• Issue up to 26,595,746 Units (assuming a Unit price of $0.235, proceeds of approximately $6,250,000 - see below for more detailed information).
• EML insiders to participate along with Quail Bend LLC ("Quail Bend").
• New funding will allow EML to expedite exploration drilling, metallurgical and battery test work and to initiate process design and preliminary mine studies at the high-grade Emily Manganese Project, Minnesota, U.S.

Toronto, Ontario--(Newsfile Corp. - May 16, 2023) - Electric Metals (USA) Limited (TSXV: EML) ("EML" or the "Company"), is pleased to announce a non-brokered financing of up to 26,595,746 units of the Company (the "Units") (the "Offering"). Each Unit will consist of one common share in the capital of the Company (each, a "Common Share") and one share purchase warrant (each, a "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 with Quail Bend dated May 12, 2023 (the "LOI") pursuant to which Quail Bend will participate in the Offering and acquire up to 21,276,596 Units or up to a 16.7% ownership interest in the Company (the "Strategic Investment").

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 (the "First Closing") 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 C$1,250,000.25 and a maximum number of Units which does not result in Quail Bend becoming a "Control Person" as defined by the policies of the TSX Venture Exchange (the "TSXV"). 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 $0.235 per Unit. Each Warrant partially comprising the Units issued pursuant to the First Closing will be exercisable at a price of $0.35 per share for a period of 24 months following the distribution thereof.

The second closing ("Second Closing") shall be completed in one or more tranches on or prior to September 30, 2023 with any tranche otherwise causing Quail Bend to become a "Control Person" to be completed within five (5) 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) C$0.235 (with the exercise price of the Warrant being C$0.35 per share), or (b) the lowest sale price and exercise price, respectively, permitted by the TSXV 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 13,000,000 Units pursuant to the Offering, EML has agreed to grant Quail Bend certain investor rights which it will retain so long as it controls 10.0% or more of the issued and outstanding Common Shares and which 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% 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, USA including continued exploration drilling, metallurgical and battery test work and process design and preliminary mine studies.

Comments

EML CEO 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 caliber of Quail Bend will allow the Company to advance discussions with US 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 preeminent suppliers to the domestic EV battery market. What's even more astonishing is that high purity manganese is currently 100% 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 approval of the TSXV 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 www.SEDAR.com under the Company's profile.

Any securities to be issued under the Offering will be subject to a hold period of four months and a day in Canada from the closing date of the Offering in accordance with the rules and policies of the TSXV 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 TSXV Policy 5.9 - Protection of Minority Security Holders in Special Transactions and Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). 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 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% of the Company's market capitalization.

This news release does not constitute an offer to sell or a solicitation of an offer to sell any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

About Electric Metals (USA) Limited

Electric Metals (USA) Limited (TSXV: EML) 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 US$26 million 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 a National Instrument 43-101 Technical Report - Resource Estimate.

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 release.

For further Information please contact:
Gary Lewis, CEO & Director: (647) 846 5299 - gl@electricmetals.com

Caution Regarding Forward-Looking Information

Certain statements contained in this news release constitute forward-looking information. These statements relate to future events or future performance. The use of any of the words "could", "intend", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on EML's current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. In particular, this news release contains forward-looking information relating to, among other things, the completion of the Strategic Investment, the completion of the First Closing, the completion of the Second Closing, the completion of the Offering, the use of proceeds of the Offering, the operations of the Company, approval by the TSXV and any other regulatory bodies and shareholder approval. Those assumptions and factors are based on information currently available to EML. Although such statements are based on reasonable assumptions of EML's management, there can be no assurance that any conclusions or forecasts will prove to be accurate.

While EML considers these statements to be reasonable based on information currently available, they may prove to be incorrect. Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include market risks and the demand for securities of the Company, risks inherent in the exploration and development of mineral deposits, including risks relating to changes in project parameters as plans continue to be redefined, risks relating to variations in grade or recovery rates, risks relating to changes in mineral prices and the worldwide demand for and supply of minerals, risks related to increased competition and current global financial conditions, access and supply risks, reliance on key personnel, operational risks, and regulatory risks, including risks relating to the acquisition of the necessary licenses and permits, financing, capitalization and liquidity risks.

The forward-looking information contained in this news release is made as of the date hereof, and EML is not obligated, and does not undertake, to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward-looking information contained herein.

NOT FOR DISSEMINATION IN THE UNITED STATES OR THROUGH U.S. NEWS WIRES

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/166269