Calibre Mining Corp. (TSX-V: CXB) is pleased to announce that the Company has closed a CDN$102.5 million brokered private placement of 170,914,480 subscription receipts at a price of $0.60 per Subscription Receipt. Pursuant to the share purchase and consolidation agreement among the Company and B2Gold Corp. dated August 29, 2019, US$40 million of the gross proceeds of the Private Placement will be used by the Company, assuming the Release Conditions (as defined below) are satisfied to fund a portion of the purchase price to acquire the producing El Limon and La Libertad Gold Mines, the Pavon Gold Project and additional concessions in Nicaragua. For further details on the Transaction, please refer to the Company’s press release dated July 2, 2019.
Russell Ball, Executive Chairman of Calibre stated: “Despite a challenging equity financing environment, we were able to raise in excess of our targeted CDN $100 million and I wanted to express my thanks to those investors who participated in the financing for their support of the team and the assets. I believe we have a unique opportunity to create value by transforming Calibre from a junior exploration company to a multi-asset gold producer with significant exploration upside. We are excited about the opportunities that lie ahead, so much so that management and the Board subscribed for approximately CDN$6.5 million of the private placement, firmly aligning the interests of management with those of our long-term shareholders, including B2Gold, who after the closing of the Transaction will hold an approximate 31% equity interest in the Company.”
The gross proceeds from the Private Placement (less the expenses of the Agents (as defined below)) will be delivered to and held by Computershare Trust Company of Canada until such time as the release conditions set out in the subscription receipt agreement have been met. The Release Conditions include the completion, satisfaction or waiver of all conditions precedent to the Transaction.
Upon the satisfaction of the Release Conditions, each Subscription Receipt will be automatically converted, without any further action or payment of any additional consideration on the part of the holder, into one common share of the Company. The net proceeds of the Private Placement will be used to satisfy the US$40 million cash component of the purchase price payable on closing of the Transaction and the balance will be used for mine operations, exploration, working capital, and general corporate purposes.
If the Release Conditions are not satisfied on or before October 31, 2019, or prior to such date, Calibre advises the Lead Agents (as defined below) that the Release Conditions will not be satisfied by October 31, 2019, the Subscription Receipt holders will be entitled to a return of the aggregate Offering Price paid and any interest earned thereon on a pro rata basis and the Subscription Receipts will be cancelled and will be of no further force or effect.
Satisfaction of the Release Conditions remains subject to applicable regulatory and shareholder approvals and the satisfaction of other closing conditions customary in transactions of this nature including the approval of the TSX Venture Exchange. The shareholder meeting to approve the Transaction is scheduled for October 8, 2019 and Transaction closing is expected to occur on or about October 15, 2019.
In connection with the Private Placement, the Company will pay certain finders commission equal to 3.0% of the gross proceeds of any orders solicited by certain finders in either cash or Common Shares. In respect of these fees, the Company expects to pay CDN$86,652 in cash fees upon the closing of the Private Placement and will issue 571,659 Common Shares at the Offering Price upon the closing of the Transaction.
The Private Placement was led by Canaccord Genuity Corp. and Sprott Capital Partners LP with a syndicate of agents that included Raymond James Ltd., RBC Capital Markets, Haywood Securities Inc. and PI Financial Corp. In consideration for their services the Agents will receive a commission of 5.0% of the gross proceeds from the Private Placement, except for that portion of the gross proceeds which is subject to Finder’s Fees, where the commission payable to the Agents will be 2.0% of the gross proceeds. The Agents have the option of receiving payment in either cash or Common Shares at the Offering Price.
In an effort to align the interest of management and directors of the Company with its shareholders, insiders of the Company (excluding B2Gold) have subscribed for 10,667,940 Subscription Receipts for gross proceeds to the Company of CDN$6,400,764.
Each subscription by an “insider” is considered to be a “related party transaction” for purposes of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions and Policy 5.9 – Protection of Minority Security Holders in Special Transactions of the TSX Venture Exchange. Pursuant to MI 61-101, the Company intends to file a material change report providing disclosure in relation to each “related party transaction” on SEDAR under the Company’s issuer profile at www.sedar.com. The Company did not file the material change report more than 21 days before the expected closing date of the Private Placement as the details of the Private Placement and the participation therein by each “related party” of the Company were not settled until shortly prior to the closing of the Private Placement, and the Company wished to close the Private Placement on an expedited basis for sound business reasons.
The Company is relying on exemptions from the formal valuation and minority shareholder approval requirements available under MI 61-101. The Company is exempt from the formal valuation requirement in section 5.4 of MI 61-101 in reliance on sections 5.5(a) and (b) of MI 61-101 as the fair market value of the transaction, insofar as it involves interested parties, is not more than the 25% of the Company’s market capitalization, and no securities of the Company are listed or quoted for trading on prescribed stock exchanges or stock markets. Additionally, the Company is exempt from the minority shareholder approval requirement in section 5.6 of MI 61-101 in reliance on section 5.7(b) as the fair market value of the transaction, insofar as it involves interested parties, is not more than the 25% of the Company’s market capitalization.
All Subscription Receipts issued under the Private Placement will be subject to a hold period expiring four months and one day from the date hereof. The Common Shares to be issued upon the conversion of the Subscription Receipts and as partial payment of the Finder’s Fees and Commission to be issued on the closing of the Transaction will be freely tradeable pursuant to applicable Canadian securities laws.
The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.
Trading Halt and Graduation
Since announcing the transaction on July 2, 2019, trading of the shares of the Company has been halted. The Company expects trading to remain halted until the completion of the Transaction. Shortly following the closing of the Transaction and subject to meeting the Toronto Stock Exchange listing requirements, the Company anticipates graduating and commencing trading on the Toronto Stock Exchange. Although the Company expects that it will be able to satisfy the listing conditions of the Toronto Stock Exchange, there is no assurance that the Toronto Stock Exchange will grant listing approval, or that listing approval will be granted immediately in connection with the closing of the Transaction.
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