Mr. Dan Hamilton reports
AMERIX ANNOUNCES CLOSING OF SECOND TRANCHE PRIVATE PLACEMENT AND PROVIDES
FURTHER INFORMATION IN RESPECT OF THE PROPOSED MERGER WITH EAGLE GRAPHITE
CORPORATION
Amerix Precious Metals Corp. and Eagle Graphite Corp. have closed the second tranche of previously announced private placements of subscription receipts, led by Canaccord Genuity Corp. Eagle issued a total of 2.6 million subscription receipts at a price of 10 cents for gross proceeds of $260,000, and Amerix issued a total of 100,000 subscription receipts at a price of 10 cents for gross proceeds of $10,000.
The proceeds of the private placements will be held in escrow pending the satisfaction of the escrow release conditions as set out in the Amerix press release dated Nov. 5, 2014. Assuming satisfaction of the escrow release conditions, the proceeds of the Amerix offering will be used for exploration expenditures by the resulting issuer (as defined below), which will constitute Canadian exploration expenses (within the meaning of the Income Tax Act (Canada)) and will be renounced in respect of the company's 2014 taxation year. The proceeds of the Eagle offering will be used to process Eagle's stockpiled graphite material, and to quarry and process additional graphite material in order to the meet the delivery requirements pursuant to the graphite offtake agreement between Eagle and ANH Refractories Company.
Pursuant to the terms of the offtake agreement, Eagle is required to make periodic deliveries to ANH of an aggregate of 720 tonnes prior to Dec. 31, 2015, as follows:
-
Jan. 31, 2015 -- 60 tonnes;
-
March 31, 2015 -- an additional 60 tonnes;
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June 30, 2015 -- an additional 100 tonnes;
-
Sept. 30, 2015 -- an additional 200 tonnes;
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Dec. 31, 2015 -- an additional 300 tonnes.
The processing costs of the current graphite stockpiles, in addition to the quarrying and processing costs of the other graphite contained material required to meet Eagle's obligations under the offtake agreement until Dec. 31, 2015, is estimated to be approximately $255,000.
In consideration for its services, the agent received a cash commission equal to 7 per cent of the gross proceeds of the Eagle offering and the Amerix offering, as well as broker warrants to purchase an aggregate of 189,000 resulting issuer shares, representing 7 per cent of the number of subscription receipts issued pursuant to the Amerix offering and Eagle offering at the issue price for a period of 24 months. The cash commission and broker warrants are being held in escrow pending satisfaction of the escrow release conditions.
As previously announced, on Nov. 5, 2014, Amerix, Eagle and a subsidiary of Amerix (Amerix Subco) entered into an amalgamation agreement. Subject to regulatory and other approvals which may be required, and the satisfaction of other conditions contained in the definitive agreement, the merger will occur via a reverse takeover under the policies of the TSX Venture Exchange. Pursuant to the terms of the definitive agreement, Amerix Subco will amalgamate with Eagle, and all outstanding securities of Eagle will be exchanged, on a one-for-one basis, for securities of the resulting issuer. Any outstanding convertible securities of Eagle, including the warrants of Eagle partially comprising the units underlying the subscription receipts issued pursuant to the Eagle offering, will be exchanged for convertible securities of Amerix on similar economic terms. It is anticipated that the resulting issuer will change its name to Eagle Graphite Inc. upon completion of the transaction.
On closing of the transaction, Latitude Minerals Inc., a company controlled (as to approximately 63 per cent) by Jamie Deith, the proposed chief executive officer of the resulting issuer, will own approximately 74 per cent of the resulting issuer. The principal shareholders of Latitude are as follows:
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Jamie Deith (and related trust) -- 63 per cent;
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Sinan Akdeniz (and related trust) -- 26 per cent;
-
Joanne Akdeniz -- 9 per cent.
The transaction has been conditionally approved by the TSX-V. It is anticipated that the common shares of the resulting issuer will be listed on Tier 2 of the TSX-V under the trading symbol EGA and will commence trading in early January, 2015, subject to satisfaction of the listing conditions and final acceptance of the transaction by the TSX-V.
As a result of the closing of the second tranche of each of the Eagle offering and the Amerix offering, the company wishes to update certain disclosure contained in the joint management information circular of Amerix and Eagle dated Nov. 25, 2014, prepared in connection with the transaction. Capitalized terms used below and not otherwise defined have the meanings ascribed thereto in the information circular.
In conjunction with the completion of the transaction, and assuming satisfaction of the escrow release conditions:
-
The Eagle shareholders as of the date of the information circular will
hold an aggregate of 220,198,800 resulting issuer common shares, representing approximately 81.48 per cent of the issued and outstanding
resulting issuer common shares.
-
The holders of Eagle notes in the aggregate value of $825,000 will hold
an aggregate of 9.24 million resulting issuer common shares, representing
approximately 3.42 per cent of the issued and outstanding resulting issuer
common shares.
-
The holders of the 100,000 ANH options and the 300,000 BayFront options
will hold an aggregate of eight million resulting issuer common shares
(assuming that both the ANH options and the BayFront options are
exercised in full), representing approximately 2.96 per cent of the issued and
outstanding resulting issuer common shares.
-
The current Amerix shareholders will hold an aggregate of approximately
4,122,746 resulting issuer common shares following the consolidation, representing approximately 1.52 per cent of the outstanding resulting issuer
common shares.
-
Purchasers under the private placements will hold an aggregate of
28.68 million resulting issuer common shares, representing approximately
10.61 per cent of the outstanding resulting issuer common shares.
Consolidated capitalization of Eagle
The associated table sets forth Eagle's share capital for and as of the end of the periods indicated. This information is derived in part from the financial statements of Eagle, which are set forth in exhibit A of the information circular.
Amount
Amount Amount outstanding as
Designation of security authorized or to outstanding as of the date
be authorized of May 31, 2014 hereof
Eagle common shares Unlimited 11,009,440 11,009,440
Eagle subscription
receipts 17,650,000 Nil 17,650,000
Eagle warrants 7,525,250 Nil 7,525,250
Eagle broker warrants 1,235,500 Nil 1,235,500
Eagle notes $825,000 $375,000 $825,000
ANH options 100,000 100,000 100,000
BayFront options 300,000 300,000 300,000
Prior sales of Eagle
In the 12-month period preceding the date hereof, the securities of Eagle summarized in the associated table have been issued.
Nature of
Number and type of Issue/exercise consideration
Date Eagle securities price per security received
May 22, 2014 Each $25,000
principal is
convertible into
280,000 Eagle
common shares and
$375,000 Eagle 140,000 Eagle
notes warrants Cash
May 30, 2014 consideration for
amending the ANH
100,000 ANH options USD $0.10 offtake agreement
June 22, 2014 Each $25,000
principal is
convertible into
280,000 Eagle
common shares and
$100,000 Eagle 140,000 Eagle
notes warrants Cash
Oct. 22, 2014 Each $25,000
principal is
convertible into
280,000 Eagle
common shares and
$350,000 Eagle 140,000 Eagle
notes warrants Cash
Nov. 5, 2014 15,050,000 Eagle
subscription
receipts $ 0.10 Cash
Nov. 5, 2014 1,053,500 Eagle
broker warrants $ 0.10 Services
Dec. 11, 2014 2,600,000 Eagle
subscription
receipts $ 0.10 Cash
Dec. 11, 2014 182,000 Eagle
broker warrants $ 0.10 Services
Fully diluted share capital
The associated table sets forth the capitalization of the resulting issuer after giving effect to the transactions described in the unaudited pro forma combined financial information for the resulting issuer.
Amount outstanding after
giving effect to the
transaction, the
consolidation, the stock
split and assuming
Amount authorized or to satisfaction of the
Designation of security be authorized escrow release conditions
Resulting issuer common
shares Unlimited 270,241,546
Resulting issuer first
preference shares Unlimited Nil
Resulting issuer second
preference shares Unlimited Nil
The associated table sets out the fully diluted share capital of the resulting issuer after giving effect to the transaction, the consolidation and the stock split, and assuming satisfaction of the escrow release conditions.
Resulting issuer common
shares after giving effect
to the transaction, the
consolidation and the stock
split, and assuming
satisfaction of the escrow
release conditions
Resulting issuer common shares held by former
Amerix shareholders (on a postconsolidation
basis) 4,122,746 (1.44%)
Resulting issuer common shares held by former
Eagle shareholders 220,198,800 (77.03%)
Resulting issuer common shares held by
purchasers in the Amerix private placement 11,030,000 (3.86%)
Resulting issuer common shares held by
purchasers in the Eagle private placement 17,650,000 (6.17%)
Resulting issuer common shares issued in
exchange for Eagle common shares issued upon
conversion of the Eagle notes 9,240,000 (3.23%)
Resulting issuer common shares issued upon
exercise of the ANH options and BayFront
options (1) 8,000,000 (2.80%)(1)
Resulting issuer common shares reserved for
issuance pursuant to resulting issuer stock
options issued in replacement of Amerix stock
options (on a postconsolidation basis) 176,666 (0.06%)
Resulting issuer common shares reserved for
issuance pursuant to resulting issuer broker
warrants issued in replacement of Amerix
broker warrants 772,100 (0.27%)
Resulting issuer common shares reserved for
issuance pursuant to resulting issuer
warrants issued in replacement of Eagle
warrants issued upon conversion of the
resulting issuer notes 4,620,000 (1.62%)
Resulting issuer common shares reserved for
issuance pursuant to resulting issuer
warrants issued in replacement of Eagle
warrants issued pursuant to the Eagle private
placement 8,825,000 (3.09%)
Resulting issuer common shares reserved for
issuance pursuant to resulting issuer broker
warrants issued in replacement of Eagle
broker warrants 1,235,500 (0.43%)
(1) Assuming the exercise of all of the ANH options and the BayFront options
Directors and officers of the resulting issuer
The names and jurisdictions of residence of the proposed directors and officers of the resulting issuer, the number and percentage of voting securities beneficially owned, or over which each exercises control or direction, directly or indirectly, following the completion of the transaction and assuming satisfaction of the escrow release conditions, and after giving effect to the consolidation and the stock split, and the offices to be held by each in the resulting issuer are as shown in the associated table.
Number of Percentage of
resulting issuer resulting issuer
common shares common shares
beneficially beneficially
owned or owned or
controlled after controlled after
giving effect to giving effect to
the transaction, the transaction,
the consolidation the consolidation
and the stock and the stock
split and split and
assuming assuming
satisfaction of satisfaction of
the escrow the escrow
release release
Name and country of Position/offices conditions conditions (1)(2)
residence to be held (1)(2)(3) (3)
Jamie Deith (4)(5)
British Columbia,
Canada CEO and director 201,588,800 (5) 74.6%
Dan Hamilton
Ontario, Canada CFO 66,250 Less than 1%
Steve Brunelle (4)
Ontario, Canada Director 54,934 Less than 1%
Robert Matter
Mesa, Arizona, United
States of America Director Nil Nil
Dr. Brian Bapty (4)
British Columbia,
Canada Director Nil Nil
(1) The information as to resulting issuer common shares beneficially owned,
or over which control or direction is exercised, directly or indirectly,
is based upon information furnished to Amerix by the respective directors
and senior officers as at the date hereof.
(2) Excludes any resulting issuer common shares issuable upon the exercise
of resulting issuer stock options, resulting issuer warrants or other
convertible securities of the resulting issuer
(3) After giving effect to the transaction, the directors, officers and
promoters of the resulting issuer, and their respective associates and
affiliates, will, collectively, hold 201,709,984 resulting issuer common
shares, representing approximately 74.64 per cent of the issued and
outstanding resulting issuer common shares, assuming satisfaction of the
escrow release conditions.
(4) Proposed member of the audit committee of the resulting issuer
(5) Includes securities held by Latitude. Latitude, a corporation incorporated
under the Business Corporations Act (British Columbia), currently holds
approximately 91 per cent of the outstanding shares of Eagle. Mr. Deith
is the controlling shareholder of Latitude, which is expected to hold
200,028,800 resulting issuer common shares after giving effect to the
transaction, the consolidation and the stock split, and assuming satisfaction
of the escrow release conditions.
Escrowed securities
The associated table sets out the holders of resulting issuer securities that will be subject to escrow, the number of such resulting issuer securities to be held by each, and the percentage this represents of the issued and outstanding resulting issuer common shares immediately following the completion of the transaction, the consolidation and the stock split, and assuming satisfaction of the escrow release conditions.
After giving effect to the
transaction, the consolidation, the
stock split and the private
Name and municipality placements and assuming
of residence of Designation of satisfaction of the escrow
securityholder class release conditions
Number of Percentage of
securities to be class
held in escrow
(Tier 2 -- value
security escrow
agreement) (1)
Steven Brunelle, Resulting issuer
Toronto, Ont. common shares 54,934 Less than 1%
Daniel Hamilton, Resulting issuer
Toronto, Ont. common shares 66,250 Less than 1%
ANH Refractories
Company, Moon Resulting issuer
township, Pa. common shares 2,000,000 Less than 1%
BayFront Capital
Partners, Ltd., Resulting issuer
Toronto, Ont. common shares 6,000,000 2.22%
(Tier 2 -- surplus
security escrow
agreement)(2)
Latitude Minerals
Inc., Courtenay, Resulting issuer
B.C. (3) common shares 200,028,800 74.7%
Jamie Deith, Resulting issuer
Courtenay, B.C. common shares 560,000 (4) Less than 1%
Timothy Logie, Resulting issuer
Vancouver, B.C. common shares 1,680,000 (5) Less than 1%
Sinan Akdeniz, Resulting issuer
Mississauga, Ont. common shares 280,000 (6) Less than 1%
(1) The resulting issuer common shares subject to the Tier 2 -- value
security escrow agreement will be released from escrow as follows: 10 per
cent immediately following the issuance of the final exchange bulletin in
respect of the transaction and 15 per cent every six months thereafter for
a period of 36 months from the date of the final exchange bulletin. The
escrow agent will be Equity Financial Trust Company.
(2) The resulting issuer common shares subject to the Tier 2 -- surplus
security escrow agreement will be released from escrow as follows: 5 per
cent immediately following the issuance of the final exchange bulletin in
respect of the transaction; 5 per cent six months after issuance of the
final exchange bulletin; 10 per cent after 12 months and after 18 months;
15 per cent after 24 months and after 30 months; and 40 per cent after
36 months. The escrow agent will be Equity Financial Trust Company.
(3) Latitude, a corporation incorporated under the Business Corporations Act
(British Columbia), currently holds approximately 91 per cent of the
outstanding shares of Eagle. Mr. Deith is the controlling shareholder of
Latitude, which is expected to hold 200,028,800 resulting issuer common
shares after giving effect to the transaction, the consolidation and the
stock split, and assuming satisfaction of the escrow release conditions.
(4) A total of 280,000 warrants to purchase resulting issuer common shares
at a price of 15 cents per share for a period of 60 months following
closing of the transaction will also be subject to a Tier 2 surplus
security agreement.
(5) A total of 840,000 warrants will also be subject to a Tier 2 surplus
security agreement.
(6) A total of 140,000 warrants will also be subject to a Tier 2 surplus
security agreement.
Available funds and principal purposes
The associated table sets out information respecting the resulting issuer's sources of cash and intended uses of such cash for a period of 12 months following the completion of the transaction. The amounts shown in the table are estimates only and are based on the best information available to Amerix and Eagle as of the date hereof. The intended uses of such cash and/or the resulting issuer's capital needs may vary based on a number of factors, including the ability of the resulting issuer to meet its exploration and production schedule, and to execute its operating and strategic plans.
Sources Amount
Estimated working capital of Amerix as at Oct. 31, 2014 $ (70,000)(1)
Estimated working capital of Eagle as at Oct. 31, 2014 $ (478,000)(2)
Gross proceeds from Amerix private placement $ 1,103,000
Gross proceeds from Eagle private placement $ 1,765,000
Gross proceeds remaining from Eagle notes $ 350,000
Pro forma adjustments (other than gross proceeds from
private placements) Nil
Total available capital $ 2,670,000
(1) Amerix has a working capital deficiency of $535,000; however, $465,000
of this working capital deficiency attributable to MVPR will not be
financed by Amerix.
(2) Eagle has a working capital deficiency of $2-million; however,
approximately $1,522,000 (after conversion into Canadian funds) of this
working capital deficiency attributable to the prepayment amount provided
by ANH under the ANH offtake agreement is repayable by Eagle under the
terms of the ANH offtake agreement in product out of inventoried stock
and future production rather than cash.
Use of proceeds Amount (1)
Exploration expenses
Phase one work program
Ground-penetrating radar survey and interpretation $ 30,000
Drilling (1,000 m at $120/m) $ 120,000
Mob and demob $ 3,000
Trenching costs $ 10,000
Field crew (geologist/assistant) $ 30,000
Field costs (such as food, accommodation, vehicle rental) $ 15,000
Analytical (200 samples at $50/sample) $ 10,000
Head office costs, report $ 10,000
$ 228,000
Other
Permitting and property taxes $ 48,700
Plant equipment insurance $ 30,000
Base utility costs $ 36,000
Plant employee costs $ 259,000
$ 373,700
Canadian eligible exploration expenditures (2) $ 1,103,000
Expenses in connection with the private placements and
transaction $ 400,760
General and administrative expenses $ 223,440
Unallocated working capital $ 341,100
Total uses $ 2,670,000
(1) Does not include contingency of approximately 15 per cent of the budget for
phase 1
(2) Within the meaning of such term in the Tax Act
Additional information in respect of Eagle, Amerix, the private placements and the transaction can be found in the information circular, which is available under Amerix's profile on SEDAR. Investors are cautioned that, except as disclosed therein, any information released or received with respect to the transaction and/or other associated transactions may not be accurate or complete and should not be relied upon. Trading in the securities of the company should be considered highly speculative. Investors should review the risk factors set forth the information circular.
For further information in respect of the transaction and Eagle, please refer to the prior press releases and the information circular. The transaction is subject to the receipt of TSX-V, and all required regulatory and shareholder approvals.
We seek Safe Harbor.
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