New Found Gold (NFGC) - 2025 Q1 - Quarterly Report

Underwriting Agreement Introduction and Offering Summary This section outlines the underwriting agreement for the offering of Flow-Through and HD Common Shares, totaling $56,129,100 gross proceeds, structured in two tranches with an over-allotment option Offering Details | Share Type | Number of Shares | Price per Share | Gross Proceeds | | :--- | :--- | :--- | :--- | | Flow-Through Shares | 21,400,000 | $2.29 | $48,996,000 | | HD Common Shares | 4,370,000 | $1.63 | $7,133,100 | | Total | 25,770,000 | | $56,129,100 | - The offering is divided into two tranches: a First Tranche for $42,079,950 and a Second Tranche for $14,049,150[3] - The Company has granted the Underwriters an Over-Allotment Option to purchase up to an additional 3,210,000 Flow-Through Shares at $2.29 per share, exercisable for 30 days after closing[4] - The Company may conduct a subsequent non-brokered private placement of up to 12,269,939 Common Shares at $1.63 per share for additional gross proceeds of up to approximately $20 million[15] Section 1: Definitions This section defines key terms used throughout the Underwriting Agreement, establishing common understanding for securities, legal, and regulatory frameworks - Defines critical terms such as "Offered Securities", "Flow-Through Shares", "Prospectus", "Applicable Securities Laws", "material adverse effect", and "Qualifying Expenditure" which are fundamental to interpreting the rights and obligations of the Company and the Underwriters[17][18][21] Section 2: Filing of Prospectuses This section outlines the Company's covenants for timely prospectus filing in Canada and the U.S., granting Underwriters participation rights in document preparation and due diligence - The Company covenants to file the Canadian Prospectus Supplement by 5:00 p.m. (Vancouver time) on May 29, 2025, to enable the lawful distribution of the Offered Securities[26] - The Company must allow Underwriters to participate fully in preparing offering documents and to conduct all necessary due diligence[28] - The agreement specifies procedures for the creation, approval, and filing of any marketing materials used in connection with the offering, ensuring compliance with securities laws[28] Section 3: Over-Allotment Option This section formally grants the Underwriters the Over-Allotment Option, specifying terms for purchasing additional shares to cover over-allocations Over-Allotment Option Details | Item | Detail | | :--- | :--- | | Option Shares | Up to 3,210,000 Flow-Through Shares | | Exercise Price | $2.29 per share | | Total Proceeds (if full) | $7,350,900 | | Exercise Period | Up to 30 days after the First Tranche Closing Date | Section 4: Distribution and Obligations This section details the Underwriters' firm commitment to purchase offered securities and mutual obligations for distribution, including securities qualification and the Company's non-involvement in subsequent purchaser transactions - The Underwriters agree to purchase all, but not less than all, of the Flow-Through Shares and HD Common Shares on the respective closing dates[31] - The Company acknowledges potential "Follow-On Transactions" (such as charitable donations or resales) by initial purchasers but confirms it has no involvement or liability related to the tax consequences of such transactions[33] - The Company is not liable if the Flow-Through Shares become "prescribed shares" under the Tax Act due to actions taken by purchasers in Follow-On Transactions[33] Section 5: Representations and Warranties This section contains foundational assurances, with the Company providing extensive representations and warranties and Underwriters providing their own, all of which must be true at signing and closing - The Company represents that the offering documents are true, contain no misrepresentations, and constitute full, true, and plain disclosure as required by applicable securities laws[34] - Each Underwriter severally represents that it is appropriately registered to fulfill its obligations and has the authority to enter into the agreement[34] - The representations and warranties survive the completion of the offering, providing a basis for future claims if they are found to be untrue[33] Section 6: Additional Covenants This section details the Company's specific operational, financial, and legal covenants before, during, and after the offering, ensuring a successful and compliant offering and protecting Underwriter interests - Exchange Listings: The Company must obtain approval from the NYSE American and TSXV for the listing of the Offered Securities[36] - Flow-Through Share Obligations: The Company must incur Qualifying Expenditures equal to the proceeds from the Flow-Through Shares by December 31, 2026, and renounce them to purchasers with an effective date no later than December 31, 2025[37][38] - Lock-Up Agreements: The Company must ensure its directors and executive officers enter into 90-day lock-up agreements, restricting them from selling their shares after the First Tranche Closing Date[43] - Closing Deliverables: The Company is required to provide numerous documents at closing, including legal opinions, auditor comfort letters, and officer's certificates, to the satisfaction of the Underwriters[40][41][42] - Standstill Covenant: The Company agrees not to issue any additional Common Shares for 90 days following the First Tranche Closing Date, with certain exceptions such as for employee incentive plans and the announced Non-Brokered Private Placement[43] Section 7: Underwriters' Fees and Expenses This section specifies Underwriter compensation, detailing the cash fee structure based on gross proceeds and confirming the Company's responsibility for all offering costs, including legal fees up to a specified cap Underwriters' Fee Structure | Sale Type | Fee Percentage | | :--- | :--- | | Standard Sales | 5.25% of gross proceeds | | President's List Sales | 1.0% of gross proceeds | - President's List Sales shall not exceed 35% of the gross proceeds from the Offering[8] - The Company is responsible for all offering expenses and will reimburse the Underwriters for their reasonable out-of-pocket expenses, including legal fees and disbursements up to a maximum of $225,000 (plus applicable taxes)[47] Section 8: Underwriting Percentages This section outlines the individual commitment of each underwriter in the syndicate, clarifying their several (not joint) obligations and detailing procedures for underwriter default Underwriter Commitments | Underwriter | Percentage | | :--- | :--- | | BMO Nesbitt Burns Inc. | 38.5% | | SCP Resource Finance LP | 33.5% | | Paradigm Capital Inc. | 10.0% | | Canaccord Genuity Corp. | 5.5% | | Haywood Securities Inc. | 3.0% | | Stifel Nicolaus Canada Inc. | 3.0% | | Roth Canada, Inc. | 2.5% | | A.G.P. Canada Investments ULC | 2.0% | | ATB Securities Inc. | 2.0% | | Total | 100% | - A 5% work fee is to be split between BMO Nesbitt Burns Inc. (54%) and SCP Resource Finance LP (46%)[46] Section 9: Conditions Precedent This section lists conditions precedent for Underwriters' obligation to purchase securities at closing, ensuring the Company meets all legal, regulatory, and business requirements - All necessary corporate actions and regulatory approvals (including from the TSXV and NYSE American) must be obtained[50] - All closing documents, including legal opinions, comfort letters, and officer's certificates, must be delivered in a form satisfactory to the Underwriters[50] - No stop-trade orders or similar proceedings shall be pending or threatened against the Company's securities[51] - The Company's representations and warranties must remain true and correct, and there must not have been any material adverse change in the Company's business or financial condition[51][53] Section 10: Closing This section specifies the logistical details for the offering's completion, including closing dates for two tranches, share delivery, and payment mechanics from Underwriters to the Company - The closing is divided into two tranches with specific dates: - First Tranche Closing Date: June 3, 2025 - Second Tranche Closing Date: June 12, 2025[53] - On the closing dates, the Company will deliver global certificates for the shares, and the Underwriters will pay the aggregate gross proceeds to the Company, with fees and expenses deducted from the first tranche proceeds and paid separately for the second tranche[53] Section 11: Option Closing This section details procedures for the Over-Allotment Option exercise, outlining the timing of option closing, delivery of additional shares, and corresponding payment by Underwriters - If the Over-Allotment Option is exercised, the closing for the additional shares will occur within three business days of the exercise notice[56] - The Company must deliver the required closing documents (as per section 6.1(w)) and the Additional Shares, after which the Underwriters will pay the proceeds for those shares, with the Underwriters' Fee being deducted or paid as applicable[56] Section 12: Indemnity This section establishes the Company's obligation to indemnify Underwriters from losses, claims, and expenses arising from misrepresentations, breaches, or non-compliance, including provisions for contribution if indemnification is unavailable - The Company agrees to indemnify the Underwriters (the "Indemnified Parties") against all claims arising from untrue statements or omissions of material facts in the offering documents[56] - The indemnity does not apply to information provided in writing by the Underwriters specifically for inclusion in the offering documents[56] - If indemnification is unavailable, the Company and Underwriters will contribute to the losses based on relative benefits (proceeds to Company vs. fees to Underwriters) and relative fault[65] Section 13: Termination of Agreement This section grants Underwriters the right to terminate their obligations under specified "out clauses," protecting them from proceeding with the offering if significant negative events occur - Underwriters can terminate the agreement if there is a material adverse change in the Company's business or financial condition[67] - Termination is also possible due to major adverse national or international events (including financial crises, terrorism, or pandemics) that negatively affect the financial markets or the Company[67] - Other termination triggers include the issuance of a cease-trade order against the Company's securities or a material breach of the agreement by the Company[67] Section 14: General This section contains standard legal clauses governing the agreement's administration and interpretation, covering notices, governing law, survival of representations, and party relationships - Notices: Specifies the contact information and methods for formal communication between the parties[68][70][71] - Governing Law: The agreement is governed by the laws of the Province of British Columbia and the applicable federal laws of Canada[76] - Relationship of Parties: Explicitly states that the Underwriters are acting as principals in an arm's length contractual relationship, not as fiduciaries to the Company[74] - Survival: Representations, warranties, and indemnification obligations survive the closing of the offering[74] Schedules Schedule 5.1: Representations and Warranties of the Company This schedule provides an exhaustive list of the Company's representations and warranties to the Underwriters, covering its legal, financial, and operational status, forming the factual basis for the offering - Corporate Status: The Company is a duly incorporated and existing reporting issuer in all Canadian qualifying jurisdictions and is listed on the TSXV and NYSE American without being in default[90] - Financials & Disclosure: Financial statements are prepared in accordance with IFRS and fairly present the Company's financial position[91] - Mining & Technical Information: The Technical Report for the Queensway Gold Project complies with NI 43-101, and the Company holds the necessary material mining claims for its current exploration activities[98][99] - Compliance: The Company asserts compliance with anti-corruption laws (FCPA, CFPOA), anti-money laundering laws, and economic sanctions[96][97] - Flow-Through Shares: The Company represents that the shares will qualify as "flow-through shares" under the Tax Act and that it will be able to incur and renounce the required amount of Qualifying Expenditures[102] Schedule A: Matters for Company's Counsel Opinion This schedule lists specific legal matters on which the Company's counsel must provide formal legal opinions to Underwriters as a closing condition, verifying key legal representations and compliance - Counsel must opine on the Company's status as a validly existing "reporting issuer" in good standing[106] - The opinion must confirm that the Offered Securities have been duly authorized and, upon issuance, will be fully paid and non-assessable shares[106] - A key opinion required is that the Flow-Through Shares will qualify as "flow-through shares" under the Tax Act and will not be "prescribed shares", subject to certain qualifications regarding purchaser actions[107] Schedule B: Mining Claims This schedule provides a detailed list of material mining licenses and claims held by New Found Gold Corp. for its Queensway Gold Project, serving as an inventory of mineral property rights - The schedule lists numerous map-staked license numbers held by New Found Gold Corp. and other parties in trust for the Company[109][112][113] Schedule C: Form of Subscription and Renunciation Agreement for Flow-Through Shares This schedule provides the template agreement for Flow-Through Share purchasers, outlining subscription terms, and detailing the Company's representations, warranties, and covenants regarding tax treatment and indemnity for tax-related failures - Subscribers agree to purchase Flow-Through Shares at $2.29 per share[116] - The Company covenants to incur Qualifying Expenditures equal to the subscription proceeds and renounce them to subscribers with an effective date no later than December 31, 2025[121] - The Company provides an indemnity to subscribers for additional taxes payable if the Company fails to renounce the required expenditures, but this indemnity does not cover issues arising from the subscriber's own actions, such as participating in a "Post-Closing Arrangement" that causes the shares to become "prescribed shares"[122] Schedule D: Pricing Disclosure Package This schedule defines the "Pricing Disclosure Package" for U.S. securities law purposes, including final offering pricing terms and specific public documents (news releases) Final Offering Terms | Security | Number Offered | Price | Underwriting Commission ($/share) | | :--- | :--- | :--- | :--- | | Flow-Through Shares | 21,400,000 | $2.29 | $0.1202 | | HD Common Shares | 4,370,000 | $1.63 | $0.0856 | - The Pricing Disclosure Package also includes the Company's news releases dated May 27, 2025 (announcing the offering) and May 28, 2025 (announcing the increased size of the offering)[130]