SolidusGold Enters into Letter of Intent with Valhalla Metals Inc. for a Proposed Reverse Takeover
SolidusGold Enters into Letter of Intent with
Valhalla Metals Inc. for a Proposed Reverse
Takeover
Vancouver, British Columbia--(Newsfile Corp. - November 29, 2021) - SolidusGold Inc. (TSXV: SDC)
("
Solidus
" or the "
Company
") is pleased to announce that it entered into a non-binding letter of intent
whereby the Company will acquire all of the issued and outstanding securities of Valhalla Metals Inc.
("
Valhalla
") by way of a share exchange, amalgamation or such other form of business combination as
the parties may determine in a definitive agreement to be negotiated between the parties, details of
which will be provided in a subsequent news release.
Upon successful completion of the proposed acquisition of the securities of Valhalla (the
"
Transaction
"), it is anticipated that the Company will maintain its listing as a Tier 2 Mining issuer on
the TSX Venture Exchange ("
TSX-V
") and will carry on the combined business of Solidus and Valhalla
(the "
Resulting Issuer
"). The Transaction would constitute a 'reverse takeover' of the Company
pursuant to Policy 5.2 of the TSX-V. Following completion of the Transaction but prior to the completion
of any concurrent private placement as discussed below, shareholders of Solidus would hold
approximately 20% of the Resulting Issuer with shareholders of Valhalla holding the remaining 80%.
Transaction Summary
Pursuant to the Transaction, the Company expects to issue approximately 50,000,000 post-
Consolidation (as defined below) common shares ("
Solidus Shares
") to the holders of common shares
in the capital of Valhalla ("
Valhalla Shares
"), with such Solidus Shares being issued to the Valhalla
shareholders on a
pro rata
basis.
No advances to be made by the Company to Valhalla are contemplated by the letter of intent and no
finder's fees are expected to be payable in connection with the Transaction.
The Transaction is subject to a number of terms and conditions, including, but not limited to, the parties
entering into a definitive agreement with respect to the Transaction on or before December 31, 2021, or
such other date as the parties may agree (such agreement to include representations, warranties,
conditions and covenants typical for a transaction of this nature), the completion of satisfactory due
diligence investigations, the completion of a private placement by the Company as further described
below, the completion of the Consolidation and the approval of the TSX-V and other applicable
regulatory authorities. All dollar figures referenced herein, unless otherwise specified, refer to Canadian
dollars.
Trading in the Solidus Shares will remain halted pending the satisfaction of all applicable requirements
of Policy 5.2 of the TSX-V. There can be no assurance that trading of Solidus Shares will resume prior to
the completion of the Transaction. Further details concerning the Transaction (including additional
financial information) and other matters will be announced if and when a definitive agreement is reached.
Information Concerning Valhalla
Valhalla is a private exploration company incorporated under the laws of the State of Alaska, U.S.A. and
based in Fairbanks, Alaska. Valhalla currently holds exploration projects concentrated in the Ambler
Mining District of Alaska in the Brooks Range of NW Alaska, including the Sun and Smucker VMS
Projects.
The Ambler District has had periodic exploration from the late 1890s through the 20
th
century by many
companies over time. In 1962, Bear Creek Mining Company, the exploration arm of Kennecott Copper
Corporation (now part of Rio Tinto), initiated regional reconnaissance work throughout the entire Ambler
District, including geologic mapping, stream-sediment sampling, and detailed follow-up work that
included induced polarization-resistivity (IP) geophysics and drilling. Due to the success of finding
massive sulfide deposits using this methodology, a staking rush in the district ensued, with companies
such as Anaconda Mining Company ("
Anaconda
"), Bear Creek, Kennecott, Sunshine Mining Company,
and Noranda, among others, acquiring parcels of ground in the Ambler District from the 1960s through
the late 1970s.
Sun Project
The Picnic Creek massive sulfide prospect, located near the Sun deposit and presently part of the Sun
project, was discovered in 1966 by Bear Creek through stream sediment, soil sampling and geologic
mapping. Bear Creek subsequently drilled five holes at Picnic Creek. In 1974, during the staking rush in
the Ambler district, Sunshine Mining Company staked what is now the Sun deposit following a regional
stream-sediment sampling program. Sunshine Mining Company conducted geochemical sampling,
geologic mapping, and IP surveying, in addition to drilling nine core holes on ~150-meter spacing in
1974.
Between 1974 and 1986, extensive exploration was conducted in the area that now encompasses the
Valhalla Sun claim block, with a total of 49 drill holes drilled at the Sun deposit, Picnic Creek, and Hot
claims by Noranda, Anaconda, Houston Oil and Minerals, Sunshine Mining and Cominco. Interest in the
district waned and the claims were eventually relinquished by Cominco. Renewed activity began when
Andover Resources acquired 25 claims over the main Sun deposit in 2007 and staked 205 additional
claims in 2011 to cover the historical Picnic Creek and Hot claim areas. Between 2011 and 2014,
Andover drilled 47 drill holes and completed a resource estimate in accordance with National Instrument
43-101
Standards of Disclosure for Mineral Projects
("
NI 43-101
") guidelines of the Sun and nearby
SW Sun deposits, which was reported publicly in a 2013 technical report. In late 2017, the Sun project
claims lapsed. Shortly thereafter, Valhalla Mining Inc. re-staked the Sun project and then transferred the
claims to Valhalla Metals Inc. in 2018.
The 2013 historical Sun Project mineral resources published by Andover were reported as
follows:
Classification
Tonnes
%Zn
%Cu
%Pb
g Ag/t
g Au/t
lbs Zn
(x1000)
lbs Cu
(x1000)
lbs Pb
(x1000)
oz Ag
oz Au
Indicated
2,165,000
4.11
1.42
1.06
57.6
0.21
196,098
67,620
50,585
4,008,000
14,000
Inferred
11,648,000
3.91
1.14
1.37
76.8
0.24
1,004,947
292,671
351,247
28,776,000
89,000
This resource estimate was prepared by Michael Gustin of Mine Development Associates. The
estimation process included the modeling of semi-massive to massive-sulfide zones on cross sections,
manually modeling the mineralized limits of each of the five metals within these zones on the cross
sections, refining the metal modeling on five-meter-spaced level plans, and interpolating metal grades
into a block model, with the grade estimation constrained by the modeled mineralized limits of each
metal as coded from the level plans. A gross metal value cut-off of $75/tonne was used to define the
resources in order to reflect the potential for underground mining. While the classification of the 2013
historical estimate is consistent with NI 43-101, key factors in the estimation are out of date, including
metal prices, densities, and metal recoveries. Solidus considers this historical estimate to be relevant to
investors, as it may indicate the presence of mineralization, but a 'qualified person' (within the meaning
of NI 43-101) for Solidus has not done sufficient work to classify the historical estimate as current mineral
resources as defined by NI 43-101, and the Company is not treating this historical estimate as a current
mineral resource.
Subsequent to acquiring the Sun project, Valhalla, a private corporation, completed the following
historical estimate of the Sun mineral resources in 2018 that was not publicly disclosed:
Classification
Tonnes
%Zn
%Cu
%Pb
g Ag/t
g Au/t
lbs Zn
(x1000)
lbs Cu
(x1000)
lbs Pb
(x1000)
oz Ag
oz Au
Indicated
1,713,000
4.32
1.48
1.11
60.0
0.21
162,962
55,846
42,035
3,307,000
12,000
Inferred
9,018,000
4.18
1.21
1.46
81.7
0.25
831,334
239,643
290,258
23,681,000
73,000
The 2018 historical estimate, also completed by Mr. Gustin, was based on the 2013 modeling but
utilized updated metal prices, metal recoveries, and densities. The 2013 estimate uses categories that
are consistent with NI 43-101. To upgrade this historical estimation to current mineral resources, key
parameters, including but not limited to, metal prices, recoveries, and modeled densities, need to be
verified. Solidus considers this historical estimate to be relevant to investors, as it may indicate the
presence of mineralization, but a 'qualified person' (within the meaning of NI 43-101) for Solidus has not
done sufficient work to classify the historical estimate as current mineral resources as defined by NI 43-
101, and the Company is not treating this historical estimate as a current mineral resource.
Smucker Project
Smucker was first discovered in 1975 by Anaconda, and Cominco American Inc. (now Teck) acquired
an interest in the property in 1994. Extensive exploration work was undertaken between 1978 and 1991,
with 24 holes drilled by Anaconda. Anaconda completed a historical pre-feasibility in the 1980s which
included an estimate of historical resources. Extensions of the mineralized horizon remain largely
untested and open at depth as well as to the north, west, and south of the main Smucker deposit. The
claims became abandoned in 2008. In 2011, Andover Resources located 58 claims covering an area
that included the original Smucker deposit first discovered by Anaconda in 1975. The claims were
abandoned in 2016 and Valhalla Mining LLC staked State of Alaska mining claims in 2017.
Additional information concerning the Sun VMS Project, which will be a material property to the Resulting
Issuer, will be contained in a technical report to be filed by the Company in connection with the
Transaction, which will be made available on Solidus' SEDAR profile at
www.sedar.com
.
Non-Arm's Length Parties and Exemptions under MI 61-101 (as defined below)
The Transaction involves "Non-Arm's Length Parties" (as defined under TSX-V policies), as a control
person of Valhalla, Bonnie Broman, is an "Associate" (as defined under TSX-V policies) of Solidus'
Chairman, Rick Van Nieuwenhuyse.
Sorin Posescu, President, CEO and a director of the Company, is also a Non-Arm's Length Party under
TSX-V policies.
Mr. Posescu is the holder of 4,025 Valhalla Shares, representing 3.6% of the issued and outstanding
Valhalla Shares. Accordingly, the issuance of Solidus Shares to Mr. Posescu as part of the Transaction
consideration, constitutes a 'related party transaction' as defined in Multilateral Instrument 61-101 -
Protection of Minority Security Holders in Special Transactions
("
MI 61-101
"). In respect of such
securities issuance, the Company is exempt from the formal valuation and minority shareholder approval
requirements of MI 61-101 in reliance on sections 5.5(a) and 5.7(1)(a), respectively, of MI 61- 101, as
neither the fair market value of the securities to be issued to Mr. Posescu, nor the fair market value of the
consideration therefor, exceeds 25% of the Company's market capitalization.
Management and Board of Directors of Resulting Issuer
Subject to the terms of a definitive agreement, it is anticipated that the board of the Company will
continue as the board of the Resulting Issuer and that management of the Company will remain
unchanged.
Rick Van Nieuwenhuyse, Chairman of the Board
Mr. Van Nieuwenhuyse has more than 40 years of experience in the natural resource sector and is
currently the President and CEO of Contango Ore. Before joining Contango Ore, he was President and
Chief Executive Officer of Trilogy Metals, currently developing the high- grade Upper Kobuk Mineral
Projects located in the Ambler Mining District of Alaska in a 50/50 partnership with South 32 in a jointly
owned company called Ambler Metals. Trilogy is a company which was created in 2012 as a spin-out
from NovaGold, a well-known company he founded over 20 years ago. Previous to his role as Founder,
President, and CEO of NovaGold, he held the position of Vice President of Exploration for Placer Dome
Inc. from 1990 to 1997. In addition to his international exploration perspective, Mr. Van Nieuwenhuyse
brings years of working experience in and knowledge of Alaska. Mr. Van Nieuwenhuyse has managed
projects from grassroots discovery through to advanced feasibility, production and closure. Mr. Van
Nieuwenhuyse holds a Candidature degree in Science from the Université de Louvain, Belgium, and a
Master of Science degree in Geology from the University of Arizona. He received the Thayer Lindsley
award in 2009 for his role in the Donlin Gold discovery and the Colin Spence Award in 2016 for his role
in the Bornite Discovery.
Sorin Posescu, President, CEO and Director
Mr. Posescu is a professional geologist with over 25 years of experience in natural resources
exploration and development, including work on world class deposits including Donlin Gold and Galore
Creek both with NovaGold. Subsequently, he participated in several discoveries in Nevada with Sierra
Geothermal Power, sold to Ram Power in 2010. Mr. Posescu served as VP Exploration for Brixton
Metals where during his tenure, the company made several discoveries. Mr. Posescu was instrumental
in creating shareholder value when he acquired and subsequently sold the Kahuna Diamonds property to
Dunnedin Ventures. Mr. Posescu is a registered Professional Geologist with the Association of
Professional Engineers and Geoscientists of British Columbia, Alberta and Ontario. Mr. Posescu has
worked for major to junior resource companies throughout Europe, USA and Canada. He has extensive
experience in M&A and strong background in corporate and project valuation. Mr. Posescu has served
on multiple boards as Director for both private and publicly traded resource development companies.
Joe Piekenbrock, Director
Mr. Piekenbrock brings over 40 years of experience in the mining exploration and development industry,
during which he has managed all aspects of exploration from grassroots discovery through feasibility.
From 2003 to 2011, he served as Vice President of Exploration for NovaGold Resources, and more
recently served as Senior Vice President of Exploration for NovaCopper (now Trilogy Metals). He
gained extensive experience throughout Latin America while working for Placer Dome, and was one of
the founding members of Brett Resources. Earlier in his career, he was a member of the Cominco
Alaska exploration team responsible for the discovery of the Whistler Cu deposit, the Sleitat Sn deposit,
the Shotgun Au deposit, and the giant Pebble Cu-Au deposit. After joining the Nova group companies in
2003, he was instrumental in leading a series of major discoveries including the Donlin Creek Au and
the Bornite Cu deposits in Alaska, and the Galore Creek Cu-Au porphyry deposit in British Columbia.
He was awarded the Thayer Lindsley medal for International Discovery in 2009 for his role in the
discovery of the Donlin Creek deposit, and the Colin Spence award for International Discovery in 2015
for his contributions to the discovery of the South Reef deposit at Bornite. Mr. Piekenbrock holds a
Bachelor of Arts degree in Geology from the University of Colorado, and a Master of Science degree in
Economic Geology from the University of Arizona.
Raj Chowdhry, Director
Mr. Chowdhry has over 30 years of experience in capital markets. He is the Founder and President of
Futura Capital Ltd., a private venture capital company that has been involved in the venture capital
business since 1981 and raises funds for various venture capital projects around the world. He is the
former director of Mountain Province Diamonds Inc. and founding director and President of Camphor
Ventures Inc. Mr. Chowdhry is currently Director, Officer, and Chairman of several public and private
companies trading on global stock exchanges, including the TSX-V.
Kara Norman, CFO and Corporate Secretary
Ms. Norman has over 20 years of professional experience in non-profit, manufacturing, and resource
exploration sectors. She is a chartered Professional Accountant (CPA, CMA).
Principals and Insiders of Resulting Issuer
In addition to the management and board individuals above, Bonnie Broman is expected to be a control
person of the Resulting Issuer after completion of the Transaction.
Ms. Broman has over 15 years of experience in the natural resource sector most often working in remote
exploration sites throughout Alaska and Montana - including the Ambler Mining VMS District, the
operating Nixon Fork high grade skarn gold mine, and the Black Butte Copper deposit. She has
managed remote logistics and training on several projects, as well as having experience working with
remote communities throughout Alaska. She has managed up to 20 geologists and geo-technicians in
addition to planning and managing up to 5 drill rigs, as well as executing surface exploration programs,
including mapping, geochemistry, and geophysics.
Ms. Broman has been responsible for target generation and geological modeling, in addition to QA/QC
and database management. Database management includes designing logging systems to record all
manner of geological, geochemical and geotechnical data, GIS data management, and QA/QC
protocols, as well as manipulating data by using 3D modeling tools such as LeapFrog, ioGAS, ArcGIS,
GeoSoft and Surfer, among others. She owns a consulting practice where her expertise includes
geochemistry and mineralogy as it relates to geo-metallurgical studies of ore deposits around the world.
In addition, she has several years' experience working in the environmental clean-up industry focused on
assessment of site infrastructure related to re-development. Ms. Broman holds a Master's degree from
the University of Alaska - Fairbanks completing a geochemical and geo-metallurgical study of the Arctic
volcanogenic massive sulfide deposit located in the Ambler Mining District; and an undergraduate
degree from Appalachian State University in North Carolina. Ms. Broman formed Valhalla Mining LLC in
2017.
Consolidation
The completion of the Transaction is subject to the completion by the Company of a consolidation of its
listed common shares on a 5:1 basis (the "
Consolidation
").
Concurrent Private Placement
In connection with the Transaction, the Company intends to complete, subject to prior acceptance by the
TSX-V, a private placement at a price and offering size to be determined in the context of the market,
with pricing to not be below the 'Discounted Market Price' in accordance with TSX-V policies.
Additional details concerning the terms of the private placement will be provided in a subsequent news
release.
The Company intends to use the net proceeds of the private placement to develop the business of the
Resulting Issuer and for working capital and general corporate purposes.
This news release does not constitute an offer to sell and is not a solicitation of an offer to buy any
securities in the United States. The securities of the Company and Valhalla have not been and will not be
registered under the
United States Securities Act of 1933
, as amended (the "
U.S. Securities Act
") or
any state securities laws and may not be offered or sold within the United States or to U.S. Persons
unless registered under the U.S. Securities Act and applicable state securities laws unless pursuant to
an exemption from such registration.
Shareholder Approvals
In accordance with the Company's constating documents, shareholder approval of the Consolidation is
not required.
The Company will seek disinterested shareholder approval of the Transaction, as well as any other
shareholder approvals required with respect to creation of any new classes of securities necessary in
connection with structuring the Transaction, at a meeting of Solidus' shareholders to be convened for
such purpose. Due to the involvement of Non-Arm's Length Parties, Solidus Shares held by Rick Van
Nieuwenhuyse and Sorin Posescu will be excluded from the Solidus shareholder vote on the
Transaction.
Valhalla shareholder approval of the Transaction is expected to be obtained by way of written consent,
with the disinterested shareholders of Valhalla (i.e. Valhalla shareholders other than Bonnie Broman and
Sorin Posescu) approving the Transaction.
Additional information concerning the Transaction, Solidus, Valhalla and the Resulting Issuer will be
provided in the Company's management information circular in respect of the Solidus shareholders'
meeting to be convened in connection with the Transaction, and which will be available under the
Company's SEDAR profile at
www.sedar.com
.
Sponsorship
The Transaction is subject to the sponsorship requirements of the TSX-V unless the Transaction
qualifies for an exemption in accordance with TSX-V policies or the Company applies for a waiver from
the sponsorship requirements. There can be no assurance that the Transaction will be exempt, or a
waiver will be granted. If an exemption from the sponsorship requirements is not obtained or a waiver is
not granted, a sponsor will be identified at a later date, details of which will be provided in a subsequent
news release. An agreement to act as sponsor in respect of the Transaction should not be construed as
any assurance with respect to the merits of the Transaction or the likelihood of its completion.
Trading Halt
Trading in the Solidus Shares has been halted as of October 27, 2021 and will remain halted pending
the satisfaction of all applicable requirements pursuant to Policy 5.2 of the TSX-V.
Name Change
Upon completion of the Transaction, the Company intends to change its name to such name as Valhalla
and the Company may determine, and the parties expect that the TSX-V will assign a new trading
symbol for the Resulting Issuer.
Qualified Person
The technical information contained in this news release has been reviewed and approved by Mr.
Michael Gustin, PhD., C.P.G., of Mine Development Associates, a division of RESPEC, Reno, Nevada.
Forward-Looking Statements:
This news release contains forward-looking statements and forward-looking information within the
meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue",
"estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends" and
similar expressions are intended to identify forward-looking information or statements. In particular, this
news release contains forward-looking information relating to the Transaction, negotiation of a definitive
agreement with respect to the Transaction, statements with respect to its completion (including obtaining
necessary approvals), statements with respect to the board of directors and management of the
Resulting Issuer, and the intended use of net proceeds from any concurrent private placement. The
forward-looking statements and information are based on certain key expectations and assumptions
made by the Company, including expectations and assumptions concerning the completion of the
Transaction, the Consolidation and the concurrent private placement; and the use of net proceeds from
such private placement. Although the Company believes that the expectations and assumptions on which
such forward-looking statements and information are based, are reasonable, undue reliance should not
be placed on the forward-looking statements and information because the Company can give no
assurance that they will prove to be correct.
Since forward-looking statements and information address future events and conditions, by their very
nature they involve inherent risks and uncertainties. Actual results could differ materially from those
currently anticipated due to a number of factors and risks. Such factors which could materially affect such
forward-looking information are described in the risk factors in the Company's most recent
management's discussion and analysis that is available on the Company's profile on SEDAR at
www.sedar.com
. Readers are cautioned that the foregoing list of factors is not exhaustive. The forward-
looking statements included in this news release are expressly qualified by this cautionary statement.
The forward-looking statements and information contained in this news release are made as of the date
hereof and the Company undertakes no obligation to update publicly or revise any forward-looking
statements or information, whether as a result of new information, future events or otherwise, unless so
required by applicable securities laws.
Neither the 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.
Completion of the Transaction is subject to a number of conditions, including but not limited to, TSX-V
acceptance and if applicable, disinterested shareholder approval. Where applicable, the Transaction
cannot close until the required shareholder approval is obtained. There can be no assurance that the
Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing
statement to be prepared in connection with the Transaction, any information released or received with
respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in
the securities of Solidus should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed Transaction and
has neither approved nor disapproved the contents of this news release.
All information contained in this news release relating to Valhalla was provided by Valhalla to the
Company for inclusion herein. The Company has not independently verified such information and shall
bear no liability for any misrepresentation contained therein.
For more information on the Company, please contact SolidusGold Inc.
Sorin Posescu, Chief Executive Officer
Email:
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