Mr. Morgan Poliquin reports
AZUCAR REPORTS NEWCREST INTENTION TO EXERCISE TOP-UP RIGHTS UNDER INVESTOR RIGHTS AGREEMENT
Newcrest Canada Holdings Inc. has confirmed its intention to exercise its top-up rights pursuant to the investor rights agreement with Azucar Minerals Ltd. The agreement was executed on May 18, 2018, when Newcrest completed its acquisition of 19.9 per cent of Azucar common shares, and provides, among other things, a standstill and lock-up on customary terms and conditions, participation and top-up rights in favour of Newcrest to maintain its pro rata interest in Azucar, and the right of Newcrest to designate one nominee to the board of directors of Azucar.
Under the top-up rights, Newcrest is, subject to regulatory approval, currently entitled to subscribe for an additional 59,654 common shares of Azucar at a price of 32.74 cents per share, for a total of $19,531. Newcrest intends to exercise its current top-up rights in full, thus maintaining its ownership in the company of 19.9 per cent. All shares issued pursuant to the subscription will be subject to a hold period of four months and one day from the date of issuance.
As Newcrest currently holds (prior to the exercise of its top-up rights) 19.8 per cent of the voting rights attached to all of Azucar's outstanding voting securities, the subscription is considered to be a related-party transaction as defined under Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions). The subscription is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as neither the fair market value of the common shares issued to, nor the consideration paid by, Newcrest exceeds 25 per cent of the company's market capitalization.
Azucar is an exploration company with a mandate to thoroughly explore the El Cobre project in Veracruz, Mexico, an approximately 7,000-hectare property, which covers multiple gold-rich porphyry targets, as demonstrated by recent drilling. Azucar is permitted and financed for an active drill campaign in 2019. Azucar holds a 100-per-cent interest in the El Cobre project, subject to net smelter return (NSR) royalty interests, assuming production from the property exceeds 10,001 tonnes per day of ore, totalling 2.25 per cent, which can be reduced to 2.0 per cent though the payment of $3.0-million (U.S.).
We seek Safe Harbor.
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