KAPA Capital Inc. to Announces Qualifying Transaction to Acquire Quantus Resources Corp.
KAPA Capital Inc.
2475 Queens Avenue
West Vancouver, BC V7V 2Y9
Quantus Resources Corp.
Registered Office:
Suite 1400 – 1125 Howe Street
Vancouver, BC V6Z 2K8
KAPA Capital Inc. to Announces Qualifying Transaction to Acquire Quantus Resources Corp.
May 6, 2020 : KAPA Capital Inc. (TSX-V: KAPA.P) (“KCI”) and Quantus Resources Corp. (“ Quantus”) are
pleased to announce that they have entere d into a binding letter of intent (the "LOI") dated May 4, 2020
pursuant to which it is contemplated that KCI will acqui re all of the outstanding common shares of Quantus by
way of a plan of arrangement (the “Arrangement”). The Arrangement is expected to constitute KCI’s Qualifying
Transaction under the Capital Pool Companies policy (the “ CPC Policy ”) of the TSX Venture Exchange (the
“Exchange”). KCI, after completion of the Qualifying Transacti on, is referred to in this news release as the
“Resulting Issuer”; the Arrangement and related transaction d escribed herein are collectively referred to herein as
the “Qualifying Transaction”.
Quantus holds an option to earn a 100% interest, subject to certain royalties, in the Blackhawk Property, a natural
resource exploration and development project targeting gold and other meta ls and minerals located near the
Lucerne Valley in San Bernardino County, California. Under the Arrangement, Quantus shall make a final
payment of 750,000 common shares completing all option payment obligations and in doing so, earn a 100%
interest in the Blackhawk Property subject to certain royalties upon production. Further information about
Quantus, including financial information, will be provided in a subsequent news release. Prior to and/or concurrent
with the completion of the Qualifying Transaction, Quan tus intends to complete a private placement for gross
proceeds of up to $2,800,000 (the “Quantus Financing”) on terms to be determined.
Upon completion of the Quantus Financing and the Arra ngement, it is anticipated that up to approximately
44,000,000 common shares of KCI will be issued to former Quantus shareholde rs to acquire Quantus. In addition,
up to 4,500,000 common shares of KCI shall be issued or issuable pursuant to the settlement of debt of Quantus.
Upon completion of the Qualifying Transaction, the parties anticipate that the Resulting Issuer will be listed as a
Tier 2 Resource Issuer on the Exchange. The Qualifying Transaction is arm’s length and is therefore not a Non-
Arm’s Length Qualifying Transaction under the CPC Policy. Accordingly, the CPC Policy does not require KCI to
obtain shareholder approval of the Qualifying Transaction.
Summary Terms of the LOI
Under the terms of the LOI, the Arra ngement will be effected under the Business Corporations Act (British
Columbia). KCI will acquire 100% of the outstanding comm on shares of Quantus by issuing to each shareholder
of Quantus one (1) common share in the capital of KCI in exchange for one (1) Quantus common share held by
such shareholder. All conver tible securities of Quantus shall be converted into conve rtible securities of KCI
without modification to the exercise price or term. Following the closing of this purchase, KCI will own 100% of
Quantus’ outstanding common shares.
Other proposed transactions under the Arrangement shall include: (i) the payment of 750,000 common shares to the
optionors of the Blackhawk Property constituting the final payment to acquire a 100% interest in the Blackhawk
Property subject to certain royalties; (ii) the Quantus Fina ncing; and (iii) $450,000 of debt shall be converted into
common shares of KCI or other securi ties convertible into KCI common shar es, which may be exercised for no
further consideration.
KCI and Quantus and will work together to finalize the de finitive agreement in furtherance of the LOI as soon
as reasonably possible.
On closing of the Qualifying Transaction, the Resulting I ssuer is expected to have approximately 49,750,001
common shares outstanding (undiluted) and 71,632,241 to 78,632,241 common shares outstanding (fully diluted).
Certain of the Resulting Issuer shares issued to the principals of Quantu s who will become management of the
Resulting Issuer, will be subject to escrow in accordance with Exchange policies.
Closing Conditions
The closing of the Arrangement will be subject to completion of several conditions, including:
• completion of due diligence satisfactory to each party;
• approval by the shareholders of Quantus at a general meeting of shareholders; and
• receipt of all necessary approvals to the Ar rangement, including from the Exchange, and the approval of the
Supreme Court of British Columbia after a hearing upon the fairness of the Arrangement.
No assurance can be given at this ti me that the proposed Arrangement will be completed, that the conditions to
closing will be satisfied or that the terms of the Arrangement will not change materially from those described in this
news release. Trading of the Company’s shares will remain halted until completion of the Qualifying Transaction or
until satisfactory documentation is filed with the Exchange. Any updates regarding the resumption of trading will be
made by way of a subsequent news release.
Sponsorship
KCI intends to apply to the Exchange for a waiver of the Exchange’s sponsorship requirements. There is no
assurance that this waiver will be granted.
Management and Board of Directors
Upon completion of the Qualifying Transaction, it is expect ed that certain members of the KCI board will resign
and the board of directors of the Resulting Issuer will be reconstituted with nominees put forth by Quantus.
Biographies for the board of directors of the Resulting Issuer will be provided in a subsequent news release.
Appointment of Special Committee
The board of directors of Quantus has appoint ed a special committee independent of KCI to review, negotiate and
recommend for approval (if appropriate) the proposed Arra ngement. The Quantus special committee is comprised
of David K. Paxton, George Nicholson and Alexander Tsakumis.
On Behalf of Quantus’ Board On Behalf of KCI’s Board
“David K. Paxton” “Charalambos Katevatis”
David K. Paxton Char alambos Katevatis
CEO and Director President, CEO and Director
For further information contact Charalambos Katevatis at 604 836-6667 or email: [email protected]
Statements in this press release regarding KCI which are not historical facts are “forward-looking statements”
that involve risks and uncertainties, such as the comple tion of the proposed Qualifying Transaction. Such
information can generally be identified by the use of forwarding-looking wording such as “may”, “expect”,
“estimate”, “anticipate”, “intend”, “believe” and “continue ” or the negative thereof or similar variations. Since
forward-looking statements address future events and cond itions, by their very nature, they involve inherent risks
and uncertainties such as the risk that the closing may not occur for any reason. Forwarding-looking statements
in this news release include the statements that: (i) the parties anticipate that the Resulting Issuer will be listed as
a Tier 2 Resource Issuer and (ii) list out the terms of the Quantus Financing.
Actual results in each case could differ materially from those currently anticipated in such statements due to
factors such as: (i) the decision to not close the Qualifying Transacti on for any reason, including adverse due
diligence results and Exchange refusal of the Qualifying Transaction; (ii) adverse market conditions; and (iii) the
need for additional financing. Except as required by la w, KCI does not intend to update any changes to such
statements.
Completion of the Qualifying Transaction is subject to a number of conditions, including but not limited to,
Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder
approval. Where applicable, the Qualifyi ng Transaction cannot close until the required shareholder approval is
obtained. There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the m anagement information circular or filing statement to be
prepared in connection with the transaction, any inform ation released or received with respect to the Qualifying
Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital
pool company should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither
approved nor disapproved the contents of this press release.
Neither TSX Venture Exchange nor its Regulation Services Prov ider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.