Prospectus Supplement
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Filed Pursuant to Rule 424(b)(5)
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to Prospectus Effective May 5, 2016
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Registration No. 333-210782
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ENERGY FUELS INC.
US$13,050,000
7,250,000 Units Consisting of One Common Share and One-Half
of One Common Share Purchase Warrant
7,250,000 Common Shares underlying the Units
3,625,000 Warrants to purchase Common Shares
3,625,000 Common Shares underlying the Warrants
This prospectus supplement (the
Prospectus Supplement
)
of Energy Fuels Inc. (the
Company
or
Energy Fuels
) supplements
the accompanying prospectus of the Company which was declared effective by the
United States Securities and Exchange Commission (the
SEC
) on May 5,
2016 (the
Prospectus
) and registers 7,250,000 units (the
Offered
Units
) of Energy Fuels at a price of US$1.80 per Offered
Unit (the
Offering Price
) that are being issued pursuant to an
underwriting agreement dated September 14, 2016, as amended and restated on
September 15, 2016 (the
Underwriting Agreement
) between Energy Fuels
and Cantor Fitzgerald Canada Corporation and Rodman & Renshaw a unit of H.C.
Wainwright & Co., LLC as co-lead underwriters (the
Lead
Underwriters
), together with Haywood Securities Inc., Raymond James Ltd.
and Dundee Securities Ltd. (collectively with the Lead Underwriters, the
Underwriters
). Each Offered Unit consists of one common share (each, a
Unit Share
) and one-half of one common share purchase warrant of the
Company (each whole common share purchase warrant, a
Warrant
). The
Offered Units will separate into Unit Shares and Warrants immediately upon
closing of the Offering (as defined below). Each Warrant will entitle the holder
to purchase one common share of the Company (each a
Warrant Share
) at a
price of US$2.45 per Warrant Share at any time prior to 5:00 p.m. (Toronto time)
on the first business day which is at least 60 months after the closing of the
Offering. This Prospectus Supplement also registers the Unit Shares, the
Warrants and the Warrant Shares.
Price: US$1.80 per Offered Unit
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Price to the Public
(1)
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Underwriters Fee
(2)
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Net Proceeds to the
Company
(3)
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Per Offered Unit
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US$1.80
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US$0.108
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US$1.692
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Total Offering
|
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US$13,050,000
(4)
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|
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US$783,000
|
|
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US$12,267,000
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Notes
:
(1)
|
The Company intends to allocate US$1.482 of the Offering
Price as consideration for the issue of each Unit Share and US$0.318 of
the Offering Price as consideration for the issue of each one-half of one
Warrant comprising each Offered Unit.
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(2)
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The Company has agreed to pay the Underwriters a cash fee
(the
Underwriters Fee
) equal to 6% of the aggregate purchase
price paid by the Underwriters to the Company per Offered Unit, including
the sale of any Over-Allotment Units (as defined herein) sold pursuant to
the exercise of the Over-Allotment Option (as defined herein), and
reimburse the Underwriters for their expenses in connection with the
Offering. See
Plan of Distribution
.
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(3)
|
After deducting the Underwriters Fee but before
deducting the expenses of the Offering (including listing fees) estimated
to be approximately US$400,000, which will be paid from
the gross proceeds of the Offering.
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(4)
|
The Company has granted to the Underwriters an over-allotment option (the
Over-Allotment Option
) exercisable in whole or in part, in the
sole discretion of the Underwriters, at any time prior to 5:00p.m.
(Toronto time) on the date that is the 30th day following the closing date
of the Offering (the
Closing Date
), to purchase up to an
additional 1,087,500 Offered Units (the
Over-Allotment Units
)
representing 15% of the number of Offered Units, on the same terms as set
out above, to cover over-allocations, if any, and for market stabilization
purposes. The Over-Allotment Option may be exercised by the Underwriters
in respect of: (i) Over-Allotment Units at the Offering Price; or (ii)
additional Unit Shares (the
Over-Allotment Unit Shares
) at a
price of US$1.482 per Over-Allotment Unit Share; or (iii) additional
Warrants (the
Over-Allotment Warrants
) at a price of US$0.636 per
Over-Allotment Warrant; or (iv) any combination of Over-Allotment Unit
Shares and/or Over-Allotment Warrants (together, the
Over-Allotment
Securities
) so long as the aggregate number of Over-Allotment Unit
Shares and Over-Allotment Warrants that may be issued under the
Over-Allotment Option does not exceed 1,087,500 Over-Allotment Unit Shares
and 543,750 Over-Allotment Warrants. If the Over-Allotment Option is
exercised in full for Over-Allotment Units only, the total Price to the
Public, Underwriters Fee and Net Proceeds to the Company (before
payment of the expenses of the Offering referred to in note 2 above) will
be US$15,007,500, US$900,450 and US$14,107,050, respectively. This
Prospectus Supplement qualifies the distribution of the Over-Allotment
Option and Over-Allotment Securities. A purchaser who acquires
Over-Allotment Securities forming part of the Underwriters
over-allocation position acquires those securities under this Prospectus
Supplement, regardless of whether the over-allocation position is
ultimately filled through the exercise of the Over-Allotment Option or
secondary market purchases. See Plan of Distribution.
|
The following table sets out the number of Over-Allotment
Securities that may be issued by the Company.
Underwriters Position
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Maximum Size or
Number
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Exercise Period or
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Exercise Price or
Average
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of Securities Available
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Acquisition Date
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Acquisition Price
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Over-Allotment Option
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1,087,500 Over-Allotment Unit Shares and/or 543,750 Over-Allotment Warrants
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30 days following
the Closing Date
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US$1.482 per Over-Allotment
Unit Share and US$0.636 per Over-Allotment Warrant
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Unless the context otherwise requires, all references to the
Offering in this Prospectus Supplement shall include the Over-Allotment Option
and all references to Offered Units shall include Over-Allotment Units,
references to Unit Shares shall include Over-Allotment Unit Shares and
references to Warrants shall include Over-Allotment Warrants, as applicable.
There is currently no market through which the Warrants may be
sold and purchasers may not be able to resell the Warrants purchased under this
Prospectus Supplement. This may affect the price of the Warrants in the
secondary market, the transparency and availability of trading prices, the
liquidity of the securities and the extent of issuer regulation. The Company has
applied to list the Warrants on the Toronto Stock Exchange (the TSX) and will
use its commercially reasonable efforts to list the Warrants on the NYSE MKT MKT
within 90 days of the Closing Date (each as defined below). Listing of the
Warrants will be subject to the Company fulfilling all of the listing
requirements of the TSX and the NYSE MKT, respectively.
An investment in the Offered Units involves a high degree of
risk and must be considered speculative due to the nature of the Companys
business and the present stage of exploration and development of certain of its
properties. Prospective investors should carefully consider the risk factors
described in this Prospectus Supplement and the Prospectus under
Risk
Factors
and
Cautionary Note Regarding Forward-Looking Statements
and the risk factors discussed in the Companys Annual Report on Form 10-K for
the year ended December 31, 2015 that is incorporated by reference into this
Prospectus Supplement and the Prospectus.
As part of this offering, the Company has filed a prospectus
supplement (the
Canadian Supplemen
t) in all provinces of Canada except
Québec to qualify the distribution of up to 7,250,000 Units of this offering in
addition to the Over-Allotment Securities (the
Canadian Offering
and,
together with this offering, the
Offering
). The Units will be offered
in the United States by Cantor Fitzgerald & Co., a U.S. affiliate of Cantor
Fitzgerald Canada Corporation, and Rodman & Renshaw a unit of H.C. Wainwright &
Co., LLC and in Canada by Cantor Fitzgerald Canada Corporation, Haywood
Securities Inc., Raymond James Ltd. and Dundee Securities Ltd. Subject to
applicable law, the Underwriters may offer to sell the Offered Units outside of
Canada and the United States. Rodman & Renshaw a unit of H.C. Wainwright & Co.,
LLC is not registered as investment dealers in any Canadian jurisdiction and,
accordingly, will only sell Offered Units into the United States and will not,
directly or indirectly, solicit offers to purchase or sell the Offered Units in
Canada. Dundee Securities Ltd., Haywood Securities Inc. and Raymond James Ltd.
may sell Units into the United States pursuant to this Prospectus Supplement
through their U.S. affiliates.
S-2
The common shares of the Company (the
Common Shares
)
are listed on the Toronto Stock Exchange (the
TSX
) under the symbol
EFR and on the NYSE MKT LLC (
NYSE MKT
) under the symbol UUUU. On
September 14, 2016, the last trading day of the Common Shares prior to the date
of this Prospectus Supplement, the closing price of the Common Shares on the TSX
was Cdn$2.94 and on the NYSE MKT was US$2.27. The Company has applied to list
the Unit Shares and the Warrant Shares on the TSX and the NYSE MKT. The listing
will be subject to the Company fulfilling all of the listing requirements of the
TSX and the NYSE MKT, respectively.
Prospective investors should be aware that the acquisition
of the Offered Units described herein may have tax consequences both in the
United States and in Canada. Such consequences for investors who are resident
in, or citizens of, the United States may not be described fully herein.
Prospective investors should read the tax discussion contained in the Prospectus
under the heading
Certain Income Tax Considerations
as
well as the tax discussion contained in this Prospectus Supplement under the
headings
Certain Canadian Federal Income Tax
Considerations
and
Certain United States Federal Income
Tax Considerations
and should consider whether to consult with an
independent tax advisor with respect to their particular circumstances.
The enforcement by investors of civil liabilities under
United States federal securities laws may be affected adversely by the fact that
the Company is governed by the laws of Canada, that some of its directors are
residents of Canada, that some of the dealers or experts named in the
registration statement of which this Prospectus Supplement forms a part, are
residents of a foreign country, and that a portion of the assets of the Company
and said persons are located outside the United States.
NEITHER THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION, NOR ANY STATE SECURITIES REGULATOR, HAS APPROVED OR DISAPPROVED THE
SECURITIES OFFERED HEREBY OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENCE.
Subscriptions for the Offered Units will be received subject to
rejection or allotment in whole or in part and the right is reserved to close
the subscription books at any time without notice. The closing of the Offering
is expected to occur on or about September 20, 2016. It is anticipated that the
Unit Shares and Warrants forming part of the Offered Units will be issued in
book-entry only form and represented by a global certificate or certificates,
or be represented by uncertificated securities, registered in the name of CDS
Clearing and Depositary Services Inc. (
CDS
) or its nominee or The
Depository Trust Company (
DTC
), as directed by the Underwriters, and
will be deposited with CDS or DTC, as the case may be. Except in limited
circumstances, no beneficial holder of Unit Shares or Warrants will receive
definitive certificates representing their interest in the Unit Shares or
Warrants. Beneficial holders of Unit Shares or Warrants will receive only a
customer confirmation from the Underwriters or another registered dealer who is
a CDS or DTC participant and from or through whom a beneficial interest in the
Unit Shares or Warrants is acquired. Certain other holders may receive
definitive certificates representing their interests in the Unit Shares or
Warrants.
Cantor Fitzgerald Canada Corporation
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Rodman
& Renshaw a unit of
H.C.
Wainwright & Co., LLC
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Haywood Securities Inc.
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Raymond James Ltd.
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Dundee Securities Ltd.
|
The date of this prospectus supplement is September 15,
2016
S-3
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
ABOUT THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
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S-6
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
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S-7
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DOCUMENTS INCORPORATED BY
REFERENCE
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S-11
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RISK FACTORS
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S-12
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PRESENTATION OF FINANCIAL
INFORMATION
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S-14
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CURRENCY PRESENTATION AND EXCHANGE RATE
INFORMATION
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S-14
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THE COMPANY
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S-14
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DIVIDENDS
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S-16
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CONSOLIDATED CAPITALIZATION
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S-16
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USE OF PROCEEDS
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S-17
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PLAN OF DISTRIBUTION
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S-18
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DESCRIPTION OF SECURITIES BEING OFFERED
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S-21
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PRIOR SALES
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S-23
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TRADING PRICE AND VOLUME
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S-25
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CERTAIN CANADIAN FEDERAL INCOME
TAX CONSIDERATIONS
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S-26
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CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS
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S-29
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INTEREST OF EXPERTS
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S-37
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LEGAL MATTERS
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S-38
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AVAILABLE INFORMATION
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S-38
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BASE SHELF PROSPECTUS
ABOUT
THIS PROSPECTUS
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1
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SUMMARY
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2
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RISK
FACTORS
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5
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CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
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5
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CAUTIONARY
NOTE TO UNITED STATES INVESTORS CONCERNING DISCLOSURE OF MINERAL RESOURCES
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7
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DOCUMENTS
INCORPORATED BY REFERENCE
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9
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S-4
USE
OF PROCEEDS
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10
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DESCRIPTION
OF COMMON SHARES
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10
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DESCRIPTION
OF WARRANTS
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10
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DESCRIPTION
OF RIGHTS
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12
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DESCRIPTION
OF SUBSCRIPTION RECEIPTS
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13
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DESCRIPTION
OF PREFERRED SHARES
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16
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DESCRIPTION
OF DEBT SECURITIES
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16
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DESCRIPTION
OF UNITS
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18
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PLAN
OF DISTRIBUTION
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18
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TRANSFER
AGENT AND REGISTRAR
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20
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LEGAL
MATTERS
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20
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EXPERTS
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20
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WHERE
YOU CAN FIND MORE INFORMATION
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21
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S-5
ABOUT THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS
This document is in two parts.
The first part is the Prospectus Supplement, including the documents
incorporated by reference, which describes the specific terms of this Offering.
The second part, the Prospectus, including the documents incorporated by
reference therein, provides more general information. References to this
Prospectus may refer to both parts of this document combined. You are urged to
carefully read this Prospectus Supplement and the Prospectus, and the documents
incorporated herein and therein by reference, before buying any of the Offered
Units being offered under this Prospectus Supplement. This Prospectus Supplement
may add, update or change information contained in the Prospectus. To the extent
that any statement made in this Prospectus Supplement is inconsistent with
statements made in the Prospectus or any documents incorporated by reference
therein, the statements made in this Prospectus Supplement will be deemed to
modify or supersede those made in the Prospectus and such documents incorporated
by reference therein.
Only the information contained or
incorporated by reference in this Prospectus Supplement and the Prospectus
should be relied upon. The Company has not authorized any other person to
provide different information. If anyone provides different or inconsistent
information, it should not be relied upon. The Offered Units offered hereunder
may not be offered or sold in any jurisdiction where the offer or sale is not
permitted. It should be assumed that the information appearing in this
Prospectus Supplement and the Prospectus and the documents incorporated by
reference herein are accurate only as of their respective dates. The Companys
business, financial condition, results of operations and prospects may have
changed since those dates.
This Prospectus Supplement does
not constitute, and may not be used in connection with, an offer to sell, or a
solicitation of an offer to buy, any securities offered by this Prospectus
Supplement by any person in any jurisdiction in which it is unlawful for such
person to make such an offer or solicitation.
In this Prospectus Supplement, unless stated otherwise, the
Company, Energy Fuels, we, us and our refer to Energy Fuels Inc. and
its subsidiaries.
S-6
CAUTIONARY NOTE TO U.S. INVESTORS CONCERNING ESTIMATES
OF MINERAL RESERVES AND MINERAL RESOURCES
Unless otherwise indicated, all
reserve and resource estimates included in this Prospectus Supplement and the
Prospectus, and in the documents incorporated by reference herein and therein,
have been, and will be, prepared in accordance with Canadian National Instrument
43-101 -
Standards of Disclosure for Mineral Projects
(
NI
43-101
) and the Canadian Institute of Mining, Metallurgy and Petroleum
classification system. NI 43-101 is a rule developed by the Canadian Securities
Administrators (the
CSA
) which establishes standards for all public
disclosure an issuer makes of scientific and technical information concerning
mineral projects.
Canadian standards, including NI
43-101, differ significantly from the requirements of the SEC and reserve and
resource information contained or incorporated by reference in this Prospectus
Supplement and the Prospectus, and in the documents incorporated by reference
herein and therein, may not be comparable to similar information disclosed by
companies reporting under United States standards. In particular, and without
limiting the generality of the foregoing, the term resource does not equate to
the term reserve under SEC Industry Guide 7. Under United States standards,
mineralization may not be classified as a reserve unless the determination has
been made that the mineralization could be economically and legally produced or
extracted at the time the reserve determination is made. The SECs disclosure
standards normally do not permit the inclusion of information concerning
measured mineral resources, indicated mineral resources or inferred mineral
resources or other descriptions of the amount of mineralization in mineral
deposits that do not constitute reserves by United States standards in
documents filed with the SEC. United States investors should also understand
that inferred mineral resources have a great amount of uncertainty as to their
existence and as to their economic and legal feasibility. It cannot be assumed
that all or any part of an inferred mineral resource will ever be upgraded to
a higher category. Under Canadian securities laws or standards, estimated
inferred mineral resources may not form the basis of feasibility or
prefeasibility studies. Investors are cautioned not to assume that all or any
part of an inferred mineral resource exists or is economically or legally
mineable. Disclosure of contained pounds in a resource estimate is permitted
disclosure under Canadian regulations; however, the SEC normally only permits
issuers to report mineralization that does not constitute reserves by SEC
standards as in place tonnage and grade without reference to unit measures. The
requirements of NI 43-101 for identification of reserves are also not the same
as those of the SEC, and reserves reported by the Company in compliance with NI
43-101 may not qualify as reserves under SEC standards. Accordingly,
information concerning mineral deposits set forth herein may not be comparable
with information made public by companies that report in accordance with United
States standards.
The Company does not have any
mineral reserves within the meaning of SEC Industry Guide 7.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus Supplement and
the Prospectus, including the documents incorporated herein and therein by
reference, contain forward-looking information and forward-looking statements
within the meaning of applicable Canadian securities laws and the United States
Private Securities Litigation Reform Act of 1995. Those statements appear in a
number of places in this Prospectus Supplement and the Prospectus and in the
documents incorporated herein and therein by reference and include, but are not
limited to, statements and information regarding the Companys current intent,
belief or expectations primarily with respect to: the Companys business
objectives, plans and expectations for FY-2016 and FY-2017; exploration and
development plans and expenditures; estimation of mineral resources and mineral
reserves; mineral grades; Energy Fuels expectations regarding additions to its
mineral resources and mineral reserves through acquisitions and development;
expectations regarding the integration of Uranerz Energy Corporation
(
Uranerz
) and EFR Alta Mesa LLC (
EFR
Alta Mesa
)
(previously named Mesteña Uranium, LLC); success of the Company's permitting
efforts, including receipt of regulatory approvals, permits and licenses and
treatment under governmental regulatory regimes and the expected timeframes for
receipt of such approvals, permits, licenses and treatments; possible impacts of
regulatory actions; capital expenditures; expansion plans; success of the
Company's mining, recovery, processing and/or milling operations; availability
of equipment and supplies; availability of alternate feed materials for
processing; the Companys processing and recovery technologies; future mineral
extraction and recovery costs, including costs of labor, energy, materials and
supplies; future effective tax rates; costs and risks associated with
transportation of the Companys ores, feed materials, intermediate and final products, waste materials and
chemicals and reagents used for processing and recovery; costs and risks
associated with reliance on third parties for any of the Companys mining,
processing, recovery or waste disposal operations; future benefits costs; future
royalties payable; the outcome and possible impacts of disputes and legal
proceedings in which the Company is involved; the timing and amount of estimated
future mineral extraction and recovery, including Energy Fuels expectations
regarding expected price levels required to support mineral extraction and
recovery and the Companys ability to increase mineral extraction and recovery
as market conditions warrant; sales volumes and future uranium and vanadium
prices and treatment charges; future trends in the Companys industry; global
economic growth and industrial demand; global growth in and/or attitudes towards
nuclear energy; changes in global uranium and vanadium and concentrate
inventories; expected market fundamentals, including the supply and demand for
uranium and vanadium; the Companys and the industrys expectations relating to
future prices of uranium and vanadium; currency exchange rates; environmental
and climate change risks; regulatory compliance costs, reclamation costs,
including unanticipated reclamation expenses and bonding requirements;
collateral requirements for surety bonds; title disputes or claims; the adequacy
of insurance coverage; and legal proceedings and the potential outcomes
therefrom. In certain cases, forward looking statements can be identified by the
use of words such as plans, expects or does not expect, is expected, is
likely, budget, scheduled, estimates, forecasts, intends,
anticipates or does not anticipate, continue, or believes, and similar
expressions or variations of such words and phrases or statements that certain
actions, events or results may, could, would, might or will be taken,
occur or be achieved.
S-7
Forward-looking statements are
based on the opinions and estimates of management as of the date such statements
are made. Energy Fuels believes that the expectations reflected in this
forward-looking information are reasonable but no assurance can be given that
these expectations will prove to be correct, and such forward-looking
information included in this Prospectus should not be unduly relied upon.
Readers are cautioned that it
would be unreasonable to rely on any such forward looking statements and
information as creating any legal rights, and that the statements and
information are not guarantees and may involve known and unknown risks and
uncertainties, and that actual results are likely to differ (and may differ
materially) and objectives and strategies may differ or change from those
expressed or implied in the forward looking statements or information as a
result of various factors. Such risks and uncertainties include risks generally
encountered in the development and operation of mineral properties and
processing and recover facilities such as: risks that the anticipated benefits
of the acquisition of EFR Alta Mesa and the acquisition of Sumitomo
Corporations 40-% interest in the Companys Roca Honda Project (the
Roca
Honda Acquisition
) are not realized; risks associated with mineral and
resource estimates, including the risk of errors in assumptions or
methodologies; risks associated with estimating production, forecasting future
price levels necessary to support production, and the Companys ability to
increase production in response to any increases in commodity prices or other
market conditions; uncertainties and liabilities inherent in mining and recovery
operations; geological, technical and processing problems, including
unanticipated metallurgical difficulties, ground control problems, process
upsets and equipment malfunctions; transportation risks; risks associated with
labour disturbances and unavailability of skilled labour; risks associated with
the availability and/or fluctuations in the costs of raw materials and
consumables used in the Company's production processes; risks and costs
associated with environmental compliance and permitting, including those created
by changes in environmental legislation and regulation and delays in obtaining
permits and licenses that could impact expected production levels or increases
in expected production levels; risks associated with environmental litigation;
risks associated with climate change, including laws, regulations, or
international accords regarding climate change, the effect of regulations on
business trends, and the physical effects of climate change; actions taken by
regulatory authorities with respect to mining, recovery and processing
activities, including changes to regulatory programs and requirements; risks
associated with the Companys dependence on third parties in the provision of
transportation and other critical services; title risks; risks associated with
ability of the Company to obtain, extend or renew land tenure, including mineral
leases and surface use agreements, on favourable terms or at all; the adequacy
of insurance coverage; uncertainty as to reclamation and decommissioning
liabilities; the ability of the Companys bonding companies to require increases
in the collateral required to secure reclamation obligations; the potential for,
and outcome of, litigation and other legal proceedings, including potential
injunctions pending the outcome of such litigation and proceedings; the ability
of Energy Fuels to meet its obligations to its creditors; risks associated with
paying off indebtedness on its maturity; risks associated with the Companys
relationships with its business and joint venture partners; failure to obtain
industry partner, government and other third party consents and approvals, when
required; competition for, among other things, capital, acquisitions of mineral reserves, undeveloped lands
and skilled personnel; incorrect assessments of the value of acquisitions; risks
posed by fluctuations in exchange rates and interest rates, as well as general
economic conditions; risks inherent in the Companys and industrys forecasts or
predictions of future uranium and vanadium price levels; fluctuations in the
market prices of uranium and vanadium, which are cyclical and subject to
substantial price fluctuations; failure to obtain suitable uranium sales terms,
including spot and term sales contracts; the risks associated with asset
impairment as a result of market conditions; risks associated with lack of
access to markets and the ability to access capital; the market price of Energy
Fuels securities; public resistance to nuclear energy or uranium mining or
recovery; uranium industry competition and international trade restrictions;
risks related to higher than expected costs related to our Nichols Ranch Project
and Canyon Mine; risks that commodity price levels will not be sufficient to
support production at the Companys mines and facilities; risks related to
securities regulations; risks related to stock price and volume volatility;
risks related to our ability to maintain our listing on the NYSE MKT and/or TSX;
risks related to our ability to maintain our inclusion in various stock indices;
risks related to dilution of currently outstanding shares; risks related to our
lack of dividends; risks related to recent market events; risks related to our
issuance of additional Common Shares or other securities; risks related to
acquisition and integration issues; risks related to defects in title to our
mineral properties; risks related to outstanding debt; risks related to the
Companys securities and the other factors discussed under the Risk Factors
section in this Prospectus Supplement, the Prospectus and the Companys Form
10-K for the year ended December 31, 2015. Actual results and developments are
likely to differ, and may differ materially, from those expressed or implied by
the forward looking statements contained in this Prospectus Supplement and the
Prospectus.
S-8
Such statements are based on a
number of assumptions which may prove to be incorrect, including, but not
limited to, the following assumptions: that there is no material deterioration
in general business and economic conditions; that there is no unanticipated
fluctuation of interest rates and foreign exchange rates; that the supply and
demand for, deliveries of, and the level and volatility of prices of uranium,
vanadium and the Companys other primary metals and minerals develop as
expected; that uranium and vanadium prices required to reach, sustain or
increase expected or forecasted production levels are realized as expected; that
the Company receives regulatory and governmental approvals for the Companys
development projects and other operations on a timely basis; that the Company is
able to operate its mineral properties and processing facilities as expected;
that existing licenses and permits are renewed as required; that the Company is
able to obtain financing for the Companys development projects on reasonable
terms; that the Company is able to procure mining equipment and operating
supplies in sufficient quantities and on a timely basis; that engineering and
construction timetables and capital costs for the Companys development and
expansion projects and restarting projects on standby, are not incorrectly
estimated or affected by unforeseen circumstances; that costs of closure of
various operations are accurately estimated; that there are no unanticipated
changes in collateral requirements for surety bonds; that there are no
unanticipated changes to market competition; that the Companys reserve and
resource estimates are within reasonable bounds of accuracy (including with
respect to size, grade and recoverability) and that the geological, operational
and price assumptions on which these are based are reasonable; that
environmental and other administrative and legal proceedings or disputes are
satisfactorily resolved; that there are no significant changes to regulatory
programs and requirements that would materially increase regulatory compliance
costs or bonding requirements; and that the Company maintains ongoing relations
with its employees and with its business and joint venture partners.
All written and oral forward
looking statements or information attributable to the Company or persons acting
on the Companys behalf are expressly qualified in their entirety by the
foregoing cautionary statements.
Forward looking statements speak
only as of the date the statements are made. You should not put undue reliance
on any forward looking statements.
The Company cautions that the
foregoing list of assumptions, risks and uncertainties is not exhaustive.
Additional information on these and other factors which could affect operations
or financial results are included under the
Risk Factors
section
in this Prospectus Supplement, the
Prospectus and in the Annual Report. The forward-looking statements and
forward-looking information contained in this Prospectus Supplement and the
Prospectus and the documents incorporated by reference herein and therein are
expressly qualified by this cautionary statement. The Company does not undertake
any obligation to publicly update or revise any forward looking statements to
reflect actual results, changes in assumptions or changes in other factors
affecting any forward looking statements or information except as expressly
required by applicable securities laws. If the Company does update one or more
forward looking statements, no
inference should be drawn that the Company will make
additional updates with respect to those or other forward looking statements.
S-9
Statements relating to "mineral
reserves" or "mineral resources" are deemed to be forward-looking information,
as they involve the implied assessment, based on certain estimates and
assumptions, that the mineral reserves and mineral resources described can be
profitably produced in the future.
S-10
DOCUMENTS INCORPORATED BY REFERENCE
Information has been
incorporated by reference in this Prospectus Supplement from documents filed
with the SEC and is therefore deemed to be incorporated by reference into the
Prospectus for purposes of this Offering
. Copies of documents incorporated
herein by reference may be obtained on request without charge from the Chief
Financial Officer of the Company, at 225 Union Blvd, Suite 600, Lakewood, CO
80228 USA, telephone (303) 389-4143. These documents are also available on SEDAR
at www.sedar.com under the Companys profile. The filings of the Company through
SEDAR and the SECs Electronic Data Gathering, Analysis and Retrieval system,
which is commonly known by the acronym EDGAR, and may be accessed at
www.sec.gov
, are not incorporated by reference in this Prospectus except
as specifically set out herein.
The following documents which
have been filed by us with the SEC, are also specifically incorporated by
reference into, and form an integral part of the Prospectus, as supplemented by
this Prospectus Supplement (excluding, unless otherwise provided therein or
herein, information furnished pursuant to Item 2.02 and Item 7.01 of any Current
Report on Form 8-K):
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(a)
|
The Companys Annual Report on Form 10-K for the year
ended December 31, 2015;
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(b)
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The Companys Quarterly Report on Form 10-Q, for the
quarter ended June 30, 2016;
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(c)
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The Companys Proxy Statement on Schedule 14A filed with
the SEC on March 24, 2016;
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(d)
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The Companys Current Reports on Form 8-K as filed with
the SEC on May 23, 2016, June 2, 2016, June 21, 2016, August 4, 2016,
August 9, 2016, September 9, 2016, September 12, 2016 and September 14,
2016;
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(e)
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The description of the Common Shares contained in our
Registration Statement on Form 40-F, as filed with the SEC on November 11,
2013, including any amendment or report filed for the purpose of amending
such description; and
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(f)
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all other documents filed by us with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the U.S. Exchange Act (excluding,
unless otherwise provided therein or herein, information furnished
pursuant to Item 2.02 and Item 7.01 on any Current Report on Form 8-K),
after the date of this prospectus supplement but before the end of the
offering of securities made by this Prospectus Supplement and the
accompanying Prospectus.
|
This Prospectus Supplement is
deemed to be incorporated by reference into the Prospectus solely for purposes
of this Offering.
Any statement contained herein
or in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for the purposes of this Prospectus
Supplement and the Prospectus to the extent that a statement contained herein,
or in any other subsequently filed document which also is incorporated or is
deemed to be incorporated by reference herein, modifies or supersedes such
statement. 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 which it modifies or supersedes. The making of a modifying
or superseding statement will not be deemed an admission for any purposes 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.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus Supplement and
the Prospectus.
S-11
RISK FACTORS
An investment in the Offered
Units is subject to a number of risks. A prospective purchaser of the Offered
Units should carefully consider the information and risks faced by the Company
described in this Prospectus Supplement, the Prospectus and the documents
incorporated herein and therein by reference, including without limitation the
risk factors set out under the headings Risk Factors in the Companys Annual
Report on Form 10-K for the year ended December 31, 2015.
The operations of the Company are
highly speculative due to the high-risk nature of its business, which includes
the acquisition, financing, exploration, permitting, development and mining of,
or recovery of product from, mineral properties, the recovery, milling and
processing of minerals and other feed materials and the marketing of the
resulting products. The risks and uncertainties incorporated by reference herein
are not the only ones facing the Company. Additional risks and uncertainties not
currently known to the Company, or that the Company currently deems immaterial,
may also impair the Companys operations. If any of the risks actually occur,
the Companys business, financial condition and operating results could be
adversely affected. As a result, the trading price of the Common Shares could
decline and investors could lose part or all of their investment.
Risks Related to This Offering and our Securities
The net proceeds of this Offering may be reallocated by
management.
We currently intend to allocate
the net proceeds to be received from this Offering as described under the
heading
Use of Proceeds
. However, management will have broad discretion
in the actual application of the net proceeds, and may elect to allocate net
proceeds differently from that described under the heading
Use of
Proceeds
if it believes it would be in the Companys best interest to do
so. The Companys security holders, including holders of the Offered Units, may
not agree with the manner in which management chooses to allocate and spend the
net proceeds. The failure by management to apply these funds effectively could
have a material adverse effect on the Companys business.
You may experience dilution as a result of the Offering
and future equity offerings.
Giving effect to the issuance of
Unit Shares in this Offering, the potential issuance of the Warrant Shares, the
receipt of the expected net proceeds and the use of those proceeds, this
Offering may have a dilutive effect on our expected net income available to our
shareholders per share. Furthermore, we are not restricted from issuing
additional securities in the future, including Common Shares, securities that
are convertible into or exchangeable for, or that represent the right to
receive, Common Shares or substantially similar securities. To the extent that
we raise additional funds through the sale of equity or convertible debt
securities, the issuance of such securities may result in dilution to our
shareholders. We may sell Common Shares or other securities in any other
offering at a price per share that is less than the price per share paid by
investors in this Offering, and investors purchasing Common Shares or other
securities in the future could have rights superior to existing shareholders.
The price per share at which we sell additional Common Shares, or securities
convertible or exchangeable into Common Shares, in future transactions may be
higher or lower than the price per share paid by investors in this Offering.
There is currently no public market for the Warrants and
there is no guarantee that the Warrants will be listed on any stock exchange.
We have applied to list the
Warrants distributed under this Prospectus Supplement on the TSX and will use
our commercially reasonable efforts to list the Warrants on the NYSE MKT within
90 days of the Closing Date. Listing is subject to the approval of the TSX and
NYSE MKT and our fulfillment of all of the listing requirements of the TSX and
the NYSE MKT, respectively. There is no guarantee that we will be able to
fulfill these listing requirements. There is currently no public market for the
Warrants and, even if we were to obtain listing for the Warrants on the TSX and
NYSE MKT, there can be no assurance that we will meet the TSX and/or NYSE MKT
requirements for continued listing or that an active public market will develop
or be sustained after completion of the Offering. In the event a public market
for the Warrants does not develop or cannot be sustained, it is not possible to
predict the price at which the Warrants will trade in the secondary market or
whether such market will be liquid or illiquid. To the extent the Warrants are
exercised, the number of Warrants outstanding will decrease, resulting in diminished liquidity for such remaining outstanding Warrants. A
decrease in the liquidity of the Warrants may cause, in turn, an increase in the
volatility associated with the price of the Warrants. To the extent that the
Warrants are or become illiquid, an investor may have to exercise the Warrants
to realize value.
S-12
Positive return not guaranteed
A positive return on an
investment in the Offered Units is not guaranteed. There is no guarantee that an
investment in the Offered Units will earn any positive return in the short term
or long term. An investment in the Offered Units involves a high degree of risk
and should be undertaken only by investors whose financial resources are
sufficient to enable them to assume such risks and who have no need for
immediate liquidity in their investment. An investment in the Offered Units is
appropriate only for investors who have the capacity to absorb a loss of some or
all of their investment.
The share price of the Company may be volatile.
The market price of the Common
Shares (and, if applicable, the Warrants) may be volatile. This volatility may
affect the ability of holders of Common Shares and Warrants to sell such
securities at an advantageous price. The market price for Common Shares (and, if
applicable, the Warrants) may be volatile and subject to wide fluctuations in
response to numerous factors, many of which are beyond the Companys control,
including the following:
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actual or anticipated fluctuations in the Companys
quarterly results of operations;
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changes in estimates of future results of operations by
the Company or securities research analysts;
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changes in the economic performance or market valuations
of other companies that investors deem comparable to the Company;
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change of the Companys executive officers and other key
personnel;
|
|
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release or other transfer restrictions on outstanding
Common Shares;
|
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sales or perceived sales of additional Common Shares;
|
|
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significant acquisitions or business combinations,
strategic partnerships, joint ventures or capital commitments by or
involving the Company or its competitors; and
|
|
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news reports relating to trends, concerns or competitive
developments, regulatory changes and other related issues in the Companys
industry or target markets.
|
Financial markets have recently
experienced significant price and volume fluctuations that have particularly
affected the market prices of equity securities of companies and that have, in
many cases, been unrelated to the operating performance, underlying asset values
or prospects of such companies. Accordingly, the market price of the Common
Shares (and, if applicable, the Warrants) may decline even if the Companys
operating results, underlying asset values or prospects have not changed.
Additionally, these factors, as well as other related factors, may cause
decreases in asset values that are deemed to be other than temporary, which may
result in impairment losses. As well, certain institutional investors may base
their investment decisions on consideration of the Companys environmental,
governance and social practices and performance against such institutions
respective investment guidelines and criteria, and failure to meet such criteria
may result in a limited or no investment in the Common Shares (and, if
applicable, the Warrants) by those institutions, which could adversely affect
the trading price of the Common Shares (and, if applicable, the Warrants). There
can be no assurance that continuing fluctuations in price and volume will not
occur. If such increased levels of volatility and market turmoil continue, the
Companys operations could be adversely impacted and the trading price of the
Common Shares (and, if applicable, the Warrants) may be adversely affected.
These broad market fluctuations may adversely affect the market prices of the
Common Shares (and, if applicable, the Warrants).
Investors will have no rights as a shareholder with
respect to their Warrants until they exercise their Warrants and acquire our
Common Shares.
Until you acquire Common Shares
upon exercise of your Warrants, you will have no rights with respect to the
Common Shares underlying such Warrants. Upon exercise of your Warrants, you will
be entitled to exercise the rights of a shareholder only as to matters for which
the record date occurs after the exercise date.
S-13
PRESENTATION OF FINANCIAL INFORMATION
The financial statements of the
Company and Uranerz incorporated by reference in this Prospectus Supplement and
the Prospectus are reported in United States dollars and, unless otherwise
indicated have been prepared in accordance with United States generally accepted
accounting principles and may not be comparable with financial statements
prepared in accordance with IFRS.
CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION
All monetary amounts used in this
Prospectus and any Prospectus Supplement are or will be stated in United States
dollars, unless otherwise indicated. References to Cdn$ are to Canadian
dollars and references to $ or US$ are to U.S. dollars. On September 14, the
noon spot rate for Canadian dollars in terms of the United States dollar, as
reported by the Bank of Canada, was US$1.00= $1.3189 or Cdn$1.00=US$ 0.7582.
THE COMPANY
Energy Fuels Inc. was
incorporated on June 24, 1987 in the Province of Alberta under the name 368408
Alberta Inc. In October 1987, 368408 Alberta Inc. changed its name to Trevco
Oil & Gas Ltd. In May 1990, Trevco Oil & Gas Ltd. changed its name to
Trev Corp. In August 1994, Trev Corp. changed its name to Orogrande Resources
Inc. In April 2001 Orogrande Resources Inc. changed its name to Volcanic
Metals Exploration Inc. On September 2, 2005, the Company was continued under
the
Business Corporations Act
(Ontario). On March 26, 2006, Volcanic
Metals Exploration Inc. acquired 100% of the outstanding shares of Energy Fuels
Resources Corporation. On May 26, 2006, Volcanic Metals Exploration Inc.
changed its name to Energy Fuels Inc.
Energy Fuels is engaged in
conventional extraction and in situ recovery (
ISR
) of uranium, along
with the exploration, permitting, and evaluation of uranium properties in the
United States. Energy Fuels owns the Nichols Ranch uranium recovery facility in
Wyoming (the
Nichols Ranch Project
), which is one of the newest ISR
uranium recovery facilities operating in the United States, and the Alta Mesa
Project in Texas (
Alta Mesa
), which is an ISR production center
currently on care and maintenance. In addition, Energy Fuels owns the White Mesa
Mill in Utah (the
White Mesa Mill
), which is the only conventional
uranium recovery facility operating in the United States. The Company also owns
uranium and uranium/vanadium properties and projects in various stages of
exploration, permitting, and evaluation, as well as fully-permitted uranium and
uranium/vanadium projects on standby. The White Mesa Mill can also recover
vanadium as a co-product of mineralized material produced from certain of its
projects in Colorado and Utah. In addition, Energy Fuels recovers uranium from
other uranium-bearing materials not derived from conventional material, referred
to as alternate feed materials, at its White Mesa Mill.
For a detailed description of the
business of Energy Fuels please refer to
General Development of the
Business
and
Energy Fuels Business
in the Companys Annual Report
on Form 10-K for the year ended December 31, 2015.
The Companys registered and head
office is located at 80 Richmond St. West, 18th Floor, Toronto, Ontario M5H 2A4.
The Companys principal place of business and the head office of the Companys
U.S. subsidiaries is located at 225 Union Blvd., Suite 600, Lakewood, Colorado,
80228 USA.
S-14
Recent Developments
Alta Mesa Technical Report
On August 2, 2016, the Company
announced the filing of a technical report (the
Alta Mesa Technical
Report
) entitled Alta Mesa Uranium Project, Alta Mesa And Mesteña Grande
Mineral Resources And Exploration Target, Technical Report National Instrument
43-101 prepared by Douglas L. Beahm, P.E., P.G. and dated July 19, 2016 with an
effective date of July 19, 2016 containing a current mineral resource estimate
for its 100% Alta Mesa ISR project located in Brooks and Jon Hogg Counties,
Texas, including the Alta Mesa and Mesteña Grande deposits and exploration
targets, in accordance with National Instrument 43-101. According to the Alta
Mesa Technical Report, Alta Mesa is estimated to hold a total of 1.6 million
tons of measured and indicated mineral resources with an average grade of
0.111% U
3
O
8
containing 3.6 million pounds of
uranium, along with 7.0 million tons of inferred mineral resources with an
average grade of 0.121% U
3
O
8
containing 16.8
million pounds of uranium. In addition, the Alta Mesa Technical Report
identifies certain exploration targets at Alta Mesa that includes 2.6 million
tons of mineralized material with an average grade of 0.08% - 0.123%
U
3
O
8
containing 4.1 to 6.6 million pounds of
uranium. The tonnages, grades and contained pounds of uranium for the
exploration targets should not be construed to reflect a calculated mineral
resource estimate (measured, indicated or inferred). The potential quantities
and grades for exploration targets are conceptual in nature, and there has not
been sufficient work completed to date to define an NI 43-101 compliant
resource. Furthermore, it is uncertain if additional exploration will result in
any of the exploration targets being delineated as a mineral resource estimate
in the future.
Key assumptions and parameters
utilized in determining the mineral resource estimate contained in the Alta Mesa
Technical Report include the following: (i) a minimum grade cut-off of
0.02% U
3
O
8
and a minimum grade x thickness (GT)
of 0.30, which is considered reasonable for economic extraction utilizing ISR
methods; (ii) a bulk density factor of 17 ft3 /ton was utilized which
is considered conservative for ISR extraction; (iii) drill data for 10,744 drill
holes was analyzed, including about 3,000 drill holes within existing
wellfields; (iv) prompt-fission-neutron (PFN) log data was available for 92.8%
of the 10,744 drill holes, which is considered reasonably equivalent to chemical
assays; (v) where possible, width and grade % x thickness (
GT
)
parameters were determined from specific drill data, and where this was not
possible, trend width was determined from data available from two existing
wellfields; and (vi) the contained pounds of uranium were calculated from the GT
value applied to the respective area of mineralization with the application of
the appropriate bulk density.
The Alta Mesa project does not
have known reserves under SEC Industry Guide 7, and is therefore considered
under SEC Industry Guide 7 definitions to be exploratory in nature.
Drilling Results at the Nichols Ranch Project
On August 15, 2016, the Company
announced drilling results at the Nichols Ranch Project in Wyoming, USA
consisting of intercepts of several large and high-grade areas of mineralization
in the wellfield associated with Header House 9. On August 1, 2016, the Company
began delineation drilling and the installation of the wellfield to be
associated with Header House 9 at the Nichols Ranch Project. As of August 15,
2016, 52 holes in this new wellfield had been drilled. Of the 52 holes, 46
encountered mineralization which is above the GT cut-off of 0.3. This includes
one hole which encountered 5.0 feet of mineralization with an average grade of
2.40% eU
3
O
8
. In addition, many of the holes
have encountered multiple intercepts above the GT cutoff. It is anticipated that
a total of 120 wells will be incorporated into Header House 9.
The Nichols Ranch Project does
not have known reserves under SEC Industry Guide 7, and is therefore considered
under SEC Industry Guide 7 definitions to be exploratory in nature.
Drilling Results at the Canyon Mine
On August 18, 2016, the Company
announced drilling results at its Canyon Mine (the
Canyon Mine
) in
northern Arizona, USA consisting of intercepts of several large and high-grade
areas of mineralization. The Company is currently pursuing an underground
delineation core drilling program from a station located at a depth of
approximately 1,000 feet below the surface. As of September 13, 2016, 15 core
holes had been drilled, and most have encountered uranium mineralization in
multiple levels throughout the deposit, including 8.5 -feet of mineralization with an average grade of 6.88%
eU
3
O
8
, 48.0 -feet of mineralization with an average grade
of 1.02% eU
3
O
8
, and 35-feet of mineralization with an
average grade of 1.39% eU
3
O
8
. This drilling program is
expected to be followed up by additional delineation drilling from a second
station later this year. In addition to the delineation drilling, the Company is
also continuing to sink an 8-foot by 20-foot mine shaft, which will be used to
access the deposit. The shaft is currently at a depth of approximately 1,200
feet.
S-15
The Canyon Mine does not have
known reserves, and is therefore considered under SEC Industry Guide 7
definitions to be exploratory in nature.
DIVIDENDS
The Company has not paid
dividends in the past and it does not expect to pay dividends in the near
future. Any earnings generated will be dedicated to finance further growth. The
Board of Directors of the Company will determine if and when dividends will be
declared and paid in the future based on the Companys financial position at the
relevant time.
CONSOLIDATED CAPITALIZATION
Since June 30, 2016, the date of
the Companys most recently filed financial statements, the only material
changes to the Companys share and loan capital, on a consolidated basis, were
the issuance of an aggregate of 213,781 Common Shares upon the exercise of stock
options and for consulting services. See
Prior Sales
.
The Company had 57,867,653 Common
Shares, 2,190,077 stock options, 1,335,244 restricted stock units and 4,547,598
warrants outstanding as at September 14, 2016. After giving effect to the
Offering, the Company will have 65,117,653, 2,190,077, 1,335,224 and 8,172,598
Common Shares, stock options, restricted stock units and warrants (including the
Warrants) respectively outstanding, assuming that the Over-Allotment Option is
not exercised. Assuming that the Over-Allotment Option is exercised in full for
Over-Allotment Units, after giving effect to the Offering, the Company will have
66,205,153, 2,190,077, 1,335,224 and 8,716,348 Common Shares, stock options,
restricted stock units and warrants (including the Warrants) respectively
outstanding.
S-16
USE OF PROCEEDS
The Company intends to use the net
proceeds of the Offering as follows: (i) $4.0 million to continue to finance the
previously announced shaft sinking and evaluation at the Companys high-grade
Canyon mine project in Arizona; (ii) $3.0 million to continue to fund wellfield
construction at the Companys Nichols Ranch Project in Wyoming; (iii) $1.5
million to continue permitting of the Companys projects, including Roca Honda
and Jane Dough; (iv) $2.0 million to repay principal on outstanding
indebtedness; and (v) the remaining for general corporate needs and working
capital requirements. However, management of Energy Fuels will have discretion
with respect to the actual use of the net proceeds of the Offering and there may
be circumstances where, for sound business reasons, a reallocation of the net
proceeds is necessary. See Risk Factors.
S-17
PLAN OF DISTRIBUTION
Pursuant to the Underwriting
Agreement, the Company has agreed to issue and sell and the Underwriters, have
severally agreed to purchase, as principals, subject to compliance with all
necessary legal requirements and the terms and conditions contained in the
Underwriting Agreement, a total of 7,250,000 Offered Units at the
Offering Price of $1.80 per Offered Unit, payable in cash to the Company
against delivery of such Offered Units, on the Closing Date. In consideration
for their services in connection with the Offering, the Underwriters will be
paid the Underwriters Fee equal to 6% of the gross proceeds of the Offering
($0.108 per Offered Unit), for an aggregate fee payable by the Company of
$783,000, exclusive of the Over-Allotment Securities. The
Offering Price was determined by negotiation between the Company and the Lead
Underwriters on their own behalf and on behalf of the other Underwriters.
Subject to the terms and conditions of the Underwriting Agreement, the Company
has agreed to sell to the Underwriters, and each Underwriter has severally
agreed to purchase, at the Offering Price less the Underwriting Fee set forth on
the cover page of this Prospectus Supplement, the number of Offered Units listed
next to its name in the following table:
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Number of
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Offered Units
|
Cantor Fitzgerald Canada
Corporation
|
3,008,750
|
Rodman & Renshaw a unit of H.C.
Wainwright & Co., LLC
|
3,008,750
|
Haywood Securities Inc.
|
435,000
|
Raymond James Ltd.
|
435,000
|
Dundee Securities Ltd.
|
362,500
|
Total
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7,250,000
|
Pursuant to the Underwriting Agreement,
Energy Fuels has granted to the Underwriters the Over Allotment Option,
exercisable at any time prior to 5:00 p.m. (Toronto time) on the day that is the
30th day following the Closing Date, to purchase up to an additional 1,087,500
Offered Units at the Offering Price to cover over-allocations, if any, and for
market stabilization purposes, on the same terms and conditions as apply to the
purchase of Offered Units thereunder. The Over-Allotment Option may be
exercisable by the Underwriters in respect of: (i) Over-Allotment Units at the
Offering Price; or (ii) Over-Allotment Unit Shares at a price of $1.482 per
Over-Allotment Unit Share; or (iii) Over-Allotment Warrants at a price of $0.636
per Over Allotment Warrant; or (iv) any combination of the Over-Allotment
Securities, so long as the aggregate number of Over-Allotment Unit Shares and
Over-Allotment Warrants which may be issued under the Over-Allotment Option does
not exceed 1,087,500 Over-Allotment Unit Shares and 543,750 Over-Allotment
Warrants. If the Over Allotment Option is exercised in full for Over-Allotment
Units only, the price to the public, Underwriters Fee and net proceeds to
Energy Fuels (before deducting expenses of the Offering) will be $15,007,500,
$900,450 and $14,107,050, respectively. This Prospectus Supplement also
registers the issuance of the Offered Units as well as the grant of the Over
Allotment Option and the issuance of the Over-Allotment Securities pursuant to
the exercise of the Over Allotment Option.
A purchaser who acquires
Over-Allotment Securities forming part of the Underwriters over-allocation
position acquires those Over-Allotment Securities under this Prospectus
Supplement, regardless of whether the over-allocation position is ultimately
filled through the exercise of the Over-Allotment Option or secondary market
purchases.
The Offered Units will be offered
in all provinces of Canada except Québec and in the United States. The Units
will be offered in the United States by Cantor Fitzgerald & Co., a U.S.
affiliate of Cantor Fitzgerald Canada Corporation, and Rodman & Renshaw a
unit of H.C. Wainwright & Co., LLC under this Prospectus Supplement filed
with the SEC and in Canada by Cantor Fitzgerald Canada Corporation, Haywood
Securities Inc., Raymond James Ltd. and Dundee Securities Ltd., under a
prospectus supplement. Subject to applicable law, the Underwriters may offer to
sell the Offered Units outside of Canada and the United States. Rodman &
Renshaw a unit of H.C. Wainwright & Co., LLC, is not registered as
investment dealers in any Canadian jurisdiction and, accordingly, will only sell
Offered Units into the United States and will not, directly or indirectly,
solicit offers to purchase or sell the Offered Units in Canada. Haywood Securities Inc., Raymond James
Ltd. and Dundee Securities Ltd. may sell Units into the United States pursuant
to this Prospectus Supplement through their U.S. affiliates.
S-18
The Warrants will be created and
issued pursuant to the terms of a warrant indenture (the
Warrant
Indenture
) dated the Closing Date to be entered into among the Company, CST
Trust Company, as Canadian warrant agent (the
Canadian Warrant Agent
),
and American Stock & Transfer Company, LLC, as U.S. Warrant Agent (the
US Warrant Agent
and, together with the Canadian Warrant Agent, the
Warrant Agents
). Each Warrant will entitle the holder thereof to
purchase one Common Share at a price of $2.45 at any time
prior to 5:00 p.m. (Toronto time) on the first business day which is at least 60
months after the closing of the Offering, after which time the Warrants will
expire and be void and of no value. The Warrant Indenture will contain
provisions designed to protect the holders of Warrants against dilution upon the
happening of certain events. No fractional Common Shares will be issued upon the
exercise of any Warrants. There is currently no market through which the
Warrants may be sold and purchasers may not be able to resell the Warrants
purchased under this Prospectus Supplement. This may affect the price of the
Warrants in the secondary market, the transparency and availability of trading
prices, the liquidity of the securities and the extent of issuer regulation. The
Company has applied to list the Warrants on the TSX and will use its
commercially reasonable efforts to list the Warrants on the NYSE MKT. Listing of
the Warrants will be subject to the Company fulfilling all of the Listing
requirements of the TSX and NYSE MKT, respectively. See
Risk
Factors
.
In addition, the Warrant holders
are entitled to a cashless exercise option if, at any time of exercise, there
is no effective registration statement registering, or no current prospectus
available for, the issuance or resale of Warrant Shares under the U.S.
Securities Act. This option entitles the Warrant holders to elect to receive
fewer Warrant Shares without paying the cash exercise price. The number of
Warrant Shares to be issued would be determined by a formula based on the total
number of Common Shares with respect to which the Warrant is being exercised,
the daily volume weighted average price for our Common Shares on the trading day
immediately prior to the date of exercise and the applicable exercise price of
the Warrants.
Energy Fuels has been advised by
the Underwriters that, in connection with this Offering, the Underwriters may
effect transactions that stabilize or maintain the market price of the Common
Shares at levels other than those that might otherwise prevail in the open
market. Such transactions, if commenced, may be discontinued at any time. The
Underwriters propose to offer the Offered Units initially at the Offering Price.
After a reasonable effort has been made to sell all of the Offered Units at the
Offering Price, the Underwriters may subsequently reduce the selling price to
investors from time to time in order to sell any of the Offered Units remaining
unsold. Any such reduction will not affect the proceeds received by the Company.
The obligations of the
Underwriters under the Underwriting Agreement are several, and not joint, and
may be terminated at their discretion upon the occurrence of certain events
specified in the Underwriting Agreement including standard litigation out,
financial out, disaster out and material adverse effect out rights of
termination.
The Underwriters are obligated to
take up and pay for all the Offered Units offered by this Prospectus Supplement
(not including the Over-Allotment Units issuable upon exercise of the
Over-Allotment Option) if any are purchased under the Underwriting Agreement,
subject to certain exceptions. Energy Fuels has agreed in the Underwriting
Agreement to reimburse the Underwriters for their legal fees and certain other
expenses in connection with the Offering, in an amount not to exceed $100,000.
We estimate that the total expenses for this Offering, excluding compensation
and expense reimbursements payable to the Underwriters under the terms of the
Underwriting Agreement, will be approximately $300,000.
The Company has agreed, pursuant
to the Underwriting Agreement, to indemnify the Underwriters and their
respective affiliates and their respective directors, officers, employees
shareholders and agents and each other person, if any, controlling any of the
Underwriters or their affiliates and against certain liabilities, including
liabilities under Canadian and U.S. securities legislation in certain
circumstances or to contribute to payments the Underwriters may have to make
because of such liabilities.
S-19
The Company has agreed in the
Underwriting Agreement that it shall not issue, negotiate or enter into any
agreement to sell or issue, or announce the issue of, any Common Shares of the
Company for a period of 90 days from the Closing Date, other than: (i) the
issuance of the Unit Shares and the Warrant Shares; (ii) pursuant to the grant
of options, restricted stock units and Common Shares in the normal course
pursuant to the Companys equity compensation plans and the issuance of Common
Shares upon the exercise of options or vesting of restricted stock units issued
under the Companys equity compensation plans and warrants outstanding as of the
date of the Underwriting Agreement; (iii) Common Shares issued in connection
with an arms length acquisition, merger, consolidation or amalgamation with any
company or companies; or (iv) pursuant to any pre-existing obligation for the
Company to issue Common Shares.
As a condition precedent to the
Underwriters obligation to close the Offering, subject to customary exemptions
permitting dispositions to trusts for the direct or indirect benefit of the
director or officer and/or the immediate family of such person, tenders to a
take-over bid or acquisition transaction and pursuant to any existing 10b5-1
plans, all directors and officers of the Company shall be required to execute
and deliver written undertakings in favour of the Underwriters agreeing not to
sell, transfer, pledge (other than as disclosed to the Underwriters in writing),
assign, or otherwise dispose of any securities of the Company owned, directly or
indirectly by such directors or officers, until 90 days following the Closing
Date, without the prior written consent of the Lead Underwriters on behalf of
the Underwriters.
Subscriptions for the Offered
Units will be received subject to rejection or allotment in whole or in part and
the right is reserved to close the subscription books at any time without
notice. The closing of the Offering is expected to occur on or about September
20, 2016. It is anticipated that the Unit Shares and Warrants forming part of
the Offered Units will be issued in book-entry only form and represented by a
global certificate or certificates, or be represented by uncertificated
securities, registered in the name of CDS or its nominee and/or DTC, as directed
by the Underwriters, and will be deposited with CDS and/or DTC, as the case may
be. Except in limited circumstances, no beneficial holder of Unit Shares or
Warrants will receive definitive certificates representing their interest in the
Unit Shares or Warrants. Beneficial holders of Unit Shares or Warrants will
receive only a customer confirmation from the Underwriters or other registered
dealer who is a CDS or DTC participant and from or through whom a beneficial
interest in the Unit Shares or Warrants is acquired. Certain other holders may
receive definitive certificates representing their interests in the Unit Shares
or Warrants.
This Prospectus Supplement and
the Prospectus in electronic format may be made available on the websites
maintained by one or more of the Underwriters or their U.S. affiliates
participating in the offering. The Underwriters may agree to allocate a number
of Offered Units to the Underwriters and their U.S. affiliates for sale to their
online brokerage account holders. Internet distributions will be allocated by
the representative to the Underwriters and their U.S. affiliates that may make
Internet distributions on the same basis as other allocations. Other than the
Prospectus and the Prospectus Supplement in electronic format, the information
on these websites is not part of this Prospectus Supplement or the registration
statement of which this Prospectus Supplement forms a part, has not been
approved or endorsed by the Company or any Underwriter in its capacity as
underwriter, and should not be relied upon by investors.
Certain of the Underwriters and
their affiliates have provided in the past to the Company and its affiliates,
and may provide from time to time in the future, certain commercial banking,
financial advisory, investment banking and other services for us and such
affiliates in the ordinary course of their business, for which they have
received and may continue to receive customary fees and commissions. In
addition, from time to time, certain of the Underwriters and their affiliates
may effect transactions for their own account or the account of customers, and
hold on behalf of themselves or their customers, long or short positions in the
Companys debt or equity securities or loans, and may do so in the future.
The Company has applied to list
the Unit Shares, Warrant Shares and the Warrants on the TSX and the Unit Shares
and the Warrant Shares on the NYSE MKT. The Company will use its commercially
reasonable efforts to have the Warrants approved for listing on the NYSE MKT
within 90 days from the Closing Date. Listing will be subject to the Company
fulfilling all of the listing requirements of the TSX and the NYSE MKT.
S-20
DESCRIPTION OF SECURITIES BEING OFFERED
The Offering consists of 7,250,000
Offered Units (plus up to 1,087,500 additional Offered Units, or a combination
of Units, Common Shares or Warrants up to such total in the event the
Over-Allotment Option is exercised in full, see
Plan of Distribution
). Each
Offered Unit will consist of one Unit Share and one-half of one Warrant, with
each Warrant entitling the holder to purchase one Warrant Share at an exercise
price of US$2.45, subject to adjustment, at any time until 5:00 p.m. (Toronto
time) on the first business day which is at least 60 months after the closing of
the Offering.
The Unit Shares and the Warrants
comprising the Offered Units will separate immediately upon closing of the
Offering.
Common Shares
As of September 14, 2016, there
were 57,687,653 Common Shares issued and outstanding and no preferred shares
outstanding. Holders of Common Shares are entitled to receive notice of, and to
attend and vote at, all meetings of the shareholders of the Company, and each
Common Share confers the right to one vote in person or by proxy at all meetings
of the shareholders of the Company. Holders of Common Shares are entitled to
receive such dividends in any financial year as the Board of Directors of the
Company may by resolution determine. In the event of the liquidation,
dissolution or winding-up of the Company, whether voluntary or involuntary,
holders of Common Shares are entitled to receive the remaining property and
assets of the Company. The Common Shares do not carry any pre-emptive,
subscription, redemption or conversion rights, nor do they contain any sinking
or purchase fund provisions.
In addition, on July 24, 2012,
the Company issued Cdn$22,000,000 aggregate principal amount of Debentures. The
terms of the Debentures were amended on August 4, 2016 and the Debentures will
mature on June 30, 2020 and are convertible into Common Shares of the Company at
the option of the holder at a conversion price, subject to certain adjustments,
of Cdn$4.15 per share at any time prior to redemption or maturity. As of
September 14, 2016, up to 5,301,205 Common Shares are issuable upon conversion
of the Debentures.
Warrants
The Warrants will be governed by
the terms of the Warrant Indenture. The Company will appoint the principal
transfer offices of the Canadian Warrant Agent in Toronto, Ontario and the US
Warrant Agent in New York City, New York as the locations at which Warrants may
be surrendered for exercise or transfer. The following summary of certain
provisions of the Warrant Indenture contains all of the material attributes and
characteristics of the Warrants but does not purport to be complete and is
qualified in its entirety by reference to the provisions of the Warrant
Indenture.
Each Warrant will entitle the
holder to purchase one Warrant Share at a price of $2.45. The exercise price and
the number of Warrant Shares issuable upon exercise are both subject to
adjustment in certain circumstances as more fully described below. Warrants will
be exercisable at any time prior to 5:00 p.m. (Toronto time) on the first
business day which is at least 60 months after the closing of the Offering after
which time the Warrants will expire and become null and void. Under the Warrant
Indenture and subject to applicable laws, the Company will be entitled to
purchase in the market, by private contract or otherwise, all or any of the
Warrants then outstanding, and any Warrants so purchased will be cancelled.
The exercise price for the
Warrants will be payable in United States dollars.
The Warrant Indenture will
provide for adjustment in the number of Warrant Shares issuable upon the
exercise of the Warrants and/or the exercise price per Warrant Share upon the
occurrence of certain events, including:
|
i.
|
the issuance of Common Shares or securities exchangeable
for or convertible into Common Shares to all or substantially all of the
holders of the Common Shares as a stock dividend or other distribution
(other than a distribution of Common Shares upon the exercise of the
Warrants or pursuant to the exercise of director, officer or employee stock options or
restricted share rights granted under the Companys equity compensation plans);
|
S-21
|
ii.
|
the subdivision, redivision or change of the Common
Shares into a greater number of shares;
|
|
|
|
|
iii.
|
the reduction, combination or consolidation of the Common
Shares into a lesser number of shares;
|
|
|
|
|
iv.
|
the issuance to all or substantially all of the holders
of the Common Shares of rights, options or warrants under which such
holders are entitled, during a period expiring not more than 45 days after
the record date for such issuance, to subscribe for or purchase Common
Shares, or securities exchangeable for or convertible into Common Shares,
at a price per share to the holder (or at an exchange or conversion price
per share) of less than 95% of the current market price, as defined in
the Warrant Indenture, for the Common Shares on such record date;
and
|
|
|
|
|
v.
|
the issuance or distribution to all or substantially all
of the holders of the Common Shares of shares of any class other than the
Common Shares, rights, options or warrants to acquire Common Shares or
securities exchangeable or convertible into Common Shares, of evidences of
indebtedness or cash, securities or any property or other
assets.
|
The Warrant Indenture will also
provide for adjustment in the class and/or number of securities issuable upon
the exercise of the Warrants and/or exercise price per security in the event of
the following additional events: (1) reclassifications or redesignations of the
Common Shares; (2) consolidations, amalgamations, take-over bids, compulsory
acquisitions, plans of arrangement or mergers of the Company with or into
another entity (other than consolidations, amalgamations, take-over bids,
compulsory acquisitions, plans of arrangement or mergers which do not result in
any reclassification of the Common Shares or a change of the Common Shares into
other shares); (3) a change, exchange or conversion of the Common Shares into or
for other shares or securities or property; or (4) the transfer (other than to
one of the Companys subsidiaries) of the undertaking or assets of the Company
as an entirety or substantially as an entirety to another corporation or other
entity.
The Warrant Indenture will also
permit, in certain circumstances, Warrant holders to participate in a rights
offering or participate in a special distribution to the same extent that such
Warrant holder would have participated therein if the Warrant holder had held
the number of Warrant Shares acquirable upon complete exercise of the Warrant
holders Warrants then held.
No adjustment in the exercise
price or the number of Warrant Shares purchasable upon the exercise of the
Warrants will be required to be made unless the cumulative effect of such
adjustment or adjustments would change the exercise price by at least 1% or the
number of Warrant Shares purchasable upon exercise by at least one one-
hundredth of a Warrant Share.
The Company will also covenant in
the Warrant Indenture that, during the period in which the Warrants are
exercisable, it will give notice to holders of Warrants of certain stated
events, including events that would result in an adjustment to the exercise
price for the Warrants or the number of Warrant Shares issuable upon exercise of
the Warrants, at least 14 days prior to the record date or effective date, as
the case may be, of such event.
No fractional Warrant Shares will
be issuable upon the exercise of any Warrants, and no cash or other
consideration will be paid in lieu of fractional shares. Holders of Warrants
will not have any voting or pre-emptive rights or any other rights which a
holder of Common Shares would have.
The Warrant Indenture also provides that
the Company will use its commercially reasonable efforts to maintain the
registration statement or another registration statement relating to the Warrant
Shares following the Closing Date (provided, however, that nothing shall prevent
the Companys amalgamation, arrangement, merger or sale, including any take-over
bid, and any associated delisting or deregistration or ceasing to be a reporting
issuer, provided that, so long as the Warrants are still outstanding and
represent a right to acquire securities of the acquiring Company, the acquiring
company shall assume the Companys obligations under the Warrant Indenture). If
there is no effective registration statement registering, or no current
prospectus available for, the issuance or resale of Warrant Shares under the
U.S. Securities Act, Warrant holders will be entitled to a cashless exercise
option. This option entitles the Warrant holders to elect to receive fewer
Warrant Shares without paying the cash exercise price. The number of Warrant
Shares to be issued would be determined by a formula based on the total number
of common shares with respect to which the Warrant is being exercised, the daily
volume weighted average price for our Common Shares on the trading day
immediately prior to the date of exercise and the applicable exercise price of
the Warrants.
S-22
From time to time, the Company
and the Warrant Agents, without the consent of the holders of Warrants, may
amend or supplement the Warrant Indenture for certain purposes, including curing
defects or inconsistencies or making any change that does not adversely affect
the rights of any holder of Warrants. Any amendment or supplement to the Warrant
Indenture that adversely affects the interests of the holders of the Warrants
may only be made by extraordinary resolution, which is defined in the Warrant
Indenture as a resolution either (1) passed at a meeting of the holders of
Warrants at which there are holders of Warrants present in person or represented
by proxy representing at least 25% of the aggregate number of the then
outstanding Warrants and passed by the affirmative vote of holders of Warrants
representing not less than 66 ?% of the aggregate number of all the then
outstanding Warrants represented at the meeting and voted on the poll upon such
resolution or (2) adopted by an instrument in writing signed by the holders of
Warrants representing not less than 66?% of the aggregate number of all the then
outstanding Warrants.
PRIOR SALES
During the 12-month period prior
to the date of this Prospectus Supplement, the Company has issued Common Shares,
or securities convertible into Common Shares, as follows:
Date Issued/
|
Number of
|
Security
|
Price per Security
|
Granted
|
Securities
|
|
|
September 25, 2015
|
80,496
|
Restricted Stock
Units granted pursuant to the Companys Omnibus Equity Incentive Plan
|
N/A
|
October 1, 2015
|
17,241
|
Restricted Stock Units granted
pursuant to the Companys Omnibus Equity Incentive Plan
|
N/A
|
October 27, 2015
|
92,906
|
Common Shares
issued in partial consideration for Wate Project acquisition.
|
$2.95
|
November 10, 2015
|
500
|
Common Shares sold under ATM
|
$2.71
|
November 11, 2015
|
200
|
Common Shares sold
under ATM
|
$2.67
|
December 18, 2015
|
29,646
|
Common Shares sold under ATM
|
$2.00
|
December 21, 2015
|
22,271
|
Common Shares sold
under ATM
|
$2.08
|
December 22, 2015
|
89,690
|
Common Shares sold under ATM
|
$2.34
|
December 23, 2015
|
1,133,601
|
Common Shares sold
under ATM
|
$2.31
|
December 30, 2015
|
100,000
|
Common Shares sold under ATM
|
$2.66
|
December 31, 2015
|
100,000
|
Common Shares sold
under ATM
|
$2.72
|
January 6, 2016
|
225
|
Common Shares sold under ATM
|
$2.83
|
January 27, 2016
|
256,642
|
Stock options
granted pursuant to the Companys Omnibus Equity Incentive Plan
exercisable at $4.16 per share
|
N/A
|
January 27, 2016
|
948,047
|
Restricted Stock Units granted
pursuant to the Companys Omnibus Equity Incentive Plan
|
N/A
|
January 28, 2016
|
90,807
|
Common Shares
issued on vesting of previously issued Restricted Stock Units
|
N/A
|
February 2, 2016
|
48,026
|
Common Shares issued on vesting of
previously issued Restricted Stock Units
|
N/A
|
S-23
Date Issued/
|
Number of
|
Security
|
Price per
Security
|
Granted
|
Securities
|
|
|
March 14, 2016
|
5,031,250
|
Units sold pursuant to a
$12.075 million public offering, each consisting of one Common Share and
one-half of a warrant with each warrant entitling the holder to purchase
one Common Share for $3.20
|
$2.40
|
March 24, 2016
|
1,200
|
Common Shares issued upon exercise of stock
options
|
$2.12
|
May 27, 2016
|
1,212,173
|
Common Shares issued as
consideration for the Roca Honda Acquisition
|
$2.31
|
June 16, 2016
|
4,551,284
|
Common Shares issued as consideration for the
acquisition of Alta Mesa (f/k/a Mesteña Uranium)
|
$2.50
|
August 23, 2016
|
7,169
|
Common Shares issued upon
exercise of stock options
|
$2.33
|
August 31, 2016
|
206,612
|
Common Shares issued for consulting services
|
$2.42
|
S-24
TRADING PRICE AND VOLUME
The Common Shares are listed and
traded in Canada on the TSX and in the United States on the NYSE MKT.
The following table sets forth
the high and low sale prices and the monthly trading volume for the Common
Shares on both the TSX and the NYSE MKT.
|
|
High
|
|
|
Low
|
|
|
Volume
|
|
Toronto Stock Exchange
|
|
(Cdn$)
|
|
|
(Cdn$)
|
|
|
(#)
|
|
September 2015
|
|
4.62
|
|
|
3.68
|
|
|
965,700
|
|
October 2015
|
|
4.50
|
|
|
3.51
|
|
|
887,774
|
|
November 2015
|
|
3.90
|
|
|
2.47
|
|
|
1,271,384
|
|
December 2015
|
|
4.12
|
|
|
2.48
|
|
|
1,307,471
|
|
January 2016
|
|
4.13
|
|
|
2.60
|
|
|
1,305,321
|
|
February 2016
|
|
3.57
|
|
|
2.82
|
|
|
815,738
|
|
March 2016
|
|
3.98
|
|
|
2.87
|
|
|
3,052,842
|
|
April 2016
|
|
3.09
|
|
|
2.64
|
|
|
1,852,787
|
|
May 2016
|
|
3.13
|
|
|
2.68
|
|
|
1,546,150
|
|
June 2016
|
|
3.65
|
|
|
2.82
|
|
|
2,300,161
|
|
July 2016
|
|
3.13
|
|
|
2.85
|
|
|
1,452,895
|
|
August 2016
|
|
3.30
|
|
|
2.83
|
|
|
1,753,745
|
|
September 1-13, 2016
|
|
3.12
|
|
|
2.94
|
|
|
242,990
|
|
|
|
High
|
|
|
Low
|
|
|
Volume
|
|
NYSE MKT
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
September 2015
|
|
3.50
|
|
|
2.76
|
|
|
3,282,800
|
|
October 2015
|
|
3.48
|
|
|
2.69
|
|
|
3,409,400
|
|
November 2015
|
|
2.93
|
|
|
1.84
|
|
|
4,445,800
|
|
December 2015
|
|
2.98
|
|
|
1.85
|
|
|
5,736,900
|
|
January 2016
|
|
2.95
|
|
|
1.81
|
|
|
4,631,500
|
|
February 2016
|
|
2.59
|
|
|
2.03
|
|
|
2,398,000
|
|
March 2016
|
|
2.98
|
|
|
2.18
|
|
|
7,835,913
|
|
April 2016
|
|
2.45
|
|
|
2.00
|
|
|
5,499,059
|
|
May 2016
|
|
2.43
|
|
|
2.06
|
|
|
4,897,067
|
|
June 2016
|
|
2.87
|
|
|
2.15
|
|
|
10,543,298
|
|
July 2016
|
|
2.43
|
|
|
2.17
|
|
|
3,361,316
|
|
August 2016
|
|
2.58
|
|
|
2.18
|
|
|
3,601,193
|
|
September 1-13, 2016
|
|
2.41
|
|
|
2.24
|
|
|
683,318
|
|
On September 14, 2016, the
closing price of the Common Shares was Cdn$2.94 on the TSX and $2.27 on the NYSE
MKT.
S-25
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes,
as of the date hereof, the principal Canadian federal income tax considerations
under the Tax Act, generally applicable to a holder who acquires, as beneficial
owner, Unit Shares and Warrants pursuant to the Offering, and Warrant Shares
upon exercise of the Warrants, and who, for purposes of the Tax Act and at all
relevant times, holds Unit Shares, Warrant Shares and Warrants as capital
property and deals at arms length with the Company, the Underwriters and any
subsequent purchaser of such securities. A holder who meets all of the foregoing
requirements is referred to as a
Holder
herein, and this summary only
addresses such Holders. Generally, Unit Shares, Warrant Shares and Warrants will
be considered to be capital property to a Holder, provided the Holder does not
hold Unit Shares, Warrant Shares and Warrants in the course of carrying on a
business of trading or dealing in securities and has not acquired them in one or
more transactions considered to be an adventure or concern in the nature of
trade.
This summary is not applicable to
a Holder (i) that is a financial institution, as defined in the Tax Act for
purposes of the mark-to-market rules in the Tax Act, (ii) that is a specified
financial institution, as defined in the Tax Act, (iii) an interest in which is
a tax shelter investment as defined in the Tax Act, (iv) that makes or has
made a functional currency reporting election for purposes of the Tax Act, or
(v) that has entered into or will enter into a derivative forward agreement,
as that term is defined in the Tax Act, with respect to the Unit Shares,
Warrants or Warrant Shares.
Additional considerations, not
discussed herein, may be applicable to Holder that is a corporation resident in
Canada and is, or becomes, controlled by a non-resident corporation for purposes
of the foreign affiliate dumping rules in section 212.3 of the Tax Act. Such
Holders should consult their tax advisors with respect to the consequences of
acquiring the Offered Units.
This summary is based upon the
provisions of the Tax Act in force as of the date hereof, all specific proposals
to amend the Tax Act that have been publicly and officially announced by or on
behalf of the Minister of Finance (Canada) prior to the date hereof (the
Proposed Amendments
) and counsels understanding of the current
administrative and assessing policies and practices of the Canada Revenue Agency
(the
CRA
), published in writing by it prior to the date hereof. This
summary assumes the Proposed Amendments will be enacted in the form proposed.
However, no assurance can be given that the Proposed Amendments will be enacted
in their current form, or at all. This summary is not exhaustive of all possible
Canadian federal income tax considerations and, except for the Proposed
Amendments, does not take into account or anticipate any changes in the law or
any changes in the CRAs administrative and assessing policies or practices,
whether by legislative, governmental or judicial action or decision, nor does it
take into account or anticipate any other federal or any provincial, territorial
or foreign tax considerations, which may differ significantly from those
discussed herein. This summary is not intended to be, nor should it be construed
to be, legal or tax advice to any particular Holder, and no representations with
respect to the income tax consequences to any Holder are made. Consequently,
Holders should consult their own tax advisors with respect to the tax
consequences applicable to them, having regard to their own particular
circumstances.
Allocation of Offering Price
Holders will be required to
allocate the aggregate cost of an Offered Unit between the Unit Share and the
one-half Warrant on a reasonable basis in order to determine their respective
costs for purposes of the Tax Act. The Company intends to allocate as
consideration for their issue $1.482 to each Unit Share and $0.318 to each
one-half Warrant acquired as part of an Offered Unit. The Company believes that
such allocation is reasonable but such allocation will not be binding on the CRA
or a Holder and the Company expresses no opinion with respect to such
allocation. The adjusted cost base to a Holder of a Unit Share acquired as part
of an Offered Unit will be determined by averaging the cost of such Unit Share
with the adjusted cost base of all Common Shares of the Company held by the
Holder as capital property immediately before such acquisition.
Exercise of Warrants
No gain or loss will be realized
by a Holder on the exercise of a Warrant to acquire a Warrant Share. When a
Warrant is exercised, the Holders cost of the Warrant Share acquired thereby
will be equal to the aggregate of the Holders adjusted cost base of such Warrant and the exercise
price paid for the Warrant Share. The Holders adjusted cost base of the Warrant
Share so acquired will be determined by averaging the cost of the Warrant Share
with the adjusted cost base to the Holder of all Common Shares of the Company
held as capital property immediately before the acquisition of the Warrant
Share.
S-26
Currency Conversion
Generally, for purposes of the
Tax Act, all amounts relating to the acquisition, holding or disposition of Unit
Shares, Warrants, or Warrant Shares must be converted into Canadian dollars
based on the exchange rates as determined in accordance with the Tax Act.
Taxation of Resident Holders
The following portion of this
summary applies to Holders (as defined above) who, for the purposes of the Tax
Act, are or are deemed to be resident in Canada at all relevant times (herein,
Resident Holders
) and this portion of the summary only addresses such
Resident Holders. Certain Resident Holders who might not be considered to hold
their Unit Shares or Warrant Shares as capital property may, in certain
circumstances, be entitled to have them and any other Canadian security (as
defined in the Tax Act) be treated as capital property by making the irrevocable
election permitted by subsection 39(4) of the Tax Act. This election does not
apply to Warrants. Resident Holders contemplating such election should consult
their own tax advisors for advice as to whether it is available and, if
available, whether it is advisable in their particular circumstances.
Expiry of Warrants
The expiry of an unexercised
Warrant generally will result in a capital loss to the Resident Holder equal to
the adjusted cost base of the Warrant to the Resident Holder immediately before
its expiry. See discussion below under the heading Capital Gains and Capital
Losses.
Taxation of Dividends
A Resident Holder will be
required to include in computing income for a taxation year any dividends
received, or deemed to be received, in the year by the Resident Holder on the
Unit Shares or Warrant Shares. In the case of a Resident Holder that is an
individual (other than certain trusts), such dividends will be subject to the
gross-up and dividend tax credit rules normally applicable under the Tax Act to
taxable dividends received from taxable Canadian corporations, including the
enhanced gross-up and dividend tax credit provisions where the Company
designates the dividend as an eligible dividend in accordance with the
provisions of the Tax Act. There may be restrictions on the ability of the
Company to designate any dividend as an eligible dividend.
A dividend received or deemed to
be received by a Resident Holder that is a corporation must be included in
computing its income but will generally be deductible in computing the
corporations taxable income, subject to all of the rules and restrictions under
the Tax Act in that regard. In certain circumstances, subsection 55(2) of the
Tax Act will treat a taxable dividend received by a Resident Holder that is a
corporation as proceeds of disposition or a capital gain. A corporation that is
a private corporation (as defined in the Tax Act) or any other corporation
controlled (whether because of a beneficial interest in one or more trusts or
otherwise) by or for the benefit of an individual (other than a trust) or a
related group of individuals (other than trusts), generally will be liable to
pay an additional tax (refundable under certain circumstances) under Part IV of
the Tax Act on dividends received or deemed to be received on the Unit Shares or
Warrant Shares in a year to the extent such dividends are deductible in
computing taxable income for the year.
Disposition of Unit Shares, Warrants and Warrant Shares
A Resident Holder who disposes,
or is deemed to dispose, of a Unit Share, a Warrant (other than on the exercise
thereof) or a Warrant Share generally will realize a capital gain (or capital
loss) equal to the amount, if any, by which the proceeds of disposition, net of
any reasonable costs of disposition, are greater (or are less) than the adjusted
cost base to the Resident Holder of such Unit Shares, Warrants or Warrant
Shares, as the case may be, immediately before the disposition or deemed disposition. The
taxation of capital gains and losses is generally described below under the
heading Capital Gains and Capital Losses.
S-27
Capital Gains and Capital Losses
Generally, a Resident Holder is
required to include in computing income for a taxation year one-half of the
amount of any capital gain (a taxable capital gain) realized by the Resident
Holder in such taxation year. Subject to and in accordance with the rules
contained in the Tax Act, a Resident Holder is required to deduct one-half of
the amount of any capital loss (an allowable capital loss) realized in a
particular taxation year against taxable capital gains realized by the Resident
Holder in the year. Allowable capital losses not so deductible in a particular
taxation year may be carried back and deducted in any of the three preceding
taxation years or carried forward and deducted in any subsequent taxation year
against net taxable capital gains realized in such years, to the extent and
under the circumstances described in the Tax Act.
The amount of any capital loss
realized by a Resident Holder that is a corporation on the disposition or deemed
disposition of a Unit Share or Warrant Share may be reduced by the amount of any
dividends received or deemed to have been received by such Resident Holder on
such shares, to the extent and under the circumstances described in the Tax Act.
Similar rules apply where a Resident Holder that is a corporation is a member of
a partnership or a beneficiary of a trust that owns Unit Shares or Warrant
Shares, directly or indirectly, through a partnership or trust. Resident Holders
to whom these rules may be relevant should consult their own tax advisors.
A Resident Holder that is
throughout the relevant taxation year a Canadian-controlled private
corporation (as defined in the Tax Act) may be liable to pay an additional tax
(refundable in certain circumstances) on certain investment income, including
taxable capital gains.
Alternative Minimum Tax
Capital gains realized and
dividends received or deemed to be received by a Resident Holder that is an
individual or a trust, other than certain specified trusts, may give rise to
alternative minimum tax under the Tax Act. Resident Holders should consult their
own tax advisors in this regard.
Taxation of Non-Resident Holders
The following portion of this
summary is generally applicable to Holders (as defined above) who, for the
purposes of the Tax Act and at all relevant times: (i) are not resident or
deemed to be resident in Canada, and (ii) do not use or hold Unit Shares,
Warrants or Warrant Shares in carrying on a business in Canada. Holders who meet
all of the foregoing requirements are referred to herein as
Non-Resident
Holders
, and this portion of the summary only addresses such Non-Resident
Holders. Special rules, which are not discussed in this summary, may apply to a
Non-Resident Holder that is an insurer carrying on business in Canada and
elsewhere. Such Non-Resident Holders should consult their own tax advisors.
Receipt of Dividends
Dividends paid or credited or
deemed to be paid or credited to a Non-Resident Holder by the Company are
subject to Canadian withholding tax at the rate of 25% of the gross amount of
the dividend unless reduced by the terms of an applicable tax treaty.
Under the
Canada-United States
Income Tax Convention
(1980) as amended (the
Treaty
), the rate of
withholding tax on dividends paid or credited to a Non-Resident Holder who is
resident in the U.S. for purposes of the Treaty and entitled to benefits under
the Treaty (a
U.S. Holder
) is generally reduced to 15% of the gross
amount of the dividend (or 5% in the case of a U.S. Holder that is a company
that beneficially owns at least 10% of the Companys voting shares).
Non-Resident Holders should consult their own tax advisors in this regard.
Disposition of Unit Shares, Warrants and Warrant Shares
A Non-Resident Holder generally
will not be subject to tax under the Tax Act in respect of a capital gain
realized on the disposition or deemed disposition of a Unit Share, a Warrant or
a Warrant Share unless such Unit Share, Warrant Share or Warrant, as the case
may be, constitutes taxable Canadian property (as defined in the Tax Act) to
the Non-Resident Holder at the time of disposition and the gain is not exempt
from tax pursuant to the terms of an applicable tax treaty.
S-28
Provided the Unit Shares and
Warrant Shares are listed on a designated stock exchange, as defined in the
Tax Act (which currently includes the TSX and the NYSE MKT) at the time of
disposition, the Unit Shares, Warrants, and Warrant Shares will generally not
constitute taxable Canadian property of a Non-Resident Holder at that time,
unless at any time during the 60-month period immediately preceding the
disposition the following two conditions are satisfied concurrently: (i) (a) the
Non-Resident Holder; (b) persons with whom the Non-Resident Holder did not deal
at arms length; (c) partnerships in which the Non-Resident Holder or a person
described in (b) holds a membership interest directly or indirectly through one
or more partnerships; or (d) any combination of the persons and partnerships
described in (a) through (c), owned 25% or more of the issued shares of any
class or series of shares of the Company; and (ii) more than 50% of the fair
market value of the Unit Shares and Warrant Shares was derived directly or
indirectly from one or any combination of: real or immovable property situated
in Canada, Canadian resource properties, timber resource properties (each as
defined in the Tax Act), and options in respect of, or interests in or for civil
law rights in, such properties. Notwithstanding the foregoing, in certain
circumstances set out in the Tax Act, the Unit Shares, Warrants, and Warrant
Shares could be deemed to be taxable Canadian property.
Even if the Unit Shares,
Warrants, and Warrant Shares are taxable Canadian property to a Non-Resident
Holder, such Non-Resident Holder may be exempt from tax under the Tax Act on the
disposition of such Unit Shares, Warrants, and Warrant Shares by virtue of an
applicable income tax treaty or convention. Non-Resident Holders who may hold
Unit Shares, Warrants or Warrant Shares as taxable Canadian property should
consult their own tax advisors.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general
summary of certain U.S. federal income tax considerations applicable to a U.S.
Holder (as defined below) arising from and relating to the acquisition,
ownership and disposition of Offered Units acquired pursuant to this Prospectus
Supplement, the acquisition, ownership, and disposition of Unit Shares acquired
as part of the Offered Units, the exercise, disposition, and lapse of Warrants
acquired as part of the Offered Units, and the acquisition, ownership, and
disposition of Warrant Shares received upon exercise of the Warrants.
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 acquisition of Offered Units pursuant to
this Offering. 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, 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 the U.S. federal, U.S. federal alternative minimum, U.S.
federal estate and gift, U.S. state and local, and non-U.S. tax consequences and
tax reporting requirements relating to the acquisition, ownership and
disposition of Offered Units, Unit Shares, Warrants, and Warrant Shares.
No opinion from 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 considerations
applicable to U.S. Holders as discussed in this summary. 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, the positions taken in this summary. In
addition, because the authorities on 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.
S-29
Scope of this Summary
Authorities
This summary is based on the
Internal Revenue Code of 1986, as amended (the
Code
), Treasury
Regulations (whether final, temporary, or proposed) promulgated under the Code,
published rulings of the IRS, published administrative positions of the IRS,
U.S. court decisions and the Treaty, that are in effect and available, as of the
date of this document. 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 basis 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 Offered Units, Unit
Shares, Warrants or Warrant Shares acquired pursuant to this Prospectus
Supplement that is for U.S. federal income tax purposes:
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a citizen or individual resident of the United States;
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a corporation (or other entity treated as a corporation
for U.S. federal income tax purposes) organized under the laws of the
United States, any state thereof or the District of Columbia;
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an estate whose income is subject to U.S. federal income
taxation regardless of its source; or
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a trust that (1) is subject to the primary supervision of
a court within the United States and the control of one or more U.S.
persons for all substantial decisions or (2) 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 Offered
Units, Unit
Shares, Warrants or Warrant Shares that is not a U.S. Holder and is not a
partnership for U.S. federal income tax purposes. This summary does not address
the U.S. federal income tax consequences to non-U.S. Holders arising from and
relating to the acquisition, ownership, and disposition of Offered Units, Unit
Shares, Warrants and Warrant Shares. Accordingly, a non-U.S. Holder should
consult its own tax advisor regarding the U.S. federal, U.S. federal alternative
minimum, U.S. federal estate and gift, 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 acquisition, ownership, and disposition of Offered
Units, Unit Shares, Warrants and Warrant Shares.
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 applicable to U.S. Holders that are
subject to special provisions under the Code, including U.S. Holders that: (a)
are tax-exempt organizations, qualified retirement plans, individual retirement
accounts, or other tax-deferred accounts; (b) are financial institutions,
underwriters, insurance companies, real estate investment trusts, or regulated
investment companies; (c) are brokers or dealers in securities or currencies or
U.S. Holders that are traders in securities that elect to apply a mark-to-market
accounting method; (d) have a functional currency other than the U.S. dollar;
(e) own Offered Units, Unit Shares, Warrants or Warrant Shares as part of a
straddle, hedging transaction, conversion transaction, constructive sale, or
other arrangement involving more than one position; (f) acquired Offered Units,
Unit Shares, Warrants or Warrant Shares in connection with the exercise of
employee stock options or otherwise as compensation for services; (g) hold
Offered Units, Unit Shares, Warrants or Warrant Shares other than as a capital
asset within the meaning of Section 1221 of the Code (generally, property held
for investment purposes); (h) are partnerships and other pass-through entities
(and investors in such partnerships and entities); or (i) own, have owned or
will own (directly, indirectly, or by attribution) 10% or more of the total
combined voting power of the Companys outstanding shares. 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 (as defined below) that have been, are, or will be a resident or deemed
to be a resident in Canada for purposes of the Tax Act; (c) persons that use or
hold, will use or hold, or that are or will be deemed to use or hold Offered
Units, Unit Shares, Warrants or Warrant Shares in connection with carrying on a
business in Canada; (d) persons whose Offered Units, Unit Shares, Warrants or
Warrant Shares constitute taxable Canadian property under the Tax Act; or (e)
persons that have a permanent establishment in Canada for the purposes of the
Treaty. U.S. Holders that are subject to special provisions under the Code,
including U.S. Holders described immediately above, should consult their own tax
advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S.
federal estate and gift, U.S. state and local, and non-U.S. tax consequences
relating to the acquisition, ownership and disposition of Offered Units, Unit
Shares, Warrants or Warrant Shares.
S-30
If an entity or arrangement that
is classified as a partnership for U.S. federal income tax purposes holds
Offered Units, Unit Shares, Warrants or Warrant Shares, the U.S. federal income
tax consequences to such entity or arrangement and the owners of such entity or
arrangement generally will depend on the activities of such entity or
arrangement and the status of such owners. This summary does not address the tax
consequences to any such entity or arrangement or owner. Owners of entities or
arrangements that are classified as partnerships for U.S. federal income tax
purposes should consult their own tax advisor regarding the U.S. federal income
tax consequences arising from and relating to the acquisition, ownership, and
disposition of Offered Units, Unit Shares, Warrants and Warrant Shares.
Tax Consequences Not Addressed
This summary does not address the
U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and
local, and non-U.S. tax consequences to U.S. Holders of the acquisition,
ownership, and disposition of Offered Units, Unit Shares, Warrants and Warrant
Shares. Each U.S. Holder should consult its own tax advisor regarding the U.S.
federal alternative minimum, U.S. federal estate and gift, U.S. state and local,
and non-U.S. tax consequences of the acquisition, ownership, and disposition of
Offered Units, Unit Shares, Warrants and Warrant Shares.
U.S. Federal Income Tax Consequences of the Acquisition of
Offered Units
For U.S. federal income tax
purposes, the acquisition by a U.S. Holder of an Offered Unit will be treated as
the acquisition of one Unit Share and one-half of one Warrant. The purchase
price for each Offered Unit will be allocated between these two components in
proportion to their relative fair market values at the time the Offered Unit is
purchased by the U.S. Holder. This allocation of the purchase price for each
Offered Unit will establish a U.S. Holders initial tax basis for U.S. federal
income tax purposes in the Unit Share and one-half of one Warrant that comprise
each Offered Unit.
For this purpose, the Company
will allocate US$1.482 of the purchase price for the Offered Unit to the Unit
Share and US$0.318 of the purchase price for each Offered Unit to one-half of
one Warrant. However, the IRS will not be bound by such allocation of the
purchase price for the Offered Units, and therefore, the IRS or a U.S. court may
not respect the allocation set forth above. Each U.S. Holder should consult its
own tax advisor regarding the allocation of the purchase price for the Offered
Units.
U.S. Federal Income Tax Consequences of the Exercise and
Disposition of Warrants
The following discussion is
subject in its entirety to the rules described below under the heading
"
Passive Foreign Investment Company Rules
."
Exercise of Warrants
A U.S. Holder generally will not
recognize gain or loss on the exercise of a Warrant and related receipt of an
Warrant Share (unless cash is received in lieu of the issuance of a fractional
Warrant Share). A U.S. Holders initial tax basis in the Warrant Share received
on the exercise of an Warrant should be equal to the sum of (a) such U.S.
Holders tax basis in such Warrant plus (b) the exercise price paid by such U.S.
Holder on the exercise of such Warrant. A U.S. Holder's holding period for the Warrant Share
received on the exercise of a Warrant should begin on the date that such Warrant
is exercised by such U.S. Holder or the day following the date of exercise by
the U.S. Holder.
S-31
In certain limited circumstances,
a U.S. Holder may be permitted to undertake a cashless exercise of Warrants into
Warrant Shares. The U.S. federal income tax treatment of a cashless exercise of
Warrants into Warrant Shares is unclear, and the tax consequences of a cashless
exercise could differ from the consequences upon the exercise of a Warrant
described in the preceding paragraph. U.S. Holders should consult their own tax
advisors regarding the U.S. federal income tax consequences of a cashless
exercise of Warrants.
Disposition of Warrants
A U.S. Holder will recognize gain
or loss on the sale or other taxable disposition of an Warrant in an amount
equal to the difference, if any, between (a) the amount of cash plus the fair
market value of any property received and (b) such U.S. Holders tax basis in
the Warrant sold or otherwise disposed of. Any such gain or loss generally will
be a capital gain or loss, which will be long-term capital gain or loss if the
Warrant is held for more than one year. Deductions for capital losses are
subject to complex limitations under the Code.
Expiration of Warrants Without Exercise
Upon the lapse or expiration of
an Warrant, a U.S. Holder will recognize a loss in an amount equal to such U.S.
Holders tax basis in the Warrant. Any such loss generally will be a capital
loss and will be long-term capital loss if the Warrants are held for more than
one year. Deductions for capital losses are subject to complex limitations under
the Code.
Certain Adjustments to the Warrants
Under Section 305 of the Code, an
adjustment to the number of Warrant Shares that will be issued on the exercise
of the Warrants, or an adjustment to the exercise price of the Warrants, may be
treated as a constructive distribution to a U.S. Holder of the Warrants if, and
to the extent that, such adjustment has the effect of increasing such U.S.
Holders proportionate interest in the earnings and profits or the Companys
assets, depending on the circumstances of such adjustment (for example, if such
adjustment is to compensate for a distribution of cash or other property to the
shareholders). Adjustments to the exercise price of Warrants made pursuant to a
bona fide reasonable adjustment formula that has the effect of preventing
dilution of the interest of the holders of the Warrants should generally not be
considered to result in a constructive distribution. Any such constructive
distribution would be taxable whether or not there is an actual distribution of
cash or other property. (See more detailed discussion of the rules applicable to
distributions made by the Company at
U.S. Federal Income Tax Consequences of
the Acquisition, Ownership, and Disposition of Unit Shares and Warrant Shares
Distributions on Unit Shares and Warrant Shares
below).
U.S. Federal Income Tax Consequences of the Acquisition,
Ownership, and Disposition of Unit Shares and Warrant Shares
The following discussion is
subject in its entirety to the rules described below under the heading
Passive Foreign Investment Company Rules
.
Distributions on Unit Shares and Warrant
Shares
A U.S. Holder that receives a
distribution, including a constructive distribution, with respect to a Unit
Shares or Warrant 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 Companys
current or accumulated earnings and profits, as computed for U.S. federal
income tax purposes. A dividend generally will be taxed to a U.S. Holder at
ordinary income tax rates. 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 Unit Shares or Warrant Shares and thereafter as gain from the sale or exchange
of such Unit Shares or Warrant Shares (see
Sale or Other Taxable Disposition
of Unit Shares and Warrant Shares
below). However, the Company may not
maintain the calculations of earnings and profits in accordance with U.S.
federal income tax principles, and each U.S. Holder may be required to assume
that any distribution by the Company with respect to the Unit Shares or Warrant
Shares constitutes ordinary dividend income. Dividends received on Unit Shares
or Warrant Shares generally will not be eligible for the dividends received
deduction. Subject to applicable limitations and provided the Company is
eligible for the benefits of the Treaty or the Unit Shares are readily tradable
on a United States securities market, dividends paid by the Company to
non-corporate U.S. Holders, including individuals, generally will be eligible
for the preferential tax rates applicable to long-term capital gains for
dividends, provided certain holding period and other conditions are satisfied,
including that the Company not be classified as a PFIC (as defined below) 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.
S-32
Sale or Other Taxable Disposition of Unit Shares and
Warrant Shares
Upon the sale or other taxable
disposition of Unit Shares or Warrant Shares, a U.S. Holder generally will
recognize capital gain or loss in an amount equal to the difference between (a)
the amount of cash plus the fair market value of any property received and (b)
such U.S. Holders tax basis in such Unit Shares or Warrant Shares sold or
otherwise disposed of. Gain or loss recognized on such sale or other disposition
generally will be long-term capital gain or loss if, at the time of the sale or
other disposition, the Unit Shares or Warrant Shares have been held for more
than one year.
Preferential tax rates may apply to long-term capital gain of a
U.S. Holder that is an individual, estate, or trust. There are no preferential
tax rates for long-term capital gain of a U.S. Holder that is a corporation.
Deductions for capital losses are subject to significant limitations under the
Code.
Passive Foreign Investment Company Rules
If the Company were to constitute
a PFIC for any year during a U.S. Holder's holding period, then certain
potentially adverse rules would affect the U.S. federal income tax consequences
to a U.S. Holder resulting from the acquisition, ownership and disposition of
Offered Units, Unit Shares, Warrants and Warrant Shares. The Company believes
that it was not a PFIC during the prior tax year ended on December 31, 2015, and
based on current business plans and financial expectations, the Company expects
that it will not be a PFIC for the current tax year and expects that it will not
be a PFIC for the foreseeable future. No opinion of legal counsel or ruling from
the IRS concerning the status of the Company as a PFIC has been obtained or is
currently planned to be requested. PFIC classification is fundamentally factual
in nature, generally cannot be determined until the close of the tax year in
question, and is determined annually. Additionally, the analysis depends, in
part, on the application of complex U.S. federal income tax rules, which are
subject to differing interpretations. Consequently, there can be no assurance
that the Company has never been, is not, and will not become a PFIC for any tax
year during which U.S. Holders hold Offered Units, Unit Shares, Warrants or
Warrant Shares.
In addition, in any year in which
the Company is classified as a PFIC, U.S. Holders will be required to file an
annual report with the IRS containing such information as Treasury Regulations
and/or other IRS guidance may require. In addition to penalties, a failure to
satisfy such reporting requirements may result in an extension of the time
period during which the IRS can assess a tax. U.S. Holders should consult their
own tax advisors regarding the requirements of filing such information returns
under these rules, including the requirement to file a IRS Form 8621 annually.
The Company will be a PFIC under
Section 1297 of the Code (a
PFIC
) if, for a tax year, (a) 75% or more
of the gross income of the Company for such tax year is passive income (the
income test
) or (b) 50% or more of the value of the Company's assets
either produce passive income or are held for the production of passive income
(the
asset test
), based on the quarterly average of the fair market
value of such assets.
Gross income
generally includes all sales
revenues less the cost of goods sold, plus income from investments and from
incidental or outside operations or sources, and passive income
generally includes, for example, dividends, interest, certain rents and
royalties, certain gains from the sale of stock and securities, and certain
gains from commodities transactions. In addition, for purposes of the PFIC
income test and asset test described above, if the Company owns, directly or
indirectly, 25% or more of the total value of the outstanding shares of another
corporation, the Company will be treated as if it (a) held a proportionate share
of the assets of such other corporation and (b) received directly a
proportionate share of the income of such other corporation.
S-33
Under certain attribution rules,
if the Company is a PFIC, U.S. Holders will be deemed to own their proportionate
share of any subsidiary of the Company which is also a PFIC (a
Subsidiary
PFIC
'), and will be subject to U.S. federal income tax on (i) a
distribution on the shares of a Subsidiary PFIC or (ii) a disposition of shares
of a Subsidiary PFIC, both as if the holder directly held the shares of such
Subsidiary PFIC.
If the Company were a PFIC in any
tax year and a U.S. Holder held Offered Units, Unit Shares, Warrants or Warrant
Shares, such holder generally would be subject to special rules under Section
1291 of the Code with respect to "excess distributions" made by the Company on
the Unit Shares, Warrants or Warrant Shares and with respect to gain from the
disposition of Offered Units, Unit Shares, Warrants or Warrant Shares. An
"excess distribution" generally is defined as the excess of distributions with
respect to the Unit Shares, Warrants or Warrant Shares received by a U.S Holder
in any tax year over 125% of the average annual distributions such U.S. Holder
has received from the Company during the shorter of the three preceding tax
years, or such U.S. Holder's holding period for the Unit Shares, Warrants or
Warrant Shares, as applicable. Generally, a U.S. Holder would be required to
allocate any excess distribution or gain from the disposition of the Offered
Units, Unit Shares, Warrants or Warrant Shares ratably over its holding period
for the Offered Units, Unit Shares, Warrants or Warrant Shares. Such amounts
allocated to the year of the disposition or excess distribution would be taxed
as ordinary income, and amounts allocated to prior tax years would be taxed as
ordinary income at the highest tax rate in effect for each such year and an
interest charge at a rate applicable to underpayments of tax would apply.
While there are U.S. federal
income tax elections that sometimes can be made to mitigate these adverse tax
consequences (including, without limitation, the
QEF Election
under
Section 1295 of the Code and the
Mark-to-Market Election
under Section
1296 of the Code), such elections are available in limited circumstances and
must be made in a timely manner. Under proposed Treasury Regulations, if a U.S.
Holder has an option, warrant, or other right to acquire stock of a PFIC (such
as the Warrants), such option, warrant or right is considered to be PFIC stock
subject to the default rules of Section 1291 of the Code that apply to excess
distributions and dispositions described above. However, under the proposed
Treasury Regulations, for the purposes of the PFIC rules, the holding period for
any Warrant Shares acquired upon the exercise of an Warrant will begin on the
date a U.S. Holder acquires the Offered Units (and not the date the Warrants are
exercised). This will impact the availability, and consequences, of the QEF
Election and Mark-to-Market Election with respect to the Warrant Shares. Thus, a
U.S. Holder will have to account for Warrant Shares and Unit Shares under the
PFIC rules and the applicable elections differently. In addition, a QEF Election
may not be made with respect to the Warrants and it is unclear whether the
Mark-to-Market Election may be made with respect to the Warrants. Such elections
may accelerate the recognition of taxable income and may result in the
recognition of ordinary income. U.S. Holders should consult their own tax
advisers regarding the potential application of the PFIC rules to the ownership
and disposition of Offered Units, Unit Shares, Warrants, and Warrant Shares, and
the availability of certain U.S. tax elections under the PFIC rules.
U.S. Holders should be aware
that, for each tax year, if any, that the Company is a PFIC, the Company provide
no assurances that it will satisfy the record keeping requirements of a PFIC, or
that it will make available to U.S. Holders the information such U.S. Holders
require to make a QEF Election with respect to the Company or any Subsidiary
PFIC. U.S. Holders should consult with their own tax advisors regarding the
potential application of the PFIC rules to the ownership and disposition of
Offered Units, Unit Shares, Warrants and Warrant Shares, and the availability of
certain U.S. tax elections under the PFIC rules.
Additional Tax Considerations
Receipt of Foreign Currency
S-34
The amount of any distribution
paid to a U.S. Holder in foreign currency or on the sale, exchange or other
taxable disposition of Unit Shares, Warrants or Warrant Shares generally will be
equal to the U.S. dollar value of such foreign currency based on the exchange
rate applicable on the date of actual or constructive receipt (regardless of
whether such foreign currency is converted into U.S. dollars at that time). If
the foreign currency received is not converted into U.S. dollars on the date of
receipt, a U.S. Holder will have a tax basis in the foreign currency equal to
its U.S. dollar value on the date of receipt. Any U.S. Holder who receives
payment in foreign currency and engages in a subsequent conversion or other
disposition of the foreign currency 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. Different rules
apply to U.S. Holders who use the accrual method of tax accounting. 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 foreign currency.
Foreign Tax Credit
Subject to the PFIC rules
discussed above, a U.S. Holder that pays (whether directly or through
withholding) Canadian income tax with respect to dividends paid on the Unit
Shares or Warrant Shares (or with respect to any deemed dividend on the
Warrants) generally will 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 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 foreign corporation (including constructive dividends) should be treated as
foreign source for this purpose, and gains recognized on the sale of stock of a
foreign 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 Unit Shares, Warrant Shares or Warrants 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 tax
advisor regarding the foreign tax credit rules.
Additional Tax on Passive Income
Certain U.S. Holders that are
individuals, estates or trusts (other than trusts that are exempt from tax) will
be subject to a 3.8% tax on all or a portion of their net investment income,
which includes dividends on the Unit Shares and Warrant Shares, and net gains
from the disposition of the Unit Shares, Warrants and Warrant Shares. Special
rules apply to PFICs. U.S. Holders that are individuals, estates or such trusts
should consult their own tax advisors regarding the applicability of this tax to
any of their income or gains in respect of the Unit Shares, Warrants and Warrant
Shares.
Information Reporting; Backup Withholding
Tax
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 foreign corporation. For example, U.S.
return disclosure obligations (and related penalties) are imposed on U.S.
Holders that hold certain specified foreign financial assets in excess of
certain threshold amounts. The definition of specified foreign financial assets
includes not only financial accounts maintained in foreign financial
institutions, but also, unless held in accounts maintained by a financial
institution, any stock or security issued by a non-U.S. person. U. S. Holders
may be subject to these reporting requirements unless their Unit Shares,
Warrants, and Warrant 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 their own tax advisors regarding the
requirements of filing information returns, including the requirement to file
IRS Form 8938.
S-35
Payments made within the United
States, or by a U.S. payor or U.S. middleman, of dividends on, and proceeds
arising from the sale or other taxable disposition of the Unit Shares, Warrants
and Warrant Shares generally may be subject to information reporting and backup
withholding tax, at the rate of 28%, if a U.S. Holder (a) fails to furnish its
correct U.S. taxpayer identification number (generally on 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 tax, or (d) fails to certify, under penalty of
perjury, that it 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 tax. However, certain exempt persons, such as U.S. Holders that are
corporations, generally are excluded from these information reporting and backup
withholding tax rules. Any amounts withheld under the U.S. backup withholding
tax 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 discussion of reporting
requirements set forth above is not intended to constitute a complete
description of all reporting requirements that may apply to a U.S. Holder. A
failure to satisfy certain reporting requirements may result in an extension of
the time period during which the IRS can assess a tax, and under certain
circumstances, such an extension may apply to assessments of amounts unrelated
to any unsatisfied reporting requirement. Each U.S. Holder should consult its
own tax advisors regarding the information reporting and backup withholding
rules.
THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE
ANALYSIS OF ALL TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH RESPECT TO
THE ACQUISITION, OWNERSHIP, AND DISPOSITION OF UNIT SHARES, WARRANTS AND WARRANT
SHARES. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX
CONSIDERATIONS APPLICABLE TO THEM IN THEIR OWN PARTICULAR CIRCUMSTANCES.
S-36
INTEREST OF EXPERTS
The Companys independent
auditors, KPMG LLP, have audited the consolidated financial statements of the
Company as at December 31, 2015 and December 31, 2014 and for each of the years
in the three-year period ended December 31, 2015. In connection with their
audit, KPMG LLP has confirmed that they are independent within the meaning of
the relevant rules and related interpretations prescribed by the relevant
professional bodies in Canada and any applicable legislation or regulation and
under all relevant U.S. professional and regulatory standards.
Each of the following Qualified
Persons, within the meaning of NI 43-101, have prepared a technical report for
the Company or a technical report for Uranerz which has been described in
documents incorporated by reference herein:
Douglas L.
Beahm P.E., P.G. of BRS Engineering prepared the technical report dated July 19,
2016 entitled Alta Mesa Uranium Project, Alta Mesa and Mesteña Grande Mineral
Resources and Exploration Target, Technical Report National Instrument 43-101;
Geoffrey S.
Carter of Broad Oak Associates prepared the technical report dated March 4, 2016
entitled Technical Report of Evaluation and Exploration Potential of the Roca
Honda Project, New Mexico, U.S.A.;
Allan Moran
and Frank A. Davies of SRK Consulting prepared the technical report dated March
10, 2015 entitled Technical Report on Resources Wate Uranium Braccia
Pipe-Northern Arizona, U.S.A.
Barton G.
Stone, C.P.G., Robert Michaud, Professional Engineer; Stuart E. Collins,
Professional Engineer; and Mark B. Mathisen, C.P.G. of Roscoe Postle Associates
(USA) Ltd. prepared the technical report dated February 27, 2015 entitled
Technical Report on the Roca Honda Project, McKinley County, New Mexico,
U.S.A.;
Richard L.
Nielsen, Certified Professional Geologist; Thomas C. Pool, Registered
Professional Engineer; Robert L. Sandefur, Certified Professional Engineer; and
Matthew P. Reilly, Professional Engineer of Chlumsky, Armbrust and Meyer LLC
prepared the technical report dated March 22, 2013 entitled Technical Report
Update of Gas Hills Uranium Project Fremont and Natrona Counties, Wyoming, USA;
Thomas C.
Pool, P.E. and David A. Ross, M. Sc., P. Geo. of Roscoe Postle Associates Inc.
prepared the technical report dated June 27, 2012 entitled Technical Report on
the Arizona Strip Uranium Project, Arizona, U.S.A.;
David A.
Ross, M.Sc., P.Geo. and Christopher Moreton, Ph.D., P.Geo., of Roscoe Postle
Associates Inc. prepared the technical report dated June 27, 2012 entitled
Technical Report on the EZ1 and EZ2 Breccia Pipes, Arizona Strip District,
U.S.A.;
William E.
Roscoe, Ph.D., P. Eng., Douglas H. Underhill, Ph.D., C.P.G., and Thomas C. Pool,
P.E. of Roscoe Postle Associates Inc. prepared the technical report dated June
27, 2012 entitled Technical Report on the Henry Mountains Complex Uranium
Property, Utah, U.S.A.;
Douglas C.
Peters, Certified Professional Geologist, of Peters Geosciences prepared: (i)
the technical report dated March 18, 2015 entitled Updated Technical Report on
Sage Plain Project (Including the Calliham Mine) San Juan County, Utah, U.S.A.;
(ii) the technical report dated March 15, 2011 entitled Updated Technical
Report on Energy Fuels Resources Corporations Whirlwind Property (Including
Whirlwind, Far West, and Crosswind Claim Groups and Utah State Metalliferous
Minerals Lease ML-49312), Mesa County, Colorado and Grand County, Utah; (iii)
the technical report dated July 18, 2012 entitled The Daneros Mine Project, San
Juan County, Utah, U.S.A; and (iv) the technical report dated March 25, 2014 entitled Technical Report on Energy Fuels
Inc.s La Sal District Project (including the Pandora, Beaver and Energy Queen
projects).;
S-37
Douglas L.
Beahm, P.E., P.G. Principal Engineer of BRS Engineering prepared (i) the
technical report dated April 13, 2012 entitled Sheep Mountain Uranium Project
Fremont County, Wyoming USA Updated Preliminary Feasibility Study National
Instrument 43-101 Technical Report, (ii) the technical report dated January 27,
2014 entitled "Juniper Ridge Uranium Project, Carbon County, Wyoming, USA,
Updated 43-101 Mineral Resource and Preliminary Economic Assessment Technical
Report and (iii) the technical report dated February 28, 2015 entitled Arkose
Uranium Project, Mineral Resource and Exploration Target, 43-101 Technical
Report;
Terrence P.
McNulty, P.E., D.Sc. prepared the technical report dated January 27, 2014
entitled "Juniper Ridge Uranium Project, Carbon County, Wyoming, USA, Updated
43-101 Mineral Resource and Preliminary Economic Assessment Technical Report.
Douglas L.
Beahm P.E., P.G. of BRS Engineering and Paul Goranson, P.E. of the Company
prepared the technical report dated February 28, 2015 entitled Nichols Ranch
Uranium Project, 43-101 Technical Report, Preliminary Economic Assessment;
Douglass H.
Graves, P.E of Trec, Inc. prepared (i) the technical report dated June 4, 2010
entitled Technical Report, North Rolling Pin Property, Campbell County,
Wyoming, U.S.A. and (ii) the technical report dated October 13, 2010 entitled
Technical Report, Reno Creek Property, Campbell County, Wyoming, U.S.A.; and
Douglass H.
Graves, P.E. of Trec, Inc. and Don R. Woody, P.G prepared the technical report
dated December 9, 2008 entitled Technical Report, West North Butte Satellite
Properties, Campbell County, Wyoming, U.S.A.
To the knowledge of the Companys
management, as of the date hereof, collectively, the above-named Qualified
Persons, beneficially own, directly or indirectly, less than one percent of the
Common Shares of the Company.
LEGAL MATTERS
Certain legal matters in
connection with the Offering will be passed on for the Company by Borden Ladner
Gervais LLP, Toronto, Ontario, as to Canadian legal matters and Dorsey &
Whitney LLP, Toronto, Ontario, as to U.S. legal matters. Certain legal matters
in connection with the Offering will be passed on for the Underwriters by
Stikeman Elliott LLP, Toronto, Ontario, as to Canadian legal matters, and Cooley
LLP, New York, New York, as to U.S. legal matters. At the date hereof, partners
and associates of each of Borden Ladner Gervais LLP, Dorsey & Whitney LLP,
Cooley LLP and Stikeman Elliott LLP
own beneficially, directly or
indirectly, less than one percent of the outstanding common shares of the
Company or any associate or affiliate of the Company.
AVAILABLE INFORMATION
The Company is a public company
and files annual, quarterly and special reports, proxy statements and other
information with Canadian securities regulatory authorities and the SEC. Any
information filed with the SEC can be read and copied at prescribed rates at the
SECs Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.
Information on the operation of the Public Reference Room may be obtained by
calling the SEC at 1-800-SEC-0330 or by accessing its website at www.sec.gov.
Some of the documents the Company files with or furnishes to the SEC are
electronically available from the SECs Electronic Data Gathering, Analysis and
Retrieval system, which is commonly known by the acronym EDGAR, and may be
accessed at www.sec.gov.
S-38
|
|
ENERGY FUELS INC.
$100,000,000
Common Shares
Warrants
Rights
Subscription Receipts
Preferred Shares
Debt Securities
Units
|
|
Energy Fuels Inc. may offer and sell, from time to
time, up to $100,000,000 aggregate initial offering price of the Companys
common shares, without par value (which we refer to as
Common
Shares
), preferred shares of the Company issuable in series (which we
refer to as
Preferred
Shares
), warrants to purchase Common Shares, warrants to purchase
Preferred Shares (which we refer to collectively as
Warrants
),
rights to purchase Common Shares or other securities of the Company (which
we refer to as
Rights
),
subscription receipts for Common Shares, Warrants, Preferred Shares or any
combination thereof (which we refer to as
Subscription
Receipts
)
, or
debt securities of the Company which may or may not be converted into
other securities (which we refer to as
Debt
Securities
), or units which consist of any combination of Common
Shares. Preferred Shares, Warrants, Rights, Subscription Receipts or Debt
Securities (which we refer to as
Units
),
in one or more transactions under this Prospectus (which we refer to as
the
Prospectus
). The
Company may also offer under this Prospectus any Common Shares issuable
upon the exercise of Warrants and any Common Shares or other securities of
the Company issuable upon the exercise of Rights and any Common Shares
issuable on conversion of Subscription Receipts, Preferred Shares or Debt
Securities. Collectively, the Common Shares, Warrants, Rights,
Subscription Receipts, Preferred Shares, Debt Securities, Common Shares
issuable upon exercise of the Warrants, Common Shares or other securities
of the Company issuable upon the exercise of Rights, Subscription
Receipts, Preferred Shares, and Debt Securities and Units are referred to
as the
Securities.
|
|
This Prospectus provides you with a general description
of the Securities that we may offer. Each time we offer Securities, we
will provide you with a prospectus supplement (which we refer to as the
Prospectus Supplement
) that describes specific information about
the particular Securities being offered and may add, update or change
information contained in this Prospectus. You should read both this
Prospectus and the Prospectus Supplement, together with any additional
information which is incorporated by reference into this Prospectus and
the Prospectus Supplement.
This Prospectus may not be used to offer or
sell securities without the Prospectus Supplement
which includes a
description of the method and terms of that offering.
|
|
We may sell the Securities on a continuous or delayed
basis to or through underwriters, dealers or agents or directly to
purchasers. The Prospectus Supplement, which we will provide to you each
time we offer Securities, will set forth the names of any underwriters,
dealers or agents involved in the sale of the Securities, and any
applicable fee, commission or discount arrangements with them. For
additional information on the methods of sale, you should refer to the
section entitled Plan of Distribution in this Prospectus.
|
|
The Common Shares are traded on the NYSE MKT LLC (which
we refer to as the
NYSE MKT
) under the symbol UUUU and on the
Toronto Stock Exchange (which we refer to as the
TSX
) under the
symbol EFI. On April 29, 2016, the last reported sale price of the
Common Shares on the NYSE MKT was $2.34 per Common Share and on the TSX
was Cdn$2.93 per Common Share.
There is currently no market through
which the
Securities, other than the Common Shares, may be sold,
and purchasers may not be able to resell the
Securities purchased under this
Prospectus. This may affect the pricing of the Securities, other than the Common
Shares, in the secondary market, the transparency and availability of trading
prices, the liquidity of these Securities and the extent of issuer regulation.
See Risk Factors.
|
|
Investing in the Securities involves
risks. See Risk Factors on page 5.
These Securities have not been
approved or disapproved by the U.S. Securities and Exchange Commission (which we
refer to as the SEC) or any state securities commission nor has the SEC or any
state securities commission passed upon the accuracy or adequacy of this
Prospectus. Any representation to the contrary is a criminal offense.
|
THE DATE OF THIS PROSPECTUS
IS
, 2016.
|
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
This Prospectus is a part of a registration statement that we
have filed with the SEC utilizing a shelf registration process. Under this
shelf registration process, we may sell any combination of the Securities
described in this Prospectus in one or more offerings up to a total dollar
amount of initial aggregate offering price of $100,000,000. This Prospectus
provides you with a general description of the Securities that we may offer. The
specific terms of the Securities in respect of which this Prospectus is being
delivered will be set forth in a Prospectus Supplement and may include, where
applicable: (i) in the case of Common Shares, the number of Common Shares
offered, the offering price and any other specific terms of the offering; (ii)
in the case of Warrants, the designation, number and terms of the Common Shares
or Preferred Shares purchasable upon exercise of the Warrants, any procedures
that will result in the adjustment of those numbers, the exercise price, dates
and periods of exercise, and the currency or the currency unit in which the
exercise price must be paid and any other specific terms; (iii) in the case of
Rights, the designation, number and terms of the Common Shares or other
securities of the Company purchasable upon exercise of the Rights, any
procedures that will result in the adjustment of these numbers, the date of
determining the shareholders entitled to the Rights distribution, the exercise
price, the dates and periods of exercise, the currency in which the Rights are
issued and any other terms specific to the Rights being offered; (iv) in the
case of Subscription Receipts, the designation, number and terms of the Common
Shares, Preferred Shares or Warrants receivable upon satisfaction of certain
release conditions, any procedures that will result in the adjustment of those
numbers, any additional payments to be made to holders of Subscription Receipts
upon satisfaction of the release conditions, the terms of the release
conditions, terms governing the escrow of all or a portion of the gross proceeds
from the sale of the Subscription Receipts, terms for the refund of all or a
portion of the purchase price for Subscription Receipts in the event the release
conditions are not met and any other specific terms; (v) in the case of
Preferred Shares, the rights, privileges, restrictions and conditions assigned
to the particular series upon the board of directors of the Company approving
their issuance, subject to the Companys articles of incorporation; (vi) in the
case of the Debt Securities, terms of any debt securities and any related
agreements or indentures; and (vii) in the case of Units, the designation,
number and terms of the Securities comprising the Units; A Prospectus Supplement
may include specific variable terms pertaining to the Securities that are not
within the alternatives and parameters set forth in this Prospectus.
In connection with any offering of the Securities (unless
otherwise specified in a Prospectus Supplement), the underwriters or agents may
over-allot or effect transactions which stabilize or maintain the market price
of the Securities offered at a higher level than that which might exist in the
open market. Such transactions, if commenced, may be interrupted or discontinued
at any time. See Plan of Distribution.
Please carefully read both this Prospectus and any Prospectus
Supplement together with the documents incorporated herein and therein by
reference under Documents Incorporated by Reference, any free writing
prospectus and the additional information described below under Where You Can
Find More Information.
Owning securities may subject you to tax consequences both
in Canada and the United States. This Prospectus or any applicable Prospectus
Supplement may not describe these tax consequences fully. You should read the
tax discussion in any Prospectus Supplement with respect to a particular
offering and consult your own tax advisor with respect to your own particular
circumstances.
References in this Prospectus to $ are to United States
dollars. Canadian dollars are indicated by the symbol Cdn$.
You should rely only on the information contained in this
Prospectus. We have not authorized anyone to provide you with information
different from that contained in this Prospectus. The distribution or possession
of this Prospectus in or from certain jurisdictions may be restricted by law.
This Prospectus is not an offer to sell these Securities and is not soliciting
an offer to buy these Securities in any jurisdiction where the offer or sale is
not permitted or where the person making the offer or sale is not qualified to
do so or to any person to whom it is not permitted to make such offer or sale.
The information contained in this Prospectus is accurate only as of the date of
this Prospectus, regardless of the time of delivery of this Prospectus or of any
sale of the Securities. Our business, financial condition, results of operations
and prospects may have changed since that date.
In this Prospectus and in any Prospectus Supplement, unless the
context otherwise requires, references to Energy Fuels Company, we, us,
Registrant, our refer to Energy Fuels Inc., either alone or together with
its subsidiaries as the context requires.
1
SUMMARY
The Company
Energy Fuels is engaged in conventional extraction and
in
situ
recovery (
ISR
) of uranium, along with the exploration,
permitting, and evaluation of uranium properties in the United States. Energy
Fuels owns the Nichols Ranch uranium recovery facility in Wyoming (the
Nichols Ranch Project
), which is one of the newest ISR uranium recovery
facilities operating in the United States. In addition, Energy Fuels owns the
White Mesa Mill in Utah (the
White Mesa Mill
), which is the only
conventional uranium recovery facility operating in the United States. The
Company also owns uranium and uranium/vanadium properties and projects in
various stages of exploration, permitting, and evaluation, as well as
fully-permitted uranium and uranium/vanadium projects on standby. The White Mesa
Mill can also recover vanadium as a co-product of mineralized material produced
from certain of its projects in Colorado and Utah. In addition, Energy Fuels
recovers uranium from other uranium-bearing materials not derived from
conventional material, referred to as alternate feed materials, at its White
Mesa Mill.
The registered and head office of Energy Fuels is located at 80
Richmond Street West, Victory Building, 18
th
Floor, Toronto, Ontario,
M5H 2A4, Canada. Energy Fuels conducts its business and owns its assets in the
United States through its U.S. subsidiaries, which have their principal place of
business and corporate office at 225 Union Blvd., Suite 600, Lakewood, Colorado
80228, USA. Energy Fuels website address is www.energyfuels.com.
Recent Developments
On April 15, 2016, the Company announced the appointment of Mr. Mark Chalmers as Chief Operating Officer of the Company. Mr. Chalmers will join the Company’s management team in July 2016 and oversee all of the Company’s conventional and ISR uranium production operations. From 2011 to 2015, Mr. Chalmers served as Executive General Manager of Production for Paladin Energy Ltd., a uranium producer with assets in Australia and Africa, including the Langer Heinrich and Kayelekera mines, where he oversaw sustained, significant increases in production while reducing operating costs. He also possesses extensive experience in ISR uranium production, including management of the Beverley Uranium Mine owned by General Atomics (Australia), and the Highland mine owned by Cameco Corporation (USA). Mr. Chalmers has also consulted to several of the largest players in the uranium supply sector, including BHP Billiton, Rio Tinto, and Marubeni, and currently serves as the Chair of the Australian Uranium Council, a position he has held since 2007. Mr. Chalmers represents a valuable addition to our management team and an important element in our overall management continuity and succession planning strategy.
The Securities Offered under this Prospectus
We may offer the Common Shares, Warrants, Rights, Subscription
Receipts, Preferred Shares, Debt Securities or Units with a total value of up to
$100,000,000 from time to time under this Prospectus, together with any
applicable Prospectus Supplement and related free writing prospectus, if any, at
prices and on terms to be determined by market conditions at the time of
offering. This Prospectus provides you with a general description of the
Securities we may offer. Each time we offer Securities, we will provide a
Prospectus Supplement that will describe the specific amounts, prices and other
important terms of the Securities, including, to the extent applicable:
-
aggregate offering price;
-
the designation, number and terms of the Common Shares purchasable upon
exercise of the Warrants, any procedures that will result in the adjustment of
those numbers, the exercise price, dates and periods of exercise, and the
currency or the currency unit in which the exercise price must be paid and any
other specific terms;
-
the record date for shareholders entitled to receive the Rights, the
designation, number and terms of the Common Shares or other securities
purchasable upon exercise of the Rights, any procedures that will result in
the adjustment of those numbers, the exercise price, dates and periods of
exercise, and the currency or the currency unit in which the exercise price
must be paid and any other specific terms;
-
rates and times of payment of interest or dividends, if any;
-
redemption, conversion, exchange or sinking funds terms, if any;
-
rank and security, if any;
-
conversion or exchange prices or rates, if any, and if applicable, any
provision for changes or adjustment in the conversion or exchange prices or
rates in the securities or other property receivable upon conversion or
exchange;
-
restrictive covenants, if any;
2
-
voting or other rights, if any; and
-
important United States and Canadian federal income tax considerations.
A Prospectus Supplement and any related free writing prospectus
that we may authorize to be provided to you may also add, update or change
information contained in this Prospectus or in documents we have incorporated by
reference. However, no Prospectus Supplement or free writing prospectus will
offer a security that is not registered and described in this Prospectus at the
time of the effectiveness of the registration statement of which this Prospectus
is a part.
We may sell the Securities on a continuous or delayed basis to
or through underwriters, dealers or agents or directly to purchasers. The
Prospectus Supplement, which we will provide to you each time we offer
Securities, will set forth the names of any underwriters, dealers or agents
involved in the sale of the Securities, and any applicable fee, commission or
discount arrangements with them.
Common Shares
We may offer Common Shares. Holders of Common Shares are
entitled to one vote per Common Share on all matters that require shareholder
approval.
Our Common Shares are described in greater detail in this
Prospectus under Description of Common Shares.
Warrants
We may offer Warrants for the purchase of Common Shares or
Preferred Shares, in one or more series, from time to time. We may issue
Warrants independently or together with Common Shares or Preferred Shares and
the Warrants may be attached to or separate from such securities.
The Warrants will be evidenced by warrant certificates and may
be issued under one or more warrant indentures, which are contracts between us
and a warrant trustee for the holders of the Warrants. In this Prospectus, we
have summarized certain general features of the Warrants under Description of
Warrants. We urge you, however, to read any Prospectus Supplement and any free
writing prospectus that we may authorize to be provided to you related to the
series of Warrants being offered, as well as the complete warrant indentures, if
applicable, and warrant certificates that contain the terms of the Warrants. If
applicable, specific warrant indentures will contain additional important terms
and provisions and will be filed as exhibits to the registration statement of
which this Prospectus is a part, or incorporated by reference from a current
report on Form 8-K that we file with the SEC.
Rights
We may offer Rights to our existing shareholders to purchase
additional Common Shares, preferred shares or other securities of the Company.
For any particular Rights, the applicable Prospectus Supplement will describe
the terms of such rights and rights agreement including the period during which
such Rights may be exercised, the manner of exercising such Rights, the
transferability of such Rights and the number of Common Shares or other
securities that may be purchased in connection with each right and the
subscription price for the purchase of such Common Shares or other securities.
In connection with a rights offering, we may enter into a separate agreement
with one or more underwriters or standby purchasers to purchase any securities
not subscribed for in the rights offering by existing shareholders, which will
be described in the applicable Prospectus Supplement. Each series of rights will
be issued under a separate rights agreement to be entered into between us and a
bank, trust company or transfer agent, as rights agent.
In this Prospectus, we have summarized certain general features
of the Rights under Description of Rights. We urge you, however, to read any
Prospectus Supplement and any free writing prospectus that we may authorize to
be provided to you related to the Rights being offered, as well as the complete
Rights certificates that contain the terms of the Rights. We may evidence each
series of rights by rights certificates that we may issue under a separate
rights agreement with a rights agent. If applicable, we will file as exhibits to
the registration statement of which this Prospectus is a part, or will
incorporate by reference from a current report on Form 8-K that we file with the
SEC, the rights agreements that describe the terms of the series of Rights we
are offering before the issuance of the related series of Rights.
Subscription Receipts
We may issue Subscription Receipts, which will entitle holders
to receive upon satisfaction of certain release conditions and for no additional
consideration, Common Shares, Preferred Shares, Warrants or other securities of
the Company or any combination thereof. Subscription Receipts will be issued
pursuant to one or more subscription receipt agreements, each to be entered into
between us and an escrow agent, which will establish the terms and conditions of
the Subscription Receipts. Each escrow agent will be a financial institution
organized under the laws of the United States or any state thereof or Canada or
any province thereof and authorized to carry on business as a
trustee. A copy of the form of subscription receipt agreement will be filed as
an exhibit to the registration statement of which this Prospectus is a part, or
will be incorporated by reference from a Current Report on Form 8-K that we file
with the SEC.
3
Preferred Shares
We may offer Preferred Shares. The Preferred Shares issuable in
series will have the rights, privileges, restrictions and conditions assigned to
the particular series upon the board of directors of the Company approving their
issuance, subject to the Companys articles of incorporation. We currently have
authorized an unlimited number of Series A Preferred Shares which are
non-redeemable, non-callable, non-voting and do not have a right to dividends.
The terms of any preferred shares offered under this Prospectus and any related
agreements will be described in the Prospectus Supplement filed in respect of
the issuance of such preferred shares.
Debt Securities
We may offer secured or unsecured Debt Securities under this Prospectus. The terms
of any Debt Securities and any related agreements or indentures will be
described in a Prospectus Supplement to be filed in respect of such offering.
Units
We may offer Units consisting of Common Shares, Warrants,
Preferred Shares, Rights, Subscription Receipts and Debt Securities in any
combination. In this Prospectus, we have summarized certain general features of
the Units under Description of Units. We urge you, however, to read any
Prospectus Supplement and any free writing prospectus that we may authorize to
be provided to you related to the series of Units being offered. We may evidence
each series of Units by unit certificates that we may issue under a separate
unit agreement with a unit agent. If applicable, we will file as exhibits to the
registration statement of which this Prospectus is a part, or will incorporate
by reference from a current report on Form 8-K that we file with the SEC, the
unit agreements that describe the terms of the series of Units we are offering
before the issuance of the related series of Units.
Risk Factors
See
Risk Factors,
as well as other information
included in this prospectus, for a discussion of factors you should read and
consider carefully before investing in our securities
THIS PROSPECTUS MAY NOT BE USED TO OFFER OR SELL ANY
SECURITIES UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
4
RISK FACTORS
Investing in the Securities involves a high degree of risk.
Prospective investors in a particular offering of Securities should carefully
consider the following risks, as well as the other information contained in this
Prospectus, any applicable Prospectus Supplement, and the documents incorporated
by reference herein before investing in the Securities. If any of the following
risks actually occurs, our business could be materially harmed. Additional
risks, including those of which we are currently unaware or that we deem
immaterial, may also adversely affect our business. You should also read and
carefully consider the risk factors incorporated by reference to our Annual
Report on Form 10-K for the fiscal year ended December 31, 2015, as amended, and
the other information contained in this Prospectus, as updated by our subsequent
filings under the Securities Exchange Act of 1934, as amended and the risk
factors and other information contained in any applicable Prospectus Supplement,
before purchasing any of our Securities.
You may experience future dilution as a result of future
equity offerings.
In order to raise additional capital, we may in the future
offer additional Common Shares or other securities convertible into or
exchangeable for Common Shares at prices that may not be the same as the price
per share paid by any investor in an offering in a subsequent Prospectus
Supplement. We may sell shares or other securities in any other offering at a
price per share that is less than the price per share paid by any investor in an
offering in a subsequent Prospectus Supplement, and investors purchasing shares
or other securities in the future could have rights superior to you. The price
per share at which we sell additional Common Shares or securities convertible or
exchangeable into Common Shares, in future transactions may be higher or lower
than the price per share paid by any investor in an offering under a subsequent
Prospectus Supplement.
Future offerings of debt or preferred equity securities,
which would rank senior to our Common Shares, may adversely affect the market
price of our common shares.
If, in the future, we decide to issue debt or preferred equity
securities that may rank senior to our Common Shares, it is likely that such
securities will be governed by an indenture or other instrument containing
covenants restricting our operating flexibility. Any convertible or exchangeable
securities that we issue in the future may have rights, preferences and
privileges more favorable than those of our Common Shares and may result in
dilution to owners of our Common Shares. We and, indirectly, our shareholders,
will bear the cost of issuing and servicing such securities. Because our
decision to issue debt or equity securities in any future offering will depend
on market conditions and other factors beyond our control, we cannot predict or
estimate the amount, timing or nature of our future offerings. Thus, holders of
our common shares will bear the risk of our future offerings reducing the market
price of our Common Shares and diluting the value of their stock holdings in us.
There can be no assurance as to the liquidity of the
trading market for certain Securities or that a trading market for certain
Securities will develop.
There is no public market for the Warrants, Preferred Shares,
Rights, Subscription Receipts or Debt Securities and, unless otherwise specified
in the applicable Prospectus Supplement, the Company does not intend to apply
for listing of these securities on any securities exchange. If these securities
are traded after their initial issue, they may trade at a discount from their
initial offering prices depending on the market for similar securities,
prevailing interest rates and other factors, including general economic
conditions and the Companys financial condition. There can be no assurance as
to the liquidity of the trading market for any Warrants, Preferred Shares,
Rights, Subscription Receipts or Debt Securities or that a trading market for
these securities will develop.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus and the documents incorporated by reference
herein contain forward-looking statements within the meaning of applicable US
and Canadian securities laws. Such forward-looking statements concern the
Companys anticipated results and progress of the Companys operations in future
periods, planned exploration, and, if warranted, development of its properties,
plans related to its business, and other matters that may occur in the future.
These statements relate to analyses and other information that are based on
forecasts of future results, estimates of amounts not yet determinable and
assumptions of management.
5
Any statements that express or involve discussions with respect
to predictions, expectations, beliefs, plans, projections, objectives,
schedules, assumptions, future events, or performance (often, but not always,
using words or phrases such as expects or does not expect, is expected,
anticipates or does not anticipate, plans, estimates or intends, or
stating that certain actions, events or results may, could, would, might
or will be taken, occur or be achieved) are not statements of historical fact
and may be forward-looking statements.
Forward-looking statements are based on the opinions and
estimates of management as of the date such statements are made. Energy Fuels
believes that the expectations reflected in this forward-looking information are
reasonable, but no assurance can be given that these expectations will prove to
be correct, and such forward-looking information included in, or incorporated by
reference into, this Prospectus should not be unduly relied upon. This
information speaks only as of the date of this Prospectus or as of the date of
the document incorporated by reference herein.
Readers are cautioned that it would be unreasonable to rely on
any such forward-looking statements and information as creating any legal
rights, and that the statements and information are not guarantees and may
involve known and unknown risks, and that actual results are likely to differ
(and may differ materially) and objectives and strategies may differ or change
from those expressed or implied in the forward-looking statements or information
as a result of various factors. Such risks include risks generally encountered
in the exploration, development, operation, and closure of mineral properties
and processing facilities. Forward-looking statements are subject to a variety
of known and unknown risks and other factors which could cause actual events or
results to differ from those expressed or implied by the forward-looking
statements, including, without limitation:
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risks associated with mineral reserve and resource
estimates, including the risk of errors in assumptions or methodologies;
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risks associated with estimating mineral extraction and
recovery, forecasting future price levels necessary to support mineral
extraction and recovery, and the Companys ability to increase mineral
extraction and recovery in response to any increases in commodity prices
or other market conditions;
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risks related to liabilities inherent to conventional
mineral extraction and recovery and/or ISR uranium operations;
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geological, technical and processing problems, including
unanticipated metallurgical difficulties, less than expected recoveries,
ground control problems, process upsets, and equipment malfunctions;
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risks associated with labor costs, labor disturbances,
and unavailability of skilled labor;
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risks associated with the availability and/or
fluctuations in the costs of raw materials and consumables used in the
Companys production processes;
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risks associated with environmental compliance and
permitting, including those created by changes in environmental
legislation and regulation, and delays in obtaining permits and licenses
that could impact expected mineral extraction and recovery levels and
costs;
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actions taken by regulatory authorities with respect to
mineral extraction and recovery activities;
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risks associated with the Companys dependence on third
parties in the provision of transportation and other critical services or
goods;
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risks associated with the ability of the Company to
negotiate access rights on certain properties on favorable terms or at
all;
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risks associated with the ability of the Company to
extend or renew land tenure, including mineral leases and surface use
agreements, on favorable terms or at all;
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the adequacy of insurance coverage;
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risks related to reclamation and decommissioning
liabilities;
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the ability of the Companys bonding companies to require
increases in the collateral required to secure reclamation obligations;
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the potential for, and outcome of, litigation and other
legal proceedings, including potential injunctions pending the outcome of
such litigation and proceedings;
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the ability of the Company to meet its obligations to its
creditors;
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risks associated with paying off indebtedness at its
maturity;
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risks associated with the Companys relationships with
its business and joint venture partners;
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failure to obtain industry partner, government, and other
third party consents and approvals, when required;
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competition for, among other things, capital, mineral
properties, and skilled personnel;
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failure to complete proposed acquisitions and incorrect
assessments of the value of completed acquisitions;
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risks posed by fluctuations in share price levels,
exchange rates and interest rates, and general economic conditions;
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risks inherent in the Companys and industry analysts
forecasts or predictions of future uranium and vanadium price levels;
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6
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fluctuations in the market prices
of uranium and vanadium, which are cyclical and subject to substantial
price fluctuations;
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failure to obtain suitable
uranium sales terms, including spot and term sale contracts;
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risks associated with asset
impairment as a result of market conditions;
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risks associated with lack of
access to markets and the ability to access capital;
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the market price of Energy Fuels
securities;
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public resistance to nuclear
energy or uranium extraction and recovery;
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uranium industry competition and
international trade restrictions;
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risks related to higher than
expected costs related to our Nichols Ranch Project and Canyon Project;
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risks related to securities
regulations;
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risks related to stock price and
volume volatility;
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risks related to our ability to
maintain our listing on the NYSE MKT and/or TSX;
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risks related to our ability to
maintain our inclusion in various stock indices;
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risks related to dilution of
currently outstanding shares;
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risks related to our lack of
dividends;
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risks related to recent market
events;
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risks related to our issuance of
additional Common Shares or other securities;
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risks related to acquisition and
integration issues;
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risks related to defects in title
to our mineral properties;
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risks related to our outstanding
debt; and
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risks related to our securities.
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This list is not exhaustive of the factors that may affect our
forward-looking statements. Some of the important risks that could affect
forward-looking statements are described further in the documents incorporated
by reference into this Prospectus. Although we have attempted to identify
important factors that could cause actual results to differ materially from
those described in forward-looking statements, there may be other factors that
cause results not to be as anticipated, estimated or intended. Should one or
more of these risks materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated, believed,
estimated, or expected. We caution readers not to place undue reliance on any
such forward-looking statements, which speak only as of the date made. Except as
required by law, we disclaim any obligation to subsequently revise any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events. Statements relating to mineral reserves or mineral resources are
deemed to be forward-looking information, as they involve the implied
assessment, based on certain estimates and assumptions that the mineral reserves
and mineral resources described may be profitably extracted in the future.
We qualify all the forward-looking statements contained in
this Prospectus by the foregoing cautionary statements
.
CAUTIONARY NOTE TO UNITED STATES INVESTORS CONCERNING
DISCLOSURE OF MINERAL RESOURCES
This Prospectus contains or incorporates by reference certain
disclosure that has been prepared in accordance with the requirements of
Canadian securities laws, which differ from the requirements of the United
States securities laws. Unless otherwise indicated, all reserve and resource
estimates included in this Prospectus and in the documents incorporated by
reference herein, have been prepared in accordance with Canadian National
Instrument 43-101 -
Standards of Disclosure for Mineral Projects
(
NI
43-101
) and the Canadian Institute of Mining, Metallurgy and Petroleum
(
CIM
) classification system. NI 43-101 is a rule developed by the
Canadian Securities Administrators (the
CSA
) which establishes
standards for all public disclosure an issuer makes of scientific and technical
information concerning mineral projects.
Canadian standards, including NI 43-101, differ significantly
from the requirements of the SEC. Reserve and resource information contained
herein, or incorporated by reference in this Prospectus, and in the documents
incorporated by reference herein, may not be comparable to similar information
disclosed by companies reporting under only United States standards. In
particular, and without limiting the generality of the foregoing, the term
resource does not equate to the term reserve under SEC Industry Guide 7.
Under United States standards, mineralization may not be classified as a
reserve unless the determination has been made that the mineralization could
be economically and legally produced or extracted at the time the reserve
determination is made. Under SEC Industry Guide 7 standards, a final or
bankable feasibility study is required to report reserves; the three-year historical average price, to the extent possible, is used in
any reserve or cash flow analysis to designate reserves; and the primary
environmental analysis or report must be filed with the appropriate governmental
authority.
7
The SECs disclosure standards under Industry Guide 7 normally
do not permit the inclusion of information concerning measured mineral
resources, indicated mineral resources or inferred mineral resources or
other descriptions of the amount of mineralization in mineral deposits that do
not constitute reserves by United States standards in documents filed with the
SEC. United States investors should also understand that inferred mineral
resources have a great amount of uncertainty as to their existence and as to
their economic and legal feasibility. It cannot be assumed that all or any part
of an inferred mineral resource will ever be upgraded to a higher category.
Under Canadian rules, estimated inferred mineral resources may not form the
basis of feasibility or prefeasibility studies.
United States investors are
cautioned not to assume that all or any part of measured or indicated mineral
resources will ever be converted into mineral reserves. Investors are cautioned
not to assume that all or any part of an inferred mineral resource exists or
is economically or legally mineable.
Disclosure of contained pounds or contained ounces in a
resource estimate is permitted disclosure under Canadian regulations; however,
the SEC normally only permits issuers to report mineralization that does not
constitute reserves by SEC standards as in-place tonnage and grade without
reference to unit measures. The requirements of NI 43-101 for identification of
reserves are also not the same as those of the SEC, and reserves reported by
the Company in compliance with NI 43-101 may not qualify as reserves under SEC
Industry Guide 7 standards. Accordingly, information concerning mineral deposits
set forth herein may not be comparable to information made public by companies
that report in accordance with United States standards.
As a company incorporated in Canada, unless otherwise
indicated, we estimate and report our resources and our current reserves
according to the definitions set forth in NI 43-101.
8
DOCUMENTS INCORPORATED BY REFERENCE
We incorporate by reference the documents listed below and
future filings we make with the SEC pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended (which we refer to as
the
Exchange Ac
t) (excluding, unless otherwise provided therein or
herein, information furnished pursuant to Item 2.02, Item 7.01 and certain
exhibits furnished pursuant to Item 9.01 of our Current Reports on Form 8-K,
which are deemed to be furnished and not filed and therefore not incorporated by
reference herein, unless specifically stated otherwise in such filings, after
the date of the initial filing of this registration statement on Form S-3 to
which this Prospectus relates until the termination of the offering under this
Prospectus.) Any statement contained in a document incorporated by reference in
this Prospectus shall be modified or superseded for purposes of this Prospectus
to the extent that a statement contained in this Prospectus, any related free
writing prospectus or in any other subsequently filed document which is
incorporated by reference modifies or supersedes such statement.
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a.
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our Annual Report on Form 10-K, for the year ended
December 31, 2015, as filed with the SEC on March 15, 2016;
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b.
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our proxy statement on Schedule 14A, dated March 24,
2016, in connection with our May 18, 2016 annual meeting of
shareholders;
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c.
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our Current Reports on Form 8-K filed with the SEC on
January 26, 2016, February 1, 2016, March 8, 2016, March 10, 2016, March
14, 2016, and April 20, 2016; and
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d.
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the description of our Common Shares contained in our
registration statement on Form 40-F filed on November 15, 2013, including
any amendment or report filed for purposes of updating such
description.
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Copies of the documents incorporated by reference in this
Prospectus may be obtained on written or oral request without charge from our
Investor Relations Department at 225 Union Blvd., Suite 600, Lakewood, Colorado,
80228 (telephone: (303) 974-2140).
We also maintain a web site at http://www.energyfuels.com
through which you can obtain copies of documents that we have filed with the
SEC. The contents of that site are not incorporated by reference into or
otherwise a part of this prospectus.
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERENCE
DIVIDENDS
The following table sets forth our consolidated ratio of
earnings to combined fixed charges and preference dividends for the periods
indicated.
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Fiscal Year Ended December 31,
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2011
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2012
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2013
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2014
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2015
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Ratio of Earnings to Combined Fixed
Charges and Preference Dividends(1)
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(3,655.5
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)
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22.9
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(23.9
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)
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(50.3
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)
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(39.5
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)
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(1)
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The ratio of earnings to combined fixed charges and
preference dividends represents the number of times that fixed charges and
preference dividends are covered by earnings. Earnings consist of income
or loss from continuing operations before income taxes and fixed charges,
excluding preference dividends. Fixed charges consist of interest expensed
and capitalized under capital leases, estimated interest expense within
rental expense, and preference dividends. In the years ended December 31,
2015, 2014, 2013, and 2011, earnings were insufficient to cover fixed
charges by $80.32 million, $84.95 million, $35.12 million and $57.34
million, respectively.
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As of the date of this prospectus, we have no Preferred Shares outstanding. Consequently, our ratio of earnings to combined
fixed charges and Preferred Share dividends and ratio of earnings to fixed
charges would be identical.
9
USE OF PROCEEDS
Unless otherwise indicated in the applicable Prospectus
Supplement, the net proceeds from the sale of Securities will be used by us for
acquisitions, the exploration and development, as warranted, of existing or
acquired mineral properties, working capital requirements or for other general
corporate purposes.
More detailed information regarding the use of proceeds
from the sale of Securities will be described in the applicable Prospectus
Supplement.
We may, from time to time, issue Common Shares or other
securities otherwise than through the offering of Securities pursuant to this
Prospectus.
DESCRIPTION OF COMMON SHARES
We are authorized to issue an unlimited number of Common Shares, without par value, of which 51,890,745 are issued and outstanding as at the date of this Prospectus. As of the date of this Prospectus, there are (a) options outstanding to purchase up to 2,420,307 Common Shares at exercise prices ranging from $2.12 to $15.61 and (b) restricted stock units redeemable for 1,075,779 Common Shares and (c) 4,547,598 warrants outstanding to purchase Common Shares at exercise prices ranging from $3.20 to $10.56. Options and warrants which were granted and are reported in Canadian dollars were translated into US dollars at the April
29, 2016 foreign exchange rate of Cdn$1 = $0.7969 US dollar.
In addition, on July 24, 2012, the Company issued Cdn$22,000,000 aggregate principal amount of convertible debentures (the
“Debentures”
). The Debentures will mature on June 30, 2017 and may be converted into Common Shares of the Company at the option of the holder at a conversion price, subject to certain adjustments, of Cdn$15.00 per share at any time prior to redemption or maturity. As of April 14, 2016, up to 1,466,667 Common Shares are issuable upon conversion of the Debentures. At maturity, the Debentures may be retired either through the payment of cash or, at the option of the Company, the issuance of Common Shares. If retired through the issuance of Common Shares, the number of Common Shares will be obtained by dividing the principal amount of the Debentures by 95% of the volume weighted average trading price of the Common Shares on the TSX over the 20 consecutive trading days ending five days prior to maturity.
Holders of Common Shares are entitled to one vote per Common
Share at all meetings of shareholders. The holders of Common Shares are also
entitled to receive dividends as and when declared by our Board of Directors and
to receive a
pro rata
share of the assets of the Company available for
distribution to the holders of Common Shares in the event of the liquidation,
dissolution or winding-up of the Company. There are no pre-emptive, conversion
or redemption rights attached to the Common Shares.
DESCRIPTION OF WARRANTS
The following description, together with the additional
information we may include in any applicable Prospectus Supplements and free
writing prospectuses, summarizes the material terms and provisions of the
Warrants that we may offer under this Prospectus, which will consist of Warrants
to purchase Common Shares or Preferred Shares and may be issued in one or more
series. Warrants may be offered independently or together with Common Shares or
Preferred Shares, Rights or any combination thereof, and may be attached to or
separate from those Securities. While the terms we have summarized below will
apply generally to any Warrants that we may offer under this Prospectus, we will
describe the particular terms of any series of Warrants that we may offer in
more detail in the applicable Prospectus Supplement and any applicable free
writing prospectus. The terms of any Warrants offered under a Prospectus
Supplement may differ from the terms described below.
General
Warrants may be issued under and governed by the terms of one
or more warrant indentures (each of which we refer to as a
Warrant
Indenture
) between us and a warrant trustee (which we refer to as the
Warrant Trustee
) that we will name in the relevant Prospectus
Supplement, if applicable. Each Warrant Trustee will be a financial institution
organized under the laws of Canada, the United States, or any province or state
thereof, and authorized to carry on business as a trustee.
This summary of some of the provisions of the Warrants is not
complete. The statements made in this Prospectus relating to any Warrant
Indenture and Warrants to be issued under this Prospectus are summaries of
certain anticipated provisions thereof and do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all provisions
of the Warrant Indenture, if any, and the Warrant certificate. Prospective
investors should refer to the Warrant Indenture, if any, and the Warrant
certificate relating to the specific Warrants being offered for the complete
terms of the Warrants. If applicable, we will file as exhibits to the
registration statement of which this Prospectus is a part, or will incorporate
by reference from a Current Report on Form 8-K that we file with the SEC, any Warrant Indenture describing the terms and
conditions of Warrants we are offering before the issuance of such Warrants.
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The applicable Prospectus Supplement relating to any Warrants
offered by us will describe the particular terms of those Warrants and include
specific terms relating to the offering. This description will include, where
applicable:
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the designation and aggregate number of Warrants;
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the price at which the Warrants will be offered;
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the currency or currencies in which the Warrants will be offered;
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the date on which the right to exercise the Warrants will commence and the
date on which the right will expire;
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the number of Common Shares or Preferred Shares that may be purchased upon
exercise of each Warrant and the price at which and currency or currencies in
which the Common Shares or Preferred Shares may be purchased upon exercise of
each Warrant;
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the designation and terms of any Securities with which the Warrants will
be offered, if any, and the number of the Warrants that will be offered with
each Security;
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the date or dates, if any, on or after which the Warrants and the other
Securities with which the Warrants will be offered will be transferable
separately;
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whether the Warrants will be subject to redemption and, if so, the terms
of such redemption provisions;
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whether we will issue the Warrants as global securities and, if so, the
identity of the depositary of the global securities;
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whether the Warrants will be listed on any exchange;
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material United States and Canadian federal income tax consequences of
acquiring, owning, exercising and disposing of the Warrants; and
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any other material terms or conditions of the Warrants.
Rights of Holders Prior to Exercise
Prior to the exercise of their Warrants, holders of Warrants
will not have any of the rights of holders of the Common Shares or Preferred
Shares issuable upon exercise of the Warrants.
Exercise of Warrants
Each Warrant will entitle the holder to purchase the Common
Shares or Preferred Shares that we specify in the applicable Prospectus
Supplement at the exercise price that we describe therein. Unless we otherwise
specify in the applicable Prospectus Supplement, holders of the Warrants may
exercise the Warrants at any time up to the specified time on the expiration
date that we set forth in the applicable Prospectus Supplement. After the close
of business on the expiration date, unexercised Warrants will become void.
Holders of the Warrants may exercise the Warrants by delivering
the Warrant certificate representing the Warrants to be exercised together with
specified information, and paying the required amount to the Warrant Trustee, if
any, or to us, as applicable, in immediately available funds, as provided in the
applicable Prospectus Supplement. We will set forth on the Warrant certificate
and in the applicable Prospectus Supplement the information that the holder of
the Warrant will be required to deliver to the Warrant Trustee, if any, or to
us, as applicable.
Upon receipt of the required payment and the Warrant
certificate properly completed and duly executed at the corporate trust office
of the Warrant Trustee, if any, to us at our principal offices, as applicable,
or any other office indicated in the applicable Prospectus Supplement, we will
issue and deliver the Common Shares or Preferred Shares purchasable upon such
exercise. If fewer than all of the Warrants represented by the Warrant
certificate are exercised, then we will issue a new Warrant certificate for the
remaining amount of Warrants. If we so indicate in the applicable Prospectus
Supplement, holders of the Warrants may surrender securities as all or part of
the exercise price for Warrants.
Anti-Dilution
The Warrant Indenture, if any, and the Warrant certificate will
specify that upon the subdivision, consolidation, reclassification or other
material change of the Common Shares or Preferred Shares or any other
reorganization, amalgamation, merger or sale of all or substantially all of our
assets, the Warrants will thereafter evidence the right of the holder to receive
the securities, property or cash deliverable in exchange for or on the
conversion of or in respect of the Common Shares or Preferred Shares to which
such holder would have been entitled immediately after such event. Similarly, any distribution to all or substantially
all of the holders of Common Shares or Preferred Shares of rights, options,
warrants, evidences of indebtedness or assets will result in an adjustment in
the number of Common Shares or Preferred Shares to be issued to holders of
Warrants, as applicable.
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Global Securities
We may issue Warrants in whole or in part in the form of one or
more global securities, which will be registered in the name of and be deposited
with a depositary, or its nominee, each of which will be identified in the
applicable Prospectus Supplement. The global securities may be in temporary or
permanent form. The applicable Prospectus Supplement will describe the terms of
any depositary arrangement and the rights and limitations of owners of
beneficial interests in any global security. The applicable Prospectus
Supplement will describe the exchange, registration and transfer rights relating
to any global security.
Modifications
The Warrant Indenture, if any, will provide for modifications
and alterations to the Warrants issued thereunder by way of a resolution of
holders of Warrants at a meeting of such holders or a consent in writing from
such holders. The number of holders of Warrants required to pass such a
resolution or execute such a written consent will be specified in the Warrant
Indenture, if any.
We may amend any Warrant Indenture and the Warrants, without
the consent of the holders of the Warrants, to cure any ambiguity, to cure,
correct or supplement any defective or inconsistent provision, or in any other
manner that will not materially and adversely affect the interests of holders of
outstanding Warrants.
DESCRIPTION OF RIGHTS
The following description, together with the additional
information we may include in any applicable Prospectus Supplements and free
writing prospectuses, summarizes the material terms and provisions of the Rights
that we may offer under this Prospectus. Rights may be offered independently or
together with Common Shares, Warrants, Preferred Shares or other security, or a
combination thereof, and may be attached to or separate from those Securities.
While the terms we have summarized below will apply generally to any Rights that
we may offer under this Prospectus, we will describe the particular terms of any
series of Rights in more detail in the applicable Prospectus Supplement. The
terms of any Rights offered under a Prospectus Supplement may differ from the
terms described below.
General
Rights may be issued independently or together with any other
security and may or may not be transferable. As part of any rights offering, we
may enter into a standby underwriting or other arrangement under which the
underwriters or any other person would purchase any securities that are not
purchased in such rights offering. If we issue Rights, each series of Rights
will be issued under a separate rights agreement to be entered into between us
and a bank, trust company or transfer agent, as rights agent, that will be named
in the applicable Prospectus Supplement. Further terms of the Rights will be
stated in the applicable Prospectus Supplement. The rights agent will act solely
as our agent and will not assume any obligation to any holders of Rights
certificates or beneficial owners of Rights. The rights agreements and rights
certificates will be filed with the SEC as an exhibit to the registration
statement of which this Prospectus is a part or as an exhibit to a filing
incorporated by reference in the registration statement.
The Prospectus Supplement relating to any Rights we offer will
describe the specific terms of the offering and the Rights, including the record
date for shareholders entitled to the Rights distribution, the number of Rights
issued and the number of Common Shares or other securities that may be purchased
upon exercise of the Rights, the exercise price of the Rights, the date on which
the Rights will become effective and the date on which the Rights will expire,
and any applicable U.S. and Canadian federal income tax considerations.
In general, a Right entitles the holder to purchase for cash a
specific number of Common Shares or other securities at a specified exercise
price. The Rights are normally issued to shareholders as of a specific record
date, may be exercised only for a limited period of time and become void
following the expiration of such period. If we decide to issue Rights, we will
accompany this prospectus with a Prospectus Supplement that will describe, among
other things:
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the record date for shareholders
entitled to receive the Rights;
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the number of Common Shares or other securities that may
be purchased upon exercise of each Right;
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the exercise price of the Rights;
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the terms for changes to or adjustments in the exercise
price, if any;
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whether the Rights are transferable;
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the period during which the Rights may be exercised and
when they will expire;
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the steps required to exercise the Rights;
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whether the Rights include oversubscription rights so
that the holder may purchase more securities if other holders do not
purchase their full allotments;
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whether we intend to sell Common Shares or other
securities that are not purchased in the rights offering to an underwriter
or other purchaser under a contractual standby commitment or other
arrangement;
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our ability to withdraw or terminate the rights offering;
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material United States and Canadian federal income tax
consequences of acquiring, owning, exercising and disposing of Rights; and
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other material terms, including terms relating to
transferability, exchange, exercise or amendment of the Rights.
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If fewer than all of the Rights issued in any rights offering
are exercised, we may offer any unsubscribed securities directly to persons
other than shareholders, to or through agents, underwriters or dealers or
through a combination of such methods, including pursuant to standby
arrangements, as described in the applicable Prospectus Supplement. After the
close of business on the expiration date, all unexercised Rights will become
void.
Prior to the exercise of a holders Rights, the holder will not
have any of the rights of holders of the securities issuable upon the exercise
of the Rights and will not be entitled to, among other things, vote or receive
dividend payments or other distributions on the securities purchasable upon
exercise.
DESCRIPTION OF SUBSCRIPTION RECEIPTS
We may issue Subscription Receipts, which will entitle holders
to receive upon satisfaction of certain release conditions and for no additional
consideration, Common Shares, Warrants, Preferred Shares or any combination
thereof. Subscription Receipts will be issued pursuant to one or more
subscription receipt agreements (each, a
Subscription Receipt
Agreement
), each to be entered into between us and an escrow agent (the
Escrow Agent
), which will establish the terms and conditions of the
Subscription Receipts. Each Escrow Agent will be a financial institution
organized under the laws of the United States or a state thereof or Canada or a
province thereof and authorized to carry on business as a trustee. We will file
as exhibits to the registration statement of which this Prospectus is a part, or
will incorporate by reference from a Current Report on Form 8-K that we file
with the SEC, any Subscription Receipt Agreement describing the terms and
conditions of Subscription Receipts we are offering before the issuance of such
Subscription Receipts.
The following description sets forth certain general terms and
provisions of Subscription Receipts and is not intended to be complete. The
statements made in this Prospectus relating to any Subscription Receipt
Agreement and Subscription Receipts to be issued thereunder are summaries of
certain anticipated provisions thereof and are subject to, and are qualified in
their entirety by reference to, all provisions of the applicable Subscription
Receipt Agreement and the Prospectus Supplement describing such Subscription
Receipt Agreement.
The Prospectus Supplement relating to any Subscription Receipts
we offer will describe the Subscription Receipts and include specific terms
relating to their offering. All such terms will comply with the requirements of
the TSX and NYSE MKT relating to Subscription Receipts. If underwriters or
agents are used in the sale of Subscription Receipts, one or more of such underwriters or agents may also
be parties to the Subscription Receipt Agreement governing the Subscription
Receipts sold to or through such underwriters or agents.
13
General
The Prospectus Supplement and the Subscription Receipt
Agreement for any Subscription Receipts we offer will describe the specific
terms of the Subscription Receipts and may include, but are not limited to, any
of the following:
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the designation and aggregate number of Subscription Receipts offered;
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the price at which the Subscription Receipts will be offered;
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the currency or currencies in which the Subscription Receipts will be
offered;
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the designation, number and terms of the Common Shares, Warrants, Preferred
Shares or combination thereof to be received by holders of Subscription
Receipts upon satisfaction of the release conditions, and the procedures that
will result in the adjustment of those numbers;
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the conditions (the Release Conditions) that must be met in order for
holders of Subscription Receipts to receive for no additional consideration
Common Shares, Warrants, Preferred Shares or a combination thereof;
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the procedures for the issuance and delivery of Common Shares, Warrants,
Preferred Shares or a combination thereof to holders of Subscription Receipts
upon satisfaction of the Release Conditions;
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whether any payments will be made to holders of Subscription Receipts upon
delivery of the Common Shares, Warrants, Preferred Shares or a combination
thereof upon satisfaction of the Release Conditions (
e.g.
, an amount
equal to dividends declared on Common Shares or Preferred Shares by us to
holders of record during the period from the date of issuance of the
Subscription Receipts to the date of issuance of any Common Shares or
Preferred Shares pursuant to the terms of the Subscription Receipt Agreement);
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the terms and conditions under which the Escrow Agent will hold all or a
portion of the gross proceeds from the sale of Subscription Receipts, together
with interest and income earned thereon (collectively, the Escrowed Funds),
pending satisfaction of the Release Conditions;
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the terms and conditions pursuant to which the Escrow Agent will hold
Common Shares or Warrants or Preferred Shares or a combination thereof pending
satisfaction of the Release Conditions;
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the terms and conditions under which the Escrow Agent will release all or a
portion of the Escrowed Funds to us upon satisfaction of the Release
Conditions;
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if the Subscription Receipts are sold to or through underwriters or agents,
the terms and conditions under which the Escrow Agent will release a portion
of the Escrowed Funds to such underwriters or agents in payment of all or a
portion of their fees or commission in connection with the sale of the
Subscription Receipts;
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procedures for the refund by the Escrow Agent to holders of Subscription
Receipts of all or a portion of the subscription price for their Subscription
Receipts, plus any
pro rata
entitlement to interest earned or income
generated on such amount, if the Release Conditions are not satisfied;
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any entitlement of the Company to purchase the Subscription Receipts in the
open market by private agreement or otherwise;
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whether we will issue the Subscription Receipts as global securities and,
if so, the identity of the depositary for the global securities;
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whether we will issue the Subscription Receipts as bearer securities,
registered securities or both;
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provisions as to modification, amendment or variation of the Subscription
Receipt Agreement or any rights or terms attaching to the Subscription
Receipts;
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the identity of the Escrow Agent;
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whether the Subscription Receipts will be listed on any exchange;
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material United States and Canadian federal tax consequences of acquiring,
owning, receiving securities in exchange and disposing of the Subscription
Receipts; and
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any other terms of the Subscription Receipts.
In addition, the Prospectus Supplement and the Subscription
Receipt Agreement for any Subscription Receipts we offer will describe all
contractual rights of rescission that will be granted to initial purchasers of
Subscription Receipts in the event this Prospectus, the Prospectus Supplement
under which the Subscription Receipts are issued or any amendment hereto or
thereto contains a misrepresentation, as discussed further under the
sub-paragraph entitled Rescission below.
The holders of Subscription Receipts will not be
shareholders of the Company. Holders of Subscription Receipts are entitled only
to receive Common Shares, Warrants, Preferred Shares or a combination thereof on
exchange of their Subscription Receipts, plus any cash payments provided for
under the Subscription Receipt Agreement, if the Release Conditions are
satisfied. If the Release Conditions are not satisfied, the holders of
Subscription Receipts shall be entitled to a refund of all or a portion of the
subscription price therefor and all or a portion of the
pro
rata
share of interest earned or income generated thereon, as
provided in the Subscription Receipt Agreement.
Escrow
The Escrowed Funds will be held in escrow by the Escrow Agent,
and such Escrowed Funds will be released to us (and, if the Subscription
Receipts are sold to or through underwriters or agents, a portion of the
Escrowed Funds may be released to such underwriters or agents in payment of all
or a portion of their fees in connection with the sale of the Subscription
Receipts) at the time and under the terms specified by the Subscription Receipt
Agreement. If the Release Conditions are not satisfied, holders of Subscription
Receipts will receive a refund of all or a portion of the subscription price for
their Subscription Receipts plus their
pro rata
entitlement to interest
earned or income generated on such amount, in accordance with the terms of the
Subscription Receipt Agreement. Common Shares or Warrants or Preferred Shares
may be held in escrow by the Escrow Agent, and will be released to the holders
of Subscription Receipts following satisfaction of the Release Conditions at the
time and under the terms specified in the Subscription Receipt Agreement.
Anti-Dilution
The Subscription Receipt Agreement will specify that upon the
subdivision, consolidation, reclassification or other material change of the
Common Shares or Warrants or Preferred Shares, as applicable, or any other
reorganization, amalgamation, merger or sale of all or substantially all of our
assets, the Subscription Receipts will thereafter evidence the right of the
holder to receive the securities, property or cash deliverable in exchange for
or on the conversion of or in respect of the Common Shares or Warrants or
Preferred Shares to which the holder of a Common Share or Warrant or Preferred
Share would have been entitled immediately after such event. Similarly, any
distribution to all or substantially all of the holders of Common Shares or
Preferred Shares, as applicable, of rights, options, warrants, evidences of
indebtedness or assets will result in an adjustment in the number of Common
Shares or Preferred Shares, as applicable, to be issued to holders of
Subscription Receipts whose Subscription Receipts entitle the holders thereof to
receive Common Shares or Preferred Shares, as applicable. Alternatively, such
securities, evidences of indebtedness or assets may, at our option, be issued to
the Escrow Agent and delivered to holders of Subscription Receipts on exercise
thereof. The Subscription Receipt Agreement will also provide that if other
actions of the Company affect the Common Shares or Warrants or Preferred Shares,
as applicable, which, in the reasonable opinion of our directors, would
materially affect the rights of the holders of Subscription Receipts and/or the
rights attached to the Subscription Receipts, the number of Common Shares or
Warrants or Preferred Shares, as applicable, which are to be received pursuant
to the Subscription Receipts shall be adjusted in such manner, if any, and at
such time as our directors may in their discretion reasonably determine to be
equitable to the holders of Subscription Receipts in such circumstances.
Rescission
The Subscription Receipt Agreement will also provide that any
misrepresentation in this Prospectus, the Prospectus Supplement under which the
Subscription Receipts are offered, or any amendment thereto, will entitle each
initial purchaser of Subscription Receipts to a contractual right of rescission
following the issuance of the Common Shares or Warrants or Preferred Shares, as
applicable, to such purchaser entitling such purchaser to receive the amount
paid for the Subscription Receipts upon surrender of the Common Shares or
Warrants or Preferred Shares, as applicable, provided that such remedy for rescission is exercised in the
time stipulated in the Subscription Receipt Agreement. This right of rescission
does not extend to holders of Subscription Receipts who acquire such
Subscription Receipts from an initial purchaser, on the open market or
otherwise, or to initial purchasers who acquire Subscription Receipts in the
United States.
15
Global Securities
We may issue Subscription Receipts in whole or in part in the
form of one or more global securities, which will be registered in the name of
and be deposited with a depositary, or its nominee, each of which will be
identified in the applicable Prospectus Supplement. The global securities may be
in temporary or permanent form. The applicable Prospectus Supplement will
describe the terms of any depositary arrangement and the rights and limitations
of owners of beneficial interests in any global security. The applicable
Prospectus Supplement also will describe the exchange, registration and transfer
rights relating to any global security.
Modifications
The Subscription Receipt Agreement will provide for
modifications and alterations to the Subscription Receipts issued thereunder by
way of a resolution of holders of Subscription Receipts at a meeting of such
holders or a consent in writing from such holders. The number of holders of
Subscriptions Receipts required to pass such a resolution or execute such a
written consent will be specified in the Subscription Receipt Agreement.
DESCRIPTION OF PREFERRED SHARES
The Preferred Shares issuable in series will have the rights,
privileges, restrictions and conditions assigned to the particular series upon
the board of directors of the Company approving their issuance, subject to the
Companys articles of continuance. We currently have authorized an unlimited
number of Series A Preferred Shares which are non-redeemable, non-callable,
non-voting and do not have a right to dividends. The terms of any Preferred
Shares offered under this Prospectus and any related agreements will be
described in the Prospectus Supplement filed in respect of the issuance of such
Preferred Shares.
DESCRIPTION OF DEBT SECURITIES
From time to time, debt securities may be offered and sold
under this Prospectus. The terms of any debt securities and any related
agreements or indentures will be described in a Prospectus Supplement to be
filed in respect of such offering.
We will provide particular terms and provisions of a series of
Debt Securities, and a description of how the general terms and provisions
described below may apply to that series, in a Prospectus Supplement. The
following summary may not contain all of the information that is important to
the investor. For a more complete description, prospective investors should
refer to the applicable Prospectus Supplement and to the applicable indenture
(the
Indenture
), a copy of which will be distributed in connection with
any distribution of Debt Securities under this Prospectus and filed by us with
the securities regulatory authorities in Canada and the United States after we
have entered into it. The Indenture will be subject to and governed by the U.S.
Trust Indenture Act of 1939, as amended.
The Indenture may not limit the aggregate principal amount of
Debt Securities which may be issued under it, and we may issue Debt Securities
in one or more series. Securities may be denominated and payable in any
currency. We may offer no more than $100,000,000 (or the equivalent in other
currencies) aggregate principal amount of Debt Securities pursuant to this
Prospectus. Unless otherwise indicated in the applicable Prospectus Supplement,
the Indenture will permit us, without the consent of the holders of any Debt
Securities, to issue additional Debt Securities under the Indenture with the
same terms and with the same CUSIP numbers as the Debt Securities offered in
that series, provided that such additional Debt Securities must be part of the
same issue as the Debt Securities offered in that series for U.S. federal income
tax purposes. We may also from time to time repurchase Debt Securities in open
market purchases or negotiated transactions without prior notice to holders.
The applicable Prospectus Supplement will set forth the
following terms relating to the Debt Securities offered by such Prospectus
Supplement:
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the title of the Debt Securities;
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the total principal amount of the Debt Securities;
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whether the Debt Securities will be issued in individual certificates to
each holder or in the form of temporary or permanent global Debt Securities
held by a depositary on behalf of holders;
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the date or dates on which the principal of and any premium on the Debt
Securities will be payable;
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any interest rate, the date from which interest will accrue, interest
payment dates and record dates for interest payments and whether and under
what circumstances any additional amounts with respect to the Debt Securities
will be payable;
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the place or places where payments on the Debt Securities will be payable;
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any provisions for optional redemption, early repayment, retraction,
purchase for cancellation or surrender;
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any sinking fund or other provisions that would require the redemption,
purchase or repayment of Debt Securities;
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whether payments on the Debt Securities will be payable in a foreign
currency or currency units or another form;
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the portion of the principal amount of Debt Securities that will be
payable if the maturity is accelerated, other than the entire principal
amount;
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events of default by the Company and covenants of the Company;
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any restrictions or other provisions relating to the transfer or exchange
of Debt Securities;
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any provisions permitting or restricting the issuance of additional
securities, the incurring of additional indebtedness and other material
negative covenants including restrictions against payment of dividends and
restrictions against giving security on our assets or the assets of our
subsidiaries;
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the rank and terms of subordination of any series of subordinate debt;
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whether or not the Debt Securities will be secured or unsecured, and the terms of any secured debt
including a general description of the collateral and of the material terms of any related security, pledge
or other agreements;
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any terms for the conversion or exchange of the Debt Securities for other
securities of the Company or any other entity, or for the redemption on
maturity through the issuance of Common Shares or any other securities of the
Company; and
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any other terms of the Debt Securities not prohibited by the Indenture.
Unless otherwise indicated in the applicable Prospectus
Supplement we will issue Debt Securities in registered form without coupons, and
in denominations of $1,000 and multiples of $1,000. Debt Securities may be
presented for exchange, and registered Debt Securities may be presented for
registration of transfer in the manner set forth in the Indenture and in the
applicable Prospectus Supplement, without service charges. We may, however,
require payment sufficient to cover any taxes or other governmental charges due
in connection with the exchange or transfer. We will appoint a trustee as
security registrar.
Unless otherwise indicated in the applicable Prospectus
Supplement, the holders of the Debt Securities will not be afforded protection
under the Indenture in the event of a highly leveraged transaction or a change
in control of the Company, except in certain specified circumstances.
We may issue Debt Securities under the Indenture bearing no
interest or interest at a rate below the prevailing market rate at the time of
issuance and, in such circumstances, we will offer and sell those Securities at
a discount below their stated principal amount. We will describe in the
applicable Prospectus Supplement any material Canadian and U.S. federal income
tax consequences and other special considerations.
Neither we nor any of our subsidiaries will be subject to any
financial covenants under the Indenture. In addition, neither we nor any of our
subsidiaries will be restricted under the Indenture from paying dividends,
incurring debt, or issuing or repurchasing its securities.
As further described in any Prospectus Supplement, any Debt Securities issued by us may be secured or unsecured obligations of the Company and may be senior or subordinate debt. As of the date of this Prospectus, we and our subsidiaries had no outstanding indebtedness, other than intercompany indebtedness, trade payables, debentures in the aggregate principal amount of Cdn$22,000,000, and a loan payable to Johnson County, Wyoming in the amount of $15,622,817.
We may issue Debt Securities and incur additional indebtedness
otherwise than through the offering of any Debt Securities pursuant to this
Prospectus.
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DESCRIPTION OF UNITS
The following description, together with the additional
information we may include in any applicable Prospectus Supplements, summarizes
the material terms and provisions of the Units that we may offer under this
Prospectus. While the terms we have summarized below will apply generally to any
Units that we may offer under this Prospectus, we will describe the particular
terms of any series of Units in more detail in the applicable Prospectus
Supplement. The terms of any Units offered under a Prospectus Supplement may
differ from the terms described below.
We will file as exhibits to the registration statement of which
this Prospectus is a part, or will incorporate by reference from a current
report on Form 8-K that we file with the SEC, the form of unit agreement (which
we refer to herein as the
Unit Agreement
), if any, between us and a
unit agent (which we refer to herein as the
Unit Agent
) that describes
the terms and conditions of the series of Units we are offering, and any
supplemental agreements, before the issuance of the related series of Units. The
following summaries of material terms and provisions of the Units are subject
to, and qualified in their entirety by reference to, all the provisions of the
Unit Agreement, if any, and any supplemental agreements applicable to a
particular series of Units. We urge you to read the applicable Prospectus
Supplements related to the particular series of Units that we sell under this
Prospectus, as well as the complete Unit Agreement, if any, and any supplemental
agreements that contain the terms of the Units.
General
We may issue Units comprising one or more Common Shares,
Warrants, Rights, Preferred Shares, Subscription Receipts or Debt Securities, in
any combination. Each Unit will be issued so that the holder of the Unit is also
the holder of each security included in the Unit. Thus, the holder of a Unit
will have the rights and obligations of a holder of each included security.
Units may be issued under a Unit Agreement. Any Unit Agreement under which a
Unit may be issued may provide that the securities included in the Unit may not
be held or transferred separately, at any time or at any time before a specified
date.
We will describe in the applicable Prospectus Supplement the
terms of the series of Units, including:
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the designation and terms of the Units and of the
securities comprising the Units, including whether and under what
circumstances those securities may be held or transferred separately;
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the provisions of any governing Unit Agreement;
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material United States and Canadian federal income tax
consequences of acquiring, owning, exercising, and disposing of the Units;
and
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any provisions for the issuance, payment, settlement,
transfer or exchange of the Units or of the securities comprising the
Units.
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The provisions described in this section, as well as those
described under Description of Common Shares, Description of Warrants,
Description of Rights, Description of Subscription Receipts, Description of
Preferred Shares and Description of Debt Securities, will apply to each Unit
and to any Common Share, Warrant Right, Preferred Share, Subscription Receipt or
Debt Security included in each Unit, respectively.
Issuance in Series
We may issue Units in such amounts and in numerous distinct
series as we determine.
PLAN OF DISTRIBUTION
General
We may offer and sell the Securities, separately or together:
(a) to one or more underwriters or dealers; (b) through one or more agents; or
(c) directly to one or more other purchasers. The Securities offered pursuant to
any Prospectus Supplement may be sold from time to time in one or more
transactions at: (i) a fixed price or prices, which may be changed from time to
time; (ii) market prices prevailing at the time of sale; (iii) prices related to
such prevailing market prices; or (iv) other negotiated prices, including sales
in transactions that are deemed to be at-the-market distributions, including
sales made directly on the TSX, NYSE MKT or other existing trading markets for
the securities. We may only offer and sell the Securities pursuant to a
Prospectus Supplement during the period that this Prospectus, including any
amendments hereto, remains effective. The Prospectus Supplement for any of the Securities being offered thereby will set forth the terms of
the offering of such Securities, including the type of Security(ies) being
offered, the name or names of any underwriters, dealers or agents, the purchase
price of such Securities, the proceeds or consideration to us from such sale,
any underwriting commissions or discounts and other items constituting
underwriters compensation and any discounts or concessions allowed or
re-allowed or paid to dealers. Only underwriters so named in the Prospectus
Supplement are deemed to be underwriters in connection with the Securities
offered thereby.
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By Underwriters
If underwriters are used in the sale, the Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
Unless otherwise set forth in the Prospectus Supplement relating thereto, the
obligations of underwriters to purchase the Securities will be subject to
certain conditions, but the underwriters will be obligated to purchase all of
the Securities offered by the Prospectus Supplement if any of such Securities
are purchased. We may offer the Securities to the public through underwriting
syndicates represented by managing underwriters or by underwriters without a
syndicate. We may agree to pay the underwriters a fee or commission for various
services relating to the offering of any Securities. Any such fee or commission
will be paid out of our general corporate funds. We may use underwriters with
whom we have a material relationship. We will describe in the Prospectus
Supplement, naming the underwriter, the nature of any such relationship.
By Dealers
If dealers are used, and if so specified in the applicable
Prospectus Supplement, we will sell such Securities to the dealers as
principals. The dealers may then resell such Securities to the public at varying
prices to be determined by such dealers at the time of resale. Any public
offering price and any discounts or concessions allowed or re-allowed or paid to
dealers may be changed from time to time. We will set forth the names of the
dealers and the terms of the transaction in the applicable Prospectus
Supplement.
By Agents
The Securities may also be sold through agents designated by
us. Any agent involved will be named, and any fees or commissions payable by us
to such agent will be set forth, in the applicable Prospectus Supplement. Any
such fees or commissions will be paid out of our general corporate funds. Unless
otherwise indicated in the Prospectus Supplement, any agent will be acting on a
best efforts basis for the period of its appointment.
Direct Sales
Securities may also be sold directly by us at such prices and
upon such terms as agreed to by us and the purchaser. In this case, no
underwriters, dealers or agents may be involved in the offering.
General Information
Underwriters, dealers and agents that participate in the
distribution of the Securities offered by this Prospectus may be deemed
underwriters under the Securities Act, and any discounts or commissions they
receive from us and any profit on their resale of the securities may be treated
as underwriting discounts and commissions under the Securities Act.
Underwriters, dealers or agents who participate in the
distribution of Securities may be entitled under agreements to be entered into
with us to indemnification by us against certain liabilities, including
liabilities under Canadian provincial and territorial and United States
securities legislation, or to contribution with respect to payments which such
underwriters, dealers or agents may be required to make in respect thereof. Such
underwriters, dealers or agents may be customers of, engage in transactions
with, or perform services for, us in the ordinary course of business.
We may enter into derivative transactions with third parties,
or sell securities not covered by this Prospectus to third parties in privately
negotiated transactions. If the applicable Prospectus Supplement indicates, in
connection with those derivatives, the third parties may sell securities covered
by this Prospectus and the applicable Prospectus Supplement, including in short
sale transactions. If so, the third parties may use securities pledged by us or
borrowed from us or others to settle those sales or to close out any related
open borrowings of stock, and may use securities received from us in settlement of those derivatives to close
out any related open borrowings of stock. The third parties in such sale
transactions will be identified in the applicable Prospectus Supplement.
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One or more firms, referred to as remarketing firms, may also
offer or sell the Securities, if the Prospectus Supplement so indicates, in
connection with a remarketing arrangement upon their purchase. Remarketing firms
will act as principals for their own accounts or as agents for us. These
remarketing firms will offer or sell the Securities in accordance with the terms
of the Securities. The Prospectus Supplement will identify any remarketing firm
and the terms of its agreement, if any, with us and will describe the
remarketing firms compensation. Remarketing firms may be deemed to be
underwriters in connection with the Securities they remarket.
In connection with any offering of Securities, underwriters may
over-allot or effect transactions which stabilize or maintain the market price
of the Securities offered at a level above that which might otherwise prevail in
the open market. Such transactions may be commenced, interrupted or discontinued
at any time.
TRANSFER AGENT AND REGISTRAR
Our registrar and transfer agent for our Common Shares is CST
Trust Company at its principal offices in Toronto, Ontario, Canada.
LEGAL MATTERS
Certain legal matters related to the Securities offered by this
Prospectus will be passed upon on our behalf by Dorsey & Whitney LLP, with
respect to matters of United States law, and Borden Ladner Gervais LLP, with
respect to matters of Canadian law.
EXPERTS
Information relating to our mineral properties in this
Prospectus and the documents incorporated by reference herein has been derived
from reports, statements or opinions prepared or certified by Roscoe Postle
Associates Inc., William E. Roscoe, Douglas T. Underhill, Thomas C. Pool, Barton
G. Stone, Robert Michaud, Stuart E. Collins, Mark B. Mathisen, Harold R.
Roberts, David A. Ross, Peters Geosciences, Douglas C. Peters, BRS Inc., Douglas
L. Beahm, W. Paul Goranson, Douglass Graves, Richard White, Don R. Woody, Woody
Enterprises, Terrence P. McNulty, T.P. McNulty & Associates Inc., Chlumsky,
Ambrust and Meyer, Geoffrey S. Carter, Broad Oak Associates, Trec, Inc., Allan
Moran, Frank A. Daviess, SRK Consulting (U.S.) Inc., Christopher Moreton,
Richard L. Nielsen, Robert L. Sandefur, Matthew P. Reilly, this information has
been included in reliance on such companies and persons expertise.
None of Roscoe Postle Associates Inc., William E. Roscoe,
Douglas T. Underhill, Thomas C. Pool, Barton G. Stone, Robert Michaud, Stuart E.
Collins, Mark B. Mathisen, Harold R. Roberts, David A. Ross, Peters Geosciences,
Douglas C. Peters, BRS Inc., Douglas L. Beahm, W. Paul Goranson, Douglass
Graves, Richard White, Don R. Woody, Woody Enterprises, Terrence P. McNulty,
T.P. McNulty & Associates Inc., Chlumsky, Ambrust and Meyer, Geoffrey S.
Carter, Broad Oak Associates, Trec, Inc., Allan Moran, Frank A. Daviess, SRK
Consulting (U.S.) Inc., Christopher Moreton, Richard L. Nielsen, Robert L.
Sandefur, Matthew P. Reilly, each being companies and persons who have prepared
or certified the preparation of reports, statements or opinions in this
Prospectus and the documents incorporated by reference herein relating to our
mineral properties, or any director, officer, employee or partner thereof, as
applicable, received or has received a direct or indirect interest in our
property or of any of our associates or affiliates. As at the date hereof, the
aforementioned persons, companies and persons at the companies specified above
who participated in the preparation of such reports, statements or opinions, as
a group, beneficially own, directly or indirectly, less than 1% of our
outstanding Common Shares.
Our consolidated financial statements as at December 31, 2015
and 2014, and for each of the years in the three- year period ended December 31,
2015, have been incorporated by reference herein in reliance upon the report of
KPMG LLP, independent registered public accounting firm, also incorporated by
reference herein, and upon the authority of that firm as experts in accounting
and auditing.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. Our SEC filings are available to the public
over the Internet at the SECs web site at http://www.sec.gov.
This Prospectus is part of a registration statement and, as
permitted by SEC rules, does not contain all of the information included in the
registration statement. Whenever a reference is made in this Prospectus to any
of our contracts or other documents, the reference may not be complete and, for
a copy of the contract or document, you should refer to the exhibits that are
part of the registration statement. You may call the SEC at 1-800-SEC-0330 for
more information on the public reference rooms and their copy charges. You may
also read and copy any document we file with the SEC at the SECs public
reference rooms at:
100 F Street, N.E.
Room 1580
Washington, D.C. 20549
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7,250,000 Units Consisting of One Common Share and One-Half
of One Common Share Purchase Warrant
7,250,000 Common Shares underlying the Units
3,625,000 Warrants to purchase Common Shares
3,625,000 Common Shares underlying the Warrants
Cantor Fitzgerald Canada Corporation
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Rodman & Renshaw
a unit of H.C.
Wainwright & Co., LLC
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Haywood Securities Inc.
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Raymond James Ltd.
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Dundee Securities Ltd.
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September 15, 2016
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