Constantine Metal offers tax advisory on spinout

Jan 15, 2020

2020-01-14 17:30 ET – News Release

Mr. Garfield MacVeigh reports

CONSTANTINE PROVIDES INFORMATION REGARDING COMPUTATION OF SHAREHOLDERS’ ADJUSTED SHARE COST BASE FOR NEW SHARES ISSUED IN CONNECTION WITH 2019 PLAN OF ARRANGEMENT

Constantine Metal Resources Ltd. is providing to shareholders information regarding the computation of shareholders’ adjusted cost base for Canadian and U.S. tax purposes in connection with its plan of arrangement which became effective on Aug. 1, 2019.

Shareholders of Constantine whose shares were subject to the Aug. 1, 2019, spinout transaction involving HighGold Mining Inc. should, for Canadian tax purposes, generally be able to automatically access “rollover” provisions in the Canadian Income Tax Act to the extent that, amongst other conditions, they have not reported any gain or loss on the exchange. Practically speaking, for future tax reporting purposes, shareholders would then be required to allocate their historical cost of those shares between the new shares of Constantine and HighGold acquired. The allocation is required to be proportionate based on the fair values of the HighGold net assets distributed and the net assets retained by Constantine. However, this determination is subject to significant estimation uncertainties and alternative valid valuation approaches, is the responsibility of each shareholder to make, and is not legally Constantine’s responsibility to provide.

Management of Constantine believes that, in its view, it would be reasonable for a shareholder to apportion the adjusted cost base of the Constantine shares held immediately prior to the share distribution record date on the following basis: 77.9 per cent should be allocated to the postarrangement Constantine shares and 22.1 per cent should be allocated to the HighGold shares.

The company cautions that it is not binding on the Canada Revenue Agency or the Internal Revenue Service, and cannot be preapproved by either of those agencies. It is not based on a formal business or asset valuation process. Accordingly, and in the context of the other comments above, shareholders are advised to seek their own independent professional advice in respect to this matter.

About Constantine Metal Resources Ltd.

Constantine is a mineral exploration company led by an experienced and proven technical team with a focus on premier North American mining environments.

We seek Safe Harbor.

https://www.constantinemetals.com/