Battery Mineral Resources Corp. Concludes Agreement to Acquire Punitaqui Copper-GOLD MINE and Closes First Tranche of Concurrent Financing
BATTERY MINERAL RESOURCES CORP. CONCLUDES AGREEMENT TO
ACQUIRE PUNITAQUI COPPER-GOLD MINE AND CLOSES FIRST TRANCHE
OF CONCURRENT FINANCING
NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR FOR RELEASE, PUBLICATION, DISTRIBUTION OR DISSEMINATION
DIRECTLY, OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES
Vancouver, British Columbia – (May 28, 2021) – Battery Mineral Resources Corp .
(TSXV: BMR) ("Battery" or the "Company") is pleased to announce its wholly-owned
Chilean subsidiary Minera BMR SpA has completed its previously announced
acquisition from Minera Altos de Punitaqui Limitada (“ MAP”), a wholly -owned
subsidiary of Xiana Mining Inc. (“Xiana”), of the Punitaqui Mining Complex, a recently
producing copper-gold mine located in the Coquimbo region of Chile (the “Punitaqui
Acquisition”).
Concurrent with the completion of the Punitaqui Acquisition, the Company completed
the first tranche of a private placem ent (the “Private Placement”), pursuant to
which the Company issued an aggregate of 21,156,074 common shares (“Common
Shares”), comprising approximately US$10.3 million of Common Shares at an issue
price of US$0.52 per share and approximately C$800,000 of Common Shares at an
issue price of C$0.65 per share. A second tranche of 1,538,462 Common Shares for
additional proceeds of US$800,000 will be completed on or about June 4, 2021, for
aggregate gross proceeds of US$11.1 million and C$800,000. Battery intends to use
the proceeds of the Private Placement to partially finance the Punitaqui Acquisition
through the settlement of outstanding obligations owed by MAP to certain secured
and unsecured creditors; to fund exploration, development, and restart activities at
the Punitaqui Mining Complex ; to fund exploration activities at the Company’s
Canadian cobalt -silver projects , and for working capital and general corporate
purposes. The Company previously announced that it intended to complete a
C$15,000,000 private placement at a price of C$0.65 per Common Share, but
determined to price the majority of the Private Placement in U.S. dollars on account
of the fact that the majority of subscription proceeds, as well as the majority of the
Company’s expenditures, are denominated in U.S. dollars.
Overview of the Punitaqui Mining Complex
• Past producing mining operation which consists of an integrated copper and
gold mining complex including all required infrastructure and sources of water
and power . The Punitaqui includes a centralized process plant which was
historically fed by four proximal copper-gold deposits: San Andres, Cinabrio,
Dalmacia, and Los Mantos and is currently modifying its existing tailings
disposal permit while consolidating its various exploitation permits.
• The copper-gold process plant consists of a standard copper sulphide crush -
grind-flotation circuit to produce a marketable copper -gold concentrate. Port
facilities are within 100 kilometers (“km”) for shipping to domestic and foreign
smelters. The MAP plant historically operated at a permitted capacity of 3,000
tonnes per day (”tpd”) with allowances to 3,600 tpd, with a potential capacity
of 4,000 tpd to be investigated.
• MAP is situated within a 25 km long mineralized district that is a classic iron
oxide copper gold and mantos style copper belt that is comprised of mantos
and structural controlled copper-gold-silver veins.
• A number of extensional and resource infill drill targets have been identified
within and surrounding each of the four main deposits and throughout the
11,800 hectares of concessions.
• Battery plans to execute a low capital cost restart program with the goal of
resumption of operations within four to six months after the completion of an
infill drilling and engineering program and finalization of permit modifications.
Punitaqui Acquisition Terms
The Company completed the Punitaqui Acquisition on the following terms:
• Pursuant to a loan purchase agreement with Bluequest Resources AG
(“Bluequest”), the Company acquired Bluequest’s interest in secured loan
obligations with a principal amount of US$10,000,000 owed by Xiana to
Bluequest (the “ Xiana Indebtedness”) and all associated rights, including
Bluequest’s security interest in MAP and the Punitaqui Mining Complex .
Acquiring the Xiana Indebtedness and the associated s ecurity will enable the
Company to acquire its leasehold interest in the Punitaqui Mining Complex free
and clear of the prior claims of any third party secured creditors. In
consideration for the Xiana Indebtedness, the Company (i) issued 10,000,000
Common Shares to Bluequest at US$0.50 and (ii) will pay up to US$5,000,000
of additional payments on achievement of certain production milestones at the
Punitaqui Mine, with each milestone payment to be satisfied, at the election of
Bluequest, by the payment of cash, the issuance of Common Shares at
prevailing market prices (subject to a minimum issue price of C $0.41), or a
combination of both.
• Pursuant to the agreement with MAP, Minera BMR will pay MAP:
o Upfront consideration of approximately US$8,450,000 to pay certain
secured, unsecured, and labor creditors
o Deferred consideration of approximately US$9,450,000 to pay certain
unsecured creditors in 23 quarterly installments (each a “ Quarterly
Installment”) payable over the course of six years be ginning on June
30, 2021
• MAP will use the proceeds indicated above to fund payments to certain
secured, unsecured, and labor creditors pursuant to a reorganization
agreement approved by the 21st Civil Court of Santiago on October 14, 2020.
• MAP will assign certain authorizations, permits and contracts to Minera BMR
for the purpose of enabling the Company to develop and operate the Punitaqui
Mine as a lessee-operator. This lessee -operator purchase structure allows
Battery to acquire all the MAP assets without assuming any potential unknown
liabilities while participating in 100% of the economic results of MAP. MAP has
granted the Company a 99-year leasehold interest and call option pursuant to
which it can convert its leasehold interest in the Punitaqui Mining Complex into
a direct ownership interest, for no consideration other than any outstanding
Quarterly Installments, at any time within 15 years following closing.
Commenting on the Punitaqui Acquisition and completion of the Private Placement,
Martin Kostuik, Chief Executive Officer of the Company, said:
“We are pleased to have closed the first tranche of the financing and , while
anticipating closing the final tranche shortly, we have closed the acquisition
agreement and are excited to have the Punitaqui Mine in our portfolio. With the right
investment and development strategy, we believe the Punitaqui Mining Complex has
significant upside potential as a sustainable, mid-size copper producing asset in the
near term. While the Punitaqui mine was placed on care and maintenance following
a decline in copper prices and challenging macroeconomic conditions related to the
COVID-19 pandemic, Battery has identified a range of opportunities that we believe
have the potential to deliver a near term restart of the operations and significant
improvements in operating performance. The Punitaqui Mining Complex has excellent
surface and underground infrastructure in place including a 3,600 ton per day
concentrator and four existing underground deposits with associated underground
development access. The existing infrastructure will allow us to execute on a focused
low capital cost restart program, which will prioritize infill drilling , minor capital
improvements in the mill and tailings system and the purchase of mining equipment
– all pointed towards greater operational efficiencies. The Punitaqui Mining Complex
is situated in a 25km copp er district which hosts numerous existing operating and
exploration projects – and is the only company with milling infrastructure in th is
highly prospective mining district. The Punitaqui mine most recently produced
approximately 21,000 tonnes of copper concentrate in 2019.
The Punitaqui Acquisition is transformational for Battery as it adds a potentially near
term cash flowing asset to complement our world class portfolio of battery mineral
exploration assets in Canada and the United States . Over the past four years, the
Company has assembled the largest battery mineral claim s land package in the
historic Gowganda Cobalt-Silver Camp and continues to pursue a focused program to
build on the recently announced, +1 million lb cobalt resource at MaCara by testing
over 50 near term prospective targets . We look forward to updating all our
shareholders and partners in this exciting year ahead as we take action to build a
premier battery mineral resources company.”
Related Party Considerations
Weston Energy, LLC (“ Weston Energy”) acquired an aggregate of 1,069,138
Common Shares in the first tranche of the Private Placement for a subscription price
of US$555,952 (the “First Tranche Weston Subscription Price”), and will acquire
an aggregate of 1,538,462 Common Shares in the second tranche of the Private
Placement for a subscription price of US$800.000 (the “ Second Tranche
Subscription Price”). Weston Energy is an insider of the Company as a result of its
beneficial ownership of, or control or direction over, directly or indirectly, greater
than 10% of the outstanding Common Shares. In addition, certain directors and
officers of the Company have acquired an aggregate of 211,941 in the Private
Placement for an agg regate subscription price of US$31,105 and C$98,881. The
participation of Weston Energy in the Private Placement constitutes a "related party
transaction" within the meaning of Multilateral Instrument 61 -101 – Protection of
Minority Security Holders in Special Transactions ("MI 61-101"). The Company has
determined that the transaction is exempt from the formal valuation and minority
shareholder approval requirements of MI 61 -101 by virtue of the exemptions
contained in Sections 5.5(a) and 5.7(1)(a) of MI 61 -101, as neither the fair market
value of securities issued to insiders nor the consideration paid by Weston Energy
exceeded 25% of the Company's market capitalization. The Company did not file a
material change report in respect of the related party transaction 21 days in advance
of closing of the Private Placement because insider participation had not been
determined at that time. The shorter period was necessary in order to permit the
Company to close the Private Placement in a timeframe consistent with usual market
practice for transactions of this nature.
Weston Energy satisfied the First Tranche Weston Subscription Price by the
assignment to the Company of US$555,952 of “debtor-in-possession” financing owed
by MAP to Weston Energy (the “DIP Financing”), which amount will be paid to the
Company out of the proceeds of the Punitaqui Acquisition as described above , and
will finance the Second Tranche Weston Subscription P rice by selling 1,538,462
Common Shares pursuant to a private agreement with a third party purchaser
concurrent with completion of the second tranche of the Private Placement.
Immediately prior to completion of the first tranche of the Private Placement, Weston
Energy and Weston Energy II, LLC (collectively, the “Weston Entities”) collectively
owned 71,601,000 Common, representing approximately 53.0% of the issued and
outstanding Common Shares. Following completion of the first tranche of the Private
Placement, the Weston Entities collectively own 72,670,138 Common Shares,
representing approximately 43.7% of the issued and outstanding Common Shares.
Following completion of the second tranche of the Private Placement, the Weston
Entities will collectively o wn 74,208,600 Common Shares, representing
approximately 44.2% of the issued and outstanding Common Shares.
The Weston Entities are considered to be controlled by Yorktown Energy Partners XI,
L.P. ("Yorktown XI"), which means that Yorktown XI is considered to beneficially
own the Common Shares owned by the Weston Entities. In addition Yorktown XI and
Yorktown Energy Partners IV, L.P. and Yorktown Energy Partners VI, L.P.
(collectively, the “ Yorktown Entities ”) collectively own 30,000,000 Common
Shares. None of the Yorktown Entities acquired any Common Shares in the Private
Placement. The 30,000,000 Common Shares owned by the Yorktown Entities, (i)
represented approximately 22.2% of the issued and outstanding Common Shares
immediately prior to the Private Placement, (ii) represent approximately 18.0% of
the issued and outstanding Common Shares following completion of the first tranche
of the Private Placement and (iii) will represent approximately 17.9% of the issued
and outstanding Common Shares following completion of the second tranche of the
Private Placement.
Taken together, the Weston Entities and the Yorktown Entities collectively owned
101,601,100 Common Shares immediately prior to the Private Placement ,
representing 75.2% of the Common Shares. Following completion of the first tranche
of the Private Placement, the Weston Entities and the Yorktown Entities collectively
own 102,670,138 Common Shares, representing approximately 61.7% of the issued
and outstanding Common Shares. Following completion of the second tranche of the
Private Placement, the Weston Entities and the Yorktown Entities will collectively own
104,208,600 Common Shares, representing approximately 62.1% of the issued and
outstanding Common Shares.
Additional Information
The TSXV has in no way passed upon the merits of the Punitaqui Acquisition, the
proposed acquisition of the Xiana Indebtedness or the Private Placement, and has
neither approved nor disapproved the contents of this press release. Neither the TSXV
nor its Regulation Services Provider (as that term is defined in the policies of the
TSXV) accepts responsibility for the adequacy or accuracy of this press release.
All securities issued pursuant to the Punitaqui Acquisition and the first tranche of the
Private Placement will be subject to a hold period with an expiry date of September
29, 2021, being four months and a day from the date of issuance.
Richard Goodwin, P. Eng , of JDS Energy and Mining Inc., is one of th e Company's
Qualified Persons (“QP”) as defined by National Instrument 43-101 and has reviewed
the technical information disclosed in this press release.
Scientific and technical information pertaining to the cobalt resource at McAra was
extracted from the Company’s NI 43 -101 “Technical report on Cobalt Exploration
Assets in Canada” dated as of May 26, 2020 with an effective date of March 31, 2020,
prepared by Glen Cole (P. Geo) of SRK Consulting (Canada) Inc.
About Battery Mineral Resources Corp.
Battery is a multi-commodity resource company. Battery is engaged in the discovery,
acquisition, and development of battery metals (cobalt, lithium, graphite, nickel and
copper), in North America and South Korea. Battery is the largest mineral claim
holder in the historic Gowganda Cobalt-Silver Camp, Canada, with various high-grade
primary cobalt silver-nickel-copper targets located in the Cobalt Belt of Ontario and
Quebec. In addition, Battery owns approximately 89.2% of ESI Energy Services, Inc.,
a pipeline equipment rental and sales company with operations in Leduc, Alberta and
Phoenix, Arizona. Finally, Battery is currently developing the Punitaqui Mining
Complex, and pursuing the potential near term resumption of operations at the prior
producing Punitaqui copper-gold mine located in the Coquimbo region of Chile.
For further information, please contact:
Battery Mineral Resources Corp.
Martin Kostuik
Phone: +1 (604) 229 3830
Email: [email protected]
The securities offered pursuant to the Private Placement have not been, and will not be, registered under
the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act") or any U.S. state securities laws, and
may not be offered or sold in the United States or to, or for the account or benefit of, United States persons
absent registration or any applicable exemption from the registration requirements of the U.S. Securities
Act and applicable U.S. state securities laws. This news release shall no t constitute an offer to sell or the
solicitation of an offer to buy securities in the United States, nor shall there be any sale of these securities
in any jurisdiction in which such offer, solicitation or sale would be unlawful.
Forward Looking Statements
This news release includes certain “forward -looking statements” under applicable
Canadian securities legislation, including statements related to the closing of the
second tranche of the Private Placement, the use of the proceeds of the Private
Placement, the repayment of the DIP Financing , the potential benefits of the
Punitaqui Acquisition and the likelihood of developing the Punitaqui Mining Complex
into a sustainable mid -sized copper producer. Actual future results may differ
materially. There can be no assurance that such statements will prove to be accurate,
and actual results and future events could differ materially from those anticipated in
such statements. Forward -looking statements reflect the beliefs, opinions and
projections of the Company on the date the statements are made and are based upon
a number of assumptions and estimates that, while considered reasonable by the
Company, are inherently subject to significant business, economic, competitive,
political and social uncertainties and conti ngencies. Many factors, both known and
unknown, could cause actual results, performance, or achievements to be materially
different from the results, performance or achievements that are or may be
expressed or implied by such forward-looking statements and the parties have made
assumptions and estimates based on or related to many of these factors. Such factors
include, without limitation, the ability of the Company to obtain sufficient financing
to complete the Punitaqui Acquisition, obtaining all required regulatory approvals
necessary to complete the Punitaqui Acquisition and the acquisition of Xiana
Indebtedness, risks related to share price and market conditions, the inherent risks
involved in the mining, exploration and development of mineral propertie s,
government regulation and fluctuating metal prices. Accordingly, readers should not
place undue reliance on forward -looking statements. Battery undertakes no
obligation to update publicly or otherwise revise any forward -looking statements
contained here in whether as a result of new information or future events or
otherwise, except as may be required by law.