Lexington Gold, the Bermudian-based gold exploration and development company with projects in North and South Carolina, has borrowed £335,000 from several of its long-term significant shareholders and company directors.

The company said the unsecured convertible loan agreements have been arranged in order to maintain the momentum of investment in exploration work and cover general working capital requirements.

As the lending group includes the participation of the company’s chairman, Edward Nealon (£50,000), company directors, Rhod Grivas (£25,000) and Melissa Sturgess (£10,000) as well as existing substantial shareholders Pure Ice Limited (£100,000) and Mark Greenwood (£100,000), the company said, the convertible loan constituted a related party transaction pursuant to Rule 13 of the AIM Rules for Companies.

Accordingly, the independent director, Lexington Gold CEO Bernard Olivier, having consulted with the company’s nominated adviser, Strand Hanson Limited, considers that the terms of the convertible loan are fair and reasonable insofar as the company’s shareholders are concerned.

Lexington said the company’s board believed that the convertible loan represented the most attractive funding option at this time and avoids excessive equity dilution for the company’s existing shareholders.

Mr Olivier said: “The last 12 months have seen us make significant progress at our promising gold projects in North and South Carolina including establishing a maiden JORC Resource estimate at Loflin.

“With the successful completion of our latest 5,000m drilling campaign and the remaining assay results for Loflin and Jones-Keystone expected during April and May 2022, our focus now shifts towards the JORC Resource related work to be conducted over the coming months.

“Given current market conditions, we have decided to obtain this convertible loan facility, which allows us to draw down funds from a group of investors, predominantly existing significant shareholders and company directors.

“We believe that this is an attractive and flexible financing option for the upcoming period while we focus on our JORC Resource related work. Our intention remains to avoid excessive equity dilution for existing shareholders in the current market conditions, which have adversely impacted our share price.”

The convertible loan is unsecured and repayable with accrued interest on April 30, 2023.

The interest rate is six per cent per annum which is accruable to maturity and payable in full in new common shares if the convertible loan is converted. The interest rate increases to 10 per cent per annum in the event of any unremedied default as set out in the underlying agreements.

Lexington Gold closed trading on Wednesday on the Alternative Investment Market, a sub-market of the London Stock Exchange, at 2.55 pence per share, well below its 52-week high of 6.41p.