Spitfyre Capital Inc. Announces Proposed Qualifying Transaction with NeoTerrex Corporation
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Spitfyre Capital Inc. Announces Proposed Qualifying Transaction with NeoTerrex Corporation
TORONTO, ONTARIO – June 28, 2023. Spitfyre Capital Inc. (the “Corporation” or “Spitfyre”) (TSXV:
FYRE.P) is pleased to announce details concerning its proposed arm’s length qualifying transaction (the
“Transaction”) involving a business combination with NeoTerrex Corporation (“NeoTerrex”), to
complete the going public transaction in Canada for NeoTerrex. Spitfyre intends that the Transaction will
constitute its “Qualifying Transaction” under Policy 2.4 - Capital Pool Companiesof the TSX Venture
Exchange (the “TSX-V”).
NeoTerrex is a private company incorporated under the Canada Business Corporations Act (“CBCA”) and
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. Mineralization continuity has also been established on several of these sites, including the King
showing where a channel sampling returned over 27 metres grading 3% Total Rare Earths Oxides (TREO).
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 on SEDAR 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.
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. The third project
reportedly contains the highest lithium value recorded in a grab sample of the entire Côte-Nord region.
NeoTerrex plans to undertake its maiden exploration program once ground conditions are deemed
favorable.
The Corporation has entered into a non-binding letter of intent with NeoTerrex dated June 28, 2023 (the
“LOI”) pursuant to which the Corporation and NeoTerrex intend to complete the Transaction by way of a
share exchange, purchase, a plan of arrangement, amalgamation, or alternate structure to be determined,
having regard to relevant tax, securities and other factors to form the resulting issuer being called
“NeoTerrex Corporation” (“Newco”), or such other name as may be determined by NeoTerrex.
Pursuant to the proposed Transaction:
(i) each issued and outstanding common share of NeoTerrex (“NeoTerrex Common Share”)
will be exchanged into one common share of Newco (“Newco Common Share”) on a 1:1
basis and the outstanding agent’s options of NeoTerrex (“NeoTerrex Agent’s Options”)
shall be exchanged into replacement agent’s options (“Newco Agent’s Options”)
exercisable on a 1:1 basis, so that all of the issued and outstanding NeoTerrex Common
Shares will be exchanged for 59,744,000 Newco Common Shares and the issued and
outstanding NeoTerrex Agent’s Options will be exchanged for 3,296,300 Newco Agent’s
Options;
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(ii) each issued and outstanding common share of Spitfyre (“Spitfyre Common Share”) will
be exchanged into one Newco Common Share on a 1:1 basis and the outstanding agent’s
options of Spitfyre (“Spitfyre Agent’s Options”) shall be exchanged for Newco Agent’s
Options, exercisable on a 1:1 basis so that all of the issued and outstanding Spitfyre
Common Shares will be exchanged for 5,750,000 Newco Common Shares and the
outstanding Spitfyre Agent’s Option will be exchanged for 125,000 Newco Agent’s
Options; and
(iii) each issued and outstanding NeoTerrex Common Share or Spitfyre Common Share issued
pursuant to the Concurrent Financing (as defined below) shall be exchanged into one
Newco Common Share on a 1:1 basis and the outstanding Concurrent Financing Warrants
(as defined below) will be exchanged for warrants of Newco with the same terms.
NeoTerrex and Spitfyre will use their commercially reasonable efforts to cause NeoTerrex and, if necessary,
Spitfyre to complete a private placement (the “Concurrent Financing”) of a minimum of $1,000,000 and
up to a maximum of $2,000,000 of subscription receipts of NeoTerrex and/or Spitfyre (the “ CS
Subscription Receipts ”) at $0.25 per Subscription Receipt and up to $2,000,000 of flow-through
subscription receipts of NeoTerrex (the “FT Subscription Receipts”) at $0.35 per FT Subscription Receipt
(together, the “Subscription Receipts”). The dollar value of the FT Subscription Receipts sold cannot
exceed the dollar value of the CS Subscription Receipts sold. Each CS Subscription Receipt will, following
the completion of the Transaction and the satisfaction of the escrow release conditions, entitle the holder to
receive, for no additional consideration, one unit of NeoTerrex or Spitfyre (a “Unit”). Each Unit shall
consist of one NeoTerrex Common Share or Spitfyre Common Share and one-half of one common share
purchase warrant (each a “Concurrent Financing Warrant”). Each whole Concurrent Financing Warrant
shall be exercisable into one NeoTerrex Common Share or Spitfyre Common Share, as the case may be, at
a price of C$0.40 for a period of 18 months from the escrow release date. Each FT Subscription Receipt
will, following the completion of the Transaction and the satisfaction of the escrow release conditions,
entitle the holder to receive, for no additional consideration, one flow-through share of NeoTerrex. The
proceeds from the Concurrent Financing will be held in trust pending closing of the Transaction.
NeoTerrex plans to engage a syndicate of agents to be led by a firm to be determined (the “Agents”) to act
as agents on a “best efforts” basis for the Concurrent Financing and if retained would pay a commission to
the Agents of up to 7.5% of the gross proceeds raised by the Agents (including selling group members).
The Agents may also be granted that number of broker warrants in the aggregate equal up to 7.5% of the
number of Subscription Receipts sold by the Agents (including selling group members) in the Concurrent
Financing. Half of the commission is expected to be payable on the closing date of the Concurrent
Financing. The remaining half of the commission and all of the broker warrants is expected to be payable
and issuable, respectively, to the Agents (and selling group members, as applicable) upon closing of the
Transaction.
If requested by NeoTerrex, Spitfyre shall take all action necessary to effect a continuance of Spitfyre from
the governing legislation of the Business Corporations Act (Ontario) to the CBCA (the “Continuance”).
The Transaction does not constitute a Non-Arm’s Length Qualifying Transaction as that term is defined in
Policy 2.4 of the TSX-V. A more comprehensive news release will be issued by the Corporation disclosing
details of the Transaction, including financial information respecting NeoTerrex, further details regarding
the Concurrent Financing, the names and backgrounds of all persons who will constitute insiders of Newco,
and information respecting sponsorship, once certain conditions have been met, including:
(i) approval of the Transaction by the boards of directors of the Corporation and NeoTerrex;
(ii) satisfactory completion of due diligence; and
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(iii) execution of a formal agreement.
The LOI expires on August 31, 2023 if the formal agreement has not been executed, and the Corporation
and NeoTerrex have agreed not to solicit or enter into any agreements that would reasonably be expected
to interfere with or prevent the Transaction, from the time of entering into the LOI until August 31, 2023.
Shareholder approval is not required with respect to the Transaction under the rules of the TSX-V. However,
the structure of the Transaction has not yet been finalized so shareholder approval under corporate law may
be required and a meeting of shareholders of the Corporation may be held prior to the closing of the
Transaction to approve one or more of the Continuance, a name change, a new stock option plan and
electing the board of directors. Trading in the common shares of the Corporation will remain halted and is
not expected to resume trading until the Transaction is completed or until the TSX-V receives the requisite
documentation to resume trading.
NeoTerrex’s disclosure of a technical or scientific nature in this news release was reviewed and approved
by Mathieu Stephens, P. Geo (Quebec), who is a qualified person under the definition of National
Instrument 43-101. Mr. Stephens is an officer of NeoTerrex and is not independent of NeoTerrex under
National Instrument 43-101.
For further information, please contact:
Spitfyre Capital Inc.
[Matthew McMillan – Chief Executive Officer]
Phone: [(905) 484-7698]
NeoTerrex Corporation
Mathieu Stephens – President, Chief Executive Officer and Director
Phone: (613) 299-0666
Forward-Looking Information Cautionary Statement
Certain statements contained in this news release constitute forward-looking information within the
meaning of Canadian securities laws regarding Spitfyre, NeoTerrex and their respective businesses, which
may include, but are not limited to, statements with respect to the Mount Discovery Project, the lithium and
other prospective projects, the Mount Discovery Technical Report, the Concurrent Financing, the
Transaction, approval of the Transaction by the board of directors of the Corporation and NeoTerrex,
respectively, completion of due diligence, execution of the formal agreement, approval of the TSX-V,
shareholder approval of certain matters and certain forward-looking statements relating to NeoTerrex’s
business generally. The use of any of the words “will”, “expected”, “view” and similar expressions and
statements relating to matters that are not historical facts are intended to identify forward-looking
information and are based on the Corporation’s current belief or assumptions as to the outcome and timing
of such future events, and are based on assumptions and subject to risks and uncertainties. Although the
management of each entity believes that the assumptions underlying these statements are reasonable, actual
future results may differ materially. In particular, statements pertaining to the terms and completion of the
Transaction constitute forward-looking information. Actual results and developments may not occur or
could differ materially as a result of known and unknown risk factors and uncertainties affecting the
companies, including risks regarding market conditions, economic factors, management’s ability to manage
and operate the business of Newco and the equity markets generally from those contemplated by forward-
looking information. Although Spitfyre and NeoTerrex have attempted to identify important factors that
could cause actual actions, events or results to differ materially from those described in forward-looking
statements, there may be other factors that cause actions, events or results to differ from those anticipated,
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estimated or intended. Readers are cautioned not to place undue reliance on forward-looking information.
No statement that is forward looking can be guaranteed. The statements made in this news release are made
as of the date hereof. The Corporation and NeoTerrex disclaim any intention or obligation to publicly update
or revise any forward-looking information, whether as a result of new information, future events or
otherwise, except as may be expressly required by applicable securities laws.
Spitfyre is a capital pool company governed by the policies of the TSX-V. The principal business of Spitfyre
is the identification and evaluation of assets or businesses with a view to completing a Qualifying
Transaction.
Completion of the Transaction is subject to a number of conditions, including but not limited to,
execution of a formal agreement relating to the Transaction, completion of satisfactory due diligence,
TSX-V acceptance, receipt of requisite regulatory approvals, and if applicable pursuant to TSX-V
requirements, majority of the minority shareholder approval. Where applicable, the Transaction
cannot close until the required shareholder approvals, and any ancillary matters thereto, are
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 TSX-V has in no way passed upon the merits of the proposed Transaction and has neither
approved nor disapproved the contents of this news release.
NEITHER THE TSX-V NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS
DEFINED IN POLICIES OF THE TSX-V) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY
OR ACCURACY OF THIS RELEASE.