- A Mongolian subsidiary of Kincora has received a Tax Act ("2021
tax assessment") for 2.7 billion MNT,
approximately US$950,000, from the
Mongolian Tax Authority ("MTA") relating primarily to the 2016
merger with IBEX
- The 2016 IBEX merger required a tax assessment ("2016 tax
assessment") as a condition precedent to closure and for
reregistration of the merged entities
- The 2021 tax assessment is a retrospectively calculated
liability and is not in-line with the 2016 tax assessment
-
- Three independent external legal opinions support Kincora's
view that the 2016 tax assessment and merger transaction were
properly formulated and supported by the Mongolian authorities at
that time
- Accordingly Kincora disagrees with the basis the 2021 tax
assessment relating to the IBEX merger
- There is limited liability recourse to Kincora's Australian and
Canadian assets and operations from the 2021 tax assessment
- Kincora is actively engaging with the MTA and is seeking a
conclusion in line with Mongolian law and the 2016 assessment which
was relied upon by both Kincora and the Mongolian authorities that
allowed for closure of the 2016 IBEX merger
- Kincora has provided a standstill to, and in discussions with,
Resilience Mining Mongolia Pty Ltd ("RMM") for the executed Option
and Acquisition Agreement in relating to Kincora's Mongolian
portfolio and subsidiaries
VANCOUVER, BC, Jan. 20, 2021 /CNW/ - Kincora Copper Ltd. (the
"Company", "Kincora") (TSXV: KCC) today announced that Mongolian
subsidiary Golden Grouse IBEX LLC ("GGI") has received a Tax Act
("2021 tax assessment") for 2.7 billion
MNT, approximately US$950,000,
from the Mongolian Tax Authority ("MTA").
The 2021 tax assessment is comprised of four items, of which
Kincora strongly refutes the merit of three including the very vast
majority of the liability sought relating to the 2016 merger with
IBEX (the agreed liability owed is 16.2
million MNT or approximately US$5,700).
The 2016 IBEX merger required a tax assessment ("2016 tax
assessment"), which followed an audit of the IBEX's entity's prior
year periods and the on and off-shore agreements to the merger
(IBEX and parent entity's). The 2016 tax assessment was a condition
precedent to close the merger with any adverse liability enabling
both counterparties to walk away from the merger. In the Company's
view, supported by three independent external legal opinions, the
2021 tax assessment's retrospective liability is not in-line with
the 2016 tax assessment and Mongolian law, and there is no basis
for a different determination.
Shortly after the IBEX merger closed, in mid 2017, a tax audit
commenced on the merged entity to validate that the merger
transaction completed as it was presented to the Mongolian
authorities in 2016. This review has only recently completed, with
a fourth audit review team, including a team member from the
original 2016 review, delivering the 2021 tax assessment. A
statute of limitation for the MTA to review and retrospectively
enable a contradictory tax act expires on February 10th, 2021.
Kincora notes that the exploration licenses included in the IBEX
merger, and the core focus of the 2021 tax assessment, have been
thoroughly explored, and subsequently all have been properly
relinquished back to the State. The basis of the tax liability
sought is referenced to the historical invested capital of the IBEX
entity counterparty to the 2016 merger, all of which has since been
written off.
Sam Spring, President and CEO,
commented: "Kincora recognizes that the MTA, similar to many
other countries' designated tax administrators, has the right to
conduct a periodic audit of tax returns filed by companies within
its jurisdiction to ensure the proper application of domestic tax
laws and that resolution processes are in place for any disputed
tax rulings.
However, Kincora strongly refutes the merit of three of the
four findings of the 2021 tax assessment, including the very vast
majority of the liability now being sought relating to the 2016
merger with IBEX which in our view, and of three separate legal
counsels views, unfortunately seeks to move the goal posts that
were relied upon for a commercial transaction to close and is
without legal basis.
The Company is seeking to proactively engage with the MTA,
defend the 2016 tax assessment and come to a conclusion in line
with Mongolian law, which was relied upon for the 2016 IBEX
merger".
In the Company's view the 2021 tax assessment, if upheld and
enforced, would create confusion for investors, as tax is now being
imposed, retrospectively, on:
- Invested capital;
- Non-cash transactions where no profit was made or will ever be
made;
- Exploration tenure that is now held by the State; and,
- A different basis to the binding 2016 assessment that was
relied upon by both Kincora and the Mongolian authorities to allow
for closure of the 2016 IBEX merger.
Kincora remains in active discussions with Resilience Mining
Mongolia Pty Ltd ("RMM"). On December 14th, 2020, the Company
executed a binding Option and Acquisition Agreement ("Agreement")
with RMM relating to Kincora's Mongolian portfolio and
subsidiaries. The Company has provided RMM a standstill for any RMM
obligations relating to this Agreement as the Company engages with
the MTA, seeking to defend the 2016 tax assessment.
The Company notes, limited recourse to Kincora's Australian and
Canadian assets and operations from the 2021 tax assessment. Assets
held within GGI primarily include the Tourmaline Hills project
exploration license (the western of the two adjacent licenses that
make up the wider Bronze Fox projects) and Red Well exploration license.
Kincora will continue to inform the market of any material
developments relating to the 2021 tax assessment and RMM
agreement.
About Kincora Copper Limited
(KCC – TSXV)
Kincora Copper is an active explorer and project generator
focused on world-class copper-gold discoveries.
The Company is currently drilling the only brownfield project
(Trundle) held by a listed junior in Australia's foremost porphyry belt (the
Macquarie Arc, in NSW), with district scale project pipeline, and
seeking to confirm its position as the leading pure play porphyry
explorer in Australia.
The Company has assembled an industry leading technical team who
have made multiple Tier 1 copper discoveries, who have "skin in the
game" equity ownership and who are backed by a strong institutional
shareholder base.
Our exploration model applies a robust systematic approach
utilising modern exploration techniques supporting high-impact,
value add programs underpinned by targets with strong indications
for world-class scale potential.
We have corporate offices in Vancouver and Melbourne. Kincora is listed on the TSX
Venture Exchange under the ticker symbol KCC and is seeking a
listing on the ASX for early in 2021 (subject to market
conditions).
Forward-Looking Statements
Certain information regarding Kincora contained herein may
constitute forward-looking statements within the meaning of
applicable securities laws. Forward-looking statements may include
estimates, plans, expectations, opinions, forecasts, projections,
guidance or other statements that are not statements of fact.
Although Kincora believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance
that such expectations will prove to have been correct. Kincora
cautions that actual performance will be affected by a number of
factors, most of which are beyond its control, and that future
events and results may vary substantially from what Kincora
currently foresees. Factors that could cause actual results to
differ materially from those in forward-looking statements include
market prices, exploitation and exploration results, continued
availability of capital and financing and general economic, market
or business conditions. The forward-looking statements are
expressly qualified in their entirety by this cautionary statement.
The information contained herein is stated as of the current date
and is subject to change after that date. Kincora does not assume
the obligation to revise or update these forward-looking
statements, except as may be required under applicable securities
laws.
Neither the TSX Venture Exchange nor its
Regulation Services Provider (as that term is defined in the
policies of the TSX Venture Exchange) accepts responsibility for
the adequacy or accuracy of this release.
SOURCE Kincora Copper Limited