Von Provides Update ON Qualifying Transaction with Xplore Resources
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VON CAPITAL CORP.
News Release
VON PROVIDES UPDATE ON QUALIFYING TRANSACTION WITH XPLORE RESOURCES
February 19, 2020
VANCOUVER, British Columbia, February 19, 2020: VON Capital Corp. (TSXV: VON.P) (“VON” or
the “Company”) is pleased to provide an update, further to its news releases of August 12, 2019
and October 1, 2019, with respect to its qualifying transaction with Xplore Resources Corp.
(“Xplore”). Effective February 18, 2020, the parties amended the terms of a definitive agreement
(the “Definitive Agreement”) entered into between VON, 2717915 Ontario Inc. (“Subco”), and
Xplore, pursuant to which Xplore and Subco will amalgamate to form a new company, which will
become a wholly-owned subsidiary of VON (the “Qualifying Transaction”). Upon completion of
the Qualifying Transaction, VON will continue with the business of Xplore as a Tier 2 Mining
Issuer (with the combined company after the Qualifying Transaction being referred to herein as
the “Resulting Issuer”) on the TSX Venture Exchange (the “Exchange”). The amendments related
to the structure of the Concurrent Financing, reflecting the terms of the Amending Agreement
to the Asset Purchase Agreement and that David Patterson will be a director of the Resulting
Issuer (all as defined herein).
Acquisition of the Valk Property
Xplore completed its acquisition of a 100% interest of the Valk property mining project (the “Valk
Property”) on September 30, 2019 (the “Closing Date ”), pursuant to an asset purchase
agreement dated June 1, 2019 between Xplore and Longford Capital Corp. (“ Longford”) and
James Douglas Rogers (the “Asset Purchase Agreement”), as subsequently amended pursuant to
an amending agreement entered into on February 7, 2020 (the “ Amending Agreement ”).
Longford is a private British Columbia incorporated company, wholly controlled by James
Douglas Rogers of British Columbia. Pursuant to the Asset Purchase Agreement, as amended, the
purchase price for the Valk Property was satisfied by Xplore issuing 1,500,000 common shares
(the “Xplore Shares”) and paying $50,000 to Longford. Xplore must pay an additional $100,000
to Longford on or before September 30, 2020 and a further $100,000 on or before September
30 2021.
In addition, Xplore granted a royalty equal to 2% of net smelter returns (the “ Royalty”) to
Longford. Xplore retained the option, at any time, to purchase one-half of the Royalty for
$1,500,000, such that the Royalty would be reduced from 2% to 1% of the net smelter returns.
In addition, Xplore is required to make expenditures on the Valk Property in the following
amounts:
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(a) $100,000 during the first year following the Closing Date (which expenditures have been
made);
(b) $250,000 during the second year following the Closing Date (originally $200,000 under
the Asset Purchase Agreement and increased to $250,000 under the Amending
Agreement); and
(c) $500,000 during the third year following the Closing Date.
Summary of the Qualifying Transaction
Pursuant to the Definitive Agreement, as consideration for the acquisition of all of the
outstanding Xplore Shares, holders of the Xplore Shares, including subscribers to the Concurrent
Financing (as defined below), will receive one (1) fully paid and non-assessable common share of
the Resulting Issuer (each, a “Resulting Issuer Share”) in exchange for each one (1) Xplore Share
held. There are currently 18,100,000 Xplore Shares issued and outstanding on a non-diluted and
fully diluted basis. The final structure of the Qualifying Transaction is subject to the receipt of
tax, corporate and securities law advice for both VON and Xplore.
Prior to the closing of the Qualifying Transaction, VON will change its name to “Xplore Resources
Corp.” or such other name as agreed to by the parties. The Qualifying Transaction will constitute
a “qualifying transaction” of VON pursuant to Policy 2.4 – Capital Pool Companies of the
Exchange.
Conditions to the Qualifying Transaction
The Qualifying Transaction is subject to certain conditions, including but not limited to,
completion of the Concurrent Financing (as defined below), the parties having received all the
necessary regulatory and third party approvals including the approval of the Exchange, VON
having no indebtedness for borrowed money or credit or equivalents other than as previously
disclosed, no material adverse effect occurring to the business of VON or Xplore, the delivery by
each of the parties of standard closing documents, and the Exchange being satisfied that after
completion of the Qualifying Transaction that the Resulting Issuer will satisfy the Exchange’s
minimum listing requirements in order to become a Tier 2 Mining Issuer.
The parties sought a waiver from the Exchange of any requirement for a sponsor of the
Qualifying Transaction, but in the event a waiver is not available, will seek a sponsorship
relationship for this Qualifying Transaction with an Exchange member firm. The Qualifying
Transaction is expected to close in the second quarter of 2020.
The common shares of VON were halted effective August 12, 2019 and will remain halted until
closing of the Qualifying Transaction.
None of the securities to be issued pursuant to the Qualifying Transaction have been or will be
registered under the United States Securities Act of 1933, as amended, or any state securities
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laws, and any securities issued pursuant to the Qualifying Transaction are anticipated to be
issued in reliance upon available exemptions from such registration requirements. This press
release does not constitute an offer to sell or the solicitation of an offer to buy any securities.
Concurrent Financing
In connection with the Qualifying Transaction, Xplore will complete a non-brokered private
placement of a minimum of 5,775,000 units to a maximum of 7,500,000 units (“Units”) at a price
of $0.20 per Unit, (each Unit comprised of one Xplore Share and one Xplore Share purchase
warrant (each, a “Warrant”) exercisable at a price of $0.40 for a period of two years from the
date of issue), for a minimum gross proceeds of $1,155,000 and maximum proceeds of
$1,500,000 (the “Concurrent Financing”). The expiry date of the Warrants may be accelerated at
the option of the Resulting Issuer if at any time prior to expiration the closing price of the
Resulting Issuer Shares on the Exchange exceeds $0.60 for ten consecutive trading days. The
Concurrent Financing is expected to close in the second quarter of 2020.
Certain of the Xplore Shares to be issued pursuant to the Qualifying Transaction are expected to
be subject to restrictions on resale or escrow under the policies of the Exchange, including the
securities to be issued to “Principals” (as defined under Exchange policies) which will subject to
the escrow requirements of the Exchange.
In connection with the Concurrent Financing Xplore will pay finders’ fees to eligible finders
(“Finders”) equal to 7% of the aggregate gross proceeds of the Concurrent Financing received
from the sale of Units to subscribers brought to the Concurrent Financing by Finders and will
issue finders warrants (each, a “Finders Warrant”) to Finders equal to 7% of the number of Units
sold to subscribers brought to the Concurrent Financing by Finders. Each Finders Warrant will be
exercisable at a price of $0.40 for a period of two years from the date of issue.
The Resulting Issuer – Summary of Proposed Directors and Officers
It is anticipated that the board of directors of the Resulting Issuer (the “Resulting Issuer Board”)
will consist of Wesley C. Hanson, Charles Edgeworth, Robert Brain, Tim McGuire, James Hyland,
and David Patterson. The officers of the Resulting Issuer will consist of Wesley C. Hanson as Chief
Executive Officer, Charles Edgeworth as Chief Financial Officer and Robert Brain as Corporate
Secretary. For a background of the proposed nominees of the Resulting Issuer, please see the
press release issued by VON dated August 12, 2019.
About VON
VON is a capital pool company. Its business activity is limited to identifying and evaluating assets
or business for acquisition. VON is headquartered in Vancouver, British Columbia.
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About Xplore
Xplore is an Ontario-incorporated private mining exploration company, incorporated on May 28,
2018. Xplore is focused on the acquisition and development of copper and gold properties.
Additional information in connection with the Qualifying Transaction will be provided in
subsequent press releases.
On behalf of the Board of Directors of VON Capital Corp.
“David Patterson”
David Patterson
President and Chief Executive Officer
Neither the 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 news release.
Reader Advisory
There can be no assurance that the Qualifying Transaction will be completed as proposed or at
all. Investors are cautioned that, except as disclosed in the filing statement to be prepared in
connection with the Qualifying Transaction, any information released or received with respect to
the Qualifying Transaction may not be accurate or complete and should not be relied upon.
Trading in the securities of the Resulting Issuer should be considered highly speculative.
Except for statements of historical fact, this news release contains certain “forward-looking
information” within the meaning of applicable securities law. In particular, forward-looking
information in this press release includes, but is not limited to, statements with respect to timing
and completion of the Concurrent Financing and the closing of the Qualifying Transaction,
receiving the necessary regulatory and third party approvals including the approval of the
Exchange and the operations and payments related to the future of the Valk Property. In
connection with the forward-looking information contained in this news release, VON has made
numerous assumptions regarding, among other things: Exchange approval of the Qualifying
Transaction, the fulfillment of the conditions of the Definitive Agreement, the ability of Xplore to
meet the payments of the purchase price of the Valk Property and the ability of the
management team of Xplore to execute its business plan. While VON considers these
assumptions to be reasonable, these assumptions are inherently subject to significant
uncertainties and contingencies.
Additionally, there are known and unknown risk factors which could cause VON and Xplore’s
actual results, performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking information
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contained herein. Risk factors include: that regulatory approval may not be obtained on a timely
basis, or at all; general economic conditions in Canada and globally; mining industry conditions;
volatility in commodity prices; unanticipated operating delays or halts; competition for and/or
inability to retain services and inputs; the availability of capital on acceptable terms; the need to
obtain required approvals from regulatory authorities; stock market volatility; and changes in tax
laws and incentive programs. A more complete discussion of the risks and uncertainties facing
the Resulting Issuer is disclosed in VON’s continuous disclosure filings with Canadian securities
regulatory authorities at www.sedar.com. All forward-looking information herein is qualified in
its entirety by this cautionary statement, and VON, Xplore, and the Resulting Issuer disclaim any
obligation to revise or update any such forward-looking information or to publicly announce the
result of any revisions to any of the forward-looking information contained herein to reflect
future results, events or developments, except as required by law.