Kodiak Copper Corp. (TSX-V:KDK) said it has entered into an agreement with Cormark Securities Inc, as lead underwriter, in connection with a ‘bought deal’ private placement under the listed issuer financing exemption, for aggregate gross proceeds of approximately $5 million.
The offering consists of: (i) 1,500,000 charity flow-through units that will be issued as part of a charity arrangement, with each Charity FT unit to consist of one common share of the company and one-half of one common share purchase warrant, both of which will qualify as ‘flow-through shares’ (within the meaning of subsection 66(15) of the Income Tax Act (Canada)), at a price of $1.32 per Charity FT unit for gross proceeds of $1,980,000; and (ii) 3,700,000 common share hard dollar (HD) units, each of which HD unit will consist of one non-flow-through common share and one-half of one non-flow-through common share purchase warrant at a price of $0.81 per HD unit for gross proceeds of $2,997,000.
Kodiak will also be completing a non-brokered private placement of: (i) up to 833,333 Charity FT units at the Charity FT unit issue price, and (ii) up to 418,498 flow-through units, each of which will consist of one common share and one-half of one FT warrant, both of which will qualify as 'flow-through shares'. at a price of $0.96 per FT unit, for aggregate gross proceeds of up to $1,500,000. Certain insiders and shareholders of the company are expected to participate in this concurrent financing.
READ: Kodiak Copper mobilizes staff to MPD copper-gold porphyry project to start 2023 Exploration Program
Each FT warrant and warrant issuable under the offering and the concurrent financing will entitle the holder to purchase one non-flow-through common share at an exercise price of $1.10 for a period of 24 months following the closing date.
In the event that the company's common share price closes at or above $1.70 on the TSX Venture Exchange (TSX-V) for 20 consecutive trading days, the company may, within 15 days of the occurrence of such event, deliver a notice to the holders of the warrants accelerating the expiry date to the date that is 30 days following such notice, and any unexercised warrants after such period shall automatically expire.
The net proceeds from the issue of the HD units will be used for working capital and general corporate purposes. The company will use an amount equal to the gross proceeds received by the company from the sale of the Charity FT units and FT units to incur eligible ‘Canadian exploration expenses’ that qualify as ‘flow-through critical mineral mining expenditures"’ as defined in the Income Tax Act (Canada) related to the company's projects in British Columbia, on or before December 31, 2024.
The company will renounce all the qualifying expenditures in favour of the subscribers of the Charity FT units and FT units effective December 31, 2023. If the qualifying expenditures are reduced by the Canada Revenue Agency, the company will indemnify each Charity FT unit and FT unit subscriber for any additional taxes payable by such subscriber as a result of the company's failure to renounce the qualifying expenditures as agreed.
The offering and the concurrent financing are expected to close on or about April 14, 2023, or such other date as the company and the underwriter may agree and is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and other approvals including the acceptance of the TSX–V.
Because the offering is being completed under the Listed Issuer Financing Exemption, the securities issued to Canadian resident subscribers in the offering will not be subject to a hold period under applicable Canadian securities laws.
The securities issued to subscribers in the concurrent financing will be subject to a hold period of four months and one day under applicable Canadian securities laws.
The securities have not been and will not be registered under the United States Securities Act of 1933, as amended, or any US state securities laws, and may not be offered or sold in the United States absent registration or available exemptions from such registration requirements.
Kodiak is focused on its 100% owned copper porphyry projects in Canada and the USA. The company's most advanced asset is the MPD copper-gold porphyry project in the prolific Quesnel Trough in south-central British Columbia, Canada. MPD has all the hallmarks of a large, multi-centered porphyry system. Kodiak has made the Gate Zone discovery of high-grade mineralization within a wide mineralized envelope, and MPD hosts several other targets with similar discovery potential.
Kodiak also holds the Mohave copper-molybdenum-silver porphyry project in Arizona, USA, near the world-class Bagdad mine. Kodiak's porphyry projects have both been historically drilled and present known mineral discoveries with the potential to hold large-scale deposits.
Contact the author at jon.hopkins@proactiveinvestors.com