Item 1.01Entry into a Material Definitive Agreement.
On January 11, 2023, Augusta Gold Corp. (the "Company") entered into an
Underwriting Agreement (the "Underwriting Agreement") with Eight Capital, as
lead underwriter and sole bookrunner, National Bank Financial and TD Securities
Inc. (collectively, the "Underwriters") pursuant to which the Company has agreed
to issue and sell to the Underwriters, 5,847,954 units of the Company (the
"Units") on a "bought deal" underwritten basis, at a public offering price of
Cdn$1.71 per Unit (the "Offering Price") for aggregate gross proceeds to the
Company of Cdn.$ 10,000,001.34 (the "Offering"). Each Unit is comprised of one
share of common stock in the capital of the Company, par value US$0.0001,
("Common Stock" or "Shares") and one-half of one common stock purchase warrant
(each whole common stock purchase warrant, a "Warrant"). Each Warrant shall
entitle the holder thereof to purchase one additional share of Common Stock
(each, a "Warrant Share") for a period of 36 months following the closing of the
Offering at an exercise price of Cdn.$2.30. The description of the Warrants
herein is a summary only and is subject to the specific attributes and detailed
provisions of the Warrants to be set forth in the warrant indenture between the
Corporation and Endeavor Trust Corporation.
Pursuant to the Underwriting Agreement, the Company has granted the Underwriters
a 30-day option ("Over-Allotment Option") from the closing of the Offering to
purchase up to 877,193 additional Units ("Additional Units") at the Offering
Price for additional gross proceeds of up to Cdn.$1,500,000.03, upon the terms
and conditions set forth in the Underwriting Agreement for the purpose of
covering over-allotments made in connection with the Offering and for market
stabilization purposes. In addition, the Company has agreed to (i) pay to the
Underwriters a cash commission, at the time of closing of the offering, equal to
5.0% of the aggregate gross proceeds received from the sale of the Units and, if
applicable, the Additional Units; and (ii) issue to the Underwriters a number of
common stock purchase warrants (the "Compensation Warrants") equal to 5.0% of
the number of Units sold pursuant to the Offering (including, if applicable,
Additional Units sold pursuant to the exercise of the Over-Allotment Option).
Each Compensation Warrant is exercisable into one share of common stock (each, a
"Compensation Warrant Share") for a period of 12 months following the closing of
the Offering at a price of Cdn.$1.71 per Compensation Warrant Share. The
Offering is expected to close on January 18, 2023, subject to customary closing
conditions as described in the Underwriting Agreement.
The net proceeds to the Company from the underwritten public Offering, after
deducting the Underwriters' expenses, the Company's estimated offering expenses,
and excluding the proceeds, if any, from the exercise of the Warrants issued in
the Offering or the Compensation Warrants, are expected to be approximately
Cdn.$8,778,837.27, assuming Over-Allotment Option is not exercised.
The Shares, Warrants, Warrant Shares, Compensation Warrants and Compensation
Warrant Shares will be issued pursuant to a prospectus supplement dated January
11, 2023, which was filed with the Securities and Exchange Commission (the
"SEC") in connection with a takedown from the Company's shelf registration
statement on Form S-3 (Registration No. 333-266055), which became effective on
August 18, 2022, and the base prospectus dated August 18, 2022 contained in such
registration statement.
The Underwriting Agreement contains customary representations, warrants and
covenants by the Company, customary conditions to closing, indemnification
obligations of the Company and the Underwriters, including for liabilities
arising under the Securities Act of 1933, as amended, other obligations of the
parties and termination provisions, as well as a form of lock-up agreement that
will be signed by certain of the Company's directors and officers, filed
herewith as Exhibit "B" to Exhibit 1.1 to this Current Report on Form 8-K. The
Underwriting Agreement has been filed with this Current Report on Form 8-K to
provide investors and security holders with information regarding its terms. It
is not intended to provide any other factual information about the Company. The
representations, warranties and covenants contained in the Underwriting
Agreement were made only for purposes of such agreement and as of specific
dates, were solely for the benefit of the parties to such agreement, and may be
subject to limitations agreed upon by the contracting parties.
The preceding summary of the Underwriting Agreement is qualified in its entirety
by reference to the full text of the Underwriting Agreement, copy of which is
attached as Exhibit 1.1 hereto and incorporated herein by reference.
Item 9.01Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Exhibit Description
1.1 Underwriting Agreement, dated January 11, 2023, among Augusta Gold
Corp. and Eight Capital, as lead underwriter and sole book runner, and
National Bank Financial and TD Securities Inc.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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