Shell Sum­mary for July 14, 2017

Stockwatch Daily - - SHELLS - By Stock­watch Busi­ness Re­porter

THE TSX Ven­ture Ex­change gained 4.59 points to 757.52 Fri­day, end­ing the week up 2.30 points. Mi­naz Dhanani’s halted cap­i­tal pool shell, Royal Life­science Corp. (RLS), plans to ac­quire Slave Lake Zinc Corp. for the shell’s qual­i­fy­ing trans­ac­tion. The shell, which has 3.99 mil­lion shares is­sued, will is­sue 25.5 mil­lion shares to its tar­get’s share­hold­ers.

Royal Life­science plans to sell a $120,000 pri­vate place­ment of shares at 15 cents. It will lend the pro­ceeds to its tar­get as a bridge fi­nanc­ing. The shell also plans to sell a $1.4-mil­lion pri­vate place­ment of units at 20 cents, to raise money for ex­plo­ration. Slave Lake Zinc owns the 465-acre O’Con­nor Lake prop­erty in the North­west Ter­ri­to­ries, south­east of Yel­lowknife.

Slave Lake Zinc was founded in Septem­ber, 2016, by Ritch Wigham and Jas Rai. Mr. Wigham was a bro­ker, spe­cial­iz­ing, says he, in com­modi­ties, for over 30 years. He worked at Mackie Re­search Cap­i­tal Corp. from 2001 to 2013, then he spent a cou­ple of years with Global Se­cu­ri­ties Corp. (now a part of PI Fi­nan­cial Corp.). Be­fore be­com­ing a bro­ker, Mr. Wigham was a ge­o­log­i­cal as­sis­tant and prospec­tor in the NWT and Saskatchewan. On clos­ing of the QT, he will be the chief ex­ec­u­tive of­fi­cer and a di­rec­tor of the re­sult­ing is­suer.

Mr. Wigham’s co-founder, Mr. Rai, was a bro­ker with Global Se­cu­ri­ties from 2004 to 2016. He has been a sub­scriber to a hand­ful of pri­vate place­ments, in­clud­ing one in

2013 by An­drew Rees’s Well­star En­ergy Corp. (WSE). On clos­ing of Royal Life­science’s QT, Mr. Rai will be the pres­i­dent and a di­rec­tor of the re­sult­ing is­suer.

Mr. Wigham and Mr. Rai will be joined on the board of the re­sult­ing is­suer by two more di­rec­tors: Wil­liam Botham and Omar Mawji. Mr. Botham ran a prop­erty devel­op­ment and man­age­ment com­pany in Van­cou­ver called Botham Hold­ings Ltd. for 40 years. In 2004, Botham Hold­ings sold one of its prop­er­ties at a profit. To save on cap­i­tal gains tax, it in­vested in a car leas­ing busi­ness, which en­abled it to claim cap­i­tal cost al­lowances. Mr. Botham also trans­ferred some of Botham Hold­ings’ as­sets into a new com­pany that he in­cor­po­rated, Bray­don In­vest­ments Ltd. In 2008, when Botham Hold­ings went bank­rupt, its cred­i­tors went af­ter the as­sets held by Bray­don. A Bri­tish Columbia Supreme Court judge ruled that Mr. Botham did not act dis­hon­estly in trans­fer­ring the as­sets; nev­er­the­less, the judge al­lowed Botham Hold­ings’ cred­i­tors to seize Bray­don’s as­sets.

The fi­nal nom­i­nee to the board of the re­sult­ing is­suer, Mr. Mawji, is a di­rec­tor of the shell. For four months in 2012, he was a re­search in­tern at Global Se­cu­ri­ties. Then from 2013 to 2014, he ex­pe­ri­enced an im­pres­sive ad­vance­ment to lead oil and gas an­a­lyst with a Chicago-based re­search firm, Lan­gen­berg & Com­pany LLC. From March, 2014, to May, 2016, Mr. Mawji was an en­ergy an­a­lyst with Marin Ka­tusa’s Ka­tusa Re­search in Van­cou­ver. Then in Au­gust, 2016, still gal­lop­ing on­ward, Mr. Mawji founded his own oil and gas re­search firm, Tur­ri­top­sis In­vest­ments Corp.

The shell’s CEO, Mr. Dhanani, will not be a di­rec­tor

of the re­sult­ing is­suer, but he will be its sec­re­tary. He is an ac­coun­tant in North Van­cou­ver and a found­ing di­rec­tor of the shell, but he was not its orig­i­nal pro­moter. Royal Life­science was listed by Craig Thomas, a se­cu­ri­ties lawyer in West Van­cou­ver and a son of Pat Thomas, the head of a long-ago bro­ker­age firm called West Coast Se­cu­ri­ties Ltd. Craig has sat on the boards of dozens of pub­lic com­pa­nies from the 1980s un­til last month, when he left BCM Re­sources Corp. (B: $0.10), a B.C. and Utah min­ing ju­nior. He was a di­rec­tor of Well­star En­ergy, as was Mr. Dhanani. Well­star En­ergy has since gone into re­ceiver­ship. Craig Thomas and Mr. Dhanani were also fel­low di­rec­tors at B.C. gold ex­plorer Bark­erville Gold Mines Ltd. (BGM: $0.85) when it was still un der Frank Cal­laghan.

Craig Thomas listed Royal Life­science in April, 2012, with a $400,000 ini­tial pub­lic of­fer­ing at 10 cents. He lined up one po­ten­tial QT, with a nan­otech­nol­ogy de­vel­oper called Nanocrys­tal Tech­nol­ogy Inc. The shell dropped this deal in 2014, blam­ing “a va­ri­ety of fac­tors, in­clud­ing volatile and de­clin­ing eco­nomic con­di­tions and a sig­nif­i­cant de­lay in the due dili­gence re­view of Nanocrys­tal.” Craig left the shell to Mr. Dhanani in June, 2016. Two months later, the shell rolled back 1 for 2.5. If its IPO share­hold­ers still hold their po­si­tions to­day, then their break-even price is now 25 cents. Be­cause they have been made to wait five years for a QT, they prob­a­bly al­ready con­sider this shell a fail­ure. (Shells should nor­mally take only two or three years to close a deal.)

(*MKTSHEL)

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