Kincora announces $4 million private placement and debt conversion

IBEX MERGER CONSOLIDATES THE SOUTHERN GOBI COPPER-GOLD BELT

CONVERSION OF OUTSTANDING $2 MILLION LOAN NOTE

PROPOSED $2 MILLION NON-BROKERED FINANCING

/NOT FOR DISTRIBUTION TO UNITED STATES WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

VANCOUVER, June 1, 2016 /CNW/ - Kincora Copper Limited (the "Company", "Kincora") (TSXV:KCC) today announces a proposed non-brokered private placement of up to $2 million through the issuance of up to 5,333,333 shares at a price of $0.375 on a post-consolidated basis (proposed 10 old for 1 new share consolidation), following the May 25, 2016 agreement, providing for the merger of two Kincora subsidiaries with Ibex Land Mongolia LLC and Ibex Mongolia LLC ("Ibex"), entities indirectly controlled by High Power Exploration Inc ("HPX").  

Concurrent with the Ibex mergers and the proposed $2 million non-brokered price placement, Kincora has received commitment from its largest shareholder, Origo Partners Plc ("Origo"), to convert the $2,000,000 convertible note outstanding (net of escrowed funds in the amount of $500,000) into equity on the same terms as the private placement, resulting in Kincora having a debt free balance sheet and funds raised from the non-brokered private placement being used to advance the Company's exploration and consolidation strategy in the Southern Gobi copper-gold belt.

Firm commitments are in place to ensure the financial requirements of the Origo loan note conversion into equity alongside the private placement and mergers with Ibex are satisfied.

Highlights

  • Intention to raise up to $2 million via non-brokered private placement at a price of $0.375 on a post consolidated basis ($0.0375/sh pre-consolidation), a 25% discount to the last closing price. 
  • Origo has agreed to convert the $2 million principal and accrued interest outstanding under the net convertible note (principal is net of $500,000 escrowed funds released to Origo), on the same terms as the private placement, resulting in Kincora having a debt free balance sheet.
  • As a result of the Ibex transaction, HPX will become a shareholder of Kincora and provide support via provision of its Typhoon geophysical technology and proprietary technical services.
  • Kincora management and board are providing financial support to this offering, directors being compensated in stock only, with senior management salaries being over a third in scrip.
  • Firm commitments are in place to ensure the financial requirements of the Origo loan note conversion into equity alongside the private placement and mergers with Ibex are satisfied.
  • Strong interest in the Ibex transaction and Kincora corporate strategy already indicated from existing and new groups.
  • Renewed interest in Mongolia as an investment jurisdiction following the notice to proceed for Oyu Tolgoi Stage 2 development and recent re-ratings of other listed metal exploration plays.

Commenting on today's announcement, Sam Spring, President and CEO of Kincora, said:

"Concurrent with the Ibex merger, having received commitment from Kincora's largest shareholder Origo to convert the convertible note outstanding into equity alongside and on the same terms of the proposed non-brokered price placement, the Company is pleased to announce an offering open to all existing shareholders in qualifying juridictions and new groups. The raising is being supported by key insiders and will result in a restructured and recapitalized Kincora, creating a favorable corporate platform to support our proposed consolidation and exploration strategy in a belt that supports the potential for the next globally significant copper/gold discoveries, at a favorable point of the Mongolian and global commodity cycles.

There has been strong interest already indicated in the Ibex transaction and Kincora corporate strategy from existing and new groups, with sufficient initial firm commitments to ensure the financing requirements of the Ibex deal and Origo loan note conversion are both satisfied. The transactions will result in a consolidated landholding of over 1,500km2, the majority of the prospective exploration licenses which dominate a key geological trend between and along strike from the Oyu Tolgoi and Tsagaan Suvarga copper mines, supporting an industry leading proposition of copper/gold and gold targets, Kincora having a debt free balance sheet and new funding being put to work in the ground".

The private placement is subject to TSX Venture Exchange approval and all securities are subject to a four-month hold period.  Finder's fees may be payable in connection with the private placement, in accordance with the policies of the TSX Venture Exchange.

Pro forma corporate structure








(in millions unless otherwise stated)


Existing


Pro forma


Pro format post

Consolidation*








Existing Common shares


314.1


314.1


31.4








Conversion of Origo note

($2m principal and accrued interest due Oct'16)




55.7


5.6








ADJUSTED COMMON SHARES




369.8


37.0

HPV merger consideration




59.0


5.9

COMMON SHARES POST LOAN & MERGER




428.7


42.9

Non-brokered offering




53.3


5.3

SHARES POST LOAN, MERGER & OFFERING




482.1


48.2

  • Assuming 10:1 roll back

Details of the non-brokered price placement

Kincora plans to undertake a non-brokered private placement of up to $2 million through the issuance of up to 5,333,333 shares at a price of $0.375 on a post-consolidated basis (proposed 10 old for 1 new share consolidation). Kincora has set a meeting date of July 12, 2016 for its Annual General Meeting ("AGM"), at which time it will seek shareholder approval for a proposed consolidation of the Company's issued and outstanding share capital on the basis of 10 old for 1 new share to facilitate the proposed non-brokered private placement, the Ibex mergers and Origo loan note conversion.

Firm commitments are in place to ensure the financial requirements of the Origo loan note conversion into equity alongside the private placement and mergers with Ibex are satisfied.

The offering is open to investors who qualify under applicable securities laws, including but not limited to existing shareholders in qualifying jurisdictions in Canada and outside the United States under B.C. Instrument 45-534 and "accredited investors" in the United States and Canada.  Kincora has set May 31, 2016 as the record date for determining shareholders entitled to participate in the offering in reliance on the existing shareholder exemption.  If the offering is over-subscribed, shares will be allotted on a first come first served basis. Qualifying investors who wish to participate in the private placement should contact the Company using the contact information set forth below. It is anticipated that the private placement will close on or about June 30, 2016.

Proceeds from this financing will be used to advance Kincora's exploration and land consolidation strategy ($1,400,000), including: testing of advance stage targets; proof of geological interpretation of regional portfolio and similar age/style/mineralized targets as other porphyries in the belt; seeking additional strategic land and other potential corporate opportunities; and, unallocated working capital ($600,000).

Origo loan note conversion
Concurrent with the Ibex mergers and the proposed non-brokered price placement, Kincora has received commitment from its largest shareholder, Origo to convert the $2,000,000 convertible note principal and interest outstanding (net of $500,000 escrowed funds to be paid to Origo) into equity, subject to an equity financing of not less than $500,000, with conversion being on the same terms as such equity financing.

The loan note is due and payable on October 21, 2016 with interest at 8.7% per annum, payable on maturity in cash or shares of Kincora, at Origo's election. Prior to the conversion of the loan note and its associated interest, Origo holds 85,883,786 common shares of Kincora.

Ibex transaction overview
As announced on May 25, 2016, Kincora has entered into a definitive Share Exchange Agreement with High Power Ventures Inc. ("HPV"), a private company controlled by HPX, whereby HPV's wholly owned Mongolian subsidiaries, Ibex Land Mongolia LLC and Ibex Mongolia LLC will merge with Kincora's respective land holding and services subsidiaries (the "Merger").

In connection with the Merger, Kincora will issue to or at the direction of HPV on a pre-consolidated basis a total of 58,950,000 shares (the "Shares") of Kincora and 29,475,000 share purchase warrants (the "Warrants") each Warrant entitling the holder to acquire a share of Kincora at a price equal to 1.8 times the price per security of the next minimum $500,000 private placement of Kincora, with certain acceleration provisions for warrant conversion. The number of Shares and Warrants are subject to adjustment in certain circumstances.

The Merger will result in HPX, Goviex Uranium Inc. and HPV minorities becoming shareholders of Kincora. HPV will have certain rights to maintain their ownership percentages by participating in further capital raisings and, at a threshold of share ownership, have the right to a board seat. The Merger is subject to a certain Mongolian processes and approvals, and to the acceptance of the TSX Venture Exchange.

About HPX
HPX is a privately owned metals-focused exploration company deploying proprietary geophysical technologies to rapidly evaluate buried targets. HPX has a highly experienced board and management team and is indirectly controlled by international financier and mining entrepreneur Robert Friedland. More information about HPX can be found at http://www.hpxploration.com

About Kincora
Kincora Copper Limited. is a junior resource company engaged in the acquisition, exploration and development of mineral properties, with a focus on copper-gold projects in Mongolia.

For further information on the Company, please visit www.kincoracopper.com

Forward-Looking Statements
Certain information regarding Kincora contained herein may constitute forward-looking statements within the meaning of applicable securities laws respecting the closing of the Merger and the expectations from the completion of the Merger. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although Kincora believes that the expectations and assumptions reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Kincora cautions that actual performance will be affected by a number of factors, most of which are beyond its control, and that future events and results may vary substantially from what Kincora currently foresees. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration results, continued availability of capital and financing and general economic, market or business conditions as well as changes in the regulation of the mining industry in Mongolia. The forward-looking statements are expressly qualified in their entirety by this cautionary statement. The information contained herein is stated as of the current date and is subject to change after that date. The Company does not assume the obligation to revise or update these forward-looking statements, except as may be required under applicable securities laws.

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.

SOURCE Kincora Copper Limited

For further information: Sam Spring, President and Chief Executive Officer, Email: sam.spring@kincoracopper.com, Phone: +61431 329 345


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