BeMetals Enters the Gold Sector with Acquisitions in Japan and Announces B2Gold as New Strategic Investor
TSXV – BMET
OTCQB – BMTLF
February 17, 2021 FRANKFURT – 1OI.F
BeMetals Enters the Gold Sector with Acquisitions in Japan and Announces B2Gold as New Strategic Investor
VANCOUVER, CANADA - BeMetals Corp. (TSXV: BMET, OTCQB: BMTLF, Frankfurt: 1OI.F) (the “Company” or
“BeMetals) is pleased to announce that it has signed an Amalgamation Agreement (the “Agreement”) to acquire
privately owned Kronk Resources Inc. (“Kronk”) and its wholly owned subsidiary Kazan Resources (“Kazan”), which
holds the rights to a highly prospective portfolio of advanced and early stage gold exploration projects in Japan
(the “Transaction”). See Figure 1 for project locations in Japan. In addition, BeMetals is pleased to announce a
non-brokered private placement of $ 7.5 million (the “Offering”) through the issuance of approximately 17.05
million shares of BeMetals at $0.44 per share to senior gold producer and new strategic investor, B2Gold Corp.
(TSX: BTO, NYSE American: BTG, NSX: B2G) (“B2Gold”), subject to successful closing of the Transaction. B2Gold is
an existing shareholder of Kronk, owning approximately 15.4 million shares of the company . Following the
Transaction and Offering, B2Gold will hold approximately 19% of BeMetals’ outstanding shares. All dollar figures
are in Canadian dollars unless otherwise indicated.
TRANSACTION AND OFFERING HIGHLIGHTS:
Benefits to BeMetals Shareholders
• The Transaction e stablishes BeMetals in the gold sector with a n expertly selected portfolio of gold
properties in Japan, including the advanced exploration-stage Kato Project in Hokkaido. This delivers on
the goal of identifying quality entry level gold projects;
• Through the Offering, B2Gold will become a new strategic investor and a major shareholder of BeMetals,
holding approximately 19% of the Company’s outstanding shares post-closing of the Transaction and the
Offering. This provides a strong technical cornerstone investor in the Company. In addition, BeMetals will
have access to B2Gold’s experienced exploration team to assist in evaluating additional precious metals
projects;
• Japan possesses extensive geological settings prospective for gold mineralization which have attracted
several international gold producers including B2Gold;
• The Offering also provides BeMetals with appropriate capital to advance the Company’s gold exploration
in Japan, its existing quality exploration and development projects, as well as fund further evaluations for
additional precious metals opportunities.
Benefits to Kronk Resources Shareholders
• Provides Kronk investors with exposure to BeMetals ’ high-grade polymetallic South Mountain Project in
Idaho, U.S.A., now entering the Preliminary Economic Assessment stage, and its tier -one targeted,
Pangeni Copper Exploration Project in Zambia;
- 2 -
• This Transaction unlocks value for Kronk’s investors with a significant return upon its last private
fundraising round, and by providing the benefits of a public listing;
• Additionally, Kronk’s investors will be well positioned to benefit from both the upside of the gold
properties in Japan with further B2Gold investment , and BeMetal s’ other quality exploration and
development assets combined with the strategic growth plans of the Company.
Benefits to B2Gold
• The Transaction allows B2Gold to maintain a strategic investment in precious metals projects that might
not otherwise meet B2Gold’s investment criteria at the outset. B 2Gold may also act as a pipeline f or
other such precious metals projects for BeMetals to evaluate;
• Positions B2Gold as a strategic investor in an emerging base and precious metals exploration and
development resource company with a focused management team, access to capital, internationally
recognized advisors, and a highly experienced board of directors;
• The Transaction will provide for the aggressive and focused exploration of t hese properties in Japan , a
country that is attracting increased attention in the gold exploration space.
BeMetals President and CEO, John Wilton stated, “ After reviewing numerous precious metals projects we are
delighted to have secured this exceptional package of gold properties in Japan. Kronk assembled, with support
from B2Gold, this land position in Japan. This Transaction provides BeMetals with excellent direct exposure to
gold exploration properties in areas of Japan known to have hosted numerous historical high-grade mines
including, but not limited to, the currently operating Hishikari Gold Mine, which produced 7.9 million ounces of
gold from 1985-2020 at an average grade of 30 -40 grams per tonne gold(1). B2Gold’s investment into BeMetals
represents a strong endorsement of our team, delivery on existing projects, and for gold exploration in Japan. We
believe the strategic investment from B2Gold could open the door to future opportunities both within Japan and
in other regions around the world.”
Dr. Richard Sillitoe , an internationally recognised expert on th e style of gold mineralization seen in Japan and
Technical Advisor to BeMetals since inception, conducted field work on the Kato Project , within this package of
properties, and other similar projects in Japan during the 1990s. This work was undertaken on behalf of the Metal
Mining Agency of Japan, a govern ment entity. He commented, “The Kato Project and its environs appear to
possess many of the important geological features required for the formation of high-grade gold mineralization
potentially amenable to underground extraction.”
Mr. Wilton concluded , “The Company look s forward to defining and testing existing drill targets on the Japan
properties with the objective to start field activities shortly. In combination with our existing high -grade
polymetallic ( zinc-silver-gold-copper) South Mountain Projec t in Idaho, U.S.A., now entering the Preliminary
Economic Assessment stage , and our Pangeni Copper Explo ration Project in Zambia, this Transaction creates a
unique portfolio of valuable assets to grow the Company.”
TRANSACTION DETAILS
Under the terms of the Agreement, BeMetals has agreed to acquire all the issued and outstanding common shares
of Kronk Resources Inc. on the basis of 0.5169 shares of BeMetals per share of Kronk held (“Primary Exchange
Ratio”). In connection with the Agreement, Certain Individuals (as hereinafter defined) have entered into a
separate share purchase agreement with BeMetals to receive a lower exchange of 0.2585 shares of BeMetals per
share of Kronk held (the “Secondary Exchange Ratio” , and together with the Primary Exchange Ratio, the
“Exchange Ratios”). The Primary Exchange Ratio represents a total consideration of approximately $0.20 per
share of Kronk and the Secondary Exchange Ratio represents a total consideration of $0.10 per share of Kronk.
- 3 -
The Exchange Ratios are based upon BeMetals’ volume weighted average price (“VWAP”) in Canada of $0.3869
per share for the 20-day period ending January 26, 2021.
The Secondary Exchange Ratio is less favourable to certain shareholders of Kronk that are also shareholders or
directors of BeMetals as well as directors or officers of B2Gold (the “Certain Individuals”) . These C ertain
Individuals have agreed to receive a reduced consideration equal to the most recent equity financing price of
Kronk, without any appreciation based upon the advancement of Kronk’s assets.
BeMetals will issue approximately 32,629,956 shares in connection with the acquisition of Kronk. It is anticipated
that both BeMetals and Kronk will require shareholder approval to close the Transaction.
The Transaction will be carried out by way of an a malgamation of Kronk Resources Inc. and a wholly owned
subsidiary of BeMetals. Several directors of BeMetals are also directors or officers of Kronk and B2Gold (the “Non-
Arm’s Length Parties”) and pursuant to the policies of the TSX Venture Exchange , the Transaction will therefore
require the approval of at least 50% of the votes cast by disinterested BeMetals shareholders. The Agreement
includes customary provisions, including non -solicitation, as well as certain representations, covenants and
conditions that are customary for a transaction of this nature. Closing of the Transaction is subject to the receipt
of applicable regulatory approvals and the satisfaction of certain other closing conditi ons customary in
transactions of this nature, including the approval of the TSX Venture Exchange. The acquisition of Kronk’s assets
is not a “fundamental acquisition” as defined in the policies of the TSX Venture Exchange. The Company expects
to spend approximately 56% of its planned expenditures and management time on its existing properties over the
next twelve months. Closing of the Transaction is anticipated to occur in early April 2021.
Further information regarding th e Transaction will be contained in a management information circular to be
prepared by BeMetals and mailed to its shareholders in connection with a special meeting of share holders
expected to be held in late March 2021, for the purpose of approving the Transaction.
BOARD RECOMMENDATIONS AND FAIRNESS OPINIONS
The Transaction has been unanimously approved by an independent committee of the board of directors of
BeMetals formed for the purpose of reviewing and approving the transaction. The directors of BeMetals
recommend that BeMetals shareholders vote in favour of the Transaction.
Raymond James Ltd. has provided a fairness opinion to the independent committee of the board of directors of
BeMetals that, as of the date thereof, and based upon and subject to the assumptions, limitations and
qualifications stated therein, the consideration to be offered by BeMetals under the Transaction is fair, from a
financial point of view, to BeMetals.
The Transaction has also been approved by the board of directors of Kronk. Haywood Securities Inc. has provided
a fairness opinion to the board of directors of Kronk that, as of the date thereof, and based upon and subject to
the assu mptions, limitations and qualifications stated therein, the consideration to be received by the
shareholders of Kronk, other than Certain Individuals, under the Transaction is fair, from a financial point of view,
to the shareholders of Kronk.
THE OFFERING
The Offering will consist of a total of approximately 17.0 5 million common shares of the Company at a price of
$0.44 per share (the “Shares”), based on the 5-day VWAP of BeMetals for the five days ended February 12, 2021,
for gross proceeds of $7,500,000. B2Gold has agreed to purchase the Shares subject to certain conditions ,
including successful closing of the Transaction and approval of the TSX Venture Exchange.
- 4 -
Proceeds from the Offering will be used to advance prospecting activities in Ja pan, continue evaluating further
precious metals acquisition targets, for exploration and development studies at the Company’s South Mountain
Project in Idaho, U.S.A., for further exploration in Zambia, as well as for general working capital purposes.
The Shares issued in the Offering will be subject to a statutory four-month hold period from the date of closing in
accordance with applicable securities legislation.
The securities to be offered pursuant to the Offering have not been, and will not be, registered under the U.S.
Securities Act of 1933, as amended (the "U.S. Securities Act") or any U.S. state securities laws, and may not be
offered or sold in the United States or to, or for the account or benefit of, United States persons absent
registration or any applicable exemption from the registration requirements of the U.S. Securities Act and
applicable U.S. state securities laws. This news release shall not constitute an offer to sell or the solicitation of an
offer to buy securities in the United States, nor shall there be any sale of these securities in any jurisdiction in
which such offer, solicitation or sale would be unlawful.
OVERVIEW OF GOLD EXPLORATION IN JAPAN
During the past decade, the Japanese mining industry has seen a n emergence of investments from a select few
foreign mining companies. The Mining Amendment Act of 2012 allows for foreign investment and development
into the mining sector following years of limited exploration. Application of modern exploration technologies
combined with classical field sampling and mapping is expected to lead to new discoveries and extensions to
known high-grade gold deposits.
THE KATO GOLD PROJECT, HOKKAIDO
The Kato Gold Project (“Kato” or the “Property”) is Kronk’s most advanced exploration project and covers close
to 2,000 hectares in Hokkaido . See figure 1 for project location . The Property was drilled by the Japanese
government’s Metal Mining Agency of Japan (“MMAJ”) in the 1990s and during that time intervals of high-grade
gold including 17.5 metres grading 8.15 grams per tonne gold in hole 5MAHB-2 and 18.65 metres grading 5.01 g/t
Au in hole 7MAHB-1 were returned. Little work was conducted on the Property since the 1990s until the Japanese
Ministry of Economy Trade and Industry (“METI”) granted the prospecting rights to Kronk in December 2017.
From 2018-2019, Kronk completed several holes which successfully intersected a zone of hydrothermal breccia
near the adjacent main target vein. KT19-02A returned a number of zones of gold mineralization including 14
metres grading 2.10 g/t Au without intersecting the primary target vein. In 2020, Kronk deployed a larger drill rig
and reached the primary target zone, intersecting over 50 metr es of hydrothermal breccia, vein breccia,
stockwork, and banded quartz-adularia veins in hole KT20-010. The hole intersected 58.9 metres grading 0.76 g/t
Au, including 7.4 metres at 2.99 g/t Au, and ended in 2.8 metres grading 3.1 g/t Au. Table 1 illustrates these
selected intersections and Table 2 shows all drill hole intersections for the Kato Project. Table 3 shows drill hole
collar co-ordinates, elevation, azimuth, dip and end of hole depth. Figure 2 below illustrates the location of the
drill collars, with traces of the holes and mineralized zones indicated. The simplified geological map shows the
interpreted trends of the mineralized veins and breccias.
Further drilling will be required to follow-up on this priority target zone and other associated highly prospective
targets, some of which have had little to no previous drill testing.
Table 1: Kato Project: Selected Historical Drilling Intersections
Drill Hole ID From (m) To (m) Core Interval (m) Au g/t Drilled By
5MAHB-2 314.80 332.30 17.50 8.15 Metal Mining Agency of Japan
7MAHB-1 258.85 277.50 18.65 5.01 Metal Mining Agency of Japan
KT19-02A 120.48 177.05 56.57 0.80 Kronk
- 5 -
Including 136.95 164.50 27.55 1.40 Hole did not reach primary target
Including 150.50 164.50 14.00 2.10
KT20-010
Kronk
Interval 1: 165.30 224.20 58.90 0.76
Including 167.70 175.10 7.40 2.99
Interval 2: 229.80 232.60* 2.80 3.10
These drill results are historical in nature. BeMetals has not undertaken any independent investigation of the sampling nor has it
independently analyzed the results of the historical exploration work in order to verify the results. BeMetals considers these historical drill
results relevant as the Company will use this data as a guide to plan future exploration programs. The Company also considers the data to
be reliable for these purposes however the Company's future exploration work will inc lude verification of the data through drilling. *Drill
hole ended in mineralization. It is estimated based upon the historical data that true widths might range from 80-90% of the drilled
intersections. A nominal cut-off grade of 0.5 g/t Au has been applied to determine the boundaries of the intersections.
Figure 1: Project Locations Map
- 6 -
Figure 2: Simplified Geological Map of the Kato Project Area with Drill Hole Locations and Traces.
- 7 -
TASHIRO, HOKUSATSU, TODOROKI, AND KONOMAI PROJECTS
The Tashiro Project (“Tashiro”) is located in northeastern Kyushu. See Figure 1 above for project location. This
property covers approximately 4,415 hectares and its prospecting rights were granted to Kronk in December 2017.
In the 1990s, MMAJ conducted drilling on the property as part of a search for the next Hishikari Gold Mine, which
is one of the highest -grade gold mining operations in the world . Mapping, soil sampling, and some geophysics
were also undertaken, and the drilling program identified a vein swarm at what is known as the Noya zone where
numerous highly anomalous gold intervals were intersected. Further fieldwork will be completed and it is likely
a number of priority drill targets will be quickly generated.
The Hokusatsu Project is located in southwestern Kyushu and the property package is 2,792 hectares. See Figure
1 above for project location. The prospecting rights for this property were granted in July 2020 and no significant
exploration work has been completed to date . This property is of interest due to its close proximity to two
important gold occurrences on the property near the former Fuke(2) (historical production of 125,000 ounces at
10.5 g/t Au) and Ohkuchi(2) (783,000 ounces at 13.1 g/t Au) Mines. In addition, the high-grade Hishikari Gold Mine
is located approximately 16 kilometres to the southeast of the Hokusatsu property.
The Todoroki Project, in southwestern Hokkaido, covers 5,181 hectares and its prospecting rights were granted
in November 2018. See Figure 1 above for project location. Mapping and sampling of the existing mine workings
within th e property were completed and confirmed the prospectivity of th e area. Further fieldwork will be
undertaken to locate possible structures that could host gold bearing veins at depth. The Todoroki veins lie along
a deeply incised canyon but other veins may exist where the level of erosion is shallower and failed to expose
them.
The Konomai Project encompasses a property that spans some 7,165 hectares in northeastern Hokkaido and its
prospecting rights were granted in December 2019. See Figure 1 above for project location. The land package is
located in the northern part of a prolific zone of gold mining operations active in pre-World War II times. Most of
the gold mines were shut down during the war years and were never reopened aside from Sumitomo Metal
Mining’s Konomai Mine, the largest in Hokkaido, which produced 3.1 million ounces of gold(1).
Table 2: Kato Project: Historical Drill Hole Intersections
Drill Hole ID From (m) To (m) Core Interval (m) Au g/t Drilled By & Comments
3MAHB-6 153.95 165.90 11.95 0.42 Metal Mining Agency of Japan
Including 153.96 157.20 3.24 1.05
3MAHB-6 126.25 127.25 1.00 0.66
3MAHB-7 64.50 72.40 7.90 0.70
4MAHB-5 116.80 119.30 2.50 13.11
4MAHB-5 217.60 218.90 1.30 1.67
4MAHB-6 175.50 184.00 8.50 3.42
4MAHB-6 300.60 316.80 16.20 0.51
4MAHB-6 320.90 323.80 2.90 0.77
5MAHB-1 44.20 44.60 0.40 7.96
5MAHB-2 252.90 266.10 13.20 0.52
Including 258.30 266.10 7.80 0.60
5MAHB-2 314.80 332.30 17.50 8.15
5MAHB-3 115.15 115.70 0.55 3.64
6MAHB-1 382.80 433.40 50.60 1.16
6MAHB-2 250.60 254.50 3.90 3.22
6MAHB-2 278.50 283.00 4.50 2.68
6MAHB-3 277.00 283.50 6.50 0.52
- 8 -
7MAHB-1 258.85 277.50 18.65 5.01
Including 262.77 270.50 7.73 8.52
7MAHB-2 Missing historical assay data
7MAHB-3 54.40 55.60 1.20 3.12
7MAHB-3 202.63 203.15 0.52 2.70
7MAHB-3 206.70 208.15 1.45 2.17
7MAHB-3 467.15 467.30 0.15 0.04
7MAHB-4 266.65 269.30 2.65 3.71
7MAHB-4 272.40 298.90 26.50 2.84
7MAHB-5 275.28 275.75 0.47 60.62
7MAHB-5 290.75 291.19 0.44 4.69
7MAHB-6 90.30 93.75 3.45 1.94
7MAHB-6 345.20 377.30 32.10 0.64
7MAHB-7 203.00 207.80 4.80 2.96
7MAHB-7 226.30 226.60 0.30 6.40
7MAHB-8 418.35 419.65 1.30 3.08
8MAHB-1 299.10 309.70 10.60 2.37
8MAHB-2 141.40 152.35 10.95 1.07
KT18-01 Kronk
Hole did not reach primary target
KT18-2 15.70 37.70 22.00 0.50 Hole did not reach primary target
KT19-02A 120.48 177.05 56.57 0.80 Hole did not reach primary target
Including 136.95 164.50 27.55 1.40
Including 150.50 164.50 14.00 2.10
KT19-03 128.60 138.17 9.57 0.64
KT19-03 168.87 176.16 7.29 0.22
KT19-04 Hole did not reach primary target
KT19-05 Hole did not reach primary target
KT19-06 121.50 122.20 0.70 1.12
KT19-07 162.05 182.07 20.02 0.58 Hole did not reach primary target
Including 165.30 169.37 4.07 1.05
KT19-07 242.97 243.27* 0.30 21.10 *0.33m from end of hole depth
KT19-08 Hole did not reach primary target
KT20-010 165.30 224.20 58.90 0.76
Including 167.70 175.10 7.40 2.99
KT20-010 229.80 232.60 2.80 3.10
These drill results are historical in nature. BeMetals has not undertaken any independent investigation of the sampling nor has it
independently analyzed the results of the historical exploration work in order to verify the results. BeMetals considers thes e historical drill
results relevant as the Company will use this data as a guide to plan future exploration programs. The Company also considers the data to
be reliable for these purposes however the Company's future exploration work will include verificat ion of the data through drilling. *Drill
hole ended in mineralization. It is estimated based upon the historical data that true widths might range from 80-90% of the drilled
intersections. A nominal cut-off grade of 0.5 g/t Au has been applied to determine the boundaries of the intersections.