South Star Mining Closes $4.19 Million in Brokered Financing and Announces a $1,000,000 Non-brokered Financing.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
NEWS RELEASE
South Star Mining Closes $4.19 Million in Brokered Financing
and Announces a $1,000,000 Non-brokered Financing.
Not for distribution to US wire services or for dissemination in the United States of America
May 16, 2018 – Vancouver, B.C. - South Star Mining Corp. (“South Star” or the “Compa-
ny”) (TSXV: STS.H) is pleased to announce that, further to its announcement of a brokered pri-
vate placement (the “Brokered Placement”) on February 28th, 2018, the Company has closed a
total of C$4,190,000 in which Company insiders invested a total of C$635,000.
South Star entered into an agreement with a synd icate of agents led by Echelon Wealth Partners
Inc. (the “Lead Agent”), which included Haywood Securities In c., PI Financial Corp. and Eight
Capital Inc. (collectively referred to as, the “ Agents”) to sell subscription receipts (the “ Sub-
scription Receipts ”) at a price of C$0.45 per Subs cription Receipt. A total of 9,312,442
Subscription Receipts were placed in the Brokered Placement.
Each Subscription Receipt shall be automatically converted, without any further action by the
holder of such Subscription Receipt, and for no additional consideration, into one unit of the
Company (each a “Unit” and collectively the “Units”) upon receipt by the escrow agent, prior to
the date that is three months from the closing date of a release notice from the Company and the
Lead Agent, on behalf of the Agents, confirming (collectively, the “ Escrow Release
Conditions”): (a) the completion, satisfaction or wa iver of all conditions precedent to the
acquisition of the Santa Cruz Graphite Project (the “ Transaction”) in accordance with the
definitive agreement respecting the Transaction, to the satisfaction of the Agents; (b) the receipt
of all required shareholder and regulatory approvals, including, without limitation, the
conditional approval of the TSX Venture Exch ange for the Brokered Placement and the
Transaction; (c) receipt by the Agents of an op inion of counsel of the Company that upon the
conversion of the Subscription Receipts and comp letion of the Transacti on, the Common Shares
issued as part of the Units, will not be subject to any statutory or other hold period in Canada
which extends beyond 4 months and one day after the closing date; (d) th e representations and
warranties of the Company contained in the agency agreement entered into in connection with
the Brokered Placement to be true and accurate in all material resp ects, as if made on and as of
the Escrow Release Date; and (e) the re organization of Brasil Grafite S.A. (" BGSA”) as
contemplated in the agency agreement, pursuant to which Brasil Graphite Corp. (“ Brasil
Graphite”) will become the owner of 100% of the outstanding shares of BGSA and certain
existing liabilities of BGSA to a third party wi ll become an inter-company debt of BGSA and
Brasil Graphite, has been completed.
Each Unit consists of one common share of the Company and one common share purchase
warrant (a “Warrant”). Each Warrant entitles the holder thereof to purchase one common share
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
of the Company for a period of 24 months from the date of issuance at a price of C$0.75 per
common share.
The Company will pay a cash commission to th e Agents for the Brokered Placement of
$293,657.43, and has issued 698,433 compensation options to the Agents (the “ Compensation
Options”) with each Compensation Option entitling the holder to acquire one Unit at the
offering price of $0.45 until the date that is 24 mont hs from the closing date. A total of 60% of
the cash commission ($176,194.46) was deducted from the proceeds of the Subscription Receipts
paid to the Company on closing. The remaining 40% of the cash commission ($117,462.97) will
be paid to the Agents on satisfaction of the Escrow Release Conditions.
Certain insiders of the Company participated in the Brokered Placement and contributed
aggregate proceeds of $635,000. The participation of the insiders is considered to be a “related
party transaction” pursuant to Multilateral In strument 61-101 Protection of Minority Security
Holders in Special Transaction (“ MI 61-101”). The Company determined that exemptions from
the formal valuation and minor ity shareholder approval requirements of MI 61-101 were
available for the related party transaction pursuant to Section 5.5(a) and S ection 5.7(1)(a) of MI
61-101 on the basis that the fair market value of the transaction involving insiders was not more
than 25% of the Company’s market capitalization.
All of the securities issued in the Brokered Placement will be subject to resale restrictions in
accordance with applicable securities laws, pursuant to which they may not be sold or transferred
until September 16, 2018.
South Star intends to use the net proceeds of the Brokered Placement to complete the previously
announced Transaction with Brasil Graphite, a nd to fund drilling, environmental studies,
engineering, metallurgical studies, permitting et c. with the intent of producing a bankable
feasibility study within the next 12-18 months. It is currently anticipated that the completion of
the Transaction will occur within the next 30 days.
Company CEO Eric Allison stated “We are pleased to close this tranche of financing that will
provide the Company with the necessary funds to advance our Santa Cruz Graphite Project
toward a feasibility study. A number of act ivities will get underway in the coming weeks
including drilling, engineering, metallurgical studies, permitting and marketing that will assist us
in more fully unlocking the significant potentia l of Santa Cruz. The graphite markets are
beginning to respond to the global Electric Vehicle revolution and we plan to position South Star
to be a significant player in this growth market”
Non-Brokered Private Placement
The Company is also pleased to announce it has arranged a non-brokered private placement of
units at C$0.45 per unit to raise up to C$1,000,000. Each unit will consist of one common share
of the Company and one common share purchase wa rrant. Each warrant will entitle the holder
thereof to purchase one common share of the Co mpany for a period of 24 months from the date
of issuance at a price of C$0.75 per common shar e. Finders fees may be payable in connection
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
with the Placement. South Star intends to use the net proceeds of the Placement for additional
drilling, engineering, concentrate marketing an d general corporate and working capital purposes.
Subsequent to the closing of the acquisition a nd the previously mentioned brokered private
placement, this additional financing is expected to close in the next 30 days, subject to Exchange
approvals.
ABOUT SOUTH STAR MINING CORP.
South Star Mining Corp. is focused on the acqui sition and development of near-term mine pro-
duction projects in Brazil to maximize shareholder value. The company is currently working to-
wards completing the acquisition of the Santa-Cruz Graphite Project in th e Bahia State, Brazil.
To learn more, please visit the Company website at www.southstarmining.com.
On behalf of the Board,
Mr. Eric Allison
Chief Executive Officer
Ph: +1 (203) 918-3098
Email: [email protected]
For additional information, please contact:
Dave McMillan
Chairman
+1 (778) 773-4560
Email:[email protected]
Mr. Kris Kottmeier
VP Corp Development
Ph: +1 (604) 506-2502
Email: [email protected]
CAUTIONARY STATEMENT
Completion of the Transaction is subject to a number of other conditions. There can be no as-
surances that the Transaction wi ll be completed as proposed or at all. Investors are cautioned
that, except as disclosed in the Company’s news releases, any information released or received
with respect to the Transaction may not be accurate or comple te and should not be relied upon.
Trading in the securities of the Company should be considered highly speculative.
Neither the TSX Venture Exchange nor its Regula tion Services Provider (as that term is de-
fined in policies of the TSX Ve nture Exchange) accepts responsibility for the adequacy or ac-
curacy of this press release.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Neither the TSXV nor its Regulation Services Pr ovider has in any way passed upon the merits
of the proposed Transaction and associated transactions and neith er of the foregoing entities
has in any way approved or disapproved of the contents of this press release.
Forward-Looking Information
This news release contains "for ward-looking information" within the meaning of applicable se-
curities laws. Generally, any statements that are not historical fa cts may contain forward-
looking information, and forward- looking information can be iden tified by the use of forward-
looking terminology such as "plans", "expect s" or "does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends ", "anticipates" or "does not anticipate", or "be-
lieves", or variations of such words and phrases or indicates that certain actions, events or re-
sults "may", "could", "would", "might" or "will be" taken, "occur" or "be achieved". Forward-
looking information includes, the Company ma y abandon the Transaction; Escrow Release Con-
ditions may not be satisfied; the Transaction may involve unexpected costs, unexpected liabilities
or unexpected delays; the Private Placement may not close; the TSXV Venture Exchange may
not approve the Private Placement or the Transaction; and the Company or Brasil Graphite may
be adversely affected by other economic, bus iness, and/or competitive factors. Although the
Company believes in light of the experience of its officers and directors, current conditions and
expected future developments and other factors that have been c onsidered appropriate, that the
expectations reflected in this forward-looking information are reasonable, undue reliance should
not be placed on them because the Company can gi ve no assurance that th ey will prove to be
correct. Readers are cautioned to not place undue reliance on forw ard-looking information. Ac-
tual results and developments may differ materially from those contemplated by these statements
depending on, among other things, the risks that th e parties will not proceed with the proposed
Transaction and the Offering; that the ultimate te rms of the proposed Transaction and the Offer-
ing will differ from those that currently are contemplated; and that the proposed Transaction
and the Offering will not be successfully complete d for any reason (including the failure to ob-
tain the required approvals or clearances from regulatory authorities). The terms and conditions
of the proposed Transaction may change based on the Company’s due diligence and the receipt
of tax, corporate and securities law advice for both the Company and Brasil Graphite. The
statements in this press releas e are made as of the date of this release and the Company under-
takes no obligation to comment on analyses, expectat ions or statements made by third-parties in
respect of the Company, Brasil Gr aphite their securities, or th eir respective financial or operat-
ing results (as applicable).