VANCOUVER, BC, Aug. 6, 2020 /CNW/ - Contact Gold Corp.
(the "Company" or "Contact Gold") (TSXV: C) (OTCQB: CGOL), is
pleased to announce that it intends to offer units of the Company
("Units") pursuant to a proposed public offering (the
"Offering"). Each Unit will consist of one share of common
stock in the capital of the Company (a "Share", and as a
constituent of the Unit, a "Unit Share") and one-half of one Share
purchase warrant (each whole warrant, a "Warrant"), with each
Warrant entitling the holder thereof to acquire one Share at an
exercise price and term to be determined in the context of the
market.
The Company also announces the entering into of a binding letter
of intent (the "LOI") with Waterton Nevada Splitter, LLC
("Waterton"), a significant shareholder of the Company, to redeem
all or a portion of the currently outstanding Class A Shares of
Preferred Stock of the Company ("Preferred Shares") (which may be
coupled with a private placement with Waterton to fund the
redemption of the remaining portion of the Preferred Shares), or
undertake an amendment to the terms of the Preferred Shares,
subject to certain terms and conditions as further described
below.
Matthew Lennox-King stated, "A
successful offering will allow the Company to launch exploration
programs at the Green Springs and Pony Creek projects with drilling
expected to commence almost immediately following the closing of
the Offering. Satisfaction of the terms of the Waterton LOI will
allow Contact Gold to redeem all or a portion of the Preferred
Shares, eliminating or reducing these securities from the Company's
capital structure. If completed, this will create better
alignment amongst all stakeholders and position the Company to
capitalize on the value of its Nevada projects."
Offering
The proposed Offering will be marketed on a "best efforts" basis
and the final size and pricing of the Offering will be determined
in the context of the market and taking into account other
factors. The Offering will be conducted (A) in Canada pursuant to a prospectus supplement
(the "Prospectus Supplement") to the Company's short form base
shelf prospectus dated October 24,
2018 filed in all of the provinces and territories of
Canada, except for Québec (the
"Canadian Jurisdictions"), and (B) to the public under an offering
statement on Form 1-A, which includes an offering circular (the
"Offering Statement"), pursuant to Regulation A under the U.S.
Securities Act of 1933, as amended (the "1933 Act"), filed with the
United States Securities and Exchange Commission (the "SEC").
A preliminary Prospectus Supplement and a preliminary Offering
Statement containing important information relating to the Offering
have been filed with the securities commissions in the Canadian
Jurisdictions and in the United
States with the SEC, respectively. The preliminary
Prospectus Supplement and the preliminary Offering Statement are
still subject to completion or amendment. Copies of the
preliminary Prospectus Supplement and the preliminary Offering
Statement are available at www.sedar.com and www.sec.gov and may be
obtained from Cormark Securities at Cormark Securities Inc.,
416-943-6405, Royal Bank Plaza, South Tower, Suite 2800, 200 Bay
Street, P.O. Box 63, Toronto, ON
M5J 2J2.
The Offering will be conducted by Cormark Securities Inc. and
its U.S. affiliate (the "Underwriters"). The Company has granted to
the Underwriters an option (the "Over-Allotment Option"),
exercisable in whole or in part, in the sole discretion of the
Underwriters, for a period of 30 days from and including the
closing date of the Offering, to purchase additional Units,
additional Shares and/or additional Warrants, in an aggregate
amount not to exceed 15% of Units, Shares or Warrants sold pursuant
to the Offering, on the same terms and at the same price as the
Units, Shares and Warrants sold under the Offering, to cover
over-allotments, if any, and for market stabilization purposes.
If the Offering is completed, the net proceeds from the Offering
are expected to be used to undertake further drilling at Contact
Gold's Green Springs and Pony Creek projects located in
Nevada, to redeem a portion of the
Preferred Shares, for exploration expenditures on Contact Gold's
other properties, and for general working capital purposes. The
nature and extent of the drilling at the Green Springs and Pony
Creek projects will be scaled based on the amount of proceeds
ultimately received by the Company from the Offering. The Offering
will be subject to certain conditions, including but not limited to
successful marketing efforts and the receipt of all necessary
securities regulatory and stock exchange approvals. There can be no
assurance as to whether the Offering will be completed.
This news release shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any offer or sale of any securities, in any state or jurisdiction
in which the offer, solicitation, or sale of securities would be
unlawful. The securities being offered have not been approved
or disapproved by the SEC or any Canadian securities commission,
nor has any such regulatory authority passed upon the accuracy or
adequacy of the preliminary Prospectus Supplement or the
preliminary Offering Statement. The securities being offered have
not been and will not be registered under the 1933 Act.
Waterton Letter of Intent
In accordance with the terms of the LOI, if at least
C$10,000,000 is raised pursuant to
the Offering: (i) Contact Gold will use a minimum of C$5,000,000 from the proceeds of the Offering to
redeem a portion of the Preferred Shares; (ii) Waterton will
purchase Shares (at a price per share equal to the price per Unit
Share) in an aggregate amount required to redeem the balance of the
remaining issued and outstanding Preferred Shares (the "Redemption
Placement"); and (iii) Contact Gold will apply the Redemption
Placement proceeds to redeem all of the outstanding Preferred
Shares.
If less than C$10,000,000 is
raised under the Offering, Contact Gold has agreed to use
commercially reasonable efforts to obtain all approvals (including
shareholder and regulatory approvals) (the "Approvals") required to
amend the terms of the Preferred Shares, by amending the articles
of incorporation ("Article Amendments"), to:
i.
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extend the maturity
date from June 7, 2022 to a date that is five years from the date
all Approvals are obtained;
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ii.
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reduce the cumulative
dividend rate from 7.5% to 3.75% per annum from the date the
Article Amendments are effective; and
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iii.
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reduce the conversion
price of the Preferred Shares from C$1.35 per share to the lesser
of: (A) C$0.31; (B) 135% of the offering price allocated to a Unit
Share; and (C) 135% of the 20-day volume weighted average price of
the Shares prior to the date all Approvals are obtained.
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If more than C$3,000,000 and less
than C$10,000,000 is raised in the
Offering, and Contact Gold fails to complete the Article
Amendments, it has agreed to use 50% of any proceeds in excess of
C$3,000,000 to redeem a portion of
the issued and outstanding Preferred Shares. Completion of the
transactions contemplated by the LOI is subject to all requisite
approvals including shareholder and TSX Venture Exchange ("TSXV")
approvals.
Technical Report
The Company also advises that it has filed a National Instrument
43-101 – Standards of Disclosure for Mineral Projects
technical report entitled "Technical Report for the Green
Springs Project, White Pine County,
Nevada, United States of
America", dated and effective as at June 12, 2020 (the "Report"), and available under
the Company's issuer profile on SEDAR at www.sedar.com. The Report
has also been posted on the Company's website.
About Contact Gold Corp.
Contact Gold is an exploration company focused on producing
district scale gold discoveries in Nevada. Contact Gold's
extensive land holdings are on the prolific Carlin, Independence and Northern Nevada Rift
gold trends which host numerous gold deposits and mines. Contact
Gold's land position comprises approximately 200 km2 of
target rich mineral tenure hosting numerous known gold occurrences,
ranging from early- to advanced-exploration and resource definition
stage.
Additional information about the Company is available at
www.contactgold.com.
Neither the TSXV nor its Regulation Services Provider (as
that term is defined in the policies of the TSXV) accepts
responsibility for the adequacy of this release. No stock exchange,
securities commission or other regulatory authority has approved or
disapproved the information contained herein.
The Form 1-A has not been qualified by the SEC or any state
securities commission. For the purposes of Regulation A of the 1933
Act, (a) no money or other consideration is being solicited and if
sent in response, will not be accepted; (b) no offer to buy the
securities can be accepted and no part of the purchase price can be
received until the Offering Statement is qualified, and any such
offer may be withdrawn or revoked, without obligation or commitment
of any kind, at any time before notice of its acceptance given
after the qualification date; and (c) any person's indication of
interest involves no obligation or commitment of any kind. All
sales, if any, are anticipated to be subject to limitations set
forth in Rule 251(d)(2)(i)(C) of Regulation A, as described in the
Offering Statement.
Cautionary Note Regarding Forward-Looking
Information
This news release contains "forward-looking information" and
"forward-looking statements" (collectively, "forward-looking
statements") within the meaning of the applicable Canadian and
United States securities
legislation. All statements, other than statements of historical
fact, are forward-looking statements and are based on expectations,
estimates and projections as at the date of this news release. Any
statement that involves discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives, assumptions,
future events or performance (often but not always using phrases
such as "expects", or "does not expect", "is expected",
"anticipates" or "does not anticipate", "plans", "budget",
"scheduled", "forecasts", "estimates", "believes" or "intends" or
variations of such words and phrases or stating that certain
actions, events or results "may" or "could", "would", "might" or
"will" be taken to occur or be achieved) are not statements of
historical fact and may be forward-looking statements. In this news
release, forward-looking statements relate, among other things, to
the proposed Offering and Redemption Placement, the intended use of
proceeds therefrom, the completion and nature of the transactions
contemplated by the LOI, the satisfaction of the conditions to the
completion of the transactions contemplated by the LOI, including
the receipt in a timely manner of regulatory and other required
approvals and clearances, including the approval of the TSXV for
the Redemption Placement and shareholder and TSXV approval of the
Article Amendments; and the nature, timing and extent of the
Corporation's planned exploration programs and activities..
These forward-looking statements are based on opinions and
estimates of management of the Company at the time such statements
were made and are based on various assumptions, including but not
limited to, favourable and stable general macroeconomic conditions,
securities markets, spot and forward prices of gold, silver, base
metals and certain other commodities and currency markets (such as
the $ to US$ exchange rate); no materially adverse changes or
economic developments, that various risks and hazards associated
with the business of mineral exploration, development and mining
will not materialize and the ability to continue raising the
necessary capital to finance operations. Actual future
results may differ materially as forward-looking statements involve
known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of the
Company to materially differ from any future results, performance
or achievements expressed or implied by such forward-looking
statements. Such risks, uncertainties and other factors that may
affect the forward-looking statements in this news release include
but are not limited to: risks related to the Offering; risks
related to successful marketing efforts; changing market
conditions; and receipt of applicable regulatory approvals.
Readers are cautioned that the foregoing list is not exhaustive of
all factors and assumptions which may have been used.
Although the forward-looking statements contained in this
news release are based upon what management of the Company
believes, or believed at the time, to be reasonable assumptions,
the Company cannot assure shareholders that actual results will be
consistent with such forward-looking statements, as there may be
other factors that cause results not to be as anticipated,
estimated or intended. Readers should not place undue reliance on
the forward-looking statements and information contained in this
news release. The Company assumes no obligation to update the
forward-looking statements of beliefs, opinions, projections, or
other factors, should they change, except as required by
law.
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SOURCE Contact Gold Corp.