VANCOUVER, BC – May 19, 2022
Kapa Capital Inc. has completed its previously announced qualifying transaction, as defined by Policy 2.4 of the TSX Venture Exchange, with Quantus Resources Corp. (see Kapa press releases dated May 6, 2020, Sept. 24, 2020, and Feb. 14, 2022). In connection with the qualifying transaction, Kapa changed its name from Kapa Capital Inc. to Kapa Gold Inc.
The Qualifying Transaction
Kapa and Quantus entered into an amended and restated acquisition agreement and an amended and restated arrangement agreement both dated for reference Sept. 22, 2020, and amended effective April 11, 2022, pursuant to which Kapa has agreed to acquire all of the issued and outstanding common shares of Quantus. The qualifying transaction is effected by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia), and Kapa will acquire 100 per cent of the outstanding common shares of Quantus by issuing to each shareholder of Quantus one common share in the capital of Kapa in exchange for one Quantus common share held by such shareholder. All convertible securities of Quantus are converted into convertible securities of Kapa without modification to the exercise price or term. Following the closing of the qualifying transaction, Kapa owns 100 per cent of Quantus’s outstanding common shares. A total of 50,447,473 Kapa shares are issued to the shareholders of Quantus at a deemed price of 25 cents per Kapa share.
The qualifying transaction was premised on the following conditions: (i) the filing of the draft-completed exchange Form 3B2 (information required in a filing statement for the qualifying transaction); (ii) public filing of the National Instrument 43-101F1 report on the Blackhawk property; (iii) public court filing of a fairness opinion; (iv) conditional approval of the exchange in respect of the arrangement agreement; (v) the completion of a non-brokered unit private placement by Quantus; (vi) the payment of 750,000 common shares of Quantus to the beneficial owners of Blackhawk Rising; and (vii) settlement of $29,869.86 of debt convertible into 298,699 Quantus common shares. The aggregate number of issued and outstanding Kapa common shares upon completion of the proposed qualifying transaction is expected to be 55,560,744.
There was no sponsor retained in connection with the qualifying transaction, and Quantus received a waiver from the sponsorship requirements.
The arrangement agreement was approval by the Supreme Court of British Columbia on April 29, 2022.
The Private Placement
Concurrently with completion of the qualifying transaction, Quantus closed its private placement concurrent financing for gross proceeds of $2,811,300. Quantus raised $2,811,300 in gross proceeds through the issuance of 11,245,200 units at a price of 25 cents per unit where each unit comprises one common share and one-half of one share purchase warrant, with each whole warrant exercisable to purchase one common share at a price of 40 cents for a period of 24 months from two years from the date of issuance.
Under the private placement concurrent financing, Quantus paid aggregate cash finders’ fees of $21,000 and issued an aggregate of 84,000 finders’ warrants exercisable for one Quantus share for two years at a price of 40 cents per share. Further finders’ fees are not expected to be paid in connection with the qualifying transaction.
Escrowed Securities
Pursuant to the terms of an exchange Tier 2 value security escrow agreement among Kapa, Computershare Investor Services Inc. (as escrow agent) and certain Kapa shareholders, an aggregate of 5,613,187 Kapa shares have been placed in escrow.
Directors and Officers
Following closing of the qualifying transaction, the directors and officers of Kapa are:
- David K. Paxton, Chief Executive Officer and Director;
- George E. Nicholson, Director;
- Alexander P. Tsakumis, Director;
- Vivian Katsuris, Director;
- Darren Prins, Chief Financial Officer;
- Anjula Trikala, Corporate Secretary.
Postarrangement Initial Operation
Kapa will immediately initiate the proposed phase 1 exploration program.
Road and adit rehabilitation will be undertaken for safe access and to facilitate the mapping and sampling program. The entire site will be compiled into a GIS database of all recent and available exploration data.
Ground geophysics survey by magnetics and VLF-EM (very low frequency/electromagnetics) geophysics will be determined following mapping alteration studies. A picketed grid would be established over the southeastern one-third of the property, which is inferred skarn replacement mineralization.
For the carbonate-hosted epithermal gold-silver deposit types, the program would be focused from the Cliff-Santa Fe zones southeastward to delineate the various thrusts. The skarn mineralization is inferred to be located near the southeastern end of the property. The entire southeastern portion of the property requires geological mapping and mineral deposit investigation to provide additional data to the skarn and carbonate-hosted deposit type.
Detailed rock sampling of exposed hematized thrusts and all reachable adits will be followed by major oxide and trace element geochemistry to define alteration signatures in mineralized thrusts and prioritize thrust panels.
The patented underground workings in the historic Blackhawk mine and surrounding areas will be investigated. The Blackhawk property consists of seven patented lode mineral claims and one patented mill site claim totalling 126 acres (51 hectares) and 179 contiguous federal (Bureau of Land Management) lode mineral claims totalling 3,698 acres (1,497 hectares). The underground mapping will be undertaken in the patented mine once safe access has been achieved. A cutting-edge detailed underground survey will be undertaken to establish the extent of the previous workings and to enable quality assurance/quality control documentation. If Kapa’s geologists consider an underground channel sample program would be meaningful, Kapa will initiate immediately.
Qualified Person
George Nicholson, PGeo, Director, a qualified person under National Instrument 43-101, has reviewed, accepted responsibility therefore and approved the foregoing geotechnical disclosure.
Blackhawk Gold Mine
The Blackhawk was a past producing, high-grade gold underground Adit Mine and associated processing plant located in San Bernardino County, southeastern California, approximately 60 km northwest of Palm Springs, California. Access to the property from Palm Springs is by paved highway, well maintained gravel roads and then dirt roads and trails. The Blackhawk property consists of seven patented lode mineral claims and one patented mill site claim totalling 126 acres (51 hectares) and 179 contiguous Federal (Bureau of Land Management) lode mineral claims totalling 3,698 acres (1,497 hectares). Our exploration program is planning to follow two separate paths; the first is to conduct a project wide survey to examine the extensive mineralization toward uncovering the source of mineralizing event, and secondly to re-enter the underground workings to examine the historic mineralization.
About Kapa
Kapa Gold is exploring its 100% owned historic Blackhawk Gold Mine and surrounding underexplored properties for economic mineralization. Kapa is lead by seasoned capital markets and experienced geologic team focused on responsibly advancing the past producing, highgrade Blackhawk mine towards development thereby creating shareholder value.
To learn more, visit www.kapagold.com .
On behalf of the Board,
David K. Paxton
Kapa Gold Corp.
For More Information Contact:
Konstantine Tsakumis
kon@kapagold.com
604-961-9442
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Forward Looking Information
This news release contains certain “forward-looking information” and “forward-looking statements” within the meaning of Canadian securities legislation as may be amended from time to time, including, without limitation, statements regarding the perceived merit of the Company’s properties, including additional exploration potential of Blackhawk, potential quantity and/or grade of minerals, the potential size of the mineralized zone, metallurgical recoveries, the timing and results of permitting and the Company’s exploration and development plans in California and expectations on the potential extension of the expired mineral concessions and granting of new mineral concessions with respect to
Blackhawk. Forward-looking statements are statements that are not historical facts which address events, results, outcomes or developments that the Company expects to occur. Forward-looking statements are based on the beliefs, estimates and opinions of the Company’s management on the date the statements are made, and they involve a number of risks and uncertainties. Certain material assumptions regarding such forward-looking statements were made, including without limitation, assumptions regarding the price of gold, silver and copper; the accuracy of mineral resource estimations; that there will be no material adverse change affecting the Company or its properties; that all required approvals will be obtained, including concession renewals and permitting; that political and legal developments will be consistent with current expectations; that currency and exchange rates will be consistent with current levels; and that there will be no significant disruptions affecting the Company or its properties. 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. Forward-looking statements involve significant known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks include, but are not limited to: risks related to uncertainties inherent in the preparation of mineral resource estimates, including but not limited to changes to the cost assumptions, variations in quantity of mineralized material, grade or recovery rates, changes to geotechnical or hydrogeological considerations, failure of plant, equipment or processes, changes to availability of power or the power rates, ability to maintain social license, changes to interest or tax rates, changes in project parameters, delays and costs inherent to consulting and accommodating rights of local communities, environmental risks, title risks, including concession renewal, commodity price and exchange rate fluctuations, risks relating to COVID-19, delays in or failure to receive access agreements or amended permits, risks inherent in the estimation of mineral resources; and risks associated with executing the Company’s objectives and strategies, including costs and expenses, as well as those risk factors discussed in the Company’s most recently filed management’s discussion and analysis, as well as its annual information form dated December 31, 2021, available on www.sedar.com. Except as required by the securities disclosure laws and regulations applicable to the Company, the Company undertakes no obligation to update these forward-looking statements if management’s beliefs, estimates or opinions, or other factors, should change.