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RAPAPORT... True North Gems Inc. will conduct a brokered private placement of up to 175 million Class A common shares priced at 9 cents each, resulting in aggregate proceeds of up to $15,750,000. The subscriber under this private placement will be Lenomi Holdings Limited, a private investment company controlled by Joseph Gutnick. The transaction will occur in three phases (tranches), with the final phase requiring shareholder approval. True North intends to use the proceeds to advance its Aappaluttoq Ruby Project in Greenland. Under the terms of the agreement, the first tranche between Lenomi and True North, will net proceeds of approximately $500,000 and close on or before April 3, 2013, subject to receipt of applicable regulatory approvals. For the second tranche, which is expected to close on or before May 5, True North proposes issuing almost 48 million shares to Lenomi as a private placement at a price of 9 cents each for proceeds of $4,793,175, which would enable Lenomi to hold approximately 19.9 percent in the company. In the third tranche, True North proposes issuing almost 122 million shares for proceeds of $10,956,825, increasing Lenomi's stake to 45 percent. Completion of the third tranche is subject to the satisfaction of a number of conditions including regulatory approval and the approval of True North's shareholders. It is anticipated that True North's shareholders will be asked to approve the third phase at True North's annual general meeting at the end of June. Provided shareholder approval is obtained, the third tranche is expected to close on or before July 15. Nick Houghton, the CEO of True North, said, "We are pleased that Lenomi Holdings and Joseph Gutnick share our vision for Greenland ruby and we welcome them as a strategic shareholder. The proposed equity transaction complements the previously announced $23 million joint venture funding and $800,000 debt financing transactions and significantly reduces the financial risks associated with development of the Greenland ruby project. In addition, the private placement price represents an attractive premium to True North's recent closing share price in the context of current market conditions."
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