VANCOUVER, BRITISH COLUMBIA--(Marketwired - Oct. 22, 2014) -
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
Arak Resources Ltd. (TSX VENTURE:AAC) (the "Company") is pleased to announce that it has completed its previously announced, private placement of 6,330,000 Units. Each Unit consists of one common share and one, three year share purchase warrant to purchase an additional common share at $0.05 in years one and two and at $0.10 thereafter. Gross proceeds of $316,500 will be used for general working capital. In connection with closing of the private placement, the Company paid an aggregate of $19,022 and issued 380,446 finders warrants under the same terms and conditions, to certain persons who introduced subscribers to the Company. All securities issued under the placement are subject to a hold period of four months and a day from the date of distribution.
Pursuant to the offering, Exchange Minerals Ltd., a company controlled by Michael Shmazian, acquired 2,225,541 units at a price of $0.05 per unit which consists of 2,225,541 common shares and 2,225,541 share purchase warrants, representing 18.5% of the issued and outstanding common shares of the Company and 35.2% of the issued and outstanding warrants of the Company following completion of the offering. As a result of the offering, Exchange Minerals Ltd. holds 2,225,541 common shares of the Company, representing 18.5% of the current issued and outstanding common shares of the Company, and would own 4,451,082 common shares representing 30.9% on a partially diluted basis assuming the exercise of 2,225,541 warrants.
The Company is advised that Exchange Minerals Ltd. has acquired these securities for investment purposes and has no present intention to acquire further securities of the Company, although it may in the future acquire or dispose of securities of the Company, through the market, privately or otherwise, as circumstances or market conditions warrant. A copy of the early warning report relating to these holdings will be available under the Company's profile on SEDAR.
The subscription to the offering by Exchange Minerals Ltd. is a "related party transaction" under the policies of the TSX Venture Exchange and Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The transaction is exempt from the formal valuation requirements under Section 5.4 of MI 61-101 and the minority approval requirements under Section 5.6 of MI 61-101 pursuant to the Company's common shares being listed on the TSX Venture Exchange, and the transaction having a fair market value of less than $2,500,000, under Sections 5.5(b) and 5.7(1)(b), respectively, of MI 61-101. The offering was reviewed and approved unanimously by the Company's board of directors.
The Company also announces that it has arranged a new private placement of up to 1,666,667 Units at a price of $0.15 per Unit. Each Unit consisting of one common share and one share purchase warrant entitling the holder to purchase an additional common share for a period of three years at a price of $0.15 per share in year one and $0.25 per share thereafter. The warrants are subject to acceleration provisions whereby, if the Company's shares trade at $0.50 or more per share for a continuous period of 30 days, the warrants must be exercised or forfeited. Gross proceeds of up to $250,000 will be used to fund administration and general working capital. The Company will pay a finders' fee of 10% of the gross proceeds in cash and 10% of the number of Units sold in warrants exercisable under the same terms and conditions.
Further, the Company has granted an aggregate of 1,100,000 incentive stock options to its officers, directors and consultants. The options will be exercisable at $0.15 per share for a period of 5 years expiring October 21, 2019.
ARAK RESOURCES LTD.
Carl von Einsiedel, Director
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. |