Subsequent event

6 Months Ended

May. 31, 2015

Subsequent event [Text Block]

9 Subsequent events

On April 22, 2015, the Company entered into a definitive agreement to acquire all of the issued and outstanding common shares of Sunward Resources Ltd. (“Sunward”), a publicly listed company on the TSX, by way of a court-approved plan of arrangement (the “Arrangement”). Shareholders of each of NovaCopper and Sunward voted in favour of the Arrangement at special meetings held on June 15, 2015. The companies received all regulatory, court and stock exchange approvals required and closed the Arrangement on June 19, 2015. Under the terms of the Arrangement, Sunward shareholders received 0.3 of a NovaCopper common share for each Sunward common share held and on June 19, 2015, the Company issued 43.1 million common shares to Sunward shareholders and holders of Sunward deferred share units pursuant to the Arrangement, bringing the Company’s total issued and outstanding common shares to approximately 103.8 million. Each Sunward stock option outstanding was exchanged for a fully-vested option to purchase NovaCopper common shares for a period of 90 days, such number and exercise price adjusted based on an exchange ratio of 0.3 NovaCopper options for each Sunward option. Following closing on June 19, 2015, the combined companies had a cash position of over $20.0 million.

The acquisition will be accounted for as a business combination under Accounting Standards Codification 805, with transaction costs recorded in the statement of loss and comprehensive loss. The total consideration paid was valued at approximately $23.0 million on closing. The identifiable net assets will be recorded at their fair value at June 19, 2015, including the acquisition of the Titiribi exploration property, and will be finalized once management has gathered and reviewed all relevant information.

Effective concurrent with closing of the Arrangement, Mr. Philip O’Neill and Mr. William Hayden joined the Board of Directors. Dr. Thomas Kaplan and Mr. Clynton Nauman tendered their resignation as members of the Board of Directors effective from the date of the Arrangement.

Subsequent to the closing of the Arrangement, Sunward was notified that Luisa Maria Escobar Wolf (“Escobar-Wolf”) has filed a lawsuit in the Fifth Court of Orality of Circuit of Medellin, Colombia to advance a verbal process. Previously, on April 28, 2014, Sunward received notice that Escobar-Wolf filed an arbitral action against Sunward pursuant to the arbitration clause contained in an easement agreement under which Sunward had acquired certain land access rights at the Titiribi Project. Escobar-Wolf alleges that a local water source had been affected as a result of Sunward’s drilling activities at the Titiribi Project and is seeking, amongst other things, damages totalling COP2,623,203,975 (approx. US$1.05 million).

Previously, during 2013, Corantioquia, the environmental agency for the Colombian State of Antioquia, investigated allegations that a local water source had been affected as a result of Sunward’s drilling activities at the Titiribi Project and on December 12, 2013, Corantioquia issued resolution No. 13128232 dismissing the allegations as the environmental agency’s internal studies showed that the water table levels are within acceptable, documented norms. The allegations made by Escobar-Wolf are the same ones Corantioquia had been investigating during 2013, which were dismissed by the environmental agency. Sunward believes that this claim is without merit but it is too early to predict the outcome of the verbal process or the ultimate impact to Sunward.

Also, during 2013 Corantioquia notified Sunward of administrative proceedings which would have required a suspension of drilling activities resulting from what the agency alleged to be an omission in failure to obtain a water permit or concession. On October 31 and December 30, 2013, Sunward received notices that Corantioquia had lifted the suspension on future drilling activities but is still considering whether to assess a penalty for failure to obtain water permits. Sunward has received no further correspondence from Corantioquia on an assessment to date.