BMR - Battery Mineral Resources Announces Proposed Capital Reorganization Including a Proposed Offering of up to US$6000000 in Unsecured Convertible Debentures and Proposed Consolidation of Existing Debt
(NewsDirect)
Proceeds fromUnsecured Convertible Debentures to Be Applied Towards the Re-Start ofProduction at Punitaqui Project, Chile
Consolidation of Existing Debt Expectedto Benefit BMR’s Balance Sheet Through an Extended Term-to-Maturity,Interest Accrual During Ramp-Up of Potential Production, and aConversion Option
Battery Mineral Resources Corp. ( TSXV: BMR ) ( OTCQB:BTRMF ) (“ Battery ” or “ BMR ” or the“ Company ”) is pleased to announce a private placementoffering (the “ Private Placement ”) of senior unsecuredconvertible debentures (the “ Debentures ”) for total grossproceeds of up to US$6 million (approximately C$8.2 million). Theproceeds from the Debentures will be applied towards working capitaland the restart of copper concentrate production at its Punitaquicopper project in Chile (the “ Restart ”).
The Company continues toprogress towards securing the balance of the capital required for theRestart and anticipates sharing further updates in that respect in thefourth quarter of 2023. The Company estimates the total capitalrequired for the Restart to be approximately US$13 million(approximately C$17.8 million) (prior to corporate costs and otherasset holding costs and inclusive of amounts to be raised in thePrivate Placement).
Inconnection with the Private Placement, the Company is also proposingto issue up to US$15.4 million (approximately C$21.0 million) inDebentures to its existing debtholders to refinance substantially allof the Company’s outstanding indebtedness.
DebentureOffering
TheDebentures will mature on September 30, 2026 (the “ MaturityDate ”) and will bear interest at 10% per annum, compoundingannually on September 30 of each year, not in advance. Interestaccrued from the date of issuance and up to and including March 30,2025, will be paid by way of issuance of common shares of the Company.Interest accrued following March 30, 2025, will be, at the option ofthe holder, paid either in cash or by way of issuance of common sharesof the Company. The issuance of common shares as payment of interestwill be at the then current market price of the Company’s commonshares at the date the interest becomes payable and will be subject tothe prior acceptance of the TSX Venture Exchange and applicablesecurities laws.
The holder of aDebenture may, at their option, at any time from March 31, 2024, andprior to the close of business on the business day immediatelypreceding the Maturity Date, convert all, but not less than all, ofthe principal amount of such Debenture into common shares of theCompany at the conversion price of US$0.22 per share (approximatelyC$0.30 per share).
WestonEnergy II LLC, a portfolio company of Yorktown Partners LLC, and anexisting shareholder of the Company, has committed to purchase US$3.0million (approximately C$4.1 million) in principal amount ofDebentures.
The Debenturefinancing is anticipated to close in two or more tranches, with thefirst closing anticipated to occur on or about October 19, 2023.
DebtConsolidation
The Company is also proposing to issue up to US$15.4 million (approximately C$21.0 million) in Debentures toholders of existing indebtedness as part of a comprehensive debtconsolidation that will simplify the Company’s capital structure andextend its near-term debt maturities.
Weston Energy LLC, also an existing shareholder of the Company,and Weston Energy II LLC, have agreed to exchange all theiroutstanding debt in the Company into Debentures. This includes US$7.4million (approximately C$10.1 million) of existing convertibledebentures (the “ Existing Debentures ”) held by WestonEnergy LLC, a secured bridge loan of US$5.5 million (approximatelyC$7.6 million) (originally announced on October 21, 2022) held byWeston Energy LLC, and an unsecured promissory note of US$1.9 million(approximately C$2.6 million) (originally announced on July 5, 2023)held by Weston Energy II LLC, for a total of US$14.9 million(approximately C$20.3 million) that Weston Energy LLC and WestonEnergy II LLC have agreed to exchange into the Debentures.
In addition, alladditional holders of the Company’s currently outstanding ExistingDebentures will be offered the opportunity to exchange their ExistingDebentures into the Debentures, which total US$0.6 million(approximately C$0.8 million) in principal and accrued and unpaidinterest outstanding. The Debentures issuable will be on the sameterms.
The debt consolidationand the completion of the Private Placement are expected to benefitBMR’s balance sheet through an enlarged capital base, an extendedterm to maturity of the Company’s debt, the accrual of interestduring the anticipated period of ramp up of copper-silver productionat Punitaqui, and through a conversion option that, if exercised bythe Debenture-holders, would significantly reduce the Company’sfinancial leverage.
The debtrefinancing and the issuance of the Debentures are subject to finalapproval by the TSX Venture Exchange.
CEO Commentary
Martin Kostuik, Battery’s CEO stated, “Weare very pleased to announce this funding which, together withanticipated additional non-dilutive project funding that the Companyis working towards closing in the fourth quarter of 2023, is expectedto fund the re-start of production at the Punitaqui project. Finally,we are pleased to have affirmation of the soundness and importance ofour pathway to creating value - as demonstrated by the continuedsupport of Yorktown Partners.”
Exchange Rates
All USD amounts for which CAD equivalent amountsare given in this news release were calculated at CAD/USD exchangerate of 1.3661, the exchange rate published by the Bank of Canada onOctober 13, 2023.
MI 61-101Matters
WestonEnergy LLC and Weston Energy II LLC are “related parties” to BMRpursuant to pursuant to Multilateral Instrument 61-101 – Protectionof Minority Security Holders in Special Transactions (“ MI61-101 “). Prior to giving effect to the transactions disclosedin this news release, Weston Energy LLC own or control 96,378,340 BMRCommon Shares (directly or indirectly) and Weston Energy II LLC own orcontrol (directly or indirectly) 7,000,000 BMR Common Shares andYorktown Energy Partners IV LP own or control 4,200,000 BMR CommonShares (directly or indirectly). On a combined undiluted basis theseentities hold 107,528,340 Common Shares and 122,491,305 BMR CommonShares assuming the conversion of all Existing Debentures(representing approximately 60.60% and 63.31%, respectively, of theoutstanding BMR Common Shares).
The refinancing of the Weston Energy LLC and Weston Energy IILLC various loans through the issuance of Debentures will constitute a“related party transaction” for the purposes of MI 61-101. Therefinancing is exempt from the formal valuation requirements of MI61-101 as BMR is not listed on a specified market that would requirecompliance with such formal valuation requirements (as set forth inSection 5.5(b) of MI 61-101) and is further exempt from the minorityshareholder approval requirements of MI 61-101 by virtue of Section5.7(e) of MI 61-101 which provides that a related party transaction isexempt from the minority shareholder approval requirements if theissuer is in serious financial difficulty, the transaction is designedto improve the financial position of the company (among othercriteria) and there is no other requirement to hold a meeting ofshareholders to approve the transaction.
As part of their deliberations in respect of the proposedrefinancing, the board of directors of BMR, including a specialcommittee composed of independent directors, considered the financialposition of BMR and the objectives of the proposed refinancingtransactions, and the criteria and conditions with respect to thefinancial hardship exemptions described above, including the fact thatthere is no requirement, corporate or otherwise, to hold a meeting toobtain any approval of the holders of BMR Common Shares for suchtransactions.
Disclaimers
The Debentures will be sold in a transaction exemptfrom registration under the Securities Act of 1933, as amended (the“Securities Act”) and will be sold only to persons reasonablybelieved to be accredited investors in the United States under Rule506 under the Securities Act and outside the United States only tonon-U.S. persons in accordance with Regulation S under the SecuritiesAct.
The Debentures and theshares of common stock issuable upon conversion of the Debentures, ifany, have not been and will not be registered under the SecuritiesAct, or any state securities laws, and unless so registered, may notbe offered or sold in the United States except pursuant to anapplicable exemption from such registration requirements of theSecurities Act and applicable state securities laws.
This press release doesnot constitute an offer to sell or a solicitation of an offer to buyany of the Debentures or any shares of common stock potentiallyissuable upon conversion of the Debentures nor shall there be any saleof Debentures (or shares issuable upon conversion thereof) in anystate or other jurisdiction in which such offer, solicitation or salewould be unlawful prior to registration or qualification under thesecurities laws of such state.
There can be no assurance that any future offerings ofDebentures will be completed.
About Battery Mineral Resources Corp.
Battery MineralResources is a battery minerals company providing shareholdersexposure to the global mega-trend of electrification while beingfocused on growth through cash-flow, exploration, and acquisitions infavourable mining jurisdictions. Battery Mineral’s mission is thediscovery, acquisition, and development of battery metals (namelycobalt, lithium, graphite, and copper), in North America, SouthAmerica and South Korea and to become a premier and responsiblesupplier of battery minerals to the electrification marketplace. BMRis currently pursuing a near-term resumption of operations of thePunitaqui Mining Complex, a past copper-gold-silver producer, in theCoquimbo region of Chile. BMR is the largest mineral claim holder inthe historic Gowganda Cobalt-Silver Camp in Ontario, Canada, andcontinues to pursue a focused program to build on the recentlyannounced, +1-million-pound high-grade cobalt resource at McAra. Inaddition, Battery Mineral owns 100% of ESI Energy Services, Inc.(including ESI’s wholly-owned USA operating subsidiary, Ozzie’s,Inc.), a profitable mainline pipeline and renewable energy equipmentrental and sales company with operations in Alberta, Canada andArizona, USA. Battery Mineral Resources is based in Canada and itsshares are listed on the Toronto Venture Exchange under the symbol“BMR” and on the OTCQB under the symbol “BTRMF”. Furtherinformation about BMR and its projects can be found on www.bmrcorp.com .
Neither the TSXV nor itsRegulation Services Provider (as that term is defined in the policiesof the TSXV) accepts responsibility for the adequacy or accuracy ofthis press release.
Forward Looking Statements
This news release includes certain “forward-lookingstatements” under applicable securities laws. There can be noassurance that such statements will prove to be accurate, and actualresults and future events could differ materially from thoseanticipated in such statements. Forward-looking statements reflect thebeliefs, opinions and projections of the Company on the date thestatements are made and are based upon a number of assumptions andestimates that, while considered reasonable by the Company, areinherently subject to significant business, economic, competitive,political and social uncertainties and contingencies. Many factors,both known and unknown, could cause actual results, performance, orachievements to be materially different from the results, performanceor achievements that are or may be expressed or implied by suchforward-looking statements and the parties have made assumptions andestimates based on or related to many of these factors. Such factorsinclude, without limitation, the ability of the Company to obtainsufficient financing (including through the Private Placement) tocomplete exploration and development activities, the ability of theCompany to close the Private Placement on the terms discussed, thecompletion, timing and size of the proposed Private Placement, theintended use of the proceeds of the Private Placement, risks relatedto share price and market conditions, the inherent risks involved inthe mining, exploration and development of mineral properties, theability of the Company to meet its anticipated development schedule,government regulation and fluctuating metal prices. Accordingly,readers should not place undue reliance on forward-looking statements.Battery undertakes no obligation to update publicly or otherwiserevise any forward-looking statements contained herein, whether as aresult of new information or future events or otherwise, except as maybe required by law. For further information regarding the risks pleaserefer to the risk factors discussed in Battery’s most recentManagement Discussion and Analysis filed on SEDAR+.
ContactDetails
Martin Kostuik, CEO
+1 604-229-3830
CorporateCommunications, IBN (InvestorBrandNetwork)
+1310-299-1717
editor@investorbrandnetwork.com
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