SG Spirit Gold Inc.
TSX VENTURE : SG

February 06, 2012 16:55 ET

SG Spirit Gold Announces Terms for $12.5 Million Brokered Offering

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 6, 2012) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR RELEASE TO U.S. NEWSWIRE SERVICES

SG Spirit Gold Inc. (TSX VENTURE:SG) ("SG Spirit Gold" or the "Company") announces that, further to its news releases of December 13, 2011 and January 26, 2012, SG Spirit Gold has engaged a syndicate of agents co-led by NCP Northland Capital Partners Inc. ("Northland") and Desjardins Securities Inc. (together with the other members of the syndicate, the "Agents"), to place on a "best efforts" basis by way of private placement, subscription receipts of the Company (the "Subscription Receipts") at a price of $0.75 per Subscription Receipt and flow-through subscription receipts of the Company (the "Flow-Through Subscription Receipts") at a price of $0.85 per Flow-Through Subscription Receipt. Aggregate gross proceeds from the sale of the Subscription Receipts and the Flow-Through Subscription Receipts will be approximately $12,500,000, with a maximum of $7,000,000 from the sale of Flow-Through Subscription Receipts (the "Offering").

Following completion of the Offering and the Transaction (defined below), SG Spirit Gold will be a fully financed, development and exploration base metals company whose primary objective will be the consolidation and advancement of a Buchans, Newfoundland centered base metal complex. SG Spirit Gold will have multiple VMS deposits hosting National Instrument 43-101 ("NI 43-101") defined resources and several advanced stage exploration projects, including the development stage Lundberg project and advanced exploration stage Daniels Pond, Tulks Hill and Bobby's Pond deposits. Upon completion of the Transaction, the Company intends to change its name to "Regiment Zinc Corp." to properly reflect its base metal focus.

Offering Details

Upon satisfaction of certain conditions (the "Release Conditions"), including the satisfaction or waiver of all conditions precedent (except for the payment of consideration) with respect to the proposed sale by Buchans Minerals Corporation to the Company of 100% of the Buchans Property and Tulks North Property and proposed sale by Mountain Lake Resources Inc. to the Company of 100% interest in the Bobby's Pond base metals deposit (collectively, the "Transaction"), each Subscription Receipt and Flow-Through Subscription Receipt will entitle the holder to receive one unit of the Company (a "Unit") and one flow-through common share of the Company, respectively, without the payment of additional consideration and without further action. Each Unit will be comprised of one common share of the Company (a "Share") and one-half of one non-transferable common share purchase warrant of the Company (each whole warrant, a "Warrant"). Each Warrant shall be exercisable into one additional Share at a price of $1.25 for a period of 24 months from the closing date of the Offering.

The gross proceeds of the Offering (the "Escrowed Funds") will be held in escrow on behalf of the subscribers by a Canadian trust company or other escrow agent (the "Escrow Agent") acceptable to the Company and Northland and invested in short term investment grade debt obligations as agreed to by the Company and Northland. Upon the Release Conditions being met, the proceeds of the Offering will be released to the Company. If the Release Conditions are not met on or before April 15, 2012, then each holder of Subscription Receipts and Flow-Through Subscription Receipts will be reimbursed the original subscription price, plus such holder's pro-rata portion of any interest.

The net proceeds raised from the offering of Subscription Receipts will be used by SG Spirit Gold to satisfy the payments due in connection with the transaction, to finance pre-feasibility study and exploration expenditures on the Buchans Property, Tulks North Property and Bobby's Pond base metals deposit (the "Properties") and for general corporate purposes. The gross proceeds raised from the offering of Flow Through Subscription Receipts will be used by SG Spirit Gold for pre-feasibility study and exploration expenditures on the Properties, which will constitute Canadian exploration expenditures (as defined in the Income Tax Act (Canada)) and will be renounced for the 2012 taxation year.

The Company will pay the Agents a cash commission equal to 6.0% of the gross proceeds of the Offering. In addition, the Company will issue to the Agents broker warrants entitling the holder to acquire up to that number of Shares as is equal to 6.0% of the aggregate number of Subscription Receipts and Flow-Through Subscription Receipts sold under the Offering at a price of $0.85 per Share for a period of 24 months following the closing date of the Offering. The Agents' compensation is payable only upon the Release Conditions being satisfied.

Full details of the Transaction will be included in the Management Information Circular to be filed with the regulatory authorities and mailed to SG Spirit Gold shareholders in accordance with applicable securities laws. It is anticipated that a special meeting of shareholders of SG Spirit Gold to approve the Transaction will be held in March 2012. The Transaction is being conducted entirely at arm's length.

All securities issued will be subject to a four month hold period. The Offering is subject to the approval of the TSX Venture Exchange.

The securities described herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws, and accordingly, may not be offered or sold within the United States except in compliance with the registration requirements of the U.S. Securities Act and applicable state securities requirements or pursuant to exemptions therefrom. This press release does not constitute an offer to sell or a solicitation of an offer to buy any of the Company's securities in the United States.

Completion of the Transaction is subject to a number of conditions, including Exchange acceptance and disinterested shareholder approval. 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 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 SG Spirit Gold should be considered highly speculative.
The Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

About SG Spirit Gold:

SG Spirit Gold is a Vancouver based resource company in the business of acquiring and advancing Canadian mineral properties prospective for precious metals and base metals. The Company's management team and Board have extensive experience and success in the resource industry. Upon completion of the Transaction, the Company intends to change its name to Regiment Zinc Corp. to properly reflect its base metal focus.

SG Spirit Gold is led by Forbes West, in association with Forbes & Manhattan. Forbes West, formerly known as the Exploration Group, is a Vancouver-based mining services company established by Mr. Mark Morabito. Forbes West provides administrative, management, geological, regulatory, tax, corporate development and investor relations services to mining companies throughout North America. Forbes West specializes in identifying, funding, developing and managing resource-based opportunities, with a special interest on the junior mining sector. With an office that is fully Sarbanes-Oxley compliant, Forbes West is vertically integrated with in-house geology, legal and corporate finance departments. Forbes West is focused on enhancing value to its growing portfolio of noteworthy public mining companies including SG Spirit Gold Inc., Alderon Iron Ore Corp., Crosshair Energy Corporation, Excelsior Mining Corp, Logan Resources Ltd. and Ridgemont Iron Ore Corp.

ON BEHALF OF THE SG BOARD

Adrian Bray, President & CEO

Cautionary Note Regarding Forward-Looking Statements

Information set forth in this news release may involve forward-looking statements under applicable securities laws. Forward-looking statements are statements that relate to future, not past, events. In this context, forward-looking statements often address expected future business and financial performance, and often contain words such as "anticipate", "believe", "plan", "estimate", "expect", and "intend", statements that an action or event "may", "might", "could", "should", or "will" be taken or occur, or other similar expressions. All statements, other than statements of historical fact, included herein including, without limitation; statements about the terms and completion of the Transaction, the terms of the Offering, the use of proceeds from the Offering, and the potential of the properties are forward-looking statements. 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: the need for additional financing; operational risks associated with mineral exploration; requirement to obtain shareholder approval; failure to execute the Definitive Agreements; fluctuations in commodity prices; title matters; environmental liability claims and insurance; reliance on key personnel; the potential for conflicts of interest among certain officers, directors or promoters with certain other projects; the absence of dividends; competition; dilution; the volatility of our common share price and volume and the additional risks identified in the management discussion and analysis section of our interim and most recent annual financial statement or other reports and filings with the Exchange and applicable Canadian securities regulations. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date that statements are made and SG Spirit Gold undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable securities laws. Investors are cautioned against attributing undue certainty to forward-looking statements.

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, and no securities regulatory authority has either approved or disapproved of the contents of this release.

Contact Information

  • SG Spirit Gold Inc.
    Konstantine Tsakumis
    Investor Relations
    1-866-683-8030 or 604-681-8030
    604-681-8039 (FAX)