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HORNBY BAY EXPLORATION LIMITED
October 6, 2003 - Symbol: YHB (TSXV) HORNBY BAY PROPOSES PRIVATE PLACEMENT Hornby Bay Exploration Limited (TSX Venture: YHB) announces a proposed non-brokered private placement of up to $5,000,000 through the issuance of up to 5,000,000 flow through special warrants at a price of $1.00 per special warrant. Each special warrant is convertible into units at a price (the "Conversion Price") equal to the lesser of $0.20 or the average trading price of the common shares of the Company for the sixty days after the date of issuance of the special warrants. Each unit is comprised of one flow through share and one flow through share purchase warrant. Each warrant entitles the holder to acquire a flow through share of the Company for a period of two years at an exercise price equal to the Conversion Price plus $0.05 for the first year and the Conversion Price plus $0.10 for the second year. In connection with the private placement the Company has agreed to pay a finder's fee to Nutok Corporation of 1,000,000 common shares of the Company. In addition to the Special Warrants the investors will receive a pro rata share in a 1% Net Smelter Royalty (to a maximum of $10,000,000) over the Company's mineral properties.The proceeds of the private placement will be used for exploration work on the Company's mineral properties located in Nunavut which cover 225,000 hectares. A $2,250,000 exploration program consisting of airborne and ground surveys to locate diamond, base metal and uranium targets has been initiated on the Company's properties. It is expected that the program will be completed by mid-November. The Company also wishes to announce that an investor has agreed to provide a credit facility to the Company of up to $2,000,000. The credit facility bears interest at 1% per month, calculated and paid monthly, until such time as all the indebtedness under the facility is extinguished. The facility will be used for the purpose of providing either standby letters of credit or term deposits with the Receiver General for Canada for the purpose of securing the Company's mineral properties. The letters of credit, or term deposits, will be paid immediately and as exploration work is performed on the properties the security will be released. The Company has agreed to issue a bonus of 1,000,000 shares to the investor in connection with the credit facility. The Company will proceed with a non-brokered proposed private placement to raise up to $200,000 previously announced on June 24, 2003. The Company will issue up to 2,000,000 units at a price of $0.10 per unit. Each unit is comprised of one common share and one common share purchase warrant, each warrant entitling the holder thereof to acquire a common share for a period of two years from the date of issuance, at a price of $0.15. The exercise price of the warrants has been amended from the exercise price announced in the previous press release.
For further information contact:
James. M. Brady,
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