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Kainantu Resources unveils non-brokered private placement for aggregate gross proceeds of up to C$2.5M

Published: 21:35 19 Oct 2022 AEDT

Kainantu Resources Ltd -
Kainantu Resources said the non-brokered private placement is for up to 22,727,273 units of the company at a price of C$0.11 per unit

Kainantu Resources Ltd (TSX-V:KRL) (KRL) has announced a non-brokered private placement for up to 22,727,273 units of the company at a price of C$0.11 per unit for aggregate gross proceeds of up to C$2.5 million.

The company said the net proceeds from the offering are intended to be used, but are not limited to, the completion of the acquisition of the Kili Teke Project - which requires a further payment to Harmony Gold (PNG) Exploration Limited of US$400,000 as a condition of closing. In addition, proceeds will be used to advance exploration programmes focusing on specific high-grade potential drilling targets at KRL North (adjacent to K92), KRL South (focusing on the Ontenu target) and May River (primarily at the Mountain Gate prospect). Proceeds will also be used for general working capital purposes.

In a statement, Matthew Salthouse, CEO of KRL commented: "KRL looks forward to closing this financing, with indications of strong support from various shareholders and investors. Having successfully grown the business through challenging markets, KRL will use proceeds raised for specific key priorities; being the closure of the Kili Teke deal and funding a path-way to targeted drilling at the KRL North, Ontenu and Mountain Gate prospects. These targeted initiatives will drive value for KRL shareholders over both the short and longer term, as the Company consolidates on its progress and achievements since listing."

READ: Kainantu Resources identifies three high-priority exploration targets at Ontenu area of KRL South project

Each unit in the private placement will be comprised of one common share of the company and one common share purchase warrant, with each warrant being exercisable for one common share at an exercise price of C$0.22 per common share at any time up to 36 months following the closing date of the offering.

The warrants will also be subject to an acceleration clause whereby, in the event the volume-weighted average trading price of the common shares on the TSX Venture Exchange (TSXV) is equal to or greater than C$0.44 for a period of ten consecutive trading days, the company will have the right to accelerate the expiry date of the warrants by giving written notice to the holders that the warrants will expire on the date that is not less than 10 days from the date notice is provided by the company to the warrant holders.

The company said current shareholder and control person of the company, Snowfields Wealth Management Limited, a private British Virgin Islands holding company controlled by Geoff Lawrence, a director of the company, and Axis Metals and Mining Pte. Ltd, a private Singapore company controlled by KRL CEO Salthouse, will participate in the offering. 

Accordingly, the participation of Snowfields and Axis in the Offering constitutes a related party transaction under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions (MI 61-101). The company anticipates that Snowfields, Axis and other significant shareholders will participate in the offering to maintain their proportionate equity interests in the company.

In connection with the offering, the company said it may pay finder's fees to certain finders, which fees would be a cash payment equal to 6% of the gross proceeds raised by purchasers introduced by such finders, and the issuance of non-transferable compensation warrants equal to 6% of the number of units purchased by purchasers introduced by such finders. Each such compensation warrants will be exercisable for one common share at an exercise price of C$0.22 per common share at any time prior up to 36 months following the closing date of the offering and will be issued on substantially the same terms and conditions as the warrants, except that the compensation warrants will not be subject to an acceleration clause.

All securities issued under the offering and as payment of any finder's fees, including common shares issuable upon the exercise of warrants or compensation warrants, if any, will be subject to a hold period of four months and one day after the date of closing of the offering. However, there is no assurance that the company will complete the offering upon the terms set out above, or at all.

The offering is expected to close on or about October 31, 2022, and the company said it will update on the private placement in due course.

Completion of the offering is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory approvals, including acceptance of the TSXV.

The units being offered will not be, and have not been, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, a US person.

Kainantu Resources is an Asia-Pacific-focused gold mining company with three highly prospective gold-copper projects, KRL South, KRL North and the May River Project. All projects are located in premier mining regions in Papua New Guinea (PNG).

Both KRL North and KRL South show potential to host high-grade epithermal and porphyry mineralisation, as seen elsewhere in the high-grade Kainantu Gold District.  The May River project is in close proximity to the world-renowned Frieda River Copper-Gold Project, with historical drilling indicating the potential for significant copper-gold projects.

KRL has a highly experienced board and management team with a proven track record of working together in the region; and an established in-country partner. KRL recently executed an agreement to acquire the Kili Teke project in the western highlands of PNG.

Contact the author at jon.hopkins@proactiveinvestors.com

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on 17/12/20