International Tower Hill Mines Ltd. (TSX: ITH / NYSE-MKT: THM) ("ITH" or the "Company") announced today that it has arranged a non-brokered private placement financing (the "Offering") of common shares to existing major shareholders to raise gross proceeds of approximately USD 22 million.
The Offering will consist of 45,833,334 common shares of the Company, representing approximately 39.4% of the 116.4 million shares currently issued and outstanding, at a price of USD 0.48 per share. The Company intends to use the net proceeds of the private placement for full satisfaction of the final payment due in January 2017 with respect to acquisition of certain mining claims and related rights in the vicinity of the Livengood Gold Project in Alaska (the "Project") (approximately USD 14.8 million as of September 30, 2016), continuation of optimization studies to further improve and de-risk the Project, required environmental baseline studies, and for general working capital purposes.
The Offering will be taken up by the current institutional shareholders of the Company, with Paulson & Co. Inc. ("Paulson") acquiring beneficial ownership of 32,429,842 shares, Tocqueville Asset Management, L.P. ("Tocqueville") acquiring beneficial ownership of 9,041,554 shares (taken together Paulson and Tocqueville will acquire a total of 41,471,396 common shares, representing approximately 35.6% of the common shares currently issued and outstanding) and AngloGold Ashanti (U.S.A.) Exploration Inc. ("AngloGold") acquiring beneficial ownership of 4,361,938 shares. Following completion of the Offering, Paulson, Tocqueville and AngloGold will beneficially own approximately 34.2%, 19.7%, and 9.5%, respectively, of the Company's 162,186,972 common shares. In connection with the Offering, the Company has agreed to appoint one Paulson designee to the Company's board of directors at closing. Commencing from the next annual general meeting of shareholders, Paulson will have the right to nominate two individuals for election to the board of directors.
The completion of the Offering is subject to a number of conditions including obtaining any required regulatory approvals including approval of the Toronto Stock Exchange ("TSX") and the NYSE MKT. All common shares issued in the Offering will be subject to a hold period in Canada of four months from the closing of the Offering. All common shares issued in the United States will be subject to resale restrictions under U.S. federal and state securities laws.
As the aggregate number of common shares issued pursuant to the Offering exceeds 25% of the currently issued and outstanding common shares of the Company, the number of common shares issued to insiders pursuant to the Offering exceeds 10% of the currently issued and outstanding common shares of the Company and the Offering will materially affect control of the Company, the Company would ordinarily be required to obtain shareholder approval under the TSX Company Manual (the "Manual"). However, the Company has applied to the TSX under Section 604(e) of the Company Manual for a "financial hardship" exemption from the requirement to obtain shareholder approval. The Company's board of directors, who are free from any interest in the Offering and are unrelated to the investors, have authorized such application on the basis of their determination that the Company is in serious financial difficulty and the Offering is designed to improve the Company's financial situation and is reasonable for the Company in the circumstances.
As a consequence of relying upon the financial hardship exemption under Section 604(e) of the TSX Company Manual, the Company expects that the TSX will commence a remedial de-listing review, which is normal practice when a listed issuer seeks to rely on this exemption. Although the Company believes that it will be in compliance with all of the TSX listing requirements following completion of the Offering, no assurance can be provided as to the outcome of such review and, therefore, the Company's continued qualification for listing on the TSX.
As Paulson and Tocqueville are insiders of the Company, the Offering is a "related party transaction" within the meaning of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The participation of Paulson and Tocqueville in the Offering is exempt from the valuation and minority shareholder approval requirements under MI 61-101 by virtue of the "financial hardship" exemptions contained in Section 5.5(g) and 5.7(e) of MI 61-101.
About International Tower Hill Mines Ltd.
International Tower Hill Mines Ltd. controls a 100% interest of the Livengood Gold Project, located along the paved Elliott Highway, 70 miles north of Fairbanks, Alaska.
Source: International Tower Hill Mines
