Sierra Madre Announces Proposed Acquisition of GOLD Property IN Quebec, Private Placement and Share Consolidation
{01517992;1}
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 re-
instatement 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.
{01517992;1}
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%
{01517992;1}
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
{01517992;1}
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.