Margaux Red Capital Inc. and Sigma Lithium Resources Inc. Announce Filing of Technical Report FOR Qualifying Property and Provide an Update ON the Private Placement and the Qualifying Transaction
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MARGAUX RED CAPITAL INC. AND SIGMA LITHIUM RESOURCES INC. ANNOUNCE
FILING OF TECHNICAL REPORT FOR QUALIFYING PROPERTY AND PROVIDE AN
UPDATE ON THE PRIVATE PLACEMENT AND THE QUALIFYING TRANSACTION
Vancouver, British Columbia: March 28, 2018 – Margaux Red Capital Inc. (NEX-MXC.H)
(“Margaux”) and Sigma Lithium Resources Inc. (“Sigma”) are pleased to announce the filing of a
technical report (the “SGS Technical Report ”) on Sigma’s 100% owned past-producing lithium project
in Brazil (the “Project”), which includes a mineral resource estimate for the Xuxa pegmatite on the Grota
do Cirilo property of the Project. Margaux and Sigma also provide this update regarding the proposed
qualifying transaction as detailed in Margaux’s December 22, 2017 press release (the “Proposed
Transaction”) and Sigma’s private placement financing. Margaux advises that there has been no material
change to the information contained in its prior press release, other than the further information provided
in this press release.
Select Technical Information regarding the Qualifying Property
Sigma, through its wholly-owned subsidiary Sigma Mineração S.A., is focused on developing its 100%
owned past-producing project located in the Araçuaí and Itinga regions of the state of Minas Gerais,
Brazil. Sigma’s properties are comprised of 28 mineral rights. The Project has been evaluated as a
potential high grade, hard rock lithium mining project which hosts numerous prospective lithium bearing
pegmatites within its land package of over 18,800 hectares.
Based on the SGS Technical Report (with an effective date of January 29, 2018), completed by SGS
Canada Inc. in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral
Projects (“NI 43-101 ”) and approved for purposes of the Proposed Transaction by the TSX Venture
Exchange (the “TSXV”), the mineral resource estimate outlines approximately 12.9 million tonnes of
resource classified as Measured & Indicated at an average grade of 1.56% Li20. In addition the mineral
resource estimate outlines an additional approximate 600,000 tonnes of resource classified as Inferred at
an average grade of 1.47% Li20. The mineral resources outlined were reported using an open-pit mining
perspective.
The following is the summary mineral resource estimate for the Xuxa pegmatite which is located on the
Grota do Cirilo Property of the Project:
Cut Off Grade Category Tonnage* Average Grade
(Li2O%) (% Li2O)
0.5 Measured 8,502,000 1.57
0.5 Indicated 4,385,000 1.55
0.5 Measured+Indicated 12,887,000 1.56
0.5 Inferred 609,348 1.47
Notes: The mineral resource estimate has been conducted using the CIM Definitions Standards for
mineral resources in accordance with NI 43-101. Mineral resources, which are not mineral
reserves, do not have demonstrated economic viability. Inferred mineral resources are
exclusive of the Measured and Indicated resources.
A fixed density of 2.72 t/m3 was used to estimate the tonnage from block model volumes.
Resources are constrained by the the topography
Geological CoG estimated from Li2O values of the composite vs value in block
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In addition, as part of the SGS Technical Report, exploration work undertaken by Sigma, as well as
historical work at the Project, was analyzed and assessed for exploration potential based on available
drilling, channel samples, grab samples and surface mapping. This analysis identified the potential for
additional mineralization with estimated aggregate volumes ranging from 37 million tonnes to 57 million
tonnes of potential lithium bearing mineralization. The following tables summarize the exploration
potential outlined in the SGS Technical Report.
Estimated volume of the Grota do Cirilo property
NORTH COMPLEX
TARGET LENGTH WIDTH DEPTH
EXPLORATION
POTENTIAL
(Mil Tonnes)
NUMBER
OF HOLE
GRADES
INTERCEPTIONS
BARREIRO 400 300 40 (12-15) 6 1.2 – 1.5% Li2O
LAVRA DO MEIO 550 30 150 (5-7) 2 1.0 – 1.2% Li2O
MURIAL 450 35 200 (6-8) 2 1.0 – 1.3% Li2O
MAXIXE 200 11 175 (1-2) 2 0.8 – 1.0% Li2O
NEXINHO DO
CHICAO
200 300 17 (3-5) - -
TOTAL VOLUME
ESTIMATE
(27-37)
Notes: The potential quantity and grade is conceptual in nature since there is insufficient exploration to define a mineral
resource. Any future exploration does not grant mineral resource on the property and all potential quantity and grade are
based on preliminary exploration results, consisting of available drilling, channel samples, grab samples and surface
mapping.
Estimated volume of the São José property
SOUTH COMPLEX
TARGET LENGTH WIDTH DEPTH
EXPLORATION
POTENTIAL
(Mil Tonnes)
NUMBER
OF HOLE
GRADES
INTERCEPTIONS
LAVRA GRANDE 228 20 300 (2-5) - -
SAMBAIA 250 20 150 (2-3) - -
ANANIAS 400 20 150 (2-4) - -
LAVRA DO RAMOM 200 20 200 (2-4) - -
LAVRA DO ANTIGA 200 15 200 (2-4) - -
TOTAL VOLUME
ESTIMATE
(10-20)
Notes: The potential quantity and grade is conceptual in nature since there is insufficient exploration to define a mineral
resource. Any future exploration does not grant mineral resource on the property and all potential quantity and grade are
based on preliminary exploration results, consisting of available drilling, channel samples, grab samples and surface
mapping.
Based on the SGS Technical Report, Sigma has proposed the following exploration and development
expenditures:
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Xuxa Feasibility
Amount ($) Expected Start-End Date
Mine design $250,000.00 May 2018 – July 2018
Metallurgical test work $800,000.00 April 2018 – June 2018
Process plant flowchart development $500,000.00 June 2018 – August 2018
Infrastructural Design $300,000.00 May 2018 – August 2018
Water treatment plant design $500,000.00 June 2018 – August 2018
Dry stacking and reject handling system $350,000.00 June 2018 – Augut2018
Pilot plant purchase $500,000.00 April 2018 – May 2018
Total $3,200,000.00 -
Resource Development
Grota do Cirilo 15,000m of drilling $2,100,000.00 April 2018 – July 2018
São José 10,000m of drilling $1,400,000.00 July 2018 – September 2018
Chemical analysis $250,000.00 May 2018 – October 2018
Metallurgical test work $600,000.00 June 2018 – August 2018
Total $4,350,000.00 -
Full details are included in the SGS Technical Report which has been filed on SEDAR.
Private Placement
As previously disclosed, the pre-transaction financing is by way of a brokered private placement (the
“Private Placement”) of subscription receipts (“Subscription Receipts”) by Sigma through a syndicate
of agents being co-led by National Bank Financial Inc. and Cormark Securities Inc. and including
Canaccord Genuity Corp. (together, the “Agents”). The Private Placement is expected to close on or
about March 29, 2018, and is expected to provide adequate capital to further explore and develop the
Project (including the exploration and development expenditures detailed above).
Through the Private Placement Sigma has offered a maximum of 10,000,000 Subscription Receipts at a
subscription price of $2.00 per Subscription Receipt for aggregate gross proceeds of up to $20,000,000.
Applying the exchange ratio for the Proposed Transaction of 10.045125 Margaux common shares per
Sigma common share, the 10,000,000 Sigma common shares to be issued on conversion of the
Subscription Receipts will be exchanged for 100,451,250 Margaux common shares (resulting in an
effective subscription price of $0.1991 per Margaux common share). Each Subscription Receipt will
entitle the holder, at no extra cost, to one common share of Sigma. The Subscription Receipts will
automatically be exchanged, without payment of any additional consideration or further action on the part
of the holders, into common shares of Sigma immediately prior to closing of the Proposed Transaction.
The net proceeds of the Private Placement will be used for ongoing exploration and development of the
Project, as described in more detail above, and for working capital and general corporate purposes. Funds
from the Private Placement will be held in esc row and will be released to Sigma if the conditions
precedent to completion of the Proposed Transaction have been satisfied. If such conditions are not
satisfied within 60 days following the closing of the Private Placement, funds will be returned to the
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subscribers without deduction. The Subscription Receipts were offered in Canada, the United States and
in jurisdictions outside of Canada and the U.S., in each case in accordance with all applicable laws. The
Agents will be entitled to agency fees of 6% of the gross proceeds of the Private Placement and warrants
to acquire (at an exercise price of $2.00 per share) such number of Sigma common shares as is equal to
3% of the number of Subscription Receipts issued.
Selected Financial Information about Sigma
The following table sets out selected financial information for Sigma for the period and as at the dates
indicated. All of the financial information presented below has been prepared by management in
accordance with International Financial Reporting Standards.
Financial information (unaudited) of Sigma (consolidated)
for the period from incorporation on April 13, 2017 to
December 31, 2017 (year-end)
$
Current assets $337,999
Reclamation deposits $21,182
Exploration and evaluation assets $2,496,260
Total Assets $2,925,441
Total Current liabilities $14,540,415
Derivative component of Convertible
Debenture
$7,415,000
Convertible Debenture $2,721,482
Other current liabilities $4,403,933
Long term liabilities $3,621,793
Total liabilities $18,162,208
Shareholder equity
Share capital $697,582
Warrants $11,244
Share-based payments reserve $81,508
Deficit $(16,027,101)
Total Equity $(15,236,767)
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Total liabilities and equity $2,925,441
In addition, for the period from incorporation on April 13, 2017 to December 31, 2017, Sigma had
general and administrative expenses of $907,227 and a net loss (inclusive of the $7,415,000 derivative
component of Sigma’s convertible debentures) of $8,539,759.
Margaux Red Capital Inc.
Margaux is a capital pool company incorporated under the provisions of the Canada Business
Corporations Act with its registered and head office in Vancouver, British Columbia. Margaux is a
“reporting issuer” in the provinces of British Columbia and Alberta. Margaux does not hold any interest
in any of the consolidated assets of Sigma.
The Proposed Transaction is an arm's length transaction subject to requisite regulatory approval,
including the approval of the TSXV. A filing statement outlining the terms of the Proposed Transaction is
currently being reviewed by the TSXV, and will be filed following completion of that review and
settlement of any comments of the TSXV.
Margaux currently has 6,696,750 Margaux common shares issued and outstanding. Under the terms of the
share exchange agreement for the Proposed Transaction, an aggregate of 662,978,250 Margaux common
shares are to be issued in exchange for all outstanding Sigma common shares, being an exchange ratio of
10.045125 Margaux common shares per Sigma common share. Since (as noted above) the Proposed
Transaction is not a non-arm’s length transaction for purpose of applicable TSXV rules, Margaux
shareholder approval is not required for the Proposed Transaction. Following completion of the Proposed
Transaction it is expected that shareholder approval will be sought to change Margaux’s name to “Sigma
Lithium Resources Inc.” and to do a consolidation of the then outstanding Margaux common shares.
The respective pro forma holdings of Margaux upon completion of the Proposed Transaction is expected
to be as follows: (i) Margaux’s current shareholders will hold 6,696,750 Margaux shares (1%); (ii)
506,274,300 Margaux shares (75.6%); (iii) 56,252,700 Margaux shares (8.4%) will be held by holders of
convertible debentures of Sigma; and (iv) 100,451,250 Margaux shares (15%) will be held by the
Subscription Receipt investors.
Board of Directors and Management
In addition to the directors and officers disclosed in Margaux’s December 22, 2017 press release, it is
expected that additional directors of Margaux will be appointed upon completion of the Proposed
Transaction, the biographies of whom will be included in a press release at the time.
Trading Halt
Trading in the Margaux common shares has been halted and may remain halted pending completion of
the review of the Proposed Transaction by the TSXV. There can be no assurance that trading in the
Margaux shares will resume prior to the completion of the Proposed Transaction.
Sponsorship
A waiver of the sponsorship requirement has been conditionally provided by the TSXV in light of the
Private Placement being brokered.
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Conditions to Completion of the Proposed Transaction
Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to:
(a) closing conditions customary to transactions of the nature of the Proposed Transaction; (b) approvals
of the TSXV for the Proposed Transaction; and (c) the completion of the Private Placement. There can
be no assurance that the Proposed Transaction will be completed as proposed or at all.
Marc-Antoine Laporte, P.Geo, M.Sc., of SGS Canada Inc. and a qualified person for purposes of NI 43-
101 has reviewed the scientific and technical information in this press release.
For further information, please contact:
Margaux Red Capital Inc.
Steve Bajic
President
(604) 288-8950
Investors are cautioned that, except as disclosed in the filing statement to be filed in connection with the
Proposed Transaction, any information released or received with respect to the Proposed Transaction
may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool
company should be considered highly speculative.
This press release does not constitute an offer of the securities of Margaux or Sigma for sale in the United
States. The securities of Margaux and Sigma have not been registered under the United States Securities
Act of 1933, (the “1933 Act”) as amended, and may not be offered or sold within the United States absent
registration or an exemption from registration under the 1933 Act. This press release shall not constitute
an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any
state in which such offer, solicitation or sale would be unlawful.
The TSXV has in no way passed upon the merits of the Proposed Transaction and has neither approved
nor disapproved the contents of this news release.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the
TSXV) accepts responsibility for the adequacy or accuracy of this news release.
Cautionary Note Regarding Forward-Looking Statements
This news release contains forward-looking statements relating to the Proposed Transaction, including
statements regarding timing for closing of the Private Placement, the use of proceeds of the Private
Placement, the exchange of Subscription Receipts, the receipt of all necessary regulatory and other
approvals and satisfaction of all other closing conditions in connection with the Proposed Transaction
and other statements that are not historical facts. Readers are cautioned not to place undue reliance on
forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon
which they are based will occur. By their nature, forward-looking statements involve numerous
assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to
the possibility that the predictions, forecasts, projections and other forward-looking statements will not
occur, which may cause actual performance and results in future periods to differ materially from any
estimates or projections of future performance or results expressed or implied by such forward-looking
statements. These assumptions, risks and uncertainties include, among other things: the risk that the
Proposed Transaction will not be completed or that the necessary approvals and/or exemptions are not
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obtained or some other condition to the closing of the Proposed Transaction will not be satisfied; the risk
that closing of the Proposed Transaction could be delayed if Margaux and Sigma are not able to obtain
the necessary approvals on the timelines planned; the risk that the Private Placement will not be
completed, the timing of obtaining required approvals, closing conditions for the Proposed Transaction,
state of the economy in general and capital markets in particular, investor interest in the business and
future prospects of Margaux and Sigma.
The forward-looking statements contained in this news release are made as of the date of this news
release. Except as required by law, Margaux and Sigma disclaim any intention and assume no obligation
to update or revise any forward-looking statements, whether as a result of new information, future events
or otherwise, except as required by applicable securities law. Additionally, Margaux and Sigma
undertake no obligation to comment on the expectations of, or statements made, by third parties in
respect of the matters discussed above.