Ucore Announces Increase of Shareholder Investment to $7.3 Million and Conversion of Royalty to Shares in Company

HALIFAX, NOVA SCOTIA–(Marketwired – May 30, 2016) – Ucore Rare Metals, Inc. (TSX VENTURE:UCU) (OTCQX:UURAF) (“Ucore” or the “Company”) is pleased to announce that it has taken receipt of CAD$7.3 Million and amended the terms of the royalty agreement announced on December 14, 2016 (the “Agreement”).
Under the original terms of the Agreement, a foreign investment fund (the “Investor”) was to pay USD $5 million in exchange for a royalty or profit share from the production of Ucore’s early stage MRT installations (the “Royalty”). Under the revised terms of the Agreement (the “Amended Agreement”), the Investor has now elected to increase its overall investment to USD $6M and to convert the royalty into shares in Ucore.
“We’re very pleased to announce this substantially increased investment,” said Jim McKenzie, President and CEO of Ucore. “What’s more, the conversion of the royalty to shareholder equity represents a significant vote of confidence in the Company’s rapidly maturing business plan. Our major investors have consistently elected to retain and progressively expand their ownership positions in Ucore. This is a strategy which gives them broad exposure to all of Ucore’s economic opportunities rather than earn payments derived from any individual production stream, and access to shares at what they believe are significantly undervalued current levels.”
Background
Under the terms of the original Agreement, the Royalty was to be comprised of two components: (i) a Gross Royalty equal to 5% of gross sales from the Company’s first MRT installation or installations, payable until the recapture of the Investment; and (ii) a Net Profits Royalty (“NSR”) equal to 5% of Ucore’s net profits from the installation. The terms of the original Agreement additionally allowed the Investor to convert the total amount of the Investment (minus any Royalty amounts already then paid by Ucore) into common shares of Ucore, subject to any applicable regulatory, stock exchange or shareholder approvals. If the Investor elected to convert such amount, Ucore’s Royalty obligations would then cease and the conversion amount would be converted into common shares at the greater of: (i) the 30 day volume weighted average share price of Ucore’s common shares, less a 20% discount; or (ii) the market price of Ucore’s common shares on the day immediately prior to the conversion date, less a 20% discount; or (iii) $0.20 per common share. The conversion right was exercisable until June 15, 2021.
Under the terms of the Amended Agreement, the Gross Royalty and the NSR are reduced from 5% to 2%, and the Conversion Rate has been increased to the greater of: (i) the market price of Ucore’s common shares on the day immediately prior to the conversion date, less a 20% discount; or (ii) $0.29 per common share. The Amended Agreement additionally allows the Royalty to be converted to Units at the aforementioned Conversion Rate. Units consist of one common share of the Company plus a common share purchase warrant. Each common share purchase warrant shall entitle the Investor to acquire 1 new Common Share from Ucore at a price of CAD$0.38 per Common Share for a period of 3 years from the issuance date of the warrant.
In accordance with the conversion terms of the Amended Agreement, the Investor has elected to convert a total of CAD$7.35 million of its Royalty to Units. As a result, a total of 25,344,821 Units have been issued. Additionally, under the terms of the original Agreement, the Investor had the option to increase the amount of the Investment by up to USD$1 Million, in exchange for a larger Royalty, provided that written notice of such exercise is provided prior to August 31, 2016. The Investor has now exercised that option, and the Investment has accordingly been increased by the USD$1 Million.
The Company has agreed to settle payables in the amount of USD $195,000 through the issuance of 600,000 shares at a deemed value of $0.325 per share. The proposed debt settlement involves amounts owed to arm’s length parties and is subject to approval by the TSX Venture Exchange. The shares issued will be subject to a four month hold period.
Company Information
Ucore Rare Metals is a development-phase company focused on rare metals resources, extraction and beneficiation technologies with near term potential for production, growth and scalability. On March 3, 2015, Ucore announced the right to acquire a controlling ownership interest in the exclusive rights to IBC SuperLig® technology for rare earths and multi-metallic tailings processing applications in North America and associated world markets. The Company has a 100% ownership stake in the Bokan project. On March 31, 2014, Ucore announced the unanimous support of the Alaska State Legislature for the investment of up to USD $145 Million in the Bokan project at the discretion of the Alaska Import Development and Export Agency (“AIDEA”).
Cautionary Notes
This press release includes certain statements that may be deemed “forward-looking statements”. All statements in this release, other than statements of historical facts, that address future exploration drilling, exploration activities, research and development timelines, and events or developments that the Company expects, are forward looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include exploitation and exploration successes or setbacks, research and develop successes or setbacks, continued availability of financing, and general economic, market or business conditions.
MRT is at advanced testing stages and has yet to be proven, at a commercial scale, for the separation of rare earth elements. The Company has not yet released an economic assessment on the use of MRT for the separation of rare earth elements and does not yet have any specific contracts for the processing of rare earths using MRT.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined by the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.