Shell Summary for July 14, 2017
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.)