Element 79 Capital Inc.
TSX VENTURE : EMS.P

December 02, 2015 11:29 ET

Element 79 Capital Inc. Receives Conditional Acceptance of Its Qualifying Transaction and Files Filing Statement

MONTREAL, QUEBEC--(Marketwired - Dec. 2, 2015) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR RELEASE PUBLICATION, DISTRIBUTION OR DISSEMINATION DIRECTLY, OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES.

Element 79 Capital Inc. (TSX VENTURE:EMS.P) ("Element 79" or the "Company"), a capital pool company listed on the TSX Venture Exchange (the "TSXV"), is pleased to announce that it has received conditional acceptance from the Exchange for the closing of its proposed Qualifying Transaction (as defined under TSXV Policy 2.4 - Capital Pool Companies) and that further to its press release dated February 23, 2015, it has filed a filing statement, dated as of November 27, 2015, in connection with the Company's Qualifying Transaction (the "Filing Statement"). The Filing Statement is available under the Company's profile on SEDAR at www.sedar.com.

On February 23, 2015, the Company signed a letter of intent (the "LOI") with Benton Resources Inc. ("Benton") to acquire a right to earn a 100% interest in Benton's right, title, and interest in and to the nine contiguous, non-surveyed, unpatented mining claims totaling 67 units comprising Benton's Abernethy gold project (the "Property") situated approximately 10 km WSW of Kenora, Ontario (the "Transaction"). The LOI was negotiated at arm's length and the Company intends the Transaction to constitute its Qualifying Transaction under the policies of the TSXV. On May 22, 2015, the Company and Benton signed a definitive option agreement in respect of the Property.

The Transaction is subject to receipt of requisite regulatory approval, including the approval of the TSXV and standard closing conditions. Assuming all conditions to closing are satisfied, the Company expects to close the Transaction on or before December 31, 2015. Upon completion of the proposed Transaction, the Company is expected to meet all of the minimum listing requirements for a Tier 2 Mining Issuer.

The Company is also pleased to announce that the Exchange granted an extension of the deadline for the transfer of the common shares of the Company to NEX until February 25, 2016. Should the Company not complete its Qualifying Transaction by the foregoing deadline, its common shares will be transferred to NEX.

The Transaction

As of the date hereof, the Company has 6,012,066 common shares ("Element 79 Shares") issued and outstanding, and securities exercisable or exchangeable for, or convertible into, or other rights to acquire, an aggregate of 601,206 Element 79 Shares at an exercise price of $0.15 per Element 79 Share.

The Company proposes to acquire an initial fifty-one percent (51%) interest in the Property by:

  1. issuing 400,000 Element 79 Shares, a deemed value of a minimum of $0.15 per Element 79 Share, to Benton upon closing of the Transaction (the "Closing"); and

  2. incurring a minimum of $500,000 in exploration expenditures on the Property within twelve (12) months of Closing.

In addition, the Option Agreement provides that Element 79 will have the right to acquire an additional:

  1. nineteen percent (19%) interest in the Property by (A) issuing an additional 600,000 Element 79 Shares to Benton at the market price of the Element 79 shares on the TSXV at the time that the right is exercised and (B) incurring a minimum of $500,000 in additional exploration expenditures on the Property within eighteen (18) months of Closing; and

  2. thirty percent (30%) interest in the Property by paying Benton $750,000, which payment may be made in cash or, subject to applicable regulatory approvals, in Element 79 Shares (at a deemed minimum price of $0.15 per share), at the sole discretion of Element 79, within 180 days following the date upon which Element 79 acquires an aggregate seventy percent (70%) interest in the Property, failing which Element 79 and Benton will remain 70%/30% joint venture partners in respect of the Property.

Should Element 79 acquire a one hundred percent (100%) interest in the Property, Benton shall be granted a three percent (3%) net smelter return royalty (NSR), half of which may be repurchased by Element 79 by paying Benton $1,000,000.

The Company will not assume any of the liabilities or obligations of Benton of any nature or kind whatsoever, contingent or otherwise, relating to the Property.

Concurrent Private Placement

Element 79 has engaged Jones, Gable & Company Limited (the "Agent") to act as agent, on a best efforts basis, in connection with a brokered private placement (the "Private Placement") of securities of Element 79 that will close concurrently with, and as a condition of, the Transaction.

The terms of the Private Placement are as follows:

  • a minimum of 3,000,000 units at a price of $0.15 per unit (each, a "Hard Cash Unit") and a minimum of 2,800,000 "flow-through" units at a price of $0.18 per unit (each, a "Flow-Through Unit"), for minimum combined gross proceeds of $954,000 (the "Minimum Offering"); and
  • a maximum of 3,300,000 Hard Cash Units at a price of $0.15 per Hard Cash Unit and a maximum of 5,500,000 Flow-Through Units at a price of $0.18 per Flow-Through Unit, for maximum combined gross proceeds of $1,485,000 (the "Maximum Offering").

Each Hard Cash Unit shall consist of one (1) Element 79 Share and one common share purchase warrant in the capital of Element 79 entitling the holder thereof to acquire one (1) Element 79 Share at an exercise price of $0.20 for a period of thirty-six (36) months following completion of the Transactions.

Each Flow-Through Unit shall consist of one (1) common share in the capital of Element 79 that is a "flow through share" as defined in subsection 66(15) of the Income Tax Act (Canada), as amended from time to time, and one half (1/2) common share purchase warrant in the capital of Element 79, with each whole common share purchase warrant entitling the holder thereof to acquire one (1) Element 79 Share at an exercise price of $0.20 for a period of twelve (12) months following completion of the Transactions.

In connection with the Private Placement, the Agent will receive (i) a cash commission of 10% of the total proceeds of the Private Placement, and (ii) compensation options (the "Agent's Options") to acquire such number of Element 79 Shares which is equal to 10% of the aggregate number of Element 79 Shares issued and sold pursuant to the Private Placement. Each Agent's Option shall entitle the Agent to acquire one additional Element 79 Share at an exercise price of $0.15 per Element 79 Share for a period of twenty-four (24) months from the completion of the Transaction.

Further Information

All information contained in this news release with respect to Element 79 and Benton was supplied by the parties respectively, for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning the other party.

Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and, if applicable, pursuant to the requirements of the Exchange, majority of the minority shareholder approval. Where applicable, 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 or filing statement 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 RELEASE.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain "forward-looking statements" under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to: the terms and conditions of the proposed Transaction; the terms and conditions of the proposed Private Placement; use of funds; and the business and operations of the Resulting Issuer after the proposed Transaction. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; delay or failure to receive board, shareholder or regulatory approvals; and the ability of the Resulting Issuer to execute and achieve its business objectives. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Element 79 disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Contact Information

  • Element 79 Capital Inc.
    Edward Ierfino
    President and Chief Executive Officer
    (514) 562-1374