Red Metal Resources signs LOI to Merge with TomaGold

Red Metal Resources (OTCPINK:RMES) reported that it has signed a Letter of Intent to sell all of the issued and outstanding common shares of Red Metal Resources (34,290,302 common shares).
According to the press release:

All of the common shares of Red Metal that may be issued upon the exercise of any options, warrants or other convertible securities after the formal filing of the transaction but before its closing (the “Transaction”). The proposal would be that such Red Metal shareholders will receive in exchange an aggregate consideration of CAD$3,250,000 payable through: (i) the payment in cash of the Red Metal’s debts for a maximum amount of CAD$500,000; and (ii) for the remainder of the aggregate consideration, the issuance of class “A” common shares of the capital stock of TomaGold at a price that is the higher between the average market price over the 20 days before the execution date of the Definitive Agreement and of CAD$0.15, subject to a maximum price of CAD$0.20. The parties to the transaction are at arm’s length.
[The LOI states] all of the common shares of Red Metal that may be issued upon the exercise of any options, warrants or other convertible securities after the formal filing of the transaction but before its closing (the “Transaction”). The proposal would be that such Red Metal shareholders will receive in exchange an aggregate consideration of CAD$3,250,000 payable through: (i) the payment in cash of the Red Metal’s debts for a maximum amount of CAD$500,000; and (ii) for the remainder of the aggregate consideration, the issuance of class “A” common shares of the capital stock of TomaGold at a price that is the higher between the average market price over the 20 days before the execution date of the Definitive Agreement and of CAD$0.15, subject to a maximum price of CAD$0.20. The parties to the transaction are at arm’s length.
The LOI includes customary provisions, including non-solicitation of alternative transactions, the right to match superior proposals and the closing by TomaGold of a financing of CAD$700,000 before the closing of the Transaction. The parties have agreed to a break-up fee of CAD$175,000 (i) payable to TomaGold if Red Metal is in default of this LOI and if a superior proposal is accepted by Red Metal’s shareholders, and (ii) payable to Red Metal if TomaGold does not complete the Transaction for reasons other than discovering an issue with their confirmatory due diligence.
Red Metal owns, or has the option to own, 100% of three projects (Farellon, Perth and Mateo) located in the prolific Candelaria iron oxide copper-gold (IOCG) belt of Chile’s coastal Cordillera, host to Freeport McMoRan’s Candelaria Mine and Anglo American’s Mantoverde Mine.

Click here for the full press release.