Cornish Metals to Raise up to £40.5 Million Through a £25 Million Strategic Investment by Sir Mick Davis' Vision Blue Resources and a UK Placing and Canadian Subscription of up to £15.5 Million

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, NEW ZEALAND OR JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BREACH ANY APPLICABLE LAW OR REGULATION.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES IN CORNISH METALS INC OR ANY OTHER ENTITY IN ANY JURISDICTION. NEITHER THIS ANNOUNCEMENT NOR THE FACT OF ITS DISTRIBUTION, SHALL FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH ANY INVESTMENT DECISION IN RESPECT OF CORNISH METALS INC.
 

Highlights

• Offering to raise up to £40.5 million (approximately C$66.8 million) comprising 
  • £25 million (approximately C$41.2 million) strategic investment by Vision Blue Resources (“VBR”), a vehicle founded by Sir Mick Davis to invest in green energy-related metal and mineral resource companies 
  • £15.5 million (approximately C$25.6 million) from a private placing to existing and new UK institutional investors as well as a subscription by existing Canadian investors and eligible accredited private investors 
• Net proceeds will advance the South Crofty tin project - a fully permitted, former producing high-grade underground tin mine, located in Cornwall, UK 
  • Work will include dewatering of the mine, resource drilling, completion of a feasibility study, evaluation of further downstream beneficiation opportunities, and on-site early works in advance of a potential construction decision
• Demand for tin is expected to increasingly outstrip supply in coming years driven by growing demand from the electronics sector, EVs, and renewable power, especially solar cells
  • Since March 2021, LME cash tin prices have risen from approximately US$25,000 per tonne to in excess of US$40,000 per tonne 

Cornish Metals Inc. (TSX-V/AIM: CUSN) (“Cornish Metals” or the “Company”), a mineral exploration and development company focused on tin / copper projects in Cornwall, United Kingdom, is pleased to announce that, subject amongst other things to receipt of the requisite shareholder approvals and the approval of the TSX Venture Exchange (“TSX-V”), the Company plans to raise gross proceeds of up to £40,500,000 (C$66,800,700) through a unit offering (the “Offering”) comprising one common share priced at 18p (C$0.30 for Canadian investors) per common share and a warrant to purchase one common share priced at 27p (C$0.45 for Canadian investors) for a period of 36 months (details provided below).

Richard Williams, CEO of Cornish Metals, stated; “This announcement marks a transformational moment for the Company, its shareholders and all stakeholders in relation to the redevelopment of South Crofty, the Company's principal asset. It is testament to the quality of both the project and the Company that an investor of the calibre of Vision Blue Resources is proposing such a significant investment, and we are delighted to welcome them as a major strategic shareholder.

“Tin is essential to anything electronic, including electric vehicle (EV) components, computing, 5G, robotics, renewable power generation, and the electrification of the economy, making South Crofty a strategic asset with the ability to provide a secure, traceable, sustainable supply of this important metal.

“We are excited to embark on this new chapter of Cornwall’s mining history which will see South Crofty make a significant contribution to the local and UK economy, with the potential to create up to 1,000 direct and indirect jobs, as well being at the forefront of the drive towards net zero.” 

Sir Mick Davis, CEO of VBR, stated: “VBR was founded to accelerate the responsible supply of commodities necessary to facilitate the transition to clean, green energy. The investment in South Crofty has the potential to deliver significant tin production to meet an expected supply shortfall and enable the deployment of new, green technologies. At the same time, restarting production at an historic underground mine, within the existing footprint, and with the benefit of modern production techniques, provides an opportunity to minimise environmental and other impacts whilst creating significant benefits for local communities.”

About Vision Blue Resources 

VBR aims to create lasting value for all stakeholders by accelerating the supply of the commodities necessary to facilitate the green energy transition. The growth in demand for these metals is unprecedented, driven by regulation and social change, and is taking place against a backdrop of limited supply due to years of underinvestment in the sector. VBR aims to unlock value in its investments by providing transformational investment capital and its financial, technical, ESG, construction and operating experience in the mining and metals sector, ensuring its investments are advanced into production and beyond.

Compelling Opportunity

Demand for tin is expected to grow rapidly as it is essential for the high-tech, low carbon economy and, according to research by the Massachusetts Institute of Technology, it is the metal most likely to be positively impacted by new technologies. Tin is primarily used in the production of lead-free solder used in almost all circuit boards and semiconductors, as well as renewable energy systems where tin is used in the production of photo voltaic cells, and there is growing demand from the automotive sector where it is utilised in EV components and has been shown to enhance the performance of EV batteries themselves.
At the same time there is no primary mine production of tin in Europe or North America and the metal has been designated as a mineral critical to economic and national security by the USA. 
South Crofty has one of the highest grade tin Mineral Resources in the world not currently in production and has the potential to be amongst the lowest cost producers globally. Having previously operated until 1998, there is significant mine infrastructure still in place, most notably several mine shafts that can be used for future production and ventilation purposes, and the operation is located within an industrial area with access to the national electricity grid as well as existing transport infrastructure. 

Details of the Offering

In connection with the Offering:

1. VBR and the Company have entered into a conditional agreement dated March 28, 2022 (the “Investment Agreement”) pursuant to which VBR has agreed to purchase, on a private placement basis (the “VBR Subscription”), an aggregate of 138,888,889 units of the Company (each, a “Unit”); 
2. the Company is undertaking a concurrent placing in the UK, on a private placement basis, of up to 76,872,728 Units (such Units being the "UK Placing Units") with certain existing and new institutional investors (the “UK Placing”); and 
3. the Company is also undertaking concurrent subscriptions, on a private placement basis, of up to 9,238,383 Units (such Units being the "Subscription Units") with certain existing Canadian and UK investors and eligible private investors (the “Concurrent Private Placements” and, collectively with the VBR Subscription and the UK Placing, the “Offering”).

The subscription price for all Units issuable under the Offering is £0.18 (C$0.30 for Canadian investors) each (the "Offering Price"). Each Unit comprises one common share of the Company (each, a “Common Share”) and one common share purchase warrant of the Company (each, a “Warrant”). Each Warrant shall entitle the holder thereof to purchase one additional Common Share (each, a “Warrant Share”) at an exercise price of £0.27 (C$0.45 for Canadian investors) per Warrant Share for a period of 36 months from the closing date of the Offering. 

Use of Proceeds

The planned use of the proceeds of the Offering is to complete a dewatering programme and feasibility study at South Crofty, evaluation of downstream beneficiation opportunities, and potential on-site early works in advance of a potential construction decision. Assuming the issuance of all 225,000,000 Units pursuant to the Offering, the proceeds raised under the Offering are budgeted to be spent in the following manner to finance a 30 month programme (from closing of the Offering) covering mine dewatering and resource drilling through to the completion of a feasibility study in respect of the South Crofty mine. 

Other Relevant Information

• The 225,000,000 Common Shares comprised in the Units to be issued pursuant to the Offering (the "New Shares") will comprise 44 per cent. of the Company’s issued and outstanding Common Shares as enlarged by the Offering¹, with VBR expected to hold 138,888,889 Common Shares or 27.2 per cent. of the Company’s issued and outstanding Common Shares as enlarged by the Offering. 

1. All references in this announcement to percentages of the Company's issued and outstanding Common Shares exclude the proposed issue at AIM Admission of the Galena / Tin Shield Shares referred to in "Deferred Consideration Payable to the Sellers for the Cornwall Assets" below as it is not yet possible to determine the number of Galena / Tin Shield Shares that will be issued..

• Pursuant to the Investment Agreement, following closing of the Offering, for so long as VBR maintains at least a 10 per cent. shareholding in the Company, VBR is expected to have the right to nominate one person to the Company’s board of directors.
• VBR will on the closing of the Offering enter into a relationship agreement with the Company and the Company's nominated adviser, SP Angel Corporate Finance LLP (“SP Angel”), relating to the carrying on of the Company’s business in an independent manner following the closing of the Offering (the "Relationship Agreement").
• Certain directors and officers of the Company intend to subscribe for £146,000 (approximately C$240,800) in aggregate of Units in the Concurrent Private Placements at the Offering Price.
• VBR and all other subscribers in the Offering have agreed to a 12 month lock-in, in respect of the shares being subscribed for. The directors and officers have agreed to a 12 month lock-in in respect of their holdings and the shares being subscribed for and to orderly market arrangements for a further 12 month period following the expiry of the initial lock-in.
• The Offering is conditional, inter alia, upon the approval of shareholders of the Company ("Shareholders") at a special meeting of the Shareholders expected to be held on or around May 19, 2022 (the “Special Meeting”).
• Certain Shareholders (including all those directors and officers of the Company who hold Common Shares) who together are beneficially interested in a total of 98,233,961 Common Shares (representing 34.4 per cent. of the Company's issued and outstanding Common Shares), have entered into irrevocable undertakings pursuant to which each have agreed to vote in favour of the requisite resolutions at the Special Meeting.
• The New Shares are expected to be admitted to trading on AIM and to be listed and for trading on the TSX-V on or around May 24, 2022.

Closing of the Offering is subject to certain conditions including, among other things:

1. receipt of the requisite Shareholder approvals at the Special Meeting to approve the creation of VBR as a new “Control Person” of the Company within the meaning of applicable Canadian securities laws and the issuance of all Units and the Warrant Shares pursuant the Offering in accordance with certain provisions in the Company’s constating documents (collectively, the “Shareholder Approvals”);
2. the conditional approval of the TSX-V for the issue of the Units pursuant to the Offering and the listing of the New Shares and the Warrant Shares on the TSX-V (the "TSX-V Conditional Approval");
3. the Secretary of State confirming, inter alia, that no action will be taken under the UK National Security and Investment Act 2021 in relation to VBR's acquisition of more than 25 per cent. of the Company's issued and outstanding Common Shares; 
4. the satisfaction of other customary closing conditions in each of the Investment Agreement, the conditional agreement dated March 27, 2022 between the Company, SP Angel and H&P Advisory Ltd. (“Hannam & Partners”) in respect of the UK Placing (the "UK Placing Agreement") and the conditional subscription agreements dated March 27], 2022 between the Company and certain existing Canadian and UK investors, directors and eligible private investors (the "Subscribers") in respect of the Concurrent Private Placements (the "Subscription Agreements"); and 
5. the admission of the New Shares to trading on AIM (“AIM Admission”) taking place on or before May 24, 2022 (or such later date as SP Angel and Hannam & Partners (together the “Joint Brokers”) may agree, but in any event not later than June 24, 2022).

Neither the VBR Subscription, the UK Placing nor the Concurrent Private Placements have been underwritten by the Joint Brokers nor by anyone else. The Company and VBR may agree (but are under no obligation to agree) that VBR may subscribe for any of the UK Placing Units not, or is likely to not be, subscribed for pursuant to the UK Placing Subject to completion of the Offering, including the TSX-V Conditional Approval, the Company expects to pay certain cash commissions to the Joint Brokers in connection with the Offering. No fees or commissions are payable by the Company in connection with the Concurrent Private Placements.

Application will be made by or on behalf of the Company to the London Stock Exchange for AIM Admission which is expected to take place on or before 8.00 a.m. (London time) on May 24, 2022 and that dealings in the New Shares on AIM will commence at the same time. The closing of the Offering is not conditional on the listing for trading of the New Shares on the TSX-V. 

Upon closing of the Offering, the New Shares will be issued credited as fully paid and will, on AIM Admission, rank pari passu in all respects with the Existing Common Shares including the right to receive all dividends or other distributions declared, made or paid after AIM Admission. 

The New Shares: (i) have not been qualified for distribution by prospectus in Canada, and (ii) may not be offered or sold in Canada during the course of their distribution except pursuant to a Canadian prospectus or in reliance on an available prospectus exemption. Subject to completion of the Offering, all the New Shares to be issued as part of the Offering would be subject to a hold period of four months and one day in Canada from the date of their issuance in accordance with applicable Canadian securities legislation. Under applicable Canadian securities legislation, such hold period will only apply to trades (as defined under applicable Canadian securities legislation) of the New Shares in Canada. 

The New Shares being offered under the Offering will not be registered under the United States Securities Act of 1933, as amended (the “US Securities Act”) and may not be offered or sold within the United States absent registration or an exemption from the registration requirements. This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the New Shares in the United States.

Special Meeting and Irrevocable Undertakings

Subject to receipt of the TSX-V Conditional Approval, the Company expects to file the management information circular in respect of the Special Meeting (the “Circular”) on SEDAR, and to post the Circular to Shareholders, on or about April 20, 2022, providing further details of the Offering and including a notice convening the Special Meeting, to seek the Shareholder Approvals for the closing of the Offering and the issue of the Common Shares and Warrants comprising the Units and the issue of the Warrant Shares following exercise of the Warrants pursuant to the Offering. The Company expects to schedule the Special Meeting on or about May 19, 2022, and will issue a further news release announcing the details of the Special Meeting, including the Circular in respect of the Special Meeting, once finalized.

Certain Shareholders (including all those directors and officers of the Company who hold Common Shares) who together are beneficially interested in a total of 98,233,961 Common Shares (representing 34.4 per cent. of the issued and outstanding Common Shares) have entered into irrevocable undertakings pursuant to which each have agreed to vote in favour of the requisite resolutions at the Special Meeting. 

Related Party Transactions 

The Company advises that Patrick Anderson, Grenville Thomas, Stephen Gatley, John McGloin, Richard Williams and Owen Mihalop, being directors and / or officers of the Company, have agreed to subscribe for Units pursuant to the Concurrent Private Placements. As such, the Concurrent Private Placements will constitute a “related party transaction” within the meaning of Policy 5.9 of the TSX-V rules and Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions (“MI 61-101”).

Related party transactions require a formal valuation and minority shareholder approval unless exemptions from these requirements are available under applicable Canadian securities laws. In connection with the Concurrent Private Placements, the Company expects to rely on the exemption from the formal valuation requirement in section 5.5(b) of MI 61-101 (as a result of the Common Shares being listed on the TSX-V and being admitted for trading on AIM). With respect to an exemption from the minority approval requirement in connection with the Concurrent Private Placements, the Company expects to rely on the exemption in section 5.7(1)(b) of MI 61-101 (as neither the fair market value of the Common Shares which may be distributed to, nor the consideration which may be paid by, the related parties will exceed $2,500,000).

Further details in respect of the Offering will be included in a material change report to be filed by the Company.

The participation of Patrick Anderson, Grenville Thomas, Stephen Gatley, John McGloin, Richard Williams and Owen Mihalop, being directors of the Company or a subsidiary of the Company, in the Offering is considered a related party transaction for the purposes of AIM Rule 13 of the AIM Rules for Companies. Ken Armstrong, the Director independent of the Offering, considers having consulted with SP Angel Corporate Finance LLP, the Company’s Nominated Adviser, that their participation in the Offering is fair and reasonable in so far as the Company’s shareholders are concerned. Details of the PDMRs’ participation can be found in the Appendix to this announcement. 

Further Information on the Offering

Further information on the Offering and the Investment Agreement, the UK Placing Agreement, the Subscription Agreements, the lock-ins and orderly market arrangements, and the Relationship Agreement can be found in the Appendix to this announcement.

Deferred Consideration Payable to the Sellers for the Cornwall Assets

Further, subject to closing of the Offering, in accordance with the deferred consideration payment terms pursuant to a Share Purchase Agreement dated March 16, 2016, as amended, among the Company, Galena Special Situations Limited (formerly Galena Special Situations Master Fund Limited) (“Galena”) and Tin Shield Production Inc. (“Tin Shield” and, together with Galena, the “Sellers”), the Company expects to issue to the Sellers, on or about the closing of the Offering, Common Shares with an aggregate value of US$4,750,000 at the Offering Price (converted into US dollars at the US$/£ exchange rate on the fifth business day before the date of the issue) (the “Galena / Tin Shield Shares”), subject to receipt of approval of the TSX-V. For further information on such deferred consideration, please see the Company’s news releases dated March 17, 2016, June 30, 2021, October 4, 2021 and November 3, 2021, all available on the Company’s profile on SEDAR at www.sedar.com. All Common Shares issuable to each of the Sellers will be subject to a hold period in Canada of four months and one day from the date of their issuance in accordance with applicable Canadian securities legislation.

ABOUT CORNISH METALS

Cornish Metals completed the acquisition of the South Crofty tin and United Downs copper / tin projects, plus additional mineral rights located in Cornwall, UK, in July 2016 (see Company news release dated July 12, 2016). The additional mineral rights cover an area of approximately 15,000 hectares and are distributed throughout Cornwall. Some of these mineral rights cover old mines that were historically worked for copper, tin, zinc, and tungsten.

The South Crofty project covers the former producing South Crofty tin mine located beneath the towns of Pool and Camborne, Cornwall. The South Crofty mine closed in 1998 following over 400 years of continuous production. Since acquiring the project in 2016, Cornish Metals has completed and published maiden NI 43-101 Mineral Resources for South Crofty using the vast archive of historical production data and more recent drilling completed between 2007 and 2013. In 2017, Cornish Metals completed a Preliminary Economic Assessment that demonstrated the economic viability of re-opening the mine. Additionally, Cornish Metals has undertaken extensive pilot-scale water treatment trials and successfully applied for and received the necessary environmental permits to abstract, treat and discharge mine water in order to dewater the mine. Planning permissions for the operation of the mine and re-development of the surface facilities have been secured and construction of the water treatment plant foundations commenced. The dewatering pumps, variable speed drives and new high-voltage power supply have been delivered to site.

For an updated Mineral Resource Estimate in respect of the South Crofty Mine, please see the Company’s technical report entitled “South Crofty Tin Project Mineral Resource Update” dated effective June 7, 2021, a summary of certain portions of which is set out below:

All technical information contained within this news release has been reviewed and approved for disclosure by Owen Mihalop, (MCSM, BSc (Hons), MSc, FGS, MIMMM, CEng), the Chief Operating Officer for the Company, and a “qualified person” as defined in NI 43-101.

For additional information please contact:

In North America:

Irene Dorsman at (604) 200 6664.

SP Angel Corporate Finance LLP          Tel: +44 203 470 0470
(Nominated Adviser & Joint Broker)     Richard Morrison
                                                                Charlie Bouverat
                                                                Grant Barker   

H & P Advisory Limited                         Tel: +44 207 907 8500
(Joint Broker)                                          Matthew Hasson
                                                                 Andrew Chubb
                                                                 Ernest Bell    

BlytheRay                                               Tel: +44 207 138 3204
(Financial PR/IR-London)                      Tim Blythe      tim.blythe@blytheray.com                                         
                                                                 Megan Ray     megan.ray@blytheray.com

For Vision Blue Resources                     Tel: +44 207 321 0000
Aura Financial                                                +44 7834 368 299
                                                                        +44 7841 748 911  

                                                                 Michael Oke    info@vision-blue.com
                                                                 Andy Mills

ON BEHALF OF THE BOARD OF DIRECTORS

“Richard D. Williams”
Richard D. Williams, P.Geo

Market Abuse Regulation disclosure

The information contained within this announcement is deemed by the Company to constitute inside information pursuant to Article 7 of EU Regulation 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended ("MAR") encompassing information relating to the Offering described above, and is disclosed in accordance with the Company's obligations under Article 17 of MAR. In addition, market soundings (as defined in MAR) were taken in respect of the UK Placing with the result that certain persons became aware of inside information (as defined in MAR), as permitted by MAR.  This inside information is set out in this Announcement. Therefore, upon publication of this announcement, those persons that received such inside information in a market sounding are no longer in possession of such inside information relating to the Company and its securities.
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.

Caution regarding forward looking statements

This news release contains "forward-looking statements". These forward-looking statements are statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Company's projections, outlook, forecast, estimates, plans, potential results of operations or upcoming work programs, financial condition, prospects, growth, strategies and the industry in which the Company operates, including, without limitation: statements in connection with the Offering and the issuance of the Units, including the amounts expected to be invested, the timeline of certain events in respect thereof, expected security holdings in the Company of VBR and investors following closing of the Offering, the related parties expected to participate in the Concurrent Private Placements, including the applicable exemptions, the board nomination rights and other rights expected to be granted to VBR following closing of the Offering, the terms and conditions of the lock-in agreements and orderly market arrangements following closing of the Offering, the potential payment of cash commissions, the expected use of proceeds, including in respect of certain work programs and the potential completion of a feasibility study on the South Crofty mine, the expected supply and demand for tin generally, the potential benefits to the Company, to the economy and to the environment in respect of the development of the South Crofty mine, exploration potential, the expected holding of the Special Meeting, the filing of the related management information circular and the irrevocable undertakings entered into in respect of voting at the Special Meeting, the satisfaction of conditions for closing of the Offering, including the potential receipt of Shareholder Approval and approval from the TSX-V in respect of the Offering, the listing of the New Shares on the TSX-V and the AIM Admission, VBR’s aims and goals, and the expected issuance of the Galena / Tin Shield Shares.

Forward-looking statements, while based on management's best estimates and assumptions at the time such statements are made, are subject to risks and uncertainties that may cause actual results to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to receipt of regulatory approvals, risk of non-compliance with planning and environmental permissions / licences, risks related to general economic and market conditions; risks related to the COVID-19 global pandemic and any variants of COVID-19 which may arise; risks related to the availability of financing; the timing and content of upcoming work programs; actual results of proposed exploration activities; possible variations in mineral resources or grade; risks associated with the unplanned departure of key  personnel, environmental risks, failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes, title disputes, claims and limitations on insurance coverage and other risks of the mining industry; changes in national and local government regulation of mining operations, tax rules and regulations. 

Although Cornish Metals has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. 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 forward-looking statements. Cornish Metals undertakes no obligation or responsibility to update forward-looking statements, except as required by law.

Information to distributors

Solely for the purposes of the UK’s implementation of Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II, and in particular paragraph 3.2.7R regarding the responsibilities of UK Manufacturers under the Product Governance requirements contained within Chapter 3 of the FCA Handbook Product Intervention and Product Governance Sourcebook (the “Product Governance Requirements”) and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes of the Product Governance Requirements) may otherwise have with respect thereto, the UK Placing Units have been subject to a product approval process, which has determined that the UK Placing Units are: (i) compatible with an end target market of (a) retail investors, (b) investors who meet the criteria of professional clients and (c) eligible counterparties, each as defined in Product Governance Requirements; and (ii) eligible for distribution through all distribution channels as are permitted by Product Governance Requirements (the “Target Market Assessment”). 

Notwithstanding the Target Market Assessment, distributors should note that: the price of the UK Placing Units may decline and investors could lose all or part of their investment; the UK Placing Units offer no guaranteed income and no capital protection; and an investment in the UK Placing Units is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the UK Placing. For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to, the UK Placing Units.

Each distributor is responsible for undertaking its own target market assessment in respect of the UK Placing Units and determining appropriate distribution channels.

SP Angel, which is a member of the London Stock Exchange, is authorised and regulated in the United Kingdom by the FCA and is acting as joint broker and nominated adviser in connection with the UK Placing. H&P, which is a member of the London Stock Exchange, is authorised and regulated in the United Kingdom by the FCA and is acting as joint broker in connection with the UK Placing. Each of the SP Angel and H&P are acting exclusively for the Company in connection with the matters referred to in this announcement and for no-one else and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, nor for providing any advice in relation to the contents of this announcement or any transaction, arrangement or matter referred to herein. 

This announcement has been issued by and is the sole responsibility of the Company. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by either SP Angel or H&P (apart from the responsibilities or liabilities that may be imposed by the Financial Services and Markets Act 2000,or the regulatory regime established thereunder) or the Company or by any of their respective affiliates or agents as to, or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.

Dates only indicative

Each of the dates referred to in this announcement as to the publication of the Circular and the date of the Special Meeting is indicative only and may be subject to change by the Company. Such dates will be notified to shareholders by announcement through a Regulatory Information Service and a news release disseminated through Globe Newswire and filed on the Company's profile on SEDAR at www.sedar.com.

Exchange rate

All C$ equivalents of the amounts being raised referred to in this announcement have been calculated using the Bank of Canada's closing exchange rate for March 25, 2022 of C$1.6494/£.
 
 

APPENDIX

Further Information on the Offering

This Appendix contains further information on the Offering and of the material contracts entered into by the Company in relation to the Offering.

The Investment Agreement

VBR has entered into the Investment Agreement with the Company to subscribe for 138,888,889 Units at the Offering Price to invest £25 million (approximately C$41.2 million) in the Company. 

VBR's obligation to subscribe for the VBR Subscription is conditional, amongst other things, on the TSX-V Conditional Approval, the Shareholder Approvals, the UK Placing Agreement and the Concurrent Private Placements becoming unconditional (other than, in each case, for AIM Admission) and not having been terminated and on AIM Admission taking place on or before May 24, 2022 (or such later date as the Company and VBR may agree, but in any event not later than June 24, 2022) and the Investment Agreement becoming unconditional and not being terminated prior to AIM Admission. The VBR Subscription is not conditional upon the listing for trading of the New Shares on the TSX-V.

The Investment Agreement contains representations and warranties from the Company in favour of VBR. The Investment Agreement may be terminated by VBR in certain circumstances prior to AIM Admission, including circumstances where any of the representations and warranties are or could reasonably be expected to become untrue, inaccurate or misleading, the UK Placing Agreement is terminated or there has occurred, in VBR’s opinion, acting in good faith, any fact, matter, event, circumstance, condition or change occurring which materially and adversely affects the business, operations, assets, liabilities, condition (whether financial or otherwise) of the Company and its affiliates (the "Group") or the South Crofty project (or the permits relating to the same) taken as a whole. 

The Investment Agreement grants the following rights to VBR for so long as its shareholding and those of its affiliates in the Company is not less than 10 per cent. of the Company’s issued and outstanding Common Shares: 
(i)    VBR may nominate from time to time one person to the Company’s board of directors, a further person as an observer at board meetings and one person to a technical committee of the Company; and
(ii)   VBR will have a participation right to maintain its percentage ownership interest in the Company upon any offering of securities at the subscription price and similar terms as are applicable to the offering.

The Company has undertaken to VBR to use its reasonable commercial efforts to complete a bankable feasibility study in respect of the South Crofty project on or before 31 December 2024.

The UK Placing Agreement

The Company and the Joint Brokers have entered into the UK Placing Agreement pursuant to which, the Joint Brokers have agreed to act as agents of the Company in connection with the UK Placing and each of them has severally agreed to use their reasonable efforts to procure placees for the UK Placing Units at the Offering Price to raise £13.8 million (approximately C$22.8 million) (before expenses) for the Company. The Common Shares comprised in the UK Placing Units will represent approximately 15.0 per cent. of the Company's issued and outstanding Common Shares as enlarged by the Offering.

The UK Placing is conditional upon, inter alia, the TSX-V Conditional Approval, the Shareholder Approvals, the Investment Agreement and the Concurrent Private Placements becoming unconditional (other than, in each case, for AIM Admission), AIM Admission taking place on or before May 24, 2022 (or such later date as the Joint Brokers may agree, being not later than June 24, 2022) and the UK Placing Agreement becoming unconditional and not being terminated prior to AIM Admission. The UK Placing is not conditional upon the listing for trading of the New Shares on the TSX-V.

The UK Placing Agreement contains warranties and indemnities from the Company in favour of the Joint Brokers. The UK Placing Agreement may be terminated by either Joint Broker in certain circumstances prior to AIM Admission, including circumstances where any of the warranties are or could reasonably be expected to become materially untrue, inaccurate or misleading, or a matter arises that gives, or might reasonably be expected to give, rise to a claim under the indemnities or any change in national or international political, diplomatic, financial, economic, monetary or market conditions occur which in the opinion of either Joint Broker is likely materially and adversely to affect the business, financial position or prospects of the Group or is or will or is likely to be prejudicial to, or make it impracticable or inadvisable to proceed with, the UK Placing and/or AIM Admission. 

The Subscription Agreements

Each Subscriber has entered into a Subscription Agreement with the Company to subscribe for the Subscription Units at the Offering Price to raise approximately £1.67 million (approximately C$2.7 million) (before expenses) for the Company. The Common Shares comprised in the Subscription Units will represent approximately 1.8 per cent. of the Company's issued and outstanding Common Shares as enlarged by the Offering.

The Subscription Agreements contain customary certifications and undertakings from the Subscribers as to its identity and level of sophistication including, without limitation, indicating that it satisfies the requirements of an available prospectus exemption under applicable Canadian and UK securities legislation.

Each Subscriber’s obligation to subscribe for the Subscription Units is conditional, amongst other things, on the TSX-V Conditional Approval, the Shareholder Approvals, the Investment Agreement and the UK Placing Agreement becoming unconditional (other than, in each case, for AIM Admission) and not being terminated prior to AIM Admission and on AIM Admission taking place on or before May 24, 2022 (or such later date as the Joint Brokers may agree, but in any event not later than June 24, 2022). The Concurrent Private Placements are not conditional upon the listing for trading of the New Shares on the TSX-V.

Lock-ins and Orderly Market Arrangements

On March 28, 2022, the Company, the directors of the Company and Owen Mihalop and Matthew Hird (the "Senior Managers"), who will together be beneficially interested in a total of 13,862,740 Common Shares as enlarged by the Offering (representing 2.7 per cent. of the Company's issued and outstanding Common Shares as enlarged by the Offering), have undertaken in an agreement with the Company and the Joint Brokers (the "Directors' Lock-in Agreement") not to, and to procure that their connected persons do not, dispose of any interest in Common Shares or other securities in the Company held at the date of the Directors' Lock-in Agreement, together with any New Shares and Warrants acquired in the Offering and any Warrant Shares or other Common Shares acquired after the date of the Directors' Lock-in Agreement, (together "Relevant Shares") for the period from the date of the Directors' Lock-in Agreement until the first anniversary of AIM Admission, subject to certain exceptions. The directors and the Senior Managers have also agreed, subject to certain exceptions, for a further 12 months following the expiry of the initial lock-in period only to, and to procure that their connected persons only, dispose of an interest in Relevant Shares through either of the Joint Brokers (or any other nominated adviser or broker appointed to act for the Company in place of either or both of the Joint Brokers) or, in the case of Canadian directors and with the consent of the Joint Brokers and the Company, their Canadian broker.

The Company, VBR, and the Joint Brokers will enter into an agreement (the "VBR Lock-in Agreement") on the closing of the Offering pursuant to which VBR, which will be beneficially interested in a total of 138,888,889 Common Shares as enlarged by the Offering (representing 27.2 per cent. of the Company's issued and outstanding Common Shares as enlarged by the Offering), will undertake with the Company and the Joint Brokers not to, and to procure that its connected persons do not, dispose of any interest in the New Shares and Warrants acquired by it in the VBR Subscription and any Warrant Shares acquired on the exercise of the Warrants or other Common Shares acquired after the date of the VBR Lock-in Agreement, (together "VBR Relevant Shares") for the period of 12 months following AIM Admission, subject to certain exceptions. 

Each subscriber under the UK Placing, who will together be beneficially interested in a total of 76,872,728 Common Shares as enlarged by the Offering (representing 15.0 per cent. of the Company's issued and outstanding Common Shares as enlarged by the Offering, has undertaken with the Company and the Joint Brokers not to, and to procure that its connected persons do not, dispose of any interest in the New Shares and Warrants acquired by it in the UK Placing and any Warrant Shares acquired on the exercise of the Warrants for the period of 12 months following AIM Admission, subject to certain exceptions. 

Each of the subscribers under the Concurrent Private Placements and who will together be beneficially interested in a total of 9,238,383 Common Shares as enlarged by the Offering (representing 1.8 per cent. of the Company's issued and outstanding Common Shares as enlarged by the Offering), has agreed with the Company and the Joint Brokers not to, and to procure that their connected persons do not, dispose of any interest in the New Shares and Warrants acquired by them in the Concurrent Private Placements and any Warrant Shares acquired on the exercise of the Warrants for the period of 12 months following AIM Admission, subject to certain exceptions.

The Relationship Agreement 

The Company, SP Angel and VBR will enter into the Relationship Agreement on the closing of the Offering pursuant to which VBR, for so long as the Company’s shares remain admitted to trading on AIM, has undertaken to the Company and (for as long as it remains nominated adviser to the Company) SP Angel, that it shall, and it shall procure that each of its associates shall, exercise the voting rights attaching to their Common Shares so that, inter alia:

(i)    the Group is capable at all times of carrying on business independently of VBR and its associates;
(ii)   the Company shall be capable of being managed in accordance with the Corporate Governance Code published by the UK's Quoted Companies Alliance (the "QCA Code") and the applicable Canadian corporate governance provisions or any other corporate governance regime adopted by the board of directors from time to time;
(iii)   all transactions or arrangements entered into between any member of the Group on the one hand and VBR and/or its associates on the other will be made at arm’s length and on a normal commercial basis and in compliance with, and disclosed in accordance with, all applicable laws and regulations including the AIM Rules for Companies published by London Stock Exchange plc, as amended or reissued from time to time; and
(iv)    there are and remain at all times a majority of directors who do not have a significant business, financial or commercial relationship with VBR on the Board and not less than two directors who are at the relevant time considered by the Board to be independent, as determined by reference to the QCA Code. 

The Relationship Agreement will terminate on VBR, together with any of its associates, ceasing to hold an interest in 20 per cent. or more of the voting rights attaching to their Common Shares. 

The notification below, made in accordance with the requirements of the UK Market Abuse Regulation, provides further detail.