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John O’Donnell is an officer and/or director of Peloton, Frederick PEC and the Company, and, as such, recused himself from the approval process of the transactions.
The acquisition by the Company of its interest in the Project pursuant to the Assignment Agreement constituted a “related party transaction” under Multilateral Instrument 61-101 –Protection of Minority Security Holders in Special Transactionsand a “Reviewable Transaction” under the TSXV Rules. The Company did not obtain prior acceptance from the TSXV of such acquisition pursuant to the TSXV Rules. Further details in respect of such acquisition will be included in a material change report to be filed by the Company following receipt of all necessary approvals in connection with this acquisition, including approval from the TSXV.
As announced on
Frederick PEC acquired its interest in the Project from Peloton (CSE Symbol: PMC) (OTCQB Symbol: PMCFF) through Peloton’s wholly owned subsidiary SBSL pursuant to the Peloton-Frederick Agreement. Under the Peloton-Frederick Agreement, Frederick PEC may earn up to a 75% interest in the Project by spending a total of
Frederick PEC may first earn a 51% interest in the Project by making annual
In order to earn its 51% interest, the Company must make all of the exploration expenditures and annual option payments required to be made to SBSL to exercise its option to earn a 51% interest in the Projectand has agreed to expend the minimum exploration expenditures to be made (
Frederick PEC retains the right to earn the additional 24% Second Earn-In Option if it chooses to do so. If it elects not to earn the Second Earn-In Option, it shall transfer and assign the right to do so to the Company upon payment to Frederick PEC of 1,000,000 fully paid and non-assessable common shares of the Company or an Affiliate company into which the rights under this Agreement may have been further transferred or assigned by the Company, subject to all regulatory and stock exchange requirements. To be clear, this provision shall not apply unless the Company is successful in having its current cease trading order lifted, otherwise this provision shall be null and void with no force and effect. In such event, the Company will be responsible for funding all additional exploration expenditures and option payments required to earn the Second Earn-In Option. If Frederick PEC elects to earn the Second Earn-In Option, it shall make the necessary exploration expenditures and option payments required to earn the Second Earn-In Option, provided however that the Company will be responsible for paying its proportionate share of such exploration expenditures and option payments equal to a ratio of 51 to 24 reflecting the respective proportionate interests of the parties in the Property. In the event that the Company does not contribute its proportionate share of such exploration expenditures and option payments and Frederick PEC has earned the Second Earn-In Option, the interest of the Company shall be diluted to 24% and the interest of Frederick PEC shall be increased to 51%.
If Frederick PEC completes an initial offering of its securities to raise funds to cover its activities, it shall offer at least half of such securities to the shareholders of the Company in proportion to their shareholdings in the Company with or without a back stop or standby purchaser agreement. Such right is limited to the first offering of securities by Frederick.
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Forward-Looking Information:
This news release contains certain forward-looking statements (“FLS”) relating to the Company’s plans, expectations, intentions and beliefs in connection with its business, including, without limitation, the application in respect of the acquisition of the Company’s interest in the Project, the application to be submitted by the Company to the TSXV to reactivate trading on the TSXV as a Tier 2 issuer, statements in respect of the filing of a material change report and receipt of necessary approvals, including approval from the TSXV, and the payments, expenditures and transactions to be made or completed, as applicable, under the Assignment Agreement and/or the Peloton-Frederick Agreement. FLS can be identified by forward-looking words such as “proposed”, “intends”, “expects”, “potential”, “estimated”, “anticipated”, “may” and “will” or similar words suggesting future outcomes or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. Such FLS reflect management’s current beliefs and are based on information currently available to management. FLS involve risks and uncertainties that could cause actual results to differ materially from those contemplatedby such statements, and there can be no assurance that actual results will be consistent with these FLS. Factors that could cause such differences include, without limitation: the inability of the Company to obtain the TSXV’s approval respecting its listing of the Common Shares on the TSXV as a Tier 2 issuer and the reinstatement of trading of the Common Shares; risks related to general economic and market conditions and financial markets; economic, social and market conditions related to the COVID19 global pandemic; the worldwide economic and social impact of COVID-19; the duration and extent of COVID-19; changes in general economic conditions; the imposition of government restrictions on business related to COVID-19, any positive cases of COVID-19 at a project site or in the area which may cause a reduction or suspension in operations and activities which may ultimately affect and delay the exploration timeline; changes in prices for gold and other metals; and other as yet unknown or unidentified risks. This list is not exhaustive of the factors that may impact the Company’s FLS. These and other factors should be considered carefully, and readers should not place undue reliance on the Company’s FLS. Although the Company believes that the expectations reflected in the forward-looking information or statements are reasonable and does not believe that the worldwide COVID-19 situation will have any immediate or long-term effect on its project, as a result of the foregoing and other factors, no assurance can be given as to the occurrence of these future events, and neither the Company nor any other person assumes responsibility for the accuracy and completeness of these FLS. The factors underlying current expectations are dynamic and subject to change.
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