FYRE.P Spitfyre Capital Inc

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TORONTO, June 28, 2023 /CNW/ - Spitfyre Capital Inc. (the "Corporation" or "Spitfyre") (TSXV: FYRE.P) is pleased to announce details concerning its proposed arm's length qualifying transaction (the "Transaction") involving a business combination with NeoTerrex Corporation ("NeoTerrex"), to complete the going public transaction in Canada for NeoTerrex. Spitfyre intends that the Transaction will constitute its "Qualifying Transaction" under Policy 2.4 - Capital Pool Companies of the TSX Venture Exchange (the "TSX-V").

NeoTerrex is a private company incorporated under the Canada Business Corporations Act ("CBCA") and is currently advancing its prospective rare earths and lithium projects located in the province of Quebec, with most of its activities focused on its Mount Discovery project (the "Mount Discovery Project").

NeoTerrex owns a 100% undivided interest in certain mineral claims located in southwestern Quebec constituting the Mount Discovery Project. The property was acquired due to its rare earth elements potential, which was confirmed in 2022 with the discovery of rare earths occurrences over an area of 900m by 300m. Mineralization continuity has also been established on several of these sites, including the King showing where a channel sampling returned over 27 metres grading 3% Total Rare Earths Oxides (TREO). NeoTerrex is in the process of completing a NI 43-101F1 Technical Report on the Mount Discovery Project ("Mount Discovery Technical Report") and will be posting this report on SEDAR in connection with the Transaction. NeoTerrex plans to initiate a follow-up exploration program on the Mount Discovery Project based on the recommendations in the Mount Discovery Technical Report. NeoTerrex also has a 100% interest in two other projects deemed prospective for rare earths. No work to date has been undertaken on these properties.

NeoTerrex also owns a 100% undivided interest in three lithium projects also located within the province of Quebec. NeoTerrex has undertaken limited exploration on two of these projects. The third project reportedly contains the highest lithium value recorded in a grab sample of the entire Côte-Nord region. NeoTerrex plans to undertake its maiden exploration program once ground conditions are deemed favorable.

The Corporation has entered into a non-binding letter of intent with NeoTerrex dated June 28, 2023 (the "LOI") pursuant to which the Corporation and NeoTerrex intend to complete the Transaction by way of a share exchange, purchase, a plan of arrangement, amalgamation, or alternate structure to be determined, having regard to relevant tax, securities and other factors to form the resulting issuer being called "NeoTerrex Corporation" ("Newco"), or such other name as may be determined by NeoTerrex.

Pursuant to the proposed Transaction:

NeoTerrex and Spitfyre will use their commercially reasonable efforts to cause NeoTerrex and, if necessary, Spitfyre to complete a private placement (the "Concurrent Financing") of a minimum of $1,000,000 and up to a maximum of $2,000,000 of subscription receipts of NeoTerrex and/or Spitfyre (the "CS Subscription Receipts") at $0.25 per Subscription Receipt and up to $2,000,000 of flow-through subscription receipts of NeoTerrex (the "FT Subscription Receipts") at $0.35 per FT Subscription Receipt (together, the "Subscription Receipts"). The dollar value of the FT Subscription Receipts sold cannot exceed the dollar value of the CS Subscription Receipts sold. Each CS Subscription Receipt will, following the completion of the Transaction and the satisfaction of the escrow release conditions, entitle the holder to receive, for no additional consideration, one unit of NeoTerrex or Spitfyre (a "Unit"). Each Unit shall consist of one NeoTerrex Common Share or Spitfyre Common Share and one-half of one common share purchase warrant (each a "Concurrent Financing Warrant"). Each whole Concurrent Financing Warrant shall be exercisable into one NeoTerrex Common Share or Spitfyre Common Share, as the case may be, at a price of C$0.40 for a period of 18 months from the escrow release date. Each FT Subscription Receipt will, following the completion of the Transaction and the satisfaction of the escrow release conditions, entitle the holder to receive, for no additional consideration, one flow-through share of NeoTerrex. The proceeds from the Concurrent Financing will be held in trust pending closing of the Transaction.

NeoTerrex plans to engage a syndicate of agents to be led by a firm to be determined (the "Agents") to act as agents on a "best efforts" basis for the Concurrent Financing and if retained would pay a commission to the Agents of up to 7.5% of the gross proceeds raised by the Agents (including selling group members). The Agents may also be granted that number of broker warrants in the aggregate equal up to 7.5% of the number of Subscription Receipts sold by the Agents (including selling group members) in the Concurrent Financing. Half of the commission is expected to be payable on the closing date of the Concurrent Financing. The remaining half of the commission and all of the broker warrants is expected to be payable and issuable, respectively, to the Agents (and selling group members, as applicable) upon closing of the Transaction.

If requested by NeoTerrex, Spitfyre shall take all action necessary to effect a continuance of Spitfyre from the governing legislation of the Business Corporations Act (Ontario) to the CBCA (the "Continuance").

The Transaction does not constitute a Non-Arm's Length Qualifying Transaction as that term is defined in Policy 2.4 of the TSX-V. A more comprehensive news release will be issued by the Corporation disclosing details of the Transaction, including financial information respecting NeoTerrex, further details regarding the Concurrent Financing, the names and backgrounds of all persons who will constitute insiders of Newco, and information respecting sponsorship, once certain conditions have been met, including:

The LOI expires on August 31, 2023 if the formal agreement has not been executed, and the Corporation and NeoTerrex have agreed not to solicit or enter into any agreements that would reasonably be expected to interfere with or prevent the Transaction, from the time of entering into the LOI until August 31, 2023.

Shareholder approval is not required with respect to the Transaction under the rules of the TSX-V. However, the structure of the Transaction has not yet been finalized so shareholder approval under corporate law may be required and a meeting of shareholders of the Corporation may be held prior to the closing of the Transaction to approve one or more of the Continuance, a name change, a new stock option plan and electing the board of directors. Trading in the common shares of the Corporation will remain halted and is not expected to resume trading until the Transaction is completed or until the TSX-V receives the requisite documentation to resume trading.

NeoTerrex's disclosure of a technical or scientific nature in this news release was reviewed and approved by Mathieu Stephens, P. Geo (Quebec), who is a qualified person under the definition of National Instrument 43-101. Mr. Stephens is an officer of NeoTerrex and is not independent of NeoTerrex under National Instrument 43-101.

Forward-Looking Information Cautionary Statement

Certain statements contained in this news release constitute forward-looking information within the meaning of Canadian securities laws regarding Spitfyre, NeoTerrex and their respective businesses, which may include, but are not limited to, statements with respect to the Mount Discovery Project, the lithium and other prospective projects, the Mount Discovery Technical Report, the Concurrent Financing, the Transaction, approval of the Transaction by the board of directors of the Corporation and NeoTerrex, respectively, completion of due diligence, execution of the formal agreement, approval of the TSX-V, shareholder approval of certain matters and certain forward-looking statements relating to NeoTerrex's business generally. The use of any of the words "will", "expected", "view" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Corporation's current belief or assumptions as to the outcome and timing of such future events, and are based on assumptions and subject to risks and uncertainties. Although the management of each entity believes that the assumptions underlying these statements are reasonable, actual future results may differ materially. In particular, statements pertaining to the terms and completion of the Transaction constitute forward-looking information. Actual results and developments may not occur or could differ materially as a result of known and unknown risk factors and uncertainties affecting the companies, including risks regarding market conditions, economic factors, management's ability to manage and operate the business of Newco and the equity markets generally from those contemplated by forward-looking information. Although Spitfyre and NeoTerrex have attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Readers are cautioned not to place undue reliance on forward-looking information. No statement that is forward looking can be guaranteed. The statements made in this news release are made as of the date hereof. The Corporation and NeoTerrex disclaim any intention or obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as may be expressly required by applicable securities laws.

Spitfyre is a capital pool company governed by the policies of the TSX-V. The principal business of Spitfyre is the identification and evaluation of assets or businesses with a view to completing a Qualifying Transaction.

Completion of the Transaction is subject to a number of conditions, including but not limited to, execution of a formal agreement relating to the Transaction, completion of satisfactory due diligence, TSX-V acceptance, receipt of requisite regulatory approvals, and if applicable pursuant to TSX-V requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approvals, and any ancillary matters thereto, are obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX-V has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this news release.

NEITHER THE TSX-V NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN POLICIES OF THE TSX-V) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

SOURCE Spitfyre Capital Inc.