Manganese X Announces Arrangement Agreement to Complete Spin-Out of Lac Aux Bouleaux Graphite Property, and Completion of Graphano Private Placement
Newsfile Corp
Montr©al, Qu©bec--(Newsfile Corp. - December 23, 2020) - Manganese X Energy Corp.(TSXV: MN) (FSE: 9SC2) (OTC Pink: MNXXF) ("Manganese X" or the "Company") is pleased to announce that it has entered into an arrangement agreement (the "Arrangement Agreement") with its wholly-owned subsidiary, Graphano Energy Ltd. ("Graphano"), to spin out its Lac Aux Bouleaux graphite property, located in the province of Quebec (the "LAB Graphite Property"). Further, the Company is pleased to announce that, in connection with the Arrangement (as defined below), Graphano completed a private placement of subscription receipts ("Subscription Receipts") on December 22, 2020, for aggregate gross proceeds of $2,721,707, at a price of $0.05 per Subscription Receipt (the "GraphanoPrivate Placement"). Details of the Graphano Private Placement are described below.
The Arrangement is expected to result in the creation of Graphano as an independent public company, which will initially be focused on the exploration of the LAB Graphite Property for graphite moving forward. Graphano is expected to have the ability to source its own funding independent of the Company.
Plan of Arrangement
The transactions contemplated by the Arrangement Agreement (collectively, the "Arrangement") will be completed as a statutory plan of arrangement (the "Plan of Arrangement") under the Business Corporations Act (British Columbia). Under the Plan of Arrangement, shareholders of the Company (the "Shareholders") are expected to receive, in exchange for each common share of the Company (each, a "Common Share") (i) one new common share of the Company (having identical terms as the Common Shares) ("New Common Shares"), and (ii) 0.125 of a common share in the capital of Graphano (each, a "Graphano Share").
Following completion of the Arrangement, Graphano will cease to be a wholly-owned subsidiary of the Company. The Company will continue to focus on the exploration and development of its Battery Hill Manganese and Peter Lake Copper-Nickel-Cobalt-Gold-Silver projects in New Brunswick and Quebec, respectively, following completion of the Arrangement, while Graphano is expected to focus on the exploration and development of the LAB Graphite Property as an independent public company. The shareholders of the Company ("Shareholders") as of the Share Distribution Date (as defined below) will be able to participate in the value associated with the development, operation, and growth of the respective business of each entity.
The Company intends to apply to the Supreme Court of British Columbia for an interim order to hold a special meeting (the "Meeting") of the Shareholders to approve the Arrangement in calendar Q1, 2021. In connection with the Arrangement, Graphano also intends to apply to list the Graphano Shares on the TSX Venture Exchange (the "Exchange").
The foregoing description is qualified in its entirety by reference to the full text of the Plan of Arrangement, attached as an exhibit to the Arrangement Agreement, which will be filed on SEDAR under the Company's profile, on or before December 28, 2020. The Arrangement is subject to various customary closing conditions, including among others, the approval of the British Columbia Supreme Court, the Shareholders, and the Exchange. There can be no assurance that such approvals will be obtained, that the Arrangement and the conversion of the Subscription Receipts issued under the Graphano Private Placement will be completed on the terms contemplated, or at all, or that the Graphano Shares will be successfully listed on the Exchange. As of the date hereof, Graphano has not submitted any application for listing the Graphano Shares to the Exchange. Any listing of the Graphano Shares on the Exchange is subject to Graphano fulfilling all of the listing requirements of the Exchange.
Graphano Private Placement
In connection with the Arrangement, Graphano completed the Graphano Private Placement on December 22, 2020 (the "Closing Date"), for aggregate gross proceeds of $2,721,707, at a price of $0.05 per Subscription Receipt. Each Subscription Receipt will entitle the holder thereof to receive, upon conversion and without any further action on the part of such holder or payment of any additional consideration, one unit of Graphano (a "Unit"), with each Unit comprised of one (1) Graphano Share and one common share purchase warrant (each, a "Warrant"). Each Warrant is exercisable into one (1) Graphano Share at an anticipated exercise price of $0.08 per Graphano Share, for an exercise period of two years. The conversion of the Subscription Receipts is subject to the satisfaction or waiver of certain customary escrow release conditions (the "Escrow Release Conditions"), including the closing of the Arrangement and the listing of the Graphano Shares on the Exchange, on or prior to June 30, 2021 (the "Outside Date").
The gross proceeds of the Graphano Private Placement less certain less an expenses (the "Escrowed Proceeds"), are held in escrow on behalf of the subscribers in the Graphano Private Placement by Garfinkle Biderman LLP, as escrow agent for the Subscription Receipts (the "Subscription Receipt Agent"), and is expected to be invested in an interest-bearing accountpursuant to the terms and conditions of the subscription receipt agreement entered into in connection with the Graphano Private Placement. Upon the satisfaction or waiver of the Escrow Release Conditions, the Escrowed Proceeds will be released to Graphano. Upon receipt thereof, Graphano is expected to use the Escrowed Proceeds to fund the exploration of the LAB Graphite Property and general working capital (including, potential future acquisitions). In the event that the Escrow Release Conditions are not satisfied prior to the Outside Date, the Escrowed Proceeds will be returned prorata to each holder of Subscription Receipts, and the Subscription Receipts will be automatically cancelled, void and of no value or effect.
The Subscription Receipts and the Graphano Shares and Warrants issuable in exchange for the Subscription Receipts are subject to a four-month statutory hold period expiring four months and one day from the Closing Date.
Further Information
Further details of the Arrangement, including, without limitation, the Meeting (including the date and time thereof, and the Shareholders entitled to vote thereat), and the record date for determining the Shareholders entitled to receive the securities being distributed under the Plan of Arrangement, will be provided in due course, including in the management information circular (the "Circular") to be prepared by the Company for delivery to the Shareholders in connection with the Meeting. Shareholders of the Company are urged to carefully read the Circular, once made available under the Company's profile on SEDAR at www.sedar.com, as it will contain additional important information concerning the Arrangement.
For details pertaining to the Lab Graphite Property, please see the Company's press release dated March 17, 2020, as well as the technical report dated February 18, 2020 in respect of the LAB Graphite Property (the "Technical Report"), available on the Company's profile on SEDAR at www.sedar.com.