First Bauxite Corp closes second tranche $11m non-brokered private placement

First Bauxite Corporation has announced the closing of the second tranche of a non-brokered private placement to Resource Capital Fund VI L.P. of a US$11 million principal amount secured convertible note bearing 8% interest and maturing August 1, 2017. The principal amount of the Note will be convertible at the option of RCF into common shares of the company at CAD$0.05698 per share for a period of one year from the date of issuance and CAD$0.10 per share thereafter, while interest outstanding on the converted amount may, at RCF's election, be settled by the issue of company shares at the market price.

The company may prepay the principal amount of the Note in shares valued at the Conversion Price if the volume weighted average trading price of the company's shares exceeds 200 per cent of the conversion price for 40 consecutive trading days, while interest outstanding on the prepaid amount may be settled by the issue of company shares at the Market Price of such shares at the time of prepayment.

On October 30, 2015, the company closed the first tranche of the Private Placement and issued to RCF a US$4 million principal amount secured convertible note.

The proceeds of the Private Placement are expected to allow the company to proceed with its budgeted programs for its fiscal 2016 year including: (i) initial detailed engineering on the mining and beneficiation plant in Guyana for the company's Bonasika bauxite project; (ii) continuing analysis of the ceramics proppant market; (iii) mining of a bulk sample to manufacture large scale proppant samples for market tests in select oil and gas wells; and (iv) general working capital.

The company has also closed the replacement of its outstanding notes having an aggregate principal amount of approximately CAD$16.3 million and US$4 million maturing today, with new convertible notes having substantially the same terms and conditions as the Note, including interest rate, maturity date and conversion features.

The new Note, tranche 1 note and the Replacement Notes are secured obligations of the company under a general security agreement between the company and each of the note holders.

The Private Placement and Replacement Notes constitute related party transactions pursuant to Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions and TSX Venture Exchange Policy 5.9. In consideration of the financial circumstances of the company, the company is relying upon the "financial hardship" exemptions from the requirements to obtain a formal valuation and minority shareholder approval in Sections 5.5(g) and 5.7(e) of MI 61-101 respectively.

The company also filed a material change report on SEDAR regarding the Private Placement and Replacement Notes on November 9, 2015.

The $11 million Note and Replacement Notes issued today are subject to a four month hold period expiring July 9, 2016.

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