offering
Cascadero arranges $1.5M rights offering, to enter JV
2021-11-25 17:03 ET - News Release
Dr. George Gale reports
CASCADERO COPPER CORPORATION ANNOUNCES GUARANTEED RIGHTS OFFERING FOR $1,500,649 AND LETTER OF INTENT FOR JOINT VENTURE WITH GOLDEN MINERALS
Cascadero Copper Corp. will proceed with a guaranteed rights offering to raise gross proceeds of $1,500,649. The company will be offering rights to holders of its common shares at the close of business on the record date of Dec. 9, 2021, on the basis of one right for every two common shares held. Each of the rights will entitle the holder to subscribe for one common share of the company upon payment of a subscription price of 1.5 cents per share. The rights offering will expire at 2 p.m. Vancouver time on Jan. 13, 2022, after which time unexercised rights will be void and of no value. The rights will be offered to shareholders resident in each province and territory of Canada except than Quebec and shareholders who have satisfied the requirements of the company for those resident outside of the eligible jurisdictions. Accordingly, and subject to the detailed provisions of the rights offering circular expected to be dated Dec. 9, 2021, rights DRS (direct registration system) certificates and subscription forms will not be mailed to shareholders resident outside of the eligible jurisdictions, unless such shareholders are able to establish to the satisfaction of the company, on or before Jan. 4, 2022, that they are eligible to participate in the rights offering. Shareholders who fully exercise their rights will be entitled to subscribe pro rata for additional shares not otherwise purchased, if any, as a result of unexercised rights prior to the expiry time, subject to certain limitations set out in the company's rights offering circular.
The company understands that certain directors and officers of the company who own shares intend to exercise their rights to purchase common shares under the rights offering.
The rights are expected to be listed and posted for trading on the TSX Venture Exchange under the symbol CCD.RT on a when issued basis commencing on Dec. 8, 2021, and will expire at 2 p.m. Vancouver time on Jan. 13, 2022.
Details of the rights offering will be set out in the rights offering notice and the circular, which will be available under the company's profile at SEDAR. The notice and accompanying rights certificates and subscription form will be mailed to each eligible shareholder of the company as at the record date. Registered shareholders who wish to exercise their rights must forward the completed subscription form, together with the applicable funds, to the rights agent, Computershare Investor Services Inc., on or before the expiry time. Shareholders who own their shares through an intermediary, such as a bank, trust company, securities dealer or broker, will receive materials and instructions from their intermediary. Rights delivered to brokers, dealers or other intermediaries may not be delivered by those intermediaries to beneficial shareholders who are residents in a jurisdiction outside of Canada or in Quebec.
The company currently has 200,086,583 shares outstanding. A maximum of 100,043,291 shares will be issued under the rights offering. If all the rights issued are validly exercised, the rights offering will raise gross proceeds of approximately $1,500,649, the net proceeds of which will be used to participate in a proposed joint venture with Golden Minerals Company (see below), for repayment of a $150,000 loan received from Springhill (as defined below) and for general working capital.
In connection with the rights offering, the company has entered into a standby guarantee agreement with InCoR Holdings Ltd. and Springhill Investments Ltd. Under the standby guarantee, after InCoR exercises its rights for 13,492,956 shares and Springhill exercises its rights for 9,242,479 shares, each of them will subscribe for all shares that are not otherwise purchased by the company's shareholders up to 38,653,928 shares. The standby guarantee has been approved by the independent directors of the company. As consideration for the standby guarantee, the company will grant each of InCoR and Springhill non-transferable compensation warrants, entitling each of InCoR and Springhill to acquire up to 9,663,482 common shares equal to, in aggregate, 25 per cent of the number of shares distributed pursuant to the rights offering (which does not include the number of shares that InCoR or Springhill is entitled to subscribe for), with each compensation warrant exercisable for one share at a price of five cents per share for a period of 60 months from the date of the closing of the rights offering.
It is expected that on completion of the rights offering and on the assumption that InCor takes up its entire standby commitment of 38,653,928 shares for $579,809 and Springhill takes up its entire standby commitment of 38,653,928 shares for $579,809 under the standby guarantee, then: (1) InCoR would hold approximately 79,132,796 shares, representing 26.37 per cent of the issued and outstanding shares, and up to 100,224,849 shares on a fully diluted basis, representing 31.20 per cent of the shares on a fully diluted basis; and (2) Lorne Harder, including through his wholly owned company Springhill, would hold approximately 66,381,364 shares, representing 22.12 per cent of the issued and outstanding shares, and up to 78,544,846 shares on a fully diluted basis, representing 25.15 per cent of the shares on a fully diluted basis.
InCoR is a related party of the company (as such term is defined under applicable securities laws) by virtue of it having beneficial ownership of, or control or direction over, directly or indirectly, securities of the company carrying more than 10 per cent of the voting rights attached to all of the company's outstanding voting securities. Springhill is a related party of the company by virtue of it being a company that is wholly owned by Lorne Harder, a director and senior officer of the company.
Closing of the rights offering is subject to a number of conditions, including receipt of all necessary corporate and regulatory approvals, including the approval of the TSX Venture Exchange.
Golden Minerals joint venture
On Aug. 17, 2021, the company entered into a non-binding letter of intent with Golden Minerals for the formation of a new joint venture company to conduct operations on the Desierto I and II concessions located in Salta, Argentina. The company (through its indirectly wholly owned subsidiary, Salta Geothermal), Golden Minerals (through its indirectly wholly owned subsidiary, Colque Exploraciones SA) and Pacha Minerals SA each own a 33.33-per-cent undivided interest in the concessions through their respective ownership of a 33.33-per-cent equity interest in an Argentine mineral exploration company, Cia de Minas Desierto (CDM).
Pursuant to the LOI, it is proposed that the company and Golden Minerals will cause Salta and Colque to form a new Argentine limited liability company (Newco), into which they will each contribute their respective interests in CDM and the concessions. Newco will be owned 51 per cent by Colque and 49 per cent by Salta. The LOI further sets out the following non-binding terms of the proposed joint venture: Upon the formation of Newco, Salta and Colque will enter into a shareholder agreement to govern the operation of the concessions.
Colque will assign to Newco its interest in the option agreement currently being negotiated between Colque and Pacha pursuant to which Colque is expected to have the right to acquire Pacha's 33.33-per-cent interest in CDM and the concessions. After such assignment, Newco will make all of the option payments and perform all of the obligations of the optionee under the option agreement.
Salta and Colque will also be expected to contribute to all costs of Newco.
At the time of entry into the shareholder agreement, an initial program and budget will be agreed to for the rest of the current year with each of Salta and Colque contributing its share in proportion to its interest. Thereafter, the manager of Newco (which is expected to be Colque for as long as its interest in Newco is 50 per cent or more) will prepare a proposed program and budget for each subsequent year. The manager will be entitled to management fees on exploration expenditures, development and construction expenditures, and mining and reclamation expenditures.
All operations on and in connection with the concessions will be managed by the Newco board of directors, to be composed of representatives of Salta and Colque. Except for certain fundamental decisions that will require a 75-per-cent supermajority vote, all decisions of the Newco board, including the approval of programs and budget, will require a 50-per-cent majority vote with the manager having a single deciding vote.
If Newco exercises the option to acquire some or all of Pacha's interest in CDM and the concessions under the option agreement, Salta and Colque will each acquire a proportionate share.
Salta and Colque will elect whether to contribute to each annual program and budget, and if it elects not to contribute, its interest will be reduced by a set formula.
If Salta and Colque elects to contribute to a program and budget and then fails to respond to a capital call in a timely manner, it will be deemed to have elected not to contribute, and such default will cause its interest to be reduced at an accelerated rate as liquidated damages by the set formula and an additional 25 per cent.
If the interest of either Salta or Colque is voluntarily reduced to less than 10 per cent, it will be deemed to have withdrawn from Newco and will retain no interest in the concessions other than a 1-per-cent net smelter return royalty interest.
If no work program is to be carried out in any given year, each of Salta and Colque will be obligated to contribute its proportionate share of the funds required to keep the concessions in good standing.
The LOI is non-binding and is subject to binding, definitive agreements to be entered into between the company and Golden Minerals and relevant regulatory approvals.
About Cascadero Copper Corp.
Cascadero is focused on the exploration and development of its properties located in Salta, Argentina. The company currently has a joint venture with Golden Minerals on its Sarita Este licence. In addition, the company has newly appointed technical advisers to work with the board and management to provide advice on exploration and development of the Cascadero mineral properties in Argentina and on other future properties of merit. The Cascadero research and development team that was instrumental in developing the patent-pending mineral processing flowsheet on Taron mineral samples is expected to continue its work under the guidance of the board.