Into the United States. Mg Capital Corporation Enters into Definitive Agreement FOR Qualifying Transaction and Increases Size of Financing
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MG CAPITAL CORPORATION ENTERS INTO DEFINITIVE AGREEMENT
FOR QUALIFYING TRANSACTION AND INCREASES SIZE OF FINANCING
Calgary, Alberta, September 26, 2019 – MG Capital Corporation (TSXV: MGX.P) (“MG” or the
“Corporation”) is pleased to announce that further to its news release dated July 29, 2019, it has entered into
an amalgamation agreement dated September 26, 2019 (the “Amalgamation Agreement”) with DLP Resources
Inc. (“DLP”), a privately held corporation incorporated under the laws of the Province of British Columbia and
1224395 B.C. Ltd., a wholly owned subsidiary of MG, incorporated under the laws of the Province of British
Columbia (“NumCo”) pursuant to which MG will, by way of a “three-cornered amalgamation”, acquire all of
the issued and outstanding securities of DLP (together with the related transactions and corporate procedures set
forth in the Amalgamation Agreement, the “Transaction”).
The Transaction is subject to TSX Venture Exchange (the “TSXV”) approval and is intended to constitute MG’s
“Qualifying Transaction” in accordance with TSXV Policy 2.4 – Capital Pool Companies.
Summary of the Transaction
Pursuant to the terms of the Amalgamation Agreement, and subject to certain conditions, including receipt of
applicable regulatory and shareholder approvals, DLP will amalgamate with NumCo pursuant to the provisions
of the Business Corporations Act (British Columbia) (the “Amalgamation”). The amalgamated entity
(“AmalCo”) will be a wholly-owned subsidiary of MG and the shareholders of DLP will be issued one common
share of MG (each an “MG Share”) in exchange for every one Class A Common Share of DLP (each a “DLP
Share”) held immediately prior to the completion of the Transaction. Each outstanding common share purchase
warrant of DLP (each a “DLP Warrant”) will also be exchanged for one common share purchase warrant of
MG on the same terms and conditions as the original security.
The Amalgamation Agreement provides that no party will solicit or negotiate with any other entities in
opposition to or in competition with the Transaction.
The completion of the Transaction is subject to the satisfaction of certain conditions precedent, including but not
limited to: (i) the DLP Financing (as defined below), raising gross proceeds of not less than $1.1 million; (ii)
approval of the Amalgamation by the shareholders of DLP; (iii) the absence of any material adverse change in
the business, operations or capital of either MG or DLP; (iv) the absence of any prohibition at law against the
Transaction; (v) the termination by MG of 540,000 of the currently outstanding stock options held by its current
directors and officers; and (vi) receipt of all requisite third party consents, waivers, permits, orders and approvals,
including the approval of the TSXV. Accordingly, there can be no assurance that the Transaction will be
completed on the terms proposed above or at all. For avoidance of doubt, the Amalgamation is not subject to the
approval of the shareholders of MG.
Subject to satisfaction or waiver of the conditions precedent referred to herein and contained in the
Amalgamation Agreement, MG and DLP anticipate that the Transaction will be completed on or before
November 1, 2019.
Each of MG and DLP will bear their own costs in respect of the Transaction except that DLP will pay all third
party costs required to be paid to complete the Transaction, including, but not limited to sponsorship fees and
any and all TSXV filing fees.
The Transaction will result in MG, as the listed issuer resulting from the Transaction (the “Resulting Issuer”),
owning 100% of the securities of DLP.
In connection with its role in connecting MG and DLP in contemplation of the Transaction and subject to TSXV
approval, there is a finder’s fee payable to Haywood Securities Inc. (“Haywood”) to be satisfied through delivery
to Haywood of $192,500, payable in cash or through the issuance of DLP Shares at a price of $0.10 per DLP
Share (the “Finder’s Fee”).
DLP Financing
The Transaction is subject to the completion of a non-brokered private placement by DLP for minimum
aggregate gross proceeds of $1,100,000 (the “DLP Financing”). In the DLP Financing, DLP expects to raise
funds through the issuance of flow-through common shares of DLP (each a “DLP FT Share”) at a price of $0.13
per DLP FT Share and through the issuance of units of DLP (each a “DLP Unit”) at a price of $0.10 per DLP
Unit. A minimum of $575,000 will be raise through the issuance of DLP Units. Each DLP Unit will be comprised
of one DLP Share and one-half of one DLP Warrant. Each DLP Warrant will entitle the holder thereof to
purchase one additional DLP Share at an exercise price of $0.15 per DLP Share for a period of 24 months from
the date of issue, subject to the Acceleration Right (as defined below). Each DLP FT Share will be a flow-
through share which will qualify as a “flow-through share” as defined in s. 66(15) of the Income Tax Act
(Canada).
The “Acceleration Right” means the right of DLP to accelerate the expiry date of the DLP Warrants to 30 days
from the date notice of such acceleration is delivered to warrantholders if the closing price of the shares of the
Resulting Issuer on the TSXV, or any other stock exchange on which such shares are then listed, is at a price
equal to or greater than $0.25 for a period of twenty consecutive trading days.
DLP expects to pay a cash commission equal to up to 7.5% of the aggregate combined gross proceeds raised
from the sale of applicable DLP Units and DLP FT Shares to subscribers introduced to DLP by qualified finders
and also expects to issue (i) such number of non-transferable warrants (“FT Finder Warrants”) that is equal to
7.5% of the gross proceeds raised in respect of the issuance of DLP FT Shares to subscribers introduced to DLP
by such finders, divided by $0.13 and (ii) such number of non-transferable warrants (“Unit Finder Warrants”)
that is equal to up to 7.5% of the gross proceeds raised in respect of the issuance of DLP Units to subscribers
introduced to DLP by such finders, divided by $0.10. Each FT Finder Warrant will entitle the holder thereof to
acquire one DLP Share for a period of 24 months from the closing date of the DLP Financing at a price of $0.13
per share. Each Unit Finder Warrant will entitle the holder thereof to acquire one DLP Share for a period of 24
months from the closing date of the DLP Financing at a price of $0.10 per share.
DLP intends to use the proceeds of the DLP Financing for the Transaction, general and administrative expenses
for the next twelve months, exploration activities on the Aldridge Properties (as defined below), property
maintenance costs and general working capital.
There is no assurance that the DLP Financing will be completed. All sales, exchanges, and issuances of any
units, shares, warrants, and securities in connection to the DLP Financing and the Transaction will be subject to
regulatory approval including, but not limited to, the approval of the TSXV and, as applicable, may be subject
to the prior approval of the shareholders of either or both of MG and/or DLP.
Bridge Loan
MG will provide a bridge loan (the “Bridge Loan”) of $25,000 to DLP at an interest rate of 10% per annum in
accordance with Section 8.5 of TSXV Policy 2.4 – Capital Pool Companies. The Bridge Loan will be used by
DLP to preserve its assets, pay outstanding invoices related to the preparation of the technical report (described
below) and other expenditures incurred while working towards completing the Transaction. The Bridge Loan
and interest accrued thereon will be payable on the closing date of the Transaction and if the Transaction is not
completed, 90 days from the date of the Amalgamation Agreement.
Resulting Issuer
After completion of the Transaction, and subject to approval by the shareholders of the Resulting Issuer, it is
anticipated that the Resulting Issuer will change its name to “DLP Resources Inc.”, or such other name as may
be acceptable to the Resulting Issuer.
Upon completion of the Transaction and assuming that (i) the minimum amount is raised under the DLP
Financing and (ii) the Finder’s Fee is satisfied entirely through the issuance of 1,925,000 DLP Shares to
Haywood, former shareholders of DLP will hold approximately 88.8% of the Resulting Issuer common shares
(“Resulting Issuer Shares ”) and MG shareholders will hold 11.2% of the Resulting Issuer Shares. It is
anticipated that there will be an aggregate of approximately 49,223,461 Resulting Issuer Shares issued and
outstanding and an additional 3,859,135 convertible securities of the Resulting Issuer exercisable into Resulting
Issuer Shares assuming $525,000 is raised through the issuance of DLP FT Shares and $575,000 is raised through
the issuance of DLP Units pursuant to the DLP Financing.
The Resulting Issuer will carry on the mineral exploration business conducted by DLP, and the Resulting Issuer
Shares will be listed under a new trading symbol. On closing of the Transaction, the Resulting Issuer anticipates
meeting the TSXV's initial listing requirements for a mining issuer.
MG’s current directors are Peter McKeown, Jamie McVicar and Glenn Jamieson. Concurrent with the
completion of the Transaction, Peter McKeown, Jamie McVicar and Glenn Jamieson, being all of the current
directors of MG, will resign in favour of nominees of DLP, being James Stypula, who will also be appointed
Chief Executive Officer, Richard Zimmer and William Bennett. Leslie Anne “Robin” Sudo will be appointed
Chief Financial Officer and Corporate Secretary of the Resulting Issuer.
The directors and officers and or companies controlled by them collectively will own a total of 14,222,222
Resulting Issuer Shares of the Resulting Issuer or 28.9% of the total number of Resulting Issuer Shares.
Information as to the individual shareholdings of each of the current officers and directors of MG is available on
SEDAR.
The following is a short background of each person who will be a director or officer of the Resulting Issuer on
completion of the Transaction:
James Stypula, age 70, Chief Executive Officer and Director
Mr. James (Jim) Stypula is a businessman with over 30 years of experience and a former investment advisor and
financier of mineral exploration and development companies in North and South America. Mr. Stypula is
currently a director of Ascot Resources Ltd. Mr. Stypula was the former Chairman of the board of directors of
Magellan Minerals Ltd. after its merger with Chapleau Resources Ltd. where he served as CEO and director.
Mr. Stypula was also one of the founding directors of Far West Mining Ltd. Mr. Stypula has acted on numerous
board committees and has a wealth of business experience related to the mining industry, especially with respect
to the small cap gold sector.
Mr. Stypula will be appointed as Chief Executive Officer and a Director of the Resulting Issuer and will also fill
the role as head of Investors Relations. Mr. Stypula intends to devote 80% of his working time to the affairs of
the Resulting Issuer. Mr. Stypula will be an employee of the Resulting Issuer. Mr. Stypula has not entered into
any non-competition agreement with DLP or the Resulting Issuer.
Leslie Anne “Robin” Sudo, age 60, Chief Financial Officer and Corporate Secretary
Ms. Leslie (Robin) Sudo has been actively involved in the mining exploration industry for 35 years, working
with major and junior companies. During this time Ms. Sudo has accumulated a vast knowledge of the industry
as she has served in a wide variety of roles including Chief Financial Officer, Accounting, Corporate Secretary,
Corporate Governance and Internal Controls developer, Land Manager including mineral claim management,
staking and permitting in numerous provinces and 2 territories. Ms. Sudo’s knowledge includes all aspects of
Administration regarding an exploration office, managing property agreements, electronic filing of public
documents (SEDAR) and has performed human resources work. Some of the companies Ms. Sudo has worked
with are Cominco Ltd. (now Teck Resources Limited), Chapleau Resources Ltd., Consolidated Ramrod Gold
Corp., Ryan Gold Corp., StrikePoint Gold Inc. and Ascot Resources Ltd.
Ms. Sudo will be appointed as Chief Financial Officer and Corporate Secretary of the Resulting Issuer. Ms. Sudo
intends to devote 80% of her working time to the affairs of the Resulting Issuer. Ms. Sudo will be an employee
of the Resulting Issuer. Ms. Sudo has not entered into any non-competition agreement with DLP or the Resulting
Issuer.
Richard Zimmer, age 70, Director
Mr. Zimmer has a degree in mining engineering and an MBA and has over 40 years of Canadian and international
mining experience including exploration, development and mine operations (both underground and open pit). In
the past, Mr. Zimmer served as: President and CEO of Far West Mining Ltd.; VP and Project Manager for Teck's
Pogo project in Alaska and General Manager of Teck's Tarmoola gold mine in Australia; Mine Manager of
Teck's Afton copper-gold mine in British Columbia as well as acting in several senior mining roles throughout
his career. Mr. Zimmer currently serves as a director of Ascot Resources Ltd., Capstone Mining Corp., and
Alexco Resource Corp.
Mr. Zimmer will be appointed as Director of the Resulting Issuer. Mr. Zimmer intends to be available as required
to attend to the affairs of the Resulting Issuer. Mr. Zimmer will not be an employee of the Resulting Issuer.
Mr. Zimmer has not entered into any non-competition agreement with DLP or the Resulting Issuer.
William Bennett, age 69, Director
Mr. William (Bill) Bennett was formerly a government MLA in British Columbia (“BC”) for 16 years in the
riding of Kootenay East. In addition to holding portfolios for Local Government and Tourism, Mr. Bennett was
named BC Mines Minister three separate times over his 16 years. Mr. Bennett has a BA from the University of
Guelph and a law degree from Queen’s University. Mr. Bennett is known across Canada for his knowledge of
the mining industry in BC. He led the BC government’s efforts over many years to restore BC’s competitiveness
for exploration investment, including having improved the BC Ministry of Energy & Mines permitting process
and helping to launch BC’s First Nations mine revenue sharing program. There are few people in Canada who
have such a strong combined knowledge of government processes, of the mining industry and of First Nations.
Mr. Bennett also sits on the board of directors of Ascot Resources Ltd., Kutcho Copper Corp., Eagle Plains
Resources Ltd., Surge Exploration Inc. and Libero Copper Corporation.
Mr. Bennett will be appointed as Director of the Resulting Issuer. Mr Bennett intends to be available as required
to attend to the affairs of the Resulting Issuer. Mr. Bennett will not be an employee of the Resulting Issuer. Mr.
Bennett has not entered into any non-competition agreement with DLP or the Resulting Issuer.
Advisory Board of Resulting Issuer
In addition to the directors and executive officers of the Resulting Issuer, the Resulting Issuer intends to
implement an advisory board (the “Advisory Board”). The following is a brief description of the members of
the Advisory Board of the Resulting Issuer.
Derek White, Advisory Board Member
Mr. Derek White has over 30 years of international experience in the mining industry. Mr. White is currently
President and CEO of Ascot Resources Ltd. Before joining Ascot, Mr. White acted as a Principal of Traxys
Capital Partners LLP, a private firm specializing in the mining and materials sectors. Prior to joining Traxys,
Mr. White was the President and CEO of KGHM International Ltd. from 2012 to 2015, overseeing six mining
operations and four large development projects in Canada, the United States and Chile. He also held the positions
of Executive Vice President, Business Development/Chief Financial Officer from 2004 to 2012 of Quadra FNX
Mining Ltd. Mr. White has held executive positions in business development, operations and finance with BHP
Billiton Plc, Billiton International Metals BV and Impala Platinum Holdings Ltd., in Vancouver, Toronto,
London, the Hague, and Johannesburg. He is an ICSA Accredited Director and has served on a number of
precious metal boards throughout his career. Mr. White holds an undergraduate degree in Geological
Engineering from the University of British Columbia and is also a Chartered Accountant. Mr. White also
currently serves as a director of MAG Silver Corp. and Orca Gold Inc.
Mr. White will serve the Resulting Issuer as an advisor on an as-needed basis. Mr. White will not be an employee
of the Resulting Issuer. Mr. White has not entered into any non-competition agreement with DLP or the Resulting
Issuer.
Mark D. Kucher, Advisory Board Member
Mr. Mark D. Kucher is the Founder and Managing Director of British Swiss Investment Corp. He founded
British Swiss Investment Corp., in 1990. Mr. Kucher has also held the following positions: the Chief Executive
Officer, President, and Director at Global Royalty Corp; the Executive Chairman, Chief Executive Officer,
President and Secretary of Battle Mountain Gold Exploration Corp.; founded Battle Mountain Gold Exploration
in 2005; served as Treasurer of Battle Mountain Gold Exploration Corp. since March 2006 and as its Chief
Financial Officer since April 2004 to May 2006; Managing Director of Sovereign Trust company since March
1998.
Mr. Kucher has had various positions with investment banks and brokerage firms. He worked in investment
banking with CIBC World Markets, BMO Harris Capital Markets, UBS Canada and Sprott Securities. From
February 1995 to September 1997, Mr. Kucher served as the Chairman and Chief Executive Officer of Phelps
Dodge Corporation. Among his credits, Mr. Kucher was directly involved as the Corporate Financier at Sprott
Securities in the initial $45 million financing of Miramar Mining Corporation's purchase of the Con Mine in
1993, the restructuring as Chief Financial Officer of Princeton Mining Corporation during their restart of the
Similco Mine and the subsequent acquisition and build out of the $100 million Huckleberry Mine and as
Chairman in the $110 million amalgamation of Aurex Resources Inc. with Cobre Mining Company and its
ultimate acquisition in 1998 by Phelps Dodge Mining Company. Mr. Kucher has served as Chairman of Hudson
Ventures, Inc., Quepasa.com, Inc. and Cobre Mining Company. Mr. Kucher has 25 years of experience in
Resource Finance in Investment Banking, Mergers and Acquisitions, Merchant Banking and Institutional
Coverage. During his career, Mr. Kucher has founded and sold 3 gold royalty companies to Royal Gold,
AngloGold Ashanti and Coeur Mining. Mr. Kucher earned an M.B.A. from the University of Western Ontario
in 1984 and a Bachelor of Commerce in Honors from the University of Manitoba.
Mr. Kucher will serve the Resulting Issuer as an advisor on an as-needed basis. Mr. Kucher will not be an
employee of the Resulting Issuer. Mr. Kucher has not entered into any non-competition agreement with DLP or
the Resulting Issuer.
Luke Alexander, Advisory Board Member
In 2018, Mr. Alexander founded Park Road Capital, a capital markets advisory group focused on the global
Natural Resource sector. Prior to Park Road Capital, Mr. Alexander was a managing director at GMP Securities
based in Vancouver. Before relocating to Vancouver, Mr. Alexander spent 12 years in London, UK, covering
the Natural Resource sector. During his time in London he was a senior partner at GMP Securities Europe, Vice
President at National Bank Financial where he helped establish their first equity trading desk in London, and an
equity sales trader at TD Securities. Mr. Alexander began his career working in the private client group at BMO
Nesbitt Burns.
Mr. Alexander will serve the Resulting Issuer as an advisor on an as-needed basis. Mr. Alexander will not be an
employee of the Resulting Issuer. Mr. Alexander has not entered into any non-competition agreement with DLP
or the Resulting Issuer.
David L. Pighin, Consulting Geologist of Advisory Board
Mr. David Pighin has dedicated his working life to mining and exploration geology and has been actively
involved in the industry for 53 years. He started his career with Cominco Ltd. (now Teck) as a professional
Prospector and was promoted to Geologist in 1977. In 1989, after 24 years, Mr. Pighin left Cominco. Since 1989,
Mr. Pighin became a consulting geologist and has worked for numerous junior exploration companies. He has
worked in BC, the Yukon, the Northwest Territories, New Brunswick as well as most of the western United
States and Mexico. Mr. Pighin has planned and managed numerous exploration programs designed to find
deposits of base metals, tungsten, moly, gold, diamonds and rare earth metals. During 1993, Mr. Pighin
ascertained the designation of P.Geo. Mr. Pighin has discovered the following significant exploration properties:
the Fors Property (PB, Zn, Ag); the Cedar Property (Tungsten); the Vine Property (Pb, Zn, Ag, Au); the
Streamboat Property (Pb, Zn, Ba); the Cross Property (discovered and recognized 4 Kimberlite pipes); the Fen
Property (rare earth metals); the Boulder Gold Property (Au) Mr. Pighin is a “qualified person” as defined in
National Instrument 43-101 – Standards of Disclosure for Mineral Projects.
Mr. Pighin will serve the Resulting Issuer as an advisor on an as-needed basis. Mr. Pighin will not be an employee
of the Resulting Issuer. Mr. Pighin has not entered into any non-competition agreement with DLP or the
Resulting Issuer.
Carol Li, Financial Advisor of Advisory Board
Ms. Carol Li is a Canadian Chartered Professional Accountant with over 20 years of financial and executive
management experience, of which 14 years in mining. Ms. Li was appointed as Chief Financial Officer of Ascot
Resources Ltd. on November 2, 2017. Ms. Li was formerly Vice President, Finance for KGHM International
Ltd. from 2012 to 2017 and Corporate Controller for Quadra/QuadraFNX Mining Ltd. from 2004 to 2012. Ms.
Li became a director of Strikepoint Gold Inc. on June 3, 2019 as a representative for Ascot Resources as one of
Strikepoint’s largest shareholders.
Ms. Li will serve the Resulting Issuer as an advisor on an as-needed basis. Ms. Li will not be an employee of the
Resulting Issuer. Ms. Li has not entered into any non-competition agreement with DLP or the Resulting Issuer.
Non-Arm's Length Relationships
The Transaction will not constitute a Non-Arm’s Length Qualifying Transaction (as such term is defined in the
policies of the TSXV). No Insider, Promoter or Control Person as such terms are defined in the policies of the
TSXV) of MG has any material interest in DLP prior to giving effect to the Transaction and no such persons are
also insiders of DLP.
Sponsorship
Sponsorship of a qualifying transaction is required by the TSXV unless exempt in accordance with TSXV
policies. The parties intend to apply for an exemption from the sponsorship requirements of the TSXV.
Filing Statement
In connection with the Transaction and pursuant to the requirements of the TSXV, MG will file a filing statement
(the “Filing Statement”) on its issuer profile on SEDAR (www.sedar.com), which will contain details regarding
the Transaction, MG, DLP and the Resulting Issuer.
About MG Capital Corporation
MG Capital Corporation is a capital pool company. The Corporation’s principal business activity is to identify
and evaluate opportunities for acquisition of assets or business. The Corporation is headquartered in Banff,
Alberta.
About DLP Resources Inc.
DLP Resources Inc. is a natural resource company which was formed under the laws of the Province of British
Columbia on June 7, 2019. As of the date hereof, there are 32,000,000 DLP Shares outstanding. The following
persons own, control or direct 10% of more of the outstanding DLP Shares:
Name and
Municipality of
Residence of
Shareholder
Type of
Ownership
Number of DLP
Shares
Percent of DLP Shares Owned Prior
to Giving Effect to the Transaction
William Robert
Bennett
Cranbrook, British
Columbia
Direct 3,555,556 11.11%
Mark Kuchar
Toronto, Ontario
Direct 3,555,556 11.11%
Park Road Capital
Corp.(1)
North Vancouver,
British Columbia
Indirect 3,555,556 11.11%
Richard Norman
Zimmer
North Vancouver,
British Columbia
Direct 3,555,556 11.11%
Carol Li
Burnaby, British
Columbia
Direct 3,555,556 11.11%
Early Bird Capital
Corp.
Cranbrook, British
Columbia
Direct 3,555,555 11.11%
Leslie Anne
“Robin” Sudo
Cranbrook, British
Columbia
Direct 3,555,555 11.11%
David Pighin
Cranbrook, British
Columbia
Direct 3,555,555 11.11%
Derek White
Vancouver, British
Columbia
Direct 3,555,555 11.11%
(1) Luke Alexander owns 100% of the voting securities of Park Road Capital Corp. and is the beneficial holder of the DLP Shares
held by Park Road Capital Corp.
(2) John James Stypula owns 100% of the voting securities Early Bird Capital Corp. and is the beneficial holder of the DLP Shares
held by Early Bird Capital Corp.
DLP’s principal business activity is in the ownership and management of mining assets in British Columbia,
Canada. It owns 100% of an exploration-stage property located northeast of Golden B.C. which is prospective
for copper and cobalt. This property was originally explored in the early 1970's and has seen little field activity
since that time. DLP also owns a 100% interest in other exploration-stage properties of merit located in the
Cranbrook-Creston corridor which are of interest due to their lead, zinc and silver potential (the “Aldridge
Property”). DLP is headquartered in Cranbrook, British Columbia.