Gran Colombia Gold Announces Letter of Intent With Bluenose in Respect of Marmato Spin Off
Gran Colombia Gold Announces Letter of Intent With Bluenose in Respect of
Marmato Spin Off
Not for distribution to U.S. news wire services or dissemination in the United States.
TORONTO, Oct. 07, 2019 -- Gran Colombia Gold Corp. (TSX: GCM, OTCQX: TPRFF) (the “Company” or “Gran Colombia”)
announced today, further to the press release of the Company dated September 16, 2019, that it has entered into a letter of
intent (the “LOI”) on October 4, 2019 with Bluenose Gold Corp. (TSX-V: BN.H) ( “Bluenose”) in respect of the proposed
acquisition by Bluenose of certain mining assets (the “Mining Assets”) at the Company’s Marmato Project located in the
Department of Caldas, Colombia (the “Transaction”).
The Mining Assets principally comprise the existing producing underground gold mine, including the right to mine in the lower
portion of the Echandia license area, the existing 1,200 tonnes per day processing plant and the area encompassing the
Deeps mineralization, all located within the mining license area referred to as Zona Baja. The existing underground mine at
Marmato produced 24,951 ounces of gold in 2018 and is on track to produce between 24,000 and 26,000 ounces of gold in
2019. The Mining Assets have excellent infrastructure, being located by the Pan American Highway with access to Medellin to
the north and Manizales to the south, and have access to the national electricity grid which runs near the property. Gran
Colombia is currently working with SRK Consulting (US) Inc. to complete a technical report for the Mining Assets pursuant to
National Instrument 43‐101 - Standards of Disclosure for Mineral Projects (the “Technical Report” ). The Technical Report,
expected to be completed by the end of November and filed on SEDAR and the Company’s website, will include an updated
Mineral Resource estimate for the Mining Assets. Gran Colombia will retain its existing ownership of the mining licenses in the
areas known as Zona Alta and Echandia. Gran Colombia and Bluenose are not related parties.
About Bluenose
Bluenose is primarily engaged in the acquisition and exploration of resource properties and is a “reporting issuer” in British
Columbia and Alberta listed on the NEX Board of the TSX Venture Exchange (the “TSX-V”). It is anticipated that the proposed
Transaction will constitute a Reverse Takeover (as such term is defined under TSX-V Policy 5.2 – Changes of Business and
Reverse Takeovers ) of Bluenose. The authorized share capital of Bluenose consists of an unlimited number of common
shares (“Bluenose Common Shares” ) and an unlimited number of preferred shares, issuable in series. As at the date
hereof, an aggregate of 106,028,802 Bluenose Common Shares on a pre-Consolidation (as hereinafter defined) basis and no
preferred shares are issued and outstanding. An aggregate of 5,800,000 Bluenose Common Shares, on a pre-Consolidation
basis, are reserved for issuance under incentive stock options granted to directors, officers and consultants of Bluenose
(“Bluenose Options”).
Prior to the completion of the Transaction, Bluenose will consolidate its outstanding common shares on a one (1) for ten (10)
basis (the “Consolidation”).
Terms of the Transaction
It is currently anticipated that Bluenose will acquire the Mining Assets by way of purchase from Gran Colombia of all of the
issued and outstanding shares of Gran Colombia’s wholly-owned subsidiary, Medoro Resources Colombia Inc. ( “Marmato
Panama” ). Marmato Panama holds all of the issued and outstanding shares of Gran Colombia Gold Marmato S.A.S.
(“Marmato Colombia” ), which, in turn, holds all of the Mining Assets. The Mining Assets will be acquired by Bluenose for
C$57,500,000 which will be satisfied by the issuance by Bluenose to Gran Colombia of an aggregate of 28,750,000 Bluenose
Common Shares (on a post-Consolidation basis) having a deemed price of C$2.00 per post consolidation Bluenose Common
Share.
Prior to, or concurrent with, the completion of the Transaction: (i) Gran Colombia will purchase from Bluenose, on a private
placement basis, 2,500,000 units of Bluenose ( “Units”), at a price of C$2.00 per Unit, for aggregate gross proceeds to
Bluenose of C$5,000,000 (the “Private Placement” ); and Bluenose anticipates that it will complete a brokered private
placement of a minimum of 5,000,000 Units and a maximum of 7,500,000 Units, at a price of C$2.00 per Unit, for aggregate
gross proceeds to Bluenose of between C$10,000,000 and C$15,000,000 (the “Brokered Private Placement” ). No agent
has yet been engaged with respect to the Brokered Private Placement.
The Units to be issued pursuant to the Private Placement and Brokered Private Placement, respectively, will each be
comprised of one Bluenose post-Consolidation Common Share and one share purchase warrant (a “Warrant”), with each
Warrant being exercisable to acquire one additional Bluenose post-Consolidation Common Share at a price of C$3.00 for a
period of five (5) years from the closing of the Private Placement or Brokered Private Placement, as applicable.
Pursuant to an agreement between Fiore Management & Advisory Corp. ( “Fiore”) and Bluenose, Fiore shall be entitled to
100,000 Bluenose post-Consolidation Common Shares upon the completion of the Transaction.
The following table outlines the anticipated share capital of Bluenose on a post-Consolidation basis following the completion of
the Private Placement, Brokered Private Placement and Transaction.
Number of Bluenose
Common Shares
(minimum Brokered
Private Placement)
Number of Bluenose
Common Shares
(maximum Brokered
Private Placement)
Outstanding Bluenose Common Shares (pre-Transaction) 10,602,880 10,602,880
Bluenose Common Shares issuable to Gran Colombia pursuant
to Transaction 28,750,000 28,750,000
Bluenose Common Shares issuable to Gran Colombia pursuant
to Private Placement 2,500,000 2,500,000
Bluenose Common Shares issuable pursuant to Brokered
Private Placement 5,000,000 7,500,000
Bluenose Common Shares issuable to Fiore 100,000 100,000
Total Issued and Outstanding 46,952,880 49,452,880
Bluenose Common Shares reserved for issuance under
Bluenose Options 580,000 580,000
Bluenose Common Shares underlying Warrants issuable to
Gran Colombia pursuant to Private Placement 2,500,000 2,500,000
Bluenose Common Shares underlying Warrants issuable
pursuant to Brokered Private Placement 5,000,000 7,500,000
Total Issued and Outstanding
Fully-Diluted 55,032,880 60,032,880
The Company and Bluenose intend to negotiate and enter into a definitive agreement (the “Definitive Agreement” ) setting
forth the detailed terms and conditions of the Transaction. The closing of the Transaction is subject to the receipt of all
necessary regulatory and third-party consents, authorizations and approvals, including, without limitation, the approval of the
listing of the Bluenose Common Shares issued in connection with the Transaction on the TSX-V which will be subject to
Bluenose satisfying the TSX-V’s minimum listing conditions for a mining issuer.
The closing of the Transaction will also be subject to the following conditions, amongst others:
i. Gran Colombia and Bluenose being satisfied with the results of their respective due diligence investigations;
ii. all liens and encumbrances in respect of Marmato Panama, Marmato Colombia and the Mining Assets granted in favour
of the holders of the 8.25% senior secured notes due in 2024 shall have been released and discharged, on terms and
conditions satisfactory to Bluenose, acting reasonably;
iii. to the extent required, the receipt of shareholder approval from the shareholders of Bluenose;
iv. the Consolidation shall have been completed;
v. the Private Placement and the Brokered Private Placement shall have been completed;
vi. the name of Bluenose shall have been changed to “Caldas Gold Corporation” or such other name as may be specified
by Gran Colombia in writing;
vii. no adverse change shall have occurred in the business, results of operations, assets, liabilities, financial condition or
affairs of Bluenose, Marmato Panama or Marmato Colombia, taken as a whole, or the Mining Assets; and
viii. the final structure and steps for the Transaction shall be satisfactory to both Bluenose and the Company, acting
reasonably, from a tax, corporate and securities law and due diligence perspective.
About the Resulting Issuer
Pursuant to the LOI, the initial members of the board of directors of Bluenose following the completion of the Transaction (the
“Resulting Issuer Board”) shall be selected by Gran Colombia and set forth in the Definitive Agreement. If a meeting of the
shareholders of Bluenose (the “Bluenose Shareholder Meeting” ) is required for the purposes of obtaining Bluenose
Shareholder Approval, the members of the Resulting Issuer Board will be nominated and elected by the shareholders of
Bluenose at the Bluenose Shareholder Meeting (subject to, and contingent upon, the completion of the Transaction). The
current directors and officers of Bluenose shall resign at or prior to the completion of the Transaction.
The Resulting Issuer Board will be fixed at five (5) directors as at the completion of the Transaction, or as soon as practicable
thereafter. Pursuant to the LOI, Gran Colombia shall be provided a continuing right to nominate a minimum of: (i) two (2)
directors to the Resulting Issuer Board, so long as it holds greater than 20% of the outstanding Bluenose Common Shares, or
(ii) one (1) director to the Resulting Issuer Board, so long as it holds greater than 10% of the outstanding Bluenose Common
Shares.
The proposed Resulting Issuer Board is expected to include the following members and Gran Colombia intends to appoint the
following individuals as officers of the resulting entity upon completion of the Transaction (the “Resulting Issuer”); the two
additional nominees to the Resulting Issuer Board are being recruited and will be disclosed when nominated:
Name and
Municipality
of
Residence
Proposed
Position
with the
Resulting
Issuer
Present Principal Occupation or Employment, Principal Occupation or Employment for the
Past Five Years or More, and Other Current Public Directorships
Serafino
Iacono
Panama
City,
Panama
Interim
Chief
Executive
Officer and
Director
Executive Co-Chairman of the Board to the Company since August 20, 2010; Co-Chairman of the
Board of Pacific Exploration & Production Corporation from January 23, 2008 to November 2, 2016;
Interim Chief Executive Officer and President of Medoro Resources Ltd. from September 2010 to
June 10, 2011.
Michael
Davies
Ontario,
Canada
Chief
Financial
Officer
Chief Financial Officer of the Company since August 20, 2010. Mr. Davies is a Chartered
Accountant (Ontario) and has a Bachelor of Commerce degree from the University of Toronto. Over
the last more than twenty years he has gained extensive international and public company
experience in financial management, strategic planning and external reporting. Mr. Davies was the
Chief Financial Officer of PetroMagdalena Energy Corp. from July 13, 2009 to July 27, 2012. His
diverse background also includes senior finance roles with several public companies, including LAC
Minerals, IMAX Corporation, Century II Holdings, Energentia Resources, Pamour Inc. and Giant
Yellowknife Mines.
Lombardo
Paredes
Arenas
Medellin,
Colombia
Director
Mr. Paredes has been the Chief Executive Officer of the Company since February 1, 2014. Prior to
joining the Company, he worked as an Independent Consultant from 2005 until January 2014. Mr.
Paredes also held a number of positions at Petróleos de Venezuela and its affiliates from 1975 to
1998.
Hernan
Juan Jose
Martinez
Torres
Barranquilla,
Colombia
Director
Mr. Martinez has been the Executive Chairman and a director of Caribbean Resources Corporation
since September 4, 2012. Mr. Martinez served as Minister of Mines (Colombia) from July 2006 to
August 2010, President of Atunec S.A. from August 2002 to July 2006 and held a number of
positions at Exxon Mobil Colombia S.A. from 1964 to 2002.
Upon completion of the Transaction, the Resulting Issuer will continue to operate within mining and natural resources industry.
About Gran Colombia Gold Corp.
Gran Colombia is a Canadian-based mid-tier gold producer with its primary focus in Colombia where it is currently the largest
underground gold and silver producer with several mines in operation at its Segovia and Marmato Operations. Gran Colombia is
continuing to focus on exploration, expansion and modernization activities at its high-grade Segovia Operations and, through
the Transaction described in this press release, progressing toward a major expansion and modernization of its underground
mining operations at the Marmato Project.
Additional information on Gran Colombia can be found on its website at www.grancolombiagold.com and by reviewing its
profile on SEDAR at www.sedar.com.
Cautionary Statement on Forward-looking Information
This news release contains “forward-looking information”, which may include, but is not limited to, statements with respect to
anticipated business plans or strategies and the future financial or operating performance of the Company and its projects.
Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is
expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including
negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might"
or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of Gran Colombia to be materially different
from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors that
could cause actual results to differ materially from those anticipated in these forward-looking statements are described under
the caption "Risk Factors" in the Company's Annual Information Form dated as of March 27, 2019 which is available for view
on SEDAR at www.sedar.com.
Forward-looking statements contained herein are made as of the date of this press release and Gran Colombia disclaims,
other than as required by law, any obligation to update any forward-looking statements whether as a result of new information,
results, future events, circumstances, or if management's estimates or opinions should change, or otherwise. There can be no
assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially
from those anticipated in such statements. Accordingly, the reader is cautioned not to place undue reliance on forward-looking
statements.
Further Information
As noted above, completion of the Transaction is subject to a number of conditions, including, but not limited to, acceptance
from the TSX-V 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 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.
This news release does not constitute an offer to sell, or a solicitation of an offer to buy, any securities under the Private
Placement and Brokered Private Placement 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 (as defined under the U.S. Securities Act) unless registered
under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.
For Further Information, Contact:
Mike Davies
Chief Financial Officer
(416) 360-4653