KWG Resources Announces Closing of Another Tranche of its Convertible Debenture Private Placement
KWG RESOURCES ANNOUNCES CLOSING OF ANOTHER TRANCHE OF ITS
CONVERTIBLE DEBENTURE PRIVATE PLACEMENT
Toronto, Canada, June 18, 2019 - KWG Resources Inc. (CSE: KWG; KWG.A) (FRANKFURT:
KW6) (“KWG” or the “Corporation”) is pleased to announce closing on June 17, 2019 of another
tranche of its private placement (the “ Private Placement ”) of convertible debentures. This
tranche was comprised of an aggregate of $100,000 of debentures. The debentures are
convertible, at the option of KWG at any time or at the option of the holder within 30 days prior to
maturity or redemption, into units (each a “Unit”) with a deemed value of $21 per U nit. The
subscriber received an option to acquire an equal amount of additional debentures at any time
within four (4) months from closing.
Each Unit is comprised of four (4) KWG.A multiple voting shares and four (4) multiple voting share
purchase warrants, with each such warrant enabling its holder to acquire one further KWG.A
multiple voting share from treasury upon payment of $7.50 at any time on or before December
15, 2019. The debentures bear interest at a rate of 12% per annum, accruing daily, compounding
annually and payable at the earlier of maturity, redemption or conversion, in KWG.A multiple
voting shares from treasury at their volume-weighted average price (“VWAP”) for the ten trading
days prior to payment. The debentures secure repayment of the principal, plus interest earned
thereon to the date of payment, plus a bonus of 20% of the original principal amount payable
immediately following issuance of the debenture by the issuance of Units with a deemed value of
$21 per Unit. At any time and from time to time, KWG will have the right to redeem the debentures
in whole or in part by payment in cash, or convert the debentures in whole or in part into Units.
The following officer and director of the Corporation (the “Insider”) participated in this tranche of
the Private Placement for an aggregate of $ 100,000 of debentures plus 952 Units representing
the bonus of 20% of the original principal amount, with the Units being comprised of an aggregate
of 3,808 multiple voting shares and 3,808 warrants representing the equivalent of 0.21% of the
Corporation’s issued and outstanding subordinate voting s hares (calculated on the basis of
conversion of the outstanding multiple voting shares into subordinate voting shares on a ratio of
300:1) on a partly diluted basis following closing of this tranche of the Private Placement:
Name and Position
with the
Corporation
No. of Subordinate
Voting Shares held
(and % of shares
outstanding) prior to
Private Placement
No. of Subordinate
Voting Shares issued
under the Private
Placement and
issuable upon
exercise of warrants
(and % of this
tranche)
No. of Subordinate
Voting Shares held (and
% of shares
outstanding) following
completion of Private
Placement
Frank Smeenk
Director and Officer
30,944,646
(2.85%)
2,284,800
(100%)
32,087,046
(2.95%)
In the event that KWG exercises its right to convert the principal of all of these debentures, the
Insider’s ownership of KWG shares would increase as follows:
KWG
PRESS RELEASE NO. 295
Subordinate shares issued & outstanding (CSE-KWG) 1,019,496,927
Convertible into Multiple-voting shares (300:1) equal to: 3,398,323
Multiple-voting shares issued & outstanding: 222,001
If all shares convert to Multiple-voting (CSE-KWG.A) 3,620,324
Name and Position
with the
Corporation
No. of Subordinate
Voting Shares held
(and % of shares
outstanding) following
completion of Private
Placement
No. of Subordinate
Voting Shares issued
on conversion of
principal and issuable
upon exercise of
warrants (and % of
this tranche)
No. of Subordinate
Voting Shares held (and
% of shares
outstanding) following
completion of Private
Placement and
conversion of principal
Frank Smeenk
Director and Officer
32,087,046
(2.95%)
11,426,400
(100%)
37,800,246
(3.46%)
The foregoing does not include any consideration of shares issuable for interest as the exchange
rate cannot be calculated at this time as the amount of interest will depend on the length of time
the debentures are outstanding and the number of shares issuable is based on the VWAP for the
10 trading days prior to payment . As well, the foregoing does not include any consideration of
the options to acquire additional debentures; however, if all such options were to be exercised
the same numbers of shares and warrants would be issuable for the debenture premium and the
conversion of the principal would result in the same numbers of shares and warrants being issued
as described above.
The proceeds received by the Corporation from the sale of the debentures will be used for the
costs and fees associated with this tranche of the Private Placement and for general corporate
overhead expenses including repaying current debts and liabilities. The working capital deficiency
and balance sheet of the Corporation will be improved, which should facilitate future financ ings
or other transactions.
All of the securities to be issued pursuant to this tranche of the Private Placement are subject to
a four (4) month hold period.
The Private Placement, in part, is a “related party transaction” within the meaning of Multilateral
Instrument 61-101 - Protection of Minority Security Holders in Special Transactions (“MI 61-101”)
as the Insider purchased all of the debentures. A formal valuation was not required under MI 61-
101 because the Corporation is not listed on any of the stock exchanges specified in MI 61-101.
Minority shareholder approval was also not required as the fair market value of the consideration
for the transaction involving the Insider does not exceed 25 percent of the Corporation’s
capitalization as of the date hereof, which is approximately $10 million. The director participating
to the Private Placement declared and disclosed his interest and did not vote on the matter. Other
directors who did not participate in the Private Placement approved the Private Placement.
Given the uncertainty as to whether Insiders would participate in the Private Placement, and to
what extent, and the demands of creditors, the Corporation has not had the opportuni ty to
announce this related party transaction 21 days in advance of closing.
About KWG:
KWG is the Operator of the Black Horse Joint Venture (‘JV’) after acquiring a vested 50% interest
through Bold Ventures Inc (‘Bold’) from Fancamp Exploration Ltd (‘Fancamp’). KWG funds all JV
exploration expenditures and Bold is carried for a 20% interest in KWG’s interest.
KWG also owns 100% of Canada Chrome Corporation which has staked claims and conducted
a surveying and soil testing program, originally for the engineering and construction of a railroad
to the Ring of Fire from Aroland, Ontario.
KWG subsequently acquired intellectual property interests, including a method for the direct
reduction of chromite to metalized iron and chrome using natural gas and an accelerant. KWG
subsidiary, Muketi Metallurgical LP, has received a patent for the direct reduction method in
Canada, South Africa and Kazakhstan and is prosecuting remaining patent applications in India,
Indonesia, Japan, South Korea, Turkey and the USA. It has also received a USA patent for
production of low carbon chromium iron alloys and a corresponding Canadian patent application
is expected to issue soon.
For further information, please contact:
Bruce Hodgman, Vice-President: 416-642-3575 ~ [email protected]
Forward-Looking Statements: Information set forth in this news release may involve forward-looking statements
under applicable securities laws. The forward- looking statements contained herein are expressly qualified in their
entirety by this cautionary statement. The forward-looking statements included in this document are made as of the
date of this document and KWG disclaims any intention or obligation to update or revise any forward-looking
statements, whether as a result of new i nformation, future events or otherwise, except as expressly required by
applicable securities legislation. Although management believes that the expectations represented in such forward-
looking statements are reasonable, there can be no assurance that suc h expectations will prove to be correct.
Accordingly, undue reliance should not be put on such.
This news release does not constitute an offer to sell or solicitation of an offer to buy any securities that may be
described herein.
Neither the Canadian Securities Exchange nor its Regulation Services Provider (as that term is defined in the policies
of the CSE) accepts responsibility for the adequacy or accuracy of this news release.