Goldshore and Sierra Madre Complete $25 Million Equity Financing

/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE U.S./

VANCOUVER, BC, Feb. 26, 2021 /CNW/ - Goldshore Resources Inc. ("Goldshore") and Sierra Madre Developments Inc. ("Sierra Madre") (TSXV: SMG.H) are pleased to announce the closing of the previously-announced brokered private placement offerings, pursuant to which Goldshore issued an aggregate of 23,076,924 subscription receipts (the "Subscription Receipts") at a price of $0.65 per Subscription Receipt and Sierra Madre issued an aggregate of 13,333,335 flow-through subscription receipts (the "Flow-Through Subscription Receipts" and together with the Subscription Receipts, the "Offered Securities") at a price of $0.75 per Flow-Through Subscription Receipt, for combined aggregate gross proceeds of $25,000,001.85 (the "Offerings").  The Offerings were conducted by a syndicate of agents, led by Eventus Capital Corp. (the "Lead Agent"), and included Canaccord Genuity Corp., Laurentian Bank Securities Inc., Haywood Securities Inc., and Desjardins Securities Inc. (together with the Lead Agent, the "Agents").

The Offerings were undertaken in conjunction with the previously announced transaction (the "Business Combination"), which will result in the reverse takeover of Sierra Madre by Goldshore (the resulting entity being the "Resulting Issuer"). As previously announced, Goldshore also entered into an agreement to acquire the interest of Wesdome Gold Mines Ltd. (the "Proposed Acquisition") in the Moss Lake gold project located in Ontario.

The Offerings and the Business Combination were originally announced by way of press releases on January 26, 2021 and February 22, 2021.

"We are truly excited by the proposed Business Combination with Sierra Madre and acquisition of the Moss Lake Project from Wesdome, as well as the completion of the $25M financing, which funds are expected to advance development on the Moss Lake project.  We fully believe that we have assembled the best positioned team to advance Moss Lake, which has significant resource growth potential along its existing historic resource and 20km+ trend. We have already identified several areas of prospective follow up work as we are going through an extensive data compilation exercise, and intend to work diligently with the entire team to advance activities on the ground and unlock value from the asset," stated Goldshore's incoming President and Chief Executive Officer, Brett A. Richards.

Each Subscription Receipt entitles the holder to receive one common share in the capital of Goldshore (a "Goldshore Share") for no additional consideration upon satisfaction of the Escrow Release Conditions (as defined below). Each Flow-Through Subscription Receipt entitles the holder to receive one flow-through common share in the capital of Sierra Madre (a "Sierra Madre Share"), to be issued as a "flow-through share" as defined in subsection 66(15) of the Income Tax Act (Canada) (the "Tax Act"), upon satisfaction of the Escrow Release Conditions. In connection with the completion of the Business Combination, each Goldshore Share will be exchanged into one common share of the Resulting Issuer (a "Resulting Issuer Share"). 

Sierra Madre will incur (or be deemed to incur) resource exploration expenses which will constitute "Canadian exploration expenses" as defined in subsection 66.1(6) of the Tax Act and "flow through mining expenditures" as defined in subsection 127(9) of the Tax Act, in an amount equal to the amount raised pursuant to the sale of Flow-Through Subscription Receipts and Sierra Madre will renounce the Canadian exploration expenses (on a pro rata basis) to each subscriber with an effective date of no later than December 31, 2021 in accordance with the Tax Act.

The gross proceeds of (a) the sale of Subscription Receipts, less 50% of the Agents' cash commission (as described below) and certain expenses of the Agents, and (b) the sale of the Flow-Through Subscription Receipts, have been deposited in escrow until the satisfaction of the Escrow Release Conditions (the "Escrowed Amount").

If the Escrow Release Conditions have not been satisfied prior to June 30, 2021, the total escrowed amount (plus any interest earned thereon in respect of the gross proceeds from the sale of Subscription Receipts) will be returned to the holders (net of any applicable withholding taxes), and the Offered Securities will be automatically cancelled and be of no further force and effect.

The remaining Escrow Release Conditions are summarized as follows: confirmation that all conditions to the completion of the Proposed Acquisition have been satisfied or waived; confirmation that all conditions to the completion of the Business Combination have been satisfied or waived, (other than the such conditions to be satisfied at completion of the Business Combination); receipt of all approvals required for completion of the Business Combination; the Resulting Issuer Shares being conditionally approved for listing on the TSX-V; counsel to the Resulting Issuer having delivered a standard legal opinion; Goldshore, Sierra Madre and the Resulting Issuer not being in breach of covenants or obligations under the transaction agreements; and Goldshore, Sierra Madre and the Lead Agent having delivered a release notice to the escrow agent.

In connection with the Offerings, the Agents are entitled to  a cash fee equal to 6% of the aggregate gross proceeds of the Offerings (4% for president's list subscribers) (50% of which such cash fee payable in respect of the sale of Subscription Receipts was paid to the Agent's on closing of the Offering) and were issued such number of compensation options (the "Compensation Options") equal to 6% of the number of Offered Securities sold under the Offerings (4% for president's list subscribers).  Each Compensation Option issued by Goldshore (the "Goldshore Compensation Options") is exercisable for one Goldshore Share for a period of two years from the satisfaction of the Escrow Release Conditions (the "Expiry Date") at a price of $0.65 per Goldshore Share. Each Compensation Option issued by Sierra Madre is exercisable for one Sierra Madre Share until the Expiry Date at a price of $0.75 per Sierra Madre Share. In connection with the Business Combination, each Goldshore Compensation Option will be exchanged for one compensation option of the Resulting Issuer, which will be exercisable for one Resulting Issuer Share at a price of $0.65 until the Expiry Date.

The Subscription Receipts are subject to an indefinite hold period, and the Flow-Through Subscription Receipts are subject to a four-month statutory hold period expiring on June 27, 2021. The Resulting Issuer Shares issued in exchange for the Goldshore Shares pursuant to the Business Combination are expected to be free of any statutory hold periods in Canada, other than in respect of control block sales.

Upon satisfaction of the Escrow Release Conditions, it is expected that the net proceeds from the Offerings will be used to advance development of the Moss Lake gold project located in Ontario, Canada and for working capital and general corporate purposes.

Goldshore Resources Inc.
"Galen McNamara"
Galen McNamara
CEO & Director

Sierra Madre Developments Inc. 
"Hani Zabaneh"
Hani Zabaneh
CEO & Director

Cautionary Note Regarding Forward-Looking Statements

This news release contains statements that constitute "forward-looking statements." Such forward looking statements involve known and unknown risks, uncertainties and other factors that may cause Sierra Madre's, Goldshore's and the Resulting Issuer's actual results, performance or achievements, or developments to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements.  Forward looking statements are statements that are not historical facts and are generally, but not always, identified by the words "expects," "plans," "anticipates," "believes," "intends," "estimates," "projects," "potential" and similar expressions, or that events or conditions "will," "would," "may," "could" or "should" occur.

Forward-looking statements in this document include, among others, statements relating to expectations regarding the completion of the Business Combination (including all required approvals), the listing on the TSX-V, the use of proceeds from the Offerings, the satisfaction of the Escrow Release Conditions, payment of the Agents' commission from escrow, the conversion of the Offered Securities, the business plans of the Resulting Issuer, and other statements that are not historical facts. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors and risks include, among others: that there is no assurance that the parties hereto will obtain the requisite director, shareholder and regulatory approvals for the Business Combination, and there is no assurance that the Business Combination will be completed as anticipated, or at all; following completion of the Business Combination, the Resulting Issuer may require additional financing from time to time in order to continue its operations which may not be available when needed or on acceptable terms and conditions acceptable; compliance with extensive government regulation; domestic and foreign laws and regulations could adversely affect the Resulting Issuer's business and results of operations; the stock markets have experienced volatility that often has been unrelated to the performance of companies and these fluctuations may adversely affect the price of the Resulting Issuer's securities, regardless of its operating performance; and the impact of COVID-19.

The forward-looking information contained in this news release represents the expectations of Sierra Madre and Goldshore as of the date of this news release and, accordingly, is subject to change after such date. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. Neither Sierra Madre nor Goldshore undertakes no obligation to update these forward-looking statements in the event that management's beliefs, estimates or opinions, or other factors, should change.

This news release does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Completion of the transactions are subject to a number of conditions, including but not limited to, TSX-V acceptance and if applicable, disinterested shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the 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 transactions, any information released or received with respect to the transactions may not be accurate or complete and should not be relied upon. Trading in the securities of Sierra Madre (and the Resulting Issuer) should be considered highly speculative.

The TSX-V has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this news release.

SOURCE Sierra Madre Developments Inc.