Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-207440
_______________________________________________
NORTHERN DYNASTY MINERALS LTD.
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14,966,589 common shares, |
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without par value |
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This prospectus relates to the offer and sale from time to time
(the Offering) by the selling shareholders identified in this
prospectus of up to 14,966,589 common shares of Northern Dynasty Minerals Ltd.
(the Company) to be distributed without additional payment upon the
exercise or deemed exercise of 14,966,589 special warrants (the Special
Warrants) of the Company held by the selling shareholders. The Special
Warrants were issued to the selling shareholders by the Company in private
placements transactions that completed on August 28, 2015 and on September 9,
2015 (the Closing Date) pursuant to subscription agreements entered
into between the Company and the selling shareholders. The common shares are
being registered pursuant to registration rights agreements entered into between
the Company and the selling shareholders. This prospectus also relates to such
indeterminate number of common shares as may be issuable with respect thereto as
a result of stock splits, stock dividends or similar transactions
The selling shareholders will receive all of the proceeds from
any sales of the common shares offered pursuant to this prospectus. We will not
receive any of these proceeds, but we will incur expenses in connection with the
offering.
The selling shareholders may sell the common shares at various
times and in various types of transactions, including sales in the open market,
sales in negotiated transactions and sales by a combination of these methods.
Shares may be sold at the market price of the common shares at the time of a
sale, at prices relating to the market price over a period of time, or at prices
negotiated with the buyers of shares.
The common shares of the Company are traded on the NYSE MKT LLC
(the NYSE MKT) and on the Toronto Stock Exchange (TSX) under
the symbols NAK and NDM, respectively. On November 6, 2015, the closing price
of the common shares, as reported on the NYSE MKT, was $0.37 per share and the
TSX was C$0.49 per share.
The principal executive office of the Company is located at
15th Floor, 1040 West Georgia Street, Vancouver, British Columbia,
Canada V6E 4H1 and its telephone number is (604) 684-6365.
An investment in our common shares involves significant
risks. You should carefully consider the risk factors included in this
prospectus under the heading Risk Factors beginning on page 11 of this
prospectus, as well as those risk factors that we have incorporated by reference
into this prospectus and that we may include in any prospectus supplement.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
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THE DATE OF THIS PROSPECTUS IS NOVEMBER 20, 2015 |
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TABLE OF CONTENTS
ABOUT THIS PROSPECTUS |
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CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS |
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CAUTIONARY NOTES TO UNITED STATES
INVESTORS CONCERNING MINERAL RESERVE AND RESOURCE ESTIMATES |
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NORTHERN DYNASTY MINERALS LTD. |
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RECENT DEVELOPMENTS |
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RISK FACTORS |
11 |
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SPECIAL WARRANT OFFERING – OFFER
STATISTICS AND EXPECTED TIMETABLE |
13 |
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CAPITALIZATION AND INDEBTEDNESS |
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REASONS FOR THE OFFER AND USE OF
PROCEEDS |
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TRADING PRICE HISTORY |
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SELLING SECURITY HOLDERS |
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PLAN OF DISTRIBUTION |
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DESCRIPTION OF SHARE CAPITAL |
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CERTAIN MATERIAL UNITED STATES FEDERAL
INCOME TAX CONSIDERATIONS |
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WHERE YOU CAN FIND MORE INFORMATION |
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INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE |
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INTERESTS OF EXPERTS |
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EXPERTS |
42 |
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LEGAL MATTERS |
42 |
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ENFORCEABILITY OF CIVIL LIABILITIES |
42 |
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form F-3
that we filed with the Securities and Exchange Commission (SEC) under
the Securities Act of 1933, as amended (the Securities Act)
using a continuous offering process. Under this continuous offering process, the
selling shareholders may from time to time sell the common shares described in
this prospectus in one or more offerings. We will not receive any of the
proceeds from these sales, but we will incur expenses in connection with the
offering.
No offer to sell these securities is being made in any
jurisdiction where the offer or sale is not permitted. You should not consider
this prospectus to be an offer or solicitation relating to the securities in any
jurisdiction in which such an offer or solicitation relating to the securities
is not authorized. Furthermore, you should not consider this prospectus to be an
offer or solicitation relating to the securities if the person making the offer
or solicitation is not qualified to do so, or if it is unlawful for you to
receive such an offer or solicitation.
These shares have not been registered under the securities laws
of any state or other jurisdiction as of the date of this prospectus. The
selling stockholders should not make an offer of these shares in any state where
the offer is not permitted.
This prospectus does not constitute a prospectus under Canadian
securities laws and accordingly does not qualify the resale of the common shares
on the TSX or otherwise in Canada. The common shares offered hereby may not be
sold on or through the facilities of the TSX and may only be resold in Canada in
compliance with exemptions from prospectus and registration requirements under
applicable Canadian securities laws. The Company has filed a separate prospectus
with Canadian securities regulatory authorities under Canadian securities laws
in respect of the issuance of the common shares offered hereby, however the
issuance by Canadian securities regulators of a receipt for such Canadian
prospectus will have no impact on the ability of the holders of the common
shares to resell the common shares within the United States.
You should rely only on information contained or incorporated
by reference in this prospectus or in any prospectus supplement hereto. We have
not authorized any other person to provide you with different information. If
anyone provides you with different or inconsistent information, you should not
rely on it.
You should assume that the information appearing in this
prospectus is accurate as of the date on the front cover of this prospectus
only. Our business, financial condition, results of operations and prospects may
have subsequently changed.
Unless the context otherwise requires, all references in this
prospectus to the Company, Northern Dynasty, we,
us, our or our company refer, collectively, to
Northern Dynasty Minerals Ltd. and its subsidiaries.
Unless otherwise indicated, in this prospectus, all references
to dollars, or $ are to United States dollars. References in this Prospectus
to C$ are to Canadian dollars. The consolidated financial statements
incorporated by reference into this prospectus, and the financial data derived
from those consolidated financial statements, are presented in Canadian dollars.
- 3 -
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes or incorporates by reference certain
statements that constitute forward-looking statements within the meaning of
the United States Private Securities Litigation Reform Act of 1995. These
statements appear in a number of places in this prospectus and documents
incorporated by reference herein and include statements regarding our intent,
belief or current expectation and that of our officers and directors. These
forward-looking statements involve known and unknown risks and uncertainties
that may cause our actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. When used in this prospectus or in
documents incorporated by reference in this prospectus, words such as believe,
anticipate, estimate, project, intend, expect, may, will, plan,
should, would, contemplate, possible, attempts, seeks and similar
expressions are intended to identify these forward-looking statements. All
statements in documents incorporated herein, other than statements of historical
facts, that address future production, permitting, reserve potential,
exploration drilling, exploitation activities and events or developments that
the Company expects are forward-looking statements. These forward-looking
statements are based on various factors and were derived utilizing numerous
assumptions that could cause our actual results to differ materially from those
in the forward-looking statements. Accordingly, you are cautioned not to put
undue reliance on these forward-looking statements. Additional forward-looking
statements include, among others, statements regarding:
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our expectations regarding the potential for
permitting of a mine at the Pebble Project; |
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the outcome of legal proceedings in which we
are engaged; |
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our expected financial performance in future
periods; |
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our plan of operations, including our plans to
carry out and finance exploration and development activities; |
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our ability to raise capital for exploration
and development activities; |
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our expectations regarding the exploration and
development potential of the Pebble Project; and |
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factors relating to our investment decisions.
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Certain of the assumptions we have made
include assumptions regarding, among other things:
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that the Company will ultimately be able to
demonstrate that a mine at the Pebble Project can be developed and
operated in an environmentally sound and socially responsible manner,
meeting all relevant federal, state and local regulatory requirements so
that we will be ultimately able to obtain permits authorizing construction
of a mine at the Pebble Project; |
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that the market prices of copper and gold will
not further decline or stay depressed for a lengthy period of time; |
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that we will be able to secure sufficient
capital necessary for the continued environmental assessment and
permitting activities and engineering work which is precondition to any
potential development of the Pebble Project which would then require
engineering and financing in order to advance to ultimate construction;
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that key personnel will continue their
employment with us; and |
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we will continue to be able to secure minimal
adequate financing on acceptable terms. |
Some of the risks and uncertainties
that could cause our actual results to differ materially from those expressed in
our forward-looking statements include:
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the outcome of legal and political challenges
with which we are engaged regarding the Pebble Project; |
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ability to obtain permitting for a mine at the
Pebble Project; |
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ability to continue to fund the exploration and
development activities; |
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the highly cyclical nature of the mineral
resource exploration business; |
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the exploration stage of the Pebble Project and
the lack of known reserves on the Pebble Project; |
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ability to establish that the Pebble Project
contains commercially viable deposits of ore; |
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ability to recover the financial statement
carrying values of the Pebble Project if the Company ceases to continue on
a going concern basis; |
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the potential for loss of the services of key
executive officers; |
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a history of, and expectation of further,
financial losses from operations impacting our ability to continue on a
going concern basis; |
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the volatility of gold, copper and molybdenum
prices and mining share prices; |
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the inherent risk involved in the exploration,
development and production of minerals, the presence of unknown geological
and other physical and environmental hazards at the Pebble Project; |
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the potential for changes in, or the
introduction of new, government regulations relating to mining, including
laws and regulations relating to the protection of the environment and
project legal titles; |
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potential claims by third parties to titles or
rights involving the Pebble Project; |
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the possible inability to insure our operations
against all risks; |
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the highly competitive nature of the mining
business; and |
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the dilution to current shareholders from
future equity financings is currently uncertain. |
This list is not exhaustive of the factors that may affect any
of the Companys forward-looking statements or information. Forward-looking
statements or information are statements about the future and are inherently
uncertain, and actual achievements of the Company or other future events or
conditions may differ materially from those reflected in the forward-looking
statements or information due to a variety of risks, uncertainties and other
factors, including, without limitation, the risks and uncertainties described
above.
Readers are advised to carefully review and consider the risk
factors identified in this prospectus and in the documents incorporated by
reference herein for a discussion of the factors that could cause the Companys
actual results, performance and achievements to be materially different from any
anticipated future results, performance or achievements expressed or implied by
the forward-looking statements. Readers are specifically referred to our annual
report on Form 20-F for the year ended December 31, 2014, as amended (our
2014 Form 20-F) for a more detailed discussion of the risks that we
face, as well as the risk factors identified under Risk Factors below. Our
2014 Form 20-F is incorporated by reference herein. Readers are further
cautioned that the foregoing list of assumptions and risk factors is not
exhaustive.
The Companys forward-looking statements and information are
based on the assumptions, beliefs, expectations and opinions of management as of
the date such statements are made. The Company will update forward-looking
statements and information if and when, and to the extent, required by
applicable securities laws. Readers should not place undue reliance on
forward-looking statements. The forward-looking statements and information
contained herein are expressly qualified by this cautionary statement.
5
CAUTIONARY NOTES TO UNITED STATES INVESTORS CONCERNING
MINERAL RESERVE AND RESOURCE ESTIMATES
This prospectus, including the documents incorporated by
reference herein, uses terms that comply with reporting standards in Canada and
certain estimates are made in accordance with Canadian National Instrument
43-101 Standards of Disclosure for Mineral Projects (NI 43-101).
NI 43-101 is a rule developed by the Canadian Securities Administrators that
establishes standards for all public disclosure an issuer makes of scientific
and technical information concerning mineral projects. Unless otherwise
indicated, all resource estimates contained in or incorporated by reference in
this prospectus have been prepared in accordance with NI 43-101. These standards
differ significantly from the requirements of the SEC, and resource information
contained herein and incorporated by reference herein may not be comparable to
similar information disclosed by companies in the United States (US
companies).
In addition, this prospectus uses the terms measured mineral
resources, indicated mineral resources and inferred mineral resources to
comply with the reporting standards in Canada. These classifications adhere to
the mineral resource and mineral reserve definitions and classification criteria
developed by the Canadian Institute of Mining and are more particularly
described in our 2014 Form 20-F. We advise United States investors that while
the terms measured mineral resources, indicated mineral resources and
inferred mineral resources are recognized and required by Canadian
regulations, the SEC does not recognize them. United States investors are
cautioned not to assume that any part or all of the mineral deposits in these
categories will ever be converted into mineral reserves. These terms have a
great amount of uncertainty as to their existence, and great uncertainty as to
their economic and legal feasibility.
Further, inferred resources have a great amount of
uncertainty as to their existence and as to whether they can be mined legally or
economically. Therefore, United States investors are also cautioned not to
assume that all or any part of the inferred resources exist. In accordance with
Canadian rules, estimates of inferred mineral resources cannot form the basis
of feasibility or other economic studies, except in limited circumstances where
permitted under NI 43-101.
It cannot be assumed that all or any part of measured mineral
resources, indicated mineral resources, or inferred mineral resources will
ever be upgraded to a higher category. Investors are cautioned not to assume
that any part of the reported measured mineral resources, indicated mineral
resources, or inferred mineral resources in this prospectus is economically
or legally mineable.
In addition, disclosure of contained ounces is permitted
disclosure under Canadian regulations; however, the SEC only permits issuers to
report mineralization as in place tonnage and grade without reference to unit
measures.
For the above reasons, information contained in this prospectus
and the documents incorporated by reference herein containing descriptions of
our mineral deposits may not be comparable to similar information made public by
US companies subject to the reporting and disclosure requirements under the
United States federal securities laws and the rules and regulations
thereunder.
6
NORTHERN DYNASTY MINERALS LTD.
This summary highlights information contained elsewhere or
incorporated by reference in this document. You should read this entire document
carefully, including the section entitled Risk Factors and our financial
statements and the related notes included elsewhere in this document or
incorporated by reference herein.
Overview
Northern Dynasty is a mineral exploration company existing
under the British Columbia Corporations Act focused on developing the
Pebble copper-gold-molybdenum mineral project located in the state of Alaska,
U.S. (the Pebble Project). The Pebble Project is located in southwest
Alaska, 19 miles (30 kilometers) from the village of Iliamna, and approximately
200 miles (320 kilometers) southwest of the city of Anchorage.
Our Alaska mineral resource exploration business is operated
through an Alaskan registered limited partnership, the Pebble Limited
Partnership (the Pebble Partnership or PLP), in which we own a
100% interest through an Alaskan general partnership, the Northern Dynasty
Partnership. Pebble Mines Corp., a 100% indirectly owned subsidiary of the
Company, is the general partner of the Pebble Partnership and responsible for
its day-to-day operations.
We currently have negative operating cash flow because we
currently have no revenues. In addition, as a result of our business plans for
development of the Pebble Project, we expect cash flow from operations to be
negative until revenues from production at the Pebble Project begin to offset
our operating expenditures. In addition, our cash flow from operations will be
affected in the future by expenses that we incur in connection with the Pebble
Project. We will require substantial additional capital in order to fund our
planned exploration and development activities. See Risk Factors.
RECENT DEVELOPMENTS
Closing of Special Warrant Offering
We
completed the offer and sale of an aggregate of 37,600,000 Special Warrants at a
price of C$0.399 per Special Warrant for gross proceeds of approximately C$15.0
million as follows:
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an initial 25,624,408 Special Warrants were issued and sold on August 28,
2015 for gross proceeds of C$10.2 million; and
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a subsequent 11,975,592 Special Warrants were issued and sold on September
9, 2015 for gross proceeds of C$4.8 million.
The
Special Warrant offering and the terms of the Special Warrants are discussed
further below under Special Warrant Offering Offer Statistics and Expected
Timetable.
The
net proceeds of the offering of approximately $14.4 million are anticipated to
be used for the following purposes:
Use of Proceeds |
Amount |
To continue to fund a multi-dimensional strategy to
January 2016, including certain expenditures incurred in past months, to
address the Environmental Protection Agencys (EPA) pre-emptive
regulatory process under Section 404(c) of the Clean Water Act and prepare
the Pebble Project to initiate federal and state permitting under NEPA.
This includes litigation related to the EPAs statutory authority to act
pre-emptively under the Clean Water Act, potential violations of the FACA
and FOIA, as well as facilitation of various third-party investigations of
EPA actions with respect to the Pebble Project. |
$6,200,000 |
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Use of Proceeds |
Amount |
Maintain an active corporate presence in Alaska to
advance relationships with political and regulatory offices of government,
Alaska Native partners and broader stakeholder groups |
$3,300,000 |
Maintain the Pebble Project, the Pebble Site and
Pebble claims in good standing and continue environmental monitoring |
$3,100,000 |
General and administration costs to maintain the
Company in good standing and advance a potential partner(s) transaction |
$1,800,000 |
The
Company may also re-allocate the net proceeds from the Offering to the extent
that management of the Company deems warranted in light of future expenditure
requirements relating to the Pebble Project and its advancement. Holders of the
Companys securities must appreciate that the Companys primary use of proceeds
is for litigation, which due to the nature and scope of litigation is often
driven by forces beyond the Companys control. Investors who are not prepared to
afford the Companys management broad discretion in the application of these
funds should not be holders of the Companys securities.
We
currently have negative operating cash flow because we currently have no
revenues. In addition, as a result of our business plans for development of the
Pebble Project, we expect cash flow from operations to be negative until
revenues from production at the Pebble Project begin to offset our operating
expenditures. However, our cash flow from operations may be affected in the
future by expenses incurred by the Company in connection with the Pebble
Project. The amounts set out above for use as working capital may be used to
offset this anticipated negative operating cash flow. See Risk Factors.
Potential Acquisition of Cannon Point
We
entered into an arrangement agreement (the Arrangement Agreement) on
August 31, 2015 with Cannon Point Resources Ltd. (Cannon Point)
pursuant to which we have acquired 100% of Cannon Point. The acquisition was
subject to the approval of a special 2/3 majority vote of Cannon Point
shareholders (calculated as a percentage of votes cast) as well as customary
regulatory and judicial approvals. The acquisition was not subject to the
approval of our shareholders. The acquisition was completed through a
conventional statutory plan of arrangement completed under British Columbia
corporate laws (the Arrangement). The purpose of the acquisition of
Cannon Point was to enable the Company to acquire the cash held by Cannon Point
which will be used to advance the Companys business objectives.
Under
the Arrangement, Cannon Point shareholders (other than dissenting shareholders)
have received certain Arrangement consideration consisting of 0.376 of a common
share of the Company (the Exchange Ratio) for each common share of
Cannon Point. Accordingly, all Cannon Point shareholders (other than dissenting
shareholders) have become shareholders of Northern Dynasty. All outstanding
Cannon Point options and Cannon Point warrants have been converted to
replacement options and replacement warrants, as the case may be, to acquire
Northern Dynasty common shares after giving effect to the Exchange Ratio. All
such replacement options, with the exception of those options granted to
charities, Fiore Management & Advisory Corp. and any optionees of Cannon
Point who will be continuing as directors of Northern Dynasty which will have
the same expiry date as the original Cannon Point options, which under the
Arrangements terms, expire 90 days after the effective date of the Arrangement.
All such replacement warrants will expire in accordance with their original
terms.
Gordon
Keep has been nominated by Cannon Point as its nominee to the Companys board of
directors on completion. Holders of approximately 21% of Cannon Point Shares
agreed to support the merger transaction. The agreement of Cannon Point to
proceed with the acquisition was conditional on at least C$10 million of Special
Warrants being sold, which condition was satisfied by the August 28, 2015
closing of Special Warrants.
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We
completed the acquisition of Cannon Point on October 29, 2015. Pursuant to the
Arrangement, we issued an aggregate of 12,881,344 common shares to the former
shareholders of Cannon Point in accordance with the Exchange Ratio. In addition,
an aggregate of 8,375,000 share purchase warrants of Cannon Point were exchanged
for an aggregate of 3,149,000 share purchase warrants of Northern Dynasty
exercisable at a price of $2.13 per share on or before December 17, 2015, and an
aggregate of 3,312,500 stock options of Cannon Point were exchanged for an
aggregate of 1,245,500 stock options of Northern Dynasty with exercise prices
ranging from $0.29 to $0.43 per share. All such options will expire on January
29, 2016, with the exception of an aggregate of 676,800 options which will
retain their original expiry date.
The
acquisition of Cannon Point is not considered a significant acquisition for the
Company under the significance tests prescribed under either (i) Canadian
National Instrument 51-102, or (ii) Item 11 of Regulation S-X. Accordingly, we
will not be filing financial statements of Cannon Point in connection with the
acquisition and have not included any financial statements of Cannon Point with
this prospectus.
Potential Acquisition of Mission Gold
On
October 8, 2015, we entered into a binding letter of intent to acquire 100% of
the TSX Venture Exchange-listed Mission Gold Ltd. (Mission), whose
primary assets are approximately C$9 million in cash and a 100% interest in the
Alto Parana titanium project. It is a condition of closing that Mission enter
into a binding agreement with a third party acceptable to the Company for the
sale of its wholly owned subsidiary, CIC Resources Inc., which indirectly holds
the Alto Parana titanium project. We entered into a definitive arrangement
agreement with Mission on October 30, 2015 further to the binding letter of
intent. The purpose of the acquisition of Mission Gold is to enable the Company
to acquire the cash held by Mission Gold which will then be used to advance the
Companys business objectives.
The
transaction is expected to be completed by way of a statutory plan of
arrangement whereby each share of Mission will be exchanged for 0.55 of a common
share of the Company resulting in the Company issuing approximately 27.8 million
common shares to Mission shareholders, subject to adjustment. The outstanding
Mission warrants will be exchanged for approximately 16.7 million warrants of
the Company having a weighted average exercise price of C$0.97.
Mission
has made available to the Company a subordinated credit facility of C$8.4
million. The credit facility has a six month term and will bear interest at the
rate of 15% per annum. The Company has agreed to appoint a nominee of Mission to
the Companys board of directors on completion. The transaction is subject to
stock exchange and court approvals, the approval of Mission securityholders and
other customary conditions. The transaction is expected to close within 120
days, but given the number of conditions beyond the Companys control there can
be no certainty of completion at this time.
Use of Proceeds from December 2014 Offering
On
December 31, 2014 and January 13, 2015, we completed the offer and sale of an
aggregate of 35,962,735 special warrants at a price of C$0.431 per Special
Warrant for gross proceeds of approximately C$15.5 million (the December
2014 Offering). All special warrants have subsequently been exercised and a
total of 35,962,735 common shares have been issued.
The
proceeds of the December 2014 Offering were used to implement a multi-pronged
strategy to address the EPAs pre-emptive CWA 404(c) regulatory action, to
maintain relationships with governments, Alaska Native groups and other
stakeholders, and corporate costs. The intended use of proceeds was predicated
on a 12-month period and contemplated significant curtailing of certain
operations. Due to the initial success of the EPA strategy (and the inherent
uncertainty as to timing and costs associated with that strategy), the Company
elected not to curtail its operations as originally envisaged, but rather
pursued additional financing to carry out its stated strategy. Accordingly, the
funds raised were effectively depleted at the end of May 2015 rather than
December 2015 as budgeted. The following sets out the use of proceeds from the
offering with explanations of variances:
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Intended Use of Proceeds of December 2014
Offering |
Actual Use of Proceeds from December 2014
Offering and Explanation of Variance and impact
on
business objectives |
(Over)/under
expenditure |
Offering Expenses |
$500,000 |
Offering Expenses |
$573,000 |
$(73,000)A |
To fund an approximately 12 month multi-dimensional strategy to
address the EPAs pre-emptive regulatory action under Section 404(c) of
the Clean Water Act and prepare the Pebble Project to initiate federal and
state permitting under NEPA. This includes litigation as set out in this
Prospectus related to the EPAs statutory authority to act pre-emptively
under the Clean Water Act, potential violations of the FACA and FOIA, as
well as facilitation of various third-party investigations of EPA actions
with respect to the Pebble Project |
$9,297,000 |
To May 2015, the Company advanced the
multi- dimensional strategy in a shorter time frame due to a number of
legal matters appearing before the courts and the Company sanctioning
phase 2 of third party investigations of EPA actions. However, as a result
of certain fees being payable toward the latter half of the year, for the
period there was an under expenditure |
$8,898,000 |
$399,000 |
Maintain an active corporate presence in Alaska to advance
relationships with political and regulatory offices of government, Alaska
Native partners and broader stakeholder groups |
$1,819,000 |
The Company increased its
expenditures in all areas in order to maintain existing relationships, to
effectively communicate the Companys activities and to act as a counter
to the negative public perception created by the EPAs actions |
$ 2,477,000 |
$(658,000) |
Maintain the Pebble Project and Pebble claims in good standing
and continue environmental monitoring |
$2,113,000 |
The Company incurred slightly higher
expenditures in environmental monitoring and site costs. However, the
under expenditure is related to the claim fees of approximately US$1
million which are only due to be paid in November 2015 |
$ 1,375,000 |
$738,000 |
General and administration costs to maintain the Company in
good standing and advance a potential partner(s) transaction |
$1,771,000 |
General and administration costs to
maintain the Company in good standing and advance a potential partner(s)
transaction |
$1,764,000 |
$7,000 |
Total |
$15,499,000 |
Total |
$15,087,000 |
$ 413,000 |
Explanation of variances and the impact of variances on the
ability of the Company to achieve its business objectives and milestones |
The additional expenditures as
explained were necessary in order to advance the Companys
multi-dimensional strategy to address the EPAs pre-emptive regulatory
action under Section 404(c) of the CWA. Timing of expenditures related to
litigation, in particular, is difficult to forecast with accuracy |
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RISK FACTORS
An investment in the securities of the Company is considered
speculative and involves a high degree of risk due to, among other things, the
nature of the Companys business, the present stage of its development and the
permitting required for the Pebble Project. You should carefully consider the
risk factors set forth in (i) our 2014 Form 20-F, as incorporated by reference
herein, (ii) our subsequent filings under the Securities Exchange Act of
1934 (the Exchange Act), and (iii) this prospectus, any amendment
or supplement to this prospectus or any free writing prospectus.
The operations of the Company are speculative due to the high
risk nature of its business which is the exploration, permitting and development
of mineral properties and ultimately the operating of mineral properties as
mines. If we do not successfully address any of the risks described herein or
therein, there could be a material adverse effect on our financial condition,
operating results and business, and the trading price of the common shares may
decline. In addition, our inability to successfully address these risks could
cause actual events to differ materially from those described in forward-looking
statements relating to the Company. We can provide no assurance that we will
successfully address these risks.
In addition to information set out elsewhere in this Prospectus
and contained in our 2014 Form 20-F, we face the following risks:
Inability to achieve mine permitting of the Pebble
Project will have an adverse effect on our business and operations
The principal risk facing the Company is that it will be
ultimately be unable to secure the necessary permits under United States Federal
and Alaskan state laws to build and operate a mine at the Pebble Project. There
are prominent and well organized opponents of the Pebble Project and the Company
may be unable, even if we are able to demonstrate solid scientific and technical
evidence of risk mitigation, to overcome such opposition and convince mining
regulatory authorities that a mine should be permitted at the Pebble Project. If
we are unable to secure the necessary permits to build a mine at the Pebble
Project, we may be unable to achieve revenues from operations and/or recover our
investment in the Pebble Project.
11
The Company will be Required to Seek Additional Capital;
Failure to do so may lead have Adverse Consequences on Operations
While the Company has prioritized the available resources in
order to meet key corporate and Pebble Project expenditure requirements, the
Company will seek to source significant additional financing. Such financing may
include any of, or a combination of: debt, equity and/or contributions from
possible new Pebble Project participants. In light of the recent significant
depreciation of the Canadian dollar and that the vast majority of the Companys
expenditures are in United States dollars, that the Pebble Project will require
additional engineering and technical expenditures beyond what is contemplated in
the current budget, and the possibility that legal expenditures may exceed
current budget expectations, it is possible that additional financing may well
be required. There can be no assurances that the Company will be successful in
obtaining any such additional financing. If the Company is unable to raise the
necessary capital resources to meet obligations as they come due, the Company
will at some point have to further reduce or curtail its operations.
We currently have a negative operating cash flow and
failure to achieve profitability and positive operating cash flow may have a
material adverse effect on our financial condition and results of operation
The Company currently has a negative operating cash flow and is
anticipated to continue to have that for the foreseeable future. The Companys
failure to achieve profitability and positive operating cash flows could have a
material adverse effect on its financial condition and results of operations.
We may not use the proceeds of the offering of Special Warrants in the manner described herein
There is no assurance that we will use the proceeds of the offering and sale of the Special Warrants in the manner described in this prospectus. We have discretion as to the use of these net proceeds and we may determine to re-allocate the proceeds between the intended use of proceeds as our management deems warranted in response to developments in our business and the litigation related to the Pebble Project. Further, we may use the net proceeds of the offering for expenditures that have not presently anticipated. Accordingly, our ultimate use of the net proceeds may differ significantly from the anticipated use of proceeds described herein.
Inability to complete the Mission acquisition will
result in the loss of access to cash assets to further fund our business
operations
There is no assurance that we will complete the acquisition of
Mission . While we have entered into a definitive agreement in respect of
this acquisition, the acquisition remains subject to a number of conditions
precedent, including the approval of the shareholders of Mission and
regulatory approval. If we do not complete this acquisition, then we will not
have access to the cash assets of Mission in order to further fund our
business operations.
The common shares may experience price and volume
volatility and the market price for the common shares may drop below the price
you paid
In recent years, the securities markets have experienced a high
level of price and volume volatility, and the market price of securities of many
companies has experienced wide fluctuations, which have not necessarily been
related to the operating performance, underlying asset values or prospects of
such companies. There can be no assurance that such fluctuations will not affect
the price of the common shares, and the price may decline below their
acquisition cost. As a result of this volatility, investors may not be able to
sell the common shares at or above their acquisition cost.
Securities of mining companies have experienced substantial
volatility in the past, often based on factors unrelated to the financial
performance or prospects of the companies involved. These factors include
macroeconomic developments in the countries where we carry on business and
globally, and market perceptions of the attractiveness of particular industries.
The price of securities of the Company is also likely to be significantly
affected by short-term changes in commodity prices, other precious metal prices
or other mineral prices, currency exchange fluctuation and the political
environment in the countries in which we do business and globally.
In the past, following periods of volatility in the market
price of a companys securities, shareholders have often instituted class action
securities litigation against those companies. Such litigation, if instituted,
could result in substantial costs and diversion of management attention and
resources, which could significantly harm our profitability and reputation.
Sales of substantial amounts of the common shares may
have an adverse effect on the market price of the common shares of the Company
Sales of substantial amounts of the common shares of the
Company, or the availability of such securities for sale, could adversely affect
the prevailing market prices for the common shares. A decline in the market
prices of the common shares of the Company could impair our ability to raise
additional capital through the sale of securities should it desire to do so.
12
Likely PFIC status has possible adverse U.S. federal
income tax consequences for U.S. investors
The Company was likely a passive foreign investment company
(a PFIC) within the meaning of the U.S. Internal Revenue Code in one or
more prior tax years, expects to be a PFIC for the current tax year, and may
also be a PFIC in subsequent years. A non-U.S. corporation is a PFIC for any tax
year in which (i) 75% or more of its gross income is passive income (as defined
for U.S. federal income tax purposes) or (ii) on average for such tax year, 50%
or more (by value) of its assets either produces or is held for the production
of passive income, and thereafter unless certain elections are made.
If the Company is a PFIC for any year during a U.S. taxpayers
holding period, such taxpayer may be required to treat any gain recognized upon
a sale or disposition of the common shares as ordinary income (rather than
capital gain), and any resulting U.S. federal income tax may be increased by an
interest charge. Rules similar to those applicable to dispositions will
generally apply to certain excess distributions in respect of the common
shares. A U.S. taxpayer may generally avoid these unfavorable tax consequences
by making a timely and effective qualified electing fund (QEF)
election or mark-to-market election with respect to the common shares. A U.S.
taxpayer who makes a timely and effective QEF election must generally report on
a current basis its share of the Companys net capital gain and ordinary
earnings for any year in which the Company is a PFIC, whether or not the Company
makes any distributions to shareholders in such year. A U.S. taxpayer who makes
a timely and effective mark-to-market election must, in general, include as
ordinary income, in each year in which the Company is a PFIC, the excess of the
fair market value of the common shares over the taxpayers adjusted cost basis
in such shares.
This risk factor is qualified in its entirety by the discussion
provided below under the heading, Certain Material United States Federal Income
Tax Considerations.
If any of the foregoing events, or other risk factor events
described in our 2014 Form 20-F and any other document incorporated by reference
herein or elsewhere herein occur, our business, financial condition or results
of operations could suffer. In that event, the market price of our securities
could decline and investors could lose all or part of their investment.
SPECIAL WARRANT OFFERING OFFER STATISTICS AND EXPECTED
TIMETABLE
Special Warrant Offering
We completed the offer and sale of an aggregate of 37,600,000
Special Warrants at a price of C$0.399 per Special Warrant for gross proceeds of
approximately C$15 million on August 28, 2015 and September 9, 2015. Each
Special Warrant is convertible into one common share of the Company, subject to
adjustment upon the occurrence of certain events, without payment of any
additional consideration by the holder (each an Underlying Share and
together, the Underlying Shares). The purchase price for the Special
Warrants was determined by negotiation between us and the purchasers of the
Special Warrants with reference to the trading price of our common shares at the
time of such negotiations.
The Special Warrants were issued on a private placement basis
(i) to purchasers outside the United States in reliance of Rule 903 of
Regulation S, and (ii) to purchasers within the United States (the U.S.
Purchasers) who qualify as accredited investors, as defined in Rule
501(a) of Regulation D, pursuant to the exemption from the registration
requirements of the Securities Act provided by Rule 506(b) of Regulation D.
The U.S. Purchasers purchased an aggregate of 7,447,792 Special
Warrants. The Special Warrants were offered and sold to the U.S. Purchasers
pursuant to U.S. purchaser subscription agreements (the Subscription
Agreements) entered into between us and each U.S. Purchasers. The forms of
the Subscription Agreements are attached as exhibits to this registration
statement.
The Special Warrants are represented by special warrant
certificates that set forth the terms, rights and restrictions of the Special
Warrants (the Special Warrant Certificates). The forms of the Special
Warrant Certificates are attached as exhibits to this registration statement.
We entered into registration rights agreements with each of the
U.S. Purchasers and one non-U.S. purchaser pursuant to the Subscription
Agreements on completion of the issuance of Special Warrants to the U.S.
Purchasers and the one non-U.S. purchaser (the Registration Rights
Agreements). We have agreed pursuant to the Registration Rights Agreements
to register the resale by the U.S. Purchasers and the one non-U.S. purchaser of
the common shares of the Company issuable upon conversion of the Special
Warrants by filing a registration statement with the SEC. The Registration Rights Agreements provide that we will use
reasonable best efforts to cause the registration statement to be declared
effective by the SEC no later than 90 days after closing of the offering and to
cause such registration statement to remain continuously effective until two
years from closing (the Resale Filing Termination Date), subject to
extension in certain circumstances. We have filed the registration statement of
which this prospectus forms a part in order to satisfy our obligations under the
Registration Rights Agreement. The form of the Registration Rights Agreement is
attached as an exhibit to this registration statement.
13
We have further agreed to use reasonable best efforts to obtain
a final receipt for a prospectus in Canada that will qualify the issuance of the
common shares issuable upon exercise or conversion of the Special Warrants under
Canadian securities laws (the Canadian Prospectus). We have agreed to
cause the Canadian Prospectus to remain effective until the expiry date of the
Canadian hold period for the Special Warrants, being the date that is four
months plus one date from their date of issuance.
Terms of the Special Warrants
The terms of the Special Warrants provide among other things,
that the holders of Special Warrants will be entitled to receive, upon voluntary
exercise or deemed exercise of the Special Warrants, without payment of any
additional consideration and subject to adjustment upon the occurrence of
certain events, one common share for each Special Warrant held.
The Special Warrants contain the following exercise and
conversion provisions that are applicable to the U.S. Purchasers as U.S.
persons:
|
(a) |
Voluntary Conversion. Subject to the
restrictions described below, each U.S. Person may voluntary exercise any
Special Warrants held at any time prior to their deemed exercise by
delivery of an exercise form to the Company. |
|
|
|
|
(b) |
Deemed Exercise for Certain Electing Less than 10%
U.S. Holders. Any unexercised Special Warrants issued to or held by
any U.S. Purchaser who, upon exercise of its Special Warrants, would be
deemed to beneficially own, as beneficial ownership is calculated for the
purpose of the Special Warrant Certificates only and together with its
affiliates and each other person or persons with whom such U.S. Person may
be deemed to be a group, less than 9.9% of the Companys then outstanding
common shares (a Less than 10% U.S. Holder) and who has elected
not to be governed by the 4.9% Blocker Restriction described in paragraph
(e) will be deemed to be exercised at 4:00 p.m. (Vancouver time) on the
earlier of (i) the date that is the sixth business day after the date on
which the Company obtains a receipt for the final Canadian Prospectus from
Canadian Securities Commissions qualifying the distribution in Canada of
the Underlying Shares; and (ii) the date that is four months plus one day
after Closing of the Holders Special Warrants (the CDN Qualification
Date). The CDN Qualification Date will be November 13, 2015 based on the issuance of a receipt for the final Canadian Prospectus on November 4, 2015. |
|
|
|
|
(c) |
Deemed Exercise for Greater than 10% U.S. Holders and
Non-Electing Less than 10% U.S. Holders. Any unexercised Special
Warrants held by any of the following holders will be deemed to be
exercised at 4:00 p.m. (Vancouver time) on the Resale Filing Termination
Date: |
|
(i) |
any U.S. Purchaser who, upon exercise of its Special
Warrants, would be deemed to beneficially own (as beneficial ownership is
calculated for the purpose of the Special Warrant Certificates only)
together with its affiliates and each other person or persons with whom
such U.S. Person may be deemed to be a group, in excess of 9.9% of the
Companys then outstanding common shares (an Greater than 10% U.S.
Holder); and |
|
|
|
|
(ii) |
any U.S. Purchaser who is a Less than 10% U.S. Holder who
has not elected not to be governed by the 4.9% Blocker Restriction
described in paragraph (e) below. |
|
(d) |
Certain Restrictions on Conversion for U.S.
Persons. No automatic or deemed conversion will be permitted to
the extent that would after giving effect to such exercise, the holder
(together with the holders affiliates, and any other persons acting as a
group together with the holder or any of the holders affiliates), would
beneficially own in excess of the Beneficial Ownership Limitation (as
defined below). To the extent that the limitation contained in this
paragraph (d) applies, the determination of whether the Special Warrant is
exercisable (in relation to other securities owned by the holder together
with any affiliates) and of which portion of this Special Warrant is
exercisable shall be in the sole discretion of the holder, and the
submission of a notice of exercise shall be deemed to be the holders
determination that the Special Warrant is exercisable in accordance with
the terms hereof (in relation to other securities owned by the holder
together with any affiliates) and of which portion of the Special Warrant
is exercisable, in each case subject to the Beneficial Ownership
Limitation, and the Company shall have no obligation to verify or confirm
the accuracy of such determination. The Beneficial Ownership
Limitation shall be 9.9% or, if requested in writing by such holder,
19.99%, of the number of common shares outstanding immediately after
giving effect to the issuance of common shares issuable upon exercise of
the Special Warrant. The holder, upon not less than 61 days prior notice
to the Company, may increase or decrease the Beneficial Ownership
Limitation provisions of this paragraph (d), provided that the Beneficial
Ownership Limitation in no event exceeds 19.99% of the number of common
shares outstanding immediately after giving effect to the issuance of
common shares upon exercise of the Special Warrant held by the holder and
the provisions of this item (e) shall continue to apply. Any such increase
or decrease will not be effective until the 61st day after such
notice is delivered to the Company. None of the Selling Shareholders are
currently subject to the Beneficial Ownership Limitation. |
14
|
(e) |
4.9% Blocker Restriction for Electing Non-Affiliate
Holders. No exercise of any Special Warrants by any Less than 10% U.S.
Holder, other than a Less than 10% U.S. Holder who has given notice of its
election not to be governed by this paragraph (e), together with the
respective holders affiliates, and any other Persons with whom such
holder may be deemed to be a Group, will be permitted to the extent that,
after giving effect to such exercise, such Holder would beneficially own
in excess of 4.9% of the number of Shares outstanding immediately after
giving effect to the issuance of Shares issuable upon exercise of the
Special Warrant (the 4.9% Beneficial Ownership Limitation). None of the
Selling Shareholders have given notice to the Company to be subject to the
4.9% Beneficial Ownership Limitation. |
|
|
|
|
(f) |
Exercise Restriction Applicable to All Holders At All
Times. Notwithstanding the foregoing provisions
regarding conversion of Special Warrants, unless the Companys
Shareholders Rights Plan has been terminated, no Holders Special Warrants
may at any time, voluntarily or automatically, be exercised in
circumstances where the Shares issued on exercise thereof would, when
aggregated with the other Shares beneficially owned by such Holder or any
applicable Group of which the Holder is a member, exceed 19.99% of the
number of Shares outstanding immediately after giving effect to the
issuance of Shares upon exercise of such Special Warrants, as such
beneficial ownership is calculated in accordance with the Companys
Shareholder Rights Plan (the 19.9% Beneficial Ownership
Limitation). All Selling Shareholders are currently subject to this
19.9% Beneficial Ownership Limitation. |
For purposes of the Special Warrants:
|
|
beneficial ownership for the purposes of the
Special Warrant Certificates, other than the determination of beneficial
ownership with respect to the Companys Shareholder Rights Plan, means
beneficial ownership as calculated in accordance with Section 13(d) of
the U.S. Exchange Act, and the rules and regulations of the SEC
promulgated thereunder, disregarding for this purpose the limitations on
conversion described in paragraphs (d) above and similar limitations on
conversion or exercise contained in any other Common Stock Equivalent, in
each case, held by such holder and its affiliates and such other person or
persons with whom such Holder may be deemed to be a Group. Nothing
contained in the Special Warrant Certificate shall be deemed to be an
agreement by the Holder that beneficial ownership or deemed beneficial
ownership of more than 9.9% of the outstanding common shares causes the
holder to be an affiliate of the Company within the meaning of the U.S.
Securities Act or the rules and regulations of the SEC thereunder.
|
15
|
|
Common Stock Equivalent means any securities of
the Company which would entitle the holder thereof to acquire at any time
common shares, including, without limitation, any debt, preferred stock,
warrants, options or other instruments convertible into or exercisable or
exchangeable for Shares; |
|
|
|
|
|
group means a group of beneficial owners within
the meaning of Section 13(d) of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder; |
|
|
|
|
|
Shareholder Rights Plan means the Companys
shareholder rights plan as presently governed by the Shareholder Rights
Plan Agreement between the Company and Computershare Investor Services
Inc. dated May 17, 2014; and |
|
|
|
|
|
U.S. Person has the meaning ascribed thereto in
Rule 902(k) of Regulation S promulgated under the Securities Act.
|
Upon voluntary exercise or deemed exercise, the certificates
representing any common shares issued will bear any restrictive legends required
by applicable securities laws and the certificates representing the Special
Warrants that have been exercised will be cancelled.
We have not as of the date of this registration statement
received any notice from any U.S. Purchaser of any intent to increase the
Beneficial Ownership Limitation that is applicable to them.
The Special Warrants do not confer on a holder of Special
Warrants any right or interest whatsoever as a shareholder of the Company,
including but not limited to any right to vote at, to receive notice of, or to
attend, any meeting of shareholders or any other proceedings of the Company or
any right to receive any dividend or other distribution.
No fractional common shares will be issued upon the exercise or
deemed exercise of the Special Warrants.
In addition, the Special Warrants provide for and contain
provisions designed to protect the holders of the Special Warrants against
dilution upon the occurrence of certain events, including any subdivision,
redivision, change, reduction, combination, consolidation, stock dividend or
reclassification of the common shares of the Company or the amalgamation, merger
or corporate reorganization of the Company. The Special Warrants also provide
that upon the occurrence of any such event the number of common shares issuable
upon the exercise or deemed exercise of the Special Warrants will be adjusted
immediately after the effective date of such event.
The rights of holders of Special Warrants may be modified. The
Special Warrants provide for meetings of the holders of Special Warrants and the
passing of resolutions and extraordinary resolutions by such holders which are
binding on all holders of Special Warrants. Certain amendments to the Special
Warrant Certificates may only be made by extraordinary resolution, which is
defined as a resolution passed by the affirmative vote of Special Warrant
holders entitled to acquire not less than 66 2/3% of the aggregate number of common
shares which may be acquired pursuant to all the then outstanding Special
Warrants represented at the meeting and voted on the poll on such resolution.
We have granted to each holder of a Special Warrant a
contractual right of rescission of the prospectus-exempt transaction under which
the Special Warrant was initially acquired. The contractual right of rescission
provides that if a holder of a Special Warrant who acquires another security of
the Company on exercise of the Special Warrant as provided for in the Canadian
Prospectus is, or becomes, entitled under the securities legislation of a
jurisdiction to the remedy of rescission because of the Canadian Prospectus or
an amendment to the Canadian Prospectus containing a misrepresentation,
|
(a) |
the holder is entitled to rescission of both the holders
exercise of its Special Warrant and the private placement transaction
under which the Special Warrant was initially acquired, |
|
|
|
|
(b) |
the holder is entitled in connection with the rescission
to a full refund of all consideration paid to the agent or Company, as the
case may be, on the acquisition of the Special Warrant, and |
|
|
|
|
(c) |
if the holder is a permitted assignee of the interest of
the original Special Warrant subscriber, the holder is entitled to
exercise the rights of rescission and refund as if the holder was the
original subscriber. |
16
The foregoing is a summary description of certain material
provisions of the Special Warrants, it does not purport to be a comprehensive
summary and is qualified in its entirety by reference to the more detailed
provisions of the certificates representing the Special Warrants.
CAPITALIZATION AND INDEBTEDNESS
The following table sets forth our capitalization and
indebtedness as of June 30, 2015, as adjusted for the proceeds from the sale of
the Special Warrants of C$15 million less estimated transaction costs (being
compensation, finders, legal and regulatory fees) of C$600,000. The
information presented should be read in conjunction with our audited
consolidated financial statements as at and for the years ended December 31,
2014 and 2013 and our unaudited interim consolidated financial statements as at
and for the six months ended June 30, 2015, which are incorporated by reference
in this prospectus.
Description |
As at June 30, 2015 (C$
thousands) |
Liabilities |
|
Total Current Liabilities |
6,715 |
Total Liabilities |
6,715 |
Equity |
|
Share Capital |
399,888 |
Special Warrants |
4,266 |
Reserves |
82,078 |
Deficit |
(357,319) |
Total Equity |
128,913 |
REASONS FOR THE OFFER AND USE OF PROCEEDS
We have agreed to register the common shares covered by this
prospectus on behalf of the U.S. Purchasers named below under Selling Security
Holders pursuant to our contractual obligations under the Registration Rights
Agreements.
The selling shareholders will receive all of the proceeds from
any sales pursuant to this prospectus. We will not receive any of the proceeds,
but we will incur expenses in connection with the offering, as described below
under Plan of Distribution.
TRADING PRICE HISTORY
Our common shares are listed on the NYSE MKT under the trading
symbol NAK and on the TSX under the trading symbol NDM.
The following table sets forth the reported high and low sale
prices in United States dollars for the common shares on the NYSE MKT for the
fiscal, quarterly and monthly periods indicated.
|
High |
Low |
|
|
|
Fiscal 2010 |
$14.45 |
$6.00 |
|
|
|
Fiscal 2011 |
$21.76 |
$5.48 |
|
|
|
Fiscal 2012 |
$8.19 |
$2.20 |
|
|
|
Fiscal 2013 |
$3.78 |
$1.06 |
|
|
|
Fiscal 2014 |
$1.70 |
$0.61 |
17
|
High |
Low |
|
|
|
Quarterly 2013 |
|
|
|
|
|
First Quarter |
$3.78 |
$2.67 |
|
|
|
Second Quarter |
$3.17 |
$1.85 |
|
|
|
Third Quarter |
$2.73 |
$1.31 |
|
|
|
Fourth Quarter |
$1.93 |
$1.00 |
|
|
|
Quarterly 2014 |
|
|
|
|
|
First Quarter |
$1.70 |
$0.80 |
|
|
|
Second Quarter |
$1.01 |
$0.61 |
|
|
|
Third Quarter |
$0.89 |
$0.52 |
|
|
|
Fourth Quarter |
$0.59 |
$0.32 |
|
|
|
Quarterly 2015 |
|
|
|
|
|
First Quarter |
$0.51 |
$0.36 |
|
|
|
Second Quarter |
$0.45 |
$0.30 |
|
|
|
Third Quarter |
$0.53 |
$0.28 |
|
|
|
For the month ended |
|
|
|
|
|
March 31, 2015 |
$0.51 |
$0.36 |
|
|
|
April 30, 2015 |
$0.43 |
$0.36 |
|
|
|
May 31, 2015 |
$0.45 |
$0.32 |
|
|
|
June 30, 2015 |
$0.44 |
$0.30 |
|
|
|
July 31, 2015 |
$0.37 |
$0.28 |
|
|
|
August 31, 2015 |
$0.53 |
$0.29 |
|
|
|
September 30, 2015 |
$0.50 |
$0.30 |
|
|
|
October 31, 2015 |
$0.44 |
$0.30 |
The following table sets forth the reported high and low sale
prices in Canadian dollars for the common shares on the TSX for the fiscal,
quarterly and monthly periods indicated.
|
High |
Low |
|
|
|
Fiscal 2010 |
C$14.45 |
C$6.15 |
|
|
|
Fiscal 2011 |
C$21.50 |
C$5.16 |
|
|
|
Fiscal 2012 |
C$8.13 |
C$2.23 |
|
|
|
Fiscal 2013 |
C$4.19 |
C$1.07 |
|
|
|
Fiscal 2014 |
C$1.85 |
C$0.38 |
|
|
|
|
High |
Low |
|
|
|
Quarterly 2013 |
|
|
|
|
|
First Quarter |
C$4.19 |
C$2.75 |
|
|
|
Second Quarter |
C$3.28 |
C$1.94 |
18
|
High |
Low |
|
|
|
Third Quarter |
C$2.84 |
C$1.35 |
|
|
|
Fourth Quarter |
C$1.98 |
C$1.07 |
|
|
|
Quarterly 2014 |
|
|
|
|
|
First Quarter |
C$1.85 |
C$0.90 |
|
|
|
Second Quarter |
C$1.13 |
C$0.67 |
|
|
|
Third Quarter |
C$0.95 |
C$0.55 |
|
|
|
Fourth Quarter |
C$0.65 |
C$0.38 |
|
|
|
Quarterly 2015 |
|
|
|
|
|
First Quarter |
C$0.83 |
C$0.45 |
|
|
|
Second Quarter |
C$0.54 |
C$0.38 |
|
|
|
Third Quarter |
C$0.67 |
C$0.37 |
|
|
|
For the month ended |
|
|
|
|
|
March 31, 2015 |
C$0.63 |
C$0.46 |
|
|
|
April 30, 2015 |
C$0.53 |
C$0.44 |
|
|
|
May 31, 2015 |
C$0.54 |
C$0.40 |
|
|
|
June 30, 2015 |
C$0.50 |
C$0.38 |
|
|
|
July 31, 2015 |
C$0.46 |
C$0.37 |
|
|
|
August 31, 2015 |
C$0.60 |
C$0.38 |
|
|
|
September 30, 2015 |
C$0.67 |
C$0.40 |
|
|
|
October 31, 2015 |
C$0.58 |
C$0.40 |
On November 6, 2015, the closing price of our common shares as
reported on the NYSE MKT was $0.37 per share and on the TSX was C$0.49 per
share.
SELLING SECURITY HOLDERS
We are registering the common shares covered by this prospectus
on behalf of the selling shareholders named in the table below in accordance
with our obligations under the Registration Rights Agreements. Selling
shareholders, including their transferees, pledgees or donees or their
successors (all of whom may be selling shareholders), may from time to time
offer and sell pursuant to this prospectus any or all of the shares. When we
refer to selling shareholders in this prospectus, we mean those persons listed
in the table below, as well as their transferees, pledgees or donees or their
successors.
The following table sets forth certain information as of
October 9, 2015 regarding beneficial ownership of our common shares by the
selling shareholders. Beneficial ownership is a term defined by the SEC in
Rule 13d-3 under the Exchange Act and includes common shares over which a
selling shareholder has direct or indirect voting or investment control and any
common shares that the selling shareholder has a right to acquire beneficial
ownership of within 60 days.
The number of common shares in the column Number of Common
Shares Beneficially Owned Prior to the Offering is based on beneficial
ownership information provided to us by or on behalf of the selling shareholders
in a selling stockholder questionnaire.
The number of common shares in the column Number of Shares
Registered for Sale Hereby represents all of the common shares that each
selling stockholder may offer under this prospectus. These common shares are the
common shares issuable pursuant to conversion of the Special Warrants purchased
by the selling shareholders in the Private Placement. The selling shareholders
may sell some, all or none of their shares. In addition, the selling shareholders may have sold, transferred or otherwise disposed
of all or a portion of their shares since the date on which they provided the
information regarding their shares in transactions exempt from the registration
requirements of the Securities Act.
19
The number of common shares in the column Number of common
shares Beneficially Owned after the Offering assumes that the selling
shareholders will sell all of their shares offered pursuant to this prospectus
and that any other common shares beneficially owned by the selling shareholders
will continue to be beneficially owned. We do not know when or in what amounts
the selling shareholders will offer shares for sale, if at all. The selling
shareholders may sell any or all of the shares included in and offered by this
prospectus. Because the selling shareholders may offer all or some of the shares
pursuant to this offering, we cannot estimate the number of shares that will be
held by the selling shareholders after completion of the offering.
Information regarding the selling shareholders may change from
time to time. Any such changed information will be set forth in supplements to
this prospectus if required.
Except as set forth in the table below, none of the selling
shareholders has had a material relationship with us within the past three
years.
|
|
Number of |
|
|
|
Common |
|
|
Number of Common Shares
|
Shares |
Number of Common Shares
|
Name of Selling |
Beneficially Owned Prior to
the |
Registered for |
Beneficially Owned After the
|
Shareholder |
Offering |
Sale Hereby |
Offering (3)
|
|
Number |
Percentage(1),
(2) |
Number |
Number |
Percentage(1),
(2) |
Donald Smith Value |
|
|
|
|
|
Fund, L.P.(4) |
5,012,531 |
3.4% |
5,012,531 |
Nil |
Nil |
FMC Partnership(5) |
659,283 |
* |
659,283 |
Nil |
Nil |
TIFF Keystone Fund(6)(9) |
646,253 |
* |
538,738 |
107,515 |
* |
Russell Trust Company – Retirement Income Plan for Employees of Armstrong Worldwide Industries, Inc. (7)(9) |
347,549 |
* |
275,211 |
72,338 |
* |
Russell Multi Asset Core |
|
|
|
|
|
Plus Portfolio(8)(9) |
489,309 |
* |
489,309 |
Nil |
Nil |
Paradigm Global Group |
|
|
|
|
|
Inc.(10) |
87,720 |
* |
87,720 |
Nil |
Nil |
Douglas R. Casey(11) |
250,000 |
* |
250,000 |
Nil |
Nil |
Mark Van Ausdal(12) |
135,000 |
* |
135,000 |
Nil |
Nil |
Stirling Global Value |
|
|
|
|
|
Fund Inc.(13) |
27,598,797 |
18.2% |
7,518,797 |
20,080,000 |
13.3% |
*Represents less than 1% of our outstanding common shares.
(1) |
Applicable percentage of ownership is based on
143,853,943 common shares outstanding as of November 6, 2015. |
|
|
(2) |
For the purpose of calculating the percentage ownership,
the number of common shares issuable upon conversion or exercise of any
convertible securities, including any special warrants, held by the holder
are included in the number of common shares outstanding |
|
|
(3) |
Assumes that the selling stockholder disposes of all of
the common shares covered by this prospectus and does not acquire
beneficial ownership of any additional shares. The registration of these
shares does not necessarily mean that the selling stockholder will sell
all or any portion of the shares covered by this prospectus. |
|
|
(4) |
Donald Smith Value Fund, L.P. is the holder of 5,012,531
Special Warrants, all of which are currently exercisable. Donald G. Smith exercises the sole voting and investment power over the securities held by Donald Smith Value Fund, L.P. Donald Smith Value Fund, L.P. is not an affiliate of a broker-dealer. All Special Warrants held by Donald Smith Value Fund, L.P. will automatically convert into common shares on November 13, 2015. |
|
|
(5) |
FMC Partnership is the holder of 659,283 Special
Warrants, all of which are currently exercisable. Jonathan Orszag exercises the sole voting and investment power over the securities held by FMC Partnership. FMC Partnership is not an affiliate of a broker-dealer. All Special Warrants held by FMC Partnership will automatically convert into common shares on November 13, 2015. |
20
(6) |
TIFF Keystone Fund is the owner of the following
securities of the Company as of the date of this prospectus: (i) 107,515
common shares, and (ii) 538,738 Special Warrants, all of which are
currently exercisable, subject to the 19.9% Beneficial Ownership
Limitation. TIFF Keystone Fund is not an affiliate of a broker-dealer. All Special Warrants held by TIFF Keystone Fund will automatically convert into common shares on November 13, 2015. |
|
|
(7) |
Russell Trust Company – Retirement Income Plan for Employees of Armstrong Worldwide Industries, Inc. is the owner, on behalf of its client, of the following securities of the Company as of the date of this prospectus: (i) 72,338 common shares, and (ii) 275,211 Special Warrants, all of which are currently exercisable, subject to the 19.9% Beneficial Ownership Limitation. Russell Trust Company – Retirement Income Plan for Employees of Armstrong Worldwide Industries, Inc. is not an affiliate of a broker-dealer. All Special Warrants held by Russell Trust Company – Retirement Income Plan for Employees of Armstrong Worldwide Industries, Inc., on behalf of its client, will automatically convert into common shares on November 13, 2015. |
|
|
(8) |
Russell Multi Asset Core Plus Portfolio is the owner of
the following securities of the Company as of the date of this prospectus:
489,309 Special Warrants, all of which are currently exercisable, subject
to the 19.9% Beneficial Ownership Limitation. Russell Multi Asset Core Plus Portfolio is not an affiliate of a broker-dealer. All Special Warrants held by Russell Multi Asset Core Plus Portfolio will automatically convert into common shares on November 13, 2015. |
|
|
(9) |
Kopernik Global Investors, LLC, a registered broker-dealer, serves as an investment advisor or sub-advisor to each of TIFF Keystone Fund, Russell Trust Company – Retirement Income Plan for Employees of Armstrong Worldwide Industries, Inc. and Russell Multi Asset Core Plus Portfolio. David Iben is the Chief Investment Officer of Kopernik Global Investors, LLC. Each of TIFF Keystone Fund, Russell Trust Company – Retirement Income Plan for Employees of Armstrong Worldwide Industries, Inc. and Russell Multi Asset Core Plus Portfolio disclaims beneficial ownership of any securities beneficially owned by any other entity or account for which Kopernik Global Investors, LLC serves as investment adviser. |
|
|
(10) |
Paradigm Global Group Inc. is the holder of 87,720
Special Warrants, all of which are currently exercisable. Amed Khan is the president of Paradigm Global Group Inc. and exercises the sole voting and investment power over the securities held by Paradigm Global Group Inc. Paradigm Global Group Inc. is not an affiliate of a broker-dealer. All Special Warrants held by Paradigm Global Group Inc. will automatically convert into common shares on November 13, 2015. |
|
|
(11) |
Douglas R. Casey is the holder of 250,000 Special
Warrants, all of which are currently exercisable. Douglas R. Casey is not an affiliate of a broker-dealer. All Special Warrants held by Douglas R. Casey will automatically convert into common shares on November 13, 2015. |
|
|
(12) |
Mark Van Ausdal is the holder of 135,000 Special
Warrants, all of which are currently exercisable. Mark Van Ausdal is not an affiliate of a broker-dealer. All Special Warrants held by Mark Van Ausdal will automatically convert into common shares on November 13, 2015. |
|
|
(13) |
Stirling Global Value Fund Inc. is the owner of the
following securities of the Company as of the date of this prospectus: (i)
20,080,000 common shares, and (ii) 7,518,797 Special Warrants, all of
which are currently exercisable by Stirling Global Value Fund Inc.,
subject to the 19.9% Beneficial Ownership
Limitation. James Gordon Flatt exercises the sole voting and investment power over the securities held by Stirling Global Value Fund Inc. Stirling Global Value Fund Inc. is not an affiliate of a broker-dealer. All Special Warrants held by Stirling Global Value Fund Inc. will automatically convert into common shares on November 13, 2015. |
PLAN OF DISTRIBUTION
We are registering the common shares to permit the resale of
the common shares by the selling shareholders from time to time after the date
of this prospectus. We will not receive any of the proceeds from the sale by the
selling shareholders of the common shares.
The selling shareholders may sell all or a portion of the
common shares beneficially owned by them and offered hereby from time to time
directly or through one or more underwriters, broker-dealers or agents. If the
common shares are sold through underwriters or broker-dealers, the selling
shareholders will be responsible for underwriting discounts or commissions or
agents commissions. The common shares may be sold in one or more transactions
at fixed prices, at prevailing market prices at the time of the sale, at varying
prices determined at the time of sale, or at negotiated prices. These sales may
be effected in transactions, which may involve crosses or block
transactions,
|
|
on any national securities exchange or
quotation service on which the securities may be listed or quoted at the
time of sale; |
|
|
|
|
|
in the over-the-counter market; |
|
|
|
|
|
in transactions otherwise than on these
exchanges or systems or in the over-the-counter market; |
|
|
|
|
|
through the writing of options, whether such
options are listed on an options exchange or otherwise; |
|
|
|
|
|
ordinary brokerage transactions and
transactions in which the broker-dealer solicits purchasers; |
|
|
|
|
|
block trades in which the broker-dealer will
attempt to sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction; |
|
|
|
|
|
purchases by a broker-dealer as principal and
resale by the broker-dealer for its account; |
|
|
|
|
|
an exchange distribution in accordance with the
rules of the applicable exchange; |
|
|
|
|
|
privately negotiated transactions; |
|
|
|
|
|
short sales; |
|
|
|
|
|
sales pursuant to Rule 144;
|
21
|
|
broker-dealers may agree with the selling
shareholders to sell a specified number of such shares at a stipulated
price per share; |
|
|
|
|
|
a combination of any such methods of sale; and
|
|
|
|
|
|
any other method permitted pursuant to
applicable law. |
If the selling shareholders effect such transactions by selling
the common shares to or through underwriters, broker-dealers or agents, such
underwriters, broker-dealers or agents may receive commissions in the form of
discounts, concessions or commissions from the selling shareholders or
commissions from purchasers of the common shares for whom they may act as agent
or to whom they may sell as principal (which discounts, concessions or
commissions as to particular underwriters, broker-dealers or agents may be in
excess of those customary in the types of transactions involved). In connection
with sales of the common shares or otherwise, the selling shareholders may enter
into hedging transactions with broker-dealers, which may in turn engage in short
sales of the common shares in the course of hedging in positions they assume.
The selling shareholders may also sell common shares short and deliver the
common shares covered by this prospectus to close out short positions and to
return borrowed shares in connection with such short sales. The selling
shareholders may also loan or pledge common shares to broker-dealers that in
turn may sell such shares.
The selling shareholders may pledge or grant a security
interest in some or all of the common shares owned by them and, if they default
in the performance of their secured obligations, the pledgees or secured parties
may offer and sell the common shares from time to time pursuant to this
prospectus or any amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act, amending, if necessary, the list of
selling shareholders to include the pledgee, transferee or other successors in
interest as selling shareholders under this prospectus. The selling shareholders
also may transfer and donate the common shares in other circumstances in which
case the transferees, donees, pledgees or other successors in interest will be
the selling beneficial owners for purposes of this prospectus.
At the time a particular offering of the common shares is made,
a prospectus supplement, if required, will be distributed which will set forth
the aggregate amount of common shares being offered and the terms of the
offering, including the name or names of any broker-dealers or agents, any
discounts, commissions and other terms constituting compensation from the
selling shareholders and any discounts, commissions or concessions allowed or
reallowed or paid to broker-dealers.
Under the securities laws of some states, the common shares may
be sold in such states only through registered or licensed brokers or dealers.
In addition, in some states the common shares may not be sold unless such shares
have been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.
There can be no assurance that any selling shareholders will
sell any or all of the common shares registered pursuant to the registration
statement of which this prospectus forms a part.
The selling shareholders and any other person participating in
such distribution will be subject to applicable provisions of the Exchange Act,
and the rules and regulations thereunder, including, without limitation, to the
extent applicable, Regulation M of the Exchange Act, which may limit the timing
of purchases and sales of any of the common shares by the selling shareholders
and any other participating person. To the extent applicable Regulation M may
also restrict the ability of any person engaged in the distribution of the
common shares to engage in market-making activities with respect to the common
shares. All of the foregoing may affect the marketability of the common shares
and the ability of any person or entity to engage in market-making activities
with respect to the common shares.
We will pay all expenses of the registration of the common
shares in accordance with our obligations under the Registration Rights
Agreements. We estimate these expenses to be $150,000 in total, including, without
limitation, SEC filing fees and expenses of compliance with state securities or
blue sky laws; provided, however, that a selling shareholders will pay all
underwriting discounts and selling commissions, if any. We will indemnify the
selling shareholders against liabilities, including some liabilities under the
Securities Act in accordance with the Registration Rights Agreement, or the
selling shareholders will be entitled to contribution. We may be indemnified by
the selling shareholders against civil liabilities, including liabilities under
the Securities Act, that may arise from any written information furnished to us
by the selling shareholders specifically for use in this prospectus, in
accordance with the Registration Rights Agreements, or we may be entitled to
contribution.
22
Once sold under the registration statement, of which this
prospectus forms a part, the common shares will be freely tradable under the
Securities Act in the hands of persons other than our affiliates.
DESCRIPTION OF SHARE CAPITAL
Authorized Capital
The Companys authorized capital consists of an unlimited
number of common shares without par value.
Outstanding Securities
Common Shares
As of the November 6, 2015, there were 143,853,943 common
shares outstanding.
Information regarding the number of common shares outstanding
as at December 31, 2014 is provided in our 2014 Form 20-F and information
regarding the number of common shares outstanding as at June 30, 2015 is
provided in our unaudited condensed consolidated interim financial statements
for the six months ended June 30, 2015 (our 2015 Q2 FS). Our 2014 Form
20-F and our 2015 Q2 FS are each incorporated by reference herein.
Rights
Attached to and trading with each of the Companys common
shares registered hereunder is a right (the Right) to purchase a number
of common shares on the terms and conditions set forth in the Shareholder Rights
Plan Agreement between the Company and Computershare Investor Services Inc.
dated May 17, 2013 (the Shareholder Rights Plan) as described below
under Shareholder Rights Plan.
Options to Purchase Common Shares
Information regarding the number of common share purchase
options outstanding as at December 31, 2014 is provided in our 2014 Form 20-F
and information regarding the number of common share purchase options
outstanding as at June 30, 2015 is provided in our 2015 Q2 FS.
Special Warrants
We completed the offer and sale of an aggregate of 37,600,000
Special Warrants at a price of C$0.399 per Special Warrant for gross proceeds of
approximately C$15 million on August 28, 2015 and September 9, 2015, all of
which Special Warrants are outstanding as of the date hereof. The terms of the
Special Warrants are described above under Special Warrants Offering
Statistics and Timetable.
Our Articles
The following is a summary of certain material provisions of
(i) our Notice of Articles and Articles, and (ii) certain provisions of the
British Columbia Business Corporations Act (the Business
Corporations Act) applicable to the Company:
Our Notice of Articles and Articles do not specify objects or
purposes. We are entitled under the Business Corporations Act to carry on
all lawful businesses which can be carried on by a natural person.
23
Directors power to vote on a proposal, arrangement or
contract in which the director is interested.
According to the Business Corporations Act, a director
holds a disclosable interest in a contract or transaction if:
|
1. |
the contract or transaction is material to the
company; |
|
|
|
|
2. |
the company has entered, or proposes to enter, into the
contract or transaction, and |
|
|
|
|
3. |
either of the following applies to the
director: |
|
a. |
the director has a material interest in the contract or
transaction; |
|
|
|
|
b. |
the director is a director or senior officer of, or has a
material interest in, a person who has a material interest in the contract
or transaction. |
However, the Business Corporations Act also provides
that in the following circumstances, a director does not hold a disclosable
interest in a contract or transaction if:
|
1. |
the situation that would otherwise constitute a
disclosable interest arose before the coming into force of the |
|
|
|
|
|
Business Corporations Act or, if the company was
recognized under the Business Corporations Act, before that
recognition, and was disclosed and approved under, or was not required to
be disclosed under, the legislation that: |
|
a. |
applied to the company on or after the date on which the
situation arose; and |
|
|
|
|
b. |
is comparable in scope and intent to the provisions of
the Business Corporations Act; |
|
2. |
both the company and the other party to the contract or
transaction are wholly owned subsidiaries of the same
corporation; |
|
|
|
|
3. |
the company is a wholly owned subsidiary of the other
party to the contract or transaction; |
|
|
|
|
4. |
the other party to the contract or transaction is a
wholly owned subsidiary of the company; or |
|
|
|
|
5. |
where the director or senior officer is the sole
shareholder of the company or of a corporation of which the company is a
wholly owned subsidiary. |
The Business Corporations Act further provides that a
director of a company does not hold a disclosable interest in a contract or
transaction merely because:
|
1. |
the contract or transaction is an arrangement by way of
security granted by the company for money loaned to, or obligations
undertaken by, the director or senior officer, or a person in whom the
director or senior officer has a material interest, for the benefit of the
company or an affiliate of the company; |
|
|
|
|
2. |
the contract or transaction relates to an indemnity or
insurance; |
|
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|
|
3. |
the contract or transaction relates to the remuneration
of the director or senior officer in that person's capacity as director,
officer, employee or agent of the company or of an affiliate of the
company; |
24
|
4. |
the contract or transaction relates to a loan to the
company, and the director or senior officer, or a person in whom the
director or senior officer has a material interest, is or is to be a
guarantor of some or all of the loan; or |
|
|
|
|
5. |
the contract or transaction has been or will be made with
or for the benefit of a corporation that is affiliated with the company
and the director or senior officer is also a director or senior officer of
that corporation or an affiliate of that
corporation. |
Under our Articles, a director or senior officer who holds a
disclosable interest (as that term is used in the Business Corporations
Act) in a contract or transaction into which we have entered or proposes to
enter:
|
1. |
is liable to account to us for any profit that accrues to
the director or senior officer under or as a result of the contract or
transaction only if and to the extent provided in the Act; |
|
|
|
|
2. |
is not entitled to vote on any directors resolution to
approve that contract or transaction, unless all the directors have a
disclosable interest in that contract or transaction, in which case any or
all of those directors may vote on such resolution; |
|
|
|
|
3. |
and who is present at the meeting of directors at which
the contract or transaction is considered for approval may be counted in
the quorum at the meeting whether or not the director votes on any or all
of the resolutions considered at the meeting. |
A director or senior officer who holds any office or possesses
any property, right or interest that could result, directly or indirectly, in
the creation of a duty or interest that materially conflicts with that
individuals duty or interest as a director or senior officer, must disclose the
nature and extent of the conflict as required by the Business Corporations
Act. No director or intended director is disqualified by his or her office
from contracting with the Company either with regard to the holding of any
office or place of profit the director holds with the Company or as vendor,
purchaser or otherwise, and no contract or transaction entered into by or on
behalf of the Company in which a director is in any way interested is liable to
be voided for that reason.
Directors' power, in the absence of an independent
quorum, to vote compensation to themselves or any members of their
body.
The compensation of the directors is decided by the directors
unless the board of directors requests approval to the compensation from the
shareholders by ordinary resolution. The Business Corporations Act
provides that a director of a company does not hold a disclosable interest in a
contract or transaction merely because the contract or transaction relates to
the remuneration of the director or senior officer in that person's capacity as
director, officer, employee or agent of the Company or of an affiliate of the
Company.
Borrowing powers exercisable by the directors.
Under the Articles, the directors may, on behalf of the
Company:
|
1. |
borrow money in such manner and amount, on such security,
from such sources and upon such terms, and conditions as they consider
appropriate; |
|
|
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|
2. |
issue bonds, debentures, and other debt obligations
either outright or as a security for any liability or obligation of the
Company or any other person and at such discounts or premiums and on such
other terms as they consider appropriate; |
|
|
|
|
3. |
guarantee the repayment of money by any other person or
the performance of any obligation of any other person;
and |
25
|
4. |
mortgage, charge, whether by way of specific or floating
charge, grant a security interest in, or give other security on, the whole
or any part of the present and future assets and undertaking of the
Company. |
Retirement and non-retirement of directors under an age
limit requirement.
There are no such provisions applicable to the Company under
its Notice of Articles or its Articles or the
Business Corporations Act.
Number of shares required for a directors
qualification.
Directors need not own any shares of the Company in order to
qualify as directors.
The rights, preferences and restrictions attached to the
Companys common shares are summarized as follows:
Dividends
Subject to the provisions of the British Columbia Business
Corporations Act, the directors may from time to time declare and authorized
payments of dividends out of available assets. Any dividends must be declared
and paid according to the number of shares held. Under the Business
Corporations Act, no dividend may be paid if we are, or would as a result of
payment of the dividend become, insolvent.
Voting Rights
Each common share is entitled to one vote on matters to which
common shares ordinarily vote including the annual election of directors,
appointment of auditors and approval of corporate changes. Directors are elected
to hold office at each annual meeting and hold office until the ensuing annual
meeting. Directors automatically retire at each annual meeting. There are no
staggered directorships among our directors or cumulative voting rights.
Rights to Profits and Liquidation Rights
All common shares of the Company participate ratably in any net
profit or loss of the Company and participate ratably as to any distribution of
assets in the event of a winding up or other liquidation.
Redemption
Our common shares are not subject to any rights of
redemption.
Sinking Fund Provisions
There are no sinking fund provisions or similar obligations
relating to our common shares.
Shares Fully Paid
Each of our common shares must, under the Business
Corporations Act, be issued as fully paid for cash, property or services
received by the Company. They are therefore non-assessable and not subject to
further calls for payment.
Pre-emptive Rights
Holders of our common shares are not entitled to any
pre-emptive rights which provide a right to any holder to participate in any
further offerings of the Companys equity or other securities.
26
With respect to the rights, preferences and restrictions
attaching to our common shares, there are generally no significant differences
between Canadian and United States law as the shareholders, or the applicable
corporate statute, will determine the rights, preferences and restrictions
attaching to each class of our shares.
4. |
Changes to Rights and Restrictions to
Shares |
Our Articles provide that, subject to the Business
Corporations Act, the Company may, by ordinary resolution of our
shareholders:
|
|
create special rights or restrictions for, and
attach those special rights or restrictions to, the shares of any class or
series of shares, whether or not any or all of those shares have been
issued; or |
|
|
|
|
|
vary or delete any special rights or
restrictions attached to the shares of any class or series of shares,
whether or not any or all of those shares have been issued and alter its
Notice of Articles accordingly. |
Subject to the Business Corporations Act, the Company
may by resolution of the directors (i) subdivide or consolidate all or any of
its unissued, or fully paid issued, shares and, if applicable, alter its Notice
of Articles, and, if applicable, its Articles, and (ii) alter the identifying
name of any of its shares.
The Articles provide that the Company may by ordinary
resolution or resolution of the directors authorize an alteration of its Notice
of Articles in order to change its name or adopt or change any translation of
that name.
Our Articles provide that, subject to the Business
Corporations Act, the Company may by ordinary resolution of our
shareholders:
|
|
create one or more classes or series of shares;
|
|
|
|
|
|
increase, reduce or eliminate the maximum
number of shares that we are authorized to issue out of any class or
series of shares or establish a maximum number of shares that we are
authorized to issue out of any class or series of shares for which no
maximum is established; |
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|
|
if the Company is authorized to issue shares of
a class of shares with par value: |
|
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decrease the par value of those shares; or
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if none of the shares of that class of shares
are allotted or issued, increase the par value of those shares;
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change all or any of its unissued, or fully
paid issued, shares with par value into shares without par value or any of
its unissued shares without par value into shares with par value; or
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otherwise alter its shares or authorized share
structure when required or permitted to do so by the Act where it does not
specify a special resolution. |
The Articles provide that a special resolution is a resolution
of shareholders that is approved by two thirds (66 2/3%) of those votes cast at
a properly constituted meeting of shareholders. An ordinary resolution is a
resolution of shareholders that is approved by a majority of those votes cast at
a properly constituted meeting of shareholders.
If special rights and restrictions are altered and any right or
special right attached to issued shares is prejudiced or interfered with, then
the consent of the holders of shares of that class or series by a special
separate resolution will be required.
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The Business Corporations Act also provides that a
company may reduce its capital if it is authorized to do so by a court order,
or, if the capital is reduced to an amount that is not less than the realizable
value of the company's assets less its liabilities, by a special resolution or
court order.
Generally, there are no significant differences between British
Columbia and United States law with respect to changing the rights of
shareholders as most state corporation statutes require shareholder approval
(usually a majority) for any such changes that affect the rights of
shareholders.
5. |
Meetings of Shareholders |
Our Articles provide that the Company must hold its annual
general meeting once in every calendar year (being not more than 15 months from
the last annual general meeting) at such time and place to be determined by the
directors. Shareholders meetings are governed by the Articles of the Company but
many important shareholder protections are also contained in the Canadian
provincial securities laws that are applicable to the Company as a reporting
issuer in the Canadian provinces of British Columbia, Alberta and Ontario
(Canadian Securities Laws) and the British Columbia Corporations
Act. Our Articles provide that we will provide at least 21 days' advance
written notice of any meeting of shareholders and will provide for certain
procedural matters and rules of order with respect to conduct of the meeting.
The directors may fix in advance a date, which is no fewer than 21 days prior to
the date of the meeting for the purpose of determining shareholders entitled to
receive notice of and to attend and vote at a general meeting.
Canadian Securities Law and the British Columbia
Corporations Act superimpose requirements that generally provide that
shareholders meetings require not less than a 60 day notice period from initial
public notice and that we make a thorough advanced search of intermediary and
brokerage registered shareholdings to facilitate communication with beneficial
shareholders so that meeting proxy and information materials can be sent via the
brokerages to unregistered but beneficial shareholders. The form and content of
information circulars and proxies and like matters are governed by Canadian
Securities Laws and the British Columbia Corporations Act. This
legislation specifies the disclosure requirements for the proxy materials and
various corporate actions, background information on the nominees for election
for director, executive compensation paid in the previous year and full details
of any unusual matters or related party transactions. We must hold an annual
shareholders meeting open to all shareholders for personal attendance or by
proxy at each shareholder's determination.
Most state corporation statutes require a public company to
hold an annual meeting for the election of directors and for the consideration
of other appropriate matters. The state statutes also include general provisions
relating to shareholder voting and meetings. Apart from the timing of when an
annual meeting must be held and the percentage of shareholders required to call
an annual meeting or an extraordinary meeting, there are generally no material
differences between Canadian and United States law respecting annual meetings
and extraordinary meetings.
6. |
Rights to Own Securities |
There are no limitations under our Articles or in the
Business Corporations Act on the right of persons who are not citizens of
Canada to hold or vote common shares.
7. |
Restrictions on Changes in Control, Mergers,
Acquisitions or Corporate Restructuring of the
Company |
Our Articles do not contain any provisions that would have the
effect of delaying, deferring or preventing a change of control of the Company.
The Company has adopted the shareholder rights plan described below under
Shareholder Rights Plan.
8. |
Ownership Threshold Requiring Public
Disclosure |
Our Articles do not require disclosure of share ownership.
Share ownership of director nominees must be reported annually in proxy
materials sent to our shareholders. There are no requirements under British
Columbia corporate law to report ownership of our shares but Canadian Securities
Laws disclosure of trading by insiders (generally officers, directors and holders of 10% of voting
shares) within 5 days of the trade. In addition, Canadian Securities Laws
require disclosure of acquisitions of more than 10% of the issued and
outstanding shares of the Company by press release and filing of an early
warning report within 2 business days of the acquisition. Canadian Securities
Laws also require that we disclose in our annual general meeting proxy
statement, holders who beneficially own more than 10% of our issued and
outstanding shares, and United States federal securities laws require the
disclosure in any annual report on Form 20-F that we file of holders who own
more than 5% of our issued and outstanding shares.
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Most state corporation statutes do not contain provisions
governing the threshold above which shareholder ownership must be disclosed.
United States federal securities laws require a company that is subject to the
reporting requirements of the Securities Exchange Act of 1934 to disclose, in
its annual reports filed with the Securities and Exchange Commission those
shareholders who own more than 5% of a corporations issued and outstanding
shares.
9. |
Differences in Law between the US and British
Columbia |
Differences in the law between United States and British
Columbia, where applicable, have been explained above within each category.
10. |
Changes in the Capital of the
Company |
There are no conditions imposed by our Notice of Articles or
Articles which are more stringent than those required by the Business
Corporations Act.
Shareholder Rights
The terms of the Rights granted under the Shareholders Rights
Plan are summarized as follows:
Term
The Shareholder Rights Plan (unless terminated earlier) will
remain in effect until termination of the annual meeting of shareholders of the
Company in 2016 unless the term of the Shareholder Rights Plan is extended
beyond such date by resolution of shareholders at such meeting.
Issuance of Rights
Under the Shareholder Rights Plan, one Right was issued by the
Company in respect of each common share (a Voting Share) outstanding as
of the close of business (Vancouver time) (the Record Time) on the
effective date of May 17, 2013 (the Effective Date). Voting Shares
include the common shares and any other shares of the Company entitled to vote
generally in the election of all directors. One Right has been and will also be
issued for each additional Voting Share issued after the Record Time and prior
to the earlier of the Separation Time and the Expiration Time, subject to the
earlier termination or expiration of the Rights as set out in the Shareholder
Rights Plan.
As of the Effective Date and the date hereof, the only Voting
Shares outstanding were the common shares.
Certificates and Transferability
Prior to the Separation Time, the Rights will be evidenced by a
legend imprinted on certificates for common shares issued after the Record Time.
Rights are also attached to common shares outstanding on the Effective Date,
although share certificates issued prior to the Effective Date will not bear
such a legend. Shareholders are not required to return their certificates in
order to have the benefit of the Rights. Prior to the Separation Time, Rights
will trade together with the common shares and will not be exercisable or
transferable separately from the common shares. From and after the Separation
Time, the Rights will become exercisable, will be evidenced by Rights
Certificates and will be transferable separately from the common shares.
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Separation of Rights
The Rights will become exercisable and begin to trade
separately from the associated common shares at the Separation Time
which is generally (subject to the ability of the Board to defer the Separation
Time) the close of business on the tenth trading day after the earliest to occur
of:
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a public announcement that a person or group of
affiliated or associated persons or persons acting jointly or in concert
has become an Acquiring Person, meaning that such person or group
has acquired Beneficial Ownership (as defined in the Rights Plan) of 20%
or more of the outstanding Voting Shares other than as a result of: (i) a
reduction in the number of Voting Shares outstanding; (ii) a Permitted
Bid or Competing Permitted Bid (as defined below);
(iii) acquisitions of Voting Shares in respect of which the Board has
waived the application of the Rights Agreement; (iv) other specified
exempt acquisitions and pro rata acquisitions in which shareholders
participate on a pro rata basis; or (v) an acquisition by a person of
Voting Shares upon the exercise, conversion or exchange of a security
convertible, exercisable or exchangeable into a Voting Share received by a
person in the circumstances described in (ii), (iii) or (iv) above;
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the date of commencement of, or the first public
announcement of an intention of any person (other than the Company or any
of its subsidiaries) to commence a takeover bid (other than a Permitted
Bid or a Competing Permitted Bid) where the Voting Shares subject to the
bid owned by that person (including affiliates, associates and others
acting jointly or in concert therewith) would constitute 20% of more of
the outstanding Voting Shares; and |
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the date upon which a Permitted Bid or Competing
Permitted Bid ceases to qualify as such. Promptly following the Separation
Time, separate certificates evidencing rights (Rights
Certificates) will be mailed to the holders of record of the Voting
Shares as of the Separation Time and the Rights Certificates alone will
evidence the Rights. |
Rights Exercise Privilege
After the Separation Time, each Right entitles the holder
thereof to purchase one common share at an initial Exercise Price equal
to three times the Market Price at the Separation Time. The Market
Price is defined as the average of the daily closing prices per share of such
securities on each of the 20 consecutive trading days through and including the
trading day immediately preceding the Separation Time. Following a transaction
which results in a person becoming an Acquiring Person (a Flip-In
Event), the Rights entitle the holder thereof to receive, upon exercise,
such number of common shares which have an aggregate Market Price (as of the
date of the Flip-In Event) equal to twice the then Exercise Price of the Rights
for an amount in cash equal to the Exercise Price. Essentially, following a
Flip-In Event, the Rights entitle the holder thereof to purchase two times the
number of common shares that the holder could have otherwise acquired for the
same purchase price. In such event, however, any Rights beneficially owned by an
Acquiring Person (including affiliates, associates and other acting jointly or
in concert therewith), or a transferee of any such person, will be null and
void. A Flip-In Event does not include acquisitions approved by the Board or
acquisitions pursuant to a Permitted Bid or Competing Permitted Bid.
Permitted Bid Requirements
A bidder can make a takeover bid and acquire Voting Shares
without triggering a Flip-In Event under the Rights Plan if the takeover bid
qualifies as a Permitted Bid. The requirements of a Permitted Bid
include the following:
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the takeover bid must be made by means of a
takeover bid circular; |
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the takeover bid is made to all holders of
Voting Shares on the books of the Company, other than the offeror;
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no Voting Shares are taken up or paid for pursuant to the
takeover bid unless more than 50% of the Voting Shares held by
independent shareholders (as defined): (i) shall have been deposited or
tendered pursuant to the take-over bid and not withdrawn; and (ii) have
previously been or are taken up at the same time; |
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the takeover bid contains an irrevocable and unqualified
provision that, no Voting Shares will be taken up or paid for pursuant to
the takeover bid prior to the close of business on the date which is not
less than 60 days following the date of the takeover bid; |
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the takeover bid contains an irrevocable and unqualified
provision that, Voting Shares may be deposited pursuant to such takeover
bid at any time during the period of time between the date of the takeover
bid and the date on which Voting Shares may be taken up and paid for and
any Voting Shares deposited pursuant to the takeover bid may be withdrawn
until taken up and paid for; and |
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the takeover bid contains an irrevocable and unqualified
provision that, if on the date on which Voting Shares may be taken up and
paid for under the takeover bid, more than 50% of the Voting Shares held
by Independent Shareholders have been deposited pursuant to the takeover
bid and not withdrawn, the offeror will make public announcement of that
fact and the takeover bid will remain open for deposits and tenders of
Voting Shares for not less than 10 business days from the date of such
public announcement. |
The Shareholder Rights Plan also allows for a competing
Permitted Bid (a Competing Permitted Bid) to be made while a Permitted
Bid is in existence. A Competing Permitted Bid must satisfy all of the
requirements of a Permitted Bid except that it may expire on the same date as
the Permitted Bid, subject to the requirement that it be outstanding for a
minimum period of 35 days (the minimum period required under Canadian securities
laws).
Permitted Lock-Up Agreements
A person will not become an Acquiring Person by virtue of
having entered into an agreement (a Permitted Lock-Up Agreement) with a
Shareholder whereby the Shareholder agrees to deposit or tender Voting Shares to
a takeover bid (the Lock-Up Bid) made by such person, provided that the
agreement meets certain requirements including:
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the terms of the agreement are publicly disclosed and a
copy of the agreement is publicly available not later than the date of the
Lock-Up Bid or, if the Lock-Up Bid has not been made prior to the date on
which such agreement is entered into, not later than the first business
day following the date of such agreement; |
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the holder who has agreed to tender Voting Shares to the
Lock-Up Bid made by the other party to the agreement is permitted to
terminate its obligation under the agreement, and to terminate any
obligation with respect to the voting of such Voting Shares, in order to
tender Voting Shares to another takeover bid or to support another
transaction where: (i) the offer price or value of the consideration
payable under the other takeover bid or transaction is greater than the
price or value of the consideration per share at which the holder has
agreed to deposit or tender Voting Shares to the Lock-Up Bid, or is
greater than a specified minimum which is not more than 7% higher than the
price or value of the consideration per share at which the holder has
agreed to deposit or tender Voting Shares under the Lock-Up Bid; and (ii)
if the number of Voting Shares offered to be purchased under the Lock-Up
Bid is less than all of the Voting Shares held by Shareholders (excluding
Voting Shares held by the offeror), the number of Voting Shares offered to
be purchased under the other takeover bid or transaction (at an offer
price not lower than in the Lock-Up Bid) is greater than the number of
Voting Shares offered to be purchased under the Lock-Up Bid or is greater
than a specified number which is not more than 7% higher than the number
of Voting Shares offered to be purchased under the Lock-Up Bid; and
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no break-up fees, top-up fees, or other penalties that
exceed in the aggregate the greater of 2.5% of the price or value of the
consideration payable under the Lock-Up Bid and 50% of the increase in
consideration resulting from another takeover bid or transaction shall be
payable by the holder if the holder fails to deposit or tender Voting
Shares to the Lock-Up Bid. |
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Waiver and Redemption
If a potential offeror does not desire to make a Permitted Bid,
it can negotiate with, and obtain the prior approval of, the Board to make a
takeover bid by way of a takeover bid circular sent to all holders of Voting
Shares on terms which the Board considers fair to all Shareholders. In such
circumstances, the Board may waive the application of the Shareholder Rights
Plan thereby allowing such bid to proceed without dilution to the offeror. Any
waiver of the application of the Shareholder Rights Plan in respect of a
particular takeover bid shall also constitute a waiver of any other takeover bid
which is made by means of a takeover bid circular to all holders of Voting
Shares while the initial takeover bid is outstanding. The Board may also waive
the application of the Shareholder Rights Plan in respect of a particular
Flip-in Event that has occurred through inadvertence, provided that the
Acquiring Person that inadvertently triggered such Flip-in Event reduces its
beneficial holdings to less than 20% of the outstanding Voting Shares within 14
days or such earlier or later date as may be specified by the Board. With the
prior consent of the holders of Voting Shares, the Board may, prior to the
occurrence of a Flip-in Event that would occur by reason of an acquisition of
Voting Shares otherwise than pursuant to the foregoing, waive the application of
the Shareholder Rights Plan to such Flipin Event. The Board may, with the prior
consent of the holders of Voting Shares, at any time prior to the occurrence of
a Flip-in Event, elect to redeem all but not less than all of the then
outstanding Rights at a redemption price of $0.00001 per Right. Rights are
deemed to be redeemed following completion of a Permitted Bid, a Competing
Permitted Bid or a takeover bid in respect of which the Board has waived the
application of the Rights Plan.
Protection against Dilution
The Exercise Price, the number and nature of securities which
may be purchased upon the exercise of Rights and the number of Rights
outstanding are subject to adjustment from time to time to prevent dilution in
the event of dividends, subdivisions, consolidations, reclassifications or other
changes in the outstanding common shares, pro rata distributions to holders of
common shares and other circumstances where adjustments are required to
appropriately protect the interests of the holders of Rights.
Exemptions for Investment Advisors
Investment advisors (for client accounts), trust companies
(acting in their capacity as trustees or administrators), statutory bodies whose
business includes the management of funds (for employee benefit plans, pension
plans, or insurance plans of various public bodies) and administrators or
trustees of registered pension plans or funds acquiring greater than 20% of the
Voting Shares are exempted from triggering a Flip- in Event, provided they are
not making, either alone or jointly or in concert with any other person, a
takeover bid.
Duties of the Board
The adoption of the Shareholder Rights Plan will not in any way
lessen or affect the duty of our board of directors to act honestly and in good
faith with a view to the best interests of the Company. Our board, when a
takeover bid or similar offer is made, will continue to have the duty and power
to take such actions and make such recommendations to shareholders as are
considered appropriate.
Amendment
We may make amendments to the Shareholder Rights Plan at any
time to correct any clerical or typographical error and may make amendments
which are required to maintain the validity of the Shareholder Rights Plan due
to changes in any applicable legislation, regulations or rules. The Company may,
with the prior approval of Shareholders (or the holders of Rights if the
Separation Time has occurred), supplement, amend, vary, rescind or delete any of
the provisions of the Shareholder Rights Plan.
CERTAIN MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS
The following is a general summary of certain material U.S.
federal income tax considerations applicable to a U.S. Holder (as defined below)
arising from the ownership and disposition of the common shares of the Company
described in this prospectus acquired from a selling
shareholder pursuant to an offering. This summary is for general information
purposes only and does not purport to be a complete analysis or listing of all
potential U.S. federal income tax considerations that may apply to a U.S. Holder
as a result of the ownership and disposition of common shares. In addition, this
summary does not take into account the individual facts and circumstances of any
particular U.S. Holder that may affect the U.S. federal income tax consequences
to such U.S. Holder, including specific tax consequences to a U.S. Holder under
an applicable tax treaty. Accordingly, this summary is not intended to be, and
should not be construed as, legal or U.S. federal income tax advice with respect
to any particular U.S. Holder. In addition, this summary does not address the
U.S. federal alternative minimum, U.S. federal estate and gift, U.S. Medicare
contribution, U.S. state and local, or non-U.S. tax consequences of the
ownership and disposition of common shares. Except as specifically set forth
below, this summary does not discuss applicable tax reporting requirements. Each
U.S. Holder should consult its own tax advisor regarding all U.S. federal, U.S.
state and local and non-U.S. tax consequences of the ownership and disposition
of common shares.
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No opinion from U.S. legal counsel or ruling from the Internal
Revenue Service (the IRS) has been requested, or will be obtained,
regarding the U.S. federal income tax consequences of the ownership and
disposition of common shares. This summary is not binding on the IRS, and the
IRS is not precluded from taking a position that is different from, and contrary
to, any position taken in this summary. In addition, because the authorities
upon which this summary is based are subject to various interpretations, the IRS
and the U.S. courts could disagree with one or more of the positions taken in
this summary.
Scope of This Disclosure
Authorities
This summary is based on the Internal Revenue Code of 1986, as
amended (the Code), Treasury Regulations (whether final, temporary, or
proposed), published rulings of the IRS, published administrative positions of
the IRS, the Convention Between Canada and the United States of America with
Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended
(the Canada-U.S. Tax Convention), and U.S. court decisions that are
applicable and, in each case, as in effect and available, as of the date hereof.
Any of the authorities on which this summary is based could be changed in a
material and adverse manner at any time, and any such change could be applied on
a retroactive or prospective basis which could affect the U.S. federal income
tax considerations described in this summary. This summary does not discuss the
potential effects, whether adverse or beneficial, of any proposed legislation
that, if enacted, could be applied on a retroactive or prospective basis.
U.S. Holders
For purposes of this summary, the term U.S. Holder
means a beneficial owner of common shares that is for U.S. federal income tax
purposes:
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an individual who is a citizen or resident of the U.S.;
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a corporation (or other entity taxable as a corporation
for U.S. federal income tax purposes) created or organized in or under the
laws of the U.S., any state thereof or the District of Columbia;
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an estate the income of which is subject to U.S. federal
income taxation regardless of its source; or |
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a trust that (a) is subject to the primary supervision of
a court within the U.S. and the control of one or more U.S. persons for
all substantial decisions or (b) has a valid election in effect under
applicable Treasury Regulations to be treated as a U.S. person.
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Non-U.S. Holders
For purposes of this summary, a non-U.S. Holder is a
beneficial owner of common shares that is not a partnership (or other
pass-through entity) for U.S. federal income tax purposes and is not a U.S.
Holder. This summary does not address the U.S. federal income tax
consequences applicable to non-U.S. Holders arising from the ownership and
disposition of common shares. Accordingly, a non-U.S. Holder should consult its
own tax advisor regarding all U.S. federal, U.S. state and local, and non-U.S.
tax consequences (including the potential application of and operation of any
income tax treaties) relating to the purchase of the common shares pursuant to
an offering. and the ownership and disposition of common shares.
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Transactions Not Addressed
This summary does not address the tax consequences of
transactions effected prior or subsequent to, or concurrently with, any purchase
of the common shares pursuant to an offering (whether or not any such
transactions are undertaken in connection with the purchase of the common shares
pursuant to an offering), including, without limitation, the following:
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any vesting, conversion, assumption,
disposition, exercise, exchange, or other transaction involving any rights
to acquire common shares, including warrants and options; and |
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any transaction, other than an offering, in
which common shares have been issued or are acquired. |
U.S. Holders Subject to Special U.S. Federal Income Tax
Rules Not Addressed
This summary does not address the U.S. federal income tax
considerations of the ownership and disposition of common shares by U.S. Holders
that are subject to special provisions under the Code, including, but not
limited to, the following: (a) tax-exempt organizations, qualified retirement
plans, individual retirement accounts, or other tax-deferred accounts; (b)
financial institutions, underwriters, insurance companies, real estate
investment trusts, or regulated investment companies; (c) broker-dealers,
dealers, or traders in securities or currencies that elect to apply a
mark-to-market accounting method; (d) U.S. Holders that have a functional
currency other than the U.S. dollar; (e) U.S. Holders that own common shares as
part of a straddle, hedging transaction, conversion transaction, constructive
sale, or other arrangement involving more than one position; (f) U.S. Holders
that acquire common shares in connection with the exercise of employee stock
options or otherwise as compensation for services; (g) U.S. Holders that hold
common shares other than as a capital asset within the meaning of Section 1221
of the Code (generally, property held for investment purposes); and (h) U.S.
Holders that own directly, indirectly, or by attribution, 10% or more, by voting
power, of the outstanding stock of the Company. This summary also does not
address the U.S. federal income tax considerations applicable to U.S. Holders
who are: (a) U.S. expatriates or former long-term residents of the U.S.; (b)
persons that have been, are, or will be a resident or deemed to be a resident in
Canada for purposes of the Income Tax Act (Canada); (c) persons that use or
hold, will use or hold, or that are or will be deemed to use or hold common
shares in connection with carrying on a business in Canada; (d) persons whose
common shares constitute taxable Canadian property under the Income Tax Act
(Canada); or (e) persons that have a permanent establishment in Canada for
purposes of the Canada-U.S. Tax Convention. U.S. Holders that are subject to
special provisions under the Code, including U.S. Holders described immediately
above, should consult their own tax advisors regarding all U.S. federal, U.S.
state and local, and non-U.S. tax consequences (including the potential
application and operation of any income tax treaties) relating to the ownership
and disposition of common shares.
If an entity or arrangement that is classified as a partnership
(or other pass-through entity) for U.S. federal income tax purposes holds
common shares, the U.S. federal income tax consequences to such partnership and
the partners (or other owners) of such partnership of the ownership and
disposition of the common shares generally will depend on the activities of the
partnership and the status of such partners (or other owners). This summary does
not address the U.S. federal income tax consequences for any such partner or
partnership (or other pass-through entity or its owners). Owners of entities
and arrangements that are classified as partnerships (or other pass-through
entities) for U.S. federal income tax purposes should consult their own tax
advisors regarding the U.S. federal income tax consequences of the ownership and
disposition of common shares.
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Ownership and Disposition of Common Shares
Distributions on Common Shares
Subject to the passive foreign investment company
(PFIC) rules discussed below (see Tax Consequences if the Company is a
PFIC), a U.S. Holder that receives a distribution, including a constructive
distribution, with respect to common shares will be required to include the
amount of such distribution in gross income as a dividend (without reduction for
any Canadian income tax withheld from such distribution) to the extent of the
current or accumulated earnings and profits of the Company, as computed for
U.S. federal income tax purposes. To the extent that a distribution exceeds the
current and accumulated earnings and profits of the Company, such distribution
will be treated first as a tax-free return of capital to the extent of a U.S.
Holders tax basis in the common shares and thereafter as gain from the sale or
exchange of such common shares (see Sale or Other Taxable Disposition of Common
Shares below). However, the Company may not maintain calculations of earnings
and profits in accordance with U.S. federal income tax principles, and each U.S.
Holder should therefore assume that any distribution by the Company with respect
to the common shares will constitute a dividend. Dividends received on the
common shares generally will not be eligible for the dividends received
deduction available to U.S. corporate shareholders receiving dividends from
U.S. corporations. If the Company is eligible for the benefits of the
Canada-U.S. Tax Convention or its shares are readily tradable on an established
securities market in the U.S., dividends paid by the Company to non-corporate
U.S. Holders generally will be eligible for the preferential tax rates
applicable to long-term capital gains, provided certain holding period and other
conditions are satisfied, including that the Company not be classified as a PFIC
in the tax year of distribution or in the preceding tax year. The dividend rules
are complex, and each U.S. Holder should consult its own tax advisor regarding
the application of such rules.
Sale or Other Taxable Disposition of Common
Shares
Subject to the PFIC rules discussed below, upon the sale or
other taxable disposition of common shares, a U.S. Holder generally will
recognize capital gain or loss in an amount equal to the difference between the
amount of cash plus the fair market value of any property received and such U.S.
Holders tax basis in the common shares sold or otherwise disposed of. Such
capital gain or loss will be long-term capital gain or loss if, at the time of
the sale or other taxable disposition, the common shares have been held for more
than one year. Preferential tax rates apply to long-term capital gains of
non-corporate U.S. Holders. There are currently no preferential tax rates for
long-term capital gains of a U.S. Holder that is a corporation. Deductions for
capital losses are subject to significant limitations under the Code. A U.S.
Holders tax basis in common shares generally will be such U.S. Holders U.S.
dollar cost for such common shares.
PFIC Status of the Company
If the Company is or becomes a PFIC, the preceding sections of
this summary may not describe the U.S. federal income tax consequences to U.S.
Holders of the ownership and disposition of common shares. The U.S. federal
income tax consequences of owning and disposing of common shares if the Company
is or becomes a PFIC are described below under the heading Tax Consequences if
the Company is a PFIC.
A non-U.S. corporation is a PFIC for each tax year in which (i)
75% or more of its gross income is passive income (as defined for U.S. federal
income tax purposes) (the income test) or (ii) on average for such tax
year, 50% or more (by value) of its assets either produces or is held for the
production of passive income (the asset test). For purposes of the PFIC
provisions, gross income generally includes sales revenues less cost of goods
sold, plus income from investments and from incidental or outside operations or
sources, and passive income generally includes dividends, interest, certain
rents and royalties, and certain gains from commodities or securities
transactions. In determining whether or not it is a PFIC, a non-U.S. corporation
is required to take into account its pro rata portion of the income and assets
of each corporation in which it owns, directly or indirectly, at least a 25%
interest (by value).
Under certain attribution and indirect ownership rules, if the
Company is a PFIC, U.S. Holders will generally be deemed to own their
proportionate share of the Company's direct or indirect equity interest in any
company that is also a PFIC (a Subsidiary PFIC), and will be subject to U.S.
federal income tax on their proportionate share of (a) any "excess
distributions," as described below, on the stock of a Subsidiary PFIC and (b) a
disposition or deemed disposition of the stock of a Subsidiary PFIC by the Company or
another Subsidiary PFIC, both as if such U.S. Holders directly held the shares
of such Subsidiary PFIC. In addition, U.S. Holders may be subject to U.S.
federal income tax on any indirect gain realized on the stock of a Subsidiary
PFIC on the sale or disposition of common shares. Accordingly, U.S. Holders
should be aware that they could be subject to tax even if no distributions are
received and no redemptions or other dispositions of the Companys common shares
are made.
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The Company believes it was a PFIC in one or more prior tax
years and, based on current business plans and financial projections, expects to
be a PFIC in the current tax year and possibly in subsequent tax years. The
determination of PFIC status is inherently factual, is subject to a number of
uncertainties, and can be determined only annually at the close of the tax year
in question. Additionally, the analysis depends, in part, on the application of
complex U.S. federal income tax rules, which are subject to differing
interpretations. There can be no assurance that the Company will or will not be
determined to be a PFIC for the current tax year or any prior or future tax
year, and no opinion of legal counsel or ruling from the IRS concerning the
status of the Company as a PFIC has been obtained or will be requested. U.S.
Holders should consult their own U.S. tax advisors regarding the PFIC status of
the Company.
Tax Consequences if the Company is a PFIC
If the Company is a PFIC for any tax year during which a U.S.
Holder holds common shares, special rules may increase such U.S. Holders U.S.
federal income tax liability with respect to the ownership and disposition of
such shares. If the Company meets the income test or the asset test for any tax
year during which a U.S. Holder owns common shares, the Company will be treated
as a PFIC with respect to such U.S. Holder for that tax year and for all
subsequent tax years, regardless of whether the Company meets the income test or
the asset test for such subsequent tax years, unless the U.S. Holder elects to
recognize any unrealized gain in the common shares or makes a timely and
effective QEF Election or Mark-to-Market Election.
Under the default PFIC rules:
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any gain realized on the sale or other disposition
(including dispositions and certain other events that would not otherwise
be treated as taxable events) of common shares (including an indirect
disposition of the stock of any Subsidiary PFIC) and any excess
distribution (defined as a distribution to the extent it (together with
all other distributions received in the relevant tax year) exceeds 125% of
the average annual distribution received during the preceding three years)
received on common shares or with respect to the stock of a Subsidiary
PFIC will be allocated ratably to each day of such U.S. Holders holding
period for the common shares; |
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the amount allocated to the current tax year and any year
prior to the first year in which the Company was a PFIC will be taxed as
ordinary income in the current year; |
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the amount allocated to each of the other tax years (the
Prior PFIC Years) will be subject to tax at the highest ordinary
income tax rate in effect for the applicable class of taxpayer for that
year; |
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an interest charge will be imposed with respect to the
resulting tax attributable to each Prior PFIC Year, which interest charge
is not deductible by non-corporate U.S. Holders; and |
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any loss realized on the disposition of the common shares
will not be recognized. |
A U.S. Holder that makes a timely and effective
mark-to-market election under Section 1296 of the Code (a Mark-to-Market
Election) or a timely and effective election to treat the Company and each
Subsidiary PFIC as a qualified electing fund (a QEF) under Section
1295 of the Code (a QEF Election) may generally mitigate or avoid the
PFIC consequences described above with respect to common shares. In light of
adverse consequences of PFIC characterization and the uncertainty as to the
Companys PFIC status, the Company will undertake to provide to any U.S. Holder,
upon written request, the information the Company determines is necessary for
United States income tax reporting purposes for such investor to make a QEF
Election. The Company may elect to provide such information on its website. U.S.
Holders should be aware that there can be no assurance that the Company has
satisfied or will satisfy the recordkeeping requirements that apply to a QEF or
that the Company has supplied or will supply U.S. Holders with
information such U.S. Holders require to report under the QEF rules in the event
that the Company is a PFIC for any tax year.
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A timely and effective QEF Election requires a U.S. Holder to
include currently in gross income each year its pro rata share of the Companys
ordinary earnings and net capital gains, regardless of whether such earnings and
gains are actually distributed. Thus, a U.S. Holder could have a tax liability
with respect to such ordinary earnings or gains without a corresponding receipt
of cash from the Company. If the Company is a QEF with respect to a U.S. Holder,
the U.S. Holders basis in the common shares will be increased to reflect the
amount of the taxed but undistributed income. Distributions of income that had
previously been taxed will result in a corresponding reduction of basis in the
common shares and will not be taxed again as a distribution to a U.S. Holder.
Taxable gains on the disposition of common shares by a U.S. Holder that has made
a timely and effective QEF Election are generally capital gains. A U.S. Holder
must make a QEF Election for the Company and each Subsidiary PFIC if it wishes
to have this treatment. To make a QEF Election, a U.S. Holder will need to have
an annual information statement from the Company setting forth the ordinary
earnings and net capital gains for the year. In general, a U.S. Holder must make
a QEF Election on or before the due date for filing its income tax return for
the first year to which the QEF Election will apply. Under applicable Treasury
Regulations, a U.S. Holder will be permitted to make retroactive elections in
particular circumstances, including if it had a reasonable belief that the
Company was not a PFIC and filed a protective election. If a U.S. Holder owns
PFIC stock indirectly through another PFIC, separate QEF Elections must be made
for the PFIC in which the U.S. Holder is a direct shareholder and the Subsidiary
PFIC for the QEF rules to apply to both PFICs.
Each U.S. Holder should consult its own tax advisor regarding
the availability and desirability of, and procedure for, making a timely and
effective QEF Election for the Company and any Subsidiary PFIC.
A Mark-to-Market Election may be made with respect to stock in
a PFIC if such stock is regularly traded on a qualified exchange or other
market (within the meaning of the Code and the applicable U.S. Treasury
Regulations). A class of stock that is traded on one or more qualified exchanges
or other markets is considered to be regularly traded for any calendar year
during which such class of stock is traded in other than de minimis quantities
on at least 15 days during each calendar quarter. If the common shares are
considered to be regularly traded within this meaning, then a U.S. Holder
generally will be eligible to make a Mark-to-Market Election with respect to its
shares. However, there is no assurance that the common shares will be or remain
regularly traded for this purpose. A Mark-to-Market Election may not be made
with respect to the stock of any Subsidiary PFIC because such stock is not
marketable. Hence, a Mark-to-Market Election will not be effective to eliminate
the application of the default rules of Section 1291 of the Code, described
above, with respect to deemed dispositions of Subsidiary PFIC stock or excess
distributions with respect to a Subsidiary PFIC.
A U.S. Holder that makes a timely and effective Mark-to-Market
Election with respect to common shares generally will be required to recognize
as ordinary income in each tax year in which the Company is a PFIC an amount
equal to the excess, if any, of the fair market value of such shares as of the
close of such taxable year over the U.S. Holders adjusted tax basis in such
shares as of the close of such taxable year. A U.S. Holders adjusted tax basis
in the common shares generally will be increased by the amount of ordinary
income recognized with respect to such shares. If the U.S. Holders adjusted tax
basis in the common shares as of the close of a tax year exceeds the fair market
value of such shares as of the close of such taxable year, the U.S. Holder
generally will recognize an ordinary loss, but only to the extent of net
mark-to-market income recognized with respect to such shares for all prior
taxable years. A U.S. Holders adjusted tax basis in its common shares generally
will be decreased by the amount of ordinary loss recognized with respect to such
shares. Any gain recognized upon a disposition of the common shares generally
will be treated as ordinary income, and any loss recognized upon a disposition
generally will be treated as an ordinary loss to the extent of net
mark-to-market income recognized for all prior taxable years. Any loss
recognized in excess thereof will be taxed as a capital loss. Capital losses are
subject to significant limitations under the Code.
Each U.S. Holder should consult its own tax advisor regarding
the availability and desirability of, and procedure for, making a timely and
effective Mark-to-Market Election with respect to the common shares.
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Foreign Tax Credit
A U.S. Holder that pays (whether directly or through
withholding) Canadian income tax in connection with the ownership or disposition
of common shares may be entitled, at the election of such U.S. Holder, to
receive either a deduction or a credit for such Canadian income tax paid.
Generally, a credit will reduce a U.S. Holders U.S. federal income tax
liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S.
Holders income subject to U.S. federal income tax. This election is made on a
year-by-year basis and applies to all creditable foreign taxes paid (whether
directly or through withholding) by a U.S. Holder during a year.
Complex limitations apply to the foreign tax credit, including
the general limitation that the credit cannot exceed the proportionate share of
a U.S. Holders U.S. federal income tax liability that such U.S. Holders
foreign source taxable income bears to such U.S. Holders worldwide taxable
income. In applying this limitation, a U.S. Holders various items of income and
deduction must be classified, under complex rules, as either foreign source or
U.S. source. Generally, dividends paid by a non-U.S. corporation should be
treated as foreign source for this purpose, and gains recognized on the sale of
stock of a non-U.S. corporation by a U.S. Holder should be treated as U.S.
source for this purpose, except as otherwise provided in an applicable income
tax treaty, and if an election is properly made under the Code. However, the
amount of a distribution with respect to the common shares that is treated as a
dividend may be lower for U.S. federal income tax purposes than it is for
Canadian federal income tax purposes, resulting in a reduced foreign tax credit
allowance to a U.S. Holder. In addition, this limitation is calculated
separately with respect to specific categories of income. The foreign tax credit
rules are complex, and each U.S. Holder should consult its own U.S. tax advisor
regarding the foreign tax credit rules.
Special rules apply to the amount of foreign tax credit that a
U.S. Holder may claim on a distribution from a PFIC. Subject to such special
rules, non-U.S. taxes paid with respect to any distribution in respect of stock
in a PFIC are generally eligible for the foreign tax credit. The rules relating
to distributions by a PFIC and their eligibility for the foreign tax credit are
complicated, and a U.S. Holder should consult its own tax advisor regarding
their application to the U.S. Holder.
Receipt of Foreign Currency
The amount of any distribution or proceeds paid in Canadian
dollars to a U.S. Holder in connection with the ownership of common shares, or
on the sale or other taxable disposition of common shares, will be included in
the gross income of a U.S. Holder as translated into U.S. dollars calculated by
reference to the exchange rate prevailing on the date of actual or constructive
receipt of the payment, regardless of whether the Canadian dollars are converted
into U.S. dollars at that time. If the Canadian dollars received are not
converted into U.S. dollars on the date of receipt, a U.S. Holder will have a
basis in the Canadian dollars equal to their U.S. dollar value on the date of
receipt. Any U.S. Holder who receives payment in Canadian dollars and engages in
a subsequent conversion or other disposition of the Canadian dollars may have a
foreign currency exchange gain or loss that would be treated as ordinary income
or loss, and generally will be U.S. source income or loss for foreign tax credit
purposes. Different rules apply to U.S. Holders who use the accrual method with
respect to foreign currency.
Each U.S. Holder should consult its own U.S. tax advisor
regarding the U.S. federal income tax consequences of receiving, owning, and
disposing of Canadian dollars.
Information Reporting; Backup Withholding
Under U.S. federal income tax law, certain categories of U.S.
Holders must file information returns with respect to their investment in, or
involvement in, a non-U.S. corporation. For example, U.S. return disclosure
obligations (and related penalties) are imposed on individuals who are U.S.
Holders that hold certain specified foreign financial assets in excess of
certain threshold amounts. The definition of specified foreign financial
assets includes not only financial accounts maintained in non-U.S. financial
institutions, but also, if held for investment and not in an account maintained
by certain financial institutions, any stock or security issued by a non-U.S.
person, any financial instrument or contract that has an issuer or counterparty
other than a U.S. person and any interest in a non-U.S. entity. A U.S. Holder
may be subject to these reporting requirements unless such U.S. Holders common
shares are held in an account at certain financial institutions. Penalties for
failure to file certain of these information returns are substantial. U.S. Holders should consult with their own tax advisors
regarding the requirements of filing information returns on IRS Form 8938, and,
if applicable, filing obligations relating to the PFIC rules, including possible
reporting on an IRS Form 8621.
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Payments made within the U.S. or by a U.S. payor or U.S.
middleman of (a) distributions on the common shares, and (b) proceeds arising
from the sale or other taxable disposition of common shares generally will be
subject to information reporting. In addition, backup withholding, currently at
a rate of 28%, may apply to such payments if a U.S. Holder (a) fails to furnish
such U.S. Holders correct U.S. taxpayer identification number (generally on IRS
Form W-9), (b) furnishes an incorrect U.S. taxpayer identification number, (c)
is notified by the IRS that such U.S. Holder has previously failed to properly
report items subject to backup withholding, or (d) fails to certify, under
penalty of perjury, that such U.S. Holder has furnished its correct U.S.
taxpayer identification number and that the IRS has not notified such U.S.
Holder that it is subject to backup withholding. Certain exempt persons
generally are excluded from these information reporting and backup withholding
rules. Backup withholding is not an additional tax. Any amounts withheld under
the U.S. backup withholding rules will be allowed as a credit against a U.S.
Holders U.S. federal income tax liability, if any, or will be refunded, if such
U.S. Holder furnishes required information to the IRS in a timely manner. The
information reporting and backup withholding rules may apply even if, under the
Canada-U.S. Tax Convention, payments are exempt from the dividend withholding
tax or otherwise eligible for a reduced withholding rate.
The discussion of reporting requirements set forth above is not
intended to constitute an exhaustive description of all reporting requirements
that may apply to a U.S. Holder. A failure to satisfy certain reporting
requirements may result in an extension of the time period during which the IRS
can assess a tax, and, under certain circumstances, such an extension may apply
to assessments of amount unrelated to any unsatisfied reporting requirement.
Each U.S. Holder should consult its own tax advisor regarding the information
reporting and backup withholding rules.
THE ABOVE SUMMARY IS NOT INTENDED TO CONSTITUTE A COMPLETE
ANALYSIS OF ALL U.S. TAX CONSIDERATIONS APPLICABLE TO U.S. HOLDERS WITH RESPECT
TO THE OWNERSHIP AND DISPOSITION OF COMMON SHARES. U.S. HOLDERS SHOULD CONSULT
THEIR OWN TAX ADVISORS AS TO THE TAX CONSIDERATIONS APPLICABLE TO THEM IN THEIR
PARTICULAR CIRCUMSTANCES.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement, of which this document
is a part, on Form F-3 with the SEC relating to the common shares to be sold by
the selling shareholders. This document does not contain all of the information
in the registration statement and the exhibits and financial statements included
with the registration statement. References herein to any of our contracts,
agreements or other documents are not necessarily complete, and you should refer
to the exhibits attached to the registration statement for copies of the actual
contracts, agreements or documents. We also file annual and other reports and
other information with the SEC. You may read and copy the registration
statement, including the documents incorporated by reference herein, the related
exhibits and other material we may file with the SEC, at the SECs public
reference room in Washington, D.C. at 100 F Street, N.E., Washington, D.C.
20549. You can also request copies of those documents, upon payment of a
duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the public reference rooms. The SEC
also maintains an internet site that contains reports, proxy and information
statements and other information regarding issuers that file with the SEC. The
website address is http://www.sec.gov.
Alternately, you may request a copy of these filings, at no
cost, by writing or telephoning us at Northern Dynasty Minerals Ltd., Attention:
Corporate Secretary, 15th Floor, 1040 West Georgia Street, Vancouver, British
Columbia V6E 4H1, Tel:(604) 684-6365.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to incorporate by reference into this
prospectus information that we have filed with the SEC. This means that we can
disclose important information by referring you to those documents. The
information incorporated by reference is considered to be a part of this
prospectus. Information that we file later with the SEC will automatically
update and supersede this information.
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The following documents that we have filed with or furnished to
the SEC are specifically incorporated by reference into, and form an integral
part of, this prospectus:
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the description of our common shares contained in our
Registration Statement on Form 8-A filed with the SEC on June 9, 2004
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the description of the share rights issuable under our
shareholder rights plan agreement, as amended, contained in our
Registration Statement on Form 8-A filed with the SEC on December 21,
2006; |
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our report of foreign issuer on Form 6-K furnished to the
SEC on May 30, 2014 and incorporating the Shareholder Rights Plan
Agreement between the Company and Computershare Investor Services Inc.
dated May 17, 2014; |
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our annual report on Form 20-F for the fiscal year ended
December 31, 2014 filed with the SEC on May 15, 2015, as amended by an
Amendment No. 1 to Form 20-F filed with the SEC on May 22, 2015;
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our report of foreign issuer on Form 6-K furnished to the
SEC on September 14, 2015 and incorporating our notice of meeting and
management information circular dated June 8, 2015 distributed in
connection with the annual and special meeting of shareholders of the
Company held on July 7, 2015; |
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our report of foreign issuer on Form 6-K furnished to the
SEC on May 26, 2015 and incorporating: |
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our unaudited condensed consolidated interim financial
statements and the notes thereto for the three months ended March 31,
2015; and |
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our associated managements discussion and analysis for
the three month period ended March 31, 2015; |
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our report of foreign issuer on Form 6-K
furnished to the SEC on August 19, 2015 and incorporating:
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our unaudited condensed consolidated interim financial
statements and the notes thereto for the three and six months ended June
30, 2015; and |
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our associated managements discussion and analysis for
the three and six month period ended June 30,
2015; |
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our report of foreign issuer on Form 6-K
furnished to the SEC on February 3, 2015 and incorporating our material
change report dated January 19, 2015; |
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our report of foreign issuer on Form 6-K
furnished to the SEC on October 8, 2015 and incorporating our material
change report dated September 21, 2015; and |
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our report of foreign issuer on Form 6-K furnished to the SEC on October 9, 2015 including all exhibits thereto associated with the Cannon Point acquisition. |
In addition, we are incorporating by reference all subsequent
annual reports filed by us on Form 20-F or Form 40-F that we file with the SEC
pursuant to the Exchange Act prior to the termination of the offering. In
addition, we may incorporate by reference any Form 6-K that we furnish to the
SEC subsequent to the date of this Prospectus by stating in those Form 6-Ks
that they are being incorporated by reference into this Prospectus. If,
subsequent to the date of this Prospectus, we become obligated to file annual
reports with the SEC on Form 10-K, we are also incorporating by reference all
such annual reports on Form 10-K and all filings on Form 10-Q and Form 8-K that
we file with the SEC pursuant to the Exchange Act prior to the termination of
the offering.
Any statement contained in a document incorporated or deemed
to be incorporated by reference herein will be deemed to be modified or
superseded for the purposes of this Prospectus to the extent that a statement
contained in this Prospectus or in any subsequently filed document that also is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded will not constitute a part of
this Prospectus, except as so modified or superseded. The modifying or
superseding statement need not state that it has modified or superseded a prior
statement or include any other information set forth in the document that it
modifies or supersedes. The making of such a modifying or superseding statement
will not be deemed an admission for any purpose that the modified or superseded
statement, when made, constituted a misrepresentation, an untrue statement of a
material fact or an omission to state a material fact that is required to be
stated or that is necessary to make a statement not misleading in light of the
circumstances in which it was made.
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You may request a copy of any of the documents incorporated
herein by reference without charge by writing or telephoning our Corporate
Secretary as the following address and phone number:
Northern Dynasty Minerals Ltd.
Attention: Corporate
Secretary
15th Floor, 1040 West Georgia Street
Vancouver, British
Columbia V6E 4H1
Telephone: 604-684-6365
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INTERESTS OF EXPERTS
None.
EXPERTS
Information relating to the Companys mineral properties
incorporated by reference in this prospectus has been derived from the 2014
Technical Report on the Pebble Project, Southwest Alaska, USA by J. David
Gaunt, P.Geo., James Lang, P.Geo., Eric Titley, P.Geo., and Ting Lu, P.Eng.,
effective date December 31, 2014 (the Pebble Property Report) which has
been prepared by the Qualified Persons named below and this information has been
included in reliance on the expertise of these Qualified Persons:
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J. David Gaunt, P.Geo., a non-independent
Qualified Person, who co-authored the Pebble Project Report; |
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James Lang, P.Geo., a non-independent Qualified
Person, who co-authored the Pebble Project Report; |
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Eric Titley, P.Geo., a non-independent
Qualified Person, who co-authored the Pebble Project Report; and |
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Ting Lu, P.Eng., an independent Qualified
Person, who co-authored the Pebble Project Report. |
None of the experts listed above has received or will receive a direct or indirect interest in the property of the Company or of any associate or affiliate of the Company. The Company understands that, after reasonable inquiry and as at the date hereof, the experts listed above as a group, beneficially own, directly or indirectly, less than one percent of the outstanding common shares of the Company.
The Companys consolidated financial statements incorporated in this prospectus by reference from the Companys Annual Report on Form 20-F for the year ended December 31, 2014, and the effectiveness of the Companys internal control over financial reporting have been audited by Deloitte LLP, an independent registered public accounting firm, as stated in their reports, which are incorporated herein by reference, (which reports (1) expresses an unqualified opinion on the financial statements and includes an explanatory paragraph referring to a material uncertainty that casts substantial doubt about the Companys ability to continue as a going concern and (2) expresses an unqualified opinion on the effectiveness of internal control over financial reporting). Such financial statements have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
The financial statements of Pebble Limited Partnership (Pebble) incorporated in this prospectus by reference from the Companys Annual Report on Form 20-F for the year ended December 31, 2014 have been audited by Deloitte & Touche LLP, an independent auditor, as stated in their report, which is incorporated herein by reference, (which reports expresses an unqualified opinion on the financial statements and includes an explanatory paragraph referring to a material uncertainty which raises substantial doubt about Pebbles ability to continue as a going concern). Such financial statements have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
LEGAL MATTERS
The law firm of McMillan LLP has acted as the Companys legal
counsel by providing an opinion on the validity of the common shares offered by
this prospectus. In addition, certain legal matters in connection with the
common shares offered by this prospectus will be passed upon by McMillan LLP. As
at the date hereof, the partners and associates of McMillan LLP, as a group,
beneficially own, directly or indirectly, less than one percent of the
outstanding common shares of the Company.
ENFORCEABILITY OF CIVIL LIABILITIES
The enforcement by investors of civil liabilities under U.S.
federal securities laws may be affected adversely by the fact that we are
incorporated under the laws of the Province of British Columbia, Canada, that
many of our officers and directors are residents of countries other than the
United States, that some of the experts named in this prospectus are residents
of countries other than the United States, and that some of the assets of said
persons are located outside the United States.
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In particular, it may be difficult to bring and enforce suits
against us or said persons under U.S. federal securities laws. It may be
difficult for U.S. holders of our common shares to effect service of process on
us or said persons within the United States or to enforce judgments obtained in
the United States based on the civil liability provisions of the U.S. federal
securities laws against us or said persons. In addition, a shareholder should
not assume that the courts of Canada (i) would enforce judgments of U.S. courts
obtained in actions against us, our officers or directors, or other said persons, predicated upon the civil
liability provisions of the U.S. federal securities laws or other laws of the
United States, or (ii) would enforce, in original actions, liabilities against
us, our officers or directors or other said persons predicated upon the U.S.
federal securities laws or other laws of the United States.
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PROSPECTUS |
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NORTHERN DYNASTY MINERALS LTD. |
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14,966,589 COMMON SHARES |
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NOVEMBER 20, 2015 |
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