VANCOUVER, BC, March 31,
2023 /CNW/ - Strategic Resources Inc. (TSXV:
SR) (the "Company" or "Strategic") is pleased to announce
that it has closed the acquisition of BlackRock Metals Inc.
announced on December 13, 2022 and
the conversion of the subscription receipts to shares (the
"Transaction").
Sean Cleary, Strategic CEO
& Chairman commented: "This is an excellent time to be
taking the BlackRock project public given the positive metal market
fundamentals. Our high-purity iron will be required for the
transition to green steel and electrification of the iron and steel
industry. Our vanadium will be required to fuel increased demand
coming from growth in high-tensile steel and the increasing
deployment of vanadium redox flow batteries. Continued support from
Investissement Québec, Orion Mine Finance and the Cree Nation
Government should enable the new Strategic to take advantage of
these opportunities."
Strategic Resources Positioning and Near-term Business
Plan
Strategic is now a high purity metallic iron and critical
minerals company with assets in two world class mining
jurisdictions. The Company is focused on providing the highest
purity (96% Fe) metallic iron on the market to be utilized in the
decarbonizing efforts of the foundry and steel producers in
North America and Europe. The vanadium and titanium ferroalloy
and energy metals products will also assist in alleviating the
critical minerals and battery metals shortage in North America and Europe. The Company will spend the balance of
2023 working to put together a construction financing package for
the BlackRock project that would allow Strategic to start
construction on the project in 2024.
The business combination provides Strategic with three main
assets:
1) Metallurgical processing facility – Canada. A fully permitted metallurgical
facility to be constructed at Port Saguenay in Québec (East Coast
deep sea port). The facility will consist of: a pelletizing plant
that can take the BlackRock mine site vanadium-titanium-magnetite
("VTM") concentrate or iron concentrate feed from third party
groups, a direct reduced iron furnace, open slag bath electric
furnace, vanadium converter furnace, conveyor system and wharf
access. 38% of the detailed engineering has been completed for this
facility. Power and natural gas agreements are in place and the
project has all the authorizations needed to start
construction.
2) Mine and beneficiation plant –
Canada. A fully permitted mine
and concentrator to be constructed in Chibougamau, Quebec. The mine site as
contemplated in the November 2022
Feasibility Study ("FS") will consist of one open pit with a
39-year mine life and a magnetite concentrator that will produce
approximately one million tonnes of VTM concentrate per year. 61%
of the detailed engineering has been completed for this facility.
The Armitage pit, which has also has a measured and indicated
mineral resource estimate was not included in the FS, but
represents a future option for growth and expansion.
FS Economic Results and Production Summary:
Economic
Assumptions
|
|
|
Exchange
Rate
|
CAD:USD
|
0.76
|
Average high purity pig
iron price
|
US$/t
|
$786
|
Average ferrovanadium
price
|
US$/kg
|
$38.17
|
Average titanium slag
price
|
US$/t
|
$300
|
|
|
|
Mining
Summary
|
|
|
Mine life
|
years
|
39
|
Average annual mill
feed
|
Mtpa
|
3.3
|
Average annual pig iron
production
|
kt
|
526
|
Average annual
ferrovanadium production
|
kt
|
4.4
|
Average annual titanium
slag production
|
kt
|
118
|
|
|
|
Economic
Results
|
|
|
Initial capital (mine
site and metallurgical plant)
|
C$M
|
$1,471
|
Pig iron cash
costs
|
US$/t
|
$277
|
Pig iron
all-in-sustaining cash costs
|
US$/t
|
$306
|
Ferrovanadium cash
costs
|
US$/kg
|
$13.61
|
Ferrovanadium all-in
sustaining cash costs
|
US$/kg
|
$15.02
|
After-tax NPV
(8%)
|
C$M
|
$1,932
|
After-tax
IRR
|
%
|
18.2 %
|
Payback
period
|
years
|
5.4
|
3) Mustavaara project – Finland. The Company completed a
Preliminary Economic Assessment ("PEA") on the past producing
Mustavaara mine in Finland project
in 2021, which contemplated a smelter and hydrometallurgical plant
in Raahe, separate from the mine site and concentrator. Given the
planned metallurgical facility in Québec for the BlackRock project
and similarities between the BlackRock and Mustavaara concentrate
specifications, the Company will now only evaluate a mine site and
concentrator operation in Finland,
with concentrate expected to be processed at the Quebec facility. The proposed project will
have 329 kt of annual pig iron and 4.6 kt of annual FeV80
production over a 20-year mine life, as described in the PEA.
Details of the Transaction
In conjunction with the Transaction:
- Strategic consolidated its 44,833,038 outstanding shares on a
six-for-one basis to 7,472,173 shares;
- Strategic acquired all of the outstanding shares of BlackRock
from the BlackRock shareholders in exchange for 46,666,667 shares
of Strategic (on a post-consolidation basis), such that BlackRock
is now a wholly-owned subsidiary of Strategic. All of the shares
issued to acquire BlackRock are subject to escrow restrictions (as
described in 'Capital Structure' below);
- Strategic raised gross proceeds of $13,500,000 through the sale of subscription
receipts, and converted every six receipts to one post-consolidated
common share on the basis of $3.00
per share (or $0.50 per share on a
pre-consolidation basis);
- Strategic raised gross proceeds of $500,000 through the sale of convertible notes,
and converted the notes and $9,315 of
accrued interest to 169,772 post-consolidated common shares on the
basis of $3.00 per share (or
$0.50 per share on a
pre-consolidation basis);
- Strategic issued a total of 2,256,609 restricted share units
(RSUs) to replace outstanding BlackRock RSUs, the exercise of which
remains subject to disinterested shareholder approval being
received at the Company's annual general meeting scheduled for
April 26, 2023;
- Strategic prepared a Filing Statement in the form prescribed
under the TSX Venture Exchange ("TSXV") Corporate Finance Manual,
which was filed on SEDAR on March 27,
2023;
- Strategic received the consent of its shareholders to the
acquisition of BlackRock, and the change of control resulting
therefrom, by way of consent resolution signed by shareholders
holding 67.93% of the outstanding shares of Strategic;
- Strategic and BlackRock received an independent technical
report on BlackRock's mineral property, prepared in compliance with
NI 43-101. A copy of the technical report has been filed on
SEDAR;
- Strategic received a fairness opinion from Cormark Securities
Inc. that the Transaction is fair, from a financial point of view,
to the Strategic shareholders;
- Scott Hicks resigned as CEO and
as a director; Tiko Maki resigned as
a director; Martin Rip resigned as CFO; each of Sean Cleary, Kurt
Wasserman and Amyot Choquette
were appointed as new directors; Sean
Cleary was appointed CEO, Dan
Nir was appointed as CFO; Scott
Hicks was appointed Executive Vice-President of Corporate
Development; and Charles Spector was
appointed Legal and Corporate Secretary;
- Strategic's head office and principal place of business has
been relocated to the Province of Quebec; and
- The Company's auditors have been changed to KPMG LLP, Chartered
Professional Accountants, of 600 de Maisonneuve Ouest Blvd, suite
1500, Montreal, Québec.
Details of the Receipt Offering
Strategic issued a total of 4,500,000 subscription receipts at
$3.00 per subscription receipt (each
on a post-consolidation basis; 27,000,000 receipts at $0.50 per receipt on a pre-consolidated basis)
for gross proceeds of $13,500,000
(the "Receipt Offering"). Each subscription receipt automatically
converted to one common share of the Company on closing of the
Company's acquisition of BlackRock. The Company plans to use the
net proceeds from the Receipt Offering to advance the BlackRock
project to a construction decision, continue permitting and
pre-feasibility study work at Mustavaara, and for general corporate
purposes. All securities issued in the Receipt Offering will be
subject to a statutory hold period of four months and one day from
the date of issuing the respective Receipts.
Certain officers, directors and other insiders of Strategic
participated in the Receipt Offering. This constituted a "related
party transaction" within the meaning of TSXV Policy 5.9 and
Multilateral Instrument 61-101 – Protection of Minority Security
Holders in Special Transactions ("MI 61-101"). The Company
relied on exemptions from the formal valuation and minority
shareholder approval requirements of MI 61-101 contained in
sections 5.5(a) and 5.7(1)(a) thereof in respect of related party
participation in the Receipt Offering as neither the fair market
value (as determined under MI 61-101) of the subject matter of, nor
the fair market value of the consideration for, the Receipt
Offering, insofar as it involves the related parties, exceeded 25%
of the Company's market capitalization (as determined under MI
61-101).
Board of Directors
Following closing, the board of directors of the Company will be
composed of Sean Cleary,
Amyot Choquette, Kurt Wasserman, Michael
Moore and Mark Serdan. The
Company plans to hold an Annual General Meeting on April 26, 2023, where Scott Hicks will also be nominated to the board
of directors, expanding the size of the board to six. More details
can be found on the Company's SEDAR profile.
Capital Structure
The Company has a total of 58,805,506 shares, 597,500 warrants
(expiring April 20, 2023), 489,000
options, and 2,256,609 RSUs outstanding following closing of the
Transaction.
The Company is expected to have approximately $12.7 million of available funds, of which it
intends to use $0.5 million toward
mine development work as recommended by the FS. For a full
description of the expected use of funds, refer to the Company's
Filing Statement on SEDAR.
A total of 49,533,334 shares issued under the Transaction
are subject to a TSXV value escrow, to be released as to 10% on
receipt of final TSXV approval, and an additional 15% every six
months thereafter over 36 months. All of the shares issued on
conversion of the subscription receipts and notes are subject to
certain resale restrictions, as noted above.
The only persons who hold 10% or more of the Company's
outstanding shares following closing are Investissement Québec
("IQ") and OMF Fund II H. Ltd. ("Orion"), each holding 23,999,420
Shares representing 40.81% of the Company's shares. All of their
shares are subject to escrow as noted above. The Company has
entered into an Investor Rights Agreement with each of IQ and Orion
(each a "Shareholder") whereby each Shareholder, for so long as it
holds at least a 10% equity interest in the Company:
(a)
|
will have the right to
receive notice of and to participate in any equity financing
undertaken by the Company, so as to maintain its equity percentage
interest in the Company;
|
|
|
(b)
|
will have the right to
receive a subscription right each time the Company grants options
or warrants to third parties to acquire Company shares (other than
stock options under the Company's equity compensation plan), in
such quantities as to enable the Shareholder to maintain its equity
percentage interest in the Company on a fully diluted
basis;
|
|
|
(c)
|
will have the right to
nominate persons for appointment as directors of the Company, as
to: (i) two nominees for so long as the Shareholder holds at least
a 20% equity interest, and (ii) one nominee for so long as the
Shareholder holds at least a 10% equity interest;
|
|
|
(d)
|
will have the right to
appoint one member to the Company's Technical Committee (to be a
five-person committee established to review operations regarding
development of the VTM Property and the Metallurgical
Facility;
|
|
|
(e)
|
will have the right to
appoint one of its director nominees to any standing committee of
the directors; and
|
|
|
(f)
|
will have the right to
require the Company to file one or more prospectuses and take such
other steps as may be reasonably necessary to facilitate a
secondary public offering of some or all of the Shareholder's
equity interest in the Company, either on its own or in conjunction
with a public offering being undertaken by the Company.
|
Qualified Persons
The FS was prepared by the following Qualified Persons under NI
43-101, each of whom is independent of BlackRock and the Company
under NI 43-101, who have reviewed, verified, and approved the
scientific and technical data for which they have responsibility
contained in this news release pertaining to the FS.
Qualified
Person
|
Company
|
Scope of
responsibility
|
Claude Bisaillon P
Geo.
|
SGS Geostat
|
Geology and Mineral
Resource Estimation
|
Isabelle Leblanc,
P.Eng.
|
BBA Inc.
|
Mineral reserve
estimation, mine planning, mining infrastructure
|
Andre Allaire,
P.Eng.
|
BBA Inc
|
Processing, Surface
infrastructure, estimate integration, financial model, overall NI
43-101 integration
|
Nathalie Fortin,
P.Eng.
|
WSP
|
Environmental
|
Nicolas Skiadas,
P.Eng.
|
Journeaux
Associates
|
Tailings and Water
management
|
Information relating to Mustavaara has been reviewed by
Leo Hathaway, P.Geo., Vice President
of Strategic and a Qualified Person as defined by NI 43-101.
About Strategic Resources
Strategic Resources Inc. (TSXV:SR) is a Vancouver, Canada-based mineral exploration
and development company focused on high-purity iron and vanadium
projects in Canada and
Finland. The Company is primarily
focused on its flagship BlackRock project, which is a fully
permitted and ready to construct mine, concentrator and
metallurgical facility in Québec.
Further details are available on the Company's website
at https://strategic-res.com/. To follow future news releases,
please sign up at https://strategic-res.com/contact/.
Follow us on: Twitter or Linkedin.
STRATEGIC RESOURCES INC.
Signed: "Sean
Cleary"
Sean
Cleary, CEO & Chairman
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
The securities offered pursuant to the Receipt Offering have
not been, and will not be, registered under the U.S. Securities Act
of 1933, as amended (the "U.S. Securities Act") or any U.S. state
securities laws, and may not be offered or sold in the United States or to, or for the account or
benefit of, United States persons
absent registration or any applicable exemption from the
registration requirements of the U.S. Securities Act and applicable
U.S. state securities laws. This news release shall not constitute
an offer to sell or the solicitation of an offer to buy securities
in the United States, nor shall
there be any sale of these securities in any jurisdiction in which
such offer, solicitation or sale would be unlawful.
Cautionary Note Regarding Forward-Looking
Information
Certain statements and information herein, including all
statements that are not historical facts, contain forward-looking
statements and forward-looking information within the meaning of
applicable securities laws. Such forward-looking statements or
information include but are not limited to statements or
information with respect to future work program, ability to secure
project financing for construction and participation of IQ and
Orion in any future financing. Often, but not always,
forward-looking statements or information can be identified by the
use of words such as "will" or "projected" or variations of those
words or statements that certain actions, events or results "will",
"could", "are proposed to", "are planned to", "are expected to" or
"are anticipated to" be taken, occur or be achieved.
Although management of the Company believes that the
assumptions made and the expectations represented by all
forward-looking statements or information are reasonable, there can
be no assurance that a forward-looking statement or information
herein will prove to be accurate. Forward-looking statements and
information by their nature are based on assumptions and involve
known and unknown risks, uncertainties and other factors which may
cause the Company's actual results, performance or achievements, or
industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements or information. These factors include,
but are not limited to: risks associated with the business of the
Company; business and economic conditions in the mining industry
generally; the supply and demand for labour and other project
inputs; changes in commodity prices; changes in interest and
currency exchange rates; risks relating to inaccurate geological
and engineering assumptions (including with respect to the tonnage,
grade and recoverability of reserves and resources); risks relating
to unanticipated operational difficulties (including failure of
equipment or processes to operate in accordance with specifications
or expectations, cost escalation, unavailability of materials and
equipment, government action or delays in the receipt of government
approvals, industrial disturbances or other job action, and
unanticipated events related to health, safety and environmental
matters); risks relating to adverse weather conditions; political
risk and social unrest; changes in general economic conditions or
conditions in the financial markets; and other risk factors as
detailed from time to time in the Company's continuous disclosure
documents filed with Canadian securities administrators. Strategic
does not undertake to update any forward-looking information,
except in accordance with applicable securities laws.
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content:https://www.prnewswire.com/news-releases/strategic-resources-closes-reverse-takeover-of-blackrock-metals-301787338.html
SOURCE Strategic Resources Inc.