TORONTO--(BUSINESS WIRE)--Almonty Industries Inc. (“Almonty” or the “Company”) (TSXV: AII) announces that it has entered into a subscription agreement with Mr. Lewis Black, Almonty’s Chairman, Chief Executive Officer and President, pursuant to which Mr. Black will subscribe for 21,175,000 common shares (“Common Shares”) of the Company at a price per Common Share of $0.30 for total gross proceeds to the Company of CAD$6,352,500 (USD$5 million) (the “Private Placement”).
The Private Placement will close in two tranches. The first tranche will be a subscription for 16,000,000 Common Shares for CAD$4,800,000.00 and is expected to close on or before August 18, 2017, subject to the approval of the TSX Venture Exchange (the “TSXV”). The second tranche, consisting of 5,175,000 Common Shares for CAD$1,552,500, will close upon either: (i) the Company receiving the written consent of shareholders of the Company holding more than 50% of the issued and outstanding Common Shares (excluding any Common Shares beneficially owned, or controlled or directed, directly or indirectly, by Mr. Black) to the creation of Mr. Black as a “Control Person” of the Company for purposes of the TSXV, or (ii) the issuance of such second tranche shares to Mr. Black, when added to the Common Shares then beneficially owned, or controlled or directed, directly or indirectly, by Mr. Black, not resulting in Mr. Black becoming a “Control Person” as defined in the Corporate Finance Manual of the TSXV.
Closing of the Private Placement is subject to the conditions to closing enumerated in the subscription agreement, including that Almonty receive approval therefor of the TSXV. All common shares issued pursuant to the Private Placement are subject to a four-month hold period from the date of issuance in accordance with applicable Canadian securities laws.
Related Party Transaction
Mr. Black, as Almonty’s Chairman, Chief Executive Officer and President, is a related party to Almonty. Accordingly, this Private Placement is deemed to be a “related party transaction” as defined under Multilateral Instrument 61-101- Protection of Minority Security Holders in Special Transactions (“MI 61-101“).
Following the closing of the first tranche of the Private Placement, Mr. Black will purchase 16,000,000 Common Shares and, as a result, will beneficially own or control or direct the voting rights in respect of 31,334,420 Common Shares, representing approximately 19.99% of the issued and outstanding Common Shares on a partially diluted basis. Assuming no further issuances of Common Shares prior to the closing of the second tranche of the Private Placement, upon closing of such second tranche Mr. Black will hold 36,509,420 Common Shares on a partially diluted basis, representing approximately 22.55% of the issued and outstanding Common Shares.
Other than the subscription agreement between Mr. Black and the Company relating to the issuance of the Common Shares pursuant to the Private Placement, the Company has not entered into any agreement with an interested party or a joint actor with an interested party in connection with the Private Placement.
The Company appointed an independent committee (the “Independent Committee”) consisting of Mark Trachuk (Chair), Daniel D’Amato and Thomas Gutschlag to review the transaction and to make a recommendation to the Board of Directors. The Independent Committee unanimously resolved to recommend to the Board of Directors that the Board approve the Private Placement. The Board subsequently unanimously approved the Private Placement with Mr. Black declaring a conflict and recusing himself.
The Private Placement is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 (pursuant to subsections 5.5(a) and 5.7(1)(a)) as the fair market value of the related party transaction is not more than 25% of the market capitalization of Almonty. The material change report in connection with the Private Placement was not filed 21 days in advance of the closing of the Private Placement for the purposes of Section 5.2(2) of MI 61-101 on the basis that the funds of the Private Placement are urgently required by the Company to address working capital requirements.
Almonty intends to use the proceeds of the Private Placement for the equity portion of the development financing necessary for the Sangdong Project and for general working capital purposes.
About Almonty
The principal business of Almonty is the mining, processing and shipping of tungsten concentrate from its Los Santos Mine in western Spain, its Wolfram Camp Mine in north Queensland, Australia and its Panasqueira mine in Portugal as well as the development of the Sangdong tungsten mine in Gangwon Province, Korea and the Valtreixal tin/tungsten project in north western Spain. The Los Santos Mine was acquired by Almonty in September 2011 and is located approximately 50 kilometres from Salamanca in western Spain and produces tungsten concentrate. The Wolfram Camp Mine was acquired by Almonty in September 2014 and is located approximately 130 kilometres west of Cairns in northern Queensland, Australia and produces tungsten and molybdenum concentrate. The Panasqueira mine, which has been in production since 1896, is located approximately 260 kilometres northeast of Lisbon, Portugal, was acquired in January 2016 and produces tungsten concentrate. The Sangdong mine, which was historically one of the largest tungsten mines in the world and one of the few long-life, high-grade tungsten deposits outside of China, was acquired in September 2015 through the acquisition of a 100% interest in Woulfe Mining Corp. Almonty owns 100% of the Valtreixal tin-tungsten project in northwestern Spain. Further information about Almonty’s activities may be found at www.almonty.com and under Almonty’s profile at www.sedar.com.
