TORONTO, Jan. 12, 2022 (GLOBE NEWSWIRE) -- POCML 6 Inc. (TSXV: POCC.P) (the “Corporation” or “POCML6”), a capital pool company listed on the TSX Venture Exchange (“TSXV”), has entered into a binding letter of intent with Lithium Ionic Inc. (“Lithium Ionic”) negotiated at arm’s length and effective as of January 7, 2022 (the “Letter of Intent”) in respect of a proposed business combination transaction pursuant to which POCML6 will acquire all of the issued and outstanding securities of Lithium Ionic (the “Proposed Transaction”). In connection with the Proposed Transaction, Lithium Ionic has also executed an engagement letter to complete a concurrent subscription receipt financing for up to $10,000,000 with Clarus Securities Inc., PowerOne Capital Markets Limited and a syndicate of agents. It is anticipated that the Proposed Transaction will constitute the qualifying transaction of POCML6 in accordance with Policy 2.4 - Capital Pool Companies of the Corporate Finance Manual of the TSX Venture Exchange (the “TSXV”). The resulting company following the completion of the Proposed Transaction is referred to as the “Resulting Issuer”. The Proposed Transaction will not constitute a Non-Arm’s Length Transaction (as such term is defined in the policies of the TSXV). All currency references used in this news release are in Canadian currency unless otherwise noted.
About Lithium Ionic
Lithium Ionic is a private company incorporated on July 5, 2021 under the laws of the Province of Ontario which owns a 100% ownership interest in the Itinga lithium project (the “Itinga Project” or the “Project”).
The Itinga Project
The Itinga Project is located in Minas Gerais State (MG), Brazil. The Project comprises five mineral licenses covering more than 1,300 hectares in the prolific Aracuai lithium province. A portion of the Project occurs immediately south of the CBL lithium mine and plant, Brazil’s only lithium producer, and immediately north of the large Barreiro and Xuxa lithium deposits of Sigma Lithium Corp (TSXV: SGML) (NASDAQ: SGML). CBL has been in operation since 1993. Sigma’s estimated mineral resources, based on their NI 43-101 technical reports, exceeds 50 million tonnes of lithium oxide (Li2O) mineralized pegmatite in four deposits.
The Project area has excellent infrastructure, including access to hydroelectrical grid power, water, commercial port, highways and communities.
Lithium mineralization (spodumene, lepidolite, petalite) occurs within a halo of pegmatite dikes and apophyses that occur within the rocks surrounding Neoproterozoic granitic intrusions. Mineralization within the mineralized province and the distribution of the mineralized pegmatites is controlled by a complex and crosscutting system of northeast and northwest oriented faults that were exploited by the dikes. Mineralized structures have been identified in two areas within the Project and the remainder of the Project area remains to be explored.
The technical information in this news release has been prepared by David Gower, a director of Lithium Ionic, who is a qualified person within the meaning of National Instrument 43-101 (“NI 43-101”) – Standards of Disclosure for Mineral Projects. Lithium Ionic has commissioned a NI 43-101 compliant technical report on the Project which it expects will be finalized before the end of Q1 2022.
Summary of the Proposed Qualifying Transaction
The Letter of Intent contemplates that Lithium Ionic and POCML6 will negotiate and enter into a definitive agreement in respect of the Proposed Transaction on or before February 6, 2022 (the “Definitive Agreement”), pursuant to which it is anticipated that POCML6 will acquire all of the issued and outstanding Lithium Ionic common shares (the “Lithium Ionic Shares”) and Lithium Ionic warrants, and shareholders and warrantholders of Lithium Ionic will receive POCML6 common shares (the “POCML6 Shares”) in exchange for their Lithium Ionic Shares and POCML6 warrants, respectively. The Proposed Transaction will be structured as a three-cornered amalgamation, plan of arrangement or other structure based on the advice of the parties' respective advisers and taking into account various securities, tax, operating and other considerations.
It is anticipated that the Resulting Issuer will continue the business of Lithium Ionic under a name to be determined by Lithium Ionic (the “Name Change”). The business of the Resulting Issuer will be primarily focused on the exploration of the Project.
Certain POCML6 Shares to be issued pursuant to the Proposed Transaction are expected to be subject to restrictions on resale or escrow under the policies of the TSXV, including the securities to be issued to principals (as defined under the TSXV policies), which will be subject to the escrow requirements of the TSXV.
The completion of the Proposed Transaction is subject to a number of terms and conditions, including and without limitation to the following: negotiation and execution of the Definitive Agreement; there being no material adverse changes in respect of either POCML6 or Lithium Ionic; the parties obtaining all necessary consents, orders, regulatory and shareholder approvals, including the conditional approval of the TSXV; completion of the Name Change and Consolidation (as defined below) and any other required corporate changes requested by Lithium Ionic, acting reasonably; completion of the Concurrent Financing (as defined below); completion of a NI 43-101 compliant technical report for the Project; completion of a thorough business, legal and financial review by each party of the other party; and other standard conditions of closing for a transaction in the nature of the Proposed Transaction.
There can be no assurance that all of the necessary regulatory and shareholder approvals will be obtained or that all conditions of closing will be met.
Upon completion of the Proposed Transaction, it is anticipated that the Resulting Issuer will be listed as a Tier 2 mining issuer on the TSXV, with Lithium Ionic as its primary operating subsidiary.
Concurrent Financing
In connection with the Proposed Transaction, Lithium Ionic has entered into an engagement letter with Clarus Securities Inc., together with PowerOne Capital Markets Limited and a syndicate of agents (collectively the “Agents”), to act for and on behalf of Lithium Ionic to complete a private placement offering (the “Offering”) of subscription receipts (the “Subscription Receipts”) at a price per Subscription Receipt of $0.70 (the “Issue Price”) for aggregate gross proceeds of up to $10,000,000. The Company and the Agents may agree to allocate a portion of the Offering as subscription receipts of POCML6. Completion of the Concurrent Financing is a condition of the completion of the Transaction. Other than in connection with the Concurrent Financing, neither party will issue any shares or rights exchangeable or exercisable into shares of such party prior to closing of the Proposed Transaction.
Each Subscription Receipt will automatically convert on the satisfaction or waiver of all conditions precedent to the Transaction and certain other ancillary conditions (the “Escrow Release Conditions”) into POCML6 Post-Consolidation Shares without any further consideration on the part of the purchaser immediately prior to effecting the Proposed Transaction.
Pursuant to the Engagement Letter, the Agents shall be (i) paid a commission (“Agent’s Commission”) equal to seven percent (7%) of the gross proceeds raised in the Financing to be payable, at the discretion of Clarus Securities Inc., in any combination of cash and/or Lithium Ionic Shares at a price of $0.70 per Lithium Ionic Share; and (ii) issued broker warrants (“Broker Warrants”) equal in number to seven percent (7%) of the total number of Subscription Receipts sold pursuant to the Concurrent Financing, each Broker Warrant entitling the holder to acquire one POCML6 Post-Consolidation Share at an exercise price of $0.70 for a period of 24 months following the date of issuance of the escrow release notice. The Agent’s Commission and Broker Warrants shall be payable upon satisfaction of the closing of the Offering.
The Company intends to use the net proceeds of the Offering for (i) exploration of the Itinga Project, and (ii) general corporate and working capital purposes.
Information Concerning POCML6
POCML6 is a capital pool company and its common shares are listed for trading on the TSXV under the symbol “POCC.P”. As at September 30, 2021, POCML6 had cash and near cash assets, net of liabilities, of approximately $611,470.
As of the date hereof, POCML6 has 11,101,430 POCML6 Shares outstanding and has issued options and broker warrants to acquire an aggregate of 1,194,750 POCML6 Shares at an exercise price of $0.10 per share. Prior to completion of the Transaction, POCML6 proposes to effect a consolidation of the issued and outstanding POCML6 Shares, on a fully diluted basis, on the basis of approximately 0.6099 of one “new” POCML6 Share (a “POCML Post-Consolidation Share”) for every one “old” POCML6 Share issued and outstanding (the “Consolidation”). At the time of closing of the Transaction, assuming the closing of the Concurrent Financing for gross proceeds of $10 million, it is anticipated that Resulting Issuer will have approximately 93,295,714 common shares and 3,672,750 convertible securities outstanding.
PowerOne Capital Markets Limited (“PowerOne”) is acting as an agent in connection with the Concurrent Financing and PowerOne may receive cash and securities-based compensation on completion of the Concurrent Financing as compensation for so acting. PowerOne is considered a related and connected issuer to POCML6 because: (i) officers and directors of PowerOne own, control or direct more than 20% of the issued and outstanding common shares of POCML6, assuming the exercise of the options of POCML6 that they own and no other convertible securities; and (ii) officers and directors of PowerOne are officers and directors of POCML6. The terms of the Concurrent Financing were determined by the Lithium Ionic and POCML6, and no proceeds from the Concurrent Financing will be applied for the benefit of PowerOne other than the previously mentioned fees. The interests of PowerOne and/or its officers and directors in the Resulting Issuer may be subject to such escrow periods as may be imposed by the TSXV and/or securities regulators and such additional contractual hold period as they may be agreed to.
Filing Statement
In connection with the Proposed Transaction and pursuant to the requirements of the TSXV, POCML6 will file a filing statement or a management information circular on its issuer profile on SEDAR (www.sedar.com), which will contain details regarding the Proposed Transaction, POCML6, the Project, the Concurrent Financing, and the Resulting Issuer.
Sponsorship of Qualifying Transaction
Sponsorship of a qualifying transaction of a capital pool company is required by the TSXV unless exempt in accordance with TSXV policies. POCML6 intends to apply for an exemption from the sponsorship requirements.
Reinstatement to Trading
In accordance with the policies of the TSXV, the POCML6 Shares are currently halted from trading and will remain so until such time as the TSXV determines, which, depending on the policies of the TSXV, may not occur until completion of the Proposed Transaction.
Further Information
Further details about the Proposed Transaction and the Resulting Issuer will be provided in a comprehensive press release when the parties enter into a Definitive Agreement and in the disclosure document to be prepared and filed in respect of the Proposed Transaction. Investors are cautioned that, except as disclosed in the disclosure document to be prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed 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.
For further information, please contact:
POCML 6 Inc.
David D'Onofrio
Director
p: (416) 643-3880
Lawrence Guy
Lithium Ionic Inc., Director
p: 416-930-7660
Information concerning Lithium Ionic, including the proposed directors of the Resulting Issuer, has been provided to the Corporation by Lithium Ionic for inclusion in this press release.
Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and if applicable pursuant to Exchange Requirements (as that term is defined in the policies of the TSXV), majority of the minority shareholder approval. Where applicable, the Proposed Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed 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 Proposed 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 TSXV 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 TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
The securities referenced herein have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.
Cautionary and Forward-Looking Statements
This press release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this press release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, 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” 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 press release, forward-looking statements relate, among other things, to: the Proposed Transaction and certain terms and conditions thereof; the business of Lithium Ionic, information concerning the Project, the commissioning of an updated NI 43-101 compliant technical report with respect to the Project, the Concurrent Financing; TSXV sponsorship requirements and intended application for exemption therefrom; shareholder, director and regulatory approvals; and future press releases and disclosure. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors that may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; and the delay or failure to receive shareholder, director or regulatory approvals. There can be no assurance that such 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 press release. Except as required by law, POCML6 assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change.
