Proxy Material out on Sedar...Sprott owed $19,000,000NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the special meeting of shareholders (“Shareholders”) of Barkerville Gold Mines Ltd. (the “Company”) will be held at 365 Bay Street, Suite 400, Toronto, Ontario, on Tuesday, June 30, 2015, at 10:00 a.m. (Toronto time) (the “Meeting”) for the following purposes:
(a) to pass, with or without variation, a resolution, approving Mr. Eric Sprott as the new “Control Person” of the Company, as such term is defined in the policies of the TSX Venture Exchange; and
(b) to pass, with or without variation, a special resolution approving of and authorizing the continuance of the Company into the Province of Ontario under the Business Corporations Act (Ontario);
(c) to pass, with or without variation, a resolution confirming the repeal of all existing by-laws of the Company and the enactment of a new By-Law No. 1, conditional on the continuance of the Company into the Province of Ontario; and
(d) to transact such further and other business as may properly brought before the Meeting or any adjournment thereof.
1. CREATION OF NEW CONTROL PERSON
Mr. Eric Sprott currently owns an aggregate of 15,897,231 Common Shares and 9,000,000 Common Share purchase warrants (the “Warrants”), representing 12.26% of the issued and outstanding Common Shares and 17.96% of the issued and outstanding Common Shares, assuming full exercise of the Warrants, either directly or through an entity which he controls, namely 2176423 Ontario Inc.
Pursuant to the terms of a credit agreement (the “Credit Agreement”) dated October 8, 2013, as amended, between the Company together with its wholly-owned subsidiaries and 2176423 Ontario Ltd. (the “Lender”), the Lender advanced an aggregate of $15,000,000 (the “Facility”) to the Company. The Facility is due and payable by way of three cash payments on each of July 31, 2014, May 31, 2015 and March 31, 2016 (each a "Repayment Date"). Each cash payment is based on the value of 4,181.67 ounces of gold (being 12,545 ounces over the term of the Facility) as priced at the Bloomberg composite 4 p.m. closing value of gold on the day prior to each repayment. If the gold price is less than US$1,200 per ounce, then the Company’s repayment amount shall be determined using a reference price of US$1,200 per ounce. If the gold price is above US$1,650 per ounce, then the Company’s repayment amount shall be determined using a reference price of US$1,650 per ounce. The Company has agreed to provide the Lender with a minimum rate of return equal to 10% per annum, which shall be calculated on the date which the Facility is fully repaid. The interest on delayed payment is calculated by multiplying the dollar amount of the gold equivalent deliverable at the time by 2.5%.
Subsequent to the year end, the Company negotiated an extension and waiver of the Repayment Dates with the Lender and the Lender has agreed to waive any events of default under the Credit Agreement until June 30, 2015.
As at June 30, 2015, based on the current price of gold, the Company estimates it will be indebted to Mr. Sprott, in the amount of approximately $19,000,000 (the “Debt”). Mr. Sprott has agreed to enter into a debt settlement agreement with the Company pursuant to which, subject to receipt of all required approvals, the Company shall issue an aggregate of approximately 63,333,333 Common Shares (the “Settlement Shares”) to settle the Debt (the “Debt Settlement”) at a price of $0.30 per Settlement Share. The amount of the Debt and the Settlement Shares to be issued may fluctuate prior the settlement of the Debt subject to the price of gold on the date of settlement. Following completion of the proposed Debt Settlement, the Company would have an aggregate of approximately 192,983,078 Common Shares issued and outstanding, at which time Mr. Sprott would hold, directly or indirectly, approximately 41.1% of the Common Shares then outstanding on a undiluted basis and approximately 43.7% of the Common Shares then outstanding on a partially diluted basis, which will result in Mr. Sprott becoming a “Control Person” of the Company (as defined below).