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Dec. 9, 2019, 10:47 a.m. EST

Fusion Gold Announces Termination of Definitive Agreement and New Letter Agreement with Battery Minerals

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Vancouver, British Columbia, Dec 09, 2019 (Newsfile Corp via COMTEX) -- Vancouver, British Columbia--(Newsfile Corp. - December 9, 2019) - Fusion Gold Ltd.  /zigman2/quotes/207006811/delayed CA:FML.P -8.33% (" Fusion " or the " Company "), has terminated its previously announced binding scheme implementation agreement dated October 11, 2019 () Definitive Agreement ") with Battery Mineral Resources Limited, an Australian incorporated entity () Battery Limited ") and a support agreement also dated October 11, 2019 with Weston Energy LLC. () Weston ") and, as a result, has received an expense reimbursement fee of C$150,000.

The Definitive Agreement was terminated as a result of Battery Limited commencing a voluntary administration process under the Corporations Act, 2001 (Cth) (Australia). The assets of Battery Limited have now been acquired by Battery Mineral Resources Corp. (" New Battery "), a new entity incorporated under the laws of British Columbia by Weston. Further to the termination of the Definitive Agreement, New Battery, Weston and Fusion have entered into a new letter agreement dated December 5, 2019 () Letter Agreement ") in respect of a transaction substantially similar to that contemplated by the Definitive Agreement.

New Battery will carry on the same business as that previously carried on by Battery Limited, namely, the exploration and development of cobalt prospects in Canada, as well as other minerals critical to the lithium-ion battery market and energy storage sector.

The Letter Agreement sets out the principal terms upon which Fusion will acquire all of the issued and outstanding securities of New Battery (together with the related transactions and corporate procedures set out in the Letter Agreement, the " Transaction "), which, although are substantially similar to those announced by news releases dated September 3, 2019 and October 11, 2019 are, for completeness, set forth in detail below.

Fusion, after giving effect to the completion of the Transaction, is referred to in this News Release as the " Resulting Issuer ".

As previously disclosed, Fusion is a "capital pool company" that completed its initial public offering in September 2018. The common shares of Fusion (the " Fusion Shares ") are listed for trading on the TSX Venture Exchange () TSXV " or the " Exchange ") under the stock symbol "FML.P". It is intended that the Transaction, when completed, will constitute the "qualifying transaction" of Fusion for the purposes of Policy 2.4 - Capital Pool Companies of the TSXV.

On closing of the Transaction, Fusion will change its name to "Battery Mineral Resources Inc." or such other similar name as New Battery may direct and which is acceptable to the Exchange and other applicable regulatory authorities.

From and upon completion of the Transaction, the common shares of the Resulting Issuer (the " Resulting Issuer Shares ") will be listed under the trading symbol "BMR". Fusion and New Battery anticipate that, on closing of the Transaction, the Resulting Issuer will meet the TSXV's initial listing requirements for a Tier 1 or Tier 2 mining issuer.

The Letter Agreement was negotiated at arm's length. The terms and conditions outlined in the Letter Agreement are binding on the parties, and the Letter Agreement is expected to be superseded by a definitive agreement to be negotiated between Fusion, Weston and New Battery and entered into on or before December 19, 2019.

About New Battery

New Battery is a private company incorporated under the laws of British Columbia for the purposes of acquiring the assets of Battery Limited.

On or about November 10, 2019, Battery Limited commenced a voluntary administration process under the Corporations Act, 2001 (Cth) (Australia). On or about December 5, 2019, New Battery acquired the assets of Battery Limited by way of the transfer of the issued and outstanding securities of the Battery Limited subsidiaries (the " Shares " and the " Assets ", respectively) pursuant to the terms of a share sale agreement dated December 2, 2019 among New Battery, Weston and Battery Limited () Share Sale Agreement ").

New Battery's principal property will be its Cobalt District Project, a significant aggregation of mineral exploration rights in Ontario and Québec comprising multiple target areas, with New Battery's focus being on the McAra and Gowganda prospects in Ontario, and the Fabré prospect in Québec. With historical exploration in the district having been primarily focused on silver, it is believed that the Cobalt District Project is underexplored for cobalt. New Battery intends to continue exploration and drilling activities at identified cobalt occurrences throughout the project area with the goal of defining additional mineral resources.

A technical report in respect of the Cobalt District Project will be filed in connection with the Transaction, which will include 2019 drilling results, and an update of the mineral resource estimate for the McAra prospect.

New Battery's head and registered office is located at 744 West Hastings St, Suite 400, Vancouver, BC V6C 1A5.

About Weston

Weston is a limited liability company formed under the laws of Delaware as an investment platform to acquire energy and natural resources assets. Weston's outstanding voting securities are owned by Yorktown Partners LLC and other investors. Yorktown Partners LLC is a private equity investment group based in New York City, which has deployed over US$8 billion in energy related investments over the past 23 years. Weston currently holds all of the common shares of New Battery.

Following its exchange of New Battery Shares for Resulting Issuer Shares upon completion of the Transaction and completion of the Concurrent Financing (as described below) and the purchase of Fusion Shares under the Share Purchase Agreements (as described below), Weston is expected to be a "Control Person" (as that term is defined under TSXV policies) of the Resulting Issuer as it will own more than 20% of the Resulting Issuer Shares then outstanding.

Structure of the Transaction

Fusion and New Battery currently intend to effect the Transaction by way of a direct share exchange, pursuant to which Fusion will acquire all of the issued and outstanding securities of New Battery from the New Battery security holders in consideration for securities of Fusion, and New Battery will become a wholly-owned subsidiary of Fusion. Fusion and New Battery have agreed to cooperate with each other in structuring the Transaction in an efficient manner and the final Transaction structure may differ from that presented above following receipt of final tax, securities, corporate law and other advice.

The parties will negotiate in good faith to enter into a more detailed and definitive share exchange among each of the New Battery shareholders, Weston, Fusion and New Battery (the " New Definitive Agreement ") in respect of the Transaction. The New Definitive Agreement will include customary terms and conditions (including representations and warranties regarding the Shares and Assets, covenants, conditions, and other provisions consistent with this Agreement) for a transaction of the nature of the Transaction and will include: (i) a covenant by each of Fusion, Weston and New Battery not to complete the Transaction unless the transactions contemplated by the Share Purchase Agreements (as defined below) have been completed or will be completed concurrently with the completion of the Transaction; and (ii) a guarantee by Weston of the obligations of New Battery.

The parties agreed to use commercially reasonable efforts to enter into the New Definitive Agreement on or before December 19, 2019.

Terms of the Transaction

In connection with the Transaction, Fusion intends to consolidate its common shares on a 2:1 basis (the " Share Consolidation ").

Completion of the Transaction is subject to the satisfaction of certain conditions, including but not limited to: (i) receipt of all requisite regulatory approvals, orders, notices and consents to implement the Transaction including those of the Exchange; (ii) completion of the Concurrent Financing; and (iii) Fusion having affected the name change referred to above and the Consolidation.

Each of Fusion, Weston and New Battery has agreed to not, directly or indirectly, make, solicit, initiate, discuss, entertain, encourage, promote or facilitate any alternative transactions or enter into any agreement, arrangement or understanding related to any proposal with respect to any alternative transaction.

Subject to satisfaction or waiver of the conditions to the Transaction, Fusion and New Battery anticipate that the Transaction will be completed on or before March 15, 2020.

Each of Fusion and New Battery will bear its own costs in respect of the proposed Transaction, except that New Battery will pay all regulatory fees including those related to sponsorship, if applicable.

In the event the Transaction is not consummated for any reason other than as a result of Fusion exercising its right to terminate the Letter Agreement as a result of its due diligence review of New Battery, or the failure of Fusion to fulfill a material condition or obligation under the Letter Agreement or the New Definitive Agreement, New Battery has agreed to pay, or cause to be paid, to Fusion, C$150,000, as an expense reimbursement.

Share Purchase Agreements

Concurrently with execution and delivery of the New Definitive Agreement, Weston will enter into share purchase agreements (the " Share Purchase Agreements ") with David DeWitt and January Vandale () Fusion Vendors "). Under the Share Purchase Agreements, the Fusion Vendors will agree to sell and transfer to Weston, concurrently with the completion of the Transaction, an aggregate of 3,200,000 outstanding common shares of Fusion (prior to giving effect to the Consolidation) at a price of C$0.08 per share. Those shares are currently held in escrow pursuant to an escrow agreement, dated June 19, 2018, among Fusion, the Fusion Vendors and Odyssey Trust Company of Canada as escrow agent.

Concurrent Financing

In connection with the Transaction, New Battery proposes to complete a "best efforts" private placement of: (i) flow-through common shares of New Battery; and (ii) common shares of New Battery, in each case, at a price to be determined in the context of market conditions but to, collectively, raise gross proceeds of at least C$5 million. Shares issued under the private placement which shall be immediately exchanged for one post-Consolidation common share of Fusion upon closing of the Transaction (together, the " Concurrent Financing ").

The net proceeds of the Concurrent Financing will be used by the Resulting Issuer for continued mineral exploration activities across its mineral properties, including drilling and resource development and general operating expenses. Finders' fees or commissions in cash or securities may be paid in connection with the Concurrent Financing.

The Resulting Issuer

Subject to finalization of the terms of the Concurrent Financing, after giving effect to the (i) Consolidation, (ii) the Concurrent Financing; and (iii) the issuance of common shares to Weston and others in connection with the organization of New Battery (including the acquisition of the Assets), it is anticipated that there will be an aggregate of approximately 100 million shares issued in the Resulting Issuer.

Directors, Management and Insiders

Upon completion of the Transaction, it is expected that the management of the Resulting Issuer will consist of Lazaros Nikeas, Ronald Phillips, Jack Cartmel, Peter Doyle, and Dr. Henry Sandri. It is anticipated that the board of directors of the Resulting Issuer will consist of Lazaros Nikeas, Dr. Stephen Dunmead, John Kiernan, and one additional New Battery nominee. All directors and officers of Fusion will resign at the closing of the Transaction.

The following individuals are expected to be directors or senior officers of the Resulting Issuer:

Lazaros Nikeas - Chief Executive Officer and Director

Mr. Nikeas is the current Chief Executive Officer of New Battery and was appointed to the board of directors of New Battery (the " Battery Board ") on December 2, 2019. He is currently a principal investment manager for Weston, a portfolio company of New York private equity group, Yorktown Partners LLC. Prior to this, he was a Partner of Traxys Capital Partners, a private equity vehicle focused on mining, chemicals and industrial investments in partnership with The Carlyle Group. Before moving into private equity, he served as the Head of Corporate Finance Advisory for Materials, Mining and Chemicals for North America for BNP Paribas for five years. Other investment banking roles included Partner in Mergers & Acquisitions Advisory at Hill Street Capital for eight years and as a Corporate Finance Analyst at Morgan Stanley, where he began his career. Altogether, he has advised on over US$25 billion of mergers and acquisitions transactions. Mr. Nikeas holds a Bachelor of Arts from Amherst College in Massachusetts, U.S.

Ronald Phillips - Vice President, Business Development

/zigman2/quotes/207006811/delayed
CA : Canada: TSX Venture
$ 0.17
-0.02 -8.33%
Volume: 0.00
Aug. 1, 2019 8:48a
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$191,500
Rev. per Employee
N/A
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