CANADA RARE EARTH CORP. ("LL")
BULLETIN TYPE: Property-Asset or Share Acquisition Agreement
BULLETIN DATE: September 17, 2015
TSX Venture Tier 2 Company
TSX Venture Exchange Inc. (the "Exchange") has accepted for filing an agreement between Canada Rare Earth Corp. ("Canada Rare Earth") and CEC Rare Earth Corp. ("REC") dated September 1, 2015 (the "Acquisition Agreement") pursuant to which Canada Rare Earth has agreed to acquire the assets of REC (the "REC Assets"), an affiliated private British Columbia company (the "Acquisition").
The REC Assets include but are not limited to cash, receivables, contracts, letters of intent, memorandums of understanding, consulting arrangements and rights associated with supplying expertise to many aspects of the rare earth industry together with rights to earn interests in rare earth projects.
Under the Acquisition Agreement, Canada Rare Earth will issue the following consideration for the REC Assets:
1. 24,178,000 common shares, subject to an escrow agreement pursuant to which shares will be released from escrow over 18 months after issuance;
2. distributions from future contract proceeds and dividends derived from the REC Assets including: (i) 5% of the first US$70 million of non-refundable gross cash collected for the implementation and execution of contracts and business arrangements and the disposition of REC Assets; (ii) for the 12 year period following closing of the Acquisition, 5% of the non-refundable gross cash collected for the implementation and execution of contracts and business arrangements and the disposition of REC Assets plus 10% of dividends derived from REC Assets ( this second royalty may be acquired by Canada Rare Earth at any time during the three years following completion of the Acquisition for US$15 million less 50% of royalties paid in this regard); and (iii) 3% of the first US$70 million of non-refundable gross cash collected for the implementation and execution of contracts and business arrangements and the disposition of REC Assets (this third royalty may be acquired by Canada Rare Earth at any time during the two years following completion of the Acquisition by the issuance of 15,712,000 common shares. Canada Rare Earth will be required to make a further filing with the Exchange at the time of any such acquisition);
3. vesting of previously issued stock options to acquire 712,500 shares of Canada Rare Earth granted to REC and confirmation that such stock options together with an additional 2,137,500 stock options previously granted to REC will continue to have an original exercise term until November 8, 2017 at the original exercise price of $0.10 per share; and
4. the immediate termination without penalty of the contract for REC to provide vertical integration implementation services.
Insider / Pro Group Participation: Peter Shearing is a director of both Canada Rare Earth and REC.
For further information please refer to Canada Rare Earth's news release dated September 2, 2015 which is available under Canada Rare Earth's profile on SEDAR.
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