TORONTO, ONTARIO--(Marketwired - Apr 7, 2016) - POCML 3 Inc. ("POCML 3") (TSX VENTURE:PWR) announced today that it has entered into a binding definitive agreement (the "Definitive Agreement") with Neo Lithium Corp. ("Neo Lithium") which outlines the general terms and conditions of a proposed transaction pursuant to which POCML 3 will enter into a business combination with Neo Lithium (the "Transaction"). The Definitive Agreement was negotiated at arm's length and is effective as of April 8, 2016.
About POCML 3
POCML 3 is a capital pool company listed on the TSX Venture Exchange (the "TSXV"). POCML 3 has not commenced commercial operations and has no assets other than cash. The Transaction, if completed, will constitute POCML 3's "Qualifying Transaction", as defined in TSXV policies.
About Neo Lithium
Neo Lithium is a company governed by the laws of the Province of Ontario and, through a wholly owned subsidiary incorporated in Argentina, holds mineral and surface rights over a newly discovered lithium salar and brine reservoir complex in Argentina, containing a lithium rich brine reservoir. The project has road access and no indigenous or other communities in the area. A Chilean port is 250 km away. The property, at an elevation of 4,100 m, encompasses approximately 300 km2 with the lithium salar and brine reservoir complex encompassing approximately 160 km2. Initial surface sampling shows high lithium grades - comparable to current producing mines, high potassium credits, and the lowest combined levels of contaminants of any known project (magnesium and sulphate). The technical team that discovered this unique complex is one of the most experienced in the modern era in lithium salars, having discovered and lead the technical work, including resource definition and full feasibility study, that established the Cauchari lithium salar.
Neo Lithium is a private company whose only significant asset is ownership of its wholly owned Argentinian subsidiary, LIEX S.A., and has no significant expenses or revenues. LIEX S.A., has, apart from the mineral and surface rights of the lithium salar and brine reservoir complex, no other significant assets and has no significant expenses or revenues. Neo Lithium, through LIEX S.A., is the sole beneficial owner of the mineral and surface rights of the lithium salar and brine reservoir complex, and there are no Vendors (as defined by TSXV Policy 2.4) of the complex.
The Transaction
The Transaction is subject to regulatory approval, including the approval of the TSXV, and standard closing conditions, including the conditions described below. The Transaction is structured as an amalgamation of POCML 3 and Neo Lithium (the "Amalgamation"). The Transaction does not constitute a Non-Arm's Length Qualifying Transaction (as defined by TSXV Policy 2.4).
As of the date hereof, POCML 3 has 7,000,000 common shares ("POCML 3 Shares") outstanding and has issued options and broker warrants to acquire an aggregate of 860,000 POCML 3 Shares at an exercise price of C$0.15 per share. Prior to completion of the Transaction, POCML 3 proposes to effect a consolidation of the issued and outstanding POCML 3 Shares on the basis of 0.91 of one "new" common share (a "POCML Post-Consolidation Share") for every one "old" POCML 3 Share issued and outstanding (the "Consolidation"). At the time of closing of the Transaction, it is anticipated that Neo Lithium will have approximately 27,000,000 common shares (the "Neo Lithium Shares") and no convertible securities outstanding.
Concurrent Financing
In connection with the completion of the Transaction, Neo Lithium has also entered into an engagement letter (the "Engagement Letter") with PowerOne Capital Markets Limited ("PowerOne") to complete a private placement of a minimum of 12,000,000 and a maximum of approximately 20,000,000 subscription receipts of POCML 3 ("Subscription Receipts") at a price of $0.35 per Subscription Receipt to raise aggregate gross minimum proceeds of $4,200,000 (the "Financing"). Completion of the Financing is a condition of the completion of the Transaction.
Each Subscription Receipt will automatically convert on the satisfaction or waiver of all conditions precedent to the Transaction and certain other ancillary conditions (the "Release Conditions") into POCML Post-Consolidation Shares without any further consideration on the part of the purchaser immediately prior to effecting the Transaction.
The gross proceeds from the Financing will be held in escrow pending the satisfaction of the Release Conditions, whereupon the POCML Post-Consolidation Shares underlying the Subscription Receipts will be issued to the purchasers and the gross proceeds of the Financing will be paid to POCML 3.
In the event the Transaction does not occur by a scheduled deadline, the Subscription Receipts will be terminated. Each Subscription Receipt will terminate on the earlier of: (i) the failure of POCML 3 to satisfy the Release Conditions prior to 5:00 p.m. (Toronto time) on September 30, 2016 (the "Release Deadline"); or (ii) public announcement by POCML 3, or notice from POCML 3 to PowerOne prior to the Release Deadline, that (A) it does not intend to satisfy any of the Release Conditions or (B) the Release Conditions are incapable of being satisfied by the Release Deadline. On termination of the Subscription Receipts, the gross proceeds of the Financing shall be returned to the purchasers pro rata without any deduction or interest and the Subscription Receipts shall be automatically cancelled.
Pursuant to the Engagement Letter and a finder's fee agreement entered into by Neo Lithium, POCML 3, and PowerOne, PowerOne shall be paid a cash commission ("Cash Commission") equal to seven percent (7%) of the gross proceeds raised in the Financing, not including gross proceeds raised from investors on the President's List, and shall be issued broker warrants ("Broker Warrants") equal in number to seven percent (7%) of the total number of Subscription Receipts sold pursuant to the Financing, not including those sold to investors on the President's List, each Broker Warrant entitling the holder to acquire one POCML Post-Consolidation Share at an exercise price of $0.35 for a period of one year from issuance. The Cash Commission and Broker Warrants shall be payable upon satisfaction of the Release Conditions.
It is intended that the proceeds raised pursuant to the Financing will be used for further exploration and technical work in respect of Neo Lithium's project and for general corporate purposes. The Financing is anticipated to close on or about April 8, 2016.
Details of the Proposed Transaction
Pursuant to the Transaction as presently proposed, the holders of the issued and outstanding Neo Lithium Shares and POCML Post-Consolidation Shares will receive one common share (a "Resulting Issuer Share") of the company resulting from the Amalgamation (the "Resulting Issuer") for each Neo Lithium Share and POCML Post-Consolidation Share held immediately prior to the Transaction (the "Exchange Ratio"). The deemed exchange price for the Resulting Issuer Shares to be issued in exchange for the Neo Lithium Shares shall be C$0.35 per Resulting Issuer Share, or such other price as permitted by applicable regulatory authorities, including the TSXV.
It is expected that following completion of the Transaction but prior to giving effect to the Financing, the current holders of POCML 3 Shares will hold approximately 19.1% of the outstanding Resulting Issuer Shares and the holders of the Neo Lithium Shares will hold approximately 80.9% of the Resulting Issuer Shares (in each case, assuming the completion of the Consolidation and without giving effect to the exercise of any outstanding convertible securities of POCML 3).
Prior to the completion of the Transaction, POCML 3 shall call a meeting of its shareholders for the purpose of approving, among other matters, (i) the Consolidation; (ii) election of the board of directors of POCML 3; (iii) appointment of auditors of POCML 3; and (iv) the approval of the Transaction. Upon closing of the Transaction, the board of the Resulting Issuer shall be reconstituted to be comprised of five members nominated by Neo Lithium in a manner that complies with the requirements of the TSXV and applicable securities laws.
Other Conditions to the Transaction
Completion of the Transaction is subject to a number of conditions, including, but not limited to, TSXV acceptance and, if applicable, majority of the minority shareholder approval. The Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed, or at all.
Other conditions to completion of the Transaction include, but are not limited to:
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Receipt of all requisite approvals from shareholders, regulatory authorities (including the TSXV) and third parties relating to the Transaction.
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No material adverse change prior to completion of the Transaction.
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The representations and warranties being true and correct in all material respects as of the closing of the Transaction.
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Receipt of legal opinions in relation to the Transaction.
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No order or decree restraining the Transaction.
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All necessary approvals shall have been received in connection with the appointment of Neo Lithium nominees to management and the board of the Resulting Issuer.
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Termination of existing management contracts of POCML 3 with no severance or other termination fees payable.
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POCML 3 shall have working capital of approximately $575,000 as of the closing date of the Transaction (prior to the release of funds from escrow pursuant to the Financing (as defined below) and payment of expenses in respect of the Transaction and Financing, and other expenses required to retain POCML 3's public company status).
In connection with the Transaction, each of POCML 3 and Neo Lithium will use its reasonable commercial efforts to cause all of its directors and officers and the holders of more than 10% of its issued and outstanding common to enter into lock up agreements pursuant to which they will agree (i) to vote all such common shares held by them in favour of the Transaction; (ii) not to vote in favour of other transactions and to otherwise support the Transaction; and (iii) not to sell or dispose of any such common shares which they hold, each until the earlier of (i) the closing date of the Transaction; and (ii) the date upon which the Transaction terminates without being concluded in accordance with its terms.
In addition, the Definitive Agreement provides for "drag along" protection to shareholders of POCML 3 and purchasers in the Financing in the event that Neo Lithium enters into an agreement in respect of an "alternative transaction" (as defined in the Definitive Agreement) in certain circumstances.
Proposed Management and Board of Directors of the Resulting Issuer
Upon completion of the Transaction, it is anticipated that the persons identified below will serve as directors and officers of the Resulting Issuer.
Waldo Perez - Director, President and Chief Executive Officer
Mr. Perez was the President and CEO of Lithium Americas Corp. Mr. Perez has 28 years of academic and industry experience in mineral exploration in South America. He was the founder and technical leader of the Cauchari project which was acquired through Lithium Americas Corp. (listed on the Toronto Stock Exchange ("TSX")), and was its President and CEO, and a director, from inception until the end of the technical work resulting in a definitive feasibility study with strong economics. Mr. Perez was also responsible for bringing Mitsubishi and Magna as strategic investors to the project. Previously to being involved in the lithium industry, Mr. Perez was VP Exploration and then CEO of Latin American Minerals Inc. and discovered and developed the Paso Yobai Gold mine in Paraguay. He was also the Project Generation Manager for Barrick Gold Corp and IAMGOLD Argentina SA and was directly involved in the discovery and development of the Loma de Leiva Gold Mine (now under Patagonia Gold LLC), El Tranquilo gold deposit (in construction by Patagonia Gold LLC), and various diamond, zinc, silver, copper and gold deposits in Peru, Colombia, Argentina and Chile.
Julio Martinez - Chief Financial Officer
Mr. Martinez is currently the CFO of Latin American Minerals Inc., a TSXV listed company with a gold asset in Paraguay. Mr. Martinez is a financial professional and CGA with 15 years of experience with public and private companies in Canada and internationally. This experience includes budgeting, accounting and controls related to mine start-up operations in South America, financial reconciliations for multiple Latin American offices, and mergers and acquisitions.
Constantine Karayannopoulos - Director
Mr. Karayannopoulos is Chairman of the Molycorp Board of Directors. He served as interim President and Chief Executive Officer of Molycorp and President and Chief Executive Officer of Neo Material Technologies. He was Director of Lithium Americas Corp. from 2011 to 2015. Mr. Karayannopoulos is a Director of the Canada China Business Council and is a member of the Advisory Board at the University of Toronto's Department of Chemical Engineering and Applied Chemistry. A professional engineer, he holds Bachelor and Master of Applied Science degrees in Chemical Engineering from the University of Toronto.
Thomas Pladsen - Director
Mr. Pladsen is the Chief Financial Officer of Atacama Pacific Gold Corporation and Crystal Peak Minerals Inc., both listed on the TSXV, which have, respectively, an advanced gold project in Chile and an advanced potash brine project in Utah. Mr. Pladsen has over 20 years' experience in the exploration and mining industry. Mr. Pladsen, who received his Chartered Accountant designation with KPMG LLP in Toronto in the mid 1980's, has since held various financial positions with TSX-listed, TSXV-listed and private mining and technology companies. He has previously served as Chief Executive Officer and Chief Financial Officer of Katanga Mining Limited and Chief Financial Officer of Andina Minerals. Mr. Pladsen has also consulted for a number of TSXV-listed junior mining companies. Mr. Pladsen is a director of Crystal Peak Minerals Inc., KWG Resources Inc., Northfield Capital Corporation and Superior Copper Corporation.
Paul Fornazzari - Director
Mr. Fornazzari is a partner at the law firm Fasken Martineau DuMoulin LLP. He was a former Chairman of Lithium Americas Corp. and has been a director of various public companies for most of his career. Previously, Mr. Fornazzari was a partner at another international law firm where he was head of its Corporate Finance, Securities and Public M&A National Practice Group and of its Mining Group. Mr. Fornazzari has broad experience advising boards, executive teams and investment dealers and acts for domestic and foreign clients in various industries including mining, petroleum, technology, life sciences and financial services. As a fluent Spanish speaker from Latin America, he has transactional experience and a strong network in almost all of the jurisdictions in that region.
Gabriel Pindar - Director
Mr. Pindar is a project executive with 22 years' experience in the development of mining projects and large scale infrastructure (rail and port) in Argentina, Peru, Mexico, Australia, Canada, West Africa and United Kingdom. He was the General Manager and Head of projects for ArcelorMittal Mining from 2013 to 2015. He was responsible for overseeing multiple international projects that secured numerous expansions and green field projects. He was also the Regional Manager in the UK responsible for the successful delivery of iron ore studies in West Africa and Deputy Director (and other positions) for BHP Billiton between 2003 and 2008. Mr. Pindar has been responsible for numerous studies and projects, including iron ore, copper, gold and uranium facilities. Mr. Pindar has sat on numerous boards and steering committees successfully engaging delivery teams for large scale projects.
Further Information
Further details about the proposed Transaction and the Resulting Issuer will be provided in the disclosure document to be prepared and filed in respect of the Transaction.
Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to TSXV requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. 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 management information circular or 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 TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.
Forward-Looking Information
This press release contains forward-looking information based on current expectations. Statements about the closing of the Transaction and Financing, expected terms of the Transaction and Financing, the number of securities that may be issued in connection with the Financing and the parties' ability to satisfy closing conditions and receive necessary approvals are all forward-looking information. These statements should not be read as guarantees of future performance or results. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. Although such statements are based on management's reasonable assumptions, there can be no assurance that the Transaction or Financing will occur or that, if the Transaction and/or Financing does occur, it will be completed on the terms described above. POCML 3 assumes no responsibility to update or revise forward-looking information to reflect new events or circumstances unless required by law.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
