Montreal, Quebec--(Newsfile Corp. - January 17, 2023) - Meteorite Capital Inc. (TSXV: MTR.P) ("Meteorite" or the "Company") is pleased to provide an update on the Company's previously announced Qualifying Transaction with Kobo Resources Inc. ("Kobo" and together with the Company, the "Parties"), as such term is defined in Policy 2.4 - Capital Pool Companies (the "Policy") of the TSX Venture Exchange (the "TSXV" or the "Exchange") Corporate Finance Manual (the "Transaction"). Further to the binding letter agreement entered into on November 1, 2022 (the "Letter Agreement"), the Parties are presently in advanced negotiations to finalize the definitive agreement (the "Proposed Definitive Agreement"), which will form the basis upon which the Parties will effect the Transaction.
About Kobo
Kobo was incorporated under the Business Corporations Act (Québec) on December 14, 2015 under the name 9333-9141 Québec Inc. On March 4, 2016, Kobo changed its name to Kobo Resources Inc.. Kobo's head office and registered office are located at 388 Grande-Allée East, Suite 101, Québec, Québec, G1R 2J4.
Kobo is a junior Canadian exploration and mining development company focused on acquiring, exploring and developing gold property assets located in West Africa and primarily in Côte d'Ivoire. Kobo, through its wholly-owned subsidiary, KOBO Ressources Côte d'Ivoire S.A., owns two research permits for gold (being the Kossou Permit and the Kotobi Permit) covering 449km2 and has three pending applications covering 1,068km2. As at the date hereof, Kobo's sole material asset is the Kossou Permit, which forms the basis of its Kossou gold project (the "Kossou Gold Project").
About Meteorite
Meteorite exists under the provisions of the Canada Business Corporations Act with its registered and head office located at 1 Place Ville Marie, Suite 3900, Montreal, Québec. It is a capital pool company and intends for the Transaction to constitute its "Qualifying Transaction" as such term is defined in the Policy. Meteorite is a "reporting issuer" within the meaning of the Securities Act of each of the Provinces of British Columbia, Alberta, Ontario and Québec.
The Transaction
Pursuant to the Proposed Definitive Agreement, the Company is expected to acquire all of the issued and outstanding common shares of Kobo (the "Kobo Shares") pursuant to a three-cornered amalgamation, whereby 9454-2123 Québec Inc., a wholly-owned subsidiary of Meteorite formed for such purpose ("Subco") will amalgamate with Kobo (the "Amalgamation") to form a newly amalgamated company ("Amalco") The Amalgamation is expected to result in the issuance, to each shareholder of Kobo (each, a "Kobo Shareholder"), of one (1) Resulting Issuer Share (as defined below) for each one (1) Kobo Share held by such holder immediately prior to the closing of the Transaction (the "Closing"). In all, Meteorite will issue an aggregate of 56,809,749 Resulting Issuer Shares at a deemed price of $0.20 per share in consideration for the acquisition of all outstanding Kobo Shares.
As part of the Amalgamation, all convertible securities of Kobo outstanding immediately prior to the Closing are expected to be replaced with or exchanged for equivalent convertible securities of the Company entitling the holders thereof to acquire Resulting Issuer Shares in lieu of Kobo Shares.
The Amalgamation will result in the reverse takeover of the Company by the Kobo Shareholders and will constitute the Company's Transaction. Following the completion of the Transaction, the Company, as the issuer resulting therefrom (the "Resulting Issuer"), is expected to carry on the current business of Kobo under the name "Kobo Resources Inc." or such other name as may be determined by Kobo and approved by the shareholders of the Company and be acceptable to the applicable regulatory authorities. Post-closing of the Transaction, the Resulting Issuer will carry on the business currently conducted by Kobo. Further, it is proposed that the officers and directors of Kobo will replace the existing officers and directors of Meteorite, with the exception of Charles R. Spector, who will stay on as director of the Company. Biographical information regarding these individuals is provided below under the heading "Proposed Officers and Directors".
The Letter Agreement may be terminated in the event the Proposed Definitive Agreement is not entered into by February 15, 2023.
Upon completion of the Transaction, it is anticipated that the Resulting Issuer will be listed as a Tier 2 Mining Issuer on the TSXV. Completion of the Transaction is subject to a number of other conditions, including obtaining all necessary board, shareholder and regulatory approvals, including TSXV approval.
Consolidation and Name Change
As will be further set out in the Proposed Definitive Agreement, the Company is expected to, prior to the Closing, (i) effect a consolidation (the "Consolidation") of its outstanding common shares (the "Common Shares") on the basis of 0.2 post-Consolidation common shares (each, a "Resulting Issuer Share") for every one (1) pre-consolidation Common Share (the "Consolidation Ratio"), and (ii) effect a change of its corporate name to "Kobo Resources Inc." or such other name as determined by Kobo and approved by the shareholders of the Company and is acceptable to the applicable regulatory authorities (the "Name Change").
As of the date hereof, there are 7,065,000 Common Shares issued and outstanding. Upon completion of the Consolidation, an aggregate of 1,413,000 Resulting Issuer Shares are expected to be issued and outstanding. Further, all outstanding incentive stock options of the Company ("Company Options") will automatically adjust in accordance with their terms to give effect to the Consolidation such that, following the Consolidation, the holders thereof will be entitled to acquire Resulting Issuer Shares in lieu of Common Shares (with adjustments to account for the Consolidation Ratio). Thus, the 565,200 Company Options currently outstanding will be exercisable for an aggregate of 113,040 Resulting Issuer Shares.
Concurrent Financing
In connection with the Transaction, Kobo is expected to undertake a brokered private placement (the "Concurrent Financing") of subscription receipts of Kobo (the "Subscription Receipts") at a price of $0.25 per Subscription Receipt led by Leede Jones Gable Inc. (the "Agent"), for minimum aggregate gross proceeds of at least $3,500,000 (the "Minimum Offering") and a maximum of $5,000,000 (the "Maximum Offering"), which proceeds will be held in escrow pending closing of the Transaction.
Each Subscription Receipt will be convertible into one Kobo Share and one-half of one warrant to purchase one Kobo Share ("Kobo Warrant"). Upon satisfaction and/or waiver (where permitted) of certain escrow release conditions, which will include, among others, events in connection with the completion of the Transaction, each Subscription Receipt is expected to be automatically converted, without payment of any additional consideration and without any further action on the part of the holder thereof, for the securities of Kobo underlying the Subscription Receipts (which securities will, upon the Closing, be exchanged for Resulting Issuer Shares and/or replacement convertible securities of the Resulting Issuer, as applicable).
The Agent, along with a syndicate of other selling agents (collectively, the "Agents"), will be compensated as follows: i) a cash commission (the "Agents' Commission") equal to 6% of the gross proceeds (including the Agent's Option) from the Concurrent Financing (the "Gross Proceeds"), other than Gross Proceeds originating from Kobo's President's List of subscribers (the "President's List") subscriptions, on which the Agents' Commission will be 2% of the gross proceeds from the President's List. As additional compensation, Kobo will issue to the Agents transferable broker subscription receipt warrants (the "Agents' Subscription Receipt Warrants", and together with the Agent's Commission, the "Agency Fee") equal to 6% of the number of Subscription Receipts sold pursuant to the Concurrent Financing (including the Agent's option to increase the size of the Concurrent Financing by 15% (the "Agent's Option") but excluding the President's List). Each Agents' Subscription Receipt Warrant will be comprised of one Kobo Share and one half of one Kobo Warrant entitling the holder to purchase, subject to adjustment, one Kobo Share at an exercise price of $0.40 for 24 months after the escrow release date. Each Agents' Subscription Receipt Warrant shall be exercisable to acquire one subscription receipt of the Resulting Issuer ("Resulting Issuer Subscription Receipt") at a price of $0.25 per Resulting Issuer Subscription Receipt for a period of 24 months following the date the escrow release date, and ii) a cash corporate finance fee (the "Cash Corporate Finance Fee") which is equal to 2% of the Gross Proceeds (including the Agent's Option) plus applicable taxes, subject to a minimum Corporate Finance Fee of $75,000, plus applicable taxes, and the Corporation shall issue warrants (the "Corporate Finance Compensation Warrants") equal to 2% of the number of Subscription Receipts sold pursuant to the Concurrent Financing (including the Agent's Option). The Corporate Finance Compensation Warrants shall have the same terms as the Agents' Subscription Receipt Warrants. Other than as set out above, neither Meteorite nor Kobo intends to pay any finder's fees or commissions in connection with the Transaction.
The proceeds of the Concurrent Financing are expected to be used to fund (i) the exploration and other expenses relating to the Kossou Gold Project (as defined below), (ii) the expenses of the Transaction and the Concurrent Financing, and (iii) the working capital requirements of the Resulting Issuer.
Kobo currently has (a) 56,809,749 Kobo Shares, (b) 3,150,000 options, of which 400,000 are conditional, to purchase Kobo Shares ("Kobo Options") and (c) 4,250,034 common share purchase warrants of Kobo ("Kobo Warrants") issued and outstanding.
It is anticipated that, following completion of the Consolidation and assuming the Minimum Offering, an aggregate of approximately 72,222,749 Resulting Issuer Shares will be issued and outstanding, and: (a) former holders of Kobo Shares will hold 56,809,749 Resulting Issuer Shares, representing approximately 78.66% of the outstanding Resulting Issuer Shares; (b) holders of Kobo Subscription Receipts will hold 14,000,000 Resulting Issuer Shares, representing approximately 19.38% of the outstanding Resulting Issuer Shares; and (c) former Meteorite Shareholders will hold 1,413,000 Resulting Issuer Shares, representing approximately 1.96% of the outstanding Resulting Issuer Shares. In addition, it is expected that the Resulting Issuer will also have outstanding approximately 3,263,040 stock options, of which 400,000 are conditional, and 4,250,034 warrants outstanding.
Insiders and Control Persons
No Insider, Promoter or Control Person (as such terms are defined in the policies of the Exchange) of the Company has any interest in Kobo.
To the best knowledge of the directors and senior officers of Kobo, no person beneficially owns, directly or indirectly, or exercises control or direction over, shares carrying more than 10% of the voting rights attached to any class of voting securities of Kobo as at the date hereof except as set out below:
| Name of Holder | Description of Securities | Number of Securities | Percentage prior to the Financing | Percentage after the Minimum Offering | Percentage after the Maximum Offering | ||||||||||
| Edouard Gosselin | Common Shares | 15,500,000(1) | 27.28% | 21.46% | 19.81% | ||||||||||
| Paul Sarjeant | Common Shares | 8,000,000(2) | 14.08% | 11.08% | 10.23% | ||||||||||
| Jean Coté/Gestion JCJC Inc. | Common Shares | 6,520,073(3) | 11.48% | 9.03% | 8.34% |
Notes:
(1) Total of 16,150,000 securities (including the 650,000 Options), representing 25.15% prior to the Concurrent Financing on a fully-diluted basis.
(2) Total of 8,400,000 securities (including the 400,000 Options), representing 13.08% prior to the Concurrent Financing on a fully-diluted basis.
(3) Total of 6,520,073 securities (including the 200,000 Options), representing 10.47% prior to the Concurrent Financing on a fully-diluted basis. Gestion JCJC Inc. is a corporation controlled by Mr. Jean Coté. Mr. Jean Côté resigned as a director of Kobo as of November 12, 2021.
Sponsorship
The Transaction is subject to the sponsorship requirements of the TSXV, unless a waiver or exemption from this requirement can be obtained in accordance with the policies of the TSXV. The Company intends to apply for a waiver of the sponsorship requirement, however there is no assurance that a waiver from this requirement can or will be obtained.
Trading in Meteorite Shares
Trading of Meteorite's common shares has been halted in compliance with the policies of the TSXV. Trading of Meteorite's shares will remain halted pending the review of the Proposed Transaction by the TSXV and satisfaction of the conditions of the TSXV for resumption of trading. It is likely that trading of Meteorite's shares will not resume prior to the closing of the Transaction.
Conditions Precedent
The completion of the Transaction remains subject to a number of terms and conditions to be set forth in the Proposed Definitive Agreement, including, among other things (i) there being no material adverse change in respect of either of the Parties, (ii) the receipt of all necessary consents, orders and regulatory and shareholder approvals, including the conditional approval of the TSXV, subject only to customary conditions of closing, (iii) the completion of the Consolidation, Name Change, the Concurrent Financing, and (iv) such other customary conditions of closing for a transaction in the nature of the Transaction. Accordingly, there can be no assurance that the Transaction will be completed on the terms proposed and described herein, or at all.
Additional Information
Further updates in respect of the Transaction will be provided in a subsequent press release. Also, additional information concerning the Transaction, the Company, Kobo, and the Resulting Issuer will be provided in the filing statement (the "Filing Statement") to be filed by the Company and Kobo in connection with the Transaction, which will be available in due course under the Company's SEDAR profile at www.sedar.com.
Shareholder Meeting
The Transaction is not a Non-Arm's Length Qualifying Transaction (as such term is defined in the Policy) and as such, the Company will not be required to obtain shareholder approval of the Transaction. In addition, the Transaction is not a "related party transaction" as such term is defined by Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions and is not subject to Policy 5.9 of the TSXV. As a result, no meeting of the shareholders of the Company is required pursuant to the Policy or securities law.
However, a special meeting of the Company's shareholders will be held to approve the various corporate matters connected to the Transaction, including the Board Reconstitution (as defined below), the Consolidation, the Name Change, and the approval of the implementation of Kobo's current stock option plan as the stock option plan of the Resulting Issuer (the "Special Meeting"). A management information circular of the Company (the "Circular") will be mailed to shareholders of the Company in connection with the Special Meeting to be held on February 7, 2023 and posted on the Company's profile on SEDAR at www.sedar.com.
A meeting of the Kobo Shareholders will be held to approve the Transaction and various corporate matters connected thereto.
Proposed Officers and Directors
Currently, Kobo's board and management team is comprised of international business leaders and mining industry professionals with expertise and experience working in Cote d'Ivoire. Several of Kobo's executives/directors have experience in conducting business in Africa. The completion of the Transaction, it is expected that all of the officers and three of the four Meteorite directors will resign and be replaced by nominees of Kobo (the "Board Reconstitution"), such that management of the Resulting Issuer will be comprised of the following individuals, subject to compliance with the requirements of the TSXV and applicable securities and corporate laws.
Charles R. Spector - Director
Charles R. Spector will stay on as a director of the Resulting Issuer. Mr. Spector is a corporate finance, M&A and securities lawyer with over 30 years of experience. Mr. Spector has previously acted as director of a TSX-listed company from 1996 through 2010 and regularly advises public companies on securities, M&A and corporate finance. He is currently a partner in the Montreal office of Dentons Canada LLP. Mr. Spector holds a B.A. degree from McGill University, a law degree (L.L.B.) from Université de Sherbrooke and a Masters of Law (L.L.M.) from Columbia University in New York. He has been a member in good standing of the Barreau du Québec since 1986.
Edouard Gosselin - Proposed Director, Chief Executive Officer and Corporate Secretary
Mr. Edouard Gosselin is an attorney, member of the Québec Bar Association since 1984 and throughout his career exclusively in private practice represented financial institutions, corporations and individuals before the courts mainly in commercial law, banking and bankruptcy, reorganizations and start-ups in tech and industrial sectors. Mr. Gosselin is also President of EG Industrial Solutions Ltd. since August 2011, a Québec-City based management-consulting and manufacturing company in specific industries. Mr. Gosselin was director of Wanted Technologies Inc. from 1999 to 2004, President of Gotar Technologies from 1999 to 2011 and Vice-President of Sawnode Technologies Ltd from 2011 to 2017 inclusively. Mr. Gosselin earned a Bachelor of Social Sciences, Conc. Political Science from Ottawa University (1980) and a License in Civil Law (L.L.L.) from Ottawa University (1983). Mr. Gosselin is also General Manager of Kobo Ressources C.I. since August 2016.
Paul Sarjeant, P.Geo. - Proposed Director, President and Chief Operating Officer
Mr. Paul Sarjeant is a mining professional having been involved in mining and exploration for over 35 years. He is the President and owner of Doublewood Consulting Inc., a consulting company with a focus on geological and management consulting to the mining industry created in August of 2006. Most recently Mr. Sarjeant acted as Manager, Exploration for Largo Inc. supervising all exploration activities at the companies mine site in Brazil. Prior to that he worked for 15 years with Echo Bay Mines. Mr. Sarjeant serves as a board member to several junior mining companies and is currently President and COO of Kobo. He also serves on the board of directors of Global Energy Metals Inc and Ares Strategic Mining Inc and has held similar positions with a number of companies over the years. He is a member in good standing with the Association of Professional Geoscientists of Ontario. He graduated in 1983 from Queen's University, Kingston Ontario with a BSc, (Honours) in Geological Sciences.
Gilles Couture - CPA, Auditor - Proposed Chief Financial Officer
Mr. Gilles Couture has acted as Kobo's CFO since February 2016. He obtained his Accounting Licence from Laval University in 1974 and is a CA and CPA. During his career, Mr. Couture was Audit Partner for PWC until July 2011 at the Québec City office, responsible for the mining, life sciences and information technology sectors. He has taught accounting sciences at Laval University for over 10 years as well Université du Québec (Rimouski). Throughout his career, Mr. Couture was involved in numerous IPOs and public financings for companies operating in the mining, health sciences, information technology and manufacturing industries on the Canadian and US markets. He is a director and shareholder of two manufacturing companies and a service company.
Frank Ricciuti - Proposed Director, Chairman
Mr. Frank Ricciuti was the President of Efjay Consulting Ltd., an Oakville-based management-consulting company providing a broad range of management and financial services, including organizational structuring, board advisory assignments and corporate finance advice to companies within a broad range of industries. Mr. Ricciuti was a director of Novik Inc. from 2006 to 2014, and of Petrolympic Ltd. from 2008 to 2019. Mr. Frank Ricciuti also acted as Kobo's Vice President, Corporate Development from December 2015 until November 12, 2021. Frank Ricciuti earned a diploma in Engineering Technology from Ryerson University, his Bachelor of Sciences degree (B.Sc.) in Mechanical Engineering from Michigan Technological University (1966) and his Masters Degree in Business Administration (MBA) in 1969 from York University.
Patrick Gagnon - Proposed Director, Independent
Mr. Patrick Gagnon is a retired executive having spent more than 25 years in the financial/brokerage industry. Nonetheless, Mr. Gagnon is an active private investor in technology, resources and consumer products industries. He obtained a bachelor's degree in Commerce from McGill University in 1986 and joined the brokerage industry first as a research assistant, research analyst, trader and institutional sales. From 1995 to 2015 Mr. Gagnon was a partner at GMP Securities Inc. and was Managing Director and Branch Manager, Institutional Sales of the firm's Montreal office. Mr. Gagnon was President of Palos Asset Management in Montreal from December 2016 to November 2017.
Jeff Hussey - Proposed Director, Independent
Mr. Jeff Hussey is a Professional Geologist with 36 years of professional experience in the mineral exploration, development, and mining industry. He graduated from the University of New Brunswick with a Bachelor of Science in Geology in 1985. He is currently a member of the Board of Directors of Brunswick Exploration Inc. and of Osisko Metals Incorporated ("Osisko"), a Canadian exploration and development company creating value in the base metal space with a particular focus on zinc mineral assets. He has served as President and CEO of Osisko between June 2017 until January 2020, and is President and COO of Osisko since January 2020. Mr. Hussey has worked in both open pit and underground mine operations at various stages of mine life, from start-up to mine closure. He spent 19 years with Noranda/Falconbridge, then as a consultant for 10 years, Jeff Hussey and Associates Inc. helped junior mine development companies, by offering services in exploration, mining and geometallurgy. Customers in Québec included Champion Iron Mines and Focus Graphite, Puma Exploration in New Brunswick, and Starcore International in Mexico. For Champion Iron Mines he led a team that built a high-quality iron Mineral Resource Inventory of five billion tonnes completing a feasibility study and participating in raising more than $70 million for corporate development. He is also a member of the board of directors of CIM.
Selected Financial Information for Kobo
The following tables summarize selected financial information for the two most recent financial years ended December 31, 2021 and 2020. Kobo had no operating revenue in any financial reporting period and did not declare or pay any dividend or distribution in any financial reporting period.
| As at and for the 9-month period ended September 30, 2022 (unaudited) | As at and for the year ended December 31, 2021 (audited) | As at and for the year ended December 31, 2020 (audited) | |
| Net Loss and Comprehensive Loss: | $869,584 | $1,466,582 | $990,760 |
| Basic and diluted net loss per share | $0.016 | 0.030 | 0.026 |
| Total assets | $188,785 | 721,337 | 336,449 |
| Total liabilities | $923,008 | 681,171 | 322,522 |
As a junior exploration company, Kobo has no expectation of generating operating profits until it develops a commercially viable mineral deposit.
Financial information for Kobo is also available at the corporation's profile on SEDAR at www.sedar.com. Meteorite and Kobo will continue to provide further details in respect of the Transaction and financial information regarding Kobo, in due course by way of press release following completion of the Private Placements. Additionally, Meteorite will make available to the TSXV, all financial information as required by the TSXV and will provide, in a press release to be disseminated at a later date, summary financial information derived from such statements.
Upon completion of the Transaction, it is the intention of the parties that the Resulting Issuer will continue to focus on the current business and affairs of Kobo and will be a mining issuer listed on the TSXV.
Further Information
All information contained in this news release with respect to Meteorite and Kobo was supplied by the parties respectively, for inclusion herein, without independent review by the other party, and each party and its directors and officers have relied on the other party for any information concerning the other party.
For further information regarding the Transaction, please contact:
Charles R. Spector, Director, Meteorite Capital Inc.
Telephone: (514) 878-8847
Email: info@Meteoritecapital.com
Edouard Gosselin, Chief Executive Officer and Director, Kobo Resources Inc.
Telephone: 1-418-609-3587
Email: egosselin@kobores.com
Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.
The TSXV has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this press release.
NEITHER THE TSXV NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSXV) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION:
This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements relate, among other things, to: the terms and conditions of the proposed Consolidation and Transaction; the terms and conditions of the proposed Offering; use of funds; and the business and operations of the Resulting Issuer after the proposed Transaction. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general business, economic, competitive, political and social uncertainties; and the delay or failure to receive board, shareholder or regulatory approvals. 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 the forward-looking statements and information contained in this news release. Except as required by law, Meteorite and Kobo assume no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.
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