VON PROVIDES UPDATE ON QUALIFYING TRANSACTION WITH XPLORE RESOURCES
February 19, 2020
VANCOUVER, British Columbia, February 19, 2020: VON Capital Corp. (TSXV: VON.P) (“VON” or the “Company”) is pleased to provide an update, further to its news releases of August 12, 2019 and October 1, 2019, with respect to its qualifying transaction with Xplore Resources Corp. (“Xplore”). Effective February 18, 2020, the parties amended the terms of a definitive agreement (the “Definitive Agreement”) entered into between VON, 2717915 Ontario Inc. (“Subco”), and Xplore, pursuant to which Xplore and Subco will amalgamate to form a new company, which will become a wholly-owned subsidiary of VON (the “Qualifying Transaction”). Upon completion of the Qualifying Transaction, VON will continue with the business of Xplore as a Tier 2 Mining Issuer (with the combined company after the Qualifying Transaction being referred to herein as the “Resulting Issuer”) on the TSX Venture Exchange (the “Exchange”). The amendments related to the structure of the Concurrent Financing, reflecting the terms of the Amending Agreement to the Asset Purchase Agreement and that David Patterson will be a director of the Resulting Issuer (all as defined herein).
Acquisition of the Valk Property
Xplore completed its acquisition of a 100% interest of the Valk property mining project (the “Valk Property”) on September 30, 2019 (the “Closing Date”), pursuant to an asset purchase agreement dated June 1, 2019 between Xplore and Longford Capital Corp. (“Longford”) and James Douglas Rogers (the “Asset Purchase Agreement”), as subsequently amended pursuant to an amending agreement entered into on February 7, 2020 (the “Amending Agreement”). Longford is a private British Columbia incorporated company, wholly controlled by James Douglas Rogers of British Columbia. Pursuant to the Asset Purchase Agreement, as amended, the purchase price for the Valk Property was satisfied by Xplore issuing 1,500,000 common shares (the “Xplore Shares”) and paying $50,000 to Longford. Xplore must pay an additional $100,000 to Longford on or before September 30, 2020 and a further $100,000 on or before September 30 2021.
In addition, Xplore granted a royalty equal to 2% of net smelter returns (the “Royalty”) to Longford. Xplore retained the option, at any time, to purchase one-half of the Royalty for $1,500,000, such that the Royalty would be reduced from 2% to 1% of the net smelter returns.
In addition, Xplore is required to make expenditures on the Valk Property in the following amounts:
- $100,000 during the first year following the Closing Date (which expenditures have been made);
- $250,000 during the second year following the Closing Date (originally $200,000 under the Asset Purchase Agreement and increased to $250,000 under the Amending Agreement); and
- $500,000 during the third year following the Closing Date.
Summary of the Qualifying Transaction
Pursuant to the Definitive Agreement, as consideration for the acquisition of all of the outstanding Xplore Shares, holders of the Xplore Shares, including subscribers to the Concurrent Financing (as defined below), will receive one (1) fully paid and non-assessable common share of the Resulting Issuer (each, a “Resulting Issuer Share”) in exchange for each one (1) Xplore Share held. There are currently 18,100,000 Xplore Shares issued and outstanding on a non-diluted and fully diluted basis. The final structure of the Qualifying Transaction is subject to the receipt of tax, corporate and securities law advice for both VON and Xplore.
Prior to the closing of the Qualifying Transaction, VON will change its name to “Xplore Resources Corp.” or such other name as agreed to by the parties. The Qualifying Transaction will constitute a “qualifying transaction” of VON pursuant to Policy 2.4 – Capital Pool Companies of the Exchange.
Conditions to the Qualifying Transaction
The Qualifying Transaction is subject to certain conditions, including but not limited to, completion of the Concurrent Financing (as defined below), the parties having received all the necessary regulatory and third party approvals including the approval of the Exchange, VON having no indebtedness for borrowed money or credit or equivalents other than as previously disclosed, no material adverse effect occurring to the business of VON or Xplore, the delivery by each of the parties of standard closing documents, and the Exchange being satisfied that after completion of the Qualifying Transaction that the Resulting Issuer will satisfy the Exchange’s minimum listing requirements in order to become a Tier 2 Mining Issuer.
The parties sought a waiver from the Exchange of any requirement for a sponsor of the Qualifying Transaction, but in the event a waiver is not available, will seek a sponsorship relationship for this Qualifying Transaction with an Exchange member firm. The Qualifying Transaction is expected to close in the second quarter of 2020.
The common shares of VON were halted effective August 12, 2019 and will remain halted until closing of the Qualifying Transaction.
None of the securities to be issued pursuant to the Qualifying Transaction have been or will be registered under the United States Securities Act of 1933, as amended, or any state securities laws, and any securities issued pursuant to the Qualifying Transaction are anticipated to be issued in reliance upon available exemptions from such registration requirements. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.
In connection with the Qualifying Transaction, Xplore will complete a non-brokered private placement of a minimum of 5,775,000 units to a maximum of 7,500,000 units (“Units”) at a price of $0.20 per Unit, (each Unit comprised of one Xplore Share and one Xplore Share purchase warrant (each, a “Warrant”) exercisable at a price of $0.40 for a period of two years from the date of issue), for a minimum gross proceeds of $1,155,000 and maximum proceeds of $1,500,000 (the “Concurrent Financing”). The expiry date of the Warrants may be accelerated at the option of the Resulting Issuer if at any time prior to expiration the closing price of the Resulting Issuer Shares on the Exchange exceeds $0.60 for ten consecutive trading days. The Concurrent Financing is expected to close in the second quarter of 2020.
Certain of the Xplore Shares to be issued pursuant to the Qualifying Transaction are expected to be subject to restrictions on resale or escrow under the policies of the Exchange, including the securities to be issued to “Principals” (as defined under Exchange policies) which will subject to the escrow requirements of the Exchange.
In connection with the Concurrent Financing Xplore will pay finders’ fees to eligible finders (“Finders”) equal to 7% of the aggregate gross proceeds of the Concurrent Financing received from the sale of Units to subscribers brought to the Concurrent Financing by Finders and will issue finders warrants (each, a “Finders Warrant”) to Finders equal to 7% of the number of Units sold to subscribers brought to the Concurrent Financing by Finders. Each Finders Warrant will be exercisable at a price of $0.40 for a period of two years from the date of issue.
The Resulting Issuer – Summary of Proposed Directors and Officers
It is anticipated that the board of directors of the Resulting Issuer (the “Resulting Issuer Board”) will consist of Wesley C. Hanson, Charles Edgeworth, Robert Brain, Tim McGuire, James Hyland, and David Patterson. The officers of the Resulting Issuer will consist of Wesley C. Hanson as Chief Executive Officer, Charles Edgeworth as Chief Financial Officer and Robert Brain as Corporate Secretary. For a background of the proposed nominees of the Resulting Issuer, please see the press release issued by VON dated August 12, 2019.
VON is a capital pool company. Its business activity is limited to identifying and evaluating assets or business for acquisition. VON is headquartered in Vancouver, British Columbia.
Xplore is an Ontario-incorporated private mining exploration company, incorporated on May 28, 2018. Xplore is focused on the acquisition and development of copper and gold properties.
Additional information in connection with the Qualifying Transaction will be provided in subsequent press releases.
On behalf of the Board of Directors of VON Capital Corp.
President and Chief Executive Officer
Neither the 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 news release.
There can be no assurance that the Qualifying Transaction will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of the Resulting Issuer should be considered highly speculative.
Except for statements of historical fact, this news release contains certain “forward-looking information” within the meaning of applicable securities law. In particular, forward-looking information in this press release includes, but is not limited to, statements with respect to timing and completion of the Concurrent Financing and the closing of the Qualifying Transaction, receiving the necessary regulatory and third party approvals including the approval of the Exchange and the operations and payments related to the future of the Valk Property. In connection with the forward-looking information contained in this news release, VON has made numerous assumptions regarding, among other things: Exchange approval of the Qualifying Transaction, the fulfillment of the conditions of the Definitive Agreement, the ability of Xplore to meet the payments of the purchase price of the Valk Property and the ability of the management team of Xplore to execute its business plan. While VON considers these assumptions to be reasonable, these assumptions are inherently subject to significant uncertainties and contingencies.
Additionally, there are known and unknown risk factors which could cause VON and Xplore’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained herein. Risk factors include: that regulatory approval may not be obtained on a timely basis, or at all; general economic conditions in Canada and globally; mining industry conditions; volatility in commodity prices; unanticipated operating delays or halts; competition for and/or inability to retain services and inputs; the availability of capital on acceptable terms; the need to obtain required approvals from regulatory authorities; stock market volatility; and changes in tax laws and incentive programs. A more complete discussion of the risks and uncertainties facing the Resulting Issuer is disclosed in VON’s continuous disclosure filings with Canadian securities regulatory authorities at www.sedar.com. All forward-looking information herein is qualified in its entirety by this cautionary statement, and VON, Xplore, and the Resulting Issuer disclaim any obligation to revise or update any such forward-looking information or to publicly announce the result of any revisions to any of the forward-looking information contained herein to reflect future results, events or developments, except as required by law.Back to Past News