Goldshore Resources to Acquire Moss Lake Gold Project from Wesdome Gold Mines Ltd., Creating New Canadian Gold Development Company Goldshore to Complete Concurrent $25 Million Equity Financing & Amalgamate with Sierra Madre Developments
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Goldshore Resources to Acquire Moss Lake Gold Project from Wesdome Gold
Mines Ltd., Creating New Canadian Gold Development Company
Goldshore to Complete Concurrent $25 Million Equity Financing & Amalgamate
with Sierra Madre Developments
Wesdome to Become Largest Shareholder of Goldshore
January 26, 2021 – 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.
Transaction Highlights
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 gold 1,2,3 in two deposits 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.
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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 maj or 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 shareh older 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 w as 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 Inc 2,3. 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 ass ociated with the Moss Lake Deposit over a total strike
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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 198 8 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 Cold stream Mine is reported to have produced significant
amounts of copper, gold and silve r4 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 Resources1,2,3
INDICATED INFERRED
Deposit Tonnes Au g/t Au oz Tonnes Au g/t Au oz
Moss Lake Deposit1 (2013 resource estimate)
Open Pit Potential 39,795,000 1.1 1,377,300 48,904,000 1.0 1,616,300
Underground Potential - - - 1,461,100 2.9 135,400
Moss Lake Total 39,795,000 1.1 1,377,300 50,364,000 1.1 1,751,600
East Coldstream Deposit2 (2011 resource estimate)
East Coldstream Total 3,516,700 0.85 96,400 30,533,000 0.78 763,276
Combined Total 43,311,700 1.08 1,473,700 80,897,000 0.98 2,514,876
Notes:
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(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
Historical Production 2,700,0000 1.89 0.56 5.59 102,000,000 44,000 440,000
Note::
(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 reconstitute d 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.
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Gavin Cooper, Chief Financial Officer
Mr. Cooper is a Chartered Professional Accountant with extensive experience in all aspec ts 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 a nd 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 reso urce 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.
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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 explor ation 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.
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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, t he 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.
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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 Securitie s 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 Subscripti on 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, f or 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 t he 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 Concur rent 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 Go ldshore 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 opti on of the Resulting Issuer, which will be exercisable for
one Resulting Issuer Share at the issue price of the Subscription Receipt.