SOURCE: Comstock Metals Ltd.

Comstock Metals Ltd.

May 09, 2016 08:30 ET

Comstock Announces Private Placement and Proposed Share Consolidation

VANCOUVER, BC--(Marketwired - May 09, 2016) -

NOT FOR DISTRIBUTION IN THE UNITED STATES OR TO U.S. NEWSWIRE SERVICES

Comstock Metals Ltd. (TSX VENTURE: CSL) ("CSL" or the "Company") is pleased to announce a non-brokered private placement financing to raise gross proceeds of up to CDN$850,000 (the "Offering") to fund exploration on the Company's properties and for general corporate purposes. The Company will have an option to increase the size of the financing by up to 20%. In addition, the Company announced that its board of directors has approved a consolidation of the Company's issued and outstanding common shares on a 1 for 5 basis which will result in 17,459,284 shares outstanding on a post-consolidated basis. The consolidation is subject to receipt of TSX Venture Exchange (the "Exchange") approval.

Comstock intends to raise up to CDN$850,000 by issuing units and flow through shares, on a post-consolidated basis, as follows:

  • CDN$600,000 gross proceeds by issuing up to 5,000,000 units ("Units") at a price of CAD$0.12 per Unit (the "Unit Offering"), subject to the above noted option to increase the size of the Unit Offering. Each Unit will consist of one common share and one non-transferable common share purchase warrant (a "Warrant"). Each whole Warrant will be exercisable into a common share of Comstock (a "Warrant Share") for a period of 24 months from the closing date at an exercise price of $0.18 per Warrant Share.
  • CDN$250,000 gross proceeds by issuing up to 1,666,667 common shares on a flow-through basis ("FT Shares"), at a price of CDN$0.15 per FT Share (the "FT Offering"). Each FT Share will be issued on a "flow-through basis" (a "FT Share") pursuant to the Income Tax Act (Canada).

The Company notes that all prices and share amounts set forth herein related to the Offering are provided on a post consolidation basis assuming the foregoing 1 for 5 consolidation is completed prior to the completion of the Offering. Insiders are expected to subscribe for securities in the private placement transaction. Details of such insider subscriptions will be provided in further news releases regarding the Offering.

The Warrants issued as part of the Unit Offering will be subject to an acceleration clause, whereby, if the weighted average trading price of Comstock's common shares on the Exchange (or such other exchange on which the common shares may trade) is at a price equal to or greater than $0.36 for a period of 20 consecutive trading days, Comstock will have the right to accelerate the expiry date of the Warrants. If Comstock exercises such right, Comstock will give written notice to the holders of the Warrants that the Warrants will expire 30 days from the date of notice to the Warrant holders. Such notice by Comstock to the holders of the Warrants may not be given until 4 months and one day after the closing date.

Closing of the Unit Offering and the FT Offering may occur in one or more closings with the initial closing anticipated to occur on or about May 20, 2016. Both offerings are subject to receipt of applicable regulatory approvals, including the approval of the Exchange. The securities issued by Comstock in connection with the Unit Offering and the FT Offering will be subject to a four month hold period as prescribed by applicable securities laws. Finders fees may be paid on a portion of the offerings.

Comstock will use the gross proceeds of the FT Offering for eligible exploration expenditures, which will constitute "Canadian Exploration Expenses" ("CEE") that are "Flow-Through mining expenditures," as defined in the Income Tax Act (Canada) which can be renounced to purchasers of the FT Shares for the 2016 taxation year in the aggregate amount of not less than the total amount of the gross proceeds raised from the FT Offering. The CEE shall be incurred no later than December 31, 2017.

The Units and the FT Shares will be offered pursuant to prospectus exemptions in all provinces of Canada and in such other jurisdictions as may be determined by Comstock. The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

Once Exchange approval has been obtained for the consolidation of the Company's shares discussed above, a further press release will be issued providing details regarding the effective date thereof and the mechanics for obtaining replacement share certificates.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

About Comstock Metals Ltd.

Comstock Metals Ltd. is a mineral exploration company. Its flagship 16,335 hectare QV Property is located in the White Gold district of the Yukon Territory, approximately 70 kilometres south of Dawson City. To date, the Company has completed 3,400 metres of drilling in 17 drill holes which formed the basis for a maiden Inferred mineral resource totalling 4.4 million tonnes grading 1.65 g/t Au containing 230,000 ounces of gold at a 0.5 g/t Au cut-off (See July 8, 2014 News Release). The VG Deposit remains open in all directions and is proximal to other untested sub-parallel structures. The VG Zone has similar geology and style of mineralization to Kinross's Golden Saddle deposit, located 11 kilometres to the south. Additional promising targets exist on the QV Project, with potential for the discovery of significant intrusion related and/or orogenic gold mineralization.

Comstock also owns early stage uranium claims in the Patterson Lake area of Saskatchewan and has recently optioned out its Corona property in Mexico (see January 28, 2016 News Release).

David A. Terry, Ph.D., P.Geo., a Qualified Person as defined by National Instrument 43-101, has reviewed and approved the scientific and technical disclosure in this news release.

Forward-Looking Statements

This news release includes forward-looking information and statements, which may include, but are not limited to, information and statements regarding or inferring the future business, operations, financial performance, prospects, and other plans, intentions, expectations, estimates, and beliefs of the Company. Such statements include statements regarding the anticipated completion of the proposed private placement. Information and statements which are not purely historical fact are forward-looking statements. Forward-looking information and statements involve and are subject to assumptions and known and unknown risks, uncertainties, and other factors which may cause actual events, results, performance, or achievements of the Company to be materially different from future events, results, performance, and achievements expressed or implied by forward-looking information and statements herein. The assumptions on which the forward-looking statements contained herein rely include the ability to complete the financing. Although the Company believes that any forward-looking information and statements herein are reasonable, in light of the use of assumptions and the significant risks and uncertainties inherent in such information and statements, there can be no assurance that any such forward-looking information and statements will prove to be accurate, and accordingly readers are advised to rely on their own evaluation of such risks and uncertainties and should not place undue reliance upon such forward-looking information and statements. Any forward-looking information and statements herein are made as of the date hereof, and except as required by applicable laws, the Company assumes no obligation and disclaims any intention to update or revise any forward-looking information and statements herein or to update the reasons that actual events or results could or do differ from those projected in any forward-looking information and statements herein, whether as a result of new information, future events or results, or otherwise, except as required by applicable laws.

Neither 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 Release.

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