Electric Royalties Signs Asset Purchase Agreement to Acquire Lithium Royalty and Option Portfolio
Electric Royalties Signs Asset Purchase Agreement to Acquire
Lithium Royalty and Option Portfolio
VANCOUVER, BC / ACCESSWIRE / April 9, 2024 / Electric Royalties Ltd.
(TSXV:ELEC)(OTCQB:ELECF) ("Electric Royalties" or the "Company") is pleased to
announce that, further to the amended and restated letter of intent described in its March 6, 2024
news release (the "LOI"), the Company has entered into an Asset Purchase Agreement with
1544230 Ontario Inc., MK Exploration Services Inc., and Gravel Ridge Resources Ltd. (together,
the "Vendors"), dated April 8, 2024, to acquire a portfolio of 18 royalty agreements and 32
lithium properties in Ontario, Canada, selected for their prospectivity after Company due
diligence (the "Transaction").
31 of the 32 properties are currently being explored by third parties pursuant to option
agreements and, to the extent that the applicable option payments (yielding the Company up to
C$2.2 million) are made over the next two and a half years and the options are exercised, each of
the properties would revert into royalty interests for Electric Royalties. Electric Royalties would
retain its ownership interest in any properties that are not ultimately transferred to an optionee
and would have the right to re-option, sell, or relinquish the released properties.
Transaction Terms
The Company will issue to the Vendors an aggregate of 2,250,000 common shares in the capital
of the Company (the "Consideration Shares"), make a cash payment (the sum of C$1,875,000
less the (i) C$75,000 non-refundable exclusivity fee already paid; (ii) the amount of certain
payments received by the Vendors under certain earn-in, option, royalty, or similar agreements
on or after January 1, 2024; and (iii) 50% of any proceeds received by the Vendors for the sale of
certain property interests described in the LOI on closing of the Transaction ("Closing").
Completion of the proposed Transaction is expected during April 2024 and remains subject to a
number of conditions, including: the satisfactory completion of due diligence; the receipt of TSX
Venture Exchange approval for the issuance of the Consideration Shares, the receipt of certain
third party approvals with respect to certain royalties and lithium properties under option and the
receipt of any other required regulatory or third party approvals.
Drawdown under Convertible Credit Facility
The Company has elected to draw down C$2,500,000 (the "Drawdown") under its
C$10,000,000 amended and restated convertible credit facility with Gleason & Sons LLC (the
"Lender") dated February 16, 2024 (the "Credit Facility") for working capital and to fund the
cash payment of the Transaction and associated Transaction costs.
Loans drawn under the Credit Facility bear interest ("Interest") at a floating rate (United States
Secured Overnight Financing Rate as published by the New York Federal Reserve ("SOFR") +
7%), with a maximum interest rate of 12.5%, with Interest payments capitalized into the
principal amount and due at the maturity date (the "Maturity Date") of January 12, 2028. Prior
to the Maturity Date, on at least 10 days' prior written notice to the Company and subject to all
required TSX Venture Exchange approvals having been obtained, the Lender has the right to
convert all or any portion of the outstanding principal amount of the Credit Facility and accrued
and unpaid interest into the Company's common shares. Any outstanding principal amount with
respect to a drawdown under the Credit Facility will be converted at a conversion price equal to
the greater of: (i) C$0.50; (ii) a 100% premium above the 30-day volume weighted average
trading price of the common shares of the Company on the TSX Venture Exchange at the time of
such drawdown; and (iii) the minimum price acceptable to the TSX Venture Exchange, per
common share of the Company, subject to adjustment as provided in the convertible note
evidencing such drawdown. Any accrued and unpaid interest may be converted at conversion
price equal to the Market Price (as defined under the TSX Venture Exchange's Policy 1.1) at the
time of settlement.
The Credit Facility is a "related party transaction" within the meaning of Multilateral Instrument
61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The
Credit Facility is exempt from the valuation requirement of MI 61-101 by virtue of the
exemption contained in section 5.5(b) as the Company's common shares are not listed on a
specified market. The Company received disinterested shareholder approval of the Credit
Facility at the Company's special meeting of shareholders held on March 19, 2024 in accordance
with MI 61-101.
The Drawdown is subject to completion of documentation, the approval of the TSX Venture
Exchange, and other customary closing conditions.
About Electric Royalties Ltd.
Electric Royalties is a royalty company established to take advantage of the demand for a wide
range of commodities (lithium, vanadium, manganese, tin, graphite, cobalt, nickel, zinc and
copper) that will benefit from the drive toward electrification of a variety of consumer products:
cars, rechargeable batteries, large scale energy storage, renewable energy generation and other
applications.
Electric vehicle sales, battery production capacity and renewable energy generation are slated to
increase significantly over the next several years and with it, the demand for these targeted
commodities. This creates a unique opportunity to invest in and acquire royalties over the mines
and projects that will supply the materials needed to fuel the electric revolution.
Upon completion of the Transaction, Electric Royalties has a growing portfolio of 40 royalties
across the world and 32 lithium properties in Ontario, Canada. The Company is focused
predominantly on acquiring royalties on advanced stage and operating projects to build a
diversified portfolio located in jurisdictions with low geopolitical risk, which offers investors
exposure to the clean energy transition via the underlying commodities required to rebuild the
global infrastructure over the next several decades toward a decarbonized global economy.
For further information, please contact:
Brendan Yurik
CEO, Electric Royalties Ltd.
Phone: (604) 364‐3540
Email: [email protected]
https://www.electricroyalties.com/
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined
in the policies of the TSX Venture Exchange), nor any other regulatory body or securities
exchange platform, accepts responsibility for the adequacy or accuracy of this release.
Cautionary Statements Regarding Forward-Looking Information and Other Company
Information
This news release includes forward-looking information and forward-looking statements
(collectively, "forward-looking information") with respect to the Company within the meaning of
Canadian securities laws. This news release includes information regarding other companies
and projects owned by such other companies, based on previously disclosed public information
disclosed by those companies and the Company is not responsible for the accuracy of that
information, and that all information provided herein is subject to this Cautionary Statement
Regarding Forward-Looking Information and Other Company Information. Forward looking
information is typically identified by words such as: believe, expect, anticipate, intend, estimate,
postulate and similar expressions, or are those, which, by their nature, refer to future events.
This information represents predictions and actual events or results may differ materially.
Forward-looking information may relate to the Company's future outlook and anticipated events
and may include statements regarding the financial results, future financial position, expected
growth of cash flows, business strategy, budgets, projected costs, projected capital expenditures,
taxes, plans, objectives, industry trends and growth opportunities of the Company and the
properties in which it holds interests.
While management considers these assumptions to be reasonable, based on information
available, they may prove to be incorrect. Forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual results, performance
or achievements of the Company or these properties to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking statements.
These risks, uncertainties and other factors include, but are not limited to risks associated with
general economic conditions; adverse industry events; marketing costs; loss of markets; future
legislative and regulatory developments involving the renewable energy industry; inability to
access sufficient capital from internal and external sources, and/or inability to access sufficient
capital on favourable terms; the mining industry generally, recent market volatility, income tax
and regulatory matters; the ability of the Company or the owners of these properties to
implement their business strategies including expansion plans; the optioned properties
remaining under option; the optionees making option payments as and when due under the
relevant option agreements; the lithium properties not being successfully explored and
developed; competition; currency and interest rate fluctuations, and the other risks.
The reader is referred to the Company's most recent filings on SEDAR+ as well as other
information filed with the OTC Markets for a more complete discussion of all applicable risk
factors and their potential effects, copies of which may be accessed through the Company's
profile page at sedarplus.ca and at otcmarkets.com.
SOURCE: Electric Royalties Ltd.