Eagle Plains Announces the Execution of Definitive Agreements Relating to the Proposed Spin-Out of Eagle Royalties
EAGLE PLAINS ANNOUNCES THE EXECUTION OF DEFINITIVE
AGREEMENTS RELATING TO THE PROPOSED SPIN-OUT OF EAGLE
ROYALTIES
Cranbrook, B.C., March 1st, 2023: Further to its news release dated January 4, 2023, Eagle
Plains Resources Ltd. (TSX-V:EPL) ("EPL" or "Eagle Plains") is pleased to announce that
it has entered into an arrangement agreement with its wholly -owned subsidiary, Eagle
Royalties Ltd. ("ER" or "Eagle Royalties") and an amalgamation agreement among 1386884
B.C. Ltd. ("138") and Eagle Royalties.
Strategic Rationale for the Spin-out Transaction and the Subsequent Amalgamation
• Separating over 50 separate r oyalties from Eagle Plain's current portfolio of assets is
expected to enable Eagle Royalties to focus on accretive growth, spotlighting the value of the
royalty assets and potentially realiz ing a fair market value that is commensurate with peer
royalty companies;
• Eagle Plains s ecurityholders will benefit by holding shares in two separate public
companies listed on both the TSX Venture Exchange ("TSX-V") and the Canadian Securities
Exchange ("CSE");
• Separating the royalties is expected to expand Eagle Royalties' potential shareholder
base, marketing opportunities and access to capital;
• Packaging these diverse royalty assets into an independent and stand-alone vehicle that
is readily available for a possible acquisition by other royalty companies interested in
expanding their existing portfolio; and
• Eagle Plains' board of directors and management team will maintain its focus on its core
business model of acquiring and advancing grassroots critical and precious metal exploration
properties.
Tim Termuende, President and CEO of Eagle Plains and Eagle Royalties commented on the
proposed transaction: "We are encouraged by progress made to date by our geological,
accounting and legal teams. As we move toward completion of the proposed transactions, we
are confident that the result ing entity will be well -funded, well-structured and strategically
positioned to take advantage o f opportunities in the royalty sector ".
Definitive Agreements and Related Matters
Arrangement Agreement
Under the terms of arrangement agreement dated February 28, 2023 between Eagle Plains and
Eagle Royalties, Eagle Plains will undergo a capital reorganization and , through a series of
transactions, will transfer a majority of its portfolio of royalty interests (the " Royalties") to
Eagle Royalties (the "Spin-out Transaction"). As a result of the Spin -out Transaction, ER
plans to issue an aggregate of 42 million Eagle Royalty shares (the "Spinco Shares"). Of the
total Spinco Shares, it is expected that approximately 5.5 million Spinco Shares will be
retained by EPL and the remaining approximately 36.5 million Spinco Shares will be
distributed to former EPL shareholders on a 1:3 basis.
The board of directors of Eagle Plain and Eagle Royalties have unanimously approved the
signing of the arrangement agreement to give effect to the Spin-out Transaction.
Amalgamation Agreement
Under the t erms of amalgamation agreement dated February 28, 2023 among 138, Eagle
Plains and Eagle Royalties, immediately after the Spin-out Transaction, Eagle Royalties and
138 will combine and continue as one business entity under the name "Eagle Royalties Ltd."
(the "Combination Transaction"). The combination between 138 and Eagle Royalties and
its respective share capital will be completed on 1:1 basis. Following the completion of the
Combination Transaction, Eagle Royalties will make an applicat ion for the listing of its
common shares on the CSE.
On completion of the Combination Transaction, it is anticipated that Eagle Royalties will
commence trading with treasury holding a minimum of $2.5M in cash.
The board of directors of Eagle Royalties a nd 138 have each unanimously approved the
signing of the amalgamation agreement.
Transaction Conditions and Timing
Eagle Plains intends to call a special meeting of securityholders to be held on or about April
20, 2023 to seek securityholder approval for the Spin -out Transaction (the " Meeting"). The
record date for the Spin-out Transaction (i.e. the cut-off date for eligible EPL securityholders
to receive a 1/3 spin-out share of Eagle Royalties) is expected to be March 17, 2023.
The Spin-out Transaction will be effected by way of a court approved plan of arrangement
under Section 193 of the Business Corporations Act (Alberta) and is expected to require:
(a) approval of at least 66.66% of the votes cast by Eagle Plains securityholders, voting as
a single class; and
(b) a simple majority of the votes cast by Eagle Plains securityholders, voting as a single
class, as required under Multilateral Instrument 61 -101 - Protection of Minority
Securityholders in Special Transactions.
Given the sequencing and timing of the transactions, the Combination Transaction will not
require the approval of EPL securityholders , but will require the approval of ER's sole
shareholder, Eagle Plains.
The completion of the Spin -out Transaction and the Combination Transaction (collectively,
the "Transactions") are also subject to the receipt of court and applicable stock exchange
approvals, namely TSX-V and the CSE, and any other required regulatory approvals, and is
subject to certain customary closing conditions for transactions of this nature.
The amalgamation agreement provides for, among other things, non -solicitation covenants,
with "fiduciary out" provisions that allows the board of directors of Eagle Plains and Eagle
Royalties to consider and accept a superior proposal, subject to a "right to match period" in
favour of 138.
The Transactions are expected to close in the first half of 2023.
Voting Support Agreements, Board Approval and Recommendation
Officers and directors of Eagle Plains (collectively, the " Insiders") who together hold, or
exercise direction and control over, approximately 12 million Eagle Plains common shares
(10.9% of the total issued and outstanding Eagle Plains common shares) (the " Insider
Shares") have each entered into a voting and support agreement pursuant to which they have
each agreed, among other things, to vote their Eagle Plains common shares in favour of the
Spin-out Transaction.
Eagle Plains has received overwhelming support for the Spin -out Transaction from multiple
significant shareholders that were contacted by the EPL's investor relations team in late
February 2023 and along with the Insiders, EPL has secured written support of approximately
27.5 million Eagle Plains common shares (25% of the total issued and outstanding Eagle
Plains common shares), 8.2 million Eagle Plains options (96% of the total issued and
outstanding Eagle Plains options) and 2.5 million Eagle Plains warrants (47% of the total
issued and outstanding Eagle Plains warrants).
The Transactions have been unanimously approved by the board of directors of each Eagle
Plains, Eagle Royalties and 138. The board of directors of Eagle Plains unanimously
recommends that its securityholders vote in favour of the Spin-out Transaction.
Eagle Plains Options and Warrants
Pursuant to the terms of the arrangement agreement, all vested Eagle Plains options and
outstanding Eagle Plains warrants, if exercised by the holder prior to the expiry of such options
or warrants, will entitle the holder to receive one (1) Eagle Plains common share and 1/3rd of
an Eagle Royalties common share.
Concurrent Financing
Concurrent with the Transactions, 138 will complete a private placement financing (the
"Concurrent Financing") raising gross proceeds of approximately $3 million through the
issuance of common shares, units or subscription receipts, as the case may be at a price of
$0.30 per security. In connection with the Concurrent Financing, 138 may: (i) pay agent
commissions in cash of up to 7% of the gross proceed raised from the Concurrent Financing;
and (ii) issue broker's warrants, equivalent to 7% of the 138 securities sold through the
Concurrent Financing.
Additional Matters Relating to the Transactions
For all additional matters relating to the Transactions and, in particular, matters relating to the
statutory and contractual escrow that will be applicable to Eagle Plains securityholders
following the completion of the Transactions, readers are encouraged to review the news
release dated January 4, 2023, which is available at the following link:
https://www.eagleplains.com/news/eagle-plains-announces-signing-letter-intent-spin-out-
certain-royalty-assets
About Eagle Royalties Ltd.
Eagle Royalties is a wholly owned subsidiary of Eagle Plains. It manages royalty assets that
have been generated by the corporate operations of the parent company over thirty years of
conducting business as a project generator in the mineral exploration industry. Eagle Royalties
intends to expand its portfolio of royalty assets as Eagle Plains continues with mineral
exploration, project acquisition activities and deal-flow in western Canada.
About 1386884 B.C. Ltd.
138 is a private British Columbia incorporated company. 138 has no active business, instead
it has been incorporated with the sole intention of completing the Combination Transaction.
About Eagle Plains Resources
Based in Cranbrook, B.C., Eagle Plains is a well -funded, prolific project generator that
continues to conduct research, acquire and explore mineral projects throughout western
Canada. The Company was formed in 1992 and is the ninth-oldest listed issuer on the TSX-V
(and one of only three that has not seen a roll-back or restructuring of its shares). Eagle Plains
has continued to deliver shareholder value over the years and through numerous spin-outs has
transferred over $100,000,000 in value directly to its shareholders, with Copper Canyon
Resources and recently Taiga Gold being notable examples. The Company is committed to
steadily enhancing shareholder value by advancing our diverse por tfolio of projects toward
discovery through collaborative partnerships and development of a highly experienced
technical team.
In late 2022 Eagle Plains announced the formation of a separate division within the Company;
Eagle Royalties Ltd. (“ER”) which will hold many of Eagle Plains’ diverse portfolio of royalty
assets. The restructuring will enhance the valuation of Eagle Plains’ extensive royalty
interests, enabling ER to market and develop its royalty assets while seeking additional royalty
acquisition opportunities. Eagle Plains’ royalties cover a broad spectrum of commodities on
projects controlled by Cameco Corp., Iso Energy Corp., Denison Mines Corp., Skeena
Resources Ltd. and Hecla Mining Co./Banyan Gold Corp., among others. Eagle Plains will
continue to focus on its core business model of acquiring and advancing grassroots critical -
and precious-metal exploration properties.
Expenditures from 2011-2022 on Eagle Plains-related projects exceed $30M, the majority of
which was funded by third -party partners. This exploration work resulted in approximately
45,000m of diamond -drilling and extensive ground -based exploration work facilitating the
advancement of numerous projects at various stages of development. Throughout the
exploration process, our mission is to help maintain prosperous communities by exploring for
and discovering resource opportunities while building lasting relationships through honest and
respectful business practices.
Advisors
McLeod Law LLP is acting as legal counsel to Eagle Plains and Eagle Royalties in connection
with the Transactions. Armstrong Simpson, Barristers and Solicitors is acting as legal counsel
to 138. Nauth LPC is acting as US legal counsel to Eagle Plains and Eagle Royalties on all
US securities law matters relating to the Transactions.
On behalf of the Board of Directors of Eagle Plains
"Tim J. Termuende"
President and CEO
For further information on EPL, please contact Mike Labach at 1 866 HUNT ORE (486 8673)
Email: [email protected] or visit our website at https://www.eagleplains.com
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is
defined in the policies of the TSX Venture Exchange) accepts responsibility for the
adequacy or accuracy of this release.
Cautionary Note Regarding Forward-Looking Statements
This news release contains "forward -looking information" and "forward -looking statements" (collectively, the
"forward-looking statements ") within the meaning of the applicable Canadian securities legislation. All
statements, other than statements of histor ical fact, are forward -looking statements and are based on
expectations, estimates and projections as at the date of this news release. Any statement that involves
discussions with respect to predictions, expectations, beliefs, plans, projections, objectiv es, assumptions, future
events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected",
"anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes", an
or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or
"could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and
may be forward-looking statements.
In this news release, forward -looking statements relate, among other things, to the terms and conditions of the
Proposed Transaction, the issuance of Spin -out Shares, the completion of the Concurrent Financing , the
proposed listings of Eagle Royalties on the CSE, the execution the definitive agreement s to give effect to the
Transactions, the expected closing timeline of the proposed Transactions and the business of E agle Royalties
following the completion of the proposed Transaction s. These forward -looking statements reflects the EPL's
current beliefs and is based on information currently available to it and on assumptions EPL's management
believes to be fair and reasonable. These assumptions include but are not limited to, the ability of the parties to
complete the proposed Transactions at all or in a timely manner, the ability of the combined business to be listed
on the CSE and following such listing, ER's ability to meet the continued listing requirements, the ability of each
of EPL, ER and 138 to successfully secure all of the necessary approvals to complete the proposed Transactions,
the ability of 138 to successfully raise the capital as contemplated in the news release and successfully close the
Concurrent Financing , the completion of satisfactory due diligence by 138 in relation to the proposed
Transactions; the satisfactory fulfilment of all of the condition's precedent prior to giving effect to the proposed
Transactions; and the receipt of all required securityholder approval, court approval and other regulatory
approvals for the proposed Transactions.
Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may
cause the actual results, level of activity, performanc e, or achievements to be materially different from those
expressed or implied by such forward-looking information. Such risks and other factors may include, but are not
limited to, general business, economic, competitive, political, and social uncertaintie s; general capital market
conditions and market price for securities; and the delay or failure to receive board, shareholder, court, or
regulatory approvals, as applicable. A description of additional risk factors that may cause actual results to
differ materially from forward-looking information can be found in EPL's disclosure documents on the SEDAR
at www.sedar.com. Although EPL has attempted to identify important factors that could cause actual results to
differ materially from those contained in the forward-looking statements in this news release, there may be other
factors that could cause results not to be as anticipated, estimated or intended. Readers are cautioned that the
foregoing list of factors is not exhaustive. There can be no assurance that s uch statements will prove to be
accurate, as actual results and future events could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on the forward -looking statements and information
contained in this news release. Except as required by law, EPL does not assume any obligation to update the
forward-looking statements should they change.