Richmond Road Capital Corp. and Fredonia Management Limited Announce Closing of $6.3 Million Subscription Receipt Financing with Significant Participation by Mr. Eric Sprott

Calgary, Alberta–(Newsfile Corp. – February 25, 2021) – Richmond Road Capital Corp. (TSXV: RRD.H) (the “Corporation” or “RRCC“) and Fredonia Management Limited (“Fredonia“) are pleased to announce that Fredonia has closed its previously announced brokered private placement of subscription receipts of Fredonia (the “Subscription Receipts“), pursuant to which an aggregate of 37,445,310 Subscription Receipts were sold at a price of $0.17 for aggregate gross proceeds of approximately $6.3 million (the “Financing“) pursuant to an agency agreement (the “Agency Agreement“) entered into between the Corporation, Fredonia and Paradigm Capital Inc. and Red Cloud Securities Inc. (together, the “Agents“) dated February 24, 2021.

Mr. Eric Sprott subscribed for 8,823,600 Subscription Receipts in the Financing for total gross proceeds to the Corporation of approximately $1.5 million.

The Financing was completed in connection with Fredonia’s proposed reverse takeover of RRCC (the “Proposed Transaction“). It is anticipated that the Proposed Transaction will constitute RRCC’s “Qualifying Transaction” pursuant to Policy 2.4 of the TSX Venture Exchange (the “Exchange“). Following the completion of the Proposed Transaction, the resulting entity (the “Resulting Issuer“) will hold all of the assets and continue the business of Fredonia. For a description of the Proposed Transaction, see the January 11, 2021 news release issued by RRCC, a copy of which is available on RRCC’s SEDAR profile at www.sedar.com.

Fredonia intends to use the Escrowed Funds to fund the exploration of its 100% interest in certain license areas within the Deseado Massif geological region in the Province of Santa Crus, Argentina, pay for expenses of the Financing and Proposed Transaction, and for general working capital purposes.

Terms of the Financing

Each Subscription Receipt shall entitle the holder thereof to receive, upon automatic exchange in accordance with the terms of the subscription receipt agreement entered into between the Corporation, Fredonia, and the Agents and TSX Trust Company as escrow agent (the “Escrow Agent“), without payment of additional consideration or further act or formality on the part of the holder thereof, one common share in the capital of Fredonia (each, an “Underlying Share“) and one half of one common share purchase warrant of Fredonia (each whole common share purchase warrant, a “Underlying Warrant“) upon the satisfaction or waiver (to the extent such waiver is permitted) of the certain escrow release conditions outlined below (the “Escrow Release Conditions“) on or before June 24, 2021 (the “Termination Date“), or such other date that the Corporation, Fredonia and the Agents may agree to in writing. The Underlying Warrants will be governed by the terms of a warrant indenture to be entered into on the date the Escrow Release Conditions are satisfied and will be exercisable at a price of $0.25 per Underlying Warrant until February 24, 2024.

Each Underlying Share and Underlying Warrant will then be exchanged for one post-consolidation Resulting Issuer common share (the “Resulting Issuer Shares“) and one Resulting Issuer common share purchase warrant (the “Resulting Issuer Warrants“) in connection with the closing of the Proposed Transaction. The Resulting Issuer will have the option to accelerate the expiry date of the Resulting Issuer Warrants in the event that the closing trading price of the Resulting Issuer Shares on the Exchange is greater than $0.60 for at least 20 consecutive trading days by delivering or causing delivery of written notice of such acceleration to the holders of Resulting Issuer Warrants.

The Escrow Release Conditions are comprised of:

1. the receipt of all required corporate, shareholder and regulatory approvals in connection with the Qualifying Transaction and Financing;

2. the completion, satisfaction or waiver of all conditions precedent to the Qualifying Transaction substantially in accordance with the definitive agreement relating thereto, to the satisfaction of the Agents’ acting reasonably (other than the release of the gross proceeds raised in connection with the Financing, less expenses and the Agent’s cash commission (the “Escrowed Funds“));

3. written confirmation to the Agents from each of Fredonia and RRCC that all conditions of the Qualifying Transaction have been satisfied or waived, other than release of the Escrowed Funds, and that the Qualifying Transaction shall be completed forthwith upon release of the Escrowed Funds;

4. the distribution of (i) the Underlying Shares and the Underlying Warrants and (ii) the Resulting Issuer Shares to be issued in exchange for the Underlying Shares pursuant to the Qualifying Transaction following the satisfaction of the Escrow Release Conditions being exempt from applicable prospectus and registration requirements of applicable securities laws and not subject to any hold or restricted period;

5. the Resulting Issuer Shares being conditionally approved for listing on the Exchange, and the completion, satisfaction or waiver of all conditions precedent to such listing, other than the release of the Escrowed Funds; and

6. Fredonia and the Agents shall have delivered a joint notice and direction to the Escrow Agent in regards to the satisfaction of conditions precedent for the release of the Escrow Funds to the Resulting Issuer (the “Release Notice“).

In the event that: (i) the Escrow Agent does not receive the Release Notice at or prior to 5:00 p.m. (Toronto time) on the Termination Date, or (ii) if prior to the Termination Date, the Corporation advises the subscribers or announces to the public that it does not intend to satisfy the Escrow Release Conditions, the Subscription Receipts will be null and void and of no further effect, and the Escrow Agent will return to each holder of Subscription Receipts an amount equal to the aggregate subscription price of the Subscription Receipts held by such holder plus a pro rata portion of any interest and other income earned on the Escrowed Funds, less applicable withholding taxes, if any. Fredonia will be responsible and liable to the holders of Subscription Receipts for any shortfall between the aggregate subscription price and the Escrowed Funds.

In the event the Escrow Release Conditions are satisfied, and the Proposed Transaction is completed, the Escrowed Funds will be released to the Corporation less the fees and expenses payable to the Agents in accordance with the Agency Agreement.

About Fredonia

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Fredonia, incorporated under the laws of the British Virgin Islands, directly or indirectly, owns 100% interest in certain license areas (totaling approximately 18,300 ha.) (collectively, the “Project”), all within the Deseado Massif geological region in the Province of Santa Cruz, Argentina, including the following principal areas: El Aguila, approx. 9,100ha, Petrificados, approx. 3,000ha, and the flagship, advanced El Dorado-Monserrat (“EDM”) covering approx. 6,200ha located close to Anglo Gold Ashanti’s Cerro Vanguardia mine, subject to a 1.5% net smelter return royalty on the EDM, 0.5% net profits interest on Winki II, El Aguila I, El Aguila II and Petrificados.

About the Project

The Deseado massif is a tectonic block which comprises Jurassic and Cretaceous volcanic outpouring, containing two important geological groups: the Bajo Pobre and Chon Aike both of which are prospective for low sulphidation epithermal style gold-silver mineralisation, such as being exploited at the Cerro Vanguardia gold – silver mine.

The property contains other prospects which are interpreted as prospective on the basis of drilling so far conducted: The Project contains several other prospects with identified structures containing significant gold-silver values in rock chip, channel and drill samples.

For further information:

Richmond Road Capital Corp.
Michael Doyle, CEO
Phone: 403-708-2427
Email: mdoyle@canpetro.com

Fredonia Management Ltd.
Carlos Espinosa, Chief Financial Officer
cespinosa@slgmexico.com

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release.

Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and obtaining all required shareholder approvals. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

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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.

All information contained in this news release with respect to RRCC, Fredonia, and the Resulting Issuer was supplied by the parties, respectively, for inclusion herein, and RRCC and its directors and officers have relied on Fredonia for any information concerning such party.

Forward-Looking Statements

This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would” , “might ” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements relate, among other things, to: the terms and conditions of the Proposed Transaction, the completion of the Financing and the release of the Escrowed Proceeds, the consolidation, the business and operations of RRCC, Fredonia and the Resulting Issuer, go-forward management of the Resulting Issuer; the trading of the Resulting Issuer common shares, and the receipt of director, shareholder and regulatory approvals. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; and the delay or failure to receive board, shareholder, court or regulatory approvals. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this news release. Except as required by law, RRCC and Fredonia assume no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law. The terms and conditions of the Proposed Transaction may change based on RRCC’s due diligence and the receipt of tax, corporate and securities law advice for both RRCC and Fredonia. The statements in this press release are made as of the date of this release.

Not for distribution to U.S. Newswire Services or for dissemination in the United States. Any failure to comply with this restriction may constitute a violation of U.S. Securities laws.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/75405