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Bluenose Announces Letter of Intent with Gran Colombia Gold in Respect of Marmato Spin Off

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Bluenose Announces Letter of Intent with Gran Colombia Gold in Respect of Marmato Spin Off

 

 

 

 

 

Bluenose Gold Corp.  (TSX-V – BN.H)  announces, that it has entered into a letter of intent dated October 4, 2019 with Gran Colombia Gold Corp. (TSX: GCM) (OTCQX: TPRFF) in respect of the proposed acquisition by Bluenose of certain mining assets at Gran Colombia’s Marmato Project located in the Department of Caldas, Colombia.

 

The Mining Assets principally comprise the existing producing underground gold mine, including the right to mine in the lower portion of the Echandia license area, the existing 1200 tonnes per day processing plant and the area encompassing the Deeps mineralization, all located within the mining license area referred to as Zona Baja. Gran Colombia has reported that the existing underground mine at Marmato produced 24,951 ounces of gold in 2018 and is on track to produce between 24,000 and 26,000 ounces of gold in 2019. The Mining Assets have excellent infrastructure, being located by the Pan American Highway with access to Medellin to the north and Manizales to the south, and have access to the national electricity grid which runs near the property. Gran Colombia is currently working with SRK Consulting (US) Inc. to complete a technical report for the Mining Assets pursuant to National Instrument 43‐101 – Standards of Disclosure for Mineral Project. The Technical Report, expected to be completed by the end of November and filed on the Company’s SEDAR site, will include an updated Mineral Resource estimate for the Mining Assets. Gran Colombia will retain its existing ownership of the mining licenses in the areas known as Zona Alta and Echandia.  Gran Colombia and Bluenose are not related parties.

 

Terms of the Transaction

 

Prior to the completion of the Transaction, Bluenose will consolidate its outstanding Common Shares on a one for ten basis.

 

It is currently anticipated that Bluenose will acquire the Mining Assets by way of purchase from Gran Colombia of all of the issued and outstanding shares of Gran Colombia’s wholly-owned subsidiary, Medoro Resources Colombia Inc. Marmato Panama holds all of the issued and outstanding shares of Gran Colombia Gold Marmato S.A.S. which, in turn, holds all of the Mining Assets. The Mining Assets will be acquired by Bluenose for C$57,500,000 which will be satisfied by the issuance by Bluenose to Gran Colombia of an aggregate of 28,750,000 Bluenose Common Shares (on a post-Consolidation basis) having a deemed price of C$2.00 per post consolidation Bluenose Common Share.

 

Prior to, or concurrent with, the completion of the Transaction: (i) Gran Colombia will purchase from Bluenose, on a private placement basis, 2,500,000 units of Bluenose, at a price of C$2.00 per Unit, for aggregate gross proceeds to Bluenose of C$5,000,000; and Bluenose anticipates that it will complete a brokered private placement of a minimum of 5,000,000 Units and a maximum of 7,500,000 Units, at a price of C$2.00 per Unit, for aggregate gross proceeds to Bluenose of between C$10,000,000 and C$15,000,000. No agent has yet been engaged with respect to the Brokered Private Placement.

 

The Units to be issued pursuant to the Private Placement and Brokered Private Placement, respectively, will each be comprised of one Bluenose post-Consolidation Common Share and one share purchase warrant, with each Warrant being exercisable to acquire one additional Bluenose post-Consolidation Common Share at a price of C$3.00 for a period of five years from the closing of the Private Placement or Brokered Private Placement, as applicable.

 

Pursuant to an agreement between Fiore Management & Advisory Corp. and Bluenose, Fiore shall be entitled to 100,000 Bluenose post-Consolidation Common Shares upon the completion of the Transaction.

 

The following table outlines the anticipated share capital of Bluenose on a post-Consolidation basis following the completion of the Private Placement, Brokered Private Placement and Transaction.

 

 

  Number of Bluenose
Common Shares
(minimum Brokered
Private Placement)
Number of Bluenose
Common Shares
(maximum Brokered
Private Placement)
Outstanding Bluenose Common Shares
(pre-Transaction)
10,602,880 10,602,880
Bluenose Common Shares issuable to Gran
Colombia pursuant to Transaction
28,750,000 28,750,000
Bluenose Common Shares issuable to Gran
Colombia pursuant to Private Placement
2,500,000 2,500,000
Bluenose Common Shares issuable
pursuant to Brokered Private Placement
5,000,000 7,500,000
Bluenose Common Shares issuable to Fiore 100,000 100,000
Total Issued and Outstanding 46,952,880 49,452,880
Bluenose Common Shares reserved for
issuance under Bluenose Options
580,000 580,000
Bluenose Common Shares underlying
Warrants issuable to Gran Colombia
pursuant to Private Placement
2,500,000 2,500,000
Bluenose Common Shares underlying
Warrants issuable pursuant to Brokered
Private Placement
5,000,000 7,500,000
Total Issued and Outstanding

Fully-Diluted

55,032,880 60,032,880

 

 

The Company and Gran Colombia intend to negotiate and enter into a definitive agreement setting forth the detailed terms and conditions of the Transaction. The closing of the Transaction is subject to the receipt of all necessary regulatory and third-party consents, authorizations and approvals, including, without limitation, the approval of the listing of the Bluenose Common Shares issued in connection with the Transaction on the TSX-V which will be subject to Bluenose satisfying the TSX-V’s minimum listing conditions for a mining issuer.

 

The closing of the Transaction will also be subject to the following conditions, amongst others:

 

(i) Gran Colombia and Bluenose being satisfied with the results of their respective due diligence investigations;
   
(ii) all liens and encumbrances in respect of Marmato Panama, Marmato Colombia and the Mining Assets granted in favour of the holders of the 8.25% senior secured notes due in 2024 shall have been released and discharged, on terms and conditions satisfactory to Bluenose, acting reasonably;
   
(iii) to the extent required, the receipt of shareholder approval from the shareholders of Bluenose;
   
(iv) the Consolidation shall have been completed;
   
(v) the Private Placement and the Brokered Private Placement shall have been completed;
   
(vi) the name of Bluenose shall have been changed to “Caldas Gold Corporation” or such other name as may be specified by Gran Colombia in writing;
   
(vii) no adverse change shall have occurred in the business, results of operations, assets, liabilities, financial condition or affairs of Bluenose, Marmato Panama or Marmato Colombia, taken as a whole, or the Mining Assets; and
   
(viii) the final structure and steps for the Transaction shall be satisfactory to both Bluenose and the Company, acting reasonably, from a tax, corporate and securities law and due diligence perspective.

 

 

About the Resulting Issuer

 

Pursuant to the LOI, the initial members of the board of directors of Bluenose following the completion of the Transaction shall be selected by Gran Colombia and set forth in the Definitive Agreement.  If a meeting of the shareholders of Bluenose is required for the purposes of obtaining Bluenose Shareholder Approval, the members of the Resulting Issuer Board will be nominated and elected by the shareholders of Bluenose at the Bluenose Shareholder Meeting (subject to, and contingent upon, the completion of the Transaction). The current directors and officers of Bluenose shall resign at or prior to the completion of the Transaction.

 

The Resulting Issuer Board will be fixed at five directors as at the completion of the Transaction, or as soon as practicable thereafter. Pursuant to the LOI, Gran Colombia shall be provided a continuing right to nominate a minimum of: (i) two (2) directors to the Resulting Issuer Board, so long as it holds greater than 20% of the outstanding Bluenose Common Shares, or (ii) one (1) director to the Resulting Issuer Board, so long as it holds greater than 10% of the outstanding Bluenose Common Shares.

 

The proposed Resulting Issuer Board is expected to include the following members and Gran Colombia intends to appoint the following individuals as officers of the resulting entity upon completion of the Transaction; the two additional nominees to the Resulting Issuer Board are being recruited and will be disclosed when nominated:

 

Name and
Municipality of
Residence
Proposed Position with
the Resulting Issuer
Present Principal Occupation or Employment,
Principal Occupation or Employment for the
Past Five Years or More, and Other Current
Public Directorships
Serafino Iacono 
Panama City, Panama
Interim Chief Executive
Officer and Director
Executive Co-Chairman of the Board of Gran
Colombia since August 20, 2010; Co-Chairman
of the Board of Pacific Exploration & Production
Corporation from January 23, 2008 to November
2, 2016; Interim Chief Executive Officer and
President of Medoro Resources Ltd. from
September 2010 to June 10, 2011.
Michael Davies 
Ontario, Canada
Chief Financial Officer Chief Financial Officer of Gran Colombia since
August 20, 2010. Mr. Davies is a Chartered
Accountant (Ontario) and has a Bachelor of
Commerce degree from the University of
Toronto. Over the last more than twenty years he
has gained extensive international and public
company experience in financial management,
strategic planning and external reporting. Mr.
Davies was the Chief Financial Officer of
PetroMagdalena Energy Corp. from July 13,
2009 to July 27, 2012. His diverse background
also includes senior finance roles with several
public companies, including LAC Minerals, IMAX
Corporation, Century II Holdings, Energentia
Resources, Pamour Inc. and Giant Yellowknife
Mines.
Lombardo Paredes 
Arenas Medellin,
Colombia
Director Mr. Paredes has been the Chief Executive
Officer of Gran Colombia since February 1, 2014.
Prior to joining Gran Colombia, he worked as an
Independent Consultant from 2005 until January
2014. Mr. Paredes also held a number of
positions at Petróleos de Venezuela and its
affiliates from 1975 to 1998.
Hernan Juan Jose
Martinez Torres
Barranquilla, Colombia
Director Mr. Martinez has been the Executive Chairman
and a director of Caribbean Resources
Corporation since September 4, 2012. Mr.
Martinez served as Minister of Mines (Colombia)
from July 2006 to August 2010, President of
Atunec S.A. from August 2002 to July 2006 and
held a number of positions at Exxon Mobil
Colombia S.A. from 1964 to 2002.

 

 

Upon completion of the Transaction, the Resulting Issuer will continue to operate within mining and natural resources industry.

 

The Transaction does not need to be approved by Bluenose shareholders under TSX-V Policy 5.2, as the Company is inactive and in good standing, the Transaction is not a “Related Party Transaction”, and no other circumstances exist which may compromise the independence of the Company or other interested parties.

 

The Company intends to seek a waiver from the TSX-V to exempt the Transaction from the sponsorship requirements of TSX-V Policy 2.2.

 

About Gran Colombia Gold Corp.

 

Gran Colombia is a Canadian-based mid-tier gold producer with its primary focus in Colombia where it is currently the largest underground gold and silver producer with several mines in operation at its Segovia and Marmato Operations. Gran Colombia is continuing to focus on exploration, expansion and modernization activities at its high-grade Segovia Operations and, through the Transaction described in this press release, progressing toward a major expansion and modernization of its underground mining operations at the Marmato Project.

 

 

Posted October 7, 2019

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