Mr. Luis da Silva reports
GB MINERALS LTD. ANNOUNCES PROPOSED US$11,185,000 PRIVATE PLACEMENT
GB Minerals Ltd. has arranged a non-brokered private placement of 265,328,536 new common shares in the share capital of the company at a price of 5.5 cents per placement share for gross proceeds of $11,185,000 (U.S.).
Zaff LP, which taken together with its related parties, is an existing significant shareholder of the company and an insider within the meaning of the rules of the TSX Venture Exchange. Zaff is proposing to subscribe for the placement shares and will, upon completion of the placement, own an aggregate of 387,551,929 common shares of the company, representing 51.6 per cent of the share capital. Upon completion of the placement, Zaff will become a control person within the meaning of the rules of the TSX-V. As a result, the company will require shareholder approval in order to complete the placement, which it intends to seek in writing.
The placement shares will represent an increase of approximately 35.3 per cent in the enlarged share capital and approximately 34.1 per cent of the fully diluted enlarged share capital. The placement shares will be subject to a four-month hold period from the date of issuance. Application will be made for the listing of the placement shares on the TSX-V. Closing of the placement is subject to due diligence by investors, the receipt of applicable regulatory approvals, including the approval of the TSX-V and shareholder approval.
The company intends to use the net proceeds from the placement for expenses and development of the company's Farim phosphate mineral property, to meet the company's financial obligations and operational commitments, and to finance litigation involving GBM Minerals Engineering Consultants Ltd.
Zaff is a related party to the company under Multilateral Instrument 61-101, protection of minority security holders in special transactions, by virtue of its existing shareholding being in excess of 10 per cent of the share capital. Accordingly, the placement is a related party transaction under MI 61-101. The placement is exempt from: (i) the formal valuation requirements under Section 5.4 of MI 61-101 pursuant to Subsection 5.5(g) of MI 61-101 and (ii) the minority approval requirements under Section 5.6 of MI 61-101 pursuant to Subsection 5.7(1)(e) of MI 61-101 because the board of directors of the company, acting in good faith, has determined, and at least two-thirds of the company's independent directors, acting in good faith, have determined, that the company is in serious financial difficulty, that the placement is designed to improve the company's financial position and that the terms of the placement are reasonable in the company's circumstances.
The company anticipates it will file a material change report less than 21 days before the closing of the placement. This shorter period is reasonable and necessary in the circumstances as the company required the proceeds of the placement immediately.
Luis da Silva, president and chief executive officer of the company, comments:
"We are extremely pleased to inform all stakeholders of this significant capital contribution that will enable the advance of preconstruction work on the ground. The substantial support from Zaff following the most recent placement in March further endorses the project and is indicative of the company's continued development. As a board, we have considered and reviewed alternative forms of funding ahead of the debt financing and believe this private placement presents the best value for all shareholders. We look forward to closing this and advancing with the debt."
We seek Safe Harbor.
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