VANCOUVER, BRITISH COLUMBIA May 3, 2022 – Lupaka Gold Corp. ("Lupaka" or the “Company") (TSX-V: LPK, FRA: LQP) is pleased to announce that it intends to issue contingent value rights (each, a “CVR”) to its shareholders and take certain other measures to facilitate the growth of the Company.
Contingent Value Rights
Each CVR will entitle the holder to receive a pro rata portion of any net amount available for distribution if the Company receives a cash award in the Company’s ongoing arbitration proceedings with the Republic of Peru (the “Arbitration”). The net amount will be calculated by deducting from the Award proceeds certain amounts including the fees of the Company’s Arbitration counsel and other payables and amounts to be retained by the Company for working capital and other corporate purposes, and a de minimus threshold will be applied to determine if a payment will be made to the CVR holders.
The Company anticipates issuing the CVRs by way of a one-time special dividend to shareholders holding common shares of the Company as of May 18, 2022 (the “Record Date”). Each shareholder on the Record Date will receive one CVR for each common share of the Company held. The Company expects the CVRs to be governed by the terms of an indenture to be entered into between the Company and Computershare Trust Company of Canada.
The issuance of the CVRs by the Company will crystallize the entitlement of current shareholders to a portion of an Arbitration award received by the Company, if any, and prevent dilution of this entitlement through future share issuances of the Company. The issuance of the CVRs is also expected to provide the Company with an enhanced ability to raise equity financing and pursue acquisitions and development of mineral properties.
The CVR issuance remains subject to approvals including the approval of the TSX Venture Exchange (the “Exchange”). There can be no assurance that the CVRs will be issued. The Company advises that the arbitration continues to progress per the agreed to schedule and that there have been no material developments in the status of the Arbitration since the Company’s most recent update on October 7, 2021.There can be no assurances that the Company will be successful in its Arbitration claim or receive any Arbitration award. Further, even if an Arbitration award is received by the Company, there can be no assurances that the award will be in an amount sufficient to result in any payment to the CVR holders. The Company anticipates issuing the CVRs by way of a dividend. Shareholders should obtain their own tax advice.
Annual General and Special Meeting to Approve Consolidation and Articles Amendment
In order to further prepare the Company to pursue new projects and development of its properties, including additional financing, the Company will be asking shareholders to approve a consolidation of the common shares in the capital of the Company at an annual general and special meeting (the “Meeting”) of shareholders to be held on June 10, 2022 (the “Meeting Date”).
The Company intends to consolidate its outstanding common shares on the basis of one (1) post-consolidation common share for every ten (10) pre-consolidation common shares (the “Consolidation”). The Company will seek shareholder approval for the Consolidation at the Meeting as required by the Company’s Articles and will further seek amendment to the Company’s Articles to permit future subdivisions or consolidations of the Company’s share capital to be carried out by resolution of the board of directors of the Company.
As of the date hereof, the Company has 160,277,702 common shares outstanding and, upon completion of the Consolidation, the Company will have approximately 16,027,770 post-consolidation common shares issued and outstanding. The board of directors believes it is in the best interest of the Company to approve the Consolidation and the amendment to the Company’s Articles.
The Company believes that the Consolidation will increase the Company’s flexibility and competitiveness in the marketplace and make the Company’s securities more attractive to a wider audience of potential investors, thereby resulting in a more efficient market for its common shares. The Consolidation will affect all shareholders of the Company uniformly and affect all of the Company’s stock options and warrants issued and outstanding at the effective date. At the time of the Consolidation, the number, exchange basis or exercise price of all stock options and warrants issued and outstanding will be adjusted to reflect the Consolidation.
The Consolidation and the proposed amendment to the Company’s Articles is subject to shareholder and regulatory approval, including the approval of the Exchange.