ATLY:CC - Altaley Mining Share Consolidation and Rights Offering
(NewsDirect)
Altaley MiningCorporation (the “ Company ” or “ Altaley ”)announces that the Company’s Board of Directors has approved aconsolidation of the Company’s issued share capital on a ratio ofone (1) new post-consolidated common share for every eight (8) oldpre-consolidated common shares (the “ Consolidation ”). TheConsolidation is subject to approval by the TSX Venture Exchange(“ TSXV ”). The Company is also pleased to announce it willbe making a rights offering (the “ Rights Offering ”) on apost-Consolidation basis in which holders of record of the Company’spost-Consolidation common shares (“ Common Shares ”), willreceive rights (“ Rights ”) to subscribe for units(“ Units ”) of the Company. The record date (the “ RecordDate ”) will be confirmed at a later date and disclosed in afurther news release following the completion of the Consolidation.
ShareConsolidation
TheCompany currently has 278,944,422 issued and outstanding common sharesand on completion of the Consolidation there is expected to beapproximately 34,868,052 issued and outstanding common shares, subjectto rounding. The Company’s name and trading symbol will remain thesame. Shareholder approval for the Consolidation is not required underthe Articles of the Company.
The Board of Directors determined the Consolidationis necessary for the Company to raise additional capital and seek newbusiness opportunities.
Proposed Rights Offering
The Company is planning to conduct a RightsOffering for up to gross proceeds of $16,000,000. Each registeredshareholder of the Company resident in Canada as of the close ofbusiness on the Record Date (the “ Eligible Shareholders ”)will receive 0.95598496 of one Right for every one (1) Common Shareheld for the issuance of a total of 33,333,333 Rights. One Right willpermit the Eligible Shareholder to purchase one Unit at a price of$0.48 per Unit (the “ Basic Subscription Privilege ”).Holders of Rights who fully exercise their Rights under the BasicSubscription Privilege will also be entitled to subscribe, on a prorata basis, for additional Units, if available, that were notsubscribed for by other holders of Rights (the “ AdditionalSubscription Privilege ”), subject to certain limitations as setout in the Company’s rights offering circular (the “ RightsOffering Circular ”).
Each Unit will consist of one Common Share andone-quarter of one transferable share purchase warrant (each whole a“ Warrant ”). Each Warrant will entitle the holder topurchase one additional Common Share at a price of $0.75 exercisableuntil 1:30 p.m. (Vancouver, BC time) on the date that is 30 monthsfrom the closing date of the Rights Offering. The Warrants, whenissued, will be issued under a warrant indenture with ComputershareInvestor Services Inc. (the “ Rights Agent ”) The RightsOffering is not subject to any minimum subscription level. If theRights Offering is fully subscribed, Altaley will issue up to33,333,333 new Common Shares and Warrants to purchase up to anadditional 8,333,333 Common Shares. If the Rights Offering is fullysubscribed and all the Warrants issued on closing of the RightsOffering are exercised, the additional proceeds to the Company fromthe exercise of the Warrants will be $6,250,000.
On completion of theConsolidation the Company will have 34,868,052 Common Shares issuedand outstanding. If all Rights are exercised, the Company’s issuedand outstanding Common Shares will increase to 68,201,385 and if allWarrants covered by this Rights Offering are exercised the CommonShares issued and outstanding will be 76,534,718.
The Company has alsoapplied to the TSXV for the trading of the Rights.
The Company hasascertained that four insiders who on a pre-Consolidation basiscollectively own or exercise control or direction over, a total of72,878,462 Common Shares, representing in the aggregate approximately26.13% intend to exercise all or a portion of their Rights andsubscribe for Units in the Rights Offering. We can give no assurancethat any other insider of the Company will subscribe for any Units inthe Rights Offering.
An offering notice (the “ Notice ”) and a rightscertificate (the “ Rights Certificate ”) will be mailed toeach Eligible Shareholder. Eligible Shareholders who wish to exercisetheir Rights must complete the Rights Certificate, and deliver theRights Certificate together with the applicable purchase funds, to theRights Agent, before 2:00 p.m. (Vancouver, BC time) on the ExpiryDate. Eligible Shareholders who own their Common Shares through anintermediary, such as a bank, trust company, securities dealer orbroker, will receive materials and instructions from theirintermediary. It is important to note that intermediaries may havedifferent cut-off times prior to the Expiry Date. As such, the Companyrecommends that all Eligible Shareholders who own their Common Sharesthrough an intermediary contact their broker or financial advisorabout the Rights Offering to ensure that they can participate by theintermediary’s cut off time for subscriptions.
The terms of the RightsOffering and the procedures for exercising Rights will be explained inthe Notice and the Rights Offering Circular which will be issued afterthe Consolidation is completed.
The Rights Offering will be made only in applicablejurisdictions in Canada, and is not, and under no circumstances is tobe construed as an offering of any securities for sale in, or to aresident of any jurisdiction, other than Canada, or a solicitationtherein or an offer to buy or sell securities. However, certainholders of Common Shares in jurisdictions outside of Canada may beable to participate in the Rights Offering where they can establishthat the transaction is exempt under applicable laws. If you are aholder of Common Shares of the Company and reside outside of Canada,please review the Notice and the Rights Offering Circular to determineyour eligibility and the process and timing requirements to receiveand, or, exercise your Rights. The Company requests any ineligibleholder interested in exercising their Rights to contact the Company attheir earliest convenience.
The Rights Offering is subject to regulatoryapproval, including the approval of the TSXV.
Additional disclosureregarding the Rights Offering will be disclosed in a subsequent newsrelease following the completion of the Consolidation.
Standby Guarantee
Calu Opportunity Fund,LP (“ Calu ”) has agreed to act, directly or indirectly, as astandby guarantor to purchase up to 20,833,333 Units that may beavailable as a result of any unexercised Rights under the RightsOffering, for subscription funds of up to $10,000,000 (the“ Guarantee ”). As consideration for acting as a standbyguarantor, the Company will issue bonus warrants (the “ BonusWarrants ”) to Calu entitling it to acquire up to 5,208,333Common Shares of the Company, being 25% of the total number of Unitsthe standby guarantor has agreed to purchase under its standbycommitment. The Bonus Warrants are exercisable at a price of $0.75 perCommon Share for a period of four years after the date on whichperformance under the guarantee could be required. 50% of such BonusWarrants issued to Calu will be subject to accelerated expiryprovisions, so that if the market price of the Common Shares closesabove $1.25 for 10 consecutive trading days (the “ AccelerationEvent ”), the expiry date of those Bonus Warrants will beaccelerated to 30 days from the date of such Acceleration Event.
If Calu exercises itsGuarantee in full and the Rights Offering is fully subscribed, Caluwill hold 30.5% of the then issued and outstanding Common Shares on anundiluted basis. Calu would also hold 5,208,333 Bonus Warrants,5,208,333 Warrants (as part of the Units), and as described elsewherein this news release, Calu would have 622,272 Loan Bonus Warrants,which in the aggregate would be exercisable into 11,038,938 furtherCommon Shares, which on a partially diluted basis, if all Calu’swarrants were exercised, would bring Calu’s ownership position to40.2% of the then outstanding Common Shares.
To date, Calu hasadvanced a majority of the Guarantee (USD$6.8 million or CDN$8.91million) to the Company in cash, therefore, when the Rights Offeringcloses, the Company will only receive the balance of the Guarantee notyet received, assuming the Guarantee is called for in full.
Use of Net Proceeds ofRights Offering
The Company intends to use the net proceeds of the RightsOffering for: Operating and capital expenditures in connection to theconstruction and commissioning of the Tahuehueto Gold Mine Project (asdescribed below), general corporate and administrative costs andsettlement of working capital deficiency.
Update Regarding Previous Loan from SailFinancial, now named Calu Opportunity Fund, LP
The Company alsoannounces that it has executed an amending agreement (the“ Amending Agreement ”) with Calu Opportunity Fund, LP(formerly, Sail Natural Resources LP) (the “Lender”) amending theterms of the loan agreement (the “ Loan Agreement ”)announced by the Company in its news release dated December 29, 2021.Details about the Loan Agreement were also disclosed by the Company inits financial statements for the three and six months ended June 30,2022, and 2021 (notes 10(d) and 19), its financial statements for thethree months ended March 31, 2022 and 2021 (note 10(d)) and itsfinancial statements for the years ended December 31, 2021 and 2020(note 26).
NewPrincipal
Pursuant to the Amending Agreement, the parties have agreedthat the indebtedness between the Company and the Lender under theLoan Agreement as of June 30, 2022, was USD$2,489,088 (the “ NewPrincipal ”). The New Principal consists of an advance ofUSD$2,345,000 and accrued interest of USD$144,088. The AmendingAgreement includes a revised payment schedule consisting of monthlypayments commencing in December 2022 and ending in December 2025. Eachpayment includes a principal repayment amount of $67,272.65 and aninterest component. The interest rate under the Amending Agreementremains unchanged at 13.5% per annum.
Grant of Loan Bonus Warrants
As consideration for theNew Principal, the Company will issue the Lender 4,978,176 sharepurchase warrants (the “ Loan Bonus Warrants ”) or 622,272Loan Bonus Warrants on a post-Consolidation basis, representing thepro rata portion of the 10,000,000 share purchase warrants proposed inthe Loan Agreement. Each Loan Bonus Warrant may be exercised into onecommon share until June 30, 2025 (being the date that is 36 monthsfrom the deemed advance date of the New Principal) at an exerciseprice of $2.80 per common share. If the New Principal is repaid inwhole or in part by the Company by June 30, 2023, then the expiry dateof the Loan Bonus Warrants will be shortened to the later of June 30,2023, and 30 days from the date of such repayment. The Loan BonusWarrants (and any common shares exercisable thereunder) are subject toa hold period of four months and one day from the date of issuance ofthe Loan Bonus Warrants. The Amending Agreement and the grant of theLoan Bonus Warrants has obtained the approval of the TSXV.
Subject to the priorapproval of the TSXV by way of a future submission, if the fullprincipal amount under the Loan Agreement is made available to theCompany (a further USD$2,655,000), the Company may issue the Lender upto a further 5,021,824 share purchase warrants (the “ ConditionalWarrants ”) or 627,728 Conditional Warrants on apost-Consolidation basis. Each Conditional Warrant will be exercisableinto one common share at an exercise price of $2.80 per common share(or such other price as may be permitted by TSXV based on theCompany’s market price at the time of announcement of any furtherloan advance and proposed Conditional Warrants) until August 31, 2025(being the date that is 36 months from the date of the AmendingAgreement) or some other period as permitted by the TSXV.
Appointment of BoardObserver
Pursuantto the Amending Agreement, the Lender will be entitled to designate anobserver to be present at all meetings of the Company’s Board ofDirectors (the “ Board ”). The observer may participate inall discussions of matters brought to the Board but shall not bedeemed to be a member of the Board or have any duties to the Companyor its shareholders. The Company may in its discretion exclude theobserver from certain matters when the circumstances warrantexclusion, including to maintain solicitor-client privilege or whenthe discussion relates to the Company’s relationship with theLender.
StockOptions
The Company has granted900,000 stock options to the new CEO/Director. The options areexercisable on or before December 5, 2025, at a price of $0.09 on apre-consolidation basis. The options will vest under the terms of theCompany’s Stock Option Plan with one-third vesting immediately,one-third within 6 months, and the remaining balance will vest at the1 st anniversary of the grant of the options.
AboutAltaley Mining Corporation
Altaley Mining Corporation is aCanadian based mining company with two 100% owned Mexican gold,silver, and base metal mining projects.
Altaley's Tahuehuetomining project is in north-western Durango State, Mexico, whereconstruction of an initial 500 tpd operation is well advanced. Thesecond stage, the 1000 tpd project, will follow immediately aftercommissioning the initial stage. The operation will generate gold,silver, lead, and zinc in concentrates.
Campo Morado is anoperating polymetallic base metal mine in Guerrero, Mexico, currentlyproducing at an average of approximately 2,400 tonnes per day and iscurrently estimated to be Mexico’s 6th largest zincproducer.
Visit: www.altaleymining.com
On Behalf of theBoard of Directors
(signed) “MikeStruthers”
Mike Struthers
CEO andDirector
Cautionary Note Regarding Production Decisionsand Forward-Looking Statements
Neither TSX Venture Exchangenor its Regulation Services Provider (as that term is defined in thepolicies of the TSX Venture Exchange) accepts responsibility for theadequacy or accuracy of this release.
It should be noted thatAltaley declared commercial production at Campo Morado prior tocompleting a feasibility study of mineral reserves demonstratingeconomic and technical viability. Accordingly, readers should becautioned that Altaley’s production decision has been made without acomprehensive feasibility study of established reserves such thatthere is greater risk and uncertainty as to future economic resultsfrom the Campo Morado mine and a higher technical risk of failure thanwould be the case if a feasibility study were completed and reliedupon to make a production decision. Altaley has completed apreliminary economic assessment (“PEA”) mining study on the CampoMorado mine that provides a conceptual life of mine plan and apreliminary economic analysis based on the previously identifiedmineral resources (see News Release dated November 8, 2017, and April4, 2018). ). Furthermore, It should be noted that Altaley intends tocommence pre-production and ramp up to full commercial production atTahuehueto prior to completing a feasibility study of mineral reservesdemonstrating economic and technical viability. Accordingly, readersshould be cautioned that Altaley’s pre-production and productiondecisions will be made without a comprehensive feasibility study ofestablished reserves such that there is greater risk and uncertaintyas to future economic results from the Tahuehueto mine and a highertechnical risk of failure than would be the case if a feasibilitystudy were completed and relied upon to make such productiondecisions. Altaley has completed a positive pre-feasibility study (the“Pre-Feasibility Study”) and updated mineral reserves/resourcesestimates at its flagship Tahuehueto Mine that provides a conceptuallife of mine plan and a preliminary economic analysis based on a 1,000tonne per day operation (see News Release dated March 7, 2022)
Statements contained in this news release that are nothistorical facts are "forward-looking information" or"forward-looking statements" (collectively,"Forward-Looking Information") within the meaning ofapplicable Canadian securities laws. Forward-Looking Informationincludes but is not limited to conditions or financial performancethat are based on assumptions about future economic conditions andcourses of action; the timing and costs of future activities on theCompany's properties, such as production rates and increases;success of exploration, development and bulk sample processingactivities, and timing for processing at its own mineral processingfacility on the Tahuehueto project site. In certain cases,Forward-Looking Information can be identified using words and phrasessuch as "plans," "expects," "scheduled,""estimates," "forecasts," "intends,""anticipates" or variations of such words and phrases. Inpreparing the Forward-Looking Information in this news release, theCompany has applied several material assumptions, including, but notlimited to, that the current exploration, development, environmentaland other objectives concerning the Campo Morado Mine and theTahuehueto Project can be achieved; that commencement ofpre-production mining and milling operations at Tahuehueto willproceed as planned; the continuity of the price of gold and othermetals, economic and political conditions, and operations.Forward-Looking Information involves known and unknown risks,uncertainties and other factors which may cause the actual results,performance, or achievements of the Company to be materially differentfrom any future results, performance or achievements expressed orimplied by the Forward-Looking Information. There can be no assurancethat Forward-Looking Information will prove to be accurate, as actualresults and future events could differ materially from thoseanticipated in such statements. Accordingly, readers should not placeundue reliance on Forward-Looking Information. Except as required bylaw, the Company does not assume any obligation to release publiclyany revisions to Forward-Looking Information contained in this newsrelease to reflect events or circumstances after the date hereof or toreflect the occurrence of unanticipated events.
ContactDetails
Glen Sandwell
+1 604-684-8071
CompanyWebsite
https://www.altaleymining.com/
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