Southstone Minerals Announces Arrangement Agreement FOR Going-Private Transaction with Terry L. Tucker
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Southstone Minerals Limited
2751 Graham Street
Victoria, British Columbia, V8T 3Z1
TSX Venture: SML
www.southstoneminerals.com
SOUTHSTONE MINERALS ANNOUNCES ARRANGEMENT AGREEMENT FOR GOING-PRIVATE
TRANSACTION WITH TERRY L. TUCKER
VICTORIA, BRITISH COLUMBIA — 22 September 2026 — Southstone Minerals Limited (“ Southstone” or the
“Company”) (TSX-V: SML) announces that it has entered into an arrangement agreement dated September 21,
2026 (the “Arrangement Agreement”) with Terry L. Tucker, the Company's Executive Chairman and Interim Chief
Executive Officer (the “Purchaser”), pursuant to which the Purchaser will acquire, by way of a court-approved plan
of arrangement under the Business Corporations Act (British Columbia) (the “Arrangement”), all of the issued and
outstanding common shares of the Company (“Shares”) that he does not already own.
TRANSACTION HIGHLIGHTS
Under the terms of the Arrangement, shareholders of the Company other than the Purchaser (“Shareholders”) will
receive cash consideration of $0.0375 per Share (the “ Consideration”), representing aggregate consideration of
approximately $1,073,508 payable in respect of 28,626,888 Shares. The Purchaser currently beneficially owns
4,775,000 Shares, representing approximately 14.30% of the Company's issued and outstanding Shares, and will
not receive any Consideration in respect of those Shares. The Consideration exceeds the indicated value range of
$0.024 to $0.034 per Share calculated by the Fairness Advisor (as defined below) by approximately 11.6% to 54.6%.
All dollar amounts are in Canadian dollars unless otherwise stated.
Upon completion of the Arrangement, the Company will be wholly -owned by the Purchaser, the Shares will be
delisted from the TSX Venture Exchange (“TSXV”), and the Company will cease to be a reporting issuer.
SPECIAL COMMITTEE AND BOARD APPROVAL
Because the Purchaser is an officer of the Company and the holder of approximately 14.30% of the Shares, the
Arrangement constitutes a “business combination” and a “related party transaction” in respect of which the
Purchaser is an “interested party”, within the meaning of Multilateral Instrument 61-101 – Protection of Minority
Security Holders in Special Transactions (“MI 61 -101”). The board of directors of the Company (the “ Board”)
accordingly formed a special committee of independent directors, comprised of Kevin Ma (Chair) and Neil Budd
(the “Special Committee”), to review, negotiate and supervise the Arrangement on behalf of the Company.
The Special Committee retained Evans & Evans, Inc. (the “Fairness Advisor”) as its independent financial advisor
and to provide a fairness opinion. The Fairness Advisor has provided its verbal opinion which will subsequently be
reaffirmed with a written report to the Special Committee that, as of the date of such opinion and subject to the
assumptions, limitations and qualifications set out therein, the Consideration to be received by Shareholders
under the Arrangement is fair, from a financial point of view, to Shareholders other than the Purchaser (the
“Fairness Opinion”).
After receiving the unanimous recommendation of the Special Committee and the Fairness Opinion, and after
consultation with its outside legal and financial advisors, the Board (with the Purchaser having declared his interest
and recused himself from delibe rations) unanimously determined that the Arrangement is fair to Shareholders
and in the best interests of the Company.
As the Shares are listed only on the TSXV and are not listed or quoted on any other market, the Company intends
to rely on the “specified market” exemption from the formal valuation requirement under MI 61 -101, such that
no formal valuation of the Shares w ill be obtained or included in the management information circular for the
Meeting (as defined below). The Arrangement is a non-arm’s length transaction.
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THE COMPANY'S OBLIGATIONS AND CIRCUMSTANCES
The aggregate consideration and obligations addressed under the Arrangement are expected to be approximately
$4.943 million, comprising (i) the cash Consideration payable to Shareholders, (ii) parent-level indebtedness, (iii)
estimated costs of the Arrangement, and (iv) obligations of the Company’s subsidiaries, which will remain as
obligations of those subsidiaries. No creditor of the Company is being asked to compromise on any part of its
claim.
In considering the Arrangement, the Special Committee considered the Company's circumstances as disclosed in
its continuous disclosure record. The mining right over the Oena Diamond Mine, held by African Star Minerals
(Pty) Ltd (“ ASM”), in which the Company holds a 43% interest and which it consolidates, expires on 14 March
2027, and the application to renew it has not yet been lodged with the Department of Mineral and Petroleum
Resources. The assessed cost of rehabilitating the current disturbance materially exceeds the financial provision
lodged with the Department. The Company's most recently filed financial statements disclose a working capital
deficiency and a material uncertainty that may cast significant doubt on its ability to continue as a going concern.
Revenue in the Company's consolidated financial statements is reported on a gross basis and includes 100% of
ASM's diamond tender sales, notwithstanding that the contract miner is entitled to the majority share of tender
proceeds and that the Company holds a 43% interest in ASM; consolidated revenue is therefore not indicative of
the amounts attributable to Shareholders.
As the Company has previously disclosed, there is no current NI 43 -101 technical report or independent mineral
resource estimate for the Oena Diamond Mine. Nothing in this news release constitutes disclosure of a mineral
resource or mineral reserve, and no such estimate should be inferred from it.
MEETING AND COURT APPROVAL
The Arrangement will be subject to, among other things, approval by: (i) not less than 66⅔% of the votes cast by
Shareholders present in person or represented by proxy at a special meeting of Shareholders to be called to
consider the Arrangement (the “Meeting”), and (ii) a simple majority of the votes cast by Shareholders, excluding
the Purchaser and any other persons required to be excluded under MI 61-101, in each case voting in accordance
with the interim order to be obtained from the Supreme Court of British Columbia (the “Court”).
Full details of the Arrangement Agreement will be included in a management information circular of Southstone
in connection with the Meeting, which will be filed with applicable regulatory authorities and mailed to
Shareholders in accordance with applicable securities laws. Pursuant to the terms of the Arrangement Agreement,
the Arrangement is subject to customary conditions including the receipt of applicable regulatory and third-party
approvals and consents as may be required to effect and complete the transaction, including final approval of the
Court and approval of the TSXV.
Assuming that all requisite approvals are received, the Purchaser and Southstone expect to close the proposed
Arrangement shortly after the date of the Meeting. Upon completion of the Arrangement, no securities of
Southstone will be listed on any public market and Southstone will cease to be a reporting issuer under Canadian
laws.
BOARD OF DIRECTORS RECOMMENDATION AND VOTING SUPPORT
The Arrangement has been unanimously approved by the Board (with the Purchaser having declared his interest
and recused himself from deliberations), after receiving the unanimous recommendation of the Special Committee
comprised entirely of independent directors, as well as considering the Fairness Opinion from the Fairness Advisor.
Certain shareholders of the Company, holding 6,905,872 Shares representing approximately 20.68% of the issued
and outstanding Shares on a non-diluted basis, have entered into support agreements with the Purchaser pursuant
to which they have agreed, among other things, to support the transaction and vote their Shares in favour of the
Arrangement.
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ADVISORS
Evans & Evans, Inc. is acting as financial advisor to the Special Committee. McMillan LLP is acting as legal counsel
to the Company. Koffman Kalef LLP is acting as legal counsel to the Purchaser. No finder’s fees were paid in
connection with the Arrangement.
Shareholders of the Company, and other interested parties, are advised to read the materials relating to the
proposed Arrangement, including the Arrangement Agreement, that will be filed by Southstone with securities
regulatory authorities when they become available.
ON BEHALF OF THE SPECIAL COMMITTEE OF SOUTHSTONE MINERALS LIMITED
Kevin Ma
Chair, Special Committee
For additional information, please contact Kevin Ma at [email protected]
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.
Forward Looking Statements Disclaimer
This news release contains “forward-looking statements” and "forward-looking information" within the meaning of
applicable Canadian and United States securities laws (collectively, "forward -looking statements"). Generally,
forward-looking statements can be identified by the use of forward -looking terminology such as “intends",
"anticipates”, "expects", "estimates", "believes", "projects", "scheduled", "forecast", "outlook", "potential",
"proposed", "plan", "budget", "target", "seeks", "will", or variations of such words and phrases or statements that
certain actions, events or results “may”, “could”, “should”, “would", "might" or “occur”. Forward -looking
statements are not, and cannot be, guarantees of future performance or outcomes. All statements in this n ews
release, other than statements of historical facts, including statements regarding future estimates, plans,
objectives, timing, assumptions or expectations of future performance are forward -looking statements, including,
but not limited to: the anticipated terms of the Arrangement, timing and completion of the Arrangement; the ability
of the Purchaser to fund the Consideration; the holding of the Meeting and the mailing of the management
information circular; the anticipated delisting of the Shares from the TSXV and the Company ceasing to be a
reporting issuer; certain Shareholders entering into voting and support agreements with the Purchaser prior to the
Meeting; the receipt of Court, Shareholder, TSXV and other required approvals and consents; the sat isfaction or
waiver of conditions precedent to the Arrangement; the Company's reliance on the “specified market” exemption
from the formal valuation requirement under MI 61 -101; and the anticipated benefits of the Arrangement. The
forward-looking statements contained in this news release are based on certain material assumptions, including,
among others: that all conditions precedent to the Arrangement will be satisfied or waived in a timely manner; that
all required regulatory, Court, Shareholder, TSXV and third-party approvals and consents will be obtained on
satisfactory terms and in a timely manner; that no material adverse change will occur in respect of the Company or
its subsidiaries prior to the completion of the Arrangement; that the Purchaser will have sufficient funds available
to satisfy the Consideration and all other obligations under the Arrangement Agreement; and that the assumptions
underlying the Fairness Opinion will remain substantially accurate. Forward -looking statements are subject to
known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from
those expressed or implied by such forward -looking statements, including, among others: the failure to obtain
Shareholder, regulatory, Court or TSXV approvals in connection with the Arrangement; the failure to satisfy or waive
conditions precedent to the Arrangement; the failure of the Purchaser to obtain financing or otherwise fund the
Consideration; the failure to complete the Arrangement on the terms or timeline currently contemplated, or at all;
the possibility of competing proposals or superior offers; the failure to realize the anticipated benefits of the
Arrangement; potential adverse tax consequences to Shareholders; changes in general econ omic, market or
business conditions; risks generally associated with the mineral exploration industry; environmental risks; changes
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in laws, regulations or governmental policy; community relations; delays in obtaining governmental or other
approvals; the accuracy of the assumptions underlying the Fairness Opinion; and the risk factors with respect to the
Company as set out in the Compa ny’s most recent management discussion and analysis and other filings which
have been filed with the Canadian securities regulators and available under the Company’s profile on SEDAR+ at
www.sedarplus.ca.
Although the Company has attempted to identify important factors that could cause actual results to differ
materially from those contained in or implied by forward-looking statements, there may be other factors that cause
results not to be as anticipated, estimated or intended. Forward -looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results, performance or achievements of the
Company to be materially different from any future results, performance or achievements expressed or implied by
the forward -looking statements. There can be no assurance that forward -looking statements will prove to be
accurate, as actual results and future events could differ materially from those anticipated, estimated or intended.
The forward-looking statements contained in this news release are made as of the date hereof and the Company
expressly disclaims any intention, obligation or undertaking to update or revise any forward -looking statements,
whether as a result of n ew information, future events or otherwise, except as expressly required by applicable
securities laws. Accordingly, readers are cautioned not to place undue reliance on forward -looking statements or
the information contained therein.