VANCOUVER, BRITISH COLUMBIA – Javelle Capital Corp. (NEX:JVL.H) (the “Company” or “Javelle“), a capital pool company listed on the NEX Board of the TSX Venture Exchange (the “Exchange“), is pleased to announce that it has signed an Amalgamation Agreement dated November 18, 2016 (the “Agreement“) with Kenadyr Mining Corporation (“KMC“), a private British Columbia corporation, whereby Javelle will acquire all of the outstanding shares of KMC (the “Proposed Transaction“) in exchange for common shares of the Company. KMC holds all of the issued and outstanding securities in PIC Ala-Too, a Kyrgyz Republic company that is the 100% legal and beneficial holder of an exploration license related to KMC’s mineral project located in Borubai, northern Kyrgyz Republic (the “Borubai Project“).
KMC was incorporated under the provisions of the Business Corporations Act (British Columbia) on August 11, 2014 and currently has 79,898,024 common shares issued and outstanding and share purchase warrants outstanding to purchase up to an additional 4,633,044 common shares. KMC’s primary business is mineral exploration in the Kyrgyz Republic, specifically gold exploration in Borubai. KMC is at arm’s length to Javelle.
KMC holds all of the issued and outstanding securities in PIC Ala-Too, a Kyrgyz Republic company registered in Bishkek, which is the 100% legal and beneficial holder of an exploration license related to KMC’s Borubai Project.
The Borubai Project comprises a 100% owned exploration license covering a contiguous 164 sq km’s and is located in northern Kyrgyz Republic. The Borubai Project has been the subject of extensive historic exploration including: drilling (98,200 m in 184 diamond drill holes), trenching (13,800 cu.m.), bulldozer cuts (33,400 cu.m.), geologic mapping at 1:25,000 and 1:50,000 scales, ridge and spur and grid soil geochemistry for multi elements (14,200 samples), rock geochemical sampling (2,320 samples), pan concentrate sampling (790 samples), and 100 meters of adits and 184 meters of underground raises. Additionally, the entire area has been subject to airborne magnetic, radiometric and gravity surveys as well as ground based resistivity and IP surveys.
The Borubai Project encircles the Zijin/KyrgyzAltyn newly constructed and operational Taldy-Bulak Levoberejny Mine (“TBL Mine“) which was built at a cost of US$296mm. According to a news release published by Zijin Mining Group Co., Ltd. on August 15, 2011, the national resources table of Kyrgyz Republic stated that the Taldy-Bulak Levoberejny field contains (C1+C2) grades: 8,906,100 tonnes gold ore∩╝îthe average grade is 7.23g/t, and gold metal is 64,420.5kg, among which, C1 grade (initial mining reserve) 4,949,754 tonnes gold ore∩╝îthe average grade is 7.02g/t, and gold metal volume is 34,754.6kg. The TBL Mine is designed to produce 125,000 oz. Au/annum. The TBL Mine orebody directly connects to KMC’s initial drill target “The South Zone” which was previously drilled by the Soviets.
Readers are cautioned that the resource and reserve estimates relating to the TBL Mine do not extend to KMC’s Borubai Project. Neither KMC or Javelle has independently verified the information with respect to the TBL Mine provided in this news release and it is not necessarily indicative of the mineralization on the Borubai Project. A qualified person has not done sufficient work to classify the historical estimates on the TBL Mine as current mineral resources or mineral reserves and neither KMC or Javelle is aware of the resource and reserve categories or the key assumptions, parameters and methods used to prepare the historical estimates on the TBL Mine. The Company is not treating the historical estimates on the TBL Mine as current mineral resources or mineral reserves as defined in NI 43-101 – Standards of Disclosure for Mineral Projects. The Company cautions readers that the historical estimates on the TBL Mine disclosed in this news release should not be relied upon.
Technical information in this news release has been approved by Brian Lueck, a director of KMC, and a Qualified Person as defined by NI 43-101 – Standards of Disclosure for Mineral Projects.
Financial information related to the significant assets of KMC will be disclosed when available.
Summary of the Proposed Transaction
The Proposed Transaction will be effected by way of a three-cornered amalgamation without court approval under the Business Corporations Act (British Columbia), pursuant to which Javelle will acquire, through the amalgamation of a newly incorporated British Columbia subsidiary of Javelle with KMC, all of the issued and outstanding shares of KMC (the “KMC Shares“), in exchange for common shares of Javelle (each, a “Javelle Share“) and KMC will become a subsidiary of Javelle.
Prior to the closing of the Proposed Transaction, Javelle will change its name to Kenadyr Mining (Holdings) Corp., or such other name as agreed by the parties, and will complete a consolidation of the Javelle Shares on the basis of one post-consolidation Javelle Share for every two pre-consolidation Javelle Shares. Pursuant to the Proposed Transaction, the shareholders of KMC will receive one post-consolidation Javelle Share for each KMC Share held at a deemed issue price of $0.35 per share. No concurrent financing is anticipated to occur in connection with the Proposed Transaction. KMC holds approximately C$10mm in cash as at the date of this news release.
Upon completion of the Proposed Transaction, all of the outstanding share purchase warrants of KMC will cease to represent a right to acquire KMC Shares and will instead provide the right to acquire post-consolidation Javelle Shares, all in accordance with the adjustment provisions provided in the certificates representing the warrants.
The Proposed Transaction is subject to, among other things, receipt of the approval of the shareholders of KMC, final approval of the Exchange and standard closing conditions, including the conditions described below. KMC shareholders representing approximately 40% of the issued and outstanding KMC Shares have entered into support agreements pursuant to which they have agreed to vote their KMC Shares in support of the Proposed Transaction.
The Proposed Transaction will constitute Javelle’s qualifying transaction pursuant to Policy 2.4 – Capital Pool Companies of the Exchange.
Upon completion of the Proposed Transaction, Javelle will continue on with the business of KMC and become a Tier 2 mining issuer, with KMC as its operating subsidiary (the Company after the Proposed Transaction being referred to herein as the “Resulting Issuer“).
All Javelle Shares issued pursuant to the Proposed Transaction will be subject to voluntary hold periods on the basis that Javelle Shares issued in exchange for KMC Shares originally issued at a price of less than $0.35 will be subject to a four month hold period and Javelle Shares issued in exchange for KMC Shares originally issued at a price of $0.35 or greater will be subject to a two month hold period from the date of closing of the Proposed Transaction. Certain of the Javelle Shares are expected to also be subject to restrictions on resale or escrow under the policies of the Exchange, including the securities to be issued to “Principals” (as defined under Exchange policies), which will subject to the escrow requirements of the Exchange.
In connection with the Proposed Transaction, Javelle will issue an aggregate of 500,000 post-consolidation Javelle Shares to certain arm’s length third parties as finder’s fees in accordance with Exchange policies.
None of the securities to be issued pursuant to the Proposed Transaction have been or will be registered under the United States Securities Act of 1933, as amended, or any state securities laws, and any securities issued pursuant to the Proposed Transaction are anticipated to be issued in reliance upon available exemptions from such registration requirements. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.
Conditions to the Proposed Transaction
The completion of the Proposed Transaction remains subject to a number of terms and conditions, including, among other things:
- KMC having received shareholder approval of the Proposed Transaction by a special majority of the KMC shareholders;
- the Proposed Transaction being effective on or prior to April 30, 2017;
- Javelle and KMC obtaining all necessary consents, orders and regulatory approvals, including the conditional approval of the Exchange subject only to customary conditions of closing;
- dissent rights not having been exercised by greater than 5% of the KMC shareholders;
- no material change occurring to the business of Javelle or KMC;
- the satisfaction of obligations under the Amalgamation Agreement relating to each of the parties; and
- the delivery by each of the parties of standard closing documents, including legal opinions.
Sponsorship of a Qualifying Transaction of a Capital Pool Company is required by the Exchange unless exempt in accordance with Exchange policies. The parties will be seeking a waiver of any requirement for a sponsor, but in the event a waiver is not available, will seek a sponsorship relationship for this transaction with an Exchange member firm.
The shares of the Company were halted effective November 21, 2016 and may remain halted until the completion of the Proposed Transaction.
The Resulting Issuer – Summary of Proposed Directors and Officers
It is currently anticipated that all of the current officers and directors of Javelle will resign from their respective positions with Javelle. The management of the Resulting Issuer is expected to include each of Alexander Becker (CEO), Bryan Slursarchuk (President), Brian Lueck (COO), and Kevin Ma (CFO) and the board of directors of the Resulting Issuer is expected to consist of Alexander Becker, Bryan Slusarchuk, Brian Lueck, R. Stuart Angus and Douglas J. Kirwin. The following are brief descriptions of the proposed directors, officers, and advisors of the Resulting Issuer:
Alex Becker – Chief Executive Officer and Director
Dr. Becker has a long and distinguished career in mining including acquiring and targeting the gold potential of the Chaarat Deposit (gold resource 6.5 million oz). He was a director of Perseus Mining, Kentor Gold, Manas Petroleum (CEO & Director), Action Hydrocarbons, Caspian Oil And Gas and V.P. Geology of Apex Asia (a subsidiary of Apex Silver Mines). He started his career during Soviet times as the Chief Geologist of the Geological Mapping Division of North Kyrgyz Geological Expedition. Dr. Becker is one of the world’s authorities on the geology of Central Asia and has authored numerous papers in international scientific journals including Geological Society of America; Tectonophysics, Structual Geology; and Geology and International Geology Review. Dr. Becker holds a M.Sc. in Geology and a Ph.D in Structural Geology.
Bryan Slusarchuk – President and Director
Mr. Slusarchuk has significant international experience structuring, funding and operating companies involved in mineral exploration, development and production. In addition to experience operationally and in the conducting of equity raises, Mr. Slusarchuk has structured complex debt financing transactions in the United States, Canada and Europe with multiple top tier banks. This includes negotiating and securing the first ever funding of a mineral exploration company by the European Bank for Reconstruction and Development (EBRD). Mr. Slusarchuk is a past TEDx speaker on the topic of capital markets, was a senior advisor at a top tier Canadian brokerage firm, and is a member of multiple mining industry advocacy associations in emerging markets, through which he has regularly advised various governments on the formation of mining policy. He has experience on the Board of and as an officer of multiple publicly traded and private companies in Canada, the United States and Europe.
Brian Lueck – Chief Operating Officer and Director
Mr. Lueck has over 25 years experience as an officer and director of Canadian and London public companies involved in mineral exploration, resource definition and feasibility studies. He is a practicing member of the Association of Professional Engineers and Geoscientists of British Columbia and a Member of the Society of Economic Geologists. Mr. Lueck is an advisor to the Board of K92 Mining Inc.
R. Stuart Angus – Chairman and Director
Mr. Angus is an independent business advisor to the mining industry. For the past 30 years, Mr. Angus has focused on structuring and financing significant international exploration, development and mining ventures. Mr. Angus is the former chairman of the board of B.C. Sugar Refinery Ltd.; he was a director of First Quantum Minerals until June, 2005, a director of Canico Resources Corp. until its takeover by CVRD in 2005, and a director of Bema Gold until its takeover by Kinross Gold in 2007. More recently, he was managing director of mergers and acquisitions for Endeavour Financial, a director of Ventana Gold until its takeover by AUX Canada Acquisition in 2011, and a director of Plutonic Power until its merger with Magma Energy in 2011. He is presently chairman of Nevsun Resources Ltd., which operates one of the highest-grade open-pit copper mines in the world.
Douglas J. Kirwin – Director
Mr. Kirwin is an independent geologist with 45 years of international exploration experience, including five years in Papua New Guinea. He held senior positions with Anglo American and Amax during the 1970’s and was Managing Director of a successful international geological consulting firm during the 1980’s and early 1990’s. In 1995 he accepted a role as vice president, exploration for Indochina Goldfields and subsequently became the executive vice president for Ivanhoe Mines Limited until 2012 after which Ivanhoe was acquired by Rio Tinto. Mr. Kirwin was also a director of South Gobi Energy, Jinshan Gold and a founding non-executive director of Ivanhoe Australia Ltd.
As a member of the joint discovery team for the Hugo Dummett deposit at Oyu Tolgoi in Mongolia, he was a co-recipient of the PDAC inaugural Thayer Lindsley medal awarded for the most significant international mineral discovery in 2004. Other mineral discoveries made by Mr. Kirwin’s exploration team include the Jelai-Mewet and Seryung epithermal deposits in north east Kalimantan, the Eunsan-Moisan gold mines in South Korea, the Moditaung gold deposits in Myanmar and the Merlin Re-Mo deposit in Australia.
Kevin Ma – CFO
Mr. Kevin Ma is a senior financial professional specializing in corporate finance, public company reporting and regulatory compliance in Canada and United States, strategic planning, financial management, and capital markets for the past 10 years. Mr. Ma has worked with a broad spectrum of industries in natural resources, software, clean tech, security, and a variety of industrial projects for SME and multi-national companies, both private and public corporate structures. Mr. Ma was a core member of the senior management team at Alexco Resource Corp. that put the Bellekeno Mine into commercial operations in 2011 in the historic Keno Hill Silver District, Yukon Territory, Canada.
Mr. Ma is a Chartered Accountant certified by the Institute of Chartered Professional Accountants of British Columbia, and holds a Diploma in Accounting and a Bachelor of Arts degree from the University of British Columbia.
Mark Eaton – Advisor
Mr. Eaton is a graduate from Hull University, England and is an experienced investment professional with over 20 years of experience in equity capital markets specializing in the resource sector. He has held the position of Managing Director of Global Mining Sales, a division of CIBC World Markets of Toronto, and Manager of US Equity Sales for CIBC World Markets. Mr. Eaton is also a former Partner and Director of Loewen Ondaatje McCutcheon Ltd., a Toronto-based investment dealer. Additional to his leadership in institutional mine finance and investment banking, Mr. Eaton has served in management and on the Boards of several public mining companies. Mr. Eaton is the current Executive Chairman and the former Chief Executive Officer (CEO) of Belo Sun Mining Corp.
Additional information concerning the Proposed Transaction, Javelle, KMC and the Resulting Issuer will be provided in the Company’s Filing Statement to be filed in connection with the Proposed Transaction and which will be available under the Company’s SEDAR profile at www.sedar.com.
The Company is a Capital Pool Company, currently listed on the NEX Board of the Exchange. Management of the Company is actively engaged in assessing possible projects with a view to completing a Qualifying Transaction. Any proposed Qualifying Transaction must be approved by the Exchange. As the Proposed Transaction is an arm’s length Qualifying Transaction no shareholder approval is required. Until the completion of a Qualifying Transaction, Javelle will not carry on any business other than the identification and evaluation of businesses or assets with a view to completing a proposed Qualifying Transaction.
The Company currently has 7,099,198 common shares issued and outstanding and no outstanding options or share purchase warrants.
On Behalf of the Board
Donald Gee, President and Director
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release.
Completion of the Qualifying Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the Proposed Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Qualifying Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.
The Exchange has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release.
All information contained in this news release with respect to Javelle and KMC was supplied by the parties, respectively, for inclusion herein, and Javelle and its directors and officers have relied on KMC for any information concerning such party.
This news release contains forward-looking statements relating to the timing and completion of the Proposed Transaction, the future operations of the Company, KMC, and the Resulting Issuer and other statements that are not historical facts. Forward-looking statements are often identified by terms such as “will”, “may”, “should”, “anticipate”, “expects” and similar expressions. All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding the Proposed Transaction and the future plans and objectives of the Company, KMC, and the Resulting Issuer are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company’s, KMC’s, and the Resulting Issuer’s expectations include the failure to satisfy the conditions to completion of the Proposed Transaction set forth above and other risks detailed from time to time in the filings made by the Company, KMC, and the Resulting Issuer with securities regulations.
The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company, KMC, and the Resulting Issuer. As a result, the Company, KMC, and the Resulting Issuer cannot guarantee that the Proposed Transaction will be completed on the terms and within the time disclosed herein or at all. The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release and the Company, KMC, and the Resulting Issuer will update or revise publicly any of the included forward-looking statements as expressly required by Canadian securities law.