/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES
OR DISSEMINATION IN THE U.S./
VANCOUVER, BC, Feb. 26, 2021 /CNW/ - Goldshore Resources Inc.
("Goldshore") and Sierra Madre Developments Inc.
("Sierra Madre") (TSXV:
SMG.H) are pleased to announce the closing of the
previously-announced brokered private placement offerings, pursuant
to which Goldshore issued an aggregate of 23,076,924 subscription
receipts (the "Subscription Receipts") at a price of
$0.65 per Subscription Receipt and
Sierra Madre issued an aggregate of
13,333,335 flow-through subscription receipts (the "Flow-Through
Subscription Receipts" and together with the Subscription
Receipts, the "Offered Securities") at a price of
$0.75 per Flow-Through Subscription
Receipt, for combined aggregate gross proceeds of $25,000,001.85 (the "Offerings").
The Offerings were conducted by a syndicate of agents, led by
Eventus Capital Corp. (the "Lead Agent"), and included
Canaccord Genuity Corp., Laurentian Bank Securities Inc., Haywood
Securities Inc., and Desjardins Securities Inc. (together with the
Lead Agent, the "Agents").
The Offerings were undertaken in conjunction with the previously
announced transaction (the "Business Combination"), which
will result in the reverse takeover of Sierra Madre by Goldshore (the resulting entity
being the "Resulting Issuer"). As previously announced,
Goldshore also entered into an agreement to acquire the interest of
Wesdome Gold Mines Ltd. (the "Proposed Acquisition") in the
Moss Lake gold project located in Ontario.
The Offerings and the Business Combination were originally
announced by way of press releases on January 26, 2021 and February 22, 2021.
"We are truly excited by the proposed Business Combination
with Sierra Madre and acquisition of
the Moss Lake Project from Wesdome, as well as the completion of
the $25M financing, which funds are
expected to advance development on the Moss Lake project. We
fully believe that we have assembled the best positioned team to
advance Moss Lake, which has significant resource growth potential
along its existing historic resource and 20km+ trend. We have
already identified several areas of prospective follow up work as
we are going through an extensive data compilation exercise, and
intend to work diligently with the entire team to advance
activities on the ground and unlock value from the asset," stated
Goldshore's incoming President and Chief Executive Officer,
Brett A. Richards.
Each Subscription Receipt entitles the holder to receive one
common share in the capital of Goldshore (a "Goldshore
Share") for no additional consideration upon satisfaction of
the Escrow Release Conditions (as defined below). Each Flow-Through
Subscription Receipt entitles the holder to receive one
flow-through common share in the capital of Sierra Madre (a "Sierra Madre Share"), to be issued as a
"flow-through share" as defined in subsection 66(15) of the
Income Tax Act (Canada)
(the "Tax Act"), upon satisfaction of the Escrow Release
Conditions. In connection with the completion of the Business
Combination, each Goldshore Share will be exchanged into one common
share of the Resulting Issuer (a "Resulting Issuer
Share").
Sierra Madre will incur (or be
deemed to incur) resource exploration expenses which will
constitute "Canadian exploration expenses" as defined in subsection
66.1(6) of the Tax Act and "flow through mining expenditures" as
defined in subsection 127(9) of the Tax Act, in an amount equal to
the amount raised pursuant to the sale of Flow-Through Subscription
Receipts and Sierra Madre 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 Tax Act.
The gross proceeds of (a) the sale of Subscription Receipts,
less 50% of the Agents' cash commission (as described below) and
certain expenses of the Agents, and (b) the sale of the
Flow-Through Subscription Receipts, have been deposited in escrow
until the satisfaction of the Escrow Release Conditions (the
"Escrowed Amount").
If the Escrow Release Conditions have not been satisfied prior
to June 30, 2021, the total escrowed
amount (plus any interest earned thereon in respect of the gross
proceeds from the sale of Subscription Receipts) will be returned
to the holders (net of any applicable withholding taxes), and the
Offered Securities will be automatically cancelled and be of no
further force and effect.
The remaining Escrow Release Conditions are summarized as
follows: confirmation that all conditions to the completion of the
Proposed Acquisition have been satisfied or waived; confirmation
that all conditions to the completion of the Business Combination
have been satisfied or waived, (other than the such conditions to
be satisfied at completion of the Business Combination); receipt of
all approvals required for completion of the Business Combination;
the Resulting Issuer Shares being conditionally approved for
listing on the TSX-V; counsel to the Resulting Issuer having
delivered a standard legal opinion; Goldshore, Sierra Madre and the Resulting Issuer not being
in breach of covenants or obligations under the transaction
agreements; and Goldshore, Sierra
Madre and the Lead Agent having delivered a release notice
to the escrow agent.
In connection with the Offerings, the Agents are entitled to
a cash fee equal to 6% of the aggregate gross proceeds of the
Offerings (4% for president's list subscribers) (50% of which such
cash fee payable in respect of the sale of Subscription Receipts
was paid to the Agent's on closing of the Offering) and were issued
such number of compensation options (the "Compensation
Options") equal to 6% of the number of Offered Securities sold
under the Offerings (4% for president's list subscribers).
Each Compensation Option issued by Goldshore (the "Goldshore
Compensation Options") is exercisable for one Goldshore Share
for a period of two years from the satisfaction of the Escrow
Release Conditions (the "Expiry Date") at a price of
$0.65 per Goldshore Share. Each
Compensation Option issued by Sierra
Madre is exercisable for one Sierra
Madre Share until the Expiry Date at a price of $0.75 per Sierra Madre
Share. In connection with the Business Combination, each
Goldshore Compensation Option will be exchanged for one
compensation option of the Resulting Issuer, which will be
exercisable for one Resulting Issuer Share at a price of
$0.65 until the Expiry Date.
The Subscription Receipts are subject to an indefinite hold
period, and the Flow-Through Subscription Receipts are subject to a
four-month statutory hold period expiring on June 27, 2021. The Resulting Issuer Shares issued
in exchange for the Goldshore Shares pursuant to the Business
Combination are expected to be free of any statutory hold periods
in Canada, other than in respect
of control block sales.
Upon satisfaction of the Escrow Release Conditions, it is
expected that the net proceeds from the Offerings will be used to
advance development of the Moss Lake gold project located in
Ontario, Canada and for working
capital and general corporate purposes.
Goldshore Resources Inc.
"Galen McNamara"
Galen McNamara
CEO
& Director
Sierra Madre Developments Inc.
"Hani
Zabaneh"
Hani Zabaneh
CEO & Director
Cautionary Note Regarding Forward-Looking Statements
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 use of proceeds from the
Offerings, the satisfaction of the Escrow Release Conditions,
payment of the Agents' commission from escrow, the conversion of
the Offered Securities, the business plans 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; 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 transactions are subject to a number of
conditions, including but not limited to, TSX-V 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 transactions, any information released or
received with respect to the transactions may not be accurate or
complete and should not be relied upon. Trading in the securities
of Sierra Madre (and the Resulting
Issuer) should be considered highly speculative.
The TSX-V has in no way passed upon the merits of the
proposed transaction and has neither approved nor disapproved the
contents of this news release.
SOURCE Sierra Madre Developments Inc.
