acquire further interests in the Bau project and for operational purposes related thereto, to bring the Company’s continuous disclosure record current and apply for full revocations of all cease trade orders as well as for general working capital purposes.

In connection with the security arrangements to be made available to Pangaea, InCoR Holdings PLC (“Incor”), which holds a secured convertible note (the “Incor Note”) in the principal amount of CAD2,000,000, has agreed to subordinate all security interests held by it in the Company to those of Pangaea, in exchange for amendments to the Incor Note the effect of which is that the Incor Note will be automatically converted into Common Shares at a price of CAD 0.01 per Common Share and Incor will be granted warrants to purchase up to 66.667 million Common Shares at an exercise price of CAD0.02 for a term of five years from the date hereof, all subject to the revocation of applicable cease trade orders to permit such issuances.

In connection with the BIA Proceedings, the Company will be delivering to the proposal trustee under the BIA Proceedings the consideration necessary to satisfy the elections made by creditors under the BIA Proceedings. A certificate of full performance will be issued by the proposal trustee once all requirements of the Company’s proposal to creditors under the BIA Proceedings have been satisfied. The Company expects that to occur within the next 45 days.

After giving effect to the exit financing and the satisfaction of the elections made by creditors under the BIA Proceedings, the Company will have an aggregate of 1.206 billion Common Shares outstanding, Warrants to acquire up to an additional 128.03 million Common Shares and notes convertible for an additional 1.3 billion Common Shares and Warrants to acquire up to an additional 433.33 million Common Shares.

John Seton, Besra’s Managing Director commented, “We are very pleased to have completed the exit financing and to emerge from the BIA proceedings. I would particularly like to acknowledge the patience and support of our creditors and shareholders. The Company, with the strong support of Pangaea, is now in a position to re-focus our efforts on rebuilding shareholder value, based on our world class Bau project in East Malaysia.”

Exchanges

See our media release of 17 October 2014. Previously listed on:
TSX:BEZ
ASX:BEZ
FRANKFURT:OP6

Important note

Besra was formerly known as Olympus Pacific Minerals. We changed our name to Besra in November 2012.