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Arco Resources to acquire Cannex Capital Group, exit mining

Arco Resources Corp. said Oct. 10 that it signed an agreement to acquire Cannex Capital Group Inc. and subsequently exit the mining sector.

The company's assets include the Taviche silver-gold property on hold in Mexico and the inactive Mbinga uranium property in Tanzania.

Cannex Capital's issued and outstanding shares will be exchanged for common Arco Resources shares on 1-for-1 basis, subject to Arco Resources consolidating its share capital to 2 million common shares at a deemed price of C$1 apiece and settling C$467,928 in debt via a share issue.

Concurrently, Cannex Capital aims to raise up to C$25 million via a private placement of 25 million subscription receipts at C$1 apiece. Each subscription receipt will be exchanged for 1 share and half a warrant 90 days after closing, with each whole warrant exercisable at C$1.50 per share for 24 months.

The company will use the proceeds to fund the acquisition of BrightLeaf Development LLC, a real estate company that has supply agreements with licensed cannabis producers and processors Northwest Cannabis Solutions LLC and 7Point Holdings LLC.

Arco will delist its shares from the NEX board of the TSX Venture Exchange and the resulting issuer, expected to be named Cannex Capital Holdings Inc. or similar, will apply to list on the Canadian Securities Exchange.

Upon completion of the merger, management of the new company will include Cannex Capital CEO Anthony Dutton as CEO and president, Leo Gontmakher as COO and Arco Resources director Barry Lee as CFO.

The resulting board of directors will comprise Dutton, Gontmakher, Jerry Derevyanny, Tom Peters and Greg Marshall, with BrightLeaf Development expected to nominate two additional directors.