VANCOUVER, British Columbia and TORONTO, Oct. 16, 2017 (GLOBE NEWSWIRE) – Camex Energy Corp. (TSXV:CXE.H) (“Camex”) and Desert Lion Energy Corp. (“Desert Lion”) are pleased to announce that they have entered into a definitive amalgamation agreement dated October 12, 2017 (the “Agreement”) pursuant to which Camex will acquire of all of the issued and outstanding common shares of Desert Lion (“Desert Lion Shares”) in exchange for securities of Camex (the “Transaction”). The Transaction will be carried out by way of a three-cornered amalgamation. As a result of the Transaction, Camex will continue on with the business of Desert Lion under the name “Desert Lion Energy Inc.”
Desert Lion Energy Corp.
Desert Lion is a private company incorporated under the Business Corporations Act (Ontario) (the “OBCA”) whose only significant asset is ownership of its 80% owned Namibian subsidiary, Desert Lion Energy (Pty) Ltd., which holds a 100% interest in the Desert Lion Energy Lithium Project consisting of a past producing lithium mine as well as the surrounding 301km2 prospecting area located in Namibia near Karibib in the Erongo region (the “Project”). Desert Lion has no revenues.
Desert Lion is focused on providing a long term sustainable solution for the low-cost supply of high quality lithium chemicals. The brownfield lithium mines of Rubicon, Helikon and Mircolite were first discovered in the 1930s and have a long history of lithium mining operations. The Project is located within 301 km2 of highly prospective land with known lithium bearing pegmatitic mineralization. The Project site is accessible year-round by road with access to power, water, rail, port, airport, and communication infrastructure.
The Desert Lion team has established a three-phase development program, which management anticipates will include: (i) concentrate sales from the stockpiled material produced from historic production at the Project, expected to start in late 2017, (ii) development of a mine and concentrator, and (iii) the development of a lithium carbonate conversion plant, which is anticipated to be located in Walvis Bay.
Since acquiring the Project, Desert Lion has completed approximately 4,500m of diamond drilling to test the lateral and depth continuation of the Rubicon extensions and of satellite bodies immediately surrounding the historic mine site. Intersections to date include:
- 9m at 2.25% Li2O, including 5 m at 2.92% Li2O (from 57m);
- 15, 11 and 10m at +1% Li2O;
- 5m at 1.94% Li2O; and
- Over 20 holes yielding 1 to 5m intersects grading +1% Li2O.
Table 1: Rubicon Li2O Drilling Intercepts
|Hole ID||Dip||From (m)||To (m)||Width (m)||Grade – Li2O||True Width (m)|
In addition to the drilling campaign for the primary pegmatite targets, a trenching and reverse circulation (“RC”) drilling program is also being conducted on the historic lithium dumps and stockpiles. To date, approximately 2,700m of RC drilling has been completed for an aggregate total, including the diamond drilling, of 7,200m. The results received for the first 376 trench and RC samples have yielded an average Li2O grade of over 1% with some samples reaching peaks of 2.6% Li2O.
Quality Assurance and Quality Control
The accuracy of the scientific and technical information in this news release has been verified and approved by Cesare Morelli, P Geo and VP Exploration for Desert Lion, who is a Qualified Person as defined by National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”). Mr. Morelli has also verified the sampling, analytical and test data underlying the scientific and technical information disclosed herein. The exploration program was directly supervised and executed by Dr. Salif Napon, P Geo, PhD, a Desert Lion consultant and a Qualified Person as defined by NI 43-101.
Desert Lion has used two internationally accredited analytical laboratories for the preparation and analyses of its samples to date: ALSChemex and ACTLabs, each of which is independent of Desert Lion. Over and above the laboratory quality assurance quality control (“QA/QC”) routinely implemented by both labs (in Canada) using pulp duplicate analysis, Desert Lion has developed an internal QA/QC protocol which utilizes analytical standards (CRMs), blanks and coarse crush duplicates on a systematic basis with the samples shipped to the analytical laboratories, as follows: 1 standard, 1 duplicate and 1 blank are inserted every 30 samples (giving an average of c.10%)
The samples assayed at ACTLabs were processed using the method named UltraTrace 7, which combines a Sodium Peroxide Fusion with ICP and ICP/MS with all metals being solubilized. The samples assayed at ALSChemex were processed using the following 2 methods: ME-MS89L (50-Element using Na2O2 fusion and ICP-MS) and Li-OG63 (ore grade Li by HF-HNO3-HClO4 digestion, HCl Leach).
The Transaction is structured as a three-cornered amalgamation, pursuant to which 2590945 Ontario Inc. (“Camex Subco”), a wholly-owned subsidiary of Camex, and Desert Lion will amalgamate (the “Amalgamation”) to form a newly amalgamated company (“Amalco”), and upon the Amalgamation, former shareholders of Desert Lion (“Desert Lion Shareholders”) will receive one New Camex Share (as defined below) for each one Desert Lion Share held and Amalco will become a wholly-owned subsidiary of Camex.
In order to align the value of the Camex shares to the value per Desert Lion Share at which the Transaction will be completed, Camex proposes to consolidate its common shares on the basis of one post-consolidation Camex common share (each a, “New Camex Share”) for each 12.0258 existing Camex common shares (the “Consolidation”). Further, Camex will continue from the Province of British Columbia to the Province of Ontario and will from such date be governed by the OBCA (the “Continuance”).
Upon completion of the Amalgamation, Camex will be the parent and the sole shareholder of Amalco and thus will indirectly carry on the business of Desert Lion. As a result, Camex intends to change its name to “Desert Lion Energy Inc.” or such other name as is acceptable to the regulators (the “Name Change”). Further, it is proposed that the management and Board of Directors of Camex be changed to consist of persons that have experience in the new business to be undertaken by the combined company. Biographical information regarding proposed management and directors of the combined company is provided below under the heading “Management Team and Board of Directors”.
In connection with the Transaction, each Desert Lion option (a “Desert Lion Option”) will be exchanged for a Camex option (a “Camex Replacement Option”) on the same terms and conditions as the prior Desert Lion Option other than such option will now be exercisable to receive one New Camex Share. In addition, each convertible security of Desert Lion other than stock options will remain outstanding and will be convertible into or exercisable for, as applicable, the equivalent number of New Camex Shares on the same terms.
In connection with the Transaction, Camex will be seeking shareholder approval of the reverse take-over pursuant to the policies of the TSX Venture Exchange (“TSXV”), the Consolidation, the Continuance, the Name Change and the election of the new directors. Desert Lion will be seeking shareholder approval with respect to the Amalgamation. The Transaction has been unanimously approved by the Boards of Directors of Desert Lion and Camex and both Boards of Directors recommend that their respective shareholders vote in favor of the Transaction and related matters.
The Transaction is subject to a number of conditions, including receipt of shareholder and regulatory approval, including approval of the TSXV.
The Transaction represents a Reverse Take-Over for Camex under the policies of the TSXV. There are no Non-Arm’s Length Parties (as defined in the TSXV Policies) to the Transaction.
In addition, pursuant to the terms of the agreement whereby Desert Lion acquired its ownership interest in the Project, an aggregate of 549,450 New Camex Shares will be issued to the vendors of the Project following completion of the Transaction.
Management Team and Board of Directors
Upon completion of the Transaction, it is anticipated that the management of the combined company will be the current management of Desert Lion, as set out below:
- Tim Johnston – President and Chief Executive Officer. Mr. Johnston was formerly Hatch’s specialist in project management and transactional analysis for their global lithium business. During his time with Hatch, he evaluated hundreds of lithium projects, and managed the development of lithium projects around the world for SQM, Rockwood Lithium (Albemarle), Bacanora Minerals, AMG-NV, Rio Tinto, Galaxy Resources and other key developers. He has co-authored seven technical publications with a focus on project execution in the lithium sector. Mr. Johnston is a chartered professional engineer (CPEng) and CFA charter holder.
- Paul Bozoki – Chief Financial Officer & Corporate Secretary. Mr. Bozoki is a dual Canadian and U.S. Charter Professional Accountant with approximately 25 years of accounting, tax, and corporate finance experience. Mr. Bozoki has served as Chief Financial Officer of several TSX and TSXV listed companies involved in mining projects and has extensive experience operating in Africa. Mr. Bozoki began his career at Ernst & Young LLP where he spent six years in the mining audit practice. Mr. Bozoki has a Master of Business Administration from the Richard Ivey School of Business and a Bachelor of Commerce from Queen’s University.
- Peter McCague – Vice-President, Corporate & Legal Affairs. Mr. McCague is a senior business and legal advisor with more than 12 years of experience in corporate finance, mergers and acquisitions, joint ventures and other strategic alliances. He has been instrumental in founding, acquiring, financing and restructuring numerous companies in the junior resources sector. Mr. McCague holds an LL.B. from Osgoode Hall Law School and formerly practiced corporate and securities law at Cassels Brock & Blackwell LLP in Toronto.
In connection with the Transaction, Camex proposes to increase the Board of Directors of Camex from three to six directors and to elect, conditional upon completion of the Transaction, six new directors, namely:
- Tim Jonhston – See details above.
- Adonis Pouroulis – Mr. Pouroulis is the founder of Pella Resources Limited, an African-focused natural resource and energy group with a strong track record in exploration and mine development across the continent. Pella Resources generates early stage private companies with the aim to develop them into individual private/public companies. Mr Pouroulis founded Petra Diamonds in 1997 and it became the first diamond company to be listed on London’s AIM market with a market capitalization at the time of just £10 million. He has since overseen Petra’s development from an exploration base into one of the largest independent diamond producers in Africa today with a market capitalization of over £1billion. Petra is a FTSE 250 Index in March 2012. Other examples of companies that form part of the Pella Resources Group are Toro Gold, Alufer Mining and Piran Resources.
- Peter McCague – See details above.
- John Vettese – Mr. Vettese is the Executive Chairman of Cassels Brock & Blackwell LLP. Mr. Vettese is recognized as a leading lawyer by Chambers Canada, Best Lawyers, the Canadian Legal Lexpert Directory, the Lexpert Guide to the Leading US/Canada Cross-Border Corporate Lawyers in Canada and the Lexpert/American Lawyer Guide to the Leading 500 Lawyers in Canada.
- Stephan Theron – Mr. Theron brings 18 years of extensive management, capital project development and M&A experience within the mining industry. Mr. Theron is currently President and CEO of Trigon Metals. Prior to that, he was Managing Director at Liberty Metals & Mining, a private equity group based in Boston, Massachusetts. Mr. Theron was also a strategic member on the board of directors of True Gold Mining. He has structured numerous mining focused investments and has worked on mining projects throughout Africa and North America. Mr. Theron holds a degree in Finance and is a Chartered Professional Accountant.
- Chris Berry – Mr. Berry has been an independent analyst since 2009 with a focus on Energy Metals including lithium, cobalt, graphite, vanadium, and rare earths. His research provides strategic insights to institutional clients and has a specific focus on how disruptive trends in energy, strategic metals, and technology create opportunities. Before shifting focus to analysis of these trends, Mr. Berry gained 12 years of capital markets experience on both the buy side and sell side. Mr. Berry holds a Master of Business Administration in finance with an international focus from Fordham University, and a Bachelor of Arts in international studies from The Virginia Military Institute.
Benefits to Shareholders
The Camex Board of Directors and the Desert Lion Board of Directors believe that the Transaction will have the following benefits for the Camex shareholders and the Desert Lion shareholders, respectively:
- the combined company will hold the Project in Namibia;
- the combined company will have a strong Board of Directors that has experience in capital markets and project advancement and a quality management and exploration team with complementary skills to ensure systematic progress on the Project;
- the combined company is expected to have increased share trading liquidity and will have a greater market capitalization that is attractive to a wider range of investors than that offered by Camex prior to the Transaction; and
- following completion of the Transaction and the Subscription Receipt Offering, it is expected that the combined company will have a sufficient cash position to advance the exploration and development of the Project;
Commenting on the Transaction, Camex’ President and Chief Executive Officer, Scott Ackerman stated, “We are very pleased to announce this transaction. This is an exciting project with a great management team, and we look forward to the value that this transaction will bring to Camex shareholders.”
Tim Johnston, President and Chief Executive Officer of Desert Lion, said, “Desert Lion Energy has a lithium asset with significant potential in a mining friendly jurisdiction. We have built a formidable team with significant experience developing lithium projects. The Project has a long history of lithium production and the Company intends to take the necessary steps to return the Project to production in the near term to support the growing demand for lithium chemicals. The completion of the transaction with Camex is an important part of our execution plan”.
Chris Berry, Director of Desert Lion, said, “The recent Chinese announcement of a plan to eventually ban the sale of automobiles powered by fossil fuels is a seminal event. Along with companies such as Volkswagen announcing a spend of roughly 50B Euros on battery procurement, the forecast for lithium demand has only strengthened in recent weeks. With many forecasts showing the lithium market more than doubling in size by 2025 and the supply demand balance expected to stay tight for the next 24 months, we strongly believe that there is potential for new low cost producers to exist alongside the majors such as SQM, Ganfeng, and Albemarle.”
Desert Lion Financings
Desert Lion has completed a non-brokered private placement (the “Unit Offering”) of an aggregate of 4,343,636 units (the “Units”) at a price of $1.82 per Unit for gross proceeds to Desert Lion of $7,905,418. Each Unit is comprised of one Desert Lion Share and three-quarters of one common share purchase warrant of Desert Lion (each whole warrant, a “Unit Warrant”). Each Unit Warrant is exercisable to acquire one Desert Lion share at a price of $2.28 until the date that is 24 months following closing of the Unit Offering.
In connection with the Unit Offering, the Company has agreed to pay certain finders a cash commission equal to 6% of the gross proceeds raised from the sale of the Units to subscribers referred to the Company by such finder. In addition, certain finders will receive such number of compensation options (“Unit Compensation Options”) as is equal to 6% of the Units sold to subscribers referred to the Company by the finder pursuant to the Unit Offering. Each Unit Compensation Option will entitle the holder thereof to acquire one Desert Lion Share and three-quarters of a Unit Warrant at a price of $1.82 per Unit Compensation Option until the date that is 24 months following closing of the Unit Offering.
In addition, Desert Lion intends to engage Haywood Securities Inc. (“Haywood”), as lead agent on behalf of a syndicate of agents (together with Haywood, the “Agents”) pursuant to which Desert Lion proposes to issue and sell, on a private placement basis subscription receipts of Desert Lion (the “Subscription Receipts”) at a price of $1.82 per Subscription Receipt (the “Subscription Receipt Price”), for aggregate gross proceeds of up to $5,000,000 (the “Subscription Receipt Offering”).
The Subscription Receipts will be issued pursuant to a subscription receipt agreement (the “Subscription Receipt Agreement”) to be entered into among Desert Lion, Haywood and Computershare Trust Company of Canada (the “Escrow Agent”). Upon satisfaction of certain Escrow Release Conditions (as described below), each Subscription Receipt will be automatically converted without any further consideration or action by the holder thereof into one Desert Lion Share and one-quarter of one common share purchase warrant of Desert Lion (each whole warrant, a “SR Warrant”). Each SR Warrant will be exercisable to acquire one Desert Lion Share at a price of $2.28 for a period of 24 months following closing of the Subscription Receipt Offering.
In connection with the Subscription Receipt Offering, the Agents will receive a cash commission equal to 6% of the gross proceeds raised from the sale of the Subscription Receipts to subscribers sourced and referred to the Company by the Agents. In addition, the Agents will receive such number of compensation options (“SR Compensation Options”) as is equal to 6% of the Subscription Receipts sold to subscribers sourced and referred to the Company by the Agents. Each SR Compensation Option will entitle the holder thereof to acquire one Desert Lion Share and one-quarter of a SR Warrant at a price of $1.82 per SR Compensation Option for a period of 24 months following closing of the Subscription Receipt Offering. In addition, the Company is in discussions with certain finders to pay a cash commission and issue SR Compensation Options in connection with the sale of Subscription Receipts to subscribers sourced and referred to the Company by the such finder on the same terms as payable to the Agents.
The gross proceeds of the Subscription Receipt Offering together with all interest and other income earned thereon (the “Escrowed Funds”) are to be held in escrow by the Escrow Agent pending satisfaction of the Escrow Release Conditions. Provided that the Escrow Release Conditions are satisfied within 120 days following the closing of the Subscription Receipt Offering (the “Escrow Release Deadline”), the Escrowed Funds will be released from escrow by the Escrow Agent to: (a) the Agents and finders, as applicable, in an amount equal to the cash commission payable thereto, together with any pro rata interest earned thereon, and any expenses incurred by the Agents and finders, respectively, in connection with the Subscription Receipt Offering; and (b) Desert Lion, in an amount equal to the Escrowed Funds, less the foregoing deductions.
If the Escrow Release Conditions have not been satisfied on or prior to the Escrow Release Deadline, the Escrowed Funds shall be returned to the holders of the Subscription Receipts on a pro rata basis and the Subscription Receipts shall thereafter be cancelled. Desert Lion will be responsible and liable to the holders of the Subscription Receipts for any shortfall between the aggregate Subscription Receipt price paid by the original purchasers of the Subscription Receipts and the amount of the Escrowed Funds.
The escrow release conditions (“Escrow Release Conditions”) will be as follows:
- all conditions precedent to the closing of the Transaction as included in the Agreement have been satisfied or waived, including, inter alia, the filing and acceptance by the TSXV of the disclosure document, to the satisfaction of the Agents;
- the receipt of all required court, shareholder and regulatory approvals, as applicable, for the Transaction and the Subscription Receipt Offering, to the satisfaction of the Agents;
- receipt of conditional approval by the TSXV for the listing of the New Camex Shares, including any such New Camex Shares issuable upon the exchange or exercise of, as applicable, the securities of Desert Lion issuable pursuant to the Subscription Receipt Offering;
- Desert Lion shall have not committed any breach of the engagement agreement entered into between Desert Lion and the Agents, or the agency agreement entered into between Desert Lion and the Agents, that has not been waived by the Agents or cured within 5 days of Desert Lion’s receipt of written notice from the Agents specifying in reasonable detail the nature of such breach;
- the agency agreement entered into between Desert Lion and the Agents in connection with the Subscription Receipt Offering shall not have been terminated by the Agents or Desert Lion; and
- Desert Lion having delivered a notice to the Escrow Agent confirming that the conditions set forth in (a) through (e) above have been met or waived.
Immediately prior to the effective time of the Transaction, upon satisfaction of the Escrow Release Conditions, the Subscription Receipts shall be automatically converted into Desert Lion Shares and SR Warrants, in accordance with the terms of the Subscription Receipt Agreement. Pursuant to the Amalgamation, holders of each Desert Lion Share will receive one New Camex Share for each one Desert Lion Share held. In addition, each convertible security of Desert Lion other than stock options (including for greater certainty the Unit Warrants, SR Warrants, Unit Compensation Options and SR Compensation Options) will remain outstanding and will be convertible into or exercisable for, as applicable, the equivalent number of New Camex Shares on the same terms.
The Subscription Receipt Offering is expected to close on or about November 15, 2017.
On closing of the Transaction and after giving effect to the Consolidation, Camex will have approximately 42,023,010 New Camex Shares issued and outstanding. Assuming gross proceeds of $5,000,000 from the Subscription Receipt Offering and the conversion of the Desert Lion Subscription Receipts on an undiluted basis, approximately 40,375,010 New Camex Shares will be held by former Desert Lion Shareholders and approximately 1,648,000 New Camex Shares will be held by former Camex shareholders, which represents ownership of the combined company of approximately 96% by former Desert Lion Shareholders and approximately 4% by former Camex shareholders on an undiluted basis.
Timing of the Transaction
Full details of the Transaction will be included in the joint management information circular of Camex and Desert Lion which is expected to be mailed to their respective shareholders in November 2017. It is anticipated that both shareholder meetings and closing of the Transaction will take place in the fourth quarter of 2017. The common shares of Camex will remain halted pending further filings with the TSXV.
Cautionary Note Regarding Forward-Looking Information
This press release contains statements which constitute “forward-looking information” within the meaning of applicable securities laws, including statements regarding the plans, intentions, beliefs and current expectations of Camex and Desert Lion with respect to future business activities and operating performance. Forward-looking information is often identified by the words “may”, “would”, “could”, “should”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” or similar expressions and include information regarding: (i) expectations regarding whether the proposed Transaction will be consummated, including weather conditions to the consummation of the Transaction will be satisfied, or the timing for completing the Transaction, (ii) expectations for the effects of the Transaction or the ability of the combined company to successfully achieve business objectives, (iii) the potential benefits of the Transaction, (iv) the timing for completing the Subscription Receipt Offering, and (v) expectations for other economic, business, and/or competitive factors.
Investors are cautioned that forward-looking information is not based on historical facts but instead reflect Camex’s and Desert Lion’s respective management’s expectations, estimates or projections concerning future results or events based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made. Although Camex and Desert Lion believe that the expectations reflected in such forward-looking information are reasonable, such information involves risks and uncertainties, and undue reliance should not be placed on such information, as unknown or unpredictable factors could have material adverse effects on future results, performance or achievements of the combined company. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking information are the following: the ability to consummate the Transaction; the ability to obtain requisite regulatory and shareholder approvals and the satisfaction of other conditions to the consummation of the Transaction on the proposed terms and schedule; the potential impact of the announcement or consummation of the Transaction on relationships, including with regulatory bodies, employees, suppliers, customers and competitors; the re-rating potential following the consummation of the Transaction; changes in general economic, business and political conditions, including changes in the financial markets; changes in applicable laws; compliance with extensive government regulation; and the diversion of management time on the Transaction. This forward-looking information may be affected by risks and uncertainties in the business of Camex and Desert Lion and market conditions.
Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Although Camex and Desert Lion have attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not to be as anticipated, estimated or intended. Camex and Desert Lion do not intend, and do not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.
For further information, please contact:
Desert Lion Energy Corp.
Chief Executive Officer
Camex Energy Corp.
Chief Executive Officer
Completion of the Transaction is subject to a number of conditions, including but not limited to TSXV acceptance and, if applicable, disinterested shareholder approval. The Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the Management Information Circular of Camex and Desert Lion to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of Camex should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has not approved or disapproved of the contents of this news release.
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.