Darnley Bay Resources Limited
TSX VENTURE : DBL

Darnley Bay Resources Limited

May 06, 2016 16:30 ET

Darnley Bay Closes Private Placement

TORONTO, ONTARIO--(Marketwired - May 6, 2016) - Darnley Bay Resources Ltd. (TSX VENTURE:DBL) ("Darnley Bay" or the "Company") is pleased to announce that it has closed a private placement of 13,000,000 units ("Units") at a price of $0.025 per Unit (the "Offering") for gross proceeds of $325,000. Each Unit is comprised of one common share ("Common Share") in the capital of the Company and one warrant ("Warrant"). Each Warrant entitles the holder to purchase one Common Share for at an exercise price of $0.05 per Common Share for a period of one year from the date of closing of the Offering, provided that should the Common Shares trade on the TSX Venture Exchange (the "TSXV") for 20 consecutive trading days at a price equal to or more than $0.10, the Company may force the Warrants to expire 30 days later. As previously announced the Company was granted a discretionary waiver from the $0.05 minimum pricing requirement by the TSXV pursuant to the TSXV Exchange Bulletin dated April 7, 2014. Insiders participated in the Offering for a total of 2,360,000 Units.

A finder fee was paid in connection with the placement to PowerOne Capital Markets Limited (the "Finder"), consisting of $26,000 and the issuance of 1,040,000 broker warrants ("Broker Warrants"), each Broker Warrant entitling the Finder to purchase a broker unit of the company ("Broker Unit") at a price of $0.05 per Broker Unit for a period of two years for the date of closing of the Offering. Each Broker Unit is comprised of one Common Share and one broker unit warrant ("Broker Unit Warrant"). Each Broker Unit Warrant entitles the Finder to purchase one Common Share at an exercise price of $0.05 per Common Share for a period of two years from the date of closing of the Offering, provided that should the Common Shares trade on the TSXV for 20 consecutive trading days at a price equal to or more than $0.10, the Company may force the Broker Unit Warrants to expire 30 days later.

The funds from the Offering will be used for the following working capital requirements:

CORPORATE ADMINISTRATIVE EXPENSES
Professional Fees (Audit, Legal) 88,100
Executive Compensation (1) 60,000
Current Liabilities (1) 46,300
Shareholder Expense (AGM, Stock Transfer, Filing Fees) 23,350
General and Administration (Insurance, Premises) 21,600
Finder fees in connection with the Offering 25,000
PROJECT EXPENDITURES
Property Expense 60,650
Gross Proceeds $ 325,000
(1) Payable to related parties

The Common Shares, Warrants and Broker Warrants (and any Common Shares issued upon the exercise of any Warrants or Broker Unit Warrants) issued to subscribers resident in Canada will be subject to a statutory four-month hold period.

Jamie Levy, a director and officer of the Company, acquired 1,200,000 Common Shares and 1,200,000 Warrants in connection with the Offering. Following the completion of the Offering, Mr. Levy will own or control, directly and indirectly, an aggregate of 3,986,000 Common Shares, representing approximately 7.54% of the issued and outstanding Common Shares of the Company. If Mr. Levy were to exercise all of his convertible securities he would own, directly and indirectly, 7,806,000 Common Shares, representing approximately 13.8% of the Company's then outstanding Common Shares, on a partially diluted basis.

Kerry Knoll, a director of the Company, acquired 760,000 Common Shares and 760,000 Warrants in connection with the Offering. Following the completion of the Offering, Mr. Knoll will own or control, directly and indirectly, an aggregate of 3,223,020 Common Shares, representing approximately 6.1% of the issued and outstanding Common Shares of the Company. If Mr. Knoll were to exercise all of his respective convertible securities he would own, directly and indirectly, 6,687,930 Common Shares, representing approximately 11.9% of the Company's then outstanding Common Shares, on a partially diluted basis.

Pasquale DiCapo acquired 4,600,000 Common Shares and 4,600,000 Warrants in connection with the Offering. Following the completion of the Offering, Mr. DiCapo will own an aggregate of 4,600,000 Common Shares, representing approximately 8.7% of the issued and outstanding Common Shares of the Company. If Mr. DiCapo were to exercise all of his respective convertible securities he would own, directly and indirectly, 9,200,000 Common Shares, representing approximately 16.01% of the Company's then outstanding Common Shares, on a partially diluted basis. In addition, the Finder, a joint actor of Mr. DiCapo, acquired ownership and control of 1,040,000 Broker Warrants, each Broker Warrant entitling the Finder to acquire one Broker Unit, representing approximately 3.8% of the Common Shares on a partially diluted basis, assuming exercise of the Broker Warrants and Broker Unit Warrants only, and when taken together with the Common Shares acquired by Mr. DiCapo, representing approximately 12.3% of the current issued and outstanding Common Shares (or approximately 19.1% on a partially diluted basis, assuming exercise of the Warrants, Broker Warrants and Broker Unit Warrants only).

Mr. Levy, Mr. Knoll and Mr. DiCapo have acquired the Units for investment purposes and they may, depending on market and other conditions, increase or decrease their beneficial ownership, control or direction over the Common Shares, or other securities of the Company, through market transactions, private agreements, treasury issuances, exercise of convertible securities or otherwise.

The Offering constituted a related party transaction within the meaning of TSX Venture Exchange Policy 5.9 and Multilateral Instrument 61-101 ("MI 61-101") as insiders of the Company subscribed for an aggregate of 1,960,000 Units. The Company is relying on the exemptions from the valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101, as the fair market value of the participation in the Offering by insiders does not exceed 25% of the market capitalization of the Company, as determined in accordance with MI 61-101. The Company did not file a material change report in respect of the related party transaction at least 21 days before the closing of the Offering, which the Company deems reasonable in the circumstances so as to be able to avail itself of the proceeds of the Offering in an expeditious manner.

Forward-Looking Information

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 release.

This news release contains certain "forward-looking information" within the meaning of applicable securities law. Forward looking information is frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "would", "potential", "proposed" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Forward-looking information is based on the opinions and estimates of management at the date the information is provided, and 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. For a description of the risks and uncertainties facing Darnley Bay and its business and affairs, readers should refer to Darnley Bay's Management's Discussion and Analysis. Darnley Bay undertakes no obligation to update forward-looking information if circumstances or management's estimates or opinions should change, unless required by law. The reader is cautioned not to place undue reliance on forward-looking information.

Not for distribution to U.S. Newswire Services or for dissemination in the United States. Any failure to comply with this restriction may constitute a violation of U.S. Securities laws.

Contact Information