Overview
On 12 January 2022, Calibre Mining Corp. (“Calibre Mining”) acquired all outstanding common shares of Fiore Gold Ltd (“Fiore Gold”) pursuant to a Canadian court approved plan of arrangement (the “Arrangement”) as detailed within the Fiore Gold Notice of Special Meeting of Shareholders and Management Information Circular dated 2 December 2021 (“Circular”). Click here to see the Circular as posted on sedar.com on 7 December 2021 under the heading of Fiore Gold Ltd.
Pursuant to the Arrangement, Calibre Mining acquired all issued and outstanding Fiore Gold common shares in exchange for Calibre Mining issuing 0.994 of a Calibre Mining common share plus C$ 0.10 in cash (ten cents Canadian currency) for each Fiore Gold common share received. The Arrangement was completed in the early hours of 12 January 2022 and prior to the opening bell of the Toronto Stock Exchange.
The closing price of Calibre Mining common shares on 11 January 2022 as reported by the Toronto Stock (TSX) Exchange (as CXB) was C$ 1.34. The closing price of Calibre Mining common shares on 11 January 2022 as reported by the United States over-the-counter (OTCQX) market (as CXBMF) was US$ 1.05.
The closing price of Fiore Gold common shares on 11 January 2022 as reported by the TSX Venture (TSXV) Exchange (as F) was C$ 1.40. The closing price of Fiore Gold common shares on 11 January 2022 as reported by the United States over-the-counter (OTCQB) market (as FIOGF) was US$ 1.10.
Below is a simplistic summary of the income tax result to a Fiore Gold shareholder that is: tax resident in Canada, tax resident in the United States (“U.S.”), or tax resident in neither the U.S. nor Canada.
The U.S. and Canadian income tax consequences of this reorganization Arrangement whereby Calibre Mining acquired Fiore Gold is very complex.
Fiore Gold shareholders are urged to consult their own tax advisors regarding the U.S. and Canadian federal income tax consequences of the Arrangement applicable to their tax circumstances as described in pages 111 to 128 of the Circular posted on Sedar.com on 7 December 2021 under the heading of Fiore Gold Ltd.
Shareholders should not construe the contents of this simplistic summary as legal, tax or financial advice. Neither Calibre Mining nor Fiore Gold make any representation with respect to the tax consequences to any shareholder.
Fiore Gold shareholders that are tax resident in Canada
The Canadian income tax consequences to a Fiore Gold shareholder are complex. You are directed to read the tax summary as provided in the Circular on pages 111 to 119.
In very general terms, a Canadian tax resident must report the tendering of a Fiore Gold common share as a taxable disposition.
There was a procedure for an eligible Fiore Gold shareholder to make a Section 85 tax election to obtain a full or partial tax-deferred rollover for income tax purposes. The ability to make a Section 85 election was time limited to within 90 days following the 12 January 2022 closing date as described in the Circular (pages 112 to 114) and the Letter of Transmittal provided to registered shareholders (Box G on page 7 - Click here for the Letter of Transmittal). The 90 day time limit after the 12 January 2022 closing date to make a Section 85 election has now expired.
A Canadian resident shareholder may also be subject to U.S. federal tax consequences. Please read pages 127 to 128 of the Circular starting with the heading of “Certain U.S. Federal Income Tax Consequences of the Arrangement to Non-U.S. Holders”.
Fiore Gold shareholders that are tax resident in the United States
The U.S federal income tax consequences to a Fiore Gold shareholder are very complex. You are directed to read the tax summary as provided in the Circular on pages 119 to 127.
Pursuant to the Arrangement, the combination of the exchange of Fiore Gold shares for Calibre Mining shares and cash, followed immediately by a corporate merger of a Calibre Mining subsidiary into Fiore Gold, was intended to qualify as a tax-deferred reorganization. Neither Fiore Gold nor Calibre Mining has sought or obtained an opinion of legal counsel or a ruling from the U.S. Internal Revenue Service (“IRS”) regarding any of the tax consequences of the Arrangement. Accordingly, there can be no assurance that the IRS will not challenge the status of the Arrangement as a reorganization or that the U.S. courts will uphold the status of the Arrangement as a reorganization in the event of an IRS challenge.
Assuming the Arrangement qualifies as a reorganization, a Fiore Gold shareholder that is a tax resident of the U.S. should not recognize gain or loss, except to the extent of some (or all) of the U.S. dollar equivalent amount of the cash received.
Click here for the Internal Revenue Service Form 8937 applicable to this reorganization.
A U.S. shareholder may also be subject to Canadian tax consequences. Please read pages 117 to 119 of the Circular starting with the heading of “Holders Not Resident in Canada”.
Fiore Gold shareholders that are tax resident in a country other than the U.S. and Canada
If a Fiore Gold shareholder is not considered tax resident in the U.S. and Canada, then you are advised to read pages 117 to 119 of the Circular starting with the heading of “Holders Not Resident in Canada”, plus pages 127 to 128 of the Circular starting with the heading of “Certain U.S. Federal Income Tax Consequences of the Arrangement to Non-U.S. Holders”, to understand the combined potential U.S. and Canadian income tax consequences.