Vancouver, British Columbia – August 29, 2019 – Squire Mining Ltd. (CSE:SQR | FWB:9SQ | OTCQB:SQRMF) (“Squire”) is pleased to announce that, further to its press release dated May 30, 2019, on August 29, 2019, Squire entered into a definitive share purchase agreement (the “Agreement“) with Mr. Calvin Ayre, Cunning Hams Limited (“Cunning Hams”), Tansley Equipment Limited (“Tansley”) and Woodland Technology Group Inc. (“Woodland”, and together with Cunning Hams and Tansley, the “Companies”) to purchase all of the issued and outstanding shares of the Companies (the “Transaction”). The Companies own and operate a fleet of cloud computing assets in Canada, the United States and China, representing approximately 2,892 petahash per second of computing power.
As consideration for the Transaction, Squire has agreed to: (i) issue to Mr. Ayre 80,000,000 common shares (the “Common Shares”) in the capital of Squire; (ii) issue to Mr. Ayre 827,000,000 non‐voting participating shares (“NVPS”, and together with the Common Shares, the “Shares”), a new class of shares to be created in the capital of Squire, subject to shareholder approval; and (iii) enter into a profit sharing agreement with respect to the assets of Cunning Hams (the “Cunning Hams Operations Agreement”). The aggregate consideration payable to Mr. Ayre in respect of the Transaction will be subject to adjustment for operational pre‐payments made by the Companies for future use of electricity as at the closing of the Transaction (“Closing”).
The board of directors of Squire has obtained a fairness opinion from Canaccord Genuity Corp., the financial advisor of Squire, that, as of the date of their opinion, and subject to the assumptions, limitations, and qualifications on which such opinion was based, the consideration to be paid by Squire pursuant to the Transaction is fair, from a financial point of view, to Squire.
Closing is subject to customary conditions, including: (i) approval of the Canadian Securities Exchange (the “CSE”) pursuant to CSE Policy 8 – Fundamental Changes & Changes of Business in connection with the transactions contemplated by the Agreement; (ii) CSE acceptance of a revised CSE Form 2A Listing Statement of Squire for the relisting of the Common Shares subsequent to the completion of the Transaction (the “Listing Statement”); and (iii) approval by a simple majority of the votes cast by the shareholders of Squire in respect of (a) an amendment to the articles of Squire to create NVPS; and (b) the Fundamental Change (as defined below) (the “Shareholder Approvals”), in each case at a shareholders’ meeting to be called by Squire (the “Shareholders’ Meeting”). Additional information on the status of filing the Listing Statement and the timing of the Shareholders’ Meeting is set out below.
The Companies and the Assets
The Companies, each of which is incorporated under the laws of Antigua and Barbuda, except for Woodland, which is incorporated under the laws of the Province of British Columbia, own and operate 198,621 ASIC blockchain cloud computers (the “units”), representing approximately 2,892 petahash of computing power, which, upon Closing, would make Squire one of the largest publicly traded blockchain
computing companies globally, as measured by computing power. The units are all operated by leading hosting providers and are allocated across the United States, Canada, and China.
As part of the Transaction, Squire will also be welcoming to its team certain employees and consultants of CoinGeek Mining & Hardware, an affiliate of Mr. Ayre, involved with the management and operation of the assets.
The Consideration
At Closing, Mr. Ayre will receive 80,000,000 Common Shares and 827,000,000 NVPS of Squire, subject to adjustment. The NVPS, the creation of which is subject to the Shareholder Approvals, will be identical in all respects to the Common Shares other than that they will not be entitled to a vote at meetings of the shareholders of Squire unless required by law. Squire and Mr. Ayre will enter into a comprehensive share exchange agreement (the “Exchange Agreement”) and coattail agreement on or prior to Closing to provide for the Common Shares and NVPS to be treated equally in an event of a take‐over bid and other fundamental transaction.
The Transaction would result in Mr. Ayre having approx. 45% of the voting control of Squire. Under the terms of the Exchange Agreement, if at any time the percentage of Common Shares held by Mr. Ayre falls below 40% of the issued and outstanding Common Shares at that time, a number of NVPS shall be exchanged into an equal number of Common Shares until Mr. Ayre’s percentage ownership is 45% or there are no further NVPS outstanding. The parties have further agreed to amend the unsecured convertible debenture note issued in connection with Squire’s acquisition of Freschette Limited on Closing to provide for the shares issuable upon conversion of the debenture to be NVPS.
The Common Shares and NVPS issued to Mr. Ayre pursuant to the Transaction will be subject to the escrow policies of CSE. Additionally, Mr. Ayre has agreed not to dispose through the facilities of the CSE of any Common Shares or NVPS acquired by him pursuant to the Transaction for three (3) months subsequent to the Closing. Upon any sale of the NVPS, such NVPS shall be exchanged into an equal number
of Common Shares of Squire on the closing of such transfer. Following Closing, pursuant to the Cunning Hams Operations Agreement, Mr. Ayre and Taal Technologies SEZC (“Taal Tech”), the wholly owned operating subsidiary of Squire, will split the profits generated
through the use of over 100,000 units owned by Cunning Hams that are located in China on the basis of approximately 65% for Taal Tech and 35% for Mr. Ayre.
Pursuant to the Agreement, Squire will enter into a prepayment agreement note for the repayment of prepaid expenses of the Companies with their hosting providers with respect to future electricity usage (the “Principal Amount”), payable in Bitcoin SV (BSV) to Mr. Ayre. Repayment commences one month after Closing and is recurring monthly for 5 months until paid in full. The Principal Amount outstanding
from time to time will not bear interest.
Additional Details about the Transaction
The parties expect Closing to occur as soon as possible after the Shareholders’ Meeting. Following Closing, Squire expects to change its name to “Taal Distributed Information Technologies Inc.” and its ticker symbol on the CSE to “TAAL”.
Under the terms of the Agreement, either party may terminate the Agreement if (i) Closing does not occur by October 31, 2019, other than by reason of a material breach by the party terminating the agreement of his/its obligations under the Agreement; (ii) the Shareholder Approvals have not been obtained or if the Meeting in respect of the Shareholder Approvals has not been held by October 31, 2019 or it becomes reasonably apparent that the Shareholder Approval will not be obtained by October 31, 2019; or (iii) if approval of CSE in respect of the Transaction has not been obtained by October 31, 2019 or it becomes reasonably apparent that such approval will not be obtained by October 31, 2019. In such circumstances, Squire would be obligated to pay to Mr. Ayre liquidated damages equal to USD$1,000,000 and shall have no obligation thereafter.
Prior to Closing, at Squire’s request and subject to certain expense sharing between the parties and indemnification from Squire in respect of any extended period of non‐operation of such units, the Companies will cause certain of the units to be relocated from their current location for strategic reasons. Further information regarding the Transaction will be included in the information circular that Squire will mail in due course to its shareholders in connection with the Shareholders’ Meeting. The Agreement will be filed on the SEDAR profile of Squire on the SEDAR website at www.sedar.com.
CSE Stock Halt
As the Transaction would constitute a “fundamental change” (“Fundamental Change”) of Squire, as defined in CSE Policies, and, pursuant to CSE Policies, Squire’s stock has been halted and will remain halted at least until the meeting materials have been accepted by CSE, sent to shareholders of Squire for approval of the Fundamental Change and posted to CSE website. The halt is considered a Regulatory Halt as defined in National Instrument 23‐101‐Trading Rules.
Update regarding Shareholders’ Meeting
Further to the press release of Squire dated June 30, 2019, since the announcement of the Transaction, Squire has been working towards the completion of the Listing Statement as required pursuant to CSE Policies, a revised draft of which has been re‐submitted by Squire to CSE for further review and approval. Squire will announce the new date for the Shareholders’ Meeting in due course.
“We are in the final stages of this long, anticipated transaction and the entire team is solely focused on closing this Transaction. We are working intensely with the regulator and third‐party professional services to respond immediately requested revisions to continue to progress towards the finish line. We want to move past this, for us and our shareholders, as we are eager to operate at scale and take on new and exciting challenges that await us,” Angela Holowaychuk, Chief Executive Officer.
Advisors to the Parties
Canaccord Genuity Corp. is acting as exclusive financial advisor to Squire in respect of the Transaction.
Norton Rose Fulbright Canada LLP is acting as legal counsel to Squire. Fasken Martineau DuMoulin LLP is acting as legal counsel to Mr.Ayre, Cunning Hams, Tansley and Woodland.
Canaccord Genuity Corp. will be paid a success fee in connection with the Transaction, further details of which will be disclosed in the information circular in respect of the Shareholder Meeting.
Corporate Update
New Director Appointment
Squire is pleased to announce Michael Cella has joined the board of directors of Squire (the “Board”) as an independent director as of August 23, 2019. Mr. Cella has been appointed to the Board of Squire. Mr. Cella has over 30 years of corporate executive experience and has raised over $4 billion through private and public offerings for progressively larger and more complex companies. Currently Mr. Cella acts as President WCF Holding, LLC a business, financial and project development advisory services firm. Prior to this he was a director, Chief Financial Officer and Secretary of Global Alumina Corporation, a TSX listed company formed to pursue a $5 billion dollar integrated bauxite mine and alumina refinery in the Republic of Guinea. Mr. Cella received his Master of Management degree in Finance and Management Policy, 1980 from J. L. Kellogg Graduate School, Northwestern University. Mr. Cella has been named to the audit committee of the Board, effective immediately.
“I am delighted to join Stefan, Angela and the other members of Squire Mining’s board of directors, and look forward to serving Squire’s shareholders as an independent member of the board as we position Squire to take full advantage of the growing opportunities in blockchain computing.”
Appointment of CEO and President and Corporate Secretary
The Board has resolved on August 13, 2019, that Angela Holowaychuk has been appointed President and Chief Executive Officer, in a permanent capacity, effective immediately. The Board has also resolved, effective August 23, 2019, to appoint Joseph Chin, the Chief Operating Officer of Squire, to the additional position of Corporate Secretary.
About Squire Mining Ltd.
Squire is a Canadian based technology company engaged, through its subsidiaries, in the business of developing and operating cloud computing data infrastructure and system technology to support global blockchain applications related to Bitcoin SV, Bitcoin Core and other associated SHA‐256 derived digital assets.
About CoinGeek Mining & Hardware
CoinGeek Mining & Hardware operates a global fleet of ASIC cloud computers that provide their hash power to secure and scale the Bitcoin SV enterprise‐grade blockchain. CoinGeek’s professional team has developed industry leading practices to ensure its mining fleet operates at peak performance whilst optimizing its cost profile to maximize profitability.
For further information contact:
Angela Holowaychuk
Chief Executive Officer
(Office Telephone: +1 800‐371‐2809)
CSE accepts no responsibility for the adequacy or accuracy of this release.
CAUTIONARY STATEMENT REGARDING FORWARD‐LOOKING INFORMATION:
This news release includes “forward‐looking information” as defined under applicable Canadian securities legislation. Forward‐looking information and statements include, but are not limited to, disclosure regarding possible events, that are based on assumptions about future economic conditions and courses of action. Forward‐looking information is 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 information. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties, uncertain and volatile equity and capital markets, lack of available capital, future demand for Bitcoin SV, Bitcoin Core and other cryptocurrencies and risks related to the mining thereof, integration issues, personnel and staffing requirements and technological change and obsolescence and risks that the conditions to closing in respect of the Transaction will not be satisfied. There are no assurances with respect to: whether the Transaction will be completed or completed on the same terms or in the anticipated time provided or that conditions to closing in respect of the Transaction will be satisfied including without limitation: obtaining approval and acceptance by the CSE of the revised Listing Statement; the timing for release of the halt of trading of the common shares on the CSE; the timing of the Shareholders’ Meeting; obtaining the required shareholder approval at the Shareholders’ Meeting; and the timing and completion of the Transaction (on the terms presently contemplated or otherwise). Actual results and future events could differ materially from those anticipated in such forward looking information. Accordingly, readers should not place undue reliance on forward‐looking information. All forward looking information in this news release is made as of the date hereof and qualified by these cautionary statements and those in our continuous disclosure filings available on SEDAR at www.sedar.com. Squire disclaims any intention or obligation to update or revise such forward‐looking information, whether as a result of new information, future events or otherwise, except as required by law.