Frontier Nuclear & Minerals Inc F-3/A, filed Aug 4, 2023
Frontier Nuclear & Minerals Inc. (FNUC)
As filed with the U.S. Securities and Exchange Commission on August 4, 2023
Registration No. 333- 272324
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 3
to
FORM F-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
SNOW LAKE RESOURCES LTD.
(Exact name of Registrant as specified in its charter)
_____________________________
Not Applicable
(Translation of Registrant’s Name into English)
_____________________________
Manitoba, Canada |
|
|
| Not Applicable |
(State or other jurisdiction of |
|
|
| (I.R.S. Employer |
_____________________________
Cogency Global Inc.
122 East 42nd Street, 18th Floor
New York, NY 10168
(800)221-0102
(Names, address, including zip code, and telephone number, including area code, of agent for service)
_____________________________
Copies to:
Shimmy Posen | David Warburg, Esq. |
Garfinkle Biderman LLP | Seyfarth Shaw LLP |
1 Adelaide Street East, Suite 801 | 620 Eighth Avenue |
Toronto, Ontario, Canada M5C 2V9 | New York, New York 10018-1405 |
(416) 869-7612 | (212) 218-4653 |
_____________________________
Approximate date of commencement of proposed sale to public: From time to time after the effective date of this Registration Statement.
_____________________________
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ☐
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a registration statement pursuant to General Instruction I.C. or a post-effective amendment thereto that shall become effective on filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ☐
If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.C. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ☐
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging growth company ☒
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
_____________________________
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS | SUBJECT TO COMPLETION | DATED AUGUST __4, 2023 |
Snow Lake Resources Ltd.
$100,000,000
Common Shares
Preferred Shares
Warrants
Units
We may offer, issue and sell from time to time, in one or more offerings, common shares, preferred shares, warrants and/or units, which we collectively refer to as the “securities.” The aggregate initial offering price of the securities that we may offer and sell under this prospectus will not exceed $100 million.
We may offer and sell any combination of the securities described in this prospectus in different series, at times, in amounts, at prices and on terms to be determined at or prior to the time of each offering. This prospectus describes the general terms of these securities and the general manner in which these securities will be offered. Each time we sell securities pursuant to this prospectus, we will provide a supplement to this prospectus that contains specific information about the offering and the specific terms of the securities offered. The prospectus supplement will also describe the specific manner in which these securities will be offered and may also supplement, update or amend information contained in this prospectus. You should read this prospectus and any applicable prospectus supplement before you invest in any of our securities.
The securities covered by this prospectus may be offered and sold through one or more underwriters, dealers and agents, or directly to purchasers, or through a combination of these methods. If any underwriters, dealers or agents are involved in the sale of any of the securities, their names and any applicable purchase price, fee, commission or discount arrangement between or among them will be set forth, or will be calculable from the information set forth, in the applicable prospectus supplement. The names of any underwriters, dealers or agents, if any, will be included in a supplement to this prospectus. For general information about the distribution of securities offered, please see “Plan of Distribution”.
On August 2, 2023, the aggregate market value worldwide of our outstanding common equity held by non-affiliates was approximately $23.8 million, based on 11,577,810 common shares outstanding held by non-affiliates and a per share price of US$2.06 based on the closing sale price of the common shares on Nasdaq on August 2, 2023. As of the date hereof, we have not sold any securities pursuant to General Instruction I.B.5 of Form F-3 during the prior 12 calendar month period that ends on and includes the date hereof. Pursuant to General Instruction I.B.5 of Form F-3, in no event will we sell securities registered on this registration statement of which any prospectus supplement forms a part in a public primary offering with a value exceeding one-third of our outstanding voting and non-voting common equity held by non-affiliates (the “public float”) in any 12-month period so long as our public float remains below $75.0 million.
Investing in our securities involves risks. See “Risk Factors” beginning on page 6 to read about factors you should consider before buying our securities.
Neither the Securities and Exchange Commission nor any state or foreign securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Prospectus dated August 4, 2023
Our common shares are listed on the Nasdaq Capital Market, or the Nasdaq, under the symbol “LITM.” On August 2, 2023, the last reported sale price for our common share was $2.06.
At present, there is a very limited market for our common shares. The trading price of our common shares has been, and may continue to be, subject to wide price fluctuations in response to various factors, many of which are beyond our control, including those described in “Risk Factors.”
We are an “emerging growth company” and a “foreign private issuer” as defined under the U.S. federal securities laws, and, as such, are eligible for reduced public company reporting requirements for this and future filings. See “prospectus Summary—Implications of Being an Emerging Growth Company” and “prospectus Summary—Implications of Being a Foreign Private Issuer.”
We are not considered a “controlled company” under Nasdaq corporate governance rules as we do not currently expect that more than 50% of our voting power will be held by an individual, a group or another company immediately following the consummation of this offering. Nonetheless, currently, our directors, officers and principal shareholders hold in aggregate approximately 36.38% or more of our common shares. As a result, these shareholders, if they act together, will be able to control the management and affairs of our Company.
As a foreign private issuer, we have the option to follow certain Canadian corporate governance practices, except to the extent that such laws would be contrary to U.S. securities laws, and provided that we disclose the requirements we are not following and describe the Canadian practices we follow instead. We may in the future elect to follow home country practices in Canada with regard to certain corporate governance matters. See “Risk Factors—Risks Related to Our Common Shares and this Offering.”
Investing in our common shares involves a high degree of risk. See “Risk Factors” beginning on page 11 of this prospectus for a discussion of information that should be considered in connection with an investment in our common shares.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is August 4, 2023.
TABLE OF CONTENTS
| Page |
1 | |
7 | |
12 | |
13 | |
14 | |
14 | |
15 | |
15 | |
16 | |
24 | |
24 | |
25 | |
38 | |
38 | |
38 | |
38 | |
39 | |
40 | |
41 | |
42 | |
|
|
i
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission (the “SEC”) utilizing a “shelf” registration process. Under this shelf registration statement, we may sell the securities described in this prospectus in one or more offerings up to a total aggregate offering price to the public of $100 million. Furthermore, so long as the aggregate market value worldwide of our public float is less than $75 million, the aggregate market value of securities sold by us pursuant to this shelf registration statement during the period of 12 calendar months immediately prior to, and including, the sale, shall be no more than one-third of the public float. The offer and sale of securities under this prospectus may be made from time to time, in one or more offerings, in any manner described under the section in this prospectus entitled “Plan of Distribution.”
This prospectus provides you with a general description of the securities we may offer. Each time we sell securities we will provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus, and may also contain information about any material federal income tax considerations relating to the securities covered by the prospectus supplement. Before purchasing any of our securities, you should read both this prospectus and any prospectus supplement together with additional information under the headings “Where You Can Find More Information” and “Incorporation of Certain Documents by Reference.”
We have not authorized anyone to give any information or to make any representation other than those contained or incorporated by reference in this prospectus. You must not rely upon any information or representation not contained or incorporated by reference in this prospectus (as supplemented or amended). We are offering to sell, and seeking offers to buy, our securities only in jurisdictions where it is lawful to do so. This prospectus does not constitute an offer to sell or the solicitation of an offer to buy any of our securities other than the registered securities to which they relate, nor does this prospectus constitute an offer to sell or the solicitation of an offer to buy our securities in any jurisdiction to any person to whom it is unlawful to make such offer or solicitation in such jurisdiction.
You should not assume that the information contained in this prospectus (as supplemented or amended) is accurate on any date subsequent to the date set forth on the front of the document or that any information we have incorporated by reference is correct on any date subsequent to the date of the document incorporated by reference, even though this prospectus (as supplemented or amended) is delivered, or securities are sold, on a later date.
This prospectus and the information incorporated herein by reference contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under the heading “Where You Can Find More Information.”
Unless otherwise indicated or the context otherwise requires, all references in this prospectus to the terms “Snow Lake,” “the company,” “we,” “us” and “our” refer to Snow Lake Resources Ltd. and its subsidiaries.
For investors outside the United States: We have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the common shares and the distribution of this prospectus outside the United States.
This prospectus includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe these industry publications and third-party research, surveys and studies are reliable, you are cautioned not to give undue weight to this information.
We may sell our securities to underwriters who will sell the securities to the public at a fixed offering price or at varying prices determined at the time of sale. The applicable prospectus supplement will contain the names of the underwriters, dealers or agents, if any, together with the terms of offering, the compensation of those underwriters, dealers or agents and the net proceeds to us. Any underwriters, dealers or agents participating in the offering may be deemed “underwriters” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).
ii
GLOSSARY OF MINING TERMS
The following is a glossary of certain mining terms that may be used in this prospectus.
|
|
Claim | A mining right that grants a holder the exclusive right to search and develop any mineral substance within a given area.
|
Concentrate | A clean product recovered in flotation, which has been upgraded sufficiently for downstream processing or sale. |
|
|
Dyke | A long and relatively thin body of igneous rock that, while in the molten state, intruded a fissure in older rocks. |
|
|
Exploration | Prospecting, sampling, mapping, diamond drilling and other work involved in searching for ore. |
|
|
Grade | Term used to indicate the concentration of an economically desirable mineral or element in its host rock as a function of its relative mass. With gold, this term may be expressed as grams per tonne (g/t) or ounces per tonne (opt).
|
Indicated Mineral Resource | Part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. |
|
|
Inferred Mineral Resource | Part of a mineral resource for which quantity and grade or quality can be estimated on the basis of limited geological evidence and sampling and reasonably implied, but not verified, geological and grade continuity. |
|
|
Km | Kilometre(s). Equal to 0.62 miles. |
|
|
kMT | Kilo metric tonne. |
|
|
M | Metre(s). Equal to 3.28 feet. |
|
|
Measured Mineral Resource | Part of a Mineral Resource for which quantity, grade or quality, densities, shape, physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity. |
|
|
Metallurgy | The science and art of separating metals and metallic minerals from their ores by mechanical and chemical processes. |
|
|
Mineral | A naturally occurring homogeneous substance having definite physical properties and chemical composition and, if formed under favorable conditions, a definite crystal form. |
|
|
Mineralization | A natural occurrence in rocks or soil of one or more yielding minerals or metals. |
|
|
Mineral Project | The term “mineral project” means any exploration, development or production activity, including a royalty or similar interest in these activities, in respect of diamonds, natural solid inorganic material, or natural solid fossilized organic material including base, precious and rare metals, coal, and industrial minerals. |
Mineral Reserve | The economically mineable part of a Measured and/or Indicated Mineral Resource. |
iii
|
|
Mineral Resource | A concentration or occurrence of diamonds, natural, solid, inorganic or fossilized organic material including base and precious metals, coal and industrial minerals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. |
|
|
Ore | Mineralized material that can be extracted and processed at a profit. |
|
|
Ounce | A measure of weight in gold and other precious metals, correctly troy ounces, which weigh 31.2 grams as distinct from an imperial ounce which weigh 28.4 grams. |
| |
Pegmatite | An igneous rock, formed by slow crystallization at high temperature and pressure at depth, and exhibiting large interlocking crystals usually greater in size than 2.5 cm (1 in). |
|
|
PFS | Preliminary feasibility study. A Preliminary Feasibility Study is a comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a preferred mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, is established and an effective method of mineral processing is determined. It includes a financial analysis based on reasonable assumptions on the Modifying Factors and the evaluation of any other relevant factors which are sufficient for a Qualified Person, acting reasonably, to determine if all or part of the Mineral Resource may be converted to a Mineral Reserve at the time of reporting. A Pre-Feasibility Study is at a lower confidence level than a Feasibility Study. |
|
|
Probable Mineral Reserve | The mineable part of an indicated, and in some circumstances, a Measured Mineral Resource. The confidence in the Modifying Factors applying to a Probable Mineral Reserve is lower than that applying to a Proven Mineral Reserve. |
|
|
Spodumene | A pyroxene mineral consisting of lithium aluminum inosilicate, LiAl(SiO3)2, and is a source of lithium. |
|
|
Tonne | A metric ton of 1,000 kilograms (2,205 pounds). |
iv
This summary highlights selected information contained elsewhere in this prospectus. This summary is not complete and does not contain all of the information that you should consider before deciding whether to invest in our common shares. You should carefully read the entire prospectus, including the risks associated with an investment in our company discussed in the “Risk Factors” section of this prospectus, before making an investment decision. Some of the statements in this prospectus are forward-looking statements. See the section titled “Special Note Regarding Forward-Looking Statements.”
In this prospectus, “we,” “us,” “our,” “our company,” “Snow Lake” and similar references refer to Snow Lake Resources Ltd. and its consolidated subsidiaries.
OUR COMPANY
Our Mission
Snow Lake is committed to produce and supply lithium to the electric vehicle and battery market in North America. We aspire to set the standard for responsible lithium battery manufacturing.
Overview
We are an exploration stage mining company engaged in lithium exploration in the province of Manitoba, Canada.
Our primary focus is currently conducting exploration for lithium at our 100% owned Snow Lake Lithium™ Project. Our objective is to develop a world-class lithium mine in Manitoba strategically located to supply the U.S. “Auto Alley,” from Michigan to the southern United States, and the European battery market via our nearby access to the Hudson Bay Railway and the Port of Churchill. We aim to derive substantial revenues from the sale of lithium to the growing electric vehicle (“EV”) and battery storage markets in the United States and abroad. With access to renewable and cheap energy produced in Manitoba, we expect to become a low cost North American lithium producer mined exclusively with the benefit of power produced from fully sustainable, local sources.
The Historical Setting for the Growth of Lithium Demand
The unprecedented prosperity of the 20th century is very much attributable to the discovery of oil in Western Pennsylvania in the mid-1800s and the subsequent invention of the internal combustion engine. The symbiotic relationship between oil and the internal combustion engine has been the underpinning of world economic growth, expansion and, most importantly, the empowerment of millions of people to whom mobility and freedom have become a way of life. The interstate highways that flourished in the United States over the past century have enabled commercial fluidity across the globe that capitalized exponentially on the gilded age of rail.
Until recently, a world without oil and the internal combustion engine was inconceivable and environmentalists protesting the high price being paid for our economic way of life, were brandished unrealistic luddites. The paradox of environmental sensitivity and the irreversible progress of a polluting population seemed permanently juxtaposed, until it wasn’t.
Today, we have reached the confluence where economic reality and social responsibility can finally meet. Thanks to technological innovation, through the development of the lithium battery we can now create an electric fleet of vehicles that not only delivers luxury and economy but is also ecologically friendly to our planet. We are now on the precipice of the next great economic age - preceded by the steam engine, the railroad, the combustion engine and the internet, we are now ready to be catapulted into the electric age. With the advent of the lithium battery, no longer will we have to rely on fossil fuel to power our economy or our cars as we embark into the next great age and, more importantly, we can limit and ultimately reverse the damage caused to our planet by the rapid economic expansion of the past century.
1
The Coming Commodity Supercycle and Growth in Lithium Demand
From our perspective, indications suggest that we are currently on the verge of a commodity supercycle fueled by pent up demand, infrastructure spending and post-COVID-19 economic exuberance. We expect that lithium, in particular, will benefit not only from a general rise in commodity demand but, specifically, from what we see as the tipping point for vehicle fleet electrification.
We believe that the journey now to the full electrification of our global automobile fleet has begun. Demand for EVs is being driven by conscious consumers who take the threat of global warming seriously and who have forced a universal commitment from the manufacturing industry to produce cars to match their environmentally conservative outlook. During the coming years, the achievement of this fleet conversion will be the primary challenge for the worldwide automobile industry and the determining factor will not be design or engineering, but batteries. Batteries will be the fuel and gold of the 21st century. Based on today’s predictions of the trajectory of future EV growth, the world will not have sufficient battery capacity to match growing demand. Today’s global fleet of approximately 1.4 billion automobiles includes 10 million plug in electric vehicles, an increase from only one million such EVs in 2015. Extrapolating the growth trajectory of EV demand, we believe that current industrial infrastructure is not scaled sufficiently to meet the coming demand.
Lithium is the key mineral ingredient in the power storage component of the EV revolution and the global demand growth curve for lithium consumption over the next decade is expected to be exponential. While normal commodity cycles are affected by incremental and organic growth, it is only once in a century that we witness new, previously nonexistent demand grow to accommodate a new economic, social and cultural reality.
We believe that current global lithium production cannot cover a fraction of the projected exponential growth anticipated in the coming EV growth cycle and we intend to position our company to become a significant lithium supplier to the North American automotive industry and beyond.
Today, a large portion of the global lithium output is mined in diverse global locations such as Australia and Chile, transported great distances, primarily to China, for processing and then shipped again, back to the North American automobile industry. This is not a sustainable model and will not provide the necessary environmental or geopolitical comfort that will be required to electrify the global fleet of automobiles.
Our Corporate Strategy
Snow Lake is committed to mining, refining and providing battery grade lithium to the burgeoning North American electric vehicle consumer market.
We are currently finalizing our IA (Initial Assessment) / PEA (Pre-Economic Assessment), which will include metallurgy analysis, an updated mineral resource estimate for both the Grass River and Thompson Brother Lithium Projects, engineering assessment and ore sorting optimization, among other studies. This is scheduled to be released in early August 2023. In addition, the company is now into its second year of environmental baseline studies as well as progressing negotiations and discussions with local communities and First Nations peoples.
As the vast majority of our 59,587 acres of tenure remains underexplored, a field exploration and scout drilling campaign is being planned for the summer of 2023. Additionally, we have just completed over 25,000m of drilling over the last 16 months which will go towards further defining our resource at Thomson Brothers and delineating a resource at the Grass River Project.
We are confident that we will be in a position to begin the construction and commissioning of our mining operations during 2024/2025
2
The Snow Lake Lithium™ Project
Our 100% owned Snow Lake Lithium™ Project consists of 59,587 acres of Crown land near Snow Lake, north-central Manitoba, Canada. We refer to this property as the Snow Lake Lithium™ property. The Snow Lake Lithium™ property encompasses two lithium-rich spodumene pegmatite clusters known as the Thompson Brothers and Grass River pegmatite dykes.
Approximately 15,000M of extension and infill drilling has been completed at Thompson Brothers to confirm and further define the above mentioned mineral resource. Additionally, the company has recently drilled 10,000m at the Grass River Project in an effort to confirm a maiden Mineral Resource. The results of these drilling campaigns are being fed into updated resources models which are in turn being analyzed to determine the economic viability of the project. We previously obtained an S-K 1300 compliant report dated June 9, 2021 assessing the potential mineral resources. As a result of the death of one of the Qualified Persons participating in that report, which leaves us unable to obtain their consent to the inclusion of the report herein, we are not filing that report, nor describing its specific results or incorporating it by reference herein.
Our Opportunity
Our Snow Lake Lithium™ Project is strategically located in Manitoba, Canada, ideally situated to economically deliver mined and processed lithium products to the EV battery industry serving North America’s “Auto Alley” from Michigan to the southern United States. With direct rail access running north to the Port of Churchill, which supplies access to Europe by ship, we expect to be able to potentially economically deliver our future lithium output to the markets of Europe as well. We have only explored 1% of the Snow Lake Lithium™ property. We expect to continue to prove up our project and hope to delineate SK-1300 resources in the near future through further exploration and technical analysis and reporting, although we can provide no guarantee that our indicated and inferred resource will be confirmed as proven or probable. With expected to be significant mineral resources and our prime location, successful completion of a PEA, obtaining of the required permitting and building of a mine and ore concentrator, we expect to be able to produce economically significant amounts of marketable lithium ore concentrate in a socially responsible and environmentally friendly way while utilizing a significant amount of renewable energy to power our mining operations. We expect to be in a strong position to be able to exploit, through offtake agreements with OEM manufacturers and other battery makers, the anticipated rising demand for lithium to meet the burgeoning needs of the EV battery and related markets in North America and beyond.
Our Competitive Strengths
We believe that the following competitive strengths contribute to be our success and to differentiate us from our competitors:
·Our Snow Lake Lithium™ property is large, and we believe it is host to valuable lithium resources in commercial quantities.
·Access to Manitoba produced 97%+ renewable energy is expected to enable us to become the first supplier in North America of lithium mined exclusively with the benefit of fully renewable sources of energy.
·No significant technical challenges related to exploration and development of the deposits have been identified.
·We are strategically located in the North American market.
·Our operations are located in an exceptional mining friendly jurisdiction with excellent mining infrastructure.
·Our leadership team consists of experienced mining executives and operators, with a track record of de-risking and delivering.
3
·The combination of the benefits of location in a mining friendly jurisdiction, and strategic proximity to the major United States EV manufacturing markets should make us an attractive source for offtake agreements with lithium battery and/or EV manufacturers who will need to secure their raw material supplies.
Our Growth Strategies
We have developed a strategic plan for further exploration and development of the Snow Lake Lithium™ property that includes the following milestones:
·Complete and announce our resource update in accordance with the SEC’s new Mining Modernization Rules (field work completed) to expand and upgrade our Thomson Brothers Lithium Projects.
·Announce a maiden Mineral Resource Estimate for the Grass River Lithium Project.
·Complete a IA / PEA, study (anticipated in early August 2023).
·Complete next stage of resource exploration drilling leading to resource upgrade to the Measured from Indicated level.
·Conduct “boot and hammer” and scout drilling exploration do determine if there are additional prospects located on our Snow Lake Lithium™ property which in turn could add additional tonnage through further drilling. We also intend to explore for extensions to the existing mineral resources and other potential mineralization within the Snow Lake Lithium™ property.
Recent Developments
Current Cash and Cash Equivalents
As of May 1, 2023, our cash and cash equivalents balance was C$5,953,698 (US$4,395,170 based on the exchange rate of 1.3546 as of May 1, 2023).
Collaboration with LG Energy Solution to Establish Lithium Supply Chain in North America
We signed a non-binding Memorandum of Understanding (MOU) with LG Energy Solution (LGES: KRX 373220) on September 22, 2022 as a next step towards building the domestic supply chain for the North American electric vehicle market.
Under the terms of the MOU, we and LGES are to collaborate to explore the opportunity to create one of Canada's first lithium hydroxide processing plants in CentrePort, Winnipeg, Manitoba. Under the terms of the MOU, we would supply LGES with lithium over a 10-year period once production starts in 2025. The MOU and contemplated partnership are be subject to a number of conditions, including the completion of due diligence from both parties. There has been no substantial progress yet on implementing the goals of the MOU, and there is no assurance that the proposed collaboration contemplated by the MOU will in fact occur.
Our Corporate Structure
We were incorporated in the Province of Manitoba, Canada under The Corporations Act (Manitoba), or MCA, on May 25, 2018 by our major shareholder Nova. As of the date of this prospectus, Nova owned approximately 36.29% of our outstanding common shares.
4
We have three wholly owned subsidiaries, Snow Lake Exploration Ltd., or Snow Lake Exploration, Snow Lake (Crowduck) Ltd., or Snow Lake Crowduck, and Thompson Bros (Lithium) PTY Ltd. (formerly Manitoba Minerals Pty Ltd), or Thompson Bros. Through a series of agreements between 2016 to 2019 we acquired a 100% interest in the Snow Lake Lithium™ property. Our subsidiary, Thompson Bros, which owned our 20 claims before they were transferred to Snow Lake Crowduck, has been deregistered in Australia and Manitoba.
Corporate Information
Our corporate address is, 360 Main St 30th Floor, Winnipeg, MB R3C 4G1, Canada. Our company email address is info@snowlakelithium.com.
Our registered office is located at 360 Main St 30th Floor, Winnipeg, MB R3C 4G1, Canada.
Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, N.Y. 10168.
Our website can be found at https://snowlakelithium.com. The information contained on our website is not a part of this prospectus, nor is such content incorporated by reference herein, and should not be relied upon in determining whether to make an investment in our common shares.
Implications of Being an Emerging Growth Company
We qualify as an “emerging growth company” under the Jumpstart Our Business Act of 2012, as amended, or the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.07 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of our initial public offering; (iii) the date on which we have, during the preceding three year period, issued more than US$1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act, which could occur if the market value of our common shares that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.
Implications of Being a Foreign Private Issuer
We are subject to the information reporting requirements of the Exchange Act that are applicable to “foreign private issuers,” and under those requirements we file certain reports with the SEC. As a foreign private issuer, we are not subject to the same requirements that are imposed upon U.S. domestic issuers by the SEC. Under the Exchange Act, we will be subject to reporting obligations that, in certain respects, are less detailed and less frequent than those of U.S. domestic reporting companies. For example, we have four months after the end of each fiscal year to file our annual reports with the SEC and we are not required to file current reports as frequently or promptly as U.S. domestic reporting companies. We also present our financial statements pursuant to IFRS, as issued by the International Accounting Standards Board, instead of pursuant to U.S. generally accepted accounting principles. Furthermore, our officers, directors and principal shareholders are exempt from the requirements to report transactions in our equity securities and from the short-swing profit liability provisions contained in Section 16 of the Exchange Act. As a foreign private issuer, we are also not subject to the requirements of Regulation FD (Fair Disclosure) promulgated under the Exchange Act. In addition, as a foreign private issuer, we are permitted, and intend to follow certain home country corporate governance practices instead of those otherwise required under the listing rules of Nasdaq for
5
domestic U.S. issuers. These exemptions and leniencies will reduce the frequency and scope of information and protections available to you in comparison to those applicable to a U.S. domestic reporting companies.
Notes on Prospectus Presentation
Numerical figures included in this prospectus have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them. Certain market data and other statistical information contained in this prospectus are based on information from independent industry organizations, publications, surveys and forecasts. Some market data and statistical information contained in this prospectus are also based on management’s estimates and calculations, which are derived from our review and interpretation of the independent sources listed above, our internal research and our knowledge of the Canadian mining industry. While we believe such information is reliable, we have not independently verified any third-party information and our internal data has not been verified by any independent source.
Our reporting currency and our functional currency is Canadian dollar. This prospectus contains translations of Canadian dollars into U.S. dollars at specific rates solely for the convenience of the reader. Unless otherwise noted, all translations from Canadian dollars into U.S. dollars relating to the unaudited interim consolidated financial statements as of December 31, 2022 and for the six months ended December 31, 2022 and 2021 in this prospectus were made at a rate of C$1.3532 per US$1.00, the noon buying rate as set forth in the H.10 statistical release of the U.S. Federal Reserve Board in effect as of December 30, 2022. All translations from Canadian dollars into U.S. dollars relating to the audited consolidated financial statements as of and for the years ended June 30, 2022 and 2021 in this prospectus were made at a rate of C$1.2871 per US$1.00, the noon buying rate as set forth in the H.10 statistical release of the U.S. Federal Reserve Board in effect as of June 30, 2022. On March 31, 2023, the noon buying rate for Canadian dollar was $1.3525 per US$1.00. We make no representation that the Canadian dollar or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or Canadian dollar, as the case may be, at any particular rate or at all.
All references in the prospectus to “U.S. dollars,” “dollars,” “US$” and “$” are to the legal currency of the United States and all references to “C$” are to the legal currency of Canada.
Share Consolidation (a “Reverse Split”)
On October 7, 2021, we effectuated a one-for-five reverse stock split of our common shares, or the Reverse Split. The Reverse Split combined each five of our common shares into one common share. Fractional shares will not be issued to any existing shareholder in connection with the Reverse Split, but the Company purchased from each existing shareholder the right to such fractional share that would have been issued, at a price based on our initial public offering price. The right to fractional shares which the Company purchased resulting from the Reverse Split, in the aggregate, was less than ten (10) common shares. The historical audited financial statements included elsewhere in this prospectus have been adjusted for the Reverse Split. Unless otherwise indicated, all other share and per share data in this prospectus have been retroactively adjusted, where applicable, to reflect the Reverse Split as if it had occurred as at the June 30, 2019 fiscal year end.
6
An investment in our securities involves a high degree of risk. You should carefully consider the following risk factors, together with the other information contained in this prospectus, contained in the applicable prospectus supplement and any related free writing prospectus, and under similar headings in our most recent Annual Report on Form 20-F and the other documents that are filed after the date hereof that are incorporated by reference into this prospectus and the applicable prospectus supplement before purchasing our common shares. We have listed below (not necessarily in order of importance or probability of occurrence) what we believe to be the most significant risk factors applicable to us, but they do not constitute all of the risks that may be applicable to us. Any of the following factors could harm our business, financial condition, results of operations or prospects, and could result in a partial or complete loss of your investment. Additional risks not presently known to us or that we currently believe are immaterial may also significantly impair our business operations. Some statements in this prospectus, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section titled “Special Note Regarding Forward-Looking Statements.”
Our Risks and Challenges
Our prospects should be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by similar companies. Our ability to realize our business objectives and execute our strategies is subject to risks and uncertainties, including, among others, the following:
Risks Related to Our Business and Industry
Risks and uncertainties related to our business and industry include, but are not limited to, the following:
All of our business activities are now in the exploration stage and there can be no assurance that our exploration efforts will result in the commercial development of lithium concentrate or lithium hydroxide.
All of our operations are at the exploration stage and there is no guarantee that any such activity will result in commercial production of lithium mineral deposits. Very limited drilling has been conducted on our Snow Lake Lithium™ property to date, which makes the extrapolation of an S-K 1300 compliant indicated or inferred resource, if and when obtained, to an S-K 1300 probable or proven reserve and to commercial viability impossible without further drilling. We intend to engage in that additional exploratory drilling with proceeds from this and potential subsequent financings. The exploration for lithium deposits involves significant risks which even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of an ore body may result in substantial rewards, few properties which are explored are ultimately developed into producing mines. Major expenses may be required to locate and establish proven mineral reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. It is impossible to ensure that the exploration programs planned by us or any future development programs will result in a profitable commercial mining operation. There is no assurance that our mineral exploration activities will result in any discoveries of commercial quantities of lithium. There is also no assurance that, even if commercial quantities of ore are discovered, a mineral property will be brought into commercial production. Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are: the particular attributes of the deposit, such as size, grade and proximity to infrastructure, metal prices which are highly cyclical; and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted. Our long-term profitability will be in part directly related to the cost and success of our exploration programs and any subsequent development programs.
7
Our mineral resources or reserves may be significantly lower than expected or as currently published.
We are in the exploration stage and our planned principal operations have not commenced. There is currently no commercial production on the Snow Lake Lithium™ property and we have not yet completed a PFS. As such, our estimated proven or probable mineral reserves, expected mine life and lithium pricing cannot be determined as the exploration program, drilling, feasibility studies and pit (or mine) design optimizations have not yet been undertaken, and the actual mineral reserves may be significantly lower than expected. You should not rely on the past or any future S-K 1300 compliant technical report, or PFS, if and when completed and published, as indications that we will have successful commercial operations in the future. Even if we prove reserves on the Snow Lake Lithium™ property, we cannot guarantee that we will be able to develop and market them, or that such production will be profitable.
The estimation of lithium reserves is not an exact science and depends upon a number of subjective factors. Any indicated or inferred resource figures presented in this prospectus are estimates from the written reports of technical personnel and mining consultants who were contracted to assess the mining prospects. Resource estimates are a function of geological and engineering analyses that require us to forecast production costs, recoveries, and metals prices. The accuracy of such estimates depends on the quality of available data and of engineering and geological interpretation, judgment, and experience. Estimated indicated or inferred lithium resources may not be upgraded to indicated or measured or to probable or proved reserves, and any reserves may not be realized in actual production and our operating results may be negatively affected by inaccurate estimates. Additionally, resource estimates do not determine the economics of a mining project and, although we have begun to prepare a PFS, even once the PFS is produced we cannot guarantee that it will reflect positive economics for our mining resources or that we will be able to execute our plans to create an economically viable mining operation.
Our mineral resources described in our most recent S-K 1300 compliant indicated and inferred mineral resource report are only estimates and no assurance can be given that the anticipated tonnages and grades will be achieved, or that the indicated level of recovery will be realized.
Further, the independent resource consultant that prepared the currently published and most recent SK-1300 compliant indicated and inferred mineral resource report has recently passed away and the Company has therefore not been able to receive consent from the said consultant to use his estimate in this report. As such, the Company presently takes no responsibility for the accuracy of the said SK-1300 resource report, and is not describing the specific results of that report or incorporating the results of that report herein.
We intend to continue exploration on our Snow Lake Lithium™ property and we may or may not acquire additional interests in other mineral properties. The search for mineral deposits as a business is extremely risky. We can provide investors with no assurance that exploration on our current properties, or any other property that we may acquire, will establish that any commercially exploitable quantities of mineral deposits exist. Additional potential problems may prevent us from discovering any mineral deposits. These potential problems include unanticipated problems relating to exploration and additional costs and expenses that may exceed current estimates. If we are unable to establish the presence of viable lithium mineral deposits on our properties, our ability to fund future exploration activities will be impeded, we will not be able to operate profitably and investors may lose all of their investment in our company.
·We have a limited operating history and have not yet generated any revenues;
·Our financial statements have been prepared on a going concern basis and our financial status creates a doubt whether we will continue as a going concern;
·If we do not obtain additional financing, our business may be at risk or execution of our business plan may be delayed;
·The coronavirus pandemic may cause a material adverse effect on our business;
8
·We previously obtained an S-K 1300 compliant indicated and inferred mineral resource report which represented only estimates and no assurance can be given that any anticipated tonnages and grades will be achieved, or that the indicated level of recovery will be realized. Although that report was S-K 1300 compliant, there has been insufficient drilling on the Snow Lake Lithium™ property to determine that we have inferred mineral resources under the SEC’s new Mining Modernization Rules. Further drilling will be required to determine whether the Snow Lake Lithium™ property contains proven or probable mineral reserves and there can be no assurance that we will be successful in our efforts to prove our resource. We are in the process of obtaining an updated S-K 1300 compliant report;
·Mineral exploration and development are subject to extraordinary operating risks. We currently do not insure against these risks. In the event of a cave-in or similar occurrence, our liability may exceed our resources, which could have an adverse impact on us;
·Our business operations are exposed to a high degree of risk associated with the mining industry;
·We may not be able to obtain or renew licenses or permits that are necessary to our operations;
·Our Snow Lake Lithium™ property may face indigenous land claims;
·Volatility in lithium prices and lithium demand may make it commercially unfeasible for us to develop our Snow Lake Lithium™ Project;
·The future market demand for lithium is and will be heavily dependent on the growth and development and continuing market acceptance and growth in market share of EVs with the overall North American and worldwide auto industry. Any reduction in the rate of growth of the EV industry may adversely affect lithium prices and the commercial feasibility of our Snow Lake Lithium™ Project;
·There can be no guarantee that our interest in the Snow Lake Lithium™ property is free from any title defects;
·Our mining operations are dependent on the adequate and timely supply of water, electricity or other power supply, chemicals and other critical supplies;
·We currently report our financial results under International Financial Reporting Standards, or IFRS, which differs in certain significant respect from U.S. generally accepted accounting principles;
·Our directors and officers are engaged in other business activities and accordingly may not devote sufficient time to our business affairs, which may affect our ability to conduct operations and generate revenue; and
·In the event that key personnel leave our company, we would be harmed since we are heavily dependent upon them for all aspects of our activities.
9
Risks Related to This Offering and Ownership of Our Common Shares
Risks and uncertainties related to this offering and our common shares include, but are not limited to, the following:
There is currently no trading market for certain of the securities and no assurance can be given that an active or liquid trading market for such securities will develop or be sustained.
There is currently no trading market for any preferred shares, warrants or units that may be offered and purchasers may not be able to resell such securities purchased under this prospectus. This may affect the pricing of such securities in the secondary market, the transparency and availability of trading prices, the liquidity of such securities, and the extent of issuer regulation. No assurance can be given that an active or liquid trading market for such securities will develop or be sustained. If an active or liquid market for such securities fails to develop or be sustained, the prices at which such securities trade may be adversely affected. Whether or not such securities will trade at lower prices depends on many factors, including liquidity of such securities, prevailing interest rates and the markets for similar securities, the market price of the common shares, general economic conditions and ours financial condition, historic financial performance and future prospects.
Our continued development may require us to raise additional financing in the future through the issuance of additional equity securities or convertible debt securities.
Our continued development may require the Company to raise additional financing in the future through the issuance of additional equity securities or convertible debt securities. If we raise additional funding by issuing additional equity securities or convertible debt securities such financings may substantially dilute the interests of our shareholders and reduce the value of their investment. Additional financings and share issuances may result in a substantial dilution to our shareholders of the Company and decrease the value of our securities.
The failure to raise or procure such additional funds as required could result in the delay or indefinite postponement of business objectives. There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, will be on terms acceptable to the Company.
The market prices for securities of mining companies, including our securities, historically have been and may continue to be volatile.
The market prices for securities of mining companies, including our securities, historically have been and may continue to be volatile. Future developments concerning us or our industry, including downward fluctuations in the price of lithium, may have a significant impact on the market price of the common shares.
There may not be an active liquid market for the common shares and there is no guarantee that an active trading market for the common shares will be maintained on Nasdaq.
There may not be an active liquid market for the common shares. There is no guarantee that an active trading market for the common shares will be maintained on Nasdaq. Investors may not be able to sell their common shares quickly or at the latest market price if trading in the common shares is not active.
Management will have discretion in the use of proceeds and the use of available funds.
Management will have broad discretion concerning the use of the net proceeds from the offering of any securities by us and the use of available funds, as well as the timing of their expenditures. Depending on fluctuations in lithium prices and other factors, the intended use of proceeds from the offering of any securities and use of available funds may change. As a result, an investor will be relying on the judgment of management for the application of the net proceeds from the offering of any securities and use of available funds. Management may use the net proceeds from the offering of any securities and available funds in ways that an investor may not consider desirable if they believe it would be in our best interests to do so. The results and the effectiveness of the application of proceeds from an offering of any securities and available funds are uncertain. If the proceeds and available funds are not applied effectively, our results of operations may suffer.
10
·If through additional drilling we are not able to prove our resource according to the SEC’s new Mining Modernization Rules, your investment in our common shares could become worthless;
·You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions against us or our management named in the prospectus based on foreign laws;
·We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies;
·As a foreign private issuer, we are permitted to rely on exemptions from certain Nasdaq corporate governance standards applicable to domestic U.S. issuers. This may afford less protection to holders of our shares;
·A major shareholder, Nova Minerals, owns a significant interest in our outstanding common shares. As a result, it will have the ability to influence all matters submitted to our shareholders for approval; and
·Future issuances of debt securities, which would rank senior to our common shares upon our bankruptcy or liquidation, and future issuances of preferred shares, which could rank senior to our common shares for the purposes of dividends and liquidating distributions, may adversely affect the level of return you may be able to achieve from an investment in our common shares.
In addition, we face other risks and uncertainties that may materially affect our business prospects, financial condition, and results of operations. You should consider the risks discussed in “Risk Factors” and elsewhere in this prospectus before investing in our common shares.
11
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to us. All statements other than statements of historical facts are forward-looking statements. The forward-looking statements are contained principally in, but not limited to, the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:
·our goals and strategies;
·expectations regarding revenue, expenses and operations;
·our having sufficient working capital and be able to secure additional funding necessary for the continued exploration of our property interests;
·expectations regarding the potential mineralization, geological merit and economic feasibility of our projects;
·expectations regarding exploration results at the Snow Lake Lithium™ Project;
·mineral exploration and exploration program cost estimates;
·expectations regarding any environmental issues that may affect planned or future exploration programs and the potential impact of complying with existing and proposed environmental laws and regulations;
·receipt and timing of exploration permits and other third-party approvals;
·government regulation of mineral exploration and development operations;
·expectations regarding any social or local community issues that may affected planned or future exploration and development programs; and
·key personnel continuing their employment with us.
In some cases, you can identify forward-looking statements by terms such as “may,” “could,” “will,” “should,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “project” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the heading “Risk Factors” and elsewhere in this prospectus. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance.
12
This prospectus also contains certain data and information, which we obtained from various government and private publications. Although we believe that the publications and reports are reliable, we have not independently verified the data. Statistical data in these publications includes projections that are based on a number of assumptions. If any one or more of the assumptions underlying the market data is later found to be incorrect, actual results may differ from the projections based on these assumptions.
The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Although we have ongoing disclosure obligations under United States federal securities laws, we do not intend to update or otherwise revise the forward-looking statements in this prospectus, whether as a result of new information, future events or otherwise.
The following table sets forth our cash and capitalization as of March 31, 2023.
You should read this table together with our financial statements and the related notes included elsewhere in this prospectus and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
|
|
| |||||
|
| C$ |
|
| US$ | ||
Cash |
|
| 8,025,129 |
|
|
| 5,930,044 |
Total long-term obligations |
|
| - |
|
|
| - |
Shareholders’ equity: |
|
|
|
|
|
|
|
Share capital |
|
| 40,570,773 |
|
|
| 29,979,142 |
Reserves |
|
| 7,234,905 |
|
|
| 5,346,121 |
Deficit |
|
| (22,043,401 | ) |
|
| (16,288,629) |
Total shareholder’s equity |
|
| 24,762,277 |
|
|
| 19,036,634 |
Total capitalization |
|
| 24,762,277 |
|
|
| 19,036,634 |
The table above is based on 18,185,810 shares outstanding as of the date of this prospectus and excludes:
·952,407 common shares potentially issuable upon the exercise of outstanding options under our Amended and Restated Stock at an exercise price of US$7.50 per share;
·350,000 common shares potentially issuable upon the exercise of outstanding options under our Amended and Restated Stock at an exercise price of US$2.50 per share;
·160,000 common shares potentially issuable upon the exercise of outstanding options under our Amended and Restated Stock Option Plan at an exercise price of C$2.50 (approximately US$1.85) per share;
·250,000 common shares potentially issuable upon the exercise of outstanding options under our Amended and Restated Stock Option Plan at an exercise price of US$2.25 per share;
·694,325 additional common shares that are reserved for future issuance under our Amended and Restated Stock Option Plan;
·1,341,054 common shares issuable upon the exercise of outstanding warrants at a weighted average exercise price of C$2.89 (approximately US$2.14) per share;
·184,000 common shares issuable upon exercise of the warrants issued to the representative of the underwriters in our initial public offering at an exercise price of US$9.375 per share; and
·670,000 common shares issuable upon the exercise of restricted share units.
13
The use of proceeds from the sale of securities will be described in the applicable prospectus supplement relating to a specific offering and sale of securities. Among other potential uses, we may use the net proceeds from the sale of securities offered hereunder for resource development activities, technical studies and reports, working capital and general corporate purposes.
The foregoing represents our current intentions to use and allocate the net proceeds of this offering based upon our present plans and business conditions. Our management, however, will have broad discretion in the way that we use the net proceeds of this offering. See “Risk Factors—Risks Related to This Offering and Ownership of Our Common Shares—We have considerable discretion as to the use of the net proceeds from this offering and we may use these proceeds in ways with which you may not agree.”
Pending our use of the net proceeds from this offering, we may invest the net proceeds in a variety of capital preservation investments, including short-term, investment grade, interest bearing instruments and U.S. government securities.
We will bear all fees and expenses incurred in effecting the registration of the common shares and other securities covered by this prospectus, including registration, listing, qualification and filing fees, fees and expenses of our counsel and our independent registered public accountants.
We may sell the securities offered by this prospectus to one or more underwriters or dealers for public offering, through agents, directly to one or more purchasers or through a combination of any such methods of sale, including in “at-the-market” offerings, within the meaning of Rule 415(a)(4) of the Securities Act into an existing trading market, on an exchange or otherwise. The name of any such underwriters, dealers or agents involved in the offer and sale of the securities, the amounts underwritten and the nature of its obligation to take the securities will be specified in the applicable prospectus supplement. We have reserved the right to sell the securities directly to investors on our own behalf in those jurisdictions where we are authorized to do so. The sale of the securities may be effected in one or more transactions (a) on any national or international securities exchange or quotation service on which the securities may be listed or quoted at the time of sale, (b) in the over-the-counter market, (c) in transactions otherwise than on such exchanges or in the over-the-counter market or (d) through the writing of options. Each time that we sell securities covered by this prospectus, we will provide a prospectus supplement or supplements that will describe the method of distribution and set forth the terms and conditions of the offering of such securities, including the offering price of the securities and the proceeds to us, if applicable.
We and our agents and underwriters may offer and sell the securities at a fixed price or prices that may be changed, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The securities may be offered on an exchange, which will be disclosed in the applicable prospectus supplement. We may, from time to time, authorize dealers, acting as our agents, to offer and sell the securities upon such terms and conditions as set forth in the applicable prospectus supplement. We may also sell the securities offered by any applicable prospectus supplement in “at-the-market offerings” within the meaning of Rule 415 of the Securities Act made through the facilities of Nasdaq or through a market maker or into an existing trading market, on an exchange or otherwise.
If we use underwriters to sell securities, we will enter into an underwriting agreement with them at the time of the sale to them. In connection with the sale of the securities, underwriters or agents may receive compensation from us in the form of underwriting discounts or commissions and may also receive commissions from purchasers of the securities for whom they may act as agent. The names of any underwriters, any underwriting compensation paid by us to underwriters or agents in connection with the offering of the securities, and any discounts, concessions or commissions allowed by underwriters to participating dealers, will be set forth in the applicable prospectus supplement to the extent required by applicable law. Underwriters may sell the securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters or commissions (which may be changed from time to time) from the purchasers for whom they may act as agents. If a dealer is utilized in the sale of the securities being offered by this prospectus, the securities will be sold to the dealer, as principal. The dealer may then resell the securities to the public at varying prices to be determined by the dealer at the time of resale.
14
Dealers and agents participating in the distribution of the securities may be deemed to be underwriters, and any discounts and commissions received by them and any profit realized by them on resale of the securities may be deemed to be underwriting discounts and commissions under the Securities Act. Unless otherwise indicated in the applicable prospectus supplement, an agent will be acting on a best efforts basis.
If so indicated in the prospectus supplement, we will authorize underwriters, dealers or agents to solicit offers by certain specified institutions to purchase offered securities from us at the public offering price set forth in the prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. Such contracts will be subject to any conditions set forth in the applicable prospectus supplement and the prospectus supplement will set forth the commission payable for solicitation of such contracts. The underwriters and other persons soliciting such contracts will have no responsibility for the validity or performance of any such contracts. Offers to purchase the securities being offered by this prospectus may also be solicited directly.
Underwriters, dealers and agents may be entitled, under agreements entered into with us, to indemnification against and contribution towards certain civil liabilities, including any liabilities under the Securities Act.
To facilitate the offering of securities, certain persons participating in the offering may engage in transactions that stabilize, maintain, or otherwise affect the price of the securities. These may include over-allotment, stabilization, syndicate short covering transactions and penalty bids. Over-allotment involves sales in excess of the offering size, which creates a short position. Stabilizing transactions involve bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum. Syndicate short covering transactions involve purchases of securities in the open market after the distribution has been completed in order to cover syndicate short positions. Penalty bids permit the underwriters to reclaim selling concessions from dealers when the securities originally sold by the dealers are purchased in covering transactions to cover syndicate short positions. These transactions may cause the price of the securities sold in an offering to be higher than it would otherwise be. These transactions, if commenced, may be discontinued by the underwriters at any time.
Information in respect of prior sales of common shares and other securities distributed under this prospectus and for securities that are convertible or exchangeable into common shares or such other securities within the previous 12-month period will be provided, as required, in a prospectus supplement with respect to the issuance of common shares and/or other securities pursuant to such prospectus supplement.
The outstanding common shares are traded on the Nasdaq under the symbol “LITM”. Trading prices and volumes of the common shares for the previous 12-month period will be provided, as required, in each prospectus supplement.
15
Directors and Executive Officers
The following table sets forth certain information regarding our directors and executive officers.
NAME |
| AGE |
| POSITION |
Frank Wheatley |
| 65 |
| Chief Executive Officer |
Peretz Schapiro |
| 43 |
| Interim Chief Operating Officer and Director |
Keith Li |
| 43 |
| Chief Financial Officer |
Brian Youngs |
| 71 |
| Vice President, Exploration |
Nachum Labkowski |
| 37 |
| Director and Chairman of the Board |
Kathleen Skerrett |
| 53 |
| Independent Director |
Brian Imrie |
| 61 |
| Independent Director |
Shlomo Kievman |
| 38 |
| Independent Director |
On July 14, 2023, our Board of Directors appointed Mr. Frank Wheatley, 65, as our Chief Executive Officer (“CEO”), effective July 17, 2023. Effective August 2, 2023, Dale Schultz resigned as VP of Resource Development.
Frank Wheatley. Prior to joining us, Mr. Wheatley has, for the past 35 years, been a senior executive and independent director of a number of Canadian public mining companies operating globally in precious, base and industrial metals. Mr. Wheatley was an independent director Teranga Gold Corporation from 2010 to 2021, when it was acquired by Endeavour Mining, and was appointed an independent director of Endeavour Mining upon the closing of the acquisition. He was the Executive Director of Talison Lithium Limited from 2010 to 2013, until its acquisition by Tianqui Lithium. Mr. Wheatley served as the CEO of Yellowhead Mining Inc. from 2013 to 2018 and as the CEO of and Karnalyte Resources Inc. from 2018 to 2019. From 2019 until present, Mr. Wheatley has been CEO of Wheatley Advisors Inc., providing bespoke advice on ESG matters to Canadian public mining companies in the battery metals space. Mr. Wheatley has extensive domestic and international experience with development and operating gold, copper, lithium and potash companies, including mergers and acquisitions, project financing, project development, and environmental permitting in accordance with all international best practice, environmental and corporate social responsibility standards. Mr. Wheatley has a BComm (Finance) and an LLB from the University of British Columbia. Mr. Wheatley has also been a member of the Law Society of British Columbia since 1985..
No family relationship exists between Mr. Wheatley and any of our other directors and executive officers. There are no arrangements or understandings with major shareholders, customers, suppliers or others pursuant to which Mr. Wheatley was selected as CEO.
Peretz Schapiro. Mr. Schapiro has served as our interim Chief Operating Officer and as a director since January 17, 2023 . Mr. Schapiro holds a Masters degree in Applied Finance and has been a global investor for more than a decade, with a particular focus in the resources sector. He understands the fundamental parameters, strategic drivers, market requirements and what it takes for a high growth business. Mr Schapiro has a diverse professional background, with deep experience in resource exploration, corporate finance, management consulting, marketing and fundraising. Mr Schapiro is also the founding Chairman of Loyal Lithium Ltd (ASX:LLI) Founding Chairman of Summit Minerals (ASX:SUM), and has previously held directorships Asra Minerals Limited (ASX:ASR) and Okapi Resources (ASX:OKR).
Keith Li. Mr. Li has served as our Chief Financial Officer since June 30, 2022. Mr. Li has over 15 years of experience in accounting, audit and executive level financial management. Prior to joining Snow Lake, Mr. Li has been serving as the Chief Financial Officer at Branson Corporate Services Ltd., providing outsourced fractional CFO functions and executive level financial services to public companies, including preparation of IFRS-compliant financial statements and MD&A since November 2017. Prior to joining our company, Mr. Li was a senior auditor with McGovern Hurley LLP from September 2011 to August 2016. From August 2016 to November 2017, he held the role of External Reporting Manager for Sears Canada Inc., and was responsible in overseeing the financial reporting functions of the company. Since joining Branson, Mr. Li had assumed the roles of Chief Financial Officer for many of Branson’s publicly-listed clients, including Pharmadrug Inc. from December 2017 to present, Quinsam Capital Corporation from March 2018 to present, Psyched Wellness Ltd. since January 2020 to present, Jubilee Gold Exploration Ltd. since January 2020 to present, Universal PropTech Inc. from June 2020 to present, Corcel Exploration Inc. since March
16
2021 to present, US Critical Metals Corp. since August 2021 to present, and Hercules Silver Corp. since November 2022 to present. Mr. Li is responsible in overseeing the financial reporting and accounting functions of these companies. Mr. Li is a Chartered Professional Accountant and holds a Bachelor of Commerce in Finance from McGill University.
Brian Youngs. Mr. Youngs joined our company in January 2018 and has served as our Vice President of Exploration since November 2018. Mr. Youngs has more than 25 years of experience in mining exploration. In a number of private and publicly traded junior mining companies, including Randsburg International Gold Corp. from May 2003 to June 2005, Wabana Exploration Inc. from 1999 to 2001 and Meegwich Consultants from 1996 to 2003. He has worked throughout Canada and internationally, as senior airborne geophysics technician with Geotech Ltd. Inc., from June 2008 to December 2017. Mr. Youngs graduated from Northern College – Haileybury School of Mines, Mining Engineering Technician program and is a member of the Ontario Association of Certified Engineering Technicians and Technologists. He has also received a GIS Specialist Diploma from Sault College and a Computer Graphics Design Diploma from Sheridan College.
Nachum Labkowski. Mr. Labkowski has served as a member of our board of directors since November 2018. He is currently the Chief Executive Officer and principal investor in Halevi Enterprises, a private equity firm which Mr. Labkowski founded in 2010 that holds equity in more than 30 private companies and invests in real estate worldwide. Mr. Labkowski’s unique approach to investing has provided significant returns from those companies he has invested in to date.
Brian Imrie. Mr. Imrie is a retired investment banker with over 30 years of experience, primarily with global firms, providing advice and raising capital for companies in multiple industries. He was with Morgan Stanley in New York and Toronto from 1983-1997, Credit Suisse First Boston from 1997-2001, ran Mergers & Acquisitions for National Bank Financial from 2001-2008 and built and ran a global M&A business for KPMG Corporate Finance from 2009-2012. He was previously the Chairman/owner of Debro Inc., a chemical distribution company and serves on several other public and private boards. He received his MBA from Harvard University in 1987 and his BA in Economics from the University of Toronto in 1983.
Shlomo Kievman. Mr. Kievman is an experienced director bringing his extensive experience as a leader in the procurement of ideas and concepts which exemplify American innovation. Mr. Kievman, who has managed and founded several ventures and businesses over the past two decades, has an in-depth understanding and operational capacity for planning and analysis, business plan development, forecasting, financial analysis, and capital commitment planning, as well as competitive analysis and bench marking, providing the tools required to succeed. His work in public and private sectors in the USA and abroad has included business development, financial modeling, action planning, and conceptual design. Mr. Kievman graduated university with honors with a BA in Liberal Arts. He is the principal of Crown Equities, an investment firm transforming the global resources sector, leading several global organizations.
Kathleen Skerrett. Ms. Skerrett is the Chair of the Securities Group at Gardiner Roberts LLP, specializing in advising clients on forming, financing, maintaining and reorganizing public companies. Ms. Skerrett was called to the Bar in Ontario in 1996 after earning a Bachelor of Laws from the University in Toronto in 1994. She also earned a Bachelor of Commerce degree from Trinity College, University of Toronto in 1991 and has completed the Canadian Securities Course. Ms. Skerrett advises clients on all aspects of compliance with corporate and securities laws, including structuring of financing transactions, mergers and acquisition, corporate governance and continuous disclosure reporting. Ms. Skerrett has a broad breadth of industry experience including advising clients in the manufacturing, technology, financial and health and wellness sectors. In particular, she has developed a strong practice in the resource sector with expertise in both structuring mining related contracts and advising on additional public company compliance matters for this sector. Ms. Skerrett also provides advice on a variety of corporate matters to private entities. Ms. Skerrett has acted as a director and/or officer of a number of public companies listed on all of the Canadian stock exchanges and is currently on the board of directors of the Canada’s National Ballet School Foundation.
No family relationship exists between any of our directors and executive officers, except that Nachum Labkowski is Peretz Schapiro’s brother-in-law. There are no arrangements or understandings with major shareholders, customers, suppliers or others pursuant to which any person referred to above was selected as a director or member of senior management.
17
Board of Directors
Nasdaq’s listing rules generally require that a majority of an issuer’s board of directors must consist of independent directors. Our board of directors currently consists of five directors, Peretz Schapiro, Nachum Labkowski, Brian Imrie, Shlomo Kievman and Kathleen Skerrett, three of whom, Mr. Imrie, Mr. Kievman and Ms. Skerrett are independent within the meaning of Nasdaq’s rules.
A director is not required to hold any shares in our company to qualify to serve as a director. Our board of directors may exercise all the powers of our company to borrow money, mortgage or charge its undertaking, property and uncalled capital, and to issue debentures, bonds and other securities, subject to applicable stock exchange limitations, if any, whenever money is borrowed or as security for any debt, liability or obligation of our company or of any third-party.
Board Committees
We have a standing audit committee, a compensation committee and a nominating and corporate governance committee of our board of directors. We have adopted a charter for each of the three committees. Each committee’s members and functions are described below.
Audit Committee
Our audit committee consists of Brian Imrie, Shlomo Kievman and Kathleen Skerrett, each of whom satisfies the “independence” requirements of Rule 10A-3 under the Exchange Act and Rule 5605(c)(2) of the Nasdaq Marketplace Rules. Brian Imrie serves as chairman of the audit committee. Our board has determined that each of Brian Imrie, Shlomo Kievman and Kathleen Skerrett qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company.
The audit committee is responsible for, among other things: (i) retaining and overseeing our independent accountants; (ii) assisting the board in its oversight of the integrity of our financial statements, the qualifications, independence and performance of our independent auditors and our compliance with legal and regulatory requirements; (iii) reviewing and approving the plan and scope of the internal and external audit; (iv) pre-approving any audit and non-audit services provided by our independent auditors; (v) approving the fees to be paid to our independent auditors; (vi) reviewing with our chief executive officer and chief financial officer and independent auditors the adequacy and effectiveness of our internal controls; (vii) reviewing hedging transactions; and (viii) reviewing and assessing annually the audit committee’s performance and the adequacy of its charter.
Compensation Committee
Our compensation committee consists of Nachum Labkowski, Peretz Schapiro and Shlomo Kievman. Shlomo Kievman satisfies the “independence” requirements of Rule 10A-3 under the Exchange Act and Rule 5605(c)(2) of the Nasdaq Marketplace Rules. Nachum Labkowski serves as chairman of the compensation committee. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers.
The compensation committee is responsible for, among other things: (i) reviewing and approving the remuneration of our executive officers; (ii) making recommendations to the board regarding the compensation of our independent directors; (iii) making recommendations to the board regarding equity-based and incentive compensation plans, policies and programs; and (iv) reviewing and assessing annually the compensation committee’s performance and the adequacy of its charter.
18
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee consists of Nachum Labkowski, Peretz Schapiro and Kathleen Skerrett. Kathleen Skerrett serves as chairman of the nominating and corporate governance committee. The nominating and corporate governance committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees.
The nominating and corporate governance committee is responsible for, among other things: (i) identifying and evaluating individuals qualified to become members of the board by reviewing nominees for election to the board submitted by shareholders and recommending to the board director nominees for each annual meeting of shareholders and for election to fill any vacancies on the board; (ii) advising the board with respect to board organization, desired qualifications of board members, the membership, function, operation, structure and composition of committees (including any committee authority to delegate to subcommittees), and self-evaluation and policies; (iii) advising on matters relating to corporate governance and monitoring developments in the law and practice of corporate governance; (iv) overseeing compliance with the our code of ethics; and (v) approving any related party transactions.
The nominating and corporate governance committee’s methods for identifying candidates for election to our board of directors will include the solicitation of ideas for possible candidates from a number of sources - members of our board of directors, our executives, individuals personally known to the members of our board of directors, and other research. The nominating and corporate governance committee may also, from time-to-time, retain one or more third-party search firms to identify suitable candidates.
In making director recommendations, the nominating and corporate governance committee may consider some or all of the following factors: (i) the candidate’s judgment, skill, experience with other organizations of comparable purpose, complexity and size, and subject to similar legal restrictions and oversight; (ii) the interplay of the candidate’s experience with the experience of other board members; (iii) the extent to which the candidate would be a desirable addition to the board and any committee thereof; (iv) whether or not the person has any relationships that might impair his or her independence; and (v) the candidate’s ability to contribute to the effective management of our company, taking into account the needs of our company and such factors as the individual’s experience, perspective, skills and knowledge of the industry in which we operate.
Duties of Directors
Under Canadian law, directors have fiduciary obligations to our company. Under the MCA, directors, when exercising the powers and discharging their duties, must act honestly and in good faith with a view to the best interests of our company and exercise the care, diligence and skill that a reasonably prudent individual would exercise in comparable circumstances.
Under Manitoba corporate law, the MCA imposes specific statutory liabilities on directors of corporations in certain situations. In certain circumstances, directors can be held liable, for example, for the authorization of share issues for a consideration other than money at less than fair market value, or for all debts not exceeding six months’ wages payable to each of the employees for services performed for the corporation while they are directors, or for the payment of a dividend if there were reasonable grounds for believing that the corporation is, or would after the payment be, unable to pay its liabilities as they become due, or the realizable value of the corporation’s assets would thereby be less than the aggregate of its liabilities and stated capital. Under numerous other provisions in federal and provincial statutes, directors may also face personal liability for, among other things, environmental offences, source deductions from payrolls, and tax remittances. Corporate directors have a number of defenses to legal actions in which it is alleged that they have breached their statutory or fiduciary duties, including:
·dissenting from a resolution passed or action taken at a board meeting, which may relieve the director of any liability for the results of that decision;
·raising a “good faith reliance” defense to an accusation of breach of a fiduciary duty, whereby the director is entitled to rely in good faith on financial statements or reports made by an officer of the corporation, the corporation’s auditor, or by other professionals, such as a lawyer, an accountant, or an engineer; and
19
·availing themselves of a due diligence defense that permits directors to avoid a number of statutory liabilities, including breach of fiduciary duty, where the directors exercise the same degree of care, diligence and skill as a reasonably prudent person in comparable circumstances.
Conflicts of Interest
There are potential conflicts of interest to which the directors, officers, insiders and promoters of our company will be subject in connection with the operations of our company. Some of the directors, officers, insiders and promoters are engaged in and will continue to be engaged in corporations or businesses which may be in competition with the business of our company. Accordingly, situations may arise where the directors, officers, insiders and promoters will be in direct competition with our company. The directors and officers of our company have a fiduciary obligation to act in the best interests of our company, avoid conflicts of interest and to disclose to all other board members any relevant information about potential conflicts. They have the same obligations to the other companies in respect of which they act as directors and officers. Discharge by the directors and officers of their obligations to our company may result in a breach of their obligations to the other companies, and in certain circumstances this could expose our company to liability to those companies. Similarly, discharge by the directors and officers of their obligations to the other companies could result in a breach of their obligation to act in the best interests of our company. Such conflicting legal obligations may expose our company to liability to others and impair our ability to achieve our business objectives. All of the directors or officers of our company have entered into non-competition or non-disclosure agreements with our company. Conflicts, if any, will be subject to the procedures and remedies as provided under the MCA and applicable securities laws, regulations and policies.
Terms of Directors and Officers
Our officers are appointed by and serve at the discretion of our board of directors. Unless the shareholders, by ordinary resolution, elect directors to hold office for a term expiring later than the close of the next annual meeting of shareholders, the term of office of a director upon election or appointment, subject to Section 103 of the MCA, shall cease at the close of the first annual meeting of shareholders following his or her election or appointment, provided that if no directors are elected at such annual meeting, he or she shall continue in office until his or her successor is elected or appointed. The following persons are disqualified by the MCA from being a director of the Company: (i) anyone who is less than 18 years of age; (ii) a person who is not an individual; and (iii) a person who has the status of a bankrupt.
Employment and Indemnification Agreements
The Company has entered into an employment agreement with Frank Wheatley. The employment agreement can be terminated by the Company without cause upon the payment of between three and twelve months of base salary depending on when such termination occurs.
The Company has entered into consulting agreements with entities owned by Peretz Schapiro and Brian Youngs. They are employed as consultants. Each consulting agreement can be terminated by the Company without cause upon the payment of ninety days’ service fees in lieu of such notice.
Each executive officer has agreed to hold, both during and after the employment agreement expires or is earlier terminated, in strict confidence and not to use or disclose to any person, corporation or other entity without written consent, any confidential information. In addition, certain of our executive officers have agreed to be bound by non-solicitation restrictions set forth in their agreements.
Although as independent contractors certain of our executive officers have been involved in other business activities, we expect that as our business operations ramp up such executive officers will devote substantially all of their time to our business operations.
We have entered into a indemnification agreement with all of our directors and officers, pursuant to which we agree to indemnify them against certain liabilities and expenses incurred by them in connection with claims made by reason of their being a director or officer.
20
Compensation of Directors and Officers
Currently, there are no requirements for disclosure of the compensation of officers and directors on an individual basis for our most recently completed fiscal year under Canadian law. For the fiscal year ended June 30, 2020 and June 30, 2021, we paid aggregate cash compensation of C$100,500 (approximately US$81,022) and C$200,858 (approximately US$161,930), respectively, to our directors and executive officers as a group. For the fiscal year ended June 30, 2022, we paid aggregate cash compensation of C$728,008 (approximately US$575,091 based on the average exchange rate of 1.2659), to our directors and executive officers as a group. We did not pay any other cash compensation or benefits in kind to our directors and executive officers. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our directors and executive officers. Our board of directors may determine compensation to be paid to the directors and the executive officers. The compensation committee will assist the directors in reviewing and approving the compensation structure for the directors and the executive officers. For information regarding share awards granted to our directors and executive officers, see “—Stock Option Plan.”
We plan to pay aggregate cash compensation of US$234,000 and US$515,947 per fiscal year, respectively, to our directors and executive officers as a group.
Stock Option Plan
On May 1, 2019, we established the Snow Lake Resources Ltd. Stock Option Plan, which, as amended and restated on October 26, 2021, is referred to herein as the “Plan”). The purpose of the Plan is to grant stock options, or Options, to encourage eligible persons to remain with our Company and to attract new directors, officers, employees and consultants. The aggregate number of common shares that may be reserved for issuance pursuant to Options under the Plan shall not exceed 2,406,732 common shares. On September 7, 2022, the Plan was purported to be further amended and restated (the “Purported 2022 Plan”) to add cashless exercise of the Options under the Plan. On May 17, 2023, the Board determined that the September 7, 2022 meeting was neither properly called nor held and accordingly the Purported 2022 Plan, including the cashless exercise feature, was never adopted and the Plan remained the stock option plan in effect prior to the September 7, 2022 meeting. In addition, on May 17, 2023, the Board determined that in the event that it is determined by a court of competent jurisdiction in a final, non-appealable judgement that the Purported 2022 Plan were validly approved, the Board approved the removal of the cashless exercise feature from the Purported 2022 Plan and revert back to the Plan.
Options give the option holder the right to acquire from us a designated number of common shares at a purchase price that is fixed upon the grant of the option. The exercise price shall not be lower than the greater of the closing market prices of the underlying securities on: (a) the trading day prior to the date of grant of the Options; and (b) the date of grant of the Options.
The following summary briefly describes the principal features of the Plan and is qualified in its entirety by reference to the full text of the Plan.
Purposes of Plan: The purpose of the Plan is to advance the interests of our Company, through the grant of Options, by providing an incentive mechanism to foster the interest of Eligible Persons in the success of our Company and our Affiliates; encouraging Eligible Persons to remain with our Company; and attracting new directors, officers, employees and consultants.
Administration of the Plan: The Plan is currently administered by the Board of Directors, or the Board. The Board shall have the authority to determine the Eligible Persons to whom Options are granted, to grant such Options, and to determine any terms and conditions, limitations and restrictions in respect of any particular Option grant, including but not limited to the nature and duration of the restrictions, if any, to be imposed upon the acquisition, sale or other disposition of common shares acquired upon exercise of the Option, and the nature of the events and the duration of the period, if any, in which any Participant’s rights in respect of an Option or common shares acquired upon exercise of an Option may be forfeited; and to interpret the terms of the Plan, to make all such determinations and take all such other actions in connection with the implementation, operation and administration of the Plan, and to adopt, amend and rescind such administrative guidelines and other rules and regulations relating to the Plan. The Board’s interpretations, determinations, guidelines, rules and regulations shall be conclusive and binding upon our Company, Eligible Persons, Participants and all other persons.
21
Eligible Persons: Eligible Persons include Directors, Officers, Employees or Consultants. An Eligible Person may receive Options on more than one occasion and may receive separate Options, with differing terms, on any one or more occasions.
Shares Available Under the Plan: The aggregate number of common shares that may be reserved for issuance pursuant to Options under the Plan shall not exceed 10% of the outstanding common shares at the time of the granting of Options, less the aggregate number of common shares then reserved for issuance pursuant to any other share compensation arrangement.
As of the date of this prospectus, 694,325 of our common shares are reserved for future issuance under the Plan, 952,407 of our common shares are currently potentially issuable upon the exercise of outstanding options at an exercise price of US$7.50 per share, 160,000 of our common shares are potentially issuable upon the exercise of outstanding options currently issued and outstanding at an exercise price of C$2.50 (approximately US$2.02) per share, 350,000 of our common shares are currently potentially issuable upon the exercise of outstanding options issued and outstanding at an exercise price of US$2.50 per share and 250,000 of our common shares are currently potentially issuable upon the exercise of outstanding options issued and outstanding at an exercise price of US$2.25 per share.
Stock Options:
General. Subject to the provisions of the Plan, the Board has the authority to determine all grants of stock options. That determination will include: (i) the number of shares subject to any option; (ii) the exercise price per share; (iii) the expiration date of the option; (iv) the manner, time and date of permitted exercise; (v) other restrictions, if any, on the option or the shares underlying the option; and (vi) any other terms and conditions as the administrator may determine. No fractional common shares shall be reserved for issuance under the Plan and the Board may determine the manner in which an Option, insofar as it relates to the acquisition of a fractional Common Share, shall be treated.
Option Price. Our Company must not grant Options with an exercise price lower than the greater of the closing market prices of the underlying securities on: (a) the trading day prior to the date of grant of the Options; and (b) the date of grant of the Options.
Exercise of Options. An option may be exercised only in accordance with the terms and conditions for the option agreement as established by the administrator at the time of the grant. The option must be exercised by notice to us, accompanied by payment of the exercise price. Payments may be made in cash or, at the option of the administrator, by actual or constructive delivery of shares of Common Stock to the holder of the option based upon the fair market value of the shares on the date of exercise.
Expiration of Options. if not previously exercised, an Option will expire on the expiration date established by the administrator at the time of grant. In the case of stock options, such term cannot exceed ten years.
Blackout Period. The expiration date of an Option shall automatically extend if such expiration date falls within a period, or the blackout period, during which our company prohibits Optionees from exercising their Options to the extent that: (i) the blackout period is formally imposed by our company pursuant to its internal trading policies as a result of the bona fide existence of undisclosed material information. For greater certainty, in the absence of our company formally imposing a blackout period, the expiration date of any Options will not be automatically extended in any circumstances; (ii) the blackout period must expire upon the general disclosure of the undisclosed material information. The expiration date of the affected Options can be extended to no later than ten business days after the expiry of the blackout period; and (iii) the automatic extension of an Optionee’s Options will not be permitted where the Optionee or our company is subject to a cease trade order (or similar order under securities laws) in respect of our common shares.
Vesting Schedule. Options shall vest as determined by the Board. Options that may be granted to Eligible Persons performing investor relations activities shall vest over a minimum of 12 months with no more than 1/4 of such Options vesting in any three month period.
22
No Rights as a Shareholder. Nothing in the Plan or any Option shall confer upon a Participant any rights as a shareholder of our company with respect to any of the common shares underlying an Option unless and until such Participant shall have become the holder of such common shares upon exercise of such Option in accordance with the terms of the Plan.
Amendment, Suspension and Termination. The Board may amend, subject to the approval of any regulatory authority whose approval is required, suspend or terminate the Plan or any portion thereof. No such amendment, suspension or termination shall alter or impair any outstanding unexercised Options or any rights without the consent of the Participant holding such outstanding Options. If the Plan is suspended or terminated, the provisions of the Plan and any administrative guidelines, rules and regulations relating to the Plan shall continue in effect for the duration of such time as any Option remains outstanding.
Non-Assignability. Options may not be assigned or transferred.
Governing Law. The Plan, all Option Agreements, the grant and exercise of Options thereunder, and the sale, issuance and delivery of common shares thereunder upon exercise of Options are governed by the laws of the Province of Manitoba and the federal laws of Canada. The Courts of the Province of Manitoba shall have the exclusive jurisdiction to hear and decide any disputes or other matters arising under the Plan.
Other Material Provisions: Every Option shall be evidenced by an Option Agreement executed by us and the Participant, which shall, if the participant is an employee, consultant or management company employee, contain a representation and warranty by us and such Participant. In the event of changes in our outstanding common shares by reason of any share consolidation or split, reclassification or other capital reorganization, or a stock dividend, arrangement, amalgamation, merger or combination, or any other change to, event affecting, exchange of or corporate change or transaction affecting the common shares, the Board shall make, as it shall deem advisable and subject to the requisite approval of the relevant regulatory authorities, appropriate substitution and/or adjustment in: (i) the number and kind of shares or other securities or property reserved or to be allotted for issuance pursuant to the Plan; (ii) the number and kind of shares or other securities or property reserved or to be allotted for issuance pursuant to any outstanding unexercised Options, and in the exercise price for such shares or other securities or property; and (iii) the vesting of any Options.
Restricted Share Units
The Board has the authority to grant restricted share units (“RSUs”) to directors, officers, employees or consultants of the Company. The Board may specify the terms of RSUs at its discretion, including the number of RSUs granted, and vesting and acceleration provisions. Each RSU provides the recipient with the right to receive one (1) common share as a discretionary payment in consideration of past services or as an incentive for future services, with such additional provisions and restrictions as the Board may determine. Each RSU grant (“RSU Award”) shall be evidenced by a restricted share unit award agreement (the “RSU Award Agreement”) which shall be subject to the terms and conditions set out in the RSU Award Agreement.
RSUs may not be assigned or transferred, unless specifically permitted in a RSU Award Agreement. If not previously vested, the common shares reserved for issuance pursuant to the RSU Award expire on the earliest of the date specified by the Board, subject to a maximum term of ten (10) years from the date of the RSU Award, unless accelerated or earlier terminated in connection with certain events. All vested and unvested RSU Awards terminate immediately upon termination of the recipient’s services to the Company. The Board may amend, alter, suspend, discontinue or cancel the RSUs, prospectively or retroactively, provided that, no such amendment adversely affect the recipient’s material rights under the RSU Award Agreement without the recipient’s consent.
Certain holders of RSUs have a right (the “Put Right”) exercisable at any one or more time on or after any RSUs are vested, but prior to the conversion into common shares to sell the vested RSUs (the “Put RSUs”) in which case, the Company will be obligated to acquire the Put RSUs at a price equal to US$2.50 per Put RSU.
No RSU Award Agreement shall confer upon the holder of RSUs any rights as a shareholder of the Company with respect to any of the common shares underlying RSUs unless and until such holder of RSUs shall have become the holder of such common shares upon the vesting of such RSUs in accordance with the terms of the RSU Award Agreement. All RSU Award Agreements, and the RSU Awards, and the issuance and delivery of the common shares
23
thereunder upon vesting of RSUs are governed by the laws of the Province of Manitoba and the federal laws of Canada. The Courts of the Province of Manitoba shall have the exclusive jurisdiction to hear and decide any disputes or other matters arising under the RSU Award Agreements.
SHARE OWNERSHIP OF NEW CHIEF EXECUTIVE OFFICER
The following table sets forth certain information with respect to the beneficial ownership of our common shares as of the date of this prospectus for our new chief executive officers.
Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities. For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any common shares that such person or any member of such group has the right to acquire within sixty (60) days of the date of this prospectus. For purposes of computing the percentage of outstanding shares held by each person or group of persons named above, any shares that such person or persons has the right to acquire within sixty (60) days of the date of this prospectus are deemed to be outstanding for such person, but not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership by any person.
|
| Common Shares |
|
| |||||
Name of Beneficial Owner |
| Shares |
|
| % |
|
| ||
Frank Wheatley, Chief Executive Officer (2) |
|
| 200,000 |
|
|
| 1.09 | % |
|
(1) | As of the date of this prospectus, a total of 18,185,810 common shares are considered to be outstanding pursuant to SEC Rule 13d-3(d)(1). For each beneficial owner above, any securities that are exercisable or convertible within 60 days have been included in the denominator. |
(2) | Consists of 200,000 restricted stock units (“RSUs”) none of which are currently exercisable within 60 days and options for the purchase of 250,000 common shares, none of which are exercisable within 60 days. The RSUs are exercisable for the corresponding number of common shares and vest as follows: 33,000 RSUs shall vest upon the volume weighted average price (“VWAP”) of the Corporation’s common shares exceeding the greater of each of these thresholds for a period of 20 consecutive trading days: (i) US$3.00; (ii) US$3.50; (iii) US$4.50; and (iv) US$5.50, and 34,000 RSUs shall vest upon the “VWAP of the Corporation’s common shares exceeding the greater of each of these thresholds for a period of 20 consecutive trading days: (i) US$6.50; and (ii) US$7.50. The options have an exercise price of US$2.25 per share and a term of three years. They are subject to vesting over 18 months with 25% of such Options vesting on January 17, 2024, an additional 25% vesting on July 17, 2024 and the remaining 50% vesting on January 17, 2025. None of the options are exercisable within 60 days of the date of this prospectus. Mr. Wheatley’s address is c/o our company, Snow Lake Resources Ltd., 360 Main St 30th Floor, Winnipeg, Manitoba R3C 4G1 Canada. |
See “Description of Share Capital—History of Securities Issuances” for historical changes in our shareholding.
The descriptions of the securities contained in this prospectus, together with the applicable prospectus supplements, summarize the material terms and provisions of the various types of securities that we may offer. We will describe in the applicable prospectus supplement the particular terms of any securities offered by such prospectus supplement. If we so indicate in the applicable prospectus supplement, the terms of the securities may differ from the terms we have summarized below.
We may sell from time to time, in one or more offerings, common shares, preferred shares, warrants, and/or units comprising any combination of these securities. The total dollar amount of all securities that we may issue under this prospectus will not exceed US$100 million.
24
General
As of the date of this prospectus, we had 18,185,810 common shares issued and outstanding held by 137 holders as shown on our shareholder list dated as of May 1, 2023.
Our share capital consists of an unlimited number of common shares, no par value per share, of which 18,185,810 are issued and outstanding, and an unlimited number of preferred shares, issuable in series, no par value per share, none of which are issued and outstanding.
Options
We have granted to employees, consultants, and directors options to purchase 1,712,407 common shares under our stock option plan and we currently have 694,325 remaining options available for issuance under our amended and restated stock option plan ratified on May 17, 2023. See “Management—Stock Option Plan.”
Restricted Share Units
As of the date of this prospectus, there are 670,000 RSUs outstanding pursuant to RSU Award Agreements, none of which have vested, 70,000 of the RSUs vest on January 30, 2024, with the remainder to vest at various stages pending conditions of certain milestones.
History of Securities Issuances
The following is a list of securities issuances since June 30, 2022:
On January 27, 2023, the Company issued 240,000 common shares to settle a debt of USD$480,000 owed to a director, in relation to services related to the requisitioning of shareholders, which the Company had agreed to complete the settlement on behalf of the director.
On January 30, 2023, the Company granted 350,000 stock options to various directors. The options are exercisable at a price of USD$2.50 per common share for a period of five years. The options vested immediately on grant. The Company also granted 470,000 RSUs to various directors. 70,000 RSUs vest on January 30, 2024, with the remainder to vest at various stages pending conditions of certain milestones.
On February 16, 2023, 110,000 stock options exercisable at USD$7.50 previously granted to certain former officers and directors of the Company, were cancelled.
On February 16, 2023, the Company granted 225,000 warrants to an advisor of the Company. 75,000 of the warrants are exercisable at a price of USD$3.00 per common share, 75,000 of the warrants are exercisable at a price of USD$4.00 per common share, and 75,000 of the warrants are exercisable at a price of USD$5.00 per common share, all for a period of two years from the date of issuance.
On March 9, 2023, the Company issued 21,052 common shares to complete the exercise of warrants for proceeds to us of C$31,578 (approximately US$23,311.68).
On March 31, 2023, the Company granted 500,000 warrants as part of a settlement with shareholders who successfully requested a special meeting of shareholders. The warrants are exercisable at a price of USD$2.50 per common share for a period of three years from the date of issuance.
On July 14, 2023, the Company granted 250,000 stock options to its new CEO Frank Wheatley. The options are exercisable at a price of USD$2.25 per common share for a period of three years. The options vest over a period of eighteen months following the date of grant. The Company also granted 200,000 RSUs to Mr. Wheatley, all of which vest at various stages pending achievement of certain milestones. See “Share Ownership of New Chief Executive Officer” for further details regarding the vesting of Mr. Wheatley’s options and RSUs.
25
Limitation of Liability and Indemnification of Directors and Officers
Under the MCA, we may indemnify our current or former directors or officers or another individual who acts or acted at our request as a director or officer, or an individual acting in a similar capacity, of another entity which the Company is or was a shareholder or creditor of, and their heirs and legal representatives, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of his or her association with us or another entity.
However, indemnification is prohibited under the MCA unless the individual:
·acted honestly and in good faith with a view to our best interests, or the best interests of the other entity for which the individual acted as director or officer or in a similar capacity at our request; and
·in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that his or her conduct was lawful;
Our bylaws require us to indemnify each of our current or former directors and officers and each individual who acts or acted at our request as a director or officer of another entity which the Company is or was a shareholder or creditor of, as well as their respective heirs and successors, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by them in respect of any civil, criminal or administrative action or proceeding to which they were made a party by reason of being or having been a director or officer, except as may be prohibited by the MCA.
We have entered into indemnification agreements with our officers and directors, pursuant to which we agree to indemnify them against certain liabilities and expenses incurred by them in connection with claims made by reason of their being a director or officer. The indemnity agreements with our directors and our executive officers provide, among other things, that we will indemnify our directors and executive officers to the fullest extent permitted by law from and against all liabilities, costs, charges and expenses incurred as a result of our directors and executive officers actions in the exercise of their duties as a director or officer; provided that, we shall not indemnify such individuals if, among other things, they did not act honestly and in good faith with a view to our best interests, in the case of a criminal or penal action, the individuals did not have reasonable grounds for believing that their conduct was lawful or the individuals did not exercise the care, diligence and skill that a reasonable prudent person would exercise in comparable circumstances.
At present, we are not aware of any pending or threatened litigation or proceeding involving any of our current directors, officers, employees or agents in which indemnification would be required or permitted.
26
Material differences between Manitoba Corporate Law and Delaware General Corporation Law
Our corporate affairs are governed by our articles of incorporation, as amended, and bylaws and the provisions of the MCA. The MCA differs from the various state laws applicable to U.S. corporations and their stockholders. The following is a summary of the material differences between the MCA and the Delaware General Corporation Law, or DGCL. This summary is qualified in its entirety by reference to the DGCL, the MCA and our governing corporate instruments.
Number and Election of Directors
Under the DGCL, the board of directors must consist of at least one number. The number of directors shall be fixed by the bylaws of the corporation, unless the certificate of incorporation fixes the number of directors, in which case a change in the number of directors shall only be made by an amendment of the certificate of incorporation. Under the DGCL, directors are elected at annual stockholder meetings by a plurality vote of the stockholders, unless a shareholder-adopted bylaw prescribes a different required vote.
Under the MCA, the board of directors must consist of at least three members, at least two of whom shall not be officers or employees of us or our affiliates, so long as Snow Lake has issued securities of which are or were part of a distribution to the public and remain outstanding and are held by more than one person. Under the MCA, the shareholders of a corporation elect directors by ordinary resolution at each annual meeting of shareholders at which such an election is required.
Director Qualifications
Delaware law does not have director residency requirements comparable to those of the MCA. Delaware law permits a corporation to prescribe qualifications for directors under its certificate of incorporation or bylaws.
Under the MCA, a director is not required to hold a share in our capital as qualification for his or her office but must be qualified as required by the MCA to become, act or continue to act as a director. The MCA provides that the following persons are disqualified from being a director of a corporation: (i) a person who is less than 18 years of age; (ii) a person who is not an individual; and (iii) a person who has the status of a bankrupt. Further, the MCA provides that at least 25% of the directors of the company must be resident Canadians, or at least one of the directors if the company has less than four directors.
Vacancies on the Board of Directors
Under the DGCL, vacancies and newly created directorships resulting from an increase in the authorized number of directors, may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director.
Under the MCA, vacancies that exist on the board of directors may be filled by the board of directors if the remaining directors constitute a quorum, unless the vacancy results from an increase in the number or minimum number of directors or a failure to elect the number or minimum number of directors provided for in the articles, in which case, or if the remaining directors do not constitute a quorum, the remaining directors shall call a meeting of shareholders to fill the vacancy.
Transactions with Directors and Officers
The DGCL generally provides that no transaction between a corporation and one or more of its directors or officers, or between a corporation and any other corporation or other organization in which one or more of its directors or officers, are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board or committee which authorizes the transaction, or solely because any such director’s or officer’s votes are counted for such purpose, if (i) the material facts as to the director’s or officer’s interest and as to the transaction are known to the board of directors or the committee, and the board or committee in good faith authorizes the transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; (ii) the material facts as to the director’s or officer’s interest and as to the transaction are disclosed or are known to the stockholders entitled
27
to vote thereon, and the transaction is specifically approved in good faith by vote of the stockholders; or (iii) the transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the board of directors, a committee or the stockholders.
The MCA requires that a director or officer of a corporation who is: (i) is a party to a material contract or proposed material contract with the corporation; or (ii) is a director or an officer of or has a material interest in any person who is a party to a material contract or proposed material contract with the corporation, shall disclose in writing to the corporation or request to have entered in the minutes of meetings of directors (or committees of directors) the nature and extent of his or her interest. An interested director is prohibited from voting on a resolution to approve the contract or transaction except in specific circumstances, such as a contract or transaction relating primarily to his or her remuneration as a director, a contract or transaction for indemnification or liability insurance of the director, or a contract or transaction with an affiliate of the corporation.
If a director or officer does not disclose his or her interest in accordance with the MCA, or (in the case of a director) votes in respect of a resolution on a contract or transaction in which he or she is interested contrary to the MCA, the corporation or a shareholder may ask the court to set aside the contract or transaction, according to the conditions the court sees fit. However, if a director or officer has disclosed his or her interest in accordance with the MCA and the contract or transaction was reasonable and fair to the corporation at the time it was approved by the directors, the contract or transaction is not invalid by reason only of the interest of the director or officer or that the director is present at or is counted to determine the presence of a quorum at the meeting of directors that authorized the contract or transaction.
Limitation on Liability of Directors
The DGCL permits a corporation to include a provision in its certificate of incorporation eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for a breach of the director’s fiduciary duty as a director, except for liability: (i) for breach of the director’s duty of loyalty to the corporation or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; (iii) under Section 174 of the DGCL which concerns unlawful payment of dividends, stock purchases or redemptions; or (iv) for any transaction from which the director derived an improper personal benefit.
The MCA does not permit the limitation of a director’s liability as the DGCL does. However, the MCA provides that the corporation may indemnify directors and officers against liabilities incurred in the course of their duties and may purchase and maintain insurance against any liability incurred by the individual in their capacity as a director or officer. Further, the MCA provides that an officer or director is entitled to indemnity from a corporation in respect of all costs, charges and expenses reasonably incurred by him or her in connection with the defence of any civil, criminal or administrative action or proceeding to which he or she is made a party by reason of being or having been a director or officer of the corporation, if the person seeking indemnity (i) was substantially successful on the merits in his or her defence of the action or proceeding, and (ii) he or she acted honestly and in good faith with a view to the best interest of the corporation, and in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, he or she had reasonable grounds for believing that his or her conduct was lawful. A director may also limit his liability by having his or her dissent entered into the minutes in respect of a decision or, by resigning from the board prior to the decision being made.
Call and Notice of Shareholder Meetings
Under Delaware law, unless otherwise provided in the certificate of incorporation or bylaws, written notice of any meeting of the stockholders must be given to each stockholder entitled to vote at the meeting not less than ten nor more than 60 days before the date of the meeting and shall specify the place, date, hour, and purpose or purposes of the meeting.
28
Under the DGCL, an annual or special stockholder meeting is held on such date, at such time and at such place as may be designated by the board of directors or any other person authorized to call such meeting under the corporation’s certificate of incorporation or bylaws. If an annual meeting for election of directors is not held on the date designated or an action by written consent to elect directors in lieu of an annual meeting has not been taken within 30 days after the date designated for the annual meeting, or if no date has been designated, for a period of 13 months after the later of the last annual meeting or the last action by written consent to elect directors in lieu of an annual meeting, the Delaware Court of Chancery may summarily order a meeting to be held upon the application of any stockholder or director.
Under the MCA, written notice of the shareholders must be given to each shareholder entitled to vote at the meeting, each director and the auditor of the corporation not less than twenty-one nor more than fifty days before the date of the meeting and shall specify the time and place of the meeting. Notice of a meeting of shareholders at which special business is to be transacted must state: (a) the nature of that business in sufficient detail to permit the shareholder to form a reasoned judgment thereon; and (b) the text of any special resolution to be submitted to the meeting.
Under the MCA, an annual meeting of shareholders must be held no later than fifteen months after holding the last preceding annual meeting. Under the MCA, the directors of a corporation may call a special meeting at any time.
In addition, holders of not less than five percent of the issued shares of a corporation that carry the right to vote at a meeting sought to be held may requisition the directors to call a meeting of shareholders for the purposes stated in the requisition.
Shareholder Action by Written Consent
Under the DGCL, a majority of the stockholders of a corporation may act by written consent without a meeting unless such action is prohibited by the corporation’s certificate of incorporation.
Under the MCA, a written resolution signed by all the shareholders of a corporation who would have been entitled to vote on the resolution at a meeting is effective to approve the resolution.
Shareholder Nominations and Proposals
Under the MCA, a shareholder entitled to vote at a shareholders’ meeting may submit a shareholder proposal relating to matters which the shareholder wishes to propose and discuss at a shareholders’ meeting and, subject to certain exceptions, such shareholder’s compliance with the prescribed time periods and other requirements of the MCA pertaining to shareholder proposals, the corporation is required to include such proposal in the information circular pertaining to the meeting for which it solicits proxies. Notice of such a proposal must be provided to the corporation at least 90 days before the anniversary date of the last annual shareholders’ meeting.
In addition, the MCA requires that any shareholder proposal that includes nominations for the election of directors must be signed by one or more holders of shares representing in the aggregate not less than five percent of the shares or five percent of the shares of a class or series of shares of the corporation entitled to vote at the meeting to which the proposal is to be presented.
The DGCL does not have a comparable provision.
Amendment of Governing Instrument
Generally, under the DGCL, the affirmative vote of the holders of a majority of the outstanding stock entitled to vote is required to approve a proposed amendment to the certificate of incorporation, following the adoption of the amendment by the board of directors of the corporation, provided that the certificate of incorporation may provide for a greater vote. Under the DGCL, holders of outstanding shares of a class or series are entitled to vote separately on an amendment to the certificate of incorporation if the amendment would have certain consequences, including changes that adversely affect the rights and preferences of such class or series.
29
Under the DGCL, after a corporation has received any payment for any of its stock, the power to adopt, amend or repeal bylaws shall be vested in the stockholders entitled to vote; provided, however, that any corporation nay, in its certificate of incorporation, provide that bylaws may be adopted, amended or repealed by the board of directors. The fact that such power has been conferred upon the board of directors shall not divest the stockholders of the power nor limit their power to adopt, amend or repeal the bylaws.
Under the MCA, amendments to the articles of incorporation generally require the approval of not less than two-thirds of the votes cast by shareholders entitled to vote on the resolution. Specified amendments may also require the approval of other classes of shares. If the amendment is of a nature affecting a particular class or series in a manner requiring a separate class or series vote, that class or series is entitled to vote on the amendment whether or not it otherwise carries the right to vote.
Under the MCA, the directors may, by resolution, make, amend or repeal any bylaws that regulate the business or affairs of a corporation and they must submit the bylaw, amendment or repeal to the shareholders at the next meeting of shareholders, and the shareholders may confirm, reject or amend the bylaw, amendment or repeal.
Votes on Mergers, Consolidations and Sales of Assets
The DGCL provides that, unless otherwise provided in the certificate of incorporation or bylaws, the adoption of a merger agreement requires the approval of a majority of the outstanding stock of the corporation entitled to vote thereon.
Under the MCA, certain extraordinary corporate actions, such as amalgamations (other than with certain affiliated corporations), continuances and sales, leases or exchanges of the property of a corporation if as a result of such alienation the corporation would be unable to retain a significant part of its business activities, and other extraordinary corporate actions such as liquidations, dissolutions and (if ordered by a court) arrangements, are required to be approved by “special resolution” of the shareholders.
A “special resolution” is a resolution passed by not less than two-thirds of the votes cast by the shareholders who voted in respect of the resolution or signed by all shareholders entitled to vote on the resolution. In specified cases, a special resolution to approve the extraordinary corporate action is also required to be approved by the holders of a class or series of shares, including in certain cases a class or series of shares not otherwise carrying voting rights.
Dissenter’s Rights of Appraisal
Under the DGCL, a stockholder of a Delaware corporation generally has the right to dissent from a merger or consolidation in which the Delaware corporation is participating, subject to specified procedural requirements, including that such dissenting stockholder does not vote in favor of the merger or consolidation. However, the DGCL does not confer appraisal rights, in certain circumstances, including if the dissenting stockholder owns shares traded on a national securities exchange and will receive publicly traded shares in the merger or consolidation. Under the DGCL, a stockholder asserting appraisal rights does not receive any payment for his or her shares until the court determines the fair value or the parties otherwise agree to a value. The costs of the proceeding may be determined by the court and assessed against the parties as the court deems equitable under the circumstances.
Under the MCA, each of the following matters listed will entitle shareholders to exercise rights of dissent and to be paid the fair value of their shares: (i) any amalgamation with another corporation (other than with certain affiliated corporations), (ii) an amendment to the corporation’s articles to add, change or remove any provisions restricting or constraining the issue or transfer of that class of shares, (iii) an amendment to the corporation’s articles to add, change or remove any restriction upon the business or businesses that the corporation may carry on, (iv) a continuance under the laws of another jurisdiction, (v) a sale, lease or exchange of all or substantially all the property of the corporation other than in the ordinary course of business, (vi) an amendment to the corporation’s articles to convert the corporation from a corporation with share capital into a corporation without share capital (or vice versa), or (vii) certain amendments to the articles of a corporation which require a separate class or series vote by a holder of shares of any class or series.
30
However, a shareholder is not entitled to dissent if an amendment to the articles is effected by a court order approving a reorganization or by a court order made in connection with an action for an oppression remedy, unless otherwise authorized by the court. The MCA provides these dissent rights for both listed and unlisted shares.
Under the MCA, a shareholder may, in addition to exercising dissent rights, seek an oppression remedy where: (i) any act or omission of a corporation or any of its affiliates effects a result; (ii) the business or affairs of the corporation or any of its affiliates are or have been carried on or conducted in a manner; or (iii) the powers of the directors of the corporation or any of its affiliates are or have been exercised in a manner; that is oppressive or unfairly prejudicial or that unfairly disregards the interests of any securityholder.
Oppression Remedy
The MCA provides an oppression remedy that enables a court to make any order, whether interim or final, to rectify matters that are oppressive or unfairly prejudicial to, or that unfairly disregards the interests of, any security holder, creditor, director or officer of the corporation if an application is made to a court by a “complainant”. An “complainant” with respect to a corporation means any of the following: (i) a registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a corporation or any of its affiliates; (ii) a present or former officer or director of the corporation or any of its affiliates; (iii) the director appointed pursuant to the MCA; and (iv) any other person who in the discretion of the court has the interest to make the application.
The oppression remedy provides the court with very broad and flexible powers to intervene in corporate affairs to protect shareholders and other complainants by making any interim or final order that it thinks fit including, without limiting the foregoing, (i) an order restraining the conduct complained of, (ii) an order appointing a receiver or receiver-manager, (iii) an order to regulate the corporation’s affairs by amending the articles or by-laws or creating or amending a unanimous shareholders agreement, (iv) an order directing an issue or exchange of securities, (v) an order appointing directors in place of or in addition to all or any of the directors then in office, (vi) an order directing a corporation, subject to certain restrictions, or any other person, to purchase securities of a security holder, (vii) an order directing the corporation, subject to certain restrictions, or any other person, to pay to a security holder any part of the moneys paid by him or her for securities, (viii) an order varying or setting aside a transaction or contract to which a corporation is a party and compensating the corporation or any other party to the transaction or contract, (ix) an order requiring the corporation, within a time specified by the court, to produce to the court or an interested person financial statements, (x) an order compensating an aggrieved person, (xi) an order directing rectification of the registers or other records of a corporation; (xii) an order liquidating and dissolving the corporation; (xiii) an order directing an investigation; or (xiv) an order requiring the trial of any issue. While conduct that is in breach of fiduciary duties of directors or that is contrary to the legal right of a complainant will normally trigger the court’s jurisdiction under the oppression remedy, the exercise of that jurisdiction does not depend on a finding of a breach of those legal and equitable rights. Furthermore, the court may order a corporation to pay the interim costs, including legal fees and disbursements, of an applicant seeking an oppression remedy, but the applicant may be held accountable for interim costs on final disposition of the complaint. The DGCL does not provide for a similar remedy.
Shareholder Derivative Actions
Under Delaware law, stockholders may bring derivative actions on behalf of, and for the benefit of, the corporation. The plaintiff in a derivative action on behalf of the corporation either must be or have been a stockholder of the corporation at the time of the transaction or must be a stockholder who became a stockholder by operation of law in the transaction regarding which the stockholder complains.
Under the MCA, a complainant may apply to a court for leave to bring an action in the name of, and on behalf of, the corporation or its subsidiary, or to intervene in an existing action to which the corporation or its subsidiary is a party, for the purpose of prosecuting, defending or discontinuing an action on behalf of the corporation or on behalf of its subsidiary. Under the MCA, no action may be brought and no intervention in an action may be made unless a court is satisfied that: (i) the complainant has given the required notice to the directors of the corporation or of the subsidiary, as applicable, of the shareholder’s intention to apply to the court if the directors do not bring, diligently prosecute or defend or discontinue the action; (ii) the complainant is acting in good faith; (iii) it appears to be in the best interests of the corporation or its subsidiary that the action be brought, prosecuted, defended or discontinued.
31
Under the MCA, the court in a derivative action may make any order it thinks fit including, without limiting the generality of the foregoing, (i) an order authorizing the complainant or any other person to control the conduct of the action, (ii) an order giving directions for the conduct of the action, (iii) an order directing that any amount adjudged payable by a defendant in the action shall be paid, in whole or in part, directly to former and present security holders of the corporation or its subsidiary instead of to the corporation or its subsidiary, and (iv) an order requiring the corporation or its subsidiary to pay reasonable legal fees incurred by the complainant in connection with the action.
Anti-Takeover and Ownership Provisions
Unless an issuer opts out of the provisions of Section 203 of the DGCL, Section 203 generally prohibits a public Delaware corporation from engaging in a “business combination” with a holder of 15% or more of the corporation’s voting stock (as defined in Section 203), referred to as an interested stockholder, for a period of three years after the date of the transaction in which the interested stockholder became an interested stockholder, except as otherwise provided in Section 203. For these purposes, the term “business combination” includes mergers, assets sales and other similar transactions with an interested stockholder.
Rules and policies of certain Canadian securities regulatory authorities, including the Manitoba Securities Commission, such as Multilateral Instrument 61-101—Protection of Minority Security Holders in Special Transactions, or National Instrument 62-104 – Take-over Bids and Issuer Bids, contain requirements in connection with, among other things, ‘related party transactions” and “business combinations”, including, among other things, any transaction by which an issuer directly or indirectly engages in the following with a related party: acquires, sells, leases or transfers an asset, acquires the related party, acquires or issues treasury securities, amends the terms of a security if the security is owned by the related party or assumes or becomes subject to a liability or takes certain other actions with respect to debt.
Under Multilateral Instrument 61-101, the term “related party” includes directors, senior officers and holders of more than 10% of the voting rights attached to all outstanding voting securities of the issuer or holders of a sufficient number of any securities of the issuer to materially affect control of the issuer.
Multilateral Instrument 61-101 requires, subject to certain exceptions, the preparation of a formal valuation relating to certain aspects of the transaction and more detailed disclosure in the proxy material sent to security holders in connection with related party transaction including related to the valuation. Multilateral Instrument 61-101 also required, subject to certain exceptions, that an issuer not engage in a related party transaction unless the shareholders of the issuer, other than the related parties, approve the transaction by a simple majority of the votes cast.
National Instrument 62-104 provides that a take-over bid is triggered when a person makes “an offer to acquire voting securities or equity securities of a class made to one or more persons … where the securities subject to the offer to acquire, together with the offeror’s securities, constitute in the aggregate 20% or more of the outstanding securities of that class of securities at the date of the offer to acquire...” When a take-over bid is triggered, an offeror must comply with certain requirements. These include, among other things, making the offer of identical consideration to all holders of the class of security that is the subject of the bid; making a public announcement of the bid in a newspaper; and sending out a bid circular to security holders which explains the terms and conditions of the bid. Directors of an issuer whose securities are the subject of a take-over bid are required to evaluate the proposed bid and circulate a directors’ circular indicating whether they recommend to accept or reject the bid or are not making a recommendation regarding the bid. Strict timelines must be adhered to.
National Instrument 62-104 further requires that whenever a person acquires beneficial ownership of, or control or direction over, voting or equity securities of any class of a reporting issuer or securities convertible into voting or equity securities of any class of a reporting issuer that, together with the person’s securities of that class, would constitute 10% or more of the outstanding securities of that class, the person must promptly file a press release announcing that fact and file an “early warning report” with applicable Canadian securities regulators. An additional news release and report must be filed at each instance the person acquires an additional 2% or more of the outstanding securities or securities convertible into 2% or more of the outstanding securities.
An “issuer bid” is defined in Multilateral Instrument 62-104 to be “an offer to acquire or redeem securities of an issuer made by the issuer to one or more persons…” Similar requirements to a takeover bid exist for issuer bids. Multilateral Instrument 62-104 also contains a number of exemptions to the take-over bid and issuer bid requirements.
32
Other Important Provisions in our Articles of Incorporation and Bylaws
The following is a summary of certain important provisions of our articles of incorporation, as amended, and our bylaws, as amended. Please note that this is only a summary, is not intended to be exhaustive and is qualified in its entirety by reference to our articles of incorporation and bylaws. For further information, please refer to the full version of our articles of incorporation and bylaws, copies of which are filed as exhibits to the registration statement of which this prospectus forms a part.
Objects and Purposes of the Company
Our articles of incorporation do not contain and are not required to contain a description of our objects and purposes. There is no restriction contained in our articles of incorporation on the business that we may carry on.
Directors
Interested Transactions
The MCA states that a director must disclose to us, in accordance with the provisions of the MCA, the nature and extent of an interest that the director has in a material contract or material transaction, whether made or proposed, with us, if the director is a party to the contract or transaction, is a director or an officer or an individual acting in a similar capacity of a party to the contract or transaction, or has a material interest in a party to the contract or transaction.
A director who holds an interest in respect of any material contract or transaction into which we have entered or propose to enter is not entitled to vote on any directors’ resolution to approve that contract or transaction, unless the contract or transaction:
·relates primarily to the director’s remuneration as a director, officer, employee or agent of us or an affiliate;
·is for indemnity or insurance otherwise permitted under the MCA; or
·is with an affiliate.
Remuneration of Directors
The MCA provides that the remuneration of our directors, if any, may be determined by our directors subject to our articles of incorporation and bylaws. That remuneration may be in addition to any salary or other remuneration paid to any of our employees who are also directors.
Age Limit Requirement
Neither our articles of incorporation nor the MCA impose any mandatory age-related retirement or non-retirement requirement for our directors.
Share Ownership
Neither our articles of incorporation nor the MCA provide that a director is required to hold any of our shares as a qualification for holding his or her office. Our board of directors has discretion to prescribe minimum share ownership requirements for directors.
Quorum
Under our bylaws, the quorum for the transaction of business at a meeting of our board of directors is a majority of the number of directors.
33
Borrowing Powers
Pursuant to our bylaw relating to the borrowing powers of our directors, our board of directors may: (i) borrow money upon our credit; (ii) issue, re-issue, sell or pledge debt obligations of the Corporation; (iii) mortgage, hypothecate, pledge or otherwise create a security interest in all or any property of the corporation, owned or subsequently acquired, to secure any debt obligation of the Corporation; and (iv) give a guarantee on behalf of the Corporation to secure performance of an obligation of any person.
Action Necessary to Change the Rights of Holders of Our Shares
Our shareholders can authorize the amendment of our articles of incorporation to create or vary the special rights or restrictions attached to any of our shares by passing a special resolution. However, a right or special right attached to any class or series of shares may not be prejudiced or interfered with unless the shareholders holding shares of that class or series to which the right or special right is attached consent by a separate special resolution. A special resolution means a resolution passed by: (1) a majority of not less than two-thirds of the votes cast by the applicable class or series of shareholders who vote in person or by proxy at a meeting or (2) a resolution consented to in writing by all of the shareholders entitled to vote.
Shareholder Meetings
We must hold an annual general meeting of our shareholders at least once every year at such day and time as determined by our board of directors, provided that the meeting must not be held later than 15 months after the preceding annual general meeting. A meeting of our shareholders must be held in the City of Winnipeg, in Manitoba, or at such other place within Manitoba or, at a place outside Canada if the place is specified in our articles or all the shareholders entitled to vote at the meeting agree that the meeting is to be held at that place.
Our directors may, at any time, call a special meeting of our shareholders. Shareholders holding not less than 5% of our issued voting shares may also cause our directors to call a shareholders’ meeting.
A notice to convene a meeting, specifying the date, time and location of the meeting, and, where a meeting is to consider special business, the general nature of the special business, must be sent to shareholders, to each director and the auditor not less than 21 days prior to the meeting, although, as a result of applicable securities laws, the time for notice is effectively longer. Under the MCA, shareholders entitled to notice of a meeting may waive the period of notice for that meeting, provided applicable securities laws requirements are met.
A quorum for meetings under our bylaws is one person present and holding, or represented by proxy, 51% of the issued shares entitled to be voted at the meeting. If a quorum is not present at the opening of the meeting, the shareholders may adjourn the meeting to a fixed time and place but may not transact any further business.
Holders of our outstanding common shares are entitled to attend meetings of our shareholders. Except as otherwise provided with respect to any particular series of preferred shares, and except as otherwise required by law, the holders of our preferred shares are not entitled as a class to receive notice of, or to attend or vote at any meetings of our shareholders. Our directors, our secretary (if any), our auditor and any other persons invited by our chairman or directors or with the consent of those at the meeting are entitled to attend at any meeting of our shareholders but will not be counted in the quorum or be entitled to vote at the meeting unless he or she is a shareholder or proxyholder entitled to vote at the meeting.
Impediments to Change of Control
Our articles of incorporation do not contain any change of control limitations with respect to a merger, acquisition or corporate restructuring that involves us.
34
Ownership and Exchange Controls
Competition Act
Limitations on the ability to acquire and hold our common shares may be imposed by the Competition Act (Canada). This legislation establishes a pre-merger notification regime for certain types of merger transactions that exceed certain statutory shareholding and financial thresholds. Transactions that are subject to notification cannot be closed until the required materials are filed and the applicable statutory waiting period has expired or been waived by the Commissioner of Competition, or the Commissioner. Further, the Competition Act (Canada) permits the Commissioner to review any acquisition of control over or of a significant interest in us, whether or not it is subject to mandatory notification. This legislation grants the Commissioner jurisdiction, for up to one year, to challenge this type of acquisition before the Canadian Competition Tribunal if it would, or would be likely to, substantially prevent or lessen competition in any market in Canada.
Investment Canada Act
The Investment Canada Act requires notification and, in certain cases, advance review and approval by the Government of Canada of an investment to establish a new Canadian business by a non-Canadian or of the acquisition by a non-Canadian of “control” of a “Canadian business”, all as defined in the Investment Canada Act. Generally, the threshold for advance review and approval will be higher in monetary terms for a member of the World Trade Organization. The Investment Canada Act generally prohibits the implementation of such a reviewable transaction unless, after review, the relevant minister is satisfied that the investment is likely to be of net benefit to Canada.
The Investment Canada Act contains various rules to determine if there has been an acquisition of control. For example, for purposes of determining whether an investor has acquired control of a corporation by acquiring shares, the following general rules apply, subject to certain exceptions. The acquisition of a majority of the voting shares of a corporation is deemed to be acquisition of control of that corporation. The acquisition of less than a majority but one-third or more of the voting shares of a corporation is presumed to be an acquisition of control of that corporation unless it can be established that, on the acquisition, the corporation is not controlled in fact by the acquiror through the ownership of voting shares. The acquisition of less than one-third of the voting shares of a corporation is deemed not to be acquisition of control of that corporation.
In addition, under the Investment Canada Act, national security review on a discretionary basis may also be undertaken by the federal government in respect of a much broader range of investments by a non-Canadian to “acquire, in whole or in part, or to establish an entity carrying on all or any part of its operations in Canada, with the relevant test being whether such an investment by a non-Canadian could be “injurious to national security.” The Minister of Industry has broad discretion to determine whether an investor is a non-Canadian and therefore may be subject to national security review. Review on national security grounds is at the discretion of the federal government and may occur on a pre- or post-closing basis.
Any of these provisions may discourage a potential acquirer from proposing or completing a transaction that may have otherwise presented a premium to our shareholders. We cannot predict whether investors will find our company and our common shares less attractive because we are governed by foreign laws.
Listing
Our common shares are listed on the Nasdaq Capital Market under the symbol “LITM.”
Transfer Agent and Registrar
The transfer agent and registrar for our common shares in the United States will be Endeavor Trust Corporation. The address for Endeavor Trust Corporation is Suite 702, 777 Hornby Street, Vancouver, BC V6Z 1S4 Canada, and the telephone number is 604-559-8880.
35
Under our amended articles of incorporation, the holders of our common shares are entitled to one vote for each share held at any meeting of the shareholders. Subject to the prior rights of the holders of our preferred shares, the holders of our common shares are entitled to receive dividends as and when declared by our board of directors. See “Dividend Policy.” Subject to the prior payment to the holders of our preferred shares, in the event of our liquidation, dissolution or winding-up or other distribution of our assets among our shareholders, the holders of our common shares are entitled to share pro rata in the distribution of the balance of our assets. Holders of common shares have no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to our common shares. There are no provision in our amended articles requiring holders of common shares to contribute additional capital, or permitting or restricting the issuance of additional securities or any other material restrictions. The rights, preferences and privileges of the holders of common shares will be subject to, and may be adversely affected by, the rights of the holders of any series of preferred shares that we may designate in the future.
As of the date of this prospectus, we have never declared or paid cash dividends on our common shares. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any cash dividends on our common shares in the near future. We may also enter into credit agreements or other borrowing arrangements in the future that will restrict our ability to declare or pay cash dividends on our common shares. Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, contractual restrictions, general business conditions and other factors that our Board of Directors may deem relevant. Further, under the terms of the MCA, we are prohibited from declaring or paying a dividend if our Board has reasonable grounds for believing that we are, or would after the payment be, unable to pay our liabilities as they become due, or the realizable value of our assets would thereby be less than the aggregate of our liabilities and stated capital.
DESCRIPTION OF PREFERRED SHARES
The following is a brief summary of certain general terms and provisions of the preferred shares that may be offered pursuant to this prospectus. This summary does not purport to be complete. The particular terms and provisions of the preferred shares as may be offered pursuant to this prospectus will be set forth in the applicable prospectus supplement pertaining to such offering of preferred shares, and the extent to which the general terms and provisions described below may apply to such preferred shares will be described in the applicable prospectus supplement.
Under our amended articles of incorporation, we are authorized to issue, without shareholder approval, an unlimited number of preferred shares, and subject to the provisions of the MCA, having the rights, privileges, restrictions and conditions, including dividend and voting rights, as set out in the articles, and such rights and privileges, including dividend and voting rights, may be superior to those of the common shares. The issuance of preferred shares, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in control of our company and might adversely affect the market price of our common shares and the voting and other rights of the holders of common shares.
36
The following sets forth certain general terms and provisions of the warrants.
The Company may issue warrants for the purchase of our common shares and/or other securities. The particular terms and provisions of the warrants offered pursuant to this prospectus will be set forth in the applicable prospectus supplement, and the extent to which the general terms and provisions described below may apply to such warrants, will be described in such prospectus supplement.
The Company may offer warrants separately or together with common shares or preferred shares, as the case may be, and such warrants may be attached to, or separate from, any such offered securities. The Warrants either will be issued under a warrant indenture or agreement that will be entered into by the Company and a warrant agent. The Company will issue warrants under a warrant indenture or agreement to be entered into between the Company and a warrant agent named in the applicable prospectus supplement at the time of issuance of the Warrants or will be represented by warrant certificates issued by the Company. Each such warrant indenture or agreement or warrant certificate, as supplemented or amended from time to time, will set out the terms and conditions of the applicable warrants. The statements in this prospectus relating to any warrant indenture or agreement or warrant certificate and the warrants to be issued under it are summaries of anticipated provisions of an applicable warrant indenture and do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all provisions of such warrant indenture or agreement or warrant certificate, as applicable.
Any prospectus supplement for warrants will contain the terms and conditions and other information relating to the warrants being offered, including:
·the exercise price of the warrants;
·the designation of the warrants;
·the aggregate number of warrants offered and the offering price;
·the designation, number and terms of our common shares and/or other securities purchasable upon exercise of the warrants, and procedures that will result in the adjustment of those numbers;
·the dates or periods during which the warrants are exercisable;
·the designation and terms of any securities with which the warrants are issued;
·the currency or currency unit in which the exercise price is denominated;
·any minimum or maximum amount of warrants that may be exercised at any one time;
·whether such warrants will be listed on any securities exchange;
·any terms, procedures and limitations relating to the transferability, exchange or exercise of the warrants;
·any other rights, privileges, restrictions and conditions attaching to the warrants; and
·any other specific terms.
Prior to the exercise of their warrants, holders of warrants will not have any of the rights of holders of the securities issuable on exercise of the warrants.
DESCRIPTION OF UNITS
The following description sets forth certain general terms and provisions of units to which any prospectus supplement may relate.
We may issue units comprised of one or more of the other securities described in this prospectus in any combination. Each unit will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will have the rights and obligations of a holder of each included security. The unit agreement under which a unit is issued, if any, may provide that the securities included in the unit may not be held or transferred separately, at any time or at any time before a specified date.
37
The applicable prospectus supplement may describe:
●the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately;
●any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units;
●whether the securities comprising the units will be listed on any securities exchange; and
●whether the units will be issued in fully registered or global form.
The applicable prospectus supplement will describe the terms of any units. The preceding description and any description of units in the applicable prospectus supplement does not purport to be complete and is subject to and is qualified in its entirety by reference to the unit agreement and, if applicable, collateral arrangements and depositary arrangements relating to such units.
Certain legal matters concerning this prospectus will be passed upon for us by Seyfarth Shaw LLP. The validity of the common shares offered in this offering and certain other legal matters as to Canada law will be passed upon for us by MLT Aikins LLP. Seyfarth Shaw LLP may rely upon MLT Aikins LLP with respect to matters governed by Canadian law.
Our consolidated financial statements as of June 30, 2021 and 2022 and for the years then ended included in this prospectus have been audited by DeVisser Gray LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such financial statements are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
The offices of DeVisser Gray LLP are located at 401-905 West Pender Street, Vancouver, BC V6C 1L6.
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
Owning any of the securities may subject holders to Canadian federal income tax consequences. The applicable prospectus supplement may describe certain Canadian federal income tax considerations generally applicable to investors described therein of purchasing, holding and disposing of applicable securities, including, in the case of an investor who is not a resident of Canada, Canadian non-resident withholding tax consideration. Prospective investors should consult their own tax advisors prior to deciding to purchase any of the securities.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
Owning any of the securities may subject holders to U.S. federal income tax consequences. The applicable prospectus supplement may describe certain U.S. federal income tax considerations generally applicable to investors described therein of purchasing, holding and disposing of applicable securities. Prospective investors should consult their own tax advisors prior to deciding to purchase any of the securities.
38
ENFORCEABILITY OF CIVIL LIABILITIES
We were incorporated under the laws of the Province of Manitoba, Canada. The Majority of our directors and officers, as well as the certain experts named in the “Experts” section of this prospectus, reside outside of the United States. Service of process upon such persons may be difficult or impossible to effect within the United States. Furthermore, because a substantial portion of our assets, and substantially all the assets of our directors and officers and the Canadian experts named herein, are located outside of the United States, any judgment obtained in the United States, including a judgment based upon the civil liability provisions of United States federal securities laws, against us or any of such persons may not be collectible within the United States. In addition, it may be difficult for an investor, or any other person or entity, to assert United States securities laws claims in original actions instituted in Canada. The Supreme Court of Canada has repeatedly affirmed that the requirements to enforce a foreign judgment are as follows:
·the judgment of the foreign court must be final and conclusive;
·the court granting the foreign judgment must have had jurisdiction over the parties and the cause of action;
·the action to enforce a foreign judgment must have been commenced within applicable limitation periods;
·the judgment is not contrary to the law, public policy, security or sovereignty of Canada and its enforcement is not incompatible with Canadian concepts of justice or contrary to the laws governing enforcement of judgments; and
·the judgment was not obtained by fraud and does not conflict with any other valid judgment in the same matter between the same parties;
Foreign judgments enforced by Canadian courts generally will be payable in Canadian dollars. A Canadian court hearing an action to recover an amount in a non-Canadian currency will render judgment for the equivalent amount in Canadian currency.
Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42th Street, 18th Floor, New York, N.Y. 10168.
Offer Restrictions Outside the United States
Other than in the United States, no action has been taken by us that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to this offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.
Australia
This prospectus is not a disclosure document under Chapter 6D of the Australian Corporations Act, has not been lodged with the Australian Securities and Investments Commission and does not purport to include the information required of a disclosure document under Chapter 6D of the Australian Corporations Act. Accordingly, (i) the offer of the securities under this prospectus is only made to persons to whom it is lawful to offer the securities without disclosure under Chapter 6D of the Australian Corporations Act under one or more exemptions set out in section 708 of the Australian Corporations Act, (ii) this prospectus is made available in Australia only to those persons as set forth in clause (i) above, and (iii) the offeree must be sent a notice stating in substance that by accepting this offer, the offeree represents that the offeree is such a person as set forth in clause (i) above, and, unless permitted under the
39
Australian Corporations Act, agrees not to sell or offer for sale within Australia any of the securities sold to the offeree within 12 months after its transfer to the offeree under this prospectus.
Canada
The securities may be sold in Canada only to purchasers, purchasing, or deemed to be purchasing, as principal, that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario). Any resale of the securities must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable Canadian securities laws. Canadian purchasers should refer to any applicable provisions of the securities legislation of their province or territory for particulars of these rights or consult with a legal advisor.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private issuers. Accordingly, we will be required to file reports, including annual reports on Form 20-F, and other information with the SEC. We also furnish to the SEC under cover of Form 6-K material information required to be made public in our home country, filed with and made public by any stock exchange on which we are listed or distributed by us to our shareholders. As a foreign private issuer, we are exempt from, among other things, the rules under the Exchange Act prescribing the furnishing and content of proxy statements and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.
The SEC maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the website is www.sec.gov. Additionally, we will make these filings available, free of charge, on our website at https://snowlakelithium.com as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the SEC. The information on our website, other than these filings, is not, and should not be, considered part of this prospectus and is not incorporated by reference into this document. We have included our website address in this prospectus solely as an inactive textual reference.
This prospectus and any prospectus supplement are part of a registration statement on Form F-3 that we filed with the SEC and do not contain all of the information in the registration statement. The full registration statement may be obtained from the SEC or us, as provided below. Forms of the documents establishing the terms of the offered securities are or may be filed as exhibits to the registration statement of which this prospectus forms a part. Statements in this prospectus or any prospectus supplement about these documents are summaries and each statement is qualified in all respects by reference to the document to which it refers. You should refer to the actual documents for a more complete description of the relevant matters. You may inspect a copy of the registration statement through the SEC’s website, as provided above.
40
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to “incorporate by reference” information into this prospectus, which means that we can disclose important information to you by referring you to other documents which we have filed or will file with the SEC. We are incorporating by reference in this prospectus the documents listed below and all amendments or supplements we may file to such documents, as well as any future filings we may make with the SEC on Form 20-F and any other reports on Form 6-K that we subsequently furnish to the SEC under the Exchange Act after (i) the date of the registration statement of which this prospectus forms a part and prior to effectiveness of such registration statement (if they state that they are incorporated by reference into such registration statement) and (ii) the date of this prospectus prior to the termination of this offering (if they state that they are incorporated by reference into this prospectus:
·our Annual Report on Form 20-F for the year ended June 30, 2022, filed with the SEC on November 1, 2022;
·our Reports on Form 6-K filed with the SEC on November 23, 2022, December 6, 2022, December 15, 2022, December 15, 2022, December 20, 2022, January 11, 2023, January 17, 2023, January 19, 2023, January 31, 2023, March 8, 2023, March 16, 2023, and March 31, 2023; and
·the description of our common shares contained in our Registration Statement on Form 8-A12B filed with the SEC on November 18, 2021.
As you read the above documents, you may find inconsistencies in information from one document to another. If you find inconsistencies between the documents and this prospectus, you should rely on the statements made in the most recent document over different information included in this prospectus or any accompanying prospectus supplement. All information appearing in this prospectus is qualified in its entirety by the information and financial statements, including the notes thereto, contained in the documents incorporated by reference herein.
Unless expressly incorporated by reference, nothing in this prospectus shall be deemed to incorporate by reference information furnished to, but not filed with, the SEC. We will provide to each person, including any beneficial owner, to whom this prospectus is delivered, a copy of these filings, at no cost, upon written or oral request to us at the following address: 360 Main St 30th Floor, Winnipeg, MB R3C 4G1, Canada, Attn: Peretz Schapiro. Please direct your telephone requests to us at (204) 815-5806.
41
EXPENSES RELATED TO THIS OFFERING
Set forth below is an itemization of our total expenses, excluding underwriting discounts and commissions, which are expected to be incurred by us in connection with the offer and sale of the securities listed herein. All amounts shown are in US dollars and are estimates and subject to future contingencies, except the U.S. Securities and Exchange Commission registration fee and the Financial Industry Regulatory Authority filing fee. These fees are calculated based on the securities offered and the number of issuances and accordingly cannot be estimated at this time.
SEC registration fee |
| $ |
| 11,600 |
FINRA filing fee |
| $ |
| 15,500 |
Printer fees and expenses |
| $ |
| * |
Legal fees and expenses |
| $ |
| * |
Transfer agent fees and expenses |
| $ |
| * |
Accounting fees and expenses |
| $ |
| * |
Miscellaneous |
| $ |
| * |
Total |
| $ |
| * |
*These fees are calculated based on the securities offered and the number of issuances and accordingly cannot be estimated at this time.
42
$__________
Common Shares
Preferred Shares
Warrants
Units
Snow Lake Resources Ltd.
PRELIMINARY PROSPECTUS
August 4, 2023
43
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 8. Indemnification of Directors and Officers.
Under the MCA, we may indemnify our current or former directors or officers or another individual who acts or acted at our request as a director or officer, or an individual acting in a similar capacity, of another entity which the Company is or was a shareholder or creditor of, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of his or her association with us or another entity. The MCA also provides that we may also advance moneys to a director, officer or other individual for costs, charges and expenses reasonably incurred in connection with such a proceeding; provided that such individual shall repay the moneys if the individual does not fulfill the conditions described below.
However, indemnification is prohibited under the MCA unless the individual:
·acted honestly and in good faith with a view to our best interests, or the best interests of the other entity for which the individual acted as director or officer or in a similar capacity at our request; and
·in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that his or her conduct was lawful.
Our bylaws require us to indemnify each of our current or former directors or officers and each individual who acts or acted at our request as a director or officer of another entity which the Company is or was a shareholder or creditor of, as well as their respective heirs and successors, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by him or her in respect of any civil, criminal or administrative action or proceeding to which he or she is made a party by reason of being or having been a director or officer, except as may be prohibited by the MCA.
Under the form of indemnification agreement filed as an exhibit to this registration statement, we will agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being such a director or executive officer.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
II-1
Item 9. Exhibits and Financial Statement Schedules.
(a) Exhibits
Exhibit No. |
| Description |
3.1 |
| |
3.2 |
| |
3.3 |
| |
3.4 |
| |
3.5 |
| |
4.1 |
| |
4.2 |
| |
4.3 |
| |
4.4†††† |
| Form of Warrant Agreement relating to this offering |
4.5†††† |
| Form of Warrant Certificate relating to this offering |
4.6†††† |
| Form of Unit relating to this offering |
5.1†† |
| |
10.1 |
| |
10.2† |
| |
10.3† |
| |
10.4 |
| |
10.5 |
| |
10.6† |
| Consultant Agreement dated March 28, 2023 between Snow Lake Resources Ltd. and DJS Consulting Inc. |
10.7 |
| Memorandum of Understanding between Snow Lake Resources Ltd. and LG Energy Solution dated September 22, 2022 (incorporated by reference to Exhibit 4.29 to Annual Report on Form 20-F filed on November 1, 2022) |
10.8††† |
| |
21.1 |
| |
23.1††† |
| |
23.2†† |
| Consent of MLT Aikins LLP (included in Exhibit 5.1 to Amendment No. 1 of the Registration Statement on Form F-3 filed July 12, 2023) |
23.3† |
| |
24.1† |
| Power of Attorney (included on the signature page of the Registration Statement on Form F-3 filed June 1, 2023) |
24.1.1††† |
| Power of Attorney for Frank Wheatley |
107† |
|
†Filed with Registration Statement on Form F-3 filed June 1, 2023.
II-2
††Filed with Amendment No. 1 to Registration Statement on Form F-3 filed July 12, 2023.
†††Filed herewith.
††††To be filed by amendment.
Item 10. Undertakings.
The undersigned registrant hereby undertakes:
(1)to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i)to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”);
(ii)to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii)to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
provided, however, that:
paragraphs (i), (ii) and (iii) do not apply if the registration statement is on Form F-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement;
(2)that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;
(3)to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering;
(4)if the registrant is a foreign private issuer, to file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Securities Act need not be furnished, provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements.
(5)that, for the purpose of determining liability under the Securities Act to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement
II-3
will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use; and
(6)that, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i)any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii)any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii)the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of an undersigned registrant; and
(iv)any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 6, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Winnipeg, Manitoba, Canada on August 3, 2023.
| SNOW LAKE RESOURCES LTD. | |
|
| |
| By: | /s/ Frank Wheatley |
| Name: | Frank Wheatley |
| Title: | Chief Executive Officer |
| SNOW LAKE RESOURCES LTD. | |
|
| |
| By: | /s/ Keith Li |
| Name: | Keith Li |
| Title: | Chief Financial Officer |
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
KNOW ALL PERSONS BY THESE PRESENTS, that Frank Wheatley, whose signature appears below, hereby constitutes and appoints Keith Li, and each of them, his true and lawful attorneys-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments, including post-effective amendments, to this registration statement, and any registration statement relating to the offering covered by this registration statement and filed pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully for all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys in fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.
II-5
/s/ * |
|
Independent Director |
|
August 3, 2023 |
Brian Imrie |
|
|
|
|
/s/ * |
|
Independent Director |
|
August 3, 2023 |
Shlomo Kievman
*by Keith Li, attorney-in-fact |
|
|
|
|
II-6
SIGNATURE OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES
Pursuant to the Securities Act of 1933, the undersigned, the duly authorized representative in the United States of Snow Lake Resources Ltd. has signed this registration statement or amendment thereto in New York on August 3, 2023.
| Authorized U.S. Representative
| |
|
| |
| By: | /s/ Ms. Colleen A. De Vries |
| Name: | Ms. Colleen A. De Vries |
| Title: | Senior Vice President on behalf of |
II-7
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 14th day of July; 2023.
BETWEEN:
SNOW LAKE RESOURCES LTD.,
a corporation existing under the Jaws
of the Province of Manitoba
(the “Corporation”),
-and-
FRANK WHEATLEY,
an individual who resides at
100 Lidstone Rd., Salmon Arm
British Columbia, V1E 2Y1
(the "Executive").
WHEREAS the Corporation wishes to employ the Executive in the position of Chief Executive Officer ("CEO");
AND WHEREAS the Executive wishes to be employed by the Corporation in the position of CEO;
AND WHEREAS the Corporation and the Executive have agreed that the terms and conditions of such employment relationship shall be as set out herein,
NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of the respective covenants and agreements of the parties herein contained, and for other good and valuable consideration (the receipt and sufficiency of which is acknowledged by each party), the parties covenant and agree as follows:
ARTICLE 1
INTERPRETATION
1.1Defined Terms
For the purposes of this Agreement, unless the context otherwise requires, the following terms shall have the respective meanings set out below and grammatical variations of such terms shall have corresponding meanings:
"Base Salary" has the meaning set out in Article 4.1;
"Board" means the Board of Directors of the Corporation
"Business Day" means any day, other than a Saturday, Sunday or statutory holiday in the Province of Ontario, on which commercial banks in Toronto, Ontario are open for business;
"Confidential Information" has the meaning set out in Article 6.1;
"Date of Termination" means the effective date of any termination of the Executive's employment with the Corporation;
1
"Effective Date" has the meaning set out in Article 5.1;
"ESA" means the Ontario Employment Standards Act, 2000, S.O. 2000, c. 41, as amended;
"Improvements" has the meaning set out in Article 6.2(a);
"Just Cause" has the meaning set out in Article 5.2;
"Non-Disclosure Period" has the meaning set out in Article 6.1
"Permanent Disability" has the meaning set out in Article 5.3;
"person" includes, without limitation, an individual, corporation, partnership, joint venture, association, trust, firm, unincorporated organization or other legal or business entity;
"Prohibited Area" means any province or territory in Canada and any state in the United States of America where, at any time during the term of this Agreement, the Corporation sells, supplies, or researches its products or services and in respect of which the Executive has been responsible (whether alone or jointly with others), concerned or active on behalf of the Corporation at any time during the term of this Agreement, and is subject to the provisions set out in Article 6.3 and
"Restricted Period" shall mean the period from the date hereof to 12 (twelve) months following the Date of Termination, provided that such period shall be extended by any time during which the Executive is in breach of any applicable covenant in Article 6, as provided in Article 6.7,
1.2Rules of Construction
Except as may be otherwise specifically provided in this Agreement and unless the context otherwise requires, in this Agreement:
(a)the terms "Agreement", "this Agreement", "the Agreement", "hereto", "hereof', "herein", "hereby", "hereunder" and similar expressions refer to this Agreement in its entirety and not to any particular provision hereof;
(b)references to an "Article", "Schedule" or "Exhibit" followed by a number or·letter refer to the specified Article or Schedule or Exhibit to this Agreement;
(c)the division of this Agreement into articles and sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement;
(d)words importing the singular number only shall include the plural and vice versa and words importing the use of any gender shall include all genders;
(e)the word "including" is deemed to mean "including without limitation";
(t)the terms "party" and "the parties" refer to a party or the parties to this Agreement;
(g)a person "controls" a second person if:
(i)the first person, directly or indirectly, beneficially owns or exercises control or direction over securities of the second person carrying votes which, if exercised, would entitle the first person to elect a majority of the directors of the second person, unless that first person holds the voting securities only to secure an obligation;
2
(ii)the second person is a partnership, other than a limited partnership, and the first person holds more than 50% of the interests of the partnership; or
(iii)the second person is a limited partnership and the general partner of the limited partnership is the first person;
(h)any reference to a statute, regulation or rule shall be construed to be a reference thereto as the same may from time to time be amended, re-enacted or replaced, and any reference to a statute shall include any regulations or rules made thereunder; and
(i)unless stated otherwise, all dollar amounts refer to Canadian dollars.
1.3Severability
If any provision of this Agreement, including the breadth or scope of the provisions contained in Article 6 (whether as to the Non-Disclosure Period, the Restricted Period, the Prohibited Area, or otherwise), shall be held by any court of competent jurisdiction to be invalid or unenforceable, in whole or in part:, such invalidity or unenforceability shall not affect the validity or enforceability of the remaining provisions, or part thereof, of this Agreement and such remaining provisions, or part thereof, shall remain enforceable and binding. In addition, should a court determine that any provision or portion of any provision of this Agreement is not reasonable or valid, the parties hereto agree that such provision should be interpreted and enforced to the maximum extent which the court deems reasonable or valid and the parties agree to request that the court apply notional severance to give effect to the restrictions in this Agreement to the fullest extent deemed reasonable or valid by the court. In particular, if such court determines that the duration of the Non Disclosure Period and/or the Restricted Period and/or the scope of the Prohibited Area is unreasonable, the parties agree to reduce such duration and/or scope to such extent as may be necessary to ensure that the covenants in this Agreement are reasonable in the circumstances, as determined by the court.
ARTICLE 2
EMPLOYMENT
2.1Employment
The Corporation agrees to employ the Executive, and the Executive accepts such employment under this Agreement in the capacity of CEO, all in accordance with and subject to the terms and conditions of this Agreement.
2.2Location of Executive
The principal location at which the Executive shall perform services for the Corporation shall be at 100 Lidstone Rd., Salmon Arm, British Columbia.
2.3Travel
The Executive acknowledges and accepts that the execution of his duties and responsibilities will require travel.
ARTICLE 3
DUTIES
3.1Employment Duties
The Executive shall perform such duties and exercise such powers as are normally associated with and incidental and ancillary to the position of CEO, including the duties described in Schedule "A" to this Agreement, and shall perform such additional duties and responsibilities as may from time to time be assigned to him by the Corporation, acting reasonably.
3
Without limiting the foregoing, during the term of his employment hereunder, the Executive shall:
(a)devote his full time and attention and his best efforts during normal business hours., and such other times as may be reasonably required, to the business and affairs of the Corporation and shall not, without the prior written consent of the Corporation, undertake any other business or occupation or public office which may detract from the proper and timely performance of his duties hereunder, except for the time required to discharge his duties as an independent director of Talon Metals Inc. and Trailbreaker Resources Ltd.;
(b)perform those duties that may be assigned to the Executive diligently and faithfully to the best of his abilities and in the best interests of the Corporation;
(c)use his best efforts to promote the interests and goodwill of the Corporation and not knowingly do, or willingly permit to be done, anything to the prejudice, loss or injury of the Corporation;
(d)at all times keep the Corporation promptly and fully informed (in writing if so requested) of his conduct of the duties and responsibilities of his employment and provide such .explanations of his conduct as the Corporation may require; and
(e)use his best efforts to develop the business of the Corporation.
3.2Deletion and Variance of Duties
The Corporation shall be entitled to delete or vary any powers and duties assigned to the Executive.
3.3Reporting
The Executive shall report to the Board. Reviews of the performance of the Executive's duties and responsibilities shall occur every year, or at such other intervals as the Corporation may determine.
3.4Qualifications and Compliance with Laws and Policies
The Executive represents and warrants that he has the necessary qualifications, experience and abilities to perform and carry out the duties of the position of CEO, such qualifications being reasonably and in good faith established by the Boatd. The Executive acknowledges that the Corporation is entering into this Agreement in reliance on the truth and accuracy of such representations and warranties.
In the course of carrying out the duties and responsibilities of his employment under this Agreement1 the Executive shall:
(a)comply with all applicable laws, statutes, regulations, by-laws, ordinances and any other applicable legal requirements; and
(b)comply with all the Corporation's policies, systems, procedures, rules and regulations, both written and oral, which are applicable to the Corporation's employees.
The Executive also acknowledges and agrees that the Corporation shall have the sole and unfettered discretion to amend such policies procedures, systems, rules and regulations at any time without prior notice to the Executive.
4
3.5Hours of Work and Overtime
Because of the nature of the Executive's position and role, the Corporation expects the Executive will devote such time as is required to perform the duties required under this Agreement. Therefore, the Executive will be required to work beyond the Corporation's normal business hours and on weekends as business needs require.
The Executive acknowledges that the position of CEO is supervisory or managerial in character (though the Executive may perform non-supervisory or non-managerial tasks on an irregular or exceptional basis) and that his compensation described in Article 4 of this Agreement is meant to compensate the Executive for all hours of work and that the Executive is not entitled to overtime under the ESA. Therefore, the Executive shall not be entitled to overtime pay if he is required to work more hours than the maximum number of hours stipulated in the ESA and/or if the Executive is required to work beyond the Corporation's normal business hours and/or if he is required to work on weekends.
ARTICLE 4
COMPENSATION
4.1Base Salary
The annual base salary (''Base Salary") payable to the Executive for his services hereunder shall be $350,000.00. The Base Salary shall be payable in semi-monthly instalments in accordance with the usual compensation practices of the Corporation from time to time. The Base Salary shall be subject to annual review on or before the anniversary of the Effective Date in each year, and adjustment to reflect increases (if any) as may be approved by the Board, unless the Executive's employment is terminated in accordance with the terms of this Agreement prior to such review.
4.2Benefits
The Executive shall be entitled to participate in such benefit programs established by the Corporation from time to time for its senior management personnel.
The benefits will be provided in accordance with and subject to the terms and conditions of the applicable plan, fund or arrangement relating to such benefits in effect from time to time. The Executive acknowledges that the Corporation may amend or terminate the benefits from time to time as provided in the applicable plan, fund or arrangement.
4.3Bonus
In the event the Corporation's market capitalization experiences a significant increase, the Board may, in its sole and unfettered discretion, pay an annual bonus (the or a "Bonus") to the Executive. If the Corporation determines that it will pay a Bonus to the Executive, the Corporation will have the sole and unfettered discretion to determine,
(a)the amount of the Bonus; and
(b)whether the Bonus will be paid m cash on the grant of the shares in the Corporation.
4.4 Equity Grant
The Executive shall be granted "Stock Options" of 250,000 (two hundred and fifty thousand) common shares of the Corporation for a term of 3 (three) years vesting as follows:
(a)25% (twenty-five percent) vesting 6 (six) months from the Effective Date;
(b)25% (twenty-five percent) vesting 12 (twelve) months from the Effective Date;
and
5
(c)50% (fifty percent) vesting 18 (eighteen) months from the Effective Date.
The option price shall be $2.50 (USD) (Two and half United States of America Dollars) or 5% (five per cent) above the Corporation's most recent closing share price prior to the date this Agreement is signed; whichever is lower, in the event that the Corporation's share price is below $2.50 (USD) (Two and half United States of America Dollars) on the date prior to the date this Agreement is signed. Or in the event that the Corporation's share price is above $2.50 (USD) the option price shall be 5% (five percent) above the Corporation's share price.
The Corporation shall grant 200,000 (two hundred thousand) Restricted Stock Units ("RSU") for the common shares of the Corporation to the Executive that shall vest as follows:
(i)33,000 (thirty-three thousand) of the RSUs vest upon the Corporation's share volume weighted average price ("VWAP") exceeding US$3.00 or a price 20% above the company's most recent closing share price prior to signing whichever is greater for a period of 20 consecutive trading days;
(ii)33,000 (thirty-three thousand) of the RSUs vest upon the Corporation's share VWAP exceeding US$3.50 or a price 20% above the company's most recent closing share price prior to signing whichever is greater for a period of 20 consecutive trading days;
(iii)33,000 (thirty-three thousand) of the RSUs vest upon the Corporation's share VWAP exceeding US$4.50 or a price 20% above the company's most recent closing share price prior to signing whichever is greater for a period of 20 consecutive trading days;
(iv)33,000 (thirty-three thousand) of the RSUs vest upon the Corporation's share VWAP exceeding US$5.50 or a price 20% above the company's most recent closing share price prior to signing whichever is greater for a period of 20 consecutive trading days;
(v)34,000 (thirty-four thousand) of the RSUs vest upon the Corporation's share VWAP exceeding US$6.50 or a price 20% above the company's most recent closing share price prior to signing whichever is greater for a period of 20 consecutive trading days; and
(vi)34,000 (thirty-four thousand) of the RSUs vest upon the Corporation's share VWAP exceeding US$7.50 or a price 20% above the company's most recent closing share price prior to signing whichever is greater for a period of 20 consecutive trading days.
4.5Deductions and Deposits
The Executive's Base Salary and Bonus, if any, will be subject to all deductions required by law including, without limitation, employment insurance, income tax and Canada Pension Plan, together with such other deductions as may be required by the Executive's participation in or receipt of any benefit or other program, and the Corporation's obligations in respect thereof shall be satisfied to the extent of such deductions and withholdings.
In addition, the Corporation shall be entitled at any time to deduct from the Executive's remuneration any amounts due from the Executive to the Corporation and the execution of this Agreement by the Executive shall constitute his express direction for permitting such deduction for all purposes, including the provisions of the ESA.
Payments of the Base Salary and any bonus payment to which the Executive may be entitled as described in this Agreement will be deposited directly into the Executive's bank account as designated by him. The Executive shall, therefore, provide particulars of his bank account to the Corporation by providing it with a void cheque or deposit sheet. If the Executive makes any changes to his said bank account, he shall provide the Corporation with all such new information required at least two (2) weeks prior to the next payroll deposit to ensure that payment is deposited into the new account.
6
4.6Vacation
The Executive is entitled to four (4) weeks vacation per calendar year.
Notwithstanding any other term in this Agreement, the Executive's vacation entitlement shall not be less than the vacation entitlements stipulated under the ESA.
The Executive is entitled to vacation pay and holiday pay in accordance with the ESA.
The Executive's vacation entitlement and the timing of his vacation shall be subject to the Corporation's policy relating to vacation to the extent that such policy does not conflict with the ESA and the timing of his vacation shall be approved by the Board.
The Executive shall take his full vacation entitlement in each year. The Corporation will not pay the Executive for any untaken vacation and the Executive will not be entitled to carry over any vacation days from one year to the next.
4.7Expenses
The Executive shall be reimbursed for all reasonable travel and other out-of-pocket expenses properly incurred by the Executive from time to time in connection with carrying out his duties and for expenses of over $1,000 which have been pre-approved in writing by the Corporation, subject to the Corporation's travel and entertainment policies, as amended from time to time. For all such expenses, the Executive shall furnish to the Corporation originals or copies of all invoices or statements in respect of which the Executive seeks reimbursement on a monthly basis. The Executive shall be entitled to apply any loyalty rewards number to any expense purchases where such loyalty rewards are allowed.
4.8Compensation Exhaustive
For greater certainty, the Executive shall not be entitled to any salary, bonus, participation in profits or other remuneration, or payment or compensation in lieu thereof. except as expressly set forth in this Agreement (unless otherwise specifically agreed in writing between the Executive and the Corporation).
4.9Indemnity. The Corporation will indemnify and save harmless the Executive from all claims, actions, proceedings, judgements, penalties and fines, including all costs, charges and expenses relating thereto, arising from the Executive performing his duties under this Agreement, and will enter into the Corporation's standard form of indemnity agreement with the Executive.
4.10Directors and Officers Liability Insurance. The Corporation will provide the Executive with the Corporation's directors and officers liability insurance during the term of this Agreement, as such insurance may be amended by the Corporation from time to time.
ARTICLES
TERM AND TERMINATION OF EMPLOYMENT
5.1Term of Employment
This Agreement shall commence on July 17, 2023 {the "Effective Date") and shall continue for a period of 3 (three) years from the Effective Date (the "Initial Term").
The term of this Agreement shall be automatically renewed for a further I (one) year term at the end of the Initial Term and for consecutive one (1) year terms thereafter (each subsequent renewal shall be referred to as a " Renewal Term"), unless either party gives the other at least 90 (ninety) days written notice of that party's intention not to renew prior to the expiration of the Initial Tenn or a Tenn, as the case may be. The period of time that this Agreement is in effect, whether during the Initial Term or a Renewal Term shall hereinafter be referred to as the "Term".
7
Notwithstanding the foregoing, this Agreement may be terminated prior to the end of the Tenn in accordance with the provisions of this Agreement.
5.2Termination for Just Cause
The Corporation may terminate the employment of the Executive at any time for Just Cause, effective immediately, by giving written notice of termination to the Executive setting out the basis for termination. "Just Cause" shall mean any of the following:
(a)the wilful failure of the Executive to properly carry out his duties hereunder or to comply with the rules and policies of the Corporation or any reasonable instruction or directive of the Corporation, provided that the Executive has been provided with written notice of such failure, specifying in reasonable detail the nature of the failure, at least 10 days prior to the Date of Termination and shall have failed to take all reasonable efforts to remedy such wilful failure within such 10-day period;
(b)the Executive acting dishonestly or fraudulently, or the wilful misconduct of the Executive, in the course of his employment hereunder, in each case resulting in adverse consequences to the Corporation and in the case of wilful misconduct only, provided that, to the extent such wilful reconduct is capable of being remedied, the Executive shall have been provided with written notice thereof at least IO days prior to the Date of Termination and shall have failed to take all reasonable efforts to remedy such wilful misconduct within such 10-day period;
(c)if the Executive or any member of his family makes any personal profit arising out of or in connection with any transaction to which the Corporation is a party or with which the Corporation is associated without making disclosure to and obtaining the prior written consent of the Corporation;
(d)the conviction of the Executive for, or a guilty plea by the Executive to, any criminal offence punishable by imprisonment that may reasonably be considered to be likely to adversely affect the Corporation or the suitability of the Executive to perform his duties hereunder, including without limitation any offence involving fraud, theft, embezzlement, forgery, wilful misappropriation of funds or property, or other fraudulent or dishonest acts;
(e)the failure by the Executive to fully comply with and perform his fiduciary duties;
(f)improper disclosure by the Executive of the Confidential Information (as that term is defined in Article 6.1 of this Agreement);
(g)any action by the Executive which has a detrimental effect on the Corporation's reputation or business;
(h)a course of conduct by the Executive amounting to gross incompetence;
(i)chronic and unexcused absenteeism by the Executive;
(j) the wilful misconduct, disobedience or wilful neglect of duty by the Executive that is not trivial and has not been condoned by the Corporation, within the meaning of the ESA; or
(k) any other act, event or circumstance which would constitute just cause at law for termination of the Executive's employment hereunder.
8
5.3Termination Where Executive Disabled
If at any time the Executive is unable to perform his duties properly because of ill health, accident or otherwise, for a period or periods totalling at least 26 weeks in any period of 12 consecutive calendar months ("Permanent Disability") and the Corporation is unable to make such reasonable accommodations for the Executive to enable him to perform the duties of his employment during the said period or periods, the Corporation may terminate the Executive's employment by giving six months' written notice or pay in lieu thereof. The notice or pay in lieu thereof must be provided to the Executive during, or within, six months after the period or periods totalling 26 weeks. The Executive shall authorize any doctors or other health practitioners consulted by or providing treatment to the Executive in connection with the condition or conditions giving rise to such inability to perform his duties to disclose information to and discuss the condition of the Executive with such doctors or other health practitioners as may be selected by the Corporation, and shall submit to such reasonable medical examinations as may be requested by such doctors or other medical practitioners selected by the Corporation, in order to determine whether the condition or conditions suffered by the Executive constitute Permanent Disability.
5.4Death
The Executive's employment shall terminate automatically upon the death of the Executive.
5.5Termination by the Corporation Without Just Cause
The Corporation may terminate this Agreement (other than as provided in the foregoing provisions of this Article 5) without just cause at any time and for any reason if the Corporation, in its sole discretion, so determines, by written notice of termination to the Executive, provided such termination without just cause is not based on grounds prohibited under any human rights legislation or on grounds which are otherwise prohibited by law.
5.6Other Termination by the Executive
The Executive may terminate his employment at any time and for any reason by giving ninety (90) days' prior notice in writing to the Corporation.
5.7Cessation of Duties
The Corporation shall have the right, at any time prior to the end of the applicable notice period pursuant to Articles 5.5 or 5.6, notwithstanding the provisions of the relevant Article, by giving written notice to the Executive, to require that the Executive cease to perform his duties and responsibilities and cease attending the Corporation's premises immediately upon giving such notice and in such case the Date of Termination shall be the effective date of the notice by the Corporation.
5.8Termination as a Result of a Change of Control In this Article. 5.8, "Change of Control" means:
(a)the Corporation is not the surviving entity in a merger, amalgamation or other reorganization (or survives only as a subsidiary of an entity other than a previously wholly-owned subsidiary of the Corporation), and the role for which the Executive's services were previously required no longer exists in a substantially similar way, or the Executive is terminated or made redundant as a results of the said merger;
(b)a resolution is adopted to wind-up, dissolve or liquidate the Corporation;
(c)Corporate activity results io the liquidation of the majority of the shares in the Corporation whereby the Corporation's board members' RSU / warrants / options automatically vest;
(d)any person., entity or group of persons or entities acting jointly or in concert (the "Acquiror") acquires, or acquires control (including, without limitation, the power to vote or direct the voting) of, voting securities of the Corporation which, when added to the voting securities owned of record or beneficially by the Acquiror or which the Acquiror has the right to vote or in respect of which the Acquiror has the right to direct the voting, would entitle the Acquiror and/or associates and/or
9
affiliates of the Acquiror to cast or direct the casting of 50% or more of the votes attached to all of the Corporation's outstanding voting securities which may be cast to elect directors of the Corporation or the successor corporation (regardless of whether a meeting has been called to elect directors) and as a result of such acquisition of control, directors of the Corporation holding such office immediately prior to such acquisition of control shall not constitute a majority of the board of directors and the role for which the Executive's services were previously required no longer exists in a substantially similar way, or the Executive is terminated or made redundant as a results of the said Acquisition;
(e)the Board adopts a resolution to the effect that a Change of Control as defined herein has occurred or is imminent; and
(f)for the purposes of the foregoing, "voting securities" means common shares of the Corporation and any other shares entitled to vote for the election of directors, and shall include any securities, whether or not issued by the Corporation, which are not shares entitled to vote for the election of directors but which are convertible into or exchangeable for shares which are entitled to vote for the election of directors, including any options or rights to purchase such shares or securities.
This Agreement shall be terminated in accordance with the provisions of Section 5.9 (e) in the event there is a Change of Control.
5.9Payments on Early Termination
(a)Upon termination of the Executive's employment voluntarily by the Executive pursuant to Article 5.6 of this Agreement, the Executive shall not be entitled to any notice or pay in lieu of notice of termination, severance or similar payment in respect of such termination other than,
(i)any accrued and unpaid Base Salary and Bonus (if any) earned by the Executive up to the Date of Termination;
(ii)any accrued, but unpaid vacation pay earned by the Executive up to the Date of Termination;
(iii)any other payments, benefits and entitlements to which the Executive is entitled under the ESA in such circumstances, other than termination pay and severance pay;
(iv)reimbursement of any pre-approved expenses incurred by the Executive, but which remain unpaid up to the Date of Termination; and
(v)all Stock Options and RSU to which the Executive is entitled, which have vested on or before the Date of Termination, shall remain exercisable until one year after the Date of Termination.
In the event of a termination of this Agreement pursuant to Article 5.6 hereof, any unvested RSU and Stock Options as of the Date of Termination shall expire immediately on the Date of Termination.
(b)Upon termination of the Executive's employment for just cause pursuant to Article 5.2,
(i)if the Executive's termination is based upon the grounds set out in Article 5.2G) of this Agreement, the Executive shall not be entitled to any notice of termination or pay in Heu of notice, severance pay or similar payment in respect of such termination, but the Executive shall receive the following payments:
(A)any accrued and unpaid Base Salary and Bonus (if any) earned by the Executive up to the Date of Termination;
10
(B)any accrued, but unpaid vacation pay earned by the Executive up to the Date of Termination;
(C)any other payments, benefits and entitlements to which the Executive is entitled under the ESA in such circumstances, other than termination pay and severance pay; and
(D)reimbursement of any preapproved expenses incurred by the Executive, but which remain unpaid up to the Date of Termination; or
(ii)if the Executive's termination is based upon one or more of the grounds set out in Article 5.2, other than Article 5.2(j), of this Agreement, the Executive shall only be entitled to:
(A)accrued and unpaid Base Salary and Bonus (if any) earned by the Executive up to the Date of Termination;
(B)accrued, but unpaid vacation pay earned by the Executive up to the Date of Termination;
(C)any other payments1 benefits and entitlements to which the Executive is entitled pursuant to the ESA and which the ESA states that an employee is entitled to upon termination of employment, including termination pay and any applicable severance pay; and
(D)reimbursement of any pre-approved expenses incurred by the Executive, but which remain unpaid up to the Date of Termination. In the event of a termination of this Agreement pursuant to Article 5.2 hereof, any vested and unvested RSU and Stock Options as of the Date of Termination shall expire immediately on the Date of Termination.
(c)Upon termination of the Executive's employment,
(i)as a result of the Permanent Disability of the Executive pursuant to Article 5.3 of this Agreement; or
(ii)by the death of the Executive pursuant to Article 5.4 of this Agreement, the Executive (or his estate, as the case may be) shall be entitled to receive,
(A)any accrued and unpaid Base S and bonus (if any) earned by the Executive up to the Date of Termination
(B)any accrued, but unpaid vacation pay earned by the Executive up to the Date of Termination;
(C)any other payments, benefits and entitlements to which the Executive is entitled pursuant to the ESA in such circumstances:
(D)re-imbursement of any pre-approved expenses incurred by the Executive, but which remain unpaid up to the Date of Termination; and
(E)in the case of a termination pursuant to Article 5.3 of this Agreement, the payments described in the said Article 5.3.
(F)all Stock Options and RSU to which the Executive is entitled, which have vested on or before the Date of Termination, shall remain exercisable until one year after the Date of Termination.
11
In the event of a termination of this Agreement pursuant to Article 5.3 or 5.4 hereof, any unvested RSU and Stock Options as of the Date of Termination shall expire immediately on the Date of Termination.
(d)If the Executive's employment is terminated without just cause by the Corporation pursuant to Article 5.5 of this Agreement, the Corporation shalt pay and provide the Executive with:
(i)an amount equivalent to 3 (three) months' Base Salary if the Corporation gives notice pursuant to Section 5.5 within 6 (six) months of the Effective Date;
(ii)an amount equivalent to 6 (six) months' Base Salary if the Corporation gives notice pursuant to Section 5.5 after 6 (six) months of the Effective Date, but before 12 (twelve) months of the Effective Date;
(iii)an amount equivalent to 12 (twelve) months' Base Salary if the Corporation gives notice pursuant to Section 5.5 after 12 (twelve) months of the Effective Date.
(iv)such additional benefits, payments and entitlements which the ESA states that an employee is entitled to upon termination;
(v)any accrued, but unpaid Base Salary and Bonus (if any) earned by the Executive up to the Date of Termination;
(vi)any accrued, but unpaid vacation pay earned by the Executive up to the Date of Termination;
(vii)re-imbursement of any pre-approved expenses incurred by the Executive, but which remain unpaid up to the Date of Termination; and
(viii)all Stock Options and RSU to which the Executive is entitled, which have vested on or before the Date of Termination, shall remain exercisable until one year after the Date of Termination.
In the event of a termination of this Agreement pursuant to Article 5.3 nor 5.4 hereof, any unvested RSU and Stock Options as of the Date of Termination shall expire immediately on the Date of Termination.
(e)If the Executive's employment is terminated because of a Change of Control where:
(i)the Executive is dismissed from his employment with the Corporation without just cause (as defined in Section 5.2 herein) in the twelve (12) months following the Change of Control. The Corporation will not dismiss the Executive for any reason unless such dismissal is specifically approved by the Board; or
(ii)within the twelve (12) months following the Change of Control, the position, responsibilities. Salary, bonus arrangement, or benefits provided to the Executive herein are materially reduced without the express written consent of the Executive, and the Executive delivers notice of resignation within thirty (30) days of said material reduction; or
(iii)if, and subject to the event in Section 5.9 (e) (b) occurring, then within sixty (60) days following the date which is one hundred and twenty (120) days after the date of the Change of Control, the Executive delivers thirty (30) days advance notice of resignation to the Corporation; then the Corporation shall pay and provide the Executive:
(i)an amount equal to 24 (twenty four) months, Base Salary;
(ii)any unvested RSU and Stock Options to which the Executive is entitled as of the Change of Control date shall immediately vest upon Change of Control;
12
(iii)such additional benefits, payments and entitlements which the ESA states that an employee is entitled to upon termination;
(iv)any accrued, but unpaid Base Salary and Bonus (if any) earned by the Executive up to the Date of Termination;
(v)any accrued, but unpaid vacation pay earned by the Executive up to the Date of Termination; and
(vi)re-imbursement of any pre-approved expenses incurred by the Executive, but which remain unpaid up to the Date of Termination.
5.10Resignation on Termination
The Executive agrees that upon any termination of his employment with the Corporation he shall immediately tender his resignation from any position he may hold as an officer or director of the Corporation. In the event of the Executive failing within three days to comply with his obligation hereunder, he hereby irrevocably authorizes and appoints each other director and officer of the Corporation as his agent and attorney to sign in his name and on his behalf any written resignations or other documents and do all other things necessary to give effect to such resignation.
5.11Continuance in Effect
For greater certainty, notwithstanding any termination of the employment of the Executive, the provisions of this Agreement shall continue in full force and effect in accordance with their terms, including, without limitation, the provisions of Article 6.
5.12Temporary Lay-Off
Notwithstanding any other provision of this Agreement, the Executive acknowledges and agrees that although the Corporation expects to employ the Executive on a full-time basis throughout the term of the Executive's employment, circumstances may arise where the Corporation may not be able to continue to employ the Executive on a full-time basis for a temporary period of time (for example, there may be a shortage of work or business for various reasons). Should such circumstances arise, the Corporation reserves the right to place the Executive on temporary unpaid lay-off in accordance with the ESA and at the time of any such lay-off the Corporation expects to recall the Executive to work. If the Corporation exercises its right to a temporary lay-off under this Agreement, the Executive's employment shall not be deemed to have been terminated by the Corporation.
ARTICLE6
EXECUTIVE'S COVENANTS
6.1Non-Disclosure
The Executive acknowledges and agrees that
(a)in the course of performing his duties and responsibilities hereunder, he will have access to and will be entrusted with detailed confidential information and trade secrets concerning past, present, future and contemplated plans, products, services, operations, technology, intellectual property, methodologies and procedures of the Corporation, whether in written, printed, pictorial, diagrammatic, electronic or any other form or medium, including, without limitation, information relating to names, addresses, contact persons, preferences, needs and requirements of past, present and prospective clients, customers, suppliers and employees of the Corporation (collectively, "Confidential Information"), the disclosure of any of which to competitors of the Corporation to the general public, or the use of any of which by the Executive or any competitor of the Corporation, would be highly detrimental to the interests of the Corporation;
13
(b)in the course of performing his duties and responsibilities hereunder, the Executive will be a representative of the Corporation to its customers, clients and suppliers and as such will have significant responsibility for maintaining and enhancing the goodwill of the Corporation with such customers, clients and suppliers and would not have, except by virtue of his employment with the Corporation, developed a close and direct relationship with the customers, clients and suppliers of the Corporation; and
(c)the right to maintain the confidentiality of the Confidential Information, the right to preserve the goodwill of the Corporation and the right to the benefit of the contacts and connections previously developed by the Executive with prospective clients, customers and others and any relationships that will be developed between the Executive and the customers, clients and suppliers of the Corporation by virtue of the Executive's employment with the Corporation constitute proprietary rights of the Corporation which the Corporation are entitled to protect.
In accordance with the matters acknowledged and agreed to by the Executive above and in consideration of the payments and other benefits to be received by the Executive pursuant to this
Agreement, the Executive covenants and agrees with the Corporation that he will not, except with the specific prior written consent of the Corporation, either during the term of this Agreement or at any time thereafter (the "Non-Disclosure Period"), directly or indirectly, disclose to any person or in any way make use of (other than for the benefit of the Corporation), in any manner, any of the Confidential Information, provided that such Confidential Information shall be deemed not to include information which is or becomes generally available to the public other than as a result of disclosure by the Executive.
6.2Intellectual Property
(a)The Executive shall disclose to the Corporation, as the Corporation may direct, all ideas, suggestions, discoveries, inventions and improvements (collectively, the "Improvements") which he may make solely, jointly or in common with other employees, during the term of his employment with the Corporation and which relate to the business activities of the Corporation. Any Improvements corning within the scope of the business of the Corporation made and/or developed by the Executive while in the employ of the Corporation, whether or not conceived or made during regular working hours, or whether or not the Executive is specifically instructed to make or develop the same, shall be for the benefit of the Corporation and shall be considered to have been made by virtue of this Agreement and shall immediately become the exclusive property of the Corporation.
(b)The Executive shall assign, set over and transfer to the Corporation, as the Corporation may direct, his entire right, title and interest in and to any and all the Improvements and to all patents, copyrights or other intellectual property rights (or applications therefor) which may be or have been filed and/or issued by or to his or on his behalf, and the Executive agrees to execute and deliver to the Corporation, any and all instruments necessary or desirable to accomplish the foregoing and, in addition, to do all lawful acts which may be necessary or desirable to assist the Corporation to obtain and enforce protection of the Improvements.
(c)The Executive waives all moral rights in any Improvements and al) work produced by the Executive during the term of this Agreement.
6.3Non-Competition
The Executive agrees that he shall not, during the Restricted Period, within the Prohibited Area, without the prior written consent of the Corporation, which consent may be withheld or granted in its sole discretion, either on his own behalf or in conjunction with or on behalf of any other person, directly or indirectly, own any interest in, provide financing or financial assistance to, operate, manage, control, participate in, consult with, advise, provide services to, or in any other manner carry on, engage in or assist any business (whether individually or through or in association with any other person or entity) that is the same as. similar to or competitive with the business of the Corporation.
14
Notwithstanding the foregoing restrictions, the Executive may acquire securities (i) of a class or series that is traded on any stock exchange or over the counter if such securities represent not more than 5% of the issued and outstanding securities of such class or series, (ii) of a mutual fund or other investment entity that invests in a portfolio the selection and management of which is not within the control of the investor, or (iii) held in a fully managed account where the Executive does not direct or influence in any manner the selection of any investment in such securities.
6.4Non-Solicitation of Customers and Suppliers
The Executive agrees that he shall not during the Restricted Period, without the prior written consent of the Corporation, which consent may be withheld or granted in its sole discretion, either on his own behalf or in conjunction with or on behalf of any other person, directly or indirectly, solicit any customers, clients, vendors or suppliers of the Corporation (or any persons who had been approached or specifically targeted to become a customer, client, vendor or supplier of the Corporation) to transfer any business from the Corporation to any other person or encourage any such customer, client, vendor or supplier to cease doing business with the Corporation or alter in any manner the method of doing business with the Corporation.
6.5Non-Solicitation of Employees
The Executive agrees that he will not during the Restricted Period, either on his own behalf or in conjunction with or on behalf of any other person, directly or indirectly, except on behalf of or with the prior written consent of the Corporation, (a) induce, solicit, entice or procure, any person who was employed by the Corporation and (i) with whom the Executive had personal contact or dealings in performing his duties or (ii) who reported to the Executive, to leave such employment; or (b) hire or accept into employment or otherwise engage or use the services of any person who was so employed within the immediately preceding six months.
Notwithstanding the provisions of the preceding paragraph, the Executive shall be entitled to hire or accept into employment or otherwise engage or use the services of any person who was employed by the Corporation as described in the said paragraph if any such person left the employ of the Corporation voluntarily, without any inducement, solicitation, enticement or procurement from the Executive.
6.6Applicability to Purchasers
The obligations undertaken by the Executive pursuant to this Article 6 may be enforced directly against the Executive by any purchaser from the Corporation of all or any part of its business, to the extent applicable by their terms to such purchased business, and shall, with respect to such purchased business, constitute a separate and distinct covenant and the invalidity or unenforceability of any such covenant shall not affect the validity or enforceability of the covenant in favour of the Corporation or any such purchaser, provided always that this Article 6.6 shall only apply to any such purchased business (a) to which the Executive provided services, (b) with which the Executive was concerned, or (c) in respect of which the Executive was responsible at any time during the term of this Agreement. If for any reason any of the obligations of the Executive pursuant to this Article 6 cannot be directly enforced by a purchaser as contemplated by this Agreement, the Executive acknowledges that such obligations may be enforced by the Corporation on behalf of such purchaser, as the case may be.
6.7Suspension of Time Periods During Breach
If the Executive is in breach of any of the terms of this Article 6, the running of the Non-Disclosure Period or Restricted Period, as applicable, shall be stayed and shall recommence upon the date the Executive ceases to be in breach thereof, whether voluntarily or by injunction.
15
6.8Disclosure
During the term of this Agreement, the Executive shall promptly disclose to the Corporation full information concerning any interest, direct or indirect, of the Executive (whether as owner, shareholder, partner, lender or other investor, director, officer, employee, consultant or otherwise) or any member of his immediate family in any business which is reasonably known to the Executive to purchase or otherwise obtain services or products from, or to sell or otherwise provide services or products to the Corporation or to any of their respective suppliers or customers.
During the Non-Disclosure Period and the Restricted Period, the Executive shall inform any prospective employer of the existence of this Agreement and the obligations which it imposes upon the Executive under Articles 6.1, 6.3, 6.4 and 6.5.
6.9Return of Materials
All files, forms, brochures, books, materials, written correspondence, memoranda, documents, manuals, computer disks, software products and lists (including financial and other information), passwords and lists of customers, suppliers, products and prices) pertaining to the Corporation which may come into the possession or control of the Executive shall at all times remain the property of the Corporation. Upon termination of the Executive's employment hereunder for any reason, the Executive agrees to immediately return all such property of the Corporation in the possession of the Executive or directly or indirectly under the control of the Executive. The Executive agrees not to make, for his personal or business use or that of any other person, reproductions or copies of any such property or other property of the Corporation.
ARTICLE 7
GENERAL
7.1Reasonableness of Restrictions and Covenants
The Executive confirms and agrees that the covenants and restrictions pertaining to the Executive contained in this Agreement, including, without limitation, those contained in Article 6, are reasonable and valid and further acknowledges and agrees that the Corporation.
would suffer irreparable injury in the event of any breach by the Executive of his obligations under any such covenant or restriction. Accordingly, the Executive acknowledges and agrees that damages would be an inadequate remedy at law in connection with any such breach and that the Corporation shall therefore be entitled, in addition to any other right or remedy which they may have at law, in equity or otherwise, to temporary and permanent injunctive relief enjoining and restraining the Executive from any such breach.
7.2Amendments and Waivers
No amendment or waiver of any provision of this Agreement shall be binding on any party unless consented to in writing by such party. No waiver of any provision of this Agreement shall constitute a waiver of any other provision, nor shall any waiver of any provision of this Agreement constitute a continuing waiver unless otherwise expressly provided.
7.3Successors and Assigns
This Agreement shall inure to the benefit of and shall be binding on and enforceable by and against the heirs, executors, administrators and legal personal representatives of the Executive and the .successors and permitted assigns of the Corporation. This Agreement is personal to the Executive and none of his rights may be assigned, made subject to a security interest or otherwise disposed of or encumbered, nor may any of the obligations be delegated or transferred, except as permitted in writing by the Corporation, or in accordance with the written policies, governance procedures and management practices of the Corporation, as approved by the Corporation from time to time.
16
7.4Notices
(a)Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be delivered in person, transmitted by e-mail or sent by mail or sent by next-day courier, charges prepaid, addressed as follows:
(i)If to the Executive:
100 Lidstone Rd.
Salmon Arm, British Columbia V1E 2Y1
Email: fdw@shaw.ca
If to the Corporation:
Attention: Peretz Shapiro
email: peretz@snowlakelithium.com
(b)Any such notice or other communication shall be deemed to have been given and received on the day on which it was delivered or transmitted, if transmitted via e-mail (or, if such day is not a Business Day or if delivery or transmission is made on a Business Day after 5:00 p.m. at the place of receipt, then on the next following Business Day) or, if sent by courier, on the next Business Day or, if sent by mail, on the fifth Business Day following the date on which it was mailed.
(c)Any party may at any time change its address for service from time to time by giving notice to the other parties in accordance with this Article 7.4.
7.5Personal Information
The Executive acknowledges and agrees that the Corporation collects, uses, stores and discloses (to authorized parties) personal information as required in accordance with applicable privacy legislation. Such personal information will be used and disclosed for the purpose of administering the employment relationship between the Executive and the Corporation. Such personal information includes, but is not limited to, information which the Executive provided to the Corporation on his application for employment and/or resume and the information provided by the Executive to the Corporation during the course of his employment with the Corporation. Such personal information includes, but is not limited to, the Executive's age, prior employment history, banking information, contact information, marital status, compensation, performance reviews and benefits.
7.6Workplace Discrimination, Harassment and Violence
The Executive acknowledges that the Corporation is committed to ensuring an inclusive and respectful work environment where all individuals are treated with dignity and respect and an environment that is free from discrimination, workplace harassment and threatening and aggressive acts. The Executive, therefore, agrees that it is a term and condition of his employment that he shall comply with all applicable human rights legislation.
7.7Entire Agreement
This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether written or oral. There are no conditions, covenants, agreements, representations, warranties or other provisions, express or implied, collateral, statutory or otherwise, relating to the subject matter hereof except as provided herein.
7.8Rules and Policies
In addition to this Agreement, all written rules and policies of the Corporation adopted by the Corporation from time to time apply to the Executive except to the extent that they are inconsistent with the express provisions of this Agreement, in which case the provisions of this Agreement will prevail.
17
7.9Governing Law
(a)This Agreement shall be interpreted and enforced in accordance with, and the respective rights and obligations of the parties shall be governed by, the laws of the Province of Ontario and the federal laws of Canada applicable in that province,
(b)Each of the parties irrevocably and unconditionally (i) submits to the exclusive jurisdiction of the courts of the Province of Ontario over any action or proceeding arising out of or relating to this Agreement; (ii) waives any objection that it might otherwise be entitled to assert to the jurisdiction of such courts; and (iii) agrees not to assert that such courts are not a convenient forum for the determination of any such action or proceeding.
7.10 No Inconsistent Obligations
The Executive is aware of no obligations, legal or otherwise, inconsistent with the terms of this Agreement or with his undertaking employment with the Corporation. The Executive will not disclose to the Corporation, or use, or induce the Corporation to use, any proprietary information or trade secrets of others. The Executive represents and warrants that he has returned all property and confidential information belonging to all prior employers.
7.11Rights Cumulative
The rights and remedies provided by this Agreement are cumulative, and the exercise of any right or remedy by either party hereto (or by its successor), whether pursuant to this Agreement, to any other agreement, or to law, shall not preclude or waive its right to exercise any or all other rights and remedies.
7.12Assistance in Litigation
The Executive shall, during and after termination of his employment with the Corporation. upon reasonable notice, furnish such information and proper assistance to the Corporation as may reasonably be required by the Corporation in connection with any litigation in which the Corporation or any of its subsidiaries or affiliates is, or may become a party; provided, however, that such assistance following termination shall be furnished at mutually agreeable times and for mutually agreeable compensation.
7.13Indemnification
The Executive hereby agrees to indemnify and hold the Corporation and its officers, directors, shareholders and executives harmless from and against any loss, claim, damage or expense, and/or all costs of prosecution or defense of their rights hereunder, whether in judicial proceedings, including appellate proceedings, or whether out of court, including without limiting the generality of the foregoing, lawyers' fees (on a full indemnity scale), and all costs and expenses of litigation, arising from or growing out of the Executive’s breach or threatened breach of any covenant contained herein.
7.14Limitations on Authority
Without the express written consent from the Corporation, the Executive shall have no apparent or implied authority to: (i) pledge the credit of the Corporation or any of its other executives; (ii) bind the Corporation under any contract, agreement, note, mortgage or otherwise, unless given express permission by the Board in order to fulfill the Executive's operational role; (iii) release or discharge any debt due the Corporation unless the Corporation has received the full amount thereof; or (iv) sell, mortgage, transfer or otherwise dispose of any assets of the Corporation.
18
7.15Acknowledgements
The Executive acknowledges that prior to signing this Agreement:
(a)he has had sufficient time to review and consider this Agreement thoroughly;
(b)he has read and understands the terms of this Agreement and his obligations hereunder;
(c)he has been given an opportunity to obtain independent legal advice, or such other advice as he may desire, concerning the-interpretation and effect of this Agreement;
(d)he has not been induced by the Corporation to terminate any existing employment
(e)he is not prevented by the terms of any other agreement with any other party from entering into this Agreement and
(f)be is entering into this Agreement voluntarily and without any coercion or pressure from anyone.
7.16Counterparts
This Agreement and all documents contemplated by or delivered under or in connection with this Agreement may be executed and delivered in any number- of counterparts, with the same effect as if all parties had signed and delivered the same document, and all counterparts shall be construed together to be an original and will constitute one and the same agreement.
The parties further acknowledge and agree that electronic or facsimile copies of this Agreement bearing their signatures will have the same effect as an original.
IN WITNESS WHEREOF this Agreement has been executed by the parties as of the date first above written.
| SNOW LAKE RESOURCES LTD. | |
|
|
|
| by | /s/Peretz Schapiro |
|
| Name:Peretz Schapiro |
|
| Title: Interim Chief Operating Officer |
19
SCHEDULE "A"
Employment Duties:
·To drive and achieve the successful and safe development of the Corporation's Projects, in accordance with Board approved plans and budgets.
·To develop and deliver commercial strategy, funding, budgeting and balance sheet management.
·To deliver effective and 'across the board' leadership, ensuring that site operations and other functions within the organisation operate on an integrated basis.
·To provide leadership and coordination of administration, financial management and reporting, investor relations and government relations activities of the Corporation to ensure the Corporation is economically managed and complies with all applicable laws.
·To perform such other matters as may be assigned to the CEO by the Board from time to time.
20
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in this Amendment No. 3 to Registration Statement on Form F-3 of Snow Lake Resources Ltd. of our report dated October 31, 2022 relating to the financial statements of Snow Lake Resources Ltd. for the year ended June 30, 2022 and 2021 and to all references to our firm included in this Registration Statement.
August 3, 2023
/s/ De Visser Gray LLP
De Visser Gray LLP
CHARTERED PROFESSIONAL ACCOUNTANTS