Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-202063
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NORTHERN DYNASTY MINERALS LTD.
18,839,146 common shares, |
without par value |
This prospectus relates to the offer and sale from time to time
(the Offering) by the selling shareholders identified in this
prospectus of up to 18,839,146 common shares of Northern Dynasty Minerals Ltd.
(the Company) to be distributed without additional payment upon the
exercise or deemed exercise of 18,839,146 special warrants (the Special
Warrants) of the Company held by the selling shareholders. The Special
Warrants were issued to the selling shareholders by the Company in private
placements transactions that completed on December 31, 2014 (the Closing
Date) pursuant to subscription agreements entered into between the Company
and the selling shareholders. The common shares are being registered pursuant to
registration rights agreements entered into between the Company and the selling
shareholders. This prospectus also relates to such indeterminate number of
common shares as may be issuable with respect thereto as a result of stock
splits, stock dividends or similar transactions
The selling shareholders will receive all of the proceeds from
any sales of the common shares offered pursuant to this prospectus. We will not
receive any of these proceeds, but we will incur expenses in connection with the
offering.
The selling shareholders may sell the common shares at various
times and in various types of transactions, including sales in the open market,
sales in negotiated transactions and sales by a combination of these methods.
Shares may be sold at the market price of the common shares at the time of a
sale, at prices relating to the market price over a period of time, or at prices
negotiated with the buyers of shares.
The common shares of the Company are traded on the NYSE MKT LLC
(the NYSE MKT) and on the Toronto Stock Exchange (TSX) under
the symbols NAK and NDM, respectively. On February 6, 2015, the closing
price of the common shares, as reported on the NYSE MKT, was $0.59 per share and
the TSX was C$0.73 per share.
The principal executive office of the Company is located at
15th Floor, 1040 West Georgia Street, Vancouver, British Columbia, Canada V6E
4H1 and its telephone number is (604) 684-6365.
An investment in our common shares involves significant
risks. You should carefully consider the risk factors included in this
prospectus under the heading Risk Factors beginning on page 13 of this
prospectus, as well as those risk factors that we have incorporated by reference
into this prospectus and that we may include in any prospectus supplement.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
THE DATE OF THIS PROSPECTUS IS
FEBRUARY 24, 2015 |
TABLE OF CONTENTS
2
ABOUT THIS PROSPECTUS
This prospectus is part of a
registration statement on Form F-3 that we filed with the Securities and
Exchange Commission (SEC) under the Securities Act of 1933, as
amended (the Securities Act) using a continuous offering process. Under
this continuous offering process, the selling shareholders may from time to time
sell the common shares described in this prospectus in one or more offerings. We
will not receive any of the proceeds from these sales, but we will incur
expenses in connection with the offering.
No offer to sell these securities
is being made in any jurisdiction where the offer or sale is not permitted. You
should not consider this prospectus to be an offer or solicitation relating to
the securities in any jurisdiction in which such an offer or solicitation
relating to the securities is not authorized. Furthermore, you should not
consider this prospectus to be an offer or solicitation relating to the
securities if the person making the offer or solicitation is not qualified to do
so, or if it is unlawful for you to receive such an offer or solicitation.
These shares have not been
registered under the securities laws of any state or other jurisdiction as of
the date of this prospectus. The selling stockholders should not make an offer
of these shares in any state where the offer is not permitted.
This prospectus does not
constitute a prospectus under Canadian securities laws and accordingly does not
qualify the resale of the common shares on the TSX or otherwise in Canada. The
common shares offered hereby may not be sold on or through the facilities of the
TSX and may only be resold in Canada in compliance with exemptions from
prospectus and registration requirements under applicable Canadian securities
laws. The Company has filed a separate prospectus with Canadian securities
regulatory authorities under Canadian securities laws in respect of the issuance
of the common shares offered hereby, however the issuance by Canadian securities
regulators of a receipt for such Canadian prospectus will have no impact on the
ability of the holders of the common shares to resell the common shares within
the United States.
You should rely only on
information contained or incorporated by reference in this prospectus or in any
prospectus supplement hereto. We have not authorized any other person to provide
you with different information. If anyone provides you with different or
inconsistent information, you should not rely on it.
You should assume that the
information appearing in this prospectus is accurate as of the date on the front
cover of this prospectus only. Our business, financial condition, results of
operations and prospects may have subsequently changed.
Unless the context otherwise
requires, all references in this prospectus to the Company,
Northern Dynasty, we, us, our or our
company refer, collectively, to Northern Dynasty Minerals Ltd. and its
subsidiaries.
Unless otherwise indicated, in
this prospectus, all references to dollars, or $ are to United States
dollars. References in this Prospectus to C$ are to Canadian dollars. The
consolidated financial statements incorporated by reference into this
prospectus, and the financial data derived from those consolidated financial
statements, are presented in Canadian dollars.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes or
incorporates by reference certain statements that constitute forward-looking
statements within the meaning of the United States Private Securities
Litigation Reform Act of 1995. These statements appear in a number of places
in this prospectus and documents incorporated by reference herein and include
statements regarding our intent, belief or current expectation and that of our
officers and directors. These forward-looking statements involve known and
unknown risks and uncertainties that may cause our actual results, performance
or achievements to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. When
used in this prospectus or in documents incorporated by reference in this
prospectus, words such as believe, anticipate, estimate, project,
intend, expect, may, will, plan, should, would, contemplate,
possible, attempts, seeks and similar expressions are intended to identify
these forward-looking statements. All statements in documents incorporated
herein, other than statements of historical facts, that address future
production, permitting, reserve potential, exploration drilling, exploitation
activities and events or developments that the Company expects are
forward-looking statements. These forward-looking statements are based on
various factors and were derived utilizing numerous assumptions that could cause
our actual results to differ materially from those in the forward-looking
statements. Accordingly, you are cautioned not to put undue reliance on these
forward-looking statements. Additional forward-looking statements include, among
others, statements regarding:
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that we will ultimately be able to demonstrate that a
mine at the Pebble Project can be developed and operated in an
environmentally sound and socially responsible manner, meeting all
relevant federal, state and local regulatory requirements, and to obtain
required operating permits; |
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our expected financial performance in future
periods; |
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our plan of operations, including our plans to
carry out exploration and development activities; and |
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our ability to raise capital for exploration
and development activities. |
Certain of the assumptions we have
made include assumptions regarding, among other things:
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that we will be ultimately able to obtain
permitting for a mine at the Pebble Project; |
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that the market prices of copper and gold will
not decline significantly nor for a lengthy period of time; |
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that we will be able to secure sufficient working capital
necessary for the continued environmental assessment and permitting
activities and engineering work which are preconditions to any potential
development of the Pebble Project which would then require engineering and
financing in order to advance to ultimate construction; |
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that key personnel will continue their
employment with us; |
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our ability to obtain the necessary expertise
in order to carry out our exploration and development activities within
the planned time periods; and |
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our ability to obtain adequate financing on
acceptable terms. |
Some of the risks and
uncertainties that could cause our actual results to differ materially from
those expressed in our forward-looking statements include:
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we may never obtain permitting for a mine at
the Pebble Project for technical, legal or political reasons; |
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the existence of concerted opposition to the
Pebble Project; |
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our ability to continue to fund our exploration
and development activities; |
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the costs of development and operation of the
Pebble Project may be greater than we anticipate; |
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the speculative nature of the mineral resource
exploration business; |
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the lack of known reserves on our Pebble
Project; |
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our inability to establish that our Pebble
Project contains commercially viable deposits of ore; |
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our ability to recover the financial statement
carrying values of our Pebble Project if the Company ceases to continue on
a going concern basis; |
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our history of financial losses; |
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our ability to continue on a going concern
basis; |
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the volatility of gold, copper and molybdenum
prices; |
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the inherent risk involved in the exploration,
development and production of minerals; |
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changes in, or the introduction of new,
government regulations relating to mining, including laws and regulations
relating to the protection of the environment; |
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the presence of unknown environmental hazards
on our Pebble Project; |
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our inability to insure our operations against
all risks; |
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the highly competitive nature of our business;
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the historical volatility in our share price;
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the potential dilution to our shareholders
resulting from any future equity financings; and |
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the potential dilution to our shareholders from
the exercise of share purchase options to purchase our shares.
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This list is not exhaustive of
the factors that may affect any of the Companys forward-looking statements or
information. Forward-looking statements or information are statements about the
future and are inherently uncertain, and actual achievements of the Company or
other future events or conditions may differ materially from those reflected in
the forward-looking statements or information due to a variety of risks,
uncertainties and other factors, including, without limitation, the risks and
uncertainties described above.
Readers are advised to carefully
review and consider the risk factors identified in this prospectus and in the
documents incorporated by reference herein for a discussion of the factors that
could cause the Companys actual results, performance and achievements to be
materially different from any anticipated future results, performance or
achievements expressed or implied by the forward-looking statements. Readers are
specifically referred to our annual information form for the year ended December
31, 2013 (our 2013 AIF) and our management discussion and analysis for
the year ended December 31, 2013 (our 2013 MD&A) for a more
detailed discussion of the risks that we face, as well as the risk factors
identified under Risk Factors below. Each of our 2013 AIF and our 2013
MD&A are attached to our annual report on Form 40-F for the year ended
December 31, 2013 that is incorporated by reference herein. Readers are further
cautioned that the foregoing list of assumptions and risk factors is not
exhaustive.
The Companys forward-looking
statements and information are based on the assumptions, beliefs, expectations
and opinions of management as of the date such statements are made. The Company
will update forward-looking statements and information if and when, and to the
extent, required by applicable securities laws. Readers should not place undue
reliance on forward-looking statements. The forward-looking statements and
information contained herein are expressly qualified by this cautionary
statement.
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CAUTIONARY NOTES TO UNITED STATES INVESTORS CONCERNING
MINERAL RESERVE AND RESOURCE ESTIMATES
This prospectus, including the
documents incorporated by reference herein, uses terms that comply with
reporting standards in Canada and certain estimates are made in accordance with
Canadian National Instrument 43-101 Standards of Disclosure for Mineral
Projects (NI 43-101). NI 43-101 is a rule developed by the Canadian
Securities Administrators that establishes standards for all public disclosure
an issuer makes of scientific and technical information concerning mineral
projects. Unless otherwise indicated, all resource estimates contained in or
incorporated by reference in this prospectus have been prepared in accordance
with NI 43-101. These standards differ significantly from the requirements of
the SEC, and resource information contained herein and incorporated by reference
herein may not be comparable to similar information disclosed by companies in
the United States (US companies).
In addition, this prospectus uses
the terms measured mineral resources, indicated mineral resources and
inferred mineral resources to comply with the reporting standards in Canada.
We advise United States investors that while those terms are recognized and
required by Canadian regulations, the SEC does not recognize them. United States
investors are cautioned not to assume that any part or all of the mineral
deposits in these categories will ever be converted into mineral reserves. These
terms have a great amount of uncertainty as to their existence, and great
uncertainty as to their economic and legal feasibility.
Further, inferred resources
have a great amount of uncertainty as to their existence and as to whether they
can be mined legally or economically. Therefore, United States investors are
also cautioned not to assume that all or any part of the inferred resources
exist. In accordance with Canadian rules, estimates of inferred mineral
resources cannot form the basis of feasibility or other economic studies,
except in limited circumstances where permitted under NI 43-101.
It cannot be assumed that all or
any part of measured mineral resources, indicated mineral resources, or
inferred mineral resources will ever be upgraded to a higher category.
Investors are cautioned not to assume that any part of the reported measured
mineral resources, indicated mineral resources, or inferred mineral
resources in this prospectus is economically or legally mineable.
In addition, disclosure of
contained ounces is permitted disclosure under Canadian regulations; however,
the SEC only permits issuers to report mineralization as in place tonnage and
grade without reference to unit measures.
For the above reasons,
information contained in this prospectus and the documents incorporated by
reference herein containing descriptions of our mineral deposits may not be
comparable to similar information made public by US companies subject to the
reporting and disclosure requirements under the United States federal securities
laws and the rules and regulations thereunder.
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GLOSSARY OF TECHNICAL TERMS
CuEQ |
Copper Equivalent |
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Cut-off Grade |
The grade below which Mineralized material will
be considered waste rather than ore. |
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Indicated Mineral Resource |
That part of a Mineral Resource for which quantity, grade
or quality, densities, shape and physical characteristics are estimated
with sufficient confidence to allow the application of modifying factors,
which are considerations used to convert Mineral Resources to NI 43- 101
mineral reserves and include, but are not restricted to, mining,
processing, metallurgical, infrastructure, economic, marketing, legal,
environmental, social and governmental factors, in sufficient detail to
support mine planning and evaluation of the economic viability of the
deposit. Geological evidence is derived from adequately detailed and
reliable exploration, sampling and testing and is sufficient to assume
geological and grade or quality continuity between points of observation.
It has a lower level of confidence than that applying to a class of
mineral reserves referred to as probable mineral reserves under NI
43-101. |
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Inferred Mineral Resource |
That part of a Mineral Resource for which quantity and
grade or quality are estimated on the basis of limited geological evidence
and sampling. Geological evidence is sufficient to imply but not verify
geological and grade or quality continuity. It has a lower level of
confidence than that applying to an Indicated Mineral Resource and must
not be converted to a Mineral Reserve. It is reasonably expected that the
majority of Inferred Mineral Resources could be upgraded to Indicated
Mineral Resources with continued exploration. |
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Measured Mineral Resource |
That part of a Mineral Resource for which quantity, grade
or quality, densities, shape, and physical characteristics are estimated
with confidence sufficient to allow the application of modifying factors,
which are considerations used to convert Mineral Resources to NI 43-101
mineral reserves and include, but are not restricted to, mining,
processing, metallurgical, infrastructure, economic, marketing, legal,
environmental, social and governmental factors, to support detailed mine
planning and final evaluation of the economic viability of the deposit.
Geological evidence is derived from detailed and reliable exploration,
sampling and testing and is sufficient to confirm geological and grade or
quality continuity between points of observation. It has a higher level of
confidence than that applying to either an Indicated Mineral Resource or
an Inferred Mineral Resource. It may be converted to either proven
mineral reserves or probable mineral reserves under NI 43-101.
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Mineral Resource |
A concentration or occurrence of solid material of
economic interest in or on the Earths crust in such form, grade or
quality and quantity that there are reasonable prospects for eventual
economic extraction. The location, quantity, grade or quality, continuity
and other geological characteristics of a Mineral Resource are known,
estimated or interpreted from specific geological evidence and knowledge,
including sampling. |
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Mineralized |
Mineral bearing; the metallic minerals may have
been either a part of the original rock unit or injected at a later time.
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Mineral Symbols |
Au - Gold; Ag - Silver; Cu - Copper; Mo -
Molybdenum |
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NI 43-101 |
National Instrument 43-101, the national securities law
instrument in Canada respecting standards of disclosure for mineral
projects. |
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Porphyry deposit |
A type of mineral deposit in which ore minerals are
widely disseminated, generally of low grade but large tonnage. |
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Qualified Person |
as defined in NI 43-101 is an engineer or geoscientist
with at least five years of experience in mineral exploration, mine
development or operation or mineral project assessment, or any combination
of these; has experience relevant to the subject matter of the mineral
project and the technical report; and is in good standing with a
professional association and, in the case of foreign association, is of
recognized stature with that organization. |
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tonne or t |
1.102 short tons. |
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NORTHERN DYNASTY MINERALS LTD.
This summary highlights
information contained elsewhere or incorporated by reference in this document.
You should read this entire document carefully, including the section entitled
Risk Factors and our financial statements and the related notes included
elsewhere in this document or incorporated by reference herein.
Overview
Northern Dynasty is a mineral
exploration company existing under the British Columbia Corporations Act
focused on developing the Pebble copper-gold-molybdenum mineral project
located in the state of Alaska, U.S. (the Pebble Project). The Pebble
Project is located in southwest Alaska, 19 miles (30 kilometers) from the
village of Iliamna, and approximately 200 miles (320 kilometers) southwest of
the city of Anchorage.
Our Alaska mineral resource
exploration business is operated through an Alaskan registered limited
partnership, the Pebble Limited Partnership (the Pebble Partnership or
PLP), in which we own a 100% interest through an Alaskan general
partnership, the Northern Dynasty Partnership. Pebble Mines Corp., a 100%
indirectly owned subsidiary of the Company, is the general partner of the Pebble
Partnership and responsible for its day-to-day operations.
We currently have negative
operating cash flow because we currently have no revenues. In addition, as a
result of our business plans for development of the Pebble Project, we expect
cash flow from operations to be negative until revenues from production at the
Pebble Project begin to offset our operating expenditures. In addition, our cash
flow from operations will be affected in the future by expenses that we incur in
connection with the Pebble Project. We will require substantial additional
capital in order to fund our planned exploration and development activities. See
Risk Factors.
RECENT DEVELOPMENTS
Bristol Bay Watershed and the EPA
In February 2011, the United
States Environmental Protection Agency (the EPA) announced it would
undertake a Bristol Bay Watershed Assessment study focusing on the potential
effects of large-scale mine development in Bristol Bay and, specifically the
Nushagak and Kvichak area drainages. This process was ostensibly initiated in
response to calls from persons and groups opposing the Pebble Project for the
EPA to pre-emptively use its asserted authority under Section 404(c) of the U.S.
Clean Water Act (the Clean Water Act) to prohibit discharges of
dredged or fill material in waters of the US within these drainages; however,
evidence exists that the EPA may have been considering a Section 404(c) veto of
the Pebble Project at least as far back as 2008 two years before it received a
petition from several Alaska Native tribes.
The EPAs first draft Bristol Bay
Watershed Assessment (BBWA) report was released on May 18, 2012. In the
Companys opinion after review with its consultants, the draft report is a
fundamentally flawed document. By the EPAs own admission, it evaluated the
effects of a hypothetical project that has neither been defined nor proposed
by the Pebble Partnership, and for which key environmental mitigation strategies
have not yet been developed and, hence would not yet be known. It is believed by
the Company that the assessment was rushed because it was based on studies
conducted over only one year in an area of 20,000 square miles. In comparison,
the Pebble Project has studied the ecological and social environment surrounding
Pebble for nearly a decade. The EPA also failed to adequately consider the
comprehensive and detailed data that the Pebble Partnership provided as part of
its 27,000-page Environmental Baseline Document.
The EPA called for public comment
on the quality and sufficiency of scientific information presented in the draft
BBWA report. In response, the Pebble Partnership and Northern Dynasty made
submissions on the draft report. Northern Dynasty made a presentation
highlighting these shortcomings at public hearings held in Seattle, Washington,
on May 31, 2012 and in Anchorage, Alaska, on August 7, 2012. In July 2012, the
Company also submitted a 635-page critique of the draft report in response to
the EPAs call for public comment, and has called upon the EPA to cease such
unwarranted actions until such time as a definitive proposal for the development
of the Pebble deposit is submitted into the rigorous National Environmental
Policy (NEPA) permitting process.
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Concerns about the reasonableness
of the basis of risk assessment in the draft EPA report were stated by many of
the independent experts on the peer review panel assembled to review the BBWA,
as summarized, in a report entitled External Peer Review of EPA's Draft
Document: An Assessment of Potential Mining Impacts on Salmon Ecosystems of
Bristol Bay, Alaska released in November 2012. In a wide-ranging
critique of the draft report's methodology and findings, many peer review
panellists called the EPA's effort to evaluate the effects of a hypothetical
mining scenario on the water, fish, wildlife and cultural resources of
Southwest Alaska inadequate, premature, unreasonable, suspect and
misleading.
On April 26, 2013, the EPA
released a revised draft of the BBWA report and announced another public comment
and Peer Review period. The Pebble Partnership and Northern Dynasty made
submissions on the revised draft. In late May 2013, Northern Dynasty filed a
205-page submission which describes the same major shortcomings as the original
report published in May 2012.
In mid-January 2014, the EPA
released the final version of its BBWA. The report still reflects many of the
same fundamental shortcomings as previous drafts.
On February 28, 2014, the EPA
announced the initiation of a regulatory process under Section 404(c) of the
Clean Water Act to consider restriction or a prohibition on mining activities
associated with the Pebble deposit in order to protect aquatic resources in
southwest Alaska. In late April 2014, the Pebble Partnership submitted a
comprehensive response to the EPAs February 28, 2014 notification letter.
In late May 2014, the Pebble
Partnership filed suit in the U.S. District Court for Alaska and sought an
injunction to halt the regulatory process initiated by the EPA under the Clean
Water Act, asserting that, in the absence of a permit application, the process
exceeds the federal agencys statutory authority and violates the Alaska
Statehood Act among other federal laws. The State of Alaska and Alaska Peninsula
Corporation, an Alaska Native village corporation with extensive land holdings
in the Pebble Project area, later joined in the Pebble Partnerships lawsuit
against the EPA as co-plaintiffs. On September 26, 2014, U.S. Federal Court in
Alaska granted the EPAs motion to dismiss the case. This ruling did not judge
the merits of the statutory authority case, it only deferred that hearing and
judgment until after a final Section 404(c) determination has been made by the
EPA. If or when the EPA action is deemed final, the Pebble Partnership will
pursue the underlying case. The Pebble Partnership has also appealed the
decision to grant the motion to dismiss to the 9th Circuit Court of Appeals. The
9th Circuit Court of Appeals has agreed to an expedited hearing of
the Pebble Partnerships appeal.
On July 18, 2014, EPA Region 10
announced a Proposed Determination to restrict the discharge of dredged or
fill material associated with mining the Pebble deposit in a 268 square mile
area should that disposal result in any of the following: loss of five or more
miles of streams with documented salmon occurrence; loss of 19 or more miles of
streams where salmon are not documented but that are tributaries of streams with
documented salmon occurrence; the loss of 1,100 or more acres of wetlands,
lakes, and ponds that connect with streams with documented salmon occurrence or
tributaries of those streams; and stream flow alterations greater than 20
percent of daily flow in nine or more linear miles of streams with documented
salmon occurrence. The Companys management does not accept that the EPA has the
statutory authority to impose conditions on development at Pebble, or any
development project anywhere in Alaska or the US, prior to the submission of a
detailed development plan and its thorough review by federal and state agencies
including development of an Environmental Impact Statement (EIS) and
review under NEPA.
On August 19, 2014, the Pebble
Partnership submitted a comprehensive legal and technical response to EPA Region
10s Proposed Determination. Northern Dynasty and the Pebble Partnership believe
the Proposed Determination is unsupported by the administrative record as
established by the Bristol Bay Watershed Assessment, and is therefore arbitrary
and capricious.
On September 3, 2014, the Pebble
Partnership initiated a second action against the EPA in federal district court
in Alaska charging that EPA violated the Federal Advisory Committee Act
(FACA) due to its close interactions with, and the undue influence of
Environmental Non-Governmental Organizations and anti-mining activists in
developing the Bristol Bay Watershed Assessment, and with respect to its
unprecedented pre-emptive 404c regulatory process under the Clean Water
Act. On September 24, 2014, the U.S. Federal Court judge in Alaska released an
order recognizing that the EPA agreed not to take the next step to advance its
404c regulatory process with respect to southwest Alaskas Pebble Project until
at least January 2, 2015.
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On November 24, 2014, the U.S.
Federal Court judge in Alaska granted the Pebble Partnerships request for a
preliminary injunction in relation to the FACA case. While the preliminary
injunction does not resolve the Pebble Partnerships claims that the EPA actions
with respect to the Bristol Bay Watershed Assessment and subsequent 404c
regulatory process violated FACA, the decision permits the further discovery
process of the underlying facts to enable the court to issue a final decision on
the merits of the FACA case. Northern Dynasty expects it will take several
months for the case to run its course.
The Pebble Partnership will now
have an opportunity for extensive depositions and discovery to determine if
there was any EPA misconduct. That the preliminary injunction was granted also
reflects the US federal court judges view that the claimant has a likelihood
of success on the merits. Should Pebble Partnership prevail in its FACA
litigation against EPA, the federal agency may be unable to rely upon the
Bristol Bay Watershed Assessment as part of the administrative record for any
regulatory action at the Pebble Project.
Northern Dynasty has submitted
seven letters to the independent Office of the EPA Inspector General
(IG) since January 2014 raising concerns of bias, process
irregularities and undue influence by environmental organizations in the EPA's
preparation of the Bristol Bay Watershed Assessment. In response to
Congressional and other requests, on May 5, 2014, the IGs office announced that
it would investigate the EPAs conduct in preparing An Assessment of Potential
Mining Impacts on Salmon Ecosystems of Bristol Bay, Alaska. A team of IG
investigators is now in place and a full investigation is underway to determine
whether the EPA adhered to laws, regulations, policies and procedures in
developing its assessment of potential mining impacts in Bristol Bay, Alaska.
The Pebble Partnership is
advancing a multi-dimensional strategy to address the EPAs pre-emptive
regulatory process under Section 404(c) of the Clean Water Act, and is
working to position the Pebble Project to initiate federal and state permitting
under NEPA unencumbered by any extraordinary development restrictions imposed by
the federal agency. This strategy includes three discrete pieces of litigation
against the EPA as set out in this Prospectus, including:
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challenging the EPAs statutory authority to
pre-emptively impose development restrictions at the Pebble Project under
Section 404(c) of the Clean Water Act prior to the Pebble Partnership
submitting a proposed development plan for the project or the development
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alleging that the EPA violated FACA in the course of
undertaking the Bristol Bay Watershed Assessment and subsequent Section
404(c) of the Clean Water Act regulatory process; and |
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alleging that the EPA is unlawfully withholding relevant
documentation and other information sought by the Pebble Partnership under
the Freedom of Information Act (FOIA).
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The Pebble Partnerships strategy
to address the EPAs Section 404(c) of the Clean Water Act regulatory process
also includes undertaking research, including technical and legal
investigations, to facilitate various investigations of EPA actions with respect
to the Pebble Project, including one by the EPA Inspector General.
While the litigation process is
inherently uncertain, and it is difficult to predict with confidence the length
of time that each of the legal initiatives described above will take to advance
to specific milestone events or final conclusion, Northern Dynasty expects the
following to occur in 2015:
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the 9th Circuit Court of Appeals is expected
to fully hear and issue a decision in 2015 on the Pebble Partnerships
appeal of a lower courts decision that its statutory authority case is
not ripe and cannot be heard until such time as the EPA has taken final
regulatory action under Section 404(c) of the Clean Water Act. If the
Pebble Partnership prevails, the case will be returned to federal court in
Alaska for a final determination on its merits; if the EPA prevails, the
statutory authority case will be heard at a later date should the federal
agency proceed to issue a final regulatory decision under Section 404(c)
of the Clean Water Act; |
10
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|
a final decision by a federal court judge in Alaska on
the Pebble Partnerships FACA case is expected in the latter half of the
year; |
|
|
|
|
|
a decision in the Pebble Partnerships FOIA litigation
against EPA is expected in the latter half of the year; and |
|
|
|
|
|
the independent Office of the EPA Inspector General is
expected to complete its investigation and publish a final report on EPA
actions with respect to the Bristol Bay Watershed Assessment and the EPAs
subsequent Section 404(c) of the Clean Water Act regulatory process in the
second or third quarter of 2015. |
The Company cannot predict the
outcome of its various challenges to what it sees as improper pre-emptory
attempts by the EPA to prevent or otherwise restrict mineral development at
Pebble. If these challenges all fail and EPA continues to oppose the Pebble
Project by all legal means, it may have a material adverse effect on the
Company.
Closing of Special Warrant Offering
On December 31, 2014 and January
13, 2015, we completed the offer and sale of an aggregate of 35,962,735 Special
Warrants at a price of C$0.431 per Special Warrant for gross proceeds of
approximately C$15.5 million. The Special Warrant offering and the terms of the
Special Warrants are discussed further below under Special Warrant Offering
Offer Statistics and Expected Timetable.
Updated NI 43-101 Technical Report on the Pebble Project
On February 6, 2015 we released a
technical report 2014 Technical Report on the Pebble Project, Southwest Alaska,
USA by J. David Gaunt, P.Geo., James Lang, P.Geo, Eric Titley, P.Geo. and Ting
Lu, P.Eng., effective date December 31, 2014 (the Pebble Project
Report).
Technical information relating to
the Pebble Project contained in this prospectus is derived from, and in some
instances is an extract from, the Pebble Project Report. Reference should be
made to the full text of the Pebble Project Report which report has been filed
with Canadian securities regulatory authorities pursuant to NI 43-101 and is
available for review under the Companys profile on the System for Electronic
Document Analysis and Retrieval of the Canadian Securities Administrators
(SEDAR) at www.sedar.com. Alternatively, a copy of the report may be
inspected until the day that is thirty days after the date hereof during normal
business hours at the Companys head office. The following disclosure is
summarized from the Pebble Project Report and is qualified by the discussion
above under Cautionary Notes to United States Investors Concerning Mineral
Reserve and Resource Estimates.
The Pebble Project Report
contains an updated mineral resource estimate for the Pebble Project prepared by
J. David Gaunt, PGeo., a qualified person, as defined under NI 43-101, who is
not independent of Northern Dynasty. It is based on approximately 59,000 assays
obtained from 699 drill holes. The deposit extends for a strike length of
approximately 13,000 ft, a width of 7,700 ft and to a depth of at least 5,810
ft.
The resource was estimated using
a geostatistical estimation method known as ordinary kriging. Descriptive
statistics, 3D surfaces and wireframe computer software models of domains for
each of the four metals, as well as specific gravity were interpreted and used
in the development of search strategies and geostatistical parameters for block
interpolation and resource classification. The tabulation is based on copper
equivalency (CuEq) that incorporates the contribution of copper, gold
and molybdenum. Although the estimate includes silver, it was not used as part
of the copper equivalency calculation in order to facilitate comparison with
previous estimates which did not consider the silver content or its potential
economic contribution. A base case cut-off of 0.3% CuEq is highlighted.
11
Cautionary Note to Investors Concerning Estimates of
Measured and Indicated Resources |
|
This section uses the terms, Measured Mineral Resources
and Indicated Mineral Resources. The Company advises investors that
while those terms are recognized and required by Canadian regulations, the
U.S. Securities and Exchange Commission (the SEC) does not
recognize them. Investors are cautioned not to assume that all or
any part of mineral deposits in these categories will ever be converted
into reserves. |
Threshold |
|
|
Cu |
Au |
Mo |
Ag |
Cu |
Au |
Mo |
Ag |
CuEq % |
CuEq% |
Tonnes |
(%) |
(g/t) |
(ppm) |
(g/t) |
Blbs |
Moz |
Blbs |
Moz |
Measured Mineral Resources |
0.3 |
0.65 |
527,000,000 |
0.33 |
0.35 |
178 |
1.66 |
3.83 |
5.93 |
0.21 |
28.13 |
0.4 |
0.66 |
508,000,000 |
0.34 |
0.36 |
180 |
1.68 |
3.80 |
5.88 |
0.20 |
27.42 |
0.6 |
0.77 |
279,000,000 |
0.40 |
0.42 |
203 |
1.84 |
2.46 |
3.77 |
0.12 |
16.51 |
1.0 |
1.16 |
28,000,000 |
0.62 |
0.62 |
302 |
2.27 |
0.38 |
0.56 |
0.02 |
2.04 |
Indicated Mineral Resources |
0.3 |
0.77 |
5,912,000,000 |
0.41 |
0.34 |
245 |
1.66 |
53.42 |
64.62 |
3.20 |
315.50 |
0.4 |
0.82 |
5,173,000,000 |
0.45 |
0.35 |
260 |
1.75 |
51.31 |
58.21 |
2.97 |
291.05 |
0.6 |
0.99 |
3,450,000,000 |
0.55 |
0.41 |
299 |
1.99 |
41.82 |
45.47 |
2.27 |
220.71 |
1.0 |
1.29 |
1,411,000,000 |
0.77 |
0.51 |
343 |
2.42 |
23.95 |
23.14 |
1.07 |
109.79 |
Measured + Indicated Mineral Resources |
0.3 |
0.76 |
6,439,000,000 |
0.40 |
0.34 |
240 |
1.66 |
56.76 |
70.38 |
3.40 |
343.63 |
0.4 |
0.81 |
5,681,000,000 |
0.44 |
0.35 |
253 |
1.75 |
55.09 |
63.92 |
3.17 |
319.62 |
0.6 |
0.97 |
3,729,000,000 |
0.54 |
0.41 |
291 |
1.98 |
44.38 |
49.15 |
2.39 |
237.37 |
1.0 |
1.29 |
1,439,000,000 |
0.76 |
0.51 |
342 |
2.42 |
24.11 |
23.60 |
1.08 |
111.97 |
Cautionary Note to Investors Concerning Estimates of
Inferred Resources |
|
This section also uses the term Inferred Mineral
Resources. The Company advises investors that while this term is
recognized and required by Canadian regulations, the SEC does not
recognize it. Inferred Mineral Resources have a great amount of
uncertainty as to their existence, and great uncertainty as to their
economic and legal feasibility. It cannot be assumed that all or any part
of a mineral resource will ever be upgraded to a higher category. Under
Canadian rules, estimates of Inferred Mineral Resources may not form the
basis of economic studies, except in rare cases. Investors are
cautioned not to assume that all or any part of an inferred
resource exists, or is economically or legally mineable.
|
Threshold |
|
|
Cu |
Au |
Mo |
Ag |
Cu |
Au |
Mo |
Ag |
CuEq % |
CuEq% |
Tonnes |
(%) |
(g/t) |
(ppm) |
(g/t) |
Blbs |
Moz |
Blbs |
Moz |
Inferred Mineral Resources |
0.3 |
0.54 |
4,460,000,000 |
0.25 |
0.26 |
222 |
1.19 |
24.55 |
37.25 |
2.18 |
170.49 |
0.4 |
0.68 |
2,630,000,000 |
0.33 |
0.30 |
266 |
1.39 |
19.14 |
25.38 |
1.55 |
117.58 |
0.6 |
0.89 |
1,290,000,000 |
0.48 |
0.37 |
291 |
1.79 |
13.66 |
15.35 |
0.83 |
74.28 |
1.0 |
1.20 |
360,000,000 |
0.69 |
0.45 |
377 |
2.27 |
5.41 |
5.14 |
0.30 |
25.94 |
The tabulated Mineral Resources are
subject to the notes below:
|
(1) |
These resource estimates have been prepared in accordance
with NI 43-101 and the CIM Definition Standards. Inferred Mineral
Resources are considered to be too speculative to allow the application of
technical and economic parameters to support mine planning and evaluation
of the economic viability of the project. Under Canadian rules, estimates
of Inferred Mineral Resources may not form the basis of feasibility or
pre-feasibility studies, or economic studies except for preliminary
economic assessments as defined under 43-101. It cannot be assumed that
all or any part of the Inferred Mineral Resources will ever be upgraded to
a higher category. |
12
|
(2) |
Copper equivalent calculations use metal prices of
$1.85/lb for copper, $902/oz for gold and $12.50/lb for molybdenum, and
recoveries of 85% for copper 69.6% for gold, and 77.8% for molybdenum in
the Pebble West deposit and 89.3% for copper, 76.8% for gold, 83.7% for
molybdenum in the Pebble East deposit. |
|
|
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|
(3) |
Contained metal calculations are based on 100%
recoveries. |
|
|
|
|
(4) |
A 0.30% CuEQ cut-off is considered to be appropriate for
porphyry deposit open pit mining operations in the Americas. |
|
|
|
|
(5) |
All Mineral Resource estimates, cut-offs and
metallurgical recoveries are subject to change as a consequence of more
detailed economic analyses that would be required in pre-feasibility and
feasibility studies. |
The Mineral Resource estimate is
constrained by a conceptual pit that was developed using parameters set out in
the table below:
Parameter |
Units |
Cost ($) |
Value |
Metal Price |
Gold |
$/oz |
- |
1540.00 |
|
Copper |
$/lb |
- |
3.63 |
|
Molybdenum |
$/lb |
- |
12.36 |
|
|
|
|
- |
Metal Recovery |
Copper |
% |
- |
89 |
|
Gold |
% |
- |
72 |
|
Molybdenum |
% |
- |
82 |
Operating Cost |
Mining (mineralized material or waste) |
$/ton mined |
1.01 |
- |
|
Added haul lift from depth |
$/ton/bench |
0.03 |
- |
|
Process |
|
-Process cost adjusted by total crushing energy |
$/ton milled |
4.40 |
- |
|
-Transportation |
$/ton milled |
0.46 |
- |
|
-Environmental |
$/ton milled |
0.70 |
- |
|
-G&A |
$/ton milled |
1.18 |
- |
Block Model |
Current block model |
ft |
- |
75 x 75 x 50 |
Density |
Mineralized material and waste rock |
- |
- |
Block model |
Pit Slope Angles |
- |
degrees |
- |
42 |
These Mineral Resource estimates
may ultimately be affected by a broad range of environmental, permitting, legal,
title, socio-economic, marketing and political factors commensurate with the
specific characteristics of the Pebble deposit (including its scale, location,
orientation and poly-metallic nature) as well as its setting (from a natural,
social, jurisdictional and political perspective).
RISK FACTORS
An investment in the securities
of the Company is considered speculative and involves a high degree of risk due
to, among other things, the nature of the Companys business, the present stage
of its development and the permitting required for the Pebble Project. You
should carefully consider the risk factors set forth in (i) our 2013 AIF and our
2013 MD&A, each of which is included as an exhibit to our annual report on
Form 40-F, as incorporated by reference herein, (ii) our subsequent filings
under the Securities Exchange Act of 1934 (the Exchange Act),
and (iii) this prospectus, any amendment or supplement to this prospectus or any
free writing prospectus.
13
The operations of the Company are
speculative due to the high risk nature of its business which is the
exploration, permitting and development of mineral properties and ultimately the
operating of mineral properties as mines. If we do not successfully address any
of the risks described herein or therein, there could be a material adverse
effect on our financial condition, operating results and business, and the
trading price of the common shares may decline. In addition, our inability to
successfully address these risks could cause actual events to differ materially
from those described in forward-looking statements relating to the Company. We
can provide no assurance that we will successfully address these risks.
In addition to information set
out elsewhere in this Prospectus and contained in our 2013 AIF and 2013
MD&A, we face the following risks:
Inability to Achieve Mine Permitting of the Pebble
Project
The principal risk facing the
Company is that it will be ultimately be unable to secure the necessary permits
under United States Federal and Alaskan State laws to build a mine at Pebble.
There are prominent and well organized opponents of the Pebble Project and the
Company may be unable, despite developing solid scientific and technical
evidence of risk mitigation, to overcome such opposition and convince mining
regulatory authorities that a mine should be permitted at Pebble. If we are
unable to secure the necessary permits to build a mine at the Pebble Project, we
may be unable to achieve revenues from operations and/ or recover our investment
in the Pebble Project.
Negative Operating Cash Flow
The Company currently has a
negative operating cash flow and may continue to have that for the foreseeable
future. Accordingly, the Company will require substantial additional capital in
order to fund its future exploration and development activities. The Company
does not have any arrangements in place for this funding and there is no
assurance that such funding will be achieved when required. The Companys
failure to obtain additional financing and its failure to achieve profitability
and positive operating cash flows will have a material adverse effect on its
financial condition and results of operations.
The common shares may experience price and volume
volatility and the market price for the common shares may drop below the price
you paid
In recent years, the securities
markets have experienced a high level of price and volume volatility, and the
market price of securities of many companies has experienced wide fluctuations,
which have not necessarily been related to the operating performance, underlying
asset values or prospects of such companies. There can be no assurance that such
fluctuations will not affect the price of the common shares, and the price may
decline below their acquisition cost. As a result of this volatility, investors
may not be able to sell the common shares at or above their acquisition cost.
Securities of mining companies
have experienced substantial volatility in the past, often based on factors
unrelated to the financial performance or prospects of the companies involved.
These factors include macroeconomic developments in the countries where we carry
on business and globally, and market perceptions of the attractiveness of
particular industries. The price of securities of the Company is also likely to
be significantly affected by short-term changes in commodity prices, other
precious metal prices or other mineral prices, currency exchange fluctuation and
the political environment in the countries in which we do business and globally.
In the past, following periods of
volatility in the market price of a companys securities, shareholders have
often instituted class action securities litigation against those companies.
Such litigation, if instituted, could result in substantial costs and diversion
of management attention and resources, which could significantly harm our
profitability and reputation.
Sales of substantial amounts of the common shares may
have an adverse effect on the market price of the common shares of the Company
Sales of substantial amounts of
the common shares of the Company, or the availability of such securities for
sale, could adversely affect the prevailing market prices for the common shares.
A decline in the market prices of the common shares of the Company could impair
our ability to raise additional capital through the sale of securities should it
desire to do so.
14
Likely PFIC status has possible adverse U.S. federal
income tax consequences for U.S. investors
The Company was likely a passive
foreign investment company (a PFIC) within the meaning of the U.S.
Internal Revenue Code in one or more prior tax years, expects to be a PFIC for
the current tax year, and may also be a PFIC in subsequent years. A non-U.S.
corporation is a PFIC for any tax year in which (i) 75% or more of its gross
income is passive income (as defined for U.S. federal income tax purposes) or
(ii) on average for such tax year, 50% or more (by value) of its assets either
produces or is held for the production of passive income, and thereafter unless
certain elections are made.
If the Company is a PFIC for any year during a U.S. taxpayer's holding period, such taxpayer may be required to treat any gain recognized upon a sale or disposition of the common shares as ordinary income (rather than capital gain), and any resulting U.S. federal income tax may be increased by an interest charge. Rules similar to those applicable to dispositions will generally apply to certain "excess distributions" in respect of the common shares. A U.S. taxpayer may generally avoid these unfavorable tax consequences by making a timely and effective "qualified electing fund" ("QEF") election or "mark-to-market" election. with respect to the common shares. A U.S. taxpayer who makes a timely and effective QEF election must generally report on a current basis its share of the Company's net capital gain and ordinary earnings for any year in which the Company is a PFIC, whether or not the Company makes any distributions to shareholders in such year. A U.S. taxpayer who makes a timely and effective mark-to-market election must, in general, include as ordinary income, in each year in which the Company is a PFIC, the excess of the fair market value of the common shares over the taxpayer's adjusted cost basis in such shares
This risk factor is qualified in
its entirety by the discussion provided below under the heading, Certain
Material United States Federal Income Tax Considerations.
If any of the foregoing
events, or other risk factor events described in our 2013 AIF, our 2013 MD&A
any other document incorporated by reference herein or elsewhere herein occur,
our business, financial condition or results of operations could suffer. In that
event, the market price of our securities could decline and investors could lose
all or part of their investment.
SPECIAL WARRANT OFFERING -
OFFER STATISTICS AND EXPECTED TIMETABLE
Special Warrant Offering
We completed the offer and sale
of an aggregate of 35,962,735 Special Warrants at a price of C$0.431 per Special
Warrant for gross proceeds of approximately C$15.5 million on December 31, 2014
and January 13, 2015. Each Special Warrant is convertible into one common share
of the Company, subject to adjustment upon the occurrence of certain events,
without payment of any additional consideration by the holder. The purchase
price for the Special Warrants was determined by negotiation between us and the
purchasers of the Special Warrants with reference to the trading price of our
common shares at the time of such negotiations.
The Special Warrants were issued
on a private placement basis (i) to purchasers outside the United States in
reliance of Rule 903 of Regulation S, and (ii) to purchasers within the United
States (the U.S. Purchasers) who qualify as accredited investors, as
defined in Rule 501(a) of Regulation D, pursuant to the exemption from the
registration requirements of the Securities Act provided by Rule 506(b) of
Regulation D.
The U.S. Purchasers purchased an
aggregate of 18,839,146 Special Warrants. The Special Warrants were offered and
sold to the U.S. Purchasers pursuant to U.S. purchaser subscription agreements
(the Subscription Agreements) entered into between us and each U.S.
Purchasers. The form of the Subscription Agreement is attached as an exhibit to
this registration statement.
The Special Warrants are
represented by special warrant certificates that set forth the terms, rights and
restrictions of the Special Warrants (the Special Warrant
Certificates). The form of the Special Warrant Certificate is attached as
an exhibit to this registration statement.
We entered into registration
rights agreements with each of the U.S. Purchasers pursuant to the Subscription
Agreements on completion of the issuance of Special Warrants to the U.S.
Purchasers (the Registration Rights Agreement). We have agreed pursuant
to the Registration Rights Agreements to register the resale by the U.S.
Purchasers of the common shares of the Company issuable upon conversion of the
Special Warrants by filing a registration statement with the SEC. The
Registration Rights Agreements provide that we will use reasonable best efforts
to cause the registration statement to be declared effective by the SEC no later
than 90 days after closing of the offering and to cause such registration
statement to remain continuously effective until two years from closing (the
Resale Filing Termination Date). We have filed the registration
statement of which this prospectus forms a part in order to satisfy our
obligations under the Registration Rights Agreement. The form of the
Registration Rights Agreement is attached as an exhibit to this registration
statement.
15
We have further agreed to use
reasonable best efforts to obtain a final receipt for a prospectus in Canada
that will qualify the issuance of the common shares issuable upon exercise or
conversion of the Special Warrants (the Canadian Prospectus). We have
agreed to cause the Canadian Prospectus to remain effective until the earlier of
(i) the date that is 90 days following the issuance of a receipt for the
Canadian prospectus, and (ii) the expiry date of the Canadian hold period for
the Special Warrants, being the date that is four months plus one date from
their date of issuance.
Terms of the Special Warrants
The terms of the Special Warrants
provide among other things, that the holders of Special Warrants will be
entitled to receive, upon voluntary exercise or deemed exercise of the Special
Warrants, without payment of any additional consideration and subject to
adjustment upon the occurrence of certain events, one common share for each
Special Warrant held.
The Special Warrants contain the
following exercise and conversion provisions that are applicable to the U.S.
Purchasers as U.S. persons:
|
(a) |
Voluntary Conversion. Subject to the
restrictions in paragraph (d) below, each U.S. Person may voluntary
exercise any Special Warrants held at any time prior to their deemed
exercise by delivery of an exercise form to the Company. |
|
|
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|
(b) |
Deemed Exercise for U.S. Persons under 9.9%. Any
unexercised Special Warrants issued to or held by a U.S. Person who, upon
exercise of its Special Warrants, would be deemed to beneficially own
together with its affiliates and each other person or persons with whom
such U.S. Person may be deemed to be a group less than 9.9% of the
Companys then outstanding common shares will be deemed to be exercised at
4:00 p.m. (Vancouver time) on the date that is 180 days after closing. For
the purposes of this calculation, the limitation on conversion described
in paragraph (d) below and any similar limitation on conversion or
exercise contained in any other Common Stock Equivalent, in each case,
held by such U.S. Person holder and its affiliates and such other person
or persons with whom such U.S. Person may be deemed to be a group, will be
disregarded. |
|
|
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|
(c) |
Deemed Exercise for U.S. Persons over 9.9%. Any
unexercised Special Warrants held by a U.S. Person who, upon exercise of
its Special Warrants, would be deemed to beneficially own together with
its affiliates and each other person or persons with whom such U.S. Person
may be deemed to be a group in excess of 9.9% of the Companys then
outstanding common shares, will be deemed to be exercised at 4:00 p.m.
(Vancouver time) on the Resale Filings Termination Date. For the purpose
of this calculation, the limitation on conversion described in paragraph
(d) below and any similar limitation on conversion or exercise contained
in any other Common Stock Equivalent, in each case, held by such U.S.
Person holder and its affiliates and such other person or persons with
whom such U.S. Person holder may be deemed to be a group, will be
disregarded. |
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|
|
|
(d) |
Certain Restrictions on Conversion for U.S.
Persons. No automatic or deemed conversion will be permitted to
the extent that would after giving effect to such exercise, the holder
(together with the holders affiliates, and any other persons acting as a
group together with the holder or any of the holders affiliates), would
beneficially own in excess of the Beneficial Ownership Limitation (as
defined below). To the extent that the limitation contained in this
paragraph (d) applies, the determination of whether the Special Warrant is
exercisable (in relation to other securities owned by the holder together
with any affiliates) and of which portion of this Special Warrant is
exercisable shall be in the sole discretion of the holder, and the
submission of a notice of exercise shall be deemed to be the holders
determination that the Special Warrant is exercisable in accordance with
the terms hereof (in relation to other securities owned by the holder
together with any affiliates) and of which portion of the Special Warrant
is exercisable, in each case subject to the Beneficial Ownership
Limitation, and the Company shall have no obligation to verify or confirm
the accuracy of such determination. The Beneficial Ownership
Limitation shall be 9.9% of the number of common shares outstanding
immediately after giving effect to the issuance of common shares issuable
upon exercise of the Special Warrant. The holder, upon not less than 61
days prior notice to the Company, may increase or decrease the Beneficial
Ownership Limitation provisions of this item (e), provided that the
Beneficial Ownership Limitation in no event exceeds 19.99% of the number
of common shares outstanding immediately after giving effect to the
issuance of common shares upon exercise of the Special Warrant held by the
holder and the provisions of this item (e) shall continue to apply. Any
such increase or decrease will not be effective until the 61st day after
such notice is delivered to the Company. |
16
For purposes of the Special Warrants:
|
|
Common Stock Equivalent means any securities of
the Company which would entitle the holder thereof to acquire at any time
common shares, including, without limitation, any debt, preferred stock,
warrants, options or other instruments convertible into or exercisable or
exchangeable for Shares; |
|
|
|
|
|
group means a group of beneficial owners within
the meaning of Section 13(d) of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder; and |
|
|
|
|
|
U.S. Person has the meaning ascribed thereto in
Rule 902(k) of Regulation S promulgated under the Securities Act.
|
Upon voluntary exercise or deemed
exercise, the certificates representing any common shares issued will bear any
restrictive legends required by applicable securities laws and the certificates
representing the Special Warrants that have been exercised will be cancelled.
We have not as of the date of
this registration statement received any notice from any U.S. Purchaser of any
intent to increase the Beneficial Ownership Limitation that is applicable to
them.
The Special Warrants do not
confer on a holder of Special Warrants any right or interest whatsoever as a
shareholder of the Company, including but not limited to any right to vote at,
to receive notice of, or to attend, any meeting of shareholders or any other
proceedings of the Company or any right to receive any dividend or other
distribution.
No fractional common shares will
be issued upon the exercise or deemed exercise of the Special Warrants.
In addition, the Special Warrants provide
for and contain provisions designed to protect the holders of the Special
Warrants against dilution upon the occurrence of certain events, including any
subdivision, redivision, change, reduction, combination, consolidation, stock
dividend or reclassification of the common shares of the Company or the
amalgamation, merger or corporate reorganization of the Company. The Special
Warrants also provide that upon the occurrence of any such event the number of
common shares issuable upon the exercise or deemed exercise of the Special
Warrants will be adjusted immediately after the effective date of such event.
The rights of holders of Special
Warrants may be modified. The Special Warrants provide for meetings of the
holders of Special Warrants and the passing of resolutions and extraordinary
resolutions by such holders which are binding on all holders of Special
Warrants. Certain amendments to the Special Warrant Certificates may only be
made by extraordinary resolution, which is defined as a resolution passed by
the affirmative vote of Special Warrant holders entitled to acquire not less
than 662/3% of the aggregate number of common shares which may be acquired
pursuant to all the then outstanding Special Warrants represented at the meeting
and voted on the poll on such resolution.
We have granted to each holder of
a Special Warrant a contractual right of rescission of the prospectus-exempt
transaction under which the Special Warrant was initially acquired. The
contractual right of rescission provides that if a holder of a Special Warrant
who acquires another security of the Company on exercise of the Special Warrant
as provided for in the Canadian Prospectus is, or becomes, entitled under the
securities legislation of a jurisdiction to the remedy of rescission because of
the Canadian Prospectus or an amendment to the Canadian Prospectus containing a
misrepresentation,
|
(a) |
the holder is entitled to rescission of both the holders
exercise of its Special Warrant and the private placement transaction
under which the Special Warrant was initially
acquired, |
17
|
(b) |
the holder is entitled in connection with the rescission
to a full refund of all consideration paid to the agent or Company, as the
case may be, on the acquisition of the Special Warrant, and |
|
|
|
|
(c) |
if the holder is a permitted assignee of the interest of
the original Special Warrant subscriber, the holder is entitled to
exercise the rights of rescission and refund as if the holder was the
original subscriber. |
The foregoing is a summary
description of certain material provisions of the Special Warrants, it does not
purport to be a comprehensive summary and is qualified in its entirety by
reference to the more detailed provisions of the certificates representing the
Special Warrants.
CAPITALIZATION AND INDEBTEDNESS
The following table sets forth our capitalization and indebtedness as of September 30, 2014 adjusted for the proceeds from the sale of the Special Warrants of C$15,499,939 less estimated transaction costs (being compensation, finders’, legal and regulatory fees) of C$500,000. The information presented should be read in conjunction with our audited consolidated financial statements as at and for the years ended December 31, 2013 and 2012 and our unaudited interim consolidated financial statements as at and for the nine months ended September 30, 2014, which are incorporated by reference in this prospectus.
Description |
As at
September 30, 2014 (C$ thousands) |
Liabilities |
|
Total Current Liabilities |
4,814 |
Deferred Income Taxes |
2,691 |
Total Liabilities |
7,505 |
Equity |
|
Share Capital |
389,227 |
Special Warrants |
15,000 |
Reserves |
67,872 |
Deficit |
(335,370) |
Total Equity |
136,729 |
REASONS FOR THE OFFER AND USE OF PROCEEDS
We have agreed to register the
common shares covered by this prospectus on behalf of the U.S. Purchasers named
below under Selling Security Holders pursuant to our contractual obligations
under the Registration Rights Agreements.
The selling shareholders will
receive all of the proceeds from any sales pursuant to this prospectus. We will
not receive any of the proceeds, but we will incur expenses in connection with
the offering, as described below under Plan of Distribution.
TRADING PRICE HISTORY
Our common shares are listed on
the NYSE MKT under the trading symbol NAK and on the TSX under the trading
symbol NDM.
The following table sets forth
the reported high and low sale prices in Canadian dollars for the common shares
on the NYSE MKT for the fiscal, quarterly and monthly periods indicated.
18
|
|
High |
|
|
Low |
|
Fiscal 2010 |
$ |
14.45 |
|
$ |
6.00 |
|
Fiscal 2011 |
$ |
21.76 |
|
$ |
5.48 |
|
|
|
High |
|
|
Low |
|
Fiscal 2012 |
$ |
8.19 |
|
$ |
2.20 |
|
Fiscal 2013 |
$ |
3.78 |
|
$ |
1.06 |
|
Fiscal 2014 |
$ |
1.70 |
|
$ |
0.61 |
|
|
|
High |
|
|
Low |
|
Quarterly 2013 |
|
|
|
|
|
|
First Quarter |
$ |
3.78 |
|
$ |
2.67 |
|
Second Quarter |
$ |
3.17 |
|
$ |
1.85 |
|
Third Quarter |
$ |
2.73 |
|
$ |
1.31 |
|
Fourth Quarter |
$ |
1.93 |
|
$ |
1.00 |
|
Quarterly 2014 |
|
|
|
|
|
|
First Quarter |
$ |
1.70 |
|
$ |
0.80 |
|
Second Quarter |
$ |
1.01 |
|
$ |
0.61 |
|
Third Quarter |
$ |
0.89 |
|
$ |
0.52 |
|
Fourth Quarter |
$ |
0.59 |
|
$ |
0.32 |
|
For the month ended |
|
|
|
|
|
|
January 31, 2015 |
$ |
0.45 |
|
$ |
0.38 |
|
December 31, 2014 |
$ |
0.50 |
|
$ |
0.33 |
|
November 30, 2014 |
$ |
0.47 |
|
$ |
0.35 |
|
October 31, 2014 |
$ |
0.59 |
|
$ |
0.32 |
|
September 30, 2014 |
$ |
0.71 |
|
$ |
0.52 |
|
August 31, 2014 |
$ |
0.89 |
|
$ |
0.65 |
|
July 31, 2014 |
$ |
0.89 |
|
$ |
0.77 |
|
The following table sets forth
the reported high and low sale prices in Canadian dollars for the common shares
on the TSX for the fiscal, quarterly and monthly periods indicated.
|
|
High |
|
|
Low |
|
Fiscal 2010 |
$ |
C14.45 |
|
$ |
C6.15 |
|
Fiscal 2011 |
$ |
C21.50 |
|
$ |
C5.16 |
|
Fiscal 2012 |
$ |
C8.13 |
|
$ |
C2.23 |
|
Fiscal 2013 |
$ |
C4.19 |
|
$ |
C1.07 |
|
Fiscal 2014 |
$ |
C1.85 |
|
$ |
C0.38 |
|
|
|
High |
|
|
Low |
|
Quarterly 2013 |
|
|
|
|
|
|
First Quarter |
$ |
C4.19 |
|
$ |
C2.75 |
|
Second Quarter |
$ |
C3.28 |
|
$ |
C1.94 |
|
19
|
|
High |
|
|
Low |
|
Third Quarter |
$ |
C2.84 |
|
|
C1.35 |
|
Fourth Quarter |
$ |
C1.98 |
|
|
C1.07 |
|
Quarterly 2014 |
|
|
|
|
|
|
First Quarter |
$ |
C1.85 |
|
|
C0.90 |
|
Second Quarter |
$ |
C1.13 |
|
|
C0.67 |
|
Third Quarter |
$ |
C0.95 |
|
|
C0.55 |
|
Fourth Quarter |
$ |
C0.65 |
|
|
C0.38 |
|
For the month ended |
|
|
|
|
|
|
January 31, 2015 |
$ |
C0.57 |
|
|
C0.45 |
|
December 31, 2014 |
$ |
C0.57 |
|
|
C0.385 |
|
November 30, 2014 |
$ |
C0.52 |
|
|
C0.40 |
|
October 31, 2014 |
$ |
C0.65 |
|
|
C0.38 |
|
September 30, 2014 |
$ |
C0.75 |
|
|
C0.55 |
|
August 31, 2014 |
$ |
C0.92 |
|
|
C0.72 |
|
July 31, 2014 |
$ |
C0.95 |
|
|
C0.82 |
|
On February 6, 2015, the closing
price of our common shares as reported on the NYSE MKT was $0.59 per share and
on the TSX was C$0.73 per share.
SELLING SECURITY HOLDERS
We are registering the common
shares covered by this prospectus on behalf of the selling shareholders named in
the table below in accordance with our obligations under the Registration Rights
Agreements. Selling shareholders, including their transferees, pledgees or
donees or their successors (all of whom may be selling shareholders), may from
time to time offer and sell pursuant to this prospectus any or all of the
shares. When we refer to selling shareholders in this prospectus, we mean
those persons listed in the table below, as well as their transferees, pledgees
or donees or their successors.
The following table sets forth
certain information as of February 6, 2015 regarding beneficial ownership of our
common shares by the selling shareholders. Beneficial ownership is a term
defined by the SEC in Rule 13d-3 under the Exchange Act and includes common
shares over which a selling shareholder has direct or indirect voting or
investment control and any common shares that the selling shareholder has a
right to acquire beneficial ownership of within 60 days.
The number of common shares in
the column Number of Common Shares Beneficially Owned Prior to the Offering is
based on beneficial ownership information provided to us by or on behalf of the
selling shareholders in a selling stockholder questionnaire.
The number of common shares in
the column Number of Shares Registered for Sale Hereby represents all of the
common shares that each selling stockholder may offer under this prospectus.
These common shares are the common shares issuable pursuant to conversion of the
Special Warrants purchased by the selling shareholders in the Private Placement.
The selling shareholders may sell some, all or none of their shares. In
addition, the selling shareholders may have sold, transferred or otherwise
disposed of all or a portion of their shares since the date on which they
provided the information regarding their shares in transactions exempt from the
registration requirements of the Securities Act.
The number of common shares in
the column Number of common shares Beneficially Owned after the Offering
assumes that the selling shareholders will sell all of their shares offered
pursuant to this prospectus and that any other common shares beneficially owned
by the selling shareholders will continue to be beneficially owned. We do not
know when or in what amounts the selling shareholders will offer shares for
sale, if at all. The selling shareholders may sell any or all of the shares
included in and offered by this prospectus. Because the selling shareholders may
offer all or some of the shares pursuant to this offering, we cannot estimate
the number of shares that will be held by the selling shareholders after
completion of the offering.
20
Information regarding the selling
shareholders may change from time to time. Any such changed information will be
set forth in supplements to this prospectus if required.
Except as set forth in the table
below, none of the selling shareholders has had a material relationship with us
within the past three years.
|
|
|
Number of |
|
|
|
|
|
Common |
|
|
|
Number of
Common Shares |
Shares |
Number of Common Shares |
Name of Selling |
Beneficially Owned Prior to |
Registered for |
Beneficially Owned After the
|
Shareholder |
the Offering |
Sale Hereby |
Offering
(3) |
|
|
|
|
|
|
|
Number |
Percentage(1) |
Number
|
Number |
Percentage(2) |
Kopernik Global All Cap |
|
|
|
|
|
Equity Fund(4) |
3,313,151(9) |
3.4%(9) |
2,865,858 |
447,293 |
* |
|
|
|
|
|
|
Kopernik Global All-Cap |
|
|
|
|
|
Fund(5) |
9,748,825(9) |
9.9%(9) |
8,496,132 |
4,824,257 |
4.2% |
|
|
|
|
|
|
Kopernik Global All-Cap |
|
|
|
|
|
Master Fund LP(6) |
2,629,287(9) |
2.7%(9) |
1,901,513 |
727,774 |
* |
|
|
|
|
|
|
Kopernik Global Real |
|
|
|
|
|
Asset Fund LP(7) |
95,055(9) |
0.1%(9) |
10,971 |
84,084 |
* |
|
|
|
|
|
|
TIFF Multi-Asset Fund(8) |
5,641,974(9) |
5.6%(9) |
5,439,672 |
202,302 |
* |
|
|
|
|
|
|
Harry W. Kirk(10) |
400,000 |
* |
65,000 |
335,000 |
* |
|
|
|
|
|
|
Peter Mitchell(11) |
210,000 |
* |
60,000 |
150,000 |
* |
*Represents less than 1% of our outstanding
common shares. |
(1) |
Applicable percentage of ownership is based on
95,009,864 common shares outstanding as of February 6, 2015. |
(2) |
Applicable percentage of ownership of the Kopernick group
(as described below in footnote 9) is based on 113,724,010 common shares
outstanding upon completion of the Offering, which includes conversion of
the 18,714,146 special warrants held by the Kopernick group and assumes no
other common share issuances by the Company. |
(3) |
Assumes that the selling stockholder disposes of all of
the common shares covered by this prospectus and does not acquire
beneficial ownership of any additional shares. The registration of these
shares does not necessarily mean that the selling stockholder will sell
all or any portion of the shares covered by this prospectus. |
(4) |
Kopernick Global All Cap Equity Fund (Kopernick Equity)
is the owner of the following securities of the Company as of the date of
this prospectus: (i) 447,293 common shares, and (ii) 2,865,858 Special
Warrants, all of which are currently exercisable by Kopernick Equity,
subject to the Beneficial Ownership Limitation. |
(5) |
Kopernick Global All-Cap Fund (Kopernick Fund) is the
owner of the following securities of the Company as of the date of this
prospectus: (i) 4,824,257 common shares, and (ii) 8,496,132 Special
Warrants, all of which are currently exercisable by Kopernick Fund,
subject to the Beneficial Ownership Limitation. |
(6) |
Kopernick Global All-Cap Master Fund LP (Kopernick
Master) is the owner of the following securities of the Company as of the
date of this prospectus: (i) 727,774 common shares, and (ii) 1,901,513
Special Warrants, all of which are currently exercisable by Kopernick
Master, subject to the Beneficial Ownership Limitation. |
(7) |
Kopernick Global Real Asset Fund LP (Kopernick Asset)
is the owner of the following securities of the Company as of the date of
this prospectus: (i) 84,084 common shares, and (ii) 10,971 Special
Warrants, all of which are currently exercisable by Kopernick Asset,
subject to the Beneficial Ownership Limitation. |
(8) |
TIFF Multi-Asset Fund (TIFF) is the owner of the
following securities of the Company as of the date of this prospectus: (i)
202,302 common shares, and (ii) 5,439,672 Special Warrants, all of which
are currently exercisable by TIFF, subject to the Beneficial Ownership
Limitation. |
21
(9) |
Kopernick Equity, Kopernick Fund, Kopernick Master,
Kopernick Asset and TIFF may be deemed to be members of a group and
beneficial ownership may be required to be aggregated under Rule 13d-3 of
the Exchange Act. Each Kopernick entity listed above disclaims beneficial
ownership of any securities beneficially owned by any other Kopernick
entity. Under the terms of the Special Warrants, the number of common
shares issuable to the members of the group, in aggregate, is subject to
the Beneficial Ownership Limitation described above under Special Warrant
Offering Offering Statistics and Timetable which limits the beneficial
ownership of the group to 9.9% of the issued and outstanding common shares
of the Company, being 9,748,825 common shares of the Company as at
February 6, 2015. The number of shares reported as being beneficially
owned reflects (i) the actual number of common shares owned by the group,
and (ii) the number of common shares issuable to members of the group, in
aggregate, issuable upon conversion of Special Warrants held by member of
the group after giving effect to the Beneficial Ownership
Limitation. |
|
|
(10) |
Mr. Kirk is the holder of (i) 65,000 common shares, and
(ii) options to purchase 270,000 common shares, all of which options are
currently exercisable or exercisable within 60 days from the date of this
prospectus, and (iii) 65,000 Special Warrants, all of which are currently
exercisable by Mr. Kirk. Mr. Kirk is a director of the Company. |
|
|
(11) |
Mr. Mitchell is the holder of (i) options to purchase
150,000 common shares, all of which options are currently exercisable or
exercisable within 60 days from the date of this prospectus, and (iii)
60,000 Special Warrants, all of which are currently exercisable by Mr.
Mitchell. |
PLAN OF DISTRIBUTION
We are registering the common
shares to permit the resale of the common shares by the selling shareholders
from time to time after the date of this prospectus. We will not receive any of
the proceeds from the sale by the selling shareholders of the common shares.
The selling shareholders may sell
all or a portion of the common shares beneficially owned by them and offered
hereby from time to time directly or through one or more underwriters,
broker-dealers or agents. If the common shares are sold through underwriters or
broker-dealers, the selling shareholders will be responsible for underwriting
discounts or commissions or agents commissions. The common shares may be sold
in one or more transactions at fixed prices, at prevailing market prices at the
time of the sale, at varying prices determined at the time of sale, or at
negotiated prices. These sales may be effected in transactions, which may
involve crosses or block transactions,
|
|
on any national securities exchange or
quotation service on which the securities may be listed or quoted at the
time of sale; |
|
|
|
|
|
in the over-the-counter market; |
|
|
|
|
|
in transactions otherwise than on these
exchanges or systems or in the over-the-counter market; |
|
|
|
|
|
through the writing of options, whether such
options are listed on an options exchange or otherwise; |
|
|
|
|
|
ordinary brokerage transactions and
transactions in which the broker-dealer solicits purchasers; |
|
|
|
|
|
block trades in which the broker-dealer will
attempt to sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction; |
|
|
|
|
|
purchases by a broker-dealer as principal and
resale by the broker-dealer for its account; |
|
|
|
|
|
an exchange distribution in accordance with the
rules of the applicable exchange; |
|
|
|
|
|
privately negotiated transactions; |
|
|
|
|
|
short sales; |
|
|
|
|
|
sales pursuant to Rule 144; |
|
|
|
|
|
broker-dealers may agree with the selling
shareholders to sell a specified number of such shares at a stipulated
price per share; |
|
|
|
|
|
a combination of any such methods of sale; and
|
|
|
|
|
|
any other method permitted pursuant to
applicable law. |
If the selling shareholders
effect such transactions by selling the common shares to or through
underwriters, broker-dealers or agents, such underwriters, broker-dealers or
agents may receive commissions in the form of discounts, concessions or
commissions from the selling shareholders or commissions from purchasers of the
common shares for whom they may act as agent or to whom they may sell as
principal (which discounts, concessions or commissions as to particular
underwriters, broker-dealers or agents may be in excess of those customary in
the types of transactions involved). In connection with sales of the common
shares or otherwise, the selling shareholders may enter into hedging
transactions with broker-dealers, which may in turn engage in short sales of the
common shares in the course of hedging in positions they assume. The selling
shareholders may also sell common shares short and deliver the common shares
covered by this prospectus to close out short positions and to return borrowed
shares in connection with such short sales. The selling shareholders may also
loan or pledge common shares to broker-dealers that in turn may sell such
shares.
22
The selling shareholders may
pledge or grant a security interest in some or all of the common shares owned by
them and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the common shares from time to
time pursuant to this prospectus or any amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act, amending, if
necessary, the list of selling shareholders to include the pledgee, transferee
or other successors in interest as selling shareholders under this prospectus.
The selling shareholders also may transfer and donate the common shares in other
circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.
At the time a particular offering
of the common shares is made, a prospectus supplement, if required, will be
distributed which will set forth the aggregate amount of common shares being
offered and the terms of the offering, including the name or names of any
broker-dealers or agents, any discounts, commissions and other terms
constituting compensation from the selling shareholders and any discounts,
commissions or concessions allowed or reallowed or paid to broker-dealers.
Under the securities laws of some
states, the common shares may be sold in such states only through registered or
licensed brokers or dealers. In addition, in some states the common shares may
not be sold unless such shares have been registered or qualified for sale in
such state or an exemption from registration or qualification is available and
is complied with.
There can be no assurance that
any selling shareholders will sell any or all of the common shares registered
pursuant to the registration statement of which this prospectus forms a part.
The selling shareholders and any
other person participating in such distribution will be subject to applicable
provisions of the Exchange Act, and the rules and regulations thereunder,
including, without limitation, to the extent applicable, Regulation M of the
Exchange Act, which may limit the timing of purchases and sales of any of the
common shares by the selling shareholders and any other participating person. To
the extent applicable Regulation M may also restrict the ability of any person
engaged in the distribution of the common shares to engage in market-making
activities with respect to the common shares. All of the foregoing may affect
the marketability of the common shares and the ability of any person or entity
to engage in market-making activities with respect to the common shares.
We will pay all expenses of the
registration of the common shares in accordance with our obligations under the
Registration Rights Agreements. We estimate these expenses to be $213,500 in
total, including, without limitation, SEC filing fees and expenses of compliance
with state securities or blue sky laws; provided, however, that a selling
shareholders will pay all underwriting discounts and selling commissions, if
any. We will indemnify the selling shareholders against liabilities, including
some liabilities under the Securities Act in accordance with the Registration
Rights Agreement, or the selling shareholders will be entitled to contribution.
We may be indemnified by the selling shareholders against civil liabilities,
including liabilities under the Securities Act, that may arise from any written
information furnished to us by the selling shareholders specifically for use in
this prospectus, in accordance with the Registration Rights Agreements, or we
may be entitled to contribution.
Once sold under the registration
statement, of which this prospectus forms a part, the common shares will be
freely tradable under the Securities Act in the hands of persons other than our
affiliates.
23
DESCRIPTION OF SHARE CAPITAL
Authorized Capital
The Companys authorized capital
consists of an unlimited number of common shares without par value.
Outstanding Securities
Common Shares
As of the date hereof, there were
95,009,864 common shares outstanding.
Information regarding the number
of common shares outstanding as at December 31, 2013 is provided in our 2013
MD&A and information regarding the number of common shares outstanding as at
September 30, 2014 is provided in our management discussion and analysis for the
nine months ended September 30, 2014 (our 2014 Q3 MD&A). Our 2013
MD&A and our 2014 Q3 MD&A are each incorporated by reference herein.
Rights
Attached to and trading with each
of the Companys common shares registered hereunder is a right (the
Right) to purchase a number of common shares on the terms and
conditions set forth in the Shareholder Rights Plan Agreement between the
Company and Computershare Investor Services Inc. dated May 17, 2013 (the
Shareholder Rights Plan) as described below under Shareholder Rights
Plan.
Options to Purchase Common Shares
Information regarding the number
of common share purchase options outstanding as at December 31, 2013 is provided
in our 2013 MD&A and information regarding the number of common share
purchase options outstanding as at September 30, 2014 is provided in our 2014 Q3
MD&A.
Special Warrants
We completed the offer and sale
of an aggregate of 35,962,735 Special Warrants at a price of C$0.431 per Special
Warrant for gross proceeds of approximately C$15.5 million on December 31, 2014
and January 13, 2015, all of which Special Warrants are outstanding as of the
date hereof. The terms of the Special Warrants are described above under
Special Warrants Offering Statistics and Timetable.
Our Articles
The following is a summary of
certain material provisions of (i) our Notice of Articles and Articles, and (ii)
certain provisions of the British Columbia Business Corporations Act (the
Business Corporations Act) applicable to the Company:
Our Notice of Articles and
Articles do not specify objects or purposes. We are entitled under the
Business Corporations Act to carry on all lawful businesses which can be
carried on by a natural person.
Directors power to vote on a proposal, arrangement or
contract in which the director is interested.
According to the Business
Corporations Act, a director holds a disclosable interest in a contract or
transaction if:
24
1. |
the contract or transaction is material to the
company; |
|
|
2. |
the company has entered, or proposes to enter, into the
contract or transaction, and |
|
|
3. |
either of the following applies to the
director: |
|
a. |
the director has a material interest in the contract or
transaction; |
|
|
|
|
b. |
the director is a director or senior officer of, or has a
material interest in, a person who has a material interest in the contract
or transaction. |
However, the Business Corporations Act also provides
that in the following circumstances, a director does not hold a disclosable
interest in a contract or transaction if:
1. |
the situation that would otherwise constitute a
disclosable interest arose before the coming into force of the Business Corporations Act or, if the company was
recognized under the Business Corporations Act, before that
recognition, and was disclosed and approved under, or was not required to
be disclosed under, the legislation that: |
|
|
|
|
a. |
applied to the company on or after the date on which the
situation arose; and |
|
|
|
|
b. |
is comparable in scope and intent to the provisions of
the Business Corporations Act; |
|
|
|
2. |
both the company and the other party to the contract or
transaction are wholly owned subsidiaries of the same
corporation; |
|
|
|
3. |
the company is a wholly owned subsidiary of the other
party to the contract or transaction; |
|
|
|
4. |
the other party to the contract or transaction is a
wholly owned subsidiary of the company; or |
|
|
|
5. |
where the director or senior officer is the sole
shareholder of the company or of a corporation of which the company is a
wholly owned subsidiary. |
The Business Corporations
Act further provides that a director of a company does not hold a
disclosable interest in a contract or transaction merely because:
1. |
the contract or transaction is an arrangement by way of
security granted by the company for money loaned to, or obligations
undertaken by, the director or senior officer, or a person in whom the
director or senior officer has a material interest, for the benefit of the
company or an affiliate of the company; |
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2. |
the contract or transaction relates to an indemnity or
insurance; |
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3. |
the contract or transaction relates to the remuneration
of the director or senior officer in that person's capacity as director,
officer, employee or agent of the company or of an affiliate of the
company; |
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4. |
the contract or transaction relates to a loan to the
company, and the director or senior officer, or a person in whom the
director or senior officer has a material interest, is or is to be a
guarantor of some or all of the loan; or |
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5. |
the contract or transaction has been or will be made with
or for the benefit of a corporation that is affiliated with the company
and the director or senior officer is also a director or senior officer of
that corporation or an affiliate of that
corporation. |
25
Under our Articles, a director or
senior officer who holds a disclosable interest (as that term is used in the
Business Corporations Act) in a contract or transaction into which we
have entered or proposes to enter:
1. |
is liable to account to us for any profit that accrues to
the director or senior officer under or as a result of the contract or
transaction only if and to the extent provided in the Act; |
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2. |
is not entitled to vote on any directors resolution to
approve that contract or transaction, unless all the directors have a
disclosable interest in that contract or transaction, in which case any or
all of those directors may vote on such resolution; |
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3. |
and who is present at the meeting of directors at which
the contract or transaction is considered for approval may be counted in
the quorum at the meeting whether or not the director votes on any or all
of the resolutions considered at the meeting. |
A director or senior officer who
holds any office or possesses any property, right or interest that could result,
directly or indirectly, in the creation of a duty or interest that materially
conflicts with that individuals duty or interest as a director or senior
officer, must disclose the nature and extent of the conflict as required by the
Business Corporations Act. No director or intended director is
disqualified by his or her office from contracting with the Company either with
regard to the holding of any office or place of profit the director holds with
the Company or as vendor, purchaser or otherwise, and no contract or transaction
entered into by or on behalf of the Company in which a director is in any way
interested is liable to be voided for that reason.
Directors' power, in the absence of an independent
quorum, to vote compensation to themselves or any members of their
body.
The compensation of the directors
is decided by the directors unless the board of directors requests approval to
the compensation from the shareholders by ordinary resolution. The Business
Corporations Act provides that a director of a company does not hold a
disclosable interest in a contract or transaction merely because the contract or
transaction relates to the remuneration of the director or senior officer in
that person's capacity as director, officer, employee or agent of the Company or
of an affiliate of the Company.
Borrowing powers exercisable by the directors.
Under the
Articles, the directors may, on behalf of the Company:
1. |
borrow money in such manner and amount, on such security,
from such sources and upon such terms, and conditions as they consider
appropriate; |
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2. |
issue bonds, debentures, and other debt obligations
either outright or as a security for any liability or obligation of the
Company or any other person and at such discounts or premiums and on such
other terms as they consider appropriate; |
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3. |
guarantee the repayment of money by any other person or
the performance of any obligation of any other person; and |
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4. |
mortgage, charge, whether by way of specific or floating
charge, grant a security interest in, or give other security on, the whole
or any part of the present and future assets and undertaking of the
Company. |
Retirement and non-retirement of directors under an age
limit requirement.
There are no such provisions
applicable to the Company under its Notice of Articles or its Articles or the
Business Corporations Act.
26
Number of shares required for a directors
qualification.
Directors need not own any shares of
the Company in order to qualify as directors.
The rights, preferences and
restrictions attached to the Companys common shares are summarized as follows:
Dividends
Subject to the provisions of the
British Columbia Business Corporations Act, the directors may from time
to time declare and authorized payments of dividends out of available assets.
Any dividends must be declared and paid according to the number of shares held.
Under the Business Corporations Act, no dividend may be paid if we are,
or would as a result of payment of the dividend become, insolvent.
Voting Rights
Each common share is entitled to
one vote on matters to which common shares ordinarily vote including the annual
election of directors, appointment of auditors and approval of corporate
changes. Directors are elected to hold office at each annual meeting and hold
office until the ensuing annual meeting. Directors automatically retire at each
annual meeting. There are no staggered directorships among our directors or
cumulative voting rights.
Rights to Profits and Liquidation Rights
All common shares of the Company
participate ratably in any net profit or loss of the Company and participate
ratably as to any distribution of assets in the event of a winding up or other
liquidation.
Redemption
Our common shares are not subject to
any rights of redemption.
Sinking Fund Provisions
There are no sinking fund provisions
or similar obligations relating to our common shares.
Shares Fully Paid
Each of our common shares must,
under the Business Corporations Act, be issued as fully paid for cash,
property or services received by the Company. They are therefore non-assessable
and not subject to further calls for payment.
Pre-emptive Rights
Holders of our common shares are
not entitled to any pre-emptive rights which provide a right to any holder to
participate in any further offerings of the Companys equity or other
securities.
With respect to the rights,
preferences and restrictions attaching to our common shares, there are generally
no significant differences between Canadian and United States law as the
shareholders, or the applicable corporate statute, will determine the rights,
preferences and restrictions attaching to each class of our shares.
27
4. |
Changes to Rights and Restrictions to
Shares |
Our Articles provide that,
subject to the Business Corporations Act, the Company may, by ordinary
resolution of our shareholders:
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create special rights or restrictions for, and
attach those special rights or restrictions to, the shares of any class or
series of shares, whether or not any or all of those shares have been
issued; or |
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vary or delete any special rights or
restrictions attached to the shares of any class or series of shares,
whether or not any or all of those shares have been issued and alter its
Notice of Articles accordingly. |
Subject to the Business
Corporations Act, the Company may by resolution of the directors (i) subdivide
or consolidate all or any of its unissued, or fully paid issued, shares and, if
applicable, alter its Notice of Articles, and, if applicable, its Articles, and
(ii) alter the identifying name of any of its shares.
The Articles provide that the
Company may by ordinary resolution or resolution of the directors authorize an
alteration of its Notice of Articles in order to change its name or adopt or
change any translation of that name.
Our Articles provide that,
subject to the Business Corporations Act, the Company may by ordinary
resolution of our shareholders:
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create one or more classes or series of shares;
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increase, reduce or eliminate the maximum number of
shares that we are authorized to issue out of any class or series of
shares or establish a maximum number of shares that we are authorized to
issue out of any class or series of shares for which no maximum is
established; |
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if the Company is authorized to issue shares of
a class of shares with par value: |
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decrease the par value of those shares; or
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if none of the shares of that class of shares
are allotted or issued, increase the par value of those shares;
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change all or any of its unissued, or fully
paid issued, shares with par value into shares without par value or any of
its unissued shares without par value into shares with par value; or
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otherwise alter its shares or authorized share
structure when required or permitted to do so by the Act where it does not
specify a special resolution. |
The Articles provide that a
special resolution is a resolution of shareholders that is approved by two
thirds (66 2/3%) of those votes cast at a properly constituted meeting of
shareholders. An ordinary resolution is a resolution of shareholders that is
approved by a majority of those votes cast at a properly constituted meeting of
shareholders.
If special rights and
restrictions are altered and any right or special right attached to issued
shares is prejudiced or interfered with, then the consent of the holders of
shares of that class or series by a special separate resolution will be
required.
The Business Corporations
Act also provides that a company may reduce its capital if it is authorized
to do so by a court order, or, if the capital is reduced to an amount that is
not less than the realizable value of the company's assets less its liabilities,
by a special resolution or court order.
28
Generally, there are no
significant differences between British Columbia and United States law with
respect to changing the rights of shareholders as most state corporation
statutes require shareholder approval (usually a majority) for any such changes
that affect the rights of shareholders.
5. |
Meetings of Shareholders |
Our Articles provide that the
Company must hold its annual general meeting once in every calendar year (being
not more than 15 months from the last annual general meeting) at such time and
place to be determined by the directors. Shareholders meetings are governed by
the Articles of the Company but many important shareholder protections are also
contained in the Canadian provincial securities laws that are applicable to the
Company as a reporting issuer in the Canadian provinces of British Columbia,
Alberta and Ontario (Canadian Securities Laws) and the British
Columbia Corporations Act. Our Articles provide that we will provide at
least 21 days' advance written notice of any meeting of shareholders and will
provide for certain procedural matters and rules of order with respect to
conduct of the meeting. The directors may fix in advance a date, which is no
fewer than 21 days prior to the date of the meeting for the purpose of
determining shareholders entitled to receive notice of and to attend and vote at
a general meeting.
Canadian Securities Law and the
British Columbia Corporations Act superimpose requirements that generally
provide that shareholders meetings require not less than a 60 day notice period
from initial public notice and that we make a thorough advanced search of
intermediary and brokerage registered shareholdings to facilitate communication
with beneficial shareholders so that meeting proxy and information materials can
be sent via the brokerages to unregistered but beneficial shareholders. The form
and content of information circulars and proxies and like matters are governed
by Canadian Securities Laws and the British Columbia Corporations
Act. This legislation specifies the disclosure requirements for the proxy
materials and various corporate actions, background information on the nominees
for election for director, executive compensation paid in the previous year and
full details of any unusual matters or related party transactions. We must hold
an annual shareholders meeting open to all shareholders for personal attendance
or by proxy at each shareholder's determination.
Most state corporation statutes
require a public company to hold an annual meeting for the election of directors
and for the consideration of other appropriate matters. The state statutes also
include general provisions relating to shareholder voting and meetings. Apart
from the timing of when an annual meeting must be held and the percentage of
shareholders required to call an annual meeting or an extraordinary meeting,
there are generally no material differences between Canadian and United States
law respecting annual meetings and extraordinary meetings.
6. |
Rights to Own Securities |
There are no limitations under
our Articles or in the Business Corporations Act on the right of persons
who are not citizens of Canada to hold or vote common shares.
7. |
Restrictions on Changes in Control, Mergers,
Acquisitions or Corporate Restructuring of the
Company |
Our Articles do not contain any
provisions that would have the effect of delaying, deferring or preventing a
change of control of the Company. The Company has adopted the shareholder rights
plan described below under Shareholder Rights Plan.
8. |
Ownership Threshold Requiring Public
Disclosure |
Our Articles do not require
disclosure of share ownership. Share ownership of director nominees must be
reported annually in proxy materials sent to our shareholders. There are no
requirements under British Columbia corporate law to report ownership of our
shares but Canadian Securities Laws disclosure of trading by insiders (generally
officers, directors and holders of 10% of voting shares) within 5 days of the
trade. In addition, Canadian Securities Laws require disclosure of acquisitions
of more than 10% of the issued and outstanding shares of the Company by press
release and filing of an early warning report within 2 business days of the
acquisition. Canadian Securities Laws also require that we disclose in our
annual general meeting proxy statement, holders who beneficially own more than
10% of our issued and outstanding shares, and United States federal securities
laws require the disclosure in any annual report on Form 20-F that we file of
holders who own more than 5% of our issued and outstanding shares.
29
Most state corporation statutes
do not contain provisions governing the threshold above which shareholder
ownership must be disclosed. United States federal securities laws require a
company that is subject to the reporting requirements of the Securities Exchange
Act of 1934 to disclose, in its annual reports filed with the Securities and
Exchange Commission those shareholders who own more than 5% of a corporations
issued and outstanding shares.
9. |
Differences in Law between the US and British
Columbia |
Differences in the law between
United States and British Columbia, where applicable, have been explained above
within each category.
10. |
Changes in the Capital of the
Company |
There are no conditions imposed
by our Notice of Articles or Articles which are more stringent than those
required by the Business Corporations Act.
Shareholder Rights
The terms of the Rights granted
under the Shareholders Rights Plan are summarized as follows:
Term
The Shareholder Rights Plan
(unless terminated earlier) will remain in effect until termination of the
annual meeting of shareholders of the Company in 2016 unless the term of the
Shareholder Rights Plan is extended beyond such date by resolution of
shareholders at such meeting.
Issuance of Rights
Under the Shareholder Rights
Plan, one Right was issued by the Company in respect of each common share (a
Voting Share) outstanding as of the close of business (Vancouver time)
(the Record Time) on the effective date of May 17, 2013 (the
Effective Date). Voting Shares include the common shares and any
other shares of the Company entitled to vote generally in the election of all
directors. One Right has been and will also be issued for each additional Voting
Share issued after the Record Time and prior to the earlier of the Separation
Time and the Expiration Time, subject to the earlier termination or expiration
of the Rights as set out in the Shareholder Rights Plan.
As of the Effective Date and the date
hereof, the only Voting Shares outstanding were the common shares.
Certificates and Transferability
Prior to the Separation Time, the
Rights will be evidenced by a legend imprinted on certificates for common shares
issued after the Record Time. Rights are also attached to common shares
outstanding on the Effective Date, although share certificates issued prior to
the Effective Date will not bear such a legend. Shareholders are not required to
return their certificates in order to have the benefit of the Rights. Prior to
the Separation Time, Rights will trade together with the common shares and will
not be exercisable or transferable separately from the common shares. From and
after the Separation Time, the Rights will become exercisable, will be evidenced
by Rights Certificates and will be transferable separately from the common
shares.
30
Separation of Rights
The Rights will become
exercisable and begin to trade separately from the associated common shares at
the Separation Time which is generally (subject to the ability of the
Board to defer the Separation Time) the close of business on the tenth trading
day after the earliest to occur of:
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a public announcement that a person or group of
affiliated or associated persons or persons acting jointly or in concert
has become an Acquiring Person, meaning that such person or group
has acquired Beneficial Ownership (as defined in the Rights Plan) of 20%
or more of the outstanding Voting Shares other than as a result of: (i) a
reduction in the number of Voting Shares outstanding; (ii) a Permitted
Bid or Competing Permitted Bid (as defined below);
(iii) acquisitions of Voting Shares in respect of which the Board has
waived the application of the Rights Agreement; (iv) other specified
exempt acquisitions and pro rata acquisitions in which shareholders
participate on a pro rata basis; or (v) an acquisition by a person of
Voting Shares upon the exercise, conversion or exchange of a security
convertible, exercisable or exchangeable into a Voting Share received by a
person in the circumstances described in (ii), (iii) or (iv) above;
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the date of commencement of, or the first public
announcement of an intention of any person (other than the Company or any
of its subsidiaries) to commence a takeover bid (other than a Permitted
Bid or a Competing Permitted Bid) where the Voting Shares subject to the
bid owned by that person (including affiliates, associates and others
acting jointly or in concert therewith) would constitute 20% of more of
the outstanding Voting Shares; and |
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the date upon which a Permitted Bid or Competing
Permitted Bid ceases to qualify as such. Promptly following the Separation
Time, separate certificates evidencing rights (Rights
Certificates) will be mailed to the holders of record of the Voting
Shares as of the Separation Time and the Rights Certificates alone will
evidence the Rights. |
Rights Exercise Privilege
After the Separation Time, each
Right entitles the holder thereof to purchase one common share at an initial
Exercise Price equal to three times the Market Price at the
Separation Time. The Market Price is defined as the average of the daily closing
prices per share of such securities on each of the 20 consecutive trading days
through and including the trading day immediately preceding the Separation Time.
Following a transaction which results in a person becoming an Acquiring Person
(a Flip-In Event), the Rights entitle the holder thereof to receive,
upon exercise, such number of common shares which have an aggregate Market Price
(as of the date of the Flip-In Event) equal to twice the then Exercise Price of
the Rights for an amount in cash equal to the Exercise Price. Essentially,
following a Flip-In Event, the Rights entitle the holder thereof to purchase two
times the number of common shares that the holder could have otherwise acquired
for the same purchase price. In such event, however, any Rights beneficially
owned by an Acquiring Person (including affiliates, associates and other acting
jointly or in concert therewith), or a transferee of any such person, will be
null and void. A Flip-In Event does not include acquisitions approved by the
Board or acquisitions pursuant to a Permitted Bid or Competing Permitted
Bid.
Permitted Bid Requirements
A bidder can make a takeover bid
and acquire Voting Shares without triggering a Flip-In Event under the Rights
Plan if the takeover bid qualifies as a Permitted Bid. The requirements of a
Permitted Bid include the following:
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the takeover bid must be made by means of a
takeover bid circular; |
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the takeover bid is made to all holders of
Voting Shares on the books of the Company, other than the offeror;
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31
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no Voting Shares are taken up or paid for pursuant to the
takeover bid unless more than 50% of the Voting Shares held by
independent shareholders (as defined): (i) shall have been deposited or
tendered pursuant to the take-over bid and not withdrawn; and (ii) have
previously been or are taken up at the same time; |
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the takeover bid contains an irrevocable and unqualified
provision that, no Voting Shares will be taken up or paid for pursuant to
the takeover bid prior to the close of business on the date which is not
less than 60 days following the date of the takeover bid; |
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the takeover bid contains an irrevocable and unqualified
provision that, Voting Shares may be deposited pursuant to such takeover
bid at any time during the period of time between the date of the takeover
bid and the date on which Voting Shares may be taken up and paid for and
any Voting Shares deposited pursuant to the takeover bid may be withdrawn
until taken up and paid for; and |
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the takeover bid contains an irrevocable and unqualified
provision that, if on the date on which Voting Shares may be taken up and
paid for under the takeover bid, more than 50% of the Voting Shares held
by Independent Shareholders have been deposited pursuant to the takeover
bid and not withdrawn, the offeror will make public announcement of that
fact and the takeover bid will remain open for deposits and tenders of
Voting Shares for not less than 10 business days from the date of such
public announcement. |
The Shareholder Rights Plan also
allows for a competing Permitted Bid (a Competing Permitted Bid) to be
made while a Permitted Bid is in existence. A Competing Permitted Bid must
satisfy all of the requirements of a Permitted Bid except that it may expire on
the same date as the Permitted Bid, subject to the requirement that it be
outstanding for a minimum period of 35 days (the minimum period required under
Canadian securities laws).
Permitted Lock-Up Agreements
A person will not become an
Acquiring Person by virtue of having entered into an agreement (a Permitted
Lock-Up Agreement) with a Shareholder whereby the Shareholder agrees to
deposit or tender Voting Shares to a takeover bid (the Lock-Up Bid)
made by such person, provided that the agreement meets certain requirements
including:
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the terms of the agreement are publicly disclosed and a
copy of the agreement is publicly available not later than the date of the
Lock-Up Bid or, if the Lock-Up Bid has not been made prior to the date on
which such agreement is entered into, not later than the first business
day following the date of such agreement; |
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the holder who has agreed to tender Voting Shares to the
Lock-Up Bid made by the other party to the agreement is permitted to
terminate its obligation under the agreement, and to terminate any
obligation with respect to the voting of such Voting Shares, in order to
tender Voting Shares to another takeover bid or to support another
transaction where: (i) the offer price or value of the consideration
payable under the other takeover bid or transaction is greater than the
price or value of the consideration per share at which the holder has
agreed to deposit or tender Voting Shares to the Lock-Up Bid, or is
greater than a specified minimum which is not more than 7% higher than the
price or value of the consideration per share at which the holder has
agreed to deposit or tender Voting Shares under the Lock-Up Bid; and (ii)
if the number of Voting Shares offered to be purchased under the Lock-Up
Bid is less than all of the Voting Shares held by Shareholders (excluding
Voting Shares held by the offeror), the number of Voting Shares offered to
be purchased under the other takeover bid or transaction (at an offer
price not lower than in the Lock-Up Bid) is greater than the number of
Voting Shares offered to be purchased under the Lock-Up Bid or is greater
than a specified number which is not more than 7% higher than the number
of Voting Shares offered to be purchased under the Lock-Up Bid; and
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no break-up fees, top-up fees, or other penalties that
exceed in the aggregate the greater of 2.5% of the price or value of the
consideration payable under the Lock-Up Bid and 50% of the increase in
consideration resulting from another takeover bid or transaction shall be
payable by the holder if the holder fails to deposit or tender Voting
Shares to the Lock-Up Bid. |
32
Waiver and Redemption
If a potential offeror does not
desire to make a Permitted Bid, it can negotiate with, and obtain the prior
approval of, the Board to make a takeover bid by way of a takeover bid circular
sent to all holders of Voting Shares on terms which the Board considers fair to
all Shareholders. In such circumstances, the Board may waive the application of
the Shareholder Rights Plan thereby allowing such bid to proceed without
dilution to the offeror. Any waiver of the application of the Shareholder Rights
Plan in respect of a particular takeover bid shall also constitute a waiver of
any other takeover bid which is made by means of a takeover bid circular to all
holders of Voting Shares while the initial takeover bid is outstanding. The
Board may also waive the application of the Shareholder Rights Plan in respect
of a particular Flip-in Event that has occurred through inadvertence, provided
that the Acquiring Person that inadvertently triggered such Flip-in Event
reduces its beneficial holdings to less than 20% of the outstanding Voting
Shares within 14 days or such earlier or later date as may be specified by the
Board. With the prior consent of the holders of Voting Shares, the Board may,
prior to the occurrence of a Flip-in Event that would occur by reason of an
acquisition of Voting Shares otherwise than pursuant to the foregoing, waive the
application of the Shareholder Rights Plan to such Flipin Event. The Board may,
with the prior consent of the holders of Voting Shares, at any time prior to the
occurrence of a Flip-in Event, elect to redeem all but not less than all of the
then outstanding Rights at a redemption price of $0.00001 per Right. Rights are
deemed to be redeemed following completion of a Permitted Bid, a Competing
Permitted Bid or a takeover bid in respect of which the Board has waived the
application of the Rights Plan.
Protection against Dilution
The Exercise Price, the number
and nature of securities which may be purchased upon the exercise of Rights and
the number of Rights outstanding are subject to adjustment from time to time to
prevent dilution in the event of dividends, subdivisions, consolidations,
reclassifications or other changes in the outstanding common shares, pro rata
distributions to holders of common shares and other circumstances where
adjustments are required to appropriately protect the interests of the holders
of Rights.
Exemptions for Investment Advisors
Investment advisors (for client
accounts), trust companies (acting in their capacity as trustees or
administrators), statutory bodies whose business includes the management of
funds (for employee benefit plans, pension plans, or insurance plans of various
public bodies) and administrators or trustees of registered pension plans or
funds acquiring greater than 20% of the Voting Shares are exempted from
triggering a Flip- in Event, provided they are not making, either alone or
jointly or in concert with any other person, a takeover bid.
Duties of the Board
The adoption of the Shareholder
Rights Plan will not in any way lessen or affect the duty of our board of
directors to act honestly and in good faith with a view to the best interests of
the Company. Our board, when a takeover bid or similar offer is made, will
continue to have the duty and power to take such actions and make such
recommendations to shareholders as are considered appropriate.
Amendment
We may make amendments to the
Shareholder Rights Plan at any time to correct any clerical or typographical
error and may make amendments which are required to maintain the validity of the
Shareholder Rights Plan due to changes in any applicable legislation,
regulations or rules. The Company may, with the prior approval of Shareholders
(or the holders of Rights if the Separation Time has occurred), supplement,
amend, vary, rescind or delete any of the provisions of the Shareholder Rights
Plan.
CERTAIN MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS
The following is a general
summary of certain material U.S. federal income tax considerations applicable to
a U.S. Holder (as defined below) arising from the ownership and disposition of
the common shares of the Company described in this prospectus acquired from a
selling shareholder pursuant to an offering. This summary is for general
information purposes only and does not purport to be a complete analysis or
listing of all potential U.S. federal income tax considerations that may apply
to a U.S. Holder as a result of the ownership and disposition of common shares.
In addition, this summary does not take into account the individual facts and
circumstances of any particular U.S. Holder that may affect the U.S. federal
income tax consequences to such U.S. Holder, including specific tax consequences
to a U.S. Holder under an applicable tax treaty. Accordingly, this summary is
not intended to be, and should not be construed as, legal or U.S. federal income
tax advice with respect to any particular U.S. Holder. In addition, this summary
does not address the U.S. federal alternative minimum, U.S. federal estate and
gift, U.S. Medicare contribution, U.S. state and local, or non-U.S. tax
consequences of the ownership and disposition of common shares. Except as
specifically set forth below, this summary does not discuss applicable tax
reporting requirements. Each U.S. Holder should consult its own tax advisor
regarding all U.S. federal, U.S. state and local and non-U.S. tax consequences
of the ownership and disposition of common shares.
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No opinion from U.S. legal
counsel or ruling from the Internal Revenue Service (the IRS) has been
requested, or will be obtained, regarding the U.S. federal income tax
consequences of the ownership and disposition of common shares. This summary is
not binding on the IRS, and the IRS is not precluded from taking a position that
is different from, and contrary to, any position taken in this summary. In
addition, because the authorities upon which this summary is based are subject
to various interpretations, the IRS and the U.S. courts could disagree with one
or more of the positions taken in this summary.
Scope of This Disclosure
Authorities
This summary is based on the
Internal Revenue Code of 1986, as amended (the Code), Treasury
Regulations (whether final, temporary, or proposed), published rulings of the
IRS, published administrative positions of the IRS, the Convention Between
Canada and the United States of America with Respect to Taxes on Income and on
Capital, signed September 26, 1980, as amended (the Canada-U.S. Tax
Convention), and U.S. court decisions that are applicable and, in each
case, as in effect and available, as of the date hereof. Any of the authorities
on which this summary is based could be changed in a material and adverse manner
at any time, and any such change could be applied on a retroactive or
prospective basis which could affect the U.S. federal income tax considerations
described in this summary. This summary does not discuss the potential effects,
whether adverse or beneficial, of any proposed legislation that, if enacted,
could be applied on a retroactive or prospective basis.
U.S. Holders
For purposes of this summary, the
term U.S. Holder means a beneficial owner of common shares that is for
U.S. federal income tax purposes:
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an individual who is a citizen or resident of the U.S.;
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a corporation (or other entity taxable as a corporation
for U.S. federal income tax purposes) created or organized in or under the
laws of the U.S., any state thereof or the District of Columbia;
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an estate the income of which is subject to U.S. federal
income taxation regardless of its source; or |
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a trust that (a) is subject to the primary supervision of
a court within the U.S. and the control of one or more U.S. persons for
all substantial decisions or (b) has a valid election in effect under
applicable Treasury Regulations to be treated as a U.S. person.
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Non-U.S. Holders
For purposes of this summary, a
non-U.S. Holder is a beneficial owner of common shares that is not a
partnership (or other pass-through entity) for U.S. federal income tax
purposes and is not a U.S. Holder. This summary does not address the U.S.
federal income tax consequences applicable to non-U.S. Holders arising from the
ownership and disposition of common shares. Accordingly, a non-U.S. Holder
should consult its own tax advisor regarding all U.S. federal, U.S. state and
local, and non-U.S. tax consequences (including the potential application of and
operation of any income tax treaties) relating to the purchase of the common
shares pursuant to an offering. and the ownership and disposition of common
shares.
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Transactions Not Addressed
This summary does not address the
U.S. federal income tax consequences of transactions effected prior or
subsequent to, or concurrently with, any purchase of the common shares pursuant
to an offering (whether or not any such transactions are undertaken in
connection with the purchase of the common shares pursuant to an offering),
including, without limitation, the following:
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any vesting, conversion, assumption, disposition,
exercise, exchange, or other transaction involving any rights to acquire
common shares, including warrants and options; and |
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any transaction, other than an offering, in
which common shares have been issued or are acquired. |
U.S. Holders Subject to Special U.S. Federal Income Tax
Rules Not Addressed
This summary does not address the
U.S. federal income tax considerations of the ownership and disposition of
common shares by U.S. Holders that are subject to special provisions under the
Code, including, but not limited to, the following: (a) tax-exempt
organizations, qualified retirement plans, individual retirement accounts, or
other tax-deferred accounts; (b) financial institutions, underwriters, insurance
companies, real estate investment trusts, or regulated investment companies; (c)
broker-dealers, dealers, or traders in securities or currencies that elect to
apply a mark-to-market accounting method; (d) U.S. Holders that have a
functional currency other than the U.S. dollar; (e) U.S. Holders that own
common shares as part of a straddle, hedging transaction, conversion
transaction, constructive sale, or other arrangement involving more than one
position; (f) U.S. Holders that acquire common shares in connection with the
exercise of employee stock options or otherwise as compensation for services;
(g) U.S. Holders that hold common shares other than as a capital asset within
the meaning of Section 1221 of the Code (generally, property held for investment
purposes); (h) U.S. Holders that own directly, indirectly, or by attribution,
10% or more, by voting power, of the outstanding stock of the Company; and (i)
U.S. Holders subject to the U.S. alternative minimum tax. This summary also does
not address the U.S. federal income tax considerations applicable to U.S.
Holders who are: (a) U.S. expatriates or former long-term residents of the U.S.;
(b) persons that have been, are, or will be a resident or deemed to be a
resident in Canada for purposes of the Income Tax Act (Canada); (c) persons that
use or hold, will use or hold, or that are or will be deemed to use or hold
common shares in connection with carrying on a business in Canada; (d) persons
whose common shares constitute taxable Canadian property under the Income Tax
Act (Canada); or (e) persons that have a permanent establishment in Canada for
the purposes of the Canada-U.S. Tax Convention. U.S. Holders that are subject to
special provisions under the Code, including U.S. Holders described immediately
above, should consult their own tax advisors regarding all U.S. federal, U.S.
state and local, and non-U.S. tax consequences relating to the ownership and
disposition of common shares.
If an entity that is classified
as a partnership (or other pass-through entity) for U.S. federal income tax
purposes holds common shares, the U.S. federal income tax consequences to such
partnership and the partners of such partnership of the ownership and
disposition of the common shares generally will depend on the activities of the
partnership and the status of such partners (or other owners). This summary does
not address the U.S. federal income tax consequences of any such partner or
partnership (or other pass-through entity or its owners). Owners of entities
that are classified as partnerships (or other pass-through entities) for U.S.
federal income tax purposes should consult their own tax advisors regarding the
U.S. federal income tax consequences of the ownership and disposition of common
shares.
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U.S. Federal Income Tax Considerations Applicable to the
Ownership and Disposition of Common Shares
Distributions on Common Shares
Subject to the passive foreign
investment company (PFIC) rules discussed below (see Tax Consequences
if the Company is a PFIC), a U.S. Holder that receives a distribution,
including a constructive distribution, with respect to common shares will be
required to include the amount of such distribution in gross income as a
dividend (without reduction for any Canadian income tax withheld from such
distribution) to the extent of the current or accumulated earnings and profits
of the Company, as computed for U.S. federal income tax purposes. To the extent
that a distribution exceeds the current and accumulated earnings and profits
of the Company, such distribution will be treated first as a tax-free return of
capital to the extent of a U.S. Holders tax basis in the common shares and
thereafter as gain from the sale or exchange of such common shares (see Sale or
Other Taxable Disposition of Common Shares below). However, the Company may not
maintain calculations of earnings and profits in accordance with U.S. federal
income tax principles, and each U.S. Holder should therefore assume that any
distribution by the Company with respect to the common shares will constitute a
dividend. Dividends received on the common shares generally will not be eligible
for the dividends received deduction available to U.S. corporate shareholders
receiving dividends from U.S. corporations. If the Company is eligible for the
benefits of the Canada-U.S. Tax Convention, dividends paid by the Company to
non-corporate U.S. Holders generally will be eligible for the preferential tax
rates applicable to long-term capital gains, provided certain holding period and
other conditions are satisfied, including that the Company not be classified as
a PFIC in the tax year of distribution or in the preceding tax year. The
dividend rules are complex, and each U.S. Holder should consult its own tax
advisor regarding the application of such rules.
Sale or Other Taxable Disposition of Common
Shares
Subject to the PFIC rules
discussed below, upon the sale or other taxable disposition of common shares, a
U.S. Holder generally will recognize capital gain or loss in an amount equal to
the difference between the amount of cash plus the fair market value of any
property received and such U.S. Holders tax basis in the common shares sold or
otherwise disposed of. Subject to the PFIC rules discussed below, such capital
gain or loss will be long-term capital gain or loss if, at the time of the sale
or other taxable disposition, the common shares have been held for more than one
year. Preferential tax rates apply to long-term capital gains of a U.S. Holder
that is an individual, estate, or trust. There are currently no preferential tax
rates for long-term capital gains of a U.S. Holder that is a corporation.
Deductions for capital losses are subject to significant limitations under the
Code.
PFIC Status of the Company
If the Company is or becomes a
PFIC, the preceding sections of this summary may not describe the U.S. federal
income tax consequences to U.S. Holders of the ownership and disposition of
common shares. The U.S. federal income tax consequences of owning and disposing
of common shares if the Company is or becomes a PFIC are described below under
the heading Tax Consequences if the Company is a PFIC.
A non-U.S. corporation is a PFIC
for each tax year in which (i) 75% or more of its gross income is passive income
(as defined for U.S. federal income tax purposes) (the income test) or
(ii) on average for such tax year, 50% or more (by value) of its assets either
produces or is held for the production of passive income (the asset
test). For purposes of the PFIC provisions, gross income generally
includes sales revenues less cost of goods sold, plus income from investments
and from incidental or outside operations or sources, and passive income
generally includes dividends, interest, certain rents and royalties, and certain
gains from commodities or securities transactions. In determining whether or not
it is a PFIC, a non-U.S. corporation is required to take into account its pro
rata portion of the income and assets of each corporation in which it owns,
directly or indirectly, at least a 25% interest (by value).
The Company believes it was a
PFIC in one or more prior tax years and, based on current business plans and
financial projections, expects to be a PFIC in the current tax year and possibly
in subsequent tax years. The determination of PFIC status is inherently factual,
is subject to a number of uncertainties, and can be determined only annually at
the close of the tax year in question. Additionally, the analysis depends, in
part, on the application of complex U.S. federal income tax rules, which are
subject to differing interpretations. There can be no assurance that the Company
will or will not be determined to be a PFIC for the current tax year or any
prior or future tax year, and no opinion of legal counsel or ruling from the IRS
concerning the status of the Company as a PFIC has been obtained or will be
requested. U.S. Holders should consult their own U.S. tax advisors regarding the
application of the PFIC rules to the common shares.
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Tax Consequences if the Company is a PFIC
If the Company is a PFIC for any
tax year during which a U.S. Holder holds common shares, special rules may
increase such U.S. Holders U.S. federal income tax liability with respect to
the ownership and disposition of such shares. If the Company meets the income
test or the asset test for any tax year during which a U.S. Holder owns common
shares, the Company will be treated as a PFIC with respect to such U.S. Holder
for that tax year and for all subsequent tax years, regardless of whether the
Company meets the income test or the asset test for such subsequent tax years,
unless the U.S. Holder elects to recognize any unrealized gain in the common
shares or makes a timely and effective QEF Election or Mark-to-Market Election.
If a U.S. Holder does not make a
timely and effective QEF Election or Mark-to-Market Election, then under the
default PFIC rules:
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any realized gain on the sale or other disposition
(including dispositions and certain other events that would not otherwise
be treated as taxable events) of common shares and any excess
distribution (defined as an annual distribution that is more than 25% in
excess of the average annual distribution during the preceding three
years) will be allocated ratably to each day of such U.S. Holders holding
period for the common shares; |
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the amount allocated to the current tax year and any year
prior to the first year in which the Company was a PFIC will be taxed as
ordinary income in the current year; |
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the amount allocated to each of the other tax years (the
Prior PFIC Years) will be subject to tax at the highest ordinary
income tax rate in effect for the applicable class of taxpayer for that
year; |
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an interest charge will be imposed with respect to the
resulting tax attributable to each Prior PFIC Year, which interest charge
is not deductible by non-corporate U.S. Holders; and |
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any loss realized on the disposition of the common shares
will not be recognized. |
A U.S. Holder that makes a timely
and effective mark-to-market election under Section 1296 of the Code (a
Mark-to-Market Election) or a timely and effective election to treat
the Company as a qualified electing fund (a QEF) under Section 1295
of the Code (a QEF Election) may generally mitigate or avoid the PFIC
consequences described above with respect to common shares. In light of
adverse consequences of PFIC characterization and the uncertainty as to the
Companys PFIC status, the Company will provide to any U.S. Holder, upon written
request, the information necessary for United States income tax reporting
purposes for such investor to make a QEF Election. The Company may elect to
provide such information on its website.
A timely and effective QEF
Election requires a U.S. Holder to include currently in gross income each year
its pro rata share of the Companys ordinary earnings and net capital gains,
regardless of whether such earnings and gains are actually distributed. Thus, a
U.S. Holder could have a tax liability with respect to such ordinary earnings or
gains without a corresponding receipt of cash from the Company. If the Company
is a QEF with respect to a U.S. Holder, the U.S. Holders basis in the common
shares will be increased to reflect the amount of the taxed but undistributed
income. Distributions of income that had previously been taxed will result in a
corresponding reduction of basis in the common shares and will not be taxed
again as a distribution to a U.S. Holder. Taxable gains on the disposition of
common shares by a U.S. Holder that has made a timely and effective QEF Election
are generally capital gains. A U.S. Holder must make a QEF Election if it wishes
to have this treatment. To make a QEF Election, a U.S. Holder will need to have
an annual information statement from the Company setting forth the ordinary
earnings and net capital gains for the year. In general, a U.S. Holder must make
a QEF Election on or before the due date for filing its income tax return for
the first year to which the QEF Election will apply. Under applicable Treasury
Regulations, a U.S. Holder will be permitted to make retroactive elections in
particular circumstances, including if it had a reasonable belief that the
Company was not a PFIC and filed a protective election.
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Each U.S. Holder should consult
its own tax advisor regarding the availability and desirability of, and
procedure for, making a timely and effective QEF Election for the Company.
A Mark-to-Market Election may be
made with respect to stock in a PFIC if such stock is regularly traded on a
qualified exchange or other market (within the meaning of the Code and the
applicable U.S. Treasury Regulations). A class of stock that is traded on one or
more qualified exchanges or other markets is considered to be regularly traded
for any calendar year during which such class of stock is traded in other than
de minimis quantities on at least 15 days during each calendar quarter. If the
common shares are considered to be regularly traded within this meaning, then
a U.S. Holder generally will be eligible to make a Mark-to-Market Election with
respect to its shares. However, there is no assurance that the common shares
will be or remain regularly traded for this purpose.
A U.S. Holder that makes a timely
and effective Mark-to-Market Election with respect to common shares generally
will be required to recognize as ordinary income each tax year an amount equal
to the excess, if any, of the fair market value of such shares as of the close
of such taxable year over the U.S. Holders adjusted tax basis in such stock as
of the close of such taxable year. A U.S. Holders adjusted tax basis in the
common shares generally will be increased by the amount of ordinary income
recognized with respect to such shares. If the U.S. Holders adjusted tax basis
in the common shares as of the close of a tax year exceeds the fair market value
of such shares as of the close of such taxable year, the U.S. Holder generally
will recognize an ordinary loss, but only to the extent of net mark-to-market
income recognized with respect to such shares for all prior taxable years. A
U.S. Holders adjusted tax basis in its common shares generally will be
decreased by the amount of ordinary loss recognized with respect to such shares.
Any gain recognized upon a disposition of the common shares generally will be
treated as ordinary income, and any loss recognized upon a disposition generally
will be treated as an ordinary loss to the extent of net mark-to-market income
recognized for all prior taxable years. Any loss recognized in excess thereof
will be taxed as a capital loss.
Each U.S. Holder should consult
its own tax advisor regarding the availability and desirability of, and
procedure for, making a timely and effective Mark-to-Market Election with
respect to the common shares.
Foreign Tax Credit
A U.S. Holder that pays (whether
directly or through withholding) Canadian income tax in connection with the
ownership or disposition of common shares may be entitled, at the election of
such U.S. Holder, to receive either a deduction or a credit for such Canadian
income tax paid. Generally, a credit will reduce a U.S. Holders U.S. federal
income tax liability on a dollar-for-dollar basis, whereas a deduction will
reduce a U.S. Holders income subject to U.S. federal income tax. This election
is made on a year-by-year basis and applies to all creditable foreign taxes paid
(whether directly or through withholding) by a U.S. Holder during a year.
Complex limitations apply to the
foreign tax credit, including the general limitation that the credit cannot
exceed the proportionate share of a U.S. Holders U.S. federal income tax
liability that such U.S. Holders foreign source taxable income bears to such
U.S. Holders worldwide taxable income. In applying this limitation, a U.S.
Holders various items of income and deduction must be classified, under complex
rules, as either foreign source or U.S. source. Generally, dividends paid by
a non-U.S. corporation should be treated as foreign source for this purpose, and
gains recognized on the sale of stock of a non-U.S. corporation by a U.S. Holder
should be treated as U.S. source for this purpose, except as otherwise provided
in an applicable income tax treaty, and if an election is properly made under
the Code. However, the amount of a distribution with respect to the common
shares that is treated as a dividend may be lower for U.S. federal income tax
purposes than it is for Canadian federal income tax purposes, resulting in a
reduced foreign tax credit allowance to a U.S. Holder. In addition, this
limitation is calculated separately with respect to specific categories of
income. The foreign tax credit rules are complex, and each U.S. Holder should
consult its own U.S. tax advisor regarding the foreign tax credit rules.
Non-U.S. income taxes paid with
respect to any distribution on shares of a PFIC generally are eligible for the
foreign tax credit. However, special rules apply to the amount of foreign tax
credit that a U.S. Holder may claim on a distribution from a PFIC. The rules
relating to distributions by a PFIC and their eligibility for the foreign tax
credit are complicated. A U.S. Holder should consult its own tax advisor
regarding their application to the U.S. Holder.
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Receipt of Foreign Currency
The amount of any distribution or
proceeds paid in Canadian dollars to a U.S. Holder in connection with the
ownership of common shares, or on the sale or other taxable disposition of
common shares, will be translated into U.S. dollars calculated by reference to
the exchange rate prevailing on the date of actual or constructive receipt of
the payment, regardless of whether the Canadian dollars are converted into U.S.
dollars at that time. If the Canadian dollars received are not converted into
U.S. dollars on the date of receipt, a U.S. Holder will have a basis in the
Canadian dollars equal to their U.S. dollar value on the date of receipt. Any
U.S. Holder who receives payment in Canadian dollars and engages in a subsequent
conversion or other disposition of the Canadian dollars may have a foreign
currency exchange gain or loss that would be treated as ordinary income or loss,
and generally will be U.S. source income or loss for foreign tax credit
purposes.
Each U.S. Holder should consult
its own U.S. tax advisor regarding the U.S. federal income tax consequences of
receiving, owning, and disposing of Canadian dollars.
Information Reporting; Backup Withholding
Under U.S. federal income tax
law, certain categories of U.S. Holders must file information returns with
respect to their investment in, or involvement in, a non-U.S. corporation. For
example, U.S. return disclosure obligations (and related penalties) are imposed
on U.S. Holders that hold certain specified non-U.S. financial assets in excess
of certain threshold amounts. The definition of specified non-U.S. financial
assets includes not only financial accounts maintained in non-U.S. financial
institutions, but also, if held for investment and not in an account maintained
by certain financial institutions, any stock or security issued by a non-U.S.
person, any financial instrument or contract that has an issuer or counterparty
other than a U.S. person and any interest in a non-U.S. entity. A U.S. Holder
may be subject to these reporting requirements unless such U.S. Holders common
shares are held in an account at certain financial institutions. Penalties for
failure to file certain of these information returns are substantial. U.S.
Holders should consult with their own tax advisors regarding the requirements of
filing information returns, and, if applicable, filing obligations relating to
the PFIC rules, including possible reporting on an IRS Form 8621.
Payments made within the U.S. or
by a U.S. payor or U.S. middleman of (a) distributions on the common shares, and
(b) proceeds arising from the sale or other disposition of common shares
generally may be subject to information reporting. In addition, backup
withholding, currently at a rate of 28%, may apply to such payments if a U.S.
Holder (a) fails to furnish such U.S. Holders correct U.S. taxpayer
identification number (generally on IRS Form W-9), (b) furnishes an incorrect
U.S. taxpayer identification number, (c) is notified by the IRS that such U.S.
Holder has previously failed to properly report items subject to backup
withholding, or (d) fails to certify, under penalty of perjury, that such U.S.
Holder has furnished its correct U.S. taxpayer identification number and that
the IRS has not notified such U.S. Holder that it is subject to backup
withholding. Certain exempt persons generally are excluded from these
information reporting and backup withholding rules. Backup withholding is not an
additional tax. Any amounts withheld under the U.S. backup withholding rules
will be allowed as a credit against a U.S. Holders U.S. federal income tax
liability, if any, or will be refunded, if such U.S. Holder furnishes required
information to the IRS in a timely manner. The information reporting and backup
withholding rules may apply even if, under the Canada-U.S. Tax Convention,
payments are exempt from the dividend withholding tax or otherwise eligible for
a reduced withholding rate. Each U.S. Holder should consult its own tax advisor
regarding the information reporting and backup withholding rules.
THE ABOVE SUMMARY IS NOT
INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL U.S. TAX CONSIDERATIONS
APPLICABLE TO U.S. HOLDERS WITH RESPECT TO THE OWNERSHIP AND DISPOSITION OF
COMMON SHARES. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX
CONSIDERATIONS APPLICABLE TO THEM IN THEIR PARTICULAR CIRCUMSTANCES.
39
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration
statement, of which this document is a part, on Form F-3 with the SEC relating
to the common shares to be sold by the selling shareholders. This document does
not contain all of the information in the registration statement and the
exhibits and financial statements included with the registration statement.
References herein to any of our contracts, agreements or other documents are not
necessarily complete, and you should refer to the exhibits attached to the
registration statement for copies of the actual contracts, agreements or
documents. We also file annual and other reports and other information with the
SEC. You may read and copy the registration statement, including the documents
incorporated by reference herein, the related exhibits and other material we may
file with the SEC, at the SECs public reference room in Washington, D.C. at 100
F Street, N.E., Washington, D.C. 20549. You can also request copies of those
documents, upon payment of a duplicating fee, by writing to the SEC. Please call
the SEC at 1-800-SEC-0330 for further information on the operation of the public
reference rooms. The SEC also maintains an internet site that contains reports,
proxy and information statements and other information regarding issuers that
file with the SEC. The website address is http://www.sec.gov.
Alternately, you may request a
copy of these filings, at no cost, by writing or telephoning us at Northern
Dynasty Minerals Ltd., Attention: Corporate Secretary, 15th Floor, 1040 West
Georgia Street, Vancouver, British Columbia V6E 4H1, Tel:(604) 684-6365.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to incorporate
by reference into this prospectus information that we have filed with the SEC.
This means that we can disclose important information by referring you to those
documents. The information incorporated by reference is considered to be a part
of this prospectus. Information that we file later with the SEC will
automatically update and supersede this information.
The following documents that we
have filed with or furnished to the SEC are specifically incorporated by
reference into, and form an integral part of, this prospectus:
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the description of our common shares contained in our
Registration Statement on Form 8-A filed with the SEC on June 9, 2004 |
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the description of the share rights issuable under our
shareholder rights plan agreement, as amended, contained in our
Registration Statement on Form 8-A filed with the SEC on December 21,
2006; |
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our annual report on Form 40-F for the fiscal year ended
December 31, 2013 filed with the SEC on March 27, 2014, which incorporates
the following by reference: |
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(i) |
our 2013 AIF, |
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(ii) |
our 2013 MD&A, |
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(iii) |
our audited consolidated financial statements and the
notes thereto as at and for the years ended December 31, 2013 and 2012,
together with the report of the Independent Registered Public Accounting
Firm thereon; |
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our report of foreign issuer on Form 6-K furnished to the
SEC on May 28, 2014 and incorporating our notice of meeting and management
information circular dated May 16, 2014 distributed in connection with the
annual and special meeting of shareholders of the Company held on June 19,
2014; |
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our report of foreign issuer on Form 6-K furnished to the
SEC on May 30, 2014 and incorporating the Shareholder Rights Plan
Agreement between the Company and Computershare Investor Services Inc.
dated May 17, 2014; |
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our report of foreign issuer on Form 6-K furnished to the
SEC on May 14, 2014 and incorporating: |
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our unaudited interim condensed consolidated financial
statements and the notes thereto for the three months ended March 31,
2014; and |
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our associated managements discussion and analysis for
the three month period ended March 31, 2014; |
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our report of foreign issuer on Form
6-K furnished to the SEC on August 18, 2014 and incorporating: |
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our unaudited interim condensed consolidated
financial statements and the notes thereto for the three and six months
ended June 30, 2014; and |
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our associated managements discussion and
analysis for the six month period ended June 30, 2014; |
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our report of foreign issuer on Form
6-K furnished to the SEC on November 18, 2014 and incorporating: |
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our unaudited interim condensed consolidated
financial statements and the notes thereto for the three and nine months
ended September 30, 2014; and |
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(ii) |
our associated managements discussion and
analysis for the nine month period ended September 30, 2014; and |
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our report of foreign issuer on Form
6-K furnished to the SEC on February 3, 2015 and incorporating our
material change report dated January 19, 2015. |
In addition, we are incorporating
by reference all subsequent annual reports filed by us on Form 20-F or Form 40-F
that we file with the SEC pursuant to the Exchange Act prior to the termination
of the offering. In addition, we may incorporate by reference any Form 6-K that
we furnish to the SEC subsequent to the date of this Prospectus by stating in
those Form 6-Ks that they are being incorporated by reference into this
Prospectus. If, subsequent to the date of this Prospectus, we become obligated
to file annual reports with the SEC on Form 10-K, we are also incorporating by
reference all such annual reports on Form 10-K and all filings on Form 10-Q and
Form 8-K that we file with the SEC pursuant to the Exchange Act prior to the
termination of the offering.
Any statement contained in a
document incorporated or deemed to be incorporated by reference herein will be
deemed to be modified or superseded for the purposes of this Prospectus to the
extent that a statement contained in this Prospectus or in any subsequently
filed document that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
will not constitute a part of this Prospectus, except as so modified or
superseded. The modifying or superseding statement need not state that it has
modified or superseded a prior statement or include any other information set
forth in the document that it modifies or supersedes. The making of such a
modifying or superseding statement will not be deemed an admission for any
purpose that the modified or superseded statement, when made, constituted a
misrepresentation, an untrue statement of a material fact or an omission to
state a material fact that is required to be stated or that is necessary to make
a statement not misleading in light of the circumstances in which it was made.
You may request a copy of any of
the documents incorporated herein by reference without charge by writing or
telephoning our Corporate Secretary as the following address and phone number:
Northern Dynasty Minerals Ltd.
Attention:
Corporate Secretary
15th Floor, 1040 West Georgia Street
Vancouver,
British Columbia V6E 4H1
Telephone: 604-684-6365
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INTERESTS OF EXPERTS
None.
EXPERTS
Information relating to the
Companys mineral properties in this prospectus has been derived from the Pebble
Property Report which has been prepared by the Qualified Persons named below and
this information has been included in reliance on the expertise of these
Qualified Persons:
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J. David Gaunt, P.Geo., a non-independent Qualified
Person, who co-authored the Pebble Project Report; |
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James Lang, P.Geo., a non-independent Qualified Person,
who co-authored the Pebble Project Report; |
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Eric Titley, P.Geo., a non-independent Qualified Person,
who co-authored the Pebble Project Report; and |
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Ting Lu, P.Eng., an independent Qualified Person, who
co-authored the Pebble Project Report. |
In addition, David Gaunt, P.Geo,
of Hunter Dickinson Services Inc., is named in our 2013 AIF as the Qualified
Person who prepared the mineral estimate for the Pebble Project that is
disclosed in the 2013 AIF. This mineral estimate has been superseded by the
mineral estimate included in the Pebble Project Report, as summarized above
under Recent Developments.
None of the experts listed above
has received or will receive a direct or indirect interest in the property of
the Company or of any associate or affiliate of the Company. The Company
understands that, after reasonable inquiry and as at the date hereof, the
experts listed above as a group, beneficially own, directly or indirectly, less
than one percent of the outstanding common shares of the Company.
The financial statements as of December 31, 2013 and 2012, and for each of the two years in the period ended December 31, 2013, included in this prospectus and the effectiveness of the Company’s internal control over financial reporting have been audited by Deloitte LLP, an independent registered public accounting firm, as stated in their reports, which are incorporated herein by reference. Such financial statements have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
LEGAL MATTERS
The law firm of McMillan LLP has
acted as the Companys legal counsel by providing an opinion on the validity of
the common shares offered by this prospectus. In addition, certain legal matters
in connection with the common shares offered by this prospectus will be passed
upon by McMillan LLP. As at the date hereof, the partners and associates of
McMillan LLP, as a group, beneficially own, directly or indirectly, less than
one percent of the outstanding common shares of the Company.
ENFORCEABILITY OF CIVIL LIABILITIES
The enforcement by investors of
civil liabilities under U.S. federal securities laws may be affected adversely
by the fact that we are incorporated under the laws of the Province of British
Columbia, Canada, that many of our officers and directors are residents of
countries other than the United States, that some of the experts named in this
prospectus are residents of countries other than the United States, and that
some of the assets of said persons are located outside the United States.
In particular, it may be
difficult to bring and enforce suits against us or said persons under U.S.
federal securities laws. It may be difficult for U.S. holders of our common
shares to effect service of process on us or said persons within the United
States or to enforce judgments obtained in the United States based on the civil
liability provisions of the U.S. federal securities laws against us or said
persons. In addition, a shareholder should not assume that the courts of Canada
(i) would enforce judgments of U.S. courts obtained in actions against us, our
officers or directors, or other said persons, predicated upon the civil
liability provisions of the U.S. federal securities laws or other laws of the
United States, or (ii) would enforce, in original actions, liabilities against
us, our officers or directors or other said persons predicated upon the U.S.
federal securities laws or other laws of the United States.
42
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PROSPECTUS
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NORTHERN DYNASTY MINERALS LTD.
18,839,146 COMMON SHARES
FEBRUARY 24, 2015
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