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Conquest Resources Ltd
Symbol CQR
Shares Issued 129,862,967
Close 2020-09-15 C$ 0.06
Recent Sedar Documents

Conquest Resources closes $3.11M receipt financing

2020-09-16 12:08 ET - News Release

Mr. John Kearney reports

CONQUEST CLOSES OVER SUBSCRIBED $3,110,000 SUBSCRIPTION RECEIPT FINANCING AND $1,300,000 STRATEGIC INVESTMENT BY KIRKLAND LAKE GOLD

Conquest Resources Ltd. has closed its previously announced non-brokered subscription receipt financing to raise gross proceeds of $3.11-million and a separate concurrent subscription receipt financing with Kirkland Lake Gold Ltd. to raise gross proceeds of $1.3-million.

John Kearney, chairman of Conquest, stated: "We are very pleased with the strong interest in our financings and, in particular, we welcome Kirkland Lake as a strategic shareholder. We look forward to completing the acquisition of Canadian Continental Exploration Corp., following which the enlarged Conquest will own a unique and very prospective portfolio of exploration properties in some of the most well-known mining camps in Ontario. Conquest will be well capitalized with over $5-million in cash and we look forward to beginning our drill program in October."

Kirkland Lake strategic investment

In connection with the Kirkland Lake financing, Conquest has issued 10 million subscription receipts to Kirkland Lake at a price of 13 cents each to raise gross receipts of $1.3-million. Each Kirkland Lake subscription receipt entitles the holder to acquire one unit of Conquest, for no additional consideration. Each Kirkland Lake unit consists of one common share of Conquest (as it exists after giving effect to the previously announced 1:2.5 consolidation of the issued and outstanding Conquest shares) and one quarter of one share purchase warrant of Conquest. Each full share purchase warrant is exercisable at 18 cents for a period of two years following the completion of Conquest's previously announced acquisition of Canadian Continental (CCEC).

The gross proceeds of the Kirkland Lake financing have been deposited in escrow. The KL subscription receipts will automatically convert into Kirkland Lake units and the Kirkland Lake escrowed funds will be released to Conquest upon completion of the acquisition and consolidation. In the event that the escrow release conditions are not satisfied by Nov. 30, 2020, the Kirkland Lake escrowed funds will be returned to Kirkland Lake and the Kirkland Lake subscription receipts will be cancelled.

In connection with the Kirkland Lake financing, Conquest has granted Kirkland Lake certain investor rights, so long as Kirkland Lake holds at least 5 per cent of the outstanding shares of Conquest, including the right to nominate one director to the board of Conquest, the pre-emptive right to participate pro rata in any future financings by the company and a condition that the company will not encumber any of its properties with any new third party royalty agreements without the prior written approval of Kirkland Lake, such consent not to be unreasonably withheld.

$3.11-million non-brokered financing

In connection with the non-brokered financing, Conquest has issued 21,105,266 subscription receipts at a price of 12 cents each, for gross proceeds of $2,532,631 and 3,880,004 subscription receipts at a price of 15 cents each, for gross proceeds of $582,000. Each non-brokered hard-dollar subscription receipt entitles the holder to acquire one unit of Conquest, for no additional consideration. Each non-brokered unit consists of one share of Conquest (as it exists following the consolidation) and one-half of one warrant. Each non-brokered FT subscription receipt entitles the holder to acquire one flow-through share of Conquest (as it exists after giving effect to the consolidation, for no additional consideration.

An insider of Conquest subscribed for 200,000 non-brokered flow-through subscription receipts for gross proceeds of $30,000.

The gross proceeds of the non-brokered financing have been deposited in escrow. The non-brokered hard-dollar subscription receipts will automatically convert into non-brokered units, the non-brokered flow-through subscription receipts will automatically convert into flow-through shares and the non-brokered escrowed funds will be released to Conquest upon the satisfaction of the escrow release conditions. In the event that the escrow release conditions are not satisfied by Nov. 30, 2020, the non-brokered escrowed funds will be returned to the subscribers for non-brokered hard-dollar subscription receipts and non-brokered flow-through subscription receipts and the non-brokered subscription receipts will be cancelled.

Upon completion of the acquisition and conversion of the Kirkland Land subscription receipts into Kirkland Land units and non-brokered subscription receipts into non-brokered units and flow-through shares, Kirkland Lake will hold approximately 8 per cent of Conquest's then-outstanding shares and 9.6 per cent of Conquest's shares on a partially diluted basis, assuming no further issuances of securities by Conquest prior to such date.

All securities issued and issuable in connection with the Kirkland Land financing and the non-brokered financing are subject to a hold period of four months and one day from the closing date of such financings, expiring on Jan. 9, 2021, and Jan. 16, 2021, respectively.

Finders' fees in the total amount of $145,000 cash will be paid to certain arm's-length parties for assisting in the non-brokered financing.

PowerOne Capital Markets Ltd. acted as finder in connection with a portion of the non-brokered financing and has been appointed to act as a financial adviser to Conquest to provide continuing financial advisory and consulting services. Conquest has agreed to grant PowerOne 750,000 stock options under the company's stock option plan, each exercisable at a price of 13 cents to acquire one share of Conquest (after giving effect to the consolidation), for a period of two years, subject to completion of the acquisition. PowerOne, an exempt market dealer, is a long-term investor focused on providing early-stage capital and advisory services to emerging growth companies.

Acquisition of Canadian Continental Exploration

Subject to final acceptance of the TSX Venture Exchange, the acquisition is expected to close immediately following a special meeting of shareholders of CCEC, scheduled to be held on Sept. 23, 2020.

Pursuant to the acquisition, Conquest will issue 40,306,667 shares of Conquest (after giving effect to the consolidation) to the shareholders of CCEC, on the basis of one share for each share of CCEC held. Conquest will also issue 2.9 million options, under the company's stock option plan in replacement of existing options currently outstanding in CCEC. Each replacement option will be exercisable at 15 cents to acquire one share of Conquest (after giving effect to the consolidation) and expire in September, 2021.

CCEC holds an extensive package of mining claims and has approximately $900,000 in a combination of cash and marketable securities.

Upon completion of the acquisition, and release of the Kirkland Land escrow funds and non-brokered escrowed funds to Conquest, Conquest is expected to have a total of approximately $5.2-million in available funds to pursue its planned drilling and exploration activities, of which approximately $800,000 will be flow through funds.

Final acceptance of the acquisition by the TSX Venture Exchange is subject fulfilling the requirements of the TSX-V.

Canadian Continental properties

The CCEC land package consists of almost 10,000 hectares of underexplored mining lands in Northern Ontario, which the company believes are highly prospective for precious and base metals. The land package includes the Teckmag1 and Eaglerock claims, which immediately surround Conquest's Golden Rose property, situated in Afton and Scholes townships at Emerald Lake approximately 65 kilometres (km) northeast of Sudbury, Ont. When combined with the company's current landholdings, Conquest will control over 130 square kilometres, making it one of the largest landholders in the Temagami mining camp area.

Conquest's Golden Rose property

Conquest's Golden Rose Property encompasses patented and staked mining claims measuring 770 hectares in size that encompass the former Golden Rose gold mine and highly prospective north and south banded iron formations at Emerald Lake. The Golden Rose gold mine (which is currently flooded) consists of more than six kilometres of underground workings, as well as a three compartment, 228-metre-deep shaft and a modern decline ramp from surface to the sixth level of the mine. An inclined winze connects the sixth and seventh levels to the fifth level of the mine.

It is reported that between 1935 and 1941, mining operations at the Golden Rose gold mine by Consolidated Mining and Smelting Company of Canada Ltd. (Cominco) produced 46,000 ounces of gold from structurally controlled, shallow to steeply dipping, high-grade quartz-pyrite veins, hosted almost exclusively in an east-west-trending banded iron formation (BIF). The property largely lay dormant from 1941 to 1982, when exploration resumed.

Diamond drilling of the mine sequence stratigraphy in 1984 intersected numerous high-grade gold intercepts. This drill campaign led to reopening and mine development by Noramco between 1986 to 1987 which included widening of the mine adit and portal down to the 600-foot level. Minor gold production of approximately 7,000 ounces was reported.

Furthermore, surface drilling between 1984 to 2011 by a previous operator identified mineralization lying adjacent to known underground development. It was reported by the previous operator that diamond drilling between 2009 to 2011 intersected gold grades as high as 155.7 grams of gold per tonne over 1.82 metres. However, the potential quantity and grade is conceptual in nature and Conquest has not undertaken sufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the targets being delineated as a mineral resource.

Share consolidation

At the annual and special meeting of shareholders held on Aug. 31, 2020, Conquest shareholders approved the consolidation.

It is intended that articles of amendment in prescribed form will be filed with the director under the Business Corporations Act (Ontario) (OBCA) immediately prior to completion of the acquisition and such articles of amendment will become effective upon the issuance by the director under the OBCA of a certificate of amendment.

The TSX-V has conditionally approved the consolidation subject to the company fulfilling all the conditions of the TSX-V in respect of the consolidation.

About Conquest Resources Ltd.

Conquest Resources, incorporated in 1945, is a mineral exploration company that is exploring for gold on mineral properties in Ontario.

Conquest holds a 100-per-cent interest in the Golden Rose project, acquired in December, 2017, located at Emerald Lake approximately 65 kilometres northeast of Sudbury, Ont., which hosts the former Golden Rose gold mine and is underlain by highly prospective Abitibi greenstone geology along a strike length of 17 kilometres. The property is located deep within the regionally large, unexplained Emerald Lake (Temagami) anomaly which closely resembles the magnetic signature of the adjacent Sudbury basin.

Conquest also holds a 100-per-cent interest in the Alexander gold property located immediately east of the Red Lake and Campbell mines in the heart of the Red Lake gold camp on the important mine trend regional structure. Conquest's property is almost entirely surrounded by Evolution Mining landholdings.

In addition, Conquest owns a 100-per-cent interest in the Smith Lake gold property of six patented claims and 181 staked mining claims to the north, west and south of the former Renabie gold mine in Rennie township in Northern Ontario that had reported gold production of over one million ounces.

Qualified person

Paul Smith, professional geoscientist, senior geologist, directs the company's explorations programs and is the company's qualified person for the purposes of National Instrument 43-101 (Standards of Disclosure for Mineral Projects) and has reviewed and approved the technical disclosure contained within this news release.

We seek Safe Harbor.

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