ESG Capital 1 and Full Circle Lithium Provide Update on Qualifying Transaction
NOT FOR DISTRIBUTION TO UNITED STATES WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES. THIS NEWS RELEASE DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES IN THE UNITED STATES. THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO U.S. PERSONS UNLESS REGISTERED UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. THIS NEWS RELEASE DOES NOT CONSTITUTE AN OFFER OR SALE OF SECURITIES IN THE UNITED STATES.
TORONTO, Jan. 17, 2023 (GLOBE NEWSWIRE) — ESG Capital 1 Inc. (“ESG” or the “Corporation”) (TSX-V: ESGO.P) is pleased to provide an update on its proposed business combination transaction (the “Proposed Transaction”) with Full Circle Lithium Inc. (“Full Circle”). It is expected the Proposed Transaction will qualify as the Corporation’s “Qualifying Transaction” under the policies of the TSX Venture Exchange (the “TSXV”).
Definitive Agreement
The Corporation has entered into a definitive agreement (the “Definitive Agreement”) with Full Circle in respect of the Proposed Transaction. Pursuant to the Definitive Agreement, ESG will acquire all of the outstanding and issued common shares of Full Circle (“Full Circle Shares”).
The Definitive Agreement stipulates that a wholly owned subsidiary of ESG, incorporated in the province of Ontario by ESG, will amalgamate with Full Circle to form a corporation to continue under the name, Full Circle Holdings Inc. Immediately following completion of the Proposed Transaction, Full Circle Holdings Inc. will be a wholly owned subsidiary of ESG and which in turn will own all of the shares of Full Circle Lithium (US) Inc, the company that holds all of Full Circle’s assets and conducts the business of Full Circle. Upon the completion of the Proposed Transaction, ESG will change its name to “Full Circle lithium Inc.” or such other name to be determined by Full Circle (the “Resulting Issuer”).
Pursuant to the Definitive Agreement, ESG and Full Circle have agreed that the Proposed Transaction is conditional upon certain conditions precedent, including, but not limited to, the consolidation of the ESG common shares (“ESG Shares”) prior to completion of the Proposed Transaction on the basis of one post-consolidation ESG Share for each 1.17 pre-consolidation ESG Shares.
The Proposed Transaction will result in ESG acquiring all of the issued and outstanding Full Circle Shares in consideration for the issuance of common shares of the Resulting Issuer (“Resulting Issuer Shares”) to holders of Full Circle Shares on a one-to-one basis. The deemed issue price per Resulting Issuer Share to be issued to the Full Circle shareholders in consideration for the Full Circle Shares pursuant to the Definitive Agreement is $0.60 per Resulting Issuer Share.
ESG Shareholders’ Meeting
As previous reported, all matters submitted to shareholders in connection with the Proposed Transaction were approved at its special meeting of shareholders of ESG held on January 4, 2023. The meeting materials were mailed to shareholders of ESG and are available under ESG’s issuer profile on SEDAR (www.sedar.com). The Proposed Transaction itself is not subject to approval of the shareholders of ESG and, accordingly, shareholder approval of the Proposed Transaction was not sought at the meeting.
Insiders of the Resulting Issuer
Further to the announcement on November 7, 2022, the board of directors of the Resulting Issuer is expected to be comprised of Mike Cosic, Paul Fornazarri, Franco Mignacco, Carlos Vicens and Orlee Wertheim. Further, the senior management team of the Resulting Issuer is anticipated to include Carlos Vicens (President & Chief Executive Officer), Omar Gonzalez (Chief Financial Officer & Secretary) and Tom Currin (Chief Operating Officer).
Mike Cosic – Proposed Director
Mr. Cosic is a strategic executive with 30 years of achievement in a variety of industries, including lithium, where he was the CFO of Lithium Americas Corp. when the company merged with Western Lithium to create an industry leading lithium resource company. Mr. Cosic has been a public company CFO for over 5 years, a public company CEO for over 1 year, and the audit committee chair for a TSX listed company for 6 years. He has extensive experience in obtaining financing for early-stage companies, has managed M&A transactions for deal value in excess of $1b, and has been instrumental in managing transactions which resulted in the creation of significant shareholder value. Mr. Cosic earned his CFA designation in 1999 and obtained his MBA in 1992.
Tom Currin – Proposed Chief Operating Officer
Mr. Currin has over 40 years of lithium chemical production and process engineering experience, including Dupont and Livent. Mr. Curring has been directly involved in all phases of development of emerging lithium projects. In 2016, Mr. Currin’s engineering team received the Outstanding Partnership Regional Award by the Federal Laboratory Consortium for Technology Transfer. His strong relation the US Federal Laboratories places him at the forefront of developing innovative process technology in the renewable energy and lithium battery industry.
Paul Fornazzari – Proposed Director
Mr. Fornazzari has over 30 years of global law experience in a number of industries focusing on capital markets and merger and acquisitions practice. He was the founding Chairman of Lithium Americas Corp., a founding director of Neo Lithium Inc. and is currently a partner in the corporate and securities group at Fasken Martineau Dumoulin LLP, a leading Canadian law firm.
Omar Gonzalez – Proposed Chief Financial Officer & Secretary
Mr. Gonzalez has over 20 years’ experience in audit & assurance in South America, included 5 years of public and private audit practice, financial analysis, and corporate development in Canada. He is bilingual in English and Spanish and has led many assurance & non-assurance engagements for companies in the energy, mining & natural resources, real estate, manufacturing, and consumer business sector. He is a Chartered Professional Accountant in Ontario and Venezuela and holds a bachelor degree with major in Accounting from the Santa Maria University.
Franco Mignacco – Proposed Director
Franco Mignacco has a comprehensive understanding of the global lithium business. He is the President of Minera Exar S.A., the operator of the Cauchari Olaroz lithium brine project co-owned by Lithium Americas Corp. and Ganfeng Lithium Co., Ltd. In this current role Mr. Mignacco is leading the buildout of one of the largest lithium brine projects in the world including construction of the lithium processing facilities for the project. He was the co-founder of Lithium Americas and a director since 2010. Franco was also Lithium America’s Vice-Chair prior to its merger with Western Lithium USA Corp. (owner of the Thacker Pass lithium clay project in Nevada), from June 2013 to September 2015. In 2021 Franco was appointed as President of the Argentinian Chamber of Mining Entrepreneurs (CAEM). Franco resides in Argentina and holds an MBA from San Andres University and an honours degree in mining from Universidad Austral, both located in Buenos Aires.
Carlos Vicens – Proposed President, Chief Executive Officer & Director
Mr. Vicens has over 25 years of global experience in capital markets, corporate development, strategy and investment banking, including mergers and acquisitions and corporate finance. Mr. Vicens previously worked as Vice-President at Carlisle Goldfields, a well-known Canadian investment banking mining team, where he participated in over $10 billion worth of M&A transactions and well over $5 billion in equity and debt issuances.
Orlee Wertheim – Proposed Director
Ms. Wertheim started her career as a corporate lawyer, where she acted for both domestic and international public companies. Using this experience, Ms. Wertheim joined the Toronto Stock Exchange’s Listed Issuer Services department, where her responsibilities included assisting companies through the listing application process and working with issuers listed on the TSX to structure transactions and to ensure compliance with TSX rules. Realizing her interest in the resource sector, Ms. Wertheim took on the role of Head of the Global Mining Business Development team with the Toronto Stock Exchange and TSX Venture Exchange. Ms. Wertheim was responsible for the development and execution of the Exchange’s global strategy for attracting new listings in the mining sector. Most recently, Ms. Wertheim acted as Capital Markets Counsel at a major Canadian law firm. Ms. Wertheim completed her law degree at University of Ottawa.
Financing Update
On December 13, 2022, ESG announced Full Circle’s proposed brokered private placement offering (the “Offering”) of up to 14,286,000 subscription receipts (the “Subscription Receipts”) at a price per Subscription Receipt of $0.70 (the “Issue Price”) for aggregate gross proceeds of up to $10,000,200 pursuant to which Clarus Securities Inc., together with PowerOne Capital Markets Limited and a syndicate of agents including Canaccord Genuity Corp. (collectively the “Agents”) have agreed to act as agents for and on behalf of Full Circle.
ESG will also offer for sale up to 2,857,143 Subscription Receipts for aggregate gross proceeds of up to $2,000,000 out of the total offering amount of $10,000,200 to purchasers on the same terms as the Subscription Receipts offered for sale by Full Circle, with the exception that Subscription Receipts issued by ESG will be subject to a statutory hold period of four months and a day.
Each Subscription Receipt will entitle the holder to receive one Resulting Issuer Share and one half of one Resulting Issuer share purchase warrant (each whole warrant, a “Warrant”) entitling the holder to purchase one Resulting Issuer Share at an exercise price of $1.10 for 24 months following the satisfaction or waiver of customary escrow release conditions, including the receipt of all regulatory, shareholder and third-party approvals for the Proposed Transaction, to be determined in subscription receipt agreements entered into between the Agents, the subscription receipt agent and each of ESG and Full Circle (the “Escrow Release Conditions”).
If the Escrow Release Conditions are not satisfied prior to the date which is 180 days from the issuance of the Subscription Receipts or if the Proposed Transaction is terminated, the proceeds from the Offering and Non-Brokered Offering including accrued interest will be returned to holders of Subscription Receipts.
On closing of the Offering, the Agents will be entitle to: (i) a cash commission equal to 7% of the gross proceeds raised under the Offering or 2.5% for “President’s List” purchasers identified by Full Circle (the “Agents’ Fee”), with 25% of the Agents’ Fee, plus the expenses of the Agents, payable solely by Full Circle on closing of the Offering, and the balance of the Agents’ Fee payable by Full Circle and the Corporation on satisfaction of the Escrow Release Conditions, and (ii) grant such number of compensation options (the “Compensation Options”) as is equal to 7% of the Subscription Receipts sold under the Offering, other than in respect of Subscription Receipts sold to purchasers on the President’s List pursuant to which Compensation Options equal to 2.5% of the number of Subscription Receipts sold to such persons shall be issuable . Each Compensation Option shall entitle the holder to acquire one Resulting Issuer Share and one-half of one Warrant at an exercise price of $0.70 per Compensation Option. The Compensation Options issued to the Agents in connection with the ESG Capital portion of the Offering will be held in escrow until completion of the Proposed Transaction.
Full Circle is also proposing to complete a concurrent non-brokered private placement of Subscription Receipts on the same terms as the Offering (the “Non-Brokered Offering”). The Agents will not be acting as agents of Full Circle in connection with the Non-Brokered Offering. The Non-Brokered Offering is expected close concurrently with the closing of the Offering, which is expected to occur on or about January 17, 2023.
It is anticipated that current securityholders of Full Circle will receive, without including any securities issued in connection with the Offering or Non-Brokered Offering, 50,854,000 Resulting Issuer Shares, 1,500,000 options and 1,314,400 common share purchase warrants to purchase Resulting Issuer Shares.
Related Party Transaction
It is expected that David D’Onofrio, a director and insider of ESG, will acquire 115,000 Subscription Receipts under the Offering, which constitutes a “related party transaction” within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). ESG is relying on an exemption from the formal valuation and minority shareholder approval requirements of MI 61-101 pursuant to section 5.5(a) and section 5.7(1)(a), as the fair market value of Mr. D’Onofrio’s participation is not more than 25% of ESG’s market capitalization.
Trading Halt
ESG’s common shares are currently halted from trading and are not expected to resume trading until the Proposed Transaction is completed.
Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, the approval of certain matters by shareholders of ESG, TSXV acceptance and the completion of the Offering with respect to Full Circle. There can be no assurance that the Proposed Transaction, Offering or Non-Brokered Offering will be completed as proposed or at all.
About Full Circle Lithium Inc.
With a fully permitted lithium processing plant in Georgia, USA and a complement of experts, Full Circle is a lithium processor focused on lithium and battery materials reintegration to meet the demand for crucial battery-grade raw materials, utilizing proprietary technology and know-how. Full Circle is focused on three complementary battery material processing divisions: battery recycling from end-of-life lithium-ion batteries, lithium feedstock recycling from industrial and chemical feedstock, and lithium refinery from upstream feedstock. Full Circle is a private company incorporated under the laws of the Province of Ontario on May 24, 2022.
About ESG Capital 1 Inc.
ESG Capital is a capital pool company created pursuant to the policies of the TSXV and intends that the Proposed Transaction will constitute its “Qualifying Transaction” under the policies of the TSXV. The Transaction will not constitute a non-arm’s length qualifying transaction or a related party transaction pursuant to the policies of the TSXV. Certain officers and directors of ESG hold in aggregate 7,950,000 Full Circle Shares, representing approximately 15.6% of the Full Circle Shares. It does not own any assets, other than cash or cash equivalents and its rights under the LOI. The principal business of ESG Capital is to identify and evaluate opportunities for the acquisition of an interest in assets or businesses and, once identified and evaluated, to negotiate an acquisition or participation subject to acceptance by the TSXV so as to complete a Qualifying Transaction in accordance with the policies of the TSXV.
For more information about ESG Capital, please contact Robert Pollock, Chief Executive Officer, at:
Robert Pollock President, CEO, CFO, Corporate Secretary and Director
T: 416 214-9672
Forward-Looking Statements Disclaimer
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Certain information in this press release may contain forward-looking statements. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. ESG Capital assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements unless and until required by securities laws applicable to ESG Capital. Additional information identifying risks and uncertainties is contained in filings by ESG Capital with the Canadian securities regulators, which filings are available at www.sedar.com.
Completion of the Offering is subject to a number of conditions, including the receipt of all necessary regulatory approvals. There can be no assurance that the Offering will be completed as proposed or at all. 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. The ESG Capital Common Shares will remain halted until such time as permission to resume trading has been obtained from the TSXV. ESG Capital is a reporting issuer in Alberta, British Columbia, and Ontario. ESG Capital disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
