VAR Resources Corp. and Grounded Lithium Corp. Announce Reverse Takeover Transaction
VAR RESOURCES CORP.
Trading symbol: TSX-V – VAR
VAR Resources Corp. and Grounded Lithium Corp. Announce Reverse Takeover Transaction
Vancouver, British Columbia – February10, 2022 – VAR Resources Corp. (the “ Company”) is pleased to
announce that the Company has entered into an amalgamation agreement dated February 10, 2022
(the “Amalgamation Agreement”) with VAR Resources (Newco) Corp., a wholly-owned subsidiary of
Company (“ NewCo”) and Grounded Lithium Corp. (“ Grounded”), a private arm’s length company
incorporated under the Business Corporations Act (Alberta) (“ABCA”), pursuant to which the Company will
acquire all of the issued and outstand ing securities of Grounded (the “ Transaction”). In connection with
the Transaction, Grounded is conducting a non- brokered private placement of up to $5,710,000
(the “Grounded Financing”), which, pursuant to the terms of the Amalgamation Agreement, shall include
an investment by certain shareholders of the Comp any identified to Grounded equal to $1,800,000
(the “Grounded Investment”).
The Transaction is subject to the approval of the TSX Venture Exchange (the “ TSXV”), and is intended to
constitute a reverse takeover (an “ RTO”) of the Company by Grounded as defined in TSXV Policy 5.2 –
Change of Business and Reverse Takeovers. The combined company that will result from the completion of the
Transaction (the “Resulting Issuer”) will be renamed “Grounded Lithium Corp.” or such other name as
agreed to by the Company and Grounded. Subject to TSXV approval, the common shares of the Resulting
Issuer will trade on the TSXV under a new trading symbol to be determined by the parties and the Resulting
Issuer will continue to be listed on Tier 2 of the TSXV as a mineral exploration issuer.
Grounded Lithium Corp.
Grounded is a private lithium brine exploration and development company incorporated pursuant to the
laws of Alberta. Grounded holds mineral leases over 70 sections of land in Saskatchewan, prospective for
lithium opportunities. Grounded seeks to add to its opportunity base while in parallel, commence
delineation operations of the lithium brine potential across its current mineral rights position.
Grounded was incorporated in October 2020 with the in tent to participate in the energy transition shift,
specifically targeting lithium resource developmen t in Western Canada. To date, Grounded has been
successful in acquiring land holdings both through government land sales in addition to contractual
arrangements with certain freehold landowners. In tota l, Grounded has 18,904 gr oss hectares (17,841 net
hectares) of land holdings. Grounded has not generate d sales to date and does not anticipate commercial
production of its lithium resources for several years. Grounded is well capitalized in conjunction with the
Grounded Financing to execute on early stages of its business plan and remains debt-free.
The following list sets forth selected management prepared historical financial information of Grounded
for the fiscal year ended December 31, 2021 and select ed balance sheet data as of such date (management
prepared draft, unaudited):
Assets: $2,469,600
Liabilities: $69,856
Revenues: $nil
Net profits (losses): $(314,920)
General Terms of the Transaction
Amalgamation
The Transaction will be effected by way of a three-cornered amalgamation, without court approval, under
the ABCA, pursuant to which, following the acquisitio n of all the issued and outstanding securities of
Grounded, NewCo and Grounded will amalgamate (the “ Amalgamation”) to form a new amalgamated
entity (“AmalCo”), and AmalCo will be a wholly-owned subsidiary of the Company. At the time of the
closing of the Transaction (the “Closing”):
each of the common shares in the capital of Grounded (each, a “ Grounded Share ”) will be
cancelled and, in consideration for such Gr ounded Shares, each Grounded shareholder
(collectively, the “Grounded Shareholders”) will receive one (1) common share in the capital of
the Company (each, a “ Share”) at a deemed price of $0.18 per Share for each one (1) Grounded
Share held by such Grounded Shareholder;
all of the holders of share purchase warrants of Grounded (each, a “ Grounded Warrant ”)
outstanding immediately prior to the Amalgamation shall receive, in exchange for their Grounded
Warrants, an equal number of Share purchase warrants of the Company (each, a “ VAR
Replacement Warrant”), each on the same terms and conditions as such Grounded Warrants;
the holder of share purchase warrants of Grou nded issued in connection with the Grounded
Financing (each, a “ Grounded Finder Warrant ”) outstanding immediately prior to the
Amalgamation shall receive, in exchange for the Grounded Finder Warrants, an equal number of
Share purchase warrants of the Company (each, a “VAR Finder Replacement Warrant”), each on
the same terms and conditions as such Grounded Finder Warrants; and
each of the stock options of Grounded (each, a “ Grounded Option”) outstanding immediately
prior to the Amalgamation shall receive, in exchange for their Grounded Options, an equal number
of stock options of the Company (each, a “ VAR Replacement Option”), each on the same terms
and conditions as such Grounded Options.
In connection with the Transaction, the Company shall seek the approval of its shareholders (collectively,
the “VAR Shareholders”) for the continuance of the Company out of the Province of British Columbia and
the provisions of the Business Corporations Act (British Columbia) and in to the Province of Alberta under
the provisions of the ABCA (the “ Continuation”). Immediately following the Closing, AmalCo will,
subsequent to the Continuation, be wound up into the Company and the assets of AmalCo will be
transferred to the Company by operation of law and the Company shall continue under the name
“Grounded Lithium Corp. ”
The Transaction is an Arm’s Length Transaction. In connection with the announcement of the Transaction,
trading in the Shares has been halted and is expected to remain halted until the Closing.
Grounded Financing
In connection with the Transaction, Grounded has co mpleted two tranches of the Grounded Financing.
Collectively, Grounded has issued an aggregate of 21,722,221 Grounded Shar es for gross proceeds of
$3,909,999.78 under the Grounded Financing. As a cond ition to the Closing, certain shareholders of the
Company will participate in the Grounded Financing in an amount equal to the Grounded Investment.
The anticipated use of proceeds from the Grounded Fina ncing are to be used by the Resulting Issuer for
exploration of its mineral properties and for general working capital purposes.
For more information on the Grounded Financing, see Grounded’s news releases disseminated by Cision’s
Newswire Services on November 30, 2021, December 21, 2021, and February 10, 2022.
Voluntary Escrow
In addition to any resale restrictions applicable to the Shares issued in connection with the Transaction
pursuant to the polices of the TSXV or applicable securities laws, 90% of the Shares issued to the Grounded
Shareholders in exchange for their Grounded Shares and any Shares issued or to be issued upon the
exercise of any VAR Finder Replacement Warrants (collectively, the “ VAR Escrowed Shares ”) shall be
subject to a voluntary escrow pursuant to the term s and conditions of the Amalgamation Agreement.
Accordingly, the escrow provision requires the VAR Es crowed Shares to be locked up and released in
accordance with the following schedule: 20% of the VA R Escrowed Shares on the date that is 6 months
from the effective date of the Amalgamation (the “ Effective Date”); 20% of the VAR Escrowed Shares on
the date that is 12 months from the Effective Date; 25% of the VAR Escrowed Shares on the date that is 15
months from the Effective Date; and 25% of the VAR Escr owed Shares on the date that is 18 months from
the Effective Date.
Change of Directors and Officers
Upon the completion of the Amalgamation and subject to prior acceptance by the TSXV, it is expected that
each of the current directors of the Company will re sign and there will be appointed in their place as
directors of the Resulting Issuer individuals designated by each of the Company and Grounded, provided
that a majority of the directors shall be designated by Grounded (the “Board Reconstitution”). In addition,
each of the current officers of the Company is expected to resign and there will be appointed in their place
as officers of the Company, such individuals as designated by Grounded (the “ Management
Reconstitution”).
Additional information regarding the nominee directors and officers of the Resulting Issuer will be set out
in a management information circular to be prepared by the parties in accordance with the policies of the
TSXV as well as in a follow-up news release once determined.
Conditions to the Transaction
The Closing of the Transaction is subject to the satisfaction of various conditions standard for a transaction
of this nature, including but not limited to:
the Company and Grounded having had the reasonable opportunity to perform searches and other
due diligence, and being satisfied with the results of such due diligence;
the Company and Grounded obtaining all necessary consents, orders and regulatory approvals,
including the conditional approval of the TSXV;
the absence of any material adverse change in th e business, affairs or operations of the Company
or Grounded, as applicable;
all outstanding Share purchase warrants of the Company, (each, a “ VAR Warrant”) on or before
Closing, being 6,250,000 VAR Warrants with an exercise price of $0.14 per VAR Warrant, shall have
been exercised;
the completion of the Grounded Financing, with certain shareholders of the Company identified
to Grounded participating in an amount equal to the Grounded Investment;
the Company shall have relinquished its exclusive option to acquire a 100% undivided right, title,
ownership and beneficial interest in and to the Hook Bay Property;
each of the Board Reconstitution and the Management Reconstitution;
approval of the Continuation by the VAR Sharehol ders, as required by applicable corporate law;
and
approval of the Transaction by the shareholders of the Company and Grounded, as required by
applicable corporate law and the policies of the TSXV, as applicable.
In connection with the Transaction, Grounded has agreed to pay customary advisory fees to an eligible
arm’s length third party, including the issuance of 208,333 Grounded Shares at a deemed price of $0.18 per
Grounded Share.
It is expected that, immediately prior to the Closing, there will be 38,327,447 Grounded Shares issued and
outstanding (assuming completion of the Grounded Fi nancing together with those subscriptions equal to
the Grounded Investment) and, accordingly, an aggregate of 38,327,447 Shares (each, a “ Consideration
Share”) are expected to be issued at a deemed price of $0.18 per Consideration Share. The Company intends
to rely on Section 2.11 of National Instrument 45-106 – Prospectus Exemptions for an exemption from the
prospectus requirements for the issuance of the Co nsideration Shares to the Grounded Shareholders, the
VAR Replacement Warrants to the former Ground ed Warrant holders and the grant of the VAR
Replacement Options to the former Grounded Option holders.
Assuming the completion of the Transaction and th at no convertible securities of the Company or
Grounded are exercised prior to Closing other than the 6,250,000 VAR Warrants, a minimum of 56,872,750
common shares of the Resulting Issuer (each, a “ Resulting Issuer Share”) are expected to be issued and
outstanding on the Closing, of which approximately 32.6% Resulting Issuer Shares will be held by the
current VAR Shareholders, approximately 11.6% will be held by the former Grounded Shareholders, and
55.8% will be held by the subscribers under the Grounded Financing.
Sponsorship
Sponsorship of a RTO is required by the TSXV unless exempt or waived in accordance with TSXV policies.
The Company intends to apply for a waiver from the sponsorship requirements. There is no assurance that
the Company will be able to obtain such a waiver.
Additional Information
All information contained in this news release with respect to the Company and Grounded was supplied,
for inclusion herein, by each respective party and each party and its directors and officers have relied on
the other party for any information concerning such other party.
Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV
acceptance and if applicable, disinterested shareh older 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 informatio n circular or filing
statement to be prepared in connection with the Tran saction, 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.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed Transaction and has
neither approved nor disapproved the contents of this news release.
Contact Information
For further information on Grounded, contact:
Grounded Lithium Corp.
Gregg Smith
President & CEO
Greg Phaneuf
VP Finance & CFO
For further information on the Company, contact:
VAR Resources Corp.
Ron Schmitz
CFO, Corporate Secretary and Director
P: (604) 685-7450
Disclaimer for Forward-Looking Information
Certain statements in this news release are forward-looking statements, which reflect the expectations of management
regarding the Company’s completion of the Transaction and related transactions. Forward-looking statements consist
of statements that are not purely historical, including an y statements regarding beliefs, plans, expectations or
intentions regarding the future, incl uding but not limited to, the Compan y completing the Transaction, the
completion of the Grounded Financing, statements regardi ng the prospective lithium opportunities of Grounded’s
mineral assets, the anticipated use of proceeds of the Grounded Financing, the conditions to be satisfied for completion
of the Transaction, completion of the Continuation, the name and business carried on by the Resulting Issuer, the
capitalization of the Resulting Issuer, the Board Reconsti tution, the Management Reconstitution, the reliance on a
prospectus exemption for the issuance of the Consideration Shares, and obtaining a waiver from the TSXV sponsorship
requirements. Such statements are subject to assumptions, risks and uncertainties that may cause actual results,
performance or developments to differ materially from thos e contained in the statements, including risks related to
factors beyond the control of the Company. The risks incl ude the following: the requisite corporate and shareholders
approvals of the directors and shareholders of the Company or Grounded, as applicable, may not be obtained; Grounded
may be unable to close the Grounded Financing in full or in part; the TSXV may not approve the Transaction; that
the parties may be unable to satisfy the closing conditio ns in accordance with the terms and conditions of the
Amalgamation Agreement; and other risks that are customary to transactions of this nature. The novel strain of
coronavirus, COVID-19, also continues to pose risks that are currently indescribable and immeasurable. No assurance
can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what
benefits the Company will obtain from them. The reader is cautioned not to place undue reliance of any forward-
looking statements. Such information, although considered reasonable by management at the time of preparation, may
prove to be incorrect and actu al results may differ materially from thos e anticipated. Forwar d-looking statements
contained in this news release are e xpressly qualified by this cautionary stat ement. The forward-looking statements
contained in this news release are made as of the date of this news release. The Company disclaims any intention or
obligation to update or revise any forward-looking statements, whether as a result of new information, future events
or otherwise, except as required by law.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies
of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in
any jurisdiction.