Prospectus Supplement
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Filed pursuant to Rule 424(b)(5)
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(To Prospectus Dated November 25, 2020)
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File No. 333-250146
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5,545,325 Common Shares
Warrants to Purchase up to 2,772,637 Common Shares
________________________________________
We are offering 5,545,325 of our common
shares and warrants to purchase up to 2,772,637 our common shares (and the common shares issuable from time to time upon
exercise of such warrants) for a total gross proceeds of $2,993,390. Each common share sold in this offering will be accompanied
by one-half warrant, with each whole warrant exercisable to purchase one common share at an exercise price of $1.50 per
share. Each common share and accompanying one-half warrant are being sold at a fixed combined purchase price of $0.5398. The
common shares and warrants can only be purchased together in this offering but will be issued separately and will be
immediately separable upon issuance. The warrants will be exercisable immediately, and the warrants will expire on the third
anniversary of the date of issuance. Unless otherwise indicated, reference to dollars in this prospectus supplement shall
mean United States dollars.
Our common shares are listed on NYSE American
under the symbol “TRX.” On December 18, 2020, which represents the last reported sale price of our common shares on
NYSE American was $0.6351 per common share. There is no established trading market for the warrants and we do not expect a market
to develop. In addition, we do not intend to list the warrants on the NYSE American, any other national securities exchange or
any other trading system.
We expect that the delivery of the common shares
and warrants being offered pursuant to this prospectus supplement will be made to the investors on or about December 23, 2020.
Investing in our securities involves a high
degree of risk. Before making an investment decision, please read “Risk Factors” beginning on page S-6 of this prospectus
supplement and any other risk factor included in our base prospectus and in the documents incorporated by reference into this prospectus
supplement and base prospectus.
Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved of these securities or determined if this prospectus supplement
is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus supplement is December 21, 2020.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
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Page
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
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S-1
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CAUTIONARY NOTE TO UNITED STATES INVESTORS CONCERNING TERMINOLOGY OF MINERAL RESERVES AND MINERAL RESOURCES
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S-1
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ABOUT THIS PROSPECTUS SUPPLEMENT
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S-3
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PROSPECTUS SUMMARY
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S-4
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THE OFFERING
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S-5
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RISK FACTORS
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S-6
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CAPITALIZATION AND INDEBTEDNESS
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S-7
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USE OF PROCEEDS
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S-8
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DILUTION
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S-8
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MARKET FOR OUR SECURITIES
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S-9
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DESCRIPTION OF SECURITIES
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S-9
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
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S-10
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PLAN OF DISTRIBUTION
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S-17
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EXPENSES
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S-18
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MATERIAL CHANGES
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S-18
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LEGAL MATTERS
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S-18
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EXPERTS
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S-18
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
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S-18
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WHERE YOU CAN FIND ADDITIONAL INFORMATION
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S-19
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PROSPECTUS
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
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1
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CAUTIONARY NOTE TO UNITED STATES INVESTORS CONCERNING TERMINOLOGY OF MINERAL RESERVES AND MINERAL RESOURCES
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1
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ABOUT THIS PROSPECTUS
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2
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ABOUT TANZANIAN GOLD CORPORATION
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3
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WHERE YOU CAN FIND ADDITIONAL INFORMATION
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4
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
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4
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RISK FACTORS
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6
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CAPITALIZATION AND INDEBTEDNESS
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16
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MARKET FOR OUR COMMON SHARES
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17
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OFFER STATISTICS AND EXPECTED TIMETABLE
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17
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USE OF PROCEEDS
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17
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PLAN OF DISTRIBUTION
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17
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DESCRIPTION OF SECURITIES WE MAY OFFER
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19
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DESCRIPTION OF COMMON SHARES
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20
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DESCRIPTION OF WARRANTS
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20
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DESCRIPTION OF DEBT SECURITIES
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22
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DESCRIPTION OF UNITS
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23
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COMPARISON OF ALBERTA AND DELAWARE CORPORATE LAW; COMPARISON OF SHAREHOLDER RIGHTS
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24
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
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33
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EXPENSE OF THE ISSUANCE AND DISTRIBUTION
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34
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MATERIAL CHANGES
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34
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LISTING
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34
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TRANSFER AGENT AND REGISTRAR
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34
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LEGAL MATTERS
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34
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EXPERTS
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34
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ENFORCEABILITY OF CIVIL LIABILITIES
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35
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus supplement and the documents
we have filed with the Securities and Exchange Commission (the “SEC”) that are incorporated by reference into this
prospectus supplement contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E
of the Exchange Act. Forward-looking statements reflect our current view about future plans, intentions or expectations. These
forward-looking statements may be included herein or incorporated by reference in this prospectus supplement and include, in particular,
statements about our plans, strategies and prospects and may be identified by terminology such as “may,” “will,”
“should,” “expect,” “scheduled,” “plan,” “intend,” “anticipate,”
“believe,” “estimate,” “aim,” “potential,” or “continue” or the negative
of those terms or other comparable terminology. These forward-looking statements are subject to risks, uncertainties and assumptions
about us. Although we believe that our plans, intentions and expectations are reasonable, we may not achieve our plans, intentions
or expectations.
Important factors that could cause actual results
to differ materially from the forward-looking statements we make in this prospectus supplement are set forth in this prospectus
supplement under the caption “Risk Factors” and in the reports we have filed or will file with the SEC and which are
incorporated by reference herein, including statements under the caption “Risk Factors” and “Forward-Looking
Statements” in such reports. All forward-looking statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by the cautionary statements in this prospectus supplement under the caption “Risk Factors”
and in the reports we have filed or will file with the SEC and which are incorporated by reference herein, including statements
under the caption “Risk Factors” and “Forward-Looking Statements” in such reports, in which we have disclosed
the material risks related to our business. These forward-looking statements involve risks and uncertainties, and the cautionary
statements identify important factors that could cause actual results to differ materially from those predicted in any forward-looking
statements. We undertake no obligation to update any of the forward-looking statements after the date of this prospectus supplement
to conform those statements to reflect the occurrence of unanticipated events, except as required by applicable law. You should
read this prospectus supplement and the documents incorporated by reference completely and with the understanding that our actual
future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all
of our forward-looking statements by these cautionary statements.
CAUTIONARY NOTE TO UNITED STATES INVESTORS CONCERNING
TERMINOLOGY OF MINERAL RESERVES AND MINERAL RESOURCES
As an Alberta corporation, Tanzanian Gold Corporation,
formerly Tanzanian Royalty Exploration Corporation (the “Company”), is subject to certain rules and regulations issued
by Canadian Securities Administrators. The Company files an Annual Report on Form 20-F as its Annual Information Form (“AIF”)
with the British Columbia, Alberta and Ontario Securities Commissions via the System for Electronic Document Analysis and Retrieval
(“SEDAR”). Under the filing requirements for an AIF, the Company is required to provide detailed information regarding
its properties including mineralization, drilling, sampling and analysis, security of samples, and mineral resource and mineral
reserve estimates, if any. Further, the Company may describe its properties utilizing terminology such as “Proven Mineral
Reserve” or “Probable Mineral Reserve” or “Measured Mineral Resources,” “Indicated Mineral
Resources” and “Inferred Mineral Resources” that are permitted by Canadian securities regulations.
United States investors are cautioned not to
assume that any part of the mineral deposits, if any, in the “Proven Mineral Reserve” or “Probable Mineral Reserve”
or “Measured Mineral Resources,” “Indicated Mineral Resources” and “Inferred Mineral Resources”
categories will ever be converted into reserves. Further, these terms are not defined terms under SEC Industry Guide 7 and are
not permitted to be used in reports and registration statements filed with the SEC. The definitions of proven and probable reserves
used in NI 43-101 differ from the definitions in SEC Industry Guide 7. Under SEC Industry Guide 7, as interpreted by the staff
of the SEC, mineralization may not be classified as a “reserve” for United States reporting purposes unless the determination
has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination
is made. Among other things, all necessary permits would be required to be in hand or issuance imminent in order to classify mineralized
material as reserves under the SEC guidelines. In addition, NI 43-101 permits disclosure of “contained ounces” of mineralization.
In contrast, the SEC staff only permits issuers to report mineralization as in place tonnage and grade without reference to unit
measures.
United States investors are cautioned not to
assume that any part or all of the mineral deposits identified as an “indicated mineral resource,” “measured
mineral resource” or “inferred mineral resource” will ever be converted to reserves as defined in SEC Industry
Guide 7. Further, “inferred mineral 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 securities legislation, estimates of inferred mineral resources may not form the basis of feasibility
or pre-feasibility studies, or economic studies. U.S. investors are cautioned not to assume that part or all of an inferred mineral
resource exists, or is economically or legally mineable.
For clarification, the Company has no properties
that contain “Proven (Measured) Reserves” or “Probable (Indicated) Reserves” as defined by SEC securities
regulations.
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement is part of a registration
statement that we filed with the SEC utilizing a “shelf” registration process. Under this shelf registration statement
process, we may from time to time offer to sell up to $25,000,000 of our common share, warrants to purchase common shares, debt
securities and units consisting of common shares, warrants, debt securities or any combination of these securities in one or more
transactions.
We provide information to you about this offering
of our securities in two separate documents that are bound together: (1) this prospectus supplement, which describes the specific
details regarding this offering of common shares; and (2) the accompanying base prospectus dated November 25, 2020, included in
our registration statement on Form F-3 (SEC File No. 333--250146), which provides general information regarding our common shares,
warrants to purchase common shares, debt securities and units consisting of common shares, warrants or debt securities or any combination
of these securities and other information some of which may not apply to this offering. If information in this prospectus supplement
is inconsistent with the accompanying base prospectus, you should rely on this prospectus supplement. However, if any statement
in one of these documents is inconsistent with a statement in another document having a later date, for example, a document incorporated
by reference in this prospectus supplement, the statement in the document having the later date modifies or supersedes the earlier
statement as our business, financial condition, results of operations and prospects may have changed since the earlier dates.
You should read this prospectus supplement,
together with the accompanying base prospectus, the documents incorporated by reference in this prospectus supplement and the base
prospectus and any free writing prospectus that we have authorized for use in connection with this offering before making an investment
decision. You should also read and consider the information in the documents referred to in the sections of this prospectus supplement
and the accompanying base prospectus entitled “Where You Can Find Additional Information” and “Incorporation
of Certain Information by Reference.” When we refer to this “prospectus,” we are referring to both this prospectus
supplement and the base prospectus combined. You should rely only on the information contained or incorporated by reference in
this prospectus supplement or in any free writing prospectus that we have authorized for use in connection with this offering.
We have not authorized anyone to provide you with different information. If anyone provides you with different or inconsistent
information, you should not rely on it.
We are not making an offer to sell the securities
covered by this prospectus supplement in any jurisdiction in which an offer or solicitation is not permitted or in which the person
making the offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make an offer or solicitation.
The information appearing in this prospectus
supplement, the documents incorporated by reference in this prospectus supplement, and in any free writing prospectus that we have
authorized for use in connection with this offering is accurate only as of its respective date, regardless of the time of delivery
of the respective document or of any sale of securities covered by this prospectus supplement. You should not assume that the information
contained in or incorporated by reference in this prospectus supplement or in any free writing prospectus that we have authorized
for use in connection with this offering, is accurate as of any date other than the respective dates thereof.
Purchasers of our securities in this offering
are advised that none of the securities will be qualified for distribution in any jurisdiction of Canada, and may not be traded
through the facilities of the Toronto Stock Exchange or any other Canadian stock exchange, or otherwise in a jurisdiction of Canada.
By purchasing the securities in this offering, each purchaser thereof will be deemed to have represented and warranted to the Company
that such purchaser (i) is acquiring the securities solely for its own account and beneficial interest for investment purposes,
and not for sale or with a view to distribution in Canada, and (ii) has no present intention of selling the securities through
the facilities of the Toronto Stock Exchange or any other Canadian stock exchange, or otherwise in a jurisdiction of Canada, and
does not presently have any reason to expect a change in such intention.
In this prospectus supplement, “we,”
“us,” “our,” “the Company,” and “Tanzanian” refer to Tanzanian Gold Corporation
and its subsidiaries, unless the context otherwise requires.
PROSPECTUS SUMMARY
This summary highlights certain information
about us, this offering and information appearing elsewhere in this prospectus supplement and in the documents we incorporate by
reference in this prospectus supplement. This summary is not complete and does not contain all of the information that you should
consider before investing in our securities. After you read this summary, to fully understand our company and this offering and
its consequences to you, you should read this entire prospectus supplement and any related free writing prospectus carefully, including
the information referred to under the heading “Risk Factors” in this prospectus supplement beginning on page S-6, and
any related free writing prospectus as well as the other documents that we incorporate by reference into this prospectus supplement
including our financial statements and the exhibits to the registration statement of which this prospectus supplement is a part.
Our Company
Tanzanian Gold Corporation, formerly Tanzanian
Royalty Exploration Corporation, was originally incorporated under the name “424547 Alberta Ltd.” in the Province of
Alberta on July 5, 1990, under the Business Corporations Act (Alberta). The name was changed to “Tan Range Exploration Corporation”
on August 13, 1991. The name of the Company was again changed to “Tanzanian Royalty Exploration Corporation” on February
28, 2006. Subsequently, at the 2019 Annual Meeting, the shareholders approved a change of name to Tanzanian Gold Corporation. The
name change to Tanzanian Gold Corporation became effective in the Province of Alberta, Canada on April 17, 2019. The name change
was recognized by the stock exchanges as of the open of trading on April 22, 2019. The Company is also registered in the Province
of British Columbia as an extra-provincial company under the Business Corporations Act (British Columbia) and in the Province of
Ontario as an extra-provincial company under the Business Corporations Act (Ontario).
The principal executive office of the Company
is located at #202, 5226 Larch Street, Vancouver, British Columbia, Canada V6M 4E1, and its telephone number is (844) 364-1830.
We maintain a website at http://www.tangoldcorp.com. Information contained on, or that can be accessed through, our website is
not part of this prospectus supplement.
Our Objectives
The Company is a mineral resource company with
development and exploration stage properties and is engaged in the acquisition of interests in and the exploration of natural resource
properties with the possible development of those properties. The Company commits its own resources to the initial evaluation of
mineral properties and, in certain situations, if and when warranted, the Company may enter into joint venture agreements with
other corporations with a view for the direct development of a mine for the purpose of earning income from the sale of gold and
other mined materials. As discussed below, the Company’s primary focus has been on the development of the Buckreef Project.
The Company’s main area of interest
has been in the exploration and development of the Buckreef Project located in Tanzania through a joint venture with the State
Mining Corporation (“STAMICO”), a wholly-owned Government enterprise under the Ministry of Energy and Minerals of the
United Republic of Tanzania, of which the Company has a 55% interest and the STAMICO has a 45% interest.
During fiscal 2019, the Company initiated
and focused on a drilling program at the Buckreef Project in furtherance of developing and defining geological model. At the Buckreef
Project the Company has (i) initiated open pit mining for oxide ore and work to construct and operate a 40 tonnes per hour oxide
processing facility; (ii) further its on-going Ultra Deep Exploration drilling program of six holes of 1200 meters; and (iii) continued
to perform necessary testing and studies to further refine the Buckreef open pit, and develop the larger processing plant all to
further the completion of the Company’s 43-101 definitive feasibility study. Based on the forgoing, in June 2020, the Company
initiated initial gold production through the processing of mined oxide ore at the Buckreef Project.
Although the Company has additional mining
projects, the Company’s involvement at this time in such other projects has been limited to only care and maintenance.
THE OFFERING
Common shares outstanding immediately before offering
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202,171,121 common shares(1)(2)
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Common shares to be outstanding after this offering
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207,716,446 common shares(1)(2)
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Warrants offered by us
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Warrants to purchase up to 2,772,637 common shares at an
exercise price of $1.50 per share. The warrants will be exercisable immediately by the holders upon issuance and have a term
of three years from the initial exercise date.
Warrants cannot be exercised for fractional amounts. Only
whole warrants may be exercisable with each whole warrant representing a right to purchase one common share at an exercise price
of $1.50 per common share. There is no established public trading market for the warrants and we do not expect a market to develop.
In addition, we do not intend to apply for listing of the warrants on NYSE American, any other national securities exchange or
any other trading system.
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Use of Proceeds
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The net proceeds from the offering will used for capital
expenditures, continued exploration, general corporate purposes and working capital. See ‘‘Use of Proceeds’’
on page S-8 of this prospectus supplement.
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Risk Factors
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Investing in our securities involves a high degree of risk.
See “Risk Factors” beginning on page S-6 of this prospectus supplement for a discussion of factors you should consider
carefully when making an investment decision.
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Common Shares
NYSE American symbol
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TRX
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(1)
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As of December 18, 2020.
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(2)
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Unless otherwise indicated, this prospectus supplement assumes the sale of common shares hereunder.
The number of common shares to be outstanding immediately after this offering as shown above is based on 202,171,121 common shares
outstanding as of December 18, 2020, and assumes the sale of all common shares being offered pursuant to this prospectus supplement,
but excludes the following:
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(i) 7,351,000 common shares issuable upon exercise of stock options outstanding under our stock
plans, at a weighted average exercise price of Cdn$0.41 per share; and (ii) 7,243,112 common shares available for future grant
or issuance pursuant to our stock plans;
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common shares that may be issued upon the conversion of outstanding convertible debentures in the
aggregate amount of $5.7 million at a conversion price equal to at the lower of the Tranche A Fixed Conversion Price which is the
20-day VWAP as calculated immediately prior to the closing for each respective Tranche A Debenture or 93% of the average of the
two lowest daily VWAPs during the 10 consecutive trading days immediately preceding the conversion date; provided, however, the
conversion price may not be less than $0.20;
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214,285; 73,616; and 3,002,037 common shares underlying warrants with an exercise price of $0.9515;
$0.8718 and $1.2125, respectively; and
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2,772,637 common shares issuable upon the exercise of the warrants sold in this offering.
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RISK FACTORS
Investment in our securities involves high
risks. Before deciding whether to invest in our common shares, you should consider carefully the risk factors discussed below and
those contained in the base prospectus and “Part I. Item 3. Key Information – D. Risk Factors” of our Annual
Report on Form 20-F for the fiscal year ended August 31, 2020, as filed with the SEC on November 30, 2020, which is incorporated
herein by reference in its entirety, as well as any amendment or update to our risk factors reflected in subsequent filings with
the SEC. If any of the risks or uncertainties described in our SEC filings actually occurs, our business, financial condition,
results of operations or cash flow could be materially and adversely affected. This could cause the trading price of our common
shares to decline, resulting in a loss of all or part of your investment. The risks and uncertainties we have described are not
the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may
also affect our business operations.
Additional Risks Related to Our Shares and this Offering
Management will have broad discretion as
to the use of the proceeds from this offering and may not use the proceeds effectively.
Although we have designated the amount of net
proceeds from this offering for certain purposes, our management will have broad discretion as to the application of the net proceeds
from this offering. Our management may use the net proceeds for corporate purposes that may not improve our financial condition
or market value.
If you purchase our common shares in this
offering, you may incur immediate dilution in the book value of your investment.
The offering price per share in this
offering may exceed the net tangible book value per share of our common share outstanding prior to this offering. Assuming
that an aggregate of 5,545,325 common shares are sold at a price of $0.5398 per share, for aggregate gross proceeds of $2,993,390,
and after deducting estimated offering expenses payable by us, you would experience immediate dilution of $(0.4042) per share,
representing the difference between our as adjusted net tangible book value per share as of August 31, 2020 after giving
effect to this offering and the assumed offering price. The exercise of outstanding options, warrants and convertible
debentures would result in further dilution of your investment. See the section entitled “Dilution” below for a
more detailed illustration of the dilution you may incur if you participate in this offering.
You may experience future dilution as a result
of future equity offerings.
In order to raise additional capital, we may
in the future offer additional common shares or other securities convertible into or exchangeable for our common shares at prices
that may not be the same as the price per share in this offering. We may sell shares or other securities in any other offering
at a price per share that is less than the price per share paid by investors in this offering, and investors purchasing shares
or other securities in the future could have rights superior to existing shareholders. The price per share at which we sell additional
shares of our common shares, or securities convertible or exchangeable into common shares, in future transactions may be higher
or lower than the price per share paid by investors in this offering.
There is no public
market for the warrants to purchase common stock in this offering.
There is no established
public trading market for the warrants being sold in this offering, and we do not expect a market to develop. In addition, we do
not intend to apply to list the warrants on any securities exchange. Without an active market, the liquidity of the warrants will
be limited.
Holders of the warrants
will have no rights as shareholders of the Company until they acquire our common shares.
Until you acquire shares
of our common shares upon exercise of any of the warrants, you will have no rights with respect to our common shares. Upon exercise
of any warrants held, you will be entitled to exercise the rights of a common shares only as to matters for which the record date
occurs after the exercise date.
Sales of a significant number of our common
shares in the public market, or the perception that such sales could occur, could depress the market price of our common shares.
Sales of a substantial number of our common
shares in the public market could depress the market price of our common shares and impair our ability to raise capital through
the sale of additional equity securities. We cannot predict the effect that future sales of our common shares would have on the
market price of our common shares.
CAPITALIZATION AND INDEBTEDNESS
The table below sets forth our capitalization and
indebtedness as of August 31, 2020.
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on an actual basis; and
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assuming that an aggregate of 5,545,325 common shares and warrants to purchase 2,772,637
common shares are sold at a price of $0.5398 per share for aggregate gross proceeds of $2,993,390, and estimated aggregate offering
expenses of $30,000.
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Pro Forma
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As at August 31, 2020
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$Cdn
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$US(1)
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Cdn$
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US$(1)
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Total Liabilities
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$17,331,089
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$13,288,674
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$17,331,089
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$13,288,674
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Authorized Capital
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Share capital
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178,396,820
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136,786,398
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182,261,643
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139,749,764
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Share based payment reserve
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3,449,269
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2,644,739
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3,449,269
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2,644,739
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Warrants Reserve
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1,033,037
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792,085
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1,033,037
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792,085
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Accumulated Other Comprehensive Loss
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(996,538)
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(764,099)
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(996,538)
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(764,099)
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Accumulated Deficit
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(149,041,291)
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(114,277,941)
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(149,041,291)
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(114,277,941)
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Equity attributable to owners of the Company
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32,841,297
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25,181,182
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36,706,120
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28,144,548
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Non-controlling interests
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(361,632)
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(277,283)
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(361,632)
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(277,283)
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Total shareholder’s equity
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$32,479,665
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$24,903,899
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$36,344,498
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$27,867,265
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(1)
Based on an exchange rate (Bank of Canada) of Cdn$1.3042 for US$1.00 as of August 31, 2020.
The number of common shares to be outstanding
immediately after this offering as shown above is based on 199,975,122 common shares outstanding as of August 31, 2020, and assumes
the sale of all common shares being offered pursuant to this prospectus supplement, but excludes the following:
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•
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(i) 7,351,000 common shares issuable upon exercise of stock options outstanding under our stock
plans, at a weighted average exercise price of Cdn$0.41per share; and (ii) 7,243,112 common shares available for future grant or
issuance pursuant to our stock plans;
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•
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common shares that may be issued upon the conversion of outstanding convertible debentures in the
aggregate amount of $5.7 million at a conversion price equal to at the lower of the Tranche A Fixed Conversion Price which is the
20-day VWAP as calculated immediately prior to the closing for each respective Tranche A Debenture or 93% of the average of the
two lowest daily VWAPs during the 10 consecutive trading days immediately preceding the conversion date; provided, however, the
conversion price may not be less than $0.20;
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•
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214,285; 73,616; and 3,002,037 common shares underlying warrants with an exercise price of $0.9515;
$0.8718 and $1.2125, respectively; and
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•
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2,772,637 common shares issuable upon exercise of the warranted offered
and sold in this offering.
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USE OF PROCEEDS
We intend to use the net proceeds from the sale
of our common shares and warrants for capital expenditures, continued exploration, general corporate purposes and working capital.
Assuming gross proceeds of $2,993,390, our estimated net proceeds from the offering will be approximately $2,963,390.
Although we intend to use the net proceeds of
this offering for the foregoing purposes, the planned expenditures may change significantly. As a result, our management will have
broad discretion in the allocation of any net proceeds. Pending use of any net proceeds, we may invest any proceeds in a variety
of capital preservation instruments, including short-term, investment-grade, and interest-bearing instruments.
DILUTION
If you invest in our common shares which
are part of this offering, you will experience dilution to the extent of the difference between the price per share you pay
in this offering and the pro forma net tangible book value per common share immediately after this offering. Our pro forma
net tangible book value as of August 31, 2020, after giving effect to the proceeds from the sale of our common shares in the
aggregate amount of $2,993,390 in this offering at an offering price of $0.5398 per share and after deducting estimated
offering expenses payable by us, our as adjusted pro forma net tangible book value would have been approximately $27,867,265
or approximately $0.1356 per common share, as of August 31, 2020. This represents a change in net tangible book value of
approximately $0.0111 per share to existing shareholders and an immediate dilution of approximately $0.4042 per share to
investors in this offering. The following table illustrates this calculation on a per share basis.
Offering price per common share
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$0.5398
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Net tangible book value per share as of August 31, 2020
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$0.1245
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Increase in net tangible book value per share attributable to this offering
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$0.0111
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Net tangible book value per share after this offering
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$ 0.1356
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Dilution per share to new investors purchasing shares in this offering
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$ 0.4042
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The table above assumes for illustrative
purposes that an aggregate of 5,545,325 common shares are sold at a price of $0.5398 per common share for aggregate gross
proceeds of $2,993,390 less expenses of $30,000. This information is supplied for illustrative purposes only.
The number of common shares to be outstanding
immediately after this offering as shown above is based on 199,975,122 common shares outstanding as of August 31, 2020, and assumes
the sale of all common shares being offered pursuant to this prospectus supplement, but excludes the following:
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(i) 7,351,000 common shares issuable upon exercise of stock options outstanding under our stock
plans, at a weighted average exercise price of Cdn$0.41per share; and (ii) 7,243,112 common shares available for future grant or
issuance pursuant to our stock plans;
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common shares that may be issued upon the conversion of outstanding convertible debentures in the
aggregate amount of $5.7 million at a conversion price equal to at the lower of the Tranche A Fixed Conversion Price which is the
20-day VWAP as calculated immediately prior to the closing for each respective Tranche A Debenture or 93% of the average of the
two lowest daily VWAPs during the 10 consecutive trading days immediately preceding the conversion date; provided, however, the
conversion price may not be less than $0.20;
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214,285; 73,616; and 3,002,037 common shares underlying warrants with an exercise price of $0.9515;
$0.8718 and $1.2125, respectively; and
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2,772,637 common shares issuable upon exercise of the warranted offered and sold in this offering.
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MARKET FOR OUR SECURITIES
Our common shares are listed on the TSX under
the symbol “TNX”. Our common shares are also listed on the NYSE American LLC (“NYSE American”) under the
symbol “TRX.”
There is no market for the warrants offered
in this offering. We do not plan on making an application to list the warrants on the NYSE American or on any other national securities
exchange or nationally recognized trading system.
DESCRIPTION OF SECURITIES
Common Shares
Our Articles authorizes the issuance of an unlimited
number of common shares, without par value. As of December 18, 2020, we had 202,171,121 common shares outstanding.
A description of the common shares we are offering
pursuant to this prospectus supplement is set forth under the heading “Description of Common Shares,” starting on page
20 of the accompanying base prospectus. The description of our capital shares is a summary and is qualified in its entirety by
reference to our Articles of Incorporation, as amended and restated (“Articles”). For a complete description, you should
refer to our Articles a copy of which is on file with the SEC.
Warrants
The warrants offered in this offering will be
issued in certificated form. You should review a copy of the form of warrant, which will be filed as an exhibit to a Current Report
on Form 6-K filed with the SEC in connection with this offering, for a complete description of the terms and conditions applicable
to the warrants. The following is a brief summary of the warrants and is subject in all respects to the provisions contained in
the warrants.
Exercisability. Holders may exercise
the Warrants beginning on the date of issuance and at any time up to the date that is three years after such date of issuance.
The Warrants will be exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise
notice accompanied by payment in full for the number of common shares purchased upon such exercise. Warrants cannot be exercised
for fractional amounts. Only whole warrants may be exercisable with each whole warrant representing a right to purchase one common
share at an exercise price of $1.50 per common share.
Exercise Price. The exercise price per
common share purchasable upon exercise of the warrants is $1.50 per common share being purchased. The exercise price is subject
to appropriate adjustment in the event of stock dividends and distributions, stock splits, stock combinations, reclassifications
or similar events affecting our common shares.
No Fractional Shares. No fractional shares
of our common shares will be issued upon exercise of Warrants. If, upon exercise of the warrants, a holder would be entitled to
receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number of common share to be
issued to the holder of the warrants and pay such holder cash in lieu of such fractional interest in our common share.
Transferability Subject to applicable
laws and the restriction on transfer set forth in the warrants, the warrants may be transferred at the option of the holders upon
surrender of the warrants to us together with the appropriate instruments of transfer.
Exchange Listing We do not plan on making
an application to list the warrants on the NYSE American or on any other national securities exchange or nationally recognized
trading system.
Rights as a Shareholder Except as otherwise
provided in the warrants or by virtue of such holder’s ownership of shares of our common shares the holders of the warrants
do not have the rights or privileges of holders of our common shares, including any voting rights, until they exercise their warrants.
CERTAIN 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 acquisition of
securities pursuant to the offering and the ownership and disposition of the securities This summary applies only to U.S. Holders
who hold common shares as capital assets (generally, property held for investment) and who acquire common shares at their original
issuance pursuant to the offering, and does not apply to any subsequent U.S. Holder of a common share.
This summary is for general information purposes
only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax considerations that may
apply to a U.S. Holder as a result of the ownership and disposition of common shares. In addition, this summary does not take into
account the individual facts and circumstances of any particular U.S. Holder that may affect the U.S. federal income tax consequences
to such U.S. Holder, including specific tax consequences to a U.S. Holder under an applicable tax treaty. Accordingly, this summary
is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any particular U.S.
Holder. In addition, this summary does not address the U.S. federal alternative minimum, U.S. federal estate and gift, U.S. Medicare
contribution, U.S. state and local, or non-U.S. tax consequences of the acquisition, ownership or disposition of common shares.
Except as specifically set forth below, this summary does not discuss applicable tax reporting requirements. Each U.S. Holder should
consult its own tax advisor regarding all U.S. federal, U.S. state and local and non-U.S. tax consequences of the acquisition,
ownership , or disposition of common 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 acquisition, ownership or disposition of common shares. This summary is not binding on the IRS, and the
IRS is not precluded from taking a position that is different from, and contrary to, any position taken in this summary. In addition,
because the authorities upon which this summary is based are subject to various interpretations, the IRS and the U.S. courts could
disagree with one or more of the positions taken in this summary.
Scope of This Disclosure
Authorities This summary is based on the Internal
Revenue Code of 1986, as amended (the “Code”), Treasury Regulations (whether final, temporary, or proposed), published
rulings of the IRS, published administrative positions of the IRS, the Convention Between Canada and the United States of America
with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended (the “Canada-U.S. Tax Convention”),
and U.S. court decisions that are applicable and, in each case, as in effect and available, as of the date hereof. Any of the authorities
on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied
on a retroactive or prospective basis which could affect the U.S. federal income tax considerations described in this summary.
This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted,
could be applied on a retroactive or prospective basis.
U.S. Holders. For purposes of this summary,
the term “U.S. Holder” means a beneficial owner of common shares that is for U.S. federal income tax purposes:
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An individual who is a citizen or resident of the U.S.;
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A corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created
or organized in or under the laws of the U.S., any state thereof or the District of Columbia;
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An estate the income of which is subject to U.S. federal income taxation regardless of its source;
or
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A trust that (a) is subject to the primary supervision of a court within the U.S. and the control
of one or more U.S. persons for all substantial decisions or (b) has a valid election in effect under applicable Treasury Regulations
to be treated as a U.S. person.
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Non-U.S. Holders. For purposes of this summary,
a “non-U.S. Holder” is a beneficial owner of common shares that is not a partnership (or other “pass-through”
entity) for U.S. federal income tax purposes and is not a U.S. Holder. This summary does not address the U.S. federal income tax
considerations applicable to non-U.S. Holders arising from the acquisition, ownership or disposition of common shares.
Accordingly, a non-U.S. Holder should consult
its own tax advisor regarding all U.S. federal, U.S. state and local, and non-U.S. tax consequences (including the potential application
of and operation of any income tax treaties) relating to the purchase of the common shares pursuant to the offering and the acquisition,
ownership or disposition of common 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 the securities
(whether or not any such transactions are undertaken in connection with the purchase of the securities), other than the U.S. federal
income tax considerations to U.S. Holders of the acquisition of common shares and the ownership and disposition of such common
shares.
U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not
Addressed
This summary does not address the U.S. federal
income tax considerations of the acquisition, ownership, or disposition of common shares by U.S. Holders that are subject to special
provisions under the Code, including, but not limited to, the following: (a) tax-exempt organizations, qualified retirement plans,
individual retirement accounts, or other tax-deferred accounts; (b) financial institutions, underwriters, insurance companies,
real estate investment trusts, or regulated investment companies; (c) broker-dealers, dealers, or traders in securities or currencies
that elect to apply a “mark-to-market” accounting method; (d) U.S. Holders that have a “functional currency”
other than the U.S. dollar; (e) U.S. Holders that own common shares as part of a straddle, hedging transaction, conversion transaction,
constructive sale, or other arrangement involving more than one position; (f) U.S. Holders that acquire common shares in connection
with the exercise of employee stock options or otherwise as compensation for services; (g) U.S. Holders that hold common shares
other than as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment purposes);
(h) U.S. Holders that own directly, indirectly, or by attribution, 10% or more, by voting power or value, of the outstanding stock
of the Company; and (i) U.S. Holders subject to Section 451(b) of the Code. 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 Tax Act; (c) persons
that use or hold, will use or hold, or that are or will be deemed to use or hold common shares in connection with carrying on a
business in Canada; (d) persons whose common shares constitute “taxable Canadian property” under the Tax Act; 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 acquisition, ownership, or disposition of common 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 common shares, the U.S.
federal income tax consequences to such partnership and the partners (or other owners) of such partnership of the acquisition,
ownership, or disposition of the common shares generally will depend on the activities of the partnership and the status of such
partners (or other owners). This summary does not address the U.S. federal income tax consequences 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 acquisition, ownership, or disposition of common shares.
Distributions on Common Shares
As stated above, we have never paid a dividend
and have no intention of paying a dividend. Subject to the “passive foreign investment company” (“PFIC”)
rules discussed below, a U.S. Holder that receives a distribution, including a constructive distribution, with respect to Common
Shares will be required to include the amount of such distribution in gross income as a dividend (without reduction for any Canadian
income tax withheld from such distribution) to the extent of the current or accumulated “earnings and profits” of the
Company, as computed for U.S. federal income tax purposes. To the extent that a distribution exceeds the current and accumulated
“earnings and profits” of the Company, such distribution will be treated first as a tax-free return of capital to the
extent of a U.S. Holder’s tax basis in the common shares and thereafter as gain from the sale or exchange of such common
shares (see “Sale or Other Taxable Disposition of Common Shares” below). However, the Company may not maintain calculations
of earnings and profits in accordance with U.S. federal income tax principles, and each U.S. Holder should therefore assume that
any distribution by the Company with respect to the common shares will be reported to them as a dividend. Dividends received on
the common shares generally will not be eligible for the “dividends received deduction” available to U.S. corporate
shareholders receiving dividends from U.S. corporations. If the Company is eligible for the benefits of the Canada-U.S. Tax Convention,
or another qualifying income tax treaty with the United States that includes an exchange of information program which the U.S.
Treasury Department has determined is satisfactory for these purposes, 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 Common Shares
Subject to the PFIC rules discussed below, upon
the sale or other taxable disposition of common shares, a U.S. Holder generally will recognize a 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. Holder’s
tax basis in the common shares sold or otherwise disposed of. Such capital gain or loss will generally be a long-term capital gain
or loss if, at the time of the sale or other taxable disposition, the U.S. Holder’s holding period for the common shares
is more than one year. Preferential tax rates apply to long-term capital gains of non-corporate U.S. Holders. Deductions for capital
losses are subject to significant limitations under the Code. A U.S. Holder’s tax basis in common shares generally will be
such U.S. Holder’s U.S. dollar cost for such common shares.
Exercise of Warrants
A U.S. Holder generally will not recognize gain
or loss upon the acquisition of a common share (“Warrant Share”) on the exercise of a warrant for cash. A U.S. Holder’s
initial tax basis in the Warrant Share received on exercise of a warrant will be equal to the sum of (i) the U.S. Holder’s
tax basis in the warrant, plus (ii) the exercise price paid by the U.S. Holder on the exercise of the warrant. A U.S. Holder’s
holding period for the arrant Share received on the exercise of a warrant will begin on the day after the warrant is exercised.
Disposition of Warrants
Subject to the PFIC rules discussed below (see
“Tax Consequences if the Corporation is a PFIC”), upon the sale or other taxable disposition of a warrant, 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. Holder’s tax basis in the warrant 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 U.S. Holder’s
holding period for the warrant is 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 taxable as a corporation
for U.S. federal income tax purposes. Deductions for capital losses are subject to significant limitations under the Code.
Expiration of Warrants Without Exercise
Subject to the PFIC rules discussed below, upon
the lapse or expiration of a warrant, a U.S. Holder will recognize a loss in an amount equal to such U.S. Holder’s tax basis
in the warrant. Any such loss generally will be a capital loss and will be a long-term capital loss if, at the time of the lapse
or expiration, the U.S. Holder’s holding period for the warrant is more than one year. Deductions for capital losses are
subject to significant limitations under the Code.
Adjustments to the Warrants
The warrant provides for an adjustment to the
number of Warrant Shares for which a warrant may be exercised or to the exercise price of a warrant upon certain events. Subject
to the PFIC rules discussed below, an adjustment that has the effect of preventing dilution of the interest of the warrant holders
generally will not be taxable to a U.S. Holder. However, an adjustment may be treated as a constructive distribution to a U.S.
Holder if and to the extent that such adjustment has the effect of increasing such U.S. Holder’s proportionate interest in
our assets or earnings and profits. Subject to the PFIC rules discussed below, any such constructive distribution would be taxable
under the rules described above under the heading “Distributions on Common Shares”.
PFIC Status of the Company
The Company had no revenues for its taxable
year ended August 31, 2018, and has not performed an analysis of whether or not it was or will be deemed a PFIC for its prior and
current taxable years. If the Company is or becomes a PFIC, the foregoing description of the U.S. federal income tax consequences
to U.S. Holders of the ownership of Common Shares will be different. The U.S. federal income tax consequences of owning and disposing
of common shares if the Company is or becomes a PFIC are described below under the heading “Tax Consequences if the Company
is a PFIC.”
A non-U.S. corporation is a PFIC for each tax
year in which (i) 75% or more of its gross income is passive income (as defined for U.S. federal income tax purposes) (the “income
test”) or (ii) 50% or more (by value) of its assets (based on an average of the quarterly values of the assets during such
tax year) either produce or are 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 other operations or sources, and “passive income” generally includes dividends, interest, certain
rents and royalties, certain gains from commodities or securities transactions and the excess of gains over losses from the disposition
of certain assets which product passive income. If a non-U.S. corporation owns at least 25% (by value) of the stock of another
corporation, the non-U.S. corporation is treated, for purposes of the income test and asset test, as owning its proportionate share
of the assets of the other corporation and as receiving directly its proportionate share of the other corporation’s income.
Under certain attribution and indirect ownership
rules, if the Company is a PFIC, U.S. Holders will generally be deemed to own their proportionate share of the Company’s
direct or indirect equity interest 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
common 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 Company’s common shares are made.
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 common shares, special rules may increase such U.S. Holder’s U.S. federal income tax liability
with respect to the ownership and disposition of such common shares. If the Company is a PFIC for any tax year during which a U.S.
Holder owns common shares, the Company will be treated as a PFIC with respect to such U.S. Holder for that tax year and for all
subsequent tax years, regardless of whether the Company meets the income test or the asset test for such subsequent tax years,
unless the U.S. Holder makes a “deemed sale” election with respect to the common shares. If the election is made, the
U.S. Holder will be deemed to sell the common shares it holds at their fair market value on the last day of the last taxable year
in which we qualified as a PFIC, and any gain recognized from such deemed sale would be taxed under the PFIC excess distribution
regime. After the deemed sale election, the U.S. Holder’s common shares would not be treated as shares of a PFIC unless the
Company subsequently becomes a PFIC. U.S. Holders should consult their own U.S. tax advisors regarding the availability and desirability
of a deemed sale 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 common 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 distribution received during the shorter of
the preceding three years or the U.S. Holder’s holding period for the common shares) received on common shares or with respect
to the stock of a Subsidiary PFIC will be allocated ratably to each day of such U.S. Holder’s holding period for the common
shares:
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The amount allocated to the current tax year and any year prior to the first year
in which the Company was a PFIC will be taxed as ordinary income in the current year;
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The amount allocated to each of the other tax years (the “Prior PFIC Years”)
will be subject to tax at the highest ordinary income tax rate in effect for the applicable class of taxpayer for that year; and
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An interest charge will be imposed with respect to the resulting tax attributable
to each Prior PFIC Year.
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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 default PFIC rules described
above with respect to common shares 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 Company’s 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. Holder’s basis in the common shares will be increased to reflect the amount of the
taxed but undistributed income. Distributions of income that had previously been taxed will result in a corresponding reduction
of basis in the common shares and will not be taxed again as a distribution to a U.S. Holder. Taxable gains on the disposition
of common shares by a U.S. Holder that has made a timely and effective QEF Election are generally capital gains. A U.S. Holder
must make a QEF Election 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 and the Company may not provide this statement, in which case a QEF Election cannot be made. 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,
but limited, circumstances, including if it had a reasonable belief that the Company was not a PFIC and did not file a protective
election. 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 (including
a “pedigreed” QEF election where necessary) for the Company and any Subsidiary PFIC.
Alternatively, a Mark-to-Market Election may
be made with respect to “marketable stock” in a PFIC if the stock is “regularly traded” on a “qualified
exchange or other market” (within the meaning of the Code and the applicable U.S. Treasury Regulations). A class of stock
that is traded on one or more qualified exchanges or other markets is considered to be “regularly traded” for any calendar
year during which such class of stock is traded in other than de minimis quantities on at least 15 days during each calendar quarter.
If the common shares are considered to be “regularly traded” within this meaning, then a U.S. Holder generally will
be eligible to make a Mark-to-Market Election with respect to its common shares. However, there is no assurance that the common
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. Hence, a Mark-to-Market Election will not be effective to eliminate the application of the
default PFIC rules, 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 common 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. Holder’s adjusted tax basis in such shares as of the close of such taxable year. A U.S. Holder’s
adjusted tax basis in the common shares generally will be increased by the amount of ordinary income recognized with respect to
such shares. If the U.S. Holder’s adjusted tax basis in the common shares as of the close of a tax year exceeds the fair
market value of such shares as of the close of such taxable year, the U.S. Holder generally will recognize an ordinary loss, but
only to the extent of net mark-to-market income recognized with respect to such shares for all prior taxable years. A U.S. Holder’s
adjusted tax basis in its common shares generally will be decreased by the amount of ordinary loss recognized with respect to such
shares. Any gain recognized upon a disposition of the common shares generally will be treated as ordinary income, and any loss
recognized upon a disposition generally will be treated as an ordinary loss to the extent of net mark-to-market income recognized
for all prior taxable years. Any loss recognized in excess thereof will be taxed as a capital loss. 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 common shares.
Foreign Tax Credit
A U.S. Holder that pays (whether directly or
through withholding) Canadian income tax in connection with the ownership or disposition of common shares may (under certain circumstances)
be entitled to receive either a deduction or a credit for such Canadian income tax paid generally at the election of such U.S.
Holder. Generally, a credit will reduce a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar basis, whereas
a deduction will reduce a U.S. Holder’s 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. Holder’s U.S. federal
income tax liability that such U.S. Holder’s “foreign source” taxable income bears to such U.S. Holder’s
worldwide taxable income. In applying this limitation, a U.S. Holder’s 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 securities of a non-U.S.
corporation by a U.S. Holder should be treated as U.S. source for this purpose, except as otherwise provided in an applicable income
tax treaty and if an election is properly made under the Code. However, the amount of a distribution with respect to the common
shares that is treated as a “dividend” may be lower for U.S. federal income tax purposes than it is for Canadian federal
income tax purposes, resulting in a reduced foreign tax credit allowance to a U.S. Holder. In addition, this limitation is calculated
separately with respect to specific categories of income. The foreign tax credit rules are complex, and each U.S. Holder should
consult its own U.S. tax advisor regarding the foreign tax credit rules.
Special rules apply to the amount of foreign
tax credit that a U.S. Holder may claim on a distribution, including a constructive 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 complicated,
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 common shares, or on the sale or other taxable disposition
of common 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 generally 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. Holder’s common shares are held in an account at certain
financial institutions. Penalties for failure to file certain of these information returns are substantial. U.S. Holders should
consult with their own tax advisors regarding the requirements of filing information returns on IRS Form 8938, and, if applicable,
filing obligations relating to the PFIC rules, including possible reporting on an IRS Form 8621.
Payments made within the U.S. or by a U.S. payor
or U.S. middleman of (a) distributions on the common shares, and (b) proceeds arising from the sale or other taxable disposition
of common shares generally will be subject to information reporting. In addition, backup withholding, currently at a rate of 24%,
may apply to such payments if a U.S. Holder (a) fails to furnish such U.S. Holder’s 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. Holder’s U.S. federal income tax liability, if any, or will
be refunded, if such U.S. Holder furnishes required information to the IRS in a timely manner. The information reporting and backup
withholding rules may apply even if, under the Canada-U.S. Tax Convention, payments are 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 Effect Of Comprehensive U.S. Tax Reform Legislation On The Company,
Whether Adverse Or Favorable, Is Uncertain.
On December 22, 2017, President Trump signed
into law H.R. 1, “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget
for fiscal year 2018” (informally titled the “Tax Cuts and Jobs Act”). Among a number of significant changes
to the U.S. federal income tax rules, the Tax Cuts and Jobs Act reduces the marginal U.S. corporate income tax rate from 35% to
21%, limits the deduction for net interest expense, shifts the United States toward a more territorial tax system, and imposes
new taxes to combat erosion of the U.S. federal income tax base. The effect of the Tax Cuts and Jobs Act on the Company and its
subsidiaries, whether adverse or favorable, is uncertain, and may not become evident for some period of time. Each U.S. Holder
is urged to consult its own tax adviser regarding the implications of the Tax Cuts and Jobs Act of holding of our common shares.
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, EXERCISE OR DISPOSITION OF OUR SECURITIES.
U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS APPLICABLE TO THEM IN THEIR PARTICULAR CIRCUMSTANCES.
PLAN OF DISTRIBUTION
We have entered into subscription agreements
directly with certain investors in connection with this offering. Under the terms of the subscription agreements, we make certain
representations, warranties and covenants, including representations, warranties and covenants relating to the absence of a stop
order suspending the effectiveness of the registration statement of which this prospectus supplement and the accompanying base
prospectus are a part, the absence of any material adverse change in our business and the receipt additional listing approval for
the common shares offered in this offering from the NYSE American and Toronto Stock Exchange. Our obligation to issue and sell
the common shares and warrants to the investors are subject to the conditions set forth in the subscription agreements, which may
be waived by us in our discretion. An investor’s obligation to purchase common shares and warrants is subject to conditions
set forth in the investor’s subscription agreement.
We currently anticipate that the closing of
the sale of the common shares and warrants will occur on or about December 23, 2020. On such closing date, the following will occur:
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we will receive funds in the amount of the aggregate purchase price of the common shares being sold by us to the investors on such closing date; and
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we will deliver common shares and warrants being sold on such closing date.
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We estimate the total offering expenses of this
offering that will be payable by us will be approximately $30,000, consisting of legal and various other fees incurred by us.
There is no minimum dollar offering amount required
as a condition to closing in this offering and there can be no assurance that any or all of the common shares and warrants being
offered hereby will be sold. Accordingly, we may sell substantially fewer number of common shares and warrants than the total number
of common shares and warrants offered hereby, in which case our net proceeds would be substantially reduced.
Our common shares are listed on the NYSE American
and on the TSX under the symbol “TRX.” Our warrants are not listed. The transfer agent and registrar for our common
shares is Odyssey Trust Company, Stock Exchange Tower 350, 300 5th Avenue SW, Calgary, Alberta Canada T2P 3C4; 888-290-1175.
The foregoing does not purport to be a complete
statement of the terms and conditions of the subscription agreements. A copy of the form of subscription agreement will be included
as exhibits to our Report on Form 6-K that will be filed with the SEC and incorporated by reference into the registration statement
on Form F-3 (SEC File No. 333-250146) of which this prospectus supplement forms a part. See “Where You Can Find Additional
Information” on page S-19.
EXPENSES
We estimate that the total expenses of this
offering payable by us will be approximately $30,000.
MATERIAL CHANGES
Except as otherwise described in our Annual
Report on Form 20-F for the fiscal year ended August 31, 2020, in our Reports on Form 6-K filed or submitted under the Exchange
Act and incorporated by reference herein and as disclosed in this prospectus supplement, no reportable material changes have occurred
since August 31, 2020.
LEGAL MATTERS
Certain legal matters in connection with the
securities offered hereby will be passed upon for us by Miller Thomson, LLP, Vancouver, British Columbia, Canada and Lewis Brisbois
Bisgaard & Smith, LLP, San Francisco, California with respect to matters of United States law.
EXPERTS
The consolidated financial statements of the
Company appearing in its Annual Report on Form 20-F for the fiscal year ended August 31, 2020 as filed with the SEC on November
30, 2020, have been audited by Dale Matheson Carr-Hilton LaBonte LLP, an independent registered public accounting firm, as set
forth in their report thereon, and incorporated herein by reference. Such consolidated financial statements are incorporated herein
by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
Information relating to the Company’s
mineral properties in this prospectus supplement and the documents incorporated by reference herein has been derived from reports,
statements or opinions prepared or certified by Crundwell Metallurgy (Crundwell) and Virimai Projects (Virimai) and this information
has been included in reliance on such companies’ expertise.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to “incorporate by reference”
the information we file with it, which means that we can disclose important information to you by referring you to those documents.
The information incorporated by reference is considered to be part of this prospectus supplement and information we file later
with the SEC will automatically update and supersede this information. The documents we are incorporating by reference as of their
respective dates of filing are:
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Our Registration Statement of common shares pursuant to Section 12(b) of the Securities Exchange
Act of 1934 on Form 8-A;
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Our Annual Report on Form 20-F for the fiscal year ended August 31, 2020, filed with the SEC on
December 2, 2020; and
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Form 6-K filed with the SEC on December 21, 2020.
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All subsequent annual reports on Form 20-F filed
by us and all subsequent reports on Form 6-K filed by us that are identified by us as being incorporated by reference shall be
deemed to be incorporated by reference into this prospectus supplement and deemed to be a part hereof after the date of this prospectus
supplement but before the termination of the offering by this prospectus supplement.
Any statement contained in a document incorporated
by reference herein shall be deemed to be modified or superseded for all purposes to the extent that a statement contained in this
prospectus supplement, or in any other subsequently filed document which is also incorporated or deemed to be incorporated by reference,
modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus supplement.
Each person, including any beneficial owner to
whom this prospectus supplement is delivered, may request, orally or in writing, a copy of these documents, which will be provided
at no cost, by contacting:
Corporate Secretary
Tanzanian Gold Corporation
#202, 5226 Larch Street
Vancouver, British Columbia
Canada V6M 4E1
Telephone number is (844) 364-1830
WHERE YOU CAN FIND ADDITIONAL INFORMATION
This prospectus supplement is part of a registration
statement on Form F-3 that we filed with the SEC relating to the securities offered by this prospectus supplement, which includes
additional information. You should refer to the registration statement and its exhibits for additional information. Whenever we
make reference in this prospectus supplement to any of our contracts, agreements or other documents, the references are not necessarily
complete and you should refer to the exhibits attached to the registration statement for copies of the actual contract, agreements
or other document.
We are subject to the informational requirements
of the Exchange Act applicable to foreign private issuers. We, as a “foreign private issuer,” are exempt from the rules
under the Exchange Act prescribing certain disclosure and procedural requirements for proxy solicitations, and our officers, directors
and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions contained in
Section 16 of the Exchange Act, with respect to their purchases and sales of shares. In addition, we are not required to file annual,
quarterly and current reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities
are registered under the Exchange Act. However, we anticipate filing with the SEC, within four months after the end of each fiscal
year, an annual report on Form 20-F containing financial statements audited by an independent accounting firm.
You may read and copy any materials we file
or furnish with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain
copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington,
DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room. You can
review our SEC filings and the registration statement by accessing the SEC’s internet site at http://www.sec.gov. We also
maintain a website at www.tangoldcorp.com, through which you can access our SEC filings. The information on our web site is not
incorporated by reference into this prospectus supplement and should not be considered to be a part of this prospectus supplement.
PROSPECTUS
$25,000,000
Common Shares
Warrants
Debt Securities
Units
From time to time, we may offer up to $25,000,000
of our common shares, warrants to purchase common shares, debt securities and units consisting of common shares, warrants and debt
securities or any combination of these securities in one or more transactions. Unless otherwise indicated, dollar amounts shall
mean United States dollars.
We will provide specific terms of these offerings
and securities in one or more supplements to this prospectus. We may also authorize one or more free writing prospectuses to be
provided to you in connection with these offerings. The prospectus supplement, and any documents incorporated by reference, may
also add, update or change information contained in this prospectus. You should read this prospectus, the applicable prospectus
supplement, any documents incorporated by reference and any related free writing prospectus carefully before buying any of the
securities being offered.
We may offer and sell these securities to or
through one or more underwriters, dealers and agents, or directly to purchasers, on a continuous or delayed basis.
We have registered $25,000,000 of our securities.
Our common shares are listed on the NYSE American under the symbol TRX. The aggregate market value of our outstanding common shares
held by non-affiliates was approximately $119,607,300 based on 197,462,832 common shares outstanding, of which 189,852,901 common
shares were held by non-affiliates, and a per share price of $0.63 based on the closing sale price of our common share on November
13, 2020.
Investing in our securities
involves a high degree of risk. Before making an investment decision, please read “Risk Factors” beginning on page
6 of this prospectus and any other risk factor included in any accompanying prospectus supplement and in the documents incorporated
by reference into this prospectus or any prospectus supplement.
Neither the Securities and
Exchange Commission (“SEC”) nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
The date of this prospectus
is November 25, 2020.
TABLE OF CONTENTS
PAGE
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
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CAUTIONARY NOTE TO UNITED STATES INVESTORS CONCERNING TERMINOLOGY OF MINERAL RESERVES AND MINERAL RESOURCES
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ABOUT THIS PROSPECTUS
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ABOUT TANZANIAN GOLD CORPORATION
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WHERE YOU CAN FIND ADDITIONAL INFORMATION
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
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RISK FACTORS
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CAPITALIZATION AND INDEBTEDNESS
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MARKET FOR OUR COMMON SHARES
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OFFER STATISTICS AND EXPECTED TIMETABLE
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USE OF PROCEEDS
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PLAN OF DISTRIBUTION
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DESCRIPTION OF SECURITIES WE MAY OFFER
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DESCRIPTION OF COMMON SHARES
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DESCRIPTION OF WARRANTS
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DESCRIPTION OF DEBT SECURITIES
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DESCRIPTION OF UNITS
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COMPARISON OF ALBERTA AND DELAWARE CORPORATE LAW; COMPARISON OF SHAREHOLDER RIGHTS
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
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EXPENSE OF THE ISSUANCE AND DISTRIBUTION
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MATERIAL CHANGES
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LISTING
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TRANSFER AGENT AND REGISTRAR
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LEGAL MATTERS
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EXPERTS
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ENFORCEABILITY OF CIVIL LIABILITIES
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements in this prospectus and
in any prospectus supplement we may file constitute “forward-looking statements” within the meaning of Section 27A
of the Securities Act of 1933 (“Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (“Exchange
Act”). These statements relate to future events concerning our business and to our potential revenues, operating results,
and financial condition. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”,
“could”, “would”, “should”, “expect”, “plan”, “anticipate”,
“intend”, “believe”, “estimate”, “forecast”, “predict”, “propose”,
“potential”, or “continue” or the negative of those terms or other comparable terminology.
Any forward looking statements contained in
this prospectus or any prospectus supplement are only estimates or predictions of future events based on information currently
available to our management and management’s current beliefs about the potential outcome of future events. Whether these
future events will occur as management anticipates, whether we will achieve our business objectives, and whether our potential
revenues, operating results, or financial condition will improve in future periods are subject to numerous risks. There are a number
of important factors that could cause actual results to differ materially from the results anticipated by these forward-looking
statements. These important factors include those that we discuss under the heading “Risk Factors” and in other sections
of our Annual Report on Form 20-F for the fiscal year ended August 31, 2019, as amended, as well as in our other reports filed
from time to time with the Securities and Exchange Commission (“SEC”) that are incorporated by reference into this
prospectus. You should read these factors and the other cautionary statements made in this prospectus and in the documents we incorporate
by reference into this prospectus as being applicable to all related forward-looking statements wherever they appear in this prospectus
or the documents we incorporate by reference into this prospectus. If one or more of these factors materialize, or if any underlying
assumptions prove incorrect, our actual results, performance or achievements may vary materially from any future results, performance
or achievements expressed or implied by these forward-looking statements. We undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise, except as required by law.
CAUTIONARY NOTE TO UNITED STATES INVESTORS CONCERNING
TERMINOLOGY OF MINERAL RESERVES AND MINERAL RESOURCES
As an Alberta corporation, Tanzanian Gold Corporation,
formerly Tanzanian Royalty Exploration Corporation (the “Company”), is subject to certain rules and regulations issued
by Canadian Securities Administrators. The Company files an Annual Report on Form 20-F as its Annual Information Form (“AIF”)
with the British Columbia, Alberta and Ontario Securities Commissions via the System for Electronic Document Analysis and Retrieval
(“SEDAR”). Under the filing requirements for an AIF, the Company is required to provide detailed information regarding
its properties including mineralization, drilling, sampling and analysis, security of samples, and mineral resource and mineral
reserve estimates, if any. Further, the Company may describe its properties utilizing terminology such as “Proven Mineral
Reserve” or “Probable Mineral Reserve” or “Measured Mineral Resources,” “Indicated Mineral
Resources” and “Inferred Mineral Resources” that are permitted by Canadian securities regulations.
United States investors are cautioned not to
assume that any part of the mineral deposits, if any, in the “Proven Mineral Reserve” or “Probable Mineral Reserve”
or “Measured Mineral Resources,” “Indicated Mineral Resources” and “Inferred Mineral Resources”
categories will ever be converted into reserves. Further, these terms are not defined terms under SEC Industry Guide 7 and are
not permitted to be used in reports and registration statements filed with the SEC. The definitions of proven and probable reserves
used in NI 43-101 differ from the definitions in SEC Industry Guide 7. Under SEC Industry Guide 7, as interpreted by the staff
of the SEC, mineralization may not be classified as a “reserve” for United States reporting purposes unless the determination
has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination
is made. Among other things, all necessary permits would be required to be in hand or issuance imminent in order to classify mineralized
material as reserves under the SEC guidelines. In addition, NI 43-101 permits disclosure of “contained ounces” of mineralization.
In contrast, the SEC staff only permits issuers to report mineralization as in place tonnage and grade without reference to unit
measures.
United States investors are cautioned not to
assume that any part or all of the mineral deposits identified as an “indicated mineral resource,” “measured
mineral resource” or “inferred mineral resource” will ever be converted to reserves as defined in SEC Industry
Guide 7. Further, “inferred mineral 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 securities legislation, estimates of inferred mineral resources may not form the basis of feasibility
or pre-feasibility studies, or economic studies. U.S. investors are cautioned not to assume that part or all of an inferred mineral
resource exists, or is economically or legally mineable.
For clarification, the Company has no properties
that contain “Proven (Measured) Reserves” or “Probable (Indicated) Reserves” as defined by SEC securities
regulations.
ABOUT THIS PROSPECTUS
This document is called a prospectus and is
part of a registration statement that we have filed with the SEC using a “shelf” registration process. Under this shelf
registration process, we may, from time to time, offer our common shares, various series of warrants to purchase common shares,
and debt securities either individually or in units, in one or more offerings, in amounts we will determine from time to time,
up to a total dollar amount of $25,000,000.
This prospectus provides you with a general
description of the securities we may offer. Each time we offer a type or series of securities described in this prospectus, we
will provide a prospectus supplement, or information that is incorporated by reference into this prospectus, containing more specific
information about the terms of the securities that we are offering. We may also authorize one or more free writing prospectuses
to be provided to you that may contain material information relating to these offerings and securities. This prospectus, together
with applicable prospectus supplement, any information incorporated by reference and any related free writing prospectuses, includes
all material information relating to these offerings and securities. We may also add, update or change in the prospectus supplement
any of the information contained in this prospectus or in the documents that we have incorporated by reference into this prospectus,
including, without limitation, a discussion of any risk factors or other special considerations that apply to these offerings or
securities or the specific plan of distribution. If there is any inconsistency between the information in this prospectus and a
prospectus supplement or information incorporated by reference having a later date, you should rely on the information in that
prospectus supplement or incorporated information having a later date. We urge you to read carefully this prospectus, any applicable
prospectus supplement and any related free writing prospectus, together with the information incorporated herein by reference as
described under the heading “Where You Can Find Additional Information”, before buying any of the securities being
offered.
You should rely only on the information we have
provided or incorporated by reference in this prospectus, any applicable prospectus supplement and any related free writing prospectus.
We have not authorized anyone to provide you with different information. No dealer, salesperson or other person is authorized to
give any information or to represent anything not contained in this prospectus, any applicable prospectus supplement or any related
free writing prospectus.
Neither the delivery of this prospectus nor
any sale made under it implies that there has been no change in our affairs or that the information in this prospectus is correct
as of any date after the date of this prospectus. You should assume that the information in this prospectus, any applicable prospectus
supplement or any related free writing prospectus is accurate only as of the date on the front of the document and that any information
we have incorporated by reference is accurate only as of the date of the document incorporated by reference, regardless of the
time of delivery of this prospectus, any applicable prospectus supplement or any related free writing prospectus, or any sale of
a security.
This prospectus contains summaries of certain
provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information.
All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein
have been filed will be filed or will be incorporated by reference as exhibits to the registration statement of which this prospectus
is a part, and you may obtain copies of those documents as described below under “Where You Can Find Additional Information”.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE A SALE OF SECURITIES, UNLESS IT IS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
In this prospectus, “we,” “us,”
“our,” the “Company,” and “Tanzanian” refer to Tanzanian Gold Corporation and its subsidiaries,
unless the context otherwise requires. In addition, references to dollar amounts in this prospectus shall mean United States dollars,
unless otherwise indicated.
ABOUT TANZANIAN GOLD CORPORATION
Tanzanian
Gold Corporation, formerly Tanzanian Royalty Exploration Corporation, was originally incorporated under the name “424547
Alberta Ltd.” in the Province of Alberta on July 5, 1990, under the Business Corporations Act (Alberta). The name was changed
to “Tan Range Exploration Corporation” on August 13, 1991. The name of the Company was again changed to “Tanzanian
Royalty Exploration Corporation” on February 28, 2006. Subsequently, at the 2019 Annual Meeting, the shareholders approved
a change of name to Tanzanian Gold Corporation. The name change to Tanzanian Gold Corporation became effective in the Province
of Alberta, Canada on April 17, 2019. The name change was recognized by the stock exchanges as of the open of trading on April
22, 2019. The Company is also registered in the Province of British Columbia as an extra-provincial company under the Business
Corporations Act (British Columbia) and in the Province of Ontario as an extra-provincial company under the Business Corporations
Act (Ontario).
The principal
executive office of the Company is located at Tanzanian Gold Corporation #202, 5226 Larch Street, Vancouver, British Columbia,
Canada V6M 4E1, and its telephone number is (844) 364-1830. We maintain a website at http://www.tangold.com. Information contained
on, or that can be accessed through, our website is not part of this prospectus.
Business Overview
The Company is a mineral resource company
with development and exploration stage properties and is engaged in the acquisition of interests in and the exploration of natural
resource properties with the possible development of those properties. The Company commits its own resources to the initial evaluation
of mineral properties and, in certain situations, if and when warranted, the Company may enter into joint venture agreements with
other corporations with a view for the direct development of a mine for the purpose of earning income from the sale of gold and
other mined materials. As discussed below, the Company’s primary focus has been on the development of the Buckreef Project.
The Company’s main area of interest
has been in the exploration and development of the Buckreef Project located in Tanzania through a joint venture with the State
Mining Corporation (“STAMICO”), a wholly-owned Government enterprise under the Ministry of Energy and Minerals of the
United Republic of Tanzania, of which the Company has a 55% interest and the STAMICO has a 45% interest.
During fiscal 2019, the Company initiated
and focused on a drilling program at the Buckreef Project in furtherance of developing and defining geological model. At the Buckreef
Project the Company has (i) initiated open pit mining for oxide ore and work to construct and operate a 40 tonnes per hour oxide
processing facility; (ii) further its on-going Ultra Deep Exploration drilling program of six holes of 1200 meters; and (iii) continued
to perform necessary testing and studies to further refine the Buckreef open pit, and develop the larger processing plant all to
further the completion of the Company’s 43-101 definitive feasibility study. Based on the forgoing, in June 2020, the Company
initiated initial gold production through the processing of mined oxide ore at the Buckreef Project.
Although the Company has additional mining
projects, the Company’s involvement in such other projects has been limited to only care and maintenance.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement
on Form F-3 under the Securities Act, with respect to the securities covered by this prospectus. This prospectus, which is a part
of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits
and schedules filed therewith. For further information with respect to us and the securities covered by this prospectus, please
see the registration statement and the exhibits filed with the registration statement. A copy of the registration statement and
the exhibits filed with the registration statement may be inspected without charge at the Public Reference Room maintained by the
SEC, located at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information about the
operation of the Public Reference Room. The SEC also maintains an Internet website that contains reports, proxy and information
statements and other information regarding registrants that file electronically with the SEC. The address of the website is http://www.sec.gov.
We are subject to the information and periodic
reporting requirements of the Exchange Act, and, in accordance therewith, we file certain reports and other information with the
SEC. Such reports and other information are available for inspection and copying at the Public Reference Room and website of the
SEC referred to above. We maintain a website at http://www.tangold.com. You may access our
Annual Report on Form 20-F filed pursuant to Sections 13(a) or 15(d) of the Exchange Act with the SEC free of charge at our website
as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. Our website and the
information contained on that site, or connected to that site, are not incorporated into and are not a part of this prospectus.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to “incorporate by reference”
the information we file with it, which means that we can disclose important information to you by referring you to those documents.
The information we incorporate by reference is an important part of this prospectus, and certain information that we will later
file with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below
as well as certain filings made with the SEC under Sections 13(a), 13(c), or 15(d) of the Exchange Act from the date of the initial
registration statement and prior to the effectiveness of this registration statement, and any filings made after the date of this
prospectus until we sell all of the securities under this prospectus, except that we do not incorporate any document or portion
of a document that was furnished and deemed by the rules of the SEC not to have been filed:
The SEC allows us to “incorporate by reference”
the information we file with it, which means that we can disclose important information to you by referring you to those documents.
The information incorporated by reference is considered to be part of this prospectus and information we file later with the SEC
will automatically update and supersede this information. The documents we are incorporating by reference as of their respective
dates of filing are:
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Our Registration Statement of common shares pursuant to Section 12(b) of the Securities Exchange
Act of 1934 on Form 8-A;
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Our Annual Report on Form 20-F for the fiscal year ended August 31, 2019, filed with the SEC on
December 2, 2019, as amended on August 11, 2020;
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Exhibits 99.1 and 99.2 to our Form 6-K for November 30, 2019, filed with the SEC on January 15,
2020, containing our Condensed Consolidated Interim Financial Statements for the three months ended November 30, 2019 and 2018
and Management Discussion and Analysis;
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Exhibits 99.1 and 99.2 to our Form 6-K for February 29, 2020, filed with the SEC on April 15, 2020,
containing our Condensed Consolidated Interim Financial Statements for the six months ended February 29, 2020 and 2019 and Management
Discussion and Analysis;
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Exhibit 99.2 to our Form 6-K for June 2020, filed with the SEC on June 16, 2020, regarding National
Instrument 43-101 Independent Technical Report - Updated Mineral Resource Estimate for the Buckreef Gold Mine Project, Tanzania,
East Africa;
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Exhibits 99.1 and 99.2 to our Form 6-K for May 31, 2020, filed with the SEC on July 16, 2020, containing
our Condensed Consolidated Interim Financial Statements for the nine months ended May 31, 2020 and 2019 and Management Discussion
and Analysis; as amended on August 11, 2020;
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Exhibits 99.1 and 99.2 to our Form 6-K for January 2020 filed with the SEC on July 23, 2020, containing
our Notice of Meeting and Management Information Circular related to our Annual General and Special Meeting held on February 27,
2020;
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Exhibits 10.1 through 10.6 to our Form 6-K for July 2020 filed with the SEC on July 23, 2020, regarding
entry into the Securities Purchase Agreement with the certain Debenture Holders; and
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Exhibit 99.1 to our Form 6-K for October 2020 filed with the SEC on October 29, 2020.
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All subsequent annual reports on Form 20-F filed
by us and all subsequent reports on Form 6-K filed by us that are identified by us as being incorporated by reference shall be
deemed to be incorporated by reference into this prospectus and deemed to be a part hereof after the date of this prospectus but
before the termination of the offering by this prospectus.
Any statement contained in a document incorporated
by reference herein shall be deemed to be modified or superseded for all purposes to the extent that a statement contained in this
prospectus, or in any other subsequently filed document which is also incorporated or deemed to be incorporated by reference, modifies
or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
Each person, including any beneficial owner to
whom this prospectus is delivered, may request, orally or in writing, a copy of these documents, which will be provided at no cost,
by contacting:
Corporate Secretary
Tanzanian Gold Corporation
#202, 5226 Larch Street
Vancouver, British Columbia
Canada V6M 4E1
Telephone number is (844) 364-1830
RISK FACTORS
Investment in our securities
involves risks. Before deciding whether to invest in our securities, you should consider carefully the risk factors discussed below
and those contained in “Part I. Item 3. Key Information- D. Risk Factors” of our Annual Report on Form 20-F for the
fiscal year ended August 31, 2019, as amended, as filed with the Securities and Exchange Commission (“SEC”) which is
incorporated herein by reference in its entirety, as well as any amendment or update to our risk factors reflected in subsequent
filings with the SEC. If any of the risks or uncertainties described in our SEC filings actually occurs, our business, financial
condition, results of operations or cash flow could be materially and adversely affected. This could cause the trading price of
our common shares to decline, resulting in a loss of all or part of your investment. The risks and uncertainties we have described
are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial
may also affect our business operations.
The Company has incurred net losses since its inception and expects
losses to continue.
The Company has not been profitable since its
inception. For the fiscal year ended August 31, 2019, the Company had a comprehensive loss of Cdn$30,417,517, of which approximately
Cdn$22,230,000 was attributed to the write down of non-Buckreef Project properties, and an accumulated deficit of Cdn$133,762,683.
For the nine months ended May 31, 2020, the Company had a comprehensive loss of Cdn$10,744,559 and an accumulated deficit of Cdn$145,461,823.
The Company has never generated substantial revenues and does not expect to generate revenues until one of its properties is placed
in commercial production. During the month of June 2020, the Company achieved initial gold production through the processing of
mined oxide ore from the Buckreef Project.
The Company needs additional capital.
As at August 31, 2019, the Company had cash
of Cdn$3,389,319 and a working capital deficiency of Cdn$10,395,970 and as at May 31, 2020, the Company had cash of Cdn$1,449,386
and a working capital deficiency of Cdn$18,007,916. Subsequent to May 31, 2020, $8,379,475 in gold and convertible short-term loans
converted into common shares. The Company will continue to incur exploration and development costs to fund its plan of operations.
In addition, although the Company has small processing plant to mill mined oxide ore, it will need to raise capital and secure
third party financing to a build processing plant for sulphide ore in the future. Ultimately, the Company’s ability to continue
its development and exploration activities depends in part on the Company’s ability to commence operations and generate revenues
or to obtain financing through joint ventures, debt financing, equity financing, production sharing agreements or some combination
of these or other means. Further the raising of additional capital by the Company may dilute existing shareholders. Traditionally,
the Company has relied on issuing equity securities and debt securities that may be converted into equity securities to raise capital.
No assurance can be given that the Company can continue to raise capital in this manner. Further, the issuance of equity securities
or debt securities that may be convertible into equity securities will have a dilutive effect.
Substantial doubt about the Company’s ability to continue
as a going concern.
Based on the Company’s current funding
sources and taking into account the working capital position and operational requirements at August 31, 2019, these factors indicate
the existence of a material uncertainty that raises substantial doubt about the Company’s ability to continue as a going
concern and is dependent on the Company raising additional debt or equity financing. Although the Company has entered into the
Securities Purchase Agreement to sell the Convertible Debentures, the Company may be required to obtain additional funding in fiscal
2021 in order to continue to explore and develop the oxide ore, and to operate and expand the oxide ore processing plant, at the
Buckreef Project and for working capital. No assurance can be given that such additional funding and/or project financing will
be obtained or obtained on commercially favorable terms.
The Company will continue to depend on the proceeds from equity
or debt financings for its operations.
Although the Company’s current operations
has just begun to generate initial cash flow, it is anticipated that the Company will continue, in the near future, to require
additional equity or debt financing to finance its operations and expansion. If the Company seeks funding from existing or new
joint venture partners, its project interest will be diluted. If the Company seeks additional equity financing, the issuance of
additional shares will dilute the current interests of the Company’s current shareholders. The Company may not be able to
obtain additional funding to allow the Company to fulfill its obligations on existing exploration properties. The Company’s
failure to obtain such additional financing could result in delay or indefinite postponement of further exploration and development
and the possible partial or total loss of the Company’s potential interest in certain properties or dilution of the Company’s
interest in certain properties.
As of August 31, 2019, our internal control over financial reporting
were ineffective, and if we continue to fail to improve such controls and procedures, investors could lose confidence in our financial
and other reports, the price of our common shares may decline, and we may be subject to increased risks and liabilities.
As a public company, we are subject to the reporting
requirements of the Exchange Act and the Sarbanes-Oxley Act of 2002. The Exchange Act requires, among other things, that we file
annual reports with respect to our business and financial condition. Section 404 of the Sarbanes-Oxley Act requires, among other
things, that we include a report of our management on our internal control over financial reporting. We are also required to include
certifications of our management regarding the effectiveness of our disclosure controls and procedures. For the year ended August
31, 2019, our management has concluded that our disclosure controls and procedures and internal control over financial reporting
were ineffective due to the following material weaknesses: (i) review and approval of invoices and the related oversight and accuracy
of recording the associated charges in the Company’s books; and (ii) lack of adequate oversight related to the development
and performance of internal controls. Due to the limited number of personnel in the company, there are inherent limitations to
segregation of duties amongst personnel to perform adequate oversight, including oversight regarding complex International Financial
Reporting Standards that may cause misinterpretation and misapplication. We intend to implement changes and procedures to address
these issues; however, any proposed changes to address the material weaknesses will take time to implement due to, among other
things, a limited number of staff at the Company. If we cannot effectively and efficiently improve our controls and procedures,
we could suffer material misstatements in our financial statements and other information we report and fail to meet our reporting
obligations, which would likely cause investors to lose confidence in our reported financial and other information. This could
lead to a decline in the trading price of our common shares.
The exercise price of our convertible debentures, warrants and
options may be below market and may have the effect of suppressing the price for our common shares.
In connection with our prior financings and
the engagement of employees and advisors, we have issued warrants and options some of which may have exercise prices that are below
the current market price for our common shares. In addition, in connection with the sale of $7.0 million in Tranche A Debentures,
such Tranche A Debenture holders may convert a Tranche A Debenture in their sole discretion at any time on or prior to pay off
at the lower of the Tranche A Fixed Conversion Price which is equal to 130% of the 20-day VWAP as calculated immediately prior
to the closing for each respective Tranche A Debenture or 93% of the average of the two lowest daily VWAPs during the 10 consecutive
trading days immediately preceding the conversion date; provided, however, the conversion price may not be less than $0.20. Further,
as of November 1, 2020, there were a total of 7,352,000 common shares underlying stock options at an exercise price of Cdn$0.41
per common share, and 3,289,938 common shares underlying warrants with exercise prices ranging from $0.8719 and $0.9515. In addition,
in connection with the issuance of $7.0 million in Tranche A Debentures, we issued warrants to purchase up to 3,002,037 common
shares at an exercise price of $1.2125 per common. These exercise prices may have the effect of suppressing the price of our common
shares until such warrants and stock options have been exercise and sold.
The conversion of the Convertible Debentures and exercise of
related warrants into common shares and future sales may further dilute the common shares and adversely impact the price of our
common shares.
In connection with the sale of Tranche A Debentures
in the aggregate amount of $7,000,000, we registered 24,002,037 common shares issuable to certain shareholders upon the conversion
of the Tranche A Debentures and related warrants (as discussed above). The Debenture Holders may convert a Tranche A Debenture
in their sole discretion at any time on or prior to pay off at the lower of the Tranche A Fixed Conversion Price which is equal
to 130% of the 20-day VWAP as calculated immediately prior to the closing for each respective Tranche A Debenture or 93% of the
average of the two lowest daily VWAPs during the 10 consecutive trading days immediately preceding the conversion date; provided,
however, the conversion price may not be less than $0.20. As of November 1, 2020, 707,131 common shares have been issued in connection
with the conversion of Tranche A Debentures. The common shares issued pursuant to conversion of the Tranche A Debentures and exercise
of related warrants will be unrestricted and freely tradeable. The sale of a substantial number of common shares on the open market
could decrease the market price of our common shares and the value of your investment.
The Company’s exploration activities are highly speculative
and involve substantial risks.
With the exception of one project, the Buckreef
Project, all of the other Company’s properties are in the exploration stage and no proven mineral reserves have been established.
The Company’s exploration work may not result in the discovery of mineable deposits of ore in a commercially economical manner.
There may be limited availability of water, which is essential to milling operations, and interruptions may be caused by adverse
weather conditions. The Company’s future operations, if any, are subject to a variety of existing laws and regulations relating
to exploration and development, permitting procedures, safety precautions, property reclamation, employee health and safety, air
quality standards, pollution and other environmental protection controls.
The Company has uninsurable risks.
The Company may be subject to unforeseen hazards
such as unusual or unexpected formations and other conditions. The Company may become subject to liability for pollution, cave-ins
or hazards against which it cannot insure or against which it may elect not to insure. The payment of such liabilities may have
a material adverse effect on the Company’s financial position.
The Company depends on key management personnel.
The success of the operations and activities
of the Company is dependent to a significant extent on the efforts and abilities of its management, including James E. Sinclair,
our Executive Chairman. Investors must be willing to rely to a significant extent on their discretion and judgment. The Company
does not maintain key-man life insurance on the Executive Chairman.
The Company may be characterized as a passive foreign investment
company.
We may be characterized as a passive foreign
investment company (“PFIC”). If we are determined to be a PFIC, our U.S. shareholders may suffer adverse tax consequences.
Under the PFIC rules, for any taxable year that our passive income or our assets that produce passive income exceed specified levels,
we will be characterized as a PFIC for U.S. federal income tax purposes. This characterization could result in adverse U.S. tax
consequences for our U.S. shareholders, which may include having certain distributions on our common shares and gains realized
on the sale of our common shares treated as ordinary income, rather than as capital gains income, and having potentially punitive
interest charges apply to the proceeds of sales of our common shares and certain distributions.
Certain elections may be made to reduce or eliminate
the adverse impact of the PFIC rules for holders of our common shares, but these elections may be detrimental to the shareholder
under certain circumstances. The PFIC rules are extremely complex and U.S. investors are urged to consult independent tax advisers
regarding the potential consequences to them of our classification as a PFIC.
Failure to comply with the U.S. Foreign Corrupt Practices Act,
the Corruption of Foreign Public Officials Act and other laws, could result in fines, criminal penalties, contract termination
and an adverse effect on our business.
The Company is subject to the Foreign Corrupt
Practices Act of 1977 (the “FCPA”), the Corruption of Foreign Public Officials Act (Canada) (“CFPOA”),
and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties
by persons and issuers as defined by the statutes, for the purpose of obtaining or retaining business. It is our policy to implement
safeguards to discourage these practices by our employees; however, our existing safeguards and any future improvements may prove
to be less than effective and our employees, consultants, sales agents or distributors may engage in conduct for which the Company
might be held responsible. Any such violation could result in substantial fines, sanctions, civil and/or criminal penalties, curtailment
of operations in certain jurisdictions, and might adversely affect our business, results of operations or financial condition.
In addition, actual or alleged violations could damage our reputation and ability to do business. Furthermore, detecting, investigating,
and resolving actual or alleged violations is expensive and could consume significant time and attention of our management.
If we are found liable for violations of the
FCPA, CFPOA or other similar anti-corruption, anti-bribery or anti-kickback laws or regulations, either due to our own acts or
out of inadvertence, or due to the acts or inadvertence of others, we could suffer criminal or civil fines or penalties or other
repercussions, including reputational harm, which could have a material adverse effect on our business, financial condition and
results of operations.
Security breaches and other disruptions could compromise the
Company’s information and expose it to liability, which would cause its business and reputation to suffer.
In the ordinary course of the Company’s
business, it collects and stores sensitive data, including intellectual property, its proprietary business information and that
of its business partners, and personally identifiable information of its employees in its data centers and on its networks. The
secure processing, maintenance and transmission of this information is critical to the Company’s operations and business
strategy. Despite its security measures, the information technology and infrastructure may be vulnerable to attacks by hackers
or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise the Company’s networks
and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss
of information could result in legal claims or proceedings, potential liability under laws that protect the privacy of personal
information, and potential regulatory penalties, disrupt the Company’s operations and damage its reputation, and cause a
loss of confidence in the Company, which could adversely affect its business and competitive position.
Our business and mining operations may be vulnerable to the impact
from the COVID-19 outbreak, and the continuation of the pandemic could have an adverse impact on our operations and financial condition.
The recent outbreak of the coronavirus, COVID-19,
which on March 10, 2020, has been declared by the World Health Organization to be a pandemic, has spread across the globe and is
impacting worldwide economic activity. A pandemic, including COVID-19 or other public health epidemic, poses the risk that we or
our employees, contractors, customers, suppliers, third party shipping carriers, government and other partners may be prevented
from or limited in their ability to conduct business activities for an indefinite period of time, including due to the spread of
the disease within these groups or due to shutdowns that may be requested or mandated by governmental authorities. While it is
not possible at this time to estimate the impact that COVID-19 could have on our business, the continued spread of COVID-19 and
the measures taken by the governments of states and countries affected could disrupt, among other things, our business and implementation
of our mining operations. The Company has implemented procedures in order to address certain CVOVID-19 concerns.
The Company cannot accurately predict whether commercial quantities
of ores as estimated or projected in the pre-feasibility study will be established once commercial production commences.
Whether an ore body will be commercially viable
depends on a number of factors beyond the control of the Company, including the particular attributes of the deposit such as size,
grade and proximity to infrastructure, as well as mineral prices and government regulations, including regulations relating to
permitting, prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection.
The Company cannot accurately predict the exact effect of these factors, but the combination of these factors may result in a mineral
deposit being unprofitable. The Company has achieved initial gold production through the process on mined oxide ore from the Buckreef
Project. Although the mineral resource estimates included herein have been prepared by the Company, or, in some instances have
been prepared, reviewed or verified by independent mining experts, these amounts are estimates only and there is a risk that a
particular level of recovery of gold or other minerals from mineral resource will not in fact be realized or that an identified
mineralized deposit, if any, will never qualify as a commercially mineable or viable reserve.
The exploration for and development of mineral deposits involves
significant risks.
Mineral resource exploration is a speculative
business and involves a high degree of risk. The Company has completed several diamond and reverse circulation drilling programs
on the Buckreef Project and independent qualified persons have reviewed the results of the drilling program in the context of analyzing
the economic significance of the open-pittable mineral resources at the Buckreef Project using current gold prices. However, the
exploration for and development of mineral deposits involves significant risks, which even a combination of careful evaluation,
experience and knowledge may not eliminate. Significant expenditures will be required to locate further and/or upgrade mineral
resources from inferred category to measured and indicated category, to revise and/or upgrade the recently established mineral
reserves, to develop metallurgical processes, to construct and run a 5 tonnes per hour oxide pilot plant to test the flowsheet
and material handling capabilities prior to upgrading to 40 tonnes per hour oxide processing plant, and to finalize on a bankable
feasibility study on a larger open pit and sulphide processing plant at the Buckreef Project site.
The Company may not be able to establish the presence of minerals
on a commercially viable basis.
The Company’s ability to generate revenues
and profits, if any, is expected to occur through exploration and development of its existing properties as well as through acquisitions
of interests in new properties. The Company will need to incur substantial expenditures in an attempt to establish the economic
feasibility of mining operations by identifying mineral deposits and establishing ore reserves through drilling and other techniques,
developing metallurgical processes to extract metals from ore, designing facilities and planning mining operations. The economic
feasibility of a project depends on numerous factors beyond the Company’s control, including the cost of mining and production
facilities required to extract the desired minerals, the total mineral deposits that can be mined using a given facility, the proximity
of the mineral deposits to a user of the minerals, and the market price of the minerals at the time of sale. The Company’s
existing or future exploration programs or acquisitions may not result in the identification of deposits that can be mined profitably.
Mining and Mineral Exploration Have Substantial Operational Risks
Mining and mineral exploration involves many
risks, which even a combination of experience, knowledge and careful evaluation may not be able to overcome. These risks include
but are not limited to:
• major or catastrophic equipment failures;
• mine failures and slope failures;
• ground fall and cave-ins;
• deleterious elements in the mined resources;
• environmental hazards;
• industrial accidents and explosions;
• unusual or unexpected geological formations;
• labor shortages or strikes;
• civil disobedience and protests; and
• natural phenomena such as inclement weather conditions,
floods, droughts, rock slides and earthquakes.
These occurrences could result in environmental
damage and liabilities, work stoppages and delayed production, increased production costs, damage to, or destruction of, mineral
properties or production facilities, personal injury or death, asset write-downs, monetary losses and other liabilities. The nature
of these risks is such that liabilities could exceed policy limits of the Company’s insurance coverage, in which case the
Company could incur significant costs that could prevent profitable operations.
The Company depends on consultants and engineers for its exploration
programs.
The Company has relied on and may continue to
rely upon consultants for exploration development, construction and operating expertise. Substantial expenditures are required
to construct mines, to establish ore reserves through drilling, to carry out environmental and social impact assessments, to develop
metallurgical processes to extract the metal from the ore and, in the case of new properties, to develop the exploration infrastructure
at any site chosen for exploration. The Company may not be able to discover minerals in sufficient quantities to justify commercial
operation, and the Company may not be able to obtain funds required for exploration on a timely basis.
The Company may not have clear title to its properties.
Acquisition of title to mineral properties is
a very detailed and time-consuming process, and the Company’s title to its properties may be affected by prior unregistered
agreements or transfers, or undetected defects. Several of the Company’s prospecting licenses are currently subject to renewal
by the Ministry of Energy and Minerals of Tanzania. There is a risk that the Company may not have clear title to all its mineral
property interests, their licenses may not be renewed or they may be subject to challenge or impugned in the future. See “Mineral
Properties.” In other instances, the Company might not have immediate access to some of its mineral properties due to the
ever-evolving statutory requirements and regulations as enacted by the Government of Tanzania and enforced by the various ministries.
During fiscal 2019, the Company received a notice
of cancellation of the Kigosi Mining License for failure to satisfy the issues raised in the default notice. The Company believes
that the notice sent by the government did not follow due process under Tanzanian law and the Company filed an appeal to this notification
subsequent to fiscal year-end. Further, during fiscal 2019, the Company received a notice of rejection of the mining license application
for the Itetemia Project. The Company believes that the notice sent by the government did not follow due process under Tanzanian
law and the Company filed an appeal to the Itetemia Project notification. The Company subsequently has received notices that the
government denied the Company’s appeal as to both notices of cancelation as to the Kigosi Mining License and the mining license
application for the Itetemia Project. The Company has appealed the most recent notices of rejection of appeal. In the event the
Company loses its appeals, the Company could lose its Kigosi Mining License and/or rights to the Itetemia Project. During the year
ended August 31, 2019, the Company wrote off the value of its Kigosi and Itetemia Projects. See the Company’s Form 20-F for
the year ended August 31, 2019, as amended, which is incorporated herein. At this time, the Company is focusing its time and efforts
to develop the Buckreef Project and the Kigosi and Itetemia Projects are in the care and maintenance phase.
The Company’s properties have been and may continue to
be subject to illegal mining.
During 2015, illegal miners, consisting primarily
of artisanal miners, invaded and forced occupation at the Buckreef Project. As a result, these illegal miners disrupted our activities.
As a result of these illegal miners’ activities, we provided a notice of force majeure under our agreement with STAMICO and
did not allow Tanzim, our joint venture operator, to continue mining activities at our property until this issue was resolved.
Although we worked out an agreement with the Deputy Minister of Energy and Minerals to provide an area for artisanal mining, no
assurance can be given that no more illegal mining activities will occur at our properties or disrupt our operations. Recently,
the Company has requested for and been provided with a police detail from the Ministry of Home Affairs, through the offices of
the Inspector General of Police (Tanzania) permanently stationed and patrolling the Buckreef Project as further efforts by the
Company to deter illegal Mining on the main project site.
During the fiscal year ended August 31, 2019,
there had been some attempted invasion in and around the Buckreef Project. Similar to other developers/operators in that area,
the Company has requested and been granted a permanent security detail from the police force at the camp site pursuant to a memorandum
of understanding with the Tanzanian inspector general police.
Mining exploration, development and operating activities are
inherently hazardous.
If the Company experiences mining accidents
or other adverse conditions, the Company’s mining operations could be materially adversely affected. The Company’s
exploration activities may be interrupted by any or all of the following mining accidents such as cave-ins, rock falls, rock bursts,
pit wall failures, fires or flooding. In addition, exploration activities may be reduced if unfavorable weather conditions, ground
conditions or seismic activity are encountered, ore grades are lower than expected, the physical or metallurgical characteristics
of the ore are less amenable than expected to mining or treatment, dilution increases or electrical power is interrupted. Occurrences
of this nature and other accidents, adverse conditions or operational problems in future years may result in the Company’s
failure to achieve current or future exploration and production estimates.
If we do not pay our annual license fees on our properties and
we may be subject to penalties.
In order to maintain the existing site of mining
and exploration licenses, the Company is required to pay annual license fees. The Company has not paid all of its annual mining
license fees with the exception of the Buckreef Project mining license. In addition, the Ministry of Mines has put into effect
a requirement that even though a license is forfeited, the outstanding fees are still due and considered a liability. As at May
31, 2020, an accrual of Cdn$347,000 (August 31, 2019 - Cdn$680,000) has been recorded relating to unpaid exploration and prospecting
license fees. For active licenses, these licenses remain in good standing until a letter of demand is received from Ministry of
Mines requesting payment of any unpaid license fees plus 50% penalty, and the Company fails to respond within 30 days. The Company
has not received a letter of demand from the Ministry of Mines on its active licenses. The potential penalty estimate relating
to unpaid active license fees at May 31, 2020 is approximately Cdn$116,000 (August 31, 201 - Cdn$211,000). The Company has not
recorded an accrual for all valid and active mining licenses but only from the forfeited licenses list as stated above.
We may be subject to additional payments to the STAMICO because
we have not brought the Buckreef Property into production by a certain date.
Our joint venture agreement with STAMICO contains
an obligation clause regarding the commissioning date for the plant. The clause becomes effective only in the event the property
is not brought into production before a specified future date which was originally estimated to be in December 2015. Under the
agreement, the Company is entitled to extend the date for one additional year: (i) for the extension year; on payment to STAMICO
of $500,000; (ii) for the second extension year, on payment to STAMICO of $625,000; and (iii) for each subsequent extension year,
on payment to STAMICO of $750,000.
In November, 2016, the Company received a request
letter from STAMICO regarding the status of the penalty payment and responded that no penalty was due at this time. The Company
received a subsequent letter from STAMICO regarding request for payment. It remains the Company’s position that no penalty
is due at this time, but the Company and STAMICO engaged in settlement discussions to resolve the issue, and a payment of $172,330
was made in settlement of the matter to be applied towards the amount requested with the remainder of $312,813 to be paid out of
proceeds of production of which the Company has recently begun monthly payments.
No assurance can be given that STAMICO will
not demand additional money from the Company because the Company has not brought the Buckreef Project into production by a certain
date.
If the Company experiences mining accidents or other adverse
conditions, the Company’s mining operations could be materially adversely affected.
The Company’s exploration activities may
be interrupted by any or all of the following mining accidents such as cave-ins, rock falls, rock bursts, pit wall failures, fires
or flooding. In addition, exploration activities may be reduced if unfavorable weather conditions, ground conditions or seismic
activity are encountered, ore grades are lower than expected, the physical or metallurgical characteristics of the ore are less
amenable than expected to mining or treatment, dilution increases or electrical power is interrupted. Occurrences of this nature
and other accidents, adverse conditions or operational problems in future years may result in the Company’s failure to achieve
current or future exploration and production estimates.
Development of the Company’s projects is based on estimates
and the Company cannot guarantee that its projects, if any, will be placed into production.
Any potential production and revenues based
on production from any of the Company’s properties are estimates only. Estimates are based on, among other things, mining
experience, resource estimates, assumptions regarding ground conditions and physical characteristics of ores (such as hardness
and presence or absence of certain metallurgical characteristics) and estimated rates and costs of mining and processing. The Company
has achieved initial gold production through the processing of mined oxide ore from the Buckreef Project, however no assurance
that the Buckreef Project will achieve commercial production or will be profitable. In addition, the Company’s actual production
from the Buckreef Project may be lower than its production estimates. Each of these factors also applies to future development
properties not yet in production at the Company’s other projects. In the case of mines the Company may develop in the future,
it does not have the benefit of actual experience in its estimates, and there is a greater likelihood that the actual results will
vary from the estimates. In addition, development and expansion projects are subject to unexpected construction and start-up problems
and delays.
The Company’s exploration activities are subject to various
federal, state and local laws and regulations.
Laws and regulation govern the exploration,
mining development, mine production, importing and exporting of minerals; taxes; labor standards; occupational health; waste disposal;
protection of the environment; mine safety; toxic substances; and other matters. The Company requires licenses and permits to conduct
exploration and mining operations. Amendments to current laws and regulations governing operations and activities of mining companies
or more stringent implementation thereof could have a substantial adverse impact on the Company. Applicable laws and regulations
will require the Company to make certain capital and operating expenditures to initiate new operations. Under certain circumstances,
the Company may be required to close an operation once it is started until a particular problem is remedied or to undertake other
remedial actions.
The Buckreef Project is held through a special
mining license expiring in June 2027 granted pursuant to the Mining Act, 2010 (Tanzania). The Company has other mineral interests
in Tanzania that are held under prospecting licenses granted under that Act. There are initial application fees, registration fees,
preparation fees and annual rental fees for prospecting licenses based on the total area of the license. Renewals of prospecting
licenses can take many months and possibly even years to process by the regulatory authority in Tanzania and there is no guarantee
that they will be granted. With each renewal at least 50% of the licensed area, if greater than 20 square kilometers, must be relinquished
and if the Company wishes to keep the relinquished one-half portion, it must file a new application for the relinquished portion.
There is no guarantee on the timing for processing the new application and whether it will be successful.
In addition, any new license (PL, ML & SML)
applications and renewals are also now subject to the recently enacted of the Ministry of Mines Local Content Regulations GN 3
of 2018 that is enforced by the newly enacted and established 6-member Tanzanian Mining Commission that now oversees the Mining
Commissioner and all license applications. The new regulations reflect a strong will to foster diversification and linkages to
the local economy, create jobs through the use of Tanzanian expertise, goods and services, businesses and financing in the mining
value chain. Not only does it force licensees and contractors to use indigenous Tanzanian companies for the procurement of goods
and services, but also requires a physical presence in Tanzania.
The Company’s competition is intense in all phases of the
Company’s business.
The mining industry in which the Company is
engaged is in general, highly competitive. Competitors include well-capitalized mining companies, independent mining companies
and other companies having financial and other resources far greater than those of the Company. The Company competes with other
mining companies in connection with the acquisition of gold and other precious metal properties. In general, properties with a
higher grade of recoverable mineral and/or which are more readily mineable afford the owners a competitive advantage in that the
cost of production of the final mineral product is lower. Thus, a degree of competition exists between those engaged in the mining
industries to acquire the most valuable properties. As a result, the Company may eventually be unable to acquire attractive gold
mining properties.
The Company is subject to the volatility of metal and mineral
prices.
The economics of developing metal and mineral
properties are affected by many factors beyond the Company’s control, including, without limitation, the cost of operations,
variations in the grade ore or resource mined, and the price of such resources. The market prices of the metals for which the Company
is exploring are highly speculative and volatile. Depending on the price of gold or other resources, the Company may determine
that it is impractical to commence or continue commercial production. Gold prices fluctuate widely and are affected by numerous
factors beyond the Company’s control, including central bank purchases and sales, producer hedging and de-hedging activities,
expectations of inflation, the relative exchange rate of the U.S. dollar with other major currencies, interest rates, global and
regional demand, political and economic conditions, production costs in major gold-producing regions, speculative positions taken
by investors or traders in gold and changes in supply, including worldwide production levels. The price of gold and other metals
and minerals may not remain stable, and such prices may not be at levels that will make it feasible to continue the Company’s
exploration activities, or commence or continue commercial production. The aggregate effect of these factors is impossible to predict
with accuracy.
The Company’s business activities are conducted in Tanzania.
The Company’s principal exploration and
mine development properties are currently located in the United Republic of Tanzania, Africa, under which the Company has obtained
a license to explore, develop and operate the properties. Although the Company believes that the Tanzanian government is a stable,
multi-party democracy, there is no guarantee that this will continue. Tanzania is surrounded by unstable countries enduring political
and civil unrest, and in some cases, civil war. There is no guarantee that the surrounding unrest will not affect the Tanzanian
government and people, and therefore, the Company’s mineral exploration activities. Any such effect is beyond the control
of the Company and may materially adversely affect its business.
Further, the operator of the Buckreef Project
is Tanzam, a joint venture that is 55% owned by one of our subsidiaries and 45% is owned by the STAMICO, a governmental agency
of the Tanzania. Therefore, the government of Tanzania will have input at our operations at the Buckreef Project.
Additionally, the Company may be affected in
varying degrees by political stability and government regulations relating to the mining industry and foreign investment in Tanzania.
The government of Tanzania may institute regulatory policies that adversely affect the exploration and mine development (if any)
of the Company’s properties. Any changes in regulations or shifts in political conditions in this country are beyond the
control of the Company and may materially adversely affect its business. Investors should assess the political and regulatory risks
related to the Company’s foreign country investments. The Company’s operations in Tanzania are also subject to various
levels of economic, social and other risks and uncertainties that are different from those encountered in North America. The Company’s
operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls,
export controls, restrictions on foreign exchange and repatriation, income taxes, expropriation of property, environmental legislation
and mine safety. Other risks and uncertainties include extreme fluctuations in currency exchange rates, high rates of inflation,
labor unrest, risks of war or civil unrest, government and civil unrest, regional expropriation and nationalization, renegotiation
or nullification of existing concessions, licenses, permits and contracts, illegal mining, corruption, hostage taking, civil war
and changing political conditions and currency controls. Infectious diseases (including Ebola virus, malaria, HIV/AIDS and tuberculosis)
are also major health care issues where the Company operates.
Mineral exploration in Tanzania is affected by local climatic
and economic conditions.
The Company’s properties in Tanzania have
year-round access, although seasonal winter rains from December to March may result in flooding in low lying areas, which are dominated
by mbuga, a black organic rich laustrine flood soil. Further, most lowland areas are under active cultivation for corn, rice, beans
and mixed crops by subsistence farmers. As a result, the area has been deforested by local agricultural practices for many years.
The seasonal rains and deforested areas can create a muddy bog in some areas, which can make access more difficult, and could impede
the transport of heavy equipment to the Company’s mineral properties at certain times of the year between December and March.
The Company’s operations are subject to issues relating
to security and human rights.
Civil disturbances and criminal activities such
as trespass, illegal mining, theft and vandalism may cause disruptions at the Company’s operations in Tanzania which may
result in the suspension of operations. There is no guarantee that such incidents will not occur in the future. Such incidents
may halt or delay exploration, increase operating costs, result in harm to employees or trespassers, decrease operational efficiency,
increase community tensions or result in criminal and/or civil liability for the Company or its employees and/or financial damages
or penalties. The manner in which the Company’s personnel respond to civil disturbances and criminal activities can give
rise to additional risks where those responses are not conducted in a manner that is consistent with international standards relating
to the use of force and respect for human rights. The failure to conduct security operations in accordance with these standards
can result in harm to employees or community members, increase community tensions, reputational harm to the Company and its partners
or result in criminal and/or civil liability for the Company or its employees and/or financial damages or penalties. It is not
possible to determine with certainty the future costs that the Company may incur in dealing with the issues described above at
its operations.
We can give no assurances that we will ever pay any dividends
on our common shares, and any return to investors is expected to come, if at all, only from potential increases in the price of
our common shares.
We have never paid dividends on our common shares
and have no intention of every paying any dividends. We make no assurances that we will ever pay future dividends, cash or otherwise.
Whether we pay any dividends in the future will depend on our financial condition, results of operations, and other factors that
we will consider. Any return to investors is expected to come, if at all, only from potential increases in the price of our common
shares.
As a foreign private issuer, the Company is subject to different
U.S. securities laws and rules than a domestic U.S. issuer, which may limit the information publicly available to U.S. shareholders.
The Company is a foreign private issuer under
applicable U.S. federal securities laws. As a result, the Company does not file the same reports that a U.S. domestic issuer would
file with the SEC, although the Company is required to file with or furnish to the SEC the continuous disclosure documents that
the Company is required to file in Canada under Canadian securities laws. In addition, the Company’s officers, directors,
and principal shareholders are exempt from the reporting and “short swing” profit rules of Section 16 of the Exchange
Act. Therefore, shareholders may not know on as timely a basis when the Company’s officers, directors and principal shareholders
purchase or sell common shares, as the reporting dates under the corresponding Canadian insider reporting requirements are longer.
In addition, as a foreign private issuer, the Company is exempt from the proxy rules under the Exchange Act.
The Company may lose its foreign private issuer status in the
future, which could result in significant additional costs and expenses.
In order to maintain the Company’s current
status as a foreign private issuer, a majority of its common shares must be either directly or indirectly owned by non-residents
of the United States, unless the Company also satisfies one of the additional requirements necessary to preserve this status. The
Company may in the future lose its foreign private issuer status if a majority of its common shares is held in the United States
and it fails to meet the additional requirements necessary to avoid loss of foreign private issuer status. The regulatory and compliance
costs under U.S. federal securities laws as a U.S. domestic issuer may be significantly more than the costs incurred as a Canadian
foreign private issuer eligible to use the multijurisdictional disclosure system (“MJDS”). If the Company is not a
foreign private issuer, it would not be eligible to use the MJDS or other foreign issuer forms and would be required to file periodic
and current reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive
than the forms available to a foreign private issuer. In addition, the Company may lose the ability to rely upon certain exemptions
from NYSE American corporate governance requirements that are available to foreign private issuers.
U.S. investors may not be able to obtain enforcement of civil
liabilities against the Company.
The enforcement by investors of civil liabilities
under the United States federal or state securities laws may be adversely affected by the fact that the Company is governed by
the Business Corporations Act (Alberta), that some of the Company’s officers and directors are residents of Canada or otherwise
reside outside the United States, and that all, or a substantial portion of their assets and a substantial portion of the Company’s
assets, are located outside the United States. It may not be possible for investors to effect service of process within the United
States on certain of the Company’s directors and officers or enforce judgments obtained in the United States courts against
the Company, certain of its directors and officers based upon the civil liability provisions of United States federal securities
laws or the securities laws of any state of the United States.
Common share prices will likely be highly volatile, and your
investment could decline in value or be lost entirely.
The market price of the common shares is likely
to be highly volatile and may fluctuate significantly in response to various factors and events, many of which the Company cannot
control. The stock market in general, and the market for mining company stocks in particular, has historically experienced significant
price and volume fluctuations. Volatility in the market price for a particular issuer’s securities has often been unrelated
or disproportionate to the operating performance of that issuer. Market and industry factors may depress the market price of the
Company’s securities, regardless of operating performance. Volatility in the Company’s securities price also increases
the risk of securities class action litigation.
Our common shares must meet the requirements of the NYSE American.
The NYSE American rules provide that the NYSE
American may, in its discretion, at any time, and without notice, suspend dealings in or remove any security from listing or unlisted
trading privileges, if, among other things, where the financial condition and/or operating results of the issuer appear to be unsatisfactory
or it appears that the extent of public distribution or the aggregate market value of the security has become so reduced as to
make further dealings on the NYSE American inadvisable. Although the Company has received no indication or notification that its
common shares may be delisted, in light of the current per common share price and the Company’s financial losses, there is
no assurance that the Company’s common shares will continue to be listed on the NYSE American.
Offers or availability for sale of a substantial number of common
shares may cause the price of our common shares to decline.
In the future, in connection with current and
future financings, we could have sales of a significant number of our common shares in the public market which could harm the market
price of our common shares and make it more difficult for us to raise funds through future offerings of common shares. The Company’s
shareholders may sell substantial amounts of its common shares in the public market. The availability of these common shares for
resale in the public market has the potential to cause the supply of its common shares to exceed investor demand, thereby decreasing
the price of the common shares.
In addition, the fact that the Company’s
shareholders can sell substantial amounts of its common shares in the public market, whether or not sales have occurred or are
occurring, could make it more difficult for the Company to raise additional financing through the sale of equity or equity-related
securities in the future at a time and price that it deems reasonable or appropriate.
CAPITALIZATION AND INDEBTEDNESS
The table below sets forth our capitalization
and indebtedness as of May 31, 2020 on an actual basis.
As at May 31, 2020
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|
$Cdn
|
|
|
$US(1)
|
|
|
|
|
|
|
Long Term Liabilities(2)
|
|
-
|
|
|
-
|
|
|
|
|
|
|
Authorized Capital
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|
|
|
|
|
Share capital
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$
|
157,673,093
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|
$
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114,181,398
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Share based payment reserve
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|
8,970,920
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|
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6,496,430
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Warrants Reserve
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|
1,033,037
|
|
|
748,090
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Accumulated Other Comprehensive Loss
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|
833,937
|
|
|
603,908
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Accumulated Deficit
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|
(145,461,823)
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|
|
(105,338,419)
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Equity attributable to owners of the Company
|
$
|
23,049,164
|
|
$
|
16,691,407
|
Non-controlling interests
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|
588,131
|
|
|
425,904
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Total shareholder’s equity
|
$
|
23,637,295
|
|
$
|
17,117,311
|
(1)
|
Based on an exchange rate of Cdn$1.3809 for US$1.00 as
of May 29, 2020 as reported by the Board of Governors of the Federal Reserve System – Foreign Exchange Rates.
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(2)
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Excludes $7.0 million in convertible debentures issued in connection
with the Securities Purchase Agreement dated July 22, 2020.
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MARKET FOR OUR COMMON SHARES
The common shares of the Company are listed
on the Toronto Stock Exchange under the symbol “TNX”. The common shares of the Company are also listed on the NYSE
American under the symbol “TRX.”
OFFER STATISTICS AND EXPECTED TIMETABLE
We may offer common shares, warrants to purchase
common shares or debt securities, or units consisting of a combination of any or all of these securities at an aggregate offering
price of up to $25,000,000. The warrants that we may offer will consist of warrants to purchase any of the other securities that
may be sold under this prospectus. The securities offered under this prospectus may be offered separately, together, or in separate
series, and in amounts, at prices and on terms to be determined at the time of sale. The actual per share price of the securities
that we will offer pursuant hereto will depend on a number of factors that may be relevant as of the time of offer (see “Plan
of Distribution” below).
This prospectus provides you with a general
description of the securities we may offer. Each time we sell securities under this shelf registration, we will provide a prospectus
supplement that will contain certain specific information about the terms of that offering, including a description of any risks
related to the offering, if those terms and risks are not described in this prospectus. A prospectus supplement may also add, update
or change information contained in this prospectus. If there is any inconsistency between the information in this prospectus and
the applicable prospectus supplement, you should rely on the information in the prospectus supplement. The registration statement
we filed with the SEC includes exhibits that provide more details on the matters discussed in this prospectus. You should read
this prospectus and the related exhibits filed with the SEC and the accompanying prospectus supplement together with additional
information described under the headings “Incorporation Of Certain Information By Reference” before investing in any
of the securities offered.
USE OF PROCEEDS
Unless otherwise indicated in the applicable
prospectus supplement, information incorporated by reference or free writing prospectus, we intend to use the net proceeds from
the sale of securities for capital expenditures, continued exploration, general corporate purposes and working capital.
PLAN OF DISTRIBUTION
We may sell the securities offered by this prospectus
from time to time in one or more transactions, including, without limitation:
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to or through underwriters;
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·
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through broker-dealers (acting as agent or principal);
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directly by us to purchasers (including our affiliates and shareholders), through a specific bidding
or auction process, a rights offering, or other method;
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·
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through a combination of any such methods of sale; or
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through any other methods described in a prospectus supplement.
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The distribution of securities may be effected,
from time to time, in one or more transactions, including:
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block transactions (which may involve crosses) and transactions on the NYSE American or Toronto
Stock Exchange or any other organized market where the securities may be traded;
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·
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purchases by a broker-dealer as principal and resale by the broker-dealer for its own account pursuant
to a prospectus supplement;
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·
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ordinary brokerage transactions and transactions in which a broker-dealer solicits purchasers;
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·
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sales “at the market” to or through a market maker or into an existing trading market,
on an exchange or otherwise; and
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·
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sales in other ways not involving market makers or established trading markets, including direct
sales to purchasers.
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The securities may be sold at a fixed price
or prices, which may be changed, or at market prices prevailing at the time of sale, at prices relating to the prevailing market
prices or at negotiated prices. The consideration may be cash, debt or another form negotiated by the parties. Agents, underwriters
or broker-dealers may be paid compensation for offering and selling the securities. That compensation may be in the form of discounts,
concessions or commissions to be received from us or from the purchasers of the securities. Dealers and agents participating in
the distribution of the securities may be deemed to be underwriters, and compensation received by them on resale of the securities
may be deemed to be underwriting discounts and commissions under the Securities Act. If such dealers or agents were deemed to be
underwriters, they may be subject to statutory liabilities under the Securities Act.
We may also make direct sales through subscription
rights distributed to our existing shareholders on a pro rata basis, which may or may not be transferable. In any distribution
of subscription rights to our shareholders, if all of the underlying securities are not subscribed for, we may then sell the unsubscribed
securities directly to third parties or may engage the services of one or more underwriters, dealers or agents, including standby
underwriters, to sell the unsubscribed securities to third parties.
Some or all of the securities that we offer
through this prospectus may be new issues of securities with no established trading market. Any underwriters to whom we sell our
securities for public offering and sale may make a market in those securities, but they will not be obligated to do so and they
may discontinue any market making at any time without notice. Accordingly, we cannot assure you of the liquidity of, or continued
trading markets for, any securities that we offer.
Agents may, from time to time, solicit offers
to purchase the securities. If required, we will name in the applicable prospectus supplement, document incorporated by reference
or free writing prospectus, as applicable, any agent involved in the offer or sale of the securities and set forth any compensation
payable to the agent. Unless otherwise indicated, any agent will be acting on a best efforts basis for the period of its appointment.
Any agent selling the securities covered by this prospectus may be deemed to be an underwriter of the securities.
If underwriters are used in an offering, securities
will be acquired by the underwriters for their own account and may be resold, from time to time, in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale, or under delayed
delivery contracts or other contractual commitments. Securities may be offered to the public either through underwriting syndicates
represented by one or more managing underwriters or directly by one or more firms acting as underwriters. If an underwriter or
underwriters are used in the sale of securities, an underwriting agreement will be executed with the underwriter or underwriters
at the time an agreement for the sale is reached. The applicable prospectus supplement will set forth the managing underwriter
or underwriters, as well as any other underwriter or underwriters, with respect to a particular underwritten offering of securities,
and will set forth the terms of the transactions, including compensation of the underwriters and dealers and the public offering
price, if applicable. This prospectus, the applicable prospectus supplement and any applicable free writing prospectus will be
used by the underwriters to resell the securities.
If a dealer is used in the sale of the securities,
we, or an underwriter, will sell the securities to the dealer, as principal. The dealer may then resell the securities to the public
at varying prices to be determined by the dealer at the time of resale. To the extent required, we will set forth in the prospectus
supplement, document incorporated by reference or free writing prospectus, as applicable, the name of the dealer and the terms
of the transactions.
We may directly solicit offers to purchase the
securities and may make sales of securities directly to institutional investors or others. These persons may be deemed to be underwriters
with respect to any resale of the securities. To the extent required, the prospectus supplement, document incorporated by reference
or free writing prospectus, as applicable, will describe the terms of any such sales, including the terms of any bidding or auction
process, if used.
Agents, underwriters and dealers may be entitled
under agreements which may be entered into with us to indemnification by us against specified liabilities, including liabilities
incurred under the Securities Act, or to contribution by us to payments they may be required to make in respect of such liabilities.
If required, the prospectus supplement, document incorporated by reference or free writing prospectus, as applicable, will describe
the terms and conditions of such indemnification or contribution. Some of the agents, underwriters or dealers, or their affiliates
may be customers of, engage in transactions with or perform services for us or our subsidiaries or affiliates in the ordinary course
of business.
Under the securities laws of some states, the
securities offered by this prospectus may be sold in those states only through registered or licensed brokers or dealers.
Any person participating in the distribution
of securities registered under the registration statement that includes this prospectus will be subject to applicable provisions
of the Exchange Act, and the applicable SEC rules and regulations, including, among others, Regulation M, which may limit the timing
of purchases and sales of any of our securities by any such person. Furthermore, Regulation M may restrict the ability of any person
engaged in the distribution of our securities to engage in market-making activities with respect to our securities.
These restrictions may affect the marketability
of our securities and the ability of any person or entity to engage in market-making activities with respect to our securities.
Certain persons participating in an offering
may engage in over-allotment, stabilizing transactions, short-covering transactions and penalty bids in accordance with Regulation
M under the Exchange Act that stabilize, maintain or otherwise affect the price of the offered securities. If any such activities
will occur, they will be described in the applicable prospectus supplement.
If more than ten percent (10%) of the net proceeds
of any offering of securities made under this prospectus will be received by Financial Industry Regulatory Authority (“FINRA”)
members participating in the offering or affiliates or associated persons of such FINRA members, the offering will be conducted
in accordance with FINRA Conduct Rule 5110(h).
To the extent required, this prospectus may
be amended or supplemented from time to time to describe a specific plan of distribution.
DESCRIPTION OF SECURITIES WE MAY OFFER
We may offer, from time to time, our common
shares, warrants to purchase common shares and debt securities, either individually or in units in amounts we will determine from
time to time, under this prospectus at prices and on terms to be determined by market conditions at the time of offering. This
prospectus provides you with a general description of the securities we may offer. See “Description of Common Shares”,
“Description of Warrants”, “Description of Debt Securities” and “Description of Units” below.
Each time we offer a type or series of securities, we will provide a prospectus supplement that will describe the specific amounts,
prices and other important terms of the securities, including, to the extent applicable:
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designation or classification;
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aggregate offering price;
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voting or other rights, if any; and
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important federal income tax considerations.
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The prospectus supplement and any related free
writing prospectus also may supplement, or, as applicable, add, update or change information contained in this prospectus or in
documents we have incorporated by reference. However, no prospectus supplement or free writing prospectus will offer a security
that is not registered and described in this prospectus at the time of the effectiveness of the registration statement of which
this prospectus is a part.
The terms of any particular offering, the offering
price and the net proceeds to us will be contained in the prospectus supplement, information incorporated by reference or free
writing prospectus relating to such offering.
DESCRIPTION OF COMMON SHARES
The description below of our capital shares
is a summary and is qualified in its entirety by reference to our Articles of Incorporation (“Articles”). For a complete
description, you should refer to our Articles a copy of which is on file with the SEC.
Our Articles authorizes the issuance of an unlimited
number of common shares, without par value.
Each holder of common shares is entitled to
one vote for each share on all matters submitted to a vote of the shareholders, except matters that relate only to one or more
of the series of preferred share, and each holder does not have cumulative voting rights. Accordingly, the holders of a majority
of the common shares entitled to vote in any election of directors can elect all of the directors standing for election, if they
so choose.
Subject to preferences that may be applicable
to any then outstanding preferred stock, holders of common shares are entitled to receive ratably those dividends, if any, as may
be declared from time to time by the board of directors out of legally available funds. In the event of our liquidation, dissolution
or winding up, holders of common shares will be entitled to share ratably in the net assets legally available for distribution
to shareholders after the payment of all of our debts and other liabilities and the satisfaction of any liquidation preference
granted to the holders of any outstanding preferred shares.
Holders of common shares have no preemptive
or conversion rights or other subscription rights, and there are no redemption or sinking fund provisions applicable to the common
share. All outstanding common shares are, and the common shares offered by us in this offering, when issued and paid for, will
be fully paid and nonassessable. The rights, preferences and privileges of the common shares are subject to, and may be adversely
affected by, the rights of the holders of shares of any series of preferred share which we may designate in the future.
DESCRIPTION OF WARRANTS
General
We may issue warrants to purchase common shares.
We may issue the warrants independently or together with any underlying securities, and the warrants may be attached or separate
from the underlying securities. We may also issue a series of warrants under a separate warrant agreement to be entered into between
us and a warrant agent. The warrant agent will act solely as our agent in connection with the warrants of such series and will
not assume any obligation or relationship of agency for or with holders or beneficial owners of warrants.
The following description is a summary of selected
provisions relating to the warrants that we may issue. The summary is not complete. When warrants are offered in the future, a
prospectus supplement, information incorporated by reference or a free writing prospectus, as applicable, will explain the particular
terms of those securities and the extent to which these general provisions may apply. The specific terms of the warrants as described
in a prospectus supplement, information incorporated by reference, or free writing prospectus will supplement and, if applicable,
may modify or replace the general terms described in this section.
This summary and any description of warrants
in the applicable prospectus supplement, information incorporated by reference or free writing prospectus is subject to and is
qualified in its entirety by reference to all the provisions of any specific warrant document or agreement. We will file each of
these documents, as applicable, with the SEC and incorporate them by reference as an exhibit to the registration statement of which
this prospectus is a part on or before the time we issue a series of warrants. See “Where You Can Find Additional Information”
and “Incorporation of Certain Information by Reference” above for information on how to obtain a copy of a warrant
document when it is filed.
When we refer to a series of warrants, we mean
all warrants issued as part of the same series under the applicable warrant agreement.
Terms
The applicable prospectus supplement, information
incorporated by reference or free writing prospectus, may describe the terms of any warrants that we may offer, including, but
not limited to, the following:
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the title of the warrants;
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the total number of warrants;
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the price or prices at which the warrants will be issued;
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the price or prices at which the warrants may be exercised;
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the currency or currencies that investors may use to pay for the warrants;
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the date on which the right to exercise the warrants will commence and the date on which the right
will expire;
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whether the warrants will be issued in registered form or bearer form;
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information with respect to book-entry procedures, if any;
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if applicable, the minimum or maximum amount of warrants that may be exercised at any one time;
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if applicable, the designation and terms of the underlying securities with which the warrants are
issued and the number of warrants issued with each underlying security;
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if applicable, the date on and after which the warrants and the related underlying securities will
be separately transferable;
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if applicable, a discussion of certain United States federal income tax considerations;
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if applicable, the terms of redemption of the warrants;
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the identity of the warrant agent, if any;
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the procedures and conditions relating to the exercise of the warrants; and
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any other terms of the warrants, including terms, procedures, and limitations relating to the exchange
and exercise of the warrants.
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Warrant Agreement
We may issue the warrants in one or more series
under one or more warrant agreements, each to be entered into between us and a bank, trust company, or other financial institution
as warrant agent. We may add, replace, or terminate warrant agents from time to time. We may also choose to act as our own warrant
agent or may choose one of our subsidiaries to do so.
The warrant agent under a warrant agreement
will act solely as our agent in connection with the warrants issued under that agreement. Any holder of warrants may, without the
consent of any other person, enforce by appropriate legal action, on its own behalf, its right to exercise those warrants in accordance
with their terms.
Form, Exchange and Transfer
We may issue the warrants in registered form
or bearer form. Warrants issued in registered form, i.e., book-entry form, will be represented by a global security registered
in the name of a depository, which will be the holder of all the warrants represented by the global security. Those investors who
own beneficial interests in a global warrant will do so through participants in the depository’s system, and the rights of
these indirect owners will be governed solely by the applicable procedures of the depository and its participants. In addition,
we may issue warrants in non-global form, i.e., bearer form. If any warrants are issued in non-global form, warrant certificates
may be exchanged for new warrant certificates of different denominations, and holders may exchange, transfer, or exercise their
warrants at the warrant agent’s office or any other office indicated in the applicable prospectus supplement, information
incorporated by reference or free writing prospectus.
Prior to the exercise of their warrants, holders
of warrants exercisable for shares of common share will not have any rights of holders of common share and will not be entitled
to dividend payments, if any, or voting rights of the common share.
Exercise of Warrants
A warrant will entitle the holder to purchase
for cash an amount of securities at an exercise price that will be stated in, or that will be determinable as described in, the
applicable prospectus supplement, information incorporated by reference or free writing prospectus. Warrants may be exercised at
any time up to the close of business on the expiration date set forth in the applicable offering material. After the close of business
on the expiration date, unexercised warrants will become void. Warrants may be redeemed as set forth in the applicable offering
material.
Warrants may be exercised as set forth in the
applicable offering material. Upon receipt of payment and the warrant certificate properly completed and duly executed at the corporate
trust office of the warrant agent or any other office indicated in the applicable offering material, we will forward, as soon as
practicable, the securities purchasable upon such exercise. If less than all of the warrants represented by such warrant certificate
are exercised, a new warrant certificate will be issued for the remaining warrants.
DESCRIPTION OF DEBT SECURITIES
General
We may issue debt securities which may or may
not be converted into common shares. We may issue the debt securities independently or together with any underlying securities,
and warrants may be attached or separate from the underlying securities. In connection with the issuance of any debt securities,
we do not intend to issue them pursuant to a trust indenture upon reliance of Section 304(a)(8) of the Trust Indenture Act and
Rule 4a-1 promulgated thereunder.
The following description is a summary of selected
provisions relating to the debt securities that we may issue. The summary is not complete. When debt securities are offered in
the future, a prospectus supplement, information incorporated by reference or a free writing prospectus, as applicable, will explain
the particular terms of those securities and the extent to which these general provisions may apply. The specific terms of the
debt securities as described in a prospectus supplement, information incorporated by reference, or free writing prospectus will
supplement and, if applicable, may modify or replace the general terms described in this section.
This summary and any description of debt securities
in the applicable prospectus supplement, information incorporated by reference or free writing prospectus is subject to and is
qualified in its entirety by reference to all the provisions of any specific debt securities document or agreement. We will file
each of these documents, as applicable, with the SEC and incorporate them by reference as an exhibit to the registration statement
of which this prospectus is a part on or before the time we issue a series of warrants. See “Where You Can Find Additional
Information” and “Incorporation of Certain Information by Reference” above for information on how to obtain a
copy of a debt security document when it is filed.
When we refer to a series of debt securities,
we mean all debt securities issued as part of the same series under the applicable indenture, if any.
Terms
The applicable prospectus supplement, information
incorporated by reference or free writing prospectus, may describe the terms of any debt securities that we may offer, including,
but not limited to, the following:
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The title of the debt securities;
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The total amount of the debt securities
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The amount or amounts of the debt securities will be issued and interest rate;
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The conversion price at which the debt securities may be converted;
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The date on which the right to exercise the debt securities will commence and the
date on which the right will expire;
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If applicable, the minimum or maximum amount of debt securities that may be exercised at any one
time;
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If applicable, the designation and terms of the underlying securities with which the debt securities
are issued and the amount of debt securities issued with each underlying security;
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If applicable, a discussion of material United States federal income tax consideration;
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If applicable, the terms of the payoff of the debt securities;
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The identity of the indenture agent, if any;
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The procedures and conditions relating to the exercise of the debt securities; and
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Any other terms of the debt securities, including terms, procedure and limitation relating to the
exchange or exercise of the debt securities.
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Form, Exchange and Transfer
We may issue the debt securities in registered
form or bearer form. Debt securities issued in registered form, i.e., book-entry form, will be represented by a global security
registered in the name of a depository, which will be the holder of all the debt securities represented by the global security.
Those investors who own beneficial interests in global debt securities will do so through participants in the depository’s
system, and the rights of these indirect owners will be governed solely by the applicable procedures of the depository and its
participants. In addition, we may issue warrants in non-global form, i.e., bearer form. If any debt securities are issued in non-global
form, debt securities certificates may be exchanged for new warrant certificates of different denominations, and holders may exchange,
transfer, or exercise their warrants at the warrant agent’s office or any other office indicated in the applicable prospectus
supplement, information incorporated by reference or free writing prospectus.
Prior to the exercise of their debt securities,
holders of debt securities exercisable for shares of debt securities will not have any rights of holders of common shares, and
will not be entitled to dividend payments, if any, or voting rights of the common shares.
Conversion of Debt Securities
A debt security may entitle the holder to purchase,
in exchange for the extinguishment of debt, an amount of securities at an exercise price that will be stated in the debt security.
Debt securities may be converted at any time up to the close of business on the expiration date set forth in the terms of such
debt security. After the close of business on the expiration date, debt securities not exercised will be paid in accordance with
their terms.
Debt securities may be converted as set forth
in the applicable offering material. Upon receipt of a notice of conversion properly completed and duly executed at the corporate
trust office of the indenture agent, if any, or to us, we will forward, as soon as practicable, the securities purchasable upon
such exercise. If less than all of the debt security represented by such security is converted, a new debt security will be issued
for the remaining debt security.
DESCRIPTION OF UNITS
We may issue units composed of any combination
of our common share and warrants. We will issue each unit so that the holder of the unit is also the holder of each security included
in the unit. As a result, the holder of a unit will have the rights and obligations of a holder of each included security. The
unit agreement under which a unit is issued may provide that the securities included in the unit may not be held or transferred
separately, at any time or at any time before a specified date.
The following description is a summary of selected
provisions relating to units that we may offer. The summary is not complete. When units are offered in the future, a prospectus
supplement, information incorporated by reference or a free writing prospectus, as applicable, will explain the particular terms
of those securities and the extent to which these general provisions may apply. The specific terms of the units as described in
a prospectus supplement, information incorporated by reference, or free writing prospectus will supplement and, if applicable,
may modify or replace the general terms described in this section.
This summary and any description of units in
the applicable prospectus supplement, information incorporated by reference or free writing prospectus is subject to and is qualified
in its entirety by reference to the unit agreement, collateral arrangements and depositary arrangements, if applicable. We will
file each of these documents, as applicable, with the SEC and incorporate them by reference as an exhibit to the registration statement
of which this prospectus is a part on or before the time we issue a series of units. See “Where You Can Find Additional Information”
and “Incorporation of Certain Information by Reference” above for information on how to obtain a copy of a document
when it is filed.
The applicable prospectus supplement, information
incorporated by reference or free writing prospectus may describe:
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the designation and terms of the units and of the securities comprising the units, including whether
and under what circumstances those securities may be held or transferred separately;
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any provisions for the issuance, payment, settlement, transfer, or exchange of the units or of
the securities composing the units;
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whether the units will be issued in fully registered or global form; and
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any other terms of the units.
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The applicable provisions described in this
section, as well as those described under “Description of Capital Shares” and “Description of Warrants”
above, will apply to each unit and to each security included in each unit, respectively.
COMPARISON OF ALBERTA AND DELAWARE CORPORATE LAW
COMPARISON OF SHAREHOLDER RIGHTS
The Company is a corporation
governed by the Business Corporations Act (Alberta) (“BCA”). The BCA differs in some material respects from
the laws generally applicable to corporation in states within the United States. We are providing the following discussion, for
illustration purposes only, a summary of certain material differences affecting Delaware corporations under the Delaware General
Corporation Law (the “DGCL”) and the BCA. This summary is qualified in its entirety by reference to the DGCL, the BCA,
and the Company’s articles.
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Delaware
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Business Corporations Act (Alberta)
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Stockholder/
Shareholder Approval
of Business
Combinations;
Fundamental Changes
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Under the DGCL, certain fundamental changes, such as amendments
to the certificate of incorporation, a merger, consolidation, sale, lease, exchange or other disposition of all or substantially
all of the property of a corporation not in the usual and regular course of the corporation’s business, or a dissolution
of the corporation, are generally required to be approved by the affirmative vote of the holders of a majority of the outstanding
stock present in person or represented by proxy and entitled to vote on the matter, unless a corporation’s certificate of
incorporation or the bylaws require a higher percentage.
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Under the BCA and the Company’s articles, certain alterations,
such as changes to authorized share structure, continuances, into or out of province, certain amalgamations, sales, leases or other
dispositions of all or substantially all of the property of the company (other than in the ordinary course of business) liquidations,
dissolutions, and certain arrangements are required to be approved by ordinary or special resolution as applicable.
An ordinary resolution is a resolution (i) passed at a shareholders’
meeting by a simple majority of the votes cast by shareholders voting shares that carry the right to vote at general meetings,
or (ii) passed, after being submitted to all of the shareholders holding shares that carry the right to vote at general meetings,
by being consented to in writing all of the shareholders entitled to vote on the resolution.
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Delaware
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Business Corporations Act (Alberta)
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However, generally under the DGCL, stockholder approval is not required
if the number of shares of common stock, including securities convertible into common stock, of a corporation issued in a merger
does not exceed 20% of its stock outstanding immediately prior to the effective date of the merger. In certain situations, the
approval of a business combination may require approval by a certain number of the holders of a class or series of shares. In addition,
Section 251(h) of the DGCL provides that stockholders of a constituent corporation need not vote to approve a merger if: (i) the
merger agreement permits or requires the merger to be effected under Section 251(h) and provides that the merger shall be effected
as soon as practicable following the tender offer or exchange offer, (ii) a corporation consummates a tender or exchange offer
for any and all of the outstanding stock of such constituent corporation that would otherwise be entitled to vote to approve the
merger, (iii) immediately following the consummation of the offer, the stock accepted for purchase or exchanges plus the stock
owned by the consummating corporation equals at least the percentage of stock that would be required to adopt the agreement of
merger under the DGCL, (iv) the corporation consummating the offer merges with or into such constituent corporation and (v) each
outstanding share of each class or series of stock of the constituent corporation that was the subject of and not irrevocably accepted
for purchase or exchange in the offer is to be converted in the merger into, or the right to receive, the same consideration to
be paid for the shares of such class or series of stock of the constituent corporation irrevocably purchased or exchanged in such
offer.
The DGCL does not contain a procedure comparable to a plan of arrangement
under BCA.
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A special resolution is a resolution (i) passed by not less than
two-thirds of the votes cast by the shareholders voting shares that carry the right to vote at general meetings who voted in respect
of the resolution at a meeting duly called and held for that purpose or (ii) passed by being consented to in writing by all shareholders
entitled to vote on the resolution.
Holders of multiple voting shares and subordinate voting shares
vote together at all meetings of shareholders except meetings at which only holders of a particular class are entitled to vote.
Under the BCA, an action that prejudices or interferes with a right
or special right attached to issued shares of a class or series of shares must be approved by a separate special resolution of
the holders of the class or series of shares being affected.
Arrangements are permitted under the BCA. In general, a plan of
arrangement is approved by a corporation’s board of directors and then is submitted to a court for approval. It is customary
for a corporation in such circumstances to apply to a court initially for an interim order governing various procedural matters
prior to calling any security holder meeting to consider the proposed arrangement. Plans of arrangement involving shareholders
must be approved by a special resolution of shareholders, including holders of shares not normally entitled to vote. The court
may, in respect of an arrangement proposed with persons other than shareholders and creditors, require that those persons approve
the arrangement in the manner and to the extent required by the court. The court determines, among other things, to whom notice
shall be given and whether, and in what manner, approval of any person is to be obtained and also determines whether any shareholders
may dissent from the proposed arrangement and receive payment of the fair value of their shares. Following compliance with the
procedural steps contemplated in any such interim order (including as to obtaining security holder approval), the court would conduct
a final hearing, which would, among other things, assess the fairness of the arrangement and approve or reject the proposed arrangement.
The BCA does not contain a provision comparable to Section 251(h)
of the DGCL.
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Delaware
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Business Corporations Act (Alberta)
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Special Vote Required
for Combinations with
Interested
Stockholders/
Shareholders
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Unless a Delaware corporation’s certificate of incorporation
provides that it elects not to be governed by Section 203 of the DGCL, a Delaware corporation may not engage in a business combination
with an interested stockholder for a period of three years after the time of the transaction in which the person became an interested
stockholder, unless (i) the board of directors of the corporation, prior to the time of the transaction in which the person became
an interested stockholder, approves either the business combination or the transaction in which the stockholder becomes an interested
stockholder; (ii) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced
(excluding shares owned by directors and officers of the corporation and shares held in certain types of employee stock plans);
or (iii) the board of directors and the holders of at least two-thirds of the outstanding voting stock not owned by the interested
stockholder approve the business combination on or after the time of the transaction in which the person became an interested stockholder.
For purposes of Section 203, the DGCL, subject to specified exceptions,
generally defines an interested stockholder to include any person who, together with that person’s affiliates or associates,
(i) owns 15% or more of the outstanding voting stock of the corporation (including any rights to acquire stock pursuant to an option,
warrant, agreement, arrangement or understanding, or upon the exercise of conversion or exchange rights, and stock with respect
to which the person has voting rights only), or (ii) is an affiliate or associate of the corporation and owned 15% or more of the
outstanding voting stock of the corporation at any time within the previous three years.
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The BCA does not contain a provision comparable to Section 203 of the DGCL with respect to business combinations.
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Delaware
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Business Corporations Act (Alberta)
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Appraisal Rights;
Rights to Dissent
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Under the DGCL, a stockholder of a corporation participating in
some types of major corporate transactions may, under varying circumstances, be entitled to appraisal rights pursuant to which
the stockholder may receive cash in the amount of the fair market value of his or her shares in lieu of the consideration he or
she would otherwise receive in the transaction.
For example, a stockholder is entitled to appraisal rights in the
case of a merger or consolidation if the shareholder is required to accept in exchange for the shares anything other than: (i)
shares of stock of the corporation surviving or resulting from the merger or consolidation, or depository receipts in respect thereof;
(ii) shares of any other corporation, or depository receipts in respect thereof, that on the effective date of the merger or consolidation
will be either listed on a national securities exchange or held of record by more than 2,000 shareholders; (iii) cash instead of
fractional shares of the corporation or fractional depository receipts of the corporation; or (iv) any combination of the foregoing.
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The BCA provides that shareholders of a corporation are entitled
to exercise dissent rights in respect of certain matters and to be paid the fair value of their shares in connection therewith.
The dissent right is applicable where the corporation resolves to (i) alter its articles to alter the restrictions on the powers
of the corporation or on the business it is permitted to carry on; (ii) approve certain amalgamations; (iii) approve an arrangement,
where the terms of the arrangement or court orders relating thereto permit dissent; (iv) sell, lease or otherwise dispose of all
or substantially all of its property; or (v) continue the corporation into another jurisdiction.
Dissent may also be permitted if authorized by resolution. A court
may also make an order permitting a shareholder to dissent in certain circumstances.
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Stockholder/
Shareholder Consent
to Action Without
Meeting
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Under the DGCL, unless otherwise provided in a corporation’s
certificate of incorporation, any action that can be taken at a meeting of the stockholders may be taken without a meeting if written
consent to the action is signed by the holders of outstanding stock having not less than the minimum number of votes necessary
to authorize or take the action at a meeting of the stockholders.
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Although it is not customary for public companies to do so, under the BCA, shareholder action without a meeting may be taken by a consent resolution of shareholders signed by all of the shareholders entitled to vote on that resolution. A consent resolution is as valid and effective as if it was a resolution passed at a meeting of shareholders.
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Delaware
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Business Corporations Act (Alberta)
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Special Meetings of
Stockholders/
Shareholders
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Under the DGCL, a special meeting of shareholders may be called
by the board of directors or by such persons authorized in the certificate of incorporation or the bylaws.
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Under the BCA, a special meeting of shareholders may be called by the board of directors.
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Distributions and Dividends;
Repurchases and
Redemptions
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Under the DGCL, subject to any restrictions contained in the certificate
of incorporation, a corporation may pay dividends out of its capital surplus or, if there is no surplus, out of net profits for
the fiscal year in which the dividend is declared or the preceding fiscal year, as long as the amount of capital of the corporation
following the declaration and payment of the dividend is not less than the aggregate amount of the capital represented by issued
and outstanding shares having a preference upon the distribution of assets. Surplus is defined in the DGCL as the excess of the
net assets over capital, as such capital may be adjusted by the board.
A Delaware corporation may purchase or redeem shares of any class
for cash or other property except when its capital is impaired or would be impaired by the purchase or redemption. A corporation
may, however, purchase or redeem out of capital shares that are entitled, upon any distribution of its assets, to a preference
over another class or series of its shares or, if no shares entitled to a preference are outstanding, any of its shares if such
shares will be retired and the capital reduced.
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Under the BCA, unless its charter or an enactment provides otherwise,
a corporation may pay a dividend in money or other property (including by issuing shares by way of dividend) unless there are reasonable
grounds for believing that the corporation is insolvent, or the payment of the dividend would render the corporation insolvent.
The BCA provides that no special rights or restrictions attached
to a series of any class of shares confer on the series a priority in respect of dividends or return of capital over any other
series of shares of the same class.
Under the BCA, the purchase or other acquisition by a corporation
of its shares is generally subject to solvency tests similar to those applicable to the payment of dividends (as set out above).
The Company is permitted, under its articles, to acquire any of its shares, subject to the special rights and restrictions attached
to such class or series of shares and the approval of its board of directors.
Under the BCA, subject to solvency tests similar to those applicable
to the payment of dividends (as set out above), a corporation may redeem, on the terms and in the manner provided in its articles,
any of its shares that has a right of redemption attached to it.
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Delaware
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Business Corporations Act (Alberta)
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Vacancies on Board of
Director
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Under the DGCL, a vacancy or a newly created directorship may be filled by a majority of the directors then in office, although less than a quorum, or by the sole remaining director, unless otherwise provided in the certificate of incorporation or bylaws. Any newly elected director usually holds office for the remainder of the full term expiring at the annual meeting of stockholders at which the term of the class of directors to which the newly elected director has been elected expires.
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Under the BCA and the Company’s articles, a vacancy among
the directors may be filled by a quorum of directors, except in the case of a vacancy resulting from an increase in the number
of directors or from a failure to elect the minimum number of directors required by the Company’s articles.
If there is not a quorum of directors, or if there has been a failure
to elect the minimum number of directors required by the Company’s articles, the directors then in office shall forthwith
call a special meeting of shareholders to fill the vacancy and, if they fail to call a meeting or if there are no directors then
in office, the meeting may be called by any shareholder.
Under the BCA and if permitted by a corporation’s articles,
directors of the corporation may, between annual general meetings, appoint one or more additional directors to serve until the
next annual general meeting, but the number of directors shall not at any time exceed 1/3 of the number of directors who held office
at the expiration of the last annual meeting of the corporation.
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Removal of Directors;
Terms of Directors
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Under the DGCL, except in the case of a corporation with a classified board or with cumulative voting, any director or the entire board may be removed, with or without cause, by the holders of a majority of the shares entitled to vote at an election of directors. If a Delaware corporation has a classified board, unless its certificate of incorporation provides otherwise, any director or the entire board may only be removed by stockholders for cause.
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The BCA provides for the removal of a director by ordinary resolution
passed at a special meeting of the shareholders.
All directors are eligible for re-election or re-appointment.
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Inspection of Books
and Records
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Under the DGCL, any holder of record of stock or a person who is the beneficial owner of shares of such stock held either in a voting trust or by a nominee on behalf of such person has the right during usual business hours to inspect the corporation’s books and records for a proper purpose.
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Under the BCA, directors and shareholders, including their agents
and legal representatives, may, without charge, inspect certain of the records of a corporation.
Public corporations, upon payment of a reasonable fee, must provide
any requesting person with certain information regarding the identity and holdings of its shareholders.
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Delaware
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Business Corporations Act (Alberta)
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Amendment of
Governing Documents
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Under the DGCL, a certificate of incorporation may be amended if:
(i) the board of directors adopts a resolution setting forth the proposed amendment, declares the advisability of the amendment
and directs that it be submitted to a vote at a meeting of shareholders; provided that, unless required by the certificate of incorporation,
no meeting or vote is required to adopt an amendment for certain specified changes; and (ii) the holders of a majority of the outstanding
shares of stock entitled to vote on the matter approve the amendment, unless the certificate of incorporation requires the vote
of a greater number of shares.
If a class vote on the amendment is required by the DGCL, a majority
of the outstanding stock of the class is required, unless a greater proportion is specified in the certificate of incorporation
or by other provisions of the DGCL.
Under the DGCL, the board of directors may amend a corporation’s
bylaws if so authorized in the certificate of incorporation. The shareholders of a Delaware corporation also have the power to
amend bylaws.
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The BCA provides that substantive changes to a corporation’s
articles (such as a change in the corporation’s authorized share structure or a change in the special rights or restrictions
that may be attached to a certain class or series of shares) may be made only by special resolution of the shareholders of the
corporation.
The BCA permits the directors to make amendments to any of a corporation’s
bylaws that regulate the business or affairs of the corporation by resolution. Any such amendment is required to be submitted to
the shareholders at the next shareholder meeting to be confirmed, rejected or amended by ordinary resolution.
Our articles provide that certain changes to the Company’s
share structure and any creation or alteration of special rights and restrictions attached to a series or class of shares be done
by way of ordinary resolution. However, if a right or special right attached to a class or series of shares would be prejudiced
or interfered with by such an alteration, the BCA requires that holders of such class or series of shares must approve the alteration
by a sperate special resolution of those shareholders.
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Indemnification of
Directors and Officers
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Under the DGCL, subject to specified limitations in the case of
derivative suits brought by a corporation’s stockholders in its name, a corporation may indemnify any person who is made
a party to any action, suit or proceeding on account of being a director, officer, employee or agent of the corporation (or was
serving at the request of the corporation in such capacity for another corporation, partnership, joint venture, trust or other
enterprise) against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with the action, suit or proceeding, provided that there is a determination that: (i) the
individual acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation;
and (ii) in a criminal action or proceeding, the individual had no reasonable cause to believe his or her conduct was unlawful.
Without court approval, however, no indemnification may be made
in respect of any derivative action in which an individual is adjudged liable to the corporation, except to the extent the Court
of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication
but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity.
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Under the BCA, a corporation may indemnify: (i) a current
or former director or officer of that corporation; or (ii) a current or former director or officer of another corporation if,
at the time such individual held such office, the corporation was an affiliate of the corporation, or if such individual held
such office at the corporation’s request against all costs, charges and expenses, including an amount paid to settle an
action or satisfy a judgment, reasonably incurred by him or her in respect of any civil, criminal, administrative or other legal
proceeding or investigative action (whether current, threatened, pending or completed) in which he or she is involved because
of that person’s position as an indemnifiable person, unless: (i) the individual did not act honestly and in good faith
with a view to the best interests of such corporation or the other entity, as the case may be; or (ii) in the case of a proceeding
other than a civil proceeding, the individual did not have reasonable grounds for believing that the individual’s conduct
was lawful. A corporation cannot indemnify an indemnifiable person if it is prohibited from doing so under its articles. In addition,
a corporation must not indemnify an indemnifiable person in proceedings brought against the indemnifiable person by or on behalf
of the corporation or an associated corporation, except where the indemnifiable person was substantially successful on the merits
in their defense of the proceedings and would otherwise be entitled to indemnification. A corporation may pay, as they are incurred
in advance of the final disposition of an eligible proceeding, the expenses actually and reasonably incurred by an indemnifiable
person in respect of that proceeding, but if it is ultimately determined that the payment of expenses was prohibited, the indemnifiable
person will repay any amounts advanced. On application from an indemnifiable person, a court may make any order the court considers
appropriate in respect of an eligible proceeding.
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Delaware
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Business Corporations Act (Alberta)
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The DGCL requires indemnification of directors and officers for expenses (including attorneys’ fees) actually and reasonably relating to a successful defense on the merits or otherwise of a derivative or third-party action.
Under the DGCL, a corporation may advance expenses to any director or officer relating to the defense of any proceeding upon the receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified.
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As permitted by the BCA, the Company’s articles require it to indemnify its directors, officers, former directors or officers (and
such individual’s respective heirs and legal representatives) and permit the Company to indemnify any person to the extent permitted
by the BCA.
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Limited Liability of
Directors
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The DGCL permits the adoption of a provision in a corporation’s certificate of incorporation limiting or eliminating the monetary liability of a director to a corporation or its shareholders by reason of a director’s breach of the director’s fiduciary duties, except for (i) any breach the duty of loyalty to the corporation or its shareholders; (ii) any act or omission not in good faith or involving intentional misconduct or a known violation of law; (iii) any breach in which the director obtains an improper personal benefit from the corporation; or (iv) the unlawful payment of a dividend or the unlawful approval a stock repurchase.
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Under the BCA, a director or officer of a corporation must (i) act
honestly and in good faith with a view to the best interests of the corporation; (ii) exercise the care, diligence and skill that
a reasonably prudent person would exercise in comparable circumstances; (iii) act in accordance with the BCA and the regulations
thereunder; and (iv) subject to (i) to (iii), act in accordance with the articles and bylaws of the corporation. These statutory
duties are in addition to duties under common law and equity.
No provision in a contract or the articles of a company may relieve
a director or officer of a company from the above duties.
Under the BCA, a director is not liable for certain acts if the
director has otherwise complied with his or her duties and relied, in good faith, on (i) financial statements of the company represented
to the director by an officer of the company or in a written report of the auditor of the company to fairly reflect the financial
position of the company, (ii) a written report of a lawyer, accountant, engineer, appraiser or other person whose profession lends
credibility to a statement made by that person, (iii) a statement of fact represented to the director by an officer of the company
to be correct, or (iv) any record, information or representation that the court considers provides reasonable grounds for the actions
of the director, whether or not that record was forged, fraudulently made or inaccurate or that information or representation was
fraudulently made or inaccurate. Further, a director is not liable if the director did not know and could not reasonably have known
that the act done by the director or authorized by the resolution voted for or consented to by the director was contrary to the
BCA.
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Delaware
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Business Corporations Act (Alberta)
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Under the BCA, a director is not liable for certain acts if the
director has otherwise complied with his or her duties and relied, in good faith, on (i) financial statements of the company represented
to the director by an officer of the company or in a written report of the auditor of the company to fairly reflect the financial
position of the company, (ii) a written report of a lawyer, accountant, engineer, appraiser or other person whose profession lends
credibility to a statement made by that person, (iii) a statement of fact represented to the director by an officer of the company
to be correct, or (iv) any record, information or representation that the court considers provides reasonable grounds for the actions
of the director, whether or not that record was forged, fraudulently made or inaccurate or that information or representation was
fraudulently made or inaccurate. Further, a director is not liable if the director did not know and could not reasonably have known
that the act done by the director or authorized by the resolution voted for or consented to by the director was contrary to the
BCA.
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Delaware
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Business Corporations Act (Alberta)
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Blank Check
Preferred
Stock/Shares
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Under the DGCL, the certificate of incorporation of a corporation
may give the board the right to issue new classes of preferred shares with voting, conversion, dividend distribution, and other
rights to be determined by the board at the time of issuance, which could prevent a takeover attempt and thereby preclude shareholders
from realizing a potential premium over the market value of their shares.
In addition, the DGCL does not prohibit a corporation from adopting
a shareholder rights plan, or “poison pill,” which could prevent a takeover attempt and also preclude shareholders
from realizing a potential premium over the market value of their shares.
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Under the Company’s articles, the preferred shares may be
issued in one or more series. Accordingly, the Company’s board of directors is authorized, without shareholder approval,
but subject to the provisions of the BCA, to determine the maximum number of shares of each series, create an identifying name
for each series and attach such special rights or restrictions, including dividend, liquidation and voting rights, as the Company’s
board of directors may determine, and such special rights or restrictions, including dividend, liquidation and voting rights, may
be superior to those of the subordinate voting shares and multiple voting shares. The issuance of preferred shares, while providing
flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of
delaying, deferring or preventing a change of control of the Company and might adversely affect the market price of the Company’s
subordinate voting shares and the voting and other rights of the holders of subordinate voting shares. Under the BCA, each share
of a series of shares must have the same special rights or restrictions as are attached to every other share of that series of
shares. In addition, the special rights or restrictions attached to shares of a series of shares must be consistent with the special
rights or restrictions attached to the class of shares of which the series of shares is part.
In addition, the BCA does not prohibit a corporation from adopting
a shareholder rights plan, or “poison pill,” which could prevent a takeover attempt and also preclude shareholders
from realizing a potential premium over the market value of their shares.
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CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSIDERATIONS
The material United States Federal income tax
consequences relating to the purchase, ownership and disposition of any of the securities offered by this prospectus will be set
forth in the applicable prospectus supplement relating to the offering of those securities.
EXPENSE OF THE ISSUANCE AND DISTRIBUTION
The following table sets forth those expenses
to be incurred by us in connection with the issuance and distribution of the securities being registered, other than underwriting
discounts and commissions. All of the amounts shown are estimates, except the SEC registration fee.
SEC registration fee
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$
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$2,728
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Legal fees and expenses
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(1)
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Accounting fees and expenses
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(1)
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Printing and postage expenses
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(1)
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Miscellaneous expenses
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(1)
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Total
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(1)
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(1) These expenses are not presently
known and cannot be estimated at this time as they are based upon the amount and type of security being offered, as well as the
number of offerings. The aggregate amount of these expenses will be reflected in the applicable prospectus supplement.
MATERIAL
CHANGES
Except
as otherwise described in our Annual Report on Form 20-F, as amended, for the fiscal year ended August 31, 2019 and in our Reports
on Form 6-K filed or submitted under the Exchange Act and incorporated by reference herein and as disclosed in this prospectus,
no reportable material changes have occurred since August 31, 2019.
LISTING
Our common shares are listed on NYSE American
and Toronto Stock Exchange under the symbols “TRX” and “TXN”.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common
shares is Odyssey Trust Company, Stock Exchange Tower 350, 300 5th Avenue SW, Calgary, Alberta Canada T2P 3C4; 888-290-1175.
LEGAL MATTERS
Certain legal matters in connection with the
securities offered hereby will be passed upon for us by Miller Thomson LLP, Vancouver, Canada and Lewis Brisbois Bisgaard &
Smith, LLP San Francisco, California with respect to matters of United States law.
EXPERTS
The consolidated financial statements of the
Company, incorporated by reference in the Company's Annual Report (Form 20-F), as amended, for the year ended August 31, 2019,
have been audited by Dale Matheson Carr-Hilton Labonte LLP, independent registered public accounting firm, as set forth in their
report thereon. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given
on the authority of such firm as experts in accounting and auditing.
Information relating to certain of the Company’s
mineral properties in this prospectus and the documents incorporated by reference herein has been derived from reports, statements
or opinions prepared or certified by Virimai Projects (Virimai) and Crundwell Metallurgy (Crundwell) and this information has been
included in reliance on such company’s expertise.
ENFORCEABILITY OF CIVIL LIABILITIES
The enforcement by investors of civil liabilities
under U.S. federal securities laws may be affected adversely by the fact that we are incorporated under the laws of the Province
of Alberta, Canada, that many of our officers and directors are residents of countries other than the United States, that some
of the experts named in this prospectus are residents of countries other than the United States, and that some of our assets and
the assets of said persons are located outside the United States.
In particular, it may be difficult to bring
and enforce suits against us or said persons under U.S. federal securities laws. It may be difficult for U.S. holders of our common
shares to effect service of process on us or said persons within the United States or to enforce judgments obtained in the United
States based on the civil liability provisions of the U.S. federal securities laws against us or said persons. In addition, a shareholder
should not assume that the courts of Canada (i) would enforce judgments of U.S. courts obtained in actions against us, our officers
or directors, or other said persons, predicated upon the civil liability provisions of the U.S. federal securities laws or other
laws of the United States, or (ii) would enforce, in original actions, liabilities against us, our officers or directors or other
said persons predicated upon the U.S. federal securities laws or other laws of the United States.
You should rely only on the information contained in this document.
We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate on the date of this document.
5,545,325 Common Shares
Warrants to Purchase up to 2,772,637
Common Shares
December 21, 2020
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