Spectre Capital (TSX-V:SOO.P) has signed a definitive agreement to acquire Northern Rare Earth (NREC), setting out the terms of its qualifying transaction.
Under the three-cornered amalgamation, a wholly owned Spectre subsidiary will combine with NREC, which will then become a subsidiary of Spectre. NREC shareholders will receive one Spectre share for each NREC share held.
If completed, Spectre expects the resulting company to be renamed Northern Rare Earth Corp and graduate to Tier 2 of the TSX Venture Exchange (TSX-V) as a mining issuer. A new trading symbol will also be assigned.
NREC holds interests in 46 mining titles comprising the Nabisipi Rare Earth Elements Project in the North Shore region in Québec, Canada, about 300km east of Sept-Îles and 100km east of Havre-Saint-Pierre.
The property package includes 36 titles acquired under a purchase agreement and subject to a 1% net smelter returns royalty. NREC also has an option to acquire another eight titles and directly staked the remaining two.
Alongside the transaction, NREC plans to raise at least C$1.5 million ($1.52 million) through a private placement of subscription receipts priced at C$0.25 each.
Each receipt will convert into one NREC share and half a warrant immediately before the transaction closes. Each whole warrant will be exercisable at C$0.40 for 24 months.
Spectre says proceeds will support exploration and development at Nabisipi, as well as general working capital. NREC previously raised C$220,000 in July to cover transaction expenses and working capital.
The deal involves non-arm’s length parties because Michael Townsend — a 10% Spectre securityholder — owns 3.3 million NREC shares. However, Spectre does not expect the arrangement to be treated as a related-party or non-arm’s length qualifying transaction requiring approval from its shareholders.
Completion is still subject to NREC shareholder approval, TSX-V acceptance, and the concurrent financing.
Trading in Spectre shares remains halted while TSX-V reviews the transaction and may not resume before the deal closes. Spectre is a capital pool company formed to identify and complete a qualifying transaction.
Write to France Pinzon at Mining.com.au
Images: Unsplash
