Pinehurst Capital II Announces Proposed Qualifying Transaction involving Acquisition of Ana Paula Gold Development Project in Guerrero, Mexico
Pinehurst Capital II Announces Proposed Qualifying Transaction involving Acquisition of Ana
Paula Gold Development Project in Guerrero, Mexico
Toronto, Ontario — September 11, 2020 – Pinehurst C apital II Inc. (TSXV: PINH.P ) (the
"Corporation " or " Pinehurst"), a capital pool company listed on the TSX Venture Exchange (" TSXV "),
is pleased to announce details concerning its propo sed arm’s length qualifying transaction with
1252201 B.C. Ltd. (" AP Mining "), a private company that has entered into a purchase agreement (the
"Argonaut Agreement") with Argonaut Gold Inc. (" Argonaut Gold ") to acquire the Ana Paula gold
development project located in the Guerrero Gold belt of Mexico (the “ Ana Paula Project”).
Pinehurst has entered into a definitive agreement with AP Mining dated September 10, 2020 (the " AP
Mining Agreement"), pursuant to which Pinehurst and AP Mining have agreed to complete a
business combination (the " Qualifying Transaction ") whereby Pinehurst will be the parent company
(the " Resulting Issuer") and 100% of the issued and outstanding securitie s of AP Mining will be
owned by the Resulting Issuer, conditional on the c ompletion by AP Mining of the acquisition of the
Ana Paula Project pursuant to the terms of the Argonaut Agreement.
About the Ana Paula Project
Under the terms of the Argonaut Agreement, AP Mining will acquire all of the issued and outstanding
shares of Aurea Mining Inc. and its wholly-owned su bsidiary Minera Aurea S.A. de C.V., for an
aggregate purchase price comprised of, in part, USD $30 million in cash on the closing, a promissory
note in the amount of CAD$10 million payable on the date on which AP Mining announces the
commencement of construction at the Ana Paula Project, a 1% net smelter return royalty in favour of
Argonaut Gold and such number of common shares of A P Mining as would result, on exchange of
such AP Mining Shares for common shares of the Resu lting Issuer pursuant to the terms of the
Qualifying Transaction, in Argonaut Gold owning app roximately 9.9% of the outstanding common
shares of the Resulting Issuer immediately following the completion of the Qualifying Transaction.
The Ana Paula Project is a gold development project located in the prolific Guerrero Gold belt of
Mexico. Extensive work was completed by previous ow ners on drilling, mining methods, metallurgy
and plant design which resulted in a prefeasibility study titled “Ana Paula Project NI 43-101 Technical
Report, Amended Preliminary Feasibility Study” issued by Alio Gold on June 7, 2017 (the “ PFS ”). The
purchase also includes extensive mill equipment inc luding a complete 6,000 tpd gold plant including
crushers, one SAG mill, one ball mill, motors, pumps and dry stack tailings press.
A full feasibility study will be undertaken on closing of the Qualifying Transaction.
Summary of the Proposed Qualifying Transaction
Pursuant to the AP Mining Agreement, the parties have agreed to cause AP Mining to complete a non-
brokered private placement (the " AP Mining Private Placement ") of aggregate proceeds of
approximately C$30 million by the issuance of subsc ription receipts of AP Mining. Further particulars
regarding the AP Mining Private Placement will be d isclosed in subsequent news releases relating to
the Qualifying Transaction. The proceeds of the AP Mining Private Placement will be used to fund a
portion of the cash purchase price payable by AP Mi ning under the Argonaut Agreement, continuing
operating expenses, general working capital purposes and to fund the cost of the feasibility study for
the Ana Paula Project. The remaining cash purchase price payable by AP Mining under the Argonaut
Agreement is expected to be funded by way of additi onal equity or debt funding to be raised prior to
the completion of the Qualifying Transaction.
Upon completion of the Qualifying Transaction, Bruc e Bragagnolo will serve as the Chief Executive
Officer and a director of the Resulting Issuer, wit h the remaining management team and directors to
be determined prior to the completion of the Qualifying Transaction.
Mr. Bragagnolo was the co-founder and Chief Executi ve Officer of Timmins Gold Corp. Mr.
Bragagnolo took Timmins Gold Corp from its initial public offering to commercial production and its
listing on the NYSE-MKT. While he was CEO, Timmins Gold built the San Francisco Mine in Mexico
on time and on budget. Under his guidance, Timmins Gold's market capitalization rose from $7 million
in 2006 to $475 million in 2012. Mr. Bragagnolo led the purchase in 2015 by Timmins Gold of the Ana
Paula Project.
Further particulars regarding the proposed director s and officers of the Resulting Issuer will be
disclosed in subsequent news releases relating to the Qualifying Transaction
Additional Information and Description of Significant Conditions to Closing
The completion of the Qualifying Transaction is sub ject to the approval of TSXV and all other
necessary regulatory approvals. The completion of t he Qualifying Transaction is also subject to
additional conditions precedent, including completi on of the transactions contemplated by the
Argonaut Agreement and the AP Mining Private Placem ent, and certain other usual and customary
conditions. In connection with the Qualifying Transaction, Pinehurst will change its name, consolidate
its outstanding common shares on a 2:1 basis and ap point a new board of directors for the Resulting
Issuer, each of which will require approval by the shareholders of Pinehurst. The Qualifying
Transaction does not constitute a Non-Arm's Length Qualifying Transaction (as defined in Policy 2.4 of
the Corporate Finance Manual) and, accordingly, is not expected to require the approval of Pinehurst's
shareholders.
Pinehurst will issue a subsequent press release des cribing additional terms of the Qualifying
Transaction, including additional information with respect to the Ana Paula Project, AP Mining financial
information, the AP Mining Private Placement and pro forma share capital of the Resulting Issuer.
Filing Statement
In connection with the Qualifying Transaction and pursuant to the requirements of the TSXV, Pinehurst
will file a filing statement or a management inform ation circular on its issuer profile on SEDAR
(www.sedar.com ), which will contain details regarding the Qualify ing Transaction, the Argonaut
Agreement, the Ana Paula Project, AP Mining, the AP Mining Private Placement and the Resulting
Issuer.
Sponsorship of Qualifying Transaction
Sponsorship of a qualifying transaction of a capita l pool company is required by the TSXV unless
exempt in accordance with TSXV policies. Pinehurst intends to apply for an exemption from the
sponsorship requirements.
Reinstatement to Trading
Trading of the common shares of Pinehurst has been halted and will not resume until certain
documents have been filed with the TSXV and a press release is issued detailing further information
about the Qualifying Transaction, as previously described herein.
For further information, please contact:
David Rosenkrantz
Pinehurst Capital II Inc., CEO
p: 416-865-0123
Bruce Bragagnolo
1252201 B.C. Ltd., CEO
p: (604) 417-9517
Information concerning AP Mining, the Argonaut Agre ement and the Ana Paula Project has been
provided to Pinehurst by AP Mining for inclusion in this press release.
Completion of the Qualifying Transaction is subject to a number of conditions, including but not limited
to, TSXV acceptance and if applicable pursuant to Exchange Requirements (as that term is defined in
the policies of the TSXV), majority of the minority shareholder approval. Where applicable, the
Qualifying Transaction cannot close until the required shareholder approval is obtained. There can be
no assurance that the Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed i n the management information circular or filing
statement to be prepared in connection with the Qua lifying Transaction, any information released or
received with respect to the Qualifying Transaction may not be accurate or complete and should not
be relied upon. Trading in the securities of a capi tal pool company should be considered highly
speculative.
The TSXV has in no way passed upon the merits of th e proposed Qualifying Transaction and has
neither approved nor disapproved the contents of th is press release. Neither the TSXV nor its
Regulation Services Provider (as that term is defin ed in the policies of the TSXV) accepts
responsibility for the adequacy or accuracy of this release.
The securities referenced herein have not been, nor will be, registered under the United States
Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from
U.S. registration requirements. This release does n ot constitute an offer for sale of securities in th e
United States.
Cautionary and Forward-Looking Statements
This press release contains “forward-looking inform ation” and “forward-looking statements”
(collectively, “forward-looking statements”) within the meaning of applicable Canadian securities
legislation. All statements, other than statements of historical fact, are forward-looking statements and
are based on expectations, estimates and projection s as at the date of this press release. Any
statement that involves discussions with respect to predictions, expectations, beliefs, plans,
projections, objectives, assumptions, future events or performance (often but not always using
phrases such as “expects”, or “does not expect”, “i s expected” “anticipates” or “does not anticipate”,
“plans”, “budget”, “scheduled”, “forecasts”, “estim ates”, “believes” or intends” or variations of such
words and phrases or stating that certain actions, events or results “may” or “could, “would”, “might” or
“will” be taken to occur or be achieved) are not st atements of historical fact and may be forward-
looking statements. In this press release, forward- looking statements relate, among other things, to:
the Qualifying Transaction and certain terms and co nditions thereof; the business of AP Mining,
information concerning the Argonaut Agreement and t he Ana Paula Project, the AP Mining Private
Placement; the proposed directors and officers of t he Resulting Issuer, TSXV sponsorship
requirements and intended application for exemption therefrom; shareholder, director and regulatory
approvals; and future press releases and disclosure . 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 f actors that 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: gener al business, economic, competitive, political and
social uncertainties, the delay or failure to recei ve shareholder, director or regulatory approvals an d
the ability of the parties to satisfy all of the co nditions of closing under the Argonaut Agreement an d
the AP Mining Agreement, including the completion of the AP Mining Private Placement. 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 st atements. Accordingly, readers should not place
undue reliance on the forward-looking statements and information contained in this press release.