Mr. Bill Trenaman reports
KAIZEN CLOSES THE FIRST $1.0 MILLION TRANCHE OF C$2.5 MILLION PRIVATE PLACEMENT FINANCING
Kaizen Discovery Inc. has successfully closed the first tranche of $1.0-million of the planned $2.5-million non-brokered private placement financing that the company announced on July 8, 2019.
Kaizen's majority shareholder, HPX TechCo Inc., subscribed for 20 million units at a price of five cents per unit (each unit consisting of one common share and one common share purchase warrant of the company) for an investment of $1.0-million of the non-brokered private placement (lead order). Each warrant will entitle the holder to purchase one common share of the company at 12 cents per share for a period of 24 months following the closing date of the private placement.
As of closing of the lead order, Kaizen will have a total of 296,766,636 shares issued and outstanding. HPX's ownership of Kaizen will change from its current level of 66.8 per cent to 69.1 per cent. Assuming full take-up of the private placement offering, Kaizen will have a total of 326,766,636 shares issued and outstanding and HPX's ownership will be 62.7 per cent.
The proceeds from the private placement will be used to finance the planned exploration drilling program at the Pinaya project, to identify and review new project opportunities, and for general administrative expenses.
The units are being offered pursuant to exemptions from the prospectus requirements. The securities underlying the units will be subject to a statutory hold period in Canada expiring four months and one day from the closing date (being Nov. 12, 2019, in the case of this first tranche).
Related party transactions
The lead order by HPX constitutes a related party transaction under Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions, as HPX is a related party of Kaizen, given its greater-than-10-per-cent beneficial shareholding. Pursuant to sections 5.5(a) and 5.7(1)(a) of MI 61-101, the company is exempt from obtaining a formal valuation and minority approval of the company's shareholders in respect of the lead order by HPX due to the fair market value of the lead order by HPX being below 25 per cent of the company's market capitalization for purposes of MI 61-101. The company will file a material change report in respect of the lead order by HPX. However, the material change report will be filed less than 21 days prior to the closing of the lead order by HPX, which is consistent with market practice and the company deems reasonable in the circumstances.
About Kaizen Discovery Inc.
Kaizen is a Canadian mineral exploration and development company with exploration projects in Peru and Canada.
We seek Safe Harbor.
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