Schooner Capital Corp. Enters into Definitive Agreement for Ponderosa Gold Property in Spences Bridge Gold Belt

Toronto, Ontario – TheNewswire October 27, 2020 – Schooner Capital Corp. (TSXV:SCH.P) ("Schooner" or the "Company") is pleased to announce that further to its news release of September 1, 2020 (the "Initial News Release"), it has entered into a definitive share exchange agreement dated October 27, 2020 (the "Definitive Agreement"), with 1201361 B.C. Ltd. ("Target") and the shareholders of Target, pursuant to which Schooner will acquire all of the issued and outstanding securities of Target (the "Transaction") which controls the prospective Ponderosa Gold Property in the Spences Bridge Gold Belt of British Columbia, Canada.

Transaction Summary

In connection with the Transaction, Schooner will acquire all of the issued and outstanding common shares of Target (the "Target Shares") through the issuance 6,655,824 common shares in the capital of the Company (the "Shares"), pursuant to which Target will become a wholly-owned subsidiary of Schooner.

Additionally, upon closing of the Transaction, Schooner will issue an additional 500,000 Shares to the Optionors (as defined below) in accordance with the terms of Option Agreement No. 2 (as defined below).

In connection with the Transaction, Schooner proposes to raise up to $2 million through a Concurrent Financing (as defined herein). Upon completion of the Transaction and the closing of the Concurrent Financing, the Resulting Issuer will have approximately 31,905,824 Shares issued and outstanding.

The management team of the Resulting Issuer will be led by Mr. Marc G. Blythe, MBA, P. Eng as President and CEO, Ms. Winnie Wong, CPA, CA as the CFO and Corporate Secretary, and Mr. William A. Wengzynowski, P. Eng. as Exploration Manager. The current directors of Schooner will resign upon completion of the Transaction. The current directors of Schooner are graciously thanked for founding Schooner and carrying the Company to its present position. It is anticipated that the board of directors of the Resulting Issuer will be comprised of Mr. Marc G. Blythe, Mr. Garrett Ainsworth, Mr. Neil Burns, and Mr. Scott Trebilcock.

Ponderosa Gold Property

Target’s principal property is the Ponderosa Gold Property, located in the Nicola Mining Division of British Columbia. Target has two separate option agreements covering the Ponderosa Gold Property. Target holds a 60% option on the central claim which is held, pursuant to an option agreement ("Option Agreement No. 1") dated September 6, 2019 with Almadex Minerals Ltd. ("Almadex") and a 100% option on three surrounding claims pursuant to an option agreement ("Option Agreement No. 2") dated April 5, 2019, as amended April 7, 2019 and October 6, 2020 with Mr. Edward Balon and Mr. Wojtek Jakubowski (the "Optionors").

Target must complete the following remaining requirements pursuant to Option Agreement No. 1 in order exercise its option:

  • – issue to Almadex such number of Target Shares as is equal to 5% of the issued and outstanding Target Shares on the business day preceding a liquidity event of Target, which includes the Transaction; and

    – incur, on or before the third anniversary of the execution date of the agreement, exploration expenditures of at least $500,000 including 500 metres of diamond drilling on the Ponderosa Gold Property.

Immediately following the exercise of the option by Target, Almadex and Target shall negotiate a joint venture agreement providing for a 60:40 interest in the property in favour of Target. In the event that either party’s interest in such joint venture is diluted below 10%, such party’s interest shall automatically convert to a 2.0% Net Smelter Returns royalty.

Target must complete the following remaining requirements pursuant to Option Agreement No. 2 to exercise its option:

  • – cash payment to the Optionors of $25,000 on the second and third anniversary of the agreement;

    – incur $1,000,000 in exploration expenditures prior to the fifth anniversary of the agreement; and

  • – issue to the Optionors an aggregate of 500,000 Target Shares on or before December 14, 2020 upon Target undergoing a "going public event" (as defined in Option Agreement No. 2), which includes the Transaction.

Additionally, upon exercising the Option pursuant to Option Agreement No.2, Target will issue a total of 500,000 common shares to the Optionors upon the preparation of resource estimate, in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects, and an additional 500,000 common shares upon preparation of a Bankable Feasibility Study (as defined under Option Agreement No. 2.

A 2.0% Net Smelter Returns royalty will be payable to the Optionors with 1.0% being subject to a right to re-purchase by the producing company for $1,000,000 up to the point of "Commercial Production" (as defined under Option Agreement No. 2).

See the Initial News Release for additional details regarding the Ponderosa Gold Property.

Financial Information about Target

The following table sets out selected financial information with respect to Target. Target’s financial statements are prepared in accordance with International Financial Reporting Standards, issued by the International Accounting Standards Board, and are denominated in Canadian dollars.

Balance Sheet Data

As at March 31, 2020 CAD$ (audited)

As at June 30, 2020 CAD$ (unaudited)

Total Cash on Hand

$30,178

$5,043

Total Exploration Assets

$188,724

$215,462

Share Capital

$89,079

$198,930

Accounts Payable

$105,202

$10,056

Shareholder’s Loan

$39,625

$28,416

Administrative Expenses

$22,572

$6,418

Vendors of the Target

All of the issued and outstanding shares of Target are held, directly or indirectly, by Marc Blythe, William A. Wengzynowski and Almadex. Each of Mr. Blythe and Mr. Wengzynowski are residents of British Columbia, Canada. Almadex is a reporting issuer, incorporated under the laws of the province of British Columbia and no individual or company, directly or indirectly, holds greater than 10% of the issued and outstanding voting shares of Almadex.

The Definitive Agreement

Completion of the Transaction is subject to the satisfaction of certain conditions set forth in the Definitive Agreement, including but not limited to: (i) receipt of all requisite regulatory approvals, orders, notices and consents to implement the Transaction including those of the TSX Venture Exchange (the "TSXV"); (ii) no material change occurring to the business of any of the parties; (iii) completion of the Concurrent Offering (as defined below); (iv) all shareholder approvals required for completion of the Transaction will have been obtained; (v) completion of the aforementioned director and management changes; (vi) the transfer of all of the Shares pursuant to the Share Purchase Agreements shall have occurred; (vii) the satisfaction of obligations under the Definitive Agreement relating to each of the parties; (viii) the delivery by each of the parties of customary closing documents; (viii) delivery of a technical report, in compliance with the requirements of National Instrument 43-101 – Standards of Disclosure for Mineral Projects with respect to the Ponderosa Gold Property and as approved by the TSXV; and (ix) completion of the Transaction on or before January 27, 2021.

Subject to satisfaction or waiver of the conditions to the Transaction, Schooner and Target anticipate that the Transaction will be completed on or before January 27, 2021.

Share Purchase Agreements

As disclosed in the Initial News Release, certain purchasers will enter into share purchase agreements (the "Share Purchase Agreements") with the existing Principals (as such term is defined in the policies of the TSXV) of Schooner prior to the completion of the Transaction to, among other things, sell and transfer to the purchasers, concurrently with the completion of the Transaction, an aggregate of 2,400,000 outstanding Shares, currently held in escrow pursuant to an escrow agreement, dated June 11, 2018, among Schooner, the Principals and Computershare Investor Services Inc., as escrow agent. Completion of the transactions contemplated by the Share Purchase Agreements is subject to the approval of the TSXV.

Concurrent Financing

As further disclosed in the Initial News Release, Schooner will complete a "best efforts" non-brokered private placement of units of the Company (the "Units") for gross proceeds of up to $1 million at a price of $0.10 per Unit (the "Unit Financing") and flow-through common shares of the Company (the "FT Shares") for gross proceeds of up to $1 million at a price of $0.10 per FT Share (collectively, the "Concurrent Financing"). The Units will be comprised of one common share (a "Share") and one-half of one common share purchase warrant (each full warrant, a "Warrant"). Each Warrant is exercisable for a Share at a price of $0.15 per Share for a period of two years from the date of issuance.

Schooner further notes that it expects to pay certain finder’s fee in connection with the Concurrent Financing equal to 6% of the gross proceeds raised from the sale of the FT Shares and Units to purchasers introduced to the Company by such finders as well as non-transferrable warrants ("Finder Warrants") equal to 6% of the total number of FT Shares and Units sold to purchasers introduced by such finders. Each Finder Warrant will entitle the holder to acquire one Share at a price of $0.10 for a period of two years from closing.

Trading Halt

The Schooner Shares are currently halted from trading, and the trading of the Schooner Shares is expected to remain halted pending completion of the Transaction.

Cautionary Note

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Schooner Capital Corp. should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

For further information, please contact:

Schooner Capital Corp.

Adam Spencer, Chief Executive Officer, Corporate Secretary, Chief Financial Officer and Director

Sandrine Lam, Investor Relations

Phone: 1-604-687-3520 Ext. 250

Forward Looking Information

This press release contains forward-looking statements and information that are based on the beliefs of management and reflect Schooner’s current expectations. When used in this press release, the words "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information.

The forward-looking statements and information in this press release include information relating to the business plans of Schooner, Target and the Resulting Issuer, the exercise of the options to acquire the Ponderosa Gold Property, the Concurrent Financing and the use of proceeds thereof, the pro forma capital structure of the Resulting Issuer, and the Transaction (including TSXV approval and the closing of the Transaction).

Such statements and information reflect the current view of Schooner. Risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following risks:

  • – there is no assurance that Target will complete its obligations under Option Agreement No. 1 and/or Option Agreement No.2 to exercise its option to acquire the Ponderosa Gold Property;

    – there is no assurance that the Concurrent Financing will be completed or as to the actual gross proceeds to be raised in connection with the Concurrent Financing;

    – there is no assurance that Schooner and Target will obtain all requisite approvals for the Transaction, including the approval of the the TSXV for the Transaction (which may be conditional upon amendments to the terms of the Transaction);

    – following completion of the Transaction, the Resulting Issuer may require additional financing from time to time in order to continue its operations. Financing may not be available when needed or on terms and conditions acceptable to the Resulting Issuer;

    – new laws or regulations could adversely affect the Resulting Issuer’s business and results of operations; and

    – the stock markets have experienced volatility that often has been unrelated to the performance of companies. These fluctuations may adversely affect the price of the Resulting Issuer’s securities, regardless of its operating performance.

There are a number of important factors that could cause the Resulting Issuer’s actual results to differ materially from those indicated or implied by forward-looking statements and information. Such factors include, among others: limited business history of Target; the risk that future exploration results do not meet expectations, disruptions or changes in the credit or security markets; results of operation activities; unanticipated costs and expenses, fluctuations in commodity prices, and general market and industry conditions.

Schooner cautions that the foregoing list of material factors is not exhaustive. When relying on the Company’s forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Schooner has assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors.

The forward-looking information contained in this press release represents the expectations of Schooner as of the date of this press release and, accordingly, is subject to change after such date. Readers should not place undue importance on forward looking information and should not rely upon this information as of any other date. While Schooner may elect to, it does not undertake to update this information at any particular time except as required in accordance with applicable laws.

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