The debenture will last five years and bear an interest rate of 10%. Also, Sphinx will receive 500,000 warrants which may be converted into Gordex shares within a 3-year period at 70 cents each.
Gordex is a small gold producer with property at Cape Spencer, N.B. It also has properties in Nova Scotia. Sphinx is one of seven members of the Quebec-based Ariel mining group.
Under the agreement, Michel David, president of Ariel, will become chairman and CEO of Gordex, while other Ariel directors will be appointed to the Gordex board. Gordex Chairman Morton Gordon will be named a director of Gordex.
The agreement is subject to the approval of the regulatory authorities and of Gordex shareholders.
Sphinx intends to share a 50% interest in the Gordex agreement with another Ariel member, Mimiska Mining (ME).
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