(TheNewswire)
Toronto, ON. - TheNewswire - December14, 2020 - Otso Gold Corp. (“ Otso ” or the“ Company ”), (TSXV:OTSO) is pleased toannounce that it has executed a subscription agreement (the“ Agreement ”) with Brunswick Gold Ltd (the “ Investor ” or“ Brunswick Gold ”) for a strategic investment of US$11 million into theCompany. Brunswick Gold is a limited liability company incorporatedunder the laws of the Republic of Cyprus, acting at arm’s length toOtso, pursuant to which the Investor has agreed to purchase284,944,440 units (each, a “ Unit ”), at an issuance price equal to $0.05per Unit, for aggregate gross proceeds of US$11million (the“ Financing ”).
On completion, the proposed Financing will fully fundthe Company to enable it move forward in line with the Company’sprevious press releases including the Company’s planned return toproduction. On completion of the Financing, the Company intends toimmediately restart its detailed directional diamond drilling programto inform a robust geological model and detailed mine plan that willbe used to move to production in 2021 (the “ Preparatory Work ”).The Preparatory Work includes the Company’s intention to release anupdated technical report that will underpin the Mine Plan.
Further, the Company confirms that both its securedcreditor (PFL Raahe Holdings LP), and its major unsecured creditor inFinland, have agreed to defer the payment of certain amounts owing tosuch parties to December 2021, thereby allowing the Company to fundPreparatory Work that is crucial for returning the Company toproduction before having to make payment on these financialliabilities.
Brian Wesson, the CEO of Otso commented: “We areexcited to welcome Brunswick Gold to the Company as a partner. Weshare the view that the considerable intrinsic value of Otso Gold willbe unlocked by expediting the plan to return the mine to production in2021. Brunswick’s strategic investment will provide the Company withthe capital required to achieve these goals. We also are lookingforward to the Brunswick nominees joining the Board of Directors asthey will provide further depth to the expertise of the Board ofDirectors.”
Vladimir Lelekov, the Chairman of Brunswick Gold,commented: “Otso Gold is a great opportunity for Brunswick in themining sector. We look forward to working with Lionsbridge to allowOtso Gold to return to production and unleash the value for allstakeholders”.
Details of Financing
The Financing is based on a CDN$ to US$ exchange rateof $1.295202. Each Unit will consist of one common share in thecapital of the Company (each, a “ Common Share ”) andone Common Share purchase warrant (each, a “ Warrant ”). EachWarrant will entitle the holder thereof to purchase one Common Shareat an exercise price equal to $0.05 per Warrant for a period of fiveyears from the date of issuance.
The Financing is subject to the fulfillment of a numberof conditions including, the approval of the TSX Venture Exchange (the“ Exchange ”) and the approval of the shareholders of the Company (the“ Shareholders ”). To this end, the Company plans on holding an annual andspecial meeting of its Shareholders in late January, 2021 (the“ Meeting ”). At the Meeting, among other things, the Shareholderswill need to approve a resolution approving the Investor becoming anew ‘Control Person’ under the policies of the Exchange.
The Company will file on SEDAR a management informationcircular (the “ Circular ”) which will describe the Financingin greater detail. Shareholders are urged to read theCircular.
In connection with the Finaning, PFL Raahe Holdings LP(“ PFL ”) has agreed to vote its Common Shares in favour of theFinancing pursuant to a voting support agreement. In addition,B&A Wesson Pty Ltd (“ B&A ”) and C&C Wesson Pty Ltd(“ C&C ”) have also agreed to vote their respective Common Sharesin favour of the Financing pursuant to voting support agreements. PFL presently holds 47,251,105 Common Shares, B&A holds25,207,348 Common Shares and C&C holds 25,207,349 Common Shares,representing 17.52%, 9.34% and 9.34% of the Common Shares,respectively.
The Board of Directors (the “ Board ”) has votedunanimously in favour of the Financing and will be recommendingShareholders to vote in favour of the Financing at the Meeting.
If the Financing is completed, the Investor will,pursuant to the terms of an investor rights agreement (the“ Investor RightsAgreement ”), have the right to appoint four ofseven directors to the Board, including the Chairperson. Lionsbridge Pty Ltd. (“ Lionsbridge ”), the manager of the Company,will have the right to appoint three directors to the Board. Details of these arrangements will be set out in the Circular preparedfor the Meeting.
The Company currently has 269,741,758 Common Sharesissued and outstanding. Assuming completion of the Financing, theInvestor will hold approximately 46.03% of the Common Shares (on anundiluted basis) after giving effect to the issuance of equity“top-up” shares (the “ Top-Up Shares ”) which will be owed to: (i)Lionsbridge as consideration for facilitating capital raises on behalfof the Company (for further details see the Company’s managementinformation circular dated July 24, 2019); and (ii) PFL asconsideration for the renegotiation of certain debt arrangements (forfurther details see the Company’s press release dated November 9,2020). In connection with the Financing, Lionsbridge will beentitled to receive 32,380,060 Top-Up Shares and PFL will be entitledto receive 31,909,280 Top-Up Shares. All securities issuedpursuant to the Financing will be subject to a statutory hold period of four months and one day from the date of issuance,in accordance with applicable Canadian securities legislation.
For furtherinformation, please contact:
Clyde Wesson
Vice President
1 917 287 0716
info@otsogold.com
www.otsogold.com
Caution
The Company cautions that it has notdefined or delineated any proven or probable reserves for the OtsoMine Project and mineralization estimates may therefore requireadjustment or downward revision based upon further exploration ordevelopment work or actual production experience. Mineral resourcesthat are not mineral reserves do not have demonstrated economicviability.
The Company also cautions that thedecision by the Company to proceed to develop the Otso Mine Projectand extract mineralization proceeded without the Company firstestablishing reserves supported by a technical report and completing apre-feasibility or feasibility study. Accordingly, there is a higherrisk of technical and economic failure at Otso because developmentproceeded without first establishing reserves supported by a technicalreport and completing a feasibility study. This is particularlyrelevant as the Company has proceeded with development at Otso onindicated and inferred resources without first completing apreliminary economic report.
Forward-lookingStatements
This press release containsforward-looking statements regarding the Company based on currentexpectations andassumptions of management, which involve known andunknown risks and uncertainties associated with our business and theeconomic environment in which the business operates. All suchstatements are forward-looking statements under applicable Canadiansecurities legislation. Any statements contained herein that are notstatements of historical facts may be deemed to be forward-lookingstatements. By their nature, forward-looking statements require us tomake assumptions and are subject to inherent risks and uncertainties.We caution our readers of this press release not to place unduereliance on our forward-lookingstatements as a number of factors couldcause actual results or conditions to differ materially from currentexpectations. Please refer to the risks set forth in the Company'scontinuous disclosure documents that can be found on SEDAR( www.sedar.com ) underthe Company’s issuer profile. The Company does not intend, anddisclaims any obligation, except as required by law, to update orrevise any forward-looking statements whether as a result of newinformation, future events or otherwise.
About the Company
Otso Gold Corp. wholly owns the Otso Gold Mine near thetown of Raahe in Finland. The Otso Gold Mine is developed, fullypermitted, has all infrastructure in place, two open pits and isprogressing towards production in 2021 to process ore at name platecapacity of 2 million tonnes per annum.
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 thisrelease.
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