Mount Morgan Gold-Copper Project in Australia and Great Southern Gold Corp. agreed to acquire Smartset Services Inc. (TSXV:SMAR.P) for CAD 8 million in a reverse merger transaction.
Following completion of the transaction but prior to completion of concurrent equity raising, it is anticipated that the resulting merged company will be 27.5% owned by existing Smartset shareholders, GBM shareholders will hold 47.5% and GSG shareholders will own 25%. Smartset will undertake a share consolidation at a ratio of 0.75:1. As a result of the consolidation, Smartset's issued and outstanding shares will decrease to 11.6 million shares. Post consolidation and completion of the transaction, Smartset's issued and outstanding shares would be approximately 42.3 million. Concurrently, Smartset plans to raise approximately CAD 8 million in new equity at CAD 0.50 per share to advance the exploration of Mount Morgan and the GSG Projects. The private placement will involve an issuance of 16 million subscription receipts which will automatically convert to common shares upon the satisfaction of certain escrow release conditions, including the approval of the exchange for the transaction, and satisfaction or waiver of all conditions precedent to the transaction as set out in the definitive agreement. Upon completion of the financing, Smartset anticipates it will have approximately 58.3 million common shares issued and outstanding. This transaction is a proposed qualifying transaction, and it is expected that upon successful completion of the transaction, Smartset will be listed on the TSXV as a Tier 2 mining issuer. As on January 26, 2022, Smartset has advanced CAD 0.25 million to GSG, by way of a secured loan
Post transaction, GBM will also have the right to appoint nominee directors to the Smartset Board. The Board of Directors and management of the resulting company will be reconstituted to consist of a slate of nominees to be appointed by GBM, GSG and Smartset jointly. The transaction is subject to completion of satisfactory due diligence; execution of definitive transaction documentation; ASX approval, if required, TSX approval, shareholder approval from both GSG and GBM, compliance with any listing rules, completion of the proposed equity raising, Smartset having minimum available working capital of not less than CAD 8 million, delivery by GBM and GSG of satisfactory National Instrument 43-101 technical reports in respect of the respective projects, disposition by GSG of certain assets unrelated to the Australian projects, and other customary conditions. The transaction is subject to the sponsorship requirements of the TSXV, unless an exemption from the sponsorship requirement is available or a waiver is granted. Smartset intends to apply for an exemption to the sponsorship requirement.