Avala Resources Ltd. (TSXV:AVZ) announced that it has signed a letter of intent to issue senior secured convertible debentures to existing investor Dundee Precious Metals Inc. for gross proceeds of $1,000,000 on January 22, 2016. The funding will be drawn in three tranches with the first tranche for $500,000, second tranche for $250,000 and the final tranche for $250,000. The debentures will bear interest at the rate of 12% per annum on the initial $500,000 worth of debentures, 15% per annum on the subsequent $250,000 worth of debentures, and 18% per annum on the final $250,000 worth of debentures.

The last drawdown will require a pre-approval from the investor. The debentures will mature on May 26, 2016 and will be convertible into common shares of company at any time up to 180 days after maturity of the debentures at a conversion price of $0.05 per common share. The issuance of the debentures is subject to a number of conditions, including but not limited to TSXV approval and execution of debenture agreements.

The directors of the company have approved the transaction.