Klondex Mines Ltd. Announces Intention to Seek Written Shareholder
Approval for Midas Financing Private Placements
ELKO, NV and VANCOUVER, BC--(Marketwired - Jan 21, 2014) -
Klondex Mines Ltd. (TSX: KDX) (OTCQX: KLNDF) ("Klondex", or the
"Company") announces that in connection with the Company's brokered
private placement (the "Equity Offering") of 29,400,000
subscription receipts ("Subscription Receipts") for gross proceeds
of C$42,630,000 completed on January 9, 2014 (see press release
dated January 9, 2014) and the proposed $25 million private
placement debt offering (the "Debt Offering" and with the Equity
Offering, the "Offerings") announced December 6, 2013, the Company
will be seeking shareholder approval pursuant to the requirements
of the Toronto Stock Exchange (the "TSX") of the Offerings together
with the issuance of 5,000,000 common share purchase warrants (the
"Consideration Warrants") to Newmont Mining Corporation (or its
subsidiary) in connection with the Midas Acquisition (as defined
below) (collectively, the "Issuances"). Shareholder approval of the
Issuances is required pursuant to the rules of the TSX as the
Issuances will result in the issuance of common shares of the
Company ("Common Shares") in excess of 25% of the number of
outstanding Common Shares. In addition, as the total number of
Common Shares to be issued to insiders of the Company pursuant to
the Offerings and previous private placements within the last six
months represents more than 10% of the outstanding Common Shares,
the TSX requires that the shareholder approval of the Offerings
exclude the insiders of the Company participating in the Offerings.
The Company advises that, in accordance with Section 604(d) of the
TSX Company Manual, the Company will be seeking to obtain the
requisite shareholder approval of the Issuances by way of written
consents.
Under the Equity Offering, each Subscription Receipt was issued
at a price of C$1.45 and will be deemed to be converted, without
payment of any additional consideration, into one Common Share upon
(i) the satisfaction or waiver of all conditions precedent (other
than the purchase price) to the proposed acquisition (the "Midas
Acquisition") by the Company of the Midas mine and related ore
milling facility (see press release dated December 4, 2013); and
(ii) receipt by the Company of the requisite approval of the
Company's shareholders to the Equity Offering pursuant to the
requirements of the TSX, (collectively, the "Escrow Release
Conditions").
The Equity Offering was completed through a syndicate of agents,
led by GMP Securities L.P., and including MGI Securities Inc.,
Mackie Research Capital Corporation, M Partners Inc., Jones, Gable
& Company Limited and PI Financial Corp. (collectively, the
"Agents"). Pursuant to the terms of the Equity Offering, the
Company issued compensation options to the Agents exercisable to
acquire up to an aggregate of 1,176,000 Common Shares at a price of
C$1.55 per Common Share at any time prior to January 9, 2016 (the
"Compensation Options") upon the satisfaction of the Escrow Release
Conditions.
As disclosed in its news release dated December 6, 2013, under
the Debt Offering the Company intends to issue units ("Units")
consisting of $25,000,000 aggregate principal amount of 11.00%
senior first lien secured notes due on or about June 30, 2017 and
warrants ("Warrants") to purchase an aggregate of 3,100,000 Common
Shares. The Warrants will be exercisable at a price of $1.95 per
Common Share for a period up to three years from the date of
closing of the Debt Offering.
Under the Offerings, an aggregate of up to 11,079,290 Common
Shares may be issued or made issuable to insiders of the Company,
representing approximately 17.20% of the Common Shares issued and
outstanding prior to the completion of the first private placement
of the Company completed in the six months prior to the date
hereof. The insider participation under the Offerings includes (i)
the K2 Principal Fund L.P., which held 11,921,864 Common Shares and
1,545,294 warrants prior to the closing of the Equity Offering, and
which subscribed for 3,448,300 Subscription Receipts and is
expected to subscribe for 5,000 Units under the Debt Offering that
will include 620,000 Warrants, and (ii) Sun Valley Gold LLC, which
held 8,700,000 Common Shares prior to the closing of the Equity
Offering, and subscribed for 6,551,800 Subscription Receipts. In
addition, certain officers and directors of the Company also
participated in the Equity Offering, purchasing in the aggregate
459,190 Subscription Receipts as set out below:
Name |
Number of Subscription Receipts |
Paul
Huet |
13,000 |
Blair
Schultz |
205,000 |
James
Haggarty |
10,000 |
William Matlack |
104,290 |
Rodney Cooper |
20,000 |
Barry
Dahl |
103,500 |
Mike
Doolin |
3,400 |
Total |
459,190 |
The Consideration Warrants issued to Newmont in connection with
the Midas Acquisition will be exercisable at a price equal to 120%
of the five-day volume weighted average price of the Common Shares
on the TSX during the five trading days immediately preceding the
closing date of the Midas Acquisition, for a period of 15 years
following their issuance (subject to early expiry in certain
circumstances).
The maximum number of Common Shares issued or made issuable
pursuant to the Issuances, including the issue of the Compensation
Options and assuming the closing of the Debt Offering and the Midas
Acquisition, is 38,676,000, which represents approximately 48.50%
of the 79,746,291 Common Shares currently outstanding. The Company
is relying on the exemption from the requirement to hold a
shareholder meeting, as set forth in section 604(d) of the TSX
Company Manual, and is seeking to obtain the approval of the
Issuances by written consent by more than 50% of the shareholders
of the Company, with such approval to exclude the Common Shares
owned by the insiders of the Company participating in the
Offerings.
As previously announced, the net proceeds from the Offerings are
expected to be used to partially fund the purchase price of the
Midas Acquisition and for the repayment of $7 million in
outstanding notes. The Company is targeting to complete the Midas
Acquisition in early February.
This news release does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities in the United
States. The securities have not been and will not be registered
under the United States Securities Act of 1933, as amended (the
"U.S. Securities Act") or any state securities laws and may not be
offered or sold within the United States unless registered under
the U.S. Securities Act and applicable state securities laws,
unless an exemption from such registration is available.
About Klondex Mines Ltd. (http://www.klondexmines.com) Klondex
Mines is focused on the exploration and development of its
high-grade Fire Creek gold deposit in north central Nevada. Fire
Creek is a compelling gold project located in a mining-friendly
jurisdiction, near major producers, power, transportation, mining
infrastructure and milling facilities. As at January 20, 2014, the
Company had 79.7 million shares issued and outstanding and 127.3
million shares fully diluted.
Cautionary Note Regarding Forward-Looking
Information
This news release contains certain information that may
constitute forward-looking information under applicable Canadian
securities legislation, including information about the release of
the proceeds of the Equity Offering upon satisfaction of the Escrow
Release Conditions, the ability of the Company to obtain the
requisite shareholder approval, the timing of the Debt Offering and
current expectations on the expected use of proceeds of the
Offerings. This forward-looking information entails various risks
and uncertainties that are based on current expectations and actual
results may differ materially from those contained in such
information. These risks and uncertainties include, but are not
limited to, the approval of the shareholders of the Company (to the
extent required) of the Issuances; the timing of the Debt Offering;
the completion of the Midas Acquisition; the risks and hazards
associated with environmental compliance and permitting for its
existing underground operations; the strength of the global
economy; the price of gold; operational, funding and liquidity
risks; the degree to which mineral resource estimates are
reflective of actual mineral resources; and the degree to which
factors which would make a mineral deposit commercially viable are
present. There is no assurance that the Midas Acquisition or any
related financing will be completed, either on the terms proposed
or at all. Risks and uncertainties about the Company's business are
more fully discussed in the Company's disclosure materials filed
with the securities regulatory authorities in Canada and available
at www.sedar.com. Readers are urged to read these materials. The
Company assumes no obligation to update any forward-looking
information or to update the reasons why actual results could
differ from such information unless required by law.
Contact: Paul Huet President & CEO Klondex Mines Ltd.
775-284-5757 Email Contact Alison Tullis Manager, Investor
Relations Klondex Mines Ltd. 647-233-4348 Email Contact
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