BMR - Battery Mineral Resources Corp. Announces First Closing of Previously Announced Offering of up to US$6M in Unsecured Convertible Debentures and Closing of Previously Announced Debt Consolidation
(NewsDirect)
Battery MineralResources Corp. ( TSXV: BMR ) ( OTCQB: BTRMF )(“ Battery ” or “ BMR ” or the “ Company ”)is pleased to announce a first closing of the private placement (the“ Private Placement ”) of senior unsecured convertibledebentures (the “ Debentures ”), which was previously pressreleased on October 17, 2023, for gross proceeds of US$1,370,000(C$1,871,557). The proceeds from the Debentures will be appliedtowards working capital and the restart of copper concentrateproduction at its Punitaqui copper project in Chile (the“ Restart ”).
TheCompany anticipates announcing an additional closing with respect tothe Private Placement in the near-term. The Company paid a cashfinder’s fee equal to 6.0% on US$500,000(C$683,050) of the grossproceeds arising from the first closing of the Private Placement foran aggregate finder’s fees of US$30,000 (C$40,983).
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).
Offering Terms (as previously announced in the press releasedated October 17 th , 2023)
The Debentures willmature on September 30, 2026 (the “ Maturity Date ”) and willbear interest at 10% per annum, compounding annually on September 30of each year, not in advance. Interest accrued from the date ofissuance up to and including March 30, 2025 will be paid by way ofissuance of common shares of the Company. Interest accrued followingMarch 30, 2025 will be, at the option of the holder, paid either incash or by way of issuance of common shares of the Company. Theissuance of common shares as payment of interest will be at the thencurrent market price of the Company’s common shares at the date theinterest becomes payable and will be subject to the prior acceptanceof the TSX Venture Exchange and applicable securities 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).
DebtConsolidation (as previously announced in the press release datedOctober 17 th , 2023)
The Company has issuedUS$15,408,039(C$21,048,922) in Debentures to holders of existingindebtedness as part of a comprehensive debt consolidation that willsimplify the Company’s capital structure and extend its near-termdebt maturities.
Weston Energy LLCand Weston Energy II LLC, who are existing shareholders of theCompany, have exchanged all their outstanding debt in the Company intoDebentures. This includes US$7,411,960 (C$10,125,478) of convertibledebentures (the “ Prior Debentures ”) previously held byWeston Energy LLC, a secured bridge loan of US$5,548,408 (C$7,579,680)(originally announced on October 21, 2022) previously held by WestonEnergy LLC, and an unsecured promissory note of US$1,889,856(C$2,581,732) (originally announced on July 5, 2023) previously heldby Weston Energy II LLC, for a total of US$14,850,224 (C$20,286,891),in each case inclusive of principal and accrued and unpaid interest,that Weston Energy LLC and Weston Energy II LLC have exchanged intothe Debentures.
In addition, alladditional holders of the Company’s Prior Debentures exchanged theirPrior Debentures into the Debentures, which total US$557,815(C$762,031) in principal and accrued and unpaid interest outstanding.
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.
All Debentures issued in the Private Placement and inconnection with the debt consolidation are subject to a four monthhold period under applicable Canadian securities laws and under thepolicies of the TSX Venture Exchange. The Debenture issuances aresubject to final approval by the TSX Venture Exchange.
CEO Commentary
MartinKostuik, Battery’s CEO stated, “The advancement of thePunitaqui Project towards a resumption of mine operations and copperconcentrate production is absolutely the right choice for ourshareholders in terms of setting the stage for increasing shareholdervalue. The first closing of the Debentures offering and theconsolidation of our existing debt is an important step towardsenabling the Restart.”
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, which was the date of the Company’s initial newsrelease announcing the Private Placement.
MI 61-101 Matters
Weston Energy LLC and Weston Energy II LLC are“related parties” to BMR pursuant to pursuant to MultilateralInstrument 61-101 – Protection of Minority Security Holders inSpecial Transactions (“ MI 61-101 “). Prior to giving effectto the transactions disclosed in this news release, Weston Energy LLCand Weston Energy II LLC and its affiliates owned or controlled(directly or indirectly) 107,578,740 BMR Common Shares on an undilutedbasis and 122,491,305 BMR Common Shares assuming the conversion of allPrior Debentures (representing approximately 60.60% and 63.31%,respectively, of the outstanding BMR Common Shares).
The refinancing of theWeston Energy LLC and Weston Energy II LLC debts through the issuanceof Debentures will constitute a “related party transaction” forthe purposes of MI 61-101. The refinancing is exempt from the formalvaluation requirements of MI 61-101 as BMR is not listed on aspecified market that would require compliance with such formalvaluation requirements (as set forth in Section 5.5(b) of MI 61-101)and is further exempt from the minority shareholder approvalrequirements of MI 61-101 by virtue of Section 5.7(e) of MI 61-101which provides that a related party transaction is exempt from theminority shareholder approval requirements if the issuer is in seriousfinancial difficulty, the transaction is designed to improve thefinancial position of the company (among other criteria) and there isno other requirement to hold a meeting of shareholders to approve thetransaction.
As part of theirdeliberations in respect of the proposed refinancing, the board ofdirectors of BMR, including a special committee composed ofindependent directors, considered the financial position of BMR andthe objectives of the proposed refinancing transactions, and thecriteria and conditions with respect to the financial hardshipexemptions described above, including the fact that there is norequirement, corporate or otherwise, to hold a meeting to obtain anyapproval of the holders of BMR Common Shares for suchtransactions.
Disclaimers
The Debentures (including any issued in futureclosings) will be sold in a transaction exempt from registration underthe Securities Act of 1933, as amended (the “ SecuritiesAct ”) and will be sold only to persons reasonably believed to beaccredited investors in the United States under Rule 506 under theSecurities Act and outside the United States only to non-U.S. personsin accordance with Regulation S under the Securities Act.
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 further tranches of the Private Placement, 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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