Gratomic Signs Letter of Intent for $5.2 Million Royalty Financing

Rhea-AI Summary

Gratomic has signed a non-binding Letter of Intent (LOI) with Tristream Capital for a $5.2 million CAD royalty financing.

The investment will be used to acquire a 5% Gross Sales Royalty (GSR) from sales of graphite at the Aukam Property, which will decrease to 1% after 5.5 years.

The agreement is subject to due diligence and a definitive agreement within 90 days.

Interest of 10% per year will be paid for the first six months. Gratomic will also be responsible for covering up to 30,000 GBP in due diligence expenses.

A finder's fee of 5% will be paid upon closing. The transaction awaits regulatory approval.

Currently, no mineral resources or reserves have been established, and the company plans to conduct a feasibility study on the Aukam Processing plant.

Positive

• Non-binding LOI for $5.2 million CAD royalty financing.
• 5% Gross Sales Royalty decreasing to 1% after 5.5 years.
• Interest payment of 10% per year for the first six months.
• 5% finder's fee to be paid upon closing.
• Plans to conduct a feasibility study on Aukam Processing plant.

Negative

• Investment conditional on due diligence and definitive agreement within 90 days.
• No established mineral resources or reserves on the Aukam property.
• Company covers up to 30,000 GBP in due diligence expenses.
• Increased risks of economic viability and technical feasibility.
• Potential material adverse impact if production does not commence or costs are higher than anticipated.

TORONTO, ON / ACCESSWIRE / June 17, 2024 / Gratomic Inc. ("Gratomic", "GRAT", or the "Company") (TSX-V:GRAT)(FSE:CB82) is pleased to announce that it has signed a non-binding Letter of Intent (the "LOI") dated June 14, 2024 with Tristream Capital Pte Limited and/or its related party Tristream Capital (Cayman) Limited ("TSC") pursuant to which TSC will invest GBP 3 Million (approximately $5.2 Million CAD) (the "Investment Amount") in Gratomic to acquire a 5% Gross Sales Royalty (the "5% GSR") in respect of sales of graphite from the Aukam Property commencing six months after receipt of the Investment Amount for a period of 5.5 years after which the royalty will be reduced to a 1% Gross Sales Royalty (the "1% GSR" and collectively with the 5% GSR, the "Royalty") for the life of the mine (the "Transaction").

Payment of the Investment Amount is conditional upon satisfactory completion of due diligence by TSC and the parties entering into a definitive agreement (the "Definitive Agreement") within 90 days of the execution of the LOI. The Definitive Agreement will include terms and conditions, representations, warranties, covenants and agreements customary for such a Transaction. The Definitive Agreement will also include certain milestones to be negotiated and specified in the Definitive Agreement.

Upon receipt of the Investment Amount, Gratomic will pay TSC interest on the Investment Amount of 10% per year for the first six months from receipt of the Investment Amount. Commencing six months after receipt of the Investment Amount for a period of 5.5 years, TSC will be paid the 5% GSR. Thereafter, TSC will be paid the 1% GSR for the life of the mine. The Royalty will have a first ranking security interest over plant and machinery at the Aukam Property.

Gratomic will be subject to a standstill, until the earlier of the receipt of the Investment Amount and termination of the LOI, preventing Gratomic from soliciting or entering into any proposals with respect to a transaction similar to the contemplated Transaction.

TSC will be primarily responsible for the preparation of the Definitive Agreement. The Company will be responsible to pay all reasonable and properly incurred expenses of TSC's due diligence exercise to a maximum of 30,000 British pounds provided that any individual expense in excess of 2000 British pounds must be preapproved by the Company.

An arm's-length party, engaged by Gratomic, will be entitled to a finder's fee of 5% of the Investment Amount due upon closing of the Transaction.

The Transaction is subject to regulatory approval.

Gratomic wishes to emphasize that no Preliminary Economic Analysis, Preliminary Feasibility Study or Feasibility Study has been completed to support any level of production. In fact, no mineral resources let alone mineral reserves demonstrating economic viability and technical feasibility, have been delineated on the Aukam property.

The Company intends to obtain a Feasibility Study (FS) on the Aukam Processing plant. The study, its recommendations, and their subsequent implementation, will provide conclusions and recommendation at a FS level of comfort relating to the scale up of the existing processing plant to a commercial scale processing facility capable of producing the desired concentrate grades and production rates.

Gratomic wishes to emphasize that the supply of graphite is conditional on Gratomic being able to bring the Aukam project into a production phase, and for any graphite being produced to meet certain technical and mineralization requirements.

Risk Factors

No mineral resources, let alone mineral reserves demonstrating economic viability and technical feasibility, have been delineated on the Aukam Property. The Company is not in a position to demonstrate or disclose any capital and/or operating costs that may be associated with the processing plant until the FS (Feasibility Study) is completed.

The Company advises that it has not based its production decision on even the existence of mineral resources let alone on a Preliminary Feasibility Study or FS of mineral reserves, demonstrating economic and technical viability, and, as a result, there may be an increased uncertainty of achieving any particular level of recovery of minerals or the cost of such recovery, including increased risks associated with developing a commercially mineable deposit.

Historically, such projects have a much higher risk of economic and technical failure. There is no guarantee that production will begin as anticipated or at all or that anticipated production costs will be achieved.

Failure to commence production would have a material adverse impact on the Company's ability to generate revenue and cash flow to fund operations. Failure to achieve the anticipated production costs would have a material adverse impact on the Company's cash flow and future profitability.

About Gratomic

Gratomic is a multinational company with projects in Namibia, Brazil, and Canada. The Company aims to become a leading graphite supplier and to secure a strong position in the electric vehicle battery supply chain through the development of its flagship Aukam graphite mine and ongoing exploration at the Capim Grosso property. The Company will continue to explore graphite opportunities that show the potential to produce the specific flake size and purity required for active anodes.

Large quantities of high-quality vein graphite have been shipped for testing to confirm its suitability as anode material. Gratomic is confident that the test results will provide a unique competitive advantage in the desired target markets. The Company will continue to update the public on the status of these tests and will share results as they become available.

On the January 25, 2023 Gratomic announced that it had entered into a LOI with Graphex Technologies to supply graphite through existing facilities and develop a downstream processing facility in the continental US.

Gratomic has entered into a collaborative agreement with Forge Nano to use its patented atomic layer technology (ALD) to coat of spherical graphite required in lithium-ion batteries.

For more information: visit the website at www.gratomic.ca or contact:

Arno Brand at abrand@gratomic.ca or (416) 561- 4095

Subscribe at gratomic.ca/contact/ to be added to our email list.

For Marketing and Media information, please email: info@gratomic.ca

"Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release."

Forward Looking Statements:

This news release contains forward-looking statements, which relate to future events or future performance and reflect management's current expectations and assumptions. Such forward-looking statements reflect management's current beliefs and are based on assumptions made by and information currently available to the Company. Investors are cautioned that these forward-looking statements are neither promises nor guarantees and are subject to risks and uncertainties that may cause future results to differ materially from those expected. These forward-looking statements are made as of the date hereof and, except as required under applicable securities legislation, the Company does not assume any obligation to update or revise them to reflect new events or circumstances. All of the forward-looking statements made in this press release are qualified by these cautionary statements and by those made in our filings with SEDAR in Canada (available at www.sedarplus.com)

SOURCE: Gratomic Inc.

View the original press release on accesswire.com

FAQ

What is the investment amount in the Gratomic and Tristream Capital deal?

The investment amount is $5.2 million CAD.

What is the royalty percentage in Gratomic's deal?

The deal includes a 5% Gross Sales Royalty, which decreases to 1% after 5.5 years.

When will the royalty payment commence for the Gratomic deal?

The royalty payment will commence six months after receipt of the investment amount.

What are the conditions for the investment from Tristream Capital in Gratomic?

The conditions include satisfactory due diligence and a definitive agreement within 90 days.

What interest will Gratomic pay on the investment amount?

Gratomic will pay an interest of 10% per year for the first six months.

What is the finder's fee for the Gratomic transaction?

The finder's fee is 5% of the investment amount.

Are there any mineral reserves established at the Aukam Property?

No, there are currently no mineral resources or reserves established at the Aukam Property.

What is the risk associated with the Gratomic project?

There is an increased risk of economic and technical failure due to the lack of established mineral resources or feasibility studies.

What expenses will Gratomic cover for Tristream Capital's due diligence?

Gratomic will cover up to 30,000 GBP in due diligence expenses.