Omnia Metals (ASX:OM1) has received a notice of civil claim from Dixie Gold (TSX-V:DG) in connection with a proposed acquisition.
On 24 October 2023, Omnia and Dixie entered a proposed acquisition agreement. Between the dates of 25 October and 19 February 2024, Omnia says it endeavoured to satisfy the customary conditions particularised in a letter in order to complete the proposed acquisition.
The company says the response by the customary third parties, while initially ‘very positive’, turned negative due to current market conditions and overall subdued sentiment in the lithium sector.
Despite best efforts – and in light of the position of Omnia’s shareholders and potential capital raising partners – Omnia was unable to satisfy the conditions to execute the proposed deal.
The letter and the completion of the acquisition was, amongst other conditions, conditional upon Omnia and Dixie entering into a formal acquisition agreement by 19 February 2024.
As a result, as Omnia is unable to meet the closing conditions in order to complete the acquisition, no formal agreement has been entered into and no extension of the end date has been agreed.
Accordingly, the letter has been terminated in accordance with the terms. The company’s decision not to pursue the transaction was considered as the ‘only reasonable decision’ and was made in after a protracted period of negotiation and due diligence.
Dixie’s claim is for damages for breach of contract and misrepresentation in respect of the Omnia’s inability to complete the acquisition pursuant to the letter. Dixie is reportedly seeking specific performance of the letter.
Omnia maintains that it is within its rights pursuant to the letter to terminate the letter due to market factors that would cause Omnia to be unable to meet closing conditions.
The quantum of the claim has not yet been specified by Dixie.
The company has 21 days to prepare and file its response to the civil claim. Omnia denies Dixie’s purported claim in its entirety.
The company believes it has valid defences against the claim and intends to fully defend itself. The company remains focused on near-term exploration opportunities at existing assets, including its IPO assets, and the Lac des Montagnes Lithium Project in the ‘highly prospective’ James Bay region of Quebec.
Additionally, it will continue to assess further acquisition opportunities which complement its existing future metals focus. The company will also look to complete a capital raise in the near future, subject to prevailing market conditions.
The raise will be used to fund the review of potential acquisitions, exploration at the Company’s existing assets and general working capital. Omnia is working with the ASX to have the suspension of its securities lifted.
Write to Adam Orlando at Mining.com.au
Images: Omnia
