Canamex arranges $6.25M placement of $5 royalty tokens

Feb 2, 2018

2018-02-02 12:15 ET – News Release

Mr. David Vincent reports

NON-BROKERED PRIVATE PLACEMENT – GOLD ROYALTY TOKENS

Canamex Gold Corp. has arranged a non-brokered private placement of gold royalty tokens, to accredited investors.

Offering

1,000,000 Gold Royalty Tokens at 0.005oz per Unit for 5,000 ounces gold
Each Gold Royalty Token offered at $USD 5.00 ($CAD 6.25)
Minimum subscription: 200 Gold Royalty Tokens for $USD 1000 ($CAD 1250)

The total Offering will raise up to $6.25-million for the Company. There is no minimum offering. The Gold Royalty Tokens are redeemable in lots of 200 Gold Royalty Tokens, for one fine ounce gold bar, fineness 99.99%, which is LBMA good delivery certified from a nominated LBMA accredited bullion house, at any time after the bullion delivery event, as defined in the Offering. The Gold Royalty Tokens, have a term of 13 years, are not-transferable and will not be listed for trading on any traditional stock exchange.

As this Offering is effectively a royalty arrangement, it is an obligation that is attached to the Bruner Gold Project (“Bruner”) itself. The royalty obligation will be registered against the Bruner property. The Gold Royalty Tokens will only pay out, if there is production from Bruner. If the Company, (or its successors, or trustees etc.) fail to place Bruner into production, within the next 13 years, the Gold Royalty Tokens may have little or no value. The Gold Royalty Tokens are illiquid as they cannot be resold, traded on a traditional stock exchange, or otherwise distributed or transferred by participants in this Offering. This Offering may result in a dilution of common shareholder’s investment, as the Company will have a legal obligation to deliver all gold required, pursuant to this Offering, to participants in this Offering, prior to any claim by common shareholders. The Gold Royalty Tokens will have no voting rights, nor do they have a right to participate in any residual equity of the Company.

Value Proposition (1)

One Gold Royalty Token Market Value: $US 6.75 ($CAD 8.43)

One Gold Royalty Token Offer Price: $US 5.00 ($CAD 6.25)

Value premium: $6.75 – $5.00 = $ US1.75 per Gold Royalty Token or 35% premium to offer price

                SUMMARY OF THE VALUE PROPOSITION               
                                    
Gold royalty token              Market premium to offering price

0.005 ounce 9999 gold bullion                                 35%

Use of the Proceeds

The net proceeds of the Offering will be used by the Company to carry out the following:

Initial Crypto-Token Offering (ITO) Development Work : ITO development work, including developing the regulatory documentation, the ITO landing platform, the logistics and the processes to initiate and complete a planned ITO of gold and/or silver backed Crypto-Tokens, with smart contracts, deployed on the Ethereum blockchain during 2018. Proceeds budgeted 10%.
Bruner Gold Development Project: Development work in 2018 to the mine financing stage, including finalizing engineering design, optimizing mining plan, complete environmental permitting, and various associated permitting work, based on the 2018 updated PEA recommendations. Proceeds budgeted 70%.
Silverton Gold Exploration Project: Complete geochemistry and geophysics work, leading to defining and executing a drilling campaign in 2018. Proceeds budgeted 20%.

Bruner Gold Development Project

As the Company is still in the development phase with its Bruner Gold Project, in Nevada, it has yet to produce any gold or other resources. The Company has not yet made a production decision, and is raising capital to advance the project through permitting and feasibility, the results of which are anticipated to support a production decision upon completion. Whilst the 2018 updated PEA is positive, and recommends advancing the project through permitting and feasibility, it is based upon mineral resources only, and not mineral reserves. The results of a feasibility study may differ from the results of the PEA. Therefore, a Gold Royalty Token linked to the production of such mineral resources is speculative, as there is no definitive time horizon in which commercial production of such resources could commence; given that there is no definitive feasibility study demonstrating economic production.

Initial Crypto-Token Offering (ITO) Considerations

Gold Royalty Token holders may be offered a priority allocation into any ITO, where any is conducted by the Company in 2018, by offering the Gold Royalty Token holders conversion of their Gold Royalty Tokens to Crypto-Tokens deployed on the Ethereum blockchain, with a priority allocation in the ITO.

T he Company is not undertaking any current ITO right now. If, as and when the Company wishes to undertake an ITO, it will disclose such details at that time, including any priority allocation in any ITO, to the holders of the Gold Royalty Tokens.

While the Company is not conducting a ITO now it may decide to do so in the future. If the Company decides to do so, it will determine the terms of such offering and such ITO may be deemed to be a securities offering, for the purposes of the Securities Act (British Columbia) and therefore require either a prospectus or an exemption from the prospectus requirement to issue the Crypto-Tokens deployed on the Ethereum blockchain. The Company may utilize the accredited investors exemption, the offering memorandum exemption or such other exemptions from the prospectus requirement that are detailed in National Instrument 45-106 – Prospectus Exemptions. However, in certain instances the issuance of a Crypto-Tokens may be determined to be a derivative if the underlying asset of the crypto-token is a commodity, which is not an investment contract. Until the Company finalizes any terms of any ITO it will be unable to definitively determine if the Crypto-Token is a security or a derivative. Crypto-Tokens may be tradeable on the Ethereum blockchain. If such Crypto-Tokens are a security then the Company will need to file a prospectus to permit the secondary market trading of the Crypto-Token or alternatively apply for an exemption from the prospectus requirement for secondary market trading, and there are no assurances that such exemptions will be granted.

Gold Royalty Token Considerations and Risks

Important considerations regarding this Offering and main risk disclosures, are summarized at Annex A.

(1) Assumptions

Gold Royalty Token Purchase price: $US 5.00 ($CAD 6.25)

One Gold Royalty Token: 0.005 ounces 9999 gold bullion by weight

Exchange Rate: 1.25 = $US 1.00

Spot Gold price: $US 1350 per ounce ($ CAD 1,687)

One Gold Royalty Token Market Value: $US 1350 x 0.005oz = $US 6.75 ($CAD 8.43)

Gold Royalty Token expiry date: 30th December 2030 (about 13 years)

About the Company

Canamex Gold Corp. (TSX-V: CSQ) (OTCBB: CNMXF) (FSE: CX6) is engaged in fast-tracking toward development of the Bruner Gold Development Project in the prolific gold jurisdiction of Nye County, Nevada. The region is home to several producing and past-producing mines along the Walker Lane Trend.

Canamex completed a positive Preliminary Economic Assessment (PEA) on the Bruner Gold Development Project in 2016. Based on additional drilling conducted on the property, the company completed an updated PEA in 2018. Canamex cautions that the PEA is preliminary in nature, in that it includes Inferred Mineral Resources which are considered too speculative geologically to have the economic considerations applied to them that would enable them to be characterized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Canamex is now moving the Bruner Gold Project forward into permitting and feasibility on the strength of this positive updated PEA and the rising gold price environment. The second asset is the Silverton Gold property, a gold exploration project, in Nevada, which has geological similarities to the Long Canyon gold deposit in Nevada, being mined by Newmont Mining. Canamex has signed Agreements with Harmonychain AS, for Ethereum Blockchain Smart Contract Crypto-Tokens for Gold and Silver, as an alternative means of raising capital, potentially without equity dilution. The Agreements secure the exclusive rights to 6 (Six) Ethereum Crypto-Token domain names, ticker codes, and associated smart contracts, for Gold and Silver, if any of them have been successfully completed by 31 st December 2018.

Greg Hahn (CPG#7122), President & COO of the Company is the qualified person who has reviewed and approved all technical disclosures in this release.

We seek Safe Harbor.

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