Mr. Ian Graham reports

COMMERCE RESOURCES AND MONT ROYAL RESOURCES ENTER INTO ARRANGEMENT AGREEMENT TO CREATE A CANADIAN-FOCUSED CRITICAL MINERALS DEVELOPMENT COMPANY

Commerce Resources Corp. has entered into a definitive arrangement agreement with Mont Royal Resources Ltd., dated April 9, 2025, to combine their respective businesses in a merger transaction, pursuant to which Mont Royal has agreed to acquire 100 per cent of the issued and outstanding common shares of Commerce by way of a court-approved plan of arrangement under the Business Corporation Act (British Columbia) (BCBCA).

This transaction will create a Quebec-focused critical minerals explorer and developer through the combination of Commerce's Ashram rare earths and fluorspar project, and Eldor niobium exploration project, and Mont Royal's Northern Lights lithium project.

The merger will result in a dual listing on the TSX Venture Exchange and the Australian Securities Exchange, enabling greater access to liquidity and financing for the Ashram project, with the combined entity bringing together highly experienced members of the management teams of each company with strong capital markets experience, project development and operational expertise.

Pursuant to the terms of the agreement, holders of Commerce shares will receive 2.3271 ordinary shares of Mont Royal in exchange for each Commerce share held immediately prior to the effective time of the transaction. Based on the exchange ratio and a 30-traded day volume-weighted average price of 4.391 Australian cents per Mont Royal share on the ASX prior to suspension on Feb. 14, 2025, this represents an implied value of 9.3 Canadian cents per Commerce share, an equity value for Commerce of $17.2-million (Canadian) and an implied premium of 55 per cent to Commerce's closing share price of six Canadian cents on April 8, 2025.

As of the date of the agreement, existing shareholders of Commerce and shareholders of Mont Royal will own approximately 85.3 per cent and 14.7 per cent, respectively, of the outstanding Mont Royal shares following completion of the transaction (before taking into account the Commerce convertible note financing and Mont Royal equity raise -- each as defined below). Commerce will appoint three directors to the Mont Royal board and Mont Royal will have one director.

The transaction is conditional upon, among other things, Mont Royal raising up to $10.0-million (Australian) through the issue of Mont Royal shares, pursuant to a public equity offering in Australia. The net proceeds of the Mont Royal equity raise are expected to be used for, among other things, advancing the preliminary economic assessment (PEA) at the Ashram project, while also advancing the Eldor niobium project and the exploration pipeline at the Northern Lights project.

In addition to the announcement of the transaction, Commerce intends to conduct a convertible note financing with a number of existing Commerce and Mont Royal shareholders, and other sophisticated investors, to raise up to $2.2-million (Canadian), to provide interim financing to be used for the continuation of studies for the development of the Ashram project and for working capital while the transaction is completed.

The convertible note financing is necessary and integral for the transaction. The convertible notes issued pursuant to the convertible note financing will automatically convert into Mont Royal shares upon completion of the transaction at a conversion price set out therein.

Transaction rationale

The transaction between Commerce and Mont Royal will create an ASX- and TSX-V-listed, Quebec-focused, critical mineral developer and exploration company with a strong focus on rare earths, fluorspar, niobium and lithium exploration. In addition to Commerce's existing assets in Canada, the key highlights of the combination include:

• A complementary exploration asset package at Mont Royal's Northern Lights project, covering an area of 536 square kilometres in the Upper Eastmain greenstone belt, offering lithium, copper and gold potential;
• Achieving a dual listing on the ASX and TSX-V, which aims to attract a broader range of investors for the merged group, increase liquidity and provide a greater ability to raise capital;
• The ASX has a greater number of listed developing rare earth companies, providing a stronger group of peer companies against which to benchmark the Ashram project;
• Having access to the combined experience of key members of the Commerce and Mont Royal boards, senior management and major shareholders, who have held former and current roles with successful international resource groups, including:
  • Champion Iron Ltd.;
  • Green Technology Metals;
  • Primero Group Ltd. (acquired by NRW Holdings Ltd.);
  • Riversdale Resources Ltd. (acquired by Hancock Prospecting Pty. Ltd.);
  • Bannerman Energy Ltd.

Commerce's executive director, Jeremy Robinson, said: "The team at Commerce is excited at the prospect of working with the Mont Royal team to create a new Canadian-focused critical metals company and to maximize the value of our outstanding flagship asset at Ashram. This merger will provide a dual listing on the ASX and TSX-V, funding, additional expertise, and a clear strategy to generate superior shareholder returns through completion of the studies at the Ashram project, while also unlocking additional exploration upside at the Eldor niobium and Northern Lights exploration projects."

Mont Royal's executive director, Peter Ruse, said: "This transaction is a great opportunity to create value for both groups of shareholders. Combining the proven exploration and management skills of the Commerce and Mont Royal teams with the large resource at Ashram and the additional upside at the Eldor niobium project will have the potential to unlock value for shareholders."

Board of directors and management

Upon closing of the transaction, it is anticipated that the board of the combined company will comprise a new non-executive chairman in Cameron Henry, appointed by Commerce, two directors from Commerce, being Mr. Robinson and Adam Ritchie, and one non-executive director from Mont Royal, expected to be Ronnie Beevor. In addition, it is expected that a new chief executive officer and president will be appointed prior to the completion of the transaction to replace the interim Commerce CEO and president, Mr. Robinson, who will transition to a non-executive director of the merged group.

Summary of transaction terms

Pursuant to the terms and conditions of the agreement, Commerce shareholders will receive 2.3271 fully paid Mont Royal shares for each Commerce share held immediately prior to the effective time, implying a consideration of 9.3 Canadian cents per Commerce share.

In addition, all outstanding stock options of Commerce immediately prior to the effective time shall be exchanged for replacement options of Mont Royal on substantially the same terms and conditions, and exercisable to acquire such number of Mont Royal shares at such exercise price in accordance with the exchange ratio. All outstanding warrants of Commerce immediately prior to the effective time shall be adjusted in accordance with their terms and become exercisable, based on the exchange ratio, to purchase Mont Royal shares on substantially the same terms and conditions.

The transaction will be effected by way of a court-approved plan of arrangement under the BCBCA and will require the approval of: (a) at least 66-2/3rds per cent of the votes cast by Commerce shareholders; and (b) if necessary, a simple majority of the votes cast by Commerce shareholders, excluding certain related parties as prescribed by Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions, in each case, voting in person or represented by proxy at a special meeting of Commerce shareholders to consider the transaction. The Commerce meeting is expected to be held in July, 2025.

Commerce's major shareholders and directors of Commerce, representing, in the aggregate, approximately 21.8 per cent of the issued and outstanding Commerce shares, have entered into voting support agreements with Mont Royal, pursuant to which each of them has agreed to, among other things, vote in favour of the transaction at the Commerce meeting.

The agreement includes customary representations and warranties for a transaction of this nature, as well as customary interim period covenants regarding the operation of Commerce's and Mont Royal's businesses. The agreement also provides for customary deal protection provisions, including fiduciary-out provisions, non-solicitation covenants and a right to match any superior proposal as defined by the agreement, as well as a termination fee of $250,000 (Australian) payable to Mont Royal in certain circumstances.

Conditions precedent and key approvals

Completion of the transaction is subject to customary conditions for a transaction of this nature, including:

• Court orders: the Supreme Court of British Columbia granting interim and final orders on terms consistent with the agreement;
• Commerce shareholder approval: Commerce shareholders approving the transaction by way of at least 66-2/3rds per cent of the votes cast on the resolution approving the transaction by the shareholders of Commerce voting as a single class holding Commerce shares on the record date;
• Commerce TSX-V approval: Commerce having obtained all necessary TSX-V approvals in connection with the transaction;
• Mont Royal shareholder approval: Mont Royal shareholders having approved the transaction (including the Mont Royal equity raise and Mont Royal consolidation (as defined below)), including for the purposes of ASX listing Rule 11.1.2;
• ASX approval: the ASX confirming that it will reinstate Mont Royal shares to official quotation on the ASX, subject to the satisfaction of such terms and conditions as are prescribed by the ASX;
• Mont Royal TSX-V approval: Mont Royal having obtained all necessary TSX-V approvals in connection with Mont Royal's proposed listing on the TSX-V;
• Completion of capital raising and consolidation: Mont Royal having completed the Mont Royal equity raise and the consolidation of Mont Royal shares on the basis of 0.2195 postconsolidation Mont Royal share for each preconsolidation Mont Royal share;
• Key regulatory approvals and third party consents: Receipt of any other regulatory approvals or third party consents that have not already been referred to in this news release.

Subject to the satisfaction (or waiver) of all conditions to closing set out in the agreement, it is anticipated that the transaction will be completed in July, 2025. Upon closing of the transaction, it is expected the Commerce shares will be delisted from the TSX-V and Mont Royal shares will begin trading on the TSX-V.

Further information regarding the transaction will be included in a management information circular to be delivered to Commerce shareholders in connection with the Commerce meeting. Copies of the circular, the agreement, the voting support agreements and certain related documents will be filed with the applicable Canadian securities regulators and will be available on SEDAR+.

Special committee and board recommendations and fairness opinion

The board of directors of Commerce, having received a unanimous recommendation from a special committee consisted solely of independent directors of Commerce, and after receiving outside legal and financial advice, unanimously determined that the transaction is in the best interests of Commerce and is fair to the Commerce shareholders, and unanimously recommends that Commerce shareholders vote in favour of the transaction.

In making their respective determinations, the board and the special committee considered, among other factors, the fairness opinion of Evans & Evans Inc. to the effect that as of the date hereof, subject to the assumptions, limitations and qualifications contained in its opinion, the consideration to be received by Commerce shareholders pursuant to the transaction is fair, from a financial point of view, to the Commerce shareholders. A copy of the fairness opinion of Evans & Evans will be included in the circular.

Interim convertible note financing

Commerce intends to conduct a convertible note financing with a number of existing Commerce and Mont Royal shareholders, and other sophisticated investors, to raise up to $2.2-million (Canadian), to provide interim financing to be used for the continuation of studies for the development of the Ashram project and for working capital while the transaction is completed. The convertible note financing is necessary and integral for the transaction. A summary of the key terms of the convertible note financing are set out below:

• Aggregate principal amount -- up to $2.2-million (Canadian);
• Automatically converts on completion of the transaction at the automatic conversion price;
• The automatic conversion price is the implied price per Commerce share based on the Mont Royal share price pursuant to the Mont Royal equity raise converted into Commerce shares at the exchange ratio, provided that, the automatic conversion price is equal to or greater than six Canadian cents, being Commerce's closing share price on April 8, 2025;
• The principal amount owing will bear interest at a rate of 20 per cent per annum and, upon automatic conversion, 12 months of accrued interest will be converted into Mont Royal shares at completion of the transaction;
• If the transaction does not proceed within 12 months, the convertible notes will either mature at a 24-month term from issue with all principal amounts owing and accrued interest due and payable at maturity or, at the holder's election, all principal amounts owing and accrued interest may convert into Commerce shares at an optional conversion price of 12 Canadian cents or, at a conversion price lower than 12 Canadian cents in the event the company undertakes an equity financing lower than the optional conversion price, subject to a minimum conversion price of six Canadian cents, being Commerce's closing share price on April 8, 2025;
• If the transaction does not proceed within 12 months, the holders of the convertible notes will have a pre-emptive right to participate in any equity financing of the company up to the aggregate amount of the principal amounts owing and accrued interest outstanding;
• The company may redeem the convertible notes at any time prior to maturity at a price equal to the aggregate amount of the principal amounts owing and accrued interest outstanding and a cash amount equal to the sum of half of all payments of interest that would be due through the maturity date after redemption;
• The convertible notes will be secured under a general security agreement, while ranking pari passu as between themselves and all holders will enter into an interlender agreement;
• The securities offered have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

Advisers and counsel

Commerce has engaged Evans & Evans, which has provided a fairness opinion in respect of the transaction, Osler, Hoskin & Harcourt LLP as Canadian legal adviser, Hamilton Locke as Australian legal adviser, and Wallabi Group Pty. Ltd. as financial adviser.

About Commerce Resources Corp.

Commerce Resources is a junior mineral resource company focused on the development of the Ashram rare earth and fluorspar deposit, located within the Eldor property in Northern Quebec, Canada. The Ashram deposit is characterized by simple rare earth (monazite, bastnaesite and xenotime) and gangue (carbonates) mineralogy, a large-tonnage resource at favourable grade, and has demonstrated the production of high-grade (more than 30 to 45 per cent TREO (total rare earth oxides)) mineral concentrates at high recovery (more than 60 to 75 per cent) in line with active global producers.

The Ashram deposit also has a fluorspar component, which makes it one of the largest potential sources of fluorspar in the world, and could be a long-term supplier to the met-spar and acid-spar markets. The company is positioning to be one of the lowest-cost rare earth producers globally, with a specific focus on being a long-term supplier of mixed rare earth carbonate and/or NdPr oxide to the global market.

Additionally, Commerce is committed to exploring the potential of other high-value commodities on the property, such as niobium and phosphate minerals, which may help advance Ashram by reducing costs through shared development.

We seek Safe Harbor.