SAC.P Savanna Capital Corp

SAVANNA CAPITAL CORP. (“Savanna”) (TSX-V: SAC.P), a capital pool company as defined under Policy 2.4 – Capital Pool Companies (the “CPC Policy”) of the TSX Venture Exchange (the “Exchange”), is pleased to announce that it has entered into a binding letter of intent (the “Letter Agreement”) with 1000090242 Ontario Inc., a privately held corporation existing under the laws of the Province of Ontario (“San Luis ON”), which outlines the general terms and conditions pursuant to which Savanna and San Luis have agreed to complete a transaction (the “Transaction”) that will result in a reverse take-over of Savanna by the current shareholders of San Luis. The Letter Agreement was negotiated at arm’s length and entered into as of January 27, 2022.

Exploranciones de SL Cordero, S.A. de C.V. (“San Luis MX”), a wholly-owned subsidiary of San Luis (San Luis MX and San Luis ON are collectively referred to hereinafter as “San Luis”), holds the mineral claims covering approximately 1,216.99 ha in the Municipality of San Luis del Cordero in the State of Durango, Mexico (the “San Luis Property”). The San Luis Property features three different mineralisation styles, high-grade silver-copper veins, which have been mined in the 70's, a silver, copper, zinc-bearing skarn deposit and manto-style mineralisation. The skarn has been drill tested for a strike-length of 750 metres, but has a potential of 3.5 kilometres of total strike length with known mineralisation zones.

THE TRANSACTION

Terms of the Transaction and Financing Matters

It is currently anticipated that the proposed Transaction will be effected by way of a plan of arrangement, triangular merger, share exchange or other mechanism deemed to be the most effective, as determined by the mutual agreement of Savanna and San Luis. The Transaction will be considered a “Qualifying Transaction” pursuant to the CPC Policy. Savanna and San Luis will enter into a definitive merger, amalgamation, arrangement or share exchange agreement (the “Definitive Agreement”) pursuant to which the combined entity of Savanna and San Luis (the “Resulting Issuer”) will continue to carry on the business of San Luis under its name and will list its securities on the Exchange as a mining issuer.

The obligations of Savanna and San Luis pursuant to the Letter Agreement shall terminate in certain specified circumstances, including in the event that the Definitive Agreement is not entered into on or before February 28, 2022 (unless extended by mutual agreement of the parties). The proposed Transaction is subject to requisite regulatory approvals and standard closing conditions, including the approval of the directors of each of Savanna and San Luis of the Definitive Agreement, as well as the conditions described below. Upon completion of the Transaction, it is the intention of the parties that the Resulting Issuer will continue to focus on the current business and affairs of San Luis.

Concurrent Offerings

Savanna has no material liabilities, approximately $45,000 in cash, 4,615,000 common shares (the “Savanna Common Shares”) and 443,200 options (the “Savanna Options”) issued and outstanding. Prior to the completion of the Transaction, it is anticipated that San Luis will complete a non-brokered private placement of approximately 10,000,000 units (the “Target Units”) at a price of C$0.15 per Target Unit for gross proceeds of approximately C$1,500,000.00 (the “San Luis Offering”). Each Target Unit shall entitle the unitholder to receive, upon satisfaction of certain escrow release conditions, and without payment of additional consideration, one common share in the capital of San Luis (a “San Luis Common Share”) and one common share purchase warrant (a “Target Warrant”) exercisable for 24 months from the date of the issuance at a price of C$0.25 per Target Warrant. Upon completion of the San Luis Offering, San Luis will have approximately 40,000,000 common shares and 10,000,000 Target Warrants issued and outstanding.

The Transaction

On closing of the Transaction, it is anticipated that the San Luis Common Shares and the Target Warrants will be exchanged for Savanna Common Shares and warrants of Savanna on a one-to-one basis.

Post-Transaction Capital Structure

Upon the completion of the Transaction, the capital structure of the Resulting Issuer is anticipated to be as follows:

• Shareholders of Savanna – 4,615,000
• Existing shareholders of San Luis – 30,000,000
• Subscribers to the San Luis Offering – 10,000,000

Additionally, there will be approximately 10,000,000 Resulting Issuer warrants (from the San Luis Offering) exercisable at C$0.25 and approximately 443,200 Savanna Options exercisable at C$0.10 issued and outstanding. Subject to expenses incurred with regard to the Transaction, upon closing of the Transaction, the Resulting Issuer will have cash of approximately $1,545,000. The anticipated capital structure of the Resulting Issuer assumes the satisfaction of certain liabilities of San Luis for San Luis Common Shares.

Conditions to Transaction

Completion of the Transaction is subject to a number of conditions of closing that are customary for a transaction of this nature, including, without limitation:

• Savanna shall obtain receipt of requisite shareholder approvals in connection with the following matters: (i) a change of name to a name as may be requested by San Luis and acceptable to applicable regulatory authorities (the “Name Change”); (ii) the election of the directors of the Resulting Issuer to replace the current directors of Savanna immediately following the completion of the proposed Transaction; and (iii) the approval of the Transaction, if required by regulatory authorities;
• Completion of the San Luis Offering;
• Savanna and San Luis entering into the Definitive Agreement; and
• The common shares of the Resulting Issuer having been approved for listing on the Exchange.

The Definitive Agreement, once executed, will be filed under Savanna’s issuer profile on SEDAR at www.sedar.com.

Shareholder Approval

Savanna and San Luis are at arm’s length, and accordingly, the Transaction is not a “Non-Arm’s Length Qualifying Transaction” (as such term is defined by the Exchange). As such, Savanna will not be required to obtain shareholder approval of the Transaction. In addition, the Transaction is not “related party transaction” as such term is defined by Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions and is not subject to Policy 5.9 of the Exchange. As a result, no meeting of the shareholders of Savanna are required pursuant to Policy 2.4 of the Exchange or securities laws.

However, Savanna plans to hold a special meeting of shareholders whereat, among other things, the shareholders of Savanna will be asked to approve: (i) the Name Change; and (ii) the appointment of a new slate of directors, conditional upon completion of the Transaction. It is anticipated that the Transaction and the Definitive Agreement will be put before the shareholders of San Luis for their approval.

THE RESULTING ISSUER

Insider, Officers and Board of Directors of the Resulting Issuer

Management of the Resulting Issuer

At closing of the Transaction, all of the existing directors and officers of Savanna will resign and the board of directors of the Resulting Issuer shall be composed of a minimum three (3) and a maximum of ten (10) directors.

More details of the number and identity of the proposed officers and directors and any insiders of the Resulting Issuer will be disclosed in a further news release.

Inter-Company Relationships

Officers, directors and principal shareholders of Savanna may own common shares of San Luis and may subscribe for Target Units in the San Luis Offering. Similarly, officers, directors and principal shareholders of San Luis may own common shares of Savanna.

Sponsorship for Qualifying Transaction

Sponsorship of a qualifying transaction of a capital pool company is required by the Exchange unless exempt in accordance with the policies of the Exchange. Savanna is currently reviewing the requirements for sponsorship and may apply for an exemption from the sponsorship requirements under policies of the Exchange; however, there is no assurance that Savanna will ultimately obtain this exemption. Savanna intends to include any additional information regarding sponsorship in a subsequent press release.

Filing Statement

In connection with the Transaction and pursuant to the requirements of the Exchange, Savanna anticipates filing a filing statement (the “Filing Statement”) on its issuer profile on SEDAR (www.sedar.com), which will contain details regarding the Transaction, the San Luis Offering and the Resulting Issuer.

Qualified Persons

The scientific and technical information contained in this press release has been reviewed, prepared and approved by Dr. Andreas Rompel, PhD, Pr. Sci. Nat. (400274/04), FSAIMM, who is a “Qualified Person” as defined by National Instrument 43-101 – Standards of Disclosure for Mineral Projects.

About Savanna

Savanna is a Capital Pool Company (as defined in the policies of the TSX Venture Exchange) listed on the Exchange.

About San Luis

San Luis ON is a private Ontario corporation that has a 100% interest in San Luis MX. San Luis MX holds the mineral claims covering approximately 1,216.99 ha in the Municipality of San Luis del Cordero in the State of Durango, Mexico (the “San Luis Property”). Further details on the historical activities of San Luis and the San Luis Property will be provided in the listing statement for the Resulting Issuer and the National Instrument 43-101: Standards of Disclosure of Mineral Projects with respect to the San Luis Property.

Further Information

For further information regarding the proposed Transaction, please contact:

Savanna Capital Corp. Kenny Choi Tel: (416) 861-2262 E-mail: Kenny.choi@fmresources.ca

San Luis Aaron Atin Tel: (416) 861-5888 Email: aaron.atin@fmresources.ca 

All information contained in this news release with respect to Savanna and San Luis was supplied by the parties respectively for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning the other party.

Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance. 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 transaction, any information release or received with respect to the 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.

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

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION:

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 terms and conditions of the proposed Offering; use of proceeds raised in the Offering, the proposed officers and directors of the Resulting Issuer; and the business and operations of the Resulting Issuer after the proposed Transaction. 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 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.

Readers should not place undue reliance on the forward-looking statements and information contained in this news release. Savanna and San Luis 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 securities to be offered in the Offering have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) or any U.S. state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, United States persons absent registration or any applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Photos accompanying this announcement are available at:

https://www.globenewswire.com/NewsRoom/AttachmentNg/b1c0cd01-cbca-44f0-acd3-168ddda60bba

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