Subject to court approval, Globex has acquired a permitted silica quarry in Wyse township, Ontario, located near the Quebec border west of the town of Temiscaming, Que. Included in the purchase are an array of stackers, two 43-foot house trailers, a large hydraulic shovel, a generator and miscellaneous other equipment. The property has a large historical resource of high-grade silica grading in the range of plus 98 per cent silicon dioxide.

Globex has optioned the Lac Suzanne Nord nickel/copper/cobalt property to Enertourbe Inc. The property consists of three claim packages totalling 23 claims (1,278 hectares). Numerous showings of nickel, copper and cobalt in sulphides occur on all the claim packages.

The company has also signed a number of confidential agreements wherein companies are undertaking due diligence on a number of Globex’s properties. Data have been made available to the various parties and studies are continuing.

The price of metals has been rising steadily in particular as it relates to gold, copper and zinc. The rising zinc price is reflected in rising royalty payments from Nyrstar’s operations at the company’s Mid-Tennessee royalty property. Payments currently have risen to over $100,000 per month and are expected to rise further as the zinc price continues to climb.

Globex currently has a strong cash and share positions of other companies and no debt; owns all its 190 assets; and has only 55 million shares issued and outstanding. Revenue from options continues. Tres-Or, for example, has confirmed that the $200,000 option payment on the Fontana gold property will be made by Jan. 11, 2021.

Various companies are working on Globex royalty properties, including O3 on Globex’s Nordeau East and West assets, located east of Val d’Or, Que.; Tres-Or and Kiboko on Globex’s optioned Fontana gold property; Renforth Resources currently completing a first-phase 7,000-metre drill program of a 15,000-metre program on Globex’s Parbec gold royalty property; Radisson Mining drilling on adjoining claims on gold zones that plunge into Globex’s Kewagama gold mine royalty asset; Excellon Resources completing over 14 drill holes on Globex’s Silver City option in Saxony, Germany; Starr Peak undertaking a magnetometer survey on Globex’s Normetal/Normetmar base metal mines royalty property and surface sampling on Globex’s Rousseau and Lac Turgeon gold royalty properties; BMEX drilling on Globex’s Tut gold royalty property; Eros Resources Corp. undertaking permitting and engineering work to advance the Bell Mountain gold/silver property to production; Nippon Dragon Resources starting underground operations at the Globex royalty Rocmec 1 gold deposit; and Maganese X Energy Corp. completing 28 drill holes totalling 4,509 metres on Globex’s Battery Hill manganese royalty property, among others.

At Globex, the company has also been focused on acquiring an understanding the potential of its various advanced assets and has completed 3-D models of a number of Globex’s advanced properties, including the Francoeur gold mine, the Vauze polymetallic mine, the Ramp gold mine, the Wrightbar gold mine, the Tarmac gold zones, the Standard gold mine, the Lac Fortune gold mine and the Blackcliff gold mine (in partnership with Altai Resources), among others.

Globex has flown detailed aeromagnetic surveys over its Francoeur/Arntfield/Lac Fortune gold property, Silidor/New Marlon gold mine property, Standard gold mine property, Blackcliff gold mine property (in partnership with Altai Resources) and Laguerre/Knutson gold property; its Courville, Venus, Randall and Napping Dwarf properties; and its McNeely lithium project. Novatem has been engaged to fly a number of other Globex properties starting in the new year.

This press release was written by Jack Stoch, Geo, president and chief executive officer of Globex, in his capacity as a qualified person under National Instrument 43-101.

We seek Safe Harbor.

In addition to the restoration of its sovereign immunity, Congress has also approved measures that could see Sudan receive hundreds of millions of dollars in debt relief and other economic assistance from the U.S.

This act by the U.S. Congress follows closely on the removal of Sudan from the list of state sponsors of terrorism (see news release dated Dec. 15, 2020). The sponsor-of-terrorism designation was in place for almost 30 years, and weighed heavily on Sudan’s economy and restricted its ability to receive international financing and aid. For investors, the reinstating of Sudan’s sovereign immunity removes yet another layer of financial risk and brings real hope for the future of the country and its people.

Commenting upon this congressional act, Richard Clark, chief executive officer, said: “The U.S. Congress’s actions today set the stage to provide real hope for Sudan and its people. Sudan now has a legitimate opportunity to become part of the international commercial community. We are excited to develop our Block 14 gold project under this much more favourable environment and to demonstrate the incredible potential the country has to offer.”

The gross proceeds received by the company from the sale of the flow-through shares will be used to incur Canadian exploration expenses that are flow-through mining expenditures (as such terms are defined in the Income Tax Act (Canada)) on the company’s properties in Saskatchewan. The qualifying expenditures will be renounced to the subscribers with an effective date no later than Dec. 31, 2020, in the aggregate amount of not less than the total amount of the gross proceeds raised from the issue of the flow-through shares.

In consideration for its services, the underwriter received a cash commission equal to 6 per cent of the gross proceeds raised under the offering, and was issued 162,162 broker warrants, with each such broker warrant entitling the holder to purchase one common share of the company at a price of $1.48 per common share for a period of 24 months from the date of issuance.

All flow-through shares, broker warrants and broker warrant shares issued and issuable under the offering are subject to a statutory hold period and may not be traded until April 23, 2021, except as permitted by applicable securities legislation and the rules and policies of the TSX Venture Exchange.

Immediately before the dispositions, Mr. Disbrow owned and exercised control or direction over an aggregate 12,197,761 common shares of the issuer, representing approximately 11.62 per cent of the issuer’s issued and outstanding common shares; and Mr. Disbrow also owned warrants and exercised control or direction over warrants entitling the purchase of an aggregate 2,051,368 common shares of the issuer; or, assuming exercise of the warrants, he owned and exercised control or direction over a total of 14,249,129 common shares or approximately 13.32 per cent of the issuer’s common shares on a postconversion beneficial ownership basis.

Immediately after the transaction that triggered the requirement to file this report, Mr. Disbrow owns and exercises control or direction over an aggregate 10,843,012 common shares of the issuer, representing approximately 10.33 per cent of the issuer’s issued and outstanding common shares; and Mr. Disbrow also owns warrants and exercises control or direction over warrants entitling the purchase of an aggregate 2,051,368 common shares of the issuer; or, assuming exercise of the warrants, the acquiror owns and exercises control or direction over a total of 12,894,380 common shares, or approximately 12.05 per cent of the issuer’s common shares on a postconversion beneficial ownership basis.

These investments will be evaluated and the investments may be increased or decreased as circumstances warrant. Mr. Disbrow may, in the future, exercise warrants and, thus, acquire additional common shares in the capital of the issuer.

A report in this regard will be filed electronically with the securities regulatory authority in each jurisdiction where the issuer is reporting and will be available for viewing through SEDAR under the issuer’s issuer profile. To obtain a copy of the report, contact Mr. Disbrow at 604-697-7159.

Highlights

• Metallurgical testing confirms excellent nickel recovery of 46 per cent and 51 per cent from two locked cycle tests.
• Conventional flowsheet employed with two stages of grinding, desliming, flotation and magnetic separation processes.

This first phase of metallurgical testing was designed to confirm initial flowsheet design, which uses a typical nickel sulphide ultramafic flowsheet of two stages of grind-deslime-float with magnetic separation to support recovery of magnetic minerals. Subsequent testing during 2021 will continue to optimize various flowsheet parameters toward a final flowsheet for the feasibility study expected by year-end 2021.

“These metallurgical results are a critical step forward for the Crawford project. The 46-per-cent and 51-per-cent recovery from samples which book-end the grades in the higher-grade core compare very favourably to similar projects. The company is incredibly pleased to deliver this excellent result in just six months, as a result of our team’s deep experience and the similarity of this deposit to other projects,” said Mark Selby, chair and chief executive officer.

“Several lab tests yielded a portion of recovered nickel with concentrate grades in excess of 30 per cent. The next phases of work will focus on continued flowsheet optimization and developing a broad base of test samples. These are essential given the wide range of mineralogy in these types of deposits which typically results in nickel recoveries for a specific block ranging from 10 to 15 per cent to as much as 60 per cent.”

The Crawford nickel-cobalt sulphide project is located in the heart of the prolific Timmins-Cochrane mining camp in Ontario, Canada, and is adjacent to well-established, major infrastructure associated with over 100 years of regional mining activity. Canada Nickel has launched wholly owned NetZero Metals Inc. with the aim to develop zero-carbon production of nickel, cobalt and iron at the Crawford project.

       METALLURGY TEST RESULTS ON HIGHER-GRADE CORE (HGC) SAMPLES FOR
            THE CRAWFORD NICKEL-COBALT SULPHIDE PROJECT, ONTARIO
   
  
                         Concentrate grades % Ni   Split of recovered nickel
Locked       % nickel
cycle test   recovery      High grade  Low grade   High grade      Low grade   

HGC-High         51%              28%         8%          57%            43%         
HGC-Low          46%              28%        13%          32%            68%         


  

             IRON RECOVERY RESULTS FOR THE CRAWFORD NICKEL-COBALT SULPHIDE PROJECT, ONTARIO

           Fe recovery %   Fe concentrate grade %   Ratio of recovered Fe (in magnetite) to recovered Ni

HGC-high             41%                      55%                                                     15
HGC-low              53%                      46%                                                     32


  

Cobalt recovery was approximately 17 per cent for both locked cycle tests, which is expected given these samples contain primarily heazlewoodite (rather than pentlandite) which contains little cobalt. PGM (platinum group metal) assays are pending.

Phase I metallurgy testing

Metallurgical recovery testing has been continuing at COREM in Quebec City and XPS in Sudbury. Test work to date has been completed on multiple samples from the Crawford deposit totalling 630 kilograms of mineralized material from several large diameter holes drilled during 2020 and selected exploration drill core samples. The two samples selected for this current metallurgical work had nickel and sulphur grades which book ended the nickel and sulphur grades from the 280 million tonnes of measured and indicated resource in the Main zone higher-grade core, which is expected to provide the bulk of the feed during the early mine life of the project. More importantly, the lower grade sample also had nickel and sulphur grades which were similar to the current overall measured and indicated resource for the 606 million tonnes of the project.

The first phase of testing focused on confirming the overall flowsheet design and leveraged work completed on several other projects. The project is designed to deliver concentrates which are expected to be used in local processing facilities which would take advantage of the NetZero production potential of the project. While the nickel concentrates could be utilized across a wide range of applications, the higher nickel/lower iron grade concentrate would be targeted at battery metal consumers, while the lower nickel/higher iron concentrate could be utilized to produce a 25 to 30 per cent ferronickel product satisfying stainless steel consumers. Given the ultramafic source of the material, magnesium oxide (MgO) contents of the concentrate are high. The high MgO content is not a factor in use for feeds in the stainless steel value chain in which all of the concentrate could be utilized (only nickel value of concentrate realized in this scenario — no cobalt or PGM credits). If the high-grade concentrate was processed in traditional sulphide concentrate facilities, MgO penalties would be incurred but could be partially or entirely offset by the relatively very high nickel grade of the concentrate and potential cobalt and PGM credits.

The current flowsheet primarily comprises two stages of grind-deslime-float. The first stage is a relatively coarse grind of 135 to 150 microns and the second stage, which follows a magnetic separation step which reduces the feed to 25 to 30 per cent of the initial plant feed, and is then ground to 45 microns. The concentrates (making up less than 2 per cent of the initial feed) is then reground and floated to generate higher and lower grade nickel concentrates. The magnetic tailings then undergo a multistage magnetic cleaning to deliver a target 45 to 50 per cent iron magnetite concentrate (focus on maximizing recovery rather than grade as magnetite is expected to be processed locally).

Phase II metallurgy testing

Metallurgy testing during 2021 will have two key areas of focus. The first area of focus will be continued optimization of both the recovery and concentrate grades and the amount of grinding and reagents utilized to produce these concentrates. The second area of focus will be continuing lab work which has highlighted the improved recovery potential from using coarser grind sizes and more aggressive desliming, to recover much of the nickel into a very-high-grade (nickel over 30 per cent) concentrate as well as the potential to improve nickel recovery from the slimes portion of the material produced.

Giulio T. Bonifacio, chief executive officer, stated: “The company believes the new name provides a fresh perspective as we now enter the next and most exciting value add phase at Copperstone. We recently concluded a project funding transaction that will allow Arizona Gold to move forward with detailed engineering and the restart of production. In addition, we are in the midst of our resource expansion drilling program with more than 6,000 metres (29 drill holes) completed with assay results pending. At the conclusion of the current drill program of up to 10,000 metres we will provide an updated mineral resource estimate in Q2 2021 that will include approximately 15,000 metres from both our 2019 and current drill programs. We fully expect that 2021 will prove an exciting year for all stakeholders with what will prove to be a most rewarding chapter for Copperstone and Arizona Gold Corp.”

The company’s shares are expected to commence trading on the Toronto Stock Exchange under the new name, ticker symbol and new Cusip and ISIN number, on or about Dec. 29, 2020. A new website for the company will be launched on Dec. 29, 2020, with visitors to the Kerr Mines website after such date being automatically redirected to the Arizona Gold website. The company expects to begin trading under its new name on the OTCQB at or about the same time and under a new ticker symbol by early January, 2021, until which time the company will continue to trade under the current OTCQB symbol (KERMF).

Results of 2020 annual meeting

The company is also pleased to announce that shareholders voted in favour of all resolutions presented in its management information circular at the annual meeting held on Dec. 22, 2020. A total of 146,510,268 common shares were voted at the meeting, representing 42.34 per cent of the votes attached to all outstanding common shares and voting results are as displayed in the attached table.

Election of directors                   Outcome            Votes for               Votes withheld

Fahad Al Tamimi                         Carried     146,117,919     99.957%      62,822      0.043%
Giulio Bonifacio                        Carried     145,931,477     99.829%     249,264      0.171%
Claudio Ciavarella                      Carried     146,118,294     99.957%      62,447      0.043%
Martin Kostuik                          Carried     146,121,477     99.959%      59,264      0.041%
Peter Damouni                           Carried     145,930,778     99.829%     249,963      0.171%
Ayman Arekat                            Carried     146,127,011     99.963%      53,730      0.037%
James McVicar                           Carried     146,121,311     99.959%      59,430      0.041%

Appointment of auditors                 Carried     146,441,502     99.953%      68,766      0.047%

Warrant extension approval (1)          Carried     109,007,155     95.213%   5,480,505      4.787%

(1) Approved by disinterested shareholder vote.

Highlights:

• Higher than modeled average head grade. The average mill head grade was 3.87 g/t Au for the Bulk Sample, which is 9.3% higher than the predicted Au grade from the geological model based on the diamond drilling information in the area.
• Solid recovery rates. Average mill recovery for the gold at 94.9% which compares well with the 96% achieved with higher grade material from the Bachelor Mine (fixed tail).
• Total bulk sample produced better than modeled grades resulting in the production of 1,308 oz., all milled at the Company’s own Bachelor Mill.

Pascal Hamelin, president and chief executive officer, commented: “It is very encouraging to see the results from the Bulk Sample meet or exceed what was predicted in the geological model and the mineral resources estimated by SGS in May 2019. These results have increased our confidence in the geological model, the grade and the mill recovery of the Moroy deposit.”

Mining

After the development of a haulage track drift, and a drift in the mineralization on level 11, which is 550 metres below surface, two conventional raises were developed over a length of 30 m allowing the development of two conventional sub-levels spaced at 15 m.

The Company used the mining method of drilling and blasting long holes from the sub-levels. Holes ranging in length from 15 to 18 m were drilled with a diameter of 64 millimetres (2.5 inches) and showed very little deviation.

The drilling pattern was the same throughout the sampling, however, the blasting technique was adjusted based on the results obtained in order to find an optimal fragmentation method suitable for conventional remotely operated equipment while minimizing the powder factor to spare the walls.

Processing

Staggered over 40 days in October, and November, 2020, the Bachelor Mine mill processed 11,093 tonnes with an average grade of 3.87 g/t. With an average recovery of 94.9%, the Bulk Sample allowed the extraction of 1,308 ounces of gold.

The Bachelor Mill operates using the carbon-in-pulp (CIP) process.

                     RESULTS OBTAINED FOR THE BULK SAMPLE 

                        Grade    Contained ounces   Mill recovery    Recovered ounces

Tonnes     Au (g/t)  *Ag (g/t)         Au      Ag       Au    *Ag          Au      Ag  
milled 

11,093        3.87        0.6       1,378     214    94.9%  83.0%       1,308     178  

*Recovery of silver grades are estimates.

Resource

In May, 2019, an assessment was made by SGS on the targeted area for the Bulk Sample. Calculations made estimated that the Bulk Sample would contain 1,336 ounces based on an estimate of 3.54 g/t Au and a tonnage of 11,736 tonnes.

COMPARISON OF THE RESULTS OBTAINED TO THOSE ESTIMATED BY SGS IN MAY, 2019

                    Tonnes   Grade (Au g/t)   Contained ounces

2019 Block Model    11,736            3.54               1,336      
2020 Bulk Sample    11,093            3.87               1,378      

Geology

The Bulk Sample from sector 11-M1-1 of the M1 Zone is characterized by an East-West trending silicified and hematized shear zone dipping from 50degree to 65degree North with an average width of approximately 1.8 m. The mineralized structure contains from 1 to 5% finely disseminated pyrite and very rarely shows visible gold, resulting in a very low little nugget effect in the gold-bearing structure. This M1 gold-bearing structure has been encountered from level 8 to level 14.

Quality control and reporting protocols

Post-milling reconciliation was performed and validated by Soutex Inc., an external consultant, based in Quebec City. Reconciliations for each work day and overall were completed. The throughput of each working day at the mill was estimated using the loading cell of the primary ball mill feed conveyor at the Bachelor Mill. Composite samples were taken at each shift (day/night) from the flows required for reconciliation. All samples were sent to an in-house laboratory for preparation and analysis. The analyses are carried out by fire assay (A.A.) with atomic absorption finish.

Critical Elements’ chief executive officer, Jean-Sebastien Lavallee, noted that Critical Elements’ vision is to create a large, responsible producer of lithium to supply the flourishing electric vehicle and energy storage systems industries. “Our focus remains firmly on advancing and de-risking the Rose lithium-tantalum project, one of the highest-purity, undeveloped lithium projects globally and the corporation’s first. Beyond Rose and Nisk-1, Critical Elements retains 100 per cent ownership in a highly prospective land position of over 700 square kilometres with demonstrable lithium mineralization.”

Option terms

Grant of first option

The corporation grants to the optionee the exclusive right and option to acquire, on or before the date that is three years from the TSX Venture Exchange approval, an initial 50-per-cent earned interest in the property, free and clear of all encumbrances other than the permitted encumbrances and the royalty, subject to the terms and conditions in this agreement.

Requirements to exercise the first option

In order to acquire the 50-per-cent earned interest under the first option, the optionee must:

1. Make cash payments totalling $500,000 to the corporation on or before the dates set out herein:
   1. A non-refundable amount of $25,000 on the date of execution of the agreement;
   2. An amount of $225,000 within a delay of five business days following the effective date;
   3. An amount $250,000 within a delay of six months from the effective date.
2. Issue to the corporation, within a delay of five business days following the effective date, 12,051,770 shares of the optionee. The shares issued will be issued as fully paid and non-assessable free and clear of all liens, charges and encumbrances, and subject only to such resale restrictions and hold periods as may be imposed by applicable securities laws and the policies of the TSX-V.
3. Incur an aggregate of $2.8-million of work expenditures on the property on or before the dates set out below:
   1. $500,000 in work expenditures on or before the date that is one year from effective date;
   2. $800,000 in work expenditures on or before the date that is two years from effective date;
   3. $1.5-million in work expenditures on or before the date that is three years from effective date.

Upon the optionee having completed the cash payments, the share payment and incurred or financed the work expenditures on or before the expiry of the first option period, the optionee may exercise the first option by delivering notice to Critical Elements to that effect and confirming exercise of the first option. Upon delivery of the first option exercise notice, the optionee shall have earned a 50-per-cent earned interest in the property.

Grant of second option

Subject to the optionee having exercised the first option, the corporation hereby also grants to the optionee the exclusive right and option to increase its earned interest in and to the property from 50 per cent to 80 per cent by incurring or financing additional work expenditures for an amount of $2.2-million, including the delivery of a resource estimate, for a period commencing on the delivery of the first option exercise notice and ending on the date that is four years from effective date.

Following the exercise of the second option, until such time as a definitive feasibility study regarding extraction and production activities on the property is delivered to the joint venture, Critical Elements shall maintain a 20-per-cent non-dilutive interest in the joint venture and shall not contribute to any joint venture costs.

Operatorship

During the currency of the agreement, except as otherwise contemplated under the agreement, Chilean shall act as the operator, and, as such, shall be responsible for carrying out and administering the work expenditures on the property, in accordance with work programs approved by the technical committee. The operator shall be entitled to receive a management fee equal to 10 per cent of the amount of work expenditures incurred on internal work and equal to 5 per cent of the amount of work expenditures incurred on contract work carried by third party contractors or consultants.

In the event Chilean exercises the first option and subsequently elects not to exercise the second option, or in the event the second option is terminated, whichever the case, Chilean’s right to act as operator shall immediately terminate and Critical Elements shall become the operator for the future conduct of work expenditures and programs on the property.

Royalty

Following the exercise of the first option by Chilean, and in addition to the obligations of Chilean under the first and second option, if applicable, Critical Elements shall receive, in the event of a lithium discovery, a royalty equal to 2-per-cent net smelter returns resulting from the extraction and production of lithium products, including lithium ore, concentrate and chemical, resulting from the extraction and production activities on the property, including transformation into chemical products. Chilean shall have the right at any time to purchase 50 per cent of the royalty and thereby reduce the royalty to 1 per cent by paying to Critical Elements a total cash amount of $2-million.

Lithium marketing rights

In the event of a lithium discovery, Critical Elements will retain lithium marketing rights, meaning the exclusive right of Critical Elements to market and act as selling agent for any and all lithium products, including lithium ore, concentrate and chemical, resulting from the extraction and production activities on the property, including transformation into chemical products.

Nisk-1 Ni-Cu-PGE deposit

Nisk is composed of two blocks totalling 90 claims covering an area of 45.9 square km and a length of over 20 km. The Route du Nord from Chibougamau runs inside the south border of the property. Nisk-1 is also traversed in a northeast direction by a Hydro-Quebec power line and a road that heads north to the Eastmain River and beyond to the La Grande River area.

Nisk-1 is currently known for its magmatic nickel-copper sulphide deposits associated with ultramafic intrusion potential. It notably hosts the Nisk-1 Ni-Cu-PGE deposit.

Nisk-1 is hosted in an elongated body of serpentinized ultramafic rocks that intrude the Lac des Montagnes paragneiss and amphibolite sequence. The ultramafic rock intrusion is a sill bordered by paragneisses and amphibolites. Quite similar on either side of the ultramafic sill, they still can be subdivided into a lower paragneiss sequence to the northwest of the sill (stratigraphically older) and an upper paragneiss sequence to the southeast of the sill (stratigraphically younger).

The ultramafic sill is not a single intrusion. At least two distinct lithological units can be identified. The first, a grey serpentinized peridotite with magnetite veinlets, does not contain any sulphide minerals. The second is a black serpentinized peridotite. The nickel-copper-cobalt-iron sulphide mineralization is invariably associated with this black serpentinite.

Nisk-1 is the only mineralized zone with estimated resources on the property. A National Instrument 43-101 resource estimate was delivered in 2009. The resource estimation was completed by RSW Inc., by Pierre Trudel, PhD, PEng, and is detailed in its report entitled, “Resource Estimate for the Nisk-1 Deposit, Lac Levac Property, Nemiscau, Quebec,” dated December, 2009. The 2009 resource estimation is considered to be a historical estimate as defined by NI 43-101 — Standards of Disclosure for Mineral Projects:

• Measured resource: 1,255,000 tonnes at 1.09 per cent Ni, 0.56 per cent Cu, 0.07 per cent Co, 1.11 grams per tonne palladium and 0.20 g/t platinum;
• Indicated resource: 783,000 tonnes at 1 per cent Ni, 0.53 per cent Cu, 0.06 per cent Co, 0.91 g/t Pd and 0.29 g/t Pt;
• Inferred resource: 1,053,000 tonnes at 0.81 per cent Ni, 0.32 per cent Cu, 0.06 per cent Co, 1.06 g/t Pd and 0.5 g/t Pt.

In connection with the FT Private Placement, the Company issued an additional 350,000 flow-through common shares of the Company (the “Participation Shares”) pursuant to an existing shareholder’s election to exercise its participation right granted under an investor rights agreement (the “Participation Right Exercise”; together with the FT Private Placement, the “Offering”). The Participation Shares were issued at a price of $2.00 per Participation Share for additional gross proceeds of $700,000, for aggregate gross proceeds from the Offering of $3,700,000 (see news release dated December 22, 2020).

The gross proceeds from the Offering are intended to be used to incur Canadian Exploration Expenses that are “flow-through mining expenditures” (as such terms are defined in the Income Tax Act (Canada)) on the Company’s Ontario gold projects located in the greater Timmins region, Ontario, which will be renounced to the subscribers with an effective date no later than December 31, 2020, in the aggregate amount of not less than the total amount of the gross proceeds raised from the Offering.

In connection with the Offering, the Company paid a finder’s fee to Cormark Securities Inc. on a portion of the raise consisting of a cash commission of $180,000. All securities issued in connection with the Offering are subject to a four-month and one day hold period in Canada.

The proceeds from the private placement will be used to incur eligible Canadian exploration expenses and flow-through mining expenditures, as defined under the Income Tax Act (Canada), that will be renounced in favour of the purchasers with an effective date of no later than Dec. 31, 2020. The finances are intended to be used to finance exploration programs on the company’s Prairie Creek property, located in Northwest Territories. Flow-through shares issued in the private placement are subject to a four-month hold period under applicable Canadian securities laws.

In connection with the private placement, the company paid a finders’ fee to Paradigm Capital Inc. comprising a cash payment of $90,000 and 1,125,000 non-transferrable common share purchase warrants. Each warrant will entitle Paradigm to purchase one additional non-flow-through common share in the capital of the company at an exercise price of eight cents per common share for a period of two years from the date of issue.

Number of shares:  1.4 million flow-through shares

Purchase price:  36 cents per share

Number of placees:  one placee

Finder’s fee:  Red Cloud Securities Inc. — $30,240.00 and 84,000 agent’s options that are exercisable into common shares at 36 cents per share to Dec. 18, 2022

Pursuant to Corporate Finance Policy 4.1, Section 1.9(e), the company issued a news release dated Dec. 21, 2020, announcing the closing of the private placement and setting out the expiry dates of the hold period(s).

Highlights:

• Victory originally announced that it intended to complete the private placement for a minimum of $8-million. On Dec. 22, 2020, Victory announced an increase in the size of the private placement to approximately $17.5-million to accommodate significant excess demand.
• The first tranche of $15.2-million in gross proceeds has now closed.
• Crescat Capital LLC, a Denver-based hedge fund, has provided a $1.5-million lead order toward a second tranche of the private placement, which will close on or about Jan. 15, 2021. The company may accept additional subscriptions in this second tranche.

Collin Kettell, chief executive officer of Victory, commented: “The completion of the proposed merger with Nevada King [Mining Ltd.] will create a new leading Nevada-focused gold explorer. The newly formed company will hold the fourth-largest land position in Nevada, with only Barrick, Newmont and Kinross having larger landholdings. Of particular note and materiality, all projects are held along the prolific Battle Mountain gold trend, with a compelling portfolio of gold targets, a number of which the company intends to move to the drill stage in 2021. Our team looks forward to embarking on a focused and fruitful 2021.”

Financing summary

The completion of the private placement by Victory represents the satisfaction of one closing condition to the previously announced merger of equals transaction between Victory and Nevada King under which Victory will acquire all the issued and outstanding shares of Nevada King for common shares of Victory.

The proceeds of the private placement will be used to advance Victory’s development- and exploration-stage assets and for other general corporate purposes.

The subscription receipts were issued pursuant to a subscription receipt agreement entered into between Victory and Alliance Trust Company, the subscription receipt agent, dated Dec. 23, 2020. Each subscription receipt entitles the holder to receive one postmerger Victory share immediately after closing of the merger, subject to other standard conditions, without further action on the part of the holder and without payment of additional consideration. The subscription receipts issued pursuant to the private placement and the underlying Victory shares issuable upon conversion thereof will be subject to a hold period under applicable Canadian securities law expiring on April 24, 2021. Finders’ fees in an aggregate amount of $394,008.55 will be paid in cash to certain finders on a portion of the private placement, subject to compliance with TSX Venture Exchange policies and applicable securities legislation.

The completion of the merger and the automatic conversion of the subscription receipts thereafter remain subject to customary closing conditions, including approval of the TSX-V, shareholders and the court. The proceeds of the private placement will be held in escrow pending the completion of the merger. Victory expects to complete the merger in the first quarter of 2021. If the merger is not completed before April 16, 2021, the subscription receipts will be deemed to be cancelled, and the holders of subscription receipts will receive a cash amount equal to the aggregate subscription price of their subscription receipts and any interest that was earned on the subscription price.

Certain insiders of the company subscribed for 300,000 subscription receipts pursuant to the private placement. Participation by insiders constitutes a related-party transaction as defined under Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions). Victory is relying on exemptions from the formal valuation and minority shareholder approval requirements provided under sections 5.5(a) and 5.7(1)(a) of MI 61-101, as the fair market value of the subscription receipts issued to such related parties does not exceed 25 per cent of Victory’s market capitalization. Victory did not include this information in a material change report 21 days prior to the closing of the private placement as the details of the participation of insiders of Victory had not been confirmed at that time.

To exercise the option to acquire the properties, the Company and Exiro Minerals have agreed that the remaining cash payment and share issuance due under the March 1, 2017 property option agreement (as amended) will be settled by the Company delivering 920,000 common shares of the Company. Exiro has agreed to accept equity in lieu of cash to complete the option agreement. Power Metals will own the two properties 100% upon shares payment. In addition (i) upon a feasibility study being completed on a property, Power Metals will make an additional $450,000 payment (in cash or shares at Power Metals’ election); and (ii) Exiro will be entitled to a 0.5% NSR royalty on all production from the Properties.

The amending agreement is subject to TSX Venture Exchange approval.

Paterson Lake Property is located within the Separation Rapids Greenstone Belt, north of Kenora, northwestern Ontario. Paterson Lake Property has Li-Cs-Ta mineralization with multiple petalite (Li ore mineral) and Ta-oxide pegmatites including Marko’s Pegmatite and Jesse’s Pegmatite (Power Metals press releases dated Oct. 29, 2018 and Nov. 28, 2018). Marko’s pegmatite also contains pollucite (Cs ore mineral).

Power Metals has two lithium drill ready targets at Paterson Lake located along two parallel northeast-southwest petalite pegmatite trends:

Marko’s pegmatite

Jesse’s pegmatite

Highlights of Marko’s pegmatite include:

over 268 m strike length on surface

3.36 to 4.43 % Li2O range for 13 grab samples.

559 to 1398 ppm Ta range for 5 grab samples

19 historic drill holes on Power Metals’ Paterson Lake Property

historic drilling showed that there is both Lithium and Tantalum mineralization at depth on the Marko’s pegmatite and it is not just one pegmatite dyke but two: Marko’s and North Marko’s.

Highlights of Jesse’s pegmatite:

discovered in June 2018 by Power Metals geologists

consists of at least 4 parallel east-west trending dykes exposed on surface: North, Between North and Jesse’s, Jesse’s and South Dykes

190 m between North and South Dykes

1.01 to 3.26 % Li2O for 12 grab samples

Up to 271 ppm Ta in grab samples

Gullwing-Tot Lakes Property located north of Dryden, northwestern Ontario also has Li-Cs-Ta mineralization with spodumene (Li ore mineral) and Ta-oxides in Gullwing Lake pegmatite and Tot Lake pegmatite. Tot Lake also contains pollucite (Cs ore mineral) (Power Metals press release Sept. 10, 2018).

The assay highlights from grab samples from Tot Lake pegmatite include:

4.58 % Li2O from quartz – spodumene core, sample 159056

2.62 % Li2O from quartz – spodumene core, sample 159057

1.68 % Li2O and 233 ppm Ta from pink spodumene pegmatite zone, sample 1590235

498 ppm Ta from albitized K-feldspar zone, sample 159238

The assay highlights from grab samples on the Gullwing North outcrop include:

6.78 % Li2O from pure spodumene sample, sample 159082

0.73 % Li2O from spodumene – albite – quartz sample, sample 159084

759 ppm Ta from large Ta-oxide crystals in albite unit, sample 159254

Power Metals completed 3 weeks of channel sampling and mapping on the Tot Lake pegmatite in the fall of 2020. Results are pending.

Further Corporate Update

On September 8, 2020, Power Metals announced that it entered into a Letter of Intent with Sinomine Resource Group Co., Ltd of Beijing, China whereby Sinomine will partner with Power Metals to further the exploration and development of Power Metals’ Case Lake, Paterson Lake and Gullwing-Tot Lakes properties. Sinomine’s goal is to find further cesium and lithium mineral resources for commercial mining other than its TANCO mine, Manitoba through a strategic partnership with Power Metals. The TANCO pegmatite has been mined for tantalum ore concentrates, pyroceramic spodumene (Li), pollucite (Cs) and rubidium since the late 1960’s. Ongoing COVID-19 travel restrictions has delayed site visits by Sinomine personnel to Power Metals properties. We will provide an update to market once dates of travel will be allowed by the Province of Ontario.

Paterson Lake

Paterson Lake Property is located in Paterson Lake and Treelined Lake Areas, 60 km north of Kenora, NW Ontario close to the Ontario-Manitoba border. Paterson Lake Property is located within the Separation Rapids Greenstone Belt and hosts multiple petalite-bearing pegmatite dykes. The Property was optioned from Exiro Minerals Corp. in 2017 (Power Metals press release dated April 20, 2017). Avalon Advanced Materials Separation Rapids Lithium Project with 8.12 Mt at 1.37 % Li2O measured + indicated resources as of November 15, 2017 is located 1.2 km from the Paterson Lake Property (Avalon Advanced Materials website: http://www.avalonadvancedmaterials.com/projects/separation_rapids/).

Gullwing-Tot Lakes

Gullwing-Tot Lakes Property is located in Drope and Webb townships, 30 km northeast of Dryden, NW Ontario with excellent road access. Gullwing and Tot Lakes pegmatites contain spodumene. The Property was optioned from Exiro Minerals Corp. in 2017 (Power Metals press release dated April 20, 2017). The Property is located 5.5 km northeast of Essential Metals’ Mavis Lake spodumene pegmatite field.

Quality Control

The grab samples were transported to SGS analytical lab, Lakefield, Ontario by Manitoulin Transport. SGS analytical lab in Lakefield, Ontario has ISO 17025 certification. Every 20 samples included one external quartz blank and one external lithium standard. The ore grade Li2O% was prepared by sodium peroxide fusion with analysis by ICP-OES with a detection limit of 0.002 % Li2O. A QA/QC review of the standards and blanks for this mapping program indicate that they passed and the assays are accurate and not contaminated.

In connection with the filing of the final prospectus, the company filed an amended and restated technical report for the Dewey Burdock in situ recovery (ISR) uranium project in South Dakota. The amended report amends and restates the previous technical report in respect of the Dewey Burdock project (dated Jan. 17, 2020, with an effective date of Dec. 3, 2019, and filed by the company on SEDAR on Jan. 17, 2020) to make certain amendments to the prior report, including to remove the non-ISR resource estimate from the mineral resource estimate included in the prior report.

The amended report was prepared by Steve Cutler, PG, and Matthew Yovich, PE, each a qualified person as defined under National Instrument 43-101. The amended report, titled “Amended and Restated NI 43-101 Technical Report, Preliminary Economic Assessment, Dewey-Burdock Uranium ISR Project, South Dakota, USA,” has been filed on SEDAR and Azarga Uranium’s website.

Number of securities:  3,469,996 common shares

Purchase price:  15 cents per common share

Warrants:  1,734,998 common share purchase warrants to purchase 1,734,998 shares

Warrant exercise price:  23 cents per share until June 13, 2022

Number of placees:  eight placees

Total pro group:  333,330 (one placee)

Finder’s fee:  none

The company has confirmed the closing of the private placement in a news release dated Dec. 17, 2020.