Philex unit to issue billion worth of convertible notes

hilex Mining Corporation and whollyowned subsidiary Silangan Mindanao Exploration Company, Inc. (SMECI) is planning to offer R7.2 billion worth of SMECI Convertible Notes.

In a disclosure to the Philippine Stock Exchange, Philex said it will act as the Solidary Co- Issuer for the offering which is subject to the terms and conditions of the Convertible Notes Agreement.

The agreement is between Philex, SMECI, and the noteholders, Asia Link B.V. – a subsidiary of First Pacific Company Limited – and the Philippine Social Security System, both existing shareholders of Philex.

SMECI is the holding company of Silangan Mindanao Mining Co., Inc. ( SMMCI), which is currently developing the Silangan Project in Surigao del Norte.

The proceeds of the issue shall be used primarily by SMECI to finance the project’s Definitive Feasibility Study and repay advances from Philex.

The valuation of the Silan-

Pgan Project, which formed the basis for the size of the issue, was conducted by an independent party. The issue bears a coupon rate of 1.5 percent, payable semi-annually every June 18 and December 18 and has a maturity of eight years, with a one-time redemption option exercisable by SMECI on the first anniversary of the issuance of the Note (i.e. December 18, 2015).

A premium, payable at a rate of 3 percent per annum, retroactive from issue date and compounded semiannually, will apply if SMECI exercises the redemption option.

Every R18,000 worth of the notes is convertible into one common share of SMECI starting December 19, 2015. A total of 400,000 new shares, representing 40 percent of the expanded share capital of SMECI, will be issued upon full conversion.

Upon maturity, all notes outstanding will be redeemed at par, plus all accrued interest, including the 3 percent per annum premium on face value, compounded semiannually from the date of issue (December 18, 2014).