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As filed with the Securities and Exchange Commission on January 11, 2017
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Registration No. 333-
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM F-10
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
NORTHERN DYNASTY MINERALS LTD.
(Exact name of Registrant as specified in its charter)
British Columbia, Canada
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1040
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Not Applicable
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(Province or other jurisdiction
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(Primary Standard Industrial
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(I.R.S. Employer
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of incorporation or organization)
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Classification Code Number)
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Identification Number)
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15
th
Floor, 1040 West Georgia Street
Vancouver, British Columbia
Canada V6E 4H1
Tel: (604) 684-6365
(Address and telephone number of
Registrants principal executive offices)
Pebble East Claims Corporation
3201 C Street, Suite 404
Anchorage, Alaska, USA 99503
Tel: 1-877-450-2600
(Name,
address (including zip code) and telephone number (including area code) of agent
for service in the United States)
Copy to:
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Mr. Trevor Thomas, General Counsel
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Michael Taylor
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Daniel I. Goldberg
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Martin Langlois
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Northern Dynasty Minerals Ltd.
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McMillan LLP
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Cooley LLP
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Stikeman Elliott LLP
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15
th
Floor, 1040 West Georgia
Street
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1500 1055 West Georgia Street
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1114 Avenue of the Americas
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5300 Commerce Court West,
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Vancouver, British Columbia
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Vancouver, British Columbia
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New York,
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199 Bay Street
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Canada V6E 4H1
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Canada V6E 4N7
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New York
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Toronto, Ontario
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(604) 684-6365
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(604) 689-9111
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10036
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Canada M5L 1B9
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(212) 479-6722
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(416) 869-5672
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Approximate date of commencement of proposed sale of the
securities to the public:
As soon as practicable after this Registration Statement
becomes effective.
Province of British Columbia, Canada
(Principal jurisdiction regulating this offering)
It is proposed that this filing shall become effective (check
appropriate box below):
A.
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[ ]
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upon filing with the Commission, pursuant to Rule 467(a)
(if in connection with an offering being made contemporaneously in the
United States and Canada).
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B.
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[X]
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at some future date (check appropriate box below)
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1.
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[ ]
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pursuant to Rule 467(b) on (
date
) at
(
time
) (designate a time not sooner than 7 calendar days after
filing).
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2.
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[ ]
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pursuant to Rule 467(b) on (
date
) at (
time
)
(designate a time 7 calendar days or sooner after filing) because the
securities regulatory authority in the review jurisdiction has issued a
receipt or notification of clearance on (
date
).
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3.
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[ ]
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pursuant to Rule 467(b) as soon as practicable after
notification of the Commission by the Registrant or the Canadian
securities regulatory authority of the review jurisdiction that a receipt
or notification of clearance has been issued with respect hereto.
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4.
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[X]
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after the filing of the next amendment to this Form (if
preliminary material is being filed).
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If any of the securities being registered on this form are to
be offered on a delayed or continuous basis pursuant to the home jurisdictions
shelf prospectus offering procedures, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Title of each class of securities
to be registered
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Amount to be
registered
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Proposed maximum
offering price per
unit
(1)
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Proposed maximum
aggregate offering
price
(1)
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Amount of
registration fee
(1),
(2)
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Common Shares, no par value
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-
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-
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28,750,000
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$3,332.13
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(1)
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Rule 457(o) under the U.S. Securities Act permits the
registration fee to be calculated on the basis of the maximum aggregate
offering price of all of the securities listed and, therefore, the table
does not specify the number of common shares to be registered or the
proposed maximum offer price per common share. The proposed maximum
initial offering price per common shares will be determined by negotiation
between the Registrant and the Underwriters named herein.
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(2)
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Based on the SECs registration fee of $115.90 per
$1,000,000 of securities registered.
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The Registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective date until the
registration statement shall become effective as provided in Rule 467 under the
U.S. Securities Act, or on such date as the Commission, acting pursuant to
Section 8(a) of the U.S. Securities Act, may determine.
PART I
INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR
PURCHASERS
Information contained herein is subject
to completion or amendment. A registration statement relating to these
securities has been filed with the United States Securities and Exchange
Commission. These securities may not be offered or sold nor may offers to buy be
accepted prior to the time the registration statement becomes effective. This
short form prospectus will not constitute an offer to sell or the solicitation
of an offer to buy, nor will there be any sale of these securities in any state
or jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
state.
No securities regulatory authority has expressed an opinion
about these securities and it is an offence to claim otherwise. This short form
prospectus constitutes a public offering of these securities only in those
jurisdictions where they may be lawfully offered for sale and only by persons
permitted to sell these securities in those jurisdictions.
Information has been incorporated by reference in this
prospectus from documents filed with securities commissions or similar
authorities in Canada.
Copies of the documents incorporated herein by
reference may be obtained on request without charge from Northern Dynasty
Minerals Ltd., 15
th
Floor, 1040 West Georgia Street,
Vancouver, British Columbia, V6E 4H1, Telephone: 604-684-6365 (attention:
Corporate Secretary),and are also available electronically at
www.sedar.com
.
SUBJECT TO COMPLETION DATED JANUARY 11, 2017
New Issue
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January 11, 2017
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US$
Common Shares
We are hereby qualifying for distribution common shares (the
Offered
Shares
) of Northern Dynasty Minerals Ltd. (
Northern
Dynasty
or the
Company
) at a price (the
Offering Price
)
of US$ per Offered Share (the
Offering
). The Offering is made pursuant
to an underwriting agreement (the
Underwriting Agreement
) dated January
, 2017 among the Company and Cantor Fitzgerald Canada Corporation, TD
Securities Inc. and BMO Nesbitt Burns Inc., as co-lead underwriters and joint
bookrunners (the
Lead Underwriters
), and
, as co-managers
(collectively, the
Underwriters
), as more fully described under the
section entitled Plan of Distribution in this short form prospectus (the
Prospectus
). The Offered Shares will be offered in the United States
and Canada through the Underwriters either directly or through their respective
U.S. or Canadian broker-dealer affiliates or agents. The Offering is being made
concurrently in the United States under the terms of a registration statement on
Form F-10 (the
Registration Statement
) filed with the United States
Securities and Exchange Commission (the
SEC
) under the Securities Act
of 1933, as amended (the
U.S. Securities Act
).
Our common shares (
Common Shares
) are listed and
posted for trading on the Toronto Stock Exchange (the
TSX
) under the
symbol
NDM
and on the NYSE MKT under the symbol
NAK
. On
January 10, 2017, the last reported sale price for our Common Shares on the TSX
was $2.73 per Common Share and on the NYSE MKT was US$2.08 per Common Share.
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Price: US$ per Offered Share
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Price
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Underwriters
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Net Proceeds
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to the Public
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Fee
(1)
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to the Company
(2)
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Per Offered Share
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US$
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US$
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US$
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Total Offering
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US$
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US$
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US$
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(1)
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The Company has agreed to pay the Underwriters a cash fee
(the
Underwriters Fee
) equal to 5.0% of the aggregate purchase
price paid by the Underwriters to the Company per Offered Share, including
the sale of any Over-Allotment Shares (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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(2)
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After deducting the Underwriters Fee, but before
deducting the expenses of the Offering (including listing fees, legal fees
and reimbursement of the Underwriters expenses), which are estimated at
US$.
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We have granted to the Underwriters an option (the
Over-Allotment Option
) to purchase up to an additional Offered Shares
(the
Over-Allotment Shares
), representing % of the number of Offered
Shares sold under the Offering. The Over-Allotment Option is exercisable in
whole or in part at any time up to 30 days after the date of closing of the
Offering. If the Over-Allotment Option is exercised in full, the total Price to
the Public, Underwriters Fee and Net Proceeds to the Company will be US$,
US$ and US$, respectively. This Prospectus qualifies the distribution of the
Over-Allotment Option and the Over-Allotment Shares. A purchaser who acquires
Over-Allotment Shares forming part of the Underwriters over-allocation position
acquires those securities under this Prospectus, regardless of whether the
over-allocation position is ultimately filled through the exercise of the
Over-Allotment Option or secondary market purchases. See Plan of Distribution.
The following table sets out the number of options or other
compensation securities, if any, which have been issued or may be issued by us
to the Underwriters:
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Maximum Size or
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Exercise Price or
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Number of Securities
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Exercise Period or
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Average Acquisition
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Underwriters
Position
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Available
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Acquisition Date
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Price
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Over-Allotment Option
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Over-Allotment Shares
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Exercisable for a period of 30
days following closing of the Offering
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US$ per Over-Allotment Share
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Unless the context otherwise requires, all references to the
Offering in this Prospectus shall include the Over-Allotment Option and all
references to Offered Shares shall include Over-Allotment Shares, as
applicable.
The Underwriters, as principals, conditionally offer the
Offered Shares subject to prior sale, if, as and when issued by us and accepted
by the Underwriters in accordance with the conditions contained in the
Underwriting Agreement referred to under Plan of Distribution, and subject to
the approval of certain legal matters on behalf of the Company by McMillan LLP
and on behalf of the Underwriters by Stikeman Elliott LLP and Cooley LLP.
Subscriptions 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. One or more book entry-only
certificates representing the Offered Shares will be issued in registered form
to the CDS Clearing and Depository Services Inc. (
CDS
) or its nominee
or The Depositary Trust Company (
DTC
) and deposited with CDS or DTC on
the Closing Date, which is expected to take place on January , 2017, or such
later date as may be agreed upon by the Company and the Underwriters but in any
event no later than 42 days following the date of a final receipt for this short
form prospectus. A purchaser of Offered Shares will receive only a customer
confirmation from the registered dealer through which the Offered Shares are
purchased. Subject to applicable laws and in connection with the Offering, the
Underwriters may effect transactions which stabilize or maintain the market
price of the Companys Common Shares at levels other than those which otherwise
might prevail on the open market. Such transactions, if commenced, may be
discontinued at any time. See Plan of Distribution.
The Offering Price was determined by negotiation between the
Company and the Lead Underwriters, on behalf of the Underwriters, with reference
to the prevailing market price of the Common Shares.
The Underwriters propose to initially offer either directly, or
through their broker-dealer affiliates or agents, the Offered Shares at the
Offering Price. After a reasonable effort has been made to sell all of the
Offered Shares at the Offering Price, the Underwriters may subsequently reduce
the selling price to purchasers. Any such reduction will not affect the proceeds
received by the Company. See Plan of Distribution.
Neither Cantor Fitzgerald & Co., TD Securities (USA) LLC
nor BMO Capital Markets Corp. is registered as an investment dealer in any Canadian jurisdiction and,
accordingly, they will only sell the Offered Shares into the United States and
will not, directly or indirectly, solicit offers to purchase or sell the Offered
Shares in Canada.
Investing in the Offered Shares involves significant risks.
Before buying any of our securities, you should carefully read the Risk
Factors section of this Prospectus beginning on page 26, the Risk Factors
section in the accompanying Prospectus and in the documents incorporated by
reference herein and therein.
You should rely only on the information contained in or
incorporated by reference into this Prospectus. The Company has not authorized
anyone to provide you with different information. The Company is not making an
offer of these securities in any jurisdiction where the offer is not permitted.
You should not assume that the information contained in this Prospectus or
incorporated by reference in this Prospectus is accurate as of any date other
than the date on the front of this Prospectus or the date of such documents
incorporated by reference herein, as applicable.
This Offering is made by a Canadian issuer that is
permitted, under a multijurisdictional disclosure system adopted by the United
States and Canada (MJDS), to prepare this Prospectus in accordance with
Canadian disclosure requirements. Prospective investors in the United States
should be aware that such requirements are different from those of the United
States. Financial statements included or incorporated by reference herein have
been prepared in accordance with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB) and
may not be comparable to financial statements of United States companies. Our
financial statements are subject to Canadian generally accepted auditing
standards and auditor independence standards, in addition to the standards of
the Public Company Accounting Oversight Board (United States) and the United
States Securities and Exchange Commission (SEC) independence standards.
Prospective investors should be aware that the acquisition
of the securities 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. You should
read the tax discussion in this Prospectus fully and consult with your own tax
advisers. See Certain Canadian Federal Income Tax Considerations, Certain
Material United States Federal Income Tax Considerations and Risk Factors.
The enforcement by investors of civil liabilities under the
United States federal securities laws may be affected adversely by the fact that
the Company is incorporated under the laws of British Columbia, Canada, that the
majority of its officers and directors are residents of Canada, and that all of
the experts named in the registration statement are not residents of the United
States.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
All references in this Prospectus to dollars or $ are to
Canadian dollars, unless otherwise stated. References to US$ are to United
States dollars.
Mr. Stephen Decker, a director of the Company, resides outside
of Canada. Mr. Decker has appointed the Companys counsel, McMillan LLP, located
at Suite 1500 1055 West Georgia Street, Vancouver, British Columbia, V6E 4N7,
as agent for service of process. Purchasers are advised that it may not be
possible for investors to enforce judgments obtained in Canada against any
person who resides outside of Canada, even if the party has appointed an agent
for service of process.
Our head office is at 15
th
Floor, 1040 West Georgia
Street, Vancouver, British Columbia V6E 4H1. The registered office of the
Company is located at Suite 1500 1055 West Georgia Street, Vancouver, British
Columbia V6E 4N7.
Cantor Fitzgerald Canada
Corporation
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TD Securities Inc.
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BMO Nesbitt Burns Inc.
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TABLE OF CONTENTS
C-2
GENERAL MATTERS
In this Prospectus, Northern
Dynasty, we, us and our refers, collectively, to Northern Dynasty
Minerals Ltd. and our wholly owned subsidiaries.
DOCUMENTS INCORPORATED BY REFERENCE
Information has been incorporated
by reference in this Prospectus from documents filed with securities commissions
or similar authorities in Canada.
Copies of the documents incorporated
herein by reference may be obtained upon request without charge from Northern
Dynasty Minerals Ltd., 15
th
Floor, 1040 West Georgia Street,
Vancouver, British Columbia V6E 4H1
(telephone 604-684-6365) (attention:
Corporate Secretary), or by accessing our disclosure documents available through
the Internet on the Canadian System for Electronic Document Analysis and
Retrieval (SEDAR) at
www.sedar.com
.
The following documents
(
documents incorporated by reference
or
documents incorporated
herein by reference
) have been filed by the Company with various securities
commissions or similar authorities in the provinces of Canada in which the
Company is a reporting issuer, are specifically incorporated herein by reference
and form an integral part of this Prospectus:
1.
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our annual information form for the year ended December
31, 2015 dated March 28, 2016 (the
2015 AIF
);
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2.
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our audited consolidated financial statements together
with the notes thereto for the financial years ended December 31, 2015,
2014 and 2013, together with the report of the independent registered
public accounting firm thereon (the
2015 Annual Financial
Statements
);
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3.
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our annual managements discussion and analysis of
financial condition and operations for the financial year ended December
31, 2015 (the
2015 MD&A
);
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4.
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our unaudited interim consolidated financial statements
for the three and nine months ended September 30, 2016 and 2015, except
for the notice provided under subparagraph 4.3(3)(a) of National
Instrument 51-102
Continuous Disclosure Obligations
;
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5.
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our managements discussion and analysis of financial
condition and operations for the three and nine months ended September 30,
2016 (the
Q3 2016 MD&A
);
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6.
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our management information circular dated May 18, 2016
distributed in connection with the annual meeting of our shareholders held
on June 16, 2016 (the
2016 Information Circular
);
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7.
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our material change report dated January 29, 2016
regarding the closing of the acquisition of Mission Gold Ltd.;
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8.
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our material change report dated February 25, 2016
regarding the restructuring of our board of directors; and
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9.
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our material change report dated June 13, 2016 regarding
the completion of our prospectus offerings of 38,000,000
units.
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Any documents of the type
referred to in the preceding paragraph, or similar material, including all
annual information forms, all information circulars, all annual and interim
financial statements and managements discussion and analysis relating thereto,
all material change reports (excluding confidential material change reports, if
any), all business acquisition reports, all updated earnings coverage ratio
information and certain other documents as set forth in Item 11.1 of Form
44-101F1 of National Instrument 44-101
Short Form Prospectus
Distributions
filed by us with securities commissions or similar authorities
in the relevant provinces of Canada subsequent to the date of this Prospectus
and prior to the completion of the Offering will be deemed to be incorporated by
reference into this Prospectus.
C-3
Any statement contained in a
document incorporated or deemed to be incorporated herein by reference will be
deemed to be modified or superseded, for purposes of this Prospectus, to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated herein by reference
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 that 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 will not be deemed,
except as so modified or superseded, to constitute part of this Prospectus.
Information contained on our
website,
www.northerndynasty.com
, is not part of this Prospectus and is
not incorporated herein by reference and may not be relied upon by you for the
purpose of determining whether to purchase the Offered Shares.
MARKETING MATERIALS
Any marketing materials are not
part of this Prospectus to the extent that the contents thereof have been
modified or superseded by a statement contained in this Prospectus. Any template
version of any marketing materials filed with the securities commission or
similar authority in each of each of the provinces of Canada, except Québec, in
connection with the Offering after the date of this Prospectus but prior to the
termination of the distribution of the securities under this Prospectus
(including any amendments to, or an amended version of, any template version of
marketing materials) is deemed to be incorporated by reference in this
Prospectus.
FORWARD-LOOKING STATEMENTS
This Prospectus and the documents
incorporated herein by reference contain certain forward-looking information and
forward-looking statements within the meaning of applicable Canadian securities
laws and forward-looking statements within the meaning of the United States
Private Securities Litigation Reform Act of 1995. Forward-looking statements
describe our future plans, strategies, expectations and objectives, and are
generally, but not always, identifiable by use of the words may, will,
should, continue, expect, anticipate, estimate, believe, intend,
plan or project or the negative of these words or other variations on these
words or comparable terminology.
Forward-looking statements
contained or incorporated by reference into this Prospectus include, without
limitation, statements regarding:
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the outcome of our multi-dimensional strategy to address
the United States Environmental Protection Agencys (
EPA
)
pre-emptive regulatory process under Section 404(c) of the
Clean Water
Act
(the
CWA
) and our plans to prepare the Pebble Project (as
hereinafter defined) to initiate federal and state permitting under the
National Environmental Policy Act
(the
NEPA
) (the
Multi-dimensional Strategy
);
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the outcome of the legal and mediation proceedings that
we are engaged in with the EPA and any future actions that may or may not
be taken by the EPA;
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the impact of any change in the administration of the EPA
resulting from the new Republican administration;
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our ability to proceed with applications for federal and
state permitting under the CWA and the NEPA;
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our expectations regarding the potential for securing the
necessary permitting of a mine at the Pebble Project;
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our expected financial performance in future periods;
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C-4
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our plan of operations, including our plans to carry out
and finance the Multi-dimensional Strategy activities, exploration and
development activities and legal and mediation proceedings;
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our ability to raise capital for the
Multi-dimensional Strategy activities, exploration and development
activities;
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our expectations regarding the exploration and
development potential of the Pebble Project; and
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factors relating to our investment decisions.
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Forward-looking information is
based on the reasonable assumptions, estimates, analysis and opinions of
management made in light of its experience and its perception of trends, current
conditions and expected developments, as well as other factors that management
believes to be relevant and reasonable in the circumstances at the date that
such statements are made, but which may prove to be incorrect. We believe that
the assumptions and expectations reflected in such forward-looking information
are reasonable.
Key assumptions upon which the
Companys forward-looking information are based include:
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that we will be able to secure sufficient capital
necessary for the Multi-dimensional Strategy activities, litigation
against and mediation with the EPA, continued environmental assessment and
permitting activities and engineering work which must be completed prior
to any potential development of the Pebble Project which would then
require engineering and financing in order to advance to ultimate
construction;
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we will ultimately have the opportunity to proceed with
permit application preparations under the CWA and NEPA for the Pebble
Project;
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that we will ultimately be able to demonstrate that a
mine at the Pebble Project can be developed and operated in an
environmentally sound and socially responsible manner, meeting all
relevant federal, state and local regulatory requirements so that we will
be ultimately able to obtain permits authorizing construction of a mine at
the Pebble Project;
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that the market prices of copper, gold, molybdenum and
silver will not significantly decline or stay depressed for a lengthy
period of time;
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that our key personnel will continue their employment
with us; and
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that we will continue to be able to secure minimal
adequate financing on acceptable terms.
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Readers are cautioned that the
foregoing list is not exhaustive of all factors and assumptions which may have
been used. Forward looking statements are also subject to risks and
uncertainties facing our business, any of which could have a material impact on
our outlook.
Some of the risks we face and the
uncertainties that could cause actual results to differ materially from those
expressed in the forward-looking statements include:
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a negative outcome of the Multi-dimensional Strategy,
including legal and political challenges with which we are engaged
regarding the Pebble Project, which would have a material adverse effect
on us;
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an inability to ultimately obtain permitting
for a mine at the Pebble Project;
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an inability to continue to fund exploration
and development activities and other operating costs;
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the highly cyclical nature of the mineral
resource exploration business;
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C-5
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the pre-development stage economic viability and
technical uncertainties of the Pebble Project and the lack of known
reserves on the Pebble Project;
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an inability to recover even the financial statement
carrying values of the Pebble Project if we cease to continue on a going
concern basis;
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the potential for loss of the services of key executive
officers;
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a history of, and expectation of further, financial
losses from operations impacting our ability to continue on a going
concern basis;
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the volatility of copper, gold, molybdenum and silver
prices and mining share prices;
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the inherent risk involved in the exploration,
development and production of minerals, and the presence of unknown
geological and other physical and environmental hazards at the Pebble
Project;
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the potential for changes in, or the introduction of new,
government regulations relating to mining, including laws and regulations
relating to the protection of the environment and project legal titles;
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|
potential claims by third parties to titles or rights
involving the Pebble Project;
|
|
|
|
|
|
the possible inability to insure our operations against
all risks;
|
|
|
|
|
|
the highly competitive nature of the mining business;
|
|
|
|
|
|
the potential equity dilution to current shareholders
from future equity financings; and
|
|
|
|
|
|
that we have never paid dividends and will not do so in
the foreseeable future.
|
While the effort was made to list
the primary risk factors, this list should not be considered exhaustive of the
factors that may affect any of our forward-looking statements or information.
Forward-looking statements or information are statements about the future and
are inherently uncertain, and actual achievements of the Company or other future
events or conditions may differ materially from those reflected in the
forward-looking statements or information due to a variety of risks,
uncertainties and other factors, including, without limitation, the risks and
uncertainties described above and otherwise contained herein.
Our forward-looking statements
and risk factors are based on the reasonable beliefs, expectations and opinions
of management on the date of this Prospectus. Although we have attempted to
identify important factors that could cause actual results to differ materially
from those contained in forward-looking information, there may be other factors
that cause results not to be as anticipated, estimated or intended. There is no
assurance that such information will prove to be accurate, as actual results and
future events could differ materially from those anticipated in such
information. Accordingly, readers should not place undue reliance on
forward-looking information. We do not undertake to update any forward-looking
information, except as, and to the extent required by, applicable securities
laws.
We qualify all the forward
looking statements contained in this Prospectus and the documents incorporated
by reference herein and therein by the foregoing cautionary statements.
CAUTIONARY NOTES TO UNITED STATES INVESTORS CONCERNING
MINERAL RESERVE AND RESOURCE ESTIMATES
This Prospectus, including the
documents incorporated by reference herein, uses terms that comply with
reporting standards in Canada and certain estimates are made in accordance with
Canadian National Instrument 43-101
Standards of Disclosure for Mineral
Projects
(
NI 43-101
). NI 43-101 is a rule developed by the Canadian
Securities Administrators that establishes standards for all public disclosure
an issuer makes of scientific and technical information concerning mineral projects. Unless otherwise indicated, all
resource estimates contained in or incorporated by reference in this Prospectus
have been prepared in accordance with NI 43-101. These standards differ
significantly from the requirements of the SEC, and resource information
contained herein and incorporated by reference herein may not be comparable to
similar information disclosed by companies in the United States (
US
companies
).
C-6
In addition, this Prospectus uses
the terms measured mineral resources, indicated mineral resources and
inferred mineral resources to comply with the reporting standards in Canada.
These classifications adhere to the mineral resource and mineral reserve
definitions and classification criteria developed by the Canadian Institute of
Mining and are more particularly described in the 2015 AIF. We advise United
States investors that while the terms measured mineral resources, indicated
mineral resources and inferred mineral resources are recognized and required
by Canadian regulations, the SEC does not recognize them. United States
investors are cautioned not to assume that any part or all of the mineral
deposits in these categories will ever be converted into mineral reserves. These
terms have a great amount of uncertainty as to their existence, and great
uncertainty as to their economic and legal feasibility.
Further, inferred resources
have a great amount of uncertainty as to their existence and as to whether they
can be mined legally or economically. Therefore, United States investors are
also cautioned not to assume that all or any part of the inferred resources
exist. In accordance with Canadian rules, estimates of inferred mineral
resources cannot form the basis of feasibility or other economic studies,
except in limited circumstances where permitted under NI 43-101.
It cannot be assumed that all or
any part of measured mineral resources, indicated mineral resources, or
inferred mineral resources will ever be upgraded to a higher category.
Investors are cautioned not to assume that any part of the reported measured
mineral resources, indicated mineral resources, or inferred mineral
resources in this Prospectus is economically or legally mineable.
In addition, disclosure of
contained ounces is permitted disclosure under Canadian regulations; however,
the SEC only permits issuers to report mineralization as in place tonnage and
grade without reference to unit measures.
For the above reasons,
information contained in this Prospectus and the documents incorporated by
reference herein containing descriptions of our mineral deposits may not be
comparable to similar information made public by US companies subject to the
reporting and disclosure requirements under the United States federal securities
laws and the rules and regulations thereunder.
CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION
Unless stated otherwise or as
the context otherwise requires, all references to dollar amounts in this
Prospectus are references to Canadian dollars. References to $ or Cdn.$ are
to Canadian dollars and references to U.S. dollars or US$ are to United
States dollars.
The high, low, average and
closing noon rates for the United States dollar in terms of Canadian dollars for
each of the financial periods of the Company ended September 30, 2016, December
31, 2015, December 31, 2014 and December 31, 2013, as quoted by the Bank of
Canada, were as follows:
|
|
Nine months ended
|
|
|
Year ended
|
|
|
Year ended
|
|
|
Year ended
|
|
|
|
September 30, 2016
|
|
|
December 31, 2015
|
|
|
December 31, 2014
|
|
|
December 31, 2013
|
|
|
|
(expressed in
Canadian dollars)
|
|
High
|
|
1.4589
|
|
|
1.3990
|
|
|
1.1643
|
|
|
1.0697
|
|
Low
|
|
1.2544
|
|
|
1.1728
|
|
|
1.0614
|
|
|
0.9839
|
|
Average
|
|
1.3218
|
|
|
1.2787
|
|
|
1.1045
|
|
|
1.0299
|
|
Closing
|
|
1.3117
|
|
|
1.3840
|
|
|
1.1601
|
|
|
1.0636
|
|
On January 10, 2017, the noon
exchange rate for the United States dollar in terms of Canadian dollars, as
quoted by the Bank of Canada, was U.S.$1.00 = $1.3208.
C-7
OUR BUSINESS
This summary does not contain
all the information about Northern Dynasty that may be important to you. You
should read the more detailed information and financial statements and related
notes that are incorporated by reference into and are considered to be a part of
this Prospectus.
We are a mineral exploration
company existing under the
Business Corporations Act
(British Columbia)
focused on developing, through our subsidiaries, the Pebble
copper-gold-molybdenum-silver mineral project located in the state of Alaska,
U.S. (the
Pebble Project
). The Pebble Project is located in southwest
Alaska, 19 miles (30 kilometers) from the village of Iliamna, and approximately
200 miles (320 kilometers) southwest of the city of Anchorage.
Our Alaska mineral resource
exploration business is operated through an Alaskan registered limited
partnership, the Pebble Limited Partnership (the
Pebble Partnership
),
in which we own a 100% interest through an Alaskan general partnership, the
Northern Dynasty Partnership. Pebble Mines Corp., a 100% indirectly owned
Alaskan subsidiary of the Company, is the general partner of the Pebble
Partnership and responsible for its day-to-day operations.
In February 2014, the EPA
announced the initiation of a regulatory action under the CWA to consider
restriction or a prohibition on mining activities associated with the Pebble
deposit. Much of the Companys efforts since that time have been focused around
providing information and responses to ward off this action. The background and
history of the regulatory action initiated by the EPA, and our efforts to
address this regulatory action, are summarized in detail in our 2015 AIF, 2015
MD&A and our Q3 2016 MD&A.
Ongoing work by Northern Dynasty
and the Pebble Partnership during 2016 has been concentrated on three key
activities:
|
|
advancing a Multi-Dimensional Strategy, as described in
our 2015 AIF, 2015 MD&A and our Q3 2016 MD&A, to address the EPAs
pre-emptive regulatory action under Section 404(c) of the CWA;
|
|
|
|
|
|
maintaining an active corporate presence in Alaska in
order to advance relationships with political and regulatory offices of
government, Alaska Native partners and other stakeholder groups; and
|
|
|
|
|
|
seeking potential partner(s) with greater financial
resources to further advance the project.
|
On October 27, 2016, the Pebble
Partnership and the EPA filed a joint Notice in federal court stating their
intent to enter into mediation in an effort to resolve ongoing litigation under
the Federal Advisory Committee Act (
FACA
). To date, no mediator has
been appointed in these mediation proceedings.
On December 30, 2016, the Pebble
Partnership and the EPA filed a joint Notice in federal court staying the
ongoing FACA litigation until March 20, 2017, as part of an effort to resolve
ongoing litigation and to provide the opportunity for the Company and the EPA to
proceed with the mediation proceedings.
Our business objectives and
milestones for 2017 are outlined below under Use of Proceeds.
Our current Multi-Dimensional
Strategy may be impacted by the change in the leadership of the EPA that will be
completed in the first quarter of 2017 as a result of the new Republican
administration. We have had preliminary discussions with certain members of the
new administrations transition team and believe, based on these discussions,
that there is a possibility that the new leadership of the EPA will reconsider
its position with respect to the EPAs previously proposed pre-emptive action
under Section 404(c) of the CWA. This would allow us to proceed with our
permitting process. These discussions are, however, not binding and there is no
assurance that this change of leadership will result in the EPA reversing its
position, and at this time we are still planning to proceed to mediation with
the EPA. There can also be no assurance of the results of mediation with the
EPA. In the event that there is a change in the EPAs position that results in
the Company being able to proceed with its permitting process, we anticipate
that (i) our MultiDimensional Strategy will change somewhat, as the key
objective of this strategy will in effect have been met, however, political and
social license outreach efforts will continue, (ii) we will commence the
preparation of documentation to initiate our applications for federal and state permitting
under the CWA and the NEPA, and (iii) we may re-allocate some of the
Multi-Dimensional Strategy budget to these permitting efforts. In the event that
there is no change on the EPA position, then we will continue with our
Multi-Dimensional Strategy and the related mediation proceedings with the EPA.
Even if we are successful in our dealings with the EPA and commence the
permitting process, there can be no assurance that we will be successful in
securing the permits we require to proceed with development of the Pebble
Project.
C-8
USE OF PROCEEDS
The net proceeds to be received
by the Company from the sale of the Offered Shares, after deducting the
Underwriters Fee and expenses of the Offering, which are estimated to be US$,
will be US$ (US$ if the Over-Allotment Option is exercised).
We intend to use the net proceeds
from the Offering (assuming no exercise of the Over-Allotment Option) as follows
to fund our operational expenditures to December 2017:
Use of Proceeds
|
Amount
(US$
millions)
|
To continue to fund the Multi-dimensional Strategy to
address the EPA pre-emptive regulatory action under Section 404(c) of the
CWA and prepare the Pebble Project to initiate federal and state
permitting under NEPA. This includes litigation as set out in the
Prospectus related to the EPAs statutory authority to act pre-emptively
under the CWA, potential violations of the
Federal Advisory Committee
Act
and
Freedom of
Information Act
, facilitation of
various third-party investigations of EPA actions with respect to the
Pebble Project and mediation costs.
(1)
(2)
|
$
|
Environmental monitoring, engineering and
environmental studies, field investigations and related technical studies
to finalize a proposed development plan, and prepare documentation to
initiate federal and state permitting under the CWA and the NEPA.
(2)
|
$
|
Enhanced outreach and engagement with political and
regulatory offices in the Alaska state and U.S. federal government, among
Alaska Native partners and broader regional and state-wide stakeholder
groups.
|
$
|
Alaskan corporate, tenure and site maintenance.
|
$
|
General and administration costs.
|
$
|
Working Capital.
(1)
|
$
|
Total
|
$
|
(1)
|
The Multi-dimensional Strategy costs do not include the
payment of a success-contingent deferred legal obligation in the event
that the Company achieves a court win or an out-of-court settlement,
which, in either case, prevents any pre-emptive regulatory action by the
EPA under Section 404(c) of the CWA. If this happens, we may use all or a
portion of the funds allocated to Working Capital to make payments on
account of these legal obligations and, if our working capital is
insufficient, we will have to raise additional funds to pay the fees or
renegotiate the amount and/or due date of such payments. However, the
Company is unable to estimate or determine the length of time that it will
take to advance to specific milestone events or final conclusion. As of
September 30, 2016, if there was a favourable outcome or settlement, the
Company estimates there would potentially be additional legal fees of
$21.3 million (US$16.2 million at closing Bank of Canada rate on September
30, 2016 of $1.3117 per US$1.00) payable by the
Company.
|
C-9
(2)
|
In the event that our Multi-Dimensional Strategy is
successful during 2017 or the objectives of this strategy are otherwise
met, we may re- allocate some of the remaining funds for this budgeted
expense to preparation of documentation to initiate federal and state
permitting under the CWA and NEPA
|
Although we intend to use the
proceeds from the Offering as set forth above, the actual allocation of the net
proceeds may vary depending on future developments, especially the outcome of
the Multi-dimensional Strategy (including legal and political outcomes) at the
discretion of our board of directors and management. A material portion of our
use of proceeds is for professional services, especially legal counsel, which
due to the nature of legal and political opposition are driven by forces beyond
our control. In the event the litigation process is more drawn out than
estimated, the costs of the Multi-dimensional Strategy set out above may
increase substantially. Investors who are not prepared to afford our management
broad discretion in the application of these funds should not be holders of the
Companys securities.
Pending the use of proceeds
outlined above, the Company intends to invest the net proceeds of the Offering
in short-term, interest bearing deposits. In the event that the Over-Allotment
Option is exercised, any additional net proceeds will be allocated to general
working capital.
Business Objectives and Milestones
Our business objectives for 2017
are to:
|
|
continue to advance the Multi-dimensional Strategy to
address the EPAs pre-emptive CWA regulatory action with the goal that the
Pebble Project will be able to initiate federal and state permitting under
the NEPA unencumbered by any extraordinary development restrictions
imposed by the EPA;
|
|
|
|
|
|
maintain an active corporate presence in Alaska to
advance relationships with political and regulatory offices of government
(both in Alaska and Washington, D.C.), Alaska Native partners and broader
stakeholder relationships;
|
|
|
|
|
|
if either our Multi-Dimensional Strategy is successful or
the EPA changes it position with the result that we are able to proceed
with our permit applications, prepare documentation to initiate federal
and state permitting under the CWA and the NEPA;
|
|
|
|
|
|
maintain the Pebble Project and Pebble claims in good
standing;
|
|
|
|
|
|
continue to seek potential partner(s) with greater
financial resources to further advance the Pebble Project; and
|
|
|
|
|
|
continue general and administrative activities to
maintain the Company in good standing.
|
CONSOLIDATED CAPITALIZATION
There have been no material
changes in our share and debt capital, on a consolidated basis, since September
30, 2016, being the date of our most recently filed unaudited consolidated
financial statements incorporated by reference in this Prospectus, except
for:
|
(a)
|
the issuances of 5,954,412 additional Common Shares
pursuant to the exercise of outstanding warrants;
|
|
|
|
|
(b)
|
the issuances of 542,202 additional Common Shares upon
the exercise of outstanding employee incentive plan stock options; and
|
|
|
|
|
(b)
|
the issuances of 164,500 additional Common Shares upon
the exercise of outstanding Non-Employee stock options,
|
each as described further below
under Prior Sales.
C-10
The following table shows the effect of the Offering on the
issued capital of the Company:
Description
|
As at September 30,
2016
Before Giving Effect to the
Offering
|
Pro Forma as at
September 30, 2016
After Giving Effect to the
Offering, assuming No
Exercise of the Over-
Allotment Option
(1),
(2)
|
Pro Forma as at
September 30, 2016
After Giving Effect to the
Offering, assuming Full
Exercise of the Over-
Allotment Option
(1),
(2)
|
Assets
|
|
|
|
Cash
|
$7,911,000
|
$
|
$
|
Liabilities
|
|
|
|
Current Liabilities
|
$1,369,000
|
$1,369,000
|
$1,369,000
|
Total Liabilities
|
$1,369,000
|
$1,369,000
|
$1,369,000
|
Equity
|
|
|
|
Common Shares
(3)
|
264,690,247
|
|
|
Share
Purchase Warrants and Non- Employee Options
(4)
|
59,690,396
|
59,690,396
|
59,690,396
|
Options
(5)
|
16,353,333
|
16,353,333
|
16,353,333
|
Deferred share units
|
458,129
|
458,129
|
458,129
|
Restricted
share units
|
639,031
|
639,031
|
639,031
|
Shareholders
Equity
|
$146,466,000
|
$
|
$
|
(1)
|
Calculated using an exchange rate of $ to US$1.00, based
on the noon exchange rate of the Bank of Canada on January ,
2017
.
|
|
|
(2)
|
Net proceeds of the Offering, after deduction of expected
costs of $, are estimated at US$ million, if the Over-Allotment Option
is not exercised. Net proceeds of the Offering, after deduction of
expenses, are estimated at US$ million if the Over-Allotment Option is
exercised.
|
|
|
(3)
|
Based on 264,690,247 Common Shares outstanding as at
September 30, 2016, exclusive of any common shares issued subsequent to
September 30, 2016 described further below under Prior Sales.
|
|
|
(4)
|
Based on 59,079,396 share purchase warrants (average
exercise price of $0.74) and 611,000 Non-employee options (average
exercise price of $0.39) outstanding as at September 30, 2016, exclusive
of any warrants or Non-employee options exercised subsequent to September
30, 2016 described further below under Prior Sales.
|
|
|
(5)
|
Based on 16,353,333 options (average exercise price of
$0.92) outstanding as at September 30, 2016, exclusive of any options
exercised subsequent to September 30, 2016 described further below under
Prior Sales.
|
C-11
PLAN OF DISTRIBUTION
The Offered Shares will be
offered in each of the provinces of Canada, except Québec, and in the United
States pursuant to the multi-jurisdictional disclosure system implemented by the
SEC and the securities regulatory authorities in Canada. Pursuant to the
Underwriting Agreement, the Company has agreed to issue and sell and the
Underwriters have severally agreed to purchase, as principals, subject to
compliance with all necessary legal requirements and the terms and conditions
contained in the Underwriting Agreement, a total of Offered Shares at the
Offering Price of US$ per Offered Share, payable in cash to the Company against
delivery of such Offered Shares, on the Closing Date. In consideration for their
services in connection with the Offering, the Underwriters will be paid the
Underwriters Fee equal to 5.0% of the gross proceeds of the Offering (US$ per
Offered Share, for an aggregate fee payable by the Company of US$, exclusive of
the Over-Allotment Shares). 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, the number
of Offered Shares listed next to its name in the following table:
|
Number of
Offered Shares
|
Cantor
Fitzgerald Canada Corporation
|
|
TD Securities Inc.
|
|
BMO Nesbitt Burns
Inc.
|
|
Total
|
|
Pursuant to the Underwriting
Agreement, Northern Dynasty has granted to the Underwriters the Over-Allotment
Option, exercisable in whole or in part at any time up to 30 days after the
Closing Date, to purchase up to an additional Offered Shares 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 Shares
thereunder. This Prospectus qualifies for distribution the Offered Shares as
well as the grant of the Over-Allotment Option and the issuance of the
Over-Allotment Shares pursuant to the exercise of the Over-Allotment Option.
A purchaser who acquires
Over-Allotment Shares forming part of the Underwriters over-allocation position
acquires those Over-Allotment Shares under the Prospectus, regardless of whether
the over-allocation position is ultimately filled through the exercise of the
Over-Allotment Option or secondary market purchases.
Cantor Fitzgerald Canada
Corporation, TD Securities Inc. and BMO Nesbitt Burns Inc. may sell Offered
Shares in the United States through their U.S. affiliates, Cantor Fitzgerald
& Co., TD Securities (USA) LLC and BMO Capital Markets Corp., which are not registered as investment
dealers in any Canadian jurisdiction and, accordingly, will only sell Offered
Shares into the United States and will not, directly or indirectly, solicit
offers to purchase or sell the Offered Shares in Canada. Subject to applicable
law, the Underwriters may offer to sell the Offered Shares outside of Canada and
the United States.
Pursuant to policies of certain
Canadian securities regulatory authorities, the Underwriters may not, throughout
the period of distribution under the Offering, bid for or purchase Common Shares
for their own accounts or for accounts over which they exercise control or
direction. The foregoing restriction is subject to certain exceptions, on the
condition that the bid or purchase not be engaged in for the purpose of creating
actual or apparent active trading in or raising the price of the Common Shares.
These exceptions include a bid or purchase permitted under Universal Market
Integrity Rules for Canadian marketplaces administered by the Investment
Industry Regulatory Organization of Canada relating to market stabilization and
passive market making activities, and a bid or purchase made for or on behalf of
a customer where the order was not solicited during the period of distribution.
Subject to the foregoing, the Underwriters may effect transactions which stabilize or maintain the market price of
the Common Shares at levels other than those which otherwise might prevail on
the open market. These stabilizing transactions, syndicate covering transactions
and penalty bids may have the effect of preventing or mitigating a decline in
the market price of the Common Shares, and may cause the price of the Offered
Shares to be higher than would otherwise exist in the open market absent such
stabilizing activities. As a result, the price of the Offered Shares may be
higher than the price that might otherwise exist in the open market. Such
transactions, if commenced, may be discontinued at any time.
C-12
The Underwriters propose to
offer the Offered Shares initially at the Offering Price. After a reasonable
effort has been made to sell all of the Offered Shares 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 Shares 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 regulatory out and material adverse change
out rights of termination.
The Underwriters are obligated to
take up and pay for all the Offered Shares offered by this Prospectus (not
including the Over-Allotment Shares issuable upon exercise of the Over-Allotment
Option) if any are purchased under the Underwriting Agreement, subject to
certain exceptions. Northern Dynasty 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 US$225,000 (exclusive
of taxes and disbursements).
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.
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 equity securities of
the Company for a period of 90 days from the Closing Date, without the prior
written consent of the Lead Underwriters, on behalf of the Underwriters, such
consent to not be unreasonable withheld or delayed, other than: (i) the issuance
of the Offered Shares; (ii) pursuant to the grant of options or other securities
(including RSUs and DSUs) in the normal course pursuant to the Companys
employee stock option plan or other equity compensation plan, and the issuance
of any common shares upon the exercise of such options outstanding as of the
date of the Underwriting Agreement; (iii) the issuance of equity securities
pursuant to the exercise or conversion, as the case may be, of any warrants or
other convertible securities of the Company outstanding as of the date of the
Underwriting Agreement; and (iv) the issuance of equity securities in connection
with one or more
bona fide
acquisitions by the Company (other than a
direct or indirect acquisition, whether by way of one or more transactions, of
an entity all or substantially all of the assets of which are cash, marketable
securities or financial in nature or an acquisition that is structured primarily
to defeat the intent of this provision).
The Company has agreed to use its
reasonable efforts to cause each director and officer of the Company to enter
into lock-up agreements in favour of the Underwriters evidencing their agreement
not to, for a period of 90 days following the Closing Date, directly or
indirectly offer, sell or enter into any other agreement to transfer the
economic consequences of, or otherwise dispose of or deal with, or publicly
announce any intention to do any of the foregoing, any Common Shares or other
securities of the Company held by them, directly or indirectly or under their
control or direction, other than as permitted under the terms of the lock-up
agreements.
This 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 Shares 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
in electronic format, the information on these websites is not part of this Prospectus or the
registration statement of which this Prospectus 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.
C-13
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.
Subscriptions 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 January , 2017.
DESCRIPTION OF SECURITIES BEING DISTRIBUTED
Authorized Capital
The authorized share capital of
the Company consists of an unlimited number of Common Shares without par value,
of which 271,351,361 were issued and outstanding as at January 10, 2017.
Common Shares
The holders of Common Shares are
entitled to receive notice of any meeting of the shareholders of the Company and
to attend and vote thereat, except those meetings at which only the holders of
shares of another class or of a particular series are entitled to vote. Each
Common Share entitles its holder to one vote. The holders of Common Shares are
entitled to receive on a pro-rata basis such dividends as the board of directors
may declare out of funds legally available therefor. In the event of the
dissolution, liquidation, winding-up or other distribution of our assets, such
holders are entitled to receive on a pro-rata basis all of assets of the Company
remaining after payment of all of liabilities. The Common Shares carry no
pre-emptive or conversion rights.
PRIOR SALES
During the 12- month period
before the date of this Prospectus, we have issued Common Shares and securities
convertible into Common Shares as follows:
|
|
Aggregate Number and
Type of
|
|
|
|
|
Date of Issuance
|
|
Securities Issued
|
|
|
Price per Security
|
|
January 13, 2016
|
|
61,100 Common Shares
(2)
|
|
|
$0.37
|
|
January 13, 2016
|
|
37,600 Common Shares
(2)
|
|
|
$0.29
|
|
January 27, 2016
|
|
112,800 Common Shares
(2)
|
|
|
$0.29
|
|
June 2016 Prospectus Offering
|
|
|
|
|
|
|
June 10, 2016
|
|
38,000,000 Common Shares
|
|
|
$0.45 per Unit
|
|
June 10, 2016
|
|
38,000,000 Warrants
|
|
|
$0.65 per Warrant Share
|
|
July 2016 Private Placement
|
|
|
|
|
|
|
July 5, 2016
|
|
4,444,376 Common Shares
|
|
|
$0.45 per Unit
|
|
July 5, 2016
|
|
4,444,376 Warrants
|
|
|
$0.65 per Warrant Share
|
|
C-14
|
|
Aggregate Number and Type of
|
|
|
|
|
Date of
Issuance
|
|
Securities Issued
|
|
|
Price per Security
|
|
July 11, 2 016
|
|
6,206,000 Options
|
|
|
$0.49 per Option
|
|
August 31, 2016
|
|
10,000 Common Shares
(1)
|
|
|
$0.49
|
|
September 2, 2016
|
|
13,333 Common Shares
(1)
|
|
|
$0.50
|
|
September 2, 2016
|
|
15,775 Common Shares
(1)
|
|
|
$0.55
|
|
September 12, 2016
|
|
22,553 Common Shares
(3)
|
|
|
$0.55
|
|
September 13, 2016
|
|
12,000 Common
Shares
(3)
|
|
|
$0.49
|
|
September 13, 2016
|
|
13,334 Common Shares
(1)
|
|
|
$0.50
|
|
September 15, 2016
|
|
8,000 Common Shares
(1)
|
|
|
$0.50
|
|
October 24, 2016
|
|
60,000 Common Shares
(1)
|
|
|
$0.50
|
|
November 1, 2016
|
|
13,334 Common Shares
(1)
|
|
|
$0.50
|
|
November 1, 2016
|
|
8,000 Common Shares
(1)
|
|
|
$0.50
|
|
November 2, 2016
|
|
56,400 Common
Shares
(2)
|
|
|
$0.40
|
|
November 4, 2016
|
|
549,500 Common Shares
(4)
|
|
|
$0.65
|
|
November 10, 2016
|
|
3,000 Common Shares
(1)
|
|
|
$0.50
|
|
November 14, 2016
|
|
30,000 Common Shares
(1)
|
|
|
$0.50
|
|
November 15, 2016
|
|
14,000 Common Shares
(1)
|
|
|
$0.50
|
|
November 15, 2016
|
|
26,450 Common
Shares
(3)
|
|
|
$0.55
|
|
November 17, 2016
|
|
100,000 Common Shares
(3)
|
|
|
$0.55
|
|
November 18, 2016
|
|
2,500 Common Shares
(3)
|
|
|
$0.55
|
|
November 21, 2016
|
|
5,500 Common Shares
(4)
|
|
|
$0.65
|
|
November 21, 2016
|
|
212,600 Common
Shares
(3)
|
|
|
$0.55
|
|
November 22, 2016
|
|
200,000 Common
Shares
(4)
|
|
|
$0.65
|
|
November 22, 2016
|
|
470,000 Common
Shares
(3)
|
|
|
$0.55
|
|
November 22, 2016
|
|
32,300 Common
Shares
(2)
|
|
|
$0.40
|
|
November 23, 2016
|
|
150,000 Common Shares
(1)
|
|
|
$1.77
|
|
November 23, 2016
|
|
53,334 Common Shares
(1)
|
|
|
$0.50
|
|
November 23, 2016
|
|
1,111,666 Common
Shares
(4)
|
|
|
$0.65
|
|
November 24, 2016
|
|
500 Common Shares
(4)
|
|
|
$0.65
|
|
December 1, 2016
|
|
25,000 Common Shares
(3)
|
|
|
$0.55
|
|
December 1, 2016
|
|
25,000 Common
Shares
(4)
|
|
|
$0.65
|
|
December 6, 2016
|
|
125,000 Common Shares
(3)
|
|
|
$0.55
|
|
December 8, 2016
|
|
100,000 Common Shares
(4)
|
|
|
$0.65
|
|
December 8, 2016
|
|
400,000 Common Shares
(3)
|
|
|
$0.55
|
|
December 9, 2016
|
|
500,000 Common Shares
(3)
|
|
|
$0.55
|
|
December 13, 2016
|
|
8,000 Common Shares
(1)
|
|
|
$0.50
|
|
December 13, 2016
|
|
10,000 Common
Shares
(2)
|
|
|
$0.40
|
|
C-15
|
|
Aggregate Number and Type of
|
|
|
|
|
Date of
Issuance
|
|
Securities Issued
|
|
|
Price per Security
|
|
December 14, 2016
|
|
150,000 Common Shares
(4)
|
|
|
$0.65
|
|
December 14, 2016
|
|
33,100 Common Shares
(3)
|
|
|
$0.55
|
|
December 19, 2016
|
|
49,996 Common Shares
(3)
|
|
|
$0.55
|
|
December 20, 2016
|
|
6,200 Common Shares
(1)
|
|
|
$1.77
|
|
December 20, 2016
|
|
50,000 Common Shares
(1)
|
|
|
$0.50
|
|
December 20, 2016
|
|
400,000 Common Shares
(3)
|
|
|
$0.55
|
|
December 20, 2016
|
|
300,000 Common Shares
(4)
|
|
|
$0.65
|
|
December 21, 2016
|
|
50,000 Common Shares
(3)
|
|
|
$0.55
|
|
December 21, 2016
|
|
50,000 Common Shares
(4)
|
|
|
$0.65
|
|
December 21, 2016
|
|
18,000 Common Shares
(1)
|
|
|
$1.77
|
|
December 21, 2016
|
|
3,000 Common Shares
(1)
|
|
|
$1.77
|
|
December 21, 2016
|
|
12,000 Common Shares
(1)
|
|
|
$0.49
|
|
December 21, 2016
|
|
22,000 Common Shares
(1)
|
|
|
$0.50
|
|
December 21, 2016
|
|
65,800 Common Shares
(2)
|
|
|
$0.40
|
|
December 22, 2016
|
|
100,000 Common Shares
(4)
|
|
|
$0.65
|
|
December 23, 2016
|
|
13,334 Common Shares
(1)
|
|
|
$0.50
|
|
December 28, 2016
|
|
25,000 Common Shares
(1)
|
|
|
$0.49
|
|
December 28, 2016
|
|
111,900 Common Shares
(4)
|
|
|
$0.65
|
|
December 29, 2016
|
|
80,000 Common Shares
(3)
|
|
|
$0.55
|
|
December 29, 2016
|
|
343,900 Common Shares
(4)
|
|
|
$0.65
|
|
December 29, 2016
|
|
3,000 Common Shares
(1)
|
|
|
$1.77
|
|
January 3, 2017
|
|
230,800 Common Shares
(4)
|
|
|
$0.65
|
|
January 4, 2017
|
|
201,000 Common Shares
(4)
|
|
|
$0.65
|
|
January 5, 2017
|
|
50,000 Common Shares
(1)
|
|
|
$1.77
|
|
Notes:
|
(1)
|
On exercise of common share purchase options per
incentive plan.
|
|
(2)
|
On exercise of common share purchase options
not
issued under incentive plan.
|
|
(3)
|
On exercise of warrants issued in December
2015.
|
|
(4)
|
On exercise of warrants issued in June and July
2016.
|
TRADING PRICE AND VOLUME
Our Common Shares are listed on
the TSX under the trading symbol NDM and on the NYSE MKT under the trading
symbol NAK.
The following table sets forth
the reported high and low sale prices in Canadian dollars for the Common Shares
on the TSX for the monthly periods indicated.
C-16
|
|
TSX Price Range ($)
|
|
|
|
|
Month
|
|
High
|
|
|
Low
|
|
|
Total Volume
|
|
January 2016
|
|
0.44
|
|
|
0.28
|
|
|
2,140,916
|
|
February 2016
|
|
0.51
|
|
|
0.36
|
|
|
4,675,143
|
|
March 2016
|
|
0.52
|
|
|
0.405
|
|
|
6,202,804
|
|
April 2016
|
|
0.57
|
|
|
0.38
|
|
|
7,757,825
|
|
May 2016
|
|
0.55
|
|
|
0.40
|
|
|
6,634,694
|
|
June 2016
|
|
0.48
|
|
|
0.37
|
|
|
5,738,281
|
|
July 2016
|
|
0.76
|
|
|
0.39
|
|
|
21,020,179
|
|
August 2016
|
|
1.48
|
|
|
0.74
|
|
|
43,274,362
|
|
September 2016
|
|
1.17
|
|
|
0.87
|
|
|
10,436,944
|
|
October 2016
|
|
1.39
|
|
|
0.71
|
|
|
11,715,681
|
|
November 2016
|
|
2.08
|
|
|
0.93
|
|
|
33,144,087
|
|
December 2016
|
|
3.12
|
|
|
1.54
|
|
|
42,097,015
|
|
January 3 10, 2017
|
|
2.89
|
|
|
2.30
|
|
|
11,085,483
|
|
The following table sets forth
the reported high and low sale prices in United States dollars for the Common
Shares on the NYSE MKT for the monthly periods indicated.
|
|
NYSE MKT Price Range (US$)
|
|
|
|
|
Month
|
|
High (US$)
|
|
|
Low (US$)
|
|
|
Total Volume
|
|
January 2016
|
|
0.32
|
|
|
0.20
|
|
|
2,761,974
|
|
February 2016
|
|
0.38
|
|
|
0.26
|
|
|
2,586,923
|
|
March 2016
|
|
0.39
|
|
|
0.31
|
|
|
4,384,548
|
|
April 2016
|
|
0.48
|
|
|
0.29
|
|
|
7,103,653
|
|
May 2016
|
|
0.45
|
|
|
0.30
|
|
|
4,412,430
|
|
June 2016
|
|
0.37
|
|
|
0.28
|
|
|
5,007,992
|
|
July 2016
|
|
0.58
|
|
|
0.30
|
|
|
26,984,840
|
|
August 2016
|
|
1.16
|
|
|
0.55
|
|
|
74,307,513
|
|
September 2016
|
|
0.90
|
|
|
0.67
|
|
|
18,471,956
|
|
October 2016
|
|
1.04
|
|
|
0.54
|
|
|
27,099,743
|
|
November 2016
|
|
1.55
|
|
|
0.70
|
|
|
62,746,340
|
|
December 2016
|
|
2.50
|
|
|
1.14
|
|
|
90,491,046
|
|
January 3 - 10, 2017
|
|
2.19
|
|
|
1.72
|
|
|
27,434,175
|
|
C-17
On January 10, 2017, the closing
price of our Common Shares as reported on the NYSE MKT was US$2.08 per share and
on the TSX was $2.73 per share.
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
General
The following is a general
summary, as of the date hereof, of the principal Canadian federal income tax
considerations under the Tax Act generally applicable to a holder who acquires,
as beneficial owner, the Offered Shares, and who, for purposes of the Tax Act
and at all relevant times, holds the Offered Shares 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.
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 has elected to
report its Canadian tax results in a currency other than the Canadian currency,
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 Offered
Shares. Any such Holders should consult their own tax advisors.
Additional considerations, not
discussed herein, may be applicable to a Holder that is a corporation resident
in Canada and is, or becomes, or does not deal at arms length for purposes of
the Tax Act with a corporation resident in Canada that is or becomes, as part of
a transaction of series of transactions or events that includes the acquisition
of the Offered Shares, 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 own tax advisors with respect to the consequences
of acquiring the Offered Shares.
This summary is based on 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 our understanding of the current
administrative and assessing policies and practices of the Canada Revenue Agency
(the
CRA
) published in writing 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. Any particular Holder should consult their own tax advisors with respect
to provincial, territorial or foreign tax considerations.
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. The discussion below is qualified
accordingly.
Currency Conversion
In general, for purposes of the
Tax Act, all amounts relating to the acquisition, holding or disposition of the
Offered Shares must be converted into Canadian dollars based on the daily noon
rate as quoted by the Bank of Canada for the applicable day (or, if such day is
after March 1, 2017, the single rate quoted by the Bank of Canada for the
applicable day) or such other rate of exchange that is acceptable to the CRA.
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 otherwise be considered to hold their Offered Shares as
capital property may be entitled, in certain circumstances, to treat their
Offered Shares as capital property by making an irrevocable election under
subsection 39(4) of the Tax Act. A Resident Holder should consult its own tax
advisor with respect to whether the election is available and advisable in its
particular circumstances.
C-18
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
Offered 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, and the Company has made no commitments in
this regard.
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 Offered Shares
in a year to the extent such dividends are deductible in computing taxable
income for the year.
Disposition of Offered Shares
A Resident Holder who disposes,
or is deemed to dispose of, an Offered 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 Offered Shares
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
.
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 an Offered 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 corporation is a member of a partnership or a beneficiary of
a trust that owns the Offered Shares, directly or indirectly. Corporations 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. Such Resident Holders should consult their own tax
advisors.
C-19
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 the Offered 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 between
Canada and the Non-Resident Holders jurisdiction of residence. Under the
Canada-United States Tax Convention (1980) (the
Treaty
), the rate of
withholding tax on dividends paid or credited to a NonResident Holder that is a
resident in the U.S. for purposes of the Treaty and who is entitled to benefits
under the Treaty (a
U.S. Holder
) is generally limited to 15% of the
gross amount of the dividend (or 5% in the case of a U.S. Holder that is a
company beneficially owning at least 10% of the Corporations voting shares).
Non-Resident Holders should consult their own tax advisors in this regard.
Disposition of Offered 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 an Offered Share unless it
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 between Canada and the
Non-Resident Holders jurisdiction of residence.
Provided the Offered 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
Offered 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: (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 Offered Shares, as applicable, 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.
A Non-Resident Holders capital
gain (or capital loss) in respect of the Offered Shares that constitute or are
deemed to constitute taxable Canadian property (and are not treaty-protected
property, as defined in the Tax Act) will generally be computed in the manner
described above under the subheading
Taxation of Resident Holders
Disposition of Offered Shares
.
Non-Resident Holders who may hold
the Offered Shares as taxable Canadian property should consult their own tax
advisors.
THE ABOVE SUMMARY IS NOT
INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL CANADIAN TAX CONSIDERATIONS
APPLICABLE TO HOLDERS WITH RESPECT TO THE OWNERSHIP, EXERCISE OR DISPOSITION OF
THE OFFERED SHARES. HOLDERS SHOULD CONSULT
THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS
APPLICABLE TO THEM IN THEIR PARTICULAR CIRCUMSTANCES.
C-20
CERTAIN MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS
The following is a general
summary of certain material U.S. federal income tax considerations applicable to
a U.S. Holder (as defined below) arising from the ownership and disposition of
Offered Shares acquired pursuant to the Offering. This summary is for general
information purposes only and does not purport to be a complete analysis or
listing of all potential U.S. federal income tax considerations that may apply
to a U.S. Holder as a result of the ownership and disposition of Offered Shares.
In addition, this summary does not take into account the individual facts and
circumstances of any particular U.S. Holder that may affect the U.S. federal
income tax consequences to such U.S. Holder, including specific tax consequences
to a U.S. Holder under an applicable tax treaty. Accordingly, this summary is
not intended to be, and should not be construed as, legal or U.S. federal income
tax advice with respect to any particular U.S. Holder. In addition, this summary
does not address the U.S. federal alternative minimum, U.S. federal estate and
gift, U.S. Medicare contribution, U.S. state and local, or non-U.S. tax
consequences of the ownership and disposition of Offered Shares. Except as
specifically set forth below, this summary does not discuss applicable tax
reporting requirements. Each U.S. Holder should consult its own tax advisor
regarding all U.S. federal, U.S. state and local and non-U.S. tax consequences
of the ownership and disposition of Offered Shares.
No opinion from U.S. legal
counsel or ruling from the Internal Revenue Service (the
IRS
) has been
requested, or will be obtained, regarding the U.S. federal income tax
consequences of the ownership and disposition of Offered Shares. This summary is
not binding on the IRS, and the IRS is not precluded from taking a position that
is different from, and contrary to, any position taken in this summary. In
addition, because the authorities upon which this summary is based are subject
to various interpretations, the IRS and the U.S. courts could disagree with one
or more of the positions taken in this summary.
Scope of This Disclosure
Authorities
This summary is based on the
Internal Revenue Code of 1986, as amended (the
Code
), Treasury
Regulations (whether final, temporary, or proposed), published rulings of the
IRS, published administrative positions of the IRS, the Convention Between
Canada and the United States of America with Respect to Taxes on Income and on
Capital, signed September 26, 1980, as amended (the
Canada-U.S. Tax
Convention
), and U.S. court decisions that are applicable and, in each
case, as in effect and available, as of the date hereof. Any of the authorities
on which this summary is based could be changed in a material and adverse manner
at any time, and any such change could be applied on a retroactive or
prospective basis which could affect the U.S. federal income tax considerations
described in this summary. This summary does not discuss the potential effects,
whether adverse or beneficial, of any proposed legislation that, if enacted,
could be applied on a retroactive or prospective basis.
U.S. Holders
For purposes of this summary, the
term
U.S. Holder
means a beneficial owner of Offered Shares that is for
U.S. federal income tax purposes:
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an individual who is a citizen or resident of the U.S.;
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a corporation (or other entity taxable as a corporation
for U.S. federal income tax purposes) created or organized in or under the
laws of the U.S., any state thereof or the District of Columbia;
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an estate the income of which is subject to U.S. federal
income taxation regardless of its source; or
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a trust that (a) is subject to the primary supervision of
a court within the U.S. and the control of one or more U.S. persons for
all substantial decisions or (b) has a valid election in effect under
applicable Treasury Regulations to be treated as a U.S. person.
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C-21
Non-U.S. Holders
For purposes of this summary, a
non-U.S. Holder
is a beneficial owner of Offered Shares that is not a
partnership (or other pass-through entity) for U.S. federal income tax
purposes and is not a U.S. Holder. This summary does not address the U.S.
federal income tax consequences applicable to non-U.S. Holders arising from the
ownership and disposition of Offered Shares. Accordingly, a non-U.S. Holder
should consult its own tax advisor regarding all U.S. federal, U.S. state and
local, and non-U.S. tax consequences (including the potential application of and
operation of any income tax treaties) relating to the purchase of Offered Shares
pursuant to the Offering and the ownership and disposition of Offered Shares.
Transactions Not Addressed
This summary does not address the
tax consequences of transactions effected prior or subsequent to, or
concurrently with, any purchase of Offered Shares pursuant to the Offering
(whether or not any such transactions are undertaken in connection with the
purchase of Offered Shares pursuant to the Offering), including, without
limitation, the following:
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any vesting, conversion, assumption, disposition,
exercise, exchange, or other transaction involving any rights to acquire
Offered Shares, including warrants and options; and
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any transaction, other than the Offering, in
which Offered Shares have been issued or are acquired.
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U.S. Holders Subject to Special U.S. Federal Income Tax
Rules Not Addressed
This summary does not address the
U.S. federal income tax considerations of the ownership and disposition of
Offered Shares by U.S. Holders that are subject to special provisions under the
Code, including, but not limited to, the following: (a) tax-exempt
organizations, qualified retirement plans, individual retirement accounts, or
other tax-deferred accounts; (b) financial institutions, underwriters, insurance
companies, real estate investment trusts, or regulated investment companies; (c)
broker-dealers, dealers, or traders in securities or currencies that elect to
apply a mark-to-market accounting method; (d) U.S. Holders that have a
functional currency other than the U.S. dollar; (e) U.S. Holders that own
Offered Shares as part of a straddle, hedging transaction, conversion
transaction, constructive sale, or other arrangement involving more than one
position; (f) U.S. Holders that acquire Offered Shares in connection with the
exercise of employee stock options or otherwise as compensation for services;
(g) U.S. Holders that hold Offered Shares other than as a capital asset within
the meaning of Section 1221 of the Code (generally, property held for investment
purposes); and (h) U.S. Holders that own directly, indirectly, or by
attribution, 10% or more, by voting power, of the outstanding stock of the
Company. This summary also does not address the U.S. federal income tax
considerations applicable to U.S. Holders who are: (a) U.S. expatriates or
former long-term residents of the U.S.; (b) persons that have been, are, or will
be a resident or deemed to be a resident in Canada for purposes of the Income
Tax Act (Canada); (c) persons that use or hold, will use or hold, or that are or
will be deemed to use or hold Offered Shares in connection with carrying on a
business in Canada; (d) persons whose Offered Shares constitute taxable
Canadian property under the Income Tax Act (Canada); or (e) persons that have a
permanent establishment in Canada for purposes of the Canada-U.S. Tax
Convention. U.S. Holders that are subject to special provisions under the Code,
including U.S. Holders described immediately above, should consult their own tax
advisors regarding all U.S. federal, U.S. state and local, and non-U.S. tax
consequences (including the potential application and operation of any income
tax treaties) relating to the ownership and disposition of Offered Shares.
If an entity or arrangement that
is classified as a partnership (or other pass-through entity) for U.S. federal
income tax purposes holds Offered Shares, the U.S. federal income tax
consequences to such partnership and the partners (or other owners) of such
partnership of the ownership and disposition of the Offered Shares generally
will depend on the activities of the partnership and the status of such partners
(or other owners). This summary does not address the U.S. federal income tax
consequences for any such partner or partnership (or other pass-through entity
or its owners). Owners of entities and arrangements that are classified as
partnerships (or other pass-through entities) for U.S. federal income tax
purposes should consult their own tax advisors regarding the U.S. federal income
tax consequences of the ownership and disposition of Offered Shares.
C-22
Ownership and Disposition of Offered Shares
Distributions on Offered Shares
Subject to the passive foreign
investment company (
PFIC
) rules discussed below (see Tax Consequences
if the Company is a PFIC), a U.S. Holder that receives a distribution,
including a constructive distribution, with respect to Offered Shares will be
required to include the amount of such distribution in gross income as a
dividend (without reduction for any Canadian income tax withheld from such
distribution) to the extent of the current or accumulated earnings and profits
of the Company, as computed for U.S. federal income tax purposes. To the extent
that a distribution exceeds the current and accumulated earnings and profits
of the Company, such distribution will be treated first as a tax-free return of
capital to the extent of a U.S. Holders tax basis in the Offered Shares and
thereafter as gain from the sale or exchange of such Offered Shares (see Sale
or Other Taxable Disposition of Offered Shares below). However, the Company may
not maintain calculations of earnings and profits in accordance with U.S.
federal income tax principles, and each U.S. Holder should therefore assume that
any distribution by the Company with respect to the Offered Shares will
constitute a dividend. Dividends received on the Offered Shares generally will
not be eligible for the dividends received deduction available to U.S.
corporate shareholders receiving dividends from U.S. corporations. If the
Company is eligible for the benefits of the Canada-U.S. Tax Convention or its
shares are readily tradable on an established securities market in the U.S.,
dividends paid by the Company to non-corporate U.S. Holders generally will be
eligible for the preferential tax rates applicable to long-term capital gains,
provided certain holding period and other conditions are satisfied, including
that the Company not be classified as a PFIC in the tax year of distribution or
in the preceding tax year. The dividend rules are complex, and each U.S. Holder
should consult its own tax advisor regarding the application of such rules.
Sale or Other Taxable Disposition of Offered
Shares
Subject to the PFIC rules
discussed below, upon the sale or other taxable disposition of Offered Shares, a
U.S. Holder generally will recognize capital gain or loss in an amount equal to
the difference between the amount of cash plus the fair market value of any
property received and such U.S. Holders tax basis in the Offered Shares sold or
otherwise disposed of. Such capital gain or loss will be long-term capital gain
or loss if, at the time of the sale or other taxable disposition, the Offered
Shares have been held for more than one year. Preferential tax rates apply to
long-term capital gains of non-corporate U.S. Holders. There are currently no
preferential tax rates for long-term capital gains of a U.S. Holder that is a
corporation. Deductions for capital losses are subject to significant
limitations under the Code. A U.S. Holders tax basis in Offered Shares
generally will be such U.S. Holders U.S. dollar cost for such Offered Shares.
PFIC Status of the Company
If the Company is or becomes a
PFIC, the preceding sections of this summary may not describe the U.S. federal
income tax consequences to U.S. Holders of the ownership and disposition of
Offered Shares. The U.S. federal income tax consequences of owning and disposing
of Offered Shares if the Company is or becomes a PFIC are described below under
the heading Tax Consequences if the Company is a PFIC.
A non-U.S. corporation is a PFIC
for each tax year in which (i) 75% or more of its gross income is passive income
(as defined for U.S. federal income tax purposes) (the
income test
) or
(ii) on average for such tax year, 50% or more (by value) of its assets either
produces or is held for the production of passive income (the
asset
test
). For purposes of the PFIC provisions, gross income generally
includes sales revenues less cost of goods sold, plus income from investments
and from incidental or outside operations or sources, and passive income
generally includes dividends, interest, certain rents and royalties, and certain
gains from commodities or securities transactions. In determining whether or not
it is a PFIC, a non-U.S. corporation is required to take into account its pro
rata portion of the income and assets of each corporation in which it owns,
directly or indirectly, at least a 25% interest (by value).
Under certain attribution and
indirect ownership rules, if the Company is a PFIC, U.S. Holders will generally
be deemed to own their proportionate shares of the Company's direct or indirect
equity interests in any company that is also a PFIC (a
''Subsidiary
PFIC
''), and will be subject to U.S. federal income tax on their
proportionate share of (a) any "excess distributions," as described below, on
the stock of a Subsidiary PFIC and (b) a disposition or deemed disposition of
the stock of a Subsidiary PFIC by the Company or another Subsidiary PFIC, both
as if such U.S. Holders directly held the shares of such Subsidiary PFIC. In
addition, U.S. Holders may be subject to U.S. federal income tax on any indirect
gain realized on the stock of a Subsidiary PFIC on the sale or
disposition of Offered Shares. Accordingly, U.S. Holders should be aware that
they could be subject to tax even if no distributions are received and no
redemptions or other dispositions of the Companys Offered Shares are made.
C-23
The Company believes it was a
PFIC in one or more prior tax years and, based on current business plans and
financial projections, expects to be a PFIC in the current tax year and possibly
in subsequent tax years. The determination of PFIC status is inherently factual,
is subject to a number of uncertainties, and can be determined only annually at
the close of the tax year in question. Additionally, the analysis depends, in
part, on the application of complex U.S. federal income tax rules, which are
subject to differing interpretations. There can be no assurance that the Company
will or will not be determined to be a PFIC for the current tax year or any
prior or future tax year, and no opinion of legal counsel or ruling from the IRS
concerning the status of the Company as a PFIC has been obtained or will be
requested. U.S. Holders should consult their own U.S. tax advisors regarding the
PFIC status of the Company.
Tax Consequences if the Company is a PFIC
If the Company is a PFIC for any
tax year during which a U.S. Holder holds Offered Shares, special rules may
increase such U.S. Holders U.S. federal income tax liability with respect to
the ownership and disposition of such shares. If the Company meets the income
test or the asset test for any tax year during which a U.S. Holder owns Offered
Shares, the Company will be treated as a PFIC with respect to such U.S. Holder
for that tax year and for all subsequent tax years, regardless of whether the
Company meets the income test or the asset test for such subsequent tax years,
unless the U.S. Holder elects to recognize any unrealized gain in the Offered
Shares or makes a timely and effective QEF Election or Mark-to-Market Election.
Under the default PFIC rules:
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any gain realized on the sale or other disposition
(including dispositions and certain other events that would not otherwise
be treated as taxable events) of Offered Shares (including an indirect
disposition of the stock of any Subsidiary PFIC) and any excess
distribution (defined as a distribution to the extent it (together with
all other distributions received in the relevant tax year) exceeds 125% of
the average annual distributions received during the preceding three
years) received on Offered Shares or with respect to the stock of a
Subsidiary PFIC will be allocated ratably to each day of such U.S.
Holders holding period for the Offered Shares;
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the amount allocated to the current tax year and any year
prior to the first year in which the Company was a PFIC will be taxed as
ordinary income in the current year;
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the amount allocated to each of the other tax years (the
Prior PFIC Years
) will be subject to tax at the highest ordinary
income tax rate in effect for the applicable class of taxpayer for that
year;
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an interest charge will be imposed with respect to the
resulting tax attributable to each Prior PFIC Year, which interest charge
is not deductible by non-corporate U.S. Holders; and
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any loss realized on the disposition of the Offered Shares generally will not be recognized.
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A U.S. Holder that makes a timely
and effective mark-to-market election under Section 1296 of the Code (a
Mark-to-Market Election
) or a timely and effective election to treat
the Company and each Subsidiary PFIC as a qualified electing fund (a
QEF
) under Section 1295 of the Code (a
QEF Election
) may
generally mitigate or avoid the PFIC consequences described above with respect
to Offered Shares.
In light of adverse consequences of PFIC characterization
and the uncertainty as to the Companys PFIC status, the Company will undertake
to provide to any U.S. Holder, upon written request, the information the Company
determines is necessary for U.S. income tax reporting purposes for such investor
to make a QEF Election. U.S. Holders should be aware that there can be no
assurance that the Company has satisfied or will satisfy the recordkeeping
requirements that apply to a QEF or that the Company has supplied or will supply
U.S. Holders with information such U.S. Holders require to report under the QEF
rules in the event that the Company is a PFIC for any tax year.
A timely and effective QEF
Election requires a U.S. Holder to include currently in gross income each year
its pro rata share of the Companys ordinary earnings and net capital gains,
regardless of whether such earnings and gains are actually distributed. Thus, a
U.S. Holder could have a tax liability with respect to such ordinary earnings or
gains without a corresponding receipt of cash from the Company. If
the Company is a QEF with respect to a U.S. Holder, the U.S. Holders basis in
the Offered Shares will be increased to reflect the amount of the taxed but
undistributed income. Distributions of income that had previously been taxed
will result in a corresponding reduction of basis in the Offered Shares and will
not be taxed again as a distribution to a U.S. Holder. Taxable gains on the
disposition of Offered Shares by a U.S. Holder that has made a timely and
effective QEF Election are generally capital gains. A U.S. Holder must make a
QEF Election for the Company and each Subsidiary PFIC if it wishes to have this
treatment. To make a QEF Election, a U.S. Holder will need to have an annual
information statement from the Company setting forth the ordinary earnings and
net capital gains for the year. In general, a U.S. Holder must make a QEF
Election on or before the due date for filing its income tax return for the
first year to which the QEF Election will apply. Under applicable Treasury
Regulations, a U.S. Holder will be permitted to make retroactive elections in
particular circumstances, including if it had a reasonable belief that the
Company was not a PFIC and filed a protective statement. If a U.S. Holder owns PFIC stock indirectly through
another PFIC, separate QEF Elections must be made for the PFIC in which the U.S.
Holder is a direct shareholder and the Subsidiary PFIC for the QEF rules to
apply to both PFICs. Each U.S. Holder should consult its own tax advisor
regarding the availability and desirability of, and procedure for, making a
timely and effective QEF Election for the Company and any Subsidiary PFIC.
C-24
A Mark-to-Market Election may be
made with respect to stock in a PFIC if such stock is regularly traded on a
qualified exchange or other market (within the meaning of the Code and the
applicable Treasury Regulations). A class of stock that is traded on one or more
qualified exchanges or other markets is considered to be regularly traded for
any calendar year during which such class of stock is traded in other than de
minimis quantities on at least 15 days during each calendar quarter. If the
Offered Shares are considered to be regularly traded within this meaning, then
a U.S. Holder generally will be eligible to make a Mark-to-Market Election with
respect to its shares. However, there is no assurance that the Offered Shares
will be or remain regularly traded for this purpose. A Mark-to-Market Election
may not be made with respect to the stock of any Subsidiary PFIC because such
stock is not marketable. Hence, a Mark-to-Market Election will not be effective
to eliminate the application of the default rules of Section 1291 of the Code,
described above, with respect to deemed dispositions of Subsidiary PFIC stock or
excess distributions with respect to a Subsidiary PFIC.
A U.S. Holder that makes a timely
and effective Mark-to-Market Election with respect to Offered Shares generally
will be required to recognize as ordinary income in each tax year in which the
Company is a PFIC an amount equal to the excess, if any, of the fair market
value of such shares as of the close of such taxable year over the U.S. Holders
adjusted tax basis in such shares as of the close of such taxable year. A U.S.
Holders adjusted tax basis in the Offered Shares generally will be increased by
the amount of ordinary income recognized with respect to such shares. If the
U.S. Holders adjusted tax basis in the Offered Shares as of the close of a tax
year exceeds the fair market value of such shares as of the close of such
taxable year, the U.S. Holder generally will recognize an ordinary loss, but
only to the extent of net mark-to-market income recognized with respect to such
shares for all prior taxable years. A U.S. Holders adjusted tax basis in its
Offered Shares generally will be decreased by the amount of ordinary loss
recognized with respect to such shares. Any gain recognized upon a disposition
of the Offered Shares generally will be treated as ordinary income, and any loss
recognized upon a disposition generally will be treated as an ordinary loss to
the extent of net mark-to-market income recognized for all prior taxable years.
Any loss recognized in excess thereof will be taxed as a capital loss. Capital
losses are subject to significant limitations under the Code.
Each U.S. Holder should consult
its own tax advisor regarding the availability and desirability of, and
procedure for, making a timely and effective Mark-to-Market Election with
respect to the Offered Shares.
Foreign Tax Credit
A U.S. Holder that pays (whether
directly or through withholding) Canadian income tax in connection with the
ownership or disposition of Offered Shares may be entitled, at the election of
such U.S. Holder, to receive either a deduction or a credit for such Canadian
income tax paid. Generally, a credit will reduce a U.S. Holders U.S. federal
income tax liability on a dollar-for-dollar basis, whereas a deduction will
reduce a U.S. Holders income subject to U.S. federal income tax. This election
is made on a year-by-year basis and applies to all creditable foreign taxes paid
(whether directly or through withholding) by a U.S. Holder during a year.
Complex limitations apply to the
foreign tax credit, including the general limitation that the credit cannot
exceed the proportionate share of a U.S. Holders U.S. federal income tax
liability that such U.S. Holders foreign source taxable income bears to such U.S. Holders worldwide
taxable income. In applying this limitation, a U.S. Holders various items of
income and deduction must be classified, under complex rules, as either foreign
source or U.S. source. Generally, dividends paid by a non-U.S. corporation
should be treated as foreign source for this purpose, and gains recognized on
the sale of stock of a non-U.S. corporation by a U.S. Holder should be treated
as U.S. source for this purpose, except as otherwise provided in an applicable
income tax treaty, and if an election is properly made under the Code. However,
the amount of a distribution with respect to the Offered Shares that is treated
as a dividend may be lower for U.S. federal income tax purposes than it is for
Canadian federal income tax purposes, resulting in a reduced foreign tax credit
allowance to a U.S. Holder. In addition, this limitation is calculated
separately with respect to specific categories of income. The foreign tax credit
rules are complex, and each U.S. Holder should consult its own U.S. tax advisor
regarding the foreign tax credit rules.
C-25
Special rules apply to the amount
of foreign tax credit that a U.S. Holder may claim on a distribution from a
PFIC. Subject to such special rules, non-U.S. taxes paid with respect to any
distribution in respect of stock in a PFIC are generally eligible for the
foreign tax credit. The rules relating to distributions by a PFIC and their
eligibility for the foreign tax credit are complex, and a U.S. Holder should
consult its own tax advisor regarding their application to the U.S. Holder.
Receipt of Foreign Currency
The amount of any distribution or
proceeds paid in Canadian dollars to a U.S. Holder in connection with the
ownership of Offered Shares, or on the sale or other taxable disposition of
Offered Shares, will be included in the gross income of a U.S. Holder as
translated into U.S. dollars calculated by reference to the exchange rate
prevailing on the date of actual or constructive receipt of the payment,
regardless of whether the Canadian dollars are converted into U.S. dollars at
that time. If the Canadian dollars received are not converted into U.S. dollars
on the date of receipt, a U.S. Holder will have a basis in the Canadian dollars
equal to their U.S. dollar value on the date of receipt. Any U.S. Holder who
receives payment in Canadian dollars and engages in a subsequent conversion or
other disposition of the Canadian dollars may have a foreign currency exchange
gain or loss that would be treated as ordinary income or loss, and generally
will be U.S. source income or loss for foreign tax credit purposes. Different
rules apply to U.S. Holders who use the accrual method with respect to foreign
currency. Each U.S. Holder should consult its own U.S. tax advisor regarding the
U.S. federal income tax consequences of receiving, owning, and disposing of
Canadian dollars.
Information Reporting; Backup Withholding
Under U.S. federal income tax
law, certain categories of U.S. Holders must file information returns with
respect to their investment in, or involvement in, a non-U.S. corporation. For
example, U.S. return disclosure obligations (and related penalties) are imposed
on individuals who are 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 non-U.S. financial institutions, but also, if held for investment
and not in an account maintained by certain financial institutions, any stock or
security issued by a non-U.S. person, any financial instrument or contract that
has an issuer or counterparty other than a U.S. person and any interest in a
non-U.S. entity. A U.S. Holder may be subject to these reporting requirements
unless such U.S. Holders Offered Shares are held in an account at certain
financial institutions. Penalties for failure to file certain of these
information returns are substantial. U.S. Holders should consult with their own
tax advisors regarding the requirements of filing information returns on IRS
Form 8938, and, if applicable, filing obligations relating to the PFIC rules,
including possible reporting on IRS Form 8621.
Payments made within the U.S. or
by a U.S. payor or U.S. middleman of (a) distributions on the Offered Shares,
and (b) proceeds arising from the sale or other taxable disposition of Offered
Shares generally will be subject to information reporting. In addition, backup
withholding, currently at a rate of 28%, may apply to such payments if a U.S.
Holder (a) fails to furnish such U.S. Holders correct U.S. taxpayer
identification number (generally on IRS Form W-9), (b) furnishes an incorrect
U.S. taxpayer identification number, (c) is notified by the IRS that such U.S.
Holder has previously failed to properly report items subject to backup
withholding, or (d) fails to certify, under penalty of perjury, that such U.S.
Holder has furnished its correct U.S. taxpayer identification number and that
the IRS has not notified such U.S. Holder that it is subject to backup
withholding. Certain exempt persons generally are excluded from these
information reporting and backup withholding rules. Backup withholding is not an
additional tax. Any amounts withheld under the U.S. backup withholding rules
will be allowed as a credit against a U.S. Holders U.S. federal income tax
liability, if any, or will be refunded, if such U.S. Holder furnishes required
information to the IRS in a timely manner.
C-26
The information reporting and backup withholding rules may
apply even if, under the Canada-U.S. Tax Convention, payments are exempt from
the dividend withholding tax or otherwise eligible for a reduced withholding
rate.
The discussion of reporting
requirements set forth above is not intended to constitute an exhaustive
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 advisor regarding the information reporting and backup withholding
rules.
THE ABOVE SUMMARY IS NOT
INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL U.S. TAX CONSIDERATIONS
APPLICABLE TO U.S. HOLDERS WITH RESPECT TO THE OWNERSHIP AND DISPOSITION OF
OFFERED SHARES. U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX
CONSIDERATIONS APPLICABLE TO THEM IN THEIR PARTICULAR CIRCUMSTANCES.
RISK FACTORS
Investing in the Offered
Shares is speculative and involves a high degree of risk due to the nature of
our business and the present stage of its development. The following risk
factors, as well as risks currently unknown to us, could materially adversely
affect our future business, operations and financial condition and could cause
them to differ materially from the estimates described in forward-looking
information relating to the Company, or our business, property or financial
results, each of which could cause purchasers of Offered Shares to lose part or
all of their investment. In addition to the other information contained in this
Prospectus and the documents incorporated by reference herein, prospective
investors should carefully consider the factors described below and set out
under the 2015 AIF and the Q3 MD&A before making an investment in the
Offered Shares.
Risks Relating to the Business of the Company
In the event that we are
unsuccessful in our litigation against the EPA, the EPA withdraws its regulatory
action or we are otherwise unable to reach a settlement with the EPA, we may
never be able to proceed with permitting with respect to the Pebble Project.
The principal risk currently
facing the Company is that we may be unable to resolve our ongoing issues with
the EPA with respect to its pre-emptive regulatory action under Section 404(c)
of the CWA. While we believe our position has merit, the proceedings have been
lengthy and have required us to expend substantial funds and time. As stated in
the Use of Proceeds section of this Prospectus, approximately $ million of
the proceeds of the Offering have been allocated to funding our strategy against
the EPA. There can be no assurance that the funds allocated for combating the
EPA action will be sufficient to bring our strategy to completion and we may be
unable to raise additional funds, causing us to abandon our strategy. Further,
even if we are able to raise sufficient funds to bring our strategy to
completion, there is no assurance that we will ultimately be successful. In the
event that we are unsuccessful, and the EPAs regulatory action is upheld, we
may be unable to proceed with permitting of the Pebble Project and the Company
will be materially adversely affected. Finally, as noted in the Use of
Proceeds section, the funds allocated for our strategy do not include the
payment of contingent legal liabilities that we will be required to pay in the
event we are successful. In the event that we are successful, we will need to
raise additional funds to make such payments or renegotiate the amount and/or
due date of such payments. There can be no assurances that we will be able to
raise additional funds or renegotiate the amount and/or due date of such
payments.
There is no assurance that
there will be any change in the position taken by the EPA in connection with
respect to its pre-emptive regulatory action under Section 404(c) of the CWA
resulting from the new Republican administration and the resulting change in the
leadership of the EPA.
It is anticipated that there will
shortly be a change in the leadership of the EPA resulting from the appointment
of a new administrator of the EPA by the new Republican administration. There is
no assurance that this change of leadership will result in the EPA reversing its
position with respect the EPAs pre-emptive regulatory action under Section
404(c) of the CWA or otherwise enable the Company to proceed with its permit
application process. The Company can provide no assurance with respect to the reaching
of or timing of a resolution, if any, with the EPA or with respect to other
matters related to the EPA. Even if the current issues with the EPA are
resolved, there is no assurance that the Company will be successful in obtaining
the required permits to proceed with the development of the Pebble Project.
C-27
Inability to Ultimately Achieve Mine Permitting and Build
a Mine at the Pebble Project.
Notwithstanding any possible
mediated or other settlement with the EPA or a change in the EPAs position that
enables us to proceed with our permit applications, the Company may ultimately
be unable to secure the necessary permits under United States Federal and
Alaskan State laws to build a mine at the Pebble Project. There is no assurance
that the EPA will not seek to undertake future regulatory action to impede or
restrict the Pebble Project. In addition, there are prominent and well organized
opponents of the Pebble Project and the Company may be unable, even if we
present solid scientific and technical evidence of risk mitigation, to overcome
such opposition and convince governmental authorities that a mine should be
permitted at the Pebble Project. The Company faces not only the permitting and
regulatory issues typical of companies seeking to build a mine, but additional
public and regulatory scrutiny due to its location and likely size. Accordingly,
there is no assurance that the Company will obtain the required permits even if
the current issues with the EPA are resolved and the Company is able to proceed
with the permit application process. If the Company clears the United States
Army Corps of Engineers and EPA regulatory processes, the Company anticipates
the permitting process will take several years or longer, in addition to a
number of years to build a mine and commence operations, during which periods
the Company will require additional financing to continue its operations. Unless
and until we build a mine at the Pebble Project we will be unable to achieve
revenues from operations and may not be able to sell or otherwise recover our
investment in the Pebble Project, which would have a material adverse effect on
the Company and an investment in the Companys common shares.
The Companys inability to obtain additional capital
could have a material adverse effect on its operations
The Company will continue to
require significant additional financing beyond the proceeds of this Offering in
order to sustain its business operations. Such financing may include any of, or
a combination of: debt, equity and/or contributions from possible new Pebble
Project participants. In light of the recent significant depreciation of the
Canadian dollar and that the vast majority of the Companys expenditures are in
United States dollars, that the Pebble Project will require additional
engineering and technical expenditures beyond what is contemplated in the
current budget, and the likelihood that expenditures to pursue the Companys
Multi-dimensional Strategy, including legal expenditures may exceed current
budget expectations, it is likely that additional financing may well be
required. There can be no assurances that the Company will be successful in
obtaining any such additional financing. If the Company is unable to raise the
necessary capital resources to meet obligations as they come due, the Company
will at some point have to further reduce or curtail its operations, which would
have a material adverse effect on the Company.
Negative Operating Cash Flow
The Company currently has a
negative operating cash flow and will continue to have that for the foreseeable
future. Accordingly, the Company will require substantial additional capital in
order to fund its future exploration and development activities. The Company
does not have any arrangements in place for this funding and there is no
assurance that such funding will be achieved when required. Any failure to
obtain additional financing or failure to achieve profitability and positive
operating cash flows will have a material adverse effect on its financial
condition and results of operations.
Risk of Secure Title or Property Interest
There can be no assurance that
title to any property interest acquired by the Company or any of its
subsidiaries is secured. Although the Company has taken reasonable precautions
to ensure that legal title to its properties is properly documented, there can
be no assurance that its property interests may not be challenged or impugned.
Such property interests may be subject to prior unregistered agreements or
transfers or other land claims, and title may be affected by undetected defects
and adverse laws and regulations.
C-28
In the jurisdictions in which
the Company operates, legal rights applicable to mining concessions are
different and separate from legal rights applicable to surface lands;
accordingly, title holders of mining concessions in such jurisdictions must
agree with surface land owners on compensation in respect of mining activities
conducted on such land. The Companys title may be affected by prior
unregistered agreements or transfers or native land claims, and title may also
be affected by undetected defects.
The Pebble Partnerships mineral
concessions at Pebble are located on State of Alaska lands specifically
designated for mineral exploration and development. Alaska is a stable
jurisdiction with a well-developed regulatory and legal framework for resource
development and public lands management, a strong commitment to the rule of law
and lengthy track record for encouraging investment in the development if its
land and natural resources.
The Pebble Project is Subject to
Political and Environmental Regulatory Opposition
As is typical for a large scale
mining project, the Pebble Project faces organized opposition from certain
individuals and organizations who are motivated to preclude any possible mining
in the Bristol Bay Watershed (the
BBW
). The BBW is an important
wildlife and salmon habitat area. The EPA has gone so far as to suggest that it
may peremptorily prevent the Pebble Project from proceeding even before a mine
permitting application is filed. Accordingly, one of the greatest risks to the
Pebble Project is seen to be political/permitting risk which may ultimately
preclude construction of a mine at the Pebble Project. Opposition may include
legal challenges to exploration and development permits, which may delay or halt
development. Other tactics may also be employed by opposition groups to delay or
frustrate development at Pebble, included political and public advocacy,
electoral strategies, media and public outreach campaigns and protest activity.
The Pebble Partnerships
Mineral Property Interests Do Not Contain Any Ore Reserves or Any Known Body of
Economic Mineralization
Although there are known bodies
of mineralization on the Pebble Project, and the Pebble Partnership has
completed core drilling programs within, and adjacent to, the deposits to
determine measured and indicated resources, there are currently no known
reserves or body of commercially viable ore and the Pebble Project must be
considered an exploration and feasibility evaluation project only. Extensive
additional work is required before Northern Dynasty or the Pebble Partnership
can ascertain if any mineralization may be economic and hence constitute
ore.
Mineral Resources Disclosed
by Northern Dynasty or the Pebble Partnership for the Pebble Project are
Estimates Only
Northern Dynasty has included
mineral resource estimates that have been made in accordance with NI 43-101.
These resource estimates are classified as measured resources, indicated
resources and inferred resources. Northern Dynasty advises investors that
while these terms are mandated by Canadian securities administrators, the SEC
does not recognize these terms. Investors are cautioned not to assume that any
part or all of mineral deposits classified as "measured resources" or "indicated
resources" will ever be converted into ore reserves. Further, "inferred
resources" have a great amount of uncertainty as to their existence, and
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, estimates of inferred mineral resources may not form the basis
of feasibility or prefeasibility studies, except in rare cases. Investors are
cautioned not to assume that part or all of an inferred resource exists, or is
economically or legally mineable.
All amounts of mineral resources
are estimates only, and Northern Dynasty cannot be certain that any specified
level of recovery of metals from the mineralized material will in fact be
realized or that the Pebble Project or any other identified mineral deposit will
ever qualify as a commercially mineable (or viable) ore body that can be
economically exploited. Mineralized material which is not mineral reserves does
not have demonstrated economic viability. In addition, the quantity of mineral
reserves and mineral resources may vary depending on, among other things, metal
prices and actual results of mining. There can be no assurance that any future
economic or technical assessments undertaken by the Company with respect to the
Pebble Project will demonstrate positive economics or feasibility.
C-29
Northern Dynasty has no
history of earnings and no foreseeable earnings, and may never achieve
profitability or pay dividends
Northern Dynasty has only had
losses since inception and there can be no assurance that Northern Dynasty will
ever be profitable. Northern Dynasty has paid no dividends on its shares since
incorporation. Northern Dynasty presently has no ability to generate earnings as
its mineral properties are in the pre-development stage.
Northern Dynastys
consolidated financial statements have been prepared assuming Northern Dynasty
will continue on a going concern basis
Northern Dynastys consolidated
financial statements have been prepared on the basis that Northern Dynasty will
continue as a going concern. At September 30, 2016, Northern Dynasty had working
capital of approximately $7.2 million. Northern Dynasty has prioritized the
allocation of available financial resources in order to meet key corporate and
Pebble Project expenditure requirements in the near term. Additional financing
will be required for continued corporate expenditures and expenditures at the
Pebble Project. Northern Dynastys continuing operations and the underlying
value and recoverability of the amounts shown for mineral property interest are
entirely dependent upon the existence of economically recoverable mineral
reserves at the Pebble Project, the ability of the Company to finance its
operating costs, the completion of the exploration and development of the Pebble
Project, the Pebble Partnership obtaining the necessary permits to mine, and on
future profitable production at the Pebble Project. Furthermore, failure to
continue as a going concern would require that Northern Dynasty's assets and
liabilities be restated on a liquidation basis, which would likely differ
significantly from their going concern assumption carrying values.
As the Pebble Project is
Northern Dynastys only mineral property interest, the failure to establish that
the Pebble Project possesses commercially viable and legally mineable deposits
of ore may cause a significant decline in the trading price of Northern
Dynastys common shares and reduce its ability to obtain new financing
The Pebble Project is, through
the Pebble Partnership, Northern Dynastys only mineral property interest.
Northern Dynastys principal business objective is to carry out further
exploration and related activities to establish whether the Pebble Project
possesses commercially viable deposits of ore. If Northern Dynasty is not
successful in its plan of operations, Northern Dynasty may have to seek a new
mineral property to explore or acquire an interest in a new mineral property or
project. Northern Dynasty anticipates that such an outcome would possibly result
in further declines in the trading price of Northern Dynastys common shares.
Furthermore, Northern Dynasty anticipates that its ability to raise additional
financing to fund exploration of a new property or the acquisition of a new
property or project would be impaired as a result of the failure to establish
commercial viability of the Pebble Project.
If prices for copper, gold,
molybdenum and silver decline, Northern Dynasty may not be able to raise the
additional financing required to fund expenditures for the Pebble Project
The ability of Northern Dynasty
to raise financing to fund the Pebble Project, will be significantly affected by
changes in the market price of the metals for which it explores. The prices of
copper, gold, molybdenum and silver are volatile, and are affected by numerous
factors beyond Northern Dynastys control. The level of interest rates, the rate
of inflation, the world supplies of and demands for copper, gold, molybdenum and
silver and the stability of exchange rates can all cause fluctuations in these
prices. Such external economic factors are influenced by changes in
international investment patterns and monetary systems and political
developments. The prices of copper, gold, molybdenum and silver have fluctuated
in recent years, and future significant price declines could cause investors to
be unprepared to finance exploration of copper, gold, molybdenum and silver,
with the result that Northern Dynasty may not have sufficient financing with
which to fund its exploration activities
Mining is inherently
dangerous and subject to conditions or events beyond the Companys control,
which could have a material adverse effect on the Companys business
Hazards such as fire, explosion,
floods, structural collapses, industrial accidents, unusual or unexpected
geological conditions, ground control problems, power outages, inclement
weather, seismic activity, cave-ins and mechanical equipment failure are
inherent risks in the Companys exploration, development and mining operations.
These and other hazards may cause injuries or death to employees, contractors or
other persons at the Companys mineral properties, severe damage to and destruction of the
Companys property, plant and equipment and mineral properties, and
contamination of, or damage to, the environment, and may result in the
suspension of the Companys exploration and development activities and any
future production activities. Safety measures implemented by the Company may not
be successful in preventing or mitigating future accidents.
C-30
Northern Dynasty
competes with larger, better capitalized competitors in the mining industry
The mining industry is
competitive in all of its phases, including financing, technical resources,
personnel and property acquisition. It requires significant capital, technical
resources, personnel and operational experience to effectively compete in the
mining industry. Because of the high costs associated with exploration, the
expertise required to analyze a projects potential and the capital required to
develop a mine, larger companies with significant resources may have a
competitive advantage over Northern Dynasty. Northern Dynasty faces strong
competition from other mining companies, some with greater financial resources,
operational experience and technical capabilities than Northern Dynasty
possesses. As a result of this competition, Northern Dynasty may be unable to
maintain or acquire financing, personnel, technical resources or attractive
mining properties on terms Northern Dynasty considers acceptable or at all.
Compliance with
environmental requirements will take considerable resources and changes to these
requirements could significantly increase the costs of developing the Pebble
Project and could delay these activities
The Pebble Partnership and
Northern Dynasty must comply with stringent environmental legislation in
carrying out work on the Pebble Project. Environmental legislation is evolving
in a manner that will require stricter standards and enforcement, increased
fines and penalties for non-compliance, more stringent environmental assessments
of proposed projects and a heightened degree of responsibility for companies and
their officers, directors and employees. Changes in environmental legislation
could increase the cost to the Pebble Partnership of carrying out its
exploration and, if warranted, development of the Pebble Project. Further,
compliance with new or additional environmental legislation may result in delays
to the exploration and, if warranted, development activities.
Changes in government
regulations or the application thereof and the presence of unknown environmental
hazards on Northern Dynastys mineral properties may result in significant
unanticipated compliance and reclamation costs
Government regulations relating
to mineral rights tenure, permission to disturb areas and the right to operate
can adversely affect Northern Dynasty. Northern Dynasty and the Pebble
Partnership may not be able to obtain all necessary licenses and permits that
may be required to carry out exploration at our projects. Obtaining the
necessary governmental permits is a complex, time-consuming and costly process.
The duration and success of efforts to obtain permits are contingent upon many
variables not within our control. Obtaining environmental permits may increase
costs and cause delays depending on the nature of the activity to be permitted
and the interpretation of applicable requirements implemented by the permitting
authority. There can be no assurance that all necessary approvals and permits
will be obtained and, if obtained, that the costs involved will not exceed those
that we previously estimated. It is possible that the costs and delays
associated with the compliance with such standards and regulations could become
such that we would not proceed with the development or operation of a mine at
the Pebble Project. Refer to further discussion our 2015 AIF and in other
filings incorporated by reference herein.
Litigation
The Company is currently and may
in future be subject to legal proceedings in the pursuit of its Pebble Project.
Given the uncertain nature of these actions, the Company cannot reasonably
predict the outcome thereof. If the Company is unable to resolve these matters
favorably it will have a material adverse effect of the Company. Please refer to
the Risk Factor regarding the EPA litigation on page 26 of this Prospectus.
Northern Dynasty is subject
to many risks that are not insurable and, as a result, Northern Dynasty will not
be able to recover losses through insurance should such certain events
occur
Hazards such as unusual or
unexpected geological formations and other conditions are involved in mineral
exploration and development. Northern Dynasty may become subject to liability
for pollution, cave-ins or hazards against which it cannot insure. The payment of such liabilities
could result in increase in Northern Dynastys operating expenses which could,
in turn, have a material adverse effect on Northern Dynastys financial position
and its results of operations. Although Northern Dynasty and the Pebble
Partnership maintain liability insurance in an amount which we consider
adequate, the nature of these risks is such that the liabilities might exceed
policy limits, the liabilities and hazards might not be insurable against, or
Northern Dynasty and the Pebble Partnership might elect not to insure itself
against such liabilities due to high premium costs or other reasons, in which
event Northern Dynasty could incur significant liabilities and costs that could
materially increase Northern Dynastys operating expenses.
C-31
If Northern Dynasty loses
the services of the key personnel that it engages to undertake its activities,
then Northern Dynastys plan of operations may be delayed or be more expensive
to undertake than anticipated
Northern Dynastys success depends to a significant extent on
the performance and continued service of certain independent contractors,
including Hunter Dickinson Services Inc. (
HDSI
). The Company has access
to the full resources of HDSI, an experienced exploration and development firm
with in-house geologists, engineers and environmental specialists, to assist in
its technical review of the Pebble Project. There can be no assurance that the
services of all necessary key personnel will be available when required or if
obtained, that the costs involved will not exceed those that we previously
estimated. It is possible that the costs and delays associated with the loss of
services of key personnel could become such that we would not proceed with the
development or operation of a mine at the Pebble Project.
Risks Relating to the Offering
You may lose your
entire investment
An investment in the Offered
Shares is speculative and may result in the loss of your entire investment. Only
potential investors who are experienced in high-risk investments and who can
afford to lose their entire investment should consider purchasing the Offered
Shares as there is no assurance that we will ever build a mine at the Pebble
Project, commence operations or achieve revenues.
We will have broad
discretion in the use of the net proceeds of the Offering
We currently intend to allocate
the net proceeds received from the Offering as described herein under the
heading, Use of Proceeds. However, we will have broad discretion over the use
of the actual application of the net proceeds of the Offering. Because of the
number and variability of factors that will determine our use of such proceeds,
our ultimate use might vary substantially from our planned use. You may not
agree with how we allocate or spend the proceeds from the Offering or with
benefit of hindsight they may later been seen to have been misallocated.
The Offering Price may not
be indicative of the price at which the Common Shares will trade following the
completion of the Offering
The Offering Price was
established with reference to the market price of our Common Shares and other
factors, and may not be indicative of the price at which the Common Shares will
trade following the completion of the Offering.
The market price for Common
Shares may be volatile and subject to wide fluctuations in response to numerous
factors, many of which are beyond our control
Financial markets have recently
experienced significant price and volume fluctuations that have particularly
affected the market prices of equity securities of public entities. Accordingly,
the market price of the Common Shares may decline even if our 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
our 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 by
those institutions, which could materially adversely affect the trading price of
the Common Shares. 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 for a protracted
period of time, the trading price of the Common Shares may be materially
adversely affected.
C-32
Likely PFIC status has
possible adverse U.S. federal income tax consequences for U.S. investors.
The Company was likely a passive
foreign investment company (a
PFIC
) within the meaning of the U.S.
Internal Revenue Code in one or more prior tax years, expects to be a PFIC for
the current tax year
,
and may also be a PFIC in subsequent years. A
non-U.S. corporation is a PFIC for any tax year in which (i) 75% or more of its
gross income is passive income (as defined for U.S. federal income tax purposes)
or (ii) on average for such tax year, 50% or more (by value) of its assets
either produces or is held for the production of passive income, and thereafter
unless certain elections are made.
If the Company is a PFIC for any
year during a U.S. taxpayers holding period, such taxpayer may be required to
treat any gain recognized upon a sale or disposition of the Offered Shares as
ordinary income (rather than capital gain), and any resulting U.S. federal
income tax may be increased by an interest charge. Rules similar to those
applicable to dispositions will generally apply to certain excess
distributions in respect of the Offered Shares. A U.S. taxpayer may generally
avoid these unfavorable tax consequences by making a timely and effective
qualified electing fund (
QEF
) election or mark-to-market election
with respect to the Offered Shares. A U.S. taxpayer who makes a timely and
effective QEF election must generally report on a current basis its share of the
Companys net capital gain and ordinary earnings for any year in which the
Company is a PFIC, whether or not the Company makes any distributions to
shareholders in such year. A U.S. taxpayer who makes a timely and effective
mark-to-market election must, in general, include as ordinary income, in each
year in which the Company is a PFIC, the excess of the fair market value of the
Offered Shares over the taxpayers adjusted cost basis in such shares.
This risk factor is qualified in
its entirety by the discussion provided above under the heading, Certain
Material United States Federal Income Tax Considerations.
LEGAL MATTERS
Certain legal matters relating to
the Offering will be passed upon on our behalf by McMillan LLP, Vancouver,
British Columbia, and on behalf of the Underwriters by Stikeman Elliott LLP,
Toronto, Ontario, with respect to Canadian legal matters and by Cooley LLP, New
York, New York, with respect to U.S. legal matters. As at the date hereof, the
partners and associates of McMillan LLP, as a group, and the partners and
associates of Stikeman Elliott LLP, as a group, each beneficially own, directly
or indirectly, less than one percent of the outstanding Common Shares of the
Company.
INTEREST OF EXPERTS
Name of Experts
Information relating to the
Companys mineral properties incorporated by reference in this Prospectus has
been derived from the
2014 Technical Report on the Pebble Project, Southwest
Alaska, USA
, effective date December 31, 2014 (the
Pebble Project
Report
), which has been prepared by the Qualified Persons named below and
this information has been included in reliance on the expertise of these
Qualified Persons:
|
|
J. David Gaunt, P.Geo., a non-independent
Qualified Person, who co-authored the Pebble Project Report;
|
|
|
|
|
|
James Lang, P.Geo., a non-independent Qualified
Person, who co-authored the Pebble Project Report;
|
|
|
|
|
|
Eric Titley, P.Geo., a non-independent
Qualified Person, who co-authored the Pebble Project Report; and
|
|
|
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|
|
Ting Lu, P.Eng., an independent Qualified
Person, who co-authored the Pebble Project Report.
|
Based on information provided by
the relevant persons, and except as otherwise disclosed in this Prospectus, none
of the persons or companies referred to above has received or will receive any
direct or indirect interests in the Companys property or the property of an
associated party or an affiliate of the Company or have any beneficial
ownership, direct or indirect, of the Companys securities or of an associated
party or an affiliate of the Company. The Company understands that, after reasonable inquiry and as at
the date hereof, the experts listed above as a group, beneficially own, directly
or indirectly, less than one percent of the outstanding Common Shares of the
Company
C-33
Deloitte LLP is independent of
the Company within the meaning of the Rules of Professional Conduct of the
Chartered Professional Accountants of British Columbia, and within the meaning
of the U.S. Securities Act and the applicable rules and regulations adopted by
the SEC and the Public Company Accounting Oversight Board (United States).
AUDITORS, TRANSFER AGENT AND REGISTRAR
The auditors of the Company are
Deloitte LLP, Chartered Professional Accountants, Vancouver, British Columbia.
Computershare Investor Services
Inc., at its Vancouver office located at 3rd Floor, 510 Burrard Street,
Vancouver, BC, V6C 3B9, is the transfer agent and registrar for the Common
Shares.
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT
In addition to the documents
specified in this Prospectus under Documents Incorporated by Reference, the
following documents have been or will be filed with the SEC as part of the
registration statement on Form F-10 of which this Prospectus forms a part: (i)
the form of Underwriting Agreement entered into between the Company and the
Underwriters referred to in this Prospectus; (ii) the consent of Deloitte LLP,
to be included as an exhibit to our Form F-10; (iii) the consent of J. David
Gaunt, P.Geo., James Lang, P.Geo., Eric Titley, P.Geo. and Ting Lu, P.Eng as a
Qualified Persons, to be included as an exhibit to our Form F-10; and (iv) the
consent of McMillan LLP, to be included as an exhibit to our Form F-10.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
This Prospectus is part of a
registration statement on Form F-10 that we have filed with the SEC. This
Prospectus does not contain all of the information contained in the registration
statement, certain items of which are contained in the exhibits to the
registration statement as permitted by the rules and regulations of the SEC.
Statements included or incorporated by reference in this Prospectus about the
contents of any contract, agreement or other documents referred to are not
necessarily complete, and in each instance you should refer to the exhibits for
a more complete description of the matter involved. Each such statement is
qualified in its entirety by such reference. You should refer to the
registration statement and the exhibits thereto for further information with
respects to us and our securities.
The Company is subject to the
information requirements of the Securities Exchange Act of 1934, as amended (the
U.S. Exchange Act
) and applicable Canadian securities legislation and,
in accordance therewith, files reports and other information with the SEC and
with the securities regulators in Canada. Under MJDS adopted by the United
States and Canada, documents and other information that the Company files with
the SEC may be prepared in accordance with the disclosure requirements of
Canada, which are different from those of the United States. As a foreign
private issuer within the meaning of rules made under the U.S. Exchange Act, the
Company is exempt from the rules under the U.S. Exchange Act prescribing the
furnishing and content of proxy statements, and the Companys officers,
directors and principal shareholders are exempt from the reporting and
short-swing profit recovery provisions contained in Section 16 of the U.S.
Exchange Act. In addition, the Company is not required to publish financial
statements as promptly as United States companies.
You may read any document that
the Company has filed with the SEC at the SECs public reference room in
Washington, D.C. You may also obtain copies of those documents from the public
reference room of the SEC at 100 F Street, N.E., Washington, D.C. 20549 by
paying a fee. You should call the SEC at 1-800-SEC-0330 or access its website at
www.sec.gov
for further information about the public reference rooms. You
may read and download some of the documents that the Company has filed with the
SECs EDGAR system at www.sec.gov. You may read and download any public document
that the Company has filed with the Canadian securities regulatory authorities
under the Companys profile on the SEDAR website at
www.sedar.com
.
II - 1
PART II
INFORMATION NOT REQUIRED TO BE DELIVERED
TO
OFFEREES OR PURCHASERS
Indemnification of Directors and Officers
The Registrant is subject to the provisions of the
Business
Corporations Act
(British Columbia) (the
Act
) and the articles of
the Registrant (the
Articles
) regarding indemnification of the
Registrants directors and officers.
Indemnification under the Act
Under Section 160(a) of the Act, and subject to Section 163 of
the Act, the Registrant may indemnify any eligible party (as defined in the Act)
against all eligible penalties (as defined in the Act) to which the eligible
party is or may be liable. Section 160(b) of the Act permits the Registrant to
pay the expenses (as defined in the Act) actually and reasonably incurred by an
eligible party after the final disposition of the eligible proceeding (as
defined in the Act).
Under Section 159 of the Act:
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an
eligible party
means an individual
who:
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o
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is or was a director or officer of the
Registrant,
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o
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is or was a director or officer of another
corporation (i) at a time when the corporation is or was an affiliate of
the Registrant, or (ii) at the request of the Registrant, or
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o
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at the request of the Registrant, is or was, or
holds or held a position equivalent to that of, a director or officer of a
partnership, trust, joint venture or other unincorporated entity,
|
and includes, except in the definition of "eligible proceeding"
and except in sections 163(1)(c) and (d) and 165 of the Act, the heirs and
personal or other legal representatives of that individual;
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an
eligible penalty
is defined as a judgment,
penalty or fine awarded or imposed in, or an amount paid in settlement of,
an eligible proceeding;
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an
eligible proceeding
means a proceeding (as
defined herein) in which an eligible party or any of the heirs and
personal or other legal representatives of the eligible party, by reason
of the eligible party being or having been a director or officer of, or
holding or having held a position equivalent to that of a director or
officer of, the Registrant or an associated corporation:
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o
|
is or may be joined as a party, or
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o
|
is or may be liable for or in respect of a
judgment, penalty or fine in, or expenses related to, the proceeding;
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expenses
are defined to include costs, charges
and expenses, including legal and other fees, but does not include
judgments, penalties, fines or amounts paid in settlement of any
proceeding; and
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a
proceeding
includes any legal proceeding or
investigative action, whether current, threatened, pending or completed.
|
Under Section 161 of the Act, the Registrant must, after the
final disposition of an eligible proceeding, pay the expenses actually and
reasonably incurred by the eligible party in respect of that proceeding if the
eligible party (a) has not been reimbursed for those expenses, and (b) is wholly
successful, on the merits or otherwise, in the outcome of the proceeding or is
substantially successful on the merits in the outcome of the proceeding.
II - 2
Under Section 162 of the Act, the Registrant may pay, as they
are incurred in advance of the final disposition of an eligible proceeding, the
expenses actually and reasonably incurred by an eligible party in respect of
that proceeding; provided the Registrant must not make such payments unless it
first receives from the eligible party a written undertaking that, if it is
ultimately determined that the payment of expenses is prohibited by Section 163,
the eligible party will repay the amounts advanced.
Under Section 163 of the Act, the Registrant must not indemnify
an eligible party against eligible penalties to which the eligible party is or
may be liable or pay the expenses of an eligible party in respect of that
proceeding under Sections 160, 161 or 162 of the Act, as the case may be, if any
of the following circumstances apply:
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if the indemnity or payment is made under an earlier
agreement to indemnify or pay expenses and, at the time that the agreement
to indemnify or pay expenses was made, the Registrant was prohibited from
giving the indemnity or paying the expenses by its memorandum or articles;
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if the indemnity or payment is made otherwise than under
an earlier agreement to indemnify or pay expenses and, at the time that
the indemnity or payment is made, the Registrant is prohibited from giving
the indemnity or paying the expenses by its memorandum or articles;
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if, in relation to the subject matter of the eligible
proceeding, the eligible party did not act honestly and in good faith with
a view to the best interests of the Registrant or the associated
corporation, as the case may be; or
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in the case of an eligible proceeding other than a civil
proceeding, if the eligible party did not have reasonable grounds for
believing that the eligible partys conduct in respect of which the
proceeding was brought was lawful.
|
Under Section 163(2) of the Act, if an eligible proceeding is
brought against an eligible party by or on behalf of the Registrant or by or on
behalf of an associated corporation, the Registrant must not either indemnify
the eligible party against eligible penalties to which the eligible party is or
may be liable in respect of the proceeding, or, after the final disposition of
an eligible proceeding, pay the expenses of the eligible party under Sections
160(b), 161 or 162 of the Act in respect of the proceeding.
Under Section 164 of the Act, despite any other provision of
Division 5
Indemnification of Directors and Officers and Payment of
Expenses
under the Act and whether or not payment of expenses or
indemnification has been sought, authorized or declined under such Division, the
Supreme Court of British Columbia may, on application of the Registrant or an
eligible party, may:
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order the Registrant to indemnify an eligible party
against any liability incurred by the eligible party in respect of an
eligible proceeding;
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order the Registrant to pay some or all of the expenses
incurred by an eligible party in respect of an eligible proceeding;
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order the enforcement of, or any payment under, an
agreement of indemnification entered into by the Registrant;
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order the Registrant to pay some or all of the expenses
actually and reasonably incurred by any person in obtaining an order under
this section; or
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make any other order the Court considers appropriate.
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Indemnification under the Articles
The articles of a company may affect its power or obligation to
give an indemnity or pay expenses. As indicated above, this is subject to the
overriding power of the Court under Section 164 of the Act.
II - 3
Under Article 21.2 of the Articles, the Registrant must
indemnify a director, former director of the Registrant and his or her heirs and
legal personal representatives against all eligible penalties to which such
person is or may be liable, and the Registrant must, after the final disposition
of an eligible proceeding, pay the expenses actually and reasonably incurred by
such person in respect of that proceeding. Each director or officer is deemed to
have contracted with the Registrant on the terms of the indemnity contained in
Article 21.2 of the Articles.
Under Article 21.3 of the Articles and subject to any
restrictions in the Act, the Registrant may indemnify any person, including any
eligible party, against eligible penalties and pay expenses incurred in
connection with the performance of services by that person for the Company.
Under Article 21.4 of the Articles the Registrant is permitted
to advance expenses to an eligible party to the extent permitted by and in
accordance with the Act.
Subject to the Act, under Article 21.5 of the Articles, the
failure of an eligible party of the Registrant to comply with the Act or the
Articles does not invalidate any indemnity to which he or she is entitled under
the Article 21 of the Articles which governs indemnification of eligible
parties.
Under the Articles, the Registrant may purchase and maintain
insurance for the benefit of any eligible party (or his or her heirs or legal
personal representatives) against any liability incurred by him or her as an
eligible party.
For the purposes of the Articles, the terms eligible party,
eligible penalty, eligible proceeding, expenses and proceeding have the
meanings set forth in the Act, as summarized above.
Indemnification for Liabilities under the Securities Act
of 1933, as amended
Insofar as indemnification for liabilities arising under the
U.S. Securities Act of 1933, as amended (the Securities Act), may be permitted
to directors, officers or persons controlling the Registrant pursuant to the
foregoing provisions, the Registrant has been informed that in the opinion of
the U.S. Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is therefore unenforceable.
II - 4
EXHIBIT INDEX
Exhibit No.
|
Description
|
|
|
3.1
|
Underwriting Agreement
(1)
|
|
|
4.1
|
Annual information form of the Registrant for the year
ended December 31, 2015 dated March 28, 2016 (incorporated by reference to
Exhibit 99.1 of the Registrants Form 6-K furnished to the Commission on
April 12, 2016)
|
|
|
4.2
|
Audited consolidated financial statements of the
Registrant as at December 31, 2015 and 2014 and for the three month period
ended December 31, 2015 together with the notes thereto and the reports of
independent registered public accounting firms thereon (incorporated by
reference to Exhibit 99.1 to the Registrants Form 6-K furnished to the
Commission on April 5, 2016)
|
|
|
4.3
|
Managements discussion and analysis of consolidated
results of operations and financial condition of the Registrant for the
year ended December 31, 2015 dated March 28, 2016 (incorporated by
reference to Exhibit 99.2 to the Registrants Form 6-K furnished to the
Commission on April 5, 2016)
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|
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4.4
|
Unaudited consolidated interim financial statements of
the Registrant for the three and nine months ended September 30, 2016 and
the notes thereto, except for the notice provided under subparagraph
4.3(3)(a) of National Instrument 51-102
Continuous Disclosure
Obligations
(incorporated by reference to Exhibit 99.1 of the
Registrants Form 6-K furnished to the Commission on November 16, 2016)
|
|
|
4.5
|
Managements discussion and analysis of consolidated
results of operations and financial condition of the Registrant for the
three and nine months ended September 30, 2016 (incorporated by reference
to Exhibit 99.2 of the Registrants Form 6-K furnished to the Commission
on November 16, 2016)
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|
|
4.6
|
Management information circular and form of proxy dated
May 18, 2016 prepared in connection with the annual general meeting of the
Registrants shareholders held on June 16, 2016 (incorporated by reference
to the Registrants Form 6-K furnished to the Commission on May 25, 2016)
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4.7
|
Material change report of the Registrant dated January
29, 2016 (incorporated by reference to the Registrants Form 6-K furnished
to the Commission on February 12, 2016)
|
|
|
4.8
|
Material change report of the Registrant dated February
25, 2016 (incorporated by reference to the Registrants Form 6-K furnished
to the Commission on February 26, 2016)
|
|
|
4.9
|
Material change report of the Registrant dated June 13,
2016 (incorporated by reference to the Registrants Form 6-K furnished to
the Commission on June 14, 2016)
|
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|
5.1
|
Consent of Deloitte LLP
(2)
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5.2
|
Consent of J. David Gaunt, P.Geo.
(2)
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5.3
|
Consent of James Lang, P.Geo.
(2)
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5.4
|
Consent of Eric Titley, P.Geo.
(2)
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5.5
|
Consent of Ting Lu, P.Eng.
(2)
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|
6.1
|
Powers of Attorney (included on signature pages hereto)
|
(1)
|
To be filed by amendment
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|
(2)
|
Filed as an exhibit to this registration statement on
Form F-10.
|
III - 1
PART III
UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
Item 1. Undertaking
.
The Registrant undertakes to make available, in person or by
telephone, representatives to respond to inquiries made by the Commission staff,
and to furnish promptly, when requested to do so by the Commission staff,
information relating to the securities registered pursuant to this Form F-10 or
to transactions in said securities.
Item 2. Consent to Service of Process.
(a)
|
Concurrently with the filing of this Registration
Statement on Form F-10, the Registrant is filing with the Commission a
written irrevocable consent and power of attorney on Form F-X.
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(b)
|
Any change to the name or address of the agent for
service of the Registrant will be communicated promptly to the Commission
by amendment to Form F-X referencing the file number of this Registration
Statement.
|
III - 2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form F-10 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Vancouver, Province of British Columbia, Country
of Canada, on January 11, 2017.
|
NORTHERN DYNASTY MINERALS INC.
|
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By:
|
/s/ Ronald Thiessen
|
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Name:
|
Ronald Thiessen
|
|
|
Title:
|
Chief Executive Officer
|
POWERS OF ATTORNEY
Each person whose signature appears below constitutes and
appoints Ronald Thiessen and Marchand Snyman , and each of them, either of whom
may act without the joinder of the other, as his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to this Registration
Statement and registration statements filed pursuant to Rule 429 under the U.S.
Securities Act, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the U.S. Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, each acting alone,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or their substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the U.S. Securities Act, this
Registration Statement has been signed by or on behalf of the following persons
in the capacities indicated on January 11, 2017.
Signature
|
|
Title
|
/s/ Ronald Thiessen
|
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|
Chief Executive Officer and
Director
|
Ronald Thiessen
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(Principal Executive
Officer)
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/s/ Marchand Snyman
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Chief Financial Officer
(Principal Financial
|
Marchand Snyman
|
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Officer and Principal
Accounting Officer)
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/s/ Robert A. Dickinson
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Robert A. Dickinson
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Director and Executive
Chairman
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|
/s/ Desmond M. Balakrishnan
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Desmond M. Balakrishnan
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Director
|
III - 3
/s/ Christian Milau
|
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Christian Milau
|
|
Director
|
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|
/s/ Steven A. Decker
|
|
|
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|
Steven A. Decker
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Director
|
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|
/s/ Kenneth W. Pickering
|
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|
Kenneth W. Pickering
|
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Director
|
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|
/s/ Gordon B. Keep
|
|
|
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Gordon B. Keep
|
|
Director
|
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/s/ David C. Laing
|
|
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David C. Laing
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Director
|
III - 4
AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of Section 6(a) of the Securities
Act of 1933, as amended, the undersigned has signed this Registration Statement,
solely in its capacity as the duly authorized representative of the Registrant
in the United States, on January 11, 2017.
|
PEBBLE EAST CLAIMS CORPORATION
|
|
|
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By:
|
/s/ Ronald Thiessen
|
|
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Name:
|
Ronald Thiessen
|
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Title:
|
Director
|
III - 5
EXHIBIT INDEX
Exhibit No.
|
Description
|
|
|
3.1
|
Underwriting
Agreement
(1)
|
|
|
4.1
|
Annual information form of the
Registrant for the year ended December 31, 2015 dated March 28, 2016
(incorporated by reference to Exhibit 99.1 of the Registrants Form 6-K
furnished to the Commission on April 12, 2016)
|
|
|
4.2
|
Audited consolidated financial
statements of the Registrant as at December 31, 2015 and 2014 and for the
three month period ended December 31, 2015 together with the notes thereto
and the reports of independent registered public accounting firms thereon
(incorporated by reference to Exhibit 99.1 to the Registrants Form 6-K
furnished to the Commission on April 5, 2016)
|
|
|
4.3
|
Managements discussion and
analysis of consolidated results of operations and financial condition of
the Registrant for the year ended December 31, 2015 dated March 28, 2016
(incorporated by reference to Exhibit 99.2 to the Registrants Form 6-K
furnished to the Commission on April 5, 2016)
|
|
|
4.4
|
Unaudited consolidated interim
financial statements of the Registrant for the three and nine months ended
September 30, 2016 and the notes thereto, except for the notice provided
under subparagraph 4.3(3)(a) of National Instrument 51-102
Continuous
Disclosure Obligations
(incorporated by reference to
Exhibit 99.1 of the Registrants Form 6-K furnished to the Commission on
November 16, 2016)
|
|
|
4.5
|
Managements discussion and
analysis of consolidated results of operations and financial condition of
the Registrant for the three and nine months ended September 30, 2016
(incorporated by reference to Exhibit 99.2 of the Registrants Form 6-K
furnished to the Commission on November 16, 2016)
|
|
|
4.6
|
Management information circular
and form of proxy dated May 18, 2016 prepared in connection with the
annual general meeting of the Registrants shareholders held on June 16,
2016 (incorporated by reference to the Registrants Form 6-K furnished to
the Commission on May 25, 2016)
|
|
|
4.7
|
Material change report of the
Registrant dated January 29, 2016 (incorporated by reference to the
Registrants Form 6-K furnished to the Commission on February 12, 2016)
|
|
|
4.8
|
Material change report of the
Registrant dated February 25, 2016 (incorporated by reference to the
Registrants Form 6-K furnished to the Commission on February 26, 2016)
|
|
|
4.9
|
Material change report of the
Registrant dated June 13, 2016 (incorporated by reference to the
Registrants Form 6-K furnished to the Commission on June 14, 2016)
|
|
|
5.1
|
Consent of Deloitte
LLP
(2)
|
|
|
5.2
|
Consent of J. David Gaunt,
P.Geo.
(2)
|
|
|
5.3
|
Consent of James Lang, P.Geo.
(2)
|
|
|
5.4
|
Consent of Eric Titley, P.Geo.
(2)
|
|
|
5.5
|
Consent of Ting Lu, P.Eng.
(2)
|
|
|
6.1
|
Powers of Attorney (included on
signature pages hereto)
|
(1)
|
To be filed by amendment
|
|
|
(2)
|
Filed as an exhibit to this registration statement on
Form F-10.
|
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