VAL D’OR, QC, March 23, 2015 / - Active Growth Capital Inc. (TSXV: ACK) (“ACK” or the “Corporation”) is pleased to announce that it has entered into a binding letter of intent (the "Agreement") with Alliance Magnesium Inc. ("AMI"), whereby AMI will acquire all of the outstanding shares of ACK under a plan of arrangement (the “Arrangement”) in consideration of one AMI common share (each an “AMI Share”) for each ACK common share (an “ACK Share”), equivalent to $0.15 per ACK share. In addition, shareholders of ACK will receive shares in a newly formed public company (“New ACK”) under the Arrangement (the “Spin Out”).
The proposed Arrangement will provide for the acquisition by AMI of all the outstanding securities of ACK in consideration of one AMI Share or warrant per ACK Share or warrant, as the case may be, and subject to any warrant term modification required by the TSXV, for an amount equivalent to $0.15 per currently-outstanding ACK Share and that gives a total consideration of $2,158,250 (the “Business Combination”), or such other corporate reorganization and restructuring which will result in the reverse takeover of ACK by AMI on the same ratio, and the subsequent listing on the TSXV of the resulting controlling entity (the “Resulting Issuer”), and the Spin Out. Regardless of the structure agreed upon to effect the Business Combination, all the securities of AMI issued and outstanding immediately prior to the closing of the Business Combination will be exchanged for an aggregate of 44,300,600 common shares of the Resulting Issuer (each a “Resulting Issuer Share”). The Business Combination pursuant to the Arrangement constitutes a Reverse Takeover under TSXV policies.
The closing of the Arrangement is conditional upon, among things, the completion of a concurrent brokered private placement of units of the Resulting Issuer (each a “Unit”), at a minimum price of $0.15 per Unit, for minimum gross proceeds of $2,250,000 upon completion of the Business Combination (the “Concurrent Financing”).
In connection with the Business Combination, finder’s fees totaling 1,000,000 Resulting Issuer Shares will be issued by the Resulting Issuer, of which 500,000 to a Non Arm’s Length Party of ACK who was specifically commissioned and without whom the Agreement would have otherwise never been entered into, the whole subject to closing of the Business Combination and TSXV approval.
ACK will apply for an exemption from the TSXV sponsorship requirement pursuant to section 3.4(a)(ii) of TSXV Policy 2.2.
In order to have sufficient funds to complete the Arrangement and continue its operations, ACK will also complete a private placement of units at a price of $0.15 per unit for maximum gross proceeds of $450,000, each unit being comprised of one ACK Share and one ACK Share purchase warrant, at an exercise price of $0.20 per share for a period of 24 months from its issuance (the “Private Placement”).
If the Arrangement is completed and assuming completion of the maximum Private Placement and the Concurrent Financing, a total of 74,688,939 Resulting Issuer Shares will be issued and outstanding, of which 19.26% will be held by the current ACK shareholders (14,388,338 Resulting Issuer Shares), 59.31% will be held by the current AMI shareholders (44,300,600 Resulting Issuer Shares) and 20.08% by subscribers to the Concurrent Financing (15,000,000 Resulting Issuer Shares).
Alliance Magnesium Inc. is a privately-owned Canadian company that has developed a patent-pending electrolysis clean tech technology for the production of magnesium (Mg) from serpentine. AMI has negotiated a right of use with respect to a site located in province of Quebec on which large serpentine tailings are located. AMI will have the right to construct a pilot plant for processing the tailings to extract magnesium on that site.
Additional information about AMI is available at alliancemagnesium.com.
ACK is pleased to be forming New ACK to continue the effort of the ACK team. President and CEO Marc Labrecque and newly-appointed CFO Pat Power will continue in the same roles at New ACK along with members of ACK’s board. In addition to exploring the Currie-Madelaine Property, ACK looks forward to new opportunities in the execution of its business plan. New ACK will be capitalized $100,000 in cash, valuing New ACK at $420,000 providing ACK shareholders with an additional $0.07 per share of consideration. New ACK intends to make application to list its shares on the Canadian Securities Exchange.
Marc Labrecque, President and CEO of ACK, commented, “New ACK will continue to expose ACK shareholders to further potential exploration and development success.”
Conditions to the Arrangement
The Arrangement is subject to the execution of a definitive agreement before April 10, 2015, the approval by ACK and AMI shareholders, court approval and other customary conditions. The transaction cannot close until all requisite approvals are obtained and the minimum Concurrent Financing of $2,250,000 has been secured. Full details of the transaction will be set out in ACK's information circular that it will prepare in respect of the meeting of shareholders to approve the Arrangement. ACK intends to mail the information circular in May 2015. The transaction is expected to close at the end of the second quarter of 2015.
Completion of the Arrangement is subject to a number of conditions, including TSXV acceptance and disinterested ACK 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 to be prepared in connection with the Arrangement, any information released or received with respect to the Arrangement may not be accurate or complete and should not be relied upon. Trading in the securities of ACK should be considered highly speculative.
The TSXV has in no way passed upon the merits of the proposed Arrangement and has neither approved nor disapproved the contents of this press release.
ACK has retained Langlois Kronström Desjardins LLP as its legal advisor and is negotiating jointly with AMI to retain a financial advisor in connection with the transaction.
Copies of the Agreement, management information circular and certain related documents will be filed with securities regulators and will be available on SEDAR at www.sedar.com.
Marc Labrecque, President and CEO of ACK, commented, “We believe this transaction is an excellent outcome for ACK shareholders as it provides them with the value embedded in the Portage Property. AMI's clean production technology will give the Portage Property the edge that it needs. We quickly recognized that it's not only about having a resource, it's about having a green and economical way of producing its minerals. This transaction couldn't have happened at a better time considering the demand forecast for magnesium in the coming years, considering that there is only one existing North American magnesium producer and the fact that magnesium is the among the top strategic minerals on the European critical element list
Dr. Joel Fournier, President and CEO of AMI commented, “This transaction represents an important step in Alliance’s development, granting it the opportunity to access new capital as well as more visibility for its clients and strategic partners. It will permit them to participate in the evolution of this new player in the magnesium world.”
Appointment of New CFO
ACK is also pleased to announce the appointment of Mr. Pat Power as CFO of the Corporation, subject to TSXV approval. Mr. Power is a senior finance and technology executive with over 30 years of industry experience founding, financing, and/or participating in the start-up teams of a number of successful companies, including Xicom Technologies Corporation (Co-founder), Corel Systems Corporation (member of founding team), Newbridge Networks Corporation (member of founding team), Nuvo Network Management Inc. (Founder), SteppingStone Capital Corporation (Founder) and James Edward Capital Corporation (Founder).
Mr. Power will be replacing Nancy Éthier as CFO. The Corporation thanks Ms. Éthier for her services.
About Active Growth Capital
Active Growth is a TSXV listed junior mineral exploration issuer whose long-term objective is to build a diversified company focused on the acquisition, exploration and development of mineral properties. Additional information about the Corporation is available at www.activegrowthcapital.com and on SEDAR at www.sedar.com.
For further information, please contact:
Active Growth Capital Inc.
CEO and President
Tel.: (819) 856-3598
Alliance Magnesium Inc.
CEO and President
Tel.: (450) 618-1658
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 of this release.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This news release discusses items that may constitute forward-looking statements within the meaning of securities laws and that involve risks and uncertainties. Such statements include those with respect to the completion of the Arrangement, the funds to be raised in connection with the Concurrent Financing or the Private Placement and New ACK or the Resulting Issuer 's business plans and operations following the Arrangement. Although each of ACK and AMI believes in light of the experience of its officers and directors, current conditions and expected future developments and other factors that have been considered appropriate that the expectations reflected in such forward-looking statements are based on reasonable assumptions, they can give no assurances that those expectations will be achieved and actual results may differ materially from those contemplated in the forward-looking statements and information. Such assumptions, which may prove incorrect, include the following: (i) the Arrangement will obtain all required regulatory approvals and any applicable shareholder approvals, (ii) the New ACK or the Resulting Issuer's management will not identify and pursue other business objectives following the Arrangement, (iii) New ACK or the Resulting Issuer will succeed in obtaining any necessary future financing to fund its ongoing operations and work plans, (iv) no material obstacles, technical or otherwise, will hinder New ACK or the Resulting Issuer's operations following the Arrangement and (v) the price of resources will remain sufficiently high and the costs of advancing New ACK or the Resulting Issuer's projects sufficiently low so as to permit those corporations to implement their business plans in a profitable manner. Factors that could cause actual results to differ materially from expectations include (i) New ACK or the Resulting Issuer's failure to make effective use of its available funds following the Arrangement, (ii) the failure of New ACK or the Resulting Issuer projects for technical, logistical, labour relations or other reasons, (iii) the inability of the ACK or AMI to obtain the necessary approvals for the Arrangement, (iv) a decrease in the price of resources below what is necessary to sustain New ACK or the Resulting Issuer's operations, (v) an increase in New ACK or the Resulting Issuer's operating costs above what is necessary to sustain its operations, (vi) accidents, labour disputes or the materialization of similar risks, (vii) a deterioration in capital market conditions that prevents New ACK or the Resulting Issuer from raising the funds that it requires on a timely basis, (viii) an inability or unwillingness of the ACK or AMI to complete the Arrangement for whatever reason, (ix) an inability or unwillingness of the individuals named above to serve as directors or officers of New ACK or the Resulting Issuer following the Arrangement, (x) an inability to secure subscribers or obtain funds under the Private Placement or Concurrent Financing and (xi) generally, an inability of New ACK or the Resulting Issuer to develop and implement a successful business plan for any reason. These factors and others are more fully discussed in the filings of the ACK with Canadian securities regulatory authorities available at www.sedar.com.
President and CEO
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Val D'Or, QC J9P 1T1