Closing of the Merger with Cerro de Pasco , the Spin-Off, the Private Placement and Related Transactions and Change of NAME
CLOSING OF THE MERGER WITH CERRO DE PASCO , THE SPIN-OFF, THE
PRIVATE PLACEMENT AND RELATED TRANSACTIONS AND CHANGE OF
NAME
NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S.
NEWSWIRE SERVICES
Montréal, Québec − (Marketwired − October 9, 2018) − G enius Properties Ltd. (CSE:GNI)
(“Genius”) and Genius Metals Inc. (“ SpinCo”) are pleased to announce the closing of a series
of transactions involving:
• the spin-off of substantially all of the assets and liabilities of Genius to SpinCo and the
distribution of the shares of SpinCo to shareholders of the Genius;
• the acquisition of Cerro de Pasco Resources S.A. (“Cerro de Pasco”) by Genius;
• the closing by SpinCo of the first tranche of the private placement for aggregate gross
proceeds of more than $900,000; and
• the change of name of Genius to “Cerro de Pasco Resources Inc.”
Acquisition of Cerro de Pasco
As announced in a press release on August 28, 2018, Genius acquired Cerro de Pasco effective
August 31, 2018 (the “ Effective Date”) in consideration for which Genius issued an aggregate
of 176,360,232 common shares (the “Genius Shares”) to the former securityholders of Cerro
de Pasco pursuant to a merger agreement between Genius and Cerro de Pasco dated
November 9, 2017, as amended (the “Merger”). As a result of the Merger, Genius acquired all
of the rights, titles and interests of Cerro de Pasco in the El Metalurgista mining concession in
Peru.
The 176,360,232 Genius S hares issued to the former securityholders of Cerro de Pasco
pursuant to the Merger are held in escrow by Computershare Investor Services Inc., as escrow
agent, and will be automatically released from escrow based on the following schedule:
Release Dates Percentage to be Released
November 1, 2018 2%
February 1, 2019 5%
August 1, 2019 15%
February 1, 2020 15%
August 1, 2020 15%
February 1, 2021 15%
August 1, 2021 15%
February 1, 2022 the remaining escrowed securities
The Canadian Securities Exchange (the “ CSE”) has conditionally approved the listing of the
176,360,232 Genius Shares issued pursuant to the merger, subject to fulfilling all of the
requirements of the CSE.
Spin Off
Prior to the Merger, Genius transferred substantially all of its assets and liabilities, including
all of its Canadian mining properties, to SpinCo in consideration for 9,797,790 common share
of SpinCo (the “SpinCo Shares”) pursuant to an asset transfer agreement between Genius and
SpinCo dated June 6, 2018, as amended (the “ Spin-Off”). Genius distributed the 9,797,790
SpinCo Shares to its own shareholders as at the record date of August 30, 2018 (the “Record
Date”), on the basis of one (1) SpinCo Share for six (6) Genius Shares.
The Spin -Off is a “related party transaction ” as defined in Regulation 61 -101 respecting
Protection of Minority Security Holders in Special Transactions (“Regulation 61-101”), since
SpinCo was an affiliate controlled by Genius at the effective time of the Spin -Off. The Spin -
Off is exempt from the form al valuation and minority shareholder approval requirements
under Part 5 of Regulation 61-101 since the parties to the Spin -Off consisted solely of Genius
and SpinCo which was a wholly -owned subsidiary of Genius at the effective time of the Spin -
Off. Moreover, the Spin-Off was a downstream transaction of Genius under MI 61-101.
Private Placement
Further to a press release dated August 20, 2018, SpinCo completed the first tranche of a non-
brokered private placement offering (the “Private Placement”) for gross proceeds to SpinCo
of $918,617.
SpinCo expects to close a second tranche of the Private Placement with the participation of
certain institutional investors of the Province of Québec within the next 30 days.
Under the first tranche of the Private Placement, SpinCo issued and sold:
• 2,486,667 common share units (the “ Common Share Units ”) at a price of $0.25 per
Common Share Unit, with each such unit being comprised of one SpinCo Share and one
common share purchase warrant of SpinCo (a “ Warrant”) entitling the holder thereof
to purchase one SpinCo Share at an exercise price of $0.35 for a period of twelve
months; and
• 848,429 Flow-Through Share Units (the “ Flow-Through Share Units ”) at a price of
$0.35 per Flow -Through Unit, with each such unit b eing comprised of one “flow -
through” SpinCo Share and one -half of one Warrant entitling the holder of one whole
Warrant to purchase one SpinCo Share at an exercise price of $0.45 for a period of
twelve months.
The net proceeds of the Private Placement will be used for exploration of the Meaghers
property (Nova Scotia) and the care and maintenance of the Sakami property (Québec) and
the Robelin property (Québec), and for general corporate purposes.
In connection with the first tranche of the Private Placement, SpinCo paid finder’s fees to
arm’s length third parties in the amount of $25,136.
All securities issued pursuant to the Private Placement are subject to a hold period under
applicable securities laws, which will expire four months plus one day f rom the date of their
issuance.
Four directors and officers of SpinCo have participated in the Private Placement and were
issued an aggregate of 100,000 Common Share Units and 121,419 Flow -Through Share Units.
Such participation in the Private Placement is a “related party transaction ” as defined in
Regulation 61-101. The Private Placement is exempt from the formal valuation and minority
shareholder approval requirements of Regulation 61-101 as neither the fair market value of
the securities issued to insid ers nor the consideration for such securities by insiders exceed
25% of SpinCo’s market capitalization. SpinCo did not file a material change report 21 days
prior to closing of the Private Placement as the participation of insiders of SpinCo in the
Private Placement had not been confirmed at that time.
Debt Settlements
SpinCo issued an aggregate of 168,000 SpinCo Shares to certain creditors of Genius (the “ Debt
Settlements”). On March 30, 2018, Genius had entered into debt settlement agreements with
certain creditors whereby the creditors agreed to convert certain debts for the unpaid
services in the aggregate amount of $42,000 in consideration for SpinCo Shares (the “ Debt
Settlement Agreements”). The liabilities of Genius under the Debt Settlement Agreement s
were transferred to SpinCo pursuant to the Asset Transfer Agreement.
One director of the Issuer has participated in the Debt Settlements and was issued an
aggregate of 30,000 SpinCo Shares. Such participation in the Debt Settlements is a “related
party transaction” as defined in Regulation 61 -101. The Debt Settlements is exempt from the
formal valuation and minority shareholder approval requirements of Regulation 61 -101 as
neither the fair market value of the securities issued to the insider nor the consi deration for
such securities by the insider exceed 25% of SpinCo’s market capitalization.
Adjustment Warrants
SpinCo issued an aggregate of 2,212,097 common share purchase warrants (the “Adjustment
Warrants”) to holders of common share purchase warrants of Genius (the “Genius Warrants”)
as at the Record Date, on the basis of one (1) Adjustment Warrant for six (6) Genius Warrants
as adjustment of the Genius Warrants resulting from the Spin -Off. Each Adjustment Warrant
entitles the holder thereof to purchase one SpinCo Share at an exercise price of $0.35 per
share for a period of 12 months.
Change of Name
Genius changed its name to “Cerro de Pasco Resources Inc.” in the English version and
“Ressources Cerro de Pasco inc.” in the French version. After the change of name, Genius will
trade under the symbol “CDPR”.
Listing on CSE
The CSE has conditionally approved the listing of SpinCo Shares, subject to fulfilling all of the
requirements of the CSE. The listing of SpinCo Shares on the CSE is expect ed to be completed
during the week of October 15, 2018. The SpinCo Shares will trade under the symbol “GENI”.
About Genius Properties Ltd.
Genius Properties Ltd. is a Canadian mineral exploration company focused on exploring and
developing the El Metalurgista mining concession located in Peru. It changed its name today to
Cerro de Pasco Resources Inc. / Ressources Cerro de Pasco inc.
About Genius Metals Inc.
Genius Metals Inc. is a Canadian mineral exploration company focused on developing projects
with some of the world’s most critical metals and minerals.
The Exchange has in no way passed upon the merits of the transactions and has neither
approved nor disapproved the contents of this news release. Neither the Exchange nor its
Regulation Services Provider accepts responsibility for the adequacy or accuracy of this news
release.
Forward-Looking Statements and Disclaimer
Certain statements in this press release may be forward -looking. Such statements include
those with respect to the Corporation ’s and SpinCo’s ability to list the Genius Shares and the
SpinCo Shares on the CSE, complete the second tranche of the Private Placement or to obtain
the necessary regulatory approvals for the proposed transactions. Although Genius and SpinCO
believe the expectations reflected in such forward -looking statements are based on
reasonable assumptions, it can give no assurances that its expectations will be achieved.
Descriptions of the risks affecting the proposed transactions appear in the listing statements
of Genius and SpinCo, as amended , which are available on Genius’s profile on SEDAR at
www.sedar.com. No assurance can be given that any events anticipated by the forward-
looking information in this press release will occur, or if any of them do so, what benefits that
Genius and/or SpinCo will derive therefrom. In particular, no assurance can be given as to the
future financial performance of Genius and/or SpinCo. Neither of Genius or SpinCo undertakes
any obligation to update or revise any forward -looking statements, except as required under
applicable law. The reader is warned against undue reliance on th ese forward -looking
statements.
Contact Information
Guy Goulet
President and CEO
Tel.: 579 476-7000
Email: [email protected]