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Aurcana Silver Corp
Symbol	AUN
Shares Issued	309,131,509
Close 2023-04-14	C$ 0.015
Market Cap	C$ 4,636,973
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Aurcana to sell Shafter project to Silver Hammer

2023-09-28 10:30 ET - News Release

Subject: For Immediate Dissemination Word Document File: '\\swfile\EmailIn\20230928 071729 Attachment Aurcana - News Release Announcing SPA.DOCX' 910404.11905/99046632.7 LEGAL_1:82323091.3 Page 1 of 3 AURCANA ANNOUNCES SALE OF SHAFTER SILVER PROJECT VANCOUVER, BC - September 28, 2023 - AURCANA SILVER CORPORATION ("Aurcana") (TSXV: AUN) is pleased to announce that it has entered into a definitive share purchase and sale agreement (the "Purchase Agreement") to sell a 100% interest in its Shafter silver project (the "Shafter Project"), a previously producing high-grade silver mine located in Presidio County in Southwest Texas, to Silver Hammer Mining Corp. ("Silver Hammer") (the "Transaction"). The consideration to be paid by Silver Hammer for the Shafter Project includes cash of US$800,000 (less certain exclusivity fees and expenses prepaid by Silver Hammer), 23,000,000 common shares in the capital of Silver Hammer having a deemed value of $5,750,000, certain contingent payments totalling up to US$3,375,000 (as detailed below)(the "Contingent Payments") and the settlement of Aurcana's debt related to the Shafter Project totalling US$6,517,662 in aggregate. Details of the Transaction The Purchase Agreement contemplates Aurcana's wholly-owned subsidiary Aurcana US Hold 1 Co Ltd.'s sale of all the shares of common stock in Rio Grande Mining Corporation (the "Company"), the direct and indirect legal owner of all the assets, property, rights and undertakings of and relating to the Shafter Project, to Silver Hammer Metals Corp. (the "Purchaser"), an affiliate of Silver Hammer. On closing, Aurcana will receive a cash payment of US$800,000 (less certain exclusivity fees and prepaid expenses) and 23,000,000 common shares in the capital of Silver Hammer having a deemed value of $5,750,000 (the "Purchaser Shares"). In addition, upon the completion of the Purchaser's first equity financing following the closing of the Transaction ("Closing"), Aurcana will receive an additional cash payment of US$375,000. Aurcana may also receive the Contingent Payments upon the achievement of certain milestones within 48 months of Closing in the aggregate amount of up to US$3,000,0000, as follows: (a) up to US$1,000,000 will be payable in connection with the first public announcement of a new mineral resource estimate on the Shafter Project, (b) US$1,000,000 will be payable upon the Shafter Project entering commercial production, (c) US$500,000 will be payable if the spot price of silver is equal to or greater than US$30 per ounce for a period of 60 consecutive days, and (d) an additional US$500,000 will be payable if both milestones (b) and (c), above, are met. Each Contingent Payment obligation may be satisfied by the Purchaser through the payment of cash, the issuance of Purchaser Shares or some combination of cash and Purchaser Shares to Aurcana in the Purchaser's sole discretion. The noteholders of the Company (collectively, the "Noteholders") have also entered into an agreement with the Purchaser to settle the outstanding debt of the Company in connection with the Transaction (the "Debt Settlement"). Pursuant to the Debt Settlement, the Purchaser will acquire all of the outstanding notes of the Company in the aggregate principal amount of $6,517,662 (the "Company Notes") from the Noteholders in exchange for (a) the issuance of an aggregate of 4,000 debenture units of the Purchaser, each consisting of one $1,000 principal amount of secured convertible debentures of the Purchaser and 2,000 common share purchase warrants of the Purchaser (the "Warrants"), (b) an aggregate of 8,000,000 units ("Units") of the Purchaser, with each Unit consisting of one Purchaser Share and one-half of a Warrant. Each whole Warrant entitles the holder thereof to purchase an additional Purchaser Share at a price of $0.33 per Purchaser Share for a period of 24 months following Closing, and (c) additional securities of the Purchaser on the same terms as the Concurrent Financing (as described below) in settlement of all interest accrued on the Company Notes from September 1, 2023 until Closing. On Closing, Aurcana and the Purchaser will enter into an investor rights agreement (the "Investor Rights Agreement") pursuant to which Aurcana and the Purchaser will agree to certain investor rights and restrictions relating to the Purchaser Shares to be issued to Aurcana pursuant to the Transaction. Under the Investor Rights Agreement, Aurcana will have the right to nominate one member of the board of directors of the Purchaser, increasing to two directors if at any time Aurcana holds greater than 35% of the outstanding Purchaser Shares. Aurcana will agree to certain standstill restrictions and to vote its Purchaser Shares in accordance with recommendations of management and for a period of 24 months. In addition, the Purchaser Shares issued to Aurcana will be subject to voluntary resale restrictions with 25% of the Purchaser Shares being locked-up for 4 months following Closing, 25% of the Purchaser Shares being locked-up for 8 months following Closing and the remaining 50% of the Purchaser Shares being locked up for a period of 12 months following Closing. In connection with the Transaction and pursuant to the terms of the Purchase Agreement, Silver Hammer will arrange a concurrent equity financing for minimum gross proceeds of $3,000,000 (the "Concurrent Financing"). The terms of the Concurrent Financing will be disclosed in a subsequent news release of Silver Hammer. The Transaction will constitute the sale of all or substantially all of the undertaking of Aurcana pursuant to the Business Corporations Act (British Columbia) and, accordingly, will require approval by not less than two-third of the votes cast at a special meeting of the shareholders of Aurcana (the "Meeting"). Aurcana expects to mail the management information circular in connection with the Meeting to shareholders and to hold the Meeting as soon as practicable following the date hereof and will provide additional details in due course. Completion of the Transaction is subject to a number of conditions, including: (i) the receipt of all required approvals of the shareholders of Aurcana and Silver Hammer; (ii) the receipt of all necessary regulatory and third party consents, approvals and authorizations, including all necessary stock exchange approvals; (iii) the completion of the Concurrent Financing for minimum gross proceeds of $3,000,000, (iv) the completion of the Debt Settlement, (v) conditional approval of the CSE for the listing of the Purchaser Shares, including the Purchaser Shares to be issued in connection with the Transaction and the Debt Settlement, and (vi) other standard closing conditions for a transaction of this nature. ON BEHALF OF THE BOARD OF DIRECTORS OF AURCANA SILVER CORPORATION Kevin Drover President & CEO For further information, visit the website at www.aurcana.com or contact: Aurcana Silver Corporation 2751 Graham Street Victoria, BC V8T 3Z1 Phone: (604) 331-9333 FORWARD LOOKING STATEMENTS AND CAUTIONARY NOTES This press release contains forward looking statements within the meaning of applicable securities laws. The use of any of the words "anticipate", "plan", "continue", "expect", "estimate", "objective", "may", "will", "project", "should", "predict", "potential" and similar expressions are intended to identify forward looking statements. In particular, this press release contains forward looking statements concerning, without limitation, statements relating to the closing of the Transaction and the satisfaction of the related conditions precedent, the Debt Settlement and the Concurrent Financing. Although the Company believes that the expectations and assumptions on which the forward looking statements are based are reasonable, undue reliance should not be placed on the forward looking statements because the Company cannot give any assurance that they will prove correct. Since forward looking statements address future events and conditions, they involve inherent assumptions, risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of assumptions, factors and risks. These assumptions and risks include, but are not limited to, assumptions and risks associated with the receipt of regulatory or shareholder approvals, and risks related to the state of financial markets or future metals prices. Management has provided the above summary of risks and assumptions related to forward looking statements in this press release in order to provide readers with a more comprehensive perspective on the Company's future operations. The Company's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward looking statements will transpire or occur, or if any of them do so, what benefits the Company will derive from them. These forward looking statements are made as of the date of this press release, and, other than as required by applicable securities laws, the Company disclaims any intent or obligation to update publicly any forward looking statements, whether as a result of new information, future events or results or otherwise. 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 release. PDF Document File: Attachment AUNNR09272023.pdf AURCANA ANNOUNCES SALE OF SHAFTER SILVER PROJECT VANCOUVER, BC September 28, 2023 AURCANA SILVER CORPORATION ("Aurcana") (TSXV: AUN) is pleased to announce that it has entered into a definitive share purchase and sale agreement (the "Purchase Agreement") to sell a 100% interest in its Shafter silver project (the "Shafter Project"), a previously producing high-grade silver mine located in Presidio County in Southwest Texas, to Silver Hammer Mining Corp. ("Silver Hammer") (the "Transaction"). The consideration to be paid by Silver Hammer for the Shafter Project includes cash of US$800,000 (less certain exclusivity fees and expenses prepaid by Silver Hammer), 23,000,000 common shares in the capital of Silver Hammer having a deemed value of $5,750,000, certain contingent payments totalling up to US$3,375,000 (as detailed below)(the "Contingent Payments") and the settlement of Aurcana's debt related to the Shafter Project totalling US$6,517,662 in aggregate. Details of the Transaction The Purchase Agreement contemplates Aurcana's wholly-owned subsidiary Aurcana US Hold 1 Co Ltd.'s sale of all the shares of common stock in Rio Grande Mining Corporation (the "Company"), the direct and indirect legal owner of all the assets, property, rights and undertakings of and relating to the Shafter Project, to Silver Hammer Metals Corp. (the "Purchaser"), an affiliate of Silver Hammer. On closing, Aurcana will receive a cash payment of US$800,000 (less certain exclusivity fees and prepaid expenses) and 23,000,000 common shares in the capital of Silver Hammer having a deemed value of $5,750,000 (the "Purchaser Shares"). In addition, upon the completion of the Purchaser's first equity financing following the closing of the Transaction ("Closing"), Aurcana will receive an additional cash payment of US$375,000. Aurcana may also receive the Contingent Payments upon the achievement of certain milestones within 48 months of Closing in the aggregate amount of up to US$3,000,0000, as follows: (a) up to US$1,000,000 will be payable in connection with the first public announcement of a new mineral resource estimate on the Shafter Project, (b) US$1,000,000 will be payable upon the Shafter Project entering commercial production, (c) US$500,000 will be payable if the spot price of silver is equal to or greater than US$30 per ounce for a period of 60 consecutive days, and (d) an additional US$500,000 will be payable if both milestones (b) and (c), above, are met. Each Contingent Payment obligation may be satisfied by the Purchaser through the payment of cash, the issuance of Purchaser Shares or some combination of cash and Purchaser Shares to Aurcana in the Purchaser's sole discretion. The noteholders of the Company (collectively, the "Noteholders") have also entered into an agreement with the Purchaser to settle the outstanding debt of the Company in connection with the Transaction (the "Debt Settlement"). Pursuant to the Debt Settlement, the Purchaser will acquire all of the outstanding notes of the Company in the aggregate principal amount of $6,517,662 (the "Company Notes") from the Noteholders in exchange for (a) the issuance of an aggregate of 4,000 debenture units of the Purchaser, each consisting of one $1,000 principal amount of secured convertible debentures of the Purchaser and 2,000 common share purchase warrants of the Purchaser (the "Warrants"), (b) an aggregate of 8,000,000 units ("Units") of the Purchaser, with each Unit consisting of one Purchaser Share and one-half of a Warrant. Each whole Warrant entitles the holder thereof to purchase an additional Purchaser Share at a price of $0.33 per Purchaser Share for a period of 24 months following Closing, and (c) additional securities of the Purchaser on the same terms as the Concurrent Financing (as described below) in settlement of all interest accrued on the Company Notes from September 1, 2023 until Closing. On Closing, Aurcana and the Purchaser will enter into an investor rights agreement (the "Investor Rights Agreement") pursuant to which Aurcana and the Purchaser will agree to certain investor rights and restrictions relating to the Purchaser Shares to be issued to Aurcana pursuant to the Transaction. Under the Investor Rights Agreement, Aurcana will have the right to nominate one member of the board of directors of the Purchaser, increasing to two directors if at any time Aurcana holds greater than 35% of the outstanding Purchaser Shares. Aurcana will agree to certain standstill restrictions and to vote its Purchaser Shares in accordance with recommendations of management and for a period of 24 months. In addition, the Purchaser Shares issued to Aurcana will be subject to voluntary resale restrictions with 25% of the Purchaser Shares being locked-up for 4 months following Closing, 25% of the Purchaser Shares being locked-up for 8 months following Closing and the remaining 50% of the Purchaser Shares being locked up for a period of 12 months following Closing. In connection with the Transaction and pursuant to the terms of the Purchase Agreement, Silver Hammer will arrange a concurrent equity financing for minimum gross proceeds of $3,000,000 (the "Concurrent Financing"). The terms of the Concurrent Financing will be disclosed in a subsequent news release of Silver Hammer. The Transaction will constitute the sale of all or substantially all of the undertaking of Aurcana pursuant to the Business Corporations Act (British Columbia) and, accordingly, will require approval by not less than two-third of the votes cast at a special meeting of the shareholders of Aurcana (the "Meeting"). Aurcana expects to mail the management information circular in connection with the Meeting to shareholders and to hold the Meeting as soon as practicable following the date hereof and will provide additional details in due course. Completion of the Transaction is subject to a number of conditions, including: (i) the receipt of all required approvals of the shareholders of Aurcana and Silver Hammer; (ii) the receipt of all necessary regulatory and third party consents, approvals and authorizations, including all necessary stock exchange approvals; (iii) the completion of the Concurrent Financing for minimum gross proceeds of $3,000,000, (iv) the completion of the Debt Settlement, (v) conditional approval of the CSE for the listing of the Purchaser Shares, including the Purchaser Shares to be issued in connection with the Transaction and the Debt Settlement, and (vi) other standard closing conditions for a transaction of this nature. ON BEHALF OF THE BOARD OF DIRECTORS OF AURCANA SILVER CORPORATION Kevin Drover President & CEO For further information, visit the website at www.aurcana.com or contact: Aurcana Silver Corporation 2751 Graham Street Victoria, BC V8T 3Z1 Phone: (604) 331-9333 FORWARD LOOKING STATEMENTS AND CAUTIONARY NOTES This press release contains forward looking statements within the meaning of applicable securities laws. The use of any of the words "anticipate", "plan", "continue", "expect", "estimate", "objective", "may", "will", "project", "should", "predict", "potential" and similar expressions are intended to identify forward looking statements. In particular, this press release contains forward looking statements concerning, without limitation, statements relating to the closing of the Transaction and the satisfaction of the related conditions precedent, the Debt Settlement and the Concurrent Financing. Although the Company believes that the expectations and assumptions on which the forward looking statements are based are reasonable, undue reliance should not be placed on the forward looking statements because the Company cannot give any assurance that they will prove correct. Since forward looking statements address future events and conditions, they involve inherent assumptions, risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of assumptions, factors and risks. These assumptions and risks include, but are not limited to, assumptions and risks associated with the receipt of regulatory or shareholder approvals, and risks related to the state of financial markets or future metals prices. Management has provided the above summary of risks and assumptions related to forward looking statements in this press release in order to provide readers with a more comprehensive perspective on the Company's future operations. The Company's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward looking statements will transpire or occur, or if any of them do so, what benefits the Company will derive from them. These forward looking statements are made as of the date of this press release, and, other than as required by applicable securities laws, the Company disclaims any intent or obligation to update publicly any forward looking statements, whether as a result of new information, future events or results or otherwise. 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 release.