Stellar AfricaGold Announces Spin-out Transaction for Mosaic Minerals shares
Vancouver, November 9, 2018 – John Cumming, President and Chief Executive Officer of Stellar AfricaGold Inc., (TSX-V: SPX) (“Stellar” or the “Company”) is pleased to announce the Company has signed an arrangement agreement with Mosaic Minerals Corp. (“Mosaic”) in connection with the previously announced sale of the Opawica gold project in Quebec (the “Opawica Sale”) to Mosaic.
Background
On September 8, 2018, Stellar closed the Opawica Sale in escrow subject to the receipt of shareholder approval in exchange for 7,200,000 shares of Mosaic (the “Mosaic Shares”) plus a 2-per-cent net smelter return royalty.
The Spin-out Transaction
On November 7, 2018, Stellar signed an arrangement agreement with Mosaic pursuant to which Stellar will spin out 2,000,000 of the Mosaic Shares (the “Spin-Out Shares”) to Stellar shareholders under a statutory plan of arrangement (the “Arrangement”) with each Stellar shareholder receiving 0.0312 of a Mosaic Share for each Stellar common share held.
The Arrangement requires the approval of the Stellar shareholders and the British Columbia Supreme Court. Details of the Arrangement will be provided in a management information circular for the Stellar shareholder meeting scheduled December 11, 2018. Stellar shareholders are urged to read the management information circular carefully and in its entirety.
Mosaic will apply to list its common shares on the Canadian Stock Exchange. To qualify for listing Mosaic must meet the minimum requirements of the Canadian Stock Exchange; there is no assurance that a listing application will be successful.
As the Arrangement is conditional on the completion of the Opawica Sale and the Company is a party to both transactions, the Arrangement and the Opawica Sale are “connected transactions” under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). Further, the Opawica Sale involves “related parties” to the Company. As such, the Arrangement is considered a “business combination” under MI 61–101 as it is an arrangement as a consequence of which the interest of a holder of an equity security of the Company may be terminated without the holder’s consent in which a “related party” is a party to a “connected transaction.” The Company relied upon exemptions from the formal valuation requirements of MI 61-101 contained in sections 4.4(1)(a) of MI 61-101, as the Company is not listed on a specified market. The Arrangement will be subject to minority approval.
To access the complete November 9, 2018 Mosaic spin-out news release click here.
