23:12:51 EDT Thu 24 Sep 2020
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GFG Resources Inc
Symbol GFG
Shares Issued 95,654,648
Close 2019-10-24 C$ 0.165
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GFG closes $3.06-million first tranche of financing

2019-10-24 14:00 ET - News Release

Mr. Brian Skanderbeg reports


GFG Resources Inc. has closed the first tranche of the previously announced non-brokered private placement for gross proceeds of $3,066,073.

"We are grateful for the support and confidence from our existing and new shareholders in our unwavering and disciplined pursuit to deliver shareholder value through discovery," stated Brian Skanderbeg, president and chief executive officer of GFG. "This financing will allow us to follow up on our recent discoveries at the Pen Gold project, located west of the Timmins gold district, and further advance our Rattlesnake Hills gold project with our partner Newcrest Mining Ltd. Over the past year, we have significantly advanced both projects and we look forward to providing numerous catalysts from the ongoing and upcoming drill programs."

Pursuant to the closing of the first tranche of the offering, the company issued (i) 5,025,555 units of the company at a price of 18 cents per unit for gross proceeds of $904,600, with each unit consisting of one common share of the company (which is not a flow-through share) and one-half of one share purchase warrant, with each whole share purchase warrant entitling the holder thereof to acquire one additional common share of the company (which shall not be a flow-through share) at an exercise price of 27 cents for a period of 24 months from the date of issuance; (ii) 3,334,546 common shares of the company that qualify as flow-through shares for the purposes of the Income Tax Act (Canada) at a price of 22 cents per flow-through share for gross proceeds of $733,600; and (iii) 5,192,267 charity units of the company at a price of 27.5 cents per charity unit for gross proceeds of $1,427,873, with each charity unit consisting of one flow-through share and one-half of one warrant.

The gross proceeds raised from the sale of the flow-through shares and charity flow-through shares will be used for exploration activities in Ontario that will qualify as Canadian exploration expenses within the meaning of the Income Tax Act (Canada). The net proceeds raised from the sale of the units and the warrants comprising, in part, the charity units will be used for exploration activities on the company's projects in Wyoming and Ontario as well as for general working capital purposes.

The company intends to close the final tranche of the offering on or about Oct. 29, 2019, for up to the remaining balance of the private placement.

The offering is subject to certain conditions, including, but not limited to, the receipt of all necessary approvals, including the final approval of the TSX Venture Exchange. All securities issued and issuable pursuant to the first tranche of the offering are subject to a hold period expiring Feb. 25, 2020.

Related party transaction

In connection with the offering, Mr. Skanderbeg, the CEO and a director of the company, and Richard Johnson, the chief financial officer of the company, have purchased a total of 478,637 flow-through shares. Insiders participation in the offering constitutes a related party transaction pursuant to Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions. The company is relying on an exemption from the formal valuation requirements of MI 61-101 available on the basis of the company not being listed on specified stock exchanges, including the Toronto Stock Exchange, the New York Stock Exchange, the American Stock Exchange, the Nasdaq and certain overseas exchanges. The company is also relying on the exemption from minority shareholder approval requirements under MI 61-101, as the fair market value of the insiders' participation in the offering does not exceed 25 per cent of the market capitalization of the company, as determined in accordance with MI 61-101.

In connection with the offering, the company paid a cash finder fee of $25,080.

About GFG Resources Inc.

GFG Resources is a North American precious metals exploration company focused on district-scale gold projects in tier-one mining jurisdictions, Ontario and Wyoming. In Ontario, the company owns 100 per cent of the Pen and Dore gold projects, two large and highly prospective gold properties west of the prolific gold district of Timmins, Ont. The Pen and the Dore gold projects have the same geological setting that hosts most of the gold deposits found in the Timmins gold camp, which have produced over 70 million ounces of gold. In Wyoming, the company has partnered with Newcrest Mining Ltd. through an option and earn-in agreement to advance the Rattlesnake Hills gold project.

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