REG - Horizonte Minerals - Proposed US$633 Million Funding Package

Horizonte MineralsAnnouncement

23/11/2021 16:40

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RNS Number : 3217T  Horizonte Minerals PLC  23 November 2021

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR
FORM ANY PART OF AN OFFER TO SELL OR ISSUE, OR A SOLICITATION OF AN OFFER TO
BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY SECURITIES IN THE UNITED STATES,
AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY OTHER JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NO PUBLIC OFFERING OF THE
FUNDRAISE SHARES IS BEING MADE IN ANY SUCH JURISDICTION. ANY FAILURE TO COMPLY
WITH THESE RESTRICTIONS MAY CONSTITUTE A VIOLATION OF THE SECURITIES LAWS OF
SUCH JURISDICTIONS.

THIS ANNOUNCEMENT IS NOT FOR PUBLIC RELEASE, PUBLICATION OR DISTRIBUTION, IN
WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES,
AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY OTHER JURISDICTION IN
WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 ("MAR") as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018.

For immediate release

23 November 2021

Horizonte Minerals Plc

("Horizonte" or the "Company")

Horizonte Announces Proposed US$633 Million Funding Package to Fully Fund
Araguaia into Production

 

Horizonte (AIM: HZM, TSX: HZM), announces that it has entered into certain
investment and subscription agreements as part of a comprehensive funding
package of US$633 million which is expected to complete the funding required
for the construction of Araguaia. The Proposed Funding Package comprises:

·      Approximately US$197 Million equity fundraise: The equity
fundraise consists of (i) strategic investments of between approximately
US$65.0 and US$75.0 million from La Mancha and US$50.0 million from Orion in
newly issued Ordinary Shares; and (ii) the placing of approximately US$75
million of newly issued Ordinary Shares by way of the UK Placing and the
Canadian Offering. In addition to the Equity Fundraise, the Company has agreed
a cornerstone subscription with Glencore of US$7 million in newly issued
Ordinary Shares. Details of the Strategic Investments and the Glencore
Subscription are set out below; additional details on the Placing will be
found in the separate announcements by the Company to be released immediately
after this Announcement.

 

·      US$65 Million Convertible Loan Notes Issue ("Convertible Notes"):
As part of their Strategic Investments, Orion and La Mancha have conditionally
agreed to subscribe for US$50 million and US$15 million of Convertible Notes
respectively. Further details on the Convertible Notes can be found below.

 

·      US$25 Million Cost Overrun Debt Facility ("Proposed Cost Overrun
Debt Facility"): Orion is proposing that a member of its group provides the
Proposed Cost Overrun Debt Facility to be used, if required, for the
construction of Araguaia. The Proposed Cost Overrun Debt Facility is subject
amongst other things on definitive documentation and would form part of a
total of US$99 million in dedicated cost overrun funding and contingency
funding for the Project. Further details on the Proposed Cost Overrun Debt
Facility can be found below.

 

·      US$346.2 Million Proposed Senior Debt Facility ("Proposed Senior
Debt Facility"): As previously announced, Horizonte has received credit
approvals and a signed commitment letter for US$346.2 million of senior debt
from a syndicate of international financial institutions (BNP Paribas, BNP
Paribas Fortis, ING Capital LLC, ING Bank N.V., Natixis, New York Branch,
Société Générale and Swedish Export Credit Corporation). The Proposed
Senior Debt Facility which is subject amongst other things to diligence and
agreeing definitive documents will comprise two tranches: Tranche A, of
US$146.2 million, will be guaranteed by two Export Credit Agencies (EKF,
Denmark's Export Credit Agency ("EKF"), and Finnvera plc, Finland's Export
Credit Agency ("Finnvera")); and Tranche B of US$200 million. Further details
of the Proposed Senior Debt Facility can be found in the Company's
announcements dated 13 September 2021 and 30 September 2021.

 

The Company also intends to raise up to US$8 million (approximately £6
million) by way of an open offer to holders of existing ordinary shares.
Further details will be found in the announcement to be released immediately
after this announcement.

Completion of the Placing and the Strategic Investments are conditional upon
each other (as further described below) and are not conditional upon the
completion of other parts of the Proposed Funding Package, and the Placing and
Strategic Investments are expected to become unconditional on admission to
trading of the Ordinary Shares to be issued pursuant to them. The issue and
allotment of the securities to be issued in connection with Proposed Funding
Package is conditional upon, among other things, the passing of resolutions by
the Company's shareholders at the General Meeting. The Company is proposing to
convene the General Meeting for on or around 20 December 2021 to seek such
approvals. Further details of the General Meeting will be announced in due
course.

Horizonte is also pleased to announce that Araguaia Niquel Metais Ltda
("Araguaia Ltda"), a member of the Company's group has entered into a
conditional ten year offtake agreement with Glencore (with the obligations of
Araguaia Ltda being guaranteed by the Company), where Glencore has committed
to acquire 100% of the production of ferronickel from Araguaia for that period
("Offtake Agreement"). The entry into the Offtake Agreement is a key
requirement of the Lenders and significantly de-risks future cash flows from
the Project. The Offtake Agreement is conditional upon, among other things,
the completion of the Glencore Subscription and the entry by Glencore into a
direct agreement with the Lenders in relation to typical intercreditor
matters.

In addition to its participation in the proposed Equity Fundraise, Convertible
Notes and the provision of the Proposed Cost Overrun Debt Facility, an
affiliate of Orion will also purchase a 2.1% gross revenue royalty on the
Vermelho project (the "Vermelho Royalty") for cash consideration to the
Company of US$25 million. The net proceeds from the sale of this royalty will
be used to advance a feasibility study and permitting work streams on the
Vermelho project.

BMO Capital Markets Limited is acting as exclusive financial advisor to the
Company in relation to the La Mancha Strategic Investment and Endeavour
Financial is acting as exclusive financial advisor to the Company in relation
to the investments being made by Orion and the Proposed Senior Debt Facility.
Norton Rose Fulbright LLP has acted as legal counsel to the Company in respect
of these investments and facilities.

Highlights

·           The net proceeds of the Proposed Funding Package will
be used towards the construction of the Araguaia, as well as for general
working capital purposes.

·           Araguaia is a high grade, low cost, long life asset
located south of the Carajas Mining District, north east Brazil. The
feasibility study disclosed in the Araguaia Technical Report demonstrates
robust economics with the Stage 1 process plant producing 14,000 tonnes of
nickel per year and generating a Post-tax IRR of 28.1%; Post-tax NPV(8%) of
US$740 million; a Payback Period of approximately 3 years; and Net Cashflow of
US$2.582bn, based on a market consensus nickel price of US$16,800 per tonne
(see the Araguaia Technical Report) and in each case based upon the various
assumptions set out in the Araguaia Technical Report. The spot nickel price is
currently US$19,625 per tonne.

·           Development of Araguaia will provide the Company with a
platform for growth in an established mining region, with potential to become
a significant nickel producer of scale through the potential future
development of a second production line at Araguaia and second potential
operation with the Vermelho Project.

·           The Company has a second 100% owned project, the
Vermelho Nickel Cobalt project which is being advanced towards feasibility
stage with the final products targeted for the EV battery market. This project
is expected to produce ~24kt Nickel pa and ~1.25kt Cobalt pa with low capital
intensity of US$27kt/t and a long mine life of 38 years at an NPV(8%) of
US$1.7 billion (see the Vermelho Technical Report).

·           There is a strong long-term outlook for the nickel
market driven by acceleration of demand from the EV battery sector which,
combined with continued robust growth in stainless steel demand has led to
Nickel price increasing by 24% in the last 12 months. Global demand is
expected to reach 3.9Mt in 2030, an increase of 1.6x compared to 2020 and
projected demand growth of 5% per annum 1 .

Use of Proceeds

The table below summarises the use of proceeds from the Proposed Funding
Package assuming the proposed amount is raised under the Placing and Strategic
Investments.

 Funding Sources                                      US$M
 Equity fundraise((1))
 Orion                                                $50.0
 La Mancha (between US$65 million and US$75 million)  $65.0
 Glencore                                             $7.0
 Placing                                              $75.0
 Total                                                $197.0
 Senior Debt Facility
 Tranche A                                            $146.2
 Tranche B                                            $200.0
 Total                                                $346.2
 Convertible Loan Note Offering                       $65.0
 Open Offer (assuming take up in full)                $8.0
 Others((2))                                          $42.0
 Total Sources of Funds                               $658.2

1.     See separate announcement released today for further details

2.     Comprises of ~US$17 million expected cash balance immediately prior
to settlement of any funds from the Proposed Funding Package and US$25 million
cost overrun loan facility from Orion. Further details on the cost overrun
loan facility can be found below.

 

 Use of Funds                                                    US$M
 Araguaia Capital Expenditure (incl. US$44 million contingency)  $477.3
 Working Capital and Other((3))                                  $135.8
 Cost Overrun Equity and Debt Contingency                        $45.0
 Total Use of Funds                                              $658.2

Note: proposed use of funds includes approximately US$100 million of
contingency, comprising US$44 million contingency in the capital cost
estimates for Araguaia, US$45 million of equity and debt cost overrun funding
and US$10 million growth allowance.

3.     Other includes pre-production operating costs, financing fees and
costs, land acquisition and interest during construction.

 

If the Open Offer raises less than US$8 million or the Glencore Subscription
does not complete, the amount of Working Capital and Other will reduce by a
corresponding amount. This will not impact the funding for Araguaia.

 

 

 

Jeremy Martin, Chief Executive Officer of Horizonte, commented:

"We are delighted to announce the Proposed Funding Package which, subject to
satisfaction of the conditions and successful completion of the Placing, is
expected to fully fund Araguaia into production. This represents a significant
milestone in the Company's journey to become a major nickel producer and will
enable Horizonte to capitalise on the significant projected growth in nickel
demand.

We are delighted to welcome La Mancha and Orion as new and existing,
respectively, strategic investors and shareholders in Horizonte, and also
grateful for the continued support of Glencore who, in addition to their
proposed cornerstone subscription, have also extended their relationship with
Horizonte by agreeing to enter into the Offtake Agreement. La Mancha and Orion
have long track records of creating sustainable shareholder value in the
mining sector and their previous investments highlight their ability to
identify compelling growth opportunities at an early stage.

We are aiming to become a leading nickel producer. We believe the terms of the
financing package and calibre of the lenders and strategic investors we have
attracted is a testament to the strong project fundamentals offered by
Araguaia. The proposed investments from La Mancha, Orion and Glencore,
alongside the Proposed Senior Debt Facility from a syndicate of leading
international financial institutions, provides strong endorsement of our
broader corporate strategy. We would like to thank all parties involved in
enabling Horizonte to secure this comprehensive funding package."

Philip Clegg, Portfolio Manager of Orion, commented:

"Orion is extremely pleased to cornerstone Horizonte's latest fundraising with
a total commitment of US$150 million. Subsequent to our US$25 million royalty
investment in 2019, this is our second deal with the Company and demonstrates
our confidence in and support of Horizonte's quality projects and management
team. We look forward to furthering our partnership with Horizonte as Araguaia
is built and Vermelho advances to construction."

Karim Nasr, Chief Executive of La Mancha, commented:

 "Our investment in Horizonte represents La Mancha's first direct investment
into the base and EV metals space. Throughout our extensive diligence, we were
impressed not only by the quality of the assets, but also by the team and the
very high standard of work carried out to date. La Mancha was attracted to the
organic growth potential, coupled with the longer-term nickel product
optionality to sustainably supply both the stainless steel and battery
markets. We are honoured to be able to support Horizonte's team and look
forward to the journey toward becoming a globally significant and responsible
nickel producer."

Enquiries:

 Horizonte Minerals plc                                                 +44 (0) 203 356 2901

 Jeremy Martin (CEO)

 Simon Retter (CFO)

 Anna Legge (Corporate Communications)

 BMO Capital Markets Limited (Corporate Broker)                         +44 (0) 207 236 1010

 Tom Rider / Pascal Lussier Duquette / Andrew Cameron / Muhammad Musa

 Peel Hunt LLP (Nominated Adviser and Corporate Broker)                 +44 (0) 207 418 8900

 Ross Allister / David McKeown

 

For the purposes of MAR and Article 2 of Commission Implementing Regulation
(EU) 2016/1055 (as transposed into the laws of the United Kingdom), the
person responsible for arranging for the release of this Announcement on
behalf of the Company is Simon Retter, Company Secretary and Chief Financial
Officer.

Details of the Orion Strategic Investment

Orion has entered into the Orion Investment Agreement pursuant to which Orion
will subscribe for US$50 million of newly issued Ordinary Shares at the UK
Placing Price subject to a maximum of 7.5 pence per share and will procure
that one of its subsidiaries will subscribe for US$50 million of Convertible
Notes. The subscription for the Ordinary Shares is conditional upon, among
other things, the approval of the Company's shareholders at the General
Meeting; the approval of the subscription by the TSX and approval of Orion as
a new "control person" of the Company; admission of the new Ordinary Shares to
trading on AIM; and the Placing and Strategic Investments having become
unconditional with gross proceeds of not less than US$175 million (other than
interconditionality and AIM Admission).

The subscription for the US$50 million of Convertible Notes is conditional
upon, among other things, the Equity Fundraise having occurred, and
construction having commenced by the time required by the Brazilian National
Mining Agency (or any extension thereof) and the long-form documentation for
the project financing being signed and the satisfaction of the conditions to
the funding of the Vermelho Royalty (other than subscription for the
Convertible Notes).

Under the Orion Investment Agreement, the Company has agreed that Orion shall
have the right to participate in any future equity or equity-linked offerings
by Horizonte up to the level of its ownership at the time of that offering so
long as Orion owns at least 10% of the Ordinary Shares in issue at the time.
Orion shall also have the right to nominate one person to be a director of the
Company for so long as it holds at least 10% of the Ordinary Shares in issue
from time to time.

Pursuant to lock-in arrangements, Orion has agreed that it will not from the
date of the Orion Investment Agreement until the date falling 4 months after
completion of the subscription of the Ordinary Shares, sell or otherwise
dispose of any Ordinary Shares, subject to certain exceptions. The lock-in
arrangements do not apply to the Convertible Loan Notes when issued.

Under the Orion Investment Agreement the Company has given certain warranties
and indemnities to Orion. The Company has also undertaken that it will not,
prior to the issuance of the Convertible Loan Notes, undertake certain
corporate transaction without the consent of Orion including issuing shares,
buying back shares or declaring a dividend. The Orion Investment Agreement
terminates if Orion ceases to hold an interest in Horizonte of at least 10 per
cent for at least 60 days.

Details of the La Mancha Strategic Investment

La Mancha has entered into the La Mancha Investment Agreement pursuant to
which La Mancha will subscribe for between US$65 million and US$75 million of
newly issued Ordinary Shares subject to their pro-forma ownership not
exceeding 19.99% of the enlarged share capital of the Company. La Mancha will
subscribe at the UK Placing Price subject to a maximum of 7.5 pence per share.
La Mancha will also subscribe for US$15 million of Convertible Notes. The
subscription for the Ordinary Shares is conditional upon, among other things,
the approval of the Company's shareholders at the General Meeting; the
approval of the subscription by the TSX; the admission of the new Ordinary
Shares to trading on AIM; and the Placing and Strategic Investments having
become unconditional with gross proceeds of not less than US$175 million
(other than interconditionality and AIM Admission).

The subscription for the US$15 million of Convertible Notes is conditional
upon, among other things, the Equity Fundraise having occurred, Orion's
conditions to subscription having been satisfied and the long-form
documentation for the project financing being signed.

Under the La Mancha Investment Agreement, the Company has agreed that La
Mancha shall have the right to participate in any future equity or
equity-linked offerings (including offerings for non-cash consideration) by
Horizonte up to the level of its ownership at the time of that offering so
long as La Mancha owns at least 10% of the Ordinary Shares in issue at the
time. La Mancha shall also have participation rights on an annual basis to
avoid dilution in respect of Ordinary Shares issued pursuant to incentive
awards. La Mancha shall also have the right to nominate one person to be a
director of the Company for so long as it holds at least 10% of the Ordinary
Shares in issue from time to time. The Company has agreed that the director
nominated by La Mancha shall also have certain consultation and approval
rights to participate in the selection and appointment of an additional
independent non-executive director, as further described below under the
heading "Corporate Governance", and on any replacement of such director for so
long as it holds at least 15% of the Ordinary Shares in issue from time to
time.

La Mancha has further agreed to ensure that it shall not take any action that
would prevent the Company from complying with its obligations under applicable
securities laws; and that it shall not procure a shareholder resolution of the
Company which would circumvent the proper application of the AIM rules or
applicable Canadian securities laws.

Under the La Mancha Investment Agreement the Company has given certain
warranties and indemnities to La Mancha. The Company has also undertaken that
it will not, prior to the issuance of the Convertible Loan Notes, undertake
certain corporate transactions without the consent of La Mancha including
issuing shares, buying back shares or declaring a dividend. The La Mancha
Investment Agreement terminates if La Mancha ceases to hold an interest in
Horizonte of at least 10 per cent for at least 90 days. Pursuant to lock-in
arrangements, La Mancha has agreed that it will not from the date of the La
Mancha Investment Agreement until the date falling 4 months after completion
of the subscription of the Ordinary Shares, sell or otherwise dispose of any
Ordinary Shares, subject to certain exceptions. The lock-in arrangements do
not apply to the Convertible Loan Notes, when issued.

Details of the Convertible Loan Notes

The Company has entered into Convertible Loan Note Instruments with each of
OMF Fund III (F) Ltd (the "Orion Noteholder") (an affiliate of Orion) and La
Mancha. The Convertible Notes will be issued by the Company at a 5.75%
discount (such that the Orion Noteholder and/or La Mancha shall only be
required to pay 94.25% of the principal amount) at a fixed interest rate of
11.75% per annum, which shall be capitalised until Project Completion and
payable in cash (subject to available cashflows) thereafter. In the case of an
event of default in accordance with the terms of the Convertible Loan Note
Instrument, the Interest Rate is increased to 15.00% per annum. Subject to
there being available cash for distribution from Araguaia and following
Project Completion, the principal (including any accrued capitalised interest)
shall be repayable in quarterly instalments.

At any time until the Maturity Date, being 3 months after the final maturity
date of Tranche A of the Proposed Senior Debt Facility, the Orion Noteholder
and/or La Mancha may, at their option, convert the Convertible Notes,
partially or wholly, into Ordinary Shares up to the total amount outstanding
under the Convertible Notes at a conversion price equal to 125% of the UK
Placing Price (the "Conversion Price") subject to customary anti-dilution
adjustments.

At any time after the fifth (5(th)) anniversary of the subscription of the
Convertible Notes, the Company shall have a one-time right to redeem the then
outstanding and unconverted Convertible Notes in whole at 105% of the par
value plus accrued and unpaid interest in cash if (i) a change of control
event occurs; or (ii) the 30-day volume weighted average trading price of
Ordinary Shares exceeds 200% of the Conversion Price and the aggregate average
daily trading value exceeds US$2.5 million over the prior 30 trading days.

Under the Convertible Loan Notes there is a cash sweep of 85% of excess cash
(being available cash for distribution from Araguaia less required interest
and principal payments on the Convertible Notes) to apply on each repayment
date from Project Completion onwards. In certain circumstances the Company has
also agreed that it will utilise proceeds of any direct or any indirect sale
(in whole or in part) of either the Araguaia or Vermelho projects as available
cash for the purposes of the Convertible Notes. The Company has also given
certain warranties and undertakings under the Convertible Notes.

Details of Proposed Senior Debt Facility

As previously announced, Horizonte has received credit approvals from the
Lenders for a US$346.2 million Proposed Senior Debt Facility to fund the
construction and development of the Araguaia Project. A signed commitment
letter has now also been received from the Lenders.

The Proposed Senior Debt Facility will include two tranches:

 

(i)         Tranche A of US$146.2 million, to be guaranteed by EKF and
Finnvera in relation to a number of key equipment and service provider
contracts; and

(ii)        Tranche B of US$200 million.

The term of the Proposed Senior Debt Facility will be ten and a half years for
Tranche A, and eight and a half years for Tranche B. The interest rate of the
Proposed Senior Debt Facility will be at a rate of 3M USD LIBOR (or
equivalent) + 1.80% for 95% guaranteed programs for Tranche A, and pre-project
completion 3M USD LIBOR (or equivalent) + 4.75% and post-project completion 3M
USD LIBOR (or equivalent) + 4.25% with a step up applicable from years 6 to 8
of 0.50% for Tranche B.

The Lenders are BNP Paribas, BNP Paribas Fortis, ING Capital LLC, ING Bank
N.V., Natixis, New York Branch, Société Générale, and Swedish Export
Credit Corporation. The ECAs are EKF and Finnvera.

Closing of the Proposed Senior Debt Facility is subject to a number of
conditions, including the completion of due diligence, negotiation and
settlement of definitive documentation and the entry into a comprehensive
intercreditor agreement, among others. Please refer to the announcements dated
13 September 2021 and 30 September 2021 for further details on the Proposed
Senior Debt Facility.

Details of Cost Overrun Facility

Orion has obtained investment committee approval to provide a Cost Overrun
Facility in the amount of US$25 million, subject to the Company and Orion
agreeing definitive documentation. The Cost Overrun Facility will benefit from
the same security package as the Proposed Senior Debt Facility but will be
subordinated to the Proposed Senior Debt Facility. It will have a maturity
date of 3 months after the final maturity date of Tranche A of the Proposed
Senior Debt Facility and will be available for drawdown in the case of a cost
overrun against the construction schedule and budget, subject to certain
conditions including the Company having invested 90% of the funding from the
Equity Fundraise and Convertible Notes into the construction of Araguaia. The
Cost Overrun Facility will be conditional upon, among other things, the
gearing ratio of 70:30 being met. The Cost Overrun Facility will bear interest
at 13.00% per annum and will be subject to a commitment fee while undrawn of
2.00% per annum.

Details of Vermelho Royalty

An affiliate of Orion, will purchase a Gross Revenue Royalty on Nickel and
Cobalt from Vermelho over the life of the mine for US$25 million. The purchase
of the Vermelho Royalty will be conditional upon, amongst others, the funding
of the Convertible Loan Notes by the Orion Noteholder and the granting of
security over the Vermelho assets in favour of the Orion royalty holder. The
Vermelho Royalty will carry an initial rate of 2.1% but will increase to 2.25%
if substantial construction of Vermelho has not commenced within five years of
the closing date of the royalty. When the resource covered in the Vermelho
Feasibility Study has been depleted, the Royalty Rate shall decrease by 50%.
The Royalty Rate will be revised to deliver an 18% IRR to the Royalty Holder
should there be any change in the mine schedule and production profile prior
to construction (relative to that contained in the Vermelho Technical Report).
The Vermelho Royalty rate may be reduced or otherwise revised in certain
circumstances. The Company also has the right to buy back 50% of the royalty
on the first four anniversaries of closing (provided on such date it has not
already been bought back) at agreed multiplies of the initial purchase price
of up to 2x or thereafter for a sum which would deliver an IRR of 17% upon a
change of control. Orion will also have the right to require the Company to
repurchase the Vermelho Royalty if construction of the Vermelho project has
not commenced within 10 years of at a price which generates minimum level of
IRR of 15% for Orion. The proceeds of the Vermelho Royalty may only be used
for the development of Vermelho and cannot be used towards Araguaia.

Under the Vermelho Royalty, Orion has been granted a right of first refusal
over future royalties/streams on the project, mining area or mining rights for
ten years. The Company has also agreed to establish a technical committee with
representatives of the Company, Orion, and independent technical and ESG
consultants. The Vermelho Royalty contact contains customary termination
provisions upon a default, with the termination amount being the higher of the
NPV of the royalty at an 8% discount rate or the Royalty Purchase Price
multiplied by 2.4.  The Company has agreed to guarantee its subsidiaries'
obligations under the Vermelho Royalty once the Araguaia debt facility has
been discharged. It has also been agreed that security for the obligations to
pay all amounts under the royalty agreement (including the termination
amounts) will be granted over all assets, shares and intercompany loans in the
Vermelho group companies. Orion has unrestricted ability to assign and
transfer its right and obligations under the Vermelho Royalty.

Timing of key events

Completion of the subscription of the Ordinary Shares relating to the
Strategic Investments, the Glencore Subscription and the Placing and Open
Offer is expected to take place on the second Business Day after the General
Meeting.

Completion of the subscription of the Convertible Notes relating to both of
the Strategic Investments will take place on the tenth Business Day after the
entry into the definitive documentation relating to Proposed Senior Debt
Facility (and the satisfaction or waiver of the other conditions precedent),
which is expected to occur in late 2021 or Q1 of 2022. The Vermelho Royalty is
expected to be drawn after the subscription of the Convertible Notes and
before 31 March 2022.

Drawdown of the Proposed Senior Debt Facility is expected to occur in late
2022 once the net proceeds of the Equity Fundraise and the Convertible Notes
have been spent, and other conditions to drawdown have been satisfied.

The obligations of Orion and La Mancha to subscribe for new Ordinary Shares
under the Strategic Investments shall terminate if the conditions to those
subscriptions are not satisfied or waived by 31 December 2021. The obligations
of Orion and La Mancha to subscribe for the Convertible Loan Notes under the
Strategic Investments shall terminate if the conditions to those subscriptions
are not satisfied or waived by 31 March 2022.

Investors are reminded that the Proposed Senior Debt Facility and the Cost
Overrun Facility are at the documentation stage and remain conditional upon
definitive documentation being agreed and the completion of due diligence.
Discussions are ongoing and, whilst the Company has no reason to believe that
the funding package described in this announcement will not be implemented,
there can be no certainty that all of the transactions contemplated by this
announcement will occur. Further announcements will be made in due course in
relation to the Proposed Senior Debt Facility.

Corporate Governance

The board of the Company currently comprises the non-executive chairman, one
executive director, and four other non-executive directors, of whom three are
considered to be independent. Following completion of the subscription of
Ordinary Shares under the Strategic Investments, it is expected that two
additional non-executive directors shall be nominated to the board by Orion
and La Mancha respectively.

The Company has agreed with La Mancha that the director nominated by La Mancha
shall be entitled to be consulted and to form part of the Company's nomination
committee solely for the purposes of identifying and appointing an additional
independent non-executive director. The appointment of such independent
non-executive director will further improve the balance of the board
independence, consistent with the Company's choice to adhere to the Quoted
Company Alliance's Corporate Governance Code for Small and Mid-Size Quoted
Companies.

Option Plans

The Company has been unable to issue options for the prior two year period due
to regulatory restrictions. It considers that the successful Equity Fundraise
marks an appropriate juncture to consider a further award of equity incentives
to key members of the executive management team, in accordance with the rules
of the Company's existing share plans. The detail of such awards to be made
within the existing schemes and plans and within the limits of those plans
will be made available in due course as required but are not currently
expected to exceed 8% of the issued share capital following completion of the
Equity Fundraise, Glencore Subscription and Open Offer.

Share Consolidation

After the completion of the Proposed Funding Package, the Company will
consider carrying out a share consolidation, subject to shareholder approval.

 

 

DEFINITIONS

In this Announcement:

"Admission" means AIM Admission and TSX Admission (or one of them as the
context may require);

"Agency Agreement" means the agency agreement in relation to the Canadian
Offering to be entered into between the Company and the Canadian Agents prior
to announcing the results of the Bookbuild;

"AIM" means AIM, a market operated by the London Stock Exchange;

"AIM Admission" means admission of the Equity Fundraise Shares to trading on
AIM becoming effective in accordance with Rule 6 of the AIM Rules for
Companies;

"AIM Rules" means the AIM Rules for Companies and the AIM Rules for Nominated
Advisers;

"AIM Rules for Companies" means the AIM Rules for Companies as issued by the
London Stock Exchange, from time to time;

"AIM Rules for Nominated Advisers" means the AIM Rules for Nominated Advisers
as issued by the London Stock Exchange, from time to time;

"Announcement" means this announcement;

"Applicable Canadian Securities Law" means all applicable securities laws in
each of the Canadian Jurisdictions and the respective rules, regulations,
instruments, blanket orders and blanket rulings under such laws together with
applicable published policies, policy statements of the securities commissions
in the Canadian Jurisdictions, together with the TSX Listing Rules.

"Application Form" means the application form relating to the Open Offer for
use, where relevant, by Qualifying Shareholders

"Applications" means the applications made by the Company (i) to the London
Stock Exchange for AIM Admission and (ii) to the TSX for TSX Admission and
references to "Application" shall be to any of such applications as the
context may require;

"Araguaia Project" means the Araguaia ferronickel project.

"Araguaia Technical Report" means the amended technical report entitled
"Feasibility Study for the Araguaia Nickel Project, Federative Republic of
Brazil" dated November 2018, available on the Company's profile on SEDAR at
www.sedar.com (http://www.sedar.com) ;

"BMO Canada" means BMO Nesbitt Burns Inc. of One First Canadian Place, 4(th)
Floor, P.O. Box 150, Toronto, Ontario M5X 1H3

"BMO UK" means BMO Capital Markets Limited, a company incorporated in England
and Wales with registered number 02928824 whose registered office is at 95
Queen Victoria Street London EC4V 4HG, United Kingdom;

"Bookbuild" means (i) the accelerated bookbuild process in relation to the UK
Placing, on the terms described in the UK Placing Agreement and the other
documents relating to the UK Placing, which will establish the number of UK
Placing Shares to be issued and allotted pursuant to the UK Placing; and (ii)
the marketed offering of the Canadian Offering Shares pursuant to, and as
described in, the Canadian Prospectus;

"Business Day" means any day, other than a Saturday or Sunday, when clearing
banks are open for business in London, United Kingdom, Toronto, Canada and New
York, United States of America;

"Canadian Agents" means each of BMO Canada, Cantor, Cormark and Paradigm;

"Canadian Base Shelf Prospectus" means the (final) short form base shelf
prospectus of the Company dated October 29, 2021 filed in each of the Canadian
Jurisdictions (together with any amendment thereto);

"Canadian Jurisdictions" means each of the provinces and territories of
Canada, except Québec;

"Canadian Offering" means the offering of the Canadian Offering Shares
pursuant to the Canadian Prospectus and the Agency Agreement;

"Canadian Offering Shares" means the new Ordinary Shares proposed to be issued
by the Company and offered to the Canadian Purchasers pursuant to the Agency
Agreement;

"Canadian Prospectus" means the Canadian Base Shelf Prospectus and any
applicable Canadian Prospectus Supplement filed in each of the Canadian
Jurisdictions in respect of the Canadian Offering Shares to be issued pursuant
to the Agency Agreement;

"Canadian Prospectus Supplement" means a prospectus supplement to the Canadian
Base Shelf Prospectus prepared in accordance with Applicable Canadian
Securities Laws and filed in connection with the distribution in Canada of the
Canadian Offering Shares pursuant to the Agency Agreement;

"Canadian Purchasers" means the persons to be procured by the Canadian Agents
pursuant to the Agency Agreement who purchase Canadian Offering Shares;

"Cantor" means Cantor Fitzgerald Canada Corporation, a corporation
incorporated in Nova Scotia with registered number 3119896 whose registered
office is at c/o Stewart McKelvey, 1959 Upper Water Street, Purdy's Wharf
Tower One, Suite 900, Halifax, Nova Scotia B3J 2X2, Canada (together with any
affiliate providing services to the Company);

"Circular" means the circular to be published by the Company in relation to
the Equity Fundraise and the Open Offer and a notice convening the General
Meeting;

"Company" means Horizonte Minerals PLC, a company incorporated in England and
Wales with registered number 05676866 whose registered office is at Rex House,
4 - 12 Regent Street, London, England, SW1Y 4RG, United Kingdom;

"Convertible Loan Note Instruments" means the La Mancha Convertible Loan Note
Instrument and the Orion Convertible Loan Note Instrument;

"Cormark" means Cormark Securities Inc., a corporation whose registered office
is at 200 Bay Street, Royal Bank Plaza, North Tower, Suite 1800, Toronto,
Ontario, Canada, M5J 2J2;

"Cost Overrun Facility" means

"Credit Approved Commitment Letter" means the commitment letter entered into
between the Company and the Lenders on 29 October 2021 setting out the
proposed terms to be incorporated into the proposed senior facility agreement;

"CREST" means the relevant system (as defined in the CREST Regulations) in
respect of which Euroclear UK & Ireland Limited is the Operator (as
defined in the CREST Regulations);

"CREST Regulations" means the Uncertificated Securities
Regulations 2001 (SI 2001/3755), as amended from time to time;

"Directors" means the directors of the Company for the time being;

"Equity Fundraise" means the UK Placing, the Canadian Offering and the
Strategic Investments;

"Equity Fundraise Shares" means the UK Placing Shares, the Canadian Offering
Shares and the Strategic Investment Shares;

"Excess Application Facility" means the arrangement pursuant to which
Qualifying Shareholders may (provided they have agreed to take up their Open
Offer Entitlement in full) apply for Open Offer Shares in excess of their Open
Offer Entitlement, in accordance with the terms and subject to the conditions
set out in the Circular;

"Exchanges" means the LSE and TSX and "Exchange" shall be construed
accordingly;

"Excluded Shareholders" means shareholders to whom Application Forms are not
to be sent or whose stock accounts in CREST are not to be credited with Open
Offer Entitlements as described in the section entitled "Overseas
Shareholders" in Part II of the Circular, save for any such persons who have
on or prior to 10.00am on the GM Date satisfied the Company that they are
permitted to apply their Open Offer Entitlements;

"FCA" means the Financial Conduct Authority of the United Kingdom;

"FSMA" means the Financial Services and Markets Act 2000, as amended;

"General Meeting" or "GM" means the general meeting of the Company convened
for the GM Date, notice of which is set out at the end of the Circular;

"Glencore" means Glencore International AG of Baarermattstrasse 3, CH-6340
Baar, Switzerland;

"Glencore Subscription" means the subscription for new Ordinary Shares by
Glencore pursuant to the Glencore Subscription Agreement;

"Glencore Subscription Agreement" means the subscription agreement between the
Company and Glencore entered into on or around the date of this Announcement;

"Glencore Subscription Shares" means the new Ordinary Shares proposed to be
issued by the Company pursuant to the Glencore Subscription Agreement;

"GM Date" means 20 December 2021 (or such other date as agreed between the
Company and the Joint Bookrunners prior to publication of the Circular).

"H&P" means H&P Advisory Limited, a company incorporated in England
and Wales with registered number 01850105 whose registered office is at 2 Park
Street, London, W1K 2HX, United Kingdom;

"Joint Bookrunners" means BMO UK, BMO Canada, Cantor, Peel Hunt, H&P,
Cormark and Paradigm in their roles as joint bookrunners for the Company and
"Joint Bookrunner" shall be construed accordingly;

"Joint UK Bookrunners" means BMO UK, H&P and Peel Hunt;

"La Mancha" means La Mancha Investments s.à r.l., a private limited liability
company (société à responsabilité limitée) incorporated under the laws of
Luxembourg

"La Mancha Convertible Loan Note Instrument" means the convertible loan note
instrument between the Company and La Mancha dated on or around the date of
this Announcement;

"La Mancha Strategic Investment" means the La Mancha investment in the Company
pursuant to the La Mancha Subscription Agreement and La Mancha Convertible
Loan Note Instrument;

"La Mancha Subscription Agreement" means the subscription agreement between
the Company and La Mancha entered into on or around the date of this
Announcement;

"Lenders" means BNP Paribas, BNP Paribas Fortis, ING Capital LLC, ING Bank
N.V., Natixis, New York Branch, Société Générale, and Swedish Export
Credit Corporation;

"London Stock Exchange" or "LSE" means London Stock Exchange plc;

"MAR" means Regulation (EU) No. 596/2014 of the European Parliament and of the
Council of 16 April 2014 on market abuse, and from 1 January 2021 as it forms
part of domestic law by virtue of the European Union (Withdrawal) Act 2018;

"Notice" means the notice of the GM set out at the end of the Circular;

"Offtake Agreement" means the offtake agreement entered into between the
Company and Glencore dated on or around the date of this Announcement

"Open Offer" means the proposed conditional offer by the Company to Qualifying
Shareholders to subscribe for the Open Offer Shares in aggregate, at the UK
Placing Price, on the terms and subject to the conditions to be set out in the
Circular and, where relevant, in the Application Form;

"Open Offer Entitlement" means an entitlement to subscribe for new Ordinary
Shares allocated to a Qualifying Shareholders pursuant to the Open Offer.

"Open Offer Shares" means new Ordinary Shares proposed to be offered to
Qualifying Shareholders pursuant to the Open Offer including, where the
context requires, such new Ordinary Shares as are validly taken up by
Qualifying Shareholders under the Excess Application Facility;

"Ordinary Shares" means the ordinary shares of £0.01 each in the capital of
the Company;

"Orion" means Orion Mine Finance Fund III LP, an exempted limited partnership
established under the laws of the Cayman Islands with number 101696 whose
registered office is at PO Box 309, Ugland House, Grand Cayman, KY1-1104;

 "Orion Convertible Loan Note Instrument" means the convertible loan note
instrument between the Company and Orion dated on or around the date of this
Announcement;

"Orion Strategic Investment" means the investment by Orion pursuant to the
Orion Convertible Loan Note Instrument and Orion Subscription Amount;

"Orion Subscription Agreement" means the subscription agreement between the
Company and Orion entered into on or around the date of this Announcement;

"Orion Term Sheet" means the term sheet entered into between the Company and
Orion dated 27 June 2021;

"Other Financing Arrangements" means certain debt and other financing
arrangements to be entered into by the Company including, but not limited to,
the Offtake Agreement, senior facility agreement on the terms set out in the
Credit Approved Commitment Letter, the Convertible Loan Note Instruments and a
cost overrun facility on the terms set out in the Orion Term Sheet;

"Paradigm" means Paradigm Capital Inc., a corporation whose registered office
is at 95 Wellington Street West, Suite 2101, PO Box 63, Toronto, Ontario, M5J
2J2;

"Peel Hunt" means Peel Hunt LLP, registered in England and Wales with
number 0C357088, whose registered office is at 7th Floor, 100 Liverpool
Street, London EC2Y 5ET, United Kingdom;

"Placing" means the Canadian Offering and the UK Placing;

"Placing Shares" means the UK Placing Shares and the Canadian Offering Shares;

"Placing Term Sheet" means the term sheet in relation to the UK Placing to be
entered into by the Company and the Joint Bookrunners following the Bookbuild;

"Proposed Funding Package" means the Equity Fundraise and the Other Financing
Arrangements;

"Prospectus Regulation" means Regulation (EU) 2017/1129 (as amended and
supplemented from time to time);

"Prospectus Regulation Rules" means the latest edition of the "Prospectus
Regulation Rules" made pursuant to section 73A of FSMA;

"Qualifying Shareholders" means shareholders whose names appear in the
register of members of the Company at the close of business on the Record
Date, other than Excluded Shareholders;

"Record Date" means 22 November 2021 or such other date required by the London
Stock Exchange or as may be agreed between the Company and the Joint
Bookrunners.

"Regulation S" means Regulation S under the US Securities Act;

"Regulatory Information Service" means a Regulatory Information Service that
is on the list of approved Regulatory Information Services maintained by the
FCA;

"Rule 144A" means Rule 144A of the US Securities Act;

"Strategic Investment Agreements" means the Orion Subscription Agreement and
La Mancha Subscription Agreement;

"Strategic Investment Shares" means the new Ordinary Shares proposed to be
issued by the Company pursuant to the Cornerstone Subscription Agreements;

"Strategic Investments" means the investments in the Company pursuant to the
Strategic Investment Agreements and the Convertible Loan Note Instruments;

"Toronto Stock Exchange" or "TSX" means the Toronto Stock Exchange operated by
TMX Group Limited;

"TSX Admission" means the listing of the Placing Shares on the TSX in
accordance with the TSX Listing Rules;

"TSX Company Manual" means the TSX Company Manual of the TSX, as amended from
time to time;

"TSX Listing Rules" means the rules and regulations of the TSX as set out in
the TSX Company Manual;

"UK Placing" means the placing of the UK Placing Shares by the Joint UK
Bookrunners pursuant to the UK Placing Agreement who agree to subscribe for UK
Placing Shares;

"UK Placing Price" has the meaning given in paragraph 4 of the section
entitled "Principal terms of the Bookbuild and UK Placing" of the Appendix;

"UK Placing Shares" means the new Ordinary Shares proposed to be allotted and
issued by the Company fully paid up and admitted to, quoted or listed (as
applicable) on the Exchanges pursuant to the UK Placing in accordance with the
terms of the UK Placing Agreement following the Bookbuild as set out in the
Placing Term Sheet;

"United Kingdom" or "UK" means the United Kingdom of Great Britain and
Northern Ireland;

"US Securities Act" means the US Securities Act of 1933, as amended; and

"Vermelho Project" means the Vermelho nickel and cobalt project; and

"Vermelho Technical Report" means the amended technical report entitled
"Pre-Feasibility Study for the Vermelho Project, Federative Republic of
Brazil" dated 31 October 2019, available on the Company's profile on SEDAR at
www.sedar.com (http://www.sedar.com) .

 

 

 

IMPORTANT NOTICES

David J. Hall, the Chairman of the Company and a qualified person as defined
in National Instrument 43- 101, has reviewed, approved and verified the
technical and scientific disclosure contained in this Announcement. For
additional information, including with respect to the economic parameters on
the Araguaia and the Vermelho projects, and the key assumptions and risks
associated thereto, please refer to the Araguaia Technical Report and the
Vermelho Technical Report, respectively.

 

It is expected that an application will be made to the London Stock Exchange,
and an application has been made to the TSX, for the ordinary shares of the
Company issuable and to be issued pursuant to the various terms of the
Proposed Funding Package to be admitted to trading on AIM and the TSX,
respectively. Admission and listing will be subject to satisfaction of the
conditions of the AIM and TSX, respectively. For the purposes of TSX approvals
in connection with the Proposed Funding Package, the Company intends to rely
on the exemption set forth in Section 602.1 of the TSX Company Manual, which
provides that the TSX will not apply its standards to certain transactions
involving eligible inter-listed issuers on a recognised exchange, such as AIM.

 

THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE OR
FORM ANY PART OF AN OFFER TO SELL OR ISSUE, OR A SOLICITATION OF AN OFFER TO
BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY SECURITIES IN THE UNITED STATES,
AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY OTHER JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NO PUBLIC OFFERING OF THE
FUNDRAISE SHARES IS BEING MADE IN ANY SUCH JURISDICTION. ANY FAILURE TO COMPLY
WITH THESE RESTRICTIONS MAY CONSTITUTE A VIOLATION OF THE SECURITIES LAWS OF
SUCH JURISDICTIONS.

 

This Announcement is not for public release, publication or distribution, in
whole or in part, directly or indirectly, in or into the United States,
Australia, the Republic of South Africa, Japan or any other jurisdiction in
which such release, publication or distribution would be unlawful.

 

No action has been taken by the Company, the Joint UK Bookrunners, the
Canadian Agents or any of their respective affiliates, or any of its or their
respective directors, officers, partners, employees, advisers and/or agents
(collectively, "Representatives") that would permit an offer of the Placing
Shares or possession or distribution of this Announcement or any other
publicity material relating to such Placing Shares in any jurisdiction where
action for that purpose is required. Persons receiving this Announcement are
required to inform themselves about and to observe any restrictions contained
in this Announcement. Persons (including, without limitation, nominees and
trustees) who have a contractual or other legal obligation to forward a copy
of this Announcement should seek appropriate advice before taking any action.
Persons distributing any part of this Announcement must satisfy themselves
that it is lawful to do so.

 

Investors Resident in the United Kingdom and the EEA

This Announcement is directed at and is only being distributed to: (a) persons
in member states of the European Economic Area (the "EEA") who are "qualified
investors", as defined in Article 2(e) of the Prospectus Regulation
(Regulation (EU) 2017/1129) (the "Prospectus Regulation") ("EEA Qualified
Investors"), (b) persons in the United Kingdom, who are qualified investors,
being persons falling within the meaning of Article 2(e) of Prospectus
Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the
European Union (Withdrawal) Act 2018, and who (i) have professional experience
in matters relating to investments who fall within the definition of
"investment professionals" in Article 19(5) of the Financial Services and
Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order");
or (ii) are persons falling within Article 49(2)(a) to (d) ("high net worth
companies, unincorporated associations, etc") of the Order; or (c) persons to
whom it may otherwise be lawfully communicated (each such person in (a), (b)
and (c), a "Relevant Person"). This Announcement and the information in it
must not be acted on or relied on by persons who are not Relevant Persons.
Persons distributing this Announcement must satisfy themselves that it is
lawful to do so. Any investment or investment activity to which this
Announcement or the Placing relates is available only to Relevant Persons and
will be engaged in only with Relevant Persons. This Announcement does not
itself constitute an offer for sale or subscription of any securities in the
Company.

 

This Announcement is not being distributed by, nor has it been approved for
the purposes of section 21 of the Financial Services and Markets Act 2000, as
amended ("FSMA") by, a person authorised under FSMA. This Announcement is
being distributed and communicated to persons in the United Kingdom only in
circumstances in which section 21(1) of FSMA does not apply.

 

Investors Resident in the United States

This Announcement is not for publication or distribution, directly or
indirectly, in or into the United States of America. This Announcement is not
an offer of securities for sale into the United States. The securities
referred to herein have not been and will not be registered under the United
States Securities Act of 1933, as amended (the "U.S. Securities Act"), or with
any securities regulatory authority of any state or jurisdiction of the United
States, and may not be offered or sold in the United States, except pursuant
to an applicable exemption from the registration requirements of the U.S.
Securities Act and in compliance with any applicable securities laws of any
state or other jurisdiction of the United States. No public offering of the
Placing Shares is being made in the United States or elsewhere.

 

Investors Resident in Canada

This Announcement is not an offer of securities in Canada. The Canadian Agents
have been retained to act as agents in connection with the Canadian Offering
to conditionally offer Placing Shares for sale if, as and when issued by the
Company and accepted by the Canadian Agents on a "best efforts" basis in
accordance with the terms and conditions contained in the Agency Agreement.
The Canadian Offering is being made in each of the provinces and territories
of Canada, except Québec. Placing Shares will be offered in such provinces
and territories through those Canadian Agents or their affiliates who are
registered to offer Placing Shares for sale in such provinces and territories
and such other registered dealers as may be designated by the Canadian Agents.
Prospective investors in the Canadian Offering should rely only on the
information contained or incorporated by reference in the Canadian Prospectus.
The Company and the Canadian Agents have not authorised anyone to provide
purchasers with information different from that contained or incorporated by
reference in the Canadian Prospectus.

 

Investors Resident in Australia

This Announcement is not a prospectus, product disclosure statement or other
disclosure document under the Corporations Act 2001 (Cth) (the ''Corporations
Act'') or any other Australian law and is not required to, and does not,
contain all the information which would be required in a disclosure document
under Australian law. This Announcement has not been and will not be lodged or
registered with the Australian Securities and Investments Commission or any
other regulator in Australia.

 

In Australia, the Placing Shares may be sold only to sophisticated investors
or professional investors as those terms are defined in sub-sections 708(8)
and 708(11) of the Corporations Act. The Placing Shares must not be offered
for sale in Australia in the period of 12 months after their respective dates
of issue, except in circumstances where disclosure to investors under Chapter
6D of the Corporations Act would not be required pursuant to an exemption
under section 708 or 708A of the Corporations Act or where the offer is
pursuant to a disclosure document which complies with Chapter 6D of the
Corporations Act. Any person acquiring Placing Shares must observe such
Australian on-sale restrictions.

 

Investors Resident in Hong Kong

 

This Announcement has not been reviewed by any regulatory authority in Hong
Kong. You are advised to exercise caution in relation to the Placing. If you
are in any doubt about any of the contents of this Announcement, you should
obtain independent professional advice.

 

The Placing Shares have not been offered or sold and will not be offered or
sold in Hong Kong, by means of any document, other than (a) to ''professional
investors'', as defined in the Securities and Futures Ordinance (Cap. 571) of
Hong Kong and any rules made under that Ordinance or (b) in other
circumstances which do not result in the document being a ''prospectus'' as
defined in the Companies (Winding Up and Miscellaneous Provision) Ordinance
(Cap. 32) of Hong Kong or which do not constitute an offer to the public
within the meaning of that Ordinance, and no advertisement, invitation or
document relating to the Placing Shares, which is directed at, or the contents
of which are likely to be accessed or read by, the public in Hong Kong has
been or will be issued, nor may it be in the possession of any person for the
purpose of issue, whether in Hong Kong or elsewhere (except if permitted to do
so under the securities laws of Hong Kong), other than with respect to the
Placing Shares which are or are intended to be disposed of only to persons
outside Hong Kong or only to ''professional investors'' as defined in the
Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made
under that Ordinance.

 

References in this Announcement to Hong Kong are to the Hong Kong Special
Administrative Region of the People's Republic of China.

 

Investors Resident in Singapore

 

 

This Announcement and any other document or material in connection with the
offer or sale, or invitation for subscription or purchase, of the Placing
Shares has not been registered and will not be registered as a prospectus with
the Monetary Authority of Singapore under the Securities and Futures Act
(Chapter 289 of Singapore (the "SFA"). Accordingly, this Announcement and any
other document or material in connection with the offer or sale, or invitation
for subscription or purchase, of the Placing Shares may not be circulated or
distributed, nor may the Placing Shares be offered or sold, or be made the
subject of an invitation for subscription or purchase, whether directly or
indirectly, to persons in Singapore other than: (i) to an institutional
investor (as defined in Section 4A of the SFA) pursuant to Section 274 of the
SFA; or (ii) otherwise pursuant to, and in accordance with the conditions of,
any other applicable provision of the SFA, in each case subject to compliance
with conditions set forth in the SFA. There are on-sale restrictions in
Singapore that may be applicable to investors who acquire the Placing Shares.
As such, investors are advised to consider carefully whether the investment is
suitable for them and seek independent professional advice to acquaint
themselves with the SFA provisions relating to resale restrictions in
Singapore and comply accordingly. As of the date of this Announcement, the
Company has not determined the classification of the Placing Shares under
Sections 309B(1) of the SFA pursuant to the exemptions under Regulations 2 and
3 of the Securities and Futures (Capital Markets Products) Regulations 2018
(the "SF(CMP)R"). Accordingly, the Placing Shares may not be offered or sold
or made the subject of an invitation for subscription or purchase nor may this
Announcement or any other document or material in connection with the offer or
sale or invitation for subscription or purchase of any Placing Shares be
circulated or distributed, whether directly or indirectly: (i) to any person
in Singapore other than to an institutional investor; or (ii) otherwise
pursuant to, and in accordance with the conditions of, any other applicable
provision of the SFA.

No Prospectus Outside Canada

Other than in Canada as contemplated pursuant to the terms of the Agency
Agreement, no public offering of the Placing Shares is being made in the
United States, United Kingdom or elsewhere. No prospectus will be made
available in the United Kingdom, the United States or elsewhere (other than in
Canada) in connection with the matters contained in this Announcement and all
offers of the Equity Fundraise Shares, Glencore Subscription Shares and the
Open Offer Shares will be made pursuant to an exemption from the requirement
to produce a prospectus under the Prospectus Regulation (EU) 2017/1129 (as
supplemented by Commission Delegated Regulation (EU) 2019/980 and Commission
Delegated Regulation (EU) 2019/979), as amended from time to time and
including any relevant implementing measure in any member state and / or as
transposed into the laws of the United Kingdom pursuant to the European Union
(Withdrawal) Act 2018.

 

Cautionary Statements Regarding Forward-Looking Information

This Announcement contains "forward-looking information" including as that
term is defined under applicable Canadian securities legislation. Such
information includes but is not limited to, the intended use of proceeds of
the proposed Equity Fundraise, Convertible Loan Notes and Proposed Senior Debt
Facility, construction and development of the Araguaia Project and intended
 reliance on the exemption set forth in Section 602.1 of the TSX Company
Manual. Generally, forward-looking information can be identified by the use of
words such as "plans", "expects" or "is expected", "scheduled", "estimates"
"intends", "anticipates", "believes", or variations of such words and phrases,
or statements that certain actions, events or results "can", "may", "could",
"would", "should", "might" or "will", occur or be achieved, or the negative
connotations thereof. These forward-looking statements are subject to numerous
risks and uncertainties, certain of which are beyond the control of the
Company, which could cause the actual results, performance or achievements of
the Company to be materially different from the future results, performance or
achievements expressed or implied by such information. These risks include,
without limitation, risks related to AIM Admission and the approval of the TSX
and other applicable securities regulatory authorities, a failure to obtain
adequate financing on a timely basis and on acceptable terms, political and
regulatory risks associated with mining and exploration activities, including
environmental regulation, risks and uncertainties relating to the
interpretation of drill and sample results, risks related to the uncertainty
of cost and time estimation and the potential for unexpected delays, costs and
expenses, risks related to metal price fluctuations, the market for nickel and
cobalt products, other risks and uncertainties related to the Company's
prospects, properties and business as well as those risk factors discussed or
referred to herein and in the Company's disclosure record, including in its
annual information form dated 31 March 2021 for the year ended 31 December
2020 filed with the securities regulatory authorities in all territories and
provinces of Canada, other than Quebec, and available at www.sedar.com.
Although the Company has attempted to identify important factors that could
cause actual actions, events or results to differ materially from those
described in forward-looking information, there may be other factors that
cause actions, events or results not to be anticipated, estimated or intended.
There can be no assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ materially from
those anticipated in such information. The Company undertakes no obligation to
update forward-looking information if circumstances or management's estimates,
assumptions or opinions should change, except as required by applicable law.
The reader is cautioned not to place undue reliance on forward-looking
information.

 

Other Cautions

 

BMO Capital Markets Limited, which is authorised and regulated in the United
Kingdom by the FCA, is acting exclusively for the Company and for no one else
in connection with the Equity Fundraise, Glencore Subscription or the Open
Offer and will not regard any other person (whether or not a recipient of this
Announcement) as a client in relation to the Equity Fundraise, Glencore
Subscription or the Open Offer or any other matter referred to in this
Announcement and will not be responsible to anyone other than the Company in
connection with the Equity Fundraise, Glencore Subscription or the Open Offer
or for providing the protections afforded to their respective clients or for
giving advice in relation to the Equity Fundraise, Glencore Subscription or
the Open Offer or any other matter referred to in this Announcement.

 

Peel Hunt LLP, which is authorised and regulated in the United Kingdom by the
FCA, is acting exclusively for the Company and for no one else in connection
with the Equity Fundraise, Glencore Subscription or the Open Offer and will
not regard any other person (whether or not a recipient of this Announcement)
as a client in relation to the Equity Fundraise, Glencore Subscription or the
Open Offer or any other matter referred to in this Announcement and will not
be responsible to anyone other than the Company in connection with the Equity
Fundraise, Glencore Subscription or the Open Offer or for providing the
protections afforded to their respective clients or for giving advice in
relation to the Equity Fundraise, Glencore Subscription or the Open Offer or
any other matter referred to in this Announcement. Peel Hunt LLP's
responsibilities as the Company's nominated adviser under the AIM Rules for
Nominated Advisers are owed solely to the London Stock Exchange and are not
owed to the Company or to any Director or to any other person.

 

H&P Advisory Ltd, which is authorised and regulated in the United Kingdom
by the FCA, is acting exclusively for the Company and for no one else in
connection with the Equity Fundraise, Glencore Subscription or the Open Offer
and will not regard any other person (whether or not a recipient of this
Announcement) as a client in relation to the Equity Fundraise, Glencore
Subscription or the Open Offer or any other matter referred to in this
Announcement and will not be responsible to anyone other than the Company in
connection with the Equity Fundraise, Glencore Subscription or the Open Offer
or for providing the protections afforded to their respective clients or for
giving advice in relation to the Equity Fundraise, Glencore Subscription or
the Open Offer or any other matter referred to in this Announcement.

 

Endeavour Financial, which is authorised and regulated in the United Kingdom
by the FCA, is acting exclusively for the Company and for no one else in
connection with the Orion Strategic Investment and will not regard any other
person (whether or not a recipient of this Announcement) as a client in
relation to the Orion Strategic Investment or any other matter referred to in
this Announcement and will not be responsible to anyone other than the Company
for providing the protections afforded to their respective clients or for
giving advice in relation to the Orion Strategic Investment or any other
matter referred to in this Announcement.

 

Except as required by Applicable Canadian Securities Laws, the Canadian Agents
are acting exclusively for the Company in connection with the Canadian
Offering and will not regard any other person (whether or not a recipient of
this Announcement) as a client in relation to the Canadian Offering or any
other matter referred to in this Announcement and will not be responsible to
anyone other than the Company in connection with the Canadian Offering or for
providing the protections afforded to their respective clients or for giving
advice in relation to the Canadian Offering or any other matter referred to in
this Announcement.

This Announcement is being issued by and is the sole responsibility of the
Company. No representation or warranty, express or implied, is or will be made
as to, or in relation to, and no responsibility or liability is or will be
accepted by or on behalf of any of the Joint UK Bookrunners or any of the
Canadian Agents (apart from, in the case of the Joint UK Bookrunners, the
responsibilities or liabilities that may be imposed by the Financial Services
and Markets Act 2000, as amended ("FSMA") or the regulatory regime established
thereunder) and/or by any of their respective affiliates and/or any of their
respective Representatives as to, or in relation to, the accuracy, adequacy,
fairness or completeness of this Announcement or any other written or oral
information made available to or publicly available to any interested party or
their respective advisers or any other statement made or purported to be made
by or on behalf of any of the Joint UK Bookrunners, any of the Canadian Agents
and/or any of their respective affiliates and/or by any of their respective
Representatives in connection with the Company, the Equity Fundraise Shares,
the Glencore Subscription Shares, the Open Offer Shares, the Proposed Funding
Package or the Open Offer and any responsibility and liability whether arising
in tort, contract or otherwise therefor is expressly disclaimed. No
representation or warranty, express or implied, is made by any of the Joint UK
Bookrunners, any of the Canadian Agents and/or any of their respective
affiliates and/or any of their respective Representatives as to the accuracy,
fairness, verification, completeness or sufficiency of the information or
opinions contained in this Announcement or any other written or oral
information made available to or publicly available to any interested party or
their respective advisers, and any liability therefor is expressly disclaimed.

 

The information in this Announcement may not be forwarded or distributed to
any other person and may not be reproduced in any manner whatsoever. Any
forwarding, distribution, reproduction or disclosure of this Announcement, in
whole or in part, is unauthorised. Failure to comply with this directive may
result in a violation of the U.S. Securities Act or the applicable laws of
other jurisdictions.

 

This Announcement does not identify or suggest, or purport to identify or
suggest, the risks (direct or indirect) that may be associated with an
investment in the Ordinary Shares. Any investment decision to buy Ordinary
Shares in the Placing or the Open Offer must be made solely on the basis of
publicly available information. This Announcement does not constitute a
recommendation concerning any investor's options with respect to the Placing
or Open Offer. Recipients of this Announcement should conduct their own
investigation, evaluation and analysis of the business, data and other
information described in this Announcement. The price and value of securities
can go down as well as up and investors may not get back the full amount
invested upon the disposal of the shares. Past performance is not a guide to
future performance. The contents of this Announcement are not to be construed
as legal, business, financial or tax advice. Each investor or prospective
investor should consult his or her or its own legal adviser, business adviser,
financial adviser or tax adviser for legal, business, financial or tax advice.

 

Any indication in this Announcement of the price at which the Company's shares
have been bought or sold in the past cannot be relied upon as a guide to
future performance. Persons needing advice should consult an independent
financial adviser. No statement in this Announcement is intended to be a
profit forecast or profit estimate for any period and no statement in this
Announcement should be interpreted to mean that earnings, earnings per share
or income, cash flow from operations or free cash flow for the Company for the
current or future financial periods would necessarily match or exceed the
historical published earnings, earnings per share or income, cash flow from
operations or free cash flow for the Company.

 

The Equity Fundraise Shares, the Glencore Subscription Shares and the Open
Offer Shares to be issued pursuant to the Proposed Funding Package will not be
admitted to trading on any stock exchange other than AIM and the TSX. The
Equity Fundraise Shares, the Glencore Subscription Shares and the Open Offer
Shares will, when issued in accordance with the rules of the TSX, form part of
the Ordinary Shares of the Company currently listed for trading on the TSX.

 

Neither the content of the Company's website (or any other website) nor the
content of any website accessible from hyperlinks on the Company's website (or
any other website) is incorporated into, or forms part of, this Announcement.

 

This Announcement has been prepared for the purposes of complying with
applicable law and regulation in the United Kingdom and the information
disclosed may not be the same as that which would have been disclosed if this
Announcement had been prepared in accordance with the laws and regulations of
any jurisdiction outside the United Kingdom.

 

 

 1  Source: Wood Mackenzie

 

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