Damara GOLD Corp. Announces Proposed Reverse Takeover with New Found GOLD Corp.
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NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES
DAMARA GOLD CORP. ANNOUNCES PROPOSED REVERSE TAKEOVER
WITH NEW FOUND GOLD CORP.
September 6, 2018, Kelowna, British Columbia: Damara Gold Corp. (TSX.V: DMR ‐ the “Company” or
“Damara”), a Tier 2 mining issuer listed on the TSX Venture Exchange (the “Exchange”), is pleased to
announce it has entered into a business combination agreement dated September 5, 2018 (the
“Business Combination Agreement”) with New Found Gold Corp. (“New Found Gold”), a private
Ontario corporation, whereby Damara will acquire (the “Proposed Transaction”) all of the
outstanding shares of New Found Gold (the “NFG Shares”) in exchange for common shares in the
capital of Damara (the “Damara Shares”) by way of three‐cornered amalgamation.
About New Found Gold
New Found Gold is a private mineral exploration company organized under the laws of the Province
of Ontario and holding exploration assets in the Provinces of Ontario and Newfoundland and
Labrador.
Summary of the Proposed Transaction
The Proposed Transaction will be effected by way of a three‐cornered amalgamation pursuant to
which Damara will acquire all of the issued and outstanding NFG Shares in exchange for the issuance
of Damara Shares to shareholders of New Found Gold (the “NFG Shareholders”). As a result of the
Proposed Transaction, the current shareholders of New Found Gold would own a majority of the
issued and outstanding Damara Shares.
The Proposed Transaction will constitute an arm’s length Reverse Takeover of Damara pursuant to
Exchange Policy 5.2 – Changes of Business and Reverse Takeovers. Upon completion of the
Proposed Transaction, Damara will continue on with the business of New Found Gold and remain a
Tier 2 mining issuer (the Company after the completion of the Proposed Transaction being referred
to herein as the “Resulting Issuer”).
Prior to the completion of the Proposed Transaction, Damara will consolidate its share capital on a 6
(old) to 1 (new) basis and change its name to “New Found Gold Corp.” or such other name as may
be agreed by the parties. Pursuant to the Proposed Transaction, the NFG Shareholders will receive
six (6) post‐consolidation Damara Shares for each NFG Share held. Prior to closing of the Proposed
Transaction, New Found Gold intends to complete a private placement financing (the “Concurrent
Financing”) through the issuance of a minimum of 12,500,000 NFG Subscription Receipts (as defined
below) (the “Minimum Offering”) and up to a maximum of 22,500,000 NFG Subscription Receipts
(the “Maximum Offering”) at a price of $0.60 per NFG Share for gross proceeds of $7,500,000
assuming completion of the Minimum Offering and up to a maximum of $13,500,000 assuming the
Maximum Offering is fully subscribed.
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Upon completion of the Proposed Transaction and subject to compliance with applicable laws,
including the policies of the Exchange, all outstanding convertible securities of New Found Gold will
be exchanged for incentive stock options of the Resulting Issuer having the same economic benefits
for the holders thereof.
The completion of the Proposed Transaction is subject to the satisfaction of various conditions that
are standard for a transaction of this nature, including but not limited to (i) the completion of the
Minimum Offering; (ii) the approval by the shareholders of Damara (the “Damara Shareholders”)
and the NFG Shareholders to complete the Proposed Transaction, (iii) receipt of all requisite
regulatory, stock exchange, court or governmental authorizations and consents, including the
Exchange; and (iv) the completion of satisfactory due diligence by each of the parties. There can be
no assurance that the Proposed Transaction will be completed on the terms proposed above or at
all.
Certain of the Damara Shares to be issued pursuant to the Proposed Transaction are expected to be
subject to restrictions on resale or escrow under the policies of the Exchange, including the
securities to be issued to “Principals” (as defined in Exchange policies), which will be subject to the
escrow requirements of the Exchange.
Subject to satisfaction or waiver of the conditions precedent referred to herein and in the Share
Exchange Agreement, Damara and New Found Gold anticipate the Proposed Transaction will be
completed in the fourth quarter of 2018.
Each of Damara and New Found Gold will bear their own costs in respect of the Proposed
Transaction.
Proposed Concurrent Financing
Prior to or concurrent with completion of the Proposed Transaction, New Found Gold will complete
the Concurrent Financing. It is anticipated that the Concurrent Financing will be undertaken via the
issuance of subscription receipts of NFG (the “Subscription Receipts”) at a price of $0.60 per
Subscription Receipt. Each Subscription Receipt shall be automatically converted to NFG Shares
without any further action or payment by the holders thereof upon the satisfaction of certain
escrow release conditions (the “Escrow Release Conditions”). New Found Gold is currently meeting
with potential agents for the Concurrent Financing. Further details pertaining to the Concurrent
Financing will be provided in a subsequent news release.
The gross proceeds from the issue and sale of the Subscription Receipts (the “Escrowed Funds”) will
be held by an escrow agent and invested in short‐term obligations or other investments guaranteed
by the Government of Canada (and other approved investments) pending the satisfaction of the
Escrow Release Conditions. Provided that the Escrow Release Conditions are satisfied, the Escrowed
Funds will be released to New Found Gold or Damara, as directed by New Found Gold, and the New
Found Gold Shares issued to holders of Subscription Receipts will then be exchanged for common
shares in the capital of the Resulting Issuer pursuant to the Business Combination Agreement.
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If: (i) the Escrow Release Conditions are not satisfied; (ii) the Business Combination Agreement is
terminated at any earlier time; or (iii) either Damara or New Found Gold has advised any agent for
the Concurrent Financing or announced to the public that it does not intend to proceed with the
Proposed Transaction, then the Subscription Receipts shall be cancelled and the Escrowed Funds,
plus accrued interest, if any, shall be returned to the subscribers.
The proceeds raised will be used to fund the costs associated with completing the Proposed
Transaction, exploration on the Resulting Issuer’s properties and for general working capital. All
securities issued pursuant to the Concurrent Financing will be subject to a hold period of four
months and one day. Commissions may be paid on proceeds raised commensurate with industry
norms. It is not known at this time if any investment dealer or other registrant will be engaged to
assist with fund raising activities.
Trading Halt
At the Company's request, trading in the Damara's Shares has been halted by the Exchange effective
September 6, 2018. Trading is expected to remain halted until, at the earliest, the completion of the
Proposed Transaction.
Sponsorship
The parties will be seeking a waiver from the Exchange of any requirement for a sponsor, but in the
event a waiver is not available, will seek a sponsorship relationship for the Proposed Transaction
with an Exchange member firm.
The Resulting Issuer
Assuming completion of the Minimum Offering, it is estimated that there will be approximately
73,237,180 Resulting Issuer Shares issued and outstanding immediately following closing of the
Proposed Transaction, with former Damara Shareholders holding approximately 4,385,430 (5.99%)
of such Resulting Issuer Shares, former NFG Shareholders holding approximately 56,351,750
(76.94%) of such Resulting Issuer Shares and subscribers under the Concurrent Financing holding
approximately 12,500,000 (17.07%) of such Resulting Issuer Shares.
Assuming the Maximum Offering is fully subscribed, it is estimated that there will be approximately
83,237,180 Resulting Issuer Shares issued and outstanding immediately following closing of the
Proposed Transaction, with former Damara Shareholders holding approximately 4,285,430 (5.27%)
of such Resulting Issuer Shares, former NFG Shareholders holding approximately 56,351,750
(67.71%) of such Resulting Issuer Shares and subscribers under the Concurrent Financing holding
approximately 22,500,000 (27.03%) of such Resulting Issuer Shares.
Upon completion of the Proposed Transaction, in is anticipated that all of the existing directors and
officers of Damara will resign and the management of the Resulting Issuer will include the persons
identified below:
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Denis Laviolette – CEO, President, and Director
Mr. Laviolette has over 10 years of experience in exploration, advanced mine operations and capital
markets. He has worked in Northern Ontario (Timmins, Kirkland and Red Lake), Norway and Ghana,
and he was responsible for a diverse array of responsibilities, including grassroots exploration, start‐
up mine management and advanced min operations. Mr. Laviolette worked as mining analyst with
Pinetree Capital Ltd. and now serves as a mining analyst and vice‐president of corporate
development for ThreeD Capital Inc. (“ThreeD Capital”). He is also a director of Xtra‐Gold Resources
Corp., Northern Sphere Mining Corp. and Tartisan Resources Corp. Mr. Laviolette has a BSc in Earth
Sciences (geology) from Brock University.
Collin Kettell – Director
Mr. Kettell is the principal and co‐founder of Palisade Global Investments Ltd. (“Palisades”), an
investment company focused on the junior resource sector. Mr. Kettell is also Chairman of Goldspot
Discoveries Inc. (“Goldspot”), an Ontario based tech startup focused on machine learning and
artificial intelligence as it pertains to the resource exploration business.
John Anderson – Chairman
John Anderson has over 20 years of capital market experience specializing in the resource sector. He
has been a founder and financier of many start‐up companies with experience on the TSX, NYSE,
NASDAQ, London AIM and Swiss Stock Exchange. He was a founder of Deep 6 PLC, American Eagle
Oil and Gas as well a founding general partner in Aquastone Capital LLC, a New York based gold fund.
Mr. Anderson is the Executive Chairman of Triumph Gold Corp. and Chairman of EXM Farming Corp.
Cejay Kim – Director
Mr. Kim has been the Chief Investment Officer at Palisade Global since June 2015. Prior to that he
was a senior associate at ReQuestEquities, a merchant bank active in the junior resource sector. Mr.
Kim holds an MBA in Global Asset Wealth Management from Simon Fraser University and is a
Chartered Financial Analyst charterholder and member of both the Vancouver and Calgary CFA
Societies.
Mike Blady – Director
Mr. Blady holds a B.Sc. in Geology from Simon Fraser University and is the principal of Ridgeline
Exploration, a grass roots exploration services company based out of Vancouver BC. He has been
involved in senior management of numerous public companies since 2009 and has acted as a
geological consultant and advisor to various public companies providing corporate development
services. Mr. Blady’s senior management experiences with resource company’s gives him an
appreciation of the best industry practices with respect to financial risk controls and disclosure.
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Greg Matheson – Chief Operating Officer
Mr. Matheson is a professional geologist with over 10 years experience managing grassroots
exploration through to advanced exploration projects. Mr. Matheson is the former exploration
manager of Norther Gold Mining, prior to its sale to Osisko Mining in 2017.
Binh Quach – Chief Financial Officer
Mr. Quach is an operational and financial manager with 20 years of experience. He has broad
experience in all aspects of accounting, financial, and corporate management, both public and
private. Mr. Quach is a member in good standing with the Chartered Professional Accountants of
Canada and Ontario, with an Honours Bachelor of Accounting from Brock University. He is also the
CFO of GoldSpot Discoveries Inc. and controller of ThreeD Capital.
About Damara Capital Corp.
Damara Gold Corp. is a TSX Venture listed Canadian public company with a Board of Directors
seasoned in the mineral exploration industry with extensive and successful international experience
with a focus on identifying and acquiring prospective and under‐explored gold properties worldwide.
About New Found Gold Resources Ltd.
All information in this Press Release relating to New Found Gold is the sole responsibility of New
Found Gold. Management of Damara has not independently reviewed this disclosure nor has
Damara's management hired any third party consultants or contractors to verify such information.
New Found Gold Corp. is actively exploring district size gold exploration projects in Newfoundland
and Ontario. From inception, the company's mandate has been to stake and acquire prospective
projects with a focus on large scale, district size projects. With a significant footprint in
Newfoundland and Ontario, New Found Gold is able to explore in mining friendly jurisdictions, with
an emphasis on gold. New Found Gold looks for projects with historic work, drill date and/or a
defined resource, as well as projects with low acquisition and holding costs.
Financial Information of New Found Gold
New Found Gold’s consolidated financial statements for the year‐ended December 31, 2017 and
for the period from incorporation (January 6, 2016) to December 31, 2016 are currently being
audited and are expected to be completed by November 30, 2018. The consolidated financial
statements have been prepared in accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board. All monetary references expressed in this
press release are references to Canadian dollar amounts (“$”).
The following unaudited consolidated financial information has been prepared using accounting
policies applicable to a going concern, which contemplates the realization of assets and settlement
of liabilities in the normal course of business as they become due. New Found Gold has net profits
since incorporation on November 9, 2016, has net income for the year ended December 31, 2017
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of $460,675 (from incorporation on January 6, 2016 to December 31, 2016 –$275,788) and has
retained earnings of $736,463 as at December 31, 2017. New Found Gold is a start‐up company
and is subject to risks and challenges similar to other companies in a comparable stage. These risks
include, but are not limited to, dependence on key individuals, exploration and development risks,
investment risks, market risks, the ability to maintain adequate cash flows, commodity prices,
exchange rate fluctuations and continuing as a going concern.
Statement of financial position highlights
(Unaudited) December 31, 2017 December 31, 2016
Cash and cash equivalents $ 1,011,116 $ 13,647
Investments, at fair value 436,995 337,500
Prepaid and accounts receivables 210,281 167,756
Sales tax recoverable 200,020 20,940
Advances to affiliated company ‐ 50,470
Exploration and evaluation assets 2,417,658 442,643
Total assets 4,276,070 1,032,956
Total liabilities 315,490 250,931
Share capital and contributed surplus 3,236,940 505,000
Foreign currency translation reserve (12,823) 1,237
Retained earnings 736,463 275,788
Working capital 1,542,922 339,382
New Found Gold has no long‐term debt.
Cautionary Note
As noted above, completion of the Proposed Transaction is subject to a number of conditions
including, without limitation, approval of the Exchange, approval of the Damara Shareholders and
the NFG Shareholders and completion of the Minimum Offering. Where applicable, the Proposed
Transaction cannot close until the required approvals have been obtained. There can be no
assurance that the Proposed Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the continuous disclosure document containing
full, true and plain disclosure regarding the Proposed Transaction, required to be filed with the
securities regulatory authorities having jurisdiction over the affairs of the Company, any information
released or received with respect to the Proposed Transaction may not be accurate or complete and
should not be relied upon. The trading in the securities of Damara on the Exchange, if reinstated
prior to completion of the Proposed Transaction, should be considered highly speculative.
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ON BEHALF OF THE BOARD OF DIRECTORS:
“Larry Nagy”
Larry Nagy, Chief Executive Officer
For additional information visit Damara’s website at www.damaragoldcorp.com or contact:
Damara Gold Corp.
Larry Nagy, Chief Executive Officer or
Terese Gieselman, Chief Financial Officer
Ph: (250‐717‐1840)
Disclaimer for Forward‐Looking Information
This press release contains forward‐looking statements and information that are based on the beliefs
of management and reflect Damara's current expectations. When used in this press release, the words
"estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should"
and the negative of these words or such variations thereon or comparable terminology are intended to
identify forward‐looking statements and information. The forward‐looking statements and information
in this press release include information relating to the business plans of Damara, New Found Gold,
and the Resulting Issuer, the Concurrent Financing, the Proposed Transaction (including Exchange
approval and the closing of the Proposed Transaction) and the board of directors and management of
the Resulting Issuer upon completion of the Proposed Transaction. Such statements and information
reflect the current view of Damara. Risks and uncertainties that may cause actual results to differ
materially from those contemplated in those forward‐looking statements and information.
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 include, among others, the following risks:
there is no assurance that the Concurrent Financing will be completed or as to the actual
offering price or gross proceeds to be raised in connection with the Concurrent Financing. In
particular, the amount raised may be significantly less than the amounts anticipated as a result
of, among other things, market conditions and investor behaviour;
there is no assurance that Damara and New Found Gold will obtain all requisite approvals for
the Proposed Transaction, including the approval of the Damara Shareholders and New Found
Gold Shareholders, or the approval of the Exchange for the Proposed Transaction (which may
be conditional upon amendments to the terms of the Proposed Transaction);
following completion of the Proposed Transaction, the Resulting Issuer may require additional
financing from time to time in order to continue its operations. Financing may not be available
when needed or on terms and conditions acceptable to the Resulting Issuer;
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new laws or regulations could adversely affect the Resulting Issuer's business and results of
operations; and
the stock markets have experienced volatility that often has been unrelated to the
performance of companies. These fluctuations may adversely affect the price of the Resulting
Issuer's securities, regardless of its operating performance.
There are a number of important factors that could cause Damara's actual results to differ materially
from those indicated or implied by forward‐looking statements and information. Such factors include,
among others: limited business history of Damara and New Found Gold; disruptions or changes in the
credit or security markets; results of operation activities and development of projects; project cost
overruns or unanticipated costs and expenses, fluctuations in commodity prices, and general market
and industry conditions.
Damara cautions that the foregoing list of material factors is not exhaustive. When relying on
Damara's forward‐looking statements and information to make decisions, investors and others should
carefully consider the foregoing factors and other uncertainties and potential events. Damara has
assumed that the material factors referred to in the previous paragraph will not cause such forward‐
looking statements and information to differ materially from actual results or events. However, the
list of these factors is not exhaustive and is subject to change and there can be no assurance that such
assumptions will reflect the actual outcome of such items or factors.
THE FORWARD‐LOOKING INFORMATION CONTAINED IN THIS PRESS RELEASE REPRESENTS THE
EXPECTATIONS OF DAMARA AS OF THE DATE OF THIS PRESS 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. WHILE DAMARA MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS
INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE
LAWS.
This press release is not an offer of the securities for sale in the United States. The securities have not
been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in
the United States absent registration or an exemption from registration. This press release shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the
securities in any state in which such offer, solicitation or sale would be unlawful.
Completion of the Proposed Transaction is subject to a number of conditions, including but not limited
to, Exchange acceptance. There can be no assurance that the Proposed Transaction will be completed
as proposed or at all.
Investors are cautioned that, except as disclosed in the information circular to be prepared in
connection with the Proposed Transaction, any information released or received with respect to the
Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the
securities of Damara should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the Proposed Transaction and
has neither approved nor disapproved the contents of this press release.