The sale will also permit the Company to re-pay its existing non Waterton US$5.0 million senior secured convertible promissory note, following which it will have no debt. The proceeds from the sale will also allow the Company to make progress at the flagship Idaho Cobalt Project and to evaluate additional opportunities already within the Company and in the market at large.
Based on the factors above, the Company made the decision to enter into the Letter Agreement to divest itself of a non-core asset while substantially increasing its cash position, reducing operational and administrative expenses and eliminating its debt. Formation believes that the proposed sale is clearly in the best interests of the Company.
The proposed sale does not constitute a sale or disposal of all or substantially all of Formation's undertaking and therefore does not require shareholder approval under the Business Corporations Act (British Columbia).
As disclosed in the Petition materials filed with the Supreme Court of British Columbia by Dundee, subsequent to the entering into of the Letter Agreement the Company received an unsolicited proposal from Sunshine Silver Mines Corporation to purchase the subsidiary of the Company that owns the Complex and certain other assets for US$12.0 million.
The special resolution of shareholders that will be proposed by the Company at the upcoming Annual General and Special Meeting to alter the Company's Articles to remove the staggered board provisions complies with the requirements of the Toronto Stock Exchange.
Formation is a well-established mineral exploration, development and refining company who owns 100% of a fully permitted primary cobalt deposit located in Idaho which has been prepared for the commencement of underground development, pending additional mine financing. Formation has additional interests in base, precious metal and uranium projects in Canada, the United States and Mexico. Formation is dedicated to the principles of environmentally sound mining and refining practices, and believes that environmental stewardship and mining can co-exist. The Company trades on the Toronto Stock Exchange under the symbol FCO.
Formation Metals Inc.
Mari-Ann Green, C.E.O.
This news release contains "forward-looking statements" within the meaning of applicable Canadian securities legislation, including statements regarding the proposed sale of the Complex, the use of proceeds from such sale and litigation involving the Company. Generally, forward-looking statements can be identified by the use of forward- looking terminology. These forward-looking statements are based on factors and assumptions of management, including that the conditions to completion of the proposed sale will be satisfied or waived, that the closing of the proposed sale will complete as contemplated in the Letter Agreement and at the time anticipated by management and that the exploration, development and other plans of the Company will not change. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements, including the risk that the conditions to completion of the proposed sale will not be satisfied or waived, that the closing of the proposed sale will not complete on the terms currently contemplated, at the time anticipated by management or at all and that the exploration, development and other plans of the Company will change. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements that are contained herein, except in accordance with applicable securities laws. Further information on the Company is available at www.sedar.com.
The statements contained in this news release in regard to Formation Metals Inc. that are not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including Formation Metals Inc.'s beliefs, expectations, hopes or intentions regarding the future. All forward-looking statements are made as of the date hereof and are based on information available to the parties as of such date. It is important to note that actual outcome and the actual results could differ from those in such forward-looking statements. Factors that could cause actual results to differ materially include risks and uncertainties such as technological, legislative, corporate, commodity price and marketplace changes.
Formation Metals Inc.
E.R. (Rick) Honsinger, P.Geo.
V.P. Corporate Communications
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