Auston Capital Corp. — M&A Activity 2022

Mar 18, 2022

AUSTON CAPITAL CORP. ANNOUNCES CONDITIONAL APPROVAL OF ITS QUALIFYING TRANSACTION WITH SOUTHERN SKY RESOURCES CORP.

FOR IMMEDIATE RELEASE

TORONTO, ONTARIO – March 16, 2022 – Auston Capital Corp. (“ Auston ” or the “ Company ”) (TSXV: ASTN.P)) is pleased to announce that the TSX Venture Exchange (the “ TSXV ”) has conditionally accepted its proposed qualifying transaction pursuant to Policy 2.4 – Capital Pool Companies of the TSXV (the “ Transaction ”) with Southern Sky Resources Corp. (“ Southern Sky ”), which, upon completion, will result in a reverse take-over of Auston by the shareholders of Southern Sky via the completion of a threecornered amalgamation whereby a wholly-owned subsidiary of Auston (“ Auston S ubco”), will amalgamate with Southern Sky, and Auston will acquire all of the issued and outstanding Southern Sky Shares. The shareholders of Southern Sky will receive post-Consolidation (as defined below) Auston common shares (the “ Auston Shares ”) in exchange for their Southern Sky Shares, resulting in a reverse takeover of Auston by Southern Sky. The amalgamated corporation resulting from the amalgamation of Auston Subco and Southern Sky will be wholly-owned by the Auston as resulting issuer.

In connection with the Transaction, Auston intends to consolidate its outstanding Auston Shares on the basis of one (1) new Auston Share for each two and one-quarter (2.25) old Auston Shares (the “Consolidation”) and change its name to Southern Sky Gold Corp., and, assuming all conditions are satisfied, it is anticipated that the common shares of the resulting issuer will commence trading on the TSXV under the symbol SSKY.

The completion of the Transaction remains subject to final acceptance by the TSXV and fulfilment of certain conditions, including, among other things, the filing on SEDAR of a filing statement in respect of the Transaction, which will include, among other things, the audited financial statements of Southern Sky for the year ended Dec. 31, 2020, and the interim unaudited financial statements of Southern Sky as at Sept. 30, 2021, together with comparatives, as well as pro forma financial statements.

The Company will issue a further news release announcing the closing of the Transaction and the date on which trading in the common shares of the Resulting Issuer will resume in due course.

Sponsorship Waiver

In connection with the Transaction the Company has been granted a waiver by the TSXV from the requirement to obtain sponsorship for the Transaction under Section 3.1 of Exchange Policy 2.2.

Concurrent Financing

As a condition of the proposed Transaction, Auston will arrange a private placement (the “ Financing ”) of eight million subscription receipts (each a “ Subscription Receipt ”) at a price of 40 cents per Subscription Receipt for aggregate gross proceeds of $3.2-million, which will be held in escrow by the Company. Upon satisfaction of the escrow release conditions, which includes completion of the proposed Transaction, each Subscription Receipt is expected to be exercised, without payment of any additional consideration

and without further action on the part of the holder thereof, for one post Consolidation Auston Share and one-half of one warrant; each whole warrant shall entitle the holder to acquire an additional postconsolidation Auston Share at 75 cents for a period of 36 months. Southern Sky may pay finders' fees in connection with the concurrent financing, in accordance with the policies of the TSXV. The proceeds of the Financing will be used to finance (i) expenses of the proposed Transaction and the Financing, (ii) the exploration and other expenses relating to the resulting issuer’s property interest in Colombia and (iii) the working capital requirements of the resulting issuer.

Further details of the Transaction can be found in Auston’s news releases dated June 11, 2021 and October 6, 2021.

About Southern Sky

Southern Sky is an exploration and development company focused on exploring prospective gold projects in South America. Southern Sky's primary asset consists of its right to acquire a net 75-per-cent interest in an advanced mineral exploration project, Project X, totalling approximately 584.39 hectares located in western Colombia pursuant to an option agreement dated June 12, 2020, between Southern Sky and a private Colombian company. The results of 14 historic drill holes completed on the property during 1997 to 1998 can be found in the Auston press release dated June 11, 2021.

Roger Connors, a resident of Toronto, Ont., and the president of Southern Sky, is the only control person of Southern Sky and is expected to be the only control person of the resulting issuer.

About Auston Capital Corp.

Auston is designated as a capital pool company under the CPC policy. Auston has not commenced commercial operations and has no assets other than cash. Auston's objective is to identify and evaluate businesses or assets with a view to completing a qualifying transaction. Any proposed qualifying transaction must be approved by the TSXV and, in the case of a non-arm's-length qualifying transaction, must also receive majority approval of the minority shareholders. Until the completion of a qualifying transaction, Auston will not carry on any business other than the identification and evaluation of businesses or assets with a view to completing a proposed qualifying transaction.

Further Information

All information contained in this news release with respect to Auston and Southern Sky 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.

For further information regarding Auston, Southern Sky and the proposed transaction, please contact either Mark Fekete, chief executive officer of Auston, at ma63fekete@gmail.com, or Roger Connors, chief executive officer of Southern Sky, at 647-920-3877 or roger@southernsky.ca.

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance. 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 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 TSXV has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this news release.

FORWARD-LOOKING STATEMENTS

This news release contains certain forward-looking statements, including, but not limited to, statements about the Corporation’s future plans and intentions, completion of the Transaction and the listing of the resulting issuer shares on the TSXV. Wherever possible, words such as “may”, “will”, “should”, “could”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict” or “potential” or the negative or other variations of these words, or similar words or phrases, have been used to identify these forwardlooking statements. These statements reflect management’s current beliefs and are based on information currently available to management as at the date hereof.

Forward-looking statements involve significant risk, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in this news release are based upon what management believes to be reasonable assumptions, the Corporation cannot assure readers that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this news release, and the Corporation assumes no obligation to update or revise them to reflect new events or circumstances, except as required by law.

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