Vancouver, British Columbia--(Newsfile Corp. - July 24, 2024) - China Keli Electric Company Ltd. (TSXV: ZKL.H) (the "Company" or "China Keli Electric"), is pleased to announce that it has entered into a letter agreement ("Letter Agreement") dated for reference July 12, 2024, with Liard Strategic Minerals Inc. ("Liard"), a British Columbia-based mineral exploration company, pursuant to which the Company proposes to acquire all of the issued and outstanding shares of Liard (the "Liard Shares") by way of a reverse takeover transaction (the "Proposed RTO"), such that, upon closing, the current shareholders of Liard (the "Target Shareholders") will own up to 97.4% of the issued and outstanding shares of the Company (the "CKE Shares") on a non-diluted basis (and assuming the Concurrent Financing (as defined below) is fully subscribed for). The resulting entity from the Proposed RTO (the "Resulting Issuer") will continue the business of Liard as a company.
Proposed RTO
Pursuant to the terms of the Letter Agreement, the Proposed RTO is expected to be completed through a business combination by way of an amalgamation, arrangement, share exchange or other similarly structured transaction whereby a subsidiary of China Keli Electric and Liard will amalgamate pursuant to the laws of British Columbia, the result of which will be that each Liard Share (including those issuable or issued pursuant to the Concurrent Financing (as defined below)) will be exchanged for one CKE Share (each, a "Resulting Issuer Share"). It is proposed that the Company will acquire all of the issued and outstanding Liard Shares (including those shares issued pursuant to the Concurrent Financing (as defined below)) payable on a non-cash basis by the issuance of such aggregate number of Resulting Issuer Shares to the Target Shareholders (on a fully-diluted basis), pro rata, based on the number of Liard Shares held by each Target Shareholder. In connection with the Proposed RTO, (i) the Company expects to change its name and the Company intends to seek the required approval for such name change at the CKE Shareholders' Meeting (as defined below); and (ii) CKE Shares shall be consolidated on the basis of 1 post-consolidation CKE Share for each 10 per-consolidation CKE Share (the "Consolidation") such that 1,211,003 CKE Shares shall be issued and outstanding prior to the closing of the Proposed RTO.
The Letter Agreement includes exclusivity provisions, pursuant to which the Company and Liard have agreed to negotiate and deal exclusively with one another with respect to the Proposed RTO during the Exclusivity Period (as defined below). Pursuant to the Letter Agreement, both parties have agreed not to, without the consent of the other party, solicit or engage in any inquiries similar in nature to the Proposed RTO, whether by way of merger, amalgamation, share exchange, consolidation, the sale or purchase of assets or otherwise. The "Exclusivity Period" commences on the date of the Letter Agreement and ends on the earlier of October 31, 2024 and the date that the Letter Agreement is terminated in accordance with its terms.
Concurrent Financing
Concurrent with the Proposed RTO, Liard intends to complete a concurrent private placement for aggregate gross proceeds of up to $3,000,000 (the "Concurrent Financing"). The terms of the Concurrent Financing are yet to be determined. It is anticipated that the Concurrent Financing will close immediately prior to or in connection with the closing of the Proposed RTO. The Liard Shares issued pursuant to the Concurrent Financing will be exchanged for Resulting Issuer Shares.
CSE Listing
It is a condition of closing of the Proposed RTO that the Resulting Issuer obtains a listing of its common shares on the Canadian Securities Exchange ("CSE"). In connection with the Proposed RTO, the Company intends to voluntarily delist its common shares from the NEX Board of the TSX Venture Exchange, and apply for a listing of the common shares of the Resulting Issuer on the CSE. As a result, it is anticipated that the Proposed RTO will be governed by the policies of the CSE. While it is anticipated that the Resulting Issuer will qualify for listing, the CSE has not reviewed the Proposed RTO and there is no certainty that the application will be approved.
Additional Conditions of Closing the Proposed RTO
The completion of the Proposed RTO is subject to a number of conditions, which include, but are not limited to:
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receipt of all required shareholder, regulatory and other approvals, authorizations and consents for the Proposed RTO as may be required;
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no material adverse change in the business, results of operations, assets, liabilities, financial conditions or affairs of the parties subsequent to the date of the Letter Agreement;
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no legal proceedings or regulatory actions against the Company or Liard that would reasonably be expected to have a material adverse effect on the Company or Liard, in the reasonable opinion of the other party, as applicable;
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no inquiry, action, suit, proceeding or investigation commenced, announced or threatened by any securities regulatory authority or stock exchange in relation to the Company or Liard;
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there being no prohibition at law against the completion of the Proposed RTO; and
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compliance by the Company and Liard will all representations, warranties, covenants, obligations and conditions of such party as set out in the definitive agreement to be negotiated between the parties.
About Liard
Liard Strategic Minerals Inc. is a mineral exploration company focused on the exploration and development of its wholly owned Liard Fluorspar Project in the Liard Mining Division, North Central British Columbia. The Liard Fluorspar Project consists of 21 mineral claims, totaling 7,581 hectares. The Liard Fluorspar deposits are analogs with the Missisippi Valley Type, the most common geological setting for the largest economic Fluorspar deposits worldwide.
Fluorite mineralization is concentrated at the unconformable contact between the Besa River shales and Dunedin Formation limestones, with over 18km of contact within the property and 9 known British Columbia Geological Survey Mineral Inventory (Minfile) occurrences. Exposed Fluorite showings are located within the limestone units, featuring classic replacements, breccias, veins, and fracture fillings typical of Mississippi Valley deposits.
A historic resource estimate was produced on the Liard Fluorspar Project by Wright Engineers and H.N. Halvorson Consultants in 1975, and in 2024, a diamond drill exploration program will be conducted to aggressively drill and upgrade the historic mineral resource estimate and bring to current NI 43-101 compliance. In conjunction, a metallurgical testing program will be performed to improve process recoveries and more accurately estimate concentrate grades.
Non-Arm's Length Party Considerations
The Company is at arm's length to Liard, and no director, officer or insider of the Company or Liard beneficially owns, or controls or directs, directly or indirectly, any securities of the other party. Therefore, the Proposed RTO is expected to be an Arm's Length Transaction as defined under TSXV Policy 1.1 - Interpretation and will not be considered a 'related party transaction' for the purposed of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101").
Resulting Issuer Board of Directors and Officers
At or following the completion of the Proposed RTO, and subject to receipt of all required approvals, the Company intends to reconstitute the directors and officers of the Resulting Issuer. It is expected that the Resulting Issuer will have three (3) directors (the "New Board"), of which two (2) directors shall be independent.
Shareholder Approval
To change the name of the Company to "Liard Strategic Mining Inc.", to elect the New Board, to adopt a new stock option plan (if required), to approve the Consolidation, to obtain shareholder approval for the voluntary delisting from the NEX Board in accordance with TSX-V policies and to approve all ancillary matters or matters as the board of directors of the Company considered necessary, the Company expects to hold a special shareholders meeting as soon as reasonably practicable.
Liard will also seek shareholder approval of the Proposed RTO at a special meeting of Target Shareholders.
Definitive Agreement
The final form of the Proposed RTO is subject to the terms of a definitive agreement to be entered into among the parties (the "Definitive Agreement"). Completion of the Proposed RTO will be subject to, among other things, satisfactory due diligence, the execution of a Definitive Agreement, the approval of the CSE, and with respect to the voluntary delisting from the NEX, the approval of the NEX Board of the TSX Venture Exchange and the satisfaction of the NEX delisting requirements, any necessary shareholder and third-party approvals, and other customary closing conditions for a transaction of this nature.
Qualified Person
The technical information contained in this news release related to the Liard Fluorspar Project has been reviewed and approved by Raul Sanabria, VP Exploration for Liard, a "Qualified Person" within the meaning of National Instrument 43-101.
Trading Halt
Shares of the Company have been halted from trading on the NEX Board of the TSX Venture Exchange, and will remain halted pending further review.
There can be no assurance that the Proposed RTO will be completed as proposed or at all. Completion of the Proposed RTO is subject to a number of conditions, including but not limited to NEX/TSXV Exchange acceptance and if applicable, disinterested shareholder approval. Where applicable, the Proposed RTO cannot close until the shared shareholder approval is obtained. There can be no assurance that the Proposed RTO will be completed as proposed or at all.
The listing of the Resulting Issuer Shares on the CSE is subject to the Resulting Issuer meeting the CSE listing criteria. There is no guarantee that the Resulting Issuer Shares will be listed on the CSE.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Proposed RTO, 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 the Company should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the Proposed RTO and has neither approved nor disapproved the contents of this news release.
About China Keli Electric Company Ltd.
Forward-Looking Statements
Investors are cautioned that, except as disclosed in the disclosure document, any information released or received with respect to the Company may not be accurate or complete and should not be relied upon. Trading in securities of the Company should be considered highly speculative.
This press release contains statements which constitute "forward-looking information" or "forward-looking statements" (together "forward-looking information") within the meaning of applicable securities laws, including statements regarding the Proposed RTO, the Letter Agreement, the business of the Resulting Issuer, and TSXV acceptance of the Proposed RTO. Forward-looking information is often identified by the words "may", "would", "could", "should", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect" or similar expressions.
Investors are cautioned that forward-looking information is not based on historical facts but instead reflect the Company's 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 the Company believes 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 key factors and risks that could cause actual results to differ materially from those projected in the forward-looking information may include, without limitation, the ability to obtain or delays in securing necessary stock exchange approvals; as well as those factors disclosed in the Company's disclosure documents publicly available under its profile at SEDAR+ at www.sedarplus.ca. This forward-looking information may be affected by risks and uncertainties in the business of the Company 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 the Company has 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. The Company does not intend, and does not assume any obligation, to update this forward-looking information except as otherwise required by applicable law.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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