CMX Appeals TSXV Decision to BC Securities Commission
CMX Appeals TSXV Decision to BC Securities Commission
Toronto, ON. August 24, 2018 . Chilean Metals Inc. (“Chilean Metals,” “CMX” or the
“Company”)(TSX.V:CMX, OTCQB: CMETF, SS E:CMX, MILA:CMX, FRA: IVV1, BER :
IVV1). Since its news release of July 9, 2018, the Company has been trying to obtain TSXV
approval for the previous placement and approval for a further tranche of the private placement.
The TSXV’s proposed alternatives for private placement approval appear out of the norm and are
not proportional. The TSXV has said that in order to consider such an acceptance, the Exchange
will require the Company to, among other things, take the necessary action to either:
1. Evidence disinterested shareholder approval for th e PP, to be obtained prior to any other matters
being put the Issuer's shareholders for approval; or
2. Ensure that the common shares issued pursuant to the PP (or any issued upon exercise of any
common share purchase warrants issued pursuant to the PP) are not voted at the Issuer's
upcoming shareholder meeting.
This would disenfranchise a group of investors who invested their capital in an offering available
to all shareholders whose funds were earmarked to repay critical payables, to remove a secured
debenture due in October and to finance our expl oration in Nova Scotia. These investors would
be prevented from voting to approve the private placement, not only in respect of shares issued
in the private placement, but in respect of any other CMX shares a shareholder happened to hold.
This would effectively prevent th em from voting on the fate of th e company in which they have
invested currently and possibly one or more times in the past.
As noted in our August 17th press release, and to-date we have received no further information as
to any purported proxy battle.
“In discussions with the Exchange, their staff ha ve discussed shareholder Chris Berlet and his
requisition for the Company to hold an annual meeting on behalf of himself and Cogonov. These
actions were initially made and publicized when he had no standing to do so, as he was not a
registered shareholder of the Company.
CMX is unaware of any proxy battle but has be en advised by Mr. Berlet that he and “Cogonov
and Friendlies” are planning to vote in a ne w board at our upcoming annual meeting. They
expressed to us that they intend to use an exem ption allowing them to solicit up to 15 persons in
this attempted Board takeover, w ithout disclosure or producing th eir own circular. They offered
to leave current management in charge of the Nova Scotia assets if we would agree to some very
onerous terms favoring Mr. Berlet and his associates, which we did not view in the best interests
of the Company. We rejected this proposal. This lack of transparency by Mr. Berlet and those
acting in concert with him is not fair to shareholders.
Cogonov Inc., according to current public record, shows as an o fficer, a former CMX executive
Gary Lohman, as president of Cogonov. Mr. Lohm an resigned from management of the CMX in
March, along with Patrick Cruickshank (past CEO of Cogonov). Following their management
resignations, the Company corrected in our MD&A this (former) disclo sure which had been
understood by the Board to be royalties in favo ur of parties affiliated with Cogonov including
specifically Mr. Berlet.
“Certain claims are subject to a 3% NSR as well as under the Nova Scotia Mineral Resource Act
there is a royalty, payable to the crown, of 2% of the net revenue or 15% of all net income,
whichever is greater, derived from the sale of metals produced from a mining lease.”
Subsequent to their resignation the disclosure was updated.
“Under the Nova Scotia Mineral Resource Act there is a royalty, payable to the crown, of 2% of
the net revenue or 15% of all net income, whicheve r is greater, derived from the sale of metals
produced from a mining lease.”
In the Company’s original news releases announcing the Cogonov transactions in 2015 and
2016, no royalties were noted as part of the tran saction, in accordance with the terms of the
purchase agreements for the Nova Scotia properties. Additionally no royalties were noted by the
TSXV Bulletins approving the purchase of the properties from Cogonov (June 21, 2016 and
October 6, 2016) and none existed in a search of the Nova Scotia Department of Natural
Resources. It seems that the former CMX executives and Cogonov affiliated board members
took it upon themselves to attempt to insert these phantom royalties to their benefit and that of
Mr. Berlet, by the change in the disclosure.
This lack of transparency by Mr. Berlet and t hose acting in concert with him is not fair to
shareholders. In these circumstances, the proposed disenfranchisement of shareholders is even a
more acute concern. If a competing board of directors were to be proposed, of which no
information has been forthcoming from Mr. Berlet or his Cogonov associates, why should
shareholders be disallowed a vote on somethi ng that may impact their investment. Hence the
TSXV position is putting our shareholders and Company in jeopardy which has compelled the
board to act.
Today we have filed notice with the BC Secu rities Commission for an appeal of the TSX
Venture Exchange decisions regarding our private placements.
This process has delayed our annual meeting which had been scheduled for September 6, 2018.
We are unaware of the appeal timing, but presently believe an annual meeting could be held on
or before October 31. We will advise with more certainty on this matter once we have received
the relevant communication.
Further, because of the TSXV denial to approv e equity financing, and the Company’s need for
working capital, the Company has arranged for a secured debenture with a one year maturity.
$250,000 has been advanced by a shareholder of the Company, who is an insider holding more
than 10% of the Company’s outst anding shares. The debenture will bear interest at 14% per
annum, and be payable up front. A further lending fee of $15,000 applies. The debenture is open
to other investors and can be increased to a maximum of $500,000. All investors would
participate on a pari passu basis.
The secured debenture advance by an insider of the Company constitutes a related party
transaction as defined under Mult ilateral Instrument 61-101 ( Protection of Minority Security
Holders in Special Transactions ). Because the Company’s sh ares trade on the TSXV, the
issuance of securities is exempt from the formal valuation requirements of Section 5.4 of MI 61-
101 pursuant to Subsection 5.5(b) of MI 61- 101 and exempt from the minority approval
requirements of Section 5.6 of MI 61-101. The Company did not file a material change report 21
days prior to the proposed advance of the debent ure by an insider of the Company as it had not
been contemplated at that time.
About Chilean Metals,
www.chileanmetals.com/
Chilean Metals Inc. is a Canadian Junior Exploration Company focusing on high potential
Copper Gold prospects in Chile & Canada.
Chilean Metals Inc is 100% ow ner of five properties comprisi ng over 50,000 acres strategically
located in the prolific IOCG (“Iron oxide-copper-gold”) belt of northern Chile. It also owns a 3%
NSR royalty interest on any future production from the Copaquire Cu-Mo deposit, recently sold
to a subsidiary of Teck Resources Inc. (“Teck”). Under the terms of the sale agreement, Teck has
the right to acquire one third of the 3% NSR fo r $3 million dollars at any time. The Copaquire
property borders Teck’s producing Quebrada Blanca copper mine in Chile’s First Region.
Chilean Metals Inc is the 100% owner of five Copper Gold C obalt exploration properties in
Nova Scotia on the western flank of the Cobequ id-Chedabucto Fault Zone (CCFZ); Fox River,
Parrsboro, Lynn, Economy and Bass River Nort h respectively. It has also optioned two
additional projects Trident at Bass River and Economy East. Chilean Me tals is exploring,
analyzing and drilling these properties in the summer of 2018.
ON BEHALF OF THE BOARD OF DIRECTORS OF
Chilean Metals Inc.
“Terry Lynch”
Terry Lynch, CEO
Contact: [email protected]
The Qualified Person for Chilean Metals Inc., as defined by National Instrument 43-101, is Mick
Sharry, M.Sc. Consultant
Forward-looking Statements: This news release may contain certain statements that may be
deemed "forward-looking statements". All statements in this release, other than statements of
historical fact, that address events or developments that CMX expects to occur, are forward
looking statements. Forward-looking statements are statements that are not historical facts and
are generally, but not always, identified by the words "expects", "plans", "anticipates",
"believes", "intends", "estimates", "projects", "potential" and similar expressions, or that events
or conditions "will", "would", "may", "could" or "should" occur. Forward-looking statements in
this document include statements regarding curre nt and future exploration programs, activities
and results. Although CMX believes the expecta tions expressed in such forward-looking
statements are based on reasonable assumptions, such statements are not guarantees of future
performance and actual results may differ materia lly from those in forward-looking statements.
Factors that could cause the actual results to differ materially from those in forward-looking
statements include market prices, exploitation an d exploration success, con tinued availability of
capital and financing, inability to obtain requ ired regulatory or govern mental approvals and
general economic, market or business conditi ons. Investors are cautioned that any such
statements are not guarantees of future perfor mance and actual results or developments may
differ materially from those projected in the forward-looking statements.
Neither the TSX Venture Exchange nor its Regulation Services Provid er (as that term is defined
in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy
of this release.