/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED
STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY
CONSTITUTE A VIOLATION OF U.S. SECURITIES LAWS./
TORONTO,
Dec. 18, 2013 /CNW/ - Ecuador Gold
& Copper Corp. (TSX-V: EGX) (the "Company") announces
the exercise by Aura International Services Ltd. ("Aura") of
8,333,333 previously issued warrants to purchase common shares
(each a "Warrant") for total proceeds to the Company of
US$625,000. The Warrants were
exercisable at a price of US$0.075
per common share, and were issued to Aura pursuant to an up to
US$3.25 million private placement by
the Company of which the final tranche closed on December 4, 2013 (the "Private
Placement").
Following the exercise of the Warrants, and
including securities acquired under the Private Placement and
previously, Aura holds a total of 98,063,589 common shares of the
Company and 46,841,252 Warrants, representing approximately 47.4%
of the issued and outstanding common shares of the Company on a
non-diluted basis, and 57.1% of the issued and outstanding common
shares of the Company on an extended partially-diluted basis after
giving effect to the exercise of all of the Warrants held by Aura
following completion of the Private Placement. As previously
reported in the Company's news release dated December 4, 2013, in exchange for the purchase by
Aura of all of the units under the Private Placement, and the
exercise of warrants, providing aggregate gross proceeds of
US$6.2 million to the Company, Aura
will be entitled to nominate up to three directors of the
Company.
Aura is a "related party" to the Company under
MI 61-101 as it is a "control person" of the Company by virtue of
its shareholdings in excess of 20% of all issued and outstanding
Shares of the Company. Accordingly, the exercise of the Warrants is
a "related party transaction" under MI 61-101.
The Private Placement, including the issuance of
the Warrants and the underlying common shares upon exercise
thereof, was unanimously approved by the board of directors of the
Company effective August 14, 2013.
The Company also received minority shareholder approval for the
Private Placement pursuant to Multilateral Instrument 61-101
Protection of Minority Security Holders in Special Transactions
("MI 61-101") at a special meeting of the shareholders
of the Company held on October 11,
2013 (the "Shareholders' Meeting").
The subscription by Aura for the Units purchased
by it was agreed to by the Company on November 6, 2013 pursuant to a subscription
agreement containing the customary provisions for the subscription
of units of a reporting issuer with such shares comprising the
Units posted and listed for trading on the TSX Venture
Exchange.
There has been no formal valuation of the
Company or its assets to date, as there has not yet been any
necessity to do so. The Private Placement (and exercise of
Warrants issued pursuant thereto) is a transaction that is exempt
from the formal valuation requirements under Section 5.4 of MI
61-101 pursuant to Subsections 5.5(b) and 5.5(c) of MI 61-101
because:
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(a) |
no securities of the
Company are listed or quoted on the Toronto Stock Exchange, the New
York Stock Exchange, the American Stock Exchange, the NASDAQ Stock
Market, or a stock exchange outside of Canada and the United States
other than the Alternative Investment Market of the London Stock
Exchange or the PLUS markets operated by PLUS Markets Group plc.;
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(b) |
the issuance of the
8,333,333 common shares pursuant to the exercise of the Warrants by
Aura for total proceeds of US$625,000 is a distribution of
securities of the Company to Aura for cash consideration, and |
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i. |
neither the Company nor, to the
Company's knowledge after reasonable inquiry, Aura has knowledge of
any material information concerning the Company or its securities
that has not been generally disclosed; and |
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ii. |
the Company's management information
circular dated September 10, 2013 in respect of the Shareholders'
Meeting fully describes the Private Placement (including the
exercise of Warrants issued pursuant thereto) and includes a
description of the effect of the Private Placement and Warrant
exercise on the direct and indirect voting interest of Aura. |
The proceeds of the Warrant exercise will be
used for exploration and development expenses, and as additional
working capital. The common shares issued to Aura pursuant to the
Warrant exercise are subject to a four-month hold period from the
date of issuance
Cautionary Note
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 Ecuador Gold and Copper Corp.