American Eagle Gold Corp. (TSXV: AE) (OTCQB: AMEGF) (“American Eagle” or the “Company”) is pleased to announce that it has entered into a subscription agreement (the “Agreement”) with a wholly owned subsidiary of South32 Ltd. (ASX: S32) (“South32”), pursuant to which South32 has agreed to invest approximately $29.16 million in the Company on a non-brokered private placement basis. Under the terms of the Agreement, American Eagle will issue 33,321,577 common shares in the capital of the Company (“Common Shares”) at a price of C$0.875 per Common Share, representing a 15% premium to the 5-day volume weighted average trading price of the Common Shares on the TSX Venture Exchange (the “TSX-V”) ending on November 8, 2024, for gross proceeds of $29,156,379.88 (the “Offering”).
“We are very pleased to welcome South32 as a strategic investor in American Eagle. This investment marks our second major mining enterprise that has endorsed our project and our work at the NAK copper-gold porphyry project. This investment underscores NAK’s potential, significantly strengthens our balance sheet, and enhances NAK’s profile,” said Anthony Moreau, CEO of American Eagle Gold.
“Upon closing of the Offering (“Closing”), American Eagle will hold approximately $37 million in cash, enabling us to thoroughly test our thesis for NAK through a comprehensive drill program to explore the full extent of the system, including the perimeter of the porphyry stock. We believe NAK has the potential for a large-scale resource with near-surface potential, favorable topography, and excellent infrastructure access.”
Under the terms of the Agreement, American Eagle will use the proceeds from the Offering to build on the successes of its 2024 drill program, which expanded NAK’s scale and identified additional high-grade zones.
No warrants are included in the Offering, and no finders fees or commissions were paid. Closing of the Offering is expected to occur on or about November 26, 2024 (the “Closing Date”), subject to the satisfaction of customary closing conditions including receipt of all necessary regulatory approvals and acceptance of the TSX-V. The Common Shares will be subject to a statutory hold period of four months plus a day following the Closing Date.
Upon Closing, the Company will be funded for substantial drill program expansions in 2025 and 2026. Further details on the 2025 drill program will be shared once assays from the 2024 program are received.
Immediately following Closing, South32 will hold 33,321,577 Common Shares, representing approximately 19.9% of the issued and outstanding Common Shares on a non-diluted basis. South32 currently holds no other securities of American Eagle.
At Closing, the Company and South32 will enter into an investor rights agreement (the “IRA”). Under the terms of the IRA, South32 has been granted participation and top-up rights to allow South32 to maintain its pro-rata ownership in the Company as well as information rights relating to the NAK project so long as South32’s ownership in American Eagle remains greater than 5.0% of the Common Shares on a non-diluted basis. The IRA does not contain any right of first refusal in favour of South32 regarding the sale of shares of the Company. Additionally, the exercise of the participation and top-up rights by South32 under the IRA shall, in no event, result in South32 holding 20% or more of the outstanding Common Shares, unless and until American Eagle shall have first received the requisite shareholder and TSX-V approval.
Pursuant to the IRA, South32 shall also be given the right to nominate one director (the “Investor Nominee”) for election to the Company’s Board of Directors (the “Board”) so long as South32 maintains a 10% or more ownership in American Eagle on a non-diluted basis. If South32 exercises its nomination right, American Eagle shall, within 10 days, appoint the Investor Nominee to the Board to serve as a member of the Board until the next annual general meeting of the Company. Election of the Investor Nominee to the Board will thereafter be subject to the approval of the Company’s shareholders at each annual general meeting of the shareholders. As at the date of this release, South32 does not currently intend to appoint an Investor Nominee.
South32’s purchase of Common Shares was made for investment purposes. South32 has agreed to be restricted from selling any Common Shares for a period of one year from the closing date of the Transaction. After the one year period, South32 may determine to increase or decrease its investment in American Eagle depending on market conditions and any other relevant factors.
