Empire Minerals Corporation Inc Announces Loan to Corporation and Option to Purchase Mining Property
- Written by Newsfile
Montreal, Quebec--(Newsfile Corp. - June 8, 2022) - Empire Minerals Corporation Inc. ("Empire" or the "Corporation") and F.T. Archibald Consulting Ltd. (the "Grantor"), an Ontario corporation, have entered into an Exploration and Option to Purchase Agreement (the "Agreement") dated the 1st of May, 2022 for a mining property with a term of five years for $3,000,000 located in Esqueda Township in the District of Algoma, Province of Ontario. The Agreement grants Empire an option to acquire a 100% undivided interest in the property as well as the right to carry out operations during the term. In addition, Empire grants to the Grantor a royalty with respect to the property of 0.5% net smelter returns on all minerals and a .5% gross overriding royalty on diamonds. Empire is entitled to buy-out the royalty agreement at any time for $7,000,000. Empire paid $500,000 upon signing the Agreement with additional payments of $500,000 due on each anniversary of the effective date for the next five years.
The Corporation has raised funds for working capital purposes as well as the initial $500,000 for the Agreement. For the year ended December 31, 2021, the Corporation reported loans from two related parties, Mr. Angelo Parravano ($125,000) and Mr. Robert Salna ($120,766). During the first quarter ended March 31, 2022, additional funds were advanced from Mr. Parravano ($10,000) and Mr. Salna ($15,000). On May 1st, 2022, Mr. Parravano and Mr. Salna advanced an additional $250,000 each. In total, the loan advances ("Loan") are $385,000 and 385,766 respectively. The Loan is unsecured, 12% interest and due on demand.
Mr. Parravano is CEO and a director of the Corporation and Mr. Salna is a significant shareholder. The execution of the Loan is a "related party transaction" for purposes of Multilateral Instrument 61-101- Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Corporation is relying on exemptions from the formal valuation and minority shareholder approval requirements available under MI 61-101. The Corporation is exempt from the formal valuation requirement in section 5.4 of MI 61-101 in reliance on Section 5.5(b) of MI 61-101 as the Corporation is not listed on a specified market. Additionally, the Corporation is exempt from minority shareholder approval requirement in Section 5.6 of MI 61-101 in reliance on Section 5.7(1)(e) of MI 61-101 as the Corporation is suffering from financial hardship.
The Corporation is insolvent; the Loan is for working capital and mining exploration. The Corporation is not subject to court approval or court orders that the Loan be affected under bankruptcy or insolvency law or Sections 41 ff. of the Business Corporations Act (Quebec). The Corporation has one or more independent directors in respect of the Loan. The Corporation's Board of Directors, acting in good faith, has determined, and at least two-thirds of the Corporation's independent directors, acting in good faith, have determined that the Corporation is insolvent and in need of improving its financial position and the terms of the Loan are reasonable in the circumstances of the Corporation.
The financing was approved by the Board of Directors pursuant to a directors' resolution dated May 16, 2022. The Corporation did not have a formal process for the review and approval of the Loan.
Due to the size of the Corporation and the financial hardship, the directors, other than Mr. Angelo Parravano, approved the Loan up to an aggregate of $4,000,000 after a discussion. The Corporation did not file a material change report more than 21 days before the expected closing of the Loan because the details of the transaction were not settled until shortly prior to the closing and the Corporation wished to close on an expedited basis for business reasons. The Corporation does not have any valuation or prior valuations that relate to the subject matter of or is otherwise relevant to the Loan.
The Corporation will file a material change report on SEDAR with respect to the Loan, a copy of which will be sent by the Corporation to any shareholder upon request and without charge. Contact sheriquestion@gmail.com[1] for information on the Loan.
For more information, please contact:
Sheri Monardosheriquestion@gmail.com[2]
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To view the source version of this press release, please visit https://www.newsfilecorp.com/release/126975[3]
References
- ^ sheriquestion@gmail.com (www.newsfilecorp.com)
- ^ sheriquestion@gmail.com (www.newsfilecorp.com)
- ^ https://www.newsfilecorp.com/release/126975 (www.newsfilecorp.com)