Awalé Resources Limited (TSX-V: ARIC) is pleased to announce that it has entered into a binding letter agreement dated September 12, 2022 with Colossal Gold Resources Limited and the shareholders of Colossal to acquire 100% of the issued share capital of Colossal. In consideration for the Colossal Shares, Awalé will issue to the Sellers an aggregate of 21,663,138 common shares of the Company which will represent 41% of the outstanding Awalé common shares post-closing of the Acquisition but prior to giving effect to any Awalé common shares issued under the Financing discussed below. The Consideration Shares are being issued at an agreed deemed price per share of CAD$0.197, a premium of approximately 40% to the Awalé closing share price on September 9, 2022.
Colossal is a private holding company with an exciting gold exploration portfolio focused on the highly prospective, but underexplored, greenstone belt of Suriname, South America. Colossal holds, through its wholly-owned Surinamese subsidiary, Consolidated Gold Resources N.V. a 100% interest in certain existing mineral exploration and exploitation licences in Suriname.
Colossal, Consolidated Gold and each of the Sellers, other than Glen Parsons, the Chief Executive Officer and a director of Awalé, are arm’s length to Awalé (see “Related Party Transaction Process” below).
Awale’s Strategic Rationale
Overview of the Acquisition
Colossal originally acquired the Licenses from a third party and agreed to make certain future payments to the Vendor. Upon Closing of the Acquisition, Awalé has agreed to assume from Colossal the following payment obligations to the Vendor:
Related Party Transaction Process
Glen Parsons, a director and the Chief Executive Officer of Awalé, is a “related party” of the Company (as defined by Multilateral Instrument 61-101 – Protection of Minority Securityholders in Special Transactions). Glen Parsons is also a shareholder of Colossal and, therefore, one of the Sellers under the Acquisition and will be a party to the Agreement. Mr. Parsons’ direct and indirect ownership is approximately 12% of Awalé’s current issued and outstanding shares and 23.4% of the current issued and outstanding Colossal Shares. He will be issued 5,472,978 Consideration Shares under the Acquisition. Accordingly, the issuance of the Consideration Shares to Mr. Parsons will constitute a “related party transaction” within the meaning of TSXV Policy 5.9 which adopts MI -61-101. The Company is relying on the exemptions from both the formal valuation requirement and the minority shareholder approval requirement in MI 61-101 for related party transactions under sections 5.5(a) and 5.7(1)(a), respectively, of MI 61-101, in connection with the issuance of the Consideration Shares to Mr. Parsons on the basis that neither the fair market value of the Colossal Shares held by Mr. Parsons, nor the fair market value of the Consideration Shares to be issued to Mr. Parsons, exceeds 25% of the Company’s market capitalization calculated in accordance with MI 61-101. The Company did not file a material change report more than 21 days before the expected Closing date of the Acquisition as it has negotiated the Acquisition on an expedited basis.
A special committee was established by the board of directors of the Company, which is comprised of the independent non-executive directors of the Company, and is chaired by Derk Hartman, to evaluate and, if appropriate, approve the Acquisition. Mr. Parsons has not participated in the evaluation and approval process for the Acquisition for either Awalé or Colossal.
The Special Committee assessed the merits of the Acquisition and unanimously approved the Acquisition on the following basis:
The Closing of the Acquisition is expected to occur on the fifth business day in the City of Vancouver, British Columbia following the satisfaction or waiver of the Closing Conditions.
Derk Hartman, Independent Director and Chairman of the Special Committee commented:
“Awalé’s acquisition of Colossal Gold Resources’ gold exploration portfolio in Suriname is a transformational and exciting transaction that represents an excellent strategic fit for Awalé. The Guiana Shield and West African Shield share the same greenstone belt geology, as it was one continent before the Atlantic Ocean was formed 195 million years ago. Whereas many multi-million ounce gold deposits have been delineated in the West African Shield, the Guiana Shield, and particularly Suriname, remains very underexplored relative to West Africa. With the acquisition of Colossal Gold Resources, Awalé is gaining an immediate and highly prospective foothold in the northern greenstone belt of Suriname, well known for its gold mineralization endowment. As Awalé succeeds, we look forward to accelerating the exploration programmes in both Suriname and Côte d’Ivoire with the combined exploration teams from Awalé and Colossal Gold Resources.”
Thomas McNeill, Independent Director to Colossal Gold Resources Limited commented:
“The Directors and Shareholders of Colossal are excited in becoming part of the greater Awalé Group. The underexplored Suriname, within the greater Guiana Shield, offers huge potential for Colossal’s objective of a successful exploration business that offers scale in jurisdictions where major producers operate. Therefore, Awalé’s strategy complements and achieves our objective of building a diversified portfolio of highly prospective assets which mitigates project and jurisdictional risk and furthermore enhances the chance of success.”
About Awalé Resources
Awalé is a gold exploration company focused on the discovery of large high-grade gold and copper-gold deposits. The Company currently undertakes exploration activities in the underexplored parts of Côte d’Ivoire. Awalé’s success to date at the Odienné Project in the Northwest of Côte d’Ivoire has culminated in an earn-in Joint Venture with Newmont (the “Newmont JV”) covering the Odienné Project where two primary targets for world-class discoveries have been made: i) the gold-rich Empire corridor and ii) the recently defined Sceptre Iron Oxide Copper Gold target, while the remaining 200km2 of granted tenure and 400km2 under application remains underexplored and has significant IOCG potential. The Newmont JV forms the foundation for the Company to continue looking at new opportunities in new jurisdictions which offers significant potential for district scale discoveries.
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