Vancouver, British Columbia–(Newsfile Corp. – February 2, 2022) – Column Capital Corp. (TSXV: CPC.P) (“CPC“), a capital pool company, is pleased to announce that it has entered into a non-binding letter of intent dated February 1, 2022 (“Letter of Intent“) with Largo Physical Vanadium Corp. (“LPV“). The Letter of Intent outlines the general terms and conditions pursuant to which CPC and LPV expect to effect a business combination that will result in CPC acquiring all of the issued and outstanding securities of LPV in exchange for securities of CPC and will result in a reverse-takeover of CPC by LPV (the “Proposed Transaction“). The Proposed Transaction will constitute the “Qualifying Transaction” of CPC under the policies of the TSX Venture Exchange (the “Exchange“), as such term is defined in Exchange Policy 2.4 – Capital Pool Companies (“Exchange Policy 2.4“).
All amounts referred to herein are in Canadian dollars unless otherwise indicated.
Terms of the Proposed Transaction
Pursuant to the terms of the Letter of Intent, CPC and LPV will negotiate and enter into a definitive agreement and other transaction documentation, incorporating the principal terms of the Letter of Intent. Upon completion of the Proposed Transaction, CPC will have acquired 100% ownership of LPV and the business of LPV will become the business of the entity resulting from the Proposed Transaction (the “Resulting Issuer“). The final structure for the Proposed Transaction is subject to satisfactory tax, corporate and securities law advice on the part of both CPC and LPV. There is no assurance that a definitive agreement will be successfully negotiated or entered into.
The Proposed Transaction is not a “Non-Arm’s Length Qualifying Transaction” within the meaning of Exchange Policy 2.4 and, as such, shareholder approval is not required (unless otherwise mandated by the Exchange).
Prior to entering into a definitive agreement in respect of the Proposed Transaction, LPV will complete a private placement for up to USD$500,000 (the “LPV Private Placement“). The proceeds from the LPV Private Placement will be used for LPV expenses incurred to date and for general working capital purposes.
If CPC and LPV enter into a definitive agreement in respect of the Proposed Transaction. CPC will issue a comprehensive press release at that time in accordance with the policies of the Exchange containing details of the definitive agreement and additional terms of the Proposed Transaction, including the proposed directors and officers of the Resulting Issuer upon completion of the Proposed Transaction.
Completion of the Proposed Transaction is subject to a number of conditions, including, but not limited to, the completion of the Concurrent Financing (defined below), completion of the Largo Contribution In-Kind (defined below), receipt of applicable regulatory and stock exchange approvals, including the approval of the Exchange for the Proposed Transaction, completion of satisfactory due diligence and the execution of the definitive agreement and related transaction documents.
Strategy of the Resulting Issuer
Upon completion of Proposed Transaction, the Resulting Issuer will be a new investor friendly vehicle with a mandate to invest in physical vanadium or commercial vanadium products. The Resulting Issuer would provide a secure, convenient and exchange traded alternative for investors interested in direct investment exposure to physical vanadium and its use in ESG-friendly energy transition and storage alternatives, including vanadium redox flow batteries (“VRFBs“) and green steel applications. Physical inventory purchased by the Resulting Issuer will be unencumbered, other than by rights under the Safekeeping Agreement (defined below), and fully allocated to investors. Growth in new economy use cases, greener steel, supplemental use in lithium-ion batteries, smart glass and other traditional uses is expected to increase vanadium requirements and usage.
Over time it is anticipated that a large portion of the Resulting Issuer’s inventory will be utilized in long duration VRFBs. Vanadium in electrolyte solution, which is utilized in rechargeable VRFBs, is not subject to degradation, is 100% reusable and can easily be converted back to powder/flake for regular warehouse storage upon termination and/or completion of a VRFB installation contract. Vanadium utilized in VRFBs always remains under oversight and management of Largo (as defined below), in its capacity as safekeeper (the “Safekeeper“) under the Safekeeping Agreement (defined below), and associated conversion costs between electrolyte and powder/flake requirements are also borne by the Safekeeper.
The expected use of vanadium in VRFBs will be aligned with ESG principles, and is expected to enhance VRFBs’ market competitiveness regardless of the underlying vanadium price. More specifically, vanadium utilized in a VRFB installation will remain under full ownership of the Resulting Issuer and not be part of the upfront installation capital borne by the VRFB end user, a strategic advantage in the development and price competitiveness of the VRFB market relative to other long duration storage alternatives. As such, it is anticipated that VRFBs will be one driver of vanadium price and will assist with the global clean energy transition through increased renewable energy integration.
Further to the above, Paul Misk, President and CEO of Largo Inc. (“Largo“) has this to say about the potential for the VRFB market: “Demand for long duration energy storage is fast-growing as governments and large organization push for net zero goals. According to the Long Duration Energy Council, long duration energy storage will have to be scaled up to ~400x present day levels to 85-140 TWh by 2040 and 10% of all electricity generated would need to be stored in long duration energy at some point.[1] VRFBs have emerged as a preferred long duration renewable energy storage system for safe and continuous energy storage over a 20+ year life cycle with zero degradation. Driven by investor interest in direct investment exposure to physical vanadium, the Resulting Issuer is expected to provide an opportunity to drive demand for long duration VRFB systems and offer a low-cost solution to potential VRFB customers through the continuation of a vanadium electrolyte rental model, minimizing CAPEX requirements.”
Through various operating agreements to be entered into concurrently with the Proposed Transaction, the Resulting Issuer will be aligned with Largo, a leader in vanadium production, which is one of the world’s largest primary vanadium producers and is undergoing a strategic transformation to vertically integrate its world-class vanadium products with its VCHARGE vanadium battery technology to support the planet’s on-going transition to renewable energy and a low carbon future. Sprott Capital Partners LP (“SCP“) has entered into an advisory agreement with Largo in respect of the creation of LPV. SCP will be appointed lead agent for the Concurrent Financing (defined below) on terms and conditions customary for a transaction of this nature and it is anticipated that SCP will enter into an advisory agreement with the Resulting Issuer for marketing, capital markets and board advisory matters related to the purchase of vanadium products.
In addition, Largo will provide for the management and safekeeping of the physical vanadium owned by the Resulting Issuer as part of a safekeeping agreement to be entered into between Largo and the Resulting Issuer (the “Safekeeping Agreement“).
Name Change
In connection with the Proposed Transaction, the Resulting Issuer intends to change its name to “Largo Physical Vanadium Corp.” or such other similar name as is determined by LPV and acceptable to applicable regulators, and will also apply to change its stock symbol.
Concurrent Financing
As a condition to the closing of the Proposed Transaction, CPC or LPV will complete a fully marketed private placement (“Concurrent Financing“) to raise minimum gross proceeds of $5 million and up to $25 million. Terms of the Concurrent Financing will be determined in the context of the market.
SCP will be appointed lead agent for the Concurrent Financing, on customary terms and conditions for a transaction of this nature. Additional details of the Concurrent Financing will be outlined in a future press release of CPC.
The proceeds of the Concurrent Financing will be used to fund the business of the Resulting Issuer, including general and administrative expenses for the Resulting Issuer, for certain transaction expenses incurred by LPV and for general working capital purposes.
Largo Contribution In-Kind
As a condition to closing of the Proposed Transaction, Largo will exchange vanadium equivalent products to the Resulting Issuer in exchange for common shares of the Resulting Issuer, on terms and conditions generally similar to the Concurrent Financing (the “Largo Contribution In-Kind“). The size of the Largo Contribution In-Kind and applicable discounts on the vanadium equivalent product price will be based on the availability of material and take other market related factors into consideration at the time.
In addition, the Resulting Issuer will enter into an agreement with Largo for a right of first refusal over any non-committed commercial vanadium equivalent products from January to October of any fiscal year from Largo, in its capacity as a technical advisor.
Trading Halt
Trading of CPC’s shares has been halted at CPC’s request and will remain halted pending the Exchange’s receipt of satisfactory documentation and completion of the Proposed Transaction.
Sponsorship of the Proposed Transaction
Sponsorship of a “Qualifying Transaction” of a capital pool company is required by the Exchange unless exempt in accordance with Exchange policies. CPC is currently reviewing the Exchange’s requirements for sponsorship and intends to seek a waiver of the sponsorship requirements. However, there is no assurance that a waiver from this requirement can or will be obtained.
About Column Capital Corp.
CPC was incorporated under the Business Corporations Act (British Columbia) in November of 2020. CPC is listed as a capital pool company on the Exchange and its common shares are listed for trading on the Exchange under the symbol CPC.P. CPC’s business objective is to identify and evaluate assets or businesses with a view to a potential acquisition by completing a Qualifying Transaction (like the Proposed Transaction). Its head office is in Vancouver, British Columbia.
CPC’s share capital consists of 3,450,000 common shares of which 2,100,000 common shares are held in escrow and will be released over a period of up to 18 months following completion of the Proposed Transaction, and CPC has 225,000 stock options exercisable for common shares at a price $0.15 each expiring June 15, 2026, and 100,000 warrants exercisable for common shares at a price $0.15 each and expiring on June 15, 2023.
About Largo Physical Vanadium Corp.
Largo Physical Vanadium Corp. is a corporation formed under the laws of the Province of British Columbia.
LPV was formed by Largo Inc. (TSX: LGO) as a means to invest and hold substantially all of its assets in physical vanadium (as contained in commercial vanadium products, as measured in vanadium unit equivalent). LPV aims to provide a secure, convenient and exchange-traded investment alternative for investors interested in direct investment exposure to physical vanadium and not speculate with regard to short-term changes in vanadium prices.
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