Mr. Martin Bajic reports

ZTR ENTERS INTO LETTER OF INTENT TO ACQUIRE FEDERAL GOLD

ZTR Acquisition Corp. has entered into a letter of intent (LOI) dated Aug. 17, 2020, outlining the general terms and conditions with respect to the acquisition by the company of all the issued and outstanding share capital of Federal Gold Corp.

The company and Federal Gold are at arm's length, and the acquisition will constitute a reverse takeover of the company, in accordance with the policies of the TSX Venture Exchange. Assuming completion of the acquisition, it is anticipated that the company will be listed on the exchange as a Tier 2 mining issuer.

Federal Gold is a widely held private company that controls the rights to the Uchi, Iron Butte, Dorado and Cordillera mineral exploration projects, located in Ontario, Nevada and Chile, respectively. Following completion of the acquisition, it is anticipated that the exploration/development of the Uchi and Dorado projects will be the primary focus of the company.

Uchi property (Ontario)

The Uchi property is located approximately 80 kilometres east of Red Lake, Ont., in the Birch-Uchi greenstone belt. The western portion of the property is adjacent to the past-producing South Bay copper-zinc-silver mine. The eastern portion of the property is adjacent to the past-producing Uchi gold mine. The property, which covers an area of 5,232 hectares, represents a regional exploration opportunity in a greenstone belt with known zones of significant mineralization, but remains relatively underexplored.

Iron Butte property (Nevada)

The Iron Butte property is located 60 kilometres south of Battle Mountain, Nev. The property, which covers an area of approximately 200 hectares, features a well-defined bulk-tonnage epithermal gold/silver system that outcrops at surface. Federal Gold has an option to acquire the property by making a series of staged cash and share payments totalling $1,572,750 (U.S.) over six years and arranging for the issuance of 187,500 common shares of the company to the optionor.

Dorado property (Chile)

The Dorado property is located in the Maricunga region of Chile, approximately 135 kilometres east of Copiapo. The property, which covers an area of 1,600 hectares, is reported to feature a significant, but poorly defined, gold-rich porphyry system that outcrops at surface. Additionally, the property is reported to be host to significant zones of hydrothermal alteration at surface that have not been explored or drilled.

Cordillera property (Chile)

The Cordillera property is located in the Maricunga region of Chile, approximately 100 kilometres east of Copiapo. The property, which covers an area of approximately 1,680 hectares, is located seven kilometres south of the Maricunga mine, formerly operated by Kinross, and three kilometres north of the Caspiche deposit, now being developed by the Norte Abierto joint venture between Barrick and Newmont. Cordillera is an early-stage property that is prospective for porphyry-style and epithermal-style gold mineralization and has not been adequately explored.

Terms of the acquisition

Federal Gold is a privately held company existing under the laws of British Columbia. Federal Gold currently has 35,187,000 common shares issued and outstanding. Selected financial information on Federal Gold will be disclosed when available.

Under the terms of the acquisition, shareholders of Federal Gold will be issued common shares of the company in exchange for their Federal Gold shares on a one-for-one basis. This will result in the issuance of 35,187,000 consideration shares, based on the current capital structure of Federal Gold. Certain of the consideration shares will be subject to escrow, pursuant to the policies of the exchange, in addition to pooling restrictions that may be negotiated by the parties.

In connection with completion of the acquisition, it is anticipated that the company will change its name to Angold Resources Ltd. and adopt the ticker symbol AAU.

Concurrent financing

As a condition to completing the acquisition, the parties intend to complete a non-brokered private placement financing to raise up to $7.5-million through the issuance of up to 18.75 million subscription receipts of Federal Gold at a price of 40 cents per subscription receipt. The proceeds of the financing will be held in escrow, pending the company receiving all applicable regulatory approvals and completing the acquisition. Upon satisfaction of the escrow conditions, immediately prior to the completion of the acquisition, each subscription receipt will automatically convert into one common share of Federal Gold for no additional consideration and will be exchanged for consideration shares on a one-for-one basis. If the acquisition is not completed on or before Dec. 31, 2020, the concurrent financing proceeds will be returned to the subscribers. Finders' fees may be payable to arm's-length parties that introduce subscribers to the concurrent financing, in accordance with the policies of the exchange.

Board of directors and management changes

On completion of the proposed acquisition, the company's board of directors and management team will be reconstituted to consist of individuals to be mutually agreed upon between the company and Federal Gold, including the individuals listed herein. Information on additional board and management appointments will be disclosed when available.

Adrian Rothwell, president, chief executive officer and director

Mining industry entrepreneur and executive for over 25 years. President, chief executive officer and director of Lucky Minerals Inc. since Sept. 16, 2019, director and chair of the audit committee of Fireweed Zinc Ltd. since Feb. 14, 2017, and director of Kore Mining Ltd. since Oct. 30, 2018 (and founder in February, 2016), formerly the president and chief executive officer of Kore Mining. Mr. Rothwell is both a British Columbia chartered professional accountant and a member of the Institute of Chartered Accountants of Australia and New Zealand. He holds a bachelor of economics degree from Macquarie University.

Galen McNamara, director

Entrepreneur and geologist with extensive discovery and capital market experience over nearly 15 years. Co-winner 2018 PDAC (Prospectors & Developers Association of Canada) Bill Dennis Prospector of the Year Award for the Arrow uranium deposit and 2016 Mines and Money Exploration Award. Chief executive officer and director of Summa Silver Corp. since May 8, 2020. Mr. McNamara holds MSc and BSc degrees in geology from Laurentian University.

Brandon Bonifacio, director

Mining executive with expertise in project development, mergers and acquisitions, and over 10 years of experience. Formerly finance director of the Norte Abierto joint venture (Cerro Casale/Caspiche) in the Maricunga region, Chile, and a member of the corporate development team at Newmont Corp. (former Goldcorp Inc.). Mr. Bonifacio holds an MASc (mining engineering) degree and an MBA degree from the University of Nevada, Reno, and a BComm degree from the University of British Columbia.

Rony Zimmerman, director

Natural resources attorney qualified in Chile and Canada, with a focus on mining projects and capital markets. Mr. Zimmerman is a 13-year partner at a major Chilean law firm and was ranked in Chambers and Partners' "Who's Who Mining Legal 500 Best Lawyers and Latin Lawyer." He is the former co-president of the natural resources committee, international section, of the American Bar Association.

Shareholder approval

Approval of the shareholders of the company will not be required in connection with the acquisition, in accordance with exchange Policy 5.2, as the acquisition is not a related party transaction and no other circumstances exist that may comprise the independence of the company or other interested parties. The company is without active operations and is not subject to a cease trade order or trading suspension, and shareholder approval is not required for the acquisition under applicable corporate or securities laws.

Sponsorship

Sponsorship of the acquisition is required by exchange Policy 2.2, unless an exemption from the sponsorship requirement is available. The company will be seeking a waiver of any requirement for a sponsor in connection with the acquisition.

Further information

Closing of the acquisition is subject to a number of conditions, including: the satisfactory completion of due diligence; entering into definitive agreements; the completion of the concurrent financing; the receipt of all required shareholder, regulatory and third party consents, including exchange approval; and the satisfaction of other customary closing conditions. The acquisition and concurrent financing cannot close until the required approvals are obtained. There can be no assurance that the acquisition and concurrent financing will be completed as proposed or at all. Except in connection with the concurrent financing, no finders' fees or commissions are payable in connection with completion of the acquisition, and no advances or loans to Federal Gold are contemplated prior to the completion of the acquisition.

In connection with the acquisition, the company has commissioned geological reports on the Uchi and Dorado properties, which are intended to be the primary focus of the company following the completion of the acquisition. Prior to the completion of the acquisition, copies of the geological reports will be filed and posted on SEDAR. Further information on the acquisition will be available and posted on SEDAR upon the completion of a filing statement to be prepared by the company.

Trading in the common shares of the company will remain halted pending further filings with the exchange.

Completion of the acquisition is subject to a number of conditions, including, but not limited to, exchange acceptance and shareholder approval, if applicable. The acquisition and concurrent financing cannot be completed until such approvals are obtained. There can be no assurance that the acquisition will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the acquisition, any information released or received with respect to the acquisition may not be accurate or complete and should not be relied upon. Trading in the securities of the company should be considered highly speculative.

We seek Safe Harbor.