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55 North Mining Inc. Signs Business Collaboration with 2552883 Ontario Inc.

55 North Mining Inc. has reported that it has signed a binding letter of intent with 2552883 Ontario Inc., according to which 55 North will enter into a business collaboration with 2552883 Ontario (a three-cornered amalgamation).

Through this collaboration, the shareholders of 2552883 Ontario will turn shareholders of 55 North (the Planned Transaction).

2552883 Ontario owns an option to purchase 100% of the title, rights, and interest in the Last Hope Gold Project—a high-grade gold project situated in the emerging Lynn Lake Gold Camp in northern Manitoba.

55 North’s board of directors has made a decision to dividend out all the 100,000,000 shares of European Cobalt Ltd., which 55 North will obtain after the sale of its Edelston Gold Project to European Cobalt, to its shareholders of record as at the special shareholder’s meeting held on August 10th, 2020.

Moreover, 55 North’s board of directors has decided to execute a 10.13:1 rollback of the company’s shares once the European Cobalt shares are dividend out to 55 North shareholders.

Once the three-cornered amalgamation, post rollback, and ex-dividend are completed, existing shareholders of 2552883 Ontario and 55 North will own about 90% and 10% of the pro-forma company, respectively, with a name analogous to 55 North and shares outstanding of about 78,325,797.

55 North is a reporting issuer in Ontario, British Columbia, and Manitoba, and 2552883 Ontario is a private company. Neither company trades on a recognized stock exchange.

In essence, the projected relative ownership of each company’s shareholders of the pro-forma company shows relative valuations of assets and ex-dividend of each company, as assessed by the board of directors and management of each company, and will be validated by independent third-party fairness opinions acquired by each company.

The Planned Transaction will be recorded as part of a definitive agreement that will be subject to shareholder approval.

Transaction Highlights

The Last Hope Gold Project offers the below-mentioned advantages to 55 North and its shareholders:

High-Grade Gold Resource: At a cut-off of 3 g/tonne—Indicative of 154,060 tonnes that grade 6.75 g/tonne for 33,458 ounces, Inferred of 872,977 tonnes that grade 5.91 g/tonne for 165,812 ounces.

Exploration Upside: Inside the currently defined resource, gold mineralization is open along strike to the SE and NW. Moreover, coincident IP and geochemical anomalies seem to point toward two parallel structures to the East that may include gold mineralization similar to that in the current resource.

Safe and Mining Friendly Jurisdiction/Good Infrastructure: Located in the Lynn Lake gold mining camp in northern Manitoba, the Last Hope Gold Project exhibits good infrastructure: connected to an extensive road and rail network, less expensive hydroelectric power, 5,000 feet paved airport runway where a larger jet aircraft can be landed, and proximity to the town of Lynn Lake.

Management Experience and Expertise in the Camp: 55 North’s senior management purchased, investigated, developed, and then sold the Lynn Lake Gold Project to Alamos Gold in 2016. The Last Hope Gold Project is situated 10 km to the south of the Lynn Lake Gold Project that belongs to Alamos Gold.

Potential Synergy with Neighbouring Assets: The resource estimate of the Last Hope Gold Project has a grade over three times that of Alamos’ Lynn Lake project’s P&P reserves (31.977 Mt grading 1.83 g/tonne for 1,884,800 ounces).

If the success of exploration at the Last Hope Gold Project leads to a larger resource estimate, it could potentially turn into a high-grade satellite deposit for any further mining operation by Alamos Gold at Lynn Lake.

We are excited to have entered into a binding letter of intent with 2552883 Ontario Inc. to effect a combination with the express purpose of acquiring the high grade Last Hope Gold Project. We believe that our technical knowledge of the area and the deposit, together with recent work on the project, present us with an exceptional opportunity to potentially significantly grow the resource estimate and generate shareholder value.

Bruce Reid, President and CEO, 55 North Mining Inc.

Transaction Details

It is predicted that the Planned Transaction will be executed through a three-cornered amalgamation under the Canada Business Corporations Act. The issuance of shares by 55 North as part of the Planned Transaction is contingent upon the approval of most of the votes cast by 55 North shareholders voting in person or represented by proxy at a special shareholders’ meeting.

Besides shareholder approvals, the Planned Transaction will be contingent upon applicable regulatory approvals and the satisfaction of a few other closing conditions commonplace in transactions of this type.

Complete details of the Planned Transaction will be incorporated in a management information circular, which is anticipated to be mailed to shareholders on or before July 17th, 2020. It is expected that the shareholder meetings and closing of the Planned Transaction will be completed by August 2020.


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