C$2.5 Million Private Placement Financing Announced, with Lead Order of C$1.0 Million Secured from HPX
HPX to Convert Outstanding Debt to Equity
Vancouver, British Columbia--(Newsfile Corp. - July 8, 2019) -
Kaizen Discovery Inc. (TSXV: KZD) (OTC: CCNCF) is pleased to announce that it has successfully completed all permitting requirements at its 100%-owned Pinaya Copper Gold Project in Peru and has executed new land access and community agreements with the Pinaya community. Kaizen has served notice to various government regulators of its intention to commence with its 2019 Pinaya resource expansion and target testing drill program.
The 2019 drilling program will be focused on the Pinaya Mineral Resource area where Kaizen has identified compelling resource expansion opportunities along strike to the north, at Cerro Antana, and to the south, at Viscachani, of the defined Mineral Resource area. Additional drilling is planned to test the new Pedro Dos Mil target, where mapping completed by Kaizen has identified outcropping potassic-altered quartz diorite porphyry carrying chalcopyrite-bearing, early-stage "A" type veining, which coincides with anomalous values of copper and gold in soils as well as ground-magnetic and chargeability anomalies.
"We are extremely pleased to have successfully completed the rigorous permitting process and to have executed new land access and community agreements with the community of Pinaya. Our focused 2019 drill program is designed to expand the known mineral resources as well as to test the exciting new outcropping Pedro Dos Mil target discovered by our team," said Tom Peregoodoff, Kaizen's President and Chief Executive Officer.
The project is located in southeastern Peru, approximately 150 kilometres northeast of the city of Arequipa. The project lies within the Andahuaylas-Yauri Porphyry Belt, which hosts numerous porphyry and skarn systems, including Las Bambas, Tintaya, Constancia and Haquira.
The project hosts Mineral Resources within three contiguous zones over a 1.7-kilometre strike in the central part of the property. The Measured and Indicated Resource estimate totals 41.7 million tonnes grading 0.32% copper and 0.49 grams/tonnes (g/t) gold (0.63% copper equivalent1; "CuEq") containing 298 million pounds of copper and 656,000 ounces of gold.2 The estimated Inferred Resource totals 40.2 million tonnes grading 0.36% copper and 0.30 g/t gold (0.55% CuEq) and contains 319 million pounds of copper and 388,000 ounces of gold.3
1. Copper‐equivalent grade estimate based on US$2.84/lb copper, US$1236/oz gold and average metallurgical recoveries of 80%.
2. The Measured and Indicated Resource consists of Measured Resources of 8.2 million tonnes grading 0.33% copper and 0.60 g/t gold (0.71% CuEq) containing 59 million pounds of copper and 158,000 ounces of gold. Indicated Resources of 33.5 million tonnes grading 0.32% copper and 0.46 g/t gold (0.62% CuEq) containing 239 million pounds of copper and 497,000 ounces of gold.
3. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
Figure 1: Map showing drill targets on the Pinaya Mineral Resource area.
To view an enhanced version of Figure 1, please visit:
https://orders.newsfilecorp.com/files/2875/46121_b2fd5d6f544a9827_002full.jpg
Kaizen undertaking a C$2.5 million financing, with lead order of C$1 million secured by majority shareholder HPX TechCo
Kaizen also is undertaking a non-brokered private placement of up to C$2.5 million. The company will be offering up to 50,000,000 units at a price of C$0.05 per unit, with each unit consisting of one common share and one common share purchase warrant of the company. Each warrant will entitle the holder to purchase one common share of the company at C$0.12 per share for a period of 24 months following the closing date of the private placement. A cash finder's fee of up to 6% may be payable on the portion of the private placement taken up by non-insiders.
Kaizen's majority shareholder, HPX TechCo Inc. (HPX), has agreed to subscribe to 20 million units, for an investment of C$1 million, of the offering (Lead Order).
The proceeds from the private placement will be used to fund the planned exploration drilling program at the Pinaya Project, to identify and review new project opportunities, and for general administrative expenses.
The units will be 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. Closing of the private placement is expected to be completed in tranches and is subject to TSX Venture Exchange approval.
This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (U.S. Securities Act) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
Conversion of US$750,000 HPX Loan
In addition to the financing, Kaizen has agreed with its majority shareholder HPX to convert the full amount of principal and interest owing on an unsecured promissory note provided to Kaizen by HPX, totalling US$781,438(C$1,020,480, based on the Bank of Canada exchange rate dated July 5, 2019), into 20,409,607 shares of Kaizen at a price of C$0.05 per share. The shares issued will be subject to a statutory hold period in Canada expiring four months and one day from the closing date. Closing of the conversion of the outstanding principal and interest of the unsecured promissory note into Kaizen shares is subject to approval of the TSX Venture Exchange.
Mr. Peregoodoff added, "This fundraising will allow the company to complete the 2019 drill program at the Pinaya Project as well as continue its business development activities. The lead order secured from HPX, as well as its agreement to convert the debt it holds to additional equity, confirms the tremendous support we continue to receive from our major shareholder."
As a result of the private placement and debt conversion, Kaizen will have a total of 347,176,243 shares issued and outstanding. HPX's ownership of Kaizen will change from its current level of 66.8% to 64.9% assuming full take up of the private placement offering.
Related Party Transactions
The conversion of debt to shares and Lead Order by HPX constitutes a "related party transaction" under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions (MI 61-101) as HPX is a related party of Kaizen given its greater than 10% beneficial shareholding. Pursuant to Section 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 conversion of debt to shares and Lead Order by HPX due to the fair market value of the conversion of debt for shares and Lead Order by HPX each being below 25% of the company's market capitalization for purposes of MI 61-101. The company will file a material change report in respect of the conversion of debt to shares and Lead Order by Kaizen. However, the material change report will be filed less than 21 days prior to the closing of both the conversion of debt for shares and Lead Order by Kaizen, which is consistent with market practice and the company deems reasonable in the circumstances.
Qualified Person, Quality Control and Assurance
Kaizen's Chief Operating Officer, Mark Gibson, PrNatSci, is the Qualified Person as defined under National Instrument 43-101 who has reviewed, approved and is responsible for the scientific and technical information presented in this news release.
For detailed information about assay methods and data verification measures used to support the scientific and technical information, and the Pinaya Mineral Resource estimate, please refer to the National Instrument 43-101 technical report for the Pinaya Project titled "Pinaya Gold-Copper Project Technical Report" that was prepared jointly by Brian Cole, P.Geo and GeoSim Services Inc., with an effective date of April 26, 2016. The technical report is available on the Kaizen's SEDAR profile at www.sedar.com and at www.kaizendiscovery.com.
About Kaizen
Kaizen is a Canadian mineral exploration and development company with exploration projects in Peru and Canada. More information on Kaizen is available at www.kaizendiscovery.com.
Information Contact
Bill Trenaman +1-604-669-6446
info@kaizendiscovery.com
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward-looking Statements
Certain statements in this release constitute "forward-looking statements" or "forward-looking information" within the meaning of applicable securities laws, including, without limitation, statements with respect to the 2019 drilling program; to the terms, timing and expected amount of proceeds to be received as part of the private placement; and the timing and completion of the private placement, the Lead Order by HPX and the conversion of debt to shares with HPX. Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of Kaizen, or industry results, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements or information. Such statements can be identified by the use of words such as "may", "would", "could", "will", "intend", "expect", "believe", "plan", "anticipate", "estimate", "scheduled", "forecast", "predict", and other similar terminology, or state that certain actions, events, or results "may", "could", "would", "might", or "will" be taken, occur, or be achieved.
These statements reflect the company's current expectations regarding future events, performance, and results and speak only as of the date of this news release. Consequently, there can be no assurances that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Except as required by securities disclosure laws and regulations applicable to the company, the company undertakes no obligation to update these forward-looking statements if the company's expectations regarding future events, performance, or results change.
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