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Redline Resources to acquire Tyko Resources as QT

2015-02-27 19:59 ET - News Release

Mr. Raymond Strafehl reports

REDLINE RESOURCES ANNOUNCES QUALIFYING TRANSACTION

Redline Resources Inc. has entered into a share exchange agreement dated Jan. 30, 2015, with Tyko Resources Inc., pursuant to which Redline will acquire all the issued and outstanding shares of Tyko in exchange for an estimated 13,036,966 common shares in the capital of Redline. Upon closing of the transaction, it is anticipated that the following parties will hold in excess of 10 per cent of the company's issued and outstanding share capital: John E. Ternowesky, Brian Mealey and Lloyd Halverson. Each of these individuals has been actively involved in the Canadian mining industry for many years, and they were the initial stakers of the Tyko property. No moneys are to be advanced by the company to Tyko under the share exchange agreement.

Redline is a capital pool company under the policies of the TSX Venture Exchange and is a TSX-V NEX-listed issuer. Completion of the transaction is intended to serve as Redline's qualifying transaction in accordance with TSX-V Policy 2.4. The transaction is an arm's-length transaction and as such will not be subject to Redline requiring shareholder approval for the transaction. Upon completion of the transaction, Redline will graduate from the NEX board of the TSX-V and be listed as a Tier 2 mining issuer.

Tyko is a private Ontario mining company based in Thunder Bay, Ont., with mineral property interests in the White Lake area of the Thunder Bay mining division, containing drill-indicated nickel, copper and platinum group mineralization in the ultramafic Nipigon plate. The property well is located north of the Trans-Canada Highway and in close proximity to the mining-related infrastructure of the Hemlo gold mining camp and the town of Marathon. Approximately $508,391 has been spent by Tyko on geophysics and prospecting of the property.

As contemplated in the share exchange agreement, closing of the transaction will be subject to a number of conditions precedent, including:

  1. Each of Redline and Tyko being satisfied with the results of their respective due diligence review of the other by no later than March 15, 2015;
  2. Receipt of all approvals and third-party consents, including the TSX-V;
  3. Receipt by Redline of a favourable title opinion on Tyko's mineral property interest;
  4. Completion by Tyko of a National Instrument 43-101-compliant technical report, and the filing of the same with the TSX-V;
  5. Confirmation from Tyko's counsel that the transaction has been conducted in accordance with applicable law;
  6. Completion of a shares-for-debt transaction whereby Redline shall issue 1,584,900 shares at a deemed price of 10 cents per share in settlement of $158,490 of outstanding debt;
  7. Completion of a private placement by Redline to raise up to $1-million;
  8. Various changes to the board of directors of Redline to include representation from the board of directors of Tyko;
  9. Change of the company's name.

There can be no assurance that all of the conditions will be satisfied or waived as proposed or at all.

Waiver of sponsorship

Sponsorship of a qualifying transaction by a capital pool company is required by the TSX-V unless an exemption from the sponsorship requirement is available. It is Redline's intention to rely upon an available exemption from the sponsorship requirements pursuant to the policies of the exchange. There is no assurance that such exemption will be granted. Further details will be announced when available.

Financing

Redline contemplates completing a private placement of at least $1-million, comprising 10 million units at a price of 10 cents per unit, with each unit comprising one common share and one-half of one share purchase warrant, with each whole warrant entitling the holder to acquire one additional common share of Redline at a price of 15 cents for a period of two years from the date of issuance. Finders' fees will be paid, in compliance with TSX-V policies, to arm's-length entities that introduce to Redline subscribers to the financing. The financings and share issuances noted herein shall be completed concurrently with the closing of the transaction, such that Redline shall have approximately 28,971,866 shares outstanding at the time of the closing of the transaction.

Finder's fee

Upon completion of the transaction, it is proposed that a finder's fee of up to 10 per cent of the value of the transaction, payable by way of issuance of up to 1.3 million common shares, may be payable, in compliance with TSX-V policies and subject to TSX-V approval, to arm's-length parties for introducing Redline to Tyko. The finder's fee shares may be subject to resale restrictions and voluntary pooling provisions.

Directors and officers

Upon completion of the transaction, the directors, officers and insiders of Redline will be:

  • J. Michael W. Collins, chief executive officer, president, director;
  • Robert J. Scott, chief financial officer, secretary;
  • Abraham P. Drost, director;
  • Roderick W. Johansen, director;
  • Raymond Strafehl, director;
  • Glenn J. Mullan, director.

The following is a brief background on each of the proposed directors and officers:

J. Michael W. Collins, PGeo

Mr. Collins is currently president, CEO and a director of Argus Metals Corp. He is vice-president, North America, of Mining Plus Canada Ltd., a specialized underground and surface mining engineering consulting company, and a director of Lions Gate Energy. Over the past 18 years, he has been involved in mineral exploration, deposit modelling and project development. Mr. Collins graduated with a BSc (honours) from Dalhousie University in 1996, and was granted professional status from APGO (Association of Professional Geoscientists of Ontario) in May, 2003, and from APEGBC (Association of Professional Engineers and Geoscientists of British Columbia) in March, 2012. Mr. Collins has worked on production and exploration projects with Goldcorp.'s Red Lake mine, has done exploration work for Canadian Royalties on its South Raglan project in the Ungava peninsula, and was involved in a syndicated project review in China in 2003. He has worked in East Africa, Central and South America, and East Asia.

Robert J. Scott, CA, CFA

Mr. Scott is a chartered accountant with over 20 years of professional experience in corporate finance, accounting, and merchant and commercial banking. He has served in management and on the boards of a number of Canadian companies. He is currently CFO of Riverside Resources and Northair Silver Corp., and a director of Mongolia Growth Group Ltd. and Entourage Metals Ltd. Mr. Scott is also a co-founder and a director of Pan American Hydro Corp., a private company involved in developing small hydro projects in Latin America. Mr. Scott earned his CA designation in 1998 and his CFA designation in 2002, and has a B.Sc. from the University of British Columbia.

Glenn J. Mullan, BSc (geology), PGeo, MS (mining engineering)

Mr. Mullan holds a BSc (geology) from Concordia University and has 35 years of experience in the mining and mineral exploration industries. Mr. Mullan is also the president, CEO and chair of Golden Valley Mines and chair/CEO of Abitibi Royalties Inc.

As an independent prospector, Mr. Mullan has assembled and acquired many mining prospects, ranging from grassroots ventures through advanced-stage projects. Mr. Mullan was instrumental in assembling many of the properties making up the portfolio now explored by Golden Valley Mines and affiliates. Mr. Mullan also is a member of the board of the Prospectors and Developers Association of Canada (PDAC).

Abraham P. Drost, MSc, PGeo

Mr. Drost is a registered professional geoscientist (Ontario). He obtained a bachelor's degree in Earth sciences from the University of Waterloo in 1984 and a master of science in mineral exploration from Queen's University in 1987. He has 30 years of experience in the Canadian mining industry. Mr. Drost is presently CEO, president and a director of Carlisle Goldfields Ltd., a director of Mega Precious Metals Inc., former CEO of Premier Royalty Inc., former president of Sandspring Resources Inc., former president of Sabina Gold and Silver Corp., and a director of Tyko Resources Inc., a private Ontario corporation and party to the present transaction.

Roderick W. Johansen

Mr. Johansen is a lawyer with Johansen Law Firm of Thunder Bay, Ont. He practises exclusively in corporate commercial matters, including transactions and litigation. He holds a bachelor of science (honours) from Lakehead University and a law degree from McGill University. He regularly provides advice to public companies on transactions, financings and other matters.

Raymond (Ray) Strafehl

Mr. Strafehl has over 30 years of experience in the investment and venture capital finance industry in Canada, and in corporate relations for public mining companies. He is a registered commodity trading adviser with the National Futures Association in Canada (since 1998), and founded Venture B.C. in 1998. He is a co-founder of International Liaison for the International Institute for Sustainable Regional Economies. Mr. Strafehl is currently CEO of Redline and has previously served as a director of a number of public companies in Canada.

Shares for debt

Prior to closing the transaction, and subject to TSX-V approval, Redline proposed to eliminate its outstanding debt in the amount of $158,490 by way of a shares-for-debt settlement whereby it will issue 1,584,900 shares at a deemed price of 10 cents per share. The debt shares will be subject to a four-month hold period from the date of issuance.

Name change

On closing of the transaction, Redline proposes to change its corporate name to Nickel One Inc. or such other name as is acceptable to the new board of directors and the TSX-V.

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