Southstone Minerals Limited (“Southstone” or the
“Company””) (TSX.V – SML) announces that it entered into a
share purchase agreement (the “
Agreement”) with
five arm’s length parties, collectively the
“
Sellers”, setting out the terms of an acquisition
(the “
Acquisition”) of the remaining 90% interest
of the issued and outstanding shares of Padstone Pte. Ltd.
(“
Padstone") a private Singaporean company.
Southstone is currently a passive shareholder of Padstone, holding
a minority 10% interest.
Padstone, via a wholly owned subsidiary, has
applied for two alluvial and kimberlite diamond exploration permits
in the Republic of Guinea, collectively the “Soromaya
Project” or the “Permits”. The Soromaya
Project is both an alluvial and kimberlite diamond exploration
project and covers an area of 198.54 square kilometers and located
northwest of the diamond mining town of Banankoro, approximately
574 kilometers east of the capital, Conakry. The Company can
provide no assurance as to when, or if, the Permits, will be
granted.
In consideration for the Acquisition, the
Sellers will be issued, on a pro-rata basis, an aggregate of
15,500,000 common shares of Southstone (the “Consideration
Shares”), with a deemed value of CAD$0.01, and will be
paid a deferred pro-rata cash payment in the amount of USD$100,000,
payable within 24 months from the closing date of the Acquisition.
Southstone has also agreed to reimburse up to a maximum amount of
USD$100,000 in interest-free Padstone shareholder loans, the
proceeds of which were used to fund working capital and general
corporate purposes. Repayment of the loans is due within 18 months
from the closing date of the Acquisition. There is no factual
financial information of Padstone to report at this time.
The Agreement with the Sellers will be executed
on the 10 January 2024 and closing of the Acquisition is subject to
(i) the two Permits being granted for a period of not less than
three years, (ii) a title opinion on the Soromaya Project and
corporate legal opinion for Padstone, and (iii) completion of an
independent National Instrument 43-101 Report (the
“Report”) on the Soromaya Project, as well as any
other conditions that may required by the TSX Venture Exchange.
Only upon granting of the Permits can the Report be completed and
therefore there are a number of significant milestones required to
ultimately close this Acquisition.
The Company has been informed by the Canadian
Investment Regulatory Organization (“CIRO”) and the TSV Venture
Exchange that trading of the Company must be halted and will remain
halted pending receipt and review of acceptable documentation
regarding the Fundamental Acquisition pursuant to Section 5.6(d) of
Exchange Policy 5.3.
Southstone currently holds a minority 10%
interest in Padstone; however, in the event that the Acquisition is
not concluded by 31 March 2024 (the “Long-stop
Date”), this 10% interest returns to Padstone’s treasury.
Accordingly, Southstone deems Padstone to be arm’s length on the
following basis: (i) no officers or directors hold office in the
other company; (ii) the Company is a passive shareholder and has no
control over the direction or management of Padstone; and (iii) the
Company’s minority 10% interest is diminimus, it provides no voting
control over any matter, and is at risk of being returned to
Padstone treasury.
The Company also confirms that the non-brokered
private placement, as announced on 6 November 2023, has been
extended, which private placement consists of up to 10M units at a
price of C$0.05 per unit for gross proceeds up to C$500,000 (the
"Private Placement").
Each unit of the Private Placement shall consist
of one common share in the capital of the Company and one-half of a
share purchase warrant, with each whole warrant entitling the
holder to purchase one additional common share at a price of C$0.10
per share at any time within two years from the date of issuance.
The warrants shall also be subject to an accelerated exercise
clause in the event the Company's share price exceeds C$0.15 for 10
consecutive trading days.
Proceeds from the Private Placement are
anticipated to be used on exploration of the Visirivier and Kabies
Sections of the Oena Mining License which have had little
exploration or mining activity to date as well as for general
working capital purposes.
The Company may pay finders fee's in either
cash, shares, share purchase warrants or a combination thereof, as
permitted by regulators, on a portion or all the Private Placement.
Closing of the Private Placement is expected to occur on or before
31 March 2024 or closing of the Acquisition. All securities issued
under the Private Placement will be subject to a hold period of
four months from the date of issuance.
Upon closing of the Acquisition, the issuance of
the Consideration Shares on a pro-rata basis, along with the
Private Placement will not result in any person who was previously
not an insider, becoming an insider of Southstone.
As consideration for introduction and assistance
with completing the Acquisition, Southstone has agreed to issue a
finder’s fee of 1,500,000 common shares, with a deemed value of
CAD$0.01, to an arm’s length third party, Mr. Scott Griffin. The
issuance of the Consideration Shares and the finders’ fees shares
are both subject to the approval of the TSX Venture Exchange and
will be subject to a customary prescribed hold period.
Upon closing of the Acquisition, Southstone
intends to appoint a new independent director and a new Chief
Financial Officer, each of whom shall be arm's length to Padstone
and its shareholders. No rights have been granted to Padstone or to
its shareholders as it relates to board nominees to the Southstone
board of directors.
ON BEHALF OF THE BOARD OF DIRECTORS OF
SOUTHSTONE MINERALS LIMITEDTerry L. Tucker,
P.Geo.Executive ChairmanFor
additional information, please contact Terry L. Tucker at
info@southstoneminerals.com
Neither 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 this release. Capitalized terms used herein that have
not been defined have the same meanings ascribed in the policies of
the TSX.V.
Forward-Looking StatementThis news release of
Company contains statements that constitute “forward-looking
statements.” Such forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause
Southstone’s actual results, performance or achievements, or
developments in the industry to differ materially from the
anticipated results, performance or achievements expressed or
implied by such forward-looking statements.
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