Concurrent Subscription Receipt Financing Up to CDN $20 Million
Toronto, Ontario--(Newsfile Corp. - February 19, 2021) - Western Exploration LLC ("Western") and Crystal Peak Minerals Inc. ("Crystal") (TSXV: CPM.H) (OTC Pink: CPMMF) are pleased to announce that they have entered into an arrangement agreement dated February 19, 2021 (the "Arrangement Agreement") outlining the terms upon which, among other things, Western will "go public" by way of a "reverse take-over" of Crystal (the "RTO") under the policies of the TSX Venture Exchange (the "Exchange"), as more particularly described in this news release. In this news release, references to the "Resulting Issuer" or "WEX" are to Crystal after the closing of the RTO.
As part of the RTO, Western has also entered into an engagement letter dated February 19, 2021 with Canaccord Genuity Corp., as lead agent on behalf of a syndicate of agents (collectively, the "Agents"), pursuant to which the Agents have agreed to sell, on a "best efforts" private placement basis subscription receipts of Crystal (the "Subscription Receipts") for gross proceeds of up to CDN $20 million (the "Financing").
Darcy Marud, Chief Executive Officer of Western, stated: "We are excited for the opportunity to bring a new and exciting company and project to a broader investment audience. I'd like to thank the Western shareholders for their unwavering support in building the company to what it is today and thank Crystal Peak for sharing our vision of creating a new Nevada-based precious metals exploration and development company."
Attributes of the Resulting Issuer
The formation of the Resulting Issuer creates a Nevada-based precious metals exploration and development company with a focus on growing the new high-grade gold and silver Gravel Creek discovery and advancing the Doby George gold development asset. The Aura Project is expected to be the only material property of the Resulting Issuer upon the completion of the RTO.
The Aura Project is an exploration and development project with a resource estimate prepared in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101") at two current mineral deposits, Doby George and Wood Gulch/Gravel Creek. The Doby George mineral deposit contains 12.9M tonnes of 0.98 g/t Au in the Indicated category and 5.0M tonnes 0.73 g/t Au in the Inferred category and the Wood Gulch/Gravel Creek mineral deposit contains 2.0M tonnes of 3.80 g/t Au and 60.8 g/t Ag in the Indicated category and 10.1M tonnes 2.08 g/t Au and 28.4 g/t Ag in the Inferred category. For additional details relating to the Aura Project, please see "Resulting Issuer Mineral Resource Estimate".
Western's Strategy with Respect to the Resulting Issuer
As part of the RTO, the existing members of Western will be entitled to receive an aggregate of 29,637,034 Resulting Issuer Shares (after giving effect to the Consolidation) in exchange for their membership interests in Western. Western expects the advancement of the assets held by the Resulting Issuer to be funded through the public markets such that Western's ownership in the Resulting Issuer will be diluted as the assets are advanced.
Financing Particulars
As part of the RTO, Western has entered into an engagement letter dated February 19, 2021 with Canaccord Genuity Corp., as lead agent on behalf of a syndicate of Agents, pursuant to which the Agents have agreed to sell, on a "best efforts" private placement basis Subscription Receipts for gross proceeds of up to CDN $20 million. Each Subscription Receipt will entitle the holder thereof to receive, for no additional consideration and without further action on the part of the holder thereof, on or about the date that the RTO is completed, one common share of the Resulting Issuer after giving effect to the Consolidation (each, a "Resulting Issuer Share"). The Resulting Issuer Shares to be issued in Canada upon the conversion of the Subscription Receipts will be freely-tradeable upon the closing of the RTO.
It is expected that the net proceeds from the Financing will primarily be used for the exploration and development of the Aura Project, and general working capital purposes following completion of the RTO. Further information regarding the Financing will be announced as the details become available. The terms of the Financing will be determined in the context of market conditions, and a further update will be provided in a separate news release in due course.
This news release does not constitute an offer to sell or a solicitation of an offer to buy any securities in the United States or any other jurisdiction. The securities offered in the Financing have not been, and will not be, registered under the U.S. Securities Act or any U.S. state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, United States persons absent registration or any applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws.
Transaction Particulars
Pursuant to the Arrangement Agreement, and as part of the RTO, and subject to any required shareholder and regulatory approvals:
- all of the outstanding membership interests in Western will be transferred to Crystal in exchange for an aggregate of 29,637,034 Resulting Issuer Shares (after giving effect to the Consolidation);
- the outstanding options and restricted share units of Crystal will be surrendered by the holders thereof and canceled for no consideration;
- the common shares of Crystal will be consolidated on a 490.97:1 basis (the "Consolidation");
- Crystal will continue from Yukon to British Columbia (the "Continuance");
- the name of the Resulting Issuer will be changed to "Western Exploration Inc." (or such other name as may be acceptable to Western) and change its stock exchange ticker symbol to "WEX";
- the Resulting issuer will adopt new articles, security-based compensation arrangements and other corporate policies,
- the board of directors and the management of the Resulting Issuer will be reconstituted; and
- the auditor of the Resulting Issuer will be MNP LLP.
Crystal expects to call a special meeting of its shareholders, expected to be held in April 2021 (the "Crystal Meeting"), to approve the RTO and various corporate actions referred to in this news release. To be effective, the RTO and the Continuance will require the approval of at least two-thirds of the votes cast by shareholders of Crystal at the Crystal Meeting.
In support of the RTO, directors, senior officers and certain shareholders of Crystal, holding an aggregate of 70,874,406 common shares of Crystal (the "Crystal Shares") (or 39.8% of the issued and outstanding Crystal Shares) have entered into a voting support agreement with Western in support of the RTO.
No insider, promoter or control person of Crystal and no associate or affiliate of the same, has any interest in or will receive any consideration as a result of the RTO other than that which arises from their current holding of Crystal Shares. Coral Reef Capital LLC, whose head office is located in New York City, New York, is considered to be a promoter of the Resulting Issuer.
The full particulars of the RTO, the mineral properties and the Resulting Issuer (including the history of Western and relevant financial information) will be described in a circular (the "Circular") prepared in connection with the Crystal Meeting. A copy of the filing statement will be available electronically on SEDAR (www.sedar.com) under Crystal's issuer profile in due course.
Completion of the RTO is subject to a number of conditions, including, but not limited to, Exchange acceptance, approval of Crystal shareholders, court approval, closing of the Financing and if applicable, disinterested shareholder approval. Where applicable, the RTO cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all. In addition, the Transaction is not a "related party transaction" as such term is defined by Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions and is not subject to Policy 5.9 of the Exchange.
Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the RTO, any information released or received with respect to the RTO may not be accurate or complete and should not be relied upon. Trading in the securities of Crystal should be considered highly speculative.
The Arrangement Agreement was negotiated at arm's length between representatives of Western and Crystal. Crystal may seek waivers or exemptions from certain listing requirements of the Exchange in connection with the RTO, including the requirement to obtain a sponsor for the RTO and the issue price of the Subscription Receipts under the Financing. However, there can be no assurance that any waivers will be obtained. If a waiver from the sponsorship requirement is not obtained, a sponsor will be identified at a later date. No deposit, advance or loan has been made or is to be made in connection with the RTO.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed RTO and has neither approved nor disapproved the contents of this news release.
Management and Board Composition
The board of directors of the Resulting Issuer is expected to include Mr. Marceau Schlumberger, as Chair, Mr. Darcy Marud, Mr. John Rogers, Mr. Brian Kennedy, Mr. Nicolas Schlumberger and Mr. Gerard Munera.
Management of the Resulting Issuer is expected to include Mr. Darcy Marud (President and Chief Executive Officer), Mr. Curtis Turner (Chief Financial Officer) and Mr. Jacob Fainzilberg (Corporate Secretary).
The following are biographies of the currently proposed directors and senior officers of the Resulting Issuer:
Marceau Schlumberger, Chair of the Board
Mr. Schlumberger founded Coral Reef Capital in 2008 and is responsible for the firm's management. He serves on the Investment Committees of CRC Resources Fund II LP and CRC Energy Fund LP.
Prior to Coral Reef Capital, he was a Principal at Columbus Nova from 2003-2008 focusing on sourcing and managing private equity and credit investment opportunities. From 1998-2003, Mr. Schlumberger was an Associate at Triumph Capital, a growth private equity firm with over $950 million of funds under management.
Mr. Schlumberger currently serves on the board of directors of Shawnee Oil Company, Krewe Energy, Rawhide Mining, Western Exploration, and ROC Service Company.
Mr. Schlumberger received a BA from Yale University and a MBA from The Wharton School.
Brian Kennedy, Director
Mr. Kennedy was previously chairman of Argonaut Gold, Inc., a Canadian public company, between 2007 - 2015. He has served as president and CEO of Argonaut LLC, a private equity group, since 2007. He further served as chairman and a director of Meridian Gold, Inc., a publicly-held mining company, until 2007, after having served as its president and CEO from 1996 to 2006. He also served as president and chief operating officer and director of publicly-held FMC Gold Company from 1987 to 1996. Mr. Kennedy is a trustee of two non-profit corporations: the Nevada Museum of Art and the Kennedy Foundation. Mr. Kennedy is a graduate of the U.S. Naval Academy and holds an MBA degree from Harvard University. Mr. Kennedy was elected as a Director of NVE, SPPC and NPC in February 2007.
Nicolas Schlumberger, Director
Nicolas has been active in international finance (New York, Tokyo, and Paris) for 42 years. Since 2000, he has been a serial entrepreneur, a founder of SICAT (France, Bet-silicium carbide for catalysis) and of Hi Tech ventures (China, terrestrial broadcasting, wireless services), and Chairman of a high-tech company based in Chengdu, China. He is also a partner in Dynabond, a major service provider to Chinese, African, and Middle Eastern nuclear, conventional, and renewable energy markets, which is headquartered in Zurich, Switzerland.
Nicolas is a graduate of Ecole Nationale Supérieure des Mines de Nancy.
Gerard Munera, Director
Drawing upon some 50 years of experience in business and finance, Mr. Munera is widely regarded for his ability to lead companies to continued success. Since the 1960s, Mr. Munera has enjoyed a variety of positions in Latin America, the United States, France, Belgium, and England. He began his career upon graduating in 1956 from the French premiere Ecole Polytechnique in Paris, and then went on to receive a CE degree from Ecole des Ponts et Chaussees, also in Paris. Within two short decades, he rose to the position of president and chief executive officer with Howmet Aluminum Corporation in Greenwich, and then to corporate vice president of nuclear fuels and electrothermal industries with Pechiney. He relocated to Belgium in 1984 as chief executive officer of Union Miniere. He recently celebrated 20 years as the managing director of the Synergex Group, a diversified company with investments in securities, mining and high tech. He is the Executive Chairman of Arcadia Inc. and has also served as a member of the board of directors with Nevsun Resources Ltd., and as a chairman with Dynamic Materials Corporation., Inc.
John Rogers, Director
John Rogers is a U.S. corporate attorney with over 24 years of experience. He is presently the General Counsel and Business Development Director (North America) for the Ambassador Theatre Group. He has been serving as a legal and strategic advisor to Coral Reef Capital since its first portfolio investment. He was previously a partner with the law firms Pepper Hamilton LLP and Herrick, Feinstein LLP.
Darcy Marud, Director and Chief Executive Officer
Mr. Marud is a Professional Geologist with more than 30 years of precious metals exploration experience in the Americas and is an active member of the Association of Professional Geoscientists of Ontario and a graduate of the University of Saskatchewan with a BSc Honors in Geology (1985). Mr. Marud is currently the CEO of Western Exploration LLC, a Nevada based precious metals exploration company, and has been in that role since December 2017. Previously he was Senior VP Exploration at Yamana Gold from 2007 to 2013 and Executive Vice President - Enterprise Strategy from 2014 until his departure from Yamana in September 2017. Prior to Yamana Gold Mr. Marud held senior roles in exploration with Homestake Mining Company, FMC Gold Corp and Meridian Gold Inc. During his career, Mr. Marud has been involved in the discovery and subsequent development of significant precious metals deposits including: El Peñón, Chile; Mercedes, Mexico and Pilar and Corpo Sul(Chapada) in Brazil.
Curtis Turner, Chief Financial Officer
Mr. Turner has over 15 years' experience in business and finance; including mergers and acquisitions, public reporting and operations, as well as community and government relations. He is currently the CFO for Rawhide Mining LLC, a producing heap-leach gold mine in Nevada, which is majority owned by Coral Reef Capital, a Private Investment firm. Previously, Mr. Turner was the CEO and director of Candelaria Mining Corp. and held a senior management position at Argonaut Gold Inc., where he was a key member of the team that successfully completed four acquisitions totaling over $700 million. Prior to his position at Argonaut Gold, Mr. Turner was CFO at sodium cyanide manufacturer Cyanco International LLC., Director of Finance at Yamana Gold Inc. and Corporate Controller at Meridian Gold Inc.
Resulting Issuer Mineral Resource Estimate
Western's only asset, the Aura Project, is located on public lands within the Mountain City Ranger District of the Humboldt-Toiyabe National Forest about 100 kilometers north of Elko, Nevada. The Aura Project area controlled by Western consists of 9 fee land parcels and 709 unpatented lode mining claims covering approximately 6,128 hectares in northern Elko County, Nevada. Annual regulatory fees of $116,985 are payable to the U.S. Bureau of Land Management and $8,608 payable to Elko County, Nevada.
The project is subject to the normal federal, state and county regulations for exploration and mining projects in Nevada and Elko County.
The gold and silver mineralization at the Aura Project is found in both Paleozoic metasedimentary rocks and overlying Tertiary volcanic rocks. Mineralization dominantly occurs as disseminations in stratabound tabular zones. Based upon occurrence style of the mineralization and the geologic setting, the gold-silver deposits in the Aura district are best classified as low-sulfidation epithermal precious-metal deposits.
Two areas within the Aura Project have had extensive drilling: Wood Gulch-Gravel Creek - 446 drill holes in the database totaling 83,248 meters; and Doby George - 827 drill holes for a total of 115,197 meters. Minor drilling has been done elsewhere on the property.
The updated mineral resource estimate for the Aura Project includes: (i) at Wood Gulch-Gravel Creek, 246,000 ounces of gold and 3.9 million ounces of silver in the Indicated resource category, and 675,000 ounces of gold and 9.2 million ounces of silver in the Inferred resource category; (ii) at Doby George, 407,000 ounces of gold in the Indicated resource category, and 118,000 ounces of gold in the Inferred resource category.
A strong understanding of the controls of mineralization enabled Western's technical team to construct a mineral resource estimate constrained by lithology, alteration, structure and mineralization.
Wood Gulch / Gravel Creek Indicated Gold Resources
Indicated
| Cutoff | Tonnes | Ounces | Ounces | |||
| g AuEq/t | g AuEq/t | g Au/t | Au | g Ag/t | Ag | |
| variable* | 2,014,000 | 4.67 | 3.80 | 246,000 | 60.8 | 3,938,000 |
* Only at Gravel Creek so effectively 2.0g AuEq/t
Wood Gulch / Gravel Creek Inferred Gold Resources
Inferred
| Cutoff | Tonnes | Grade | Grade | Ounces | Grade | Ounces |
| g AuEq/t | g AuEq/t | g Au/t | Au | g Ag/t | Ag | |
| variable* | 10,094,000 | 2.49 | 2.08 | 675,000 | 28.4 | 9,212,000 |
0.2g AuEq/t for shallow resources and 2.0g AuEq/t for deep resources rounding may cause minor differences in totals
Doby George Global Resources Indicated Gold Resources
Indicated
| Cutoff | |||
| g Au/t | Tonnes | g Au/t | oz Au |
| variable* | 12,922,000 | 0.98 | 407,000 |
*0.2g Au/t - oxide resources, 0.3g Au/t - mixed redox, and 1.2g Au/t - reduced rounding may cause minor differences in totals | |||
Doby George Global Resources Inferred Gold Resources
Inferred
| Cutoff | |||
| g Au/t | Tonnes | g Au/t | oz Au |
| variable* | 4,999,000 | 0.73 | 118,000 |
*0.2g Au/t - oxide resources, 0.3g Au/t - mixed redox, and 1.2g Au/t - reduced rounding may cause minor differences in totals | |||
The Resulting Issuer intends to focus on advancing the Aura Project through focused exploration efforts at both Doby George and Wood Gulch/Gravel Creek.
At Wood Gulch/Gravel Creek the company will complete a 2-phase program of expanding and confirming the current mineral resource. Phase 1 will consist of approximately 15,000 meters of core and reverse circulation drilling, focused on extensions to the known resource. Geophysics and soil geochemistry will be completed on the northern extension of the large alteration system to define additional future areas of exploration. Phase 2 will consist of approximately 15,000 meters of core drilling to bring new drilling into the known mineral resource and complete an updated resource estimate in accordance with NI 43-101, which is expected to be used for purposes of a Preliminary Economic Assessment.
At Doby George, the company will complete approximately 2,000 meters of PQ core drilling to collect samples for metallurgical test work and approximately 2,000 meters of reverse circulation drilling for exploration purposes. The metallurgical test work will be used to prepare a prefeasibility study over the next 24 months.
In accordance with NI 43-101, an updated technical report for the Aura Project will be filed on SEDAR (www.sedar.com) under the Resulting Issuer's issuer profile in due course.
Qualified Person
The scientific and technical content of this news release has been reviewed and approved by Darcy Marud for Western, who is a "qualified person" for purposes of NI 43-101.
Advisors
Bennett Jones LLP is legal counsel to Western and Osler, Hoskin & Harcourt LLP is legal counsel to Crystal. Cassels Brock & Blackwell LLP is legal counsel to the Agents.
About Western Resources LLC
Western is a private company organized under the laws of the State of Nevada. Western has been engaged in the acquisition, exploration and development of precious metals mineral properties in Nevada since its inception in 1997. Its principal asset is the Aura gold silver project located in Elko County, Nevada approximately 120 kilometers north of the city of Elko, Nevada.
Western's head office is located at 121 Woodland Avenue, Suite 140, Reno, NV 89523.
For further information, please contact Western Exploration LLC:
Darcy Marud
President
Tel. 775-329-8119
dmarud@westernexploration.com
About Crystal Peak Minerals Inc.
Crystal is a public company organized under the laws of the Yukon Territory, whose shares are listed for trading on the NEX board of the Exchange. Crystal was previously engaged in the acquisition, exploration and development of a sulfate of potash project in the United States, but currently does not have an active business, and is investigating new business opportunities.
Crystal's head office is located at 2150 South 1300 East, Suite 550, Salt Lake City, Utah 84106.
For further information, please contact Crystal Peak Minerals Inc.:
Woods Silleroy
Vice President Operations & Corporate Secretary
Tel. (801) 485-0223
info@crystalpeakminerals.com
Forward-looking Statements
Certain statements contained in this news release may be deemed "forward-looking statements" within the meaning of applicable Canadian securities laws. These forward-looking statements, by their nature, require Western and Crystal to make certain assumptions and necessarily involve known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward-looking statements. Forward-looking statements are not guarantees of performance. Words such as "may", "will", "would", "could", "expect", "believe", "plan", "anticipate", "intend", "estimate", "continue", or the negative or comparable terminology, as well as terms usually used in the future and the conditional, are intended to identify forward-looking statements. Information contained in forward-looking statements, including with respect to future outlook and anticipated events, production of mines, consummation and timing of the proposed RTO and Financing, the satisfaction of conditions precedent to the RTO and/or Financing, the anticipated benefits of the RTO, is based upon certain material assumptions that were applied in drawing a conclusion or making a forecast or projection, including management's perceptions of historical trends, current conditions and expected future developments, public disclosure from operators of the relevant mines, as well as other considerations that are believed to be appropriate in the circumstances. Western and Crystal consider their respective assumptions to be reasonable based on information currently available, but cautions the reader that their assumptions regarding future events, many of which are beyond the control of Western and Crystal, may ultimately prove to be incorrect since they are subject to risks and uncertainties that affect Western and Crystal, and their respective businesses.
The forward- looking statements set forth herein concerning Western reflect management's expectations as at the date of this news release and are subject to change after such date. Western and Crystal disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by law.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this news release. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.
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