Vancouver, British Columbia – June 23, 2017 – Discovery Harbour Resources Corp. (TSXV:DHR) (“Discovery Harbour” or the “Company”) announces that it has agreed to amend (the “Amendment”) the unsecured convertible debenture (the “Debenture”) in the principal amount of $100,000 issued to Richard Gilliam, a director and significant shareholder of the Company as previously announced in its News Releases of March 24, 2017 and April 7, 2017. The Company and Richard Gilliam have agreed to amend the conversion terms of the Debenture from convertible into common shares of the Company to convertible into units (each, a “Unit”) of the Company at the greater of $0.05 per Unit or the subscription price for each share in the most recently completed private placement of the Company during the term of the Debenture, subject to adjustment. Each Unit will consist of one common share (each, a “Share”) and one non‐transferable share purchase warrant (each, a “Warrant”). Each Warrant will be exercisable into one Share at an exercise price equal to the greater of $0.075 per Share or the warrant exercise price, if any, for each warrant issued in the most recently completed private placement of the Company during the term of the Debenture, subject to adjustment, for a period of one year from April 7, 2017, with an acceleration clause that if the closing share trading price meets or exceeds $0.20 for 10 consecutive trading days then notice can be given that the Warrants must be exercised within 30 days from notice. All other terms of the Debenture shall remain the same. The Amendment is subject to the approval of the TSX Venture Exchange (the “Exchange”).
Richard Gilliam is considered a “related party” within the meaning of Multilateral Instrument 61‐101 Protection of Minority Security Holders in Special Transactions (“MI 61‐101”) and the Amendment is therefore considered to be a “related party transaction” within the meaning of MI 61‐101. The Amendment, however, is exempt from the valuation requirement and from the minority shareholder approval requirements of MI 61‐101 by virtue of the exemptions contained in sections 5.5(a) and 5.7(1) (a) of MI 61‐ 101 in that the fair market value of the consideration of the Debenture issued to the related party did not exceed 25% of the Company’s market capitalization. This News Release is being filed less than 21 days before the Amendment being approved because the Company wishes to complete the Amendment in a timely manner.
None of the securities issued in connection with the Amendment will be registered under the United States Securities Act of 1933, as amended (the “1933 Act”), and none of them may be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the 1933 Act. This news release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there by any sale of the securities in any state where such offer, solicitation, or sale would be unlawful.
The Company also announces that it intends to proceed with a consolidation of its outstanding common Shares on the basis of three (3) pre‐consolidation Shares for one (1) post‐consolidation Share (the “Consolidation”)
Currently, a total of 53,393,513 Shares are issued and outstanding. Accordingly, if the Consolidation is completed, a total of 17,797,838 Shares would be issued and outstanding, subject to adjustments for rounding and assuming there are no other changes in the issued capital of the Company. There is currently no maximum number of authorized Shares. There is no name change in conjunction with the Consolidation. The Consolidation is subject to the approval of the Exchange.
ON BEHALF OF THE BOARD OF DISCOVERY HARBOUR RESOURCES CORP.
Mark Fields, P.Geo., Interim President, CEO and Director
Disclaimer for Forward‐Looking Information
This news release contains forward‐looking information that involve various risks and uncertainties regarding future events. Such forward‐looking information can include without limitation statements based on current expectations involving a number of risks and uncertainties and are not guarantees of future performance of Discovery Harbour, such as statements that Discovery Harbour intends to amend the terms of the Debenture, complete the Consolidation and the anticipated post‐ Consolidation capitalization. There are numerous risks and uncertainties that could cause actual results and Discovery Harbour’s plans and objectives to differ materially from those expressed in the forward‐looking information, including: (i) adverse market conditions; or (ii) the Exchange not approving the Amendment and the Consolidation. Actual results and future events could differ materially from those anticipated in such information. These and all subsequent written and oral forward‐looking information are based on estimates and opinions of management on the dates they are made and are expressly qualified in their entirety by this notice. Except as required by law, Discovery Harbour does not intend to update these forward‐looking statements. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.