Nbs Capital Announces Proposed Qualifying Transaction with Electric Metals (USA) Limited
NBS CAPITAL ANNOUNCES PROPOSED QUALIFYING TRANSACTION WITH
ELECTRIC METALS (USA) LIMITED
NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWS WIRES
OTTAWA, October 19, 2020 - NBS Capital Inc. (“NBS” or the “Company”) (TSXV: NBS.P) announces
that it has entered into a non-binding letter of intent dated September 17, 2020 with Electric Metals (USA)
Limited (“EML”), an unlisted public company incorporated under the laws of New South Wales, Australia,
to effect an arm’s length transaction that will result in a reverse takeover of NBS by EML (the “Proposed
Transaction”). Trading in the common shares of NBS has been halted in accordance with the policies of
the TSX Venture Exchange (the “ TSXV”) in connection with NBS’ proposed transaction with Ubook
Editora S.A. (“Ubook”), as first announced on November 27, 2019. NBS also announces the termination
of the proposed qualifying transaction with Ubook as the letter of intent dated November 22, 2019 between
NBS and Ubook expired effective June 1, 2020 according to its terms and was not renewed. Trading in the
common shares of NBS will remain halted until such time as all required documentation has been filed with
and accepted by the TSXV in connection with the Proposed Transaction. There can be no assurances that
the Proposed Transaction will be completed on the terms set out below or at all.
The Proposed Transaction
It is intended that the Proposed Transaction will constitute the “Qualifying Transaction” of NBS as such
term is defined in the policies of the TSXV. NBS currently has 7,300,000 common shares outstanding
(each, an “NBS Common Share”), stock options to acqu ire 730,000 NBS Common Shares at a price of
$0.10 per share expiring December 18, 2023 (the “ NBS Stock Options”) and share purchase warrants to
acquire 500,000 NBS Common Shares at a price of $0.10 per share expiring December 18, 2020 (the
“Agent’s Warrants”). It is expected that all NBS Stock Options and Agent’s Warrants outstanding will be
exercised in accordance with their terms on or prior to the completion of the Proposed Transaction.
As a result of the Proposed Transaction, it is expected that EML w ill become a wholly-owned subsidiary
of NBS (the “Resulting Issuer” following completion of the Proposed Transaction) or otherwise combine
its corporate existence with a wholly-owned subsidiary of NBS. While the final structure of the Proposed
Transaction will be subject to the receipt of tax, corporate and securities law advice for both NBS and EML,
it is currently anticipated that the Proposed Transaction will be effected by way of a three-cornered
merger/amalgamation effected pursuant to a court-supervised scheme of arrangement under the laws of
Australia (the “Arrangement”), whereby EML will combine with a newly incorporated wholly -owned
Australian subsidiary of NBS (“NBS Subco”) in accordance with the terms of an arrangement agreement
or scheme implementation agreement to be entered into by EML, NBS and NBS Subco (the “Arrangement
Agreement”).
The Company and EML anticipate that upon on closing of the Proposed Transaction, the Resulting Issuer
will meet the TSXV’s initial listing requirements for a Tier 1 or Tier 2 mining issuer.
Name Change and Consolidation
On or immediately prior to the completion of the Proposed Transaction, it is anticipated that: (i) NBS will
effect a name change to “Nevada Silver Corporation” or such other name as is ac ceptable to EML (the
“Name Change”); and (ii) NBS will consolidate its issued and outstanding shares by a factor of 0.73271
to arrive at 6,250,000 NBS common shares on closing of the Proposed Transaction assuming all NBS Stock
Options and Agent’s Warrants are exercised (the “ Consolidation”), or such other consolidation ratio as
may be required under the policies of the TSXV and as may be acceptable to the parties, with all issuances
of NBS Common Shares in connection with the Proposed Transaction being comm ensurately adjusted.
NBS will seek the approval of its shareholders for the Name Change and Consolidation at a meeting of
shareholders (the “ Meeting”) to be held prior to completion of the Proposed Transaction. Notice of the
Meeting will be posted on www.SEDAR.com under the Company’s profile.
In connection with the Proposed Transaction, it is anticipated that NBS shall issue an aggregate of
43,820,020 post-Consolidation NBS Common Shares to the shareholders of EML, on a pro-rata basis, on
closing of the Proposed Transaction in exchange for all of the issued and outstanding securities of EML.
The number of post -Consolidation NBS Common Shares to be issued may be adjusted depending on the
final Consolidation Ratio determi ned by the parties to be appropriate in connection with the Proposed
Transaction.
At this time, the parties to the Proposed Transaction do not believe that approval of the NBS shareholders
for the Proposed Transaction is required under applicable TSXV poli cies due, in part, to the fact that the
transaction is arms-length.
Electric Metals (USA) Limited
EML is a public, unlisted company incorporated under the laws of New South Wales, Australia on July 24,
2019. It is a US-based resource company, with its material asset being the 100% owned Corcoran Canyon
Silver Project (“ Corcoran”) in Nevada. EML also holds a high -grade manganese project in Minnesota,
USA.
Corcoran is located within a highly productive belt of current and past producing mines. Previous
metallurgical testing of Silver Reef material returned an overall 76.6% recovery of silver through flotation
and cyanidation. Based on mining operations at other silver-dominant projects, mineralization in the Silver
Reef zone may also be amenable to heap-leach processing. EML believes that the project is located near
good infrastructure with moderate terrain in a mining -friendly jurisdiction. The project area includes 328
contiguous mineral claims (2,674 ha) covering the existing mineralization as well as three exploration
expansion targets.
The major shareholders of EML include Lewis Super Admin Pty Ltd. (“Lewis Holdco”) which holds 22.8%
of the outstanding securities and ACT2 Pty Limited (“ ACT2”) which holds 13.2% of the outstanding
securities. Gary Lewis, the Chief Executive Officer of EML and a resident of New South Wales, Australia,
controls each of Lewis Holdco and ACT2. Dr. Henry J. Sandri and Karen L. Spaulding of Minnesota, USA,
jointly hold 17.7% of the outstanding securities of EML.
Selected Financial Information
The following table sets out selected financial information with respect to EML as at the dates noted. The
selected financial information is derived from EML’s unaudited financial statements for the periods
described, which have been prepared in accordance with International Financial Reporting Standards,
issued by the International Accounting Standards Board, and denominated in Canadian dollars.
As at
December 31, 2019
(unaudited)
As at
June 30, 2020
(unaudited)
Total assets 169,717 4,258,794
Total liabilities - 896,752
Shareholders’ equity 169,717 3,362,042
The Concurrent Financing
In conjunction with the Proposed Transaction, EML is expected to use its best efforts to complete, on or
prior to the completion of the Proposed Transaction, a non -brokered private placement (the “Concurrent
Financing”) of subscription receipts (the “Subscription Receipts”) for aggregate gross proceeds of up to
Cdn$5,000,000 subject to a minimum of Cdn$4,000,000, at a price of Cdn$0.33 per Subscription Receipt.
The gross proceeds raised in connection with the Concurrent Financing, less expenses (the “ Escrowed
Funds”), will be delivered to and held in escrow on behalf of the subscribers by TSX Trust Company or
such other licenced escrow agent as determined by EML (the “Escrow Agent”) and invested in an interest-
bearing account, or short-term obligations of, or obligations guaranteed by, the Government of Canada or
any other investments that may be approved by EML, pending the satisfaction or waiver (to the extent such
waiver is permitted) of certain escrow release conditions (the “Escrow Release Conditions”) on or before
the 120th day after the closing of the Concurrent Financing (the “Termination Date”), in accordance with
the provisions of a subscription agreement to be entered into with the subscribers in the Concurrent
Financing and a subscription receipt agreement to be entered into with the Escrow Agent. Finder’s fees
may be payable in connection with sourcing investors to participate in the Concurrent Financing.
Each Subscription Receipt shall entitle the holder thereof to receive, upon automatic exchange in
accordance with the terms of the Subscription Receipt Agreement (as defined below), without payment of
additional consideration or further act or formality on the part of the holder thereof, one common share in
the capital of EML (each, an “Underlying Share”) and one-half of one common share purchase warrant of
EML (each whole such warrant, an “Underlying Warrant”) upon the satisfaction or waiver (to the extent
such waiver is permitted) of the Escrow Release Conditions on or before the Termination Date. Each whole
Underlying Warrant will entitle the holder to acquire one share of the Resulting Issuer at an exercise price
of $0.60 per share for a period of two years from the closing of the Qualifying Transaction (the “Warrant
Expiry Date”); however, the number of Resulting Issuer shares issuable, and the price per sha re payable,
on exercise of the Underlying Warrants may be adjusted if the Consolidation Ratio is adjusted. The
Company will be entitled to accelerate the Warrant Expiry Date upon notice to the Underlying Warrant
holders should the closing price of the shares of the Resulting Issuer on the TSXV be greater than $1.00 for
twenty consecutive trading days.
Each Underlying Share will then be exchanged for one common share of the Resulting Issuer upon closing
of the Proposed Transaction and each Underlying Warrant will, upon exercise in accordance with its terms,
entitle the holder thereof to one common share of the Resulting Issuer.
The Escrow Release Conditions are comprised of:
(a) raising minimum proceeds of $4,000,000 under the Concurrent Financing;
(b) the completion, satisfaction or waiver of all conditions precedent to the Qualifying Transaction other
than the release of the Escrowed Funds;
(c) the receipt of all shareholder and regulatory approvals required for the Qualifying Transaction;
(d) written confirmation from each of EML and NBS that all conditions of the Qualifying Transaction
have been satisfied or waived, other than release of the Escrowed Funds, and that the Qualifying
Transaction shall be completed forthwith upon release of the Escrowed Funds (the “Release Notice”);
(e) the distribution of (i) the Underlying Shares and Underlying Warrants and (ii) the Resulting Issuer
common shares to be issued in exchange for the Underlying Shares pursuant to the Qualifying
Transaction following the satisfaction of the Escrow R elease Conditions being exempt from
applicable prospectus and registration requirements of applicable securities laws and not subject to
any hold or restricted period;
(f) the Resulting Issuer common shares being conditionally approved for listing on the TSXV, and the
completion, satisfaction or waiver of all conditions precedent to such listing, other than the release of
the Escrowed Funds; and
(g) EML shall have delivered the Release Notice to the Escrow Agent in accordance with the terms of
the Subscription Receipt agreements entered into with subscribers of the Concurrent Financing.
In the event that: (i) the Escrow Agent does not receive the Release Notice at or prior to 11:59 p.m. (Toronto
time) on the Termination Date, or (ii) if prior to the Termination Date, the Company advises the subscribers
or announces to the public that it does not intend to satisfy the Escrow Release Conditions, the Subscription
Receipts will be null and void and of no further effect, and the Escrow Agent will return to each holder of
Subscription Receipts an amount equal to the aggregate subscription price of the Subscription Receipts held
by such holder plus a pro rata portion of any interest and other income earned on the Escrowed Funds, less
applicable withholding taxes, if any. EML will be responsible and liable to the holders of Subscription
Receipts for any shortfall between the aggregate Subscription Price and the Escrowed Funds.
In the event the Escrow Release Conditions are satisfied, and the Proposed Transaction is completed, the
Escrowed Funds will be released to the Company. The Company intends to use the Escrowed Funds to fund
the exploration of EML’s Corcoran Canyon Silver Project, pay for expenses of the Concurrent Financing
and Proposed Transaction, and for general working capital purposes.
Closing Conditions
It is proposed that completion of the Proposed Transaction will be subject to a number of conditions,
including but not limited to, completion of the Concurrent Financing, the satisfaction of the Company and
EML in respect of the due diligence investigations to be undertaken by each party, the entering into by the
parties of a definitive agreement with respect to the Proposed Transaction (such agreement to include
representations, warranties, conditions and covenants typical for a transaction of this nature), the receipt of
approval of the directors of each of NBS and EML, the approval of the Arrangement by the Australian
courts and the shareholders of EML, the receipt of all nec essary approvals of the shareholders of NBS at
the Meeting, and the receipt of all necessary approvals of all regulatory bodies having jurisdiction in
connection with the Proposed Transaction, including the Australian Securities and Investment Commission
and the TSXV, and the determination of a new board of directors of the Resulting Issuer (which is presently
contemplated to include Sheldon Inwentash, Non-Executive Chairman; Gary Lewis, executive director; Dr.
Ian Pringle, director; Dr. Henry Sandri, director; and John Kutkevicius, director) and appointment of new
officers of the Resulting Issuer, (which are presently contemplated to consist of Gary Lewis, Group CEO;
Dr. Ian Pringle, Technical Director; Dr. Henry Sandri, COO; and Ms. Natasha Tsai, CFO). EML and NBS
continue to evaluate individuals to serve in those capacities to ensure the board possesses appropriate capital
markets and operational experience. As such, the composition of the directors, officers and insiders of the
Resulting Issuer may be amended prior to completion of the Qualifying Transaction. Any amendments will
be set out in a further press release of the Company. The Proposed Transaction cannot close until the
required conditions are satisfied or waived, and there can be no assurance th at the Proposed Transaction
will be completed as proposed or at all and there can be no assurances that the Proposed Transaction will
be completed on the terms outlined herein, or at all.
Proposed Director and Officer Qualifications
Gary Lewis, Director and Group Chief Executive Officer
Mr. Lewis is an executive with over 30 years’ experience in capital markets, business and strategy
development. Mr. Lewis founded, invested and operated resource projects or assets valued at more than
US$400M, in cluding the acquisition and ultimate selldown or listing of high -value, multi -commodity
resource projects in Australia, the United Kingdom, Southeast Asia, Central Asia and the Americas. Mr.
Lewis has a background in the pharmaceutical and food industries and has worked in natural resources
since 2006. He was the founder and Managing Director of Australian-listed Robust Resources Limited, and
more recently was the founder and Chief Executive Officer of Battery Mineral Resources Limited. Mr.
Lewis holds a Bachelor of Commerce and Master of Business and Technology from the University of New
South Wales.
Dr. Henry Sandri, Director and Chief Operating Officer
Dr. Sandri is a senior mining executive with a successful history of exploration, project development,
construction management and operations on six continents. He is a former senior officer for base, precious
and battery metals and industrial minerals companies, and a former director of private and public
corporations on Canadian, United States and United Kingdom exchanges. Dr. Sandri was previously
President, Chief Executive Officer and Director of TSX -listed Duluth Metals Limited, a US -based base
metals company, and took the company’s value from less than US$1 million to over US$350 million in
fewer than four years. A former officer at Inco Limited and senior consultant at Behre Dolbear, Dr. Sandri
obtained a BS in Foreign Service from Georgetown University, a Masters in Applied Economics from The
American University, and a PhD in Mineral Economics from the Colorado School of Mines.
John Kutkevicius, Non-Executive Director
Mr. Kutkevicius is an income tax lawyer with the Toronto law firm of Wildeboer Dellelce LLP. He has
served as a director of a number of junior resource companies including Barkerville Gold Mines Ltd.,
Changfeng Energy Inc. and Chariot Resources Limited. Mr. Kutkevicius holds a Bachelor of Commerce
degree from Queen’s University, a Bachelor of Laws degree from the University of Western Ontario, and
a Master of Law degree (in taxation) from York University.
Dr. Ian Pringle, Technical Director
Dr. Pringle is a senior mining executive with outstanding track record of successful mineral resource
evaluation, discovery, project development and operations. As a managing director of several Aus tralian-
listed resource companies, he has gained considerable experience and practicable ability with respect to
international base and precious metals projects. Dr. Pringle’s strengths include high technical capability
and knowledge of all aspects of mineral exploration, resource and mining activities, strong leadership and
effective teamwork. Between 1997 and 2011, he managed Silver Standard Resources’ Australian operations
and oversaw exploration at the Bowden’s Silver Deposit which is Australia’s larges t unmined silver
resource.
Sheldon Inwentash, Non-Executive Chairman
Mr. Inwentash is the Founder, Chairman and Chief Executive Officer of ThreeD Capital Inc., and has more
than 30 years of investing experience. He co -founded Visible Genetics, the first commercial
pharmacogenomics company, in 1994, and exited to Bayer in 2001. Through two decades leading Pinetree
Capital, a company listed on the TSX, Mr. Inwentash created significant shareholder value through early
investments in Queenston Mining (acquired by Osisko Mining Corp. for $550 million), Aurelian Resources
(acquired by Kinross for $1.2 billion) and Gold Eagle Mines (acquired by Goldcorp for $1.5 billion). He
obtained his Bachelor of Commerce from the University of Toronto and is a Chartered Professional
Accountant. In 2012, Mr. Inwentash received an honorary Doctor of Laws degree from the University of
Toronto for his leadership as an entrepreneur and for his invaluable philanthropic work with children, youth
and their families.
Natasha Tsai, Chief Financial Officer
Ms. Tsai is a Chartered Professional Accountant with Malaspina Consultants Inc. Prior thereto, she was a
senior accountant with Grant Thornton LLP. She has acted as Chief Financial Officer and/or controller for
a number of liste d companies and has corporate finance and listed -company experience in an array of
sectors. Currently, Ms. Tsai also serves as Chief Financial Officer of NameSilo Technologies Corp. (CSE:
URL), Getchell Gold Corp. (CSE: GTCH), PPX Mining Corp. (TSXV: PPX), Sentinel Resources Corp.
(CSE: SNL), and Shoal Point Energy Ltd. (CSE: SHP).
Sponsorship
NBS and EML intend to comply with the TSXV requirements regarding sponsorship of the Proposed
Transaction, but may seek an exemption or waiver from the sponsorship requirements. If the parties seek
such an exemption or waiver, there can be no assurances that the TSXV will grant such an exemption or
waiver, either at all or on the terms sought by the parties.
If and when a definitive agreement between NBS and EML is executed, NBS will issue a subsequent
press release in accordance with the policies of the TSXV containing the details of the definitive
agreement and the additional terms of the Proposed Transaction.
Technical Information
The technical information in this news release has been reviewed and approved by Dr. Ian Pringle, a
Qualified Person as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects
of the Canadian Securities Administrators.
Cautionary Statements
Disclosure Regarding Forward -Looking Statements : This press release contains certain “Forward -
Looking Statements” within the meaning of applicable securities legislation relating to the proposal to
complete the Proposed Transaction and associated transactions, including statements regarding the terms
and conditions of the Proposed Transaction, the Concurrent Financing, the use of proceeds of the
Concurrent Financing, and the business of the Resulting Issuer. The information about EML contained in
the press release has not been independently verified by the Company. We use words such as “might”,
“will”, “should”, “anticipate”, “plan”, “expect”, “believe”, “estimate”, “forecast” and similar terminology
to identify forward looking statements and forward-looking information. Such statements and information
are based on assumptions, estimates, opinions and analysis made by management in light of its experience,
current conditions and its expectations of future developments as well as other factors which it believes to
be reasonable and relevant. Forward -looking statements and information involve known and unknown
risks, uncertainties and other factors that may cause our actual results to differ materially from those
expressed or implied in the forward -looking statements and information and accordingly, readers should
not place undue reliance on such statements and information. Although the Company believes, in light of
the experience of its officers and directors, current conditions and expected future developments and other
factors that have been considered app ropriate, that the expectations reflected in this forward -looking
information are reasonable, undue reliance should not be placed on them because the Company can give no
assurance that they will prove to be correct. In evaluating forward -looking statements and information,
readers should carefully consider the various factors which could cause actual results or events to differ
materially from those expressed or implied in the forward looking statements and forward -looking
information depending on, among other things, the risks that the parties will not proceed with the Proposed
Transaction, the Concurrent Financing and/or other associated transactions, that the ultimate terms of the
Proposed Transaction, the Concurrent Financing and/or other associated transactions will differ from those
currently contemplated, and that the Proposed Transaction, the Concurrent Financing and/or other
associated transactions will not be successfully completed for any reason (including the failure to obtain
the required approvals or clearances from regulatory authorities). The statements in this press release are
made as of the date of this release. The Company undertakes no obligation to comment on analyses,
expectations or statements made by third parties in respect of the Com pany, EML, their respective
securities, or their respective financial or operating results (as applicable).
Completion of the transaction is subject to a number of conditions, including but not limited to, TSXV
acceptance and if applicable pursuant to Exchange 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 TSXV has in no way passed upon the merits of the proposed transaction 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 release.
This press release is intended for distribution in Canada only and is not intended for distribution to United
States newswire services or dissemination in the United States. The securities being offered have not been,
nor will they be, registered under the United States Securities Act of 1933, as amended, or any state
securities laws and may not be offered or sold within the United States or to, or for the account or benefit
of, U.S. persons absent U.S. registration or an applicable exemption from the U.S. registration requirements.
This release does not constitute an offer for sale of securities in the United States.
All information contained in this press release relating to EML was provide d by EML to NBS for
inclusion herein. NBS has not independently verified such information and shall bear no liability for
any misrepresentation contained therein.
About NBS Capital Inc.
The only business of NBS is the identification and evaluation of assets or businesses with a view to
completing a “Qualifying Transaction” in accordance with the policies of the TSXV.
Investors are cautioned that trading in the securities of a capital pool company should be considered highly
speculative. For further information, contact: NBS Capital Inc. Paul Barbeau, Chief Executive Officer and
Director. Phone: 613-232-1567 x 201.