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Osprey Gold Development Ltd
Symbol OS
Shares Issued 69,842,332
Close 2020-03-19 C$ 0.03
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Megumagold to merge with Osprey Gold

2020-03-23 17:34 ET - News Release

See News Release (C-NSAU) Megumagold Corp

Mr. Regan Isenor of Megumagold reports

MEGUMAGOLD AND OSPREY GOLD TO COMBINE, CREATING A LEADING PRECIOUS METALS EXPLORATION COMPANY IN NOVA SCOTIA

Megumagold Corp. and Osprey Gold Development Ltd. have entered into a letter agreement pursuant to which Megumagold would acquire 100 per cent of the issued and outstanding shares of Osprey via a business combination.

The proposed transaction would provide shareholders of both companies with:

  • A natural district consolidation of Osprey's properties, including the Goldenville and Caribou projects, and Megumagold's extensive exploration land position;
  • Continued and increased exposure to Nova Scotia's Meguma terrane;
  • Strengthened balance sheet;
  • Opportunities for operational and exploration synergies;
  • Significantly strengthened management and leadership team through complementary skill sets.

Osprey is a Canadian exploration company focused on exploring five gold properties in Nova Scotia's largest historical gold district. Osprey's exploration licences all sit contiguous with Megumagold claims in the heart of the Meguma gold district. Osprey's main focus is developing the Goldenville project, located in Nova Scotia's largest historical gold district within the Meguma supergroup. Osprey is also focused on exploring four other gold projects within the Meguma supergroup, including the Caribou project, located within one of Nova Scotia's past-producing gold districts.

Megumagold and Osprey have both centred their exploration focus on the developing Meguma formation of Nova Scotia. Megumagold has assembled a strategically positioned, district-scale claim tenure position comprising 107,114 hectares within the Meguma gold district. Megumagold's current focus is preparing drilling campaigns for its Killag and Touquoy West properties while continuing to develop its regional targets throughout the district. At Touquoy West, located four kilometres to the west of St Barbara's Touquoy mine, combined soil geochemistry results and induced polarization (IP) survey results have identified three main anomalies on strike with the Touquoy mine that have never been drill tested. At Killag, Megumagold's initial reverse circulation (RC) drilling program has identified anomalous gold results over a strike length of one kilometre open to the east and west, approximately 20 kilometres to the east of St Barbara's Touquoy mine. Megumagold currently holds 7,176 hectares of exploration licences adjacent to Osprey's Goldenville project. Osprey's Mitchell Lake zone, located approximately 3.5 kilometres west of the Goldenville deposit, has been identified by Osprey as a high-priority area for additional exploration work and follow-up drilling due to the lack of historical drilling in this area that leaves large areas of untested potential.

Management of both companies believes that the combination of Osprey's Goldenville and Caribou projects with Megumagold's developing gold projects and district-scale exploration potential will create a combined entity that will be the leader in advanced exploration and regional development of the Meguma gold district.

Theo Van der Linde, president of Megumagold, stated: "We believe this consolidation of assets is the logical step in building a company optimally positioned to capitalize on the upside of the developing gold camp in Nova Scotia. Combining Osprey's assets of Goldenville and Caribou with Megumagold's developmental projects contained within its underexplored 107,000-hectare land position presents a compelling opportunity for our shareholders. The combination of Megumagold's commanding land position in the Belt and Osprey's deposits creates a combined entity that, through a continued corporate and exploration activity, would represent a go-to critical-mass Canadian gold and exploration opportunity in the Meguma gold district, adjacent to Atlantic Gold's operations which was acquired by St Barbara Ltd. for $722-million cash consideration in July, 2019."

Osprey Gold's president, Cooper Quinn, commented: "Our board of directors believes the proposed combination of Osprey and Megumagold creates an attractive opportunity in Nova Scotia for Osprey shareholders by forging an entity of real scale, utilizing Osprey's historically producing, resource-stage projects with the significant exploration ground held by Megumagold, and management teams with complementary skill sets. Our vision is to build the leading explorer in Nova Scotia, developing a resource base through exploration on deposits across the Meguma terrane where geology, access and infrastructure align, and we believe that the combined entity and its personnel will be positioned to raise and deploy the capital to do just that."

Nova Scotia

Nova Scotia is currently experiencing a resurgence in gold exploration, predominantly as a result of the St Barbara acquisition of Atlantic Gold and its Moose River consolidated project in July, 2019, for $722-million cash consideration. The Moose River consolidated project is currently producing gold from the Touquoy open-pit mine located approximately 10 kilometres south of Osprey's Caribou project and four kilometres west of Megumagold's Touquoy West project.

Details of the proposed transaction

Megumagold will acquire all of the issued and outstanding shares of Osprey. Each shareholder of Osprey will receive such number of common shares of Megumagold as is equal to the product of the number of Osprey shares held by such shareholder at an exchange ratio which equals one Meguma share per two Osprey shares outstanding at the closing of the transaction.

The definitive agreement will provide that unexercised Osprey options and share purchase warrants will be assumed by Megumagold and will: (i) remain outstanding for their full term; and (ii) following the closing date of the transaction, entitle the holder thereof to acquire Megumagold shares in lieu of Osprey shares, in such number and at such exercise price as shall be adjusted based on the exchange ratio inherent in the transaction, and otherwise on the same terms and conditions as existed prior to the transaction.

Osprey will have the right to appoint two members to the board of directors of the resulting issuer, with the total number of members of such board of directors to be initially set at five. Osprey shall contribute management personnel to the resulting issuer.

Megumagold currently has 102,780,640 outstanding shares and 31,364,506 shares reserved for issuance under incentive stock options and warrants. As of today's date, without including any of Megumagold's current shareholdings in Osprey, it is anticipated that a total of 36,671,166 common shares of Megumagold are anticipated to be issued to Osprey shareholders, along with incentive stock options and warrants entitling Osprey shareholders to acquire a further 13,921,068 common shares of Megumagold.

Based on the foregoing, and assuming no outstanding common shares or warrants of Osprey are exercised prior to closing, the resulting issuer from the transaction will have 139,451,806 shares issued and outstanding, of which former shareholders of Osprey will hold approximately 26.3 per cent (27.4 per cent on a fully diluted basis).

The transaction is subject to a number of conditions, including due diligence by each party, completion of definitive documentation, approval by the boards of directors of each party, obtaining any necessary shareholder approvals (including any minority approval required by Multilateral Instrument 61-101, if applicable), and obtaining all governmental, regulatory, TSX Venture Exchange, Canadian Securities Exchange and other third party approvals that are necessary in order to allow the parties to complete the transaction. The precise form of the transaction will be determined following further advice and consultation with the parties' respective legal and tax advisers. The transaction cannot close until all of these conditions are met. There can be no assurance that the transaction will be completed as proposed, or at all.

Upon closing of the transaction, the resulting issuer is expected to be listed for trading on the CSE.

Qualified person statement

This press release has been reviewed and approved by Regan Isenor, chief executive officer of Megumagold. Paul Teniere, MSc, PGeo, of Mercator Geological Services Ltd., and Perry MacKinnon, PGeo, vice-president of exploration of Osprey, both qualified persons as defined under National Instrument 43-101, have prepared and approved the scientific and technical information disclosed in this press release.

About Megumagold Corp.

Megumagold is a Canadian junior gold exploration company engaged in the business of acquiring, exploring and developing natural resource properties. Megumagold has centred its exploration focus on the developing Meguma formation of Nova Scotia. As a result, Megumagold has assembled a strategically positioned, district-scale tenure position of 107,114 hectares within the Meguma gold district.

About Osprey Gold Development Ltd.

Osprey is focused on exploring five historically producing gold properties in Nova Scotia, Canada. Osprey has the option to earn 100 per cent (subject to certain royalties) of all five properties.

We seek Safe Harbor.

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