NQ Exploration Inc. ("NQ") announces the signing of an arm's length binding letter of intent (the "LOI") with A&M Resources USA LLC ("A&M"), a private company existing under the laws of Florida, pursuant to which NQ may acquire from A&M resource Colombia SAS, a wholly-owned subsidiary of A&M, a 15% undivided interest in a coal mine project encompassing a total of 100 Hectares located in Patia, Cuaca region, which is about 70 km from the city of Cali, Colombia (the "Property") and a $ 2 per tonne royalty on the Property's production, in consideration of an unsecured loan (the "Loan"), at the rate of 16% per annum with a 36 months maturity, from NQ for a principal amount of $ 1,200,000 to A&M (the "Acquisition").
In conjunction with the Acquisition, and in order to have sufficient working capital to complete the Acquisition and execute the business plan thereafter, NQ will complete a private placement (the "Offering") of an aggregate of $ 1,500,000 principal amount of convertible debentures (the "Debentures"). The Debentures will mature 36 month from their issuance and will bear interest at a rate of 14% per annum payable quarterly in cash. The principal amount of the Debentures shall be automatically convertible at any time before maturity into common shares of the Company (the "Common Shares") at a price of $ 5 per Common Share in the vent of a default on the Loan.
The Acquisition is subject to the following conditions: (i) the approval of the Acquisition by the TSX Venture Exchange, (ii) NQ obtaining a legal opinion on title to the Property, (iii) NQ completing the Private Placement, and (iv) the negotiation, execution and delivery of a definitive agreement. In addition, at any time on or before August 31, 2016, NQ may conduct due diligence investigations of the Property. If, at any time, NQ determines that it is not satisfied in its sole discretion with the results of such investigations, NQ may elect not to proceed with the Acquisition.