Jazz Resources Inc. Clarifies Disclosure ON Acquisition and Non- Brokered Private Placement
JAZZ RESOURCES INC.
September 14, 2020 TSXV: JZR
JAZZ RESOURCES INC. CLARIFIES DISCLOSURE ON ACQUISITION AND NON-
BROKERED PRIVATE PLACEMENT
Vancouver, British Columbia, Canada – Further to its news releases dated July 28, 2020 and July 3 1,
2020, Jazz Resources Inc. (the “Company” or “ JZR”) wishes to clarify previous disclosure about a
proposed acquisition and a non-brokered private placement.
On July 31, 2020, the Company announced a proposed arms-length transaction to acquire from Coltan
Gold Mining Inc . (“CGM”), a private company based in Vancouver , British Columbia , on or before
October 19, 2020, unless amended by the parties, its interests in and to the Vila Nova gold exploration
and development project in Brazil by the acquisition by JZR fr om CGM of a joint venture royalty
agreement (“JV Royalty Agreement ”) between CGM and Eco Mining Oil & Gaz Drilling and
Exploration EIRELLI (“ Eco”), a “Green Seal” mining operator, dated July 6, 2020, CGM has agreed to
acquire a 50% net profits interest in the Vila Nova property in Amapa, Brazil . Under the JV Royalty
Agreement, CGM has agreed to make the following payments to Eco , subject to satisfactory project
assessment prior to each stage of funding:
(a) On or before September 30 , 2020 of the JV Royalty Agr eement, USD$500,000 to fund the 2,000
m drilling program and related costs needed to complete the business plan to construct a 1,280 t/d
bulk exploitation program on the Vila Nova property (the “Initial Program”);
(b) On or before November 15, 2020, a second payment of USD$500,000; and
(c) On or before May 5, 2021, a final payment of USD$5,000,000.
In consideration, Eco has granted to CGM a 50% net profits interest from all products and minerals
produced from the property (50% of gross proceeds after costs) and exclusive rights to explore and
develop the property, including initiating and carrying out commercial production. Eco will remain the
sole operator of all mining-related activity on the property, including environmental remediation.
CGM will have the right, at any time, prior to completing the payments under the JV Royalty Agreement,
to give notice to Eco to terminate the JV Royalty Agreement, and all payments made by under the JV
Royalty Agreement to Eco will be secured loan advances bearing interest at 6% per annum for a two-year
term and shall be repayable by Eco . To date CGM has advanced USD$540,000 to Eco on behalf of the
Estrela property (which Eco has agreed is repayable under the JV Royalty Agreement in accordance with
its terms), USD$140,000 to Eco under the JV Royalty Agreement, and paid CAD$35,000 for a draft
report on the Vila Nova property.
Under the proposed terms of the agreement between the Company and CGM, JZR is required to provide a
USD$500,000 loan to CGM to fund the Initial Program to ex plore and assess the merits of conducting
further exploration and development on the property, which includes 2 ,000 m of drilling , which will be
overseen by GE21 Mining Consultoria Mineral of Brazil. If warranted, JZR can continue its participation
by raising up to USD$5.5 million to place the 1280 t/per day plant into operation on the Vila Nova
property. Any such production shall not be based on a feasibility study of mineral reserves demonstrating
economic and technical viability and, accordingly, there m ay be increased uncertainty and the specified
economic and technical risks of failure associated with such production decision.
There shall be no change of management in connection with the foregoing transactions.
The Company re -announces a non-brokered private placement (the “Private Placement ”) of up to
10,000,000 units (each, a “ Unit”) at a deemed price of $0.20 per Unit for gross proceeds of $2,000,000,
as previously announced on July 28, 2020. Each Unit is comprised of one common share of the Company
and one common share purchase warrant (“Warrant”), with each Warrant entitling the holder to purchase
one additional common share at $0.39 per share for a period of six months from the date of issue. To fund
the initial USD$500,000 cash advance to CGM, t he Company proposes to complete, a portion of th e
$2,000,000 private placement as a sidecar private placement. Under the sidecar financing, that amount
equal to US$500,000 shall be raised by subscription receipts and the funds raised shall be loaned to CGM
on an unsecured basis. In the event that the acquisition of the JV Royalty Agreement by JZR from CGM
does not occur for any reason, then (a) the sidecar subscribers shall be deemed to have completely released
and discharged JZR, (b) the loan from JZR to CGM will be cancelled and CGM will no longer be indebted
to JZR and (c) such sidecar subscribers and CGM shall be deemed to have entered into lo an agreements
with regards to the funds advanced to JZR that JZR loaned to CGM (each, a “Coltan Loan Agreement”).
Each loan under the Coltan Loan Agreement shall be have a term of 5 years and bear interest at 6% per
annum and may bew converted into a CGM common share at the rate of $0.05 of indebtedness per CGM
common share.
Should JZR assume CGM’s obligations under the JV Royalty Agreement, JZR proposes to issue to CGM:
(1) a combination of common shares, and / or special warrants exercisable into common shares of
JZR which, in the aggregate and upon the exercise of any special warrants, shall not exceed
2,000,000 common shares. The special warrants may be exercised for no further consideration,
provided the exercise , and in addition to any common shares issued by JZR to CGM, will not
result in CGM owning more than 19.5% of the issued and outstanding common shares of JZR
assuming completion of the Private Placement . The Special Warrants shall have no voting rights;
and
(2) A two-year convertible note (the “Convertible Note ”) having a principal amount of $1,250,000,
accruing interest at 4% per annum not compounded and sha ll be unsecured. The loan principal
may be converted at the sole option of the Seller into common shares of Buyer at $0.40 per
common share for an aggregate amount of 3,125,000 common shares of Buyer and the
interest may be converted at the sole option of the Seller into common shares of Buyer at
the greater of $0.40 per common share or the undiscounted closing market price as at the trading day
of Buyer on the date of written notice of Seller to convert such interest into common shares subject to
the fol lowing restrictions: (A) the common shares issued by JZR pursuant to such conversion
shall not result in CGM owning, together with any other common shares of JZR under its
ownership, control or direction, 19.5% or more the issued and outstanding common shares of JZR
after immediately giving effect to such issuance; or (B) the disinterested shareholders of JZR
passing a resolution at a meeting approving any exercise that would result in CGM owning,
together with any other common shares of the Company under i ts ownership, control or direction
19.5% or more the issued and outstanding common shares of the Company. The Convertible Note
shall have no voting rights.
Subject to TSX Venture Exchange approval, the Company may pay a cash finder’s fee of up to 6% of the
aggregate gross proceeds of the Private Placement and 6% warrants to registered brokers of the aggregate
gross proceeds of the Private Placement.
All securities issued pursuant to the Private Placement will be subject to a four month hold period from the
date of issuance. Completion of the Private Placement is subject to TSX Venture Exchange approval.
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.
None of the securities of JZR have been registered under the U.S. Securities Act of 1933, as amended
(the “U.S. Securities Act”), or any state securities law, and may not be offered or sold in the United States
or to, or for the account or benefit of, persons in the United States or “U.S. persons” (as such term is
defined in Regulation S under the U.S. Securities Act) absent registration or an exemption from such
registration requirements. This press release shall not constitute an offer to sell or the solicitation of an
offer to buy in the United States nor shall there be any sale of the securities in any State in which such
offer, solicitation or sale would be unlawful.
For further information, please contact:
Robert Klenk
Chief Executive Officer
www.jazzresources.ca