Avalon Works Corp. announces completion of acquisition of Elmtree Gold Project in NE New Brunswick, $ 5,040,500 concurrent financing s and listing on the TSX Venture Exchange
Avalon Works Corp. announces completion of acquisition of Elmtree Gold Project
in NE New Brunswick, $ 5,040,500 concurrent financing s and listing on the TSX
Venture Exchange
Edmonton, Alberta -- (February 26, 2021) – Avalon Works Corp. (TSXV: AWB) (the "Company") is pleased
to announce that, further to the news release issued by the Company on November 26, 2020 , the
Company has completed a consolidation (the " Consolidation") of all issued and outstanding common
shares on the basis of 4.9362-to-1 effective February 25, 2021 followed by the acquisition on February 26,
2021 (the " Acquisition") of a mineral exploration property comprised of two mineral exploration
properties respectively comprised of 24 and 25 contiguous mineral claims totaling 1,063,326 hectares in
northeast New Brunswick known as the " Elmtree Gold Project " (the "Property"), pursuant to the terms
of an agreement (the "Acquisition Agreement") dated November 18 , 2020 among the Company and
Kevin Vienneau, Roy Bonnell, Nick Stajduhar and John Williamson, who are businessmen resident in
Canada (collectively, the " Vendors"). In addition, immediately following the Acquisition, the Company
completed a concurrent financi ng (the " Concurrent Financing ") for aggregate gross proceeds of
$3,588,500 and a private placement (the " Private Placement ") offering of common shares of the
Company on a flow -through basis for gross proceeds of $1,452,000. The Company also received
conditional listing approval for the listing (the " Listing") of its common shares on the TSX Venture
Exchange (the " TSXV") pursuant to a Listing Application dated February 25, 2021 (the " Listing
Application"), which is filed under the Company's profile on SEDAR at www.sedar.com, and expects to
commence trading on Wednesday March 3, 2021 under the trading symbol " AWB" as a Tier 2 mining
company.
In connection with the Acquisition and Listing, the Company has also filed on SEDAR under its profile, a
geological te chnical report prepared in accordance with National Instrument 43 -101—Standards for
Disclosure for Mineral Projects ("NI 43 -101") on the Property entitled, "NI 43 -101 Technical Report,
Geological Introduction to Avalon Works Corp.'s Elmtree Gold Project, N ortheast New Brunswick,
Canada" dated effective February 25, 2021 (the " Technical Report"). In addition, the Listing Application
also provides more detailed information about the Consolidation, Bridge Financing, Acquisition,
Concurrent Financing, Private P lacement, and Listing (collectively, the " Transactions"), as well as
additional information about the Company itself and the Elmtree Gold Project.
Bridge Financing and Consolidation
Pursuant to the Acquisition Agreement and prior to the closing of the Acquisition , Avalon received
shareholders' approval to consolidate all of its issued and outstanding securities on the basis of 4.9362 -
to-1 (the " Consolidation") and completed the Consolidation on February 25, 2021 . Prior t o the
Consolidation on February 1, 2021, the Company completed a bridge financing of $150,000 (the "Bridge
Financing") by way of a non-brokered private placement offering of 400,000 special warrants (the "Bridge
Special Warrants ", and each a " Bridge Special Warrant") at an effective post -Consolidation priv ate of
$0.375 per Bridge Special Warrant of the Company. There were no commissions or finders fees paid in
respect of the Bridge Financing.
Upon completion of the Consolidation and concurrent with the Acquisition, each Bridge Special Warrant
was automatically exercised at no additional consideration into a unit (a "Bridge Unit") of a wholly-owned
subsidiary of the Company , 1290012 B.C. Ltd. ("Fin Sub "). Each Bridge Unit was comprised of one
common share and one -half common share purchase warrant of Fin Sub (a " FinSub Bridge Warrant").
Each FinSub Bridge Warrant entitled the holder thereof to acquire one common share of FinSub at an
exercise price of $0.75 per share for 12 months after the date of is suance. After completion of the
Acquisition, the Bridge Units were exchanged automatically at under the Amalgamation (as described
below) on a 1-for-1 basis for like securities of Avalon, on a post -Consolidation basis, which securities are
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not subject to a hold or resale restrictions under applicable securities laws or the policies of the TSXV .
However, 49,867 common shares and 24,933 common share purchase warrants of the Company issued to
a principal of the Company in connection with the Br idge Financing are subject to a 36 month staged
release Tier 2 Value Escrow pursuant to the policies of the TSXV.
The Acquisition of Elmtree Gold Project
Pursuant to the Acquisition Agreement, the Company acquired the Property on February 26, 2021
through one of its wholly -owned subsidiaries, 1290015 B.C. Ltd. ("Property Sub") by paying a purchase
price of $ 7,350,000 through: (i) payment of $3 50,000 cash to Kevin Vienneau ; (ii) the issuance of
14,000,000 common shares of the Com pany at a deemed price of $0 .50 per share (the " Purchase
Shares"), which Purchase Shares are allocated to Kevin Vienneau or his corporate nominee (2,400,000
Purchase Shares), Severin Holdings Inc. (3,866,666 Purchase Shares), 678119 Alberta Ltd. ( 3,866,666
Purchase Shares), and Jemseg Capital Inc. (3,866,666 Purchase Shares); and (iii) grant of a 2% net smelter
returns royalty (the "2% NSR") on the Elmtree Gold Project to Kevin Vienneau or his corporate nominee
pursuant to a Net Smelter Return Royalty Agreement entered into betwe en the Company and Kevin
Vienneau or his corporate nominee . The Company also paid an arm's length third party finder, Redstone
Concepts Inc. of Montreal, Quebec (the " Finder"), a finder's fee of $10 0,000 by issuance of 2 00,000
common shares of the Company at a deemed price of $0.50 per share (the " Finder's Shares "). The
Purchase Shares were issued to the Venders and the Finders Shares were issued to the Finder pursuant to
the Amalgamation and are not subject to a hold period or resale restrictions following the issuance
thereof pursuant to applicable securities laws and the policies of the TSXV. However, the 13,999,998
Purchase Shares issued to the Vendors together with 49, 867 common shares and a further 24,933
common share purchase warrants of the Company issued to a principal of the Company in connection
with the Bridge Financing are subject to a 36 month staged release Tier 2 Value Escrow pursuant to the
policies of the TSXV.
Concurrent Financings
Concurrent with completion of the Acquisition, the Company also completed a concurrent financing (the
"Concurrent Financing") by way of a non-brokered private placement of special warrants of the Company
(the " Concurrent Special Warrants " and each a " Concurrent Special Warrant ") at a price of $0.50 per
Concurrent Special Warrant for a total gross proceeds of $3,588,500 through the issuance of 7,177,000
Concurrent Special Warrants. Each Concurrent Special Warrant entitled the holder thereof automatically
following completion of the Consolidation and concu rrent with the Acquisition on a post -Consolidation
basis, one u nit of Fin S ub (each a " Fin Sub Concurrent Unit "). The Company intends to use the net
proceeds of the Concurrent Financing to fund exploration of the Elmtree Gold Project, and for working
capital and administrative costs and expenses, as more specifically set forth in the Listing Application.
Upon completion of the Consolidation and concurrent with the Acquisition, each Concurrent Special
Warrant was automatically exercised at no additiona l consideration into a unit (a " Concurrent Unit") of
Fin Sub. Each Concurrent Unit was comprised of one common share and one common share purchase
warrant of Fin Sub (a " FinSub Warrant"). Each FinSub Warrant entitled the holder thereof to acquire one
common share of FinSub at an exercise price of $0.75 per share for 24 months after the date of issuance.
After completion of the Acquisition, the Bridge Units were exchanged automatically pursuant to the
Amalgamation (as described below) on a 1 -for-1 basis for like securities of Avalon, on a post -
Consolidation basis , which securities are not subject to a hold or resale restrictions under applicable
securities laws or the policies of the TSXV.
In addition to the Concurrent Financing, the Company also completed following completion of the
Amalgamation, a Private Placement offering of common shares (the " Shares") of the Company at a price
of $0.55 per Share for total proceeds of $1,452,000 through the issuance of $2,640,000 Shares. Each
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Share was issued as a "flow -through share" as defined in the Income Tax Act (Canada) (the "Tax Act").
The Company intends to use the proceeds of the Private Placement to incur "Canadian exploration
expenses" within the meaning of the Tax Act (" CEE") on its Elmtree Gold Project pursuant to the
recommended work program in the Technical Report which forms part of the use of proceeds described
in the Listing Application during the period from the closing date to and including December 31, 2022.
The Company will renounce the CEE to the subscribers in the Private Placement with an effective date no
later than December 31, 2021. The Shares are subject to a hold period until June 27, 2021 pursuant to
applicable securities laws.
In connection with the Concurrent Financing, the Company paid a fee to certain finders, including Clarus
Securities Inc., which is comprised of total aggregate cash commissions of $ 148,000 and 296,000 brokers
warrants (the " Brokers Warrants "). Each Brokers Warrant entitles the holder thereof to acquire one
common share of the Company at a price of $0.50 per share for a period of 24 months after issuance.
In connection with the Private Placement, the Company paid a fee to certain finders, including Clarus
Securities Inc., which is comprised of total aggregate cash commissions of $ 87,120 and 158,400 brokers
warrants (the "FT Brokers Warrants "). Each FT Brokers Warrant entitles the holder thereof to acquire
one common share of the Company at a price of $0.55 per share for a period of 24 months after
issuance.
Amalgamation
Pursuant to the Acquisition Agreement, Avalon completed a three -corned amalgamation with Property
Sub and Fin Sub (the "Amalgamation") whereby: (i) Fin Sub and Property Sub amalgamated; (ii) security
holders of Property Sub (other than Avalon) received like securities of Avalon on a one -for-one basis in
exchange for their securities of Property Sub; and (iii) security holders of Fin Sub (other than Avalon)
received like securities of Avalon on a one -for-one basis in exchange for their securities of Fin Sub. As a
consequence of the Amalgamation, Fin Sub and Property Sub amalgamate d under the Business
Corporations Act (British Columbia) into a wholly owned subsidiary of Avalon retaining the name 1290015
B.C. Ltd. ("Amalco") with Avalon becoming the Resulting Issuer owning 100% of Amalco as registered
owner of the Elmtree Gold Project.
Following completion of the Amalgamation, all existing directors re signed as directors of the Company
and John Williamson, Roy Bonnell, Nicholas Stajduhar, and Kevin Vienneau joined as new directors.
Management of the Company has also changed so that it now consists of John Williamson as President
and Chief Executive Officer, and Justin Bourassa as Chief Financial Officer and Corporate Secretary.
The Company has also changed its head office from Ontario to Suite 300, 10545 45 Avenue NW,
Edmonton, Alberta and it is in the process of applying to change its Principal Regulator to the British
Columbia Securities Commission.
The Acquisition and the other Transactions in connection therewith has resulted in a "reverse takeover"
under the policies of the TSXV , and the Company has applied for listing of its common shares on the
Exchange, has received conditional listing approval from the Exchange. T he Company has also made the
necessary submission for final approval of the TSXV, and trading of the common shares o f the Company
under the new symbol " AWB" is expected to commence on the TSXV on Wednesday March 3, 2021 as a
Tier 2 mining company.
Upon completion of the Transactions at the time of Listing, the Company will have 26,217,000 common
shares issued and outstanding with 14,049, 867 common shares and 24,867 common share purchase
warrants subject to a 36 month staged release Tier 2 Value Escrow Agreement.
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About Avalon Works Corp.
Avalon Works Corp. is a mineral exploration company focused on pr oving and developing the resource
potential of the 1,063,326 hectare mineral property in northeast New Brunswick known as the " Elmtree
Gold Project", approximately 20 km northwest of the City of Bathurst, New Brunswick and approximately
10 km west of the village of Petit Rocher, New Brunswick near the enhanced service areas of Alcida and
Dauversiere, New Brunswick. For further details about the Elmtree Gold Project, please refer to the
Company's website or current geological T echnical Report dated February 25, 2021 available under the
Company's profile on SEDAR at www.sedar.com. In addition, the Company's Listing Application dated
February 25, 2021 also provides addi tional detailed information about the Company, its Elmtree Gold
Project, and the Transactions , which is also publicly available under the Company's profile on SEDAR at
www.sedar.com.
On behalf of the Board of Directors
Avalon Works Corp.
"John Williamson"
John Williamson
President, CEO and Director
For further information:
Nick Stajduhar
Director
Telephone: 780-701-3216
Email: [email protected]
Investors are cautioned that, except as disclosed in the management information circular or listing
application prepared in connection with the Acquisition, any information released or received with respect
to the Acquisition may not be accurate or complete and should not be relied upon. Trading in the securities
of the Company should be considered highly speculative.
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 press
release.
Cautionary Statement Regarding Forward-Looking Information
This press release contains "forward -looking information" within the meaning of applicable Canadian
securities legislation. Forward-looking information includes, without limitation, statements regarding the
use of proceeds from the Bridge Financing and Concurrent Financing, the expected timing for completion
of the recommended work program pursuant to the Technical Report, and the future plans or prospects of
the Company. Generally, forward -looking informatio n can be identified by the use of forward -looking
terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or 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 are necessarily based upon a
number of assumptions that, while considered reasonable by management, are inherently subject to
business, market and economic risks, uncertainties and contingencies that may cause actual results,
performance or achievements to be materially different from those expressed or implied by forward-
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looking statements. Although the Company has attempted to identify important factors that could cause
actual results to differ materially from those contained in forward -looking information, there may be
other factors that cause results not to be as anticipated, estimated or intended. There can be no
assurance that such information will prove to be accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly, readers should not place undue reliance
on forward-looking information. Other factors which could materially affect such forward-looking
information are described in the risk factors in the Company's most recent annual management's
discussion and analysis which is available on the Company's prof ile on SEDAR at www.sedar.com. The
Company does not undertake to update any forward -looking information, except in accordance with
applicable securities laws.
Not for distribution to U.S. Newswire Services or for dissemination in the United States. Any failure to
comply with this restriction may constitute a violation of U.S. securities laws.