Highland Copper Co. (HI-V) June 17, '14 has completed the final closing of its previously announced private placement by issuing 36,694,800 of its common shares at a price of 50 cents per share for total gross proceeds of $18.3-million.The company also announces the closing of the previously announced acquisition of the Copperwood project located in the Upper Peninsula of Michigan, United States, from Orvana Minerals Corp.
Copperwood acquisition
The company closed the acquisition of Copperwood through the acquisition from Orvana of all of the outstanding shares of Orvana Resources U.S. Corp. As described in the news release issued May 29, 2014, Highland paid $13-million (U.S.) in cash at closing and issued a $7-million (U.S.) secured promissory note. The note matures on Dec. 15, 2014, and will bear interest at an annualized rate of 13.5 per cent on the outstanding amount from issuance of the note until Sept. 30, 2014, and an annualized rate of 17.5 per cent thereafter. Highland may have to repay the note, partially or completely, before maturity with the raising of additional capital. The note is secured by, among other things, a first priority security interest over all of the assets of Orvana Resources U.S. and a pledge of 100 per cent of Orvana Resources U.S.'s shares. Additional consideration of up to $5-million (U.S.) may be paid by Highland in cash or shares of Highland, at Orvana's option, with $2.5-million (U.S.) payable no later than the fourth anniversary of the closing and $2.5-million (U.S.) payable following commercial production if the copper price reaches certain thresholds.
Copperwood is a feasibility-stage project. On Feb. 25, 2011, Orvana had announced an updated resource estimate for Copperwood, including the mineralization in the adjacent Copperwood satellite areas. Subsequently, on Feb. 7, 2012, Orvana announced the results of a feasibility study for Copperwood. As disclosed in the Feb. 11, 2014, news release, the company is reporting Orvana's mineral reserve and resource estimates as historical data. As required by the TSX Venture Exchange as a condition for final acceptance of the acquisition, Highland has filed on SEDAR a National Instrument 43-101 technical report for Copperwood. Jerry DeWolfe of Golder Associates Ltd. is the qualified person responsible for the technical report entitled "NI 43-101 Technical Report on the Copperwood Project, Michigan, USA," dated June 12, 2014, with an effective date of March 17, 2014.
Private placement
The net proceeds of the private placement will be used to pay $13-million (U.S.) to Orvana and to settle transaction-related costs, with the balance being used for exploration and development of the company's projects, as well as for general working capital requirements.
After closing the private placement, the company's issued and outstanding share capital totals 96,966,745 common shares. Certain directors and officers of the company participated in this final tranche of the private placement, purchasing 2,085,800 common shares. These constitute related-party transactions pursuant to TSX-V Policy 5.9 and Multilateral Instrument 61-101. The company relied on sections 5.5(a) and 5.7(1)(a) of MI 61-101 for exemptions from the formal valuation and minority shareholder approval requirements on the basis that the fair market value of the transaction insofar as the transaction involved interested parties did not exceed 25 per cent of the company's market capitalization.
As permitted by the rules of the TSX-V, the company paid finders' fees on a portion of the private placement. All common shares issued pursuant to the private placement are restricted from trading for a period of four months and one day after closing. |
