start here

start here

The Daily IKN email digest, get all daily posts sent to you next day (& no ads)


Lithium X (LIX.v) receives a mail

First LIX received this from the fund mentioned on Monday October 23rd, then IKN received it from some place inside LIX between then and today. Not from Bri-Bri mind you, but from one of the people he thinks is his friend. Read on, Mr. Duggan:


Delbrook Capital Advisors Inc. (“Delbrook”), a shareholder of Lithium X Energy Corp. (“Lithium X” or the “Company”), is contacting the Board of Directors to register its concern and to request information related to the interests that the Company’s Chief Executive Officer, Mr. Brian Paes-Braga had in the Company (which was known at the time as Royce Resources Corp.) in the reacquisition transaction of the Company which was completed on November 26, 2015 (the ”Transaction”).

It is our understanding, based upon the public disclosure of the Company, that pursuant to the Transaction, the Company acquired all of the issued and outstanding securities of 1045564 B.C. Ltd. (“Privco”) in exchange for common shares of the Company. The Transaction was announced on October 2, 2015 and detailed in a filing statement on SEDAR dated November 20, 20151 (the “Filing Statement”). Delbrook further understands that Mr. Paes-Braga, a director, officer and majority shareholder of Privco, acquired 3,000,000 common shares of the Company in exchange for the shares of Privco he held, and became President, Chief Executive Officer and Director of the Company. Delbrook notes that the public disclosure indicates that Mr. Paes-Braga did not beneficially own, direct or control, directly or indirectly, any securities of the Company at the time of the transaction.

Delbrook has received information which alleges that Mr. Paes-Braga did in fact, contrary to the public disclosure, have an interest, direct or indirect, in the Company at the time of the Transaction and benefitted economically from the Transaction in a manner which was not disclosed to the public in accordance with applicable securities laws and TSX Venture Exchange (the “Exchange”) policies.

Accordingly, as a shareholder of the Company, Delbrook requests the Board of Directors confirm to it, and provides satisfactory evidence in respect of the same, that Mr. Brian Paes-Braga, together with his affiliates, associates or any other with whom he was acting jointly and in concert (as all such terms are defined under applicable Canadian securities law) (collectively the “Paes-Braga Group”) held no shares and had no economic interest, directly or otherwise, in the Company at any time prior to, or on completion of, the Transaction. Delbrook is requesting that the Board of Directors provide evidence of this by delivering a list of non-objecting beneficial owners (“NOBO”) of the Company prior to, at the time of, and following completion of the Transaction, including a copy of the NOBO list generated in connection with the Company’s annual and special meeting held on November 26, 2015. In addition, please provide us with a certified copy of the security registers of Privco immediately prior to the completion of the Transaction (together with the requested NOBO lists, the “Shareholder Information”).

Delbrook requests this information due to concerns that the Paes-Braga Group had an interest in the Company, which was not properly disclosed by Mr. Paes-Braga or the Company in connection with the Transaction. Clearly, this interest would be material information required to be disclosed publically under both applicable securities laws and the Exchange policies, including without limitation under Exchange Policy 5.9 and Multilateral Instrument 61-101 – Protection of Minority Shareholders in Special Transactions, National Instrument 51-102 – Continuous Disclosure Obligations, Part 5 of National Instrument 62-104 - Take-Over Bids and Issuer Bids, National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues, National Instrument 55-104 – Insider Reporting Requirements and Exemptions, Exchange Policy 3.3 – Timely Disclosure and Exchange Policy 5.2- Changes in Business and Reverse Take-overs. Further, in the event that any such interest did exist and was not disclosed, the disclosure contained in the Filing Statement (which was certified by the directors and officers of both the Company and Privco as being full, true and plain disclosure of all material information) and in the Early Warning Press Release, Early Warning Report and SEDI report filed by Mr. Paes-Braga would contain material misrepresentations, which could result in serious consequences for the Company and Mr. Paes-Braga personally, pursuant to securities legislation.

In addition to our concerns set out above, the information received would further imply that the methods which may have been used by Mr. Paes-Braga to attempt to disguise his interest in the Company at the time of the Transaction, may also give rise to concerns related to the improper transfer and re-registration of securities and compliance of the same with applicable market integrity rules.

As a shareholder of the company, Delbrook is very concerned that the alleged activity of Mr. Paes-Braga, if proven to be true, poses a material risk to shareholders and believe the Board of Directors must take steps to address these concerns, including the provision of the information requested above and to the commencement of a fulsome and detailed investigation into these allegations.

Delbrook would note that since the Transaction the Company has filed annual audited financial statements2, an annual information form3, and a short form prospectus4. These documents were not only certified to contain full, true and plain disclosure by Mr. Paes-Braga, as Chief Executive Officer, but also by other directors and officers of the Company. In addition, Delbrook notes that on October 11, 2017 the Company has announced an additional capital raise via short form prospectus, which is scheduled to close on or about October 31, 2017. As the board will again be called to certify the accuracy and completeness of the information contained or incorporated by reference therein, Delbrook would expect that the Company will need to investigate these allegations as soon as possible, and in any event prior to the closing of this announced offering.

Delbrook thanks you in advance for your prompt attention to this matter, and asks that you please provide it with a written reply to this letter which addresses in adequate detail Delbrook’s concerns, and provide Delbrook with a copy of the Shareholder Lists not later than October 27, 2017.