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LeadFX issues 28.75 million warrants to InCoR

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hitpaydirt   Thursday, 08/17/17 01:08:58 AM
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LeadFX issues 28.75 million warrants to InCoR



2017-08-15 18:12 ET - News Release


Ms. Jessica Helm reports

LEADFX ANNOUNCES ISSUANCE OF WARRANTS IN CONNECTION WITH INCOR TRANSACTION

LeadFX Inc. has issued 28.75 million common share purchase warrants following the finalization of definitive documentation and receipt of regulatory approvals relating to the previously announced arm's-length transaction with InCoR Technologies Ltd. and InCoR Energy Materials Ltd.

Pursuant to the transaction, among other things, (a) the company has now issued the warrants to InCoR, and (b) upon completion of a successful definitive feasibility study (DFS) with respect to the initial development of a hydrometallurgical refinery at the company's Paroo Station mine, InCoR will sublicense the technology (defined below) to LeadFX for no additional consideration pursuant to an agreed form of technology transfer agreement.

Warrants

The warrants were issued pursuant to two warrant certificates and will be exercisable, for no additional cash consideration, on the following terms:

80 per cent of the warrants (23 million common shares) are to be exercisable only upon completion of a successful DFS and have an outside expiry date of Aug. 14, 2019. 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 $450-million (U.S.);
The remaining 20 per cent of the warrants (5.75 million common shares) are to be exercisable only upon receipt of definitive environmental approvals by LeadFX to construct a hydrometallurgical refinery at Paroo Station and have an expiry date that is the earlier of (y) the date the DFS warrants expire unexercised and (z) March 20, 2027.
Technology transfer agreement

If the conditions precedent to the exercise of the DFS warrants are satisfied and as consideration for the exercise of the DFS warrants, InCoR shall execute the technology transfer agreement with LeadFX in order to sublicense the Technology to LeadFX. The technology comprise (i) an exclusive licence from BASF SE related to patented hydrometallurgical technology for "recovering lead from a mixed oxide material," which is subject to a granted U.S. patent, and pending applications in Australia, Canada, China, Europe, Japan and Mexico; and (ii) a licence from the University of British Columbia related to patented hydrometallurgical technology for "recovering lead from a lead material including lead sulphide," which is subject to a granted U.S. patent, both of which utilize methane sulphonic acid (MSA) as a leaching agent. Under the terms of the technology transfer agreement, LeadFX will receive an exclusive sublicence of the technology from InCoR and shall be entitled to a further assignment of InCoR's rights in the technology, subject to meeting certain conditions relating to refinancing its current indebtedness and receipt of consent of an assignment from the technology owners. Following execution of the technology transfer agreement, LeadFX will have certain rights and obligations with respect to the use of the technology, which will include, among other things, assuming successful application of the technology to a future LeadFX hydrometallurgical refinery, payment of a technical services fee and payment of a 1-per-cent royalty on all the invoiced sales of MSA to a LeadFX facility. Once executed, the technology transfer agreement will be effective until the last of the technology patents expire, lapse, are abandoned or are held to be invalid subject to certain limited termination rights for InCoR, including failure to make a first commercial shipment using the technology within 10 years, uncured material breach of conditions, or the bankruptcy or insolvency of the company.

Assuming the full exercise of the warrants and no additional issuances of common shares, InCoR would own approximately 42.9 per cent of LeadFX's issued and outstanding common shares, expressed on a non-diluted basis.

DFS update

The DFS is being prepared by SNC-Lavalin Australia Pty. Ltd., at InCoR's cost, to apply the oxide technology to a hydrometallurgical refinery at the Paroo Station mine. Management of the company has been engaged in the past couple of months with InCoR and SNC-Lavalin to assist completion of the DFS. As part of the work being performed for the DFS, a drill sampling program has been completed at the Paroo Station mine to test the oxide technology on various ore types. With the drill sampling complete, InCoR expects to commence variability testing of the oxide technology on the various ore types by the end of August. InCoR anticipates that the DFS will be completed in the fourth quarter.

The oxide technology has the potential to transform the Paroo Station mine from a relatively short-life, moderate-risk lead concentrate operation to a longer-life, lower-cost, lower-risk lead metal producer. This, in turn, will provide a significant production platform on which to build a world-class lead resources business through the application of the technology at other mining projects and further development for application for other purposes including lead recycling. Until the DFS is complete, however, the company cannot provide any assurances with respect to the outcomes of the DFS, including whether the construction of a refinery at Paroo Station would be technically or economically feasible, or would increase the mine life.

A copy of the definitive agreements will be filed with the company's continuous disclosure documents on SEDAR.

About LeadFX Inc.

LeadFX is a Canadian-based mining company focused on the development of lead-silver projects located in stable jurisdictions. Its current portfolio includes a restart-ready lead operation in Western Australia and a development project in Utah, United States. The company continues to seek opportunities at its new properties in North America to underpin future cash flow and growth.

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