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Revelo Resources Corp (2)
Symbol RVL
Shares Issued 43,552,609
Close 2020-09-01 C$ 0.27
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Austral to acquire Revelo for cash, shares

2020-09-02 12:08 ET - News Release

See News Release (C-AGLD) Austral Gold Ltd

Mr. Stabro Kasaneva of Austral reports

AUSTRAL GOLD AND REVELO ANNOUNCE SIGNING OF NON-BINDING OFFER LETTER FOR AUSTRAL TO ACQUIRE REVELO FOR SHARES AND CASH

Austral Gold Ltd. and Revelo Resources Corp. have entered into a conditional non-binding letter of intent pursuant to which Austral would purchase all the outstanding shares of Revelo in exchange for shares in Austral and cash. The key terms of the offer letter are non-binding, except for exclusivity, confidentiality, term, termination fees and other standard clauses.

Accordingly, the transaction remains subject to further due diligence, negotiation and satisfaction of material conditions, such as entering into definitive agreements (which will make the transaction and all key terms legally binding between the parties). However, as a similar release is being made on the TSX Venture Exchange by Revelo and Austral, the transaction is also being announced by Austral on the Australian Securities Exchange to keep the Australian market fully informed.

The parties will continue to negotiate exclusively and in good faith to enter into definitive agreements during September, 2020. If and when definitive agreements have been entered into by the parties, a further announcement will be released.

At present, the key details of the transaction are as follows:

  • Each Revelo shareholder will receive, in exchange for each Revelo share held immediately prior to the effective date of the transaction, 0.9184 common share of Austral.
  • The exchange ratio to result in the current Revelo shareholders owning approximately 5.9 per cent of the outstanding shares of the combined entity on an undiluted basis and 5.8 per cent on a fully diluted basis. The Austral shares will be issued utilizing the company's existing capacity under ASX Listing Rule 7.1.
  • In addition, Austral to pay $1,176,471 to the Revelo shareholders, pro rata, based on their respective shareholdings as of the completion date of the transaction. Austral proposes to finance the cash consideration utilizing its existing cash reserves.
  • Based on the 30-day volume-weighted trading price of Revelo's and Austral's shares on the TSX-V prior to signing of the offer letter, the Austral shares being issued represent a 55-per-cent premium to the price of Revelo's stock and the aggregate of the Austral shares being issued and the cash consideration represents a 77-per-cent premium.
  • Austral and Revelo have mutually agreed to pay the other party a termination fee of $500,000 (U.S.) if the transaction does not close by Feb. 28, 2021, for any reason other than certain exceptions agreed to between the parties in the offer letter (which includes the entering into definitive agreements). Therefore, if definitive agreements are not entered into by the parties and the transaction does not proceed, the termination fee will not be payable.
  • The transaction is expected to proceed on a friendly basis with the unanimous support of the board of directors of both Austral and Revelo.
  • There will be no changes to the board of Austral as a consequence of the transaction.

Chairman Michael Winn, and president and chief executive officer Timothy Beale, holding an aggregate of 19,938,869 common shares of Revelo, representing approximately 51.6 per cent of the outstanding common shares of Revelo, have entered into a voting support agreement with Austral pursuant to which they and entities controlled by them have agreed, among other things, to support the transaction and vote their common shares of Revelo in favour of the transaction.

As noted herein, completion of the transaction remains subject to a number of material terms and conditions being satisfied, including:

  • Revelo shareholder approval;
  • Entering into of definitive agreements, including support agreements by Revelo's officers and directors and significant shareholders;
  • Obtaining all applicable regulatory, court and stock exchange (TSX-V and ASX) approvals;
  • The absence of material adverse changes to Revelo or Austral;
  • Completion of satisfactory due diligence activities by Revelo and Austral.

Austral does not consider that the transaction, if it proceeds, will require Austral to seek shareholder approval.

Austral's CEO, Stabro Kasaneva, said: "We are pleased to make an offer for the acquisition of Revelo as they own seven interesting assets, three of which are precious metals projects located in the Paleocene-Eocene belt, which is in the vicinity of our Guanaco/Amancaya mining complex. In addition, Revelo is pursuing an attractive transaction with West Pacific Ventures Corp., which should result in Revelo owning a 19.9-per-cent interest in a new vehicle that will control an interesting set of copper projects in the same area. This transaction would allow us to consolidate our leading role in the Paleocene-Eocene belt in Chile and increase our portfolio of exploration assets."

Revelo's chairman, Mr. Winn, commented: "This is a very attractive deal for Revelo's shareholders. Austral Gold is a growing producer of gold and silver with what we believe to be great upside potential. The proposed business combination between Austral's production and Revelo's exploration assets, with three of Revelo's gold-silver exploration projects within easy trucking distance of Austral's processing plant at Guanaco, make for a compelling story."

Revelo and Austral are working to complete due diligence activities and sign definitive documentation in mid-September with a view to closing the transaction in mid-November.

Revelo continues to work toward the closing of its previously announced spinout transaction whereby eight of Revelo's projects are being sold to West Pacific Ventures Corp., following which West Pacific will participate in a reverse takeover transaction with Fireswirl Technologies Inc. (see Fireswirl's news release dated Aug. 17, 2020). The agreement is subject to the raising of a minimum of $4-million in financing for the new venture, which will be invested in the exploration of the properties being sold. Austral is fully supportive of this transaction being concluded as soon as possible.

About Austral Gold Ltd.

Austral is a growing gold and silver mining, development and exploration company building a portfolio of quality assets in Chile, the United States and Argentina. Its flagship Guanaco/Amancaya project in Chile is a gold and silver producing mine with further exploration upside. Austral also holds the Casposo mine (San Juan, Argentina), a 26.46-per-cent interest in the Rawhide mine (Nevada) and an attractive portfolio of exploration projects including the Pinguino project in Santa Cruz, Argentina (100-per-cent interest), and the San Guillermo and Reprado projects near Amancaya (100-per-cent interest). With an experienced local technical team and highly regarded major shareholder, Austral's goal is to continue to strengthen its asset base through acquisition and discovery.

About Revelo Resources Corp.

Revelo is a Canadian company. Revelo holds interests in a substantial portfolio of gold-silver and copper projects located along world-class mineral belts in northern Chile. Discounting the eight properties in the process of being sold to West Pacific Ventures, as described herein, Revelo's landholdings include four projects focused on gold and silver totalling approximately 38,000 hectares, together with three projects focused on copper-gold totalling approximately 30,000 hectares, and represents an important portfolio in the country with many highly prospective indicators of precious metals and copper porphyry mineralization, including, in some cases, historic drill intercepts. Additionally, Revelo has a 15-per-cent equity interest in a private company, Atacama Copper Exploration Ltd., and will have a 19.9-per-cent equity interest in the new spinout venture involving West Pacific once that transaction closes.

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