MASON RESOURCES EMERGES AS STRATEGIC SHAREHOLDER OF NOUVEAU MONDE GRAPHITE THROUGH SALE OF LAC GUÉRET GRAPHITE PROPERTY
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Insights
The acquisition of the Lac Guéret Property by Nouveau Monde Graphite Inc. (NMG) from Mason Resources Inc. represents a significant strategic move within the graphite industry, which is poised for growth due to its critical role in battery and electric vehicle manufacturing. The deal's structure, involving both equity and cash, reflects a creative approach to asset acquisition in the mining sector. This transaction not only enhances NMG's resource portfolio but also potentially increases its leverage in commercial negotiations with top-tier battery manufacturers.
From a market perspective, the premium of 143% on the implied market value of the Lac Guéret Property indicates a bullish outlook on the asset's future profitability and the expected growth in graphite demand. Additionally, the equity stake that Mason will hold in NMG post-transaction allows Mason's shareholders to benefit from NMG's future performance without bearing the development risks and costs associated with the Uatnan Mining Project.
Investors should monitor the graphite market closely, especially considering recent Chinese restrictions on graphite exports, which could lead to a tightening of global supply and an increase in prices. This deal could position NMG favorably if such market dynamics play out.
The financial implications of this transaction are multifaceted. Mason's receipt of 9.25% of NMG's pro forma issued and outstanding common shares, in addition to a cash payment upon the commencement of commercial production, diversifies Mason's investment portfolio and aligns its interests with NMG's success. The lock-up period for the shares ensures stability and reflects a long-term commitment to the partnership.
The transaction eliminates the need for Mason to secure additional financing for the Uatnan Mining Project, thereby avoiding potential equity dilution for Mason's shareholders. This financial maneuvering is beneficial as it preserves shareholder value. The immediate reduction in care and maintenance costs for the Lac Guéret Property, as these will now be borne by NMG, will improve Mason's short-term financials.
For NMG, acquiring a high-quality natural graphite deposit is a strategic investment that could enhance the company's market capitalization and investor appeal. The transaction could also influence NMG's stock performance, as the market assimilates the potential for increased production capacity and commercial opportunities.
The legal structure of the Asset Purchase Agreement (APA) is noteworthy, particularly the staggered lock-up periods for the common shares of NMG to be issued to Mason. This provision is designed to prevent an immediate sell-off of shares, which could destabilize NMG's share price post-transaction. The transaction's closing conditions, including the termination of previous agreements between Mason and NMG, indicate a consolidation of efforts and resources towards the Uatnan Mining Project.
Legal advisors play a crucial role in transactions of this nature, ensuring compliance with regulatory requirements and minimizing risks associated with the transfer of assets. The involvement of reputable legal advisors, such as Davies Ward Phillips & Vineberg LLP, adds a layer of credibility and assurance to the transaction, which can have a positive impact on shareholder confidence.
In consideration for the sale of the Lac Guéret Property, Mason will receive 6,208,210 common shares of NMG, representing a
Benefits to Mason Shareholders
- Provides opportunity to become one of NMG's largest shareholders at an opportune time given the rapid progress of NMG, strategically positioning Mason for future gains;
- Provides exposure to NMG's active commercial discussions with tier-1 battery and electric vehicle manufacturers, including Panasonic Energy Co. Ltd., a wholly owned subsidiary of Panasonic Holdings Corporation (TYO: 6752), which not only confirm the strong projected demand by battery materials analysts for graphite, but are likely to support the establishment of a globally relevant graphite industry in the Province of
Québec ; - Provides diversification and mitigates long-term development risks associated with the Uatnan Mining Project, while retaining equivalent exposure to the graphite sector;
- Unlocks near-term value with attractive premium:
143% 1 premium received in consideration on the implied market value of Lac Guéret Property, based on 10-day volume weighted average price ("VWAP"); - Enhances exposure to the anticipated near-term increase in graphite prices, especially in light of recent Chinese restrictions announced on graphite material exports, with equity ownership of a near-term producer;
- Eliminates future financing requirements related to the Uatnan Mining Project, avoiding eventual equity dilution;
- Eliminates care and maintenance costs related to the Lac Guéret Property, resulting in further direct and short-term financial benefits; and
- Reinforces NMG's fully vertically integrated production model in
North America , further strengthening Mason's strategic positioning.
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Fahad Al-Tamimi, Chairman of Mason, commented: "In forging this new strategic partnership with Nouveau Monde Graphite through this innovative structure, we pave the way for a thriving
Arne H Frandsen, Chair of NMG, declared: "With its very large, high-quality natural graphite deposit, the acquisition of the Lac Guéret deposit represents a strategically important move by NMG. This addition of a world-class asset to NMG's portfolio of resources, underpins the Company's growth prospects and commercial attractiveness. It also puts us in a unique position in the global battery materials space. Our leadership and strong technical teams are looking forward to the smart further development of the Lac Guéret asset, fully synchronized with NMG's current execution plans. We also warmly welcome Mason as a shareholder of NMG as we build a pioneering – and possibly the largest! – integrated natural graphite production in the Western World."
Eric Desaulniers, Founder, President and CEO of NMG, said: "In light of commercial discussions for our Phase-2 production out of the Matawinie Mine and Bécancour Battery Material Plant, we are confident in the current and future demand for ethically sourced and environmentally produced graphite-based anode material. NMG is set to match the sustained market growth with a robust expansion plan now secured in the Uatnan Mining Project. Uitshi-atussemitutau – together with the Innu First Nation of Pessamit – is our vision for the development of this project. We are committed to a strong involvement of the First Nation and active engagement with the region's community and stakeholders to ensure a responsible and sustainable development."
Under the terms of the APA, NMG has agreed to acquire
Closing of the transaction is subject to standard closing conditions and is expected to occur on or before January 31, 2024. The closing of the transaction will supersede and terminate the previously announced investment agreement, and option and joint venture agreement between Mason and NMG. See the Company's press releases dated May 16, June 23, July 5, and July 20, 2022.
Paradigm Capital Inc. is acting as financial advisor and Davies Ward Phillips & Vineberg LLP is acting as legal advisor to the Company in connection with the transaction.
Nouveau Monde Graphite is striving to become a key contributor to the sustainable energy revolution. The Company is working towards developing a fully integrated source of carbon-neutral battery anode material in
For more information: www.NMG.com.
Mason Resources Inc. is a Canadian corporation focused on seeking investment opportunities. Mason is the largest shareholder of Black Swan Graphene Inc. ("Black Swan") (TSX.V: SWAN) (OTCQB: BSWGF) (Frankfurt: R96) focusing on the large-scale production of patented high-performance and low-cost graphene products aimed at several industrial sectors, including concrete and polymers, which are expected to require large volumes of graphene and, in turn, large volumes of graphite. Black Swan aims at leveraging
For more information: www.masonresourcesinc.com and www.blackswangraphene.com.
Mason Resources Inc. on behalf of the Board of Directors
Peter Damouni, President & Chief Executive Officer
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
The information contained herein contains "forward-looking statements" or "forward-looking information" within the meaning of applicable securities legislation. Forward-looking statements or forward-looking information relate to information that is based on assumptions of management, forecasts of future results, and estimates of amounts not yet determinable. Any statements that express predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance are not statements of historical fact and may be "forward-looking statements" or "forward-looking information". Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation: risks related to the completion of the transaction with NMG, risks related to Mason's holding of the NMG shares, risks related to the development of NMG's projects, risks related to Black Swan's business, risk related to the failure to obtain adequate financing on a timely basis and on acceptable terms; risks related to the outcome of legal proceedings; political and regulatory risks associated with the industry; risks related to the maintenance of stock exchange listings; risks related to environmental regulation and liability; the potential for delays in development activities or the completion of feasibility studies; the uncertainty of profitability; risks related to the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses; results of feasibility studies, and the possibility that future results will not be consistent with Mason's expectations; risks related to commodity prices fluctuations; and other risks and uncertainties related to Mason's prospects, properties and business detailed elsewhere in Mason's disclosure record. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements. Investors are cautioned against attributing undue certainty to forward-looking statements. These forward-looking statements are made as of the date hereof and Mason does not assume any obligation to update or revise them to reflect new events or circumstances, except in accordance with applicable securities laws. Actual events or results could differ materially from Mason's expectations or projections.
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SOURCE Mason Resources Inc.
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