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TORONTO, Aug. 8, 2017 /CNW/ - Arias Resource Capital Fund L.P. ("ARC I"), a Cayman Islands exempted limited partnership, Arias Resource Capital Fund II L.P. ("ARC II"), a Cayman Islands exempted limited partnership, Arias Resource Capital Fund II (Mexico) L.P., an Ontario limited partnership ("ARC Mexico", together with ARC I and ARC II, the "ARC Funds"), and Arias Resource Capital Management L.P. ("ARCM"), a Delaware limited partnership, announced today that they received an aggregate of 3,817,803 common shares ("Shares") in the capital of Cautivo Mining Inc. ("Cautivo" or the "Corporation"), representing approximately 70.5% of the issued and outstanding Shares.
Pursuant to a previously announced distribution of Shares by Sierra Metals Inc. ("Sierra"), the former parent company of Cautivo, as a return of capital, to holders of Sierra's common shares (the "Distribution"), ARC I received 1,054,439 Shares, ARC II received 559,626 Shares, ARC Mexico received 31,756 Shares and ARCM received 8,137 Shares. Each of the ARC Funds and ARCM passively received such Shares in their capacities as shareholders of Sierra and, consequently, no consideration was payable or paid therefor. The Distribution was qualified pursuant to a final long form prospectus of Cautivo dated July 10, 2017 (the "Prospectus").
Under the Prospectus, the Corporation also implemented a rights offering (the "Rights Offering") whereby holders of Sierra common shares at 5:00 p.m. (Toronto time) on July 26, 2017 (other than certain ineligible holders) received 3.6589638 rights (each whole a "Right") for each Share held. For every whole Right held, a holder is entitled to subscribe for one Share at a price of $0.84 per Share at any time from August 8, 2017 to August 29, 2017. On July 10, 2017, the Corporation entered into a standby purchase agreement (the "Standby Agreement") with each of ARC II and ARC Mexico pursuant to which each of ARC II and ARC Mexico agreed to, among other things, irrevocably exercise all of the Rights held by it (collectively the "Initial Purchaser Rights"). Concurrently with the Distribution and pursuant to the Standby Agreement, ARC II and ARC Mexico irrevocably exercised their Initial Purchaser Rights by paying C$1,817,629 in the aggregate to Cautivo in consideration for the issuance by Cautivo of 2,047,651 and 116,194 Shares to ARC II and ARC Mexico, respectively.
The ARC Funds are managed by ARCM. The respective general partner of each of the ARC Funds retains the power to make investment and voting decisions in respect of the securities (including the Shares) beneficially owned by the ARC Funds. J. Alberto Arias is the sole director of each of the general partners of the ARC Funds and indirectly controls ARCM. As such, J. Alberto Arias may be deemed to share voting and dispositive power with respect to the Shares beneficially owned by the ARC Funds and ARCM, but he disclaims any beneficial ownership of any such securities, except to the extent of his pecuniary interest therein.
The Standby Agreement provides that ARC II and ARC Mexico shall, subject to satisfaction or waiver of certain terms and conditions, severally and not jointly, each purchase its respective percentage of the Shares underlying Rights that are unexercised following the expiry of the exercise period under the Rights Offering. As such, assuming the terms and conditions of the Standby Agreement are satisfied or waived, ARC II and ARC Mexico will acquire all of the Shares underlying the Rights that are unexercised following the expiry of the Rights Offering on or about August 29, 2017. In addition, the ARC Funds may, from time to time, acquire additional securities of Cautivo and/or dispose of such securities as they may deem appropriate. The ARC Funds and ARCM currently have no other plans or intentions that relate to or would result in any of the actions listed in Items 5 (a) to (k) of Form 62-103F1 – Required Disclosure Under the Early Warning Requirements, but depending on market conditions, general economic and industry conditions, trading prices of Cautivo's securities, Cautivo's business, financial condition and prospects and/or other relevant factors, the ARC Funds may develop such plans or intentions in the future.
This news release has been disseminated in accordance with the early warning requirements of securities laws of each of the provinces and territories of Canada (other than Québec).
SOURCE ARIAS RESOURCE CAPITAL FUND L.P.
For further information: J. Alberto Arias, Director, phone: (212) 266-8600 / e-mail: [email protected]