AADirection Capital Corp. Announces Proposed Qualifying Transaction to Acquire Centenario Gold Corp

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VANCOUVER, BC / ACCESSWIRE / February 2, 2023 / AADirection Capital Corporation (TSXV:AAD.P) (the "Issuer"), a capital pool company, announced that it has entered into a binding letter agreement ("Agreement") dated January 20, 2023 to acquire (the "Qualifying Transaction") Centenario Gold Corp. ("Centenario"), a British Columbia incorporated mineral resource exploration company that holds Mexican property interests through a 99% owned subsidiary, Durango Gold Corp. S.A. de C.V. (the "Subsidiary"). The Agreement is to be replaced by a definitive agreement ("Definitive Agreement") to be entered into by the parties prior to closing (the "Closing") the Qualifying Transaction with a three (3) cornered amalgamation structure. Upon Closing, Centenario, with its Mexican Subsidiary, will be wholly owned by the Issuer, the shareholders of Centenario will have a controlling interest in the Issuer, and the management team of Centenario will assume management of the Issuer (the "Resulting Issuer").

This Qualifying Transaction constitutes the Issuer's "Qualifying Transaction" (as defined by the Capital Pool Policy of the TSX Venture Exchange (the "Exchange")) and is not a Non-Arm's Length Qualifying Transaction (as defined by the policies of the Exchange). The Qualifying Transaction is subject to Exchange approval. Trading in the shares of the Issuer will remain halted pending receipt and review of acceptable documentation regarding the Qualifying Transaction pursuant to Listing Policy 2.4.

Overview of Business of Centenario

Centenario, through its Subsidiary, holds an option (the "Option Agreement") on a resource exploration property (the "Eden Property") which consists of two (2) contiguous and titled mineral concessions named El Eden and El Eden 1 covering approximately 2,489 hectares. The Eden Property is located in the Cosala mining district of southeastern Sinaloa State, Mexico, in the southwestern foothills of the Sierra Madre Occidental, approximately 160 kilometres north of Mazatlan, Mexico.

The El Eden property is located on the northern boundary of the Los Reyes property that is owned and operated by a Vancouver-based company called Prime Mining Corp. (TSXV: PRYM). Prime Mining Corp. has owned and worked this property for the last four years and reported an NI 43-101 initial resource exceeding 1.0 million oz of gold equivalent, (see Prime news releases dated April 2, 2020 and April 7, 2020)

The Option Agreement, dated March 24, 2021, provides that Centenario has the option to acquire 100% of the Eden Property, subject to a 1% NSR, by making aggregate cash payments of US$700,000 (US$100,000 has been paid) and incurring US$3,000,000 in expenditures (approximately US$700,000 in expenditures have been incurred to date) over four (4) years. The next Option Agreement cash payment (US$75,000) is due on or before March 24, 2023 (the "March Payment") for which Centenario has cash on hand. Centenario recently obtained an amendment to the Option Agreement which now provides that the deadline for the completion of an initial US$1,000,000 in expenditures on the Property is March 24, 2024 instead of March 24, 2023.

The principal business of Centenario, pursuant to the Option Agreement, is the exploration and development of, primarily, precious metals projects in Mexico, with a current focus on the Eden Property. Centenario intends to fund the exploration activities on the Eden Property using the proceeds of a proposed financing to close concurrently with the Qualifying Transaction as further described below.

Centenario completed a first phase exploration program on the Eden property in late 2022.Centenario collected and received assay results for 260 rock samples from both surface and underground workings that returned grades as high as 239.94 g/t Au and 1389.91 g/t Ag. Centenario also completed semi-detailed mapping over a 2.8 km portion of the ‘Buenavista' prospect's mineralized corridor, followed by an IP/Resistivity geophysical survey and soil sampling program. Additional geophysical and soil sampling studies were completed across the ‘La Provedora' prospect located 1.5 km further to the east. An up-to-date detailed National Instrument 43-101 ("NI 43-101") compliant technical report on the Eden Property is being finalized in the next few weeks.

Centenario also holds a 50% interest in a recently staked, non-titled, adjacent mineral concession named Eden 2 totaling approximately 2,430 hectares.

The Qualifying Transaction

Pursuant to the Agreement, the Issuer will acquire 100% of the outstanding common shares in the capital of Centenario by way of a one for one (1:1) share exchange issuing 23,138,818 Issuer common shares (deemed consideration of $2,257,000) to the shareholders of Centenario on the closing date ("Closing Date") of the Qualifying Transaction by way of a three (3) cornered amalgamation. There are approximately 90 shareholders of Centenario with most resident in British Columbia and a few in Mexico. There is no single controlling shareholder of Centenario. The Issuer will also issue 1,925,663 share purchase warrants on a one for one (1:1) basis in exchange for all outstanding share purchase warrants of Centenario as at the Closing Date on the same terms as were issued by Centenario.

On Closing, it is agreed that the name of the Issuer, which will become the parent company of Centenario, will be changed to Centenario Gold Corp. or such other name as determined by Centenario management and is acceptable to the Exchange.

Concurrent Financing

Pursuant to the Agreement, the parties have agreed to complete a private placement financing (the "Concurrent Financing") for aggregate gross proceeds of an estimated CAD$1.75 million to close concurrent with the Closing of the Qualifying Transaction following receipt of conditional Exchange acceptance of the Qualifying Transaction. The Concurrent Financing is expected to be carried out by way of subscription receipts ("Subscription Receipts") at $0.15 per Subscription Receipt, convertible into units ("Units") of Centenario, each Unit consisting of a common share and one-half of a share purchase warrant exercisable at $0.30 per warrant share for a 2 year period, that through the amalgamation are immediately exchanged for Issuer securities on a 1:1 basis. The funds raised will be used to fund the second phase program set out in a 43-101 technical report (the "Technical Report") on the Eden Property which includes an initial 2,000m drill program, such program to be sufficient to complete the initial US$1,000,000 expenditure requirement required by the Option Agreement. The remainder of the proceeds will be sufficient to cover the general and operating expenses of the post-Closing Resulting Issuer for a minimum of one (1) year and include a minimum of $100,000 in unallocated working capital. The Issuer's management members are committed to raising a minimum of 20% of the total Concurrent Financing. Seven percent (7%) finders fees will be paid to eligible finders in connection with the Concurrent Financing.

Loan

Subject to Exchange approval, and as a sign of its commitment to the listing of Centenario, the Issuer has agreed to loan to Centenario a total of $150,000 to fund the March Payment and for working capital. The loan will be secured by way of a general security agreement.

Distribution Requirements

Upon completion of the Qualifying Transaction, it is expected that the Resulting Issuer will meet the public distribution requirements of an Exchange Tier 2 issuer. Principals of the Issuer and the Resulting Issuer will be subject to applicable Exchange escrow policies.

Waivers Sought

The Issuer intends on seeking a waiver from the Exchange from the sponsorship requirement pursuant to Section 3.4 of the Sponsorshop Policy of the Exchange.

Conditions Precedent

The completion of the Qualifying Transaction will be subject to at least the following mutual conditions precedent:

1. Centenario shareholder approval of the Agreement by special resolution at a Centenario shareholder meeting;
2. the execution of the Definitive Agreement including standard representations, warranties and covenants for an agreement of this nature;
3. the completion of due diligence by the parties;
4. the completion of the Concurrent Financing;
5. the Issuer completing a name change to Centenario Gold Corp. or such other name as requested by Centenario;
6. the receipt of all necessary regulatory, corporate and third party approvals, including the acceptance of the Exchange, and compliance with all applicable regulatory requirements and conditions in connection with the Qualifying Transaction;
7. the confirmation of the representations and warranties of each party to the Definitive Agreement as set out therein;
8. the absence of any material adverse effect on the financial and operational condition or the assets of each of the parties to the Definitive Agreement;
9. the delivery of standard completion documentation; and
10. other conditions precedent customary for a transaction such as the Qualifying Transaction.

The conditions precedent in favour of the Issuer may be waived in whole or in part by the Issuer and the conditions precedent in favour of Centenario may be waived in whole or in part by Centenario.

The completion of the Qualifying Transaction is expected to occur as soon as is practicable following the satisfaction or waiver of the conditions precedent (other than those conditions precedent to be completed concurrent with the Closing) or such other date as mutually agreed to by the Parties, save and except for regulatory, corporate and/or third party approvals that are beyond the control of the parties but are in process.

Each of the Issuer and Centenario will generally bear their own respective costs and expenses associated with the Qualifying Transaction.

Overview of Management and the Board of Directors of the Resulting Issuer

Douglas Fulcher, President, Corporate Secretary and Director. Doug Fulcher has over 45 years of mineral exploration experience. He has worked with numerous senior and junior mining companies, domestically and at an international level, both public and private. Doug Fulcher is currently the President of Centenario and the President and CEO of One World Lithium Inc. Previously, he was the President and CEO of Maritime Resources Corp from March 2014 to January 2019. He was the President and CEO of Abacus Mining and Exploration from 2003 until 2010 where he was instrumental in the development of the Afton Ajax project. Doug Fulcher also served on the Boards of True Grit Resources Ltd. and previously was the President of Burnstone Ventures Inc., Skygold Ventures Ltd and a director of Redstar Gold Corp. and Niblack Mining Corp which was formed as a spin out company of Abacus Mining. Mr Fulcher has a business degree from Capilano University.

Alain Charest, Chief Executive Officer, VP Exploration and Director. Alain Charest is a geological engineer with more than 40 years in major and junior company exploration worldwide. He has spent the past 27 years based in Mexico exploring and developing mining operations. Alain Charest was VP Exploration for Francisco Gold Corp. and Chesapeake Gold Corp., both operating in Mexico. Alain Charest studied Geological Engineering at the University of British Columbia.

Jonathan Younie, Chief Financial Officer. Jonathan Younie has been the Principal of Copsewood Capital Corp., a Corporate Finance and Accounting firm since 2020. From July 2006 until May 2021, he was Manager, Corporate Finance and Accounting of New Dawn Holdings Ltd., an investment and financial consulting firm providing administration and financial advisory services to private and public companies. Jonathan Younie has been the Chief Financial Officer of Centenario since April 1, 2021. Jonathan Younie is a Director of Kelly Ventures Ltd., and Chief Financial Officer of Galaxy Ventures Inc., both CPC companies listed on the TSXV. He is also the Chief Financial Officer of Condor Resources Inc., a junior natural resource company listed on the TSXV, and Chief Financial Officer of Tyner Resources Ltd. which is listed on NEX. From April 2019 to November 2021, he was Chief Financial Officer of RooGold Inc. (formerly JNC Resources Inc.), a junior natural resource company listed on the CSE. Jonathan Younie has also served as a director and/or officer of a number of other public companies listed on the TSXV/NEX.

Pablo Mendez, Director. Pablo Méndez is currently a director of Centenario. Pablo Méndez joined the legal firm of Ec Rubio in October 2004 and became partner in March 2010. In 2007, he opened the Mining Area of the Ec Rubio and has been its director since. In 2017, he was appointed Managing Director of the Chihuahua office. From 2002 to 2004, he worked for the Ministry of Foreign Affairs at the Consulate of Mexico in Albuquerque, New Mexico, US. His areas of expertise are civil, commercial and banking litigation, mining, international affairs, amparo and immigration. Mr Mendez earned a law degree at Instituto Panamericano de Alta Dirección de Empresas.

Kevin Milledge, Director. Kevin Milledge has over 45 years' experience as a businessman and entrepreneur in the mineral exploration field. Kevin Milledge is president of Pamicon Developments Ltd., which is a full-service geological consulting firm with global experience. He has held management and executive positions and has extensive experience in project planning, development, and budgeting. Kevin Milledge has served on the boards and committees of several public companies trading on both the TSX Venture Exchange and Canadian Securities Exchange. Kevin Milledge is currently on the board of One World Lithium Inc. and is the Chairman of the Audit Committee.

Xiao Qin (Mary) Ma, Director. Mary Ma, is currently theChief Executive Officer, Chief Financial Officer and a Director of the Issuer. She will be a Director of the Resulting Issuer. Ms. Ma has over 20 years of experience in finance and accounting of private, international, and public companies including CFO, Director, Coporate Secretary roles for several Canadian public companies since 2009. Ms. Ma currently is also the CFO and a Director of Hanwei Energy Services Corp. and the CFO of OOOOO Entertainment Commerce Limited.
About AADirection Capital Corp.

The Issuer, a capital pool company within the meaning of the policies of the Exchange, was incorporated in British Columbia on December 1, 2020 and was listed on the Exchange on August 17, 2021. The Issuer does not have any operations and has no assets other than cash exceeding $340,000. The Issuer's business is to identify and evaluate businesses and assets with a view to completing a Qualifying Transaction.

For further information please contact:

Completion of the Qualifying Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Qualifying 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 released 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 has in no way passed on the merits of the proposed transaction and has neither approved or disapproved the contents of this press release.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

BUSINESS DISCLOSURE & FORWARD LOOKING INFORMATION

The above information regarding Centenario's business and management has been provided by Centenario, and based on preliminary due diligence reflects the beliefs and expectations of the Issuer's management. This press release contains forward-looking statements and information that are based on the beliefs of management and reflect the Issuer's current expectations. When used in this press release, such words as "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information. The forward-looking statements and information in this press release includes information relating to the Qualifying Transaction (including shareholder approval, the name change, and completion or termination), the Financing, the controlling shareholder, and the directors and management of the Resulting Issuer upon completion of the Qualifying Transaction.

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause 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 include, among others, the following risks: risks associated with the completion of the Qualifying Transaction and matters relating thereto and the risks associated with the marketing and sale of securities, the need for additional financing, reliance on key personnel, the potential for conflicts of interest among certain officers or directors with certain other projects, and the volatility of the Issuer's common share price and volume. Forward-looking statements are made based on management's beliefs, estimates and opinions on the date that statements are made and the Issuer undertakes no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. Investors are cautioned against attributing undue certainty to forward-looking statements.

The Issuer cautions that the foregoing list of material factors is not exhaustive. When relying on the Issuer's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Issuer has assumed a certain progression, which may not be realized. It has also assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. While the Issuer may elect to, it does not undertake to update this information at any particular time.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS PRESS RELEASE REPRESENTS THE EXPECTATIONS OF THE ISSUER AS OF THE DATE OF THIS PRESS 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. WHILE THE ISSUER MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE LAWS.

SOURCE: AAD Direction Capital Corp.