VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 17, 2012) - Shanghai Richstone Investment Group Ltd. ("Shanghai Richstone") announced today that it will not complete its proposed $9.25 million financing (the "Financing") with Sunridge Gold Corp. ("Sunridge" or "the Company"). In June, Shanghai Richstone provided $2 million, representing the initial portion of the Financing to the Company, in exchange for 5,405,405 common shares in the capital of Sunridge. Shanghai Richstone will retain ownership of the said 5,405,405 common shares but has notified Sunridge that it will not provide the remaining balance of the Financing to Sunridge.
The Subscription Agreement between Shanghai Richstone and the Company dated June 14, 2012 (the "Agreement") called for a final closing date of July 20, 2012, subject to Shanghai Richstone's ability to obtain the necessary approval from authorities in the People's Republic of China (the "PRC") for the transfer of funds. The Agreement further stated that if Shanghai Richstone was unable to obtain such approval by July 20, Shanghai Richstone "…use its commercially reasonable efforts to continue to obtain such approval by August 15, 2012." The Agreement also stated that "the Issuer (Sunridge) may, in its discretion, seek the approval of the TSX Venture Exchange for a later Closing Date in respect of the Final Closing…"
Shanghai Richstone was reasonably certain that the PRC approval would be received by the August 15th deadline as this same process had been followed in a successful $9.75 million investment in another Canadian publicly traded mining company earlier in the year.
It is noteworthy that the PRC approval was granted and the funds for investment became available on August 9, 2012.
On July 17, 2012, Shanghai Richstone, as provided under the Agreement, requested an extension to the closing date as Shanghai Richstone had not yet received the PRC approval. On July 18, 2012, Sunridge advised Shanghai Richstone that it would not allow a delay in the finalization of the Financing and further stated that it would not exercise its discretion under the Agreement to seek TSX Venture Exchange approval for the anticipated delay.
As stated above, Shanghai Richstone believed that the PRC approval would be received by the August 15th deadline and also believed that an extension of the closing date would have most likely been granted by the TSX Venture Exchange in light of Shanghai Richstone's private placement price of $0.37 per share versus the $0.26 closing price of Sunridge's shares on Friday, July 20, 2012 which represented a 42.3% premium.
We deeply regret the decision of Sunridge's management in cancelling the balance of the Financing but we remain strong believers in the assets of the Company and wish Sunridge great success in its future endeavors.