Stornoway Diamond Corporation entered into a bought-deal financing agreement with Scotiabank for 15 million units, where each unit will be priced at $1, exercisable for one common share of Stornoway for no additional consideration, plus one-half of a common share purchase warrant. Each whole warrant entitles a holder to acquire one share at a price of $1.20 for a period of 24 months following closing of the Offering.
Aggregate gross proceeds of the offering will be $15 million, and the net proceeds will be used for pre-development capital expenditures of the Renard diamond project and for general corporate purposes. Stornoway expects the closing to occur on or about March 28, subject to approval of the Toronto Stock Exchange.
Stornoway granted Scotiabank an over-allotment option too, whereas it may purchase up to an additional 2,250,000 units at the offering price, exercisable in whole or in part at any time up to 30 days following closing of the offering. In the event that the over-allotment option is exercised in its entirety, proceeds will be $17.25 million.
In addition, Stornoway is negotiating a private placement of up to 10 million units, comprised of shares and common share purchase warrants, which the company currently intends to issue on substantially the same terms as this offering. The private placement is anticipated to be concluded with a current shareholder and one or more additional institutional investors.