Mr. Dale Wallster of Southern Empire reports
SOUTHERN EMPIRE TO ACQUIRE MAS GOLD TO ESTABLISH AN ADVANCED STAGE GOLD EXPLORATION AND DEVELOPMENT COMPANY
Southern Empire Resources Corp. and MAS Gold Corp. have entered into a binding agreement dated July 11, 2020, whereby Southern Empire has agreed to acquire all of the issued and outstanding common shares of MAS Gold.
Highlights of the transaction
MAS Gold has two advanced-stage gold deposits having National Instrument 43-101 mineral resources located in the La Ronge gold belt of Saskatchewan, Canada:
The North Lake gold deposit containing 417,000 ounces gold comprises an inferred mineral resource of 14.11 million tonnes grading 0.92 gram per tonne gold;
The Greywacke North gold deposit containing 95,600 ounces Au comprises an indicated mineral resource of 255,500 tonnes at 9.92 g/t Au, plus an inferred mineral resource of 59,130 tonnes at 7.42 g/t Au at a cut-off grade of five g/t Au.
Significant potential for resource expansion exists at both Greywacke North and North Lake.
Excellent exploration potential also exists for MAS Gold's Preview-North property (which hosts the Point gold deposit), Henry Lake and Elizabeth Lake properties.
The combined entity will have a strong balance sheet, with no debt and a cash position of approximately $5.5-million, which will be used to target expansion of the current NI 43-101 resources as well as exploration and development on all of Southern Empire's projects.
Chief executive officer of Southern Empire Dale Wallster stated: "With this transaction, Southern Empire will emerge as a company having NI 43-101 gold resources in Saskatchewan, annually ranked as one of the best mining jurisdictions in the world, which we will target to expand and enhance. Together with our Oro Cruz and Eastgate gold projects in the southwestern USA, we will be a multiasset, advanced-stage gold exploration and development company with holdings in some of the best mining jurisdictions in the world. Southern Empire has a strong treasury, an award-winning technical team and management with strong track records in the capital markets."
Details of the arrangement
The transaction will be effected by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia). Under the terms of the agreement, each shareholder of MAS Gold will receive one common share of Southern Empire for every 8.5 common shares of MAS Gold. Assuming completion, and none of the options or share purchase warrants of MAS Gold being exercised prior to closing of the transaction, Southern Empire will issue a total of 5,828,090 Southern Empire shares to the shareholders of MAS Gold.
Based on a price of $1.19 per Southern Empire share, being the closing price of Southern Empire on July 10, 2020, the 8.5-to-one conversion ratio represents an offer price of 14.5 cents per MAS share, being a premium of 21 per cent of MAS Gold's closing price on July 10, 2020.
Following the completion of the transaction, Southern Empire will have 56,734,890 issued and outstanding shares, of which the former shareholders of MAS Gold will hold approximately 10.3 per cent.
All outstanding options and warrants of MAS Gold will remain outstanding (if not exercised prior to closing of the transaction) and will be adjusted to give effect to the transaction in accordance with their respective terms or pursuant to the agreement.
After taking into consideration, among other things, the terms of the transaction, the recommendation of the special committee of independent MAS Gold directors established to review the transaction and discussions with its advisers, MAS Gold's board of directors has concluded that the transaction is in the best interests of MAS Gold and has approved the agreement. MAS Gold's board of directors intends to recommend in the management information circular to be mailed in connection with the MAS Gold shareholder meeting that the MAS Gold shareholders vote in favour of the transaction.
Similarly, after taking into consideration, among other things, the terms of the transaction, the Southern Empire board of directors has concluded that the transaction is in the best interests of Southern Empire and has approved the agreement.
The transaction will require the approval by at least 66.66 per cent of the votes cast on the special resolution by MAS Gold shareholders and, if required, Southern Empire shareholders present in person or represented by proxy at the shareholder meetings. The transaction may also require the approval of a majority of the votes cast by minority shareholders of MAS Gold for the purposes of Multilateral Instrument 61-101.
Ron Netolitzky is chairman and director of Southern Empire, and CEO, president and a director of MAS Gold, and Andrew Davidson is chief financial officer of each of Southern Empire and MAS Gold.
The transaction is subject to due diligence by each party, shareholder approval, applicable regulatory and TSX Venture Exchange approvals, and satisfaction of customary provisions. The transaction is expected to close in the second half of 2020.
The agreement includes customary deal protection provisions, including a break fee of $250,000 payable by a breaching party, and a right to match and a non-solicitation provision in favour of Southern Empire.
Details of the transaction, including a summary of the terms and conditions of the agreement, will be disclosed in the management information circular of MAS Gold, which will be mailed to the security holders of MAS Gold and will also be available on SEDAR.
Management team and board of directors
The parties anticipate that the management team and board of directors for Southern Empire will remain unchanged. The management team will continue to be Mr. Wallster (CEO and president) and Mr. Davidson (CFO), and the board of directors will be Mr. Netolitzky (chairman), Mr. Wallster, Bryan Slusarchuk, James Currie and a mutually agreed representative of the current MAS Gold board of directors. James Hutton will remain as an adviser to the company.
The scientific and technical information contained in this news release has been prepared, reviewed, verified and approved by David Tupper, PGeo (B.C.), Southern Empire's vice-president of exploration and a qualified person within the context of Canadian Securities Administrators' National Instrument 43-101 -- Standards of Disclosure for Mineral Projects.
About Southern Empire Resources Corp.
Southern Empire is focused on the acquisition, exploration and development of gold deposits in North America, currently having two projects in the American southwest.
About MAS Gold Corp.
MAS Gold is a Canadian mineral exploration company focused on road-accessible exploration projects located in the La Ronge gold belt of Saskatchewan. MAS Gold's Greywacke and Preview North gold projects are located within 10 km of Highway 102, approximately 60 km west of the producing Seabee and Santoy gold mines operated by SSR Mining Inc.
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