Strongbow Exploration Inc. (TSXV:SBW) , (“Strongbow” or the “Company”) is pleased to announce that it has agreed to sell a 1.5% Net Smelter Returns royalty (the “Royalty”) to Osisko Gold Royalties Ltd. (TSX:OR) (“Osisko”) on all metals and minerals produced from the South Crofty tin project in Cornwall, UK, for $7.17 million. Concurrently with the Royalty sale, the Company intends to complete a non-brokered private placement of common shares at $0.14 per share for gross proceeds of up to $2.0 million. Osisko intends to purchase 9.5 million common shares at a total cost of $1.33 million.
Proceeds from both the Royalty sale and the private placement will be used, subject to receipt of permits, to construct a water treatment plant at South Crofty and for general working capital.
Richard Williams, President and CEO of Strongbow stated: “This agreement reinforces Osisko’s support of the South Crofty tin project and provides Strongbow with strong momentum as we advance the project to a production decision.”
The Royalty will be structured as a secured convertible note (the “Note”) and be secured by a first ranking lien on the Company’s assets. The Note will be convertible into the Royalty upon the earliest date at which the Company is able to grant such a Royalty in a manner satisfactory to Osisko, in its sole discretion (the “Conversion”). The Note may only be drawn upon once all required permits are received from the Environment Agency for the construction and operation of a 25,000m3/day waste-water treatment plant. The term of the Note will be the earlier of Conversion or two years from the date of draw-down.
In addition to the sale of the Royalty, the Company intends to complete a non-brokered private placement of common shares (the “Shares”) at $0.14 per share for gross proceeds of up to $2.0 million. Osisko is expected to purchase 9.5 million common shares as part of this financing.
Osisko beneficially owns, directly or indirectly, approximately 23.4% of the outstanding common shares of the Company and accordingly, the Royalty sale is a “related party transaction” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”) and the policies of the TSX Venture Exchange. The Company is relying on certain exemptions available to it under MI 61-101 from the requirement to obtain a formal valuation and disinterested shareholder approval in respect of the transaction.
Completion of the Royalty sale and the private placement is subject to certain conditions, including the approval of the TSX Venture Exchange. All securities issued as part of the private placement will be subject to a hold period of four months from the date the securities are issued. Closing of the private placement is expected to occur on or before September 8, 2017, subject to the receipt of all required approvals.
For additional information please contact Richard Williams at (604) 638-8005 or by e-mail at [email protected] or Irene Dorsman at (604) 671-0632 or by e-mail at [email protected] or Sherman Dahl of Pretium Communications at (250) 558-8340.
ON BEHALF OF THE BOARD OF DIRECTORS
“Richard D. Williams”
Richard D. Williams, P.Geo
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 release.