Chieftain Metals Corp.
TSX : CFB

Chieftain Metals Corp.

September 13, 2013 17:13 ET

Chieftain Metals Provides Update with Regard to Financing Activities

TORONTO, ONTARIO--(Marketwired - Sept. 13, 2013) - Chieftain Metals Corp. ("Chieftain" or the "Company") (TSX:CFB) announces that, further to its prior press releases and further to the requirements of the Toronto Stock Exchange (the "TSX"), it is seeking written consents from shareholders holding a majority of disinterested common shares to complete (a) the second tranche (the "West Face Second Tranche") of the previously announced private placement including an aggregate of $1,500,000 principal amount of 8% convertible unsecured debentures (the "Debentures") to a fund managed by West Face Capital Inc. ("West Face"); and (b) a potential subscription by a director of the Company in the Corporation's previously announced and ongoing non-brokered flow-through private placement (the "Flow-Through Private Placement").

The West Face Second Tranche (consisting of the remaining $1,000,000 principal amount of Debentures) represents the second tranche of a larger private placement to West Face, the initial tranche of which was completed August 15, 2013 (the "West Face First Tranche"). Part of the proceeds of the West Face financing and all of the proceeds of the Flow-Through Private Placement will be used for the Corporation's previously announced 2013 exploration campaign and for general corporate purposes.

Although the Corporation is seeking written consents as described above, the Corporation may, in its discretion or if otherwise required by the TSX, call and hold a special meeting of shareholders for the purpose of obtaining the affirmative vote of the requisite majority of voting shares held by disinterested shareholders in order to complete the transactions contemplated herein.

The rules of the TSX require the Corporation to obtain disinterested shareholder approval prior to completing the transactions referred to herein because an aggregate of 1,454,000 common shares were issued or made issuable to West Face in the West Face First Tranche, representing approximately 9.9% of the Corporation's issued and outstanding common shares immediately prior to August 6, 2013 (referred to as the "Reference Date" for purposes of the TSX aggregation rule regarding multiple private placements). Since the number of common shares which may be issuable to West Face upon conversion of the Debentures under the West Face Second Tranche or which may be issued to a director in connection with the Flow-Through Private Placement will each provide for the issuance of (or reserving for issuance on conversion or exercise) common shares to insiders, in aggregate, greater than 10% of the number of common shares of the Corporation which were outstanding (on an undiluted basis) prior to the Reference Date, the rules of the TSX require that the Corporation obtain approval of such issuance from the holders of a majority of the common shares of the Corporation, excluding the votes attached to the common shares of the Corporation held by interested insiders. However, the rules of the TSX also provide that such approval may be obtained in writing from disinterested shareholders representing a majority of disinterested common shares, without the requirement to convene a shareholders' meeting for such purposes.

If the West Face Second Tranche and the issuances of flow-through common shares to a director (as described further below) are completed, the total number of common shares to be issued or made issuable to insiders pursuant to the transactions for which disinterested shareholder consents are being sought would represent an additional 7.1% of the Company's issued and outstanding common shares as at the Reference Date (for a total percentage of the Company's issued and outstanding common shares to be issued or made issuable to insiders, when taken together with the previously completed West Face First Tranche, equal to approximately 17.1% as at the Reference Date).

The closing of the West Face Second Tranche and the Flow-Through Private Placement will occur as soon as all applicable closing conditions, including TSX approval, have been satisfied, but no earlier than September 20, 2013 and no later than September 27, 2013 (unless otherwise extended by the Company, with the approval of the TSX). If disinterested shareholder approval is sought by way of a shareholder meeting, the Corporation may complete these transactions by no later than December 25, 2013 (unless otherwise extended by the Company, with the approval of the TSX).

The West Face Second Tranche and the Flow-Through Private Placement (insofar as the director participates) are related party transactions pursuant to applicable securities laws; however, the Corporation is relying on applicable exemptions from obtaining minority shareholder approval and a formal valuation. To the knowledge of the Corporation, the participation of the director in the Flow-Through Private Placement and of West Face in the West Face Second Tranche will not, individually or taken together, materially affect control of the Corporation for the purposes of the TSX.

Information Regarding the West Face Second Tranche

The Debentures to be issued under the West Face Second Tranche will have the same terms and conditions as those issued in the West Face First Tranche (see the Company's press release dated August 15, 2013 for further details). The Debentures will mature August 31, 2016 (the "Maturity Date") and bear interest at the rate of 8% per annum. Outstanding principal will be convertible in whole or in part into common shares, at the option of the holder, at a conversion price of CDN $1.00 per common share (subject to adjustment) (the "Conversion Price"). Interest amounts are not convertible. The aggregate maximum number of common shares issuable pursuant to the conversion of the Debentures issuable in the West Face Second Tranche will be 1,000,000 common shares (assuming no adjustment).

West Face is considered an insider of the Corporation as such term is defined in the TSX Company Manual, as it owns, or controls or directs, directly or indirectly, greater than 10% of the Corporation's outstanding common shares. To the Corporation's knowledge, prior to the completion of the West Face First Tranche, West Face owned, or controlled or directed (directly or indirectly), approximately 20.6% of the Corporation's outstanding common shares (calculated on an undiluted basis) and, following completion of the West Face First Tranche, West Face currently owns, or controls or directs (directly or indirectly), approximately 24.9% of the Corporation's outstanding common shares (calculated on an undiluted basis), and approximately 27.3% of the Corporation's outstanding common shares, calculated on a partially-diluted basis after giving effect to the exercise of the warrants and the conversion of the Debentures issued in the West Face First Tranche.

If the West Face Second Tranche is completed, to the Corporation's knowledge, West Face will continue to own, or control or direct, directly or indirectly, approximately 24.9% of the Corporation's outstanding common shares (calculated on an undiluted basis) but will hold approximately 31.3% of the Corporation's outstanding common shares calculated on a partially-diluted basis after giving effect to the exercise of the warrants, the conversion of the Debentures issued in the West Face First Tranche, and the conversion of the Debentures to be issued in the West Face Second Tranche.

Information Regarding Insider Participation in the Flow-Through Private Placement

As previously announced on August 6, 2013, the Corporation is, concurrently with the private placement to West Face, engaged in a non-brokered private placement of "flow-through" common shares. For further details regarding the Flow-Through Private Placement, please see the Corporation's press release dated August 6, 2013.

A director of the Corporation may subscribe for up to 31,250 flow-through common shares under the Flow-Through Private Placement. To the Corporation's knowledge, this director currently owns, or controls or directs (directly or indirectly), approximately 23,530 common shares representing approximately 0.1% of the Corporation's outstanding common shares (calculated on an undiluted basis). Assuming this director subscribes for this amount, following such issuance he would own, or control or direct (directly or indirectly), approximately 54,780 common shares representing up to approximately 0.3% of the Corporation's outstanding common shares (calculated on an undiluted basis and assuming the West Face Second Tranche is not completed and no other subscribers participate in the Flow-Through Private Placement).

About Chieftain Metals Corp.:

Chieftain Metals Corp. is the public holding company of Chieftain Metals Inc. ("Chieftain Inc."), whose principal business is the acquisition, exploration and development of mineral properties. Since incorporation, the Company's business has focused entirely on the acquisition, and thereafter the development, of the Tulsequah Chief Polymetallic Project, in north-western British Columbia, Canada. Chieftain Inc.'s property consists of 54 mineral claims and Crown-grants covering approximately 30,547 hectares and covers two previously producing mines. For more information on Tulsequah and related projects, please refer to the NI 43-101 compliant technical reports, being "Technical Report for the Tulsequah Chief Project of Northern British Columbia, Canada" with an effective date of December 12, 2012 as well as "Tulsequah Chief Deposit, Tulsequah Chief Property, Northern British Columbia" and "Big Bull Project, Tulsequah Chief Property, Technical Report, Northern British Columbia", each dated as of November 8, 2010, which are available under the Company's profile on SEDAR (www.sedar.com).

Cautionary Note Regarding Forward-Looking Information

This press release contains forward-looking information. This forward-looking information includes statements with respect to, among other things: the Corporation's plans to complete: (i) the West Face Second Tranche and the terms thereof; and (ii) the Flow-Through Private Placement; and the use of proceeds therefrom. Forward-looking information contained in this document is based on the opinions and estimates of management as well as certain assumptions considered by management to be reasonable and which are made as at the date the information is given (including, in respect of the forward-looking information contained in this document, assumptions regarding the Corporation's business, its ability to raise funds on terms acceptable to it and the anticipated exploration of and development of the Corporation's mineral properties). Readers should be cautioned that forward-looking information is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. These factors include without limitation: the inherent risks involved in the exploration and development of mineral properties; the inherent volatility of metal prices; the risk that the Corporation may not be able to arrange necessary additional financing or complete the Flow-Through Private Placement or the West Face Second Tranche; and other factors. Readers are cautioned to not place undue reliance on forward-looking information because it is possible that predictions, forecasts, projections and other forms of forward-looking information will not be achieved by the Corporation. The forward-looking information contained herein is made as of the date hereof and the Corporation assumes no responsibility to update or revise it to reflect new events or circumstances, except as required by law.

Contact Information