South Star Battery Metals Corp., is pleased to announce that it that it has successfully completed the closing of the third and final tranche of its upsized, non-brokered private placement (the “Private Placement“) of Units for gross proceeds to the Company of US$879,449.45 (CA$1,231,229.06). When combined with Tranche 1 and Tranche 2, the gross proceeds of the Private Placement to the Company total US$3,000,000 (CA$4,200,000). Funds from the Private Placement will be used for exploration, development, production activities, as well as corporate G&A and general working capital requirements.
Tranche 3 of the Private Placement consists of the issuance of 2,045,231 Units (the “Units“). Each Unit consists of one common share (a “Share“) priced at US$0.43 (CA$0.602) and one common share purchase warrant (a “Warrant“). Each Warrant is exercisable into one Share at a price of US$0.89 (CA$1.246) for five years from the date of issue and is subject to an acceleration clause as detailed below.
Final closing of the Private Placement is subject to customary closing conditions, including, but not limited to, the receipt of all necessary approvals, including the approval of the TSX Venture Exchange. In connection with the third tranche closing of the Private Placement, the Company paid finder’s fees of US$40,000 (CA$56,000) and issued 55,813 common shares (the “Finders Shares“) to A8 Capital Advisors Latam Ltd. The Units and Finder’s Shares issued pursuant to the Private Placement will be subject to a four-month hold period.
Insiders of the Company participated in Tranche 3 of the Private Placement for an aggregate amount of US$29,440.45 (CA$41,216.53) for 68,466 Units. Insider participation for the Private Placement totaled US$936,798.50 (CA$1,311,517.90) for 2,178,601 Units. The transaction with the director, officers and insiders constitutes a “related party transaction” as defined under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Company is relying on the exemptions under section 5.5(a) and section 5.7(1)(a) from the formal valuation and minority shareholder approval requirements of MI 61-101, as the fair market value of the Units issued to the related parties and the consideration paid by the related parties under the Private Placement does not exceed 25% of Company’s market capitalization, as determined in accordance with MI 61-101. The Company did not file a material change report in respect of the related party transaction at least 21 days before the closing of the Private Placement, as the details of the participation by related parties of the Company were not settled until shortly prior to closing of the Private Placement.
Acceleration Clause
The acceleration clause of the Warrants will provide that, if, during any period of ten (10) consecutive trading days between the date that is four (4) months following the closing of the Private Placement and the expiry of the Warrants, the daily volume weighted average trading price of the common shares of the Company on the TSX Venture Exchange (or such other stock exchange where the majority of the trading volume occurs) is equal to or exceeds US$1.79 (CA$2.506) on each day, the Company may, within thirty (30) days of such an occurrence, give notice, via news release, to the holders of the Warrants that all unexercised Warrants will expire at 4:00 p.m. (Vancouver time) on the 30th day following the giving of such notice. Upon receipt of such notice, the holders of the Warrants will have thirty (30) days to exercise their Warrants and any Warrants that remain unexercised will expire.
