Awalé Resources Limited Updates on Acquisition of Colossal Gold in Suriname

(Awalé, 11.Oct.2022) — Awalé Resources Limited (TSXV: ARIC) announced that, further to the company’s news release of 13 September 2022, the TSX Venture Exchange (TSXV) has conditionally accepted the acquisition of Colossal Gold Resources Limited by Awalé pursuant to a letter agreement dated 12 September 2022 between Awalé, Colossal and the shareholders of Colossal (the “Sellers”).

Final TSXV acceptance of the Acquisition is conditional on the company satisfying the requirements outlined in the TSXV’s conditional acceptance letter in compliance with TSXV Policy 5.3 which the company is in the process of completing.

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.

In addition to final TSXV acceptance, closing of the acquisition remains subject to receipt of the approval of the disinterested shareholders of the company; Awalé having completed a financing to raise a minimum of gross proceeds of CAD$2,000,000; the assumption by Awalé of the Assumed Obligations (as defined below); and other closing conditions as are standard for a transaction of the nature of the acquisition. Awalé has now completed its in-country due diligence review of Colossal’s assets, which was a condition to closing of the Acquisition, and is satisfied with the results.

The company will seek the approval of the disinterested shareholders of Awalé to the acquisition and the issuance of an aggregate of 21,663,138 common shares of the company to the Sellers in consideration of 100% of the Colossal shares, at the annual general meeting of the Awalé shareholders to be held on 7 November 2022. The management information circular relating to the meeting setting out the details of the acquisition, will be mailed to shareholders on 11 October 2022. The sellers in the aggregate currently hold approximately 24% of the outstanding Awalé shares. The sellers will be excluded from voting any of those Awalé shares for the approval of the acquisition.

Upon closing of the acquisition, the company will assume the following liabilities of Colossal and Consolidated Gold:

(a) the following payments owing to Dimitri Lemmer, one of the Sellers, in consideration of Colossal’s acquisition of the Licences, (the “Assumed Obligations”):

  • Payment of $250,000 on closing of the acquisition or as otherwise agreed;
  • Payments totaling a maximum of $1.75mn following issuance of a technical report prepared in accordance National Instrument 43-101 – Standards for Disclosure of Mineral Projects establishing a mineral resource on the Project on the following basis:
    1. $0.50 per ounce of gold for reported accumulated ounces of up to 999,999 ounces of gold (the “initial ounces);
    2. $1.00 per ounce of gold for reported accumulated ounces of one million ounces or greater of gold plus an additional payment of $0.50 per initial ounce;

(b) $299,614 as at 31 July 2022, owing to third parties in connection with exploration expenditure being salaries, Auger drilling, assaying, logistics and related expenditure; and

(c) other monthly operating expenses from 1 August 2022 accruing and amounting to no greater than $14,450 per month until closing.

As at the date of hereof, the pricing and terms of the Financing have not yet been determined. Other than Thierry Dalais, a Seller under the agreement, who will become an insider of Awalé after closing of the acquisition as he will then hold approximately 10.69% of the Awalé outstanding shares, no other insiders of the company will be participating in the financing. Although the financing is a condition to closing the acquisition, which may be waived, closing of the financing is not contingent or conditional on completion of the acquisition.

Under the terms of the agreement, any party could terminate the agreement if any of the closing conditions for the benefit of the terminating party was not satisfied or waived by 15 October 2022 (the “outside date”), unless such date was extended by mutual written consent of Awalé and Colossal. Awalé and Colossal have agreed to extend the outside sate to 30 November 2022.