Northern Vertex Mining Corp. (“Northern Vertex”) (TSXV: NEE) (OTC-NASDAQ Intl: NHVCF) and Eclipse Gold Mining Corp. (“Eclipse”) (TSXV: EGLD) (OTC: EGLPF) are pleased to announce that they have entered into a definitive arrangement agreement (the “Arrangement Agreement”) to combine in an at-market merger (the “Transaction”), creating a new gold growth resource business focused on the Western United States. Northern Vertex will be the resulting company with offices in the US and Canada.

Transaction Highlights

  • Concurrent “best efforts” private placement of subscription receipts by Eclipse for minimum gross proceeds of C$20 million to be led by Stifel GMP on behalf of a syndicate of agents including Canaccord Genuity Corp., Raymond James Ltd., Beacon Securities Limited, and PI Financial Corp.
  • Exchange ratio for existing common shares of Eclipse of 1.09 shares of Northern Vertex for every one share of Eclipse, determined based on the 20-day VWAP of each company on December 4th, 2020.
  • Combined company will be comprised of 71% Northern Vertex shareholders, 18% Eclipse shareholders and 11% new shareholders.
  • Joining the Board of Directors of Northern Vertex from Eclipse will be Douglas J. Hurst and Marcel de Groot. Mr. Hurst will serve as Chairman of Northern Vertex and lead the integrated Board and management team.
  • Accelerated corporate growth will be supported by the Moss Mine’s production and cash flow, and a bolstered balance sheet.
  • Shareholders of the combined company gain leverage to resource growth at greater scale with accelerated drilling at both the Moss Mine and Hercules Gold project.

Northern Vertex President, CEO and Director Mr. Kenneth Berry stated, “The result of this transaction will be a combined company with a greatly strengthened balance sheet, and an enhanced team with extensive experience growing multi-asset gold companies. This represents a significant step toward our unwavering vision of building a top of the class mid-tier gold producer. We plan to use this new platform to accelerate organic growth opportunities by targeting significant resource expansion at the Moss Mine and execute an aggressive roll-up strategy focused on the Western United States.”

Eclipse President, CEO and Director Michael G. Allen stated, “This combination gives Eclipse shareholders exposure to creating value on a larger scale, supported by positive cash-flow. Shareholders of the new combined company will now own a platform including two Walker Lane gold projects with multi-million-ounce potential, a producing mine with untapped production and cash-flow growth opportunities, and an executive team with demonstrated success building multi-asset companies organically and through M&A. This combination aligns all the key elements required toward building America’s next mid-tier gold growth story.”

Greenstone Resources LLP Senior Partner Michael Haworth stated, “As a 22% shareholder of this new, integrated gold company, we are excited about the opportunity we see ahead with a stronger balance sheet, enhanced capital markets presence, and accelerated fulfilment of operational and exploration potential. With our original investment in 2017, we had a vision for developing a consolidated, Western US precious metals producer and support this transaction as the next step in that direction.”

Board and Management Team

The combined company will feature a new integrated Board of Directors comprised of Douglas J. Hurst (Eclipse) acting as Chairman, Geoff Burns (Maverix Metals/Northern Vertex), Michael Haworth (Greenstone Resources/Northern Vertex), Marcel de Groot (Eclipse), David Farrell (Northern Vertex), Kenneth Berry (Northern Vertex), and James M. McDonald (Northern Vertex).

The management team will be comprised of President and CEO Kenneth Berry, CFO David Splett, EVP Corporate Development Michael G. Allen, and Dr. Warwick Board as Vice President of Exploration.

Transaction Details

Eclipse and Northern Vertex, who are arms length to each other, have entered into an Arrangement Agreement dated December 4th, 2020 pursuant to which shareholders of Eclipse will receive 1.09 shares in Northern Vertex for each Eclipse share by way of a plan of arrangement under the Business Corporations Act (British Columbia).

All outstanding stock options and warrants of Eclipse will be exchanged for stock options or warrants of Northern Vertex on the same basis as the share exchange ratio for the common shares.

The Transaction will be carried out by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia) and is subject to a number of conditions being satisfied or waived by one or both of Eclipse and Northern Vertex at or prior to closing of the Transaction, including approval of Eclipse’s shareholders and receipt of all necessary regulatory and court approvals and the satisfaction of certain other closing conditions customary for a transaction of this nature, including completion of the Offering (as hereinafter defined).

It is expected that the special meeting of Eclipse shareholders to approve the proposed Transaction will be held in February 2021 with closing shortly thereafter.

The Arrangement Agreement includes customary provisions, including mutual non-solicitation, right-to-match and fiduciary out provisions, as well as certain representations, covenants and conditions that are customary for a transaction of this nature. A termination fee of C$2.0 million will be payable by either party in the case of certain terminating events. The termination fee payable by Northern Vertex will increase to C$2.6 million in the event that Northern Vertex terminates the Arrangement Agreement to accept a superior proposal at any time following the closing of the Offering, as defined below.

Further information regarding the Transaction will be contained in a management information circular to be prepared by Eclipse and mailed to Eclipse shareholders in connection with a special meeting of shareholders to consider the Transaction. All shareholders of Eclipse are urged to read the information circular once available, as it will contain important additional information concerning the Transaction.

Board Recommendations and Voting Support

The Transaction has been unanimously approved by the board of directors of both Northern Vertex and Eclipse. The board of directors of Eclipse has unanimously recommended that the Eclipse shareholders vote in favour of the Transaction.

All the directors and officers of Eclipse, holding in aggregate approximately 17.3% of the issued and outstanding common shares of Eclipse have entered into customary voting support agreements agreeing to vote in favour of the Transaction.

Stifel GMP has provided a fairness opinion to the board of directors of Eclipse that, as of the date hereof, and based upon and subject to the assumptions, limitations and qualifications stated therein, the consideration being received by the shareholders of Eclipse under the Transaction is fair, from a financial point of view, to the shareholders of Eclipse.

Concurrent Financing

Concurrent with signing the Arrangement Agreement, Eclipse has entered into an agreement with a syndicate of agents led by Stifel GMP and including Canaccord Genuity Corp., Raymond James Ltd., Beacon Securities Limited, and PI Financial Corp. (collectively, the “Agents”) in connection with a “best efforts” private placement financing (the “Offering”) of subscription receipts (the “Subscription Receipts”) to be sold at C$0.50 per Subscription Receipt for minimum gross proceeds of C$20 million.

The Subscription Receipts will each be automatically converted into one divided by 1.09 of an Eclipse share (the “Eclipse Shares”) (for no further consideration and without any further action by the holders thereof) upon the satisfaction of certain  escrow release conditions, all of which must occur before February 28, 2021. The Eclipse Shares acquired upon conversion of the Subscription Receipts will be exchanged for Northern Vertex shares in accordance with the Plan of Arrangement resulting in purchasers of Subscription Receipts receiving one common share in Northern Vertex for each Subscription Receipt purchased in the Offering.

The Northern Vertex shares issued in connection with the closing of both the offering and the Transaction will not be subject to any statutory hold period in Canada.

Maverix Metals Inc. (“Maverix”) has agreed to exercise, on or before December 12, 2020, approximately 19.5 million share purchase warrants (the “Warrants”) exercisable into 19.5 million Northern Vertex common shares (the “Warrant Shares”) at C$0.40 per Warrant Share for gross proceeds to Northern Vertex of approximately C$7.8 million.  As part of the Transaction, Maverix will sell the Warrant Shares to Eclipse for C$0.50 per Warrant Share for a total purchase price of C$9.8 million.  Immediately following the closing of the Transaction the Warrant Shares will be returned to Northern Vertex for cancellation.

The proceeds of the Offering will partly be used to fund the purchase of the Warrant Shares from Maverix (C$9.8 million) with the remaining funds (C$10.2 million), prior to commission and expenses, together with the C$7.8 warrant exercise proceeds plus cash on hand, will be used to fund ongoing exploration and development at Northern Vertex’s Moss Mine, the Hercules Gold project, and general corporate purposes.

Advisors and Counsel

Stifel GMP is acting as financial advisor to Eclipse and DuMoulin Black LLP is acting as legal counsel to Eclipse.

Raymond James Ltd. is acting as financial advisor and Maxis Law Corporation is acting as legal counsel to Northern Vertex.

Qualified Persons

The foregoing technical information contained in this news release has been reviewed and verified by Mr. Joseph Bardswich, P.Eng., a director of Northern Vertex and a Qualified Person (“QP”) for the purpose of National Instrument 43-101 (Disclosure Standards for Mineral Projects), as well as Dr. Warwick Board, P.Geo., Vice President of Exploration for Eclipse Gold Mining Corporation, and a QP.