Surge Copper Corp. (“Surge” or the “Company”) announced that it has signed a subscription agreement with African Rainbow Minerals Limited, a new strategic investor, for private placement financing.
According to the terms of the Strategic Placement, ARM will subscribe for 39,608,708 common shares (the “Strategic Placement Common Shares”) of Surge for C$0.095 per Strategic Placement Common Share, which represents an approximate 18% premium to the 20-day volume weighted average price of the company's common shares on the TSX Venture Exchange.
ARM will receive gross proceeds of approximately C$3,762,827. The company will do this through its wholly-owned subsidiary, ARM Copper Company Proprietary Limited (“ARM Copper”). Following the Strategic Placement, 15% of Surge's issued and outstanding common shares will be owned, on a non-diluted basis, by ARM (via ARM Copper).
We are excited to be welcoming ARM as a strategic investor into Surge. They bring significant experience in the development and operation of large-scale mines, with a foundational commitment to operational efficiency and fostering strong community ties. We look forward to leveraging this expertise as we advance our wholly owned Berg project and surrounding exploration targets in this emerging critical minerals district.
Leif Nilsson, Chief Executive Officer, Surge Copper Corp.
ARM and ARM Copper will sign an investor rights agreement (the “IRA”) concurrently with the closing of the Strategic Placement if ARM maintains minimum ownership thresholds in the company.
The IRA will grant it certain rights, such as the ability to continue owning equity through future equity financings and the ability to designate a member of a technical advisory committee that will be established after the Strategic Placement closes. Furthermore, the IRA will contain a two-year pledge from ARM Copper to support management's recommendations on ordinary items that the company's shareholders must approve.
ARM Copper will also consent in the IRA to a two-year standstill regarding the purchase of further company securities, subject to the usual exceptions for a standstill of this kind, so that ARM Copper would own more than 19.9% of the then-issued and outstanding common shares of the company on a non-diluted basis.
ARM Copper is eligible to propose one director to the company's board of directors, provided that ARM Copper owns at least 19.9% of Surge's issued and outstanding common shares on a non-diluted basis.
The advancement of the Berg Project, exploration, working capital, and general business purposes will be funded by the net proceeds from the Strategic Placement. The approval of the South African Reserve Bank, acceptance by the TSX Venture Exchange, and receipt of the approval by ARM are typical requirements that must be met before the Strategic Placement can close.
The Strategic Placement is anticipated to conclude in four to six weeks. A four-month and one-day statutory hold period will apply to the Strategic Placement Common Shares after the date of issuance.