RNS Number : 9345U Cornish Metals Inc. 28 January 2025 THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, AUSTRALIA, HONG KONG, SINGAPORE, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A BREACH OF THE RELEVANT SECURITIES LAWS OF SUCH JURISDICTION. THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE A PROSPECTUS OR OFFERING MEMORANDUM OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMENDATION, OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE OR DISPOSE OF ANY SECURITIES OF CORNISH METALS INC. OR ANY OTHER ENTITY IN ANY JURISDICTION. NEITHER THIS ANNOUNCEMENT NOR THE FACT OF ITS DISTRIBUTION, SHALL FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH ANY INVESTMENT IN RESPECT OF CORNISH METALS INC. This Announcement contains inside information for the purposes of the UK version of the Market Abuse Regulation (EU No. 596/2014) as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended by the European Union (Withdrawal) Act 2020 ("UK MAR"). In addition, market soundings (as defined in UK MAR) were taken in respect of certain of the matters contained in this Announcement, with the result that certain persons became aware of such inside information, as permitted by UK MAR. Upon the publication of this Announcement, this inside information is now considered to be in the public domain and such persons shall therefore cease to be in possession of inside information. 28 January 2025 Cornish Metals Inc ("Cornish Metals" or the "Company") Strategic Investment and Proposed Fundraising of a minimum of £56 million Cornish Metals Inc. (AIM/TSX-V: CUSN), a mineral exploration and development company focused on the advancement and restart of its 100% owned-and-permitted South Crofty high-grade tin project in Cornwall, the United Kingdom, is pleased to announce that it is undertaking a proposed fundraising to raise a minimum of £56 million (the "Fundraising"). As part of the Fundraising, the Company today announces that it has conditionally raised up to £28.75 million by way of a strategic investment by the National Wealth Fund Limited ("NWF"), a company wholly-owned by HM Treasury (the "NWF Subscription"), pursuant to which NWF has conditionally agreed to subscribe for up to 359,375,000 new common shares of no par value each ("Common Shares") (the "NWF Subscription Shares") at 8 pence per share (the "Issue Price"). The NWF Subscription Shares are subject to the scale back arrangements as described below, subject to NWF investing a minimum of £25 million (before expenses). Vision Blue Resources Limited ("Vision Blue" or "VBR"), which currently holds approximately 25.95 per cent. of the issued share capital of the Company, has also conditionally agreed to subscribe at the Issue Price (the "VBR Subscription") as follows: (i) for such number of new Common Shares which are required in order to maintain its c. 25.95 per cent. ownership interest in the Company following the results of the Fundraising pursuant to the exercise of its Participation Right (as more fully described below) (the "VBR Participation Right Shares"); and (ii) in addition and separately from its Participation Right, such further number of Common Shares as shall be required in order for the VBR Subscription to raise, in aggregate, up to a maximum of £18,280,550 (before expenses) for the Company (the "VBR Additional Subscription Shares" and, together with the VBR Participation Right Shares, the "VBR Subscription Shares"). The VBR Additional Subscription Shares are subject to the scale back arrangements as described below, subject to VBR subscribing for a minimum number of Common Shares to maintain its c. 25.95% ownership interest in the Company immediately following the completion of the Fundraising. The Company also announces that it has engaged each of H&P Advisory Ltd ("Hannam & Partners") and SP Angel Corporate Finance LLP ("SP Angel") as joint bookrunners ("Joint Bookrunners") and Canaccord Genuity Limited ("Canaccord Genuity") as co-manager ("CoManager") (the Joint Bookrunners and the Co-Manager, together, the "Placing Agents") to raise c. £8.8 million (before expenses) by way of a conditional placing to both new and existing institutional and other investors (the "Placing") at the Issue Price. The Company has also granted the Placing Agents a broker option pursuant to which an additional up to c.£5.9 million may be raised at the Issue Price subject to demand following the release of this Announcement (the "Broker Option"). The Broker Option may be exercised at any time by the Placing Agents prior to the release of the announcement of the results of the Fundraising by the Company. In addition, all of the Directors other than John McGloin (the "Participating Directors") have conditionally subscribed with the Company or participated in the Placing for, in aggregate, 1,597,561 new Common Shares (the "Director Participation Shares") at the Issue Price, raising £127,805 for the Company (before expenses) (the "DirectorParticipations"). In order to provide the Company's existing retail shareholders the opportunity to participate in the Fundraising, the Company also intends to carry out a separate retail offer to raise further gross proceeds of up to £3.0 million at the Issue Price via the BookBuild Platform (the "Retail Offer"). A separate announcement will be made shortly regarding the Retail Offer and its terms. The Retail Offer is expected to close on 31 January 2025. Accordingly, the final results of the Fundraising, including VBR's and NWF's final participation, will be confirmed and announced following the results of the Retail Offer. Capitalised terms in the announcement which are not otherwise defined shall have the meaning as set out in Appendix II. Highlights of the Fundraising: The Fundraising will raise a minimum gross proceeds of approximately £56 million (before expenses) comprising: · the NWF Subscription, raising up to £28.75 million (before expenses) through the issue of up to 359,375,000 NWF Subscription Shares (subject to scaleback) at the Issue Price; · the VBR Subscription to raise up to £18,280,550 (before expenses), comprising: (i) the subscription by VBR at the Issue Price for such number of VBR Participation Right Shares as shall be required in order to maintain its percentage ownership interest (approximately 25.95 per cent.) in the Company following the Fundraising pursuant to its Participation Right; and (ii) the separate and additional subscription for the VBR Additional Subscription Shares (subject to scaleback); · the Placing to raise c.£8.8 million (before expenses) at the Issue Price together with the Broker Option to accommodate any additional demand following the release of this announcement; · the Director Participations to raise £127,805 (before expenses) through the issue of 1,597,561 Director Participation Shares at the Issue Price; · the Retail Offer to raise up to £3.0 million (before expenses) through the issue of up to 37,500,000 new Common Shares (the "Retail Offer Shares") at the Issue Price. A further announcement will be made shortly in connection with the Retail Offer. · The proceeds of the Fundraising will be principally used to ensure that the Company can continue with its path to development through competing the shaft refurbishment and dewatering process, the start of early project works, ordering long lead items and completion of the project finance process and up to the point of the formal final investment decision at its South Crofty Tin Mine. · The Issue Price of 8p (converted into Canadian dollars at the Bank of Canada's closing exchange rate for January 24, 2025 of C$1.7873/£1) represents a discount of approximately 3.61 per cent. to the closing middle market price of 8.3 pence per Common Share on 27 January 2025, being the latest practicable date prior to the date and time of this Announcement, and a discount of approximately 1.39 per cent. to the closing price of C$0.145 per Common Share on 27 January 2025, being the last closing price of the Common Shares trading on the TSX Venture Exchange ("TSX-V") prior to the date and time of this Announcement. · The Placing will be effected by way of an accelerated bookbuild process (the "Bookbuild"). The PlacingAgentswill commence the Bookbuild immediately following the release of this announcement and will be conducted in accordance with the terms of conditions set out in Appendix I to this announcement. The number of Placing Shares (including any new Common Shares to be issued pursuant to the Broker Option (the "Broker Option Shares") in the event there is excess demand which can be accommodated) will be determined at the end of the Bookbuild. A further announcement confirming closing of the Bookbuild and the number of Placing Shares to be issued pursuant to the Placing is expected to be made in due course. · Any BrokerOptionShares issued shall scale back both the NWF Subscription Shares and the VBR Additional Subscription Shares on an equal basis as follows: for every 1 (one) Broker Option Share subscribed for; the number of NWF Subscription Shares shall be reduced by 0.5 (i.e. half a share) and the number of VBR Additional Subscription Shares shall be reduced by 0.5 (half a share) with the number of shares being subscribed for being rounded up in each case to a full share) provided that: (i) NWF shall invest a minimum of £25 million; and (ii) VBR shall, in accordance with its Participation Right, subscribe for at least such number of VBR Participation Right Shares as shall ensure it maintains its c. 25.95% ownership interest in the Company immediately following completion of the Fundraising. Given the results of the Retail Offer will only be announced following the results of the Placing (and any exercise of the Broker Option), the Company will confirm the final results of the Fundraising (including the number of NWF Subscription Shares and VBR Subscription Shares subscribed for once the results of the Retail Offer are confirmed.) · The VBR Subscription, the Placing and the Director Participations are being undertaken in two tranches as the Company, at the date of this announcement, has insufficient authorities from its shareholders to issue all of the VBR Subscription Shares, Placing Shares and Director Participation Shares. Accordingly, the Company plans to utilise the share issuance authorities that it was granted at its annual general and special meeting held on June 4, 2024 to issue the First Tranche New Shares (being up to a maximum of 133,817,678 new common shares and comprising: (i) 34,722,222 of the VBR Subscription Shares, representing a portion of the VBR Participation Right Shares ("First Tranche VBR Subscription Shares"); (ii) 97,698,902 of the Placing Shares ("First Tranche Placing Shares"); and (iii) 1,396,554 of the Director Participation Shares ("First Tranche Director Participation Shares")).For further details regarding the Company's share issuance authorities, please refer to the Company's management information circular datedApril 19, 2024 for the annual general and special meeting held on June 4, 2024, a copy of which is availableon the Company's profile on SEDAR+ atwww.sedarplus.ca. · Any new Common Shares of the Company which are not issuable by the Company in the first tranche of the Fundraising pursuant to the Company's existing share issuance authorities shall be issued by the Company conditional upon the Company obtaining new share issuance authorities from shareholders at a special meeting of shareholders of the Company (the "Special Meeting") to be held on or about March 18, 2025.The Company has filed a notice of meeting and record date in respect of the Special Meeting, a copy of which is availableon the Company's profile on SEDAR+ atwww.sedarplus.ca. · Subject to receipt of all necessary approvals, including approvals from the shareholders at the Special Meeting and the approval of the TSX-V, the Company expects to issue the remaining VBR Subscription Shares, representing the remaining portion of the VBR Participation Right Shares plus the VBR Additional Subscription Shares ("Second Tranche VBR Subscription Shares"); remaining Placing Shares ("Second Tranche Placing Shares"); remaining Director Participation Shares ("Second Tranche Director Participation Shares"); all of the Retail Offer Shares; and all of the NWF Subscription Shares (together the "Second Tranche New Shares") and expects such remaining shares to be admitted to trading on AIM and the TSX-V shortly after the Special Meeting. · It is important to note that the First Tranche New Shares shall be issued on First Admission of those shares to trading on AIM, which, subject to TSXV Conditional Approval, is expected to occur at 8.00 a.m. on 06 February 2025 (or such later date as the Company and the Placing Agents may agree). If the conditions to the issue of the Second Tranche New Shares are not subsequently satisfied (including the passing of the necessary shareholder resolutions at the Special Meeting, TSXV Conditional Approval and the NWF Subscription Agreement becoming unconditional in all respects), the Second Tranche New Shares will not be issued by the Company and neither the NWF Subscription nor the Retail Offer will proceed, notwithstanding the fact that the First Tranche New Shares will already be in issue.None of the NWF Subscription Shares nor the Retail Offer Shares will be issued in the first tranche of the Fundraising. · Neither the Placing, Director Participations nor the Retail Offer are underwritten. The Placing is subject to the terms and conditions set out in Appendix I to this Announcement (which forms part of this Announcement). Don Turvey, CEO of Cornish Metals, commented:"We are very pleased to welcome NWF as a major shareholder in Cornish Metals and to lead this fundraise alongside Vision Blue, demonstrating support for the Company and our plans to bring tin mining back to Cornwall. Tin is a critical mineral that is essential for the energy transition and anything electronic. South Crofty is a strategic asset with the ability to responsibly provide a secure, high grade long-term supply of tin, reviving Cornwall's rich mining history and contributing to the local economy and the UK's transition to net zero. The Cornish Metals team has achieved many important milestones over the last couple of years as we rapidly advance South Crofty towards a restart of production. This financing will enable the Company to maintain this strong momentum and further unlock the project's potential by delivering crucial milestones expected in the coming year including the completion of mine dewatering and shaft refurbishment, the start of early project works, placing orders for long-lead items, and concluding the project finance process." John Flint, CEO of NWF, commented:"Critical minerals are not only an important driver of the UK's transition to net zero, but also of the UK's growth mission, providing opportunities to anchor important supply chains in the UK. This is our second investment in critical minerals in Cornwall, and indicative of our ability to mobilise private investment into local economies, creating skilled and long-term employment." Rationale for the Fundraising Subject to shareholder approval and the issue of the Second Tranche New Shares, the Fundraising will enable the Company to further de-risk the South Crofty Project and advance it towards a formal final investment decision by: · bringing the South Crofty Project nearer to production by funding approximately £20m of the South Crofty Project's initial capital expenditure requirements; · commencing early project works, including initial construction of the groundworks for the processing plant; · placing orders for long-lead items of plant and equipment; and · advancing detailed project engineering studies; Use of proceeds In addition to the Company's current cash balances (being £5.3 million as at 31 December 2024), the proceeds of the Fundraising will be allocated towards the following workstreams: · £13.3 million for mining and related works and dewatering; · £17.2 million for early works and long-lead items; · £5.1 million for project engineering studies; · £7.8 million for the repayment of the credit facilityplus accrued interest provided by Vision Blueto the Company, details of which were announced on 15 October 2024; · £12.6 million for South Crofty site costs, facilities and land purchase, financing fees associated with the Fundraising and corporate costs. The Fundraising is expected to provide financial runway through to the end of Q1 2026 with project debt finance to be arranged before then and a final investment decision expected at that time. The proceeds from the Retail Offer Shares issued and any Broker Option Shares issued in excess of the scale back of NWF and VBR will provide additional working capital to the Company. The NWF Subscription NWF is operationally independent but wholly-owned and backed by HM Treasury. It was launched in June 2021 as the UK Infrastructure Bank, transforming into the National Wealth Fund in October 2024. The Fund partners with the private sector and local government to increase investment in pursuit of two strategic objectives: tackling climate change and driving growthacross the regions and nations of the United Kingdom. NWF's investments must achieve one or both of its strategic objectives, generate a positive financial return and demonstrate additionality - focusing where there is an undersupply of private sector financing and reducing barriers to investment - thereby mobilising private capital. NWF is based in Leeds and has £27.8bn of finance to deploy across the capital structure, including loans, credit enhancement, equity investments and guarantees. NWF has entered into a conditional agreement with the Company dated 28 January, 2025 (the "NWF Subscription Agreement") pursuant to which it has agreed to subscribe for up to 359,375,000 NWF Subscription Shares at the Issue Price, raising a total of up to £28.75 million for the Company (and a minimum of £25 million). The number of NWF Subscription Shares to be subscribed for will be scaled back by the number of Broker Option Shares issued (if any) subject to a minimum investment from NWF of £25 million. The scale back will affect the NWF Subscription Shares and the VBR Additional Subscription Shares on an equal basis such that every 1 (one) Broker Option Share issued will scale back the NWF Subscription Shares by 0.5 (i.e. half a share) and the VBR Additional Subscription Shares by 0.5 (half a share) (with the number of shares being subscribed for by each of NWF and VBR being rounded up to a full share). Subject to receipt of all necessary approvals, including approvals from the shareholders at the Special Meeting and TSXV Conditional Approval, completion of the NWF Subscription shall occur on Second Admission. No NWF Subscription Shares will be issued on First Admission. The NWF Subscription is subject to certain conditions, including, among other things: (a) receipt of the requisite shareholder approvals at the Special Meeting to approve the creation of NWF as a new "Control Person" of the Company within the meaning of applicable Canadian securities laws and the satisfaction of other customary closing conditions in the NWF Subscription Agreement; (b) all other resolutions being passed at the Special Meeting; (c) all necessary approvals from the TSXV in respect of the completion of all of the transactions contemplated by the Fundraising, which, for certainty, shall include the transactions contemplated by the NWF Subscription Agreement, VBR Subscription Agreement, the Placing Agreement and the Debt Set-Off Agreement, which approvals shall include, without limitation, Conditional Acceptance (within the meaning of Policy 4.1 of the TSXV Rules) and acceptance of the Debt Set-Off Agreement by the TSXV pursuant to Policy 4.3 of the TSXV Rules, and the fulfilment by the Company of all applicable conditions set forth in such Conditional Acceptance or acceptance, respectively, prior to the issuance of the New Shares, on the terms and conditions contemplated in the Fundraising and the listing of the New Shares on the TSXV ("TSXV Conditional Approval") (d) should, following the results of the Bookbuild, NWF hold over 25 per cent. of the Company's issued and outstanding Commons Shares (which shall be confirmed following the results of the Bookbuild), the Secretary of State confirming, inter alia, that no action will be taken under the UK National Security and Investment Act 2021 in relation to the NWF Subscription; (e) the Company having obtained title insurance in respect of its registered land, and for its unregistered land on commercially acceptable terms, with an indemnity limit of £28.75 million; (f) the Company having received irrevocable legally-binding commitments by all participants in the Fundraising raising gross proceeds of, in aggregate, at least £56 million (before expenses); (g) the Placing Agreement becoming unconditional in all respects save for Second Admission (and save for any condition therein relating to the NWF Subscription Agreement itself or the other transaction documents becoming unconditional) and not having been terminated; (h) the VBR Subscription Agreement and the Debt Set Off Agreement becoming unconditional in all respects save for Second Admission (and save for any condition relating to the NWF Subscription Agreement itself or the other transaction documents becoming unconditional) and to the extent they are not set off under the Debt Set Off Agreement, the subscription monies for the Second Tranche VBR Subscription Shares having been received by the Company (or on the Company's behalf by its solicitors); (i) the Director's Participation agreements becoming unconditional in all respects save for Second Admission (and save for any condition therein relating to the NWF Subscription Agreement itself or the other transaction documents becoming unconditional) and not having been terminated; (j) First Admission having occurred; and (k) admission of the Second Tranche New Shares (including the NWF Subscription Shares) taking place not later than 8.00 am on 24 March 2025 or such later date as is agreed in writing between the Company and NWF, but in any event not later than 8.00 am on 25 April 2025. Application will also be made to the TSX-V to approve the issuance and listing of the NWF Subscription Shares. The NWF Subscription Agreement contains representations and warranties from the Company in favour of NWF. The NWF Subscription Agreement may be terminated by NWF in certain circumstances prior to Second Admission, including circumstances where any of the representations and warranties are or could reasonably be expected to become untrue, inaccurate or misleading, the Placing Agreement is terminated or there has occurred, in NWF's opinion, any fact, matter, event, circumstance, condition or change occurring which materially and adversely affects the business, operations, assets, liabilities, condition (whether financial or otherwise) of the Company and its affiliates (the "Group") or the South Crofty Project taken as a whole. The NWF Subscription Agreement grants the following rights to NWF for so long as its shareholding and those of its affiliates in the Company is not less than 10 per cent. of the Company's issued and outstanding Shares: (a) NWF may nominate from time to time one person to the Company's board of directors and a further person as an observer at board meetings; (b) NWF will have a participation right to maintain its percentage ownership interest in the Company upon any offering of securities for cash; and (c) certain "demand registration" and "piggy back" registration rights for such time as the Company remains a reporting issuer in Canada, further details of which will be provided the management information circular in respect of the Special Meeting. Cornish Metals' Board have also provided an undertaking to NWF that it shall use all reasonablebut commercially prudentendeavours to effect a delisting of the share capital of the Company from the TSX-V and a re-domiciliation of the Company to England & Wales within 12 months following the conclusion of the Fundraising at Second Admission. Relationship Agreement In addition to the NWF Subscription Agreement, the Company, SP Angel and NWF, subject to Second Admission, will enter into the Relationship Agreement pursuant to which, for so long as the Company's shares remain admitted to trading on AIM and NWF holds at least 10 per cent. of the issued share capital of the Company, NWF has undertaken to the Company and (for as long as it remains nominated adviser to the Company) SP Angel, that it shall, and it shall procure that each of its associates shall, exercise the voting rights attaching to their Common Shares so that, inter alia: (a) the Group is capable at all times of carrying on business independently of NWF and its associates; (b) the Company shall be capable of being managed in accordance with the Corporate Governance Code published by the UK's Quoted Companies Alliance (the "QCA Code") and the applicable Canadian corporate governance provisions or any other corporate governance regime adopted by the board of directors from time to time; (c) all transactions or arrangements entered into between any member of the Group on the one hand and NWF and/or its associates on the other will be made at arm's length and on a normal commercial basis and in compliance with, and disclosed in accordance with, all applicable laws and regulations including the AIM Rules for Companies published by London Stock Exchange plc, as amended or reissued from time to time; and (d) there are and remain at all times a majority of directors who do not have a significant business, financial or commercial relationship with NWF on the Board and not less than two directors who are at the relevant time considered by the Board to be independent, as determined by reference to the QCA Code. The Relationship Agreement will terminate on NWF, together with any of its associates, ceasing to hold an interest in 10 per cent. or more of the voting rights attaching to their Shares. VBR's Subscription and the Vision Blue Debt Set Off Agreement On May 24, 2022, the Company completed a £40,500,000 private placement offering of units (comprising shares and warrants) of the Company (the "2022 Offering"). In connection with the 2022 Offering, the Company and Vision Blue entered into an investment agreement dated 27 March 2022 (the "VBR 2022 Investment Agreement"), pursuant to which, among other things, for so long as Vision Blue holds not less than 10% of the Company's issued and outstanding common shares, Vision Blue has a participation right to maintain its percentage ownership interest in the Company upon any offering of securities at the issue price and similar terms as are applicable to such offering (the "Participation Right"). As at the date of this Announcement, Vision Blue's ownership interest in the common shares of the Company is currently approximately 25.95 per cent. On October 15, 2024, the Company entered into a US$9.1 million (£7.0 million) secured credit facility (the "Facility") with Vision Blue to support the continued development of the South Crofty Project, with the proceeds of such Facility being used for the Company's general operating and corporate purposes. In accordance with the terms of the VBR 2022 Investment Agreement, the Fundraising has permitted Vision Blue to exercise its Participation Right upon the terms and condition of the VBR 2022 Investment Agreement and Vision Blue has accordingly entered into the VBR Subscription Agreement pursuant to which it has conditionally agreed to subscribe for such number of VBR Participation Right Shares at the Issue Price as is required in order to maintain its percentage ownership interest in the Company following completion of the Fundraising (which is approximately 25.95 per cent. of the issued share capital of the Company). Separately from its Participation Right, Vision Blue has also conditionally agreed to subscribe for such further VBR Additional Subscription Shares which would be required in order for the VBR Subscription to raise, in aggregate, up to a maximum of £18,280,550 (before expenses) for the Company. The number of VBR Additional Subscription Shares to be subscribed for will be scaled back by the number of Broker Option Shares issued (if any) subject to a minimum investment from VBR to maintain its percentage ownership interest in the Fundraising of c. 25.95 per cent. The scale back will affect the VBR Additional Subscription Shares and the NWF Subscription Shares on an equal basis such that every 1 (one) Broker Option Share issued will scale back the NWF Subscription Shares by 0.5 (i.e. half a share) and the VBR Additional Subscription Shares by 0.5 (half a share) (with the number of shares being subscribed for by VBR being rounded up to a full share). In connection with the Participation Right, Vision Blue and the Company have also entered into a debt set-off deed dated 28 January 2025 (the "Debt Set Off Agreement"), pursuant to which the Company and Vision Blue have conditionally agreed to set off amounts owed by the Company to Vision Blue under the Facility against amounts due from Vision Blue to the Company in respect of the subscription of the VBR Participation Right Shares pursuant to the VBR 2022 Investment Agreement. The Debt Set-Off Agreement is treated as a "Shares for Debt" transaction under the policies of the TSX-V and is subject to the approval of the TSX-V. Appl