Elemental & Fengro Announce Closing of C$24M Financing

Elemental Royalties Limited (‘Elemental’ or the ‘Company’) is pleased to confirm that the previously announced brokered private placement offering of subscription receipts for combined aggregate gross proceeds of $23,969,029.50 has been closed.

A news release made by Fengro Industries Corp (‘Fengro’) today provides comprehensive background information. A link to this is provided below.

Elemental is pleased to announce the closing of the previously announced brokered private placement offering of subscription receipts for combined aggregate gross proceeds of $23,969,029.50 (the “Offering”) issued pursuant to the terms of an agency agreement dated June 10, 2020 between Fengro, Elemental, Canaccord Genuity Corp., as lead agent and sole bookrunner (the “Lead Agent”), together with Haywood Securities Inc. and Sprott Capital Partners LP (collectively, the “Agents”). The Offering was completed in connection with the proposed reverse takeover of Fengro by Elemental (the “Transaction”).

Pursuant to the terms of the Offering, 1249739 B.C. Ltd., a wholly-owned British Columbia subsidiary of Elemental (“ERL Finco”) issued today 17,713,615 subscription receipts (“ERL Finco Subscription Receipts”) at a price of $1.30 per ERL Finco Subscription Receipt for aggregate gross proceeds of $23,027,699.50. Each ERL Finco Subscription Receipt will, upon satisfaction of certain escrow release conditions, automatically convert, without any further action or further consideration from the subscription receipt holder, into one common share of ERL Finco (each an “ERL Finco Share”) and, immediately thereafter, upon completion of the Transaction, each ERL Finco Share will be exchanged for one post-Consolidation common share of Fengro (each a “Fengro Share”). Prior to the completion of the Transaction, Fengro will complete a consolidation of the outstanding common shares on the basis of one post-consolidation common share for each 209 pre-consolidation common shares held (the “Consolidation”).

Concurrently with the issuance of the ERL Finco Subscription Receipts, and pursuant to the Offering, Fengro issued today 724,100 subscription receipts (each, a “Fengro Subscription Receipt”) at a price of $1.30 per Fengro Subscription Receipt for aggregate gross proceeds of $941,330.00. Each Fengro Subscription Receipt will automatically convert, without any further action or further consideration from the subscription receipt holder, into one Fengro Share immediately following the conversion of the ERL Finco Subscription Receipts.

The gross proceeds from the Offering, less 50% of the Agents’ commission (described below) and all of the Agents’ expenses incurred in connection with the Offering, will be held in escrow by Computershare Trust Company of Canada as subscription receipt agent (“Computershare”) in accordance with the subscription receipt agreement dated June 10, 2020 entered into between Fengro, Elemental, Computershare and the Lead Agent in respect of the Fengro Subscription Receipts, and in accordance with the subscription receipt agreement dated June 10, 2020 entered into between Elemental, ERL Finco (defined above), Computershare and the Lead Agent in respect of the ERL Finco Subscription Receipts. If the Transaction is not completed within four months and one day from the date hereof, each of the Fengro Subscription Agreements and the ERL Finco Subscription Agreements will be cancelled and the escrowed funds will be returned to subscribers together with any pro rata interest earned thereon and any shortfall due to subscribers upon termination will be repaid by Elemental.

One insider of Fengro has acquired direction and control over 460,000 Fengro Subscription Receipts under the Offering. The placement to such person constitutes a “related party transaction” within the meaning of Exchange Policy 5.9 and Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”) adopted in the Policy. Following the completion of the Transaction, such insider purchaser will hold less than 10% of the outstanding common shares of Fengro (the “Resulting Issuer”). Fengro has relied on exemptions from the formal valuation and minority shareholder approval requirements of MI 61-101 contained in sections 5.5(a) and 5.7(1)(b) of MI 61-101 in respect of related party participation in the Offering as the fair market value (as determined under MI 61-101) of the subject matter of the transaction, insofar as it involves the related party, will neither (i) exceed 25% of the Resulting Issuer’s market capitalization, nor (ii) exceed $2,500,000 in total consideration. Further details will be included in a material change report to be filed by the Company.

In connection with the performance of their services under the Offering, the Agents were paid an aggregate cash commission of $1,263,141.77, of which 50% has been deposited in escrow with Computershare as subscription receipt agent. Closing of the Offering remains subject to the final approval of the TSXV. The Fengro Subscription Receipts are subject to a four month hold period from the date hereof, and the ERL Finco Subscription Receipts are subject to an indefinite hold period.

The text above is Elemental Royalties’ comment to the operator’s news release and is not included within the original release. The original article is available using the link below.

Download PDF: 
http://www.elementalroyalties.com/_resources/news/2020/200610-ERL-Fengro-Financing-Closed.pdf?v=0.994

About Elemental Royalties Limited

Elemental provides investors with exposure to a dividend-paying royalty company building a diverse portfolio of mining royalties, benefiting from ongoing royalty revenue, future exploration upside and low operating costs.

Since early 2017 Elemental has assembled a portfolio of six royalties over seven commodities in five countries, five of which cover producing mines. Immediate cash-flow has enabled Elemental to limit dilutive fund-raisings to facilitate royalty acquisitions, and to pay a dividend from inception.

Elemental’s focus remains on securing royalties over advanced assets with established operators and credible counter-parties from a robust pipeline of potential royalty acquisitions across commodities and geographies.

For further information you are invited to visit the Company’s website www.elementalroyalties.com or contact:

Cautionary Note Regarding Forward Looking Statements

This press release may contain statements which constitute “forward-looking”, including statements regarding the plans, intentions, beliefs and current expectations of the Company, and its directors, or officers with respect to the future business activities and operating performance of the Company. The words “may”, “would”, “could”, “will”, “intend”, “plan”, “anticipate”, “believe”, “estimate”, “expect” and similar expressions or the negative thereof, as they relate to the Company, or its management, are intended to identify such forward-looking statements.

Investors are cautioned that any such forward-looking statements are not guarantees of future business activities or performance and involve risks and uncertainties, and that the Company’s future business activities may differ materially from those in the forward-looking statements as a result of various factors.

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.  These forward-looking statements speak only as at the date of this press release.  Although the Company has attempted to identify important risks, uncertainties and factors which could cause actual results to differ materially, there may be others that cause results not be as anticipated, estimated or intended. The Company does not intend, and does not assume any obligation, to update these forward-looking statements.