GFG Resources Announces Agreements to Consolidate Significant Timmins Land Package with Proposed Acquisition of Rapier Gold and Properties from Probe Metals and Osisko Mining GFG Resources Also Announces Private Placement of up to C$7 Million
Media Release
NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWSWIRES
Release: Immediate
GFG Resources Announces Agreements to Consolidate
Significant Timmins Land Package with Proposed Acquisition
of Rapier Gold and Properties from Probe Metals and Osisko
Mining
GFG Resources Also Announces Private Placement of up to C$7 Million
December 11, 2017 Saskatoon, Saskatchewan, Canada: GFG Resources Inc. (TSX-V: GFG)
(OTCQB: GFGSF) (“GFG” or the “Company”) is pleased to announce that it has entered into
agreements (the “Agreements”) to consolidate a large , highly prospective land package west of
Timmins, Ontario (See Figure 1) with each of Rapier Gold Inc. (TSX-V: RPR) (“Rapier”), Probe
Metals Inc. (TSX-V: PRB) (“Probe”), and Osisko Mining Inc. (TSX: OSK) (“Osisko”). Under the
respective Agreements, GFG will acquire all of the outstanding common shares of Rapier pursuant
to a plan of arrangement (the “Rapier Acquisition”) and the West Porcupine Property from Probe
(the “West Porcupine Property Acquisition”) and the Swayze Project from Osisko (the “Swayze
Property Acquisition”) via property purchase agreements. In addition to the Agreements, the
Company announces a non-brokered private placement to raise gross proceeds of up to $7 million
(the “Concurrent Financing”). Upon completion of these transactions, GFG will hold nearly 700
square kilometres ( “km2”) of highly prospective district scale gold assets in tier one mining
jurisdictions.
Transaction Highlights:
• Creation of a prominent North American precious metals explorer : Combination of
~700 km2 gold properties in tier one jurisdictions, Wyoming and Ontario;
• Significant exploration potential: Highly prospective district scale assets with brownfield
and greenfield opportunities;
• Leading management and board of directors: Highly experienced leadership team with
a proven track record and focused on aggressively advancing projects;
• Near term catalysts: GFG will plan to aggressively drill both Rattlesnake Hills and the
Timmins portfolio in 2018. A maiden resource is expected at Rattlesnake Hills in H1 2018;
• Well capitalized company: Strong financial position and capital structure to aggressively
advance projects; and
• Strong strategic investor support: GFG is pleased to welcome Probe Metals and Osisko
Mining as significant stakeholders in the pro forma company.
For further information and a detailed presentation on the t ransaction and related assets,
please visit the Company’s website www.gfgresources.com/investors/Transaction-Overview.
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Brian Skanderbeg, President and CEO, commented, “We are very excited to announce the se
transactions, which will involve the acquisition of over 550 km2 in one of the best mining camps in
the world. This area of the West Timmins gold belt has all the geological hallmarks that have
contributed to over 70 million ounces of historic gold production in the Timmins mining camp
along with several large deposits in the southern Swayze district. These transactions perfectly
complement our technical skill set and our strategy to aggressively explore district scale gold
projects in tier one mining jurisdictions in North America. Our focus and commitment to our
Rattlesnake Hills Gold Project will not be impacted by these transactions and w e are excited to
aggressively explore at both projects in 2018.”
Transaction Details
Rapier Acquisition
Under the terms of the arrangement agreement dated December 11, 2017 between GFG and Rapier
(the “Arrangement Agreement”), all of Rapier’s issued and outstanding common shares will be
exchanged on the basis of 0.15 of a common share in the capital of GFG (each whole share, a “GFG
Share”) for each one Rapier common share, representing total consideration of approximately
C$0.08 per Rapier share based on GFG’s 20-day volume weighted average share price (“VWAP”)
ending December 7, 2017 on the TSX Venture Exchange (“TSXV”). The consideration represents
a premium of approximately 47.5% based on the respective 20-day VWAPs of GFG and Rapier
common shares.
Pursuant to the Arrangement Ag reement, the Rapier Acquisition will be carried out by way of a
court approved plan of arrangement and will require the approval of at least 66 2/3% of the votes
cast by the securityholders of Rapier present in person or by proxy at a special meeting expected to
be held in February of 2018 (the “Rapier Meeting”) and, if required by Multilateral Instrument
61-101 – Protection of Minority Securityholders in Special Transactions (“MI 61-101”), “minority
approval” in accordance with section 8.1 of MI 61-101. The Rapier Acquisition includes customary
deal-protection provisions, including non-solicitation provisions, a right to match in the event of a
superior proposal and a termination fee payable under certain circumstances. Full details of the
Rapier Acquisition will be included in the management information circular of Rapier to be mailed
in respect of the Rapier Meeting.
The board of directors of each of GFG and Rapier have unanimously approved the Agreement. The
directors, senior officers, and certain significant shareholders (the “Supporting Shareholders”)
have entered into voting support agreements pursuant to which each has agreed to vote all of their
Rapier securities in favor of the Rapier Acquisition. Collectively, the Supporting Shareholders own
approximately 35%, 63%, 48% and 100% of the outstanding common shares, options, warrants and
deferred share units, respectively, of Rapier.
West Porcupine Property Acquisition
GFG and Probe have entered into a binding property purchase agreement dated December 11, 2017
pursuant to which GFG will purchase 100% of Probe’s interest in the West Porcupine property, a
land package consisting of 198 claims and covering approximately 245 km2 located 50 kilometres
southwest of Timmins, Ontario, in exchange for the issuance of 6,477,883 GFG Shares,
representing an implied purchase price of approximately $3.5 million based on GFG’s 20-day
VWAP. Completion of the West Porcupine Property Acquisition is subject to certain customary
closing conditions, including approval of the TSXV to issue the 6,477,883 GFG Shares and
completion of the Concurrent Financing.
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Swayze Property Acquisition
GFG and Osisko have entered into a binding property purchase agreement dated December 11,
2017 pursuant to which Osisko will sell 100% of its interest in the Swayze property, a land package
consisting of 56 claims and covering approximately 120 km2 located 40 kilometres from Borden,
Ontario, to GFG in exchange 1,110,494 GFG Shares, representing an implied purchase price of
approximately $600,000 based on GFG’s 20- day VWAP. Completion of the Swayze Property
Acquisition is subject to certain customary closing conditions, including approval of the TSXV to
issue the 1,110,494 GFG Shares and certain consents to transfer the Swayze Property.
Concurrent Private Placement
The Company will proceed, subject to TSXV approval, with the Concurrent Financing by way of
a private placement of up to 3,636,364 flow-through common shares at a price of C$0.55 per share
for gross proceeds of up to C$2 million (the “FT Private Placement”) and up to 10,000,000 units
at a price of C $0.50 per unit for gross proceeds of up to C $5 mil lion (the “Non-FT Private
Placement”), each unit consisting of one GFG Share and one-half of a common share purchase
warrant. Each whole warrant will entitle the holder to purchase one additional GFG Share at an
exercise price of C $0.75 for a period of 24 months. Gross proceeds raised under the FT Private
Placement will be used for exploration activities in Ontario that will qualify as “ Canadian
Exploration Expenses”. Net proceeds raised under the Non-FT Private Placement will be used for
exploration activities on the Company’s projects in Wyoming and Ontario as well as for general
working capital purposes.
Closing and Capitalization
Subject to regulatory approvals and other customary closing conditions , the Company expects to
close the West Porcupine Property Acquisition, the Swayze Property Acquisition, and the
Concurrent Financing on or about December 21, 2017. Completion of the Rapier Acquisition is
expected to occur mid-February 2018 following receipt of all requisite regulatory, security holder
and court approvals and the completion of the Concurrent Financing with minimum gross proceeds
of C$5 million.
Assuming completion of all of the transactions, including issuance of the Advisory Fee Shares (as
defined below), GFG will have approximately 87,068,294 common shares outstanding, of which
58% will be held by current GFG shareholders; 17% will be held by the former Rapier shareholders;
7% will be held by Probe; 1% will be held by Osisko and 16% will be held by the purchasers under
the Concurrent Financing, all on a non-diluted basis.
Advisors and Counsel
Macquarie Capital Markets Canada Ltd. (“Macquarie Capital”) is acting as financial advisor and
DuMoulin Black LLP is acting as legal counsel to GFG and its Board of Directors. In consideration
for Macquarie Capital’s services GFG has agreed to pay an advisory fee of which a portion will be
paid, subject to TSXV approval, through the issuance of 500,000 GFG Shares (the “Advisory Fee
Shares”).
Figure 1: Regional Land Map of West Timmins and Locations of Acquired Properties
https://gfgresources.com/files/images/projects/photos_maps/GFG-Resources_Regional-Map-of-
Timmins-Properties_Dec-11-2017.jpg
Qualified Persons
Brian Skanderbeg, P.Geo. and M.Sc., serves as President and CEO of GFG, and is a “qualified
person” within the meaning of National Instrument 43-101 – Standards of Disclosure for Mineral
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Projects. Mr. Skanderbeg has reviewed and approved the information contained in this news
release.
This news release does not constitute an offer to sell or the solicitation of an offer to buy, nor
shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under the securities laws of
such jurisdiction. 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 unless an exemption from such
registration is available.
For further information, please contact:
GFG Resources Inc.
Brian Skanderbeg, President & CEO
Phone: (306) 931-0930
or
Marc Lepage, Vice President, Business Development
Phone: (306) 931-0930
Email: [email protected]
Website: www.gfgresources.com
About GFG Resources Inc.
GFG Resources is a publicly traded precious metals exploration company headquartered in
Saskatoon, Saskatchewan, Canada, whose shares trade on the TSX Venture Exchange (GFG) and
on the OTCQB (GFGSF) . The Company controls 100% of the Rattlesnake Hills Gold Project, a
district scale gold exploration project located approximately 100 kilometres southwest of Casper,
Wyoming, U.S. The geologic setting, alteration and mineralization seen in the Rattlesnake Hills are
similar to other gold deposits of the Rocky Mountain alkaline province which, collectively, have
produced over 50 million ounces of gold.
Neither 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.
CAUTION REGARDING FORWARD-LOOKING INFORMATION
All statements, other than statements of historical fact, contained in this news release constitute “forward-looking information” within
the meaning of applicable Canadian securities laws and “forward-looking statements” within the meaning of the United States Private
Securities Litigation Reform Act of 1995 (referred to herein as “forward-looking statements”). Forward-looking statements include, but
are not limited to, disclosure regarding possible events, the proposed completion of the Rapier Acquisition , West Porcupine Property
Acquisition, Swayze Property Acquisition and Concurrent Financing (collectively, the “ Transactions”), conditions or financial
performance that is based on assumptions about future economic conditions and courses of action; planned use of proceeds, expenditures
and budgets and the execution thereof. Generally, these forward -looking statements 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 the negative connotation thereof or variations of such words and phrases or state
that certain actions, events or results, “may”, “could”, “would”, “will”, “might” or “will be taken”, “occur” or “be achieved” or the
negative connotation thereof.
All forward -looking statements are based on various assumptions, including, without limitation, the expectations and beliefs of
management, the assumed long-term price of gold, that the current exploration and other objectives concerning its mineral projects can
be achieved and that its other corporate activities will proceed as expected; that the current price and demand for gold will be sustained
or will improve; the continuity of the price of gold and other metals, economic and political conditions and operations; that all conditions
precedent to the West Porcupine Property Acquisition and Swayze Property Acquisition and Concurrent Financing will be fulfilled so
as to permit such Transactions to be completed on or about December 21, 2017; that all conditions precedent to the Rapier Acquisition
will be fulfilled so as to permit such Transaction to be completed mid-February 2018; all necessary approvals and consents in respect of
each of the Transactions, including requisite regulatory, securityholder and court approvals, as applicable, will be obtained in a timely
manner and on acceptable terms; and that general business and economic conditions will not change in a materially adverse manner. In
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addition, the similarity or proximity of other gold deposits of the Rocky Mountain alkaline province to the Rattlesnake Hill Gold Project
is not necessarily indicative of the geological setting, alteration and mineralization of the Rattlesnake Hills Gold Project.
Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results,
level of activity, performance or achieveme nts of GFG to be materially different from those expressed or implied by such forward -
looking statements, including but not limited to: risks and uncertainties related to the Transactions not being completed in the event that
any of the conditions precedent thereto are not satisfied; actual results of current exploration activities; environmental risks; future prices
of gold; operating risks; accidents, labour issues and other risks of the mining industry; delays in obtaining government app rovals or
financing; and other risks and uncertainties. These risks and uncertainties are not, and should not be construed as being, exhaustive.
Although GFG has attempted to identify important factors that could cause actual results to differ materially from those con tained in
forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be
no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those
anticipated in such statements. In addition, forward -looking statements are provided solely for the purpose of providing information
about management’s current expectations and plans and allowing investors and others to get a better understanding of our operating
environment. Accordingly, readers should not place undue reliance on forward-looking statements.
Forward-looking statements in this news release are made as of the date hereof and GFG assume no obligation to update any f orward-
looking statements, except as required by applicable laws.