Vancouver’s Kincora announces $4 million private placement and debt conversion

Kincora Copper Limited is a mining exploration and development company, based in Vancouver—their key asset, the Bronze Fox copper-gold deposit is located in southeast Mongolia. — Photo courtesy Kincora Copper Limited

VANCOUVER, June 1, 2016 /CNW/ - Kincora Copper Limited (the "Company", "Kincora") (TSXV:KCC) today announces a proposed non-brokered private placement of up to $2 million through the issuance of up to 5,333,333 shares at a price of $0.375 on a post-consolidated basis (proposed 10 old for 1 new share consolidation), following the May 25, 2016 agreement, providing for the merger of two Kincora subsidiaries with Ibex Land Mongolia LLC and Ibex Mongolia LLC ("Ibex"), entities indirectly controlled by High Power Exploration Inc ("HPX").

Concurrent with the Ibex mergers and the proposed $2 million non-brokered price placement, Kincora has received commitment from its largest shareholder, Origo Partners Plc ("Origo"), to convert the $2,000,000 convertible note outstanding (net of escrowed funds in the amount of $500,000) into equity on the same terms as the private placement, resulting in Kincora having a debt free balance sheet and funds raised from the non-brokered private placement being used to advance the Company's exploration and consolidation strategy in the Southern Gobi copper-gold belt.

Firm commitments are in place to ensure the financial requirements of the Origo loan note conversion into equity alongside the private placement and mergers with Ibex are satisfied.

• Intention to raise up to $2 million via non-brokered private placement at a price of $0.375 on a post consolidated basis ($0.0375/sh pre-consolidation), a 25% discount to the last closing price.
• Origo has agreed to convert the $2 million principal and accrued interest outstanding under the net convertible note (principal is net of $500,000 escrowed funds released to Origo), on the same terms as the private placement, resulting in Kincora having a debt free balance sheet.
• As a result of the Ibex transaction, HPX will become a shareholder of Kincora and provide support via provision of its Typhoon geophysical technology and proprietary technical services.
• Kincora management and board are providing financial support to this offering, directors being compensated in stock only, with senior management salaries being over a third in scrip.
• Firm commitments are in place to ensure the financial requirements of the Origo loan note conversion into equity alongside the private placement and mergers with Ibex are satisfied.
• Strong interest in the Ibex transaction and Kincora corporate strategy already indicated from existing and new groups.
• Renewed interest in Mongolia as an investment jurisdiction following the notice to proceed for Oyu Tolgoi Stage 2 development and recent re-ratings of other listed metal exploration plays.

Commenting on today's announcement, Sam Spring, President and CEO of Kincora, said: "Concurrent with the Ibex merger, having received commitment from Kincora's largest shareholder Origo to convert the convertible note outstanding into equity alongside and on the same terms of the proposed non-brokered price placement, the Company is pleased to announce an offering open to all existing shareholders in qualifying juridictions and new groups. The raising is being supported by key insiders and will result in a restructured and recapitalized Kincora, creating a favorable corporate platform to support our proposed consolidation and exploration strategy in a belt that supports the potential for the next globally significant copper/gold discoveries, at a favorable point of the Mongolian and global commodity cycles.

There has been strong interest already indicated in the Ibex transaction and Kincora corporate strategy from existing and new groups, with sufficient initial firm commitments to ensure the financing requirements of the Ibex deal and Origo loan note conversion are both satisfied. The transactions will result in a consolidated landholding of over 1,500km2, the majority of the prospective exploration licenses which dominate a key geological trend between and along strike from the Oyu Tolgoi and Tsagaan Suvarga copper mines, supporting an industry leading proposition of copper/gold and gold targets, Kincora having a debt free balance sheet and new funding being put to work in the ground".

The private placement is subject to TSX Venture Exchange approval and all securities are subject to a four-month hold period. Finder's fees may be payable in connection with the private placement, in accordance with the policies of the TSX Venture Exchange.

Concurrent with the Ibex mergers and the proposed non-brokered price placement, Kincora has received commitment from its largest shareholder, Origo to convert the $2,000,000 convertible note principal and interest outstanding (net of $500,000 escrowed funds to be paid to Origo) into equity, subject to an equity financing of not less than $500,000, with conversion being on the same terms as such equity financing.

The loan note is due and payable on October 21, 2016 with interest at 8.7% per annum, payable on maturity in cash or shares of Kincora, at Origo's election. Prior to the conversion of the loan note and its associated interest, Origo holds 85,883,786 common shares of Kincora.

As announced on May 25, 2016, Kincora has entered into a definitive Share Exchange Agreement with High Power Ventures Inc. ("HPV"), a private company controlled by HPX, whereby HPV's wholly owned Mongolian subsidiaries, Ibex Land Mongolia LLC and Ibex Mongolia LLC will merge with Kincora's respective land holding and services subsidiaries (the "Merger").

In connection with the Merger, Kincora will issue to or at the direction of HPV on a pre-consolidated basis a total of 58,950,000 shares (the "Shares") of Kincora and 29,475,000 share purchase warrants (the "Warrants") each Warrant entitling the holder to acquire a share of Kincora at a price equal to 1.8 times the price per security of the next minimum $500,000 private placement of Kincora, with certain acceleration provisions for warrant conversion. The number of Shares and Warrants are subject to adjustment in certain circumstances.

The Merger will result in HPX, Goviex Uranium Inc. and HPV minorities becoming shareholders of Kincora. HPV will have certain rights to maintain their ownership percentages by participating in further capital raisings and, at a threshold of share ownership, have the right to a board seat. The Merger is subject to a certain Mongolian processes and approvals, and to the acceptance of the TSX Venture Exchange.

HPX is a privately owned metals-focused exploration company deploying proprietary geophysical technologies to rapidly evaluate buried targets. HPX has a highly experienced board and management team and is indirectly controlled by international financier and mining entrepreneur Robert Friedland. More information about HPX can be found at http://www.hpxploration.com

Kincora Copper Limited. is a junior resource company engaged in the acquisition, exploration and development of mineral properties, with a focus on copper-gold projects in Mongolia. For further information on the Company, please visit www.kincoracopper.com