(TheNewswire)
VANCOUVER, BC - TheNewswire – April 27, 2021 - Kenadyr Mining (Holdings) Corp. (TSXV:KEN ) ( OTC:KNDYF ) ( FRA:KM0) (the “ Company ” or“ Kenadyr ”) announces it has entered into a binding letter of intentdated April 23, 2021 (“LOI”) to acquire 100% of the Kamkor CopperProject (“Kamkor”) in Kazakhstan. Kamkor has a historicalKazakhstan-standard estimate of 30.9 million tonnes of mineralizedmaterial at 0.64% copper (Cu) in the C1+C2 categories (200,700 tonnesof contained copper at a lower cut-off of 0.2% Cu). The historicalresource was constructed in 2006 and is pit constrained and based upon35 drillholes and 24 surface trenches. An additional 22 core holeswere completed in 2018 with some additional trenching.
Readers are cautioned that aqualified person has not done sufficient work to classify thehistorical estimates on the Kamkor project as current mineralresources or mineral reserves and Kenadyr is not aware of the resourceand reserve categories or the key assumptions, parameters and methodsused to prepare the historical estimates on the Kamkor project. TheCompany is not treating the historical estimates on the Kamkor projectas current mineral resources or mineral reserves as defined in NI43-101 – Standards of Disclosure for Mineral Projects. The Companycautions readers that the historical estimates on the Kamkor projectdisclosed in this news release should not be relied upon in drawinginferences as to current mineral resources or mineral reserves on theKamkor Copper Project.
Pursuant to the terms of the LOI, Kenadyr will acquire100% of Kamkor-Saryarka LLP (“Kamkor-Saryarka”), a Kazakhstanlimited liability partnership that is the 100% legal and beneficialholder of a subsurface exploration contract for Kamkor with theauthorized Kazakhstan government authorities, in exchange for commonshares and warrants of Kenadyr (the “ Proposed Transaction ”).
Tim McCutcheon, Kenadyr’s CEO, said: “I am veryexcited about this transformative acquisition for the Company, as weretain our Central Asia focus, where we have a high level ofexpertise, but gain exposure to a late-stage copper asset, and thusrejuvenate the Company and put it on track to metal production andcash flow. I look forward to sharing with our stakeholders transactionand development news on this fantastic asset.”
Kamkor Exploration History
Extensive exploration work has been conducted on Kamkorover the last 50 years.
1959 – 1985: Six different exploration programsresulted in extensive exploration work, which included magneticsurveys, trenching and sampling, along with drilling that establishedKamkor as a copper exploration target. The magnetic andelectromagnetic surveys, along with the trenching, sampling andinitial drilling, identified a mineralized zone 500m long withthickness of up to 38m and copper grades in channel/chip samplesranging from 1.0% - 4.7%. Five exploration core holes yieldedaverage copper grades over several meters in a range of 0.80% to 1.15%and to a depth of about 100m.
2005 – 2006: Tsentrgeolsyemka LLP (a Kazakhstangeological services and consulting company) conducted prospecting andassessment work. A program of drilling and trenching furtherdelineated the Kamkor mineralized zone (22 core holes for a total of5,998m and 3,381m 3 of trenching). Based on the results of thiswork, in 2006 a Kazakhstan-standard mineralized material calculationreport was compiled for category C2, as well as for category P1, to adepth of 400m. The historical resource estimate for this coppermineralized material was carried out at a cut-off grade of 0.2% Cu. The resource estimate was block modelled, pit constrained andutilized 35 drillholes and a number of trenches.
2015 – 2020: Tsentrgeolsyomka LLP continuedexploration and deposit definition work at Kamkor, which included over454m 3 of trenching and 22 diamond-drill wells for 4,300m. Thiswork, combined with previous data, allowed JSC Wealth Minerals toprepare documentation for the Kazakhstan mining authorities in orderto convert the Kamkor license from exploration status to exploitation.
2021: Final application to the Kazakhstan miningauthorities for approval of a state-registered-resource and subsequentexploitation license prepared, is expected to be filed in June, andreceipt of exploitation status by August.
Kamkor Geology and Metallurgy
The Kamkor copper deposit is thought to be a group ofmagmatic, segregated copper+/-nickel occurrences located within adifferentiated intrusion. The geology of the Kamkor deposit areaincludes terrigenous-carbonate deposits of the Tournaisian and Viseanstages of the Carboniferous system, volcanogenic formations of theKarkaralinskaya suite of the Lower Carboniferous and the Chubaraigyrsuite of the Lower Permian. Intrusive rocks include diorites,gabbro-diorites, granodiorites, biotite granites of the MiddleCarboniferous Topar complex, porphyritic potassium feldspar granitesof the Middle-Late Carboniferous Kuttuadam complex and leucocraticgranites of the Early Permian Akchatau complex. The Kamkor coppermineralization is hosted in Carboniferous gabbro-peridotiteintrusions.
Historical metallurgical work has been conducted on theKamkor mineralized material. Standard flotation separation methodshave been employed on Kamkor material yielding concentrates withsignificant copper and minor gold and silver. The main copper mineralin the mineralized material is chalcopyrite.
The technical content of this newsrelease has been reviewed and approved by Michael Dufresne, M.Sc,P.Geol., P.Geo., a qualified person as defined by National Instrument43-101.
Kamkor-Saryarka
Kamkor-Saryarka is a Kazakhstan registered entity,whose sole asset is the Kamkor project (Kazakhstan subsoil licensenumber 343-B, issued on 13 October 2014). Kamkor-Saryarka iswholly-owned by QAZ Mining LLC, a Delaware, USA limited liabilitycompany that is beneficially owned and controlled by AlexandreYakushev and Petro Sztyk (91% and 9% respectively, collectively the“Vendors”). Kamkor-Saryarka is at arm’s length to Kenadyr.Following the completion of the Proposed Transaction, Mr. Yakushev isexpected to own greater than 20% of the shares of the Resulting Issuer(as defined below) and will be considered a control person and an insider of Kenadyr, as per TSX VentureExchange (“TSX-V”) Policy 3.1. None of the Vendors are actingjointly or in concert.
The Proposed Transaction
The Proposed Transaction will be effected by way of adirect purchase of all of the existing charter capital ofKamkor-Saryarka in exchange for common shares (each, a “KenadyrShare”) and warrants of Kenadyr (“Kenadyr Warrants”) andKamkor-Saryarka will become a wholly-owned subsidiary of Kenadyr.
Prior to the completion of the Proposed Transaction,subject to the approval of the TSX-V, Kenadyr will change its name toKenadyr Metals Corp., or such other name as agreed by the parties, andwill complete a consolidation of the Kenadyr Shares on the basis ofone post-consolidation Kenadyr Share for every ten pre-consolidationKenadyr Shares (the “Consolidation”). Kenadyr will issue to theVendors an aggregate of 65,019,773 Kenadyr Shares and 6,501,977Kenadyr Warrants on a post-Consolidation basis. Each Kenadyr Warrantwill entitle the holder thereof to acquire one additional KenadyrShare at an exercise price of $0.72 per Kenadyr Share for two yearsfrom the date of issuance. Based on the last closing share price ofKenadyr, the implied value of the Proposed Transaction is $22.8million.
Upon completion of the Proposed Transaction, Kenadyrwill continue as a Tier 2 mining issuer (the Company after theProposed Transaction being referred to herein as the “ResultingIssuer”).
Upon completion of the Proposed Transaction, certainmembers of Kenadyr management will be entitled to change of controlpayments, which they have elected to take in Kenadyr Shares, resultingin the issuance of an aggregate of 1,200,000 Kenadyr Shares on apost-Consolidation basis, subject to TSX-V approval.
Upon completion of the Proposed Transaction (but nottaking into account the Bridge Financing or the Concurrent Financing(as defined below)), the Vendors will hold approximately 83.33% ofissued and outstanding Kenadyr Shares, on an undiluted basis(approximately 81.77% on a fully diluted basis), while existingshareholders of Kenadyr will own approximately 16.67%, on an undilutedbasis (approximately 18.23% on a fully diluted basis).
Kenadyr intends to hold a meeting to seek shareholderapproval for the Proposed Transaction and the creation of a newcontrol person in accordance with the requirements of the TSX-V.Additional information on the date and time of the meeting will beprovided in a subsequent news release.
Bridge Financing and ConcurrentFinancing
Prior to the completion of the Proposed Transaction,Kenadyr intends to conduct a private placement (the “BridgeFinancing”) of convertible notes (the “Notes”) for grossproceeds of up to $200,000 prior to the completion of the ConcurrentFinancing (as hereinafter defined) to supplement corporate workingcapital and fund the costs relating to the Proposed Transaction. TheNotes will have a twelve month term and will yield an interest rate of5% per annum due on maturity or conversion. The Notes will beconvertible into units (each, a “Unit”) of Kenadyr, which willeach consist of one Kenadyr Share and one share purchase warrant ofKenadyr (each, a “Warrant”), at a conversion price of $0.05 perUnit (the “Conversion Price”). Each Warrant will be exercisable for a period of eighteen months from thedate of issuance of the Notes at an exercise price equal to theConversion Price. In addition, assuming the completion of theConsolidation, the Notes will automatically convert into Units on thebasis of one Unit for each $0.35 of the principal amount of the Notes.
Pursuant to the terms of the LOI, Kenadyr will alsoconduct a concurrent financing prior to the completion of the ProposedTransaction (the “Concurrent Financing”) for gross proceeds of aprice and size satisfactory to the Kamkor parties, on apost-Consolidation basis (the “Concurrent Financing”). TheConcurrent Financing shall be structured as either a common shareoffering, unit offering, a subscription receipt offering, or suchother security offering as determined by the parties based ondiscussions with investors.
The specific terms of the Concurrent Financing will bedisclosed in a subsequent news release once finalized.
The securities to be issued pursuant to the ProposedTransaction, the Bridge Financing and the Concurrent Financing havenot been, and will not be, registered under the U.S. Securities Act of1933, as amended (the “U.S. Securities Act”) or any U.S. statesecurities laws, and may not be offered or sold in the United Statesor to, or for the account or benefit of, United States persons absentregistration or any applicable exemption from the registrationrequirements of the U.S. Securities Act and applicable U.S. statesecurities laws. This news release shall not constitute an offer tosell or the solicitation of an offer to buy securities in the UnitedStates, nor shall there be any sale of these securities in anyjurisdiction in which such offer, solicitation or sale would beunlawful.
Conditions to the ProposedTransaction
The completion of the Proposed Transaction remainssubject to a number of terms and conditions, including, among otherthings:
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- no material adverse change shall have occurred in thebusiness, results of operations, assets, liabilities, financialcondition or affairs of Kenadyr or Kamkor-Saryarka, financial orotherwise;
- receipt by Kenadyr of shareholder approval for theProposed Transaction;
- the Consolidation, and any other corporate changesrequired in connection with the Proposed Transaction shall have beenimplemented;
- each of Kenadyr and Kamkor-Saryarka shall haveprovided to the other such audited, unaudited and pro forma financialstatements as required in an application for the Proposed Transactionto the TSX-V;
- Kenadyr shall have completed the ConcurrentFinancing;
- Kamkor-Saryarka shall have provided a technicalreport for the Kamkor Project prepared in accordance with NationalInstrument 43-101 – Standards of Disclosure for Mineral Projects ;
- Kamkor-Saryarka shall have provided a title opinionon the Kamkor Project;
- receipt of all necessary regulatory and third-partyconsents, approvals and authorizations as may be required in respectof the Proposed Transaction, including acceptance of the TSX-V;and
- the delivery by each of the parties of standardclosing documents, including legal and title opinions.
Sponsorship of a reverse takeover (as the ProposedTransaction is to be categorized) is required by the TSX-V unlessexempt in accordance with TSX-V policies. The parties will be seekinga waiver of any requirement for a sponsor, but in the event a waiveris not available, will seek a sponsorship relationship for theProposed Transaction with a TSX-V member firm.
The shares of the Company were halted effective April26, 2021 and may remain halted until the completion of the ProposedTransaction.
Directors, Officers and Insiders ofthe Resulting Issuer
It is currently anticipated that upon completion of theProposed Transaction, the Board of Directors of the Resulting Issuerwill consist of five directors, three of whom will be existingdirectors of Kenadyr and two of whom will be nominated by the Vendors. The management of the Resulting Issuer is expected to consist ofTimothy McCutcheon (CEO), Kevin Ma (CFO and Corporate Secretary) andAndrew Aitchison (Head Geologist), with the other officers to bedetermined by the Board of Directors of the Resulting Issuer.
Mr. Alexandre Yakushev (Canada residence, Kazakhstan citizen), Mr. Edgard Kramer(Kazakhstan residence, German citizen), Mr. Georges Sztyk (Canadaresidence, Canada citizen) and Armanbay Jubayev, CFA (Kazakhstanresidence, Kazakhstan citizen) are each expected to become Insiders(such terms as defined under TSX-V policies) of the ResultingIssuer.
Mr. Alexandre Yakushev (Canada residence, Kazakhstancitizen) is an experienced banker who built his career at KKB,Kazakhstan’s largest retail bank at the time of his tenure there( https://halykbank.kz/en/about/press_center/news/8819 ). Mr. Yakushev worked his way up the ranks of KKB tomanaging director and member of the management board, and his mainrole was senior government relations and strategic client relations. After retiring from KKB, Alexandre moved to Ottawa, Canada and he isinvolved in private business ventures, primarily in Russia and CentralAsia.
Mr. Edgard Kramer (Kazakhstan residence, Germancitizen) is a finance professional who studied finance at Regent’sUniversity in London, UK. He worked at PriceWaterhouseCoopers inKazakhstan and Germany for four years before joining the developmentteam at Kamkor-Saryarka in 2019 as General Manager.
Mr. Georges Sztyk (Canada residence, Canadian citizen)is currently a business manager and entrepreneur after a 23-yearcareer with Royal Dutch Shell. In 1997, Mr. Stzyk was a founder andmanager of Kyrgyz Petroleum Co., which developed oil assets inKyrgyzstan. From 2003 to 2005 Mr. Stzyk was a key manager atVictoria Oil and Gas Plc, an exploration and production company withassets in Cameroon, Kazakhstan and Russia.
Armanbay Jubaev CFA (Kazakhstan residence, Kazakhstancitizen) has been an advisor to the metals and mining industry in theCIS region with 20 years' experience in M&A, performanceimprovement and project development. Mr. Jubaev has a Master's degreefrom the University of Oxford and an MBA from the University ofCalifornia Berkeley, and has previously worked for McKinsey &Company, SAP, and Polymetal International, where he led the localM&A deal origination function, and acted as the CFO at the VarvaraGold-Copper Deposit.
Additional information concerning the ProposedTransaction, Kenadyr, Kamkor-Saryarka and the Resulting Issuer,including summary financial information of Kamkor-Saryarka, will beprovided in a subsequent news release and in the Company’smanagement information circular to be filed in connection with theProposed Transaction and which will be available under the Company’sSEDAR profile at www.sedar.com .
About Kenadyr
Kenadyr is developing its 100%-owned Borubai goldexploration license in the Kyrgyz Republic, as well as evaluatinggrowth opportunities in the gold mining sector. The Borubai licensecompletely surrounds the Taldybulak Levoberezhniy gold mine, withwhich it shares mineralization trends. Taldybulak Levoberezhniyproduced 133,335 oz gold in 2019 and is operated by ZijinMining.
ON BEHALF OF KENADYR MINING (HOLDINGS) CORP.
Tim McCutcheon
Chief Executive Officer and Director
For more information, please contact:
Tim McCutcheon or Kevin Ma
E-mail: info@kenadyr.com
Phone: +1-604-569-2963 Ext 105
Cautionary Statement onForward-Looking Information
NEITHER THE TSX VENTURE EXCHANGE NORITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THEPOLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THEADEQUACY OR ACCURACY OF THIS RELEASE.
Completion of the ProposedTransaction is subject to a number of conditions, including but notlimited to, the TSX-V acceptance. Where applicable, the ProposedTransaction cannot close until the required shareholder approval isobtained. There can be no assurance that the Proposed Transactionwill be completed as proposed or at all.
Investors are cautioned that, exceptas disclosed in the management information circular or filingstatement to be prepared in connection with the Proposed Transaction,any information released or received with respect to the ProposedTransaction may not be accurate or complete and should not be reliedupon.
The TSX-V has in no way passed uponthe merits of the Proposed Transaction and has neither approved nordisapproved the contents of this press release.
All information contained in thisnews release with respect to the Company and Kamkor-Saryarka wassupplied by the parties, respectively, for inclusion herein, and theCompany and its directors and officers have relied on Kamkor-Saryarkafor any information concerning such party.
This news release containsforward-looking statements relating to the timing and completion ofthe Proposed Transaction, the future operations of the Company,Kamkor-Saryarka, and the Resulting Issuer, the timing of receipt byKamkor-Saryarka of an exploitation license and other statements thatare not historical facts. Forward-looking statements are oftenidentified by terms such as "will", "may","should", "anticipate", "expects" andsimilar expressions. Allstatements other than statements of historical fact, included in thisrelease, including, without limitation, statements regarding theProposed Transaction and the future plans and objectives of theCompany, Kamkor-Saryarka, and the Resulting Issuer are forward-lookingstatements that involve risks and uncertainties. There can be noassurance that such statements will prove to be accurate and actualresults and future events could differ materially from thoseanticipated in such statements. Important factors that could causeactual results to differ materially from the Company's,Kamkor-Saryarka’s, and the Resulting Issuer’s expectations includethe failure to satisfy the conditions to completion of the ProposedTransaction set forth above and other risks detailed from time to timein the filings made by the Company, Kamkor-Saryarka, and the ResultingIssuer with securities regulations.
The reader is cautioned thatassumptions used in the preparation of any forward-looking informationmay prove to be incorrect. Events or circumstances may cause actualresults to differ materially from those predicted, as a result ofnumerous known and unknown risks, uncertainties, and other factors,many of which are beyond the control of the Company, Kamkor-Saryarka,and the Resulting Issuer. As a result, the Company, Kamkor-Saryarka,and the Resulting Issuer cannot guarantee that the ProposedTransaction will be completed on the terms and within the timedisclosed herein or at all. The reader is cautioned not to place unduereliance on any forward-looking information. Such information,although considered reasonable by management at the time ofpreparation, may prove to be incorrect and actual results may differmaterially from those anticipated. Forward-looking statementscontained in this news release are expressly qualified by thiscautionary statement. The forward-looking statements contained in thisnews release are made as of the date of this news release and theCompany, Kamkor-Saryarka, and the Resulting Issuer will update orrevise publicly any of the included forward-looking statements asexpressly required by Canadian securities law.
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