Vancouver, British Columbia--(Newsfile Corp. - May 7, 2021) - Hansco Capital Corp. (TSXV: HCO.P) ("Hansco" or the "Company") is pleased to announce that it has entered into a non-binding letter of intent (the "LOI") dated May 3, 2021 with Aurex Energy Corp. ("Aurex", an Alberta corporation) respecting a proposed transaction (the "Transaction") pursuant to which Hansco will acquire 100% of the issued and outstanding common shares of Desert Strike Resources (US) Inc. ("DSRI", a Nevada corporation). DSRI holds a 70% right, title and interest in and to the Cook Property (the "Property") located in Humboldt County, Nevada, subject to a 2.5% net smelter royalty interest (the "NSR"). Under the LOI, Hansco and Aurex have agreed to act in good faith to draft, negotiate and execute a definitive share purchase agreement (the "Definitive Agreement") respecting the Transaction, which will supersede the LOI.
The Transaction is intended to qualify as Hansco's "Qualifying Transaction" as defined by Policy 2.4 of the TSX Venture Exchange (the "Exchange"). Following closing, the resulting issuer (the "Resulting Issuer") will be a "Mining" issuer under the policies of the Exchange. Trading of the common shares of Hansco (each, a "Share") will remain halted in connection with the dissemination of this press release and will recommence at such time as the Exchange may determine, having regard to the completion of certain requirements pursuant to Exchange Policy 2.4. Further details of the proposed Transaction will follow in future press releases.
About the Cook Property
The Property is comprised of 88 mineral claims covering 7.4 square kilometers in Humboldt County, Nevada. DSRI holds a 70% right, title and interest in and to the Property (subject to the NSR), which interest was obtained by DSRI, as Aurex's agent and subsidiary, pursuant to a sale and purchase agreement (the "Property Purchase Agreement") respecting the Property dated as of January 9, 2017 between Aurex, as purchaser, and a private Nevada corporation ("Nevco"), as seller. Pursuant to the Property Purchase Agreement, DSRI and Aurex are obligated to pay any and all fees required to maintain title to the Property. Under the Property Purchase Agreement, the parties have agreed to reserve a 2.5% net smelter return royalty interest on Property. The Property Purchase Agreement contemplates a five mile area of mutual interest ("AMI") around the Property, and if either party stakes or acquires any mining claim or other mining property or interest within the AMI, that claim, property or interest will automatically become part of the Property.
DSRI and Aurex are entitled to make such investment in the Property as they may determine, provided that Nevco shall have no obligation to fund any further maintenance or development of the Property through or until the time that one or more claims included in the Property is subject to a bankable feasibility study that establishes a reserve on which a commercial lender would lend against the Property as collateral and there are approved mine permits and bonding at the local, state and federal levels. Upon a determination by DSRI and Aurex to develop such a reserve, the parties shall form a 70%/30% joint venture under a definitive joint venture agreement.
The Transaction
Under the Transaction, Hansco and Aurex will negotiate, execute and deliver the Definitive Agreement, pursuant to which Hansco will acquire 100% of the issued and outstanding common shares of DSRI (each, a "DSRI Share"). As consideration for the acquisition of the DSRI Shares, Hansco will issue an aggregate of 14,000,000 Shares to Aurex at an anticipated price of no less than $0.15 per Share, representing an anticipated aggregate valuation of a minimum of $2,100,000. The only asset of DSRI is its interest in the Property, which has a book value of $999,718 (unaudited) as at September 30, 2020. DSRI has no liabilities. No finder's fees will be payable under the Transaction, except in connection with the Private Placement (defined and described below).
Aurex is a reporting issuer in British Columbia, Alberta and Saskatchewan and its shares are listed on the TSX Venture Exchange under the symbol AURX.V. No person holds more than 10% of the issued and outstanding shares of Aurex or is a controlling shareholder of Aurex. No Non-Arm's Length Party (as defined by the Exchange) of Hansco has any direct or indirect beneficial interest in Aurex, DSRI, Nevco or the Property, is an Insider (as defined by the Exchange) of Aurex, DSRI or Nevco or has any relationship with any Non-Arm's Length Party to the Qualifying Transaction (as defined by the Exchange). The Transaction does not constitute a Non-Arm's Length Qualifying Transaction (as defined by the Exchange), is not subject to Exchange Policy 5.9 or Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions, and is not expected to be subject to approval of the Hansco shareholders.
The Transaction is subject to completion of certain conditions precedent, including without limitation: execution of the Definitive Agreement; the preparation and filing of a Filing Statement with the Exchange; completion by Hansco of a private placement (the "Private Placement") for gross proceeds of no less than $2,000,000; and receipt of all necessary regulatory and Exchange approvals.
Under the Private Placement, Hansco intends to raise no less than $2,000,000 and no more than $3,000,000 through the issuance of units of Hansco at a price of not less than $0.15 per unit, with each unit expected to be comprised of one Share and one common share purchase warrant exercisable for an additional Share for two years at an exercise price of not less than $0.15. Hansco may pay finder's fees and may issue finder's warrants in connection with the Private Placement. Further information respecting the Private Placement will be provided by the Company in due course in a subsequent press release.
Sponsorship of a Qualifying Transaction of a capital pool company is required by the Exchange unless exempt in accordance with Exchange policies or unless a waiver is granted by the Exchange. Hansco intends to apply for an exemption from the sponsorship requirements under section 3.4 of Exchange Policy 2.2 or a waiver of sponsorship if an exemption from sponsorship is unavailable; however, there can be no guarantee that a waiver will be granted if no exemption is available.
The Resulting Issuer
The Resulting Issuer will be a "Mining" issuer under the policies of the TSXV. In conjunction with closing the proposed Transaction, the name of the Resulting Issuer will be changed to a name mutually agreed to in writing by Hansco and Aurex. The board of directors and management of the Resulting Issuer will be as determined by Hansco and Aurex prior to the execution of, and as reflected in, the Definitive Agreement, including without limitation that Gary Billingsley (Aurex's Chief Executive Officer) will be the CEO of the Resulting Issuer.
Gary Billingsley, CPA, CA (non-practicing professional accountant), P.Eng., P.Geo., is a professional engineer and geoscientist with more than 40 years' experience in the mineral industry-most of those years in Saskatchewan. Mr. Billingsley has been an officer and director of several public mining and mineral exploration companies during the past 35 years. In addition to experience with uranium and base-metal exploration, Gary has been directly involved with putting Saskatchewan's largest gold mine into production and has played a major role in the discovery of diamond-bearing kimberlite in Saskatchewan. He was also involved in drilling some of the first horizontal oil wells in southern Saskatchewan. For much of the last 20 years, Mr. Billingsley has been involved in developing strategic metal deposits. He identified, very early on, the importance of achieving self-reliance across the entire supply chain for critical and strategic minerals, in particular rare earth elements.
On closing of the Transaction, and assuming that Hansco raises $2,000,000 under the Private Placement at a price of $0.15 per unit, the Resulting Issuer will have 33,333,333 Shares issued and outstanding. The current shareholders of Hansco would hold approximately 18% of the Shares of the Resulting Issuer, participants in the Private Placement would hold approximately 40% of the Shares of the Resulting Issuer, and Aurex would hold approximately 42% of the Shares of the Resulting Issuer.
About Hansco
Hansco is a capital pool company in accordance with Exchange Policy 2.4 and its principal business is the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction.
For additional information, please refer to the Company's disclosure record on SEDAR (www.sedar.com) or contact the Company as follows: Aris Morfopoulos, CFO, at (604) 721-2650.
Cautionary Note
Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the transaction 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.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
Forward-Looking Information
This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described in this press release in the United States. Such securities have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws, and, accordingly, may not be offered or sold within the United States, or to or for the account or benefit of persons in the United States or "U.S. Persons", as such term is defined in Regulation S promulgated under the U.S. Securities Act, unless registered under the U.S. Securities Act and applicable state securities laws or pursuant to an exemption from such registration requirements.
Certain statements contained in this press release constitute "forward-looking information" as such term is defined in applicable Canadian securities legislation. The words "may", "would", "could", "should", "potential", "will", "seek", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions as they relate to Hansco , including, the completion of the Transaction and the Private Placement and pro forma information regarding the Resulting Issuer, are intended to identify forward-looking information. All statements other than statements of historical fact may be forward-looking information. Such statements reflect Hansco's current views and intentions with respect to future events, and current information available to them, and are subject to certain risks, uncertainties and assumptions, including, without limitation: the ability to obtain all requisite approvals (and otherwise satisfy all closing conditions) for the Transaction; the estimation of capital requirements; the estimation of operating costs; the timing and amount of future business expenditures; and the availability of necessary financing. Many factors could cause the actual results, performance or achievements that may be expressed or implied by such forward-looking information to vary from those described herein should one or more of these risks or uncertainties materialize. Such factors include but are not limited to: changes in economic conditions or financial markets; an escalation of the current COVID-19 pandemic; increases in costs; litigation; legislative, environmental and other judicial, regulatory, political and competitive developments; and exploration or operational difficulties. This list is not exhaustive of the factors that may affect forward-looking information. These and other factors should be considered carefully, and readers should not place undue reliance on such forward-looking information. Should any factor affect Hansco in an unexpected manner, or should assumptions underlying the forward-looking information prove incorrect, the actual results or events may differ materially from the results or events predicted. Any such forward-looking information is expressly qualified in its entirety by this cautionary statement. Moreover, Hansco does not assume responsibility for the accuracy or completeness of such forward-looking information. The forward-looking information included in this press release is made as of the date of this press release and Hansco undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.
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