Golden Share Provides Update on Proposed Business Combination with Lipari Diamond Mines

2023-03-20

TSXV - TSX Venture Exchange · Gold · Copper · Zinc · Silver · Canada

Toronto, Ontario--(Newsfile Corp. - March 20, 2023) - Golden Share Resources Corporation(TSXV: GSH) ("Golden Share" or the "Company") is pleased to provide an update on the Company's previously announced arm's length reverse takeover transaction (the "Transaction") with Lipari Diamond Mines Ltd. ("Lipari"), a British Columbia-based company with interests in diamond properties in Brazil and Angola, whereby Lipari and all of its subsidiaries and affiliates will become directly or indirectly wholly-owned subsidiaries of the Company (upon completion of the Transaction, referred to as the "Resulting Issuer").

On March 15, 2023, Golden Share and the shareholders of Lipari signed a share exchange agreement (the "Definitive Agreement") which forms the basis upon which the companies will affect the Transaction.

Unless otherwise indicated, all dollar amounts in this news release are in Canadian currency.

The Transaction

Pursuant to the Definitive Agreement, the Company will issue common shares ("Resulting Issuer Shares") in exchange for the outstanding common shares of Lipari (the "Lipari Shares"), on the basis of 2.21678892 Resulting Issuer Shares for each Lipari Share (the "Exchange Ratio"). For the purposes of the Transaction Lipari is being valued at US$25,000,000 or Cdn$34,000,000 (based on an exchange ration of US$1.00 = Cdn$1.36) and as such the Resulting Issuer Shares will be issued at a deemed price of US$0.45110294 (Cdn$0.6135) per Resulting Issuer Share. Lipari also has a US$3,850,000 convertible debenture outstanding and following completion of the Financing such debenture will be convertible into Resulting Issuer Shares at a price equal to the Offering Price (as defined below).

In accordance with the terms and conditions of the Definitive Agreement, the Company will prior to closing of the Transaction effect a consolidation (the "Consolidation") of the outstanding common shares of GSH ("GSH Shares") on the basis of one (1) post-Consolidation GSH Share for every ten (10) pre-Consolidation GSH Shares (the "Consolidation Ratio"). All outstanding incentive stock options and common share purchase warrants of Golden Share will automatically adjust in accordance with their terms to give effect to the Consolidation such that, following the Consolidation, the holders thereof will be entitled to acquire Resulting Issuer Shares in lieu of GSH Shares (with adjustments to account for the Consolidation Ratio). Thus the 3,770,000 Golden Share Options and 3,000,000 Golden Share Warrants will be exercisable for an aggregate of 677,000 Resulting Issuer Shares.

Upon the completion of the Transaction, the Resulting Issuer will assume sole ownership of the share capital of Lipari. The Resulting Issuer will own 100% of Lipari and the former holders of the Lipari Shares will become shareholders of the Resulting Issuer. The primary business of the Resulting Issuer will then become that of the business of Lipari. The Resulting Issuer will change its name to "Lipari Diamond Mines Ltd." and will have its head office located at 517 Rua João Chagas Ortins de Freitas, Sala 301, Lauro de Freitas, Bahia, Brazil CEP:42.710-610, and its registered office will be located at Suite 3000, 77 King Street West, Toronto, Ontario M5K 1G7.

About Lipari

Lipari was incorporated under the Business Corporations Act (British Columbia) on December 6, 2021. Lipari's current registered office is 10thFloor, 595 Howe St., Vancouver, B.C, V6C 2T5, Canada, and operates from its administrative office in Lauro de Freitas, Bahia, Brazil. Lipari is a junior Canadian diamond mining and exploration company with assets in Angola and Brazil.

On February 10, 2023, Lipari completed the acquisition of certain mining assets pursuant to the terms of a share exchange agreement that was signed on January 26, 2022 and amended on December 19, 2022 between (i) the shareholders of SOPEMI - Sociedade de Pesquisa e Exploração Mineira, S.A. ("SOPEMI") which owns a 75% interest in the Tchitengo Project in northeastern Angola, (ii) the shareholders of Lipari Mineração Ltda. ("LML") which owns and operates the Braúna diamond mine in the State of Bahia, Brazil, and (iii) Mineração Montes Claros Ltda. ("MMC") which owns a 100% interest in the Jaibaras Property in the State of Pará, Brazil. A description of Lipari's assets is provided in this news release under the heading "Lipari's Assets".

About Golden Share

Golden Share exists under the provisions of the Canada Business Corporations Act with its registered office at 145 Riviera Drive, Unit 7, Markham, Ontario, Canada, L3R 5J6. Golden Share is listed on the TSX Venture Exchange (the "TSXV") and trades under the symbol "GSH". Golden Share is a natural resource exploration company focused on Northern Ontario, Canada. The Company's primary assets are the Ogoki Diamond Project and the Kagiami Base Metal Project. Golden Share is a "reporting issuer" in each of the Provinces of Canada. A description of Golden Share's assets is provided in this news release under the heading "Golden Share's Assets".

Financing

Lipari has engaged ERG Securities (US) LLC, an affiliate of ERG Capital Partners ("ERG Capital"), to raise up to $34,000,000 (the "Financing") in equity capital. ERG is a boutique investment bank specializing in raising growth capital for small and midsized companies through its offices in Toronto, New York and London. ERG covers a variety of industry sectors including mining with a focus on strategic metals in most jurisdictions across the globe.

The Financing is expected to be a brokered private placement of subscription receipts of Lipari (the "Subscription Receipts") at a price of $0.62 per Subscription Receipt (the "Offering Price") for minimum aggregate gross proceeds of $6,800,000 (the "Minimum Offering") and maximum gross proceeds of $34,000,000 (the "Maximum Offering"), with the proceeds held in escrow pending closing of the Transaction.

Each Subscription Receipt will be convertible into one Lipari Share. Upon satisfaction and/or waiver (where permitted) of certain escrow release conditions, which will include, among others, events in connection with the completion of the Transaction, each Subscription Receipt will be automatically converted, without payment of any additional consideration and without any further action on the part of the holder thereof, for the Lipari Shares which securities will, upon Closing, be exchanged for Resulting Issuer Shares on the basis of the Exchange Ratio.

ERG Capital, along with other selling agents that may be added to form a syndicate (collectively, the "Agents"), will be paid a cash commission ("Agent's Commission") equal to 5% of the gross proceeds raised in the Financing. As additional compensation, Lipari will issue to the Agents a number of non-transferable broker warrants (the "Agents Warrants", and together with the Agent's Commission, the "Agency Fee") equal to 5% of the aggregate number of Subscription Receipts sold pursuant to the Financing. Each Agents Warrant will entitle the holder thereof to ultimately acquire one Resulting Issuer Share at any time on or after the second anniversary of the completion of the Transaction at an exercise price equal to the Offering Price. The Agency Fee will be paid following the conversion of the Subscription Receipts into Lipari Shares and Lipari Warrants. Lipari has also agreed to pay ERG Capital a work fee of US$75,000 payable in three monthly installments of US$25,000. As of the date of this release, US$50,000 had been paid to ERG Capital.

The proceeds of the Financing are expected to be used to fund: (i) development of the Tchiuzo kimberlite on the Tchitengo project in Angola; (ii) capital and operating costs related to transitioning the Braúna 3 mine in Brazil to either a VMINE or underground mining operation; (iii) complete delineation drilling of the Jaibaras kimberlites in Brazil; (iv) the expenses of the Transaction and Financing; and (v) the working capital requirements of the Resulting Issuer. It is anticipated that funding for the drilling of the Ogoki project will be completed by way of a separate flow through financing. No terms of such financing have yet been agreed upon.

Share Structure of Resulting Issuer

It is anticipated that, following completion of the Consolidation and assuming the Maximum Offering, an aggregate of 115,077,067 Resulting Issuer Shares will be issued and outstanding, with: (i) the former holders of Lipari Shares (not including investors in the Financing) holding 55,419,723 Resulting Issuer Shares, representing approximately 48.2% of the outstanding Resulting Issuer Shares; (b) holders of Lipari Subscription Receipts holding 54,838,710 Resulting Issuer Shares, representing approximately 47.7% of the outstanding Resulting Issuer Shares; and (c) former Golden Share shareholders holding 4,818,635 Resulting Issuer Shares, representing 4.2% of the outstanding Resulting Issuer Shares.

Assuming the Minimum Offering, an aggregate of 71,206,099 Resulting Issuer Shares will be issued and outstanding, with: (a) the former holders of Lipari Shares holding 55,419,723 Resulting Issuer Shares, representing approximately 77.8% of the outstanding Resulting Issuer Shares; (b) holders of Lipari Subscription Receipts holding 10,967,742 Resulting Issuer Shares, representing approximately 15.4% of the outstanding Resulting Issuer Shares; and (c) former Golden Share shareholders holding 4,818,635 Resulting Issuer Shares, representing 6.8% of the outstanding Resulting Issuer Shares.

Insiders and Control Persons

No Insider, Promotor or Control Person (as such terms are defined in the policies of the TSXV) of Golden Share have any interest in Lipari.

To the best knowledge of the directors and senior officers of Lipari and the Company, no person beneficially will own, directly or indirectly, or will exercise control or direction over shares carrying more than 10% of the voting rights attached to any class of voting securities of the Resulting Issuer following completion of the Transaction except as set out below:

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Table 1

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Sponsorship

Sponsorship of the Transaction is required by the TSXV unless an exemption from this requirement can be obtained in accordance with the policies of the TSXV. The Company intends to apply to the TSXV for an exemption from the sponsorship requirements for the Qualifying Transaction. There is no assurance that an exemption from this requirement will be obtained.

Trading in Golden Shares Common Shares

Trading in GSH Shares has been halted in compliance with the policies of the TSXV. Trading in GSH Shares will remain halted pending the review of the Transaction by the TSXV and satisfaction of the conditions of the TSXV for resumption of trading. It is likely that trading of Golden Shares common shares will not resume prior to the closing of the Transaction.

Conditions Precedent

The completion of the Transaction remains subject to a number of terms and conditions that have been set forth in Definitive Agreement, including, among other things (i) there being no material adverse change in respect of either of the Parties, (ii) the receipt of all necessary consents, orders and regulatory and shareholder approvals, including the conditional approval of the TSXV, subject only to customary conditions of closing, (iii) the completion of the Consolidation, Name Change, the minimum Financing, and (iv) such other customary conditions of closing for a transaction in the nature of this Transaction. Accordingly, there can be no assurance that the Transaction will be completed on the terms proposed and described herein, or at all.

Shareholder Meeting

GSH anticipates calling an annual and special meeting in the second quarter to approve certain matters relating to the Transaction including the election of a board of directors of the Resulting Issuer, approving the Consolidation and approving the name change. It is anticipated that any shareholder approval required by the TSXV will be obtained by way of written consents of the GSH shareholders holding in excess of 50% of the outstanding GSH Shares.

Proposed Officers and Directors

Lipari's management team and board of directors is comprised of diamond industry professionals, legal and financial experts who possess executive experience in the diamond and mining industries in both Brazil and Africa. Several of Lipari's executives/directors have first-hand experience in Angola's diamond industry. At the completion of the Transaction, it is expected that all of the existing officers and directors of Golden Share will resign and be replaced by nominees of Lipari (the "Board Reconstitution"), such that management of the Resulting Issuer will be comprised of the following individuals, subject to compliance with the requirements of the TSXV and applicable securities and corporate laws.

_Ken Johnson - Proposed President and Chief Executive Officer _Mr. Johnson has 40 years of mining industry experience with the majority of his experience focused on the development of diamond deposits in Brazil, Central and South Africa and Canada. He was responsible for the acquisition, financing and development of the Braúna diamond mine. Ken has been active in Brazil for 20 years, and is one of the leading diamond experts in that country. He was the founding director of Lipari Mineração Ltda. and has been President and Chief Executive Officer of the company since 2011. Prior to that, Ken was President and Chief Executive Officer of Vaaldiam Resources Ltd. (1997-2010), a TSX-listed company that he formed in 1997 to develop diamond deposits in central and southern Africa, and in Brazil. He was President and Chief Executive Officer of Caussa Capital Corporation (1999 to 2003) which operated the Barberton Gold Mine in South Africa, and was Executive Vice-President of Asquith Resources Inc. (1986 to 1999) which discovered the Passandro gold deposits in the Central African Republic. During that same period (1986 to 1999), Ken was the Executive Vice-President of United Reef Limited and was responsible for the discovery and development of the Bamingui alluvial diamond deposit in joint venture with the Trans Hex Group of South Africa. Ken holds a B.Sc. degree in geology from the University of Windsor, Canada and has completed certification courses in South Africa related to the valuation of natural diamonds.

_Bruce Ramsden - Proposed Director and Chief Financial Officer _Mr. Ramsden is an experienced financial executive with 40 years of industry experience in both Canada and Africa. Previously, Bruce held the position of Vice President and Chief Financial Officer of Mountain Province Diamonds Inc. (2013 to 2017), a TSX- and NASDAQ-listed company which owns a 49% interest in the Gahcho Kué diamond mine in Canada's north. He was also the Chief Financial Officer of Kennady Diamond Inc. (2013 to 2018), the exploration arm of Mountain Province Diamonds. During his career in the mining industry, Bruce has been directly responsible for arranging over US$525 million of senior debt financings, including the US$370 million in senior financing acquired for the construction of the Gahcho Kué diamond mine. Bruce was also Chief Financial Officer of Tiomin Resources Inc. a TSX-listed company (2005 to 2010), which had a mineral sands project in east Africa. While at Tiomin, Bruce was directly responsible for raising $120 million in debt financing, $35 million in subordinated debt financing, political risk insurance as well as a cost overrun facility for the project. More recently, he was Executive Vice President and Chief Financial Officer of Roscan Gold Corporation (2021 to 2023), a TSXV listed company developing gold deposits in west Africa. Bruce holds a B.Comm. degree from the University of South Africa and the Chartered Institute of Secretaries (C.I.S.) through the United Kingdom. He was a member of the Institute of Chartered Secretaries and Administrators of Canada and Financial Executives International.

_Luiz Bizzi - Proposed Director and Co-Chairman _Dr. Bizzi holds a Ph.D. in geology from the University of Cape Town, South Africa and was with De Beers for 15 years, from 1985 to 2000, reaching the position of Technical Director for South America. Following his time at De Beers, Dr. Bizzi held the position of Executive Director of the Brazilian Geological Survey from 2000 to 2003. He then held the position of Regional Exploration Manager for BHP Billiton from 2005 to 2009, where he was responsible for mineral exploration in South America. In between those assignments, Dr Bizzi held executive positions in TSX-listed companies and consulted for the Brazilian Development Bank. Since 2011, Luiz has held the position of Chief Executive Officer of Rio Grande Mineração S.A., which is developing heavy mineral deposits in southern Brazil and northern Uruguay. Since 2019, Luiz has held the position of Chairman of SOPEMI in Angola, which is now a subsidiary of Lipari.

_Maurice Aftergut - Proposed Director and Co-Chairman _Mr. Aftergut is a controlling shareholder of Aftergut N. & Zonen b.v.b.a. in Antwerp, Belgium, a company which was started by his father in 1956 and has grown into one of the largest family-operated rough diamond trading companies in the industry, with group sales of over US$250M. Maurice has been active in the diamond industry for over 40 years, having started to learn the trade at the age of 18 years, working alongside his father trading in rough and polished diamonds. He eventually rose to the position of Managing Director of the company in 1995, expanding the business beyond that of diamond trading into investments in various diamond manufacturing, exploration and mining operations. Aftergut's group of companies have over 20 years of experience in operating in Angola, and are one of the principal buyers of diamond production from the Catoca mine. Maurice holds a diploma as a Gemologist (polished diamonds) from the Diamond High Council - Institute of Gemology in Antwerp (1988), and is a member of the Antwerpsche Diamantkring (Antwerp Diamond Bourse), the world's leading rough diamond bourse.

_Augusto Paulino de Almeida Neto - Proposed Director and President of Lipari's Angolan Subsidiaries _Mr. Almeida is President of Lipari's subsidiaries in Angola, SOPEMI (since 2018) and Tchitengo Mining (since January 2023). Paulino holds a degree in Mining Engineering from the Agostinho Neto University in Luanda, Angola. He also holds a degree in Business Administration from the Politécnica de Madrid University in Spain. He has over 35 years of mining industry experience in Angola, where he has held senior positions with both private and public entities. He was previously Vice President of ESCOM in Angola (2009 to 2013), and was President of BHP Billiton's Angolan subsidiary (2005 to 2009) during the time that they discovered the Tchegi kimberlites, which are now part of Lipari's Tchitengo project. He has previously held senior positions with ENDIAMA, the Angolan government's mining company, and with the Angolan Ministry of Mines where he was a director. He is currently the Chairman and Independent Director of the Board of the Standard & Charter Bank of Angola, a position he has held since 2020.

_Frances Kwong - Proposed Director (Independent) _Frances Kwong is a finance professional with over 35 years of international experience from accounting and strategic planning to management of financial systems and implementation in mining, telecommunications and other industries. She has over 15 years of experience in the global mining sector, ensuring compliance with financial and regulatory requirements and has been involved in numerous financing as well as transactions both at asset and corporate level, serving as Chief Financial Officer of Vaaldiam Resources Ltd. from 2008 to 2010, and later with Vaaldiam Mining Inc. from 2010 to 2012, and Frances is currently Vice President Finance, Chief Financial Officer and Corporate Secretary at Adventus Mining Corporation, a position she has held since 2017. Frances is a fellow of the Institute of Chartered Accountants in England and Wales, a CPA, and holds a B.Soc.Sc.(Hons) degree from the University of Hong Kong. Frances is the Proposed Chairperson of the Audit Committee of the Resulting Issuer.