Sierra Madre Announces Proposed Acquisition of Gold Property in Quebec, Private Placement and Share Consolidation
NEWS RELEASE
SIERRA MADRE ANNOUNCES PROPOSED ACQUISITION OF GOLD PROPERTY IN QUEBEC, PRIVATE PLACEMENT AND SHARE CONSOLIDATION
February 25, 2020
Sierra Madre Developments Inc. (the “Company”) (TSXV: SMG.H) announces that it proposes to acquire a prospective gold property in a prolific Quebec gold district, to carry out a share consolidation, name change, and non-brokered private placement financing, and to seek reinstatement on Tier 2 of the TSX Venture Exchange.
Acquisition of Quebec Exploration Property
The Company announces that it has entered into an acquisition agreement with an arm’s length consortium to acquire 161 claims covering 8,867 hectares (the “Property”) located in close proximity to the major deposits (Osisko Mining’s Windfall Deposit, and Bonterra Resources’ Gladiator and Barry Deposits) of the emerging Urban-Barry Gold Camp in Quebec. See Figure
| 1 below. | Pursuant to the acquisition agreement, subject the approval of the TSX Venture | |
| Exchange, the Company will acquire the Property by the issuance of 7,000,000 post-consolidated | ||
| common shares of the Company. | The consortium consists of a number of individuals and |
companies, the principals of which are Jean-Francois Montreuil, Quentin Yarie, Eric Steffler, David Patterson, Jegudiel Holdings Inc. (Kosta Kostic) and 514 Finance Inc. (Perry Theoharis).
The acquisition agreement is also subject to an area of mutual interest, whereby the Company will have the option to acquire any claims acquired by the consortium within one kilometer of the Property.
A review of the geophysics associated with and covering the claims suggests similar magnetic anomalies to that of the nearby Windfall and Barry deposits exist. The area has been mapped as granitic which is a likely reason these claims have not seen significant exploration; however, the magnetic signature suggests similar structure to the nearby Windfall and Barry deposits.
Figure 1: Property location map and surrounding projects
Share Consolidation
In conjunction with the proposed property acquisition, the directors have approved the consolidation of the Company’s 10,798,083 issued and outstanding common shares on the basis of one new share for every two outstanding shares. As a result of the share consolidation, the Company will have approximately 5,399,041 common shares outstanding. The share consolidation is subject to acceptance of the TSX Venture Exchange. In conjunction with the share consolidation it is anticipated that the Company will change its name.
Private Placement
The directors have also approved a private placement to raise up to $1,000,000 through the distribution of a combination of post-consolidated units (each a “Unit”) at $0.05 per Unit and post-consolidated flow-through units (each a FT Unit”) at $0.05 per FT Unit. Each Unit will consist of one common share of the Company and one share purchase warrant (a “Warrant”), with each Warrant exercisable at a price of $0.10 per share for a period of two years from the date of issue. Each FT Unit will consist of one flow-through common share of the Company and one-half of one Warrant. It is anticipated that approximately $200,000 of the total amount raised will be FT Units.
Funds will be used for an initial $200,000 exploration program on the Property, payment of certain debts, and for working capital purposes. The Company has agreed to pay up to 10% in cash, 5% in common shares and 5% in broker warrants as finder fees to arm’s length parties in connection with the closing of the Private Placement.
Change of Management
The Company announces the resignation, effective March 3, 2020 of Carl von Einsiedel as the Chief Executive Officer, Chief Financial Officer and a director of the Company, and that on March 3, 2020, Raymond Wladichuk, a British Columbia registered Professional Geologist, will join the board of directors and be appointed Chief Executive Officer.
Upon completion of the above transactions, it is contemplated that the Board of the Company will be comprised of Raymond Wladichuk and current directors Robert Anderson and Kathryn Witter.
Raymond Wladichuk is a technical and managerial consultant in the natural resource, engineering, and construction industries. He holds a Bachelor of Science in Earth Sciences and a graduate diploma in Business Administration from Simon Fraser University.
Kathryn Witter has, since 1989, been the Chief Executive Officer of Marketworks, Inc., a private company specializing in providing financial, regulatory and consulting services to both emerging and mid-cap public companies trading in Canada, the USA and the United Kingdom. Ms. Witter has been a director and/or officer in several publicly traded companies and has experience in full cycle accounting, project and budget management; customization of managerial and administrative procedures, mergers and acquisition, negotiation and structuring.
Robert Anderson has been involved in the resource industry for 39 years with both exploration and mining companies. He has held CFO positions with 13 such companies over that time. He has also acted as a director and secretary for a number of these companies. His experience covers all levels of accounting, preparing corporate tax returns, prospectuses, flow-through shares, regulatory filings, contracts and mergers.
Qualified Persons
All disclosure of scientific or technical information pertaining to the Property contained herein has been reviewed and approved by Raymond Wladichuk, P. Geo., a qualified person as defined in NI 43-101 – Standards of Disclosure for Mineral Projects.
TSXV Policies
The transactions described herein will amount to a “reactivation” of the Company under TSXV Policy 2.6, and a “RTO” under TSXV Policy 5.2. As a result, trading of the Company’s shares has been halted, and are expected to remain halted until closing of the transactions and the relisting of the Company’s shares on Tier 2 of the TSXV. No sponsor has been engaged in connection with the Company’s application for TSXV approval of the transactions.
It is anticipated that no shareholders’ vote will be required in connection with the above transactions (other than the consolidation), as in accordance with section 4.1 of TSXV Policy 5.2, the transactions are not “Related Party Transactions”, the Company is inactive and listed on the NEX, the Company is not subject to any existing or proposed cease trade orders, and no shareholders’ vote is required under applicable corporate or securities law. It is anticipated shareholders’ approval to the consolidation will be obtained by way of consent resolution.
No finder’s fees will be paid in connection with the Property acquisition. It is not expected that the Company will be advancing any funds to the Property owners or towards work on the Property prior to completion of the reactivation.
The RTO is subject to the sponsorship requirements of the TSXV, unless an exemption from the sponsorship requirement is available or a waiver is granted. The Company intends to apply for an exemption to the sponsorship requirement. There is no assurance that an exemption from this requirement will be obtained.
Completion of the transactions is subject to a number of conditions, including but not limited to, Exchange acceptance and, if applicable, disinterested shareholder approval. Where applicable, the transactions cannot close until the required shareholder approval is obtained. There can be no assurance that the transactions 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 the Company should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transactions and has neither approved nor disapproved the contents of this news release.
ON BEHALF OF THE BOARD:
“Carl von Einsiedel”
Carl von Einsiedel, CEO Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news release includes certain “forward-looking statements” under applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to: the proposed Property acquisition, the consolidation of the Company’s shares, and the proposed private placement. There is no assurance the Company will be able to raise funds on the terms stated, or at all, or to close the acquisition of the Property. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, political and social uncertainties; delay or failure to receive board, shareholder or regulatory approvals; and the uncertainties surrounding the mineral exploration industry. Accordingly, readers should not place undue reliance on forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.