Mr. Gary Lewis reports

ELECTRIC METALS (USA) LIMITED ("EML") ANNOUNCES NON-BROKERED FINANCING

Electric Metals (USA) Ltd. has arranged a non-brokered financing of up to 26,595,746 units of the company. Each unit will consist of one common share in the capital of the company and one share purchase warrant exercisable to acquire one additional common share for a period of 24 months from the date of issuance of the unit.

In connection with the offering, the company has entered into a binding letter of intent (LOI) with Quail Bend dated May 12, 2023, pursuant to which Quail Bend will participate in the offering and acquire up to 21,276,596 units or up to a 16.7-per-cent ownership interest in the company.

The LOI provides that the Quail Bend portion of the offering will close in multiple tranches. The first closing shall occur on or before June 15, 2023, and shall be for an amount of units purchased to be determined by Quail Bend, subject to a minimum of 5,319,150 units for minimum proceeds of not less than $1,250,000.25 and a maximum number of units that do not result in Quail Bend becoming a control person as defined by the policies of the TSX Venture Exchange. The first closing is also expected to include the subscription of 5,319,150 units by certain insiders of the company and other third parties mutually acceptable to the parties. The purchase price for the units sold in the first closing will be 23.5 cents per unit. Each warrant partially comprising the units issued pursuant to the first closing will be exercisable at a price of 35 cents per share for a period of 24 months following the distribution thereof.

The second closing shall be completed in one or more tranches on or prior to Sept. 30, 2023, with any tranche otherwise causing Quail Bend to become a control person to be completed within five business days after receipt of shareholder approval permitting Quail Bend to become a control person. The second closing shall be for: (i) equity units priced at the greater of: (a) 23.5 cents (with the exercise price of the warrant being 35 cents per share); or (b) the lowest sale price and exercise price, respectively, permitted by the TSX-V or any applicable regulatory authority; and (ii) an amount of equity units not exceeding in the aggregate the difference between 21,276,596 and the number of equity units subscribed for by Quail Bend in the first closing.

In connection with the strategic investment and subject to Quail Bend acquiring a minimum of 13 million units pursuant to the offering, Electric Metals has agreed to grant Quail Bend certain investor rights that it will retain so long as it controls 10.0 per cent or more of the issued and outstanding common shares and that will include the following:

• Quail Bend will fill a newly created sixth board seat with its nominee and will receive the right to nominate a director for election as a company nominee at each shareholder meeting of the company.
• Quail Bend will have the right to participate in any public or private equity financing by the company to maintain its pro rata ownership interest in the company and to potentially increase its ownership interest in the company, to the extent there is additional room in the relevant financing.

The LOI provides that a minimum of 80.0 per cent of the funds raised from proceeds of the offering from Quail Bend will be used on further exploration and development of the company's Emily manganese project in Minnesota, United States, including continued exploration drilling, metallurgical and battery test work, process design, and preliminary mine studies.

Comments

Electric Metals chief executive officer Gary Lewis commented: "With drilling at the high-grade Emily manganese project continuing, we are looking to fast-track a number of other project-related activities, including a resource upgrade, metallurgical and battery test work, process design, and preliminary mine studies. The additional funding provided by Quail Bend and the EML insiders will provide certainty in this regard and potentially cut months off our previously determined timeline. We also expect that the addition of a strategic investor of the calibre of Quail Bend will allow the company to advance discussions with U.S. federal and state governments."

Steve Durbin, president of Quail Bend, commented: "I couldn't be more thrilled to be an investor in such an exciting project. We believe that the combination of size, grade and location of the company's deposit are unmatched in North America and provide the foundation for the company to potentially become one of the pre-eminent suppliers to the domestic EV [electric vehicle] battery market. What's even more astonishing is that high-purity manganese is currently 100 per cent imported from overseas, so, in addition to enjoying substantial geological and locational competitive advantages, the resource also has national strategic value, which will certainly be an important factor in the company's journey towards production."

Closing of the offering is subject to customary closing conditions, including the negotiation of definitive unit purchase agreements and an investor rights agreement, receipt of all required regulatory approvals, the availability of prospectus and registration exemptions, and the approval of the TSX-V and where applicable, company shareholders.

The summary of the LOI in this press release is qualified in its entirety by the full text of the LOI, which can be accessed on SEDAR under the company's profile.

Any securities to be issued under the offering will be subject to a hold period of four months and one day in Canada from the closing date of the offering in accordance with the rules and policies of the TSX-V and applicable Canadian securities laws and/or such other further restrictions as may apply under foreign securities laws.

It is anticipated that certain subscribers under the first tranche will be insiders of the company. The issuance of units to insiders of the company pursuant to the first tranche will be considered related party transactions within the meaning of TSX-V Policy 5.9, Protection of Minority Security Holders in Special Transactions, and Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions. For the first tranche, the company intends to rely on the exemption from the formal valuation requirements contained in Section 5.5(a) of MI 61-101 and the exemption from the minority shareholder requirements contained in Section 5.7(1)(a) of MI 61-101 as neither the fair market value of any securities issued to or the consideration paid by such insiders will exceed 25 per cent of the company's market capitalization.

About Electric Metals (USA) Ltd.

Electric Metals is a U.S.-based mineral development company with manganese and silver projects geared to supporting the transition to clean energy. The company's principal asset is the Emily manganese project in Minnesota, which has been the subject of considerable technical studies, including a National Instrument 43-101 technical report resource estimate, with $26-million (U.S.) invested to date. The company's mission in Minnesota is to become a domestic U.S. producer of high-purity, high-value manganese metal and chemical products for supply to U.S. energy, technology and industrial markets. With manganese playing a critical and prominent role in lithium-ion battery formulations and with no current domestic supply or active mines for manganese in North America, the exploration and development of the Emily manganese project represents a significant opportunity for the company's shareholders. In addition, the company owns and operates the Corcoran silver-gold project and the Belmont silver project in Nevada, with the former also having been the subject of an NI 43-101 technical report resource estimate.

We seek Safe Harbor.