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Karus Gold Spinout

Download PDF of Investor FAQ

On January 25, 2021, KORE Mining Ltd. (“KORE”) completed the spinout of its BC gold exploration assets (“Spin Out”) into a pure-play exploration company called Karus Gold Corp. (“Karus” or “Karus Gold”).

This FAQ should be read in conjunction with the January 25, 2021 news release.

Please contact us at 1-888-455-7620 or at [email protected] with any additional questions.

General

Will my Karus shares be a “qualified investment” for my RRSP?

Karus shares will be a “qualified investment” for a trust governed by an RRSP, an RRIF, a deferred profit-sharing plan, an RESP, an RDSP or a TFSA as those terms are defined in the Canadian Tax Act as long as the Karus shares are listed on a designated stock exchange within its first taxation year. While Karus plans to list on the TSX-V within the first half of 2021, there can be no assurance that Karus shares will be listed on a designated stock exchange in time for the shares to become a qualified investment.

Are my KORE shares impacted?  What is a new KORE share?  Do I need to exchange my KORE share for a new KORE share? 

Nothing has changed with respect to your ownership of KORE. You own the same number of common shares in KORE as at January 22, 2021. KORE continues to trade as TSX-V: KORE and OTCQX: KOREF.  

The issuance of the new KORE shares is simply a step in the Arrangement to transfer the assets to Karus. If you are a REGISTERED Shareholder of KORE, you will have to complete the Letter of Transmittal to receive your new KORE shares and Karus shares. The Letter of Transmittal is included in your mailing package and available on SEDAR under KORE’s profile and on KORE’s website. Also see “How do I get my Karus shares” below for more information.

If you hold your KORE shares through a broker or other intermediary, you do not have to do anything.

How many Karus Gold Shares will I own after the Spin-out?

For every KORE share registered to a shareholder as at January 22, 2021, KORE shareholders will continue to hold the same number of KORE shares and will also receive one-half a common share of Karus for every share of KORE owned.

For example, if you own 1,000 KORE shares on January 22, 2021, you will own 1,000 KORE shares and also own 500 Karus shares on January 25, 2021.

Do I have to subscribe to the anticipated Rights Offering?  What is a Rights Offering?

Karus is raising capital by way of a Rights Offering that gives all Karus shareholders the opportunity to participate in the initial financing of Karus.  Participation in the Rights Offering will be optional. More information on the Rights Offering can be found HERE and in our February 1, 2021 news release.

Why isn’t Karus Gold going to be listed on a stock exchange right away?

Karus shareholders will benefit from drill results from FG Gold and Gold Creek expected in Q1 2021. In addition, keeping Karus unlisted in the near-term will reduce costs and be strategic in the timing of bringing Karus back to public markets.

Currently there will be no ticker symbol or public market to sell Karus shares. There are plans to list on the TSX-V in the first half of 2021.

Karus Gold will be a “reporting issuer”, which means what?

Karus will adhere to all of the continuous disclosure rules required by the Canadian Securities Administrators – releasing interim and annual financial statements and the accompanying MD&A, press releasing all material news, and filing its public documents on SEDAR at www.sedar.com

How do I get my Karus shares if I have not received them yet?

If you are in Canada and hold your KORE shares electronically in an online account, you won’t need to do anything. The conversion happened automatically effective January 25, 2021, in some cases it will take a few days or a few weeks to take effect depending on the brokerage firm you use. Since Karus is not listed, your Karus shares will not show a ticker symbol or a market value, but you should see them in your account. While the majority of brokerage firms are willing to hold private company shares, it is possible that some discount brokerage firms will not offer this service. If your brokerage firm is not willing to hold private company shares, you can contact KORE’s transfer agent, Computershare (contact information below), and ask to be issued a DRS Advice for your Karus shares.

If you are in the United States – all Karus shares will be issued as a DRS Advice and held on book deposit with Computershare. Once Karus has listed you will be able to transfer your shares into your account.

If you are in Canada or the USA and hold physical share certificates or DRS Advice (ie. a Registered shareholder), you should have received a Letter of Transmittal and instructions by mail. If you do not have a Letter of Transmittal, you can get a copy HERE or request one by emailing [email protected].

Please do not send your share certificates or DRS Advice to KORE. They must be submitted to Computershare, preferably by courier or registered mail, to:

Computershare Investor Services
8th Floor, North Tower, 100 University Ave
Toronto, ON, Canada   M5J 2Y1
[email protected]
1-800-564-6253

Tax Information

Please note that neither KORE nor Karus is able to provide advice regarding the tax consequences or financial implications of this transaction, since the transaction will affect each shareholder differently. Shareholders should consult with their own financial and tax advisors. More information is included in the Circular that is filed on SEDAR under KORE’s profile.

What are the tax effects of the Spinout?
If you are a Canadian Shareholder receiving Karus shares, you will be deemed to have received a taxable dividend equal to the fair market value of the Karus shares you receive that exceeds the “paid-up capital” of the KORE shares at the time of receipt. KORE does not expect the fair market value of the Karus shares to be greater than the paid-up capital of KORE. KORE does not expect that any Shareholder will be deemed to receive a taxable dividend on the Share Exchange.

Shareholders resident outside of Canada should consult their own tax advisors with respect to their own
particular circumstances.  

For more information on this subject, including general information for Shareholders resident outside of Canada, please consult the section titled “Material Income Tax Considerations” in the Circular that is filed on SEDAR under KORE’s profile.

What will be the cost base of my Karus shares? My new KORE shares?
KORE and Karus have obtained independent appraisal by that determines the cost base of Karus shares at C$0.20 per share. The cost base of your new KORE shares will be the cost base of your old KORE shares less the fair market value of your Karus shares, which is C$0.20.

Disclaimer