EARLY WARNING REPORT
FILED PURSUANT TO NATIONAL INSTRUMENT 62-103
(a) The name and address of the offeror.
Lexam Explorations Inc.
99 George St., 3rd Floor
Toronto, Ontario
M5A 2N4
(b) The designation and number or principal amount of securities and the
offeror’s securityholding percentage in the class of securities of which the
offeror acquired ownership or control in the transaction or occurrence giving
rise to the obligation to file this report, and whether it was ownership or
control that was acquired in the circumstances.
Lexam Explorations Inc. (“Lexam”) has acquired ownership of 12,594,814 units
(the “Units”) of VG Gold Corp. (“VG Gold”) at a price of $0.08 per Unit, with
each Unit consisting of one common share (“Common Share”) of VG Gold and one
warrant (“Warrant”) of VG Gold exercisable to acquire one Common Share at a
price of $0.15 until 18 months after the date of the issuance of the Units (the “First
Tranche”). The aggregate consideration for the Units in the First Tranche was
$1,007,585.12.
Conditional upon receipt by VG Gold of shareholder approval as required by the
Toronto Stock Exchange, Lexam has agreed to acquire an additional 24,905,186
Units (the “Second Tranche”) at a price of $0.08 per Unit. The aggregate
consideration for the Units in the Second Tranche will be $1,992,414.88.
Prior to the acquisition of the First Tranche, Lexam had no ownership or control
over common shares of VG Gold.
(c) The designation and number or principal amount of securities and the
offeror’s securityholding percentage in the class of securities immediately after
the transaction or occurrence giving rise to the obligation to file this report.
The Common Shares forming part of the First Tranche represent approximately
12.5% of the current outstanding common shares of VG Gold prior to giving effect
to the transaction (or approximately 11.1% after giving effect to the transaction).
Assuming the exercise of all of the Warrants forming part of the First Tranche,
Lexam would hold approximately 20% of the outstanding common shares of VG
Gold.
Upon the acquisition of the Second Tranche, Lexam will hold approximately 26.8%
of the outstanding common shares of VG Gold (assuming the expected issuance of
1,500,000 Common Shares to other investors concurrently with the issuance of the
Second Tranche, and before giving effect to the exercise of the Warrants forming
part of the First Tranche and the Second Tranche). Assuming the exercise of all of
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the Warrants forming part of the First Tranche and the Second Tranche, Lexam
would hold approximately 42.3% of the outstanding common shares of VG Gold.
(d) The designation and number or principal amount of securities and the
percentage of outstanding securities of the class of securities referred to in
paragraph (c) over which
(i) the offeror, either alone or together with any joint actors, has
ownership and control,
See paragraph (c) above.
(ii) the offeror, either alone or together with any joint actors, has
ownership but control is held by other persons or companies other than
the offeror or any joint actor, and
Not applicable.
(iii) the offeror, either alone or together with any joint actors, has exclusive
or shared control but does not have ownership.
Not applicable.
(e) The name of the market in which the transaction or occurrence that gave rise
to this report took place.
The First Tranche was, and the Second Tranche will be, issued from the treasury of
VG Gold pursuant to private placements.
(e.1) The value, in Canadian dollars, of any consideration offered per security if the
offeror acquired ownership of a security in the transaction or occurrence
giving rise to the obligation to file this report.
$0.08 per Unit in both the First Tranche and the Second Tranche.
(f) The purpose of the offeror and any joint actors in effecting the transaction or
occurrence that gave rise to this report, including any future intention to
acquire ownership of, or control over, additional securities of the reporting
issuer.
The acquisition by Lexam was made for investment purposes. Lexam may increase
or reduce its investment in VG Gold according to market conditions or other
relevant factors.
(g) The general nature and the material terms of any agreement, other than
lending arrangements, with respect to securities of the reporting issuer entered
into by the offeror, or any joint actor, and the issuer of the securities or any
entity in connection with the transaction or occurrence giving rise to this
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report, including agreements with respect to the acquisition, holding,
disposition or voting of any of the securities.
The subscription agreement entered into by Lexam with VG Gold in relation to the
First Tranche and the Second Tranche provides, among other things, that, for a
period of five years following the closing of the First Tranche, Lexam will have the
right to nominate a director of VG Gold and a right to participate pro rata in future
VG Gold financings, provided Lexam’s aggregate interest remains above 10% of
the outstanding common shares of VG Gold (assuming the exercise of any
Warrants held by Lexam).
(h) The names of any joint actors in connection with the disclosure required by
this report.
Not applicable.
(i) In the case of a transaction or occurrence that did not take place on a stock
exchange or other market that represents a published market for the
securities, including an issuance from treasury, the nature and value, in
Canadian dollars, of the consideration paid by the offeror.
See paragraph (e.1) above.
(j) If applicable, a description of any change in any material fact set out in a
previous report by the entity under the early warning requirements in respect
of the reporting issuer’s securities.
Not applicable.
(k) If applicable, a description of the exemption from securities legislation being
relied on by the offeror and the facts supporting that reliance.
Not applicable.
DATED this 23rd day of July, 2009.
LEXAM EXPLORATIONS INC.
Per: (signed) “Ian Ball”
Name: Ian Ball
Title: VP Corporate Development
Early Warning Report.DOC
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