Enters into Definitive Agreement IN Respect of Proposed Qualifying Transaction
NOT FOR DISTRIBUTION TO THE U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION
IN THE UNITED STATES
SPITFYRE CAPITAL INC.
ENTERS INTO DEFINITIVE AGREEMENT IN RESPECT OF PROPOSED QUALIFYING TRANSACTION
Toronto, Ontario - (October 5, 2023) - Spitfyre Capital Inc. ("Spitfyre") (TSX Venture: FYRE.P) a capital pool
company as defined under Policy 2.4 – Capital Pool Companies ("CPC") of the TSX Venture Exchange (the
"Exchange"), is pleased to announce that, further to its news release dated June 28, 2023, it has entered
into a definitive amalgamation agreement dated October 4, 2023 (the "Amalgamation Agreement") with
NeoTerrex Corporation (" NeoTerrex"). Pursuant to the Amalgamation Agreement, Spitfyre's wholly-
owned subsidiary, 15363497 Canada Inc. (" Subco"), will amalgamate with NeoTerrex (the
"Amalgamation") to complete Spitfyre's qualifying transaction (the "Transaction") in accordance with the
policies of the Exchange.
In connection with the Amalgamation, it is intended that Spitfyre will be renamed to "NeoTerrex
Incorporated" (the "Resulting Issuer"). The Transaction is subject to the receipt of all necessary regulatory
and shareholder approvals required by applicable corporate law, including the approval of the Exchange,
as well as the satisfaction of conditions to closing as set out in the Amalgamation Agreement. It is intended
the Resulting Issuer will continue the business of NeoTerrex and be listed on the Exchange as a mining
issuer, subject to Exchange approval.
About NeoTerrex
NeoTerrex is a private company incorporated under the Canada Business Corporations Act ("CBCA"). It is
currently advancing its prospective rare earths and lithium projects located in the province of Quebec,
with most of its activities focused on its Mount Discovery project (the "Mount Discovery Project").
NeoTerrex owns a 100% undivided interest in certain mineral claims located in southwestern Quebec
constituting the Mount Discovery Project. The property was acquired due to its rare earth elements
potential, which was confirmed in 2022 with the discovery of rare earths occurrences over an area of
900m by 300m. Channel sampling results from the King showing expressed in Total Rare Earths Oxides
(TREO)(1) are shown in the table below. NeoTerrex is in the process of completing a NI 43-101F1 Technical
Report on the Mount Discovery Project (" Mount Discovery Technical Report ") and will be posting this
report under Spitfyre's profile on SEDAR+ at www.sedarplus.ca in connection with the Transaction.
NeoTerrex plans to initiate a follow-up exploration program on the Mount Discovery Project based on the
recommendations in the Mount Discovery Technical Report. NeoTerrex also has a 100% interest in two
other projects deemed prospective for rare earths. No work to date has been undertaken on these
properties.
Channel TREO % Length (metres)**
L1 3.5 27.20
W4 7.5 8.25
W3 4.81 5.25
W6 2.24 6.00
W5 NSV* 2.00
W7 NSV* 3.75
W8 0.36 3.00
*No Significant Values; **May not represent true width
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NeoTerrex also owns a 100% undivided interest in three lithium projects also located within the province
of Quebec. NeoTerrex has undertaken limited exploration on two of these projects. No work to date has
been undertaken on the third project.
NeoTerrex has 59,744,000 common shares (" NeoTerrex Shares") issued and outstanding. Additionally,
NeoTerrex has 3,296,300 broker warrants entitling the holder thereof to purchase NeoTerrex Shares
issued and outstanding.
Terms of the Proposed Transaction
The Transaction will be carried out pursuant to the terms of the Amalgamation Agreement, a copy of
which is, or shortly will be, filed on Spitfyre’s SEDAR+ profile at www.sedarplus.ca. The below description
of the terms of the Transaction and the Amalgamation Agreement is qualified in its entirety by reference
to the full text of the Amalgamation Agreement.
Pursuant to the terms of the Amalgamation Agreement, at the effective time of the Amalgamation,
NeoTerrex will amalgamate with Subco to form an amalgamated entity (" Amalco"), which will continue
as a wholly-owned subsidiary of Spitfyre. In connection with the completion of the Amalgamation, each
holder of NeoTerrex Shares shall exchange their NeoTerrex Shares for common shares in the capital of
the Resulting Issuer (" Resulting Issuer Common Shares ") on the basis of one (1) fully paid and non-
assessable Resulting Issuer Common Share for every one (1) NeoTerrex Share held, for a deemed price of
$0.25 per NeoTerrex Share.
The Transaction itself is not subject to Spitfyre shareholder approval. Spitfyre intends to hold an annual
and special meeting of its shareholders (the " Spitfyre Meeting ") in October 2023 to approve certain
matters related to the Transaction, including, among other matters, the:
•appointment, subject to the completion of the Transaction, of Raymond Chabot Grant Thornton
LLP as the auditors of Spitfyre and the authorization of the board of directors of Spitfyre to fix the
remuneration thereof;
•election of the directors of Spitfyre to hold office from the effective time of the completion of the
Transaction;
•change in the name of Spitfyre from "Spitfyre Capital Inc." to "NeoTerrex Incorporated" or such
other name as the board of directors of Spitfyre deems appropriate; and
•continuance of Spitfyre from a corporation incorporated under the laws of the Province of Ontario
to a corporation continued under the CBCA (collectively, the foregoing approvals, the " Required
Approvals").
Additional details regarding the annual and special meeting of the shareholders of Spitfyre will be
available in a management information circular that is expected to be delivered to shareholders of
Spitfyre. The Amalgamation will be approved by the sole shareholder of Subco by way of a written
resolution. The Amalgamation will further require the approval of the shareholders of NeoTerrex.
In connection with the proposed Transaction, it is expected that 59,744,000 Resulting Issuer Common
Shares will be issued to the holders of NeoTerrex Shares (not including NeoTerrex Shares issuable upon
the conversion of Subscription Receipts (as defined below)). Based on the number of NeoTerrex Shares
outstanding as of the date hereof, and assuming the exchange of each Subscription Receipt into
underlying securities, it is expected that there would be a minimum of approximately 72,605,111 Resulting
Issuer Common Shares and a maximum of approximately 75,494,000 Resulting Issuer Common Shares
(assuming the full exercise of the Agent's Option (as defined below)) outstanding upon completion of the
Transaction, on a non-diluted basis. On completion of the Transaction, the current shareholders of
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Spitfyre are expected to hold an aggregate of approximately 5,750,000 Resulting Issuer Common Shares,
representing approximately 7.92% of the minimum number of Resulting Issuer Common Shares and
approximately 7.62% of the maximum number of Resulting Issuer Common Shares (assuming the full
exercise of the Agent's Option), the current shareholders of NeoTerrex would hold an aggregate of
59,744,000 Resulting Issuer Common Shares, representing approximately 82.29% of the minimum
number of Resulting Issuer Common Shares and approximately 79.14% of the maximum number of
Resulting Issuer Common Shares (assuming the full exercise of the Agent's Option), and investors in the
Private Placement (as defined below) would hold an aggregate of a minimum of approximately 7,111,111
Resulting Issuer Common Shares and a maximum of approximately 10,000,000 Resulting Issuer Common
Shares (assuming the full exercise of the Agent's Option), representing approximately 9.79% of the
minimum number of Resulting Issuer Common Shares and approximately 13.25% of the maximum
number of Resulting Issuer Common Shares.
The completion of the Amalgamation is conditional on obtaining all necessary regulatory and shareholder
approvals in connection with the matters described above and other conditions customary for a
transaction of this type. Spitfyre and NeoTerrex anticipate closing the Transaction in mid to late December
2023.
Summary Financial Information of NeoTerrex
Based on the audited annual financial statements for NeoTerrex as at and for the years ended December
31, 2022 and 2021, and the unaudited interim financial statements for NeoTerrex for the six months
ended June 30, 2023:
June 30, 2023 December 31, 2022 December 31, 2021
Assets
Current Assets
Cash and cash equivalents $3,274,877 $3,310,980 $4,961,024
Sales tax receivable $44,272 $80,618 $31,815
Tax credits and mining rights receivable $129,118 $368,373 $15,143
Prepaid expenses $24,038 $8,778 $1,040
Total Assets $3,472,305 $3,768,749 $5,009,022
Liabilities
Current Liabilities
Trade payables and accrued liabilities $135,068 $64,121 $135,910
Liability related to the premium on
flow-through shares - - $140,000
Total Liabilities $135,068 $64,121 $275,910
Expenses
Six-months
ended June 30,
2022
For the year ended
December 31,
2022
For the 178 -day
period ended
December 31,
2021
Exploration and evaluation
expenditures, net of tax credits and
mining rights $272,335 $910,072 $154,712
Salaries $94,529 $133,334 -
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Professional and consulting fees $104,903 $156,540 $56,954
Conference and promotion $8,672 $7,779 $1,872
Insurance, taxes and permits $12,080 $20,628 -
Other $11,184 $20,215 $5,235
Total Expenses $503,703 $1,248,568 $218,773
Other Items
Flow-through shares premium - $140,000 -
Finance income $71,312 $80,084 $595
Total other items $71,312 $220,084 $595
Net Loss and comprehensive loss ($432,391) ($1,028,484) ($218,178)
The financial information provided as at and for the period ended June 30, 2023 is derived from the
unaudited interim financial statements of NeoTerrex for the six months ended June 30, 2023, which have
not been reviewed by the auditors of NeoTerrex, and accordingly is subject to change.
Further financial information will be included in the filing statement to be prepared in connection with
the Transaction.
Private Placement of Subscription Receipts of NeoTerrex and Spitfyre
Prior to the completion of the Transaction, NeoTerrex and Spitfyre are expected to complete a brokered
private placement (the "Private Placement"), through iA Private Wealth Inc. as lead agent (the " Agent")
with a syndicate of agents including Canaccord Genuity Corp., for aggregate gross proceeds of a minimum
of $2,000,000 and a maximum of $2,000,000, subject to the Agent's Option, of (a) subscription receipts
of NeoTerrex and/or Spitfyre (the "NeoTerrex CS Subscription Receipts" and the "Spitfyre CS Subscription
Receipts", respectively, hereafter collectively referred to as the "CS Subscription Receipts"), at a price of
$0.25 per CS Subscription Receipt, and (b) flow-through subscription receipts of NeoTerrex (the
"NeoTerrex FT Subscription Receipts" and, together with the CS Subscription Receipts, the "Subscription
Receipts"), at a price of $0.30 per NeoTerrex FT Subscription Receipt, provided that the aggregate gross
proceeds from the sale of the NeoTerrex FT Subscription Receipts may not be greater than two times the
aggregate gross proceeds from the sale of the CS Subscription Receipts. It is anticipated that the Agent
will be granted an option, exercisable in whole or in part at the closing of the Private Placement, to
increase the size of the Private Placement by up to an aggregate of $500,000 (the “Agent’s Option”).
The Subscription Receipts will be created and issued pursuant to the terms of subscription receipt
agreements (the " Subscription Receipt Agreements ") to be entered into among Computershare Trust
Company of Canada, as subscription receipt agent (the "Subscription Receipt Agent"), NeoTerrex, Spitfyre
and the Agent.
Each CS Subscription Receipt will be automatically converted, without payment of additional
consideration or further action by the holder thereof, into one unit comprised of, as applicable, (a) one
NeoTerrex Share and one-half of one common share purchase warrant of NeoTerrex (each whole warrant,
a "NeoTerrex Warrant") or (b) one common share in the capital of Spitfyre (" Spitfyre Share") and one-
half of one common share purchase warrant of Spitfyre (each whole warrant, a " Spitfyre Warrant "),
subject to adjustment in certain events, immediately before the completion of the Transaction upon the
satisfaction or waiver of the Escrow Release Conditions (as to be defined in the Subscription Receipt
Agreements) on or before December 31, 2023 (the "Escrow Release Deadline"). Each NeoTerrex Warrant
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will entitle the holder thereof to acquire one NeoTerrex Share at a price of $0.40 per NeoTerrex Share for
a period of 24 months following the date of issuance thereof, subject to adjustment in certain events.
Each Spitfyre Warrant will entitle the holder thereof to acquire one Spitfyre Share at a price of $0.40 per
Spitfyre Share for a period of 24 months following the date of issuance thereof, subject to adjustment in
certain events.
Each NeoTerrex FT Subscription Receipt will be automatically converted, without payment of additional
consideration or further action by the holder thereof, into one NeoTerrex Share issued on a flow-through
basis under the Income Tax Act (Canada), subject to adjustment in certain events, immediately before the
completion of the Transaction upon the satisfaction or waiver of the Escrow Release Conditions on or
before the Escrow Release Deadline.
In consideration for their services in connection with the Private Placement, NeoTerrex will pay to the
Agent a cash commission equal to 7.5% of the aggregate gross proceeds from the sale of the Subscription
Receipts (including Subscription Receipts issued pursuant to the exercise of the Agent's Option), 50% of
which commission will be paid on the closing date of the Private Placement with proceeds from the sale
of NeoTerrex CS Subscription Receipts and NeoTerrex FT Subscription Receipts. The remaining 50% of the
commission will be deposited in escrow. As additional consideration for the services of the Agent,
concurrently with the exchange of the Subscription Receipts into underlying securities (if and when),
NeoTerrex and Spitfyre will issue to the Agent warrants to purchase NeoTerrex Shares and/or Spitfyre
Shares, as applicable, in an amount equal to 7.5% of the number of issued CS Subscription Receipts
(including CS Subscription Receipts issued pursuant to the exercise of the Agent's Option), which warrants
shall be exercisable at any time up to 24 months following the date of issuance thereof at a price of $0.25
per share (the "CS Broker Warrants"), and in an amount equal to 7.5% of the number of issued NeoTerrex
FT Subscription Receipts (including NeoTerrex FT Subscription Receipts issued pursuant to the exercise of
the Agent's Option), which warrants shall be exercisable at any time up to 24 months following the date
of issuance thereof at a price of $0.30 per share ("NeoTerrex FT Broker Warrants", and together with the
CS Broker Warrants, the " Broker Warrants"). A reduced cash commission equal to 3% is payable and a
reduced number equal to 3% of Broker Warrants are issuable in respect of the sale of Subscription
Receipts (including Subscription Receipts issued pursuant to the exercise of the Agent's Option) to
purchasers identified by NeoTerrex or Spitfyre to the Agent up to a maximum aggregate total of $750,000
of the amount of the Private Placement. As further consideration for the services provided in connection
with the Private Placement, NeoTerrex has agreed to pay iA Private Wealth Inc. a non-refundable work
fee of $20,000 plus applicable taxes.
Upon closing of the Private Placement, the aggregate gross proceeds of the Private Placement, less 50%
of the cash commission and less the full amount of the Agent's reasonable expenses incurred up to and
as of the closing date of the Private Placement, will be deposited in escrow with the Subscription Receipt
Agent pending satisfaction or waiver of the Escrow Release Conditions, in accordance with the provisions
of the Subscription Receipt Agreements. All such reasonable expenses of the Agent will be paid out of
proceeds from the sale of NeoTerrex CS Subscription Receipts and NeoTerrex FT Subscription Receipts. If
the Escrow Release Conditions are not satisfied at or before the Escrow Release Deadline, each of the
then issued and outstanding Subscription Receipts will be cancelled and the Subscription Receipt Agent
will return to each holder of Subscription Receipts an amount equal to the aggregate purchase price of
the Subscription Receipts held by such holder plus an amount equal to the holder's pro rata share of any
interest or other income earned on the escrowed funds (less applicable withholding tax, if any). To the
extent that the escrowed funds are insufficient to refund such amounts to each holder of the Subscription
Receipts of NeoTerrex, NeoTerrex shall be liable for and will contribute such amounts as are necessary to
satisfy the shortfall.
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Proceeds of the Private Placement
It is intended that the net proceeds from the Private Placement will be used for the exploration and
development of the Mount Discovery Project, claim renewal and maintenance cost, the identification and
evaluation of future potential acquisitions of rare earth and lithium projects, the exploration and
evaluation of NeoTerrex's other rare earth and lithium projects and general working capital following
completion of the Qualifying Transaction.
Sponsorship
Under the policies of the Exchange, the parties to the Transaction will be required to engage a sponsor
for the Transaction unless an exemption or waiver from this requirement can be obtained. Spitfyre intends
to apply to the Exchange for a waiver from the sponsorship requirements for the Transaction based upon
the waivers available in Exchange policies. There is no assurance that a waiver from this requirement can
or will be obtained.
Resulting Issuer
Immediately following the completion of the Transaction, the Resulting Issuer is expected to change its
name to "NeoTerrex Incorporated", and the Resulting Issuer will be a Mining issuer under the policies of
the Exchange.
Conditions to Completion of the Transaction
It is intended that the Transaction, when completed, will constitute Spitfyre's "Qualifying Transaction" in
accordance with Policy 2.4 of the Exchange. Completion of the Transaction is subject to a number of
conditions precedent, including, but not limited to, (i) acceptance by the Exchange and receipt of other
applicable regulatory approvals; (ii) receipt of the Required Approvals at the Spitfyre Meeting, (iii) receipt
of the requisite approval of the shareholders of NeoTerrex of the Amalgamation, and (iv) completion of
the Private Placement. There can be no assurance that the Transaction will be completed as proposed or
at all.
Proposed Management and Board of Directors of Resulting Issuer
Concurrent with the completion of the Transaction, it is expected that all directors and officers of Spitfyre
will resign and the directors and officers of the Resulting Issuer will be as follows:
Mathieu Stephens – President, Chief Executive Officer and Director
Mr. Stephens is a professional geologist with over 15 years in the mining industry. He is currently the
President, Chief Executive Officer and a director of NeoTerrex. Prior thereto, Mr. Stephens was the
President and Chief Executive Officer of UrbanGold Minerals Inc., a precious and base metals exploration
company, which was subsequently acquired by Troilus Gold Corp. in 2021, and Vice President of
Exploration for Beaufield Resources Inc., a mineral exploration company, which was acquired by Osisko
Mining Inc. in 2018. Previous to this, Mr. Stephens worked for Canaccord Capital for over 6 years.
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Alastair Neill - Director
Mr. Neill is the President of Trinity Management, a consulting company specializing in business
development activities in rare earths and specialty metals. He has over 25 years of experience evaluating
a number of potential mining projects globally. Mr. Neill has been the director of Exchange-listed
companies and has presented at a number of global conferences. He has a degree in Material Science
Engineering from the University of Western Ontario, London, Ontario and an MBA from York University,
Toronto.
V.E. Dale Burstall - Director
Mr. Burstall is a partner with DS Lawyers Canada LLP and practices in the area of commercial law with an
emphasis on securities law. Mr. Burstall’s practice includes all aspects of securities law from both the
perspective of an issuer or an underwriter, including initial public offerings, secondary financings, mergers
and acquisitions, all dealings with regulators including stock exchanges and securities commissions, and
corporate governance. Mr. Burstall is a director or secretary of several issuers, both listed and private.
Mr. Burstall is also a director or trustee of charitable organizations. In addition, Mr. Burstall sits on an
advisory committee of the Exchange.
Rajesh Sharma - Director
Mr. Sharma has over 25 years of leadership experience in mining, exploration, metals and international
trade. He has executive experience in advancing exploration and mining projects including investments,
acquisitions, joint ventures, partnerships and running global businesses. Mr. Sharma is currently the Chief
Executive Officer of Fancamp Exploration Ltd., a mineral exploration company. His past roles include
Executive in Residence at Investissement Quebec, CEO and Board Member of TSMC, Board member of
SFPPN, PPP for Port at SFPPN, CEO and Board Member of Black Ginger 461 Pty Ltd, investment arm of
Tata for mineral projects in Africa, Board member of exploration company Tata Steel Cote D’Ivoire. Mr.
Sharma has management and engineering degrees. He completed a scholarship program on Globalization
and Leadership from London School of Economics. He was granted the ICD.D designation by the Institute
of Corporate Directors.
Denis Pilon - Director
Mr. Pilon is Chief Operating Officer of Helicopter Transport Services, a global air operator that focuses in
the mining sector and utility air operations. Mr. Pilon has been working closely with the mining sector for
over twenty years and has also been an active rotary and fixed wing pilot on mining explorations projects.
Mr. Pilon has over two decades of management experience in operating aviation businesses worldwide,
from aerial firefighting, offshore, SAR, EMS, DOD Security and utility VFR operations. Mr. Pilon attained a
Master of Business Administration degree from Queen’s University.
Vatché Tchakmakian – Chief Financial Officer and Corporate Secretary
Mr. Tchakmakian is a Chartered Professional Accountant with over 30 years of experience in the minerals
industry. He is specialized in the field of public companies and securities regulations in Canada. Mr.
Tchakmakian has been an officer of several public companies in the mineral sector having operations in
Canada, and Latin America. From 1988 to 1993, he managed audit assignments at one of the predecessors
of PricewaterhouseCoopers LLP, a national accounting firm, for a number of large private and public
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companies. Mr. Tchakmakian received his B.S. in Public Accounting from the École des Hautes Études
Commerciales, in Montréal, Quebec. He sits on an advisory committee of the Exchange.
Other Insiders of the Resulting Issuer
Each of Fancamp Exploration Ltd. (" Fancamp") and HTS Holdings Inc. (" HTS") currently hold more than
10% of the issued and outstanding NeoTerrex Shares. It is anticipated that, following completion of the
Transaction, each entity will hold more than 10% of the issued and outstanding common shares of the
Resulting Issuer, and accordingly will be an insider of the Resulting Issuer under the policies of the
Exchange.
Fancamp is a corporation existing under the laws of the Province of British Columbia. It is listed for trading
on the Exchange under the symbol FNC. Rajesh Sharma, a current director of NeoTerrex and a proposed
director of the Resulting Issuer, is the Chief Executive Officer of Fancamp.
HTS, a corporation existing under the laws of the Province of Ontario, is controlled by Luc Pilon of Ottawa,
Ontario. Denis Pilon, a current director of NeoTerrex and a proposed director of the Resulting Issuer, is
the Chief Operating Officer of HTS.
Arm's Length Transaction
The Transaction was negotiated by parties who are dealing at arm’s length with each other and therefore,
the Transaction is not a Non-Arm’s Length Qualifying Transaction in accordance with the policies of the
Exchange.
Finder's Fees
No finder's fees or commissions are payable by Spitfyre or NeoTerrex in connection with the closing of
the Transaction, other than with respect of the Private Placement.
Filing Statement
In connection with the Transaction and pursuant to Exchange requirements, Spitfyre will file a filing
statement under its profile on SEDAR+ at www.sedarplus.ca, which will contain details regarding the
Transaction, the Amalgamation, the Private Placement, Spitfyre, NeoTerrex and the Resulting Issuer.
Shareholder approval is not required with respect to the Transaction under the rules of the Exchange. In
the event any of the conditions set forth above are not completed or the Transaction does not proceed,
Spitfyre will notify shareholders. Trading in the common shares of Spitfyre will remain halted and is not
expected to resume trading until the Transaction is completed or until the Exchange receives the requisite
documentation to resume trading.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities
in any jurisdiction, nor shall there be any offer, sale, or solicitation of securities in any state in the United
States in which such offer, sale, or solicitation would be unlawful.