Kirkland Lake Gold Ltd. (NYSE: KL) group has entered into an arrangement on behalf of Kirkland Lake Gold with Stifel GMP and Clarus Securities Inc. as agents to arrange the selling of 18,500,000 units at a rate of $2.45 per unit for total proceeds of $45,325,000 to Kirkland Lake Gold. Every unit consists of one common share of Kirkland Lake Gold-owned Novo Resources Corp. and one-half of Kirkland Lake’s common share purchase warrant. Each Warrant shall entitle the holder thereof, for a period of 12 months from the date of issue, to obtain one additional Novo Share held by Kirkland Lake Gold at an exercise price of $2.80. The selling of the Unit Shares will take place in Canada by block dealing and the sale of the Warrants will take place on a private placement basis. The selling of both the Unit Shares and the Warrants will be made on a private placement basis in the United States.
The sale agreement is expected to close on or before December 3, 2020, or any other date decided between the dealers and Kirkland Lake Gold and is subject to certain conditions.
The securities to be issued in the Selling Agreement have not been and may not be licensed under the U.S. Securities Act of 1933, as amended, or other state securities regulations, and can therefore not be offered or sold within the U.S. or to or for the account or profit of a U.S. citizen or a person outside the U.S. Securities Act and related conditions on state securities or waivers from them. This press release does not represent an offer to sell or an offer to purchase any of the shares in the United States of America.
Upon closing of the Selling Deal and assuming the full sale of the Warrants, 135,168 Novo Shares will be held by Kirkland Lake Gold. Kirkland Lake Gold has negotiated with the dealers that, subject to customary exceptions, the outstanding Novo shares will be subject to a 30-day lock-up clause.
Kirkland Lake Gold would have sold 18,500,000 Novo Shares as a part of the Units upon completing the Sale Deal. Unit purchases would have $45,325,000 in net gross proceeds. Sales of the units to the vendors would be made by block exchange.
Kirkland Lake Gold owned 27,885,168 Novo Shares prior to the selling deal, comprising roughly 12.1 percent of Novo’s stake. Kirkland Lake Gold will retain 9,385,168 Novo shares reflecting an estimated 4.1 percent stake in Novo upon the close of the sale deal.
In the case of the complete exercise of the Warrants representing part of the Units, Kirkland shall dispose of a further 9,250,000 Novo Shares with a valuation of $2.80 per Novo Share, for an additional gross proceeds of $25,900,000 to Kirkland Lake Gold. This more clause would result in a further reduction in Kirkland’s Novo shareholding, resulting in the holding of 135,168 Novo shares by Kirkland Lake Gold, or about 0.05 percent of Novo shares currently issued and outstanding.
An immediate source of capital for the company of Kirkland Lake Gold is given by the disposal of Novo Shares. While Kirkland Lake Gold currently has no immediate plans or intentions with regard to Novo Shares, Kirkland Lake Gold may establish certain plans or intentions with regard to Novo Shares, depending on market conditions, general economic and industrial conditions, Novo Shares’ trading rates, Kirkland Lake Gold’s company, financial condition and prospects, and/or other related factors, including Kirkland’s financial position and liquidity,
In conjunction with the closure of the Sale Deal, Kirkland Lake Gold will file an early warning notice under National Instrument 62-103. As Kirkland Lake Gold will have reduced its Novo security holdings by less than 10 percent, following the above-noted early warning report request, it will no longer be necessary to report under the National Instrument 62-104 Take-Over Bids and Issuer Bids early warning provisions, until its Novo security holdings rise to 10 percent or more in the future.