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SolidusGold Enters into Letter of Intent with Valhalla Metals Inc. for a Proposed Reverse Takeover

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Vancouver, British Columbia, Nov 29, 2021 (Newsfile Corp via COMTEX) -- Vancouver, British Columbia--(Newsfile Corp. - November 29, 2021) - SolidusGold Inc. /zigman2/quotes/207978593/delayed CA:SDC 0.00% (" 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 () 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.

/zigman2/quotes/207978593/delayed
CA : Canada: TSX Venture
$ 0.11
0.00 0.00%
Volume: 0.00
Dec. 22, 2021 4:10p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$6.55 million
Rev. per Employee
N/A
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