Share Exchange to Combine a Portfolio of
Green-Energy Mineral Mining Properties and Fast Track Battery
Materials Development in the United States for Sales
Worldwide
Alabama Graphite Corp. (“Alabama Graphite” or the
“Corporation”) (TSX-V:CSPG) (OTCQB:CSPGF) (FRANKFURT:1AG) is
pleased to announce that it has entered into a definitive agreement
(the “Arrangement Agreement”) with
Westwater Resources,
Inc. (“Westwater”) (NASDAQ:WWR) pursuant to which
Westwater will acquire all of the issued and outstanding securities
of Alabama Graphite (the “Acquisition”).
Both Westwater and Alabama Graphite are mineral
exploration and development companies with advancing American
green-energy minerals and materials projects. Westwater is an
explorer and developer of mineral resources that are materials
essential to 21st Century clean energy production. Westwater holds
dominant mineral rights positions in the Western United States and
the Republic of Turkey for both lithium and uranium deposits, as
well as licensed production facilities for uranium in Texas.
Alabama Graphite is focused on the exploration and development of
its flagship Coosa Graphite Project in Coosa County, Alabama — the
most advanced flake graphite project in the contiguous United
States of America — and its Bama Mine Project in Chilton County,
Alabama. The Coosa Graphite Project represents the largest
Indicated Mineral Resource1 of flake graphite in the United States
of America. Alabama Graphite is also an aspiring battery materials
production company. Alabama Graphite’s intent is to commence
small-scale mining and primary processing operations in Alabama
and, subsequently, divert 100% of primary production to secondary
processing, specialty-graphite production (namely, Coated Spherical
Purified Graphite or ‘CSPG’ and Purified Micronized Graphite or
‘PMG’) for use in lithium-ion and other battery markets.
1 Mineral Resources that are not Mineral
Reserves do not have demonstrated economic viability.
Management and the Board of Directors of both
Westwater and Alabama Graphite and the Special Committee of the
Alabama Graphite Board of Directors are unanimously in support of
the proposed business combination. “This combination is an
excellent strategic fit,” noted Chris Jones,
President and Chief Executive Officer of Westwater.
“The timing of this transaction could not be
better,” added Jean Depatie, Chairman of
Alabama Graphite. “Alabama Graphite’s Coosa Graphite Project
is at the feasibility-study stage and Westwater, having excellent
management and financial resourcefulness, has the experience and
ability to advance our projects and enhance shareholder value at a
pace, and in a manner, we would not have been able to
achieve on our own. Furthermore, this transaction provides Alabama
Graphite with much needed interim financing that protects our
shareholders from equity dilution and going-concern risk.”
HIGHLIGHTS OF THE
ACQUISITIONThe Boards of Directors of Westwater and
Alabama Graphite consider the Acquisition to be a compelling and
fair transaction, which is expected to provide significant
strategic and financial benefits to the shareholders of both
companies.
Key benefits of the Acquisition include:
- The combination of Westwater’s in-house technical abilities and
operational expertise in the production of a wide range of
commodities with the mineral resources controlled by Alabama
Graphite near Sylacauga, Alabama provides strategic corporate
experience and a stronger balance sheet for a fast-track route to
expected low-cost, specialized graphite intended to supply the
existing and growing battery markets;
- Provides the shareholders of both companies with exposure to an
extensive project portfolio consisting of near and mid-term
resources to support the fast-growing transportation battery market
through the near-term Coosa Graphite Project and the mid-term
Westwater lithium exploration properties in Nevada and Utah, as
well as long-term leverage to the expected rise in the uranium
price with Westwater’s uranium property portfolio;
- Greatly improved access to and greater appeal for global equity
capital markets through Westwater’s current listing on the NASDAQ;
and
- Establishment of a strong platform to continue developing a
leading energy materials, exploration, and development business
through both organic growth and/or further corporate
transactions.
TERMS OF THE
ACQUISITIONWestwater and Alabama Graphite plan to complete
the Acquisition by way of a court-approved Plan of Arrangement
pursuant to the Business Corporations Act (British Columbia),
whereby each issued and outstanding Alabama Graphite common share
will be purchased by Westwater, and the holder thereof will receive
0.08 of one Westwater common share (the “Exchange Ratio”), which
represents a value of approximately CAD$0.117 per Alabama Graphite
common share based upon the closing price of Westwater’s common
shares on NASDAQ on December 11, 2017. The share Exchange Ratio
represents a discount of approximately 2.3% to the closing price of
Alabama Graphite’s common shares on the TSX Venture Exchange on
December 11, 2017. Westwater has also agreed to provide Alabama
Graphite with a secured loan of up to USD$2 million to remedy
Alabama Graphite’s current working capital deficit, to pay
outstanding payables, and to fund its essential operations until
the close of the Acquisition, which is targeted for April 2018.
Holders of Alabama Graphite common share
purchase warrants and stock options shall receive replacement
warrants or options issued by Westwater. Pursuant to the terms of
the Acquisition, management, staff, and directors of Alabama
Graphite have agreed to surrender 8,241,000 stock options and
4,883,337 warrants so that Westwater is not required to issue
replacement securities for these Alabama Graphite securities.
Currently, Alabama Graphite has 145,315,187
common shares issued and outstanding, and Westwater has 27,640,324
common shares outstanding. Upon the closing of the Acquisition as
currently proposed, Westwater will have 39,265,539 issued and
outstanding common shares, of which approximately 70% will be held
by Westwater’s current shareholders and approximately 30% will be
held by Alabama Graphite shareholders.
The Arrangement Agreement also provides for,
among other things, a non-solicitation covenant on the part of
Alabama Graphite, subject to customary “fiduciary out” provisions
that entitle Alabama Graphite to consider and accept a superior
proposal, a right in favor of Westwater to match any superior
proposal and an entitlement for expense reimbursement upon
termination for Westwater of up to USD$1.5 million, under certain
circumstances.
All of Alabama Graphite’s Directors and Officers
have executed voting and support agreements indicating their
support for the Acquisition and their intention to vote to approve
the Acquisition at Alabama Graphite’s upcoming shareholders’
meeting.
The Acquisition is subject to all requisite
regulatory approvals, court approval, obtaining all security holder
approvals required by applicable laws and such other conditions as
are customary in transactions of this nature. Alabama Graphite will
be seeking shareholder approval of the proposed Acquisition, in a
meeting to be held on or before March 30, 2018. Westwater will be
seeking shareholder approval of the proposed Acquisition, in a
meeting to be held on or before March 30, 2018. The Acquisition is
also subject to the approval of the Supreme Court of British
Columbia.
SECURED LOAN AGREEMENTIn order
to fund Alabama Graphite’s current working capital deficit, to pay
outstanding accounts payable, and provide sufficient cash resources
to enable the Corporation to carry on its business until the
closing of the Acquisition, concurrent with the execution of the
Arrangement Agreement, Alabama Graphite and Westwater also agreed
to the terms of a secured loan from Westwater to Alabama Graphite
for up to USD$2 million (the “Secured
Loan”). The Secured Loan will carry a 3% interest
rate and is convertible into common shares of Alabama Graphite at
Westwater’s election using a conversion price to be determined
following the announcement of the Acquisition. The Secured Loan
remains subject to TSX Venture Exchange review and approval.
Should the Arrangement Agreement become
terminated, the Secured Loan will become repayable on June 30,
2018; however, it would become repayable immediately if Alabama
Graphite withdraws its support for the Acquisition and recommends a
competing transaction.
The promissory note issued by Alabama Graphite
to Westwater and, if converted, the underlying common shares of
Alabama Graphite convertible from the Secured Loan, are subject to
a restricted period of four months and one day, which will end on
April 14, 2018, in accordance with National Instrument 45-102 –
Resale of Securities.
BENEFITS TO ALABAMA GRAPHITE
SHAREHOLDERSDuring the past several years, Alabama
Graphite has always been able to operate and develop its business
without the financial support of any revenues from its operations.
It has been able to continually do this due to Alabama Graphite’s
ability to procure new funds for itself, primarily from the equity
capital markets. During the Fall of 2017, Alabama Graphite
considered a variety of funding sources and alternate funding
techniques and also considered a traditional discounted equity
private placement. Alabama Graphite recognized that the capital
required for its sustainability and especially for its desired
growth and project development plans, while considered feasible if
pursued determinedly, would likely result in significantly
discounted and dilutive financing solutions that would not be
consistent with maximizing shareholder value. Accordingly, one of
the important considerations of Alabama Graphite’s Special
Committee and its Board of Directors in regard to pursuing and
approving the transaction with Westwater was to obtain the
non-dilutive interim loan financing and join forces with an
impressive company with, among other strengths, superior financial
resourcefulness. Pursuant to the Acquisition, Westwater will add
Alabama Graphite’s graphite assets to Westwater’s portfolio of
green-energy mineral projects in order to develop these important
21st Century assets and unlock value for shareholders at a pace
that Alabama Graphite would not likely have been able to do on its
own. Alabama Graphite’s Board of Directors is unanimously pleased
with Alabama Graphite’s much-improved prospects for the enhancement
of shareholder value over both the near and long terms.
Alabama Graphite shareholders will derive many benefits from the
Acquisition, including:
- An expected immediate improvement in upside equity valuation
potential as compared to other alternatives that were
considered;
- An expected significant increase in daily share trading
liquidity;
- Leverage the skills and know-how of Westwater’s experienced
mining and operations teams;
- Benefits of a higher profile through Westwater’s NASDAQ listing
in the U.S.;
- Benefits from both diversification and product synergies
related to Westwater’s lithium and uranium project portfolios;
and
- Improved short-term and long-term funding capabilities and
resourcefulness.
As part of the transition period prior to the
expected upcoming completion of the Acquisition, Alabama Graphite’s
President and CEO, Donald Baxter, has agreed to
resign from his officer and director positions with Alabama
Graphite with immediate effect. Alabama Graphite’s Board of
Directors appreciates Mr. Baxter’s efforts and contributions.
Dr. Gareth Hatch, a Director of Alabama Graphite,
has been appointed as its interim CEO. Executive Vice President and
Corporate Secretary Tyler Dinwoodie has been
appointed as Alabama Graphite’s President and will assist Dr. Hatch
with duties and responsibilities during the transition period.
Alabama Graphite’s Audit Committee is now comprised of Jean
Depatie, Daniel Goffaux, and Dr. Hatch.
BENEFITS TO WESTWATER
SHAREHOLDERSWestwater’s shareholders will also realize
many benefits from the Acquisition, including:
- Exposure to a new green-energy commodity, which is in high
demand as transportation batteries increase production;
- The post-merger management team will work to further optimize
the project, working in conjunction with Alabama Graphite’s
customary product development laboratories in the US and Canada;
and
- The potential for Westwater to be re-categorized as a mining
producer sooner than may otherwise have been the case by relying on
its uranium and lithium production timeline expectations
alone.
The Board of Directors of Westwater unanimously
recommends Westwater shareholders approve the issue of all
consideration securities to Alabama Graphite security holders.
Westwater CEO Chris Jones commented: “This is a transformational
merger for our shareholders that positions our combined company as
having assembled a formidable portfolio of American ‘must-have’
green-energy mineral projects, with the Coosa Project being our new
priority core asset. We will be meeting with all stakeholders
and state regulatory entities shortly and we are full speed ahead
with development of the project in Alabama.”
BENEFITS FOR BOTH ALABAMA GRAPHITE AND
WESTWATER SHAREHOLDERSIn addition to the strong benefits
expected for each group of shareholders, there are a number of
benefits that both companies' shareholders may enjoy,
including:
- More extensive portfolio of projects, ranging from potential
near-term production assets (Coosa) to grassroots exploration
opportunities, which better equip the post-merger company to
respond to changing commodity market conditions;
- Geographical concentration – the United States, as
preferentially sourced graphite and other battery materials from
domestic sources and companies. The post-merger company will be
headquartered in Centennial, Colorado, a suburb of Denver;
- Expected increase in attractiveness to both retail and
institutional investors;
- Expected increase in trading liquidity and coverage by
green-energy sector analysts;
- Establishment of a stronger platform from which the combined
business may pursue future growth opportunities; and
- Cost savings due to the elimination of duplicative head office
and management expenses.
ADVISERS Roth Capital Partners,
LLC has provided an opinion to the Westwater Board of Directors
that the Exchange Ratio is fair, from a financial point of view to
the Westwater shareholders. As well, Echelon Wealth Partners Inc.
has provided a fairness opinion to the Special Committee of the
Alabama Graphite Board of Directors, indicating that the
consideration to be received by Alabama Graphite shareholders is
fair, from a financial point of view to Alabama Graphite
shareholders. Westwater is represented by Hogan Lovells LLP in
Denver, Stikeman Elliott LLP in Toronto and Balch & Bingham LLP
in Alabama. Alabama Graphite is represented by Miller Thomson LLP
in Toronto, Dorsey & Whitney LLP in Toronto and Minneapolis,
and Dominick Feld Hyde, P.C. in Alabama.
On behalf of the Board of Directors ofALABAMA
GRAPHITE CORP.
Dr. Gareth P. Hatch, CEng,
FIMMM, FIETChief Executive Officer and Executive Director
ABOUT ALABAMA GRAPHITE
CORP.Alabama Graphite Corp. is a Canadian-based flake
graphite exploration and development company as well as an aspiring
battery materials production and technology company. Alabama
Graphite operates through its wholly owned subsidiary, Alabama
Graphite Company, Inc. (a company registered in the state of
Alabama). With an advancing flake graphite project in the United
States of America, Alabama Graphite intends to become a reliable,
long-term U.S. supplier of specialty high-purity graphite products.
Alabama Graphite Corp. is focused on the exploration and
development of its flagship Coosa Graphite Project in Coosa County,
Alabama, and its Bama Mine Project in Chilton County, Alabama as
well as the research and development of the manufacturing and
technological processing of battery materials.
Alabama Graphite Corp. holds a 100% interest in
the mineral rights for these two U.S.-based graphite projects,
which are both located on private land. The two projects encompass
more than 43,000 acres and are located in a geopolitically stable,
mining-friendly jurisdiction with significant historical production
of crystalline flake graphite in the flake graphite belt of central
Alabama, also known as the Alabama Graphite Belt (source: U.S.
Bureau of Mines). A significant portion of the Alabama deposits is
characterized by graphite-bearing material that is oxidized and has
been weathered into extremely soft rock. Both projects have
infrastructure in place, are within close proximity to major
highways, rail, power and water, and are approximately three hours
(by truck or train) to the Port of Mobile, the Alabama Port
Authority’s deep-seawater port and the ninth largest port by
tonnage in the United States (source: U.S. Army Corps of
Engineers/USACE). The state of Alabama’s hospitable climate allows
for year-round mining operations and the world’s largest marble
quarry (which operates 24 hours a day, 365 days a year in
Sylacauga, Alabama), is located within a 30-minute drive of the
Coosa Graphite Project.
On November 30, 2015, Alabama Graphite Corp.
announced the results of its PEA2 for the Coosa Graphite Project,
indicating a potentially low-cost project with potential positive
economics. Please refer to the Company’s technical report titled
“Alabama Graphite Corp. Preliminary Economic Assessment (PEA) on
the Coosa Graphite Project, Alabama, USA” dated November 27, 2015,
prepared by independent engineering firms AGP Mining Consultants
Inc. and Metal Mining Consultants Inc., and filed on SEDAR at
www.sedar.com.
2 A Preliminary Economic Assessment or PEA is
preliminary in nature, it includes inferred mineral resources that
are considered too speculative geologically to have economic
considerations applied to them that would enable them to be
categorized as mineral reserves and there is no certainty that the
preliminary economic assessment will be realized.
For more information on Alabama Graphite Corp.,
please visit www.alabamagraphite.com.
ABOUT WESTWATER RESOURCES, INC.
Westwater Resources, Inc., (“WWR” or the “Company”) (formerly
Uranium Resources, Inc.) is focused on developing energy-related
metals. The Company has developed a dominant land position in three
prospective lithium brine basins in Nevada and Utah in preparation
for exploration and potential development of any lithium resources
that may be discovered there. In addition, WWR remains focused on
advancing the Temrezli in-situ recovery (ISR) uranium project in
Central Turkey when uranium prices permit economic development of
this project. WWR controls extensive exploration properties in
Turkey under eight exploration and operating licenses covering
approximately 39,000 acres (over 16,000 ha) with numerous
exploration targets, including the potential satellite Sefaatli
Project, which is 30 miles (48 km) southwest of the Temrezli
Project. In Texas, the Company has two licensed and currently idled
uranium processing facilities and approximately 11,000 acres (4,400
ha) of prospective ISR uranium projects. In New Mexico, the Company
controls mineral rights encompassing approximately 186,000 acres
(75,300 ha) in the prolific Grants Mineral Belt, which is one of
the largest concentrations of sandstone-hosted uranium deposits in
the world. Incorporated in 1977, WWR also owns an extensive
information database of historic drill hole logs, assay
certificates, maps and technical reports for uranium properties
located in the Western United States.
For more information on Westwater Resources,
Inc., please visit www.westwaterresources.net.
FORWARD-LOOKING STATEMENTSThis
press release contains forward-looking information under applicable
Canadian securities laws (“forward-looking statements”), which may
include, without limitation, statements with respect to potential
relationships between the Company, its shareholders and possible
third-party investors or joint actors. The forward-looking
statements are based on the beliefs of management and reflect
Alabama Graphite Corp.’s current expectations. When used in this
press release, the words “estimate”, “project”, “belief”,
“anticipate”, “intend”, “expect”, “plan”, “predict”, “may”, “will”
or “should” and the negative of these words or such variations
thereon or comparable terminology are intended to identify
forward-looking statements. Such statements reflect the current
view of Alabama Graphite Corp. with respect to risks and
uncertainties that may cause actual results to differ materially
from those contemplated in those forward-looking statements. By
their nature, forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause our actual
results, performance or achievements, or other future events, to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. Such factors include, among other things, the
interpretation and actual results of current exploration
activities; changes in project parameters as plans continue to be
refined; future prices of graphite; possible variations in grade or
recovery rates; failure of equipment or processes to operate as
anticipated; the failure of contracted parties to perform; labor
disputes and other risks of the mining industry; delays in
obtaining governmental approvals or financing or in the completion
of exploration, as well as those factors disclosed in the Company’s
publicly filed documents. Forward-looking statements are also based
on a number of assumptions, including that contracted parties
provide goods and/or services on the agreed timeframes, that
equipment necessary for exploration is available as scheduled and
does not incur unforeseen breakdowns, that no labor shortages or
delays are incurred, that plant and equipment function as
specified, that no unusual geological or technical problems occur,
and that laboratory and other related services are available and
perform as contracted. Forward-looking statements are made based on
management’s beliefs, estimates, and opinions on the date that
statements are made and Alabama Graphite Corp. undertakes no
obligation to update forward-looking statements (unless required by
law) if these beliefs, estimates and opinions or other
circumstances should change. Investors are cautioned against
attributing undue certainty to forward-looking statements. Alabama
Graphite Corp. cautions that the foregoing list of material factors
and assumptions are not exhaustive. When relying on Alabama
Graphite Corp. forward-looking statements to make decisions,
investors and others should carefully consider the foregoing
factors and assumptions and other uncertainties and potential
events.
Alabama Graphite Corp. has also assumed that the
material factors and assumptions will not cause any forward-looking
statements to differ materially from actual results or events.
However, the list of these factors and assumptions is not
exhaustive and is subject to change and there can be no assurance
that such assumptions will reflect the actual outcome of such items
or factors.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS
REGULATION SERVICE PROVIDER (AS THAT TERM IS DEFINED IN THE
POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR
THE ADEQUACY OR ACCURACY OF THE CONTENT OF THIS NEWS
RELEASE.
QUALIFIED PERSONS
Dr. Gareth P. Hatch, CEng, FIMMM,
FIET, Chief Executive Officer and Director of Alabama
Graphite Corp., is a Qualified Person as defined by National
Instrument 43-101 (“N.I. 43-101”) guidelines, and has reviewed and
approved the scientific and technical disclosure in this news
release.
Jesse R. Edmondson, P.G.,
Project Geologist of Alabama Graphite Corp., is a Qualified Person
as defined by N.I. 43-101 guidelines, and has reviewed and approved
the geology and mineral resource estimation disclosure in this news
release.
CONTACT
Alabama Graphite
Corp.
Tyler W. P. Dinwoodie President +1 (416) 309-8641
tdinwoodie@alabamagraphite.com
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