October 07, 2024 8:56 PM EDT | Source: Arcland Resources Inc.
Vancouver, British Columbia–(Newsfile Corp. – October 7, 2024) – Arcland Resources Inc. (TSXV: ADR.H) (the “Company” or “Arcland“) is pleased to announce that it has entered into a non-binding letter of intent dated October 4, 2024 (the “LOI“) with NEXT Lithium Corp. (“NEXT“), pursuant to which Arcland intends to acquire all of issued and outstanding securities of NEXT in exchange for common shares of Arcland (each, an “Arcland Share“) in accordance with the Exchange Ratio (as defined herein) (the “Proposed Transaction“). It is intended that the Proposed Transaction will be an arm’s length “Reverse Takeover” for Arcland, as such term is defined in TSX Venture Exchange (the “TSXV“) Policy 5.2 Changes of Business and Reverse Takeovers.
The LOI is to be superseded by a definitive agreement (the “Definitive Agreement“) to be signed on or prior to November 30, 2024, or such later date as may be mutually agreed upon by the parties in writing. The Proposed Transaction is subject to:
requisite regulatory approval, including the approval of the TSXV;
customary closing conditions, including the approval of the directors (and as required, the shareholders) of each of Arcland and NEXT of the Definitive Agreement and completion of due diligence investigations to the satisfaction of each of Arcland and NEXT; and
the additional conditions described below.
The legal structure for the Proposed Transaction will be confirmed after the parties have considered all applicable tax, securities law and accounting efficiencies.
Arcland is at arm’s length to NEXT, and no director, officer or insider of Arcland or NEXT beneficially owns, or controls or directs, directly or indirectly, any securities of the other party. Therefore, the Proposed Transaction is expected to be an “Arm’s Length Proposed Transaction”, as defined under TSXV Policy 1.1 Interpretation, and does not constitute a “related party transaction” for the purpose of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions.
Among other terms customary for a transaction of this nature, the Definitive Agreement will provide for:
a change of name of the Company to such name as is mutually agreed between NEXT and Arcland and acceptable to applicable regulatory authorities (the “Name Change“) effective upon closing of the Proposed Transaction (the “Closing“);
the Consolidation (as defined below); and
the appointment of a slate of directors nominated by NEXT and Arcland (the “Board Nominees“), which board reconstitution will be effective upon Closing.
Trading in the Arcland Shares has been halted in accordance with the policies of the TSXV and will remain halted until such time as all required documentation in connection with the Proposed Transaction has been filed with and accepted by, and permission to resume trading has been obtained from, the TSXV. There can be no assurance that trading of Arcland Shares will resume prior to the completion of the Proposed Transaction.
About NEXT Lithium Corp.
NEXT is organized under the provisions of the Business Corporations Act (British Columbia) with its registered and head office located in Vancouver, British Columbia. NEXT is a lithium development company incorporated in October of 2021. NEXT, through a wholly-owned subsidiary, is currently developing the 12,000 ha Centenario Lithium Project in Salta Province, Argentina. NEXT is led by CEO Kyle Stevenson, a lithium industry professional with a successful track record of developing and selling multiple lithium assets in Argentina.
Acquisition of Fenix
Prior to the Proposed Transaction, NEXT will acquire all of the issued and outstanding common shares of Fenix Advanced Materials Inc. (“Fenix“) in exchange for common shares of NEXT (“NEXT Shares“), pursuant to the terms of a share exchange agreement dated August 31, 2024 between NEXT, the shareholders of Fenix and Fenix (the “Fenix Acquisition“). Fenix is a clean technology company specialized in the manufacture of ultra-high purity metals of up to 6N5+ (>99.99995%) level. Fenix was incorporated in May of 2015. Fenix is managed and directed by Don Freschi, a Professional Applied Science Technologist (MBA) with over 30 years of pure metals and semiconductor experience.
Concurrent Financing
Prior to or concurrently with the Proposed Transaction, NEXT intends to complete one or more private placements on terms acceptable to Arcland, acting reasonably (collectively, the “Concurrent Financing“), for minimum gross aggregate proceeds of CAD$5,000,000, through the issuance of securities of NEXT at a price per security of CAD$1.00 or such other price as may be approved by Arcland, acting reasonably (the “Concurrent Financing Price“).
The proceeds of the Concurrent Financing will be used to advance the business of NEXT and for general corporate and working capital purposes.
Selected Financial Information of NEXT
The following selected consolidated financial information of NEXT has been supplied to Arcland by NEXT for purposes of inclusion herein:1
Year ended
June 30,
2023
Year ended
June 30,
2022
(unaudited)
(unaudited)
(in USD$)
(in USD$)
Income Statement
Revenue
–
–
Total Expenses
(3,942,228
)
(1,246,613
)
Other Income
1,026,517
214,701
Net Income (Loss)
(2,915,711
)
(1,031,912
)
Balance Sheet
Current Assets
134,021
824,668
Total Assets
7,752,674
3,621,631
Current Liabilities
11,537,643
606,358
Total Liabilities
11,774,945
4,728,191
Shareholders’ Equity (Deficiency)
(4,022,271
)
(1,106,560
)
Conditions to Proposed Transaction
Prior to or currently with completion of the Proposed Transaction, as applicable, and as conditions of Closing:
NEXT and Arcland must complete mutually satisfactory due diligence investigations;
Arcland and NEXT will enter into a Definitive Agreement in respect to the Proposed Transaction on or prior to November 30, 2024;
Arcland and NEXT will obtain the requisite board and, as applicable, shareholder approvals for the Proposed Transaction and any ancillary matters contemplated in the Definitive Agreement;
all requisite regulatory approvals relating to the Proposed Transaction, including, without limitation, the TSXV, will have been obtained;
NEXT will have completed the Fenix Acquisition on terms acceptable to Arcland, acting reasonably;
NEXT will have completed the Concurrent Financing prior to or concurrently with the Closing;
Arcland will have effected the Consolidation prior to the Closing;
the Board Nominees will have been duly appointed to the board of directors of Arcland effective as of Closing; and
Arcland will have effected the Name Change.
The Proposed Transaction
Pre-Closing Capitalization of Arcland
As of the date hereof, Arcland has 13,232,337 Arcland Shares issued and outstanding and nil Arcland Shares reserved for issuance pursuant to the exercise or conversion of convertible securities of Arcland. The Arcland Shares are currently listed on the NEX board of the TSXV under the symbol “ADR.H”.
Consolidation of Arcland
Prior to or concurrently with Closing, subject to Arcland shareholder approval, Arcland will undertake a share consolidation (the “Consolidation“) on the basis of one post-consolidation Arcland Share for every “N” pre-consolidation Arcland Shares, where N = the Concurrent Financing Price multiplied by 10.
Pre-Closing Capitalization of NEXT
As of the date hereof, NEXT has 12,500,050 NEXT Shares issued and outstanding, 5,000,000 NEXT Shares reserved for issuance pursuant to the exercise of NEXT Share purchase warrants (“Next Warrants“) and certain additional NEXT Shares (the exact number of which will vary based on the Concurrent Financing Price) reserved for issuance pursuant to the conversion of convertible debentures of NEXT (the “NEXT Convertible Debentures“), each of which will convert into one unit of NEXT comprised of one NEXT Share and one-half of one NEXT Share purchase warrant (each whole warrant, a “NEXT Debenture Warrant“) immediately prior to Closing with no further action required by the holders thereof.
Terms of the Proposed Transaction
It is currently anticipated that Arcland will acquire NEXT by way of a three-cornered amalgamation, share exchange, plan of arrangement or other similar form of transaction as agreed to by the parties to ultimately form the resulting issuer (the “Resulting Issuer“). The final structure of the Proposed Transaction is subject to the receipt of tax, corporate and securities law advice for both Arcland and NEXT.
The exact exchange ratio (the “Exchange Ratio“) will be determined by Arcland and NEXT following receipt of financial advice and a review of the parties’ respective capital structures, but is anticipated to be conducted on the basis of:
(a) an Arcland valuation of approximately $1,323,234, as determined following the Consolidation; and
(b) a NEXT valuation of approximately $33,000,000, as determined following the Fenix Acquisition and conversion of the Next Convertible Debentures, but prior to the Concurrent Financing.
In addition, to the extent any NEXT Warrants or NEXT Debenture Warrants remain outstanding on Closing, Arcland will issue replacement securities (the “Arcland Replacement Securities“) in consideration of the cancellation of the NEXT Warrants and NEXT Debenture Warrants. The Arcland Replacement Securities will be exercisable to acquire Arcland Shares in lieu of NEXT Shares based on the Exchange Ratio, but will otherwise bear the same terms and conditions as the cancelled NEXT Warrants and NEXT Debenture Warrants, as applicable.
Upon completion of the Proposed Transaction, the Resulting Issuer will carry on the business of NEXT. It is expected that the Resulting Issuer will be classified as a Tier 2 Mining Issuer.
Insiders, Officers and Board of Directors of the Resulting Issuer
Upon completion of the Proposed Transaction, it is anticipated that the board of directors of the Resulting Issuer shall consist of five directors, each of whom shall be nominated by NEXT and Arcland. The nominees will be determined in connection with the execution of the Definitive Agreement, and the Company will provide an update once available. The parties expect Kyle Stevenson to act as Chief Executive Officer of the Resulting Issuer.
Sponsorship
The Proposed Transaction may require sponsorship under the policies of the TSXV unless an exemption from sponsorship is granted. Arcland intends to apply for an exemption from sponsorship requirements of the TSXV in connection with the Proposed Transaction. There can be no assurance that such exemption will ultimately be granted.
Further Information
All information contained in this news release with respect to Arcland and NEXT was supplied by the parties respectively, for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning the other party.
Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and, if applicable, pursuant to the requirements of the TSXV, disinterested shareholder approval. Where applicable, the Proposed Transaction cannot close until any required shareholder approvals 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 Proposed 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 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 press release.
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 Statements Regarding Forward-Looking Information
This news release contains “forward-looking information” within the meaning of applicable securities laws relating to the proposal to complete the Proposed Transaction and associated transactions. Any such forward-looking statements may be identified by words such as “expects”, “anticipates”, “believes”, “projects”, “plans” and similar expressions. Readers are cautioned not to place undue reliance on forward-looking statements. Statements about, among other things, the completion and expected terms of the Proposed Transaction, the number of securities of Arcland that may be issued in connection with the Proposed Transaction, the completion of the Fenix Acquisition and Concurrent Financing, obtaining the requisite shareholder approval, NEXT’s strategic plans and the parties’ ability to satisfy closing conditions and receive necessary approvals, are all forward-looking information. These statements should not be read as guarantees of future performance or results. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. Although such statements are based on management’s reasonable assumptions, there can be no assurance that the Proposed Transaction (including the name change and Consolidation), the Fenix Acquisition or the Concurrent Financing will occur or that, if the Proposed Transaction, the Fenix Acquisition and the Concurrent Financing do occur, they will be completed on the terms described above. Arcland and NEXT assume no responsibility to update or revise forward-looking information to reflect new events or circumstances unless required by applicable law.
1 The selected consolidation financial information of NEXT has been prepared in accordance with U.S. GAAP.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/225942
SOURCE: Arcland Resources Inc.
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