LeadFX Inc. (fka IVWFF)

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LeadFX provides additional details on InCor deal

2017-06-19 17:17 ET - News Release


Ms. Jessica Helm reports

LEADFX ANNOUNCES ADDITIONAL DETAILS REGARDING TRANSACTION WITH INCOR

Further to the announcement of May 12, 2017, LeadFX Inc. has provided additional details regarding its previously announced arm's-length transaction with InCoR Technologies Ltd. and InCoR Energy Materials Ltd., related to the transfer of lead-refining technologies to LeadFX for the initial development of a lead refinery at the company's Paroo Station mine. Except as described herein, the terms of the Transaction remain unchanged from the previous announcement.

Terms of the transaction:

As previously disclosed, pursuant to the terms of a definitive umbrella agreement (the "Agreement"), InCoR will undertake and pay for a Definitive Feasibility Study ("DFS") for the development of a lead refinery at the Paroo Station mine. Upon the successful completion of the DFS, LeadFX will have exclusive rights to use and sub-license InCoR's lead refining technologies worldwide.

The Agreement provides that LeadFX will issue two separate common share purchase warrants (the "Warrants") to InCoR to acquire (in the aggregate) up to 28,750,000 common shares in the capital of LeadFX ("Common Shares"). The Warrants will be exercisable, for no additional consideration, on and subject to the occurrence of the following triggering events:

(a) 80% of the Warrants (23,000,000 Common Shares) (the "Stage 2 Warrant") are to be exercisable only on completion of a successful DFS. The DFS will be deemed to be completed and successful if and only if it meets strict criteria and delivers a superior economic outcome for LeadFX, including (i) a demonstrable Paroo Station life of mine of no less than 10 years, and (ii) Paroo Station life of mine gross operating cash flows minus refinery capital expenditures of no less than US$450 million; and
(b) the remaining 20% of the Warrants (5,750,000 Common Shares) (the "Stage 3 Warrant") are to be exercisable only upon receipt of definitive environmental approvals by LeadFX to construct a lead refinery at Paroo Station.
The aggregate number of Common Shares to be issued after giving effect to the exercise of the Warrants represents approximately 75.2% of the Common Shares currently issued and outstanding (on a non-diluted basis) prior to giving effect to the Transaction. As of the date hereof, InCoR holds nil Common Shares in the Company.

The percentages noted above are subject to change as the Agreement also provides for certain adjustment and anti-dilution provisions in favour of InCoR in the event the Company issues additional Common Shares (or obligations convertible into Common Shares). In particular, unless InCoR elects to participate in any issue by LeadFX of Common Shares or obligations convertible into Common Shares during the term of the Stage 2 Warrant, any such issuance shall result in a further warrant being issued to InCoR at no additional cost, at an effective exercise price of nil, such that InCoR can continue to maintain its pro rata ownership percentage in the Company as described above. In the case of a convertible obligation, the additional warrant would only be exercisable by InCoR if and when such convertible obligation is exercised by the holder(s) thereof. Further details in respect of any additional dilution are provided below.

In respect of the Stage 2 Warrant and the Stage 3 Warrant, no such adjustment will be required for Common Share issuances in aggregate up to a maximum of CAD$2,500,000 (excluding any debt obligations convertible into Common Shares) occurring before the exercise of the Stage 2 Warrant, where InCoR is given the option (whether exercised or not) to participate on the same terms and conditions in such issuance.

In respect of the Stage 3 Warrant, no such adjustment will be required for Common Share issuances (including any debt obligations convertible into Common Shares) occurring after the exercise of the Stage 2 Warrant, where InCoR is given the option (whether exercised or not) to participate on the same terms and conditions in such issuance.

Assuming the full exercise of both the Stage 2 Warrant and the Stage 3 Warrant and no additional issuances of Common Shares, InCoR would own approximately 42.9% of the outstanding Common Shares, expressed on a non-diluted basis. The Company's majority shareholder, Sentient Group of Global Resource Funds ("Sentient") would own approximately 48.6% and the minority shareholders would own approximately 8.5% of the issued and outstanding Common Shares, respectively.

If, during the term of the Stage 2 Warrant, LeadFX either (i) effects an offering of Common Shares for gross proceeds in excess of $2,500,000; (ii) effects an offering of Common Shares for gross proceeds of less than $2,500,000 but does not provide InCoR with a pro rata participation right, or (iii) issues securities convertible into Common Shares in which InCoR chooses not to participate in and which are ultimately converted into Common Shares, then the anti-dilution provisions described above will operate to ensure that, on full exercise of the Warrants, InCoR continues to own approximately 42.9% of the issued and outstanding Common Shares.

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