Dundarave Enters Into Binding Letter Agreement With Perfect Lithium Corp.
September 24, 2014
Dundarave Resources Inc. has entered into a binding letter agreement dated Aug. 29, 2014, with Perfect Lithium Corp., which sets out the terms of a proposed business combination between Dundarave and PLC. Upon completion, the transaction will constitute a reverse takeover of Dundarave by PLC, with the resulting company to be renamed Perfect Lithium Corp. Dundarave and PLC are at arm’s length to each other.
Summary of the transaction
Pursuant to the transaction, Dundarave, or a wholly owned subsidiary of Dundarave, will acquire 100 per cent of the issued and outstanding shares of PLC in exchange for 0.8 of a postconsolidation share (as defined herein) for each outstanding share of PLC.
All outstanding warrants of PLC will be exchanged for Dundarave warrants to purchase postconsolidation shares with appropriate adjustments to the number and price of shares that may be acquired upon exercise thereof to reflect the exchange ratio. All stock options of Dundarave and PLC issued prior to the agreement will be cancelled upon closing of the transaction.
Concurrent with the closing of the transaction, Dundarave will consolidate all of its issued and outstanding common shares on the basis of one new common share for every two existing common shares. Each shareholder of Dundarave will also receive one share purchase warrant for each postconsolidation share held. Each warrant may be exercised to either acquire an additional full postconsolidation share in the first year from the closing date of the transaction, or an additional half postconsolidation share in the second year from the closing date, in either case, at the same price as the exercise price of the warrants issued pursuant to the private placement (as defined herein).
On closing of the transaction, the board of directors of the resulting issuer will be composed of Paul Matysek, who will also act as chairman, Dan Blondal, who will also act as chief executive officer, John Lando, who will also act as president, and two additional nominees of PLC. See below for additional information on the proposed directors and management of the resulting issuer.
Pursuant to the terms of the agreement, the company and PLC are subject to customary standstill provisions, including the payment of break fees in certain circumstances.
The closing of the transaction is subject to various conditions, including completion of due diligence, the parties entering into a definitive agreement, obtaining the approval of the shareholders of Dundarave and PLC, and obtaining all required regulatory and stock exchange approvals.
In connection with obtaining shareholder approval, Dundarave will prepare an information circular, which will provide full disclosure in respect of the transaction.
In connection with the transaction, Dundarave will conduct a private placement of securities of Dundarave for gross proceeds of up to $3-million. Details of the offering will be announced by subsequent news release.
About Perfect Lithium
Perfect Lithium is a private B.C. company, founded in 2011. PLC is focused on developing novel, scalable and low-cost processing technology for the production of high-performance nano-structured materials. PLC’s mission is to establish its patent-pending technology as the de facto platform for the production of a new generation of high-volume, high-performance advanced materials.
PLC’s primary market is the multibillion-dollar cathode materials supply chain for lithium ion batteries that are used in consumer electronics, electric vehicles and industrial storage. Testing in 2014 by Canada’s National Research Council has validated the efficacy of materials supplied by PLC. Based on these tests, PLC believes its enhanced processing technology has the potential to address demand for cheaper higher-performing batteries. The three-stage proprietary process uses common industrial equipment that is designed to commercialize high-volume production of nano-structured materials.
PLC has six patents pending in the United States, five worldwide and one in Taiwan.
PLC intends to use the proceeds of the private placement for full cell battery testing, technology development, pilot production, commercialization efforts and general working capital. While PLC’s processing technology will initially be focused on lithium ion batteries, it also proposes to leverage its platform technology in health sciences, 3-D printing, catalysts, ceramics, pharmaceuticals, agriculture, aerospace, communications and other materials markets.
PLC is building an experienced technology development and production team to advance the technology. Team members include Dr. Byron Gates, Dr. Ulrich von Sacken and Dr. Joseph Guy as advisers and Russell Barton as a principal engineer, all providing expertise in the areas of materials science, lithium ion batteries, intellectual property and systems engineering.
Dr. Gates is a Tier 3 Canada research chair in the Department of Chemistry at Simon Fraser University, investigating the surface and interface chemistry of nanomaterials, and is the principal investigator for the Centre for Soft Materials in 4D Labs, a materials research institute at SFU.
Dr. von Sacken has 20 years experience as general manager of research and development at E-One Moli Energy Canada and vice-president of technology at BAK Battery Canada.
Dr. Guy works as a patent agent with Perkins Law Firm, and is a chemist with more than 23 years experience, prosecuting patents and intellectual property matters, with a focus on complex technologies, including material science, electronic components, pharmaceuticals and medical products.
Mr. Barton has over 40 years experience, designing mechanical and electrochemical systems and fuel cell products for Ballard Power Systems, Energizer, PolyFuel, the University of North Florida and Neptune Dynamics. He is credited with 30 patents issued in Canada, the United States and foreign jurisdictions.
PLC is launching collaborative relationships with Noram Engineering and Constructors Ltd. and its subsidiary B.C. Research Inc. Noram and BCRI are globally recognized in process engineering and will be valuable contributors to PLC’s technology development, scale-up and commercialization. They will provide incubation and piloting facilities along with support in laboratory, design, engineering and industrial know-how.
PLC also has had financial support from Canada’s National Research Council Industrial Research Assistance Program for two projects and is working to expand its valuable relationship with IRAP.
Proposed board of directors and management
The following are brief descriptions of the proposed directors and officers upon completion of the transaction:
Mr. Matysek, chairman and director
Mr. Matysek is a corporate entrepreneur, professional geochemist and geologist with over 30 years of experience in the mining industry. He is currently president and chief executive officer of Goldrock Mines Corp., has previously held senior executive and director positions with several natural resource exploration and development companies, and is a proven company builder. He was recently president and chief executive officer of Lithium One Inc., whose world-class lithium development project was in northern Argentina. In July, 2012, Lithium One merged with Galaxy Resources of Australia through a $112-million plan of arrangement to create an integrated lithium company. Prior to Lithium One, Mr. Matysek was the president and CEO of Potash One Inc., where he was the architect of the $434-million friendly takeover of Potash One by K+S Ag, which closed in early 2011. Prior to founding Potash One, Mr. Matysek was the founder, president and CEO of Energy Metals Corp., a premier uranium company traded on the New York and Toronto stock exchanges. Mr. Matysek led EMC as one of the fastest-growing Canadian companies in recent years, increasing its market capitalization from $10-million in 2004 to approximately $1.8-billion when acquired by a larger uranium producer in 2007.
Mr. Blondal, CEO and director
Mr. Blondal has 26 years of experience as a professional engineer, managing high-growth technology in a career that has spanned materials handling, medical devices, industrial printing, nuclear fusion and materials science. He is credited with eight patents issued in Canada, the United States and foreign jurisdictions. He has served in various roles at Fluor, Andronic Devices, Creo, Kodak and alternative energy start-up General Fusion. Mr. Blondal brings significant experience in systems engineering, physics and business. As product and technology manager at Creo and Kodak, he led vital initiatives valued at $20-million annually to leverage software, laser and chemical systems for high-quality printing.
Mr. Lando, president and director
Mr. Lando has 26 years of experience in venture capital management, equity markets and financing of public companies. After trading equities at RBC Dominion Securities, he transitioned to senior management roles at early-stage venture companies, including New World Resource Corp. and Northern Lion Gold.
Trading in Dundarave’s shares has been halted, and the halt is expected to remain in place until the transaction closes.