Santa Fe Gold plans to place $22 million 8% gold bonds due 2018

By Angela McDaniels

Tacoma, Wash., July 15 – Santa Fe Gold Corp. plans to place an estimated $22 million of 8% gold bonds due 2018 that are redeemable in cash or shares of a gold exchange-traded fund, according to a company news release.

The company has entered into a “best-efforts” placement agreement with an investment bank for the notes.

The notes will be issued in connection with a strategic share exchange agreement under which Santa Fe will issue 66 million shares of its common stock to Canarc Resource Corp. and Canarc will issue 33 million of its common shares to Santa Fe. Once the exchange is complete, Santa Fe will own about 17% of Canarc’s outstanding shares and Canarc will own about 34% of Santa Fe’s outstanding common shares.

The company said the purpose of the share exchange is to facilitate a turnaround for Santa Fe and a material new opportunity for Canarc driven by the appointment of Canarc nominees to the Santa Fe management team and board of directors, the recapitalization of Santa Fe, the restructuring of Santa Fe secured debt and redevelopment of its Summit gold-silver mine in New Mexico to production while preserving Santa Fe's more than $78 million of net operating loss carry-forwards.

Santa Fe said its senior secured creditors, Waterton Global Value, LP, Sandstorm Gold Ltd. and Sandstorm Gold (Barbados) Ltd., have entered into agreements that demonstrate that they are supportive of the share exchange transaction and that they are “amenable” to restructuring roughly $20 million of Santa Fe debt.

Santa Fe Gold is based in Albuquerque. It mines for gold, silver, copper and industrial minerals.

Canarc is a gold exploration and mining company based in Vancouver, B.C.

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