Why Principal Reasons for Effecting the Consolidation
The Board has not concluded if or when it might want to undertake the Consolidation to reduce the number of Common Shares outstanding, but there are three considerations that will likely determine whether to proceed. First, the Company believes an increased Common Share price will allow it to attract certain individual and institutional investors who have minimum share price thresholds for equity investments, which thresholds preclude them from investing in ‘penny stocks’. Second, the Company may pursue a secondary listing on a securities exchange in the United States, which has certain minimum share price requirements. The Company believes that a secondary listing could attract new investors given the strong demand for equity investments in battery materials, recycling and electric vehicle companies in the United States. The third consideration is the timing to affect a Consolidation. Management has studied many consolidations and believes that in order to be successful, they should be preceded by a significant event, milestone or catalyst. As at October 21, 2021, the last trading day prior to the date of this Circular, the closing price of the Common Shares on the TSXV was $0.305.
With guidance from financial advisors, the Company believes a total Common Share count below 60,000,000 will better position the Company for future investment by North American institutional investors while maintaining appropriate trading liquidity and meeting minimum United States listing thresholds. The current Common Share count arose through a merger with an Australian company, where higher outstanding shares are more common.
Principal Effects of the Consolidation
On October 21, 2021, the Company had 540,414,476 Common Shares issued and outstanding. Should the Board proceed with the minimum allowable Consolidation on the basis of one (1) post-Consolidation Common Share for every ten (10) pre-Consolidation Common Shares, the number of post-Consolidation Common Shares issued and outstanding will be approximately 54,041,448 (on a non-diluted basis). Should the Board proceed with the maximum allowable Consolidation on the basis of one (1) post-Consolidation Common Share for every eighteen (18) pre-Consolidation Common Shares, the number of post- Consolidation Common Shares issued and outstanding will be approximately 30,023,026 (on a non-diluted basis).