Cleghorn Minerals Ltd.
TSX VENTURE : JZZ.H

August 12, 2016 09:30 ET

Cleghorn Minerals Announces Increase to Private Placement Financing and Qualifying Transaction Update

VAL-D'OR, QUÉBEC--(Marketwired - Aug. 12, 2016) -

THIS PRESS RELEASE IS NOT FOR DISTRIBUTION IN THE UNITED STATES OR TO U.S. NEWS AGENCIES

Cleghorn Minerals Ltd. ("Cleghorn") (TSX VENTURE:JZZ.H), a "capital pool company" under the policies of the TSX Venture Exchange, announces that, further to its news release of July 26, 2016, it has increased its non-brokered private placement offering (the "Financing") to gross proceeds of a minimum of $600,000 and a maximum of $966,600 as follows:

  1. a minimum of 2,083,333 and a maximum of 3,679,998 flow-through units (the "FT Units") at a per FT Unit price of $0.12 for gross proceeds of a minimum of $250,000 and a maximum of $441,600, each FT Unit consisting of one common share in the capital of Cleghorn issued on a flow-through basis under the Canada Income Tax Act and one-half of one non-transferable non-flow-through common share purchase warrant, each whole warrant entitling the holder to purchase one non-flow-through common share in the capital of Cleghorn at a per share price of $0.15 for 18 months from the date of issuance; and
  2. a minimum of 3,500,000 and a maximum of 5,250,000 units (the "Units") at a per Unit price of $0.10 for gross proceeds of a minimum of $350,000 and a maximum of $525,000, each Unit consisting of one non-flow-through common share in the capital of Cleghorn and one non-transferable common share purchase warrant, entitling the holder to purchase one common share in the capital of Cleghorn at a per share price of $0.12 for 18 months from the date of issuance.

In connection with the Financing, Cleghorn will enter into finder's fee agreements with various arms' length parties to pay to such finders a fee equal to 8% of the gross proceeds raised from subscribers under the Financing who were introduced to Cleghorn by such finders (payable in cash or in Units at the election of the finder), plus non-transferable warrants (the "Finder Warrants") equal to 8% of the aggregate number of the FT Units and Units purchased by subscribers introduced to Cleghorn by such finders. Each Finder Warrant will entitle the holder to purchase one common share in the capital of Cleghorn at a per share price of $0.12 for 18 months from the date of issuance.

The Financing is intended to close, on August 18, 2016, concurrent with completion by Cleghorn of its proposed acquisition (the "Acquisition") of the Meech Lake - Matachewan Prospect, which is intended to serve as Cleghorn's Qualifying Transaction in accordance with Exchange Policy 2.4. The Acquisition is a non-arm's length transaction, which was approved by Cleghorn's shareholders on June 25, 2015. In connection with the Acquisition, Cleghorn will issue an aggregate of 7,888,928 common shares (the "Payment Shares") at the deemed price of $0.05 a share; allocated as follows:

Name of person to whom the
Payment Shares are to be issued
Number of Payment Shares
to be issued to such person
Siobhan Mullan 500,000
Taelan Mullan 500,000
Logan Mullan 500,000
Glenn Mullan 3,613,928
Joe Groia 2,625,000
Michael Rosatelli 150,000
Total: 7,888,928

Attached hereto as Schedule "A" are updated Pro Forma Financial Statements of Cleghorn as at March 31, 2016 which reflect the Financing and the Acquisition.

In accordance with applicable securities legislation, all securities to be issued under the Financing and the Acquisition will be subject to a hold period of four months and one day from the date of issuance.

The proposed Acquisition has been conditionally accepted by the TSX Venture Exchange subject to submission to the Exchange by Cleghorn of final materials related thereto on or prior to August 18, 2016. There can be no assurance that the proposed Acquisition and Financing will be completed as proposed or at all.

Cleghorn's proposed Qualifying Transaction was previously announced by news releases on October 20, 2014, January 12, 2015, June 26, 2015, August 10, 2015, November 4, 2015, February 15, 2016, and May 19, 2016. Details of the proposed Acquisition by Cleghorn of the Meech Lake - Matachewan Prospect are included in the Information Circular prepared by Cleghorn's management, which was mailed to shareholders in connection with the annual general and special meeting of shareholders held in Montréal, Québec, on Thursday, June 25, 2015. The Information Circular has been electronically filed with regulators and is available for viewing through the Internet at the SEDAR website (www.sedar.com) under Cleghorn's issuer profile.

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and majority of the minority shareholder approval. The transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

This news release contains certain statements that may be deemed "forward-looking statements". Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects", "plans", "anticipates", "believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events or conditions "will", "would", "may", "could" or "should" occur. Although Cleghorn believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in forward-looking statements. Forward-looking statements are based on the beliefs, estimates and opinions of Cleghorn's management on the date the statements are made. Except as required by law, Cleghorn undertakes no obligation to update these forward-looking statements in the event that management's beliefs, estimates or opinions, or other factors, should change.

THIS PRESS RELEASE, REQUIRED BY APPLICABLE CANADIAN LAWS, IS NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES, AND DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO SELL ANY OF THE SECURITIES DESCRIBED HEREIN IN THE UNITED STATES. THESE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS UNLESS REGISTERED OR EXEMPT THEREFROM.

SCHEDULE "A"

PRO FORMA FINANCIAL STATEMENTS AS AT MARCH 31, 2016

CLEGHORN MINERALS LTD.
(A Capital Pool Company)

Pro Forma Statements of Financial Position
As at March 31, 2016

Cleghorn Minerals Ltd.
Pro Forma Statement of Financial Position
(Unaudited)
(In Canadian dollars)

As at March 31, 2016
Cleghorn
Minerals
Ltd.
Pro
Forma
adjustments
Pro
Forma
Pro
Forma
Statement
Pro
Forma
Statement
notes (Min
Financing)
(Max
Financing)
$ $ $ $
ASSETS
Current
Cash and cash equivalent 56,256 (5,000 ) 4a 607,525 961,821
68,309 4c
(60,000 ) 4e
600,000 4f
(52,040 ) 4h
966,600 4i
(64,344 ) 4k
Receivables 68,309 (68,309 ) 4c
Sales taxes recoverable 342 342 342
Prepaid expenses 681 681 681
Total current assets 125,588 1,385,216 608,548 962,844
Non-current
Exploration and evaluation assets 5,000 4a 399,446 399,446
394,446 4b
Total assets 125,588 1,784,662 1,007,994 1,362,290
LIABILITIES
Current
Accounts payable, accrued liabilities
and total liabilities 396 135,800 4g 136,196 240,273
239,877 4j
EQUITY
Capital stock 880,100 394,446 4b 1,496,537 1,639,513
221,991
364,967
Contributed surplus 115,327 115,327 115,327
Warrants 190,169 190,169 297,412
297,412
Deficit (870,235 ) (60,000 ) 4e (930,235 ) (930,235 )
Total equity 125,192 1,408,985 871,798 1,122,017
Total liabilities and equity 125,588 1,784,662 1,007,994 1,362,290

The accompanying notes are an integral part of the interim financial statements.

Cleghorn Minerals Ltd.
Notes to Pro Forma Financial Statements

(All amounts are expressed in Canadian dollars, unless otherwise noted.)

As at March 31, 2016

1 - BASIS OF PRESENTATION

These unaudited pro forma financial statements have been compiled by management after giving effect to the Mineral Claim Purchase Agreement (the "Purchase Agreement") entered into on January 5, 2015, as amended and restated on April 1, 2015 and further amended and restated on May 14, 2015, by Cleghorn Minerals Ltd (the "Company" or "Cleghorn" ) and 2973090 Canada Inc. ("2973090") pursuant to which Cleghorn would acquire a 100% undivided interest in the Meech Lake - Matachewan Prospect (the "Property").

These unaudited pro forma financial statements have been derived from Cleghorn March 31, 2016 annual audited financial statements and give effect to the Company's proposed acquisition on a proforma basis. They have been prepared as if the proposed acquisition had occurred on March 31, 2016.

It is management opinion that these unaudited pro forma financial statements present, in all material respects, the proposed acquisition described in Note 3 and is in accordance with International Financial Reporting Standards ("IFRS"). These unaudited pro forma financial statements are not intended to reflect the financial position of the Company that would have resulted if the proposed acquisition reflected herein had occurred on the date indicated and further, they are not necesssarily indicative of the financial position that may be attained in the future. These unaudited pro forma financial statements should be read in conjonction with the Company's March 31, 2016 audited financial statements included with this submission.

The Company's pro forma effective income tax rate is 26.5% (Federal : 15%, Provincial : 11.5%)

2 - NON-ARM'S LENGTH TRANSACTION

2973090, the vendor, is a privately held mineral exploration company 100% owned by Glenn J. Mullan, who is also the president, CEO, secretary and a director of the Company. In addition, in case of a successful closing of the transaction, other directors of the Company would be receiving some of the shares to be issued by the Company in payment of the property.

3 - PROPOSED TRANSACTION

Acquisition of Meech Lake Matachewan Prospect

The Company entered into a Mineral Claim Purchase Agreement with 2973090 Canada Inc. to acquire a 100% undivided interest in the Meech Lake Matachewan Prospect. The Meech Lake Matachewan Prospect consists of three (3) mining claims overlying parts of the Argyle, McNeil and Robertson Townships, approximately 22 KM Northwest of Matachewan in Northeastern Ontario. Previous exploration work indicated the property to include several precious ands base metal showings with good potential for anomalous Nickel, Copper and Platinum Group Elements.

As consideration for the property, the Company shall, on the closing of the acquisition, a) pay to 2973090 $5,000 (representing staking fees with respect to the property), b) issue an aggregate of 7,888,928 common shares at a deemed price of $0,05 per share, c) grant 2973090 a 3% net smelter royalty on the property.

Cleghorn shall be entitled to repurchase 0.5% leaving the 2973090 with a 2.5% NSR, by paying to 2973090 $1,000,000 and an additional 1%, leaving 2973090 with a 1.5% NSR, by paying to 2973090 an additional $3,000,000.

The transaction is subject to the following conditions: a) the Company obtaining approval of the transaction by its minority shareholders, its board of directors and amongst others by the regulatory authorities, b) 2973090 providing the Company with a title opinion satisfactory to the Company, and c) a Technical Report with respect to the property prepared in accordance with the requirements of NI 43-101 that recommends a work program of at least $200,000 and indicates that at least $100,000 of expenditures have been incurred on the property.

Private Placement

Concurrent with the acquisition of the Meech Lake Matachewan Prospect, the Company intends to complete a non brokered private placement. The private placement will consist in the issuance of: (i) A minimum 3,500,000 non flow- through units at $0.10 per non flow-through unit and 2,083,333 flow-through units at $0.12 per flow-through unit; and (ii) A maximum 5,250,000 non flow-through units at $0.10 per non flow-through unit and 3,679,998 flow-through units at $0.12 per flow-through unit. Each non flow-through unit will include one common share and one warrant at an exercise price of $0.12 per share for 18 months from date of issuance. Each flow-through unit will include one common share and one-half of one warrant, each whole warrant to purchase one share at an exercise price of $0.15 for 18 months from date of issuance.

In connection with the non-brokered private placement, the Company will pay finder's fees on arms' length investment, in cash equal to 8% of the gross proceed plus non-transferable finder warrants equal to 8% of the aggregate number of the units. Each finder warrant will entitle the holder to purchase one common share at an exercise price of $0.12 for 18 months from the date of issuance. The Company will also pay one finder a settlement fee in cash of a maximum of $5,000.

4 - PROFORMA ADJUSTMENTS

The unaudited proforma financial statements include the following adjustments to reflect the proposed transaction: the cost of acquiring the legal rights to the Meech Lake Matachewan Prospect being presented as exploration and evaluation asset and the issue of common shares and warrants to finance future exploration programs on the property being presented in the equity section.

4a - Cash consideration

Cleghorn shall pay, on closing, to 2973090 the sum of $5,000, representing staking fees.

4b - Share consideration

On the closing date, Cleghorn shall issue 7,888,928 common shares of its capital at the deemed price of $0.05 per share (a total value of $394,446) to acquire the legal rights to the Meech Lake Matachewan Prospect from 2973090, The owner of the property, 2973090, has indicated a list of business associates and relatives to which it desires the Company to issue the 7,888,928 common shares. The Company is acquiring an exploration and evaluation asset that meets all the requirements to be capitalized and presented as such in its financial statements.

The shares issued as part of the acquisition are valued at $0.05 based on the closing price of the Company's common shares on the Exchange on October 9, 2012, the last day the common shares traded prior to the trading halt on October 11, 2012.

4c - Reimbursement of cost of work done on the property

The cost of $68,309 representing the work performed on the property by the Company on behalf of 2973090 ($55,554) and Golden Valley Mines Ltd ($12,755) before its acquisition has been reimbursed in cash to the Company on August 3, 3016.

4d - Royalty

No value has been allocated to the 3% NSR. Being given the grass root stage of exploration of the Meech Lake Matachewan Prospect and the prerequisite of commercial production before any royalty payment, the Company considered the 3% NSR did not meet the basic definition of financial liability.

4e - Transaction cost

As part of the proposed acquisition, the Company anticipates incurring professional fees and other transaction related costs of approximately $60,000.

4f - Financing - Minimum Level Assumption

Gross proceeds of $600,000 from the issuance of 3,500,000 units at a price per unit of $0.10 and 2,083,333 flow- through units at a price of $0.12.

4g - Warrants - Minimum Level Assumption

The 3,500,000 warrants issued with the regular shares have been valued at $104,167 using the residual method; the Company considering it was the most appropriate valuation method being given the trading history of the Company's shares. The 1,041,666 warrants issued with the flow-through shares have been valued at $10,033 using the Black- Scholes valuation method. The difference of $135,800 between the gross proceeds and the value of the flow-through shares and the related warrants is the obligation related to the tax benefit renunciation and is included in short term liabilities.

4h - Finder's Fees - Minimum Level Assumption

The Company anticipates to incur total Finder's fees and cash settlement fees of $57,176 of which $52,040 will be settled in cash. The value of the finder's warrants has been estimated using the Black-Scholes Method to $5,136.

4i - Financing - Maximum Level Assumption

Gross proceeds of $966,600 from the issuance of 5,250,000 units at a price per unit of $0.10 and 3,679,998 flow- through units at a price of $0.12.

4j - Warrants - Maximum Level Assumption

The 5,250,000 warrants issued with the regular shares have been valued at $262,500 using the residual method; the

Company considering it was the most appropriate valuation method being given the trading history of the Company's shares. The 1,839,998 warrants issued with the flow-through shares have been valued at $17,723 using the Black- Scholes valuation method. The difference of $239,877 between the gross proceeds and the value of the flow-through shares and the related warrants is the obligation related to the tax benefit renunciation and is included in short term liabilities.

4k - Finder's Fees - Maximum Level Assumption

The Company anticipates to incur total Finder's fees and cash settlement fees of $81,533 of which $64,344 will be settled in cash. Two finders elected to get their finder fee paid, or partly paid, with the issue of 147,840 non flow- through units; each unit comprising one common share and one warrant at an exercise price of $0.12 per share for 18 months from the date of issuance. The total value of the finder's warrants has been estimated at $17,189; $8,992 using the residual method for the warrants issued in lieu of cash and $8,197 using the Black-Scholes valuation method for the other warrants.

5 - SHARE CAPITAL

Upon completion of the proposed acquisition and financing, the Company's pro forma share capital will be as follows:

The capital stock of the Company consists only of fully paid common shares.
Authorized
Unlimited number of common shares, without par value, voting and participating.

Unlimited number of preferred shares, without par value, non-participating. The directors will define the rights.

Financing Maximum
allotment
notes Common
shares
outstanding
Capital
Stock
Contributed
Surplus
Warrants Deficit Total
Equity
Number $ $ $ $ $
Balance at March 31, 2016 4,400,500 880,100 115,327 - -870,235 125,192
Common shares issued to acquire
Meech Lake Matachewan Prospect 4b 7,888,928 394,446 394,446
Units issued by private placement 4i, 4j 8,929,998 446,500 446,500
Compensation units issued 4j 280,223 280,223
Units issue expenses 4k 147,840 -81,533 17,189 -64,344
Net loss 4e -60,000 -60,000
Balance at March 31, 2016 21,367,266 1,639,513 115,327 297,412 -930,235 1,122,017
Financing Minimum
allotment
Common
shares
outstanding
Capital
Stock
Contributed
Surplus
Warrants Deficit Total
Equity
Number $ $ $ $ $
Balance at March 31, 2016 4,400,500 880,100 115,327 - -870,235 125,192
Common shares issued to acquire
Meech Lake Matachewan Prospect 4b 7,888,928 394,446 394,446
Units issued by private placement 4f, 4g 5,583,333 279,167 279,167
Compensation warrants issued 4g 185,033 185,033
Units issue expenses 4h -57,176 5,136 -52,040
Net loss 4e -60,000 -60,000
Balance at March 31, 2016 17,872,761 1,496,537 115,327 190,169 -930,235 871,798

Contact Information

  • Glenn Mullan
    President, Chief Executive Officer, Secretary and Director
    (819) 824-2808