Spokane, WA – June 23, 2015 - Goldrich Mining Company (OTCBB: GRMC) (“Goldrich” or the “Company”) is pleased to announce the Company has raised gross proceeds of US$1.2 million through the sale of 12% of the cash flows Goldrich receives in the future from its interest in Goldrich NyacAU Placer, LLC (“GNP”) to Chandalar Gold, LLC (“CGL”), a non-related entity. Goldrich will retain its ownership of its 50% interest in GNP but, after the transaction, subject to the terms of the GNP operating agreement, Goldrich will effectively receive approximately 44% and CGL will receive 6% (12% of Goldrich’s 50% of GNP = 6%) of any cash distributions produced by GNP.
GNP is a 50/50 joint-venture formed between Goldrich and NyacAU LLC (“NyacAU”) to mine the various placer deposits that occur throughout the Company’s 23,000 acre Chandalar land package (“Chandalar”) in central Alaska. Commercial production of the Little Squaw placer deposit is on track to commence this year.
According to the GNP operating agreement, on at least an annual basis, GNP shall allocate and distribute all revenue (whether in cash or as gold) generated from GNP’s placer operation in the following order:
- Current year operating expenses,
- Members’ distribution of 20% (10% to Goldrich and 10% to NyacAU) provided that, for so long as the loan (LOC2) to GNP from NyacAU for the purchase of a royalty is not paid in full, GNP shall retain 100% of Goldrich’s distribution to apply against the loan,
- After payment of operating expenses and the member’s distribution of 20%, GNP will apply any remaining revenue to reduce the remaining balance of the loan from NyacAU to GNP for the development of the mine (LOC1),
- Reserves for future operating expenses and capital needs, not to exceed $3,000,000 in any year, and
- Member distributions of any remaining gold production on a 50:50 basis to each of NyacAu and Goldrich provided that, for so long as LOC2 is not paid in full, GNP shall retain 100% of Goldrich’s distribution to apply against the loan.
As part of the purchase, CGL also received 2,250,000 5-year warrants and an option to acquire an additional 10% of the cash flows Goldrich receives from its interest in GNP. Each warrant is exercisable to purchase one additional share of common stock of the Company at $0.07, for a period of five years.
The option must be exercised before July 1, 2016 to purchase an additional 10% of Goldrich’s future cash flow in consideration of a one-time cash payment of US$1.3 million. Subsequent to the exercise of the option and payment of all commissions, Goldrich would effectively receive, subject to the terms of the GNP operating agreement, approximately 38.5% and CGL would receive 11% (22% of Goldrich’s 50% of GNP = 11%) of any cash distributions produced by GNP.
GVC Capital LLC (“GVC”) of Greenwood Village, Colorado acted as lead placement agent for the Offering and received a commission equal to 5% of gross proceeds raised, was granted a perpetual undivided 0.5% interest in distributions paid out by GNP to Goldrich, and was issued 1.2 million Warrants (“Warrants”) (5% Warrant coverage), each Warrant exercisable into one common share of the Company for a period of five (5) years at a price of $0.05 per share. Should CGL exercise its option, the same fee structure would apply as above, including an additional 0.5% interest in distributions paid out by GNP to Goldrich.
Proceeds from the Offering will be used for general working capital purposes and reclamation at Chandalar.
This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described herein. None of the securities described herein have been or will be registered under the Securities Act or any applicable securities laws of any state of the United States and may not be offered or sold absent such registration or an available exemption therefrom. The securities were issued to qualified investors pursuant to exemptions from such registration requirements. The warrants may not be exercised except pursuant to exemptions under the Securities Act and any applicable securities laws of any state of the United States.