DeepRock Minerals Inc. Signs Letter Agreement For Spin-Off and Reverse Takeover With Allied Critical Metals Corp.
Deeprock Minerals Inc.
Suite 1518, 800 West Pender Street
Vancouver, British Columbia V6C 1J8
Suite 1518 – 800 West Pender Street
Vancouver, British Columbia, Canada V6C 2V6
DEEPROCK MINERALS INC. SIGNS LETTER AGREEMENT FOR SPIN-OFF AND REVERSE TAKEOVER WITH
ALLIED CRITICAL METALS CORP.
Vancouver, British Columbia – June 14, 2024 – Deeprock Minerals Inc. (the "Company" or "Deep")(CSE
Symbol: “DEEP”), is pleased to announce that it has signed a letter agreement (the "Letter Agreement")
dated June 14, 2024 with Allied Critical Metals Corp. ("ACM" or "Allied Critical Metals"), which provides
the general terms and conditions of the spin-out transaction of Deep and subsequent reverse takeover of
the Company by Allied Critical Metals (the "Transaction"), pursuant to the policies of the Canadian
Securities Exchange (the "Exchange") and applicable securities laws.
Allied Critical Metals is a private company incorporated under the laws of Ontario, Canada, having a
registered office in Toronto, Ontario, which is engaged in the acquisition, exploration, and potential
development of tungsten projects in Portugal. ACM owns, through its wholly owned Portuguese
subsidiary, ACM Tungsten Unipessoal Lda. (“PortCo”), a Portuguese company named Pan Metals
Unipessoal Lda. (“Pan Metals ”), which beneficially owns 90% of the two historical and established
Portuguese tungsten projects (the "Tungsten Projects"): the Borralha Tungsten Project ("Borralha"); and
the Vila Verde Tungsten Project ("Vila Verde"), and ACM has the right to purchase the remaining 10% of
the Tungsten Properties at a discount. Borralha is comprised of a Mining License that allows for production
of up to 150,000 tonnes per year of mineralized material covering an area of 382.5 hectares (3.8 sq. km).
Vila Verde is comprised of an Experimental Exploration License area covering 1,400 hectares (14 sq. km).
Both properties were past producing mines which have excellent infrastructure including paved and gravel
roads, electricity, water, nearby skilled labour and the ability to use existing waste dumps.
The Company and ACM are presently preparing the required technical reports (the " Technical Reports")
in accordance with National Instrument 43 -101—Standards for Disclosure of Mineral Projects ("NI 43-
101") for each of the Tungsten Projects, which will be filed under the Company's profile on SEDAR + as a
condition to closing the Transaction. Further details of the Tungsten Projects will be provided in the
Technical Reports and a subsequent news release to be disseminated prior to the closing of the
Transaction.
ACM has raised approximately $2.15 million in equity financing over the past 12 months of which over
$1.8 million has been spent on drilling over 3,680m and other exploration and development the Tungsten
Projects, which includes a recent $250,000 strategic investment by Majestic Gold Corp. (TSXV: MJS)
(“Majestic”) (see https://majesticgold.com). Majestic has over 13 years’ experience itself in building and
operating underground and open pit mines. ACM believes its relationship with Majestic will be helpful as
ACM progresses its projects through exploration and development towards the goal of eventual
production.
In addition, ACM and the Company are pleased to announce that ACM has entered into an agency
engagement with Fund Box Sociedade de Capital de Risco, S.A. (“ FundBox”) (see www.fundbox.pt), an
international fund management and investment firm based in Lisbon, Portugal to arrange for initial long-
term debt financing on a best efforts basis of up to €11,000,000 (the “ Debt Financing”) for ACM and its
wholly-owned Portuguese subsidiary, Pan Metals. The Debt Financing is comprised of convertible
debentures (the “ Debentures”) to be subscribed for and purchased by a fund (“ Fund”) established by
FundBox closing in one or more tranches over a period of 24 months from May 31, 2024. The Debentures
will have a terms of 5 years and bear interest at a rate of 5% per year, payable semi-annually. The principal
- 2 -
and any unpaid interest of the Debentures may be converted at the end of the term, at the election of the
Fund, into RI Shares (as defined below) at the conversion price equal to the then applicable 20-day volume
weighted average price, subject to the policies of the Exchange. Since 2004, FundBox has raised more than
€550 million. ACM believes its long -term Debt Financing will be key in providing funding for both
exploration and development expenses as well as capital costs such as its intended Q4 2024 pilo t plant
(the “Pilot Plant”) at Vila Verde that is capable of processing up to 150,000 tonnes per year of mineralized
material.
Roy Bonnell, CEO of Allied Critical Metals commented, "We are very excited to be
accelerating the advancement of these near-term, low-cost Portuguese Tungsten Projects
in the heart of the European Union where demand is sharply increasing as a strategic
military metal and critical mineral . The Tungsten Projects are brownfield historical
production sites located in northern Portugal with excellent infrastructure and access to
inexpensive water, power and skilled labour and an existing road network. The projec ts
are located approximately 100 km northeast of the ocean port city of Porto for excellent
access to EU and North American markets. Borralha presently has a 25-year mining license
and Vila Verde has an experimental mining license that provide a clear path for further
development."
The Letter Agreement for the Transaction is in addition and further to the Vila Verde net profits stream in
respect of ACM’s intended Pilot Plant pursuant to a letter agreement between ACM and Deep dated
March 19, 2024 (the “NPS Agreement”) announced by the Company in its news release dated March 20,
2024.
Independent director of Deep, Tom Christoff added, "We are excited to expand the
potential of the NPS Agreement and unlock shareholder value in our proposed spin -out
with the additional opportunity presented by ACM for near-term commercialization of its
tungsten properties, where tungsten has been declared a "critical mineral" by Canada, the
USA, and the EU facing significant supply chain shortages as a strategic military metal
with almost 90% of world supply dominated by China and Russia."
The Transaction
The Company intends to complete the Transaction pursuant to a plan of arrangement
(the “Arrangement”), which will include the following steps:
1. the Company will incorporate a wholly-owned subsidiary (“Sub1”) and transfer all of its assets to
Sub1 and then transfer all of its common shares of Sub 1 to the Deep shareholders pro rata in
proportion to their ownership of Deep (the “Spin-Out”);
2. the Company will consolidate all of its issued and outstanding common shares on a 40-to-1 basis
(the “Consolidation”) and change its name to “Allied Critical Metals Corp.” or such other name as
may be determined by ACM which is acceptable to the Exchange (the ”Name Change”);
3. ACM shall complete a concurrent private placement equity financing of units (the “ Units”) at a
price of $0.60 per Unit to raise gross proceeds of up to $7,500,000 (the “Concurrent Financing”),
and each Unit will be comprised of one common share of ACM and one common share purchase
warrant of ACM (each whole warrant a “Warrant”) wherein each Warrant will be exercisable for
a period of 24 months from the date of issuance at a price of $1.00 per share; and
4. ACM will amalgamate (the “ Amalgamation”) as a three -cornered amalgamation with a second
newly incorporated wholly-owned subsidiary of the Company (“Sub2”) to form an amalgamated
- 3 -
company (“Amalco”) as a wholly-owned subsidiary of the Company, named “ACM Holdings Ltd.”
Or such other name as determined by ACM, and the shareholders of ACM will transfer all of their
common shares of ACM (the “ ACM Shares ”) to the Company in consideration for post -
Consolidation common shares of the Company as the resulting issuer (the “Resulting Issuer”) on
a 1-for-1 basis (the “Share Exchange Ratio”), and the business of ACM shall become the business
of the Resulting Issuer, and the common shares of the Resulting Issuer (the “ RI Shares”) will be
listed and posted for trading on the Exchange as a mining issuer.
Resulting Issuer Capital Structure
Assuming completion of the Transaction with a minimum concurrent Financing of $2,000,000 at $0.60 per
Unit, the Resulting Issuer will have approximately 74,230,000 common shares issued and outstanding, as
well as 1,666,667 Warrants exercisable at $1.00 per share, 927,500 warrants exercisable at $2.40 to $2.80,
266,666 brokers warrants exercisable at $0.60, and no options.
Escrow Conditions
RI Shares issued pursuant to the Amalgamation shall be subject to resale restrictions pursuant to the
policies of the Exchange, and RI Shares issued to insiders of the Resulting Issuer shall be subject to escrow
in accordance with the policies of the Excha nge. However, RI Shares issued in exchange for ACM Shares
issued under the Concurrent Financing shall be free trading and not be subject to resale restrictions,
escrow or hold periods.
Subject to the policies of the Exchange and applicable securities laws, upon closing of the Transaction
(the “Closing”):
(a) 19,600,000 common shares of the Resulting Issuer held by principals of the Resulting Issuer will
be subject to escrow wherein 10% of the shares will be released on Closing and 15% will be
released every 6 months thereafter over 36 months; and
(b) 6,332,084 common shares of the Resulting Issuer held by prior owners of the Tungsten Properties
will be subject to escrow wherein 10% of the shares will be released on Closing and 15% will be
released every 6 months thereafter over 36 months.
Concurrent Financing
Prior to completion of the Transaction and as a condition precedent to the obligations of the Company,
ACM intends to complete a concurrent financing (the " Concurrent Financing") to raise aggregate gross
proceeds of up to $7,500,000 CAD by way of a private placement of units (the "Units") of ACM at a price
of $0.60 per Unit (the "Listing Price"). Each Unit will be comprised of one common share of ACM (each an
"ACM Share ") and one -half common share purchase warrant of ACM (each a " Warrant") and each
Warrant will entitle the holder to acquire an ACM Share at a price per ACM Share of $1.00 for a period of
24 months from the date of issuance. On closing of the Transaction (the " Closing"). RI Shares issued in
exchange for ACM Shares issued under the Concurrent Financing shall be free trading and not be subject
to resale restrictions, escrow or hold periods.
ACM and the Company intend to use the net proceeds of the Concurrent Financing to fund the costs of
the Transaction, the recommended work programs described in the Technical Reports, and for general
working capital expenses of the Resulting Issuer.
- 4 -
Finders Fees
In conjunction with the Concurrent Financing, ACM intends to pay a finder's fee on Closing, subject to the
policies of the Exchange , of up to a cash commission equal to up to 8% of the gross proceeds of from
purchasers under the Concurrent Financing introduced by the finder and a number of common share
purchase warrants (the “ Brokers Warrants ”) equal to up to 8% of the number of Units issued to
purchasers under the Concurrent Financing introduced by the finder . Each Brokers Warrant will be
exercisable into a RI Share for two years from the date of issuance at the Listing Price.
Related Party Transaction
The Transaction is a related party transaction under Multilateral Instrument 61 -101—Protection of
Minority Shareholders in Special Transactions (“MI 61-101”) because each of the Company and ACM share
a same director and officer. However, the Company is exempt under section 5.5(b) of MI 61-101 from the
requirement to obtain formal valuation because the Company is not listed on a “specified market".
However, the Company does intend to seek majority of the minority shareholder approval and general
corporate shareholder approval for the Transaction and will prepare a management information circular
(the “Information Circular”) in respect of the Transaction in accordance with the policies of the Exchange
and applicable securities laws.
Exchange Listing
Upon completion of the Transaction, the Resulting Issuer will own 100% of Amalco, which will own 100%
of PortCo, which owns 100% of PanMetals, and PanMetals owns 90% of the Tungsten Properties with the
right to acquire the remaining 10%. Upon Closing, the Resulting Issuer expects to list on the Exchange as
a mining issuer, subject to Exchange approval.
Conditions
Completion of the Transaction is subject to customary conditions precedent, including:
1. ACM and Deep shall have executed a definitive agreement for the Arrangement (the " Definitive
Agreement"), which will contain the applicable terms and conditions set forth therein and the
representations, warranties, covenants, and terms and conditions customarily found in such
agreements;
2. satisfactory completion of due diligence by each of ACM and Deep and their respective counsel of
each other and their respective subsidiaries, business and assets;
3. absence of any material adverse effect on the financial or operational condition of the assets or
business of each of the parties to the Definitive Agreement;
4. completion of the Technical Report for Borralha in accordance with NI 43-101 and filing thereof under
Deep's profile on SEDAR+;
5. completion and delivery to Deep of the title opinion in respect of the Tungsten Projects;
6. representations and warranties of each of the ACM and Deep contained in the Definitive Agreement
being true and correct as of the Closing Date, and there being no material breach of ACM or Deep of
the representations, warranties and covenants in the Letter Agreement or Definitive Agreement;
- 5 -
7. Deep shall have advanced at least $ 200,000 to $1,000,000 to ACM under the NPS Agreement , and
Deep shall have working capital of at least $ 100,000 as at Closing Date, excluding liabilities of up to
$50,000 for reasonable costs and expenses incurred in the ordinary course of business;
8. ACM and Deep shall be satisfied, acting reasonably, that the Tungsten Projects and ACM’s interests
therein satisfies the Exchange’s initial listing requirements;
9. receipt of all required regulatory, corporate and third party approvals, including Deep shareholder
approval, Exchange approval, and compliance with all applicable regulatory requirements and
conditions necessary to complete the Transaction;
10. delivery of standard completion documentation, including but not limited to, legal opinions, officers'
certificates, and certificates of good standing or compliance; and
11. other mutual conditions precedent customary for a transaction such as the Transaction.
Directors, Officers and Other Insiders
On completion of the Transaction, it is anticipated that the board of the Resulting Issuer will consist of
five members, with ACM nominating four members and Deep nominating one member. On Closing, all of
the directors of Deep will resign other than Andrew Lee, and Roy Bonnell, Sean O'Neill (as Non-Executive
Chairman), Joao Barros, and Colin Padget will be appointed as directors of the Resulting Issuer . Roy
Bonnell will be appointed as President and Chief Executive Officer , Keith Margetson as Chief Financial
Officer, and Andrew Lee as Corporate Secretary. The Company will provide additional information about
its proposed new directors, officers and insiders in a subsequent news release and an Information Circular
and a Listing Statement that will be prepared and filed under the Company's profile on SEDAR + as the
principal disclosure documents in respect of the Transaction.
Qualified Person
Douglas Blanchflower, B.Sc. (Hons.), P.Geo., is an independent Qualified Person for the purposes of NI 43-
101 and has reviewed and approved the scientific and technical information in this news release.
Further Information
More details will follow in the Company’s Information Circular and the Resulting Issuer’s Listing Statement
to be prepared in accordance with the listing requirements of the CSE Policies.
This news release does not constitute an offer to sell or a solicitation of an offer to buy any securities in
the United States. The securities to be issued in connection with the Transaction have not been and will
not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”)
or any state securities laws and may not be offered or sold within the United Staters or to U.S. Persons
unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from
such registration is available.
Completion of the Transaction is subject to a number of conditions, including but not limited to,
Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority
shareholder approval. Where applicable, the Transaction cann ot close until the required shareholder
approval is obtained. There can be no assurance that the Transaction will be completed as proposed or
at all.
- 6 -
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 Listing 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 the Company should be
considered highly speculative.
For further information concerning this press release, please contact the respective representatives of
Solid and ACM as follows:
Deeprock Minerals Inc.
Andrew Lee, President & CEO
Tel: 604-720-2703
Allied Critical Metals Corp.
Roy Bonnell, President & CEO
Tel: 514-928-5933
The Canadian Securities Exchange has in no way passed on the merits of the Transaction and has neither
approved nor disapproved the contents of this news release.
Cautionary Statement and Forward-Looking Information
All information contained in this news release with respect to the Company and ACM was supplied by the
parties, respectively, for inclusion herein, and each such party has relied on the other party for any
information concerning such party.
Certain statements contained in this press release constitute forward -looking information, including
statements regarding the expected issuance of approval of the Company’s shareholders and the Exchange
and the expected commencement of trading of the common shares of the Resulting Issuer on the Exchange.
These statements relate to future events or future performance. The use of any of the words “could”,
“intend”, “expect”, “believe”, “will”, “projected”, “estimated” and similar expressions and statements
relating to matters that are not historical facts are intended to identify forward -looking information and
are based on the parties’ current belief or assumptions as to the outcome and timing of such future events.
Actual future results may differ materially. The business of the Company is subject to a number of material
risks and uncertainties. Please refer to SEDAR+ filings for further details. Various assumptions or factors
are typically applied in drawing conclusions or making the forecasts or projections set out in forward -
looking information. Those assumptions and factors are based on information currently available to the
parties. The material factors and assumptions include the parties being able to obtain the necessary
corporate, regulatory and other third parties approvals. The forward looking information contained in this
release is made as of the date hereof and the parties are not obligated to update or revise any forward
looking information, whether as a result of new information, future events or otherwise, except as required
by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein,
investors should not place undue reliance on forward looking information. The foregoing statements
expressly qualify any forward looking information contained herein.
Not for dissemination in the United States of America.