Cassowary Capital Corporation Limited Executes Letter of Intent for Proposed Qualifying Transaction to Become Scotland Focused Gold Exploration Company
CASSOWARY CAPITAL CORPORATION LIMITED
Cassowary Capital Corporation Limited Executes Letter of Intent for Proposed
Qualifying Transaction to Become Scotland Focused Gold Exploration Company
For Immediate Release
Calgary, Alberta June 1, 2020
Cassowary Capital Corporation Limited (TSXV – BIRD.P) ("BIRD") is pleased to announce
that it has entered into a binding letter of intent dated effective June 1, 2020 (" LOI") with
Western Gold Exploration Limited ("WGE") to complete a business combination, whereby BIRD
has agreed, subject to certain conditions, to acquire WGE (the " Transaction"). Upon
completion of the Transaction, the combined entity (the " Resulting Issuer") will continue the
business of WGE and initially will be engaged in the exploration and development of prospective
mineral properties located in Scotland, with a focus on gold and copper exploration and
development.
The Transaction is intended to constitute the Qualifying Transaction of BIRD, as such term is
defined in Policy 2.4 of the TSX Venture Exchange (the " Exchange"), and will result in a
reverse takeover of BIRD.
About WGE
WGE is a private company formed under the laws of England and Wales, that holds minerals
rights in Argyll County in western Scotland, and which mineral rights include the Knapdale and
Lagalochan projects. The mineral rights at Knapdale extend to base metal exploration rights
over 3,253 hectares, with right to lease, and gold exploration rights over 1,574 hectares, with
conditional right to lease. The mineral rights at Lagalochan extend to base metal exploration
rights over 612.5 hectares, with right to lease, and gold exploration rights over 118 km 2, with
conditional right to lease.
A National Instrument 43-101 – Standards of Disclosure for Mineral Projects compliant technical
report and recommended work program is currently being prepared in respect of WGE’s mining
interests, and details of that technical report and further information regarding WGE’s mineral
rights will be disclosed in a subsequent news release. Financial information with respect to
WGE will also be disclosed in a subsequent news release.
The Qualifying Transaction
Terms of the Transaction
The LOI is to be superseded by a definitive agreement (" Definitive Agreement ") to be
executed on or before June 30, 2020 (or such other date as is agreed to by BIRD and WGE).
BIRD proposes to acquire all of the issued and outstanding WGE Shares (as defined below)
pursuant to the terms of the Definitive Agreement, in exchange for 32,666,900 common shares
of the Resulting Issuer (on a pre-Consolidation basis (as defined below)) at closing of the
Transaction. This share exchange was based on BIRD shareholders and WGE shareholders
holding (before the Concurrent Financing (as defined below)), 30% and 70% of the outstanding
common shares of the Resulting Issuer upon completion of the Transaction, respectively, or on
a deemed valuation of BIRD of $0.1225 per BIRD Common Share and a deemed valuation of
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WGE of $4 million. Pursuant to the Transaction, the holders of the WGE Shares will become
shareholders of the Resulting Issuer. The last closing price of the BIRD Common Shares prior
to the issuance of this news release was $0.05 per share.
Prior to the completion of the Transaction, the parties will use “commercially reasonable efforts”
to cause BIRD or WGE (as determined by the parties) to complete an arm’s length private
placement financing of securities (the “Concurrent Financing”), provided that such securities
represent no less than 10% of the outstanding common shares of the Resulting Issuer upon
completion of the Transaction. The terms and pricing of such Concurrent Financing and the
involvement of any agents has not yet been determined and will be dependent on various
factors, including market conditions.
It is also proposed that concurrent with the completion of the Transaction, the common shares
of the Resulting Issuer be consolidated on the basis of one (1) post-consolidation share for each
two and one-half (2.5) pre-consolidation shares (the “Consolidation”). A special resolution for
the approval of the Consolidation will be put to BIRD’s shareholders for consideration at BIRD’s
shareholder meeting, as described below.
Conditions of Closing
Completion of the Transaction is subject to a number of conditions, including:
(i) the parties and the requisite number of WGE shareholders entering into the Definitive
Agreement on or before June 30, 2020;
(ii) the parties preparing an information circular in accordance with the rules of the
Exchange, outlining the terms of the Transaction;
(iii) the parties receiving all requisite regulatory approval, including the approval of the
Exchange, and any third party approvals and authorizations;
(iv) each of BIRD and WGE obtaining the requisite shareholder approvals for the
Transaction;
(v) the parties obtaining requisite board approvals for the Transaction;
(vi) each of the parties required by the Exchange entering into an escrow agreement
upon the terms and conditions imposed pursuant to the policies of the Exchange;
(vii) completion of the Concurrent Financing;
(viii) the Resulting Issuer meeting the applicable Initial Listing Requirements of the
Exchange as a Mining Issuer (pursuant to Policy 2.1 – Initial Listing Requirements of
the Exchange), including, without limitation, the public float requirements; and
(ix) completion of confirmatory due diligence by each of BIRD and WGE, acting
reasonably.
BIRD expects that upon completion of the Transaction, the Resulting Issuer will be an
exploration stage company with no producing properties and, consequently, no current
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operating income, cash flow or revenues. There is no assurance that a commercially viable
mineral deposit exists on the mineral interests held by WGE.
Sponsorship
Sponsorship of the Transaction is required by the Exchange unless an exemption or waiver
from sponsorship requirement is available. BIRD is currently reviewing the requirements for and
may apply for an exemption from the sponsorship requirements pursuant to the policies of the
Exchange. BIRD intends to include any additional information regarding sponsorship in a
subsequent news release.
Related Party Transaction and Shareholder Approval
The Transaction will not constitute a “Non-Arm’s Length Qualifying Transaction” (as such term is
defined by the Exchange) but will constitute a “related party transaction” as such term is defined
by Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special
Transactions and is subject to Policy 5.9 of the Exchange. As a result, a meeting of the
shareholders of BIRD is required pursuant to Policy 2.4 of the Exchange or applicable securities
laws to, among other things, approve the Transaction.
Prior to the completion of the Transaction, BIRD will call a meeting of its shareholders for the
purpose of approving, among other matters:
(i) a change of name of BIRD, as acceptable to the applicable regulatory authorities,
effective upon closing of the Transaction;
(ii) reconstitution of BIRD’s board of directors, as applicable;
(iii) as required by governing regulatory bodies, the requisite approval of the Transaction;
and
(iv) the Consolidation.
Trading Halt
The BIRD Common Shares are presently halted and will remain halted until the Transaction is
completed and approved by the Exchange.
Pre-Closing Capitalization of BIRD
As of the date hereof, BIRD's authorized share capital consists of an unlimited number of
common shares (" BIRD Common Shares ") in the capital of BIRD, of which 14,000,100 BIRD
Common Shares are issued and outstanding. As well there are 1,400,000 options and 400,000
broker options outstanding, each exercisable to acquire one BIRD Common Share at an
exercise price of $0.10.
Pre-Closing Capitalization of WGE
As of the date hereof, 135,817,334 ordinary shares in WGE (“WGE Shares”) are issued and
outstanding. Prior to the completion of the Transaction, WGE will have no more than
154,834,000 WGE Shares issued and outstanding.
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Additional details regarding the ownership of WGE will be disclosed in a subsequent news
release.
Board of Directors and Management
BIRD will confirm the expected members of the Board of Directors and management of the
Resulting Issuer upon completion of the Transaction, in a subsequent news release.
Name Change
BIRD intends to seek the requisite shareholder approval to change the name of the company.
Any such name change is subject to applicable Exchange and other regulatory approvals.
Further Information
BIRD will issue additional news releases related to the final legal structure of the Transaction,
Concurrent Financing terms, sponsorship, financial and shareholder information regarding
WGE, the names and background of insiders of the Resulting Issuer and other material
information as it becomes available.
For further information, please contact:
Stuart Olley
Chief Executive Officer and Director
Cassowary Capital Corporation Limited
403 618 4900
Completion of the Transaction is subject to a number of conditions, including but not limited to,
Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the
minority 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 a capital pool company 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.
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is
defined in the policies of the TSX Venture Exchange) accepts responsibility for the
adequacy or accuracy of this release.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION: This news
release includes certain "forward-looking statements" under applicable Canadian securities
legislation. Forward-looking statements include, but are not limited to, statements with respect
to the structure, terms, conditions and proposed timing for completion of the Transaction and
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the Offering; the ability of BIRD and WGE to complete the Transaction and the Concurrent
Financing; the anticipated ownership percentages in connection with the Transaction; the
resumption in trading of the BIRD Common Shares; the Resulting Issuer’s future business
operations and results; the receipt of all necessary shareholder, Exchange, securities regulatory
authority and other third party consents and approvals; the receipt by BIRD of an exemption
from the sponsorship requirements of the Exchange; the anticipated terms of the Definitive
Agreement; and the anticipated composition of the board of directors and management of the
Resulting Issuer. Forward-looking statements are necessarily based upon a number of
estimates and assumptions that, while considered reasonable, are subject to known and
unknown risks, uncertainties, and other factors, which may cause the actual results and future
events to differ materially from those expressed or implied by such forward-looking statements.
Such factors include, but are not limited to: general business, economic, competitive, political
and social uncertainties; delay or failure to receive shareholder or regulatory approvals; and the
results of continued development, marketing and sales. There can be no assurance that such
statements will prove to be accurate, as actual results and future events could differ materially
from those anticipated in such statements. Accordingly, readers should not place undue reliance
on forward-looking statements. BIRD disclaims any intention or obligation to update or revise
any forward-looking statements, whether because of new information, future events or
otherwise, except as required by law.
(Not for dissemination in the United States of America)