Sunridge Gold Corp. (the "Company" or "Sunridge") is incorporated under the laws of the Province of British Columbia and is a reporting issuer in British Columbia and Alberta.
Sunridge was engaged in the exploration and development of the Asmara Project in Eritrea, Africa through its 60% interest in Asmara Mining Share Company ("AMSC"). On April 26, 2016, Sunridge completed the sale of its 60% interest in AMSC to Sichuan Road & Bridge Mining Investment Development Corp. Ltd. ("SRBM") for US$65,000,000 cash. In addition, SRBM assumed the obligation to pay Sunridge the remaining principal of the deferred payment of US$13,330,000 (the "Deferred Payment") owed to the Company by Eritrean National Mining Corporation ("ENAMCO"). On closing, SRBM paid Sunridge the first US$6,000,000 of the Deferred Payment and on October 20, 2016, SRBM paid the balance of US$7,330,000 of the Deferred Payment.
On January 22, 2016, the shareholders of Sunridge approved an ordinary resolution to authorize the Board of Directors of the Company (the "Board") to cause all debts and liabilities of the Company to be satisfied and distribute remaining available cash to shareholders as a return of capital, and after the distribution of the property of the Company, to authorize the Company to voluntarily dissolve.
The Company's common shares and warrants were de-listed from trading from the TSX Venture Exchange ("TSXV") and the OTCQX on May 13, 2016. The Company's registered shareholder list was closed on May 18, 2016. The May 18, 2016 shareholders include registered shareholders and depositories such as CDE, CEDE and DTCC. Beneficial shareholders have their shares on deposit with a stock broker, who in turn hold the shares with a depository such as CDE, CEDE through DTCC, and it is those depositories who are the May 18, 2016 shareholders. Beneficial shareholders who have their shares deposited with one of these depositories have been able to sell their Sunridge shares on the Pink Sheets of the OTCQB in the United States and will continue to be able to do so until the Company is dissolved. On May 25, 2016, the Company paid the first return on capital distribution of $83,434,415 to the holders of 231,762,265 common shares or $0.36 per share. Beneficial shareholders who sold their shares after May 18, 2016 will not be entitled to any additional return on capital distributions.
On November 22, 2016, the Company announced that the Board has determined that a second return of capital distribution of $0.03 per share be paid to shareholders on December 8, 2016.
The Company must pay or make provision for all of its liabilities and obligations prior to dissolution, and in this connection the Board has been identifying and assessing all of the Company's liabilities to determine the amount of net cash that will be available to be distributed to the shareholders prior to dissolution of the Company.
The Company's only contingent obligation relates to the ultimate settlement of a foreign arbitration judgment (the "Foreign Arbitration Award") awarded to Delizia Limited ("Delizia") against the state of Eritrea in April 2006. On January 9, 2015, the Company was issued a final order of garnishment ("FOG") by a Prothonotary of the Federal Court of Canada ordering that any debts owing or accruing from the Company to the State of Eritrea be paid into Court to answer the Foreign Arbitration Award in the amount of $4.4 million. This case does not arise from any conduct or activity by Sunridge. The Company appealed the decision to issue the FOG to the trial division of the Federal Court of Canada and the appeal was heard in November 2015. On April 8, 2016, the Federal Court of Canada overturned the FOG based on the appeal but a few days later Delizia delivered notice to the Company that it intends to appeal the decision to overturn the FOG to the Federal Court of Appeal (see Sunridge news release April 14, 2016). Both Delizia and the Company are currently following the process with the Federal Court of Appeal for the appeal to be heard which is expected to be in the second quarter of 2017.
The Board, supported by independent legal advice, does not consider it probable that any significant cash will be required to resolve the Delizia matter. However, the Board also considers it prudent to provide for the unlikely eventuality that the Company would be obligated to pay funds to Delizia and as a result the Board has decided to hold back a sum of money for the protection of the shareholders and directors of the Company to be deposited with an agent (the "Agent"). When the matter with Delizia and the Company is resolved, the Agent will transfer the remaining funds to the Company's transfer agent who will then distribute that cash to shareholders. The Board has made arrangements for the Agent to hold approximately $6 million in trust for the benefit of shareholders until the Delizia appeal is finally resolved and to cover any other post-dissolution matters that may arise.
The Board has therefore determined that the Company be dissolved on December 9, 2016. The share register of the Company was closed May 18, 2016 and the beneficial shareholder register will be closed on December 8, 2016 and that register of holders of the 231,762,265 shares of the Company will be archived and used to pay the third and final distribution if and when there is one.