Richmond Road Capital Corp.
TSX VENTURE : RRD.H
NEX BOARD : RRD.H

June 13, 2017 08:30 ET

Richmond Road Capital Corp. Announces Its Qualifying Transaction and Concurrent Private Placement of Subscription Receipts

CALGARY, ALBERTA--(Marketwired - June 13, 2017) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR RELEASE, PUBLICATION, DISTRIBUTION OR DISSEMINATION DIRECTLY, OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES.

Richmond Road Capital Corp. (NEX:RRD.H) ("Richmond Road" or the "Company"), a capital pool company as defined under policy 2.4 - Capital Pool Companies ("CPC") of the TSX Venture Exchange (the "Exchange"), is pleased to announce it has entered into a letter of intent dated as of June 8, 2017 (the "Agreement") with North American Lithium Inc. ("North American Lithium"), a private company incorporated under the laws of Canada, whereby the Company will acquire all of the issued and outstanding common shares of North American Lithium (the "North American Lithium Shares") by way of a three-cornered amalgamation, or such other business combination transaction as the parties may agree upon (the "Transaction"), subject to the terms and conditions outlined below. Richmond Road intends that the Transaction will constitute its Qualifying Transaction, as such term is defined in the policies of the Exchange.

North American Lithium is a Canadian industrial minerals mining company focused on the extraction and processing of lithium products in Quebec incorporated under the federal laws of Canada. North American Lithium is focused on operating its 100% owned Quebec Lithium mine located in Val-d'Or, Quebec where over C$500 million has been invested to-date. North American Lithium is expected to be North America's first "hard rock" lithium producer. The purpose of the Transaction is to create a publicly-listed, "pure play" lithium company that is anticipated to initially produce lithium concentrate (also known as spodumene) and, through the refurbishment of the existing hydrometallurgical plant located at the Quebec Lithium mine, become one of the first integrated lithium carbonate producers with operations focused in North America. The Quebec project site is now being commissioned with the aim of putting the mine into commercial production this year.

In connection with the Transaction, Richmond Road anticipates that the 5,000,000 shares in the capital of Richmond Road (the "Richmond Road Shares") currently issued and outstanding will be consolidated (the "Consolidation") on the basis of 1 (new) Richmond Road Share for every 18.5 (old) Richmond Road Shares.

Summary of the Qualifying Transaction

The Agreement contemplates Richmond Road and North American Lithium completing an arm's length business combination transaction by way of a three-cornered amalgamation under the provisions of the Canada Business Corporations Act, pursuant to which a newly incorporated, wholly-owned subsidiary of Richmond Road will amalgamate with North American Lithium, and Richmond Road would acquire all of the issued and outstanding North American Lithium Shares in exchange for shares of Richmond Road on the basis of one post-Consolidation Richmond Road Share for each issued and outstanding North American Lithium Share. As described below, on completion of the Transaction, the current shareholders of North American Lithium would own a majority of the issued and outstanding shares of the Resulting Issuer (as such term is defined in Exchange Policy 2.4) and North American Lithium will become a wholly-owned subsidiary of the Resulting Issuer. The common shares of the Resulting Issuer will be listed for trading on the Exchange. Further information about the proposed Transaction consideration, comprised of the Transaction's amalgamation and share exchange, will be provided in a subsequent news release.

The parties to the Transaction are at arm's length and it is therefore anticipated that the approval of the shareholders of Richmond Road will not be required. It is anticipated that shareholders of the Company will be asked to approve certain ancillary matters required to enable the Company to reorganize to complete the Transaction, which include approval for the Consolidation, the continuance of the Company out of the Province of Alberta and into the Province of British Columbia (the "Continuance"), an increase in the size of the board of directors and a change of name of the Company (the "Name Change").

Pursuant to the terms of the Agreement, North American Lithium and Richmond Road have agreed not to solicit or negotiate with any other entities in regard to a transaction similar to the Transaction. Each of Richmond Road and North American Lithium will bear their own costs in respect of the Transaction, subject to the occurrence of certain termination events provided in the Agreement.

The completion of the Transaction is subject to the satisfaction of various conditions as are standard for a transaction of this nature, including but not limited to (i) the completion of the Financing (as defined below) for minimum gross proceeds of at least C$25 million; (ii) all requisite approvals from the shareholders of North American Lithium and the Board of each of Richmond Road and North American Lithium, (iii) the approval by the shareholders of Richmond Road of the ancillary matters including the Consolidation, the Continuance and the Name Change; (iv) the absence of any material adverse change, material litigation, claims, investigations or other matters affecting Richmond Road or North American Lithium, including any subsidiaries or related companies thereof; (v) receipt of all requisite regulatory, stock exchange, court or governmental authorizations and consents, (vi) the approval of the Exchange for the Transaction, the Financing, the Consolidation and the listing of the common shares of the Resulting Issuer including those shares to be issued upon conversion of the Subscription Receipts (as defined below). Upon completion of the Transaction, the Resulting Issuer shall be a mining issuer. There can be no assurance that the Transaction will be completed on the terms proposed above or at all.

Private Placement Financing

In connection with the Transaction, North American Lithium will undertake to complete an equity financing to raise a minimum of at least C$25 million up to approximately C$75 million (the "Financing'') through the issuance of subscription receipts (the "Subscription Receipts"). The Financing will be completed on a "best efforts" brokered private placement basis at a price to be determined in the context of the market (the "Issue Price"). GMP Securities L.P. has been engaged to act as lead agent (the "Agent") in connection with the Financing which is anticipated to close in July, 2017 (the "Closing Date"). For its services in connection with the Financing, the Agent will receive (i) a cash commission equal to 6% of the gross proceeds of the Financing and (ii) compensation options entitling the Agent to subscribe for a period of two years after the completion of the Transaction for that number of North American Lithium Shares as is equal to 3% of the total number of Subscription Receipts sold pursuant to the Financing (collectively, the "Agency Fee"). No Agency Fee will be paid to the Agents in connection with Subscription Receipts sold to certain investors subscribing to the Financing. Further information about the Financing will be provided in a subsequent news release.

Each Subscription Receipt will be automatically exchanged, without payment of any additional consideration and subject to adjustment, for one North American Lithium Share (each an "SR Share") upon satisfaction of the Escrow Release Conditions (as hereinafter defined) on or before the Escrow Deadline (as hereinafter defined). The SR Shares will be exchanged for common shares of Richmond Road pursuant to the Transaction. All securities issued pursuant to the Financing (including, for greater certainty, the SR Shares) shall be subject to a statutory hold period of four months and one day from the Closing Date.

The gross proceeds of the Financing less an amount equal to 50% of the Agency Fee in connection with the Financing will be delivered to and held by a licensed Canadian trust company or other escrow agent (the "Escrow Agent") mutually acceptable to the Agent and the Company in an interest bearing account (the "Escrowed Funds"). An amount equal to 50% of the Agency Fee plus any interest accrued thereon will be released to the Agents out of the Escrowed Funds and the balance of the Escrowed Funds will be released from escrow to the Company upon satisfaction of the following conditions (together, the "Escrow Release Conditions") on or before 5:00 p.m. (Toronto time) on September 30, 2017 (the "Escrow Deadline"):

(A) the satisfaction of all conditions precedent to the business combination transaction involving North American Lithium and Richmond Road to the satisfaction of the Agent;
(B) the receipt of all required shareholder and regulatory approvals (including, without limitation, the conditional approval of the Exchange for the Transaction and the listing of the common shares of the Resulting Issuer;
(C) counsel to the Company having delivered an opinion (the final form of which opinion shall ultimately be delivered on the Closing Date) addressed to the Agent confirming, among other things, that the common shares of the Resulting Issuer issued in exchange for the SR Shares pursuant to the Transaction shall be free of any statutory hold periods in Canada upon the issue thereof, other than in respect of control block sales; and
(D) a shareholder agreement having been entered into between the Resulting Issuer and certain of the controlling shareholders of North American Lithium in a form satisfactory to the Agent acting reasonably.

If the Escrow Release Conditions are not satisfied on or before the Escrow Deadline, the Escrowed Funds plus any accrued interest shall be used by the Company to repurchase the Subscription Receipts at a redemption price per Subscription Receipt equal to the Issue Price plus a pro rata amount of any interest accrued in respect of the Escrowed Funds to the date of redemption. To the extent that the Escrowed Funds (plus any accrued interest) are not sufficient to purchase all of the Subscription Receipts at the Issue Price, the Company has agreed to contribute such amounts as are necessary to satisfy any shortfall. Release to North American Lithium of Escrowed Funds of a particular subscriber under the Financing prior to the satisfaction of the Escrow Release Conditions may only be authorized by specific written agreement of such subscriber and North American Lithium.

The net proceeds of the Financing will be used to fund (i) the ongoing commissioning of North American Lithium's Quebec Lithium project, (ii) the evaluation and redevelopment of the hydro metallurgical plant at the Quebec Lithium project, and (iii) corporate and general working capital purposes.

Sponsorship of the Qualifying Transaction

Sponsorship of a "Qualifying Transaction" of a CPC is required by the Exchange unless exempt therefrom in accordance with the Exchange's policies. Given the size and nature of the Transaction, including the amount of the Financing, Richmond Road intends to apply for an waiver from the sponsorship requirements pursuant to the policies of the Exchange. If the waiver is not granted by the Exchange, then Richmond Road would be required to engage a sponsor.

The Resulting Issuer

Upon completion of the Transaction the Resulting Issuer is expected to change its name to North American Lithium Corp. or such other name as determined by North American Lithium.

It is estimated that there will be approximately 76.9 million common shares of the Resulting Issuer issued and outstanding immediately following closing of the Transaction (on a basic basis), with former Richmond Road shareholders holding approximately 0.4% of such common shares, former North American Lithium shareholders holding approximately 73.7% of such common shares and subscribers under the Financing holding approximately 26.0% of such common shares. The principal shareholders of North American Lithium are 9554548 Canada Inc. (currently holding 75% of the issued and outstanding shares of North American Lithium) and Resources Quebec Inc. (currently holding 25% of the issued and outstanding shares of North American Lithium). 9554548 Canada Inc. ("955") is a wholly owned subsidiary of Jien International Investment Ltd. ("JIIL"), which is expected to be a control person of the Resulting Issuer upon completion of the Transaction by virtue of its ownership and control of shares of the Resulting Issuer through its subsidiary, 955. No other control person is expected to be created pursuant to the Transaction.

Concurrent with the completion of the Transaction, it is expected that all directors and officers of Richmond Road will resign and be replaced by the directors and officers of North American Lithium listed below. Additional directors will be added to the board of directors of the Resulting Issuer (the "Board") in the normal course and once identified, information with respect to the proposed additional directors will be included in a subsequent news release.

The management and Board of the Resulting Issuer will include the persons identified below:

James Xiang - Chief Executive Officer & Director

Mr. Xiang, who led the acquisition of the Quebec Lithium project, is the Chief Executive Officer of the Company and has been since July 2016. In addition, Mr. Xiang serves as director for several TSX and US-listed companies, and has served as a director and CFO for several TSX and US-listed companies since 2005. Mr. Xiang is the Chief Executive Officer and a director of Jien International Investment Ltd. and has managed its $1.6 billion asset in Canada since 2013. Prior to his engagement with Jien International Investment Ltd., Mr. Xiang was the President of China Mineral Resources Limited, a company that provides investment and financial advisory services to Chinese companies seeking to list, finance or transact on M&A opportunities in North America. Mr. Xiang holds a Bachelor of Arts from Huazhong University of Science & Technology in China and a Masters of Business Administration from York University.

Yves Desrosiers - General Manager

Mr. Desorsiers is a metallurgical engineer graduated from Laval in 1994. He began his career at Cambior Gant Dormant to pursue at Louvicout Mine as a metallurgist and environmental engineer. Since 1999, Yves has held management positions such as Timbal's superintendent pit and mill and Timber Superintendent for Tembec. From 2005 to 2012, he worked for ArcelorMittal as head of ovens in Contrecoeur, plant and mine manager in Fermont and as deputy general manager. In 2012, he became general manager for Canada Lithium and then in 2013 moved to be Managing Director at Nyrstar in Lebel Sur Quevillon until joining the Company in August 2016.

Charles Sung - Chief Financial Officer

Charles Sung, CPA, CA, CPA(IL) is a Canadian and US CPA. Through his eleven years of experience, Charles provides business/financing consulting, accounting, assurance and general tax services to private and public entities. Before joining the Company, Charles was also an Assurance Manager at MNP Canada, and has managed numerous audit and consulting engagements and advised on technical accounting and auditing issues for private and public clients. Charles graduated from University of Toronto with a Master of Management of Professional Accounting degree and a Bachelor of Applied Science degree in Electrical Engineering.

Thomas Laporte Aust - VP Corporate Affairs & Corporate Secretary

Mr. Aust leads NAL's corporate affairs and sustainability programs. Prior to joining NAL in 2017, Mr. Aust served as a outside counsel to the Company and was involved in the acquisition of the Quebec Lithium project from the RB Energy receivership. Over the course of his career, he has been involved in acquisition projects across a variety of sectors throughout Canada. Previously, he worked as a lawyer within the corporate and securities practice of one of Canada's most prestigious national law firms. Mr. Aust holds a Bachelor of Arts (Political Science) from Queens University and a law degree from Université Laval (LLB). He is a member of the Barreau du Québec as well as the American Bar Association.

André Boivin - Director

Mr. Boivin is a Partner at the law firm Cassels Brock & Blackwell LLP with a practice focused on corporate and securities law, primarily in the mining and natural resources sectors, for companies with properties and operations all over the world including the Americas, Africa, Eastern Europe and Australia. Mr. Boivin has substantial experience leading capital market financing transactions and public mergers & acquisitions and advises numerous public companies with respect to regulatory compliance and governance matters.

Ruobing Wang - Director

Mr. Wang is the Chairman of Jilin Jien Nickel Industry Co. Ltd. Mr. Wang joined Jilin Jien in 1996 as an auditor and has since held the positions of Vice President and President of the Company. Jilin Jien Nickel Industry Co. Ltd. is listed on the Shanghai Stock Exchange.

About Richmond Road Capital Corp.

Richmond Road Capital Corp. is a capital pool company. The Company's principal business activity is to identify and evaluate opportunities for acquisition of assets or business. The Company was founded on September 19, 2012 and is headquartered in Calgary, Alberta.

About North American Lithium Inc.

North American Lithium Inc. is a Canadian industrial minerals mining company operating the Quebec Lithium mine located near Val-d'Or, Quebec. The Quebec Lithium mine is an open pit, hard rock lithium mine and processing plant currently in the process of being commissioned to produce lithium concentrate. With the restart of the hydro metallurgical plant at the Quebec Lithium Mine, North American Lithium intends to become an integrated producer capable of producing lithium carbonate. The high quality product expected to be produced from the mine is anticipated to meet the rapidly growing needs of the portable consumer electronics industry, electric and hybrid-electric vehicles, and grid storage solutions. Further information about North American Lithium, including financial and other information, will be provided in a subsequent news release.

As noted above, North American Lithium is currently 75% owned by 955 and 25% by Resources Quebec Inc. Resources Quebec Inc. is a Quebec corporation resident in the Province of Quebec, and is beneficially owned directly or indirectly by the Province of Quebec. 955 is a corporation resident in Ontario, existing under the federal laws of Canada, and is wholly owned by JIIL. JIIL has investment decision-making authority over 955 and the holdings of 955, and is a corporation resident in Ontario and existing under the federal laws of Canada.

Cautionary Note

As noted above, completion of the Transaction is subject to a number of conditions including, without limitation, approval of the Exchange, approval of the shareholders of North American Lithium and Richmond Road, court approval of the Transaction (if required), completion of the Consolidation and Continuation by Richmond Road and completion of the Financing by North American Lithium. Where applicable, the Transaction cannot close until the required approvals have been 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 continuous disclosure document containing full, true and plain disclosure regarding the Transaction, required to be filed with the securities regulatory authorities having jurisdiction over the affairs of the Company, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. The trading in the securities of Richmond Road on the Exchange, if reinstated prior to completion of the Transaction, should be considered highly speculative.

Trading in the common shares of the Company is presently halted and is expected to remain halted pending closing of the Transaction. While halted, the common shares of the Company may only trade upon Exchange approval and the filing of required materials with the Exchange as contemplated by Exchange policy.

Disclaimer for Forward-Looking Information

Although the Company 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 this forward-looking information are reasonable, undue reliance should not be placed on them because the Company can give no assurance that they will prove to be correct. When used in this press release, the words "estimate", "project", "belief", "anticipate", "intend", "expect", "plan", "predict", "may" or "should" and the negative of these words or such variations thereon or comparable terminology are intended to identify forward-looking statements and information. The forward-looking statements and information in this press release include information relating to the business plans of Richmond Road and North American Lithium, the Financing, the Transaction (including Exchange approval, court approval, and the closing of the Transaction) and the board of directors and management of the Resulting Issuer upon completion of the Transaction. Such statements and information reflect the current view of Richmond Road and/or North American Lithium, respectively. Risks and uncertainties that may cause actual results to differ materially from those contemplated in those forward-looking statements and information.

By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Such factors include, among others, the following risks:

  • there is no assurance that the Financing will be completed or as to the actual proceeds to be raised in connection with the Financing or as to the offering price to be realized. In particular, the amount raised may be significantly less than the amounts indicated if investors are not prepared to invest;
  • there is no assurance that Richmond Road and North American Lithium will obtain all requisite approvals for the Transaction, including the approval of the North American Lithium Shareholders, the approval of the Exchange for the Transaction (which may be conditional upon amendments to the terms of the Transaction) or court approval of the Transaction;
  • following completion of the Transaction, the Resulting Issuer may require additional financing from time to time in order to continue its operations. Financing may not be available when needed or on terms and conditions acceptable to the Resulting Issuer;
  • new laws or regulations could adversely affect the Resulting Issuer's business and results of operations;
  • the stock markets have experienced volatility that often has been unrelated to the performance of companies. These fluctuations may adversely affect the price of the Resulting Issuer's securities, regardless of its operating performance;

There are a number of important factors that could cause Richmond Road and North American Lithium's actual results to differ materially from those indicated or implied by forward-looking statements and information. Such factors include, among others: currency fluctuations; limited business history of Richmond Road; disruptions or changes in the credit or security markets; results of operation activities and development of projects; project cost overruns or unanticipated costs and expenses, fluctuations in commodity prices, and general market and industry conditions. The terms and conditions of the Qualifying Transaction may be based on the Company's due diligence (which is going to be limited as the Company intends largely to rely on the due diligence of other parties of the Qualifying Transaction to contain its costs, among other things) and the receipt of tax, corporate and securities law advice for both the Company and North American lithium. The Company undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Company, North American Lithium, their securities, or their respective financial or operating results (as applicable).

Richmond Road cautions that the foregoing list of material factors is not exhaustive. When relying on Richmond Road's forward-looking statements and information to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Richmond Road has assumed that the material factors referred to in the previous paragraph will not cause such forward-looking statements and information to differ materially from actual results or events. However, the list of these factors is not exhaustive and is subject to change and there can be no assurance that such assumptions will reflect the actual outcome of such items or factors. The information about North American Lithium contained in this press release has not been independently verified by the Company.

THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS PRESS RELEASE REPRESENTS THE EXPECTATIONS OF RICHMOND ROAD AS OF THE DATE OF THIS PRESS RELEASE AND, ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. READERS SHOULD NOT PLACE UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS INFORMATION AS OF ANY OTHER DATE. WHILE RICHMOND ROAD MAY ELECT TO, IT DOES NOT UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME EXCEPT AS REQUIRED IN ACCORDANCE WITH APPLICABLE LAWS.

This press release is not an offer of the securities for sale in the United States. The securities have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an exemption from registration. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

Completion of the Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange requirements, majority of the minority shareholder approval. Where applicable, 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 or filing statement to be prepared in connection with the Transaction, 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 a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this press release.

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 or accuracy of this press release.

Contact Information

  • Richmond Road Capital Corp.
    Robb McNaughton
    Director
    (403) 298-1077
    (403) 695-3546 (FAX)

    Richmond Road Capital Corp.
    Michael Doyle
    President, Chief Executive Officer and Director
    (403) 708-2427