Search Minerals Inc. Announces Partial Revocation of Cease Trade Order, Proposed Private Placement and Issuance of Shares Under Option Agreements

Rhea-AI Summary

Search Minerals Inc. (TSXV: SHCMF) has received a partial revocation of a cease trade order from the British Columbia Securities Commission. This allows the company to:

1. Complete a private placement of convertible notes up to CAD 1,000,000 to finance financial statement preparation and operational expenses.

2. Issue 700,000 common shares under option agreements for Two Tom Lake and Mann #1 properties.

The convertible notes will have a one-year maturity and 15% annual interest rate. Funds will be used for audit fees, regulatory costs, and exploration-related expenses. The company aims to finalize its financial statements and regain compliance with regulatory requirements.

Positive

• Partial revocation of cease trade order allows for fundraising and share issuance
• Private placement of up to CAD 1,000,000 in convertible notes
• Funds to be used for finalizing financial statements and operational expenses
• Ability to issue 700,000 common shares under existing option agreements

Negative

• Company under cease trade order since April 8, 2024
• Delayed financial statements for fiscal year 2023 and subsequent quarters
• High interest rate of 15% on convertible notes indicates financial distress
• Significant portion of funds allocated to regulatory compliance and past due expenses

Vancouver, British Columbia--(Newsfile Corp. - September 9, 2024) - Search Minerals Inc. (TSXV: SMY) ("Search" or the "Company") announces that on September 6, 2024, the British Columbia Securities Commission (the "BCSC") granted a partial revocation (the "Partial Revocation") of a cease trade order (the "CTO") previously issued by the BCSC on April 8, 2024. The Partial Revocation permits the Company to complete a private placement transaction for the purpose of finalizing its annual financial statements for the year ended November 30, 2023, interim financial statements, management's discussion and analysis and certification of interim filings for the periods ended February 29 and May 31, 2024, as well as provide funding for certain operational, filing, debt and administrative expenses. The Partial Revocation also permits the Company to issue an aggregate of 700,000 common shares in the capital of the Company ("Shares") under the option agreements in respect of the Two Tom Lake and Mann #1 properties.

Private Placement of Convertible Notes

The Partial Revocation was pursued to permit Search to issue and sell non-transferable unsecured convertible notes (the "Convertible Notes") with an aggregate principal amount of up to $1,000,000 (the "Offering"). The Convertible Notes will have a maturity date of one year from the date of issuance (the "Maturity Date") and will bear simple interest at a rate of 15% per annum. Following the full revocation of the CTO and prior to the Maturity Date, principal and interest under the Convertible Notes may be converted into Shares at the option of the noteholder. The conversion price of the principal will be $0.05 per Share and the conversion price of interest into Shares will be as permitted by the policies of the TSX Venture Exchange (the "TSXV"). The Offering remains subject to the approval of the TSXV.

The gross proceeds from the Offering are expected to be used as follows:

Description	Cost (in CAD)
Revocation costs
Audit and other professional fees and taxes related to the preparation and completion of the unfiled audit and  quarterly financial reports	$85,000
Transfer agent and TSXV Fees related to the Offering	$25,000
Legal fees - preparation of the Partial Revocation and full revocation order materials and application for reinstatement of trading	$80,000
Filing fees and penalties to security regulators	$15,000
Working Capital	$50,000
Total Revocation Costs	$255,000
Maintenance Costs (4 months)
Reimbursement of expenses already paid by directors and insiders to be repaid (mineral claims security  deposits, news release dissemination, legal and audit retainers, utilities, BCSC application fees)	$50,000
Ongoing Expenses - transfer agent, utilities on building, insurance, property tax, news release preparation, filing fees	$60,000
Renewal fees required to keep mineral claims in good standing	$38,500
Security deposits in lieu of work commitment on properties	$103,000
Total Maintenance Fees	$251,500
Assessment Related Expenses
Payment to Vendor to receive partial assay results from 2022 drill program - needed to prepare exploration  permits for upcoming season	$250,000
Re-instatement of geological database and licensing fees	$60,000
Hire two geologists - to review and interpret the assay results and prepare assessment reports to Mining Dept. of Newfoundland to keep mineral properties in good standing (5 months).	$125,000
Total Assessment Related Expenses	$435,000
Working Capital	$58,500
Total Budget	$1,000,000

 

Payment of Shares Under Option Agreements

The Partial Revocation was also pursued to permit the Company to issue Shares under both the option agreement dated June 14, 2021 (the "Two Tom Agreement") between the Company and United Gold Inc., Aubrey Budgell and Donna Lewis (collectively, the "Two Tom Vendors") and the option agreement dated June 15, 2021 (the "Mann Agreement") between the Company and Ronal Quinlan and Eddie Quinlan (the "Mann Vendors").

Pursuant to the Two Tom Agreement, the Company will issue the Two Tom Vendors an aggregate of 400,000 Shares as part of the third anniversary payment. The Two Tom Vendors had agreed to delay this payment until the Partial Revocation was granted (see the Company's news release dated August 23, 2024). Pursuant to the Mann Agreement, the Company will issue the Mann Vendors an aggregate of 300,000 Shares as part of the third anniversary payment. The Mann Vendors had agreed to delay this payment until the Partial Revocation was granted (see the Company's news release dated August 9, 2024).

For further information about Search Minerals Inc., please contact:

Joseph Lanzon
Interim CEO and Director
Telephone: 613-796-5957
Email: joseph.lanzon@searchminerals.ca

About Search Minerals Inc.:

Search Minerals is focused on finding and developing Critical Rare Earths Elements (CREE), Zirconium (Zr) and Hafnium (Hf) resources within the emerging Port Hope Simpson - St. Lewis CREE District of South East Labrador. Search controls two deposits (Foxtrot and Deep Fox), two drill ready prospects (Fox Meadow and Silver Fox) and numerous other REE prospects, including Fox Valley, Foxy Lady and Awesome Fox, along a 64 km long belt forming a REE District in Labrador.

Search also controls additional CREE assets in the Red Wine CREE District of central Labrador. These include: the drill ready Two Tom Lake CREE-Be-Nb deposit, the Mann #1 CREE-Nb-Be prospect and Merlot CREE Prospect."

Forward-Looking Information

Statements contained in this news release that are not historical facts are "forward-looking information" or "forward-looking statements" (collectively, "Forward-Looking Information") within the meaning of applicable Canadian securities legislation. Forward-Looking Information includes, but is not limited to, disclosure regarding possible events, the terms and completion of the Offering, the proposed use of proceeds from the Offering, if and when the CTO will be revoked, next steps and courses of action. In certain cases, Forward-Looking Information can be identified by the use of words and phrases or variations of such words and phrases or statements such as "anticipate", "expect" "plan", "likely", "believe", "intend", "forecast", "project", "estimate", "potential", "could", "may", "will", "would" or "should". Forward-Looking Information in this news release are based on certain material assumptions and involve, known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Search Minerals to be materially different from any future results, performance or achievements expressed or implied by the Forward-Looking Information. Such risks and other factors include, those factors discussed in Search Minerals' public filings and its Canadian disclosure record. Although Search Minerals has attempted to identify important factors that could affect Search Minerals and may cause actual actions, events or results to differ materially from those described in Forward-Looking Information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that Forward-Looking Information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on Forward-Looking Information. For further information on these and other risks and uncertainties that may affect the Company's business, see the "Risk Factors" and "Management's Discussion and Analysis" with the Canadian securities regulators, which are available at www.sedarplus.ca. Except as required by law, Search Minerals does not assume any obligation to release publicly any revisions to Forward-Looking Information contained in this news release to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) has in any way passed upon the merits of the contents of this press release and neither of the foregoing entities accepts responsibility for the adequacy or accuracy of this release or has in any way approved or disapproved of the contents of this press release.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/222624

FAQ

What is the purpose of Search Minerals' partial revocation of the cease trade order?

The partial revocation allows Search Minerals (SHCMF) to raise funds through a private placement and issue shares under option agreements to finance the completion of overdue financial statements and cover operational expenses.

How much is Search Minerals (SHCMF) aiming to raise in its proposed private placement?

Search Minerals is aiming to raise up to CAD 1,000,000 through the issuance of convertible notes in its proposed private placement.

What are the terms of the convertible notes being offered by Search Minerals (SHCMF)?

The convertible notes have a one-year maturity date, bear 15% annual simple interest, and are convertible into shares at $0.05 per share for principal and at TSXV-approved rates for interest.

How many shares is Search Minerals (SHCMF) issuing under its option agreements?

Search Minerals is issuing a total of 700,000 common shares under option agreements for the Two Tom Lake (400,000 shares) and Mann #1 (300,000 shares) properties.