Goldshore to Complete Concurrent $25 Million Equity Financing
& Amalgamate with Sierra Madre Developments Inc.
Wesdome to Become Largest Shareholder of Goldshore
Goldshore Resources Inc. (“Goldshore”) and Sierra Madre Developments Inc. (“Sierra Madre”) (TSX-V: SMG.H) are pleased to announce that the two companies have entered into an amalgamation agreement (the “Amalgamation Agreement”), effective January 25, 2021, pursuant to which Sierra Madre will acquire all of the issued and outstanding shares of Goldshore (the “Business Combination”). Completion of the Business Combination will result in the reverse takeover of Sierra Madre by Goldshore pursuant to the policies of the TSX Venture Exchange (the “TSX-V”) (with the resulting entity being the “Resulting Issuer”).
Goldshore has entered into an asset purchase agreement (the “Asset Purchase Agreement”) dated January 25, 2021 with Wesdome Gold Mines Ltd. (“Wesdome”) and Moss Lake Gold Mines Ltd. (“Moss Lake Gold”), a subsidiary of Wesdome, pursuant to which Goldshore will acquire (the “Property Acquisition”) a 100% interest in the Moss Lake gold project (“Moss Lake” or the “Project”), located in Ontario, Canada.
Creation of a new Canadian gold development company: Historical estimates of mineral resources on the Project specify total indicated resources of 1,473,700 ounces of gold and inferred resources of 2,514,876 ounces of gold¹²³ in two dposits located near Thunder Bay, Ontario (for details on resource categories, tonnages and grades see Table 1).*
* A qualified person has not done sufficient work to classify the historical estimates as current resources and neither Goldshore nor Sierra Madre is treating the historical estimates as current resources. Significant data compilation, re-drilling, re-sampling and data verification may be required by a qualified person before the historical estimate on the Project can be classified as a current resource
Historic Preliminary Economic Assessment: In 2013, Moss Lake Gold completed a historic preliminary economic assessment which yielded an after tax net present value of $276M at a Canadian dollar gold price of $1,629 per ounce1.
Strong expansion and discovery potential: The historical resource areas remain largely open to potential expansion and the Project features a 20+ km trend hosting at least four major zones of mineralization on a large land package (14,292 ha), but with major gaps in exploration that require further consideration.
Experienced management team and board: The proposed new team includes a group of individuals with deep mining industry experience and strong track records of value creation, major discoveries, project execution and M&A transactions.
Strategic partnership with Wesdome: Upon closing of the Business Combination, Wesdome will be the largest shareholder in the Resulting Issuer and will hold approximately 30% of the Resulting Issuer Shares (as defined below) outstanding on a non-diluted basis.
Strong balance sheet: In connection with the transaction, Goldshore is anticipating raising $25 million through a hard-dollar and flow-through subscription receipt financing led by Eventus Capital Corp. Goldshore and Sierra Madre currently have a combined total of approximately $4.4 million in cash on hand.
“We fully believe that Goldshore has assembled the best positioned team to advance Moss Lake which has significant resource growth potential along its 20km+ trend. We have already identified several areas of prospective follow up work and intend to work diligently with the entire Goldshore team to unlock value from the asset,” stated Goldshore’s incoming President and Chief Executive Officer, Brett A. Richards. “I am confident that Goldshore will work closely with Wesdome’s management as its largest shareholder and through their board representation. We are excited to develop this new strategic partnership and are confident that under the stewardship of both Goldshore’s experienced management team and Wesdome, collectively we will be positioned to deliver significant long-term value for both Goldshore and Wesdome stakeholders.”
The Moss Lake Gold Project
The Project is located approximately 100 km west of the city of Thunder Bay, Ontario. It is accessed via Highway 11 which passes within 1 km of the property boundary to the north. The Project consists of 282 unpatented and patented mining claims that are 100% owned by Wesdome’s subsidiary, Moss Lake Gold, and cover 14,292 hectares.
Moss Lake hosts a number of gold and base metal rich deposits including the Moss Lake Deposit, the East Coldstream Deposit (Table 1), the historically producing North Coldstream Mine (Table 2), and the Hamlin Zone, all of which occur over a mineralized trend exceeding 20 km in length. A historical preliminary economic assessment was completed on Moss Lake in 2013 and published by Moss Lake Gold1. A historical mineral resource estimate was completed on the East Coldstream Deposit in 2011 by Foundation Resources Inc2,3. In addition to these zones, the Project also hosts a number of poorly understood mineral occurrences which are reported to exist both at surface and in historically drilled holes. The Moss Lake Deposit is a shear-hosted disseminated-style gold deposit which outcrops at surface. It has been drilled over a 2.5 km length and to depths of 300 m with 376 holes completed between 1983 and 2017. The last drilling program conducted in 2016 and 2017 by Wesdome, which consisted of widely spaced holes along the strike extension of the deposit was successful in expanding the mineralized footprint and hydrothermal system 1.6 km to the northeast. Additionally, the deposit remains largely open to depth. In 2017, Wesdome completed an induced polarization survey which traced the potential extensions of pyrite mineralization associated with the Moss Lake Deposit over a total strike length of 8 km and spanning the entire extent of the survey grids. Historic drill hole highlights from the Moss Lake Deposit include 11.3 g/t Au over 70.4m in L-08-01, 2.55 g/t Au over 71.3 m in 89-172, and 1.19 g/t Au over 163.1 m in 87-101.
The East Coldstream Deposit is a shear-hosted disseminated-style gold deposit which locally outcrops at surface. It has been drilled over a 1.3 km length and to depths of 200 m with 138 holes completed between 1988 and 2017. The deposit remains largely open at depth and may have the potential for expansion along strike. Historic drill hole highlights from the East Coldstream Deposit include 4.86 g/t Au over 27.3 m in C-10-15.
The historically producing North Coldstream Mine is reported to have produced significant amounts of copper, gold and silver4 from mineralization with potential iron-oxide-copper-gold deposit style affinity. The exploration potential immediately surrounding the historic mining area is not currently well understood and historic data compilation is required.
The Hamlin Zone is a significant occurrence of copper and gold mineralization, and also of potential iron-oxide-copper-gold deposit style affinity. Between 2008 and 2011, Glencore tested Hamlin with 24 drill holes which successfully outlined a broad and intermittently mineralized zone over a strike length of 900 m. Historic drill hole highlights from the Hamlin Zone include 0.9 g/t Au and 0.35% Cu over 150.7 m in HAM-11-75.
The Moss Lake, East Coldstream and North Coldstream deposits sit on a mineral trend marked by a regionally significant deformation zone locally referred to as the Wawiag Fault Zone in the area of the Moss Lake Deposit. This deformation zone occurs over a length of approximately 20 km on the Project and there is an area spanning approximately 7 km between the Moss Lake and East Coldstream deposits that is significantly underexplored.
Table 1: Historical Mineral Resources¹²³
Moss Lake Deposit¹ (2013 resource estimate)
Open Pit Potential
Moss Lake Total
East Coldstream Deposit² (2011 resource estimate)
East Coldstream Total
(1) Source: Poirier, S., Patrick, G.A., Richard, P.L., and Palich, J., 2013. Technical Report and Preliminary Economic Assessment for the Moss Lake Project, 43-101 technical report prepared for Moss Lake Gold Mines Ltd. Moss Lake Deposit resource estimate is based on 0.5 g/t Au cut-off grade for open pit and 2.0 g/t Au cut-off grade for underground resources.
(2) Source: McCracken, T., 2011. Technical Report and Resource Estimate on the Osmani Gold Deposit, Coldstream Property, Northwestern Ontario, 43-101 technical report prepared for Foundation Resources Inc. and Alto Ventures Ltd. East Coldstream Deposit resource estimate is based on a 0.4 g/t Au cut-off grade.
(3) The reader is cautioned that the above referenced “historical mineral resource” estimates are considered historical in nature and as such is based on prior data and reports prepared by previous property owners. A qualified person has not done sufficient work to classify the historical estimates as current resources and Goldshore is not treating the historical estimates as current resources. Significant data compilation, re-drilling, re-sampling and data verification may be required by a qualified person before the historical estimate on the Project can be classified as a current resource. There can be no assurance that any of the historical mineral resources, in whole or in part, will ever become economically viable. In addition, mineral resources are not mineral reserves and do not have demonstrated economic viability. Even if classified as a current resource, there is no certainty as to whether further exploration will result in any inferred mineral resources being upgraded to an indicated or measured mineral resource category
Table 2: Reported Historical Production from the North Coldstream Deposit⁴
|Deposit||Tonnes||Cu %||Au g/t||Ag||Cu lbs||Au oz||Ag oz|
(4) Source: Schlanka, R., 1969. Copper, Nickel, Lead and Zinc Deposits of Ontario, Mineral Resources Circular No. 12, Ontario Geological Survey, pp. 314-316.
Proposed Management Team and Board of Directors of the Resulting Issuer
Following completion of the Business Combination, the board of directors of the Resulting Issuer will be reconstituted to consist of Brett Richards, Doug Ramshaw, Victor Cantore, Galen McNamara, Shawn Khunkhun, Brandon Macdonald, Michael Michaud and Heather Laxton. Management of the Resulting Issuer will consist of Brett Richards as President and Chief Executive Officer, Gavin Cooper as Chief Financial Officer and Corporate Secretary, and Peter Flindell as Vice President of Exploration. The following are brief profiles of the proposed members of management and the board of directors:
Brett A. Richards, President, Chief Executive Officer and a Director
Mr. Richards is a natural resources executive with over 33 years of expertise in mining and metals. He has a unique background in mining M&A, mine financing, mine development and senior level operations experience. He brings publicly listed CEO experience in the mining sector, as well as global operational experience. Brett has held positions for private equity shareholders in the past including CEO of Banro Corporation who was appointed in its restructuring phase, CEO of Midnight Sun Mining, CEO of African Thunder Platinum, CEO of Renew Resources, and CEO of Octéa. He previously served as the transition CEO of Roxgold, CEO of Avocet Mining, and was part of the five-person start-up of Katanga Mining. Mr. Richard’s other publicly listed experience was in senior executive positions with Kinross Gold and Co-Steel Inc. Mr. Richards is a Mechanical Engineer, and graduated Magna Cum Laude from Cornell University, Johnson School of Business – Masters of Business Administration, in Management Engineering.
Gavin Cooper, Chief Financial Officer
Mr. Cooper is a Chartered Professional Accountant with extensive experience in all aspects of corporate and financial management. For the past 35 years, Mr. Cooper has been providing strategic and financial advice and corporate administration services, and has held senior positions with a number of public and private companies with local and international operations. He was formerly CEO and a director of a ship-construction project with a budget in excess of $400 million, and Director of Finance & Administration at a shipyard that had employed over 1,000 workers. He currently acts as CFO, corporate secretary or director of various other TSX-V listed companies. Mr. Cooper has a Hons. Bachelor of Accounting from the University of South Africa and is a member of the Chartered Professional Accountants of British Columbia.
Peter Flindell, Vice President of Exploration
Mr. Flindell is an Australian geologist with 35 years of experience in minerals exploration and feasibility studies. He has worked in senior exploration, resource development and management roles and has led teams to discover, develop and expand several gold and copper mines in Southeast Asia, Central Asia, West Africa, Central Africa, Europe and Central America. His experience also extends to base metal and iron ore projects. His career includes 12 years with Newmont Mining, 11 years with Avocet Mining and 8 years with Signal Delta. Peter is a member of AusIMM and AIG enabling him to perform the roles of Competent Person (JORC) and Qualified Person (NI 43-101) for most gold and copper deposits. He is a non-executive Director on the Board of Global Drilling and Exploration Group.
Doug Ramshaw, Director
Doug Ramshaw is a senior executive and corporate director with more than 25 years of experience in the mineral resource sector. His work has focused on mineral project evaluation, M&A and business development strategies supporting corporate growth. Mr. Ramshaw is currently President and Director of Minera Alamos Inc. and has previously worked as a mining analyst for an independent brokerage firm in London, UK and served in various executive capacities for a number of publicly listed junior resource companies. He holds a Bachelor of Science in Mining Geology from the Royal School of Mines.
Victor Cantore, Director
Mr. Cantore is a seasoned capital markets professional specializing in the resource and hi-tech sectors. He has more than 20 years of advisory and leadership experience having begun his career in 1992 as an investment advisor and then moving into management roles at both public and private companies. During his career, he has organized and structured numerous equity and debt financings, mergers and acquisitions, joint venture partnerships and strategic alliances. Mr. Cantore serves on the boards of various companies both private and public.
Galen McNamara, Director
Mr. McNamara is an entrepreneur and geologist with extensive discovery and capital markets experience over nearly 15 years. He was the co-winner of the 2018 PDAC Bill Dennis “Prospector of the Year” award for the Arrow uranium deposit and 2016 Mines and Money Exploration Award. He is currently Chief Executive Officer and Director of Summa Silver Corp. and Chairman of Angold Resources Ltd. Mr. McNamara holds MSc and BSc degrees in geology from Laurentian University.
Shawn Khunkhun, Director
Mr. Khunkhun is currently CEO, President & Director of Dolly Varden Silver. He has over 15 years of experience in the capital markets, mineral exploration and development sector with a focus on enhancing shareholder value. He has served in a variety of strategic roles including investor relations, corporate development, chief executive officer and director. Mr. Khunkhun has been instrumental in creating a new awareness for undervalued companies including grass roots explorers, developers and producers. Mr. Khunkhun’s experience in incubating and growing early stage companies through capital raises, acquisitions, joint ventures and spinouts, and his long-standing relationships with an extensive global network of high-net-worth investors, private equity and institutional investors, analysts, brokers, and investment bankers have been a valuable asset to growing mineral exploration companies.
Brandon Macdonald, Director
Mr. Macdonald is a professional geologist with a diverse experience base including exploration geology worldwide and investment banking. He is currently CEO & Director of Fireweed Zinc. In recent years he has focused his efforts in exploration and development as a principal of and consultant to various junior mining companies. He has worked previously in London structuring financings and risk management at Macquarie Bank. In 2007, Mr. Macdonald graduated with an MBA (with Distinction) from Oxford. He completed his B.Sc. in Geology from UBC in 2000. He is a Professional Geologist registered with Engineers and Geoscientists British Columbia (EGBC).
Michael Michaud, Director
Currently Vice President, Exploration at Wesdome, Mr. Michaud, P.Geo., M.Sc. is a Professional Geologist with over 30 years of experience in domestic and international gold exploration and mining that includes a broad range of deposit types within North and South America, Africa, Asia and Europe. Michael was responsible for developing and implementing regional and mine-site exploration strategies to discover new deposits and to expand mineral resources and reserves around existing mines. Most recently Michael served as IAMGOLD’s Chief Geologist responsible for providing global geological support for IAMGOLD’s exploration activities worldwide. Previously, Michael held roles of increasing responsibility for several exploration and mining companies including, Vice-President, Exploration for St Andrew Goldfields and was a Principal of SRK Consulting Inc. Mr. Michaud holds an honors B.Sc. from the University of Waterloo, and a M.Sc. from Lakehead University.
Heather Laxton, Director
Ms. Laxton has over 23 years of corporate governance, corporate secretarial, and securities regulation experience with a focus on the mining sector in Canada, Europe, Russia and West Africa. Ms. Laxton began her career working as a professional law clerk in multi-national law firms and has held executive roles for several mining companies throughout her career, including her current role as Chief Governance Officer with Wesdome Gold Mines Ltd. and previously as Corporate Secretary with Kirkland Lake Gold, Chief Governance Officer and Corporate Secretary with Northern Gold Mining Inc. She has been involved in numerous transactions and financings, and has led the evaluation, design, implementation and monitoring of governance programs for several junior and emerging companies. Ms. Laxton will complete a Master’s Degree in Business Law at Osgoode Hall Law School in 2021, obtained an honours diploma from the Law Clerk Program at Seneca College, completed the Canadian Securities Course in 2000, and is a member of faculty with the Governance Professionals of Canada Education Program.
Proposed Strategic Advisory Team of the Resulting Issuer
In addition, the Resulting Issuer is expected to appoint a Strategic Advisory Board consisting of the following individuals:
- David Garofalo – Former CEO of Goldcorp presiding over its sale to Newmont in 2019
- Craig Parry – Chairman of Skeena Resources, CEO of IsoEnergy
- Bryan Slusarchuk – Co-Founder and former President & Director of K92 Mining
- Leo Hathaway – Senior VP for Luminex Resources and Lumina Gold
- Daniel J. Kunz – CEO & Director of Prime Mining, Former CEO of Ivanhoe Mines Ltd
- Adrian Rothwell – CEO & Director of Angold Resources, Former Goldcorp executive
Summary of the Property Acquisition
Pursuant to the Asset Purchase Agreement, Goldshore will acquire the Project for aggregate consideration of proceeds of $57 million which, on closing, includes the payment of $12.5 million cash and the issuance of Goldshore Shares (the “Payment Shares”) equal to the greater of (a) the number of Goldshore Shares having an aggregate deemed value (calculated based on a price per Goldshore Share of not less than $0.65) equal to $19.5 million; and (ii) 30% of the issued and outstanding Goldshore Shares.
In addition, Goldshore has agreed to issue up to $20 million in milestone shares (the “Milestone Shares”) to Wesdome as follows:
- $5 million in Milestone Shares within 12 months from closing of the Property Acquisition (“Closing”);
- $7.5 million in Milestone Shares upon the earlier of (i) Goldshore completing an updated preliminary economic assessment or pre-feasibility study on the Project; and (ii) 30 months from Closing; and
- $7.5 million in Milestone Shares upon the earlier of (i) Goldshore completing a feasibility study on the Project, or, if Goldshore does not complete a feasibility study on the Project, the earlier of (A) the date on which Goldshore makes a development decision on the Project; and (B) 48 months from Closing.
All Milestone Shares will be issued based on the volume-weighted average price of the Resulting Issuer for the 20 trading days prior to the date of issuance.
Under the terms of the Asset Purchase Agreement, the Resulting Issuer is required to issue all Milestone Shares immediately prior to the effective time of certain change of control transactions of the Resulting Issuer.
In addition, Goldshore will grant Wesdome a 1% NSR royalty on all metal production from Moss Lake. Goldshore will have the right to repurchase the NSR royalty for (i) $3 million in cash and $2 million in shares, if the buyback right is exercised within 30 months of closing; or (ii) $5.5 million in cash and $2 million in shares, if the buyback right is exercised between 30 and 48 months from Closing. The royalty buyback rights will expire if not exercised within 48 months of Closing.
It is expected that the Property Acquisition will close concurrently with the Business Combination, and that, if necessary, Goldshore’s rights and obligations under the Asset Purchase Agreement will be assigned to the Resulting Issuer at such time.
Summary of the Concurrent Financing
Goldshore and Sierra Madre have entered into an engagement letter with Eventus Capital Corp., as lead agent and sole bookrunner (the “Lead Agent”), on its own behalf and on behalf of a syndicate of agents including Canaccord Genuity Corp., Laurentian Bank Securities Inc., Haywood Securities Inc., and Desjardins Securities Inc. (together with the Lead Agent, the “Agents”), in respect of a private placement by Goldshore of up to an aggregate of 33,600,000 subscription receipts (the “Subscription Receipts”) and flow-through subscription receipts (the “Flow-Through Subscription Receipts” and together with the Subscription Receipts, the “Offered Securities”) for gross proceeds of up to $25,000,000 (the “Concurrent Financing”).
The Offered Securities will be offered at a price of $0.65 per Subscription Receipt and a price $0.75 per Flow-Through Subscription Receipt. Each Subscription Receipt will be automatically exercised, for no additional consideration, into one common share of Goldshore (a “Share”) and each Flow-Through Subscription Receipt will be automatically exercised, for no additional consideration, into one flow-through common share of Goldshore (a “Flow-Through Share” and together with the Shares, the “Goldshore Shares”). Each Goldshore Share will be exchanged for one share of the Resulting Issuer (a “Resulting Issuer Share”) (on a post-Consolidation basis), upon satisfaction of certain escrow release conditions (the “Escrow Release Conditions”).
The Flow-Through Subscription Receipts will be issued on a “flow-through” basis and will consist of “flow-through shares” as defined in subsection 66(15) of the Income Tax Act (Canada). Goldshore will incur resource exploration expenses which will constitute “Canadian exploration expenses” as defined in subsection 66.1(6) of the Income Tax Act (Canada) and “flow through mining expenditures” as defined in subsection 127(9) of the Income Tax Act (Canada), in an amount equal to the amount raised pursuant to the sale of Flow-Through Subscription Receipts and Goldshore will renounce the Canadian exploration expenses (on a pro rata basis) to each subscriber with an effective date of no later than December 31, 2021 in accordance with the Income Tax Act (Canada).
The gross proceeds of the Concurrent Financing, less 50% of the Agents’ cash commission (as described below) and certain expenses of the Agents, will be deposited in escrow on the closing date of the Concurrent Financing until the satisfaction of the Escrow Release Conditions.
If the Escrow Release Conditions have not been satisfied prior to 120 days following the closing of the Concurrent Financing, or Goldshore advises the Lead Agent or announces to the public that it does not intend to satisfy the Escrow Release Conditions or that the Business Combination has been terminated, the aggregate issue price of the Offered Securities (plus any interest earned thereon) will be returned to the holders (net of any applicable withholding taxes), and such Offered Securities will be automatically cancelled and be of no further force and effect.
In connection with the Concurrent Financing, the Agents will be entitled to receive a cash fee equal to 6% of the aggregate gross proceeds of the Concurrent Financing (provided that the cash commission for president’s list subscribers will be 4%) and such number of compensation options (the “Compensation Options”) equal to 6% of the number of Offered Securities sold under the Concurrent Financing (provided that the compensation options for president’s list subscribers will be 4%). Each Compensation Option will be exercisable for one Goldshore Share for a period of two years from the date of closing of the Concurrent Financing at a price of $0.65 per share. In connection with the completion of the Business Combination, each Compensation Option will be exchanged into one compensation option of the Resulting Issuer, which will be exercisable for one Resulting Issuer Share at the issue price of the Subscription Receipt.
The Offered Securities will be offered in all provinces of Canada and such other jurisdictions as Goldshore and the Agents may agree, where the Concurrent Financing can be offered and sold without the requirement to file a prospectus or similar document. It is expected that the net proceeds from the Concurrent Financing will be used to advance development of the Project and for working capital and general corporate purposes.
Summary of the Business Combination
Pursuant to the Amalgamation Agreement, Sierra Madre and Goldshore will complete an arm’s length business combination by way of a three-cornered amalgamation pursuant to the provisions of the Business Corporations Act (British Columbia). The shareholders of Goldshore (the “Goldshore Shareholders”), other than the Goldshore Shareholders who exercise their dissent rights, will receive, subject to adjustment, one common share in the capital of Sierra Madre (a “Sierra Madre Share”) (on a post-Consolidation basis) for each Goldshore Share (as defined below) held.
As a condition precedent of the Business Combination, Sierra Madre’s board of directors will approve a consolidation of Sierra Madre’s issued and outstanding share capital on a 6:1 basis (the “Consolidation”). Upon completion of the Business Combination, assuming completion of the Consolidation and the Offering (as defined below), (a) former Goldshore Shareholders will hold, in the aggregate, approximately 30,122,380 Resulting Issuer Shares representing approximately 30.1% of the outstanding Resulting Issuer Shares on a non-diluted basis, (b) existing holders of Sierra Madre Shares (the “Sierra Madre Shareholders”) will hold, in the aggregate, approximately 3,677,620 Resulting Issuer Shares, representing approximately 3.68% of the outstanding Resulting Issuer Shares on a non-diluted basis, (c) Wesdome will hold approximately 30,000,000 Resulting Issuer Shares, representing approximately 30% of the outstanding Resulting Issuer Shares, and (d) the participants in the Concurrent Financing will hold 36,200,000 Resulting Issuer Shares, representing approximately 36% of the outstanding Resulting Issuer Shares on a non-diluted basis.
The completion of the Business Combination is subject to the satisfaction of various conditions, including but not limited to the approval of the listing of the Resulting Issuer Shares on the TSX-V and other conditions customary for a transaction of this nature.
In connection with the Business Combination, Sierra Madre intends to change its name to “Goldshore Resources Inc.” and list on the TSX-V as a Tier 1 mining issuer under the symbol “GSHR”.
Under the policies of the TSX-V, Sierra Madre is not expected to require shareholder approval for the Business Combination. In this regard, Sierra Madre and the Business Combination satisfy the TSX-V requirements as to not be subject to a shareholder approval requirement as: (a) the Business Combination is an Arm’s Length transaction; (b) Sierra Madre is a NEX-listed issuer without active operations; (c) Sierra Madre is not subject to a cease trade order and is not expected to be subject to such an order upon completion of the Business Combination; and (d) shareholder approval of the Business Combination is not required under applicable corporate and securities laws. However, Sierra Madre is expected to seek shareholder approval of certain matters related to the implementation of the Business Combination, including the Consolidation and the approval of the appointment of new board of directors of Sierra Madre to be effective upon completion of the Business Combination.
Goldshore is a private company incorporated under the Business Corporations Act (British Columbia) with a mandate to identify and evaluate mining related projects in North America. To date, Goldshore has raised approximately $4 million, identified and evaluated a number of projects and negotiated the Asset Purchase Agreement. Additional information on Goldshore will follow in a subsequent news release.
The Sierra Madre Shares have been halted and may remain halted until the completion of the Business Combination. There can be no assurance that the Business Combination will be completed on the terms proposed or at all.
Further details about the Business Combination and the Resulting Issuer will be provided in a TSX-V filing statement prepared and filed by Sierra Madre in respect of the Business Combination.
Additional Commitments by Wesdome, Goldshore Insiders and Shareholders
Pursuant to the Asset Purchase Agreement, in addition to any statutory hold period under applicable securities laws and TSX-V policies, Wesdome, all Goldshore insiders, strategic advisors and shareholders, and certain shareholders of Sierra Madre (representing a combined total of approximately 97% of the Resulting Issuer Shares prior to conversion of the Offered Securities) will have entered into voluntary escrow agreements which restrict resale for periods of between 18-36 months after Closing.
Investor Rights Agreement
In connection with the Closing, Wesdome and the Resulting Issuer are expected to enter into an investor rights agreement, pursuant to which will provide, among other things, that for so long as Wesdome holds at least 10% of the issued and outstanding Resulting Issuer, it will have a pro rata participation right and a standard piggyback registration right which would allow Wesdome to require the Resulting Issuer to include Resulting Issuer Shares held by Wesdome in any qualification of securities for distribution under Canadian securities laws by way of a prospectus. Further, until such time as Wesdome no longer holds 10% or more of the issued and outstanding Resulting Issuer Shares, Wesdome must give the Resulting Issuer prior written notice of its intention to sell more than 1% of the then issued and outstanding Resulting Shares in any 90-day period. Upon receipt of such notice, the Resulting Issuer will have five business days to designate the purchase of all or any portion of such shares, failing which, Wesdome will have the right to sell any remaining shares for an additional 30 days. Additionally, for so long as Wesdome holds at least 10% of the issued and outstanding Resulting Shares, it has the right to nominate two directors to the Resulting Issuer board of directors, with the initial investor nominee being Michael Michaud, Vice President, Exploration at Wesdome and the subsequent investor nominee to be determined.
Advisors and Counsel
Cassels Brock & Blackwell LLP is acting as Goldshore’s legal advisors.
Forooghian & Company Law Corporation is acting as Sierra Madre’s legal advisors.
Laurentian Bank Securities Inc. is acting as financial advisor to Wesdome, and Stikeman Elliott LLP is acting as Wesdome’s legal advisors.
Goldshore Resources Inc.
President & Director
Sierra Madre Developments Inc.
CEO & Director
Cautionary Note Regarding Forward-Looking Statements
Galen McNamara, P.Geo, President & Director of Goldshore, a qualified person under NI 43-101 has approved the technical information contained in this news release.
Michael Michaud, P.Geo, Vice President, Exploration of Wesdome, a qualified person under NI 43-101 has approved the technical information contained in this news release.
This news release contains statements that constitute “forward-looking statements.” Such forward looking statements involve known and unknown risks, uncertainties and other factors that may cause Sierra Madre’s, Goldshore’s and the Resulting Issuer’s actual results, performance or achievements, or developments to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects,” “plans,” “anticipates,” “believes,” “intends,” “estimates,” “projects,” “potential” and similar expressions, or that events or conditions “will,” “would,” “may,” “could” or “should” occur.
Forward-looking statements in this document include, among others, statements relating to expectations regarding the completion of the Business Combination (including all required approvals), the listing on the TSX-V, the Concurrent Financing (including the size of the Concurrent Financing and the use of the proceeds therefrom), the business plans of the Resulting Issuer, the composition of management, the board and advisory board of the Resulting Issuer and other statements that are not historical facts. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors and risks include, among others: that there is no assurance that the parties hereto will obtain the requisite director, shareholder and regulatory approvals for the Business Combination, and there is no assurance that the Business Combination will be completed as anticipated, or at all; there is no assurance that the Concurrent Financing will be completed or as to the actual offering price or gross proceeds to be raised in connection with the Concurrent Financing; following completion of the Business Combination, the Resulting Issuer may require additional financing from time to time in order to continue its operations which may not be available when needed or on acceptable terms and conditions acceptable; compliance with extensive government regulation; domestic and foreign laws and regulations could adversely affect the Resulting Issuer’s business and results of operations; the stock markets have experienced volatility that often has been unrelated to the performance of companies and these fluctuations may adversely affect the price of the Resulting Issuer’s securities, regardless of its operating performance; and the impact of COVID-19.
The forward-looking information contained in this news release represents the expectations of Sierra Madre and Goldshore as of the date of this news release and, accordingly, is subject to change after such date. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. Neither Sierra Madre nor Goldshore undertakes no obligation to update these forward-looking statements in the event that management’s beliefs, estimates or opinions, or other factors, should change.
This news release does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable, disinterested shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Sierra Madre should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this news release.