HIVE Blockchain Technologies Ltd. (previously, Leeta Gold Corp.) revealed today that it has completed its previously announced acquisition of a state-of-the-art GPU-based blockchain data center in Reykjanes, Iceland and formed a strategic partnership with Genesis Mining Ltd. a cloud-based cryptocurrency mining hashpower provider.
The new HIVE facility was built in May 2017 and utilizes cutting-edge computing components and infrastructure design. The facility will produce mined cryptocurrency immediately now that the transaction has been closed.
HIVE was created with the goal of building the leading listed blockchain company through the development and ownership of cryptocurrency mining infrastructure and other related blockchain businesses. HIVE is the culmination of an exclusive partnership between Genesis Mining, the world’s largest cloud bitcoin mining company with over 700,000 customers, and Fiore Group, a leading Canadian merchant banking firm led by Frank Giustra, Gord Keep, and Brian Paes-Braga, with a track record of success.
HIVE has an exclusive arrangement with Genesis to operate its data centers under a Master Service Agreement. The data centers will be monitored with Genesis Hive, Genesis’ proprietary software tool for large-scale mining, to automatically optimize chip temperatures and power consumption for maximal coin production. Genesis Hive and Genesis’ expertise enabled them to become the leading miners and owners of Ether, the crypto-fuel for the distributed application platform Ethereum, now the world’s second largest cryptocurrency market after Bitcoin.
“HIVE’s mission is to accelerate the blockchain sector through traditional capital markets and create long-term shareholder value. We are now focused on establishing a market presence and scaling our mining business. Our facility provides us significant flexibility to mine multiple cryptocurrencies including, but not limited to, Ethereum, Monero and ZCash. We will continue to examine other alt-coins for potential opportunities.”
Acquisition and Partnership
In accordance with the transaction agreement between HIVE and Genesis dated September 13, 2017, and related agreements, HIVE completed the acquisition and entered into the partnership for total cash proceeds of US$9,000,000 and the issuance of 67,975,428 common shares in capital of the company to Genesis, with the result that Genesis becomes a control person of HIVE, which means that Genesis will retain significant power in the decision-making process of the company.
The transaction shares are subject to an escrow agreement and to a hold period of four months and one day from today’s closing date of the transaction.
The partnership includes an agreement as to the general terms governing the potential acquisition of further cryptocurrency data centers from Genesis, and a master services agreement dated September 13, 2017, pursuant to which Genesis will provide hosting, maintenance, and related ongoing services at the acquired HIVE Facility.
Hong-Kong headquartered Genesis Mining will now own 67,975,428 of common shares in HIVE, representing 30% of the issued and outstanding shares. Prior to the completion of the deal, Genesis held no common shares in the capital of the company.
The transaction shares were acquired by Genesis as partial consideration for the transaction. Genesis may in the future wish to increase or decrease its shareholdings in the company as circumstances warrant.
Copies of the filing statement of the company dated September 13, 2017, and material agreements related to the transaction, as well as the early warning report filed by Genesis with the applicable securities regulators in respect of the transaction shares are available at sedar.com under the HIVE Blockchain Ltd. profile.
Conversion of Subscription Receipts
Following the closing of the transaction, HIVE’s outstanding subscription receipts issued upon closing of the previously announced private placement financing automatically converted into an aggregate of 55,000,000 common shares in the capital of the company. Aggregate proceeds of C$16,500,000, which had been held in escrow in accordance with the terms of the subscription receipts, have been released to the company.
Change of Name and Stock Symbol, Resumption of Trading
In connection with the closing of the acquisition, the company changed its name from Leeta Gold Corp. to HIVE Blockchain Technologies Ltd. also changing its stock symbol from LTA to HIVE.
New Board, Management, and Corporate Matters
At the annual general and special meeting of HIVE held on August 23, 2017, Harry Pokrandt, Frank Holmes, Olivier Roussy Newton, Bjoern Arzt and Tobias Ebel were elected as directors.
In addition, the directors have appointed Jessica Van Den Akker as Chief Financial Officer of the company and Kristen Reinertson as Corporate Secretary, who join Harry Pokrandt, President and Chief Executive Officer as the management team going forward.
Finder’s Agreement
In connection with the transaction, HIVE and Olivier Roussy Newton entered into a finder’s agreement on June 8, 2017. In connection with the finder’s agreement and as disclosed in the company’s announcement from September 7, 2017, HIVE has issued 3,398,771 common shares to Mr. Newton. The finder’s shares are subject to an escrow agreement, as described below, and are subject to a hold period of four months and one day from the closing date.
Sponsor
HIVE engaged PI Financial Corp. to act as sponsor to the company in connection with the transaction.
Escrowed Securities
In accordance with the policies of the exchange, and as disclosed in the filing statement, an aggregate of 75,874,199 common shares in the capital of the HIVE will be held in escrow pursuant to an escrow agreement among Genesis, Harry Pokrandt, Olivier Roussy Newton and Computershare Investor Services Inc., as escrow agent.
The escrowed shares will be released from escrow as follows: 10% upon issuance of the exchange bulletin granting final approval for the transaction; 15% on the date that is six months after the date of the final bulletin; 15% on the date that is 12 months after the date of the final bulletin; 15% on the date that is 18 months after the date of the final bulletin; 15% on the date that is 24 months after the date of the final bulletin; 15% on the date that is 30 months after the date of the final bulletin; and 15% on the date that is 36 months after the date of the final bulletin.
Pooling Arrangement
As disclosed in the filing statement, 73,910,115 common shares in the capital of the company are subject to a pooling arrangement.
IR Agreement
HIVE has entered into an investor relations (IR) agreement with Future Money Trends, LLC, a limited liability company headquartered in the State of Texas.
The initial term of the IR agreement is for three years. In connection with the agreement, the company has granted Future Money Trends, LLC and its affiliates an aggregate of 1,333,000 stock options under the company’s stock option plan with an exercise price of $0.30 per stock option, exercisable for a period of five years from the date of grant, vesting as follows: 25% 3 months after the date of grant; 25% 12 months after the date of grant; 25% 24 months after the date of grant; and 25% 36 months after the date of grant.
Stock Option Grants
In addition to the IR options and concurrently with the closing of the transaction, the company has also granted an aggregate of 21,300,000 stock options under the company’s stock option plan to directors, officers, consultants, and charitable organizations with an exercise price of $0.30 per stock option, exercisable for a period of ten years from the date of grant.
Loans and Bonus Warrants
The company has received exchange acceptance of the two loan agreements entered into by the company with a company owned by Harry Pokrandt and has received exchange approval for the issuance of the bonus warrants issued in connection with such loans, each as previously disclosed in the news releases of the company dated August 9, 2017 aand September 7, 2017.