UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM F-10
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
GREAT PANTHER SILVER LIMITED
(Exact name of Registrant as specified in its charter)
British Columbia
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1040
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Not Applicable
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(Province or other jurisdiction
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(Primary Standard Industrial
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(I.R.S. Employer
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of incorporation or organization)
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Classification Code Number)
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Identification Number)
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1330 200 Granville Street
Vancouver, British
Columbia
Canada V6C 1S4
604 608 1766
(Address and telephone number of Registrants principal executive
offices)
Corporation Service Company
1090 Vermont Avenue N.W.
Washington, DC 20005
Telephone: (800) 927-9801
(Name, address (including zip code) and telephone number (including
area code) of agent for service in the United States)
Copy to:
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Robert Archer, President & CEO
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Tom Theodorakis/ Michael Taylor
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Great Panther Silver Limited
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McMillan LLP
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1330 200 Granville Street
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1500 1055 West Georgia Street
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Vancouver, British Columbia
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Vancouver, British Columbia
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Canada V6C 1S4
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Canada V6E 4N7
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(604) 608-1766
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(604) 689-9111
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Approximate date of commencement of proposed sale of the
securities to the public:
From time to time after this Registration Statement becomes
effective.
Province of British Columbia, Canada
(Principal jurisdiction regulating this offering)
It is proposed that this filing shall become effective (check
appropriate box below):
A.
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[ ]
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upon filing with the Commission, pursuant to Rule 467(a)
(if in connection with an offering being made contemporaneously in the
United States and Canada).
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B.
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[X]
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at some future date (check appropriate box below)
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1.
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[ ]
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pursuant to Rule 467(b) on (
date
) at (
time
)
(designate a time not sooner than 7 calendar days after filing).
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2.
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[ ]
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pursuant to Rule 467(b) on (
date
) at (
time
)
(designate a time 7 calendar days or sooner after filing) because the
securities regulatory authority in the review jurisdiction has issued a
receipt or notification of clearance on (
date
).
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3.
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[ ]
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pursuant to Rule 467(b) as soon as practicable after
notification of the Commission by the Registrant or the Canadian
securities regulatory authority of the review jurisdiction that a receipt
or notification of clearance has been issued with respect hereto.
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4.
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[X]
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after the filing of the next amendment to this Form (if
preliminary material is being filed).
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If any of the securities being registered on this form are to
be offered on a delayed or continuous basis pursuant to the home jurisdictions
shelf prospectus offering procedures, check the following box.
CALCULATION OF REGISTRATION FEE
Title of each class of
securities
to be registered
(1)
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Amount to be
registered
(3)
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Proposed maximum
offering price per
unit
(3)
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Proposed maximum
aggregate offering
price
(2)(3)(4)
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Amount of
registration fee
(3)(4)(5)
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Common Shares, no par value
Common Share
Purchase
Warrants
Subscription Receipts
Units
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Total
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-
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-
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US$61,050,061
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US$7,075.70
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(1)
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Includes an indeterminate number of common shares, common
share purchase warrants, subscription receipts for any combination thereof
or units of any combination thereof. This registration statement also
covers (i) common shares that may be issued upon exercise of warrants,
(ii) common shares, warrants or units that may be issued upon conversion
of subscription receipts and (iii) such indeterminate amount of securities
as may be issued in exchange for, or upon conversion of, as the case may
be, the securities registered hereunder. No separate consideration will be
received for any securities issued upon conversion or exchange. In
addition, any securities registered hereunder may be sold separately or as
units with other securities registered hereunder. The securities which may
be offered pursuant to this registration statement include, pursuant to
Rule 416 of the Securities Act of 1933, as amended (the
U.S.
Securities Act
), such additional number of common shares of the
Registrant that may become issuable as a result of any stock split, stock
dividends or similar event.
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(2)
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Represents the initial offering price of all securities
sold up to an aggregate public offering price not to exceed US$61,050,061
or the equivalent thereof in foreign currencies, foreign currency units or
composite currencies to the Registrant.
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(3)
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Rule 457(o) under the U.S. Securities Act permits the
registration fee to be calculated on the basis of the maximum aggregate
offering price of all of the securities listed and, therefore, the table
does not specify by each class information as to the amount to be
registered or the proposed maximum offer price per security. The proposed
maximum initial offering price per security will be determined, from time
to time, by the Registrant.
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(4)
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Calculated based on the proposed maximum aggregate
offering price of CDN$80,000,000 converted into U.S. dollars based on the
noon exchange rate on October 18, 2016, as reported by the Bank of Canada,
for the conversion of Canadian dollars into U.S. dollars of CDN$1.00 =
US$0.76313.
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(5)
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Based on the SECs registration fee of $115.90 per
$1,000,000 of securities registered.
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The Registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective date until the
registration statement shall become effective as provided in Rule 467 under the
U.S. Securities Act, or on such date as the Commission, acting pursuant to
Section 8(a) of the U.S. Securities Act, may determine.
I- 1
PART I
INFORMATION REQUIRED TO BE DELIVERED TO OFFEREES OR
PURCHASERS
Information contained herein is subject to completion
or amendment. A registration statement relating to these securities
has been filed with the United States Securities and Exchange Commission.
These securities may not be offered or sold nor may offers to buy
be accepted prior to the time the registration statement becomes
effective. This short form prospectus shall not constitute an offer to
sell or the solicitation of an offer to buy, nor shall there be any
sale of these securities in any state in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any such state.
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SUBJECT TO COMPLETION, DATED OCTOBER 20, 2016
Prospectus Dated , 2016
GREAT PANTHER SILVER LIMITED
$80,000,000
Common Shares
Warrants
Subscription Receipts
Units
Great Panther Silver Limited (the
Company
or
Great
Panther
) may offer and issue from time to time common shares (the
Common Shares
), warrants (the
Warrants
) to purchase Common
Shares or other Securities (as defined below), subscription receipts
(
Subscription Receipts
) which entitle the holder to receive upon
satisfaction of certain release conditions, and for no additional consideration,
Common Shares or Warrants of the Company or any combination thereof, or units
(
Units
) consisting of two or more of the foregoing (all of the
foregoing, collectively, the
Securities
) or any combination thereof up
to an aggregate initial offering price of $80,000,000 (or its equivalent in any
other currency used to denominate the Securities at the time of the offering)
during the 25-month period that this short form base shelf prospectus (the
Prospectus
), including any amendments thereto, remains effective.
Securities may be offered separately or together, in amounts, at prices and on
terms to be determined based on market conditions at the time of sale and set
forth in an accompanying shelf prospectus supplement (a
Prospectus
Supplement
). In addition, Securities may be offered and issued in
consideration for the acquisition of other businesses, assets or securities by
the Company or a subsidiary of the Company. The consideration for any such
acquisition may consist of any of the Securities separately, a combination of
Securities or any combination of, among other things, Securities, cash and
assumption of liabilities.
Investing in Securities of the Company involves a high
degree of risk. You should carefully review the risks outlined in this
Prospectus and in the documents incorporated by reference in this Prospectus and
consider such risks in connection with an investment in such Securities. See
Risk Factors.
This offering is made by a Canadian issuer that is
permitted, under a multijurisdictional disclosure system adopted by the United
States and Canada (MJDS), to prepare this Prospectus in accordance with
Canadian disclosure requirements. Prospective investors in the United States
should be aware that such requirements are different from those of the United
States. Financial statements included or incorporated by reference herein have
been prepared in accordance with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB) and
may not be comparable to financial statements of United States companies. Our
financial statements are subject to Canadian generally accepted auditing standards and auditor independence standards, in
addition to the standards of the Public Company Accounting Oversight Board
(United States) and the United States Securities and Exchange Commission (SEC)
independence standards.
I-ii
Prospective investors should be aware that the acquisition
of the securities described herein may have tax consequences both in the United
States and in Canada. Such consequences for investors who are resident in, or
citizens of, the United States may not be described fully herein. Prospective
investors should read the tax discussion contained in the applicable Prospectus
Supplement with respect to a particular offering of Securities.
The enforcement by investors of civil liabilities under the
United States federal securities laws may be affected adversely by the fact that
the Company is incorporated under the laws of British Columbia, Canada, that the
majority of its officers and directors are residents of Canada, that all of the
experts named in the registration statement are not residents of the United
States, and that a substantial portion of the assets of the Company and said
persons are located outside the United States.
NEITHER THE SEC NOR ANY STATE OR CANADIAN SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENCE.
The specific terms of the Securities with respect to a
particular offering will be set out in the applicable Prospectus Supplement and
may include, where applicable: (i) in the case of Common Shares, the number of
Common Shares offered, the issue price, and any other terms specific to the
Common Shares being offered; (ii) in the case of Warrants, the designation,
number and terms of the Common Shares or other Securities issuable upon exercise
of the Warrants, any procedures that will result in the adjustment of these
numbers, the exercise price, dates and periods of exercise, the currency in
which the Warrants are issued and any other specific terms; (iii) in the case of
Subscription Receipts, the designation, number and terms of the Common Shares or
Warrants receivable upon satisfaction of certain release conditions, any
procedures that will result in the adjustment of those numbers, any additional
payments to be made to holders of Subscription Receipts upon satisfaction of the
release conditions, the terms of the release conditions, terms governing the
escrow of all or a portion of the gross proceeds from the sale of the
Subscription Receipts, terms for the refund of all or a portion of the purchase
price for Subscription Receipts in the event the release conditions are not met
and any other specific terms; and (iv) in the case of Units, the terms of the
component Securities and any other specific terms. A Prospectus Supplement may
include specific variable terms pertaining to the Securities that are not within
the alternatives and parameters described in this Prospectus. Where required by
statute, regulation or policy, and where Securities are offered in currencies
other than Canadian dollars, appropriate disclosure of foreign exchange rates
applicable to such Securities will be included in the Prospectus Supplement
describing such Securities.
Warrants will not be offered for sale separately to any member
of the public in Canada unless the offering is in connection with, and forms
part of, the consideration for an acquisition or merger transaction.
All information permitted under applicable laws to be omitted
from this Prospectus will be contained in one or more Prospectus Supplements
that will be delivered to purchasers together with this Prospectus, such
delivery to be effected in the case of United States purchasers through the
filing of such Prospectus Supplement or Prospectus Supplements with the SEC.
Each Prospectus Supplement will be incorporated by reference into this
Prospectus for the purposes of securities legislation as of the date of the
Prospectus Supplement and only for the purposes of the distribution of the
Securities to which the Prospectus Supplement pertains.
This Prospectus constitutes a public offering of these
Securities only in those jurisdictions where they may be lawfully offered for
sale and therein only by persons permitted to sell such Securities. The Company
may offer and sell Securities to or through underwriters or dealers and also may
offer and sell certain Securities directly to purchasers or through agents
pursuant to exemptions from registration or qualification under applicable
securities laws. A Prospectus Supplement relating to each issue of Securities
offered thereby will set forth the names of any underwriters, dealers or agents
involved in the offering and sale of such Securities and will set forth the
terms of the offering of such Securities, the method of distribution of such
Securities including, to the extent applicable, the proceeds to the Company and any fees, discounts or any other
compensation payable to underwriters, dealers or agents and any other material
terms of the plan of distribution.
I-iii
The outstanding Common Shares of the Company are listed for
trading on Toronto Stock Exchange (
TSX
) under the symbol GPR and on
NYSE MKT (
NYSE MKT
) under the symbol GPL. Unless otherwise specified
in the applicable Prospectus Supplement, Securities other than the Common Shares
of the Company will not be listed on any securities exchange. On October 19,
2016, the closing price of the Common Shares on TSX was $1.70 per share and the
closing price of the Common Shares on NYSE MKT was U.S.$1.30 per share.
There
is currently no market through which Securities, other than the Common Shares,
may be sold and purchasers may not be able to resell such Securities purchased
under this Prospectus. This may affect the pricing of the Securities, other than
the Common Shares, in the secondary market, the transparency and availability of
trading prices, the liquidity of these Securities and the extent of issuer
regulation. See Risk Factors.
The offering of Securities hereunder is subject to approval of
certain legal matters on behalf of the Company by McMillan LLP with respect to
Canadian and United States legal matters.
In connection with any offering of Securities (unless otherwise
specified in a Prospectus Supplement), other than an at-the-market
distribution, the underwriters may over-allot or effect transactions which
stabilize or maintain the market price of the Securities offered at a level
above that which might otherwise prevail in the open market. Such transactions,
if commenced, may be discontinued at any time. See Plan of Distribution.
The Companys head office and its registered office is located
at Suite 1330 200 Granville Street, Vancouver, British Columbia V6C 1S4.
No underwriter has been involved in the preparation of this
Prospectus or performed any review of the contents of this Prospectus.
A-1
TABLE OF CONTENTS
_____________________
You should rely only on the information contained in or
incorporated by reference into this Prospectus or contained in any applicable
Prospectus Supplement. The Company has not authorized anyone to provide you with
different information. The Company is not making an offer of these Securities in
any jurisdiction where the offer is not permitted. You should not assume that
the information contained in this Prospectus and any Prospectus Supplement is
accurate as of any date other than the date on the front of those documents or
that any information contained in any document incorporated by reference is
accurate as of any date other than the date of that document.
Unless the context otherwise requires, references in this
Prospectus and any Prospectus Supplement to we, our, us, Great Panther
or the Company refer to Great Panther Silver Limited and each of its material
subsidiaries.
A-2
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus and the documents incorporated by reference
herein contain forward-looking statements within the meaning of applicable
Canadian and United States securities laws.
Forward-looking statements are often, but not always,
identified by the words anticipates, believes, expects, may, likely,
plans, intends, expects, may, forecast, project, budgets,
potential, and outlook, or similar words, or statements that certain events
or conditions may, might, could, can, would, or will occur.
Forward-looking statements reflect the Companys current expectations and
assumptions, and are subject to a number of known and unknown risks,
uncertainties and other factors which may cause the Companys actual results,
performance or achievements to be materially different from any anticipated
future results, performance or achievements expressed or implied by the
forward-looking statements.
Forward-looking statements contained or incorporated by
reference into this Prospectus include, without limitation, statements
regarding:
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the future production of silver, gold, lead and zinc;
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profit, operating costs and cash flow;
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grade improvements;
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sales volume and selling prices of products;
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capital and exploration expenditures, plans, timing,
progress, and expectations for the development of the Companys mines and
projects;
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progress in the development of mineral properties;
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the timing of production and the cash and total costs of
production;
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sensitivity of earnings to changes in commodity prices
and exchange rates;
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the impact of foreign currency exchange rates;
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the impact of taxes and royalties;
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expenditures to increase or determine reserves and
resources;
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sufficiency of available capital resources;
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title to claims;
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expansion and acquisition plans; and
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future plans and expectations for the Companys
properties and operations.
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These forward-looking statements are necessarily based on a
number of factors and assumptions that, while considered reasonable by the
Company as of the date of such statements, are inherently subject to significant
business, economic and competitive uncertainties and contingencies. The
assumptions made by the Company, which may prove to be incorrect, include, but
are not limited to:
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general business and economic conditions;
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A-3
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the supply and demand for, deliveries of, and the level
and volatility of prices of, silver, gold, lead and zinc;
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expected Canadian dollar, Mexican peso and US dollar
exchange rates;
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expected taxes and royalties;
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the timing of the receipt of regulatory and governmental
approvals for development projects and other operations;
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costs of production, and production and productivity
levels;
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estimated future capital expenditures and cash flows;
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the continuing availability of water and power resources
for operations;
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the accuracy of the interpretation and assumptions used
in calculating resource estimates (including with respect to size, grade
and recoverability);
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the accuracy of the information included or implied in
the various published technical reports;
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the geological, operational and price assumptions on
which such technical reports are based;
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conditions in the financial markets;
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the ability to attract and retain skilled staff;
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the ability to procure equipment and operating supplies
and that there are no material unanticipated variations in the cost of
energy or supplies;
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the ability to secure contracts for the sale of the
Companys products (metals concentrates);
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the execution and outcome of current or future
exploration activities;
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the possibility of project delays and cost overruns, or
unanticipated excessive operating costs and expenses;
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the Companys ability to maintain adequate internal
control over financial reporting, and disclosure controls and procedures;
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the ability of contractors to perform their contractual
obligations; and
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operations not being disrupted by issues such as
mechanical failures, labour disturbances, illegal occupations or mining,
and adverse weather conditions.
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This list is not exhaustive of the factors that may affect any
of the Companys forward-looking statements or information. Forward-looking
statements or information are statements about the future and are inherently
uncertain, and actual achievements of the Company or other future events or
conditions may differ materially from those reflected in the forward-looking
statements or information due to a variety of risks, uncertainties and other
factors, including, without limitation, changes in commodity prices; changes in
foreign currency exchange rates; acts of foreign governments; political risk and
social unrest; uncertainties related to title to the Companys mineral
properties and the surface rights thereon, including the Companys ability to
acquire, or economically acquire, the surface rights to certain of the Companys
exploration and development projects; unanticipated operational difficulties due
to adverse weather conditions; failure of plant or mine equipment and
unanticipated events related to health, safety, and environmental matters;
inability to obtain or delays in obtaining necessary permits for development of
new projects or for the expansion or continued operation of existing projects;
illegal activity, including illegal mining, occupations, kidnapping and political
corruption; failure of counterparties to perform their contractual obligations;
uncertainty of mineral resource estimates and deterioration of general economic
conditions.
A-4
Readers are advised to carefully review and consider the risk
factors identified in this Prospectus and any Prospectus Supplement under Risk
Factors and elsewhere in this Prospectus and any Prospectus Supplement and in
the documents incorporated by reference herein for a discussion of the factors
that could cause the Companys actual results, performance and achievements to
be materially different from any anticipated future results, performance or
achievements expressed or implied by the forward-looking statements. Readers are
further cautioned that the foregoing list of assumptions and risk factors is not
exhaustive.
The Companys forward-looking statements and information are
based on the assumptions, beliefs, expectations and opinions of management as of
the date such statements are made. The Company will update forward-looking
statements and information if and when, and to the extent, required by
applicable securities laws. Readers should not place undue reliance on
forward-looking statements. The forward-looking statements and information
contained herein are expressly qualified by this cautionary statement.
CAUTIONARY NOTES TO UNITED STATES INVESTORS CONCERNING
MINERAL RESERVE
AND RESOURCE ESTIMATES
This Prospectus and the documents incorporated by reference
herein have been prepared in accordance with the requirements of Canadian
provincial securities laws, which differ from the requirements of U.S.
securities laws. Unless otherwise indicated, all reserve and resource estimates
included or incorporated by reference in this Prospectus have been prepared in
accordance with Canadian National Instrument 43-101Standards of Disclosure for
Mineral Projects (
NI 43-101)
and the Canadian Institute of Mining,
Metallurgy and Petroleum (the
CIM
) CIM Definition Standards on Mineral
Resources and Mineral Reserves, adopted by the CIM Council, as amended. NI
43-101 is an instrument developed by the Canadian Securities Administrators that
establishes standards for all public disclosure an issuer makes of scientific
and technical information concerning mineral projects. The terms mineral
reserve, proven mineral reserve and probable mineral reserve are Canadian
mining terms as defined in accordance with NI 43-101 and CIM standards. These
definitions differ from the definitions in the SECs Industry Guide 7 under the
United States Securities Act of 1933, as amended (the
U.S. Securities
Act
).
Under United States standards, mineralization may not be
classified as a reserve unless the determination has been made that the
mineralization could be economically and legally produced or extracted at the
time the reserve determination is made. Under SEC Industry Guide 7 standards, a
final or bankable feasibility study is required to report reserves, the
three-year historical average price is used in any reserve or cash flow analysis
to designate reserves and the primary environmental analysis or report must be
filed with the appropriate governmental authority.
In addition, the terms mineral resource, measured mineral
resource, indicated mineral resource and inferred mineral resource are
defined in and required to be disclosed by NI 43-101; however, these terms are
not defined terms under SEC Industry Guide 7 and are normally not permitted to
be used in reports and registration statements filed with the SEC. Investors are
cautioned not to assume that all or any part of mineral deposits in these
categories will ever be converted into reserves. Inferred mineral resources
have a great amount of uncertainty as to their existence, and great uncertainty
as to their economic and legal feasibility. It cannot be assumed that all or any
part of an inferred mineral resource will ever be upgraded to a higher category.
Under Canadian rules, estimates of inferred mineral resources may not form the
basis of feasibility or pre-feasibility studies, except in rare cases. Investors
are cautioned not to assume that all or any part of an inferred mineral resource
exists or is economically or legally mineable. Disclosure of contained ounces
in a resource is permitted disclosure under Canadian regulations; however, the
SEC normally only permits issuers to report mineralization that does not
constitute reserves by SEC Industry Guide 7 standards as in place tonnage and
grade without reference to unit measures.
Accordingly, information contained in this Prospectus and the
documents incorporated by reference herein contain descriptions of the Companys
mineral deposits that may not be comparable to similar information made public
by United States companies subject to the reporting and disclosure requirements
under the United States federal securities laws and the rules and regulations
thereunder.
A-5
NOTE TO UNITED STATES READERS REGARDING DIFFERENCES
BETWEEN UNITED STATES AND CANADIAN REPORTING PRACTICES
Effective January 1, 2011, the Company began preparing its
financial statements, which are incorporated by reference into this prospectus,
in accordance with International Financial Reporting Standards, as issued by the
International Accounting Standards Board (
IFRS
). Accordingly, the
Companys financial statements are not comparable to financial statements of
United States companies.
CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION
Unless stated otherwise or as the context otherwise
requires, all references to dollar amounts in this Prospectus and any Prospectus
Supplement are references to Canadian dollars. References to $ or Cdn$ are
to Canadian dollars and references to U.S. dollars or US$ are to United
States dollars.
Except as otherwise noted in the Companys AIF (as defined
under The Company and its Business) and the Companys financial statements and
related managements discussion and analysis of financial condition and results
of operations of the Company that are incorporated by reference into this
Prospectus (see Documents Incorporated by Reference), the financial
information contained in such documents is expressed in Canadian dollars.
The high, low, average and closing noon rates for the United
States dollar in terms of Canadian dollars for each of the financial periods of
the Company ended June 30, 2016, December 31, 2015, December 31, 2014 and
December 31, 2013, as quoted by the Bank of Canada, were as follows:
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Six months ended
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Year ended
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Year ended
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Year ended
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June 30, 2016
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December 31, 2015
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December 31, 2014
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December 31, 2013
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(expressed in Canadian dollars)
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High
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1.4589
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1.3990
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1.1643
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1.0697
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Low
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1.2544
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1.1728
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1.0614
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0.9839
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Average
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1.3302
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1.2787
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1.1045
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1.0299
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Closing
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1.3009
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1.3840
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1.1601
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1.0636
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On September 30, 2016, the noon exchange rate for the United
States dollar in terms of Canadian dollars, as quoted by the Bank of Canada, was
U.S.$1.00 = $1.3117.
GLOSSARY OF TECHNICAL TERMS
Indicated Mineral
Resource
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An Indicated Mineral Resource is that part of a Mineral
Resource for which quantity, grade or quality, densities, shape and
physical characteristics are estimated with sufficient confidence to allow
the application of Modifying Factors in sufficient detail to support mine
planning and evaluation of the economic viability of the deposit.
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Geological evidence is derived from adequately detailed
and reliable exploration, sampling and testing and is sufficient to assume
geological and grade or quality continuity between points of observation.
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An Indicated Mineral Resource has a lower level of
confidence than that applying to a Measured Mineral Resource and may only
be converted to a Probable Mineral Reserve.
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A-6
Inferred Mineral
Resource
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An Inferred Mineral Resource is that part of a Mineral
Resource for which quantity and grade are estimated on the basis of
limited geological evidence and sampling. Geological evidence is
sufficient to imply but not verify geological and grade or quality
continuity.
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An Inferred Mineral Resource has a lower level of
confidence than that applying to an Indicated Mineral Resource and must
not be converted to a Mineral Reserve. It is reasonably expected that the
majority of Inferred Mineral Resources could be upgraded to Indicated
Mineral Resources with continued exploration.
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Measured Mineral
Resource
|
A Measured Mineral Resource is that part of a Mineral
Resource for which quantity, grade or quality, densities, shape, and
physical characteristics are estimated with confidence sufficient to allow
the application of Modifying Factors to support detailed mine planning and
final evaluation of the economic viability of the deposit.
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Geological evidence is derived from detailed and reliable
exploration, sampling and testing and is sufficient to confirm geological
and grade or quality continuity between points of observation.
|
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A Measured Mineral Resource has a higher level of
confidence than that applying to either an Indicated Mineral Resource or
an Inferred Mineral Resource. It may be converted to a Proven Mineral
Resource or to a Probable Mineral Reserve.
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Mineral Reserve
|
A Mineral Reserve is the economically mineable part of a
Measured and/or Indicated Mineral Resource. It includes diluting materials
and allowances for losses, which may occur when the material is mined or
extracted and is defined by studies at pre-feasibility or feasibility
level as appropriate that include application of Modifying Factors. Such
studies demonstrate that, at the time of reporting, extraction could
reasonably be justified.
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Mineral Resource
|
A Mineral Resource is a concentration or occurrence of
solid material of economic interest in or on the Earths crust in such
form, grade or quality that there are reasonable prospects for eventual
economic extraction. The location, quantity, grade or quality, continuity
and other geological characteristics of a Mineral Resource are known,
estimated or interpreted from specific geological evidence and knowledge,
including sampling.
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Modifying Factors
|
Modifying Factors are considerations used to convert
Mineral Resources to Mineral Reserves. These include, but are not
restricted to, mining, processing, metallurgical, infrastructure,
economic, marketing, legal, environmental, social and governmental
factors.
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Probable Mineral
Reserve
|
A Probable Mineral Reserve is the economically mineable
part of an Indicated Mineral Resource, and in some circumstances, a
Measured Mineral Resource. The confidence in the Modifying Factors
applying to a Probable Mineral Reserve is lower than that applying to a
Proven Mineral Reserve.
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Proven Mineral
Reserve
|
A Proven Mineral Reserve is the economically mineable
part of a Measured Mineral Resource. A Proven Mineral Reserve implies a
high degree of confidence in the Modifying Factors.
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A-7
THE COMPANY AND ITS BUSINESS
Great Panther is a primary silver mining and precious metals
producer and exploration company listed on the TSX trading under the symbol
GPR and on the NYSE MKT trading under the symbol GPL. The Companys
wholly-owned mining operations in Mexico are the Topia Mine (
Topia
),
and the Guanajuato Mine Complex (the
GMC
), which comprises the
Companys Guanajuato Mine, the San Ignacio Mine (
San Ignacio
) and the
Cata processing plant.
The GMC produces silver and gold concentrate and is located in
central Mexico, approximately 380 kilometres north-west of Mexico City, and
approximately 30 kilometres from the Guanajuato International Airport. The Topia
Mine is located in the Sierra Madre Mountains in the state of Durango in
northwestern Mexico and produces concentrates containing silver, gold, lead and
zinc at its own processing facility.
The method of production at Topia and the GMC consists of
underground mining through cut and fill operations. Extracted ore is trucked to
on-site conventional processing plants which consist of zinc and lead-silver
flotation circuits at the Topia Mine, and a pyrite-silver-gold flotation circuit
at the GMC.
The Companys current exploration properties include El Horcón,
Santa Rosa and Plomo in Mexico; and Argosy in Canada. The Santa Rosa project is
located approximately 15 kilometres northeast of Guanajuato, El Horcón is 100
kilometres by road northwest of Guanajuato, and the Plomo exploration property
is located in Sonora, Mexico. The Argosy exploration property is located in the
Red Lake Mining District in Northwestern Ontario.
The Company did not undertake any active exploration programs
on the above noted exploration properties in 2015 and 2016. During 2015 and
2016, the Company undertook significant exploration and evaluation work on the
Coricancha Mine in Peru, which it optioned from Nyrstar N.V. in May 2015. On May
11, 2016, the Company terminated the option agreement to acquire the Coricancha
Mine. However, the Company is continuing with its evaluation of the project and
the potential purchase of the mine. The Company continues to seek and evaluate
additional mining opportunities in the Americas.
The GMC, Topia, El Horcón and Santa Rosa projects are held by
Minera Mexicana el Rosario, S.A.de C.V. (
MMR
), a wholly-owned
subsidiary acquired in February 2004. In 2005, the Company incorporated
Metálicos de Durango, S.A. de C.V. and Minera de Villa Seca, S.A. de C.V. which
are responsible for the day-today affairs and operations of Topia and the GMC,
respectively, through service agreements with MMR.
Argosy is held by Cangold Limited (
Cangold
), a
wholly-owned subsidiary of the Company acquired in May 2015, and Plomo is held
by Coboro Minerales de Mexico, S.A. de C.V., a wholly-owned subsidiary of
Cangold.
Further information regarding the business of the Company, its
operations and its mineral properties, including the Topia Mine and the
Guanajuato Mine Complex, can be found in the Companys annual information form
for the year ended December 31, 2015 dated March 24, 2016 (the
AIF
) and
the materials incorporated by reference into this Prospectus. See Documents
Incorporated by Reference.
Recent Developments
In February 2016, the Comisión Nacional del Agua (CONAGUA),
the Mexican federal agency responsible for water administration, required that
the Company make formal applications for permits associated with the occupation
and construction of the tailings facility at the GMC. Following the February
meeting, the Company filed its applications. After the Company filed the
applications, CONAGUA carried out an inspection of the tailings facility and
requested further technical information. The Company is in the process of
compiling the requested technical information. The compilation, submission, and
CONAGUAs review of such information, has been ongoing for several months, and
is expected to continue to extend at least into the first quarter of 2017. The
Company believes its current tailings footprint can be maintained and will
support operations at the GMC until at least 2020. The Company also believes,
based on its meetings and other communication with CONAGUA, that it will be able
to obtain all of the above noted permits if and as required, with no suspension
of the GMC operations. See Risks Associated with Obtaining and Complying with
Tailings and Other Permits.
A-8
Since the February meeting with CONAGUA, the Company has also
discovered through its own undertaking that some additional CONAGUA permits may
be needed in connection with water discharge and use at GMC tailings facility
and the San Ignacio satellite mine. An application has been made for the permit
in the case of the San Ignacio mine. The Company is assessing whether it
requires an additional water use permit during the dry season.
The Topia tailings capacity will require an expansion in 2016
or early 2017 beyond the present Phase I facility. The Company has received its
permit for the construction of the tails handling equipment and Phase II
facility from SEMARNAT (the Mexican environmental permitting agency), and work
is underway on the facilities including the fabrication of tails handling
equipment, civil engineering design, fieldwork, and permitting details. This
work is on a tight timetable and, although completion is expected in the second
quarter of 2017, it presents a risk to continuing normal operations at Topia.
The Company is undertaking a technical evaluation to assess the geotechnical
state of the Phase I tailing facility and the opportunities to extend the
capacity of the Phase I facility in order to ensure a smooth transition to the
Phase II facility. The technical evaluation includes a geotechnical assessment
of the remaining capacity of the Phase I facility based on the recommendations
of a professional engineering firm that the Company has consulted. See Risks
Associated with Topia Tailings Facility Expansion
Reviews by the regulatory authorities in the current year,
coupled with the permitting work underway by the Company in connection with the
expansion of the Topia tailings facility, have led to a broader review by
PROFEPA (the Mexican environmental compliance authority) of all of the Topia
operations permitting status and environmental compliance, including the
historical tailings dating back to the period prior to Great Panthers
ownership. The Company is working with the Mexican authorities to complete the
review. The Company anticipates that it will be able to address any potential
gaps in existing compliance through a mitigation plan, however, the Company
cannot provide complete assurance that the PROFEPA review or the aforementioned
technical evaluation will not lead to a suspension of operations or an inability
to continue to utilize the Phase I facility before the Phase II facility is
available for use.
ATM Offering
The Company entered into an At-the-Market Offering Agreement on
April 20, 2016 with H.C. Wainwright (the
ATM Agreement
). Under the ATM
Agreement, the Company is entitled, at its discretion and from time-to-time
during the term of the ATM Agreement, to sell, through H.C. Wainwright, as
placement agent, such number of Common Shares having an aggregate gross sales
price of up to US$10.0 million (the
ATM Offering
). Sales of the Common
Shares under the ATM Offering will be made through "at the market
distributions", as defined in National Instrument 44-102, directly on the NYSE
MKT or on any other existing trading market in the United States. The Common
Shares will be distributed at market prices or prices related to prevailing
market prices from time to time. As a result, prices of the Common Shares sold
under the ATM Offering will vary as between purchasers and during the period of
distribution. The Company suspended the ATM Offering for 45 days following the
closing of the July 2016 Bought Deal Offering described below. At the date of
this Prospectus, the Company has sold an aggregate of 3,498,627 Common Shares
for gross proceeds of US$5.65 million under the ATM Agreement. See below under
Prior Sales
. The Company pays H.C. Wainwright a commission of 2% of the
gross proceeds of sale of Common Shares sold under the ATM Offering.
Bought Deal Offering of Units
On July 12, 2016 the Company completed a bought deal offering
of 18,687,500 units at a price of US$1.60 per unit for gross proceeds of US$29.9
million, which included 2,467,500 units sold pursuant to the exercise in full of
an over-allotment option granted to the underwriters for the offering (the
July 2016 Bought Deal Offering
). Each unit consisted of one Common
Share and one half of one Common Share purchase warrant, each whole warrant
entitling the holder to purchase a further Common Share at a price of US$2.25
per Common Share for a period of 18 months following the closing of the
offering. The units were sold pursuant to an amended and restated underwriting
agreement dated July 6, 2016 between the Company and Cantor Fitzgerald Canada
Corporation and Rodman & Renshaw (a unit of H.C. Wainwright & Co. LLC),
as joint bookrunners, and Euro Pacific Capital Inc. and Sprott Private Wealth
LP, as co-managers. The offering was completed under a prospectus supplement
dated July 6, 2016 to a base shelf prospectus dated October 14, 2014 in all of
the provinces of Canada except Quebec, and to a base shelf prospectus filed as
part of an effective shelf registration statement on Form F-10 filed with the
United States Securities and Exchange Commission under the Canada/U.S.
multi-jurisdictional disclosure system. The proceeds of the offering are being used by the Company to fund
operating, development and exploration expenditures at its mining operations and
projects, and for possible future acquisitions.
A-9
USE OF PROCEEDS
Unless otherwise specified in a Prospectus Supplement, the net
proceeds from the sale of the Securities will be used for general corporate
purposes, including funding working capital, potential future acquisitions and
capital expenditures. Each Prospectus Supplement will contain specific
information concerning the use of proceeds from that sale of Securities.
All expenses relating to an offering of Securities and any
compensation paid to underwriters, dealers or agents, as the case may be, will
be paid out of the Companys general funds, unless otherwise stated in the
applicable Prospectus Supplement.
CONSOLIDATED CAPITALIZATION
There has been no material change in our share or loan capital
on a consolidated basis since June 30, 2016, being the date of our most recently
filed unaudited interim consolidated financial statements incorporated by
reference in this Prospectus Supplement, other than the issuance:
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|
of an additional 366,920 Common Shares pursuant to the
outstanding stock options, as described below under
Prior Sales
;
|
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|
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of an additional 160,000 Common Shares pursuant to the
ATM Agreement, as described below under
Prior Sales
; and
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of an additional 18,687,500 Common Shares and 9,343,750
warrants pursuant to the July 2016 Bought Deal Offering, as described
below under
Prior Sales
.
|
The following table shows the effect of the above noted changes
in share or loan capital on the consolidated capitalization of the Company as at
June 30, 2016:
Description
|
As at June 30, 2016
|
As at June 30,
2016
(After giving effect to the above
noted
changes to share and loan capital)
|
Cash
(2)
|
$28,835,000
|
$65,894,000
|
Long term financial liabilities
|
$8,848,000
|
$8,848,000
|
Common Shares
|
147,221,498
|
166,435,918
|
Class A Preferred Shares
|
Nil
|
Nil
|
Class B Preferred Shares
|
Nil
|
Nil
|
Options
|
10,966,402
|
10,599,482
|
Warrants
|
Nil
|
9,343,750
(1)
|
A-10
Description
|
As at June 30, 2016
|
As at June 30,
2016
(After giving effect to the above
noted
changes to share and loan capital)
|
Shareholders Equity
(2)
|
$61,861,000
|
$98,641,000
|
(1) Representing the warrants issued in connection with the
July 2016 Bought Deal Offering (the
July 2016 Warrants
). Each July 2016
Warrant entitles the holder to purchase one Common Share at a price of US$2.25
per Common Share (a
July 2016 Warrant Share
) at any time on or before
5:00 pm (Toronto time) on January 12, 2018. The July 2016 Warrants were issued
pursuant to a warrant indenture dated July 12, 2016 between the Company and
Computershare Trust Company of Canada (the
July 2016 Indenture
).
Pursuant to the terms of the July 2016 Indenture, holders of July 2016 Warrants
are entitled to a cashless exercise option if, at any time of exercise, there
is no effective registration statement registering, or no current prospectus
available for, the issuance or resale of July 2016 Warrant Shares under the U.S.
Securities Act. This option entitles the holders to elect to receive fewer
Common Shares without paying the cash exercise price. The number of July 2016
Warrant Shares to be issued is determined by a formula based on the total number
of Common Shares with respect to which the July 2016 Warrant is being exercised,
the daily volume weighted average price for the Common Shares on the trading day
immediately prior to the date of exercise and the applicable exercise price of
the July 2016 Warrants.
(2) The effect of the above noted changes in share or loan
capital on Cash is calculated using the noon exchange rate for the United States
dollar in terms of Canadian dollars on September 30, 2016, as quoted by the Bank
of Canada, of US$1.00 = $1.3117. The effect of the above noted changes in share
or loan capital on Shareholders Equity is calculated using the noon exchange
rate for the United States dollar in terms of Canadian dollars on July 12, 2016,
as quoted by the Bank of Canada, of US$1.00 = $1.3016.
DIVIDEND POLICY
The Company has not declared or paid any dividends on its
Common Shares since the date of its incorporation. The Company intends to retain
its earnings, if any, to finance the growth and development of its business and
does not expect to pay dividends or to make any other distributions in the near
future. The Companys board of directors will review this policy from time to
time having regard to the Companys financing requirements, financial condition
and other factors considered to be relevant.
DESCRIPTION OF COMMON SHARES
The Companys authorized share capital consists of an unlimited
number of Common Shares without par value. As at the date of this Prospectus,
there are 166,435,918 Common Shares issued and outstanding.
Each Common Share ranks equally with all other Common Shares
with respect to distribution of assets upon dissolution, liquidation or
winding-up of the Company and payment of dividends. The holders of Common Shares
are entitled to one vote for each share on all matters to be voted on by such
holders and are entitled to receive pro rata such dividends as may be declared
by the board of directors of the Company. The holders of Common Shares have no
pre-emptive or conversion rights. The rights attaching to the Common Shares can
only be modified by the affirmative vote of at least two-thirds of the votes
cast at a meeting of shareholders called for that purpose.
On June 9, 2016, the shareholders of the Company approved an
amended and restated shareholder rights plan (the
Rights Plan
), which
amended and restated a shareholder rights plan dated April 17, 2012. For the
purpose of encouraging potential offerors seeking to make a takeover bid for the
Company to comply with certain minimum conditions or be subject to the dilutive
features of the Rights Plan. The Rights Plan provides that one right attaches
to each outstanding Common Share entitling the holder to purchase, in the
prescribed circumstances and subject to exceptions, additional Common Shares in
accordance with the terms and conditions of the rights agreement dated April 17,
2012 as amended and restated as of June 9, 2016 between the Company and
Computershare Investor Services Inc., as rights agent.
A-11
The Common Shares are listed on the TSX trading under the
symbol GPR, and on the NYSE MKT trading under the symbol GPL.
DESCRIPTION OF WARRANTS
The following description, together with the additional
information the Company may include in any Prospectus Supplements, summarizes
the material terms and provisions of the Warrants that the Company may offer
under this Prospectus, which may consist of Warrants to purchase Common Shares
or other Securities and may be issued in one or more series. Warrants may be
offered independently or together with Common Shares or other Securities offered
by any Prospectus Supplement, and may be attached to or separate from those
Securities. Warrants will not, however, be offered for sale separately to any
member of the public in Canada unless the offering is in connection with, and
forms part of, the consideration for an acquisition or merger transaction. While
the terms summarized below will apply generally to any Warrants that the Company
may offer under this Prospectus, the Company will describe the particular terms
of any series of Warrants that it may offer in more detail in the applicable
Prospectus Supplement. The terms of any Warrants offered under a Prospectus
Supplement may differ from the terms described below.
General
Any Warrants issued will be issued under and governed by the
terms of one or more warrant indentures or agreement (each a
Warrant
Indenture
) between the Company and a warrant trustee or warrant agent (a
Warrant Trustee
) that the Company will name in the relevant Prospectus
Supplement. Each Warrant Trustee will be a financial institution organized under
the laws of Canada or any province thereof and authorized to carry on business
as a trustee. If applicable, the Company will file with the SEC as exhibits to
the registration statement of which this Prospectus is a part, or will
incorporate by reference from a Report of Foreign Private Issuer on Form 6-K
that the Company files with the SEC, any Warrant Indenture describing the terms
and conditions of such Warrants that the Company is offering before the issuance
of such Warrants.
This summary of some of the provisions of the Warrants is not
complete. The statements made in this Prospectus relating to any Warrant
Indenture and Warrants to be issued under this Prospectus are summaries of
certain anticipated provisions thereof and do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all provisions
of the applicable Warrant Indenture. Prospective investors should refer to the
Warrant Indenture relating to the specific Warrants being offered for the
complete terms of the Warrants. The applicable Prospectus Supplement relating to
any Warrants offered by the Company will describe the particular terms of those
Warrants and include specific terms relating to the offering.
The particular terms of each issue of Warrants will be
described in the applicable Prospectus Supplement. This description will
include, where applicable:
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the designation and aggregate number of Warrants;
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the price at which the Warrants will be offered;
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the currency or currencies in which the Warrants will be
offered;
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the date on which the right to exercise the Warrants will
commence and the date on which the right will expire;
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the number of Common Shares or other Securities that may
be purchased upon exercise of each Warrant and the price at which and
currency or currencies in which the Common Shares or other Securities may
be purchased upon exercise of each Warrant;
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the designation and terms of any Securities with which
the Warrants will be offered, if any, and the number of the Warrants that
will be offered with each Security;
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A-12
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the date or dates, if any, on or after which the Warrants
and the other Securities with which the Warrants will be offered will be
transferable separately;
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any minimum or maximum number of Warrants that may be
exercised at any one time;
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whether the Warrants will be subject to redemption and,
if so, the terms of such redemption provisions;
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whether the Company will issue the Warrants as global
securities and, if so, the identity of the depositary of the global
securities;
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whether the Warrants will be listed on an exchange;
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material Canadian federal income tax consequences and, if
applicable, material United States federal income tax consequences of
owning the Warrants; and
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any other material terms or conditions of the Warrants.
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Rights of Holders Prior to Exercise
Prior to the exercise of Warrants, holders of Warrants will not
have any of the rights of holders of the Common Shares or other Securities
issuable upon exercise of the Warrants.
Exercise of Warrants
Each Warrant will entitle the holder to purchase the Securities
that the Company specifies in the applicable Prospectus Supplement at the
exercise price described therein. Unless the Company otherwise specifies in the
applicable Prospectus Supplement, holders of the Warrants may exercise the
Warrants at any time up to the specified time on the expiration date set forth
in the applicable Prospectus Supplement. After the close of business on the
expiration date, unexercised Warrants will become void.
Holders of the Warrants may exercise the Warrants by delivering
the Warrant Certificate representing the Warrants to be exercised together with
specified information, and paying the required amount to the Warrant Trustee in
immediately available funds, as provided in the applicable Prospectus
Supplement. The Company will set forth on the Warrant Certificate and in the
applicable Prospectus Supplement the information that the holder of the Warrant
will be required to deliver to the Warrant Trustee.
Upon receipt of the required payment and the Warrant
Certificate properly completed and duly executed at the corporate trust office
of the Warrant Trustee or any other office indicated in the applicable
Prospectus Supplement, the Company will issue and deliver the Securities
purchasable upon such exercise. If fewer than all of the Warrants represented by
the Warrant Certificate are exercised, then the Company will issue a new Warrant
Certificate for the remaining amount of Warrants. If the Company so indicates in
the applicable Prospectus Supplement, holders of the Warrants may surrender
Securities as all or part of the exercise price for Warrants.
Adjustment
The Warrant Indenture will specify that, upon the subdivision,
consolidation, reclassification or other material change of the Common Shares or
any other reorganization, amalgamation, arrangement, merger or sale of all or
substantially all of the Companys assets, Warrants exercisable for Common
Shares will thereafter evidence the right of the holder to receive the
securities, property or cash deliverable in exchange for or on the conversion of
or in respect of the Common Shares to which the holder of a Common Share would
have been entitled immediately after such event. Similarly, any distribution to
all or substantially all of the holders of Common Shares of rights, options,
warrants, evidences of indebtedness or assets will result in an adjustment in
the number of Common Shares to be issued to holders of Warrants that are
exercisable for Common Shares.
A-13
Global Securities
The Company may issue Warrants in whole or in part in the form
of one or more global securities, which will be registered in the name of and be
deposited with a depositary, or its nominee, each of which will be identified in
the applicable Prospectus Supplement. The global securities may be in temporary
or permanent form. The applicable Prospectus Supplement will describe the terms
of any depositary arrangement and the rights and limitations of owners of
beneficial interests in any global security. The applicable Prospectus
Supplement will describe the exchange, registration and transfer rights relating
to any global security.
Modifications
The Warrant Indenture will provide for modifications and
alterations to the Warrants issued thereunder by way of a resolution of holders
of Warrants at a meeting of such holders or consent in writing from such
holders. The number of holders of Warrants required to pass such a resolution or
execute such a written consent will be specified in the Warrant Indenture.
The Company may amend any Warrant Indenture and the Warrants,
without the consent of the holders of the Warrants, to cure any ambiguity, to
cure, correct or supplement any defective or inconsistent provision, or in any
other manner that will not materially and adversely affect the interests of
holders of outstanding Warrants.
DESCRIPTION OF SUBSCRIPTION RECEIPTS
The Company may issue Subscription Receipts, which will entitle
holders to receive upon satisfaction of certain release conditions and for no
additional consideration, Common Shares, Warrants or any combination thereof.
Subscription Receipts will be issued pursuant to one or more subscription
receipt agreements (each, a
Subscription Receipt Agreement
), each to be
entered into between the Company and an escrow agent (the
Escrow
Agent
), which will establish the terms and conditions of the Subscription
Receipts. Each Escrow Agent will be a financial institution organized under the
laws of Canada or a province thereof and authorized to carry on business as a
trustee. A copy of the form of Subscription Receipt Agreement will be filed with
Canadian securities regulatory authorities and, if applicable, the Company will
file with the SEC as exhibits to the registration statement of which this
Prospectus is a part, or will incorporate by reference from a Report of Foreign
Private Issuer on Form 6-K that the Company files with the SEC, any Subscription
Receipt Agreement describing the terms and conditions of such Subscription
Receipts that the Company is offering before the issuance of such Subscription
Receipts.
The following description sets forth certain general terms and
provisions of Subscription Receipts and is not intended to be complete. The
statements made in this Prospectus relating to any Subscription Receipt
Agreement and Subscription Receipts to be issued thereunder are summaries of
certain anticipated provisions thereof and are subject to, and are qualified in
their entirety by reference to, all provisions of the applicable Subscription
Receipt Agreement and the Prospectus Supplement describing such Subscription
Receipt Agreement.
The Prospectus Supplement relating to any Subscription Receipts
the Company offers will describe the Subscription Receipts and include specific
terms relating to their offering. All such terms will comply with the
requirements of the TSX and NYSE MKT relating to Subscription Receipts. If
underwriters or agents are used in the sale of Subscription Receipts, one or
more of such underwriters or agents may also be parties to the Subscription
Receipt Agreement governing the Subscription Receipts sold to or through such
underwriters or agents.
General
The Prospectus Supplement and the Subscription Receipt
Agreement for any Subscription Receipts the Company offers will describe the
specific terms of the Subscription Receipts and may include, but are not limited
to, any of the following:
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the designation and aggregate number of
Subscription Receipts offered;
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A-14
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the price at which the Subscription Receipts will be
offered;
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the currency or currencies in which the Subscription
Receipts will be offered;
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the designation, number and terms of the Common Shares,
Warrants or combination thereof to be received by holders of Subscription
Receipts upon satisfaction of the release conditions, and the procedures
that will result in the adjustment of those numbers;
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the conditions (the
Release Conditions
) that
must be met in order for holders of Subscription Receipts to receive for
no additional consideration Common Shares, Warrants or a combination
thereof;
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the procedures for the issuance and delivery of Common
Shares, Warrants or a combination thereof to holders of Subscription
Receipts upon satisfaction of the Release Conditions;
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whether any payments will be made to holders of
Subscription Receipts upon delivery of the Common Shares, Warrants or a
combination thereof upon satisfaction of the Release Conditions (e.g. an
amount equal to dividends declared on Common Shares by the Company to
holders of record during the period from the date of issuance of the
Subscription Receipts to the date of issuance of any Common Shares
pursuant to the terms of the Subscription Receipt Agreement);
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the identity of the Escrow Agent;
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the terms and conditions under which the Escrow Agent
will hold all or a portion of the gross proceeds from the sale of
Subscription Receipts, together with interest and income earned thereon
(collectively, the
Escrowed Funds
), pending satisfaction of the
Release Conditions;
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the terms and conditions pursuant to which the Escrow
Agent will hold Common Shares, Warrants or a combination thereof pending
satisfaction of the Release Conditions;
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the terms and conditions under which the Escrow Agent
will release all or a portion of the Escrowed Funds to the Company upon
satisfaction of the Release Conditions;
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|
|
if the Subscription Receipts are sold to or through
underwriters or agents, the terms and conditions under which the Escrow
Agent will release a portion of the Escrowed Funds to such underwriters or
agents in payment of all or a portion of their fees or commission in
connection with the sale of the Subscription Receipts;
|
|
|
|
procedures for the refund by the Escrow Agent to holders
of Subscription Receipts of all or a portion of the subscription price for
their Subscription Receipts, plus any pro rata entitlement to interest
earned or income generated on such amount, if the Release Conditions are
not satisfied;
|
|
|
|
any contractual right of rescission to be granted to
initial purchasers of Subscription Receipts in the event this Prospectus,
the Prospectus Supplement under which Subscription Receipts are issued or
any amendment hereto or thereto contains a misrepresentation;
|
|
|
|
any entitlement of the Company to purchase the
Subscription Receipts in the open market by private agreement or
otherwise;
|
|
|
|
whether the Company will issue the Subscription Receipts
as global securities and, if so, the identity of the depositary for the
global securities;
|
|
|
|
whether the Company will issue the Subscription Receipts
as bearer securities, registered securities or both;
|
|
|
|
provisions as to modification, amendment or variation of
the Subscription Receipt Agreement or any rights or terms attaching to the
Subscription Receipts;
|
A-15
|
whether the Subscription Receipts will be listed on an
exchange;
|
|
|
|
material Canadian federal income tax consequences and, if
applicable, material United States federal income tax consequences of
owning the Subscription Receipts; and
|
|
|
|
any other terms of the Subscription Receipts.
|
The holders of Subscription Receipts will not be
shareholders of the Company. Holders of Subscription Receipts are entitled only
to receive Common Shares, Warrants or a combination thereof on exchange of their
Subscription Receipts, plus any cash payments provided for under the
Subscription Receipt Agreement, if the Release Conditions are satisfied. If the
Release Conditions are not satisfied, Holders of Subscription Receipts shall be
entitled to a refund of all or a portion of the subscription price therefor and
all or a portion of the pro rata share of interest earned or income generated
thereon, as provided in the Subscription Receipt Agreement.
Escrow
The Escrowed Funds will be held in escrow by the Escrow Agent,
and such Escrowed Funds will be released to the Company (and, if the
Subscription Receipts are sold to or through underwriters or agents, a portion
of the Escrowed Funds may be released to such underwriters or agents in payment
of all or a portion of their fees in connection with the sale of the
Subscription Receipts) at the time and under the terms specified by the
Subscription Receipt Agreement. If the Release Conditions are not satisfied,
holders of Subscription Receipts will receive a refund of all or a portion of
the subscription price for their Subscription Receipts plus their pro rata
entitlement to interest earned or income generated on such amount, in accordance
with the terms of the Subscription Receipt Agreement. Common Shares or Warrants
may be held in escrow by the Escrow Agent and will be released to the holders of
Subscription Receipts following satisfaction of the Release Conditions at the
time and under the terms specified in the Subscription Receipt Agreement.
Adjustment
The Subscription Receipt Agreement will specify that upon the
subdivision, consolidation, reclassification or other material change of Common
Shares or Warrants underlying the particular Subscription Receipts or any other
reorganization, amalgamation, arrangement, merger or sale of all or
substantially all of the Companys assets, the Subscription Receipts will
thereafter evidence the right of the holder to receive the securities, property
or cash deliverable in exchange for or on the conversion of or in respect of the
Common Shares or Warrants to which the holder of a Common Share or identical
Warrant would have been entitled immediately after such event. Similarly, any
distribution to all or substantially all of the holders of Common Shares of
rights, options, warrants, evidences of indebtedness or assets will result in an
adjustment in the number of Common Shares to be issued to holders of
Subscription Receipts whose Subscription Receipts entitle the holders thereof to
receive Common Shares. Alternatively, such securities, evidences of indebtedness
or assets may, at the option of the Company, be issued to the Escrow Agent and
delivered to holders of Subscription Receipts on exercise thereof. The
Subscription Receipt Agreement will also provide that if other actions of the
Company affect the Common Shares or Warrants, which, in the reasonable opinion
of the directors of the Company, would materially affect the rights of the
holders of Subscription Receipts and/or the rights attached to the Subscription
Receipts, the number of Common Shares or Warrants which are to be received
pursuant to the Subscription Receipts shall be adjusted in such manner, if any,
and at such time as the directors of the Company may in their discretion
reasonably determine to be equitable to the holders of Subscription Receipts in
such circumstances.
Rescission
The Subscription Receipt Agreement will also provide that any
misrepresentation in this Prospectus, the Prospectus Supplement under which the
Subscription Receipts are offered, or any amendment hereto or thereto, will
entitle each initial purchaser of Subscription Receipts to a contractual right
of rescission following the issuance of the Common Shares or Warrants to such
purchaser entitling such purchaser to receive the amount paid for the
Subscription Receipts upon surrender of the Common Shares or Warrants, provided
that such remedy for rescission is exercised in the time stipulated in the Subscription Receipt Agreement.
This right of rescission does not extend to holders of Subscription Receipts who
acquire such Subscription Receipts from an initial purchaser, on the open market
or otherwise, or to initial purchasers who acquire Subscription Receipts in the
United States.
A-16
Global Securities
The Company may issue Subscription Receipts in whole or in part
in the form of one or more global securities, which will be registered in the
name of and be deposited with a depositary, or its nominee, each of which will
be identified in the applicable Prospectus Supplement. The global securities may
be in temporary or permanent form. The applicable Prospectus Supplement will
describe the terms of any depositary arrangement and the rights and limitations
of owners of beneficial interests in any global security. The applicable
Prospectus Supplement also will describe the exchange, registration and transfer
rights relating to any global security.
Modifications
The Subscription Receipt Agreement will provide for
modifications and alterations to the Subscription Receipts issued thereunder by
way of a resolution of holders of Subscription Receipts at a meeting of such
holders or consent in writing from such holders. The number of holders of
Subscriptions Receipts required to pass such a resolution or execute such a
written consent will be specified in the Subscription Receipt Agreement.
DESCRIPTION OF UNITS
The following description, together with the additional
information the Company may include in any applicable Prospectus Supplements,
summarizes the material terms and provisions of the Units that the Company may
offer under this Prospectus. While the terms summarized below will apply
generally to any Units that the Company may offer under this Prospectus, the
Company will describe the particular terms of any issue of Units in more detail
in the applicable Prospectus Supplement. The terms of any Units offered under a
Prospectus Supplement may differ from the terms described below.
The Company will also add to disclosure in any subsequent
Prospectus Supplement whereby Units are offered the form of any unit agreement
(
Unit Agreement
) between the Company and a unit agent (
Unit
Agent
) that describes the terms and conditions of the issue of Units being
offered, and any supplemental agreements. The following summaries of material
terms and provisions of the Units are subject to, and qualified in their
entirety by reference to, all the provisions of any Unit Agreement and any
supplemental agreements applicable to a particular issue of Units. The Company
urges you to read the applicable Prospectus Supplements relating to the
particular issue of Units that the Company sells under this Prospectus, as well
as any Unit Agreement and any supplemental agreements that contain the terms of
the Units. If applicable, the Company will file with the SEC as exhibits to the
registration statement of which this Prospectus is a part, or will incorporate
by reference from a current report on Form 6-K that the Company files with the
SEC, any Unit Agreement describing the terms and conditions of such Units that
the Company is offering before the issuance of such Units.
General
The Company may issue Units comprising of Common Shares and
Warrants. Each Unit will be issued so that the holder of the Unit is also the
holder of each Security included in the Unit. Therefore, the holder of a Unit
will have the rights and obligations of a holder of each included Security. Any
Unit Agreement under which a Unit is issued may provide that the Securities
included in the Unit may not be held or transferred separately, at any time or
at any time before a specified date. The Company will describe in the applicable
Prospectus Supplement the terms of the issue of Units, including: the
designation and terms of the Units and of the securities comprising the Units,
including whether and under what circumstances those securities may be held or
transferred separately; any provisions of any governing Unit Agreement that
differ from those described below; and any provisions for the issuance, payment,
settlement, transfer or exchange of the Units or of the securities comprising
the Units. The provisions described in this section, as well as those described
under Description of Common Shares and Description of Warrants will apply to
each Unit and to any Common Share or Warrant included in each Unit,
respectively.
A-17
Issuance in Series
The Company may issue Units in such amounts and in numerous
distinct series as the Company may determine.
Enforceability of Rights by Holders of Units
Each Unit Agent will act solely as the Companys agent under
any applicable Unit Agreement and will not assume any obligation or relationship
of agency or trust with any holder of any Unit. A single trust company may act
as a Unit Agent for more than one series of Units. A Unit Agent will have no
duty or responsibility in case of any default by us under any applicable Unit
Agreement or Unit, including any duty or responsibility to initiate any
proceedings at law or otherwise, or to make any demand upon us. Any holder of a
Unit may, without the consent of any related Unit Agent or the holder of any
other Unit, enforce by appropriate legal action its rights as holder under any
security included in the Unit. The Company, any Unit Agents, and any of the
Companys or their agents may treat the registered holder of any Unit
certificate as an absolute owner of the Units evidenced by that certificate for
any purpose and as the person entitled to exercise the rights attaching to the
Units so requested, despite any notice to the contrary.
DENOMINATIONS, REGISTRATION AND TRANSFER
The Securities will be issued in registered form without
coupons attached in either global or definitive form and in denominations and
integral multiples as set out in the applicable Prospectus Supplement. Other
than in the case of book-entry-only Securities, Securities may be presented for
registration of transfer (with the form of transfer endorsed thereon duly
executed) in the city specified for such purpose at the office of the registrar
or transfer agent designated by the Company for such purpose with respect to any
issue of Securities referred to in the Prospectus Supplement. No service charge
will be made for any transfer, conversion or exchange of the Securities but the
Company may require payment of a sum to cover any transfer tax or other
governmental charge payable in connection therewith. Such transfer, conversion
or exchange will be effected upon such registrar or transfer agent being
satisfied with the documents of title and the identity of the person making the
request. If a Prospectus Supplement refers to any registrar or transfer agent
designated by the Company with respect to any issue of Securities, the Company
may at any time rescind the designation of any such registrar or transfer agent
and appoint another in its place or approve any change in the location through
which such registrar or transfer agent acts.
In the case of book-entry-only Securities, a global certificate
or certificates representing the Securities may be held by a designated
depositary for its participants. The Securities must be purchased or transferred
through such participants, which includes securities brokers and dealers, banks
and trust companies. The depositary will establish and maintain book-entry
accounts for its participants acting on behalf of holders of the Securities. The
interests of such holders of Securities will be represented by entries in the
records maintained by the participants. Holders of Securities issued in
book-entry-only form will not be entitled to receive a certificate or other
instrument evidencing their ownership thereof, except in limited circumstances.
Each holder will receive a customer confirmation of purchase from the
participants from which the Securities are purchased in accordance with the
practices and procedures of that participant.
PLAN OF DISTRIBUTION
The Company may sell the Securities to or through underwriters
or dealers, and also may sell Securities to one or more other purchasers
directly or through agents, including sales pursuant to ordinary brokerage
transactions and transactions in which a broker-dealer solicits purchasers.
Underwriters may sell Securities to or through dealers. Each Prospectus
Supplement will set forth the terms of the offering, including the name or names
of any underwriters, dealers or agents and any fees or compensation payable to
them in connection with the offering and sale of a particular series or issue of
Securities, the public offering price or prices of the Securities and the
proceeds to the Company from the sale of the Securities.
A-18
The Securities may be sold, from time to time in one or more
transactions at a fixed price or prices which may be changed or at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices, including sales in transactions that are deemed
to be at-the-market distributions as defined in National Instrument
44-102Shelf Distributions, including sales made directly on the TSX, NYSE MKT
or other existing trading markets for the Securities. The prices at which the
Securities may be offered may vary as between purchasers and during the period
of distribution. If, in connection with the offering of Securities at a fixed
price or prices, the underwriters have made a bona fide effort to sell all of
the Securities at the initial offering price fixed in the applicable Prospectus
Supplement, the public offering price may be decreased and thereafter further
changed, from time to time, to an amount not greater than the initial public
offering price fixed in such Prospectus Supplement, in which case the
compensation realized by the underwriters will be decreased by the amount that
the aggregate price paid by purchasers for the Securities is less than the gross
proceeds paid by the underwriters to the Company.
Underwriters, dealers and agents who participate in the
distribution of the Securities may be entitled under agreements to be entered
into with the Company to indemnification by the Company against certain
liabilities, including liabilities under the U.S. Securities Act and Canadian
securities legislation, or to contribution with respect to payments which such
underwriters, dealers or agents may be required to make in respect thereof. Such
underwriters, dealers and agents may be customers of, engage in transactions
with, or perform services for, the Company in the ordinary course of business.
In connection with any offering of Securities, other than an
at-the-market distribution, the underwriters may over-allot or effect
transactions which stabilize or maintain the market price of the Securities
offered at a level above that which might otherwise prevail in the open market.
Such transactions, if commenced, may be discontinued at any time.
Unless otherwise specified in the applicable Prospectus
Supplement, the Company does not intend to list any of the Securities other than
the Common Shares on any securities exchange. Any underwriters, dealers or
agents to or through which Securities other than the Common Shares are sold by
the Company for public offering and sale may make a market in such Securities,
but such underwriters, dealers or agents will not be obligated to do so and may
discontinue any such market making at any time and without notice. No assurance
can be given that a market for trading in Securities of any series or issue will
develop or as to the liquidity of any such market, whether or not the Securities
are listed on a securities exchange.
PRIOR SALES
The following table sets out details of all Common Shares
issued by the Company during the 12 months prior to the date of this
Prospectus.
|
Price per
|
|
|
|
Security/Exercise
|
|
|
Date
|
Price per Security
|
|
Number of Securities
|
|
|
|
|
Common Shares
|
|
|
|
|
|
|
|
Issued pursuant to the
July 2016 Bought Deal Financing
|
|
|
|
|
|
|
|
July 12, 2016
|
US$1.60
|
|
18,687,500
|
|
|
|
|
Issued pursuant to
sales under ATM Offering
|
|
|
|
|
|
|
|
July 1, 2016
|
US$1.71
|
|
160,000
|
|
|
|
|
June 30, 2016
|
US$1.64
|
|
50,000
|
|
|
|
|
June 28, 2016
|
US$1.52
|
|
11,500
|
|
|
|
|
June 27, 2016
|
US$1.50
|
|
51,000
|
|
|
|
|
June 24, 2016
|
US$1.61
|
|
70,100
|
A-19
|
Price
per
|
|
|
|
Security/Exercise
|
|
|
Date
|
Price per Security
|
|
Number of Securities
|
|
|
|
|
June 23, 2016
|
US$1.60
|
|
50,000
|
|
|
|
|
June 20, 2016
|
US$1.61
|
|
155,400
|
|
|
|
|
June 17, 2016
|
US$1.63
|
|
10,600
|
|
|
|
|
June 16, 2016
|
US$1.72
|
|
191,620
|
|
|
|
|
June 15, 2016
|
US$1.68
|
|
260,000
|
|
|
|
|
June 13, 2016
|
US$1.67
|
|
6,741
|
|
|
|
|
June 10, 2016
|
US$1.75
|
|
120,000
|
|
|
|
|
June 9, 2016
|
US$1.72
|
|
212,300
|
|
|
|
|
June 8, 2016
|
US$1.73
|
|
95,300
|
|
|
|
|
June 7, 2016
|
US$1.63
|
|
65,957
|
|
|
|
|
June 6, 2016
|
US$1.64
|
|
252,298
|
|
|
|
|
June 3, 2016
|
US$1.57
|
|
212,600
|
|
|
|
|
June 2, 2016
|
US$1.45
|
|
30,000
|
|
|
|
|
June 1, 2016
|
US$1.40
|
|
30,000
|
|
|
|
|
May 31, 2016
|
US$1.43
|
|
110,000
|
|
|
|
|
May 27, 2016
|
US$1.49
|
|
40,000
|
|
|
|
|
May 26, 2016
|
US$1.62
|
|
34,800
|
|
|
|
|
May 25, 2016
|
US$1.57
|
|
40,100
|
|
|
|
|
May 24, 2016
|
US$1.54
|
|
50,000
|
|
|
|
|
May 23, 2016
|
US$1.68
|
|
105,000
|
|
|
|
|
May 20, 2016
|
US$1.65
|
|
3,200
|
|
|
|
|
May 19, 2016
|
US$1.65
|
|
27,400
|
|
|
|
|
May 18, 2016
|
US$1.79
|
|
4,000
|
|
|
|
|
May 16, 2016
|
US$1.80
|
|
135,000
|
|
|
|
|
May 13, 2016
|
US$1.78
|
|
150,000
|
|
|
|
|
April 25, 2016
|
US$1.44
|
|
353,259
|
|
|
|
|
April 22, 2016
|
US$1.50
|
|
85,367
|
|
|
|
|
April 21, 2016
|
US$1.49
|
|
325,085
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued pursuant to
exercise of options
|
|
|
|
|
|
|
|
October 17, 2016
|
$1.31
|
|
6,666
|
|
|
|
|
October 12, 2016
|
$0.71
|
|
53,000
|
|
|
|
|
October 3, 2016
|
$1.31
|
|
3,750
|
|
|
|
|
September 28, 2016
|
$0.65
|
|
14,067
|
A-20
|
Price per
|
|
|
|
Security/Exercise
|
|
|
Date
|
Price per Security
|
|
Number of Securities
|
|
|
|
|
September 6, 2016
|
$0.65
|
|
25,000
|
|
|
|
|
August 16, 2016
|
$1.31
|
|
4,500
|
|
|
|
|
August 8, 2016
|
$1.31
|
|
3,334
|
|
|
|
|
July 14, 2016
|
$0.71
|
|
9,000
|
|
|
|
|
July 5, 2016
|
$1.78
|
|
10,000
|
|
|
|
|
July 5, 2016
|
$1.71
|
|
15,000
|
|
|
|
|
July 5, 2016
|
$1.31
|
|
72,249
|
|
|
|
|
July 5, 2016
|
$0.71
|
|
5,167
|
|
|
|
|
July 5, 2016
|
$0.65
|
|
22,751
|
|
|
|
|
July 4, 2016
|
$1.71
|
|
35,000
|
|
|
|
|
July 4, 2016
|
$1.31
|
|
75,918
|
|
|
|
|
July 4, 2016
|
$0.71
|
|
3,667
|
|
|
|
|
July 4, 2016
|
$0.65
|
|
7,851
|
|
|
|
|
June 30, 2016
|
$1.31
|
|
15,666
|
|
|
|
|
June 29, 2016
|
$1.31
|
|
76,498
|
|
|
|
|
June 28, 2016
|
$1.31
|
|
44,750
|
|
|
|
|
June 27, 2016
|
$1.31
|
|
15,000
|
|
|
|
|
June 27, 2016
|
$0.70
|
|
30,000
|
|
|
|
|
June 24, 2016
|
$1.71
|
|
25,000
|
|
|
|
|
June 24, 2016
|
$0.71
|
|
15,000
|
|
|
|
|
June 24, 2016
|
$0.70
|
|
12,900
|
|
|
|
|
June 23, 2016
|
$0.70
|
|
7,100
|
|
|
|
|
June 22, 2016
|
$1.31
|
|
2,833
|
|
|
|
|
June 22, 2016
|
$0.65
|
|
2,734
|
|
|
|
|
June 20, 2016
|
$0.70
|
|
25,000
|
|
|
|
|
June 17, 2016
|
$1.31
|
|
5,667
|
|
|
|
|
June 17, 2016
|
$0.65
|
|
5,067
|
|
|
|
|
June 16, 2016
|
$1.71
|
|
41,200
|
|
|
|
|
June 16, 2016
|
$1.31
|
|
8,250
|
|
|
|
|
June 16, 2016
|
$0.65
|
|
8,617
|
|
|
|
|
June 15, 2016
|
$0.71
|
|
9,833
|
|
|
|
|
June 15, 2016
|
$0.65
|
|
1,667
|
|
|
|
|
June 14, 2016
|
$0.71
|
|
10,000
|
|
|
|
|
June 13, 2016
|
$0.65
|
|
6,650
|
A-21
|
Price
per
|
|
|
|
Security/Exercise
|
|
|
Date
|
Price per Security
|
|
Number of Securities
|
|
|
|
|
June 10, 2016
|
$1.71
|
|
13,800
|
|
|
|
|
June 9, 2016
|
$0.65
|
|
2,934
|
|
|
|
|
June 8, 2016
|
$1.71
|
|
10,000
|
|
|
|
|
June 8, 2016
|
$0.65
|
|
15,866
|
|
|
|
|
June 7, 2016
|
$1.31
|
|
4,000
|
|
|
|
|
June 7, 2016
|
$0.65
|
|
6,400
|
|
|
|
|
June 6, 2016
|
$1.71
|
|
10,000
|
|
|
|
|
June 6, 2016
|
$1.31
|
|
5,333
|
|
|
|
|
June 6, 2016
|
$0.65
|
|
49,583
|
|
|
|
|
June 3, 2016
|
$1.31
|
|
8,333
|
|
|
|
|
June 2, 2016
|
$1.31
|
|
3,750
|
|
|
|
|
May 27, 2016
|
$1.31
|
|
6,000
|
|
|
|
|
May 27, 2016
|
$0.92
|
|
75,000
|
|
|
|
|
May 27, 2016
|
$0.65
|
|
2,867
|
|
|
|
|
May 26, 2016
|
$1.31
|
|
13,167
|
|
|
|
|
May 26, 2016
|
$0.65
|
|
2,300
|
|
|
|
|
May 25, 2016
|
$1.31
|
|
6,833
|
|
|
|
|
May 25, 2016
|
$1.78
|
|
10,000
|
|
|
|
|
May 20, 2016
|
$1.31
|
|
9,750
|
|
|
|
|
May 20, 2016
|
$0.65
|
|
2,483
|
|
|
|
|
May 19, 2016
|
$1.31
|
|
10,500
|
|
|
|
|
May 19, 2016
|
$1.78
|
|
20,000
|
|
|
|
|
May 17, 2016
|
$1.31
|
|
27,833
|
|
|
|
|
May 17, 2016
|
$0.65
|
|
1,916
|
|
|
|
|
May 16, 2016
|
$1.31
|
|
45,584
|
|
|
|
|
May 16, 2016
|
$0.70
|
|
6,900
|
|
|
|
|
May 16, 2016
|
$0.65
|
|
6,050
|
|
|
|
|
May 13, 2016
|
$1.78
|
|
10,000
|
|
|
|
|
May 13, 2016
|
$1.31
|
|
7,667
|
|
|
|
|
May 13, 2016
|
$0.86
|
|
25,000
|
|
|
|
|
May 13, 2016
|
$0.70
|
|
18,100
|
|
|
|
|
May 13, 2016
|
$0.65
|
|
27,000
|
|
|
|
|
May 12, 2016
|
$1.31
|
|
11,000
|
|
|
|
|
May 11, 2016
|
$2.00
|
|
500
|
A-22
|
Price
per
|
|
|
|
Security/Exercise
|
|
|
Date
|
Price per Security
|
|
Number of Securities
|
|
|
|
|
May 11, 2016
|
$1.31
|
|
37,418
|
|
|
|
|
May 11, 2016
|
$0.65
|
|
5,700
|
|
|
|
|
May 10, 2016
|
$1.71
|
|
40,000
|
|
|
|
|
May 10, 2016
|
$1.31
|
|
30,584
|
|
|
|
|
May 10, 2016
|
$0.65
|
|
4,617
|
|
|
|
|
May 9, 2016
|
$1.31
|
|
19,000
|
|
|
|
|
April 18, 2016
|
$1.31
|
|
9,167
|
|
|
|
|
April 18, 2016
|
$0.65
|
|
5,267
|
|
|
|
|
April 15, 2016
|
$0.65
|
|
1,500
|
|
|
|
|
April 15, 2016
|
$1.31
|
|
6,667
|
|
|
|
|
April 13, 2016
|
$1.31
|
|
6,667
|
|
|
|
|
April 12, 2016
|
$1.31
|
|
6,000
|
|
|
|
|
April 12, 2016
|
$0.65
|
|
3,733
|
|
|
|
|
April 12, 2016
|
$0.70
|
|
75,000
|
|
|
|
|
April 11, 2016
|
$0.96
|
|
5,000
|
|
|
|
|
April 11, 2016
|
$0.71
|
|
14,000
|
|
|
|
|
April 11, 2016
|
$0.70
|
|
9,600
|
|
|
|
|
April 8, 2016
|
$0.70
|
|
25,000
|
|
|
|
|
April 4, 2016
|
$0.65
|
|
2,667
|
|
|
|
|
March 30, 2016
|
$0.70
|
|
1,400
|
|
|
|
|
March 29, 2016
|
$0.70
|
|
66,100
|
|
|
|
|
March 28, 2016
|
$0.70
|
|
6,000
|
|
|
|
|
March 24, 2016
|
$0.70
|
|
6,500
|
|
|
|
|
March 22, 2016
|
$0.96
|
|
13,333
|
|
|
|
|
March 22, 2016
|
$0.71
|
|
18,000
|
|
|
|
|
March 22, 2016
|
$0.70
|
|
163,700
|
|
|
|
|
March 22, 2016
|
$0.65
|
|
5,450
|
|
|
|
|
March 18, 2016
|
$0.70
|
|
151,700
|
|
|
|
|
March 18, 2016
|
$0.65
|
|
44,016
|
|
|
|
|
March 17, 2016
|
$0.96
|
|
10,000
|
|
|
|
|
March 17, 2016
|
$0.71
|
|
20,000
|
|
|
|
|
March 17, 2016
|
$0.70
|
|
55,000
|
|
|
|
|
March 17, 2016
|
$0.65
|
|
18,198
|
|
|
|
|
March 16, 2016
|
$0.75
|
|
16,667
|
A-23
|
Price per
|
|
|
|
Security/Exercise
|
|
|
Date
|
Price per Security
|
|
Number of Securities
|
|
|
|
|
March 16, 2016
|
$0.65
|
|
2,400
|
|
|
|
|
March 16, 2016
|
$0.70
|
|
50,000
|
|
|
|
|
March 15, 2016
|
$0.70
|
|
100,000
|
|
|
|
|
March 14, 2016
|
$0.70
|
|
140,000
|
|
|
|
|
March 11, 2016
|
$0.70
|
|
50,000
|
|
|
|
|
March 11, 2016
|
$0.71
|
|
12,000
|
|
|
|
|
March 10, 2016
|
$0.71
|
|
13,000
|
|
|
|
|
March 10, 2016
|
$0.65
|
|
10,000
|
|
|
|
|
March 10, 2016
|
$0.70
|
|
33,334
|
|
|
|
|
February 12, 2016
|
$0.70
|
|
10,000
|
The following table sets out details of all securities
convertible or exercisable into Common Shares that were issued or granted by the
Company during the 12 months prior to the date of this Prospectus.
|
|
|
|
|
|
Exercise or
conversion
|
|
|
|
|
Number of Common
|
|
price per Common
Share
|
|
|
|
|
Shares issuable upon
|
|
(Cdn$ unless
otherwise
|
Date
|
|
Type of Security Issued
|
|
exercise or conversion
|
|
indicated)
|
July 6, 2016
|
|
Warrants
|
|
9,343,750
|
|
US$2.25
|
June 10, 2016
|
|
Stock Options
|
|
1,345,900
|
|
$2.19
|
December 11, 2015
|
|
Stock Options
|
|
2,344,000
|
|
$0.71
|
TRADING PRICE AND VOLUME
The Common Shares are listed for trading on the TSX under the
symbol GPR and on the NYSE MKT under the symbol GPL.
The following table sets forth the price ranges in Canadian
dollars and trading volume of the Common Shares of the Company as reported by
the TSX during the 12-month period before the date of this Prospectus:
Period
|
|
High ($)
|
|
Low ($)
|
|
Volume
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October
|
|
0.80
|
|
0.52
|
|
3,040,755
|
|
|
|
|
|
|
|
November
|
|
0.78
|
|
0.58
|
|
1,460,697
|
|
|
|
|
|
|
|
December
|
|
0.73
|
|
0.62
|
|
1,215,931
|
|
|
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January
|
|
0.74
|
|
0.54
|
|
1,719,025
|
|
|
|
|
|
|
|
February
|
|
1.09
|
|
0.71
|
|
3,859,660
|
|
|
|
|
|
|
|
March
|
|
1.40
|
|
0.87
|
|
6,826,702
|
|
|
|
|
|
|
|
April
|
|
2.82
|
|
1.13
|
|
10,194,013
|
|
|
|
|
|
|
|
May
|
|
2.80
|
|
1.75
|
|
14,038,204
|
|
|
|
|
|
|
|
June
|
|
2.33
|
|
1.79
|
|
7,964,748
|
A-24
Period
|
|
High ($)
|
|
Low ($)
|
|
Volume
|
|
|
|
|
|
|
|
July
|
|
2.60
|
|
1.64
|
|
14,472,574
|
|
|
|
|
|
|
|
August
|
|
2.02
|
|
1.57
|
|
10,836,476
|
|
|
|
|
|
|
|
September
|
|
1.90
|
|
1.56
|
|
5,779,004
|
|
|
|
|
|
|
|
October 1-19
|
|
1.76
|
|
1.51
|
|
3,439,149
|
The closing price per Common Share on the TSX on October 19,
2016 was $1.70.
The following table sets forth the price ranges in U.S. dollars
and trading volume of the Common Shares of the Company as reported by the NYSE
MKT during the 12-month period before the date of this Prospectus:
Period
|
|
High (US$)
|
|
Low (US$)
|
|
Volume
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September
|
|
0.44
|
|
0.37
|
|
4,991,518
|
|
|
|
|
|
|
|
October
|
|
0.63
|
|
0.39
|
|
13,682,096
|
|
|
|
|
|
|
|
November
|
|
0.60
|
|
0.43
|
|
6,830,040
|
|
|
|
|
|
|
|
December
|
|
0.55
|
|
0.44
|
|
6,530,731
|
|
|
|
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January
|
|
0.53
|
|
0.41
|
|
6,889,300
|
|
|
|
|
|
|
|
February
|
|
0.79
|
|
0.51
|
|
14,692,400
|
|
|
|
|
|
|
|
March
|
|
1.08
|
|
0.64
|
|
21,725,500
|
|
|
|
|
|
|
|
April
|
|
2.25
|
|
0.86
|
|
42,809,255
|
|
|
|
|
|
|
|
May
|
|
2.25
|
|
1.33
|
|
52,342,089
|
|
|
|
|
|
|
|
June
|
|
1.80
|
|
1.36
|
|
30,542,714
|
|
|
|
|
|
|
|
July
|
|
2.00
|
|
1.23
|
|
64,956,340
|
|
|
|
|
|
|
|
August
|
|
1.54
|
|
1.20
|
|
45,338,950
|
|
|
|
|
|
|
|
September
|
|
1.45
|
|
1.18
|
|
21,759,120
|
|
|
|
|
|
|
|
October
1-19
|
|
1.36
|
|
1.14
|
|
12,737,650
|
The closing price per Common Share on the NYSE MKT on October
19, 2016 was US$1.30.
CERTAIN INCOME TAX CONSIDERATIONS
The applicable Prospectus Supplement will describe certain
Canadian federal income tax consequences to investors described therein of
acquiring Securities.
The applicable Prospectus Supplement will also describe certain
United States federal income tax consequences of the acquisition, ownership and
disposition of Securities by an initial investor who is a U.S. person (within
the meaning of the United States Internal Revenue Code), if applicable,
including, to the extent applicable, any such consequences relating to
Securities payable in a currency other than the United States dollar, issued at
an original issue discount for United States federal income tax purposes or
other special terms.
LEGAL MATTERS
Certain legal matters in connection with the Securities offered
hereby will be passed upon on behalf of the Company by McMillan LLP with respect
to Canadian legal matters and with respect to certain United States legal
matters.
A-25
INTEREST OF EXPERTS
The following are the names of each person or company who has
prepared or certified a report, valuation, statement or opinion in this
Prospectus, either directly or in a document incorporated by reference, and
whose profession or business gives authority to the report, valuation, statement
or opinion made by the person or company:
|
McMillan LLP is the Companys counsel with
respect to Canadian and United States legal matters herein.
|
|
|
|
KPMG LLP is the external auditor of the Company and
reported on the Companys audited financial statements for the years ended
December 31, 2015 and 2014 filed on SEDAR.
|
|
|
|
Robert F. Brown, P. Eng., Vice President, Exploration and
Qualified Person for the Company, as defined by NI 43-101, reviewed and
approved the technical information contained in this prospectus and in the
documents incorporated by reference. Mr. Brown holds 124,000 Common Shares
and options to purchase 585,000 Common Shares.
|
To the Companys knowledge, each of the aforementioned firms or
persons held less than 1% of the outstanding securities of the Company or of any
associate or affiliate of the Company when they prepared the reports referred to
above or following the preparation of such reports. None of the aforementioned
firms or persons received any direct or indirect interest in any securities of
the Company or of any associate or affiliate of the Company in connection with
the preparation of such reports. Other than Robert F. Brown, and based on
information provided by the relevant persons, none of the aforementioned firms
or persons, nor any directors, officers or employees of such firms, are
currently expected to be elected, appointed or employed as a director, officer
or employee of the Company or of any associate or affiliate of the Company.
The Companys auditors, KPMG LLP, are independent within the
meaning of the Rules of Professional Conduct of the Chartered Professional
Accountants of British Columbia and within the meaning of the United States
Securities Exchange Act of 1934 and the applicable rules and regulations
thereunder adopted by the U.S. Securities and Exchange Commission and the Public
Company Accounting Oversight Board (United States).
RISK FACTORS
Investing in securities of the Company involves a
significant degree of risk and must be considered speculative due to the
high-risk nature of the Companys business. Investors should carefully consider
the information included or incorporated herein by reference in this Prospectus
(including subsequently filed documents incorporated by reference) and the
Companys historical consolidated financial statements and related notes thereto
before making an investment decision concerning the Securities. There are
various risks that could have a material adverse effect on, among other things,
the operating results, earnings, properties, business and condition (financial
or otherwise) of the Company. These risk factors, together with all of the other
information included, or incorporated by reference in this Prospectus, including
information contained in the section entitled Cautionary Note Regarding
Forward-Looking Statements should be carefully reviewed and considered before a
decision to invest in the Securities is made. Additional risks and uncertainties
not currently known to the Company, or that the Company currently deems
immaterial, may also materially and adversely affect its business. In addition,
risks relating to a particular offering of Securities will be set out in a
Prospectus Supplement relating to such offering.
Metals and Mineral Prices Are Subject to Dramatic and
Unpredictable Fluctuations
The market prices of precious metals and other minerals are
volatile and cannot be controlled. If the prices of precious metals and other
minerals should drop significantly, the economic prospects of the Companys
operating mines and projects could be significantly reduced or rendered
uneconomic. There is no assurance that even if commercial quantities of ore are
discovered, a profitable market may exist for the sale of same. Mineral prices
have fluctuated widely, particularly in recent years. The marketability of
minerals is also affected by numerous other factors beyond the control of the
Company, including government regulations relating to royalties, allowable
production and importing and exporting of minerals, the effect of which cannot
be accurately predicted.
A-26
The Company has not entered into any hedging arrangements for
any of its metal and mineral production, but has sought arrangements to price
silver and gold content of its production in advance of contractual pricing
periods which can be two to three months from the time of shipment. The Company
may enter into similar arrangements in the future.
Current Global Financial Conditions
In recent years, global financial markets have experienced
increased volatility and global financial conditions have been subject to
increased instability. These had a profound impact on the global economy. Many
industries, including the mining sector, were impacted by these market
conditions. Some of the key impacts of financial market turmoil include
contraction in credit markets resulting in a widening of credit risk,
devaluations and high volatility in global equity, commodity, foreign exchange
and precious metal markets and a lack of market liquidity. Access to financing
for mining companies continues to be negatively impacted by liquidity
constraints. These factors may impact the ability of the Company to obtain
equity or debt financing and, if available, to obtain such financing on terms
favourable to the Company. If these increased levels of volatility and market
turmoil continue, the Companys operations and planned growth could be adversely
impacted and the trading price of the securities of the Company may be adversely
affected.
Inaccuracies in Production and Cost Estimates
The Company prepares estimates of future production and future
production costs for specific operations. No assurance can be given that these
estimates will be achieved. Production and cost estimates are based on, among
other things, the following: the accuracy of Mineral Resource estimates; the
accuracy of assumptions regarding ground conditions and physical characteristics
of mineralization, equipment and mechanical availability, labour, and the
accuracy of estimated rates and costs of mining and processing. Actual
production and costs may vary from estimates for a variety of reasons, including
actual mineralization mined varying from estimates of grade, tonnage, dilution
and metallurgical and other characteristics, short-term operating factors
relating to the Mineral Resources, such as the need for sequential development
of mineralized zones and the processing of new or different grades of
mineralization; and the risks and hazards associated with mining described below
under Mining and Mineral Exploration Have Substantial Operational Risks. In
addition, there can be no assurance that silver recoveries or other metal
recoveries in small scale laboratory tests will be duplicated in larger scale
tests under on-site conditions or during production, or that the existing known
and experienced recoveries will continue. Costs of production may also be
affected by a variety of factors, including: variability in grade or dilution,
metallurgy, labour costs, costs of supplies and services (such as, fuel and
power), general inflationary pressures and currency exchange rates. Failure to
achieve production or cost estimates, or increases in costs, could have an
adverse impact on the Companys future cash flows, earnings, results of
operations and financial condition.
Uncertainty Regarding Resource Estimates
Only mineral resources have been determined for certain of the
Companys properties, and no estimate of reserves on any property has been
completed. Resource estimates are based on interpretation and assumptions and
may yield less mineral production under actual conditions than is currently
estimated. In making determinations about whether to advance any projects to
development, the Company must rely upon estimated calculations as to the mineral
resources and grades of mineralization on its properties. Until mineralized
zones are actually mined and processed, mineral resources and grades of
mineralization must be considered as estimates only. These estimates are
imprecise and depend upon geological interpretation and statistical inferences
drawn from drilling and sampling which may prove to be unreliable. The Company
cannot assure that:
|
Resource or other mineralization estimates will
be accurate; or
|
|
|
|
Mineralization can be mined or processed
profitably.
|
Any material changes in mineral resource estimates and grades
of mineralization will affect the economic viability of a mine or a project and
its return on capital. The Companys resource estimates have been determined and
valued based on assumed future prices, cut-off grades and operating costs that
may prove to be inaccurate. Extended declines in market prices for silver, gold, zinc and lead may
render portions of the Companys mineralization uneconomic and result in reduced
reported mineral resources.
A-27
Any material reductions in estimates of mineral resources, or
of the Companys ability to extract such mineral resources, could have a
material adverse effect on the Companys results of operations or financial
condition. The Company cannot assure that mineral recovery rates achieved in
small scale tests will be duplicated in large scale tests under on-site
conditions or in production scale.
Production Decisions made Without Identified Mineral
Reserves
There are no current estimates of mineral reserves at either
the Topia Mine or the Guanajuato Mine Complex. The Company made production
decisions to enter into production at the Topia Mine, the Guanajuato Mine and
the San Ignacio Mine without having completed final feasibility studies.
Accordingly, the Company did not base its production decisions on any
feasibility studies of mineral reserves demonstrating economic and technical
viability of the mines. As a result, there may be increased uncertainty and
risks of achieving any particular level of recovery of minerals from the
Companys mines or the costs of such recovery. As the Companys mines do not
have established reserves, the Company faces higher risks that anticipated rates
of production and production costs will be achieved, each of which risks could
have a material adverse impact on the Companys ability to continue to generate
anticipated revenues and cash flows to fund operations from and ultimately
achieve or maintain profitable operations.
Sufficiency of Current Capital and Ability to Obtain
Financing
The further exploitation, development and exploration of
mineral properties in which the Company holds interests or which the Company
acquires may depend upon its ability to obtain financing through equity
financing and/or debt financing, to enter into joint venture arrangements or to
obtain other means of financing. There is no assurance that the Company will be
successful in obtaining required financing as and when needed. Volatile precious
metals markets may make it difficult or impossible for the Company to obtain
financing on favourable terms, or at all.
As at June 30, 2016, the Company had $28.8 million of cash and
cash equivalents, and for the year ended December 31, 2015, the Company
generated positive cash flow from operating activities. Further, the Company
raised approximately USD29.9 million in gross proceeds from the July 2016 Bought
Deal Offering, which closed after June 30, 2016. While the Company considers
that it has sufficient capital to support its current operating requirements
based on its current capital resources and cash flows from ongoing operations,
there is a risk that commodity prices decline or other factors may result that
the Company will be unable to continue generating sufficient cash flows to
sustain operations or that it will be unable to fund planned capital projects,
including expansions and potential acquisitions. In addition, the Company may
require additional capital if the costs of its capital projects are materially
greater than the Companys projections. There is no assurance that the Company
will be able to obtain additional capital when required. Failure to obtain
additional financing on a timely basis may cause the Company to postpone
acquisitions, expansion, development and exploration plans, or even suspend
operations.
Mining and Mineral Exploration Have Substantial
Operational Risks
Mining and mineral exploration involves many risks, which even
a combination of experience, knowledge and careful evaluation may not be able to
overcome. These risks include but are not limited to:
|
major or catastrophic equipment failures;
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mine failures and slope failures;
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failure of tailings facilities;
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ground fall and cave-ins;
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A-28
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deleterious elements materializing in the mined
resources;
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environmental hazards;
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industrial accidents and explosions;
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encountering unusual or unexpected geological
formations;
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labour shortages or strikes;
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civil disobedience and protests; and
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natural phenomena such as inclement weather
conditions, floods, droughts, rock slides and earthquakes.
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These occurrences could result in environmental damage and
liabilities, work stoppages and delayed production, increased production costs,
damage to, or destruction of, mineral properties or production facilities,
personal injury or death, asset write-downs, monetary losses, loss of or
suspension of permits as a result of regulatory action, reputational damage and
other liabilities. The nature of these risks is such that liabilities could
exceed policy limits of the Companys insurance coverage, in which case the
Company could incur significant costs that could prevent profitable operations.
Political Risk and Government Regulations
The Companys mining, exploration and development activities
are focussed in Mexico and Peru and are subject to national and local laws and
regulations, governing prospects, taxes, labour standards, occupational health,
land use, environmental protection, mine safety and others which currently or in
the future may have a substantial adverse impact on the Company. In order to
comply with applicable laws, the Company may be required to make significant
capital or operating expenditures. Existing and possible future environmental
legislation, regulation and action could cause additional expense, capital
expenditures, restriction and delays in the activities of the Company, the
extent of which cannot be reasonably predicted. Violators may be required to
compensate those suffering loss or damage by reason of the Companys mining
activities and may be fined if convicted of an offence under such legislation.
Mining and exploration activities in Mexico and/or Peru may be
affected in varying degrees by political instabilities and government
regulations relating to the mining industry. Any changes in regulations or
shifts in political conditions are beyond the Companys control and may
adversely affect the business. Operations may also be affected to varying
degrees by government regulations with respect to restrictions on production,
price controls, export controls, income taxes, expropriation of property,
environmental legislation and mine safety. The status of Mexico and Peru as
developing countries may make it more difficult for the Company to obtain any
required financing for projects. The effect of all these factors cannot be
accurately predicted. Notwithstanding the progress achieved in improving Mexican
and Peruvian political institutions and revitalizing its economy, the present
administration, or any successor government, may not be able to sustain the
progress achieved. The Company does not carry political risk insurance.
Mexican Foreign Investment and Income Tax Laws
Under the Foreign Investment Law of Mexico, there is no
limitation on foreign capital participation in mining operations; however, the
applicable laws may change in a way which may adversely impact the Company and
its ability to repatriate profits. Under Mexican Income Tax Law, dividends are
subject to a withholding tax. Corporations with their tax residence in Mexico
are taxed on their worldwide income. Mexico levies a value added tax, known as
the IVA, which is an indirect tax levied on the value added to goods and
services, and it is imposed on corporations that carry out activities within
Mexican territory.
During 2013, the Mexico Senate passed tax reform legislation,
effective January 1, 2014. The tax reform includes an increase in the corporate
tax rate to 30% from 28%, the introduction of a special mining royalty of 7.5%
on the profits derived from the sale of minerals, and, the
introduction of an extraordinary mining royalty of 0.5% on the gross income
derived from the sale of gold, silver and platinum. These changes are expected
to have a material impact on the Companys future earnings and cash flows, and
possibly on future capital investment decisions.
A-29
Risks Associated with Obtaining and Complying with
Tailings and Other Permits
The Companys operations are subject to obtaining and
maintaining permits (including environmental permits) from appropriate
governmental authorities. There is no assurance that necessary permits will be
obtained or that delays will not occur in connection with obtaining all
necessary renewals of such permits for the existing operations, or additional
permits for any possible future changes to operations, or additional permits
associated with new legislation. Additionally, it is possible that previously
issued permits may become suspended for a variety of reasons, including through
government or court action. There can be no assurance that the Company will
continue to hold or obtain, if required to, all permits necessary to develop or
continue operating at any particular property.
The Company has been advised by CONAGUA, the Mexican federal
agency responsible for water administration, that the Company is required to
make applications for permits associated with the occupation and construction of
the tailings facility at the GMC, as discussed above under The Company and its
Business
Recent Developments.
At meetings held in February and April 2016, CONAGUA officials
identified no specific issues arising from the outstanding tailings permits and
requested that the Company complete its applications. The process of applying
for the tailings permits includes the preparation of technical information
regarding the construction of the tailings facility, including before the
Company`s operation of the facility. Subsequently, CONAGUA officials requested
additional technical information, which the Company is in the process of
collecting. The permit application process has taken several months, and is
expected to take several more months. The duration and success of efforts to
obtain the tailings permits are contingent upon many variables not within the
Companys control.
The Company cannot assure that the tailings permits will be
obtained or renewable on reasonable terms, or at all. Delays or a failure to
obtain such required permits, or the expiry, revocation or failure by the
Company to comply with the terms of any such permits, if obtained, would
adversely affect the Companys ability to continue operating the tailings
facility at the GMC, could result in a halt of mining operations at the GMC, or
to expand the tailings facility, each of which could adversely affect the
Companys results of operations.
The Company has also determined that it may require additional
water use and discharge permits for its operations at the GMC, particularly
during the dry season. The Company continues to evaluate whether such permits
are necessary. If such permits prove necessary, there can be no assurance that
the Company will be able to obtain such permits, which could adversely affect
the Companys operations.
Risks Associated with Topia Tailings Facility Expansion
The Topia tailings capacity requires expansion beyond the
present Phase I facility. Work underway includes fabrication of tails handling
equipment, civil engineering design, fieldwork, and permitting details.
This work is on a tight timetable and, although expected to meet the
timetable, presents a risk in continuing normal operations at Topia. If the
Company is not able to complete construction in the anticipated timeframe, the
Company may be not be able to use the tailings facility that is part of the
Phase II expansion before its existing Phase I capacity is exhausted. While the
Company is conducting geotechnical work to assess the current state and ability
to extend capacity at its existing Phase I facility, there is no assurance that
use of Phase I will continue uninterrupted. If extension of the existing Phase I
facility is not possible, or the Company is unable to complete construction and
commissioning of the Phase II facility before capacity at the Phase I facility
is exhausted, the Company may be required to curtail or suspend production at
Topia, which could adversely affect the Companys results of operations.
Further, if the environmental review discussed under The Company and its
Business Recent Developments identifies any non-compliance of the existing
facility, there is no assurance that Mexican regulatory authorities will agree
to any mitigation plan proposed by the Company
A-30
Factors beyond the Companys Control
There are a number of factors beyond the Companys control.
These factors include, but are not limited to, changes in government regulation,
political changes, high levels of volatility in metal prices, availability of
markets, availability of adequate transportation and smelting facilities,
availability of capital, environmental factors and catastrophic risks, and
amendments to existing taxes and royalties. These factors and their effects
cannot be accurately predicted.
Environmental and Health and Safety Risks
The Companys operations are subject to environmental
regulations promulgated by government agencies from time to time. There is no
assurance that environmental regulations will not change in a manner that could
have an adverse effect on the Companys financial condition, liquidity or
results of operations, and a breach of any such regulation may result in the
imposition of fines and penalties.
Environmental legislation is constantly expanding and evolving
in ways that impose stricter standards and more rigorous enforcement, with
higher fines and more severe penalties for non-compliance, and increased
scrutiny of proposed projects. There is an increased level of responsibility for
companies, and trends towards criminal liability for officers and directors for
violations of environmental laws, whether inadvertent or not. The cost of
compliance with changes in governmental regulations has the potential to reduce
the profitability of the Companys operations.
Exploration activities and/or the pursuit of commercial
production of the Companys mineral claims may be subject to an environmental
review process under environmental assessment legislation. Compliance with an
environmental review process may be costly and may delay commercial production.
Furthermore, there is the possibility that the Company would not be able to
proceed with commercial production upon completion of the environmental review
process if government authorities do not approve the proposed mine, or if the
costs of compliance with government regulation adversely affect the commercial
viability of the proposed mine.
The development and operation of a mine involves significant
risks to personnel from accidents or catastrophes such as fires, explosions or
collapses. These risks could result in damage or destruction of mineral
properties, production facilities, casualties, personal injury, environmental
damage, mining delays, increased production costs, monetary losses and legal
liability. The Company may not be able to obtain insurance to cover these risks
at economically feasible premiums. Insurance against certain environmental
risks, including potential liability for pollution and other hazards as a result
of the disposal of waste products occurring from production, is not generally
available to companies within the mining industry. The Company may be materially
adversely affected if it incurs losses related to any significant events that
are not covered by its insurance policies.
The Company has safety programs in place and continues to
pursue further improvements on an ongoing basis. Safety meetings with employees
and contractors are held on a regular basis to reinforce standards and
practices. However, there is no assurance that safety incidents will not be
experienced in the future, or that operations might not be materially affected
by their occurrence. Further, a safety incident could have an adverse effect on
the Companys financial condition, liquidity or results of operations, and may
result in the imposition of fines and penalties.
Risks Which Cannot Be Insured
The Company maintains appropriate insurance for liability and
property damage; however, the Company may be subject to liability for hazards
that cannot be insured against, which if such liabilities arise, could impact
profitability and result in a decline in the value of the Companys securities.
The Companys operations may involve the use of dangerous and hazardous
substances; however, extensive measures are taken to prevent discharges of
pollutants in the ground water and the environment. Although the Company will
maintain appropriate insurance for liability and property damage in connection
with its business, the Company may become subject to liability for hazards that
cannot be insured against or which the Company may elect not to insure itself
against due to high premium costs or other reasons. In the course of mining and
exploration of mineral properties, certain risks and, in particular, unexpected
or unusual geological operating conditions including rock bursts, cave-ins,
fires, flooding and earthquakes, may occur. It is not always possible to fully
insure against such risks and the Company may decide not to take out insurance
against such risks as a result of high premiums or other reasons.
A-31
Risk of Secure Title of Property Interest
There can be no assurance that title to any property interest
acquired by the Company or any of its subsidiaries is secured. Although the
Company has taken reasonable precautions to ensure that legal title to its
properties is properly documented, there can be no assurance that its property
interests may not be challenged or impugned. Such property interests may be
subject to prior unregistered agreements or transfers or other land claims, and
title may be affected by undetected defects and adverse laws and regulations.
In the jurisdictions in which the Company operates, legal
rights applicable to mining concessions are different and separate from legal
rights applicable to surface lands; accordingly, title holders of mining
concessions in such jurisdictions must agree with surface land owners on
compensation in respect of mining activities conducted on such land.
Unauthorized Mining
The mining industry in Mexico is subject to incursions by
illegal miners or lupios who gain unauthorized access to mines to steal ore
mainly by manual mining methods. The Company has experienced such incursions
including an incident in the first quarter of 2014 which resulted in both a
significant financial loss to the Company and a material impact to the Companys
operations. In addition to the risk of losses and disruptions, these illegal
miners pose a safety and security risk. The Company has taken security measures
at its sites to address this issue and ensure the safety and security of its
employees and contractors. These incursions and illegal mining activities can
potentially compromise underground structures, equipment and operations, which
may lead to production stoppages and impact the Companys ability to meet
production goals.
Commercialization Risk of Development and Exploration
Stage Properties and Ability to Acquire Additional Commercially Mineable Mineral
Rights
The Companys primary mineral properties, the Topia Mine and
Guanajuato Mine, have been in the production stage for more than nine years,
under the ownership of the Company, and have generated positive cash flow from
operating activities however, the commercial viability of these mines was not
established by a feasibility study or preliminary economic assessment.
Similarly, the San Ignacio Mine commenced production in 2014 and has generated
positive cash flow from operating activities; however, the commercial viability
of this mine was not established by a feasibility study or preliminary economic
assessment.
Mineral exploration involves a high degree of risk. There is no
assurance that commercially viable quantities of ore will be discovered at the
Companys exploration sites, or that its exploration and development projects
will be brought into commercial production.
Most exploration projects do not result in the discovery of
commercially mineable ore deposits and no assurance can be given that any
anticipated level of recovery of ore reserves will be realized or that any
identified mineral deposit will ever qualify as a commercially mineable (or
viable) ore body which can be legally and economically exploited. Estimates of
reserves, resources, mineral deposits and production costs can also be affected
by such factors as environmental permitting regulations and requirements,
weather, environmental factors, social dynamics in local communities, unforeseen
technical difficulties, unusual or unexpected geological formations and work
interruptions.
Material changes in commodity prices, mineral resources,
grades, dilution or recovery rates, or other project parameters may affect the
economic viability of any project. The Companys future growth and productivity
will depend, in part, on the ability to identify and acquire additional
commercially mineable mineral rights, and on the costs and results of continued
exploration and potential development programs. Mineral exploration and
development is highly speculative in nature and is frequently non-productive.
Substantial expenditures are required to:
A-32
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establish mineral resources through drilling
and metallurgical and other testing techniques;
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determine metal content and metallurgical
recovery processes to extract metal from the ore;
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evaluate the economic viability or feasibility;
and,
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construct, renovate, expand or modify mining
and processing facilities.
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In addition, if potentially economic mineralization is
discovered, it would take several years from the initial phases of exploration
until production is possible. During this time, the economic feasibility of
production may change. As a result of these uncertainties, there can be no
assurance that the Company will successfully acquire additional commercially
mineable (or viable) mineral rights.
Development projects usually have no operating history upon
which to base estimates of future cash flow. Estimates of Proven and Probable
Reserves, Measured and Indicated Resources, and Inferred Resources are, to a
large extent, based upon detailed geological and engineering analysis. Further,
Mineral Resources that are not Mineral Reserves do not have demonstrated
economic viability. At this time, none of the Companys properties have defined
ore-bodies with Mineral Reserves. Due to the uncertainty of Inferred Mineral
Resources, there is no assurance that Inferred Mineral Resources will be
upgraded to either Measured or Indicated Resources or to Proven or Probable
Mineral Reserves as a result of continued exploration.
Because mines have limited lives, the Company must continually
replace and expand its mineral resources as the Companys mines produce metals.
The life-of-mine estimates for the Companys mines may not be correct. The
ability of the Company to maintain or increase its annual production of metals
and the Companys future growth and productivity will be dependent in
significant part on its ability to identify and acquire additional commercially
mineable mineral rights, to bring new mines into production, to expand mineral
resources at existing mines, and on the costs and results of continued
exploration and potential development programs.
Fluctuations in the Price of Consumed Commodities
Prices and availability of commodities or inputs consumed or
used in connection with exploration, development and mining, such as natural
gas, diesel, oil, electricity, and re-agents fluctuate and affect the costs of
production at the Companys operations. These fluctuations can be unpredictable,
can occur over short periods of time and may have a materially adverse impact on
operating costs or the timing and costs of various projects.
Fluctuation in Foreign Currency Exchange Rates
The Company maintains bank
accounts in Canadian dollars, U.S. dollars and Mexican pesos. The Company earns
revenue in U.S. dollars while its costs are incurred in Canadian dollars, U.S.
dollars and Mexican pesos. An appreciation in the Mexican peso and/or U.S.
dollar against the Canadian dollar will increase operating and capital
expenditures as reported in Canadian dollars. A decrease in the U.S. dollar
against the Canadian dollar will reduce the Companys revenues as reported in
Canadian dollars and will also result in a loss to the Company to the extent
that the Company holds funds in U.S. dollars. Similarly, a decrease in the
Mexican peso against the Canadian dollar will result in a loss to the Company to
the extent that the Company holds funds in Mexican pesos. The Company has used
hedging instruments in managing its foreign exchange risk. Such instruments can
be subject to material gains and losses.
Dependency on Key Personnel
The Companys success and viability depends, in large part, on
its ability to attract and maintain qualified key management personnel.
Competition for such personnel is intense, and may impact the ability to attract
and retain such personnel in Canada and Mexico. The Companys growth and
viability has depended, and will continue to depend, on the efforts of key
management personnel such as Robert A. Archer, President, Chief Executive
Officer and director; Jim Zadra, Chief Financial Officer; Ali Soltani, Chief
Operating Officer; and Robert F. Brown, Vice President, Exploration. The loss of
any key management personnel may have a material adverse effect on the Company, its business and its financial position. The Company
has employment contracts with these employees but does not have key-man life
insurance. The Company provides these employees with long-term incentive
compensation which generally vest over a minimum of three years and is designed
to retain these employees and align their interests with those of the Companys
shareholders.
A-33
Conflicts of Interest of Directors and Officers
Certain of the Companys directors and officers may continue to
be involved in a wide range of business activities through their direct and
indirect participation in corporations, partnerships or joint arrangements, some
of which are in the same business as the Company. Situations may arise in
connection with potential acquisitions and investments where the other interests
of these directors and officers may conflict with the interests of the Company.
The directors and officers of the Company are required by law and the Companys
Code of Business Conduct & Ethics to act in the best interests of the
Company. They may have the same obligations to the other companies and entities
for which they act as directors or officers. The discharge by the directors and
officers of their obligations to the Company may result in a breach of their
obligations to these other companies and entities and, in certain circumstances,
this could expose the Company to liability to those companies and entities.
Similarly, the discharge by the directors and officers of their obligations to
these other companies and entities could result in a breach of their obligation
to act in the best interests of the Company. Such conflicting legal obligations
may expose the Company to liability to others and impair its ability to achieve
its business objectives.
Concentration of Customers
The Company sells refined concentrates containing silver, gold,
lead and zinc to metals traders and smelters. During the year ended December 31,
2015, three customers accounted for over 99% of the Companys revenues. The
Company believes that a limited number of customers will continue to represent a
significant portion of its total revenue. The Company does not consider itself
economically dependent upon any single customer or combination of customers due
to the existence of other potential metals traders or smelters capable of
purchasing the Companys supply. However, the Company could be subject to
limited smelter availability and capacity, it could face the risk of a potential
interruption of business from a third party beyond its control, or it may not be
able to maintain its current significant customers or secure significant new
customers on similar terms, any of which may have a material adverse effect on
the Companys business, financial condition, operating results and cash
flows.
Risks Associated with Transportation and Storage of
Concentrate
The concentrates produced by the Company have significant value
and are loaded onto road vehicles for transport to smelters in Mexico or to sea
ports for export to smelters in foreign markets, such as Europe and Asia, where
the metals are extracted. The geographic location of the Companys operating
mines in Mexico and trucking routes taken through the country to the smelters
and ports for delivery, give rise to risks including concentrate theft, road
blocks and terrorist attacks, losses caused by adverse weather conditions,
delays in delivery of shipments, and environmental liabilities in the event of
an accident or spill.
Theft of Concentrate
In addition, the Company may have significant concentrate
inventories at its facilities or on consignment at other warehouses awaiting
shipment. The Company has experienced theft of concentrates in the past and has
taken additional steps to secure its concentrate, whether in storage or in
transit. The Company has insurance coverage; however, recovery of the full
market value may not always be possible. Despite these risk mitigation measures,
there remains a continued risk that theft of concentrate may have a material
impact on the Companys financial results.
Illegal Activity in the Countries in which the Company
Operates could have an Adverse Effect on Operations
The Companys primary mineral activities are conducted in
Mexico and are exposed to various levels of political, economic and other risks
and uncertainties. These risks include but are not limited to, hostage taking,
murder, illegal mining, high rates of inflation, corruption of government
officials, blackmail, extortion and other illegal activity. Corruption of foreign officials could affect or delay
required permits, service levels by foreign officials, and protection by police
and other government services.
A-34
Mexico continues to undergo violent internal struggles between
the government and organized crime with drug-cartel relations and other unlawful
activities. The number of kidnappings, violence and threats of violence
throughout Mexico is of particular concern and appears to be on the rise. While
the Company takes measures to protect both personnel and property there is no
guarantee that such measures will provide an adequate level of protection for
the Company or its personnel. The occurrence of illegal activity against the
Company or its personnel cannot be accurately predicted, and could have an
adverse effect on the Companys operations.
In January of 2016 a small amount of explosives was stolen from
the GMC. While the Company has taken additional security measures, there is no
assurance that theft of explosives will not again occur in the future.
Explosives are highly regulated, and any theft or loss of explosives may be
subject to investigation by Mexican regulatory authorities. The Mexican
regulatory authorities may elect at their discretion to exercise administrative
action during the investigation and/or at its conclusion. Administrative action
could include a fine and, possibly, a suspension of the Companys explosives
permit during the investigation period or longer, which would negatively impact
the Companys operations.
Compliance with Anti-Corruption Laws
The Company's operations are governed by, and involve
interaction with, many levels of government in Mexico. The Company is subject to
various anti-corruption laws and regulations such as the Canadian Corruption of
Foreign Public Officials Act and the United States Foreign Corrupt Practices
Act, each of which prohibit a company and its employees or intermediaries from
bribing or making improper payments to foreign officials or other persons to
obtain or retain business or gain some other business advantage. The GMC and the
Topia properties are located in Mexico and, according to Transparency
International, Mexico is perceived as having fairly high levels of corruption
relative to Canada. The Company cannot predict the nature, scope or effect of
future regulatory requirements to which the Company's operations might be
subject or the manner in which existing laws might be administered or
interpreted.
Failure to comply with the applicable anti-corruption laws and
regulations could expose the Company and its senior management to civil or
criminal penalties or other sanctions, which could materially and adversely
affect the Company's business, financial condition and results of operations.
Likewise, any investigation of any alleged violations of the applicable
anti-corruption legislation by Canadian or foreign authorities could also have
an adverse impact on the Company's business, reputation, financial condition and
results of operations. Although the Company has adopted policies to mitigate
such risks, such measures may not be effective in ensuring that the Company, its
employees or third party agents will comply with such laws.
Acquisition Strategy
As part of Great Panthers business strategy, the Company has
made acquisitions in the past and continues to seek new acquisition
opportunities in the Americas. The opportunities sought by the Company are
operating mines, as well as exploration and development opportunities, with a
primary focus on silver and/or gold. As a result, the Company may, from time to
time, acquire additional mineral properties or securities of issuers which hold
mineral properties. In pursuit of such opportunities, the Company may fail to
select appropriate acquisition candidates or negotiate acceptable arrangements,
including arrangements to finance acquisitions or integrate the acquired
businesses and their personnel into the Company, and may fail to assess the
value, strengths, weaknesses, contingent and other liabilities and potential
profitability of acquisition candidates, or to achieve identified and
anticipated operating and financial synergies, and may incur unanticipated
costs, diversion of management attention from existing businesses, the potential
loss of the Companys key employees or of those of the acquired business. The
Company cannot assure that it can complete any acquisition or business
arrangement that it pursues, or is pursuing, on favourable terms, or that any
acquisitions or business arrangements completed will ultimately benefit the
Company. Acquisitions may involve a number of special risks, circumstances or
legal liabilities. These and other risks related to acquiring and operating
acquired properties and companies could have a material adverse effect on the
Companys results of operations and financial condition. Further, to acquire
properties and companies, the Company may be required to use available cash,
incur debt, issue additional securities, enter into off-take, royalty agreements or metal streaming agreements, or a combination of
any one or more of these. This could affect the Companys future flexibility and
ability to raise capital, to operate, explore and develop its properties and
could dilute existing shareholders and decrease the price of the common shares
of the Company. There may be no right for the Companys shareholders to evaluate
the merits or risks of any future acquisition undertaken by the Company, except
as required by applicable laws and regulations.
A-35
Community Relations and Social License to Operate
The Companys relationship with the communities in which it
operates is important to ensure the future success of its existing operations
and the construction and development of its projects. While the Companys
relationships with the communities in which it operates are believed to be
strong, there is an increasing level of public concern relating to the perceived
effect of mining activities on the environment and on communities impacted by
such activities. Certain non-governmental organizations (
NGOs
), some of
which oppose globalization and resource development, are often vocal critics of
the mining industry and its practices. Adverse publicity generated by such NGOs
or others related to extractive industries generally, or its operations
specifically, could have an adverse effect on the Companys reputation or
financial condition and may impact its relationship with the communities in
which it operates. While the Company believes that it operates in a socially
responsible manner, there is no guarantee that the Companys efforts in this
respect will mitigate this potential risk.
Volatility of Share Price
Trading prices of Great Panthers shares may fluctuate in
response to a number of factors, many of which are beyond the control of the
Company. In addition, the stock market in general, and the market for gold and
silver companies in particular, has experienced extreme price and volume
fluctuations that have often been unrelated or disproportionate to the operating
performance of such companies. These broad market and industry factors may
adversely affect the market price of the Companys shares, regardless of
operating performance.
In the past, following periods of volatility in the market
price of a companys securities, securities class-action litigation has been
known to be initiated. Such litigation, if instituted, could result in
substantial costs and a diversion of managements attention and resources.
Substantial Decommissioning and Reclamation Costs
The Company reviews and reassesses its reclamation obligations
at each of its mines based on updated mine life estimates, rehabilitation and
closure plans. As at June 30, 2016, the Company had recorded a provision for
$5.0 million on its Statement of Financial Position for the estimated present
value of future reclamation and remediation costs associated with the expected
retirement of its mineral properties, plant, and equipment. The present value of
these reclamation provisions may be subject to change based on managements
current and future estimates of ultimate decommissioning and reclamation costs,
changes in the remediation technology or changes to applicable laws, regulations
and interest rates. Such changes will be recorded in the accounts of the Company
as they occur.
The costs of performing the decommissioning and reclamation
must be funded by the Companys operations. These costs can be significant and
are subject to change. The Company cannot predict what level of decommissioning
and reclamation may be required in the future by regulators. If the Company is
required to comply with significant additional regulations or if the actual cost
of future decommissioning and reclamation is significantly higher than current
estimates, this could have an adverse impact on the Companys future cash flows,
earnings, results of operations and financial condition.
Officers and Directors Are Indemnified against All Costs,
Charges and Expenses Incurred by Them
The Companys articles contain provisions limiting the
liability of its officers and directors for all acts, receipts, neglects or
defaults of themselves and all of the other officers or directors for any other
loss, damage or expense incurred by the Company which happen in the execution of
the duties of such officers or directors, as do indemnification agreements
between the directors and officers and the Company. Such limitations on
liability may reduce the likelihood of derivative litigation against the
Companys officers and directors and may discourage or deter shareholders from suing the officers and directors based
upon breaches of their duties to the Company, though such an action, if
successful, might otherwise benefit the Company and its shareholders.
A-36
Enforcement of Legal Actions or Suits
It may be difficult to enforce suits against the Company or its
directors and officers. The Company is organized and governed under the laws of
under the
Business Corporations Act
of British Columbia, Canada and is
headquartered in this jurisdiction. Primarily all of the Companys directors and
officers are residents of Canada, and all of the Companys assets are located
outside of the United States. Consequently, it may be difficult for United
States investors to realize in the United States upon judgments of United States
courts predicated upon civil liabilities under the United States Securities
Exchange Act of 1934, as amended. There is substantial doubt whether an original
action could be brought successfully in Canada against any of such persons
predicated solely upon such civil liabilities.
Dilution of Shareholders Interests as a Result of
Issuance of Incentive Stock Options to Employees, Directors, Officers and
Consultants
The Company has granted, and in the future may grant, to
directors, officers, insiders, employees, and consultants, options to purchase
common shares as non-cash incentives to those persons. Such options have been,
and may in future be, granted at exercise prices equal to market prices, or at
prices as allowable under the policies of the TSX. The issuance of additional
shares will cause existing shareholders to experience dilution of their
ownership interests. As at June 30, 2016, there are outstanding share options
exercisable into 10,966,402 common shares which, if exercised, would represent
approximately 7% of the Companys issued and outstanding shares. If all of these
share options are exercised and issued, such issuance will also cause a
reduction in the proportionate ownership and voting power of all other
shareholders. The dilution may result in a decline in the market price of the
Companys shares.
Dilution of Shareholders Interests as a Result of
Issuances of Additional Shares
Depending on the outcome of the Companys exploration programs
and mining operations, the Company may issue additional shares to finance
additional programs and mining operations, acquire additional properties, or
engage in other acquisition activity. In the event that the Company is required
to issue additional shares or decides to enter into joint venture arrangements
with other parties in order to raise financing through the sale of equity
securities, investors interests in the Company will be diluted and investors
may suffer dilution in their net book value per share depending on the price at
which such securities are sold.
Trading of the Companys Shares May Be Restricted by the
SEC's Penny Stock Regulations Which May Limit a Stockholders Ability to Buy
and Sell the Shares
The U.S. Securities and Exchange Commission has adopted
regulations which generally define penny stock to be any equity security that
has a market price (as defined) less than US$5.00 per share or an exercise price
of less than US$5.00 per share, subject to certain exceptions. The Companys
securities are covered by the penny stock rules, which impose additional sales
practice requirements on broker-dealers who sell to persons other than
established customers and accredited investors (as defined). The penny stock
rules require a broker-dealer to provide very specific disclosure to a customer
who wishes to purchase a penny stock, prior to the purchase. These disclosure
requirements may have the effect of reducing the level of trading activity in
the secondary market for the stock that is subject to these penny stock rules.
Consequently, these penny stock rules may affect the ability of broker-dealers
to trade the Companys securities.
The Company Does Not Expect to Declare or Pay Any
Dividends
The Company has not declared or paid any dividends on its
common stock since inception, and does not anticipate paying any such dividends
for the foreseeable future.
A-37
Credit and Counterparty Risk
Credit risk is the risk of financial loss if a customer or
counterparty fails to meet its contractual obligations. The Companys credit
risk relates primarily to cash and cash equivalents, trade receivables in the
ordinary course of business, and value added tax refunds primarily due from the
Mexico taxation authorities, and other receivables. The Company sells and
receives payment upon delivery of its concentrates primarily through
international organizations. These are generally large and established
organizations with good credit ratings. Payments of receivables are scheduled,
routine and received within the specific terms of the contract. If a customer or
counterparty does not meet its contractual obligations, or if they become
insolvent, the Company may incur losses for products already shipped and be
forced to sell greater volumes of concentrate than intended in the spot market,
or there may be no market for the concentrates, and the Companys future
operating results may be materially adversely impacted as a result.
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to
meet its financial obligations as they arise. The Company has a planning and
budgeting process in place to help determine the funds required to support the
Companys normal operating requirements on an ongoing basis and its expansion
plans. As at June 30, 2016, the Company had net working capital (current assets
in excess of current liabilities) of $49.4 million and no long-term debt. The
July 2016 Bought Deal Offering for gross proceeds of US$29.9 million further
increased working capital. The Company believes it has sufficient cash to meet
operating requirements as they arise for at least the next 12 months, but there
can be no assurance that a sudden significant decrease in silver prices, or
unforeseen liability, or other matter affecting the operations of the business
might arise which will have a material impact on the Companys sufficiency of
cash reserves to meet operating requirements. In addition, a large acquisition
or significant change in capital plans could significantly change the cash and
working capital required by the Company.
Internal Control over Financial Reporting
The Company documented and tested its internal control
procedures during its most recent fiscal year in order to satisfy the
requirements of Section 404 of the Sarbanes-Oxley Act (
SOX
). SOX
requires an annual assessment by management and an independent assessment by the
Companys independent auditors of the effectiveness of the Companys internal
control over financial reporting. For the year ended December 31, 2015, the
Company qualified as an emerging growth company under the United States
Securities Exchange Act of 1934 and therefore is eligible to forego the
requirements for independent assessment of its internal control procedures under
SOX. The Company has undertaken an independent assessment of its internal
control procedures under SOX for the year ended December 31, 2015 by its
independent auditors, but to the extent it retains its emerging growth company
status, may not do so in future periods.
The Company may fail to achieve and maintain the adequacy of
its internal control over financial reporting as such standards are modified,
supplemented, or amended from time to time, and the Company may not be able to
ensure that it can conclude on an ongoing basis that it has effective internal
controls over financial reporting in accordance with Section 404 of SOX. The
Companys failure to satisfy the requirements of Section 404 of SOX on an
ongoing, timely basis could result in the loss of investor confidence in the
reliability of its financial statements, which in turn could harm the Companys
business and negatively impact the trading price of its common shares. In
addition, any failure to implement required new or improved controls, or
difficulties encountered in their implementation, could harm the Companys
operating results or cause it to fail to meet its reporting obligations. There
can be no assurance that the Company will be able to remediate material
weaknesses, if any, identified in future periods, or maintain all of the
controls necessary for continued compliance, and there can be no assurance that
the Company will be able to retain sufficient skilled finance and accounting
personnel, especially in light of the increased demand for such personnel among
publicly traded companies. Future acquisitions of companies may provide the
Company with challenges in implementing the required processes, procedures and
controls in its acquired operations. Acquired companies may not have disclosure
controls and procedures or internal control over financial reporting that are as
thorough or effective as those required by the securities laws currently
applicable to the Company.
No evaluation can provide complete assurance that the Companys
internal control over financial reporting will detect or uncover all failures of
persons within the Company to disclose material information otherwise required
to be reported. The effectiveness of the Companys controls and
procedures could also be limited by simple errors or faulty judgment. The
challenges involved in implementing appropriate internal controls over financial
reporting will likely increase with the Companys plans for ongoing development
of its business and this will require that the Company continues to improve its
internal controls over financial reporting. Although the Company intends to
devote substantial time and incur costs, as necessary, to ensure ongoing
compliance, the Company cannot be certain that it will be successful in
complying with Section 404 of SOX.
A-38
DOCUMENTS INCORPORATED BY REFERENCE
Information has been incorporated by reference in this
Prospectus from documents filed with securities commissions or similar
authorities in Canada, which have also been filed with, or furnished to, the
SEC.
Copies of the documents incorporated herein by reference may be
obtained on request without charge from the Chief Financial Officer of the
Company at Suite 1330 200 Granville Street, Vancouver, British Columbia V6C
1S4, telephone: (604) 608-1766. These documents are also available through the
internet on SEDAR (www.sedar.com) and on EDGAR (accessed at www.sec.gov).
The following documents of the Company, filed with the
securities regulatory authorities in the jurisdictions in Canada in which the
Company is a reporting issuer, are specifically incorporated by reference into,
and form an integral part of, this Prospectus:
1.
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the annual information form of the Company dated March
24, 2016 for the year ended December 31, 2015, filed March 30,
2016;
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2.
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the audited comparative annual consolidated financial
statements of the Company for the years ended December 31, 2015 and 2014
and the auditors report thereon, filed March 3, 2016;
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3.
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the managements discussion and analysis of financial
condition and results of operations of the Company for the year ended
December 31, 2015, filed March 3, 2016;
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4.
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the unaudited interim consolidated financial statements
of the Company for the three and six months ended June 30, 2016 and the
notes thereto, filed August 3, 2016;
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5.
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the managements discussion and analysis of financial
condition and results of operations of the Company for the three and six
months ended June 30, 2016, filed August 3, 2016;
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6.
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the information circular dated April 29, 2016 with
respect to the Companys annual general meeting of shareholders held on
June 9, 2016, filed May 6, 2016;
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7.
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the material change report of the Company dated April 26,
2016 filed in respect of the ATM Offering;
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8.
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the material change report of the Company dated May 11,
2016 filed in respect of the termination of the Option Agreement for the
Coricancha Property; and
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9.
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the material change report of the Company dated July 12,
2016 filed in respect of the closing of the July 2016 Bought Deal
Offering.
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All documents of the type referred to in section 11.1 of Form
44-101F1 of National Instrument 44-101Short Form Prospectus Distributions filed
by the Company with the securities commissions or similar regulatory authorities
in the applicable provinces of Canada after the date of this Prospectus, and
before the termination of the Offering, are deemed to be incorporated by
reference into this Prospectus.
Any document filed by the Company with the SEC and any Report
of Foreign Private Issuer on Form 6-K furnished to the SEC pursuant to the
United States Securities Exchange Act of 1934, as amended (the
U.S. Exchange
Act
), after the date of this Prospectus shall also be deemed to be
incorporated by reference into this Prospectus (in the case of any Report on
Form 6-K, if and to the extent provided in such document).
A-39
Any statement contained in this Prospectus or in a document
incorporated or deemed to be incorporated by reference in this Prospectus shall
be deemed to be modified or superseded for the purposes of this Prospectus to
the extent that a statement contained herein or in any subsequently filed
document that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. The modifying or superseding statement
need not state that it has modified or superseded a prior statement or include
any other information set forth in the document that contains the statement that
it modifies or supersedes. The making of such a modifying or superseding
statement shall not be deemed an admission for any purposes that the modified or
superseded statement, when made, constituted a misrepresentation, an untrue
statement of a material fact or an omission to state a material fact that is
required to be stated or that is necessary to make a statement not misleading in
light of the circumstances in which it was made. Any statement so modified or
superseded shall not constitute a part of this Prospectus, except as so modified
or superseded.
A Prospectus Supplement containing the specific terms of an
offering of Securities will be delivered to purchasers of such Securities
together with this Prospectus and will be deemed to be incorporated by reference
into this Prospectus as of the date of such Prospectus Supplement, but only for
the purposes of the offering of Securities covered by that Prospectus
Supplement.
Upon a new annual information form and related annual financial
statements being filed by us with, and where required, accepted by, the
applicable securities regulatory authority during the currency of this
Prospectus, the previous annual information form, the previous annual financial
statements and all interim financial statements, material change reports and
information circulars and all Prospectus Supplements filed prior to the
commencement of the Companys financial year in which a new annual information
form is filed shall be deemed no longer to be incorporated into this Prospectus
for purposes of future offers and sales of Securities hereunder.
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT
The following documents have been or will be filed with the SEC
as part of the registration statement of which this Prospectus forms a part: (i)
the documents set out under the heading Documents Incorporated by Reference;
(ii) the consents of the Companys auditor, legal counsel and technical report
authors; and (iii) the powers of attorney from the directors and certain
officers of the Company. A copy of the form of warrant indenture or subscription
receipt agreement, as applicable, will be filed by post-effective amendment or
by incorporation by reference to documents filed or furnished with the SEC under
the U.S. Exchange Act.
ADDITIONAL INFORMATION
The Company has filed with the SEC a registration statement on
Form F-10 relating to the Securities. This Prospectus, which constitutes a part
of the registration statement, does not contain all of the information contained
in the registration statement, certain items of which are contained in the
exhibits to the registration statement as permitted by the rules and regulations
of the SEC. Statements included or incorporated by reference in this Prospectus
about the contents of any contract, agreement or other documents referred to are
not necessarily complete, and in each instance you should refer to the exhibits
for a more complete description of the matter involved. Each such statement is
qualified in its entirety by such reference.
The Company is subject to the information requirements of the
U.S. Exchange Act and applicable Canadian securities legislation and, in
accordance therewith, file reports and other information with the SEC and with
the securities regulators in Canada. Under MJDS adopted by the United States and
Canada, documents and other information that the Company files with the SEC may
be prepared in accordance with the disclosure requirements of Canada, which are
different from those of the United States. As a foreign private issuer within
the meaning of rules made under the U.S. Exchange Act, the Company is exempt
from the rules under the U.S. Exchange Act prescribing the furnishing and
content of proxy statements, and the Companys officers, directors and principal
shareholders are exempt from the reporting and short-swing profit recovery
provisions contained in Section 16 of the U.S. Exchange Act. In addition, the
Company is not required to publish financial statements as promptly as United
States companies.
A-40
You may read any document that the Company has filed with the
SEC at the SECs public reference room in Washington, D.C. You may also obtain
copies of those documents from the public reference room of the SEC at 100 F
Street, N.E., Washington, D.C. 20549 by paying a fee. You should call the SEC at
1-800-SEC-0330 or access its website at www.sec.gov for further information
about the public reference rooms. You may read and download some of the
documents that the Company has filed with the SECs EDGAR system at www.sec.gov.
You may read and download any public document that the Company has filed with
the Canadian securities regulatory authorities under the Companys profile on
the SEDAR website at www.sedar.com.
ENFORCEABILITY OF CIVIL LIABILITIES AGAINST NON-U.S. PERSONS
The Company is a corporation existing under the
Business
Corporations Act
(British Columbia). Most of the Companys directors and
officers, and some or all of the experts named in this Prospectus, are residents
of Canada or otherwise reside outside the United States, and all or a
substantial portion of their assets, and substantially all of the Companys
assets, are located outside the United States. The Company has appointed an
agent for service of process in the United States, but it may be difficult for
holders of Common Shares who reside in the United States to effect service
within the United States upon those directors, officers and experts who are not
residents of the United States. It may also be difficult for holders of Common
Shares who reside in the United States to realize in the United States upon
judgments of courts of the United States predicated upon the Companys civil
liability and the civil liability of its directors, officers and experts under
the United States federal securities laws.
The Company filed with the SEC, concurrently with its
registration statement on Form F-10 of which this Prospectus is a part, an
appointment of agent for service of process on Form F-X. Under the Form F-X, the
Company appointed Corporation Service Company as its agent for service of
process in the United States in connection with any investigation or
administrative proceeding conducted by the SEC, and any civil suit or action
brought against or involving the Company in a United States court arising out of
or related to or concerning the offering of the Securities under this
Prospectus.
II- 1
PART II
INFORMATION NOT REQUIRED TO BE DELIVERED TO
OFFEREES OR
PURCHASERS
Indemnification of Directors and Officers.
The Registrant is subject to the provisions of the
Business
Corporations Act
(British Columbia) (the
Act
).
Under Section 160 of the Act, an individual who:
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is or was a director or officer of the
Registrant,
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is or was a director or officer of another corporation
(i) at a time when the corporation is or was an affiliate of the
Registrant, or (ii) at the request of the Registrant, or
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at the request of the Registrant, is or was, or holds or
held a position equivalent to that of, a director or officer of a
partnership, trust, joint venture or other unincorporated entity,
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and includes, the heirs and personal or other legal
representatives of that individual (collectively, an
eligible party
),
may be indemnified by the Registrant against a judgment, penalty or fine awarded
or imposed in, or an amount paid in settlement of, a proceeding (an
eligible
penalty
) in which, by reason of the eligible party being or having been a
director or officer of, or holding or having held a position equivalent to that
of a director or officer of, the Registrant or an associated corporation, (a)
the eligible party is or may be joined as a party, or (b) the eligible party is
or may be liable for or in respect of a judgment, penalty or fine in, or
expenses related to, the proceeding (
eligible proceeding
) to which the
eligible party is or may be liable. Section 160 of the Act also permits the
Registrant to pay the expenses actually and reasonably incurred by an eligible
party after the final disposition of the eligible proceeding.
Under Section 161 of the Act, the Registrant must, after the
final disposition of an eligible proceeding, pay the expenses actually and
reasonably incurred by the eligible party in respect of that proceeding if the
eligible party (a) has not been reimbursed for those expenses, and (b) is wholly
successful, on the merits or otherwise, in the outcome of the proceeding or is
substantially successful on the merits in the outcome of the proceeding.
Under Section 162 of the Act, the Registrant may pay, as they
are incurred in advance of the final disposition of an eligible proceeding, the
expenses actually and reasonably incurred by an eligible party in respect of
that proceeding; provided the Registrant must not make such payments unless it
first receives from the eligible party a written undertaking that, if it is
ultimately determined that the payment of expenses is prohibited by Section 163,
the eligible party will repay the amounts advanced.
Under Section 163 of the Act, the Registrant must not indemnify
an eligible party against eligible penalties to which the eligible party is or
may be liable or pay the expenses of an eligible party in respect of that
proceeding under Sections 160, 161 or 162 of the Act, as the case may be, if any
of the following circumstances apply:
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if the indemnity or payment is made under an earlier
agreement to indemnify or pay expenses and, at the time that the agreement
to indemnify or pay expenses was made, the Registrant was prohibited from
giving the indemnity or paying the expenses by its memorandum or articles;
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if the indemnity or payment is made otherwise than under
an earlier agreement to indemnify or pay expenses and, at the time that
the indemnity or payment is made, the Registrant is prohibited from giving
the indemnity or paying the expenses by its memorandum or articles;
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II- 2
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if, in relation to the subject matter of the eligible
proceeding, the eligible party did not act honestly and in good faith with
a view to the best interests of the Registrant or the associated
corporation, as the case may be; or
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in the case of an eligible proceeding other than a civil
proceeding, if the eligible party did not have reasonable grounds for
believing that the eligible partys conduct in respect of which the
proceeding was brought was lawful.
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If an eligible proceeding is brought against an eligible party
by or on behalf of the Registrant or by or on behalf of an associated
corporation, the Registrant must not either indemnify the eligible party against
eligible penalties to which the eligible party is or may be liable in respect of
the proceeding, or, after the final disposition of an eligible proceeding, pay
the expenses of the eligible party under Sections 160, 161 or 162 of the Act in
respect of the proceeding.
Under Section 164 of the Act, the Supreme Court of British
Columbia may, on application of the Registrant or an eligible party, order the
Registrant to indemnify the eligible party or to pay the eligible partys
expenses, despite Sections 160 to 163 of the Act.
The articles of a company may affect its power or obligation to
give an indemnity or pay expenses. As indicated above, this is subject to the
overriding power of the Supreme Court of British Columbia under Section 164 of
the Act.
Under the articles of the Registrant, subject to the provisions
of the Act, the Registrant must indemnify a director or former director of the
Registrant and the heirs and legal personal representatives of all such persons
against all eligible penalties to which such person is or may be liable, and the
Registrant must, after the final disposition of an eligible proceeding, pay the
expenses actually and reasonably incurred by such person in respect of that
proceeding. Each director and officer is deemed to have contracted with the
Registrant on the terms of the indemnity contained in the Registrants articles.
The failure of a director or officer of the Registrant to comply with the Act or
the articles of the Registrant does not invalidate any indemnity to which such
person is entitled under the Registrants articles.
Under the articles of the Registrant, the Registrant may
purchase and maintain insurance for the benefit of any eligible party against
any liability incurred by such party as a director, officer or person who holds
or held an equivalent position.
Underwriters, dealers or agents who participate in a
distribution of securities registered hereunder may be entitled under agreements
to be entered into with the Registrant to indemnification by the Registrant
against certain liabilities, including liabilities under the United States
Securities Act of 1933, as amended, and applicable Canadian securities
legislation, or to contribution with respect to payments which such
underwriters, dealers or agents may be required to make in respect thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the U.S. Securities Act) may be permitted
to directors, officers or persons controlling the Registrant pursuant to the
foregoing provisions, the Registrant has been informed that in the opinion of
the U.S. Securities and Exchange Commission such indemnification is against
public policy as expressed in the U.S. Securities Act and is therefore
unenforceable.
II- 3
EXHIBITS
Exhibit No.
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Description
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4.1
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Annual Information Form of the
Registrant for the year ended December 31, 2015, dated as of March 24,
2016 (incorporated by reference to the Registrants Annual Report on Form
40-F for the fiscal year ended December 31, 2015, filed with the
Commission on March 30, 2016)
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4.2
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Audited financial statements of
the Registrant and the notes thereto for the fiscal years ended December
31, 2015 and 2014 together with the report of the auditors thereon
(incorporated by reference to the Registrants Annual Report on Form 40-F
for the fiscal year ended December 31, 2015, filed with the Commission on
March 30, 2016)
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4.3
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Management's discussion and
analysis of the Registrant for the year ended December 31, 2015
(incorporated by reference to the Registrants Annual Report on Form 40-F
for the fiscal year ended December 31, 2015, filed with the Commission on
March 30, 2016)
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4.4
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Unaudited condensed interim
consolidated financial statements of the Registrant for the three and six
months ended June 30, 2016 and the notes thereto (incorporated by
reference to the Registrants Form 6-K furnished to the Commission on
August 4, 2016)
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4.5
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Managements discussion and
analysis of financial condition and results of operations of the
Registrant for the three and six months ended June 30, 2016 (incorporated
by reference to the Registrants Form 6-K furnished to the Commission on
August 4, 2016)
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4.6
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Management information circular
dated April 29, 2016 with respect to the Registrants annual meeting of
shareholders held on June 9, 2016 (incorporated by reference to the
Registrants Form 6-K furnished to the Commission on May 4, 2016)
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4.7
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Material change report of the
Registrant dated April 26, 2016 filed in respect of the Companys
at-the-market offering of common shares (incorporated by reference to
the Registrants Form 6- K furnished to the Commission on April 27, 2016)
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4.8
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Material change report of the
Registrant dated May 11, 2016 filed in respect of the termination of the
option agreement for the Coricancha Property (incorporated by reference to
the Registrants Form 6-K furnished to the Commission on May 12, 2016)
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4.9
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Material change report of the
Registrant dated July 12, 2016 filed in respect of the closing of the of
the Companys bought deal offering of units (incorporated by reference to
the Registrants Form 6-K furnished to the Commission on October 20, 2016)
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5.1
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Consent of KPMG LLP
(1)
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5.2
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Consent of McMillan LLP
(1)
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5.3
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Consent of Robert Brown, P.
Eng.
(1)
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6.1
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Powers of Attorney (included on
signature pages hereto)
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(1)
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Filed as an exhibit to this registration statement on
Form F-10.
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III- 1
PART III
UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
Item 1. Undertaking
.
The Registrant undertakes to make available, in person or by
telephone, representatives to respond to inquiries made by the Commission staff,
and to furnish promptly, when requested to do so by the Commission staff,
information relating to the securities registered pursuant to this Form F-10 or
to transactions in said securities.
Item 2. Consent to Service of Process.
(a)
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Concurrently with the filing of this Registration
Statement on Form F-10, the Registrant is filing with the Commission a
written irrevocable consent and power of attorney on Form F-X.
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(b)
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Any change to the name or address of the agent for
service of the Registrant will be communicated promptly to the Commission
by amendment to Form F-X referencing the file number of this Registration
Statement.
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III- 2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form F-10 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Vancouver, Province of British Columbia, Country
of Canada, on October 20, 2016.
GREAT PANTHER SILVER LIMITED
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By:
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/s/ Robert Archer
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Name:
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Robert Archer
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Title:
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President and Chief Executive Officer
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POWERS OF ATTORNEY
Each person whose signature appears below constitutes and
appoints Robert Archer and Jim Zadra, and each of them, either of whom may act
without the joinder of the other, as his true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any or all amendments
(including post-effective amendments) to this Registration Statement and
registration statements filed pursuant to Rule 429 under the U.S. Securities
Act, and to file the same, with all exhibits thereto and other documents in
connection therewith, with the U.S. Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, each acting alone, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or their substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the U.S. Securities Act, this
Registration Statement has been signed by or on behalf of the following persons
in the capacities indicated on October 20, 2016.
Signature
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Title
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/s/ Robert A. Archer
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President and Chief Executive Officer
and
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Robert A. Archer
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Director
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/s/ Jim A. Zadra
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Chief Financial Officer and Corporate
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Jim A. Zadra
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Secretary
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/s/ R.W. (Bob) Garnett
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R. W. (Bob) Garnett
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Director and Chairman
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III- 3
/s/ Kenneth W. Major
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Kenneth W. Major
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Director
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/s/ John Jennings
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John Jennings
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Director
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/s/ W.J. (James) Mullin
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W.J. (James) Mullin
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Director
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/s/ Jeffrey R. Mason
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Jeffrey R. Mason
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Director
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III- 4
AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of Section 6(a) of the Securities
Act of 1933, as amended, the undersigned has signed this Registration Statement,
solely in its capacity as the duly authorized representative of the Registrant
in the United States, on October 20, 2016.
By:
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PUGLISI & ASSOCIATES
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/s/ Donald J. Puglisi
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Name:
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Donald J. Puglisi
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Title:
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Managing Director
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III- 5
EXHIBIT INDEX
Exhibit No.
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Description
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4.1
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Annual Information Form of the Registrant for the year
ended December 31, 2015, dated as of March 24, 2016 (incorporated by
reference to the Registrants Annual Report on Form 40-F for the fiscal
year ended December 31, 2015, filed with the Commission on March 30, 2016)
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4.2
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Audited financial statements of the Registrant and the
notes thereto for the fiscal years ended December 31, 2015 and 2014
together with the report of the auditors thereon (incorporated by
reference to the Registrants Annual Report on Form 40-F for the fiscal
year ended December 31, 2015, filed with the Commission on March 30, 2016)
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4.3
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Management's discussion and analysis of the Registrant
for the year ended December 31, 2015 (incorporated by reference to the
Registrants Annual Report on Form 40-F for the fiscal year ended December
31, 2015, filed with the Commission on March 30, 2016)
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4.4
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Unaudited condensed interim consolidated financial
statements of the Registrant for the three and six months ended June 30,
2016 and the notes thereto (incorporated by reference to the Registrants
Form 6-K furnished to the Commission on August 4, 2016)
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4.5
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Managements discussion and analysis of financial
condition and results of operations of the Registrant for the three and
six months ended June 30, 2016 (incorporated by reference to the
Registrants Form 6-K furnished to the Commission on August 4, 2016)
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4.6
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Management information circular dated April 29, 2016 with
respect to the Registrants annual meeting of shareholders held on June 9,
2016 (incorporated by reference to the Registrants Form 6-K furnished to
the Commission on May 4, 2016)
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4.7
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Material change report of the Registrant dated April 26,
2016 filed in respect of the Companys at-the-market offering of common
shares (incorporated by reference to the Registrants Form 6-K furnished
to the Commission on April 27, 2016)
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4.8
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Material change report of the Registrant dated May 11,
2016 filed in respect of the termination of the option agreement for the
Coricancha Property (incorporated by reference to the Registrants Form
6-K furnished to the Commission on May 12, 2016)
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4.9
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Material change report of the Registrant dated July 12,
2016 filed in respect of the closing of the of the Companys bought deal
offering of units (incorporated by reference to the Registrants Form 6-K
furnished to the Commission on October 20, 2016)
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5.1
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Consent of KPMG LLP
(1)
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5.2
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Consent of McMillan LLP
(1)
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5.3
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Consent of Robert Brown, P. Eng.
(1)
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6.1
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Powers of Attorney (included on signature pages hereto)
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(1)
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Filed as an exhibit to this registration statement on
Form F-10.
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