Spruce Ridge Resources Limited announced that further to the letter of intent signed by the Company as announced on October 1, 2019, the Company has entered into the definitive agreement for that transaction on the same basis.
John Ryan, Spruce Ridge President and CEO commented: “We are pleased that Mark Selby will lead Canada Nickel Company to advance the Crawford Nickel-Sulphide project in a dedicated nickel company. Mr. Selby has considerable experience in the global nickel industry, including development of the Dumont Nickel deposit.”
“This transaction allows Spruce Ridge to aggressively work the Great Burnt Copper and Gold property in Newfoundland with a plan to carry out an infill drilling program with a view to firming up the resource (see news release dated October 29, 2019 where Spruce Ridge announced an Updated Mineral Resource Estimate) prior to carrying out a planned PEA.”
1. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues, although Spruce Ridge is not aware of any such issues.
2. The Inferred Mineral Resource in this estimate has a lower level of confidence that that applied to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of the Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource with continued exploration.
3. The Mineral Resources were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines.
4. The 0.90% Cu cut-off grade was derived from the September 30/19 respective two year trailing average Cu and Au prices of US$2.90/lb and US$1,305/oz, two year trailing average US$ exchange rate of $0.77, 92% process recovery, underground mining C$40/t, processing C$15/t, G&A $5/t and smelting/refining C$10/t.
Transaction Summary
The planned consolidation of the Crawford Nickel-Sulphide Project will be put into effect under the terms of an implementation agreement dated as of November 14, 2019 (the “Implementation Agreement”) that has been entered by Canada Nickel Company Inc. (“Canada Nickel”), Noble Mineral Exploration Inc. (“Noble”), Mark Selby (a principal of Canada Nickel), Spruce Ridge and certain private investors (the “Investors”) based on the previous agreed terms in the binding letter of intent announced October 1, 2019.
The net result for Spruce Ridge of the proposed transactions under the Implementation Agreement (the “Transactions”) is:
- Canada Nickel will issue 20 million common shares of Canada Nickel to Spruce Ridge, for total consideration valued at $5 million (applying $0.25 per share as the value of Canada Nickel Shares issued);
- Noble will issue a $1 million promissory note and issue to Spruce Ridge 10,000,000 common share units of Noble (each unit comprised of one common share and 1/2 common share purchase warrant, with each full warrant being exercisable at $0.15 per share for three years);
- Spruce Ridge will issue 2 million common shares to Noble (for a value of $90,000 applying a value of $0.045 per share);
- Promptly following the completion of the Arrangement, Noble shall pay Spruce $1 million in cash in repayment of the $1 million promissory note issued to Spruce upon termination of the Crawford JV Agreement.
- Noble will transfer the 907ha Crawford VMS assets to Spruce Ridge, subject to Noble retaining a back-in right to a 25% interest and to the right of Spruce Ridge to substitute other VMS properties in Crawford Township, Ontario of the same size; and
- Spruce Ridge will transfer 10 million common shares of Canada Nickel to the Investors (for a value of $2,500,000 applying a value of $0.25 per share); and
- Spruce Ridge will issue 10 million units of Spruce Ridge to the Investors, each unit to be comprised of one common share of Spruce Ridge and one-half of a common share purchase warrant of Spruce Ridge (exercisable for three years at $0.10 per share for a value of $450,000 applying $0.045 per Spruce Ridge Unit); and
- Under the Implementation Agreement, Spruce Ridge has also undertaken that it will seek to distribute to its shareholders 5 million of the Canada Nickel shares it will retain after the Crawford JV Agreement and Investor Agreement have been terminated.
About Spruce Ridge Resources Ltd.
Spruce Ridge holds a 100% interest in the Great Burnt Copper-Gold Property in Central Newfoundland which covers a series of copper ± gold rich VMS deposits. In 2015, Spruce Ridge optioned its Viking/Kramer gold properties in Western Newfoundland to Anaconda Mining Inc. The Company also has a 50% joint venture with Americas Silver and Gold Corporation on property that contains tailings with low grade gold and silver from the Drumlummon Mine in Montana.
