Wolfville, Nova Scotia (FSCwire) - Mountain Lake Minerals Inc. (CSE:MLK) (“Mountain Lake” or the “Company”) is pleased to inform its shareholders that Management has signed a letter of intent (“LOI”) which generally record the terms of a proposed business combination whereby the Company would acquire 1151024 B.C. Ltd. (“1151024 B.C.”) (the “Transaction”) and complete a spin-out of its mining assets to its existing shareholders (the “Spin Out”).
Executive Chairman Bill Fleming comments, “This is a good day for Mountain Lake as it provided a significant path forward and represents a major opportunity to grow the newly established company.”
About 1151024 B.C.
1151024 B.C. is a private company doing business through Active Health Products Ltd. (“Active Health”), a subsidiary company with an application to produce medical marijuana under Canada’s Access to Cannabis for Medical Purposes Regulations (the “License Application”).
Active Health is pursuing the License Application on a ½ acre of land in the Duncan Industrial Park which has been approved by the municipality for usage in the marijuana industry. Active Health has plans to build an 11,000 sq. ft facility on the site which is expected to be completed within six months of commencement of construction which has not yet occurred. The License Application is in the detailed review stage and has passed its security clearances. There can be no assurances that a license to cultivate or license to sell will be granted to Active Health and at this time an estimate of the time it may take for any license to be granted is not possible to determine. Until Active Health has developed the facility meeting the requirements under the ACMPR and a license to cultivate is received, Active Health cannot begin production of medical marijuana and until a license to sell is granted, it cannot sell medical marijuana.
The terms of the proposed Transaction remain subject to further negotiation by the parties, but pursuant to the LOI, the existing shareholders of the Company will retain at least 10% of the resulting issuer following completion of the Transaction.
There is no guarantee that the Company will enter into a binding definitive agreement with 1151024 B.C. (a “Definitive Agreement”) or ultimately complete the proposed Transaction. Moreover, the proposed Transaction would result in a Fundamental Change (as defined in Policy 8 of the CSE) to the Company.
The LOI
Under the terms of the LOI, Mountain Lake will allow 1151024 B.C. the right to appoint two additional members to the board of directors. The Transaction is subject to, a ten for one share rollback (the “Consolidation”) and the completion of the Spin Out to the Company’s existing shareholders. Additionally, 1151024 B.C. will make a $250,000 payment to the Company towards its accounting and general operating expenses of which $50,000 has been paid on execution of the LOI and $200,000 on signing of a binding agreement in respect of the Transaction.
In addition, 1151024 B.C. has agreed to assist in securing a capital raise of $1,000,000 (the “Placement”) for the Spin-Out which will provide both operating and continued exploration funds necessary for the spin out entity and allow it to pursuant a listing on the TSX Venture Exchange.
The LOI may be terminated by either party on 10 business day’s notice. The LOI is expressly non-binding and the execution of a Definitive Agreement is subject to the parties’ is subject to completion of due diligence and ongoing negotiations concerning the specific terms of the Transaction.
Completion of the Transaction and Spin-Out is subject to a number of conditions, including but not limited to: (a) entering into a Definitive Agreement; (b) completion of due diligence by the parties; (c) CSE acceptance; (d) completion of the Consolidation, Spin-Out and Placement and (e) if necessary, approval of the Company’s shareholders. The Transaction cannot close until the conditions are satisfied. There can be no assurance that the Transaction will be completed as proposed or at all. Trading in the securities of the Company should be considered highly speculative.
President and CEO of Mountain Lake, Paul Smith stated that, “Finding the right opportunity for this Company has been a long time in the making but this agreement opens potential opportunities for expanding the Company’s asset portfolio”.
Additional Information
Further details regarding the proposed Transaction and the resulting entity will be provided in a comprehensive news release if and when the parties enter into a Definitive Agreement. As noted above, if completed, the Transaction will constitute a “Fundamental Change” pursuant to CSE policies.
The Definitive Agreement will incorporate the principal terms of the Transaction described herein and in the LOI, and in addition, such other terms and provisions of a more detailed structure and nature as the parties may agree upon after receiving further tax, legal and financial advice from their respective advisors. However, there is no assurance that the Definitive Agreement will be successfully negotiated or entered into.
In the event that a Definitive Agreement is completed, trading in the common shares of the Company will be halted pending satisfaction of applicable requirements of the CSE. Additionally, there are no assurances that should the Transaction not be completed that the Company will pursue alternate acquisition opportunities in the medical marijuana industry.