American Lithium Corp. (TSX-V:LI) (OTCQB:LIACF) (Frankfurt:5LA1) and Plateau Energy Metals Inc. (TSXV:PLU) (OCTQB:PLUUF) are pleased to announce that they have entered into a definitive arrangement agreement to consolidate two significant and strategic undeveloped lithium assets in the Americas at a time of rapidly growing lithium demand in the context of increasing focus on electric vehicles, energy storage and renewable energy generation. It is expected that Plateau shareholders will hold approximately 21% of American Lithium’s shares on an outstanding undiluted basis upon completion of the Transaction (as defined below).
Benefits to American Lithium Shareholders
Benefits to Plateau Shareholders
American Lithium intends to implement a strategic approach to the uranium assets of Plateau, specifically Macusani, with the goal of maximizing the value of this asset for the benefit of shareholders of the combined entity following the closing of the transaction. The timing and exact approach to this asset will be determined following completion of the Transaction (as defined below).
Michael Kobler, CEO and Director of American Lithium, stated: “We are very pleased to be able to add Plateau and its assets to the American Lithium platform. We believe that Falchani offers geographic and geological diversity in one of the leading mining jurisdictions in South America and one of the strongest emerging markets globally. The combination of assets and key personnel is complimentary and will position American Lithium with a large and diverse lithium resource base and strong technical expertise from which to unlock significant additional shareholder value.”
Laurence Stefan, President and COO of Plateau, further added: “This Transaction represents a significant premium for our shareholders and allows us to gain exposure to an asset portfolio in Nevada, a successful team, and a larger public company platform possessing access to capital and excellent trading liquidity. Certain members of Plateau’s team and board will continue on with the newly diversified company to provide for continuity.”
Under the terms of the Agreement, American Lithium has agreed to acquire all of the issued and outstanding common shares of Plateau on the basis of 0.29 units of American Lithium for each share of Plateau held, by way of a plan of arrangement under the Business Corporations Act (Ontario).
Each Exchange Unit will consist of one (1) common share of American Lithium plus one-half of a common share purchase warrant of American Lithium. Each Exchange Warrant will entitle the holder to acquire one additional common share of American Lithium at an exercise price of $3.00 for a period of thirty-six months from completion of the Transaction. American Lithium will use commercially reasonable efforts to list the Exchange Warrants on the TSX Venture Exchange as soon as practicable following closing of the Transaction.
The Arrangement represents a 72% premium to Plateau shareholders using the trailing 20-day volume weighted average trading price on the TSX Venture Exchange of each company as of market close on February 5, 2021 and valuing the Exchange Warrants using the Black-Scholes methodology at a 50% volatility.
Pursuant to the terms of the Agreement, American Lithium will acquire all of the issued and outstanding common shares of Plateau on the basis of 0.29 Exchange Units for each share of Plateau held. The outstanding and unexercised warrants to purchase common shares of Plateau will be adjusted in accordance with their terms based on the Exchange Ratio. Plateau’s outstanding and unexercised stock options will be adjusted and holders of the options will receive common shares of American Lithium, the number of common shares to be adjusted based on the Exchange Ratio, subject to a reduction in term for stock options held by individuals who will not be continuing on with American Lithium post-closing of the Transaction. All RSUs and DSUs of Plateau will vest immediately and will be treated in accordance with their respective plans.
Upon closing of the Transaction, Plateau will nominate two directors to join a newly reconstituted board of American Lithium. American Lithium will additionally retain certain employees and consultants of Plateau in order to provide continuity with ongoing concession work in Peru and development activities at Falchani with Plateau’s existing Peru team.
The Arrangement will be carried out by way of a court-approved plan of arrangement and will require the approval of: (i) at least 66 2/3% of the votes cast by all Plateau shareholders; (ii) at least 66 2/3% of the votes cast by all Plateau shareholders and all holders of Plateau stock options voting together as a single class; and (iii) and a simple majority of the votes cast by all Plateau shareholders excluding certain interested or related parties as required by Multilateral Instrument 61-101, in each case by securityholders present in person or represented by proxy at the securityholder meeting.
The Agreement includes customary provisions, including non-solicitation, right-to-match and fiduciary out provisions, as well as certain representations, covenants and conditions that are customary for a transaction of this nature. A termination fee of $3.25 million may be payable by Plateau in the case of certain terminating events, including the acceptance of a superior proposal.
Closing of the Transaction is subject to the receipt of applicable regulatory approvals and the satisfaction of certain other closing conditions customary in transactions of this nature, including, without limitation, approval of the Ontario Superior Court of Justice and the TSX Venture Exchange. Closing of the Transaction is anticipated to occur in May 2021.
In connection with the Transaction, American Lithium and Plateau have also entered into a secured loan agreement. The loan is in a principal amount of $1.5 million, carries an annual interest rate of 6% and is to be used in funding Plateau’s budgeted working capital needs.
Further information regarding the Transaction will be contained in a management information circular to be prepared by Plateau and mailed to its shareholders and optionholders in connection with a special meeting of securityholders to be held to consider the Arrangement, which is expected to be held in April 2021, with further details to be provided. All shareholders and optionholders of Plateau are urged to read the information circular once available, as it will contain important additional information concerning the Transaction.
Board Recommendations and Voting Support
The Arrangement has been unanimously approved by the board of directors of both American Lithium and Plateau, and the directors of Plateau, based on the recommendation of a special committee of independent directors of Plateau, recommend that Plateau shareholders and optionholders vote in favour of the Transaction.
All of the directors and officers of Plateau, plus certain significant shareholders, directly holding or controlling in aggregate approximately 17% of the issued and outstanding common shares of Plateau, have entered into customary voting support agreements agreeing to vote in favour of the Transaction.
Haywood Securities Inc. has provided a fairness opinion to the special committee and board of directors of Plateau that, as of the date thereof, and based upon and subject to the assumptions, limitations and qualifications stated therein, the consideration to be received by the shareholders of Plateau under the Arrangement is fair, from a financial point of view, to the shareholders of Plateau.
Advisors and Counsel
Cassels Brock & Blackwell LLP is acting as legal counsel to American Lithium. In connection with completion of the Transaction, Axemen Resource Capital Ltd. is entitled to receive a success fee upon closing.
Haywood Securities Inc. is acting as financial advisor and Blake, Cassels & Graydon LLP is acting as legal counsel to Plateau. In connection with completion of the Transaction, Bedrock Capital Corporation, or its agent, is entitled to receive a finder’s fee upon closing.
None of the securities to be issued pursuant to the Transaction have been or will be registered under the United State Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws, and any securities issued pursuant to the Transaction are anticipated to be issued in reliance upon available exemptions from such registration requirements pursuant to Section 3(a)(10) of the U.S. Securities Act and applicable exemptions under state securities laws. This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities.
About American Lithium
American Lithium is actively engaged in the acquisition, exploration and development lithium deposits within mining-friendly jurisdictions throughout the Americas. The company is currently exploring and developing the TLC lithium project located in the highly prospective Esmeralda lithium district in Nevada. TLC is close to infrastructure, 3.5 hours south of the Tesla Gigafactory, and in the same basinal environment as Albemarle’s Silver Peak lithium mine, and several advancing deposits and resources, including Ioneer Ltd.’s (formerly Global Geoscience) Rhyolite Ridge and Cypress Development Corp.’s Clayton Valley Project.
Plateau Energy Metals Inc., a Canadian exploration and development company, is enabling the new energy paradigm through exploring and developing its Falchani lithium project and Macusani uranium project in southeastern Peru, both of which are situated near significant infrastructure.
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