Kazax Minerals Inc.
TSX VENTURE : KZX

Kazax Minerals Inc.

October 09, 2014 11:25 ET

Kazax Announces Proposed Private Placement of Convertible Debentures and Warrants

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Oct. 9, 2014) -

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

Kazax Minerals Inc. ("Kazax" or the "Company") (TSX VENTURE:KZX) announces that it intends to complete, subject to the approval of the TSX Venture Exchange (the "Exchange"), a non-brokered private placement (the "Private Placement") for US$20,000,000 in aggregate principal amount of convertible secured debentures (the "Debentures") and an aggregate of 100,000,000 warrants ("Warrants", and together with the Debentures, the "Securities") to purchase common shares of the Company ("Shares"). The Company intends to issue the Securities to two of the Company's directors, Messrs. Riad Al Sadek and Moshtagh Moshtaghi (collectively, the "Holders"), to amend the terms of the US$20 million loans granted by them to the Company as disclosed in the Company's news release dated September 17, 2014.

The Debentures will be direct obligations of the Company which will, following receipt of necessary approvals by the Kazakh Ministry of Investments and Development ("MID"), be secured (up to such amount as is approved by MID) by all of the shares of a wholly-owned subsidiary of the Company (the "Security"). The annual interest rate on the Debentures will be 12.5 per cent. Interest will be payable at maturity in cash or, at the election of the Company and subject to certain conditions, in Shares, in accordance with applicable rules of the Exchange.

The Debentures will mature and become payable on the 6-month anniversary of their issuance, subject to an extension of the maturity date to December 31, 2016 following receipt of MID approval of the Security and for the conversion features. The Holders will have the option to require the Company to repay the Debenture earlier than the Maturity Date upon the occurrence of any of a (i) sale for consideration by the Company of at least 50% of its shareholdings in Lomonosovkoye LLP or (ii) a change of control of the Company.

The principal amount owing under Debentures will be convertible into Shares at the option of each Holder at a price of C$0.20 at any time following satisfaction of the following conditions: (i) receipt of all necessary approvals from the Kazakh Ministry of Investments and Development; (ii) approval by the requisite majority of shareholders of the Company; and (iii) where such conversion would not result in a reduction in the existing percentage of common shares of the Company held by persons other than insiders or their associates and affiliates and not subject to resale restrictions (collectively, the "Conversion Conditions").

Subject to satisfaction of the Conversion Conditions, the Warrants will be exercisable to purchase one common share of the Company (a "Warrant Share") at an exercise price of Cdn$0.10 until December 31, 2016, provided however that in the event that the closing price of the Shares on the Exchange is equal to or exceeds Cdn$1.00 for a period of 10 consecutive trading days ("Acceleration Event"), the Warrants will expire on the date which is 90 calendar days after the Company provides notice that the Acceleration Event has occurred.

The Debentures and any Shares issued upon conversion of the Debentures, and the Warrants and any Warrant Shares issued upon exercise of the Warrants, will be subject to a hold period expiring four months and one day from the date the Debentures and the Warrants are issued.

Participation by Insiders

The Private Placement will be considered a related party transaction as insiders are currently expected to subscribe for the Securities to be issued pursuant to the Private Placement. As such, approval by shareholders of the Company other than the respective insiders is required before the respective Securities will convert, or be exercised, as the case may be, into Shares. The material change report in relation to this transaction may be filed less than 21 days before closing as the Company intends to complete the Private Placement as soon as is commercially feasible.

For further information on Kazax, readers are referred to the Company's website (www.kazaxmineralsinc.com) and to Canadian regulatory filings on SEDAR at www.sedar.com.

ON BEHALF OF THE BOARD

Trevor Campbell Smith, President & CEO

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.

Forward-Looking Statements

This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "schedule", "believe", "plans", "intends" and similar expressions are intended to identify forward-looking information or statements. More particularly and without limitation, this news release contains forward looking statements and information concerning the Company s future operations and prospects. The forward-looking statements and information are based on certain key expectations and assumptions made by the Company, including expectations and assumptions concerning the Company's ability to make the consideration payments as required, equipment and crew availability, and joint venture partner financial capability. Although the Company believes that the expectations and assumptions on which such forward-looking statements and information are based are reasonable, undue reliance should not be placed on the forward looking statements and information because the Company can give no assurance that they will prove to be correct. By its nature, such forward-looking information is subject to various risks and uncertainties, which could cause the Company's actual results and experience to differ materially from the anticipated results or expectations expressed. These risks and uncertainties include, but are not limited to, the Company's ability to make the consideration payments as required, reservoir performance, labour, equipment and material costs, access to capital markets, interest and currency exchange rates, and political and economic conditions. Additional information on these and other factors is available in continuous disclosure materials filed by the Company with Canadian securities regulators. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed in this news release or otherwise, and to not use future-oriented information or financial outlooks for anything other than their intended purpose. The Company undertakes no obligation to update publicly or revise any forward -looking information, whether as a result of new information, future events or otherwise, except as required by law.

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