UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 13, 2023
Pyrophyte Acquisition Corp.
(Exact name of registrant as specified in its charter)
Cayman Islands | 001-40957 | N/A | ||
(State
or incorporation or organization) |
(Commission File Number) | (IRS
Employer Identification No.) |
3262 Westheimer Road Suite 706 Houston, Texas |
77098 | |
(Address of principal executive offices) | (Zip Code) |
(281) 701-4234
Registrant’s telephone number, including area code
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☒ | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class registered | Trading Symbol(s) |
Name
of each exchange on which registered | ||
Units, each consisting of one Class A ordinary share and one-half of one redeemable warrant | PHYT.U | The New York Stock Exchange | ||
Class A ordinary shares, par value $0.0001 per share | PHYT | The New York Stock Exchange | ||
Redeemable warrants, each warrant exercisable for one Class A ordinary share, each at an exercise price of $11.50 per share | PHYT WS | The New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement
On November 13, 2023, Pyrophyte Acquisition Corp., a Cayman Islands exempted company (“Pyrophyte”), entered into the Business Combination Agreement, as defined and described below, and certain other agreements related thereto, each as described below.
Business Combination Agreement
On November 13, 2023, Pyrophyte, Sio Silica Corporation, an Alberta corporation (“Sio”), Sio Silica Incorporated, a newly-formed Alberta corporation formed solely for the purpose of engaging in the Proposed Transactions (as defined below) and that is wholly owned by Feisal Somji, a nominee (“Nominee”) of Sio (“Sio Newco”), and Snowbank NewCo Alberta ULC, an Alberta unlimited liability corporation and wholly-owned subsidiary of Pyrophyte (“Pyrophyte Newco”), entered into a Business Combination Agreement (the “Business Combination Agreement”), pursuant to which, among other things and subject to the terms and conditions contained therein, (i) Pyrophyte will transfer by way of continuation from the Cayman Islands to Alberta in accordance with the Cayman Islands Companies Act (as revised) (the “Companies Act”) and continue as an Alberta corporation in accordance with the applicable provisions of the Business Corporations Act (Alberta) (the “ABCA”) (such continuation, the “Domestication”), (ii) following the Domestication, Pyrophyte will amalgamate with Sio Newco (the “SPAC Amalgamation”), with Sio Newco surviving the SPAC Amalgamation (“Pubco”) in accordance with the terms of a Plan of Arrangement (the “Plan of Arrangement”), and (iii) Sio and Pyrophyte Newco will amalgamate (the “Sio Amalgamation” and together with the SPAC Amalgamation, the “Amalgamations”), with Sio surviving the Sio Amalgamation as a wholly-owned subsidiary of Pubco and such entity will continue the business operations currently undertaken by Sio. The Amalgamations, together with the other transactions contemplated by the Business Combination Agreement, the Plan of Arrangement and all other agreements, certificates and instruments entered into in connection therewith, are referred to herein as the “Proposed Transactions.”
Sio is a Canadian-based company that seeks to become a global leader in the production and supply of environmentally- and ethically-produced high-purity quartz silica. Sio’s extraction of silica is a patent-pending method that does not require truck traffic, surface mining, tunneling, dust generation or chemical cleansing. Combined with its facility using renewable electricity, natural gas, and efficient processing, Sio expects to contribute to a low-carbon future.
Conversion of Securities
Domestication
Pursuant to the Domestication, Pyrophyte will transfer by way of continuation from the Cayman Islands to Alberta in accordance with the Companies Act and continue as an Alberta corporation in accordance with the applicable provisions of the ABCA. In connection with the Domestication, each then-issued and outstanding Class A ordinary share of Pyrophyte, par value $0.0001 per share (the “SPAC Class A Ordinary Shares”), will convert automatically, on a one-for-one basis, into one Class A common share of Pyrophyte (after the Domestication) (the “SPAC Class A Common Shares”) and each of the then-issued and outstanding warrants representing the right to purchase one SPAC Class A Ordinary Share will automatically become a warrant to acquire one SPAC Class A Common Share (the “SPAC Warrants”) in accordance with the terms of the warrant agreement, dated as of October 26, 2021, by and between Pyrophyte and Continental Stock Transfer & Trust Company, as warrant agent (the “Warrant Agreement”).
Concurrently with and as part of the Domestication, Pyrophyte will file articles of incorporation in Canada in substantially the same form as attached as Exhibit B to the Business Combination Agreement.
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SPAC Amalgamation
Pursuant to the SPAC Amalgamation, which will take place not later than one business day prior to the closing (the “Closing”) of the Proposed Transactions (the “Closing Date”), but after the Domestication, (i) each then-issued and outstanding SPAC Class A Common Share will be exchanged, on a one-for-one basis, for a Class A common share in the authorized share capital of Pubco (the “Pubco Class A Common Shares”), (ii) each then-issued and outstanding SPAC Warrant will become a warrant to acquire one Pubco Class A Common Share (the “Pubco Warrants”) in accordance with the terms of the Warrant Agreement, (iii) each then-issued and outstanding unit of Pyrophyte, comprised of one SPAC Class A Common Share and one-half of one SPAC Warrant (the “SPAC Units”), will be exchanged for a unit of Pubco representing one Pubco Class A Common Share and one-half of one Pubco Warrant (the “Pubco Units”) (each of which will be separated into its component parts in connection with the Closing), (iv) each common share of Sio Newco held by the Nominee (the “Nominee Share”) will be exchanged for one Pubco Class A Common Share, and (v) immediately thereafter, the Pubco Class A Common Share held by the Nominee will be purchased by Sio Newco for cash at the price initially paid by the Nominee for the Nominee Shares and immediately cancelled, in each case upon and subject to the terms and conditions set forth in the Business Combination Agreement, the Plan of Arrangement and in accordance with the provisions of applicable law.
As a result of the SPAC Amalgamation, all holders of then-issued and outstanding SPAC Class A Common Shares will become holders of Pubco Class A Common Shares.
Sio Amalgamation
Pursuant to the Sio Amalgamation, on the Closing Date and following the exercise on a cashless basis of all then-issued and outstanding warrants (the “Sio Warrants”) and options of Sio for common shares in the authorized share capital of Sio (the “Sio Common Shares”) in accordance with the Plan of Arrangement (the “Sio Warrant and Option Settlement”), (i) each then-issued and outstanding Sio Common Share (other than any Sio Common Shares issued by Sio to certain investors during the interim period (the “Sio Interim Common Shares”)) will be exchanged for (x) a number of Pubco Class A Common Shares equal to the Sio Common Share Exchange Ratio (as defined below) and (y) a number of Sio Earnout Shares (as defined below) equal to the Sio Earnout Exchange Ratio (as defined below), (ii) each then-issued and outstanding share award to purchase Sio Common Shares (each, a “Sio RSU”) will become exercisable for a number of Pubco Class A Common Shares (rounded down to the nearest whole share) equal to (a) the number of Sio Common Shares subject to the applicable Sio RSU multiplied by (b) the Sio Common Share Exchange Ratio, (iii) any Sio Warrant that is not exercised pursuant to the Sio Warrant and Option Settlement will remain outstanding and will automatically in accordance with its terms become a warrant to acquire Pubco Class A Common Shares, and (iv) each then-issued and outstanding Sio Interim Common Share will be exchanged for a number of Pubco Class A Common Shares equal to (a) the number of then-issued and outstanding Sio Interim Common Shares multiplied by (b) the Sio Common Share Exchange Ratio, in each case upon and subject to the other terms and conditions set forth in the Business Combination Agreement, the Plan of Arrangement and in accordance with the provisions of applicable law.
As a result of the Amalgamations, Sio will become a wholly-owned subsidiary of Pubco and will continue the business operations currently undertaken by it. Upon the Closing, the Pubco Class A Common Shares and the Pubco Warrants are expected to trade on the New York Stock Exchange under the symbols “SIOS” and “SIOS WS,” respectively.
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“Sio Common Share Exchange Ratio” means the quotient obtained by (A) dividing (i) Sio’s valuation of $675,000,000 by (ii) $10.25, and then (B) by further dividing the resulting number of Pubco Class A Common Shares established in (A) above by the sum of (x) the number of Sio Common Shares that are issuable upon the exercise of Sio RSUs that are unexpired, issued and outstanding as of immediately prior to the effective of the Sio Amalgamation (the “Sio Amalgamation Effective Time”), (y) the number of Sio Common Shares issued and outstanding immediately prior to the Sio Amalgamation Effective Time, which shall (1) include any Sio Common Shares issued in connection with the Sio Warrant and Option Settlement and (2) exclude any Sio Interim Common Shares, and (z) the number of Sio Common Shares that are issuable upon the exercise of any issued and outstanding warrants to purchase Sio Common Shares that is not exercised pursuant to the Company Warrant and Option Settlement (“Unexercised Company Warrants”) issued and outstanding as of immediately prior to the Sio Amalgamation Effective Time minus a number of Sio Common Shares with a fair market value equal to the aggregate exercise price (determined with reference to the US dollar to the Canadian dollar exchange rate reported by the Bank of Canada at the close of business on the date that is two (2) business days prior to the Closing) of all such Unexercised Company Warrants if they were so exercised (such sum, the “Fully-Diluted Sio Common Shares”).
“Sio Earnout Exchange Ratio” means the quotient obtained by dividing (i) 6,585,366 by (ii) the Fully-Diluted Sio Common Shares.
“Sio Earnout Shares” means the pro rata portion of an aggregate of 6,585,366 Pubco Class A Common Shares (without duplication) issued to each shareholder of Sio (other than holders of any Sio Interim Common Shares) pursuant to the Sio Amalgamation and the Business Combination Agreement (the “Earnout”), valued at the deemed issue price of the Pubco Class A Common Shares in connection with the Earnout, which is $10.25 per Pubco Class A Common Share, which Sio Earnout shares are subject to forfeiture in accordance with the terms of the Business Combination Agreement.
Representations, Warranties and Covenants; Indemnification
The Business Combination Agreement contains customary representations and warranties by the parties thereto, as more particularly set forth in the Business Combination Agreement. The Business Combination Agreement also contains customary pre-Closing covenants of the parties, including the obligation of Pyrophyte and Sio and their respective subsidiaries to conduct their businesses in the ordinary course and to refrain from taking certain specified actions, subject to certain exceptions, without the prior written consent of certain counterparties to the Business Combination Agreement.
The Business Combination Agreement does not provide for indemnification with respect to any of the representations and warranties of the parties thereto. Additionally, Pubco will enter into customary indemnification agreements reasonably satisfactory to Sio and Pubco with the post-Closing directors and officers of Pubco, which indemnification agreements shall continue to be effective following the Closing.
Registration Statement / Proxy Statement
As promptly as reasonably practicable after the date of the Business Combination Agreement, Pyrophyte, Sio and Sio Newco will prepare and Sio Newco will file with the U.S. Securities and Exchange Commission (“SEC”) a registration statement on Form F-4 relating to the Proposed Transactions (the “Registration Statement”), which will contain a proxy statement with respect to Pyrophyte’s extraordinary general meeting of its shareholders (the “Pyrophyte Shareholders Meeting”) to be held to consider, among other things, (A) approval of the Domestication, (B) approval of the proposed business combination (including the approval and adoption of the Business Combination Agreement and the Proposed Transactions, including the Plan of Arrangement) and (C) the adoption and approval of any other proposals the parties deem necessary to effectuate the Proposed Transactions, and a prospectus with respect to the securities of Sio Newco to be issued in connection with the Proposed Transactions.
Conditions to the Parties’ Obligations to Consummate the Amalgamations
Under the Business Combination Agreement, the obligations of the parties to consummate the Amalgamations are subject to certain conditions, including (i) the requisite approval by Pyrophyte’s shareholders and Sio’s shareholders having been obtained; (ii) the final order (the “Final Order”) of the Alberta Court of King’s Bench (the “Court”) pursuant to section 193 of the ABCA, approving the Arrangement and not having amended, modified or supplemented the same in a manner unacceptable to the parties; (iii) the absence of specified adverse laws, rules, regulations, judgments, decrees, executive orders or awards making the Proposed Transactions illegal or otherwise prohibiting their consummation; (iv) the Pubco Class A Common Shares having been accepted for listing on the New York Stock Exchange or another national securities exchange mutually agreed to in writing by the parties to the Business Combination Agreement (the “Stock Exchange”); (v) the Registration Statement having been declared effective by the SEC under the Securities Act of 1933, as amended (the “Securities Act”), no stop order suspending the effectiveness of the Registration Statement being in effect, and no proceedings for purposes of suspending the effectiveness of the Registration Statement having been initiated or threatened in writing by the SEC; and (vi) the Domestication and the SPAC Amalgamation having been consummated.
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The obligations of Pyrophyte and Pyrophyte Newco to consummate the Amalgamations are further subject to additional conditions, including: (i) the truth and accuracy of the representations and warranties of Sio, subject to the materiality standards contained in the Business Combination Agreement; (ii) material compliance by Sio and Sio Newco with their respective covenants under the Business Combination Agreement; (iii) no Company Material Adverse Effect (as defined in the Business Combination Agreement) having occurred; and (iv) receipt of a customary officer’s certificate of Sio, certifying the satisfaction of the conditions listed in clauses (i) through (iii) above.
The obligations of Sio and Sio Newco to consummate the Amalgamations are further subject to additional conditions, including: (i) the truth and accuracy of the representations and warranties of Pyrophyte, subject to the materiality standards contained in the Business Combination Agreement; (ii) material compliance by Pyrophyte and Pyrophyte Newco with their respective covenants under the Business Combination Agreement; (iii) no SPAC Material Adverse Effect (as defined in the Business Combination Agreement) having occurred; (iv) a customary officer’s certificate of Pyrophyte, certifying the satisfaction of the conditions listed in clauses (i) through (iii) above; (v) each officer and director of Pubco having delivered a written resignation in form and substance reasonably satisfactory to Sio, effective as of the Sio Amalgamation Effective Time; and (vi) the Available Closing Cash (as defined below) available at closing (x) being no less than $130,000,000 and (y) having a Debt-to-Other Cash Ratio (defined as the ratio of (a) the available amount under the Credit Agreement to be funded in connection with the Closing, to (b) an amount equal to the sum of (i) Available Closing Cash that results from proceeds of all sources other than in connection with the Credit Agreement and (ii) Transaction Expenses) no greater than 0.5882. “Available Closing Cash” means an amount equal to (a) the funds contained in the Pyrophyte’s trust account as of the Sio Amalgamation Effective Time (prior to the payment of any cash to satisfy the redemption rights exercised by the Pyrophyte shareholders at the Pyrophyte Shareholders Meeting (the “Redemption”)); plus (b) all other cash and cash equivalents of Pyrophyte, including the proceeds of any securities or indebtedness funded in connection with the Closing (excluding, for the avoidance of doubt, any amount already included pursuant to (a) or (e) of this definition); plus (c) the proceeds received on or before the Sio Amalgamation Effective Time from and pursuant to the Royalty Purchase and Sale Agreements plus (d) the proceeds received as a result of the PIPE Investment (as defined below); plus (e) the available amount under the credit agreement to be entered into between Sio and one or more debt financing sources (the “Credit Agreement”); plus (f) the proceeds received as a result of the issuance of any Interim Company Shares or Flow-Through Shares; minus (g) the aggregate amount of cash required to be paid in connection with the Redemption; minus (h) transaction expenses, which include the transaction expenses incurred by each of Sio and Pyrophyte, and all expenses incurred in connection with the Debt Financing (as defined below).
Financing
The Business Combination Agreement contemplates (a) the delivery and execution of the Credit Agreement on the Closing Date and the debt financing pursuant to such Credit Agreement (“Debt Financing”) becoming available, (b) the receipt on the Closing Date of approximately $40,000,000 in aggregate sales proceeds pursuant to the Royalty Purchase and Sale Agreements between Sio and the agreement counterparties, pursuant to which Sio covenants to sell to each of the agreement counterparties an overriding royalty (in the form of an undivided percentage interest in and to all marketable naturally occurring minerals or mineral bearing material mined or otherwise recovered from Sio’s BRU Property) for a specified cash purchase price, which purchase price is to be used by Sio solely to fund the development of its BRU Property, and (c) the PIPE Investment. Availability of the Debt Financing is subject to certain conditions, including Sio receiving gross proceeds of not less than $55,000,000 in the aggregate from any PIPE financing and any remaining cash in Pyrophyte’s trust account after the Redemption (or any combination thereof).
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Termination Rights
The Business Combination Agreement may be terminated at any time prior to the Closing (i) by mutual written consent of Pyrophyte and Sio; (ii) by Pyrophyte or Sio upon the occurrence of any of the following: (a) if the Closing has not occurred prior to November 13, 2024 (the “Outside Date”), which may be extended by either party pursuant to written notice given to the other party for an additional sixty-five (65) days if the SEC has not declared the Registration Statement effective by the date which is sixty (60) days prior to the Outside Date, provided however, that the Business Combination Agreement may not be terminated by or on behalf of any party that is either directly or indirectly through its affiliates in breach or violation of any representation, warranty, covenant, agreement or obligation contained in the Business Combination Agreement and such breach is the cause of the failure of a condition to the parties’ obligation to close; (b) by Pyrophyte or Sio if any governmental entity has enacted, issued, promulgated, enforced or entered any injunction, order, decree or ruling which has become final and nonappealable and has the effect of permanently restraining, enjoining or otherwise prohibiting the Proposed Transactions, except that such termination right will not apply as a result of the refusal of the Court to issue a Final Order in respect of the Plan of Arrangement; or (c) by Pyrophyte or Sio if the requisite approvals are not obtained from Pyrophyte’s shareholders or Sio’s shareholders, except that such termination right will not be available to any party to the Business Combination Agreement whose failure to fulfill any of its obligations or breach of any its representations and warranties under the Business Combination Agreement has been the cause of, or results in, failure to obtain such requisite approvals; (iii) by Pyrophyte in the event any representation, warranty, covenant or agreement by Sio or Sio Newco has been breached or has become untrue such that the conditions to Closing would not be satisfied; provided, however, that Pyrophyte has not waived such breach and that Pyrophyte or Sio Newco is not then in material breach of its representations, warranties, covenants or agreements under the Business Combination Agreement; provided, further, that, if such breach is curable by Sio or Sio Newco, Pyrophyte may not terminate for so long as Sio or Sio Newco continues to exercise its reasonable efforts to cure such breach, unless such breach is not cured by the earlier of 30 days after notice of such breach and the Outside Date, and that Pyrophyte may not terminate pursuant to this clause (iii) if it has materially breached the Business Combination Agreement, which breach has not been cured; (iv) by Sio in the event any representation, warranty, covenant or agreement by Pyrophyte or Pyrophyte Newco has been breached or has become untrue such that the conditions to Closing would not be satisfied; provided, however, that Sio has not waived such breach and that Sio or Sio Newco is not then in material breach of their representations, warranties, covenants or agreements under the Business Combination Agreement; provided, further, that, if such breach is curable by Pyrophyte or Pyrophyte Newco, Sio may not terminate for so long as Pyrophyte or Pyrophyte Newco continue to exercise their reasonable efforts to cure such breach, unless such breach is not cured by the earlier of 30 days after notice of such breach and the Outside Date, and that Sio may not terminate pursuant to this clause (iv) if it has materially breached the Business Combination Agreement, which breach has not been cured; or (v) by Sio at any time prior to Pyrophyte receiving the requisite approval of its shareholders, if Pyrophyte or Pyrophyte’s board of directors effects a Change in Recommendation (as defined in the Business Combination Agreement).
Effect of Termination
If the Business Combination Agreement is terminated, the agreement will become void, and there will be no liability under the Business Combination Agreement on the part of any party thereto, except as set forth in the Business Combination Agreement. The Business Combination Agreement provides that no such termination shall affect any liability on the part of any party for fraud or a willful and material breach of the Business Combination Agreement.
A copy of the Business Combination Agreement is filed with this Current Report on Form 8-K as Exhibit 2.1 and is incorporated herein by reference. The foregoing description of the Business Combination Agreement and the Proposed Transactions does not purport to be complete and is qualified in its entirety by reference to the full text of the Business Combination Agreement filed with this Current Report on Form 8-K. The Business Combination Agreement is included to provide security holders with information regarding its terms. It is not intended to provide any other factual information about Sio, Pyrophyte Newco, Pyrophyte or Sio Newco. In particular, the assertions embodied in representations and warranties by Sio, Pyrophyte Newco, Pyrophyte and Sio Newco contained in the Business Combination Agreement are subject to important qualifications and limitations agreed to by the parties in connection with negotiating such agreement, including being qualified by confidential information in the disclosure schedules provided by the parties in connection with the execution of the Business Combination Agreement, and are subject to standards of materiality applicable to the contracting parties that may differ from those applicable to security holders. The confidential disclosures contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Business Combination Agreement. Moreover, certain representations and warranties in the Business Combination Agreement were used for the purpose of allocating risk between the parties, rather than establishing matters as facts. Accordingly, security holders should not rely on the representations and warranties in the Business Combination Agreement as characterizations of the actual state of facts about Sio, Pyrophyte Newco, Pyrophyte or Sio Newco. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Business Combination Agreement, which subsequent information may or may not be fully reflected in Pyrophyte’s public disclosures.
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Subscription Agreements
Concurrently with the execution of the Business Combination Agreement, Pyrophyte, Sio and Sio Newco entered into subscription agreements with (i) a certain accredited investor (the “Non-Insider PIPE Investor”) and (ii) certain other accredited investors who are existing shareholders of Sio or Pyrophyte (the “Insider PIPE Investors” and, together with the Non-Insider PIPE Investor, the “PIPE Investors”), pursuant to which, among other things, Sio Newco agreed to issue and sell, in a private placement to close concurrently with and conditioned upon the effectiveness of the consummation of the Proposed Transactions, an aggregate of 3,114,258 Pubco Class A Common Shares (the “PIPE Investment”) to the PIPE Investors for an aggregate purchase price equal to $20,122,474.
The foregoing description of the PIPE Investment does not purport to be complete and is qualified in its entirety by the terms and conditions of (i) the form of subscription agreement entered into with the Non-Insider PIPE Investors (the “Non-Insider Subscription Agreement”) and (ii) the form of subscription agreement entered into with the Insider PIPE Investors (the “Insider Subscription Agreement” and, together with the Non-Insider Subscription Agreement, the “Subscription Agreements”), as applicable, copies of which are filed as Exhibits 10.1 and 10.2, respectively, hereto and are incorporated by reference herein.
Non-Redemption Agreement
Concurrently with the execution of the Business Combination Agreement, Pyrophyte and Sio Newco entered into a non-redemption agreement (the “Non-Redemption Agreement”) with a Pyrophyte shareholder with respect to 100,000 SPAC Class A Ordinary Shares held by such shareholder (the “Non-Redemption SPAC Shares”), pursuant to which, among other things, Pyrophyte agreed to issue 58,570 SPAC Class A Ordinary Shares to such shareholder in consideration of such shareholder’s commitment not to redeem the Non-Redemption SPAC Shares held by it in connection with the approval of the Proposed Transactions by Pyrophyte’s shareholders (the “Non-Redemption Transaction”).
The foregoing description of the Non-Redemption Transaction and the Non-Redemption Agreement does not purport to be complete and is qualified in its entirety by the full text of the Non-Redemption Agreement, a copy of which is filed as Exhibit 10.3 hereto and is incorporated by reference herein.
Sponsor Support Agreement
Concurrently with the execution of the Business Combination Agreement, Pyrophyte Acquisition LLC, a Delaware limited liability company (the “Sponsor”), entered into a letter agreement (the “Sponsor Support Agreement”) with Sio, Sio Newco, Pyrophyte and the directors and officers (or otherwise a part of the management team) of Pyrophyte, solely for purposes of amending certain of the terms of the letter agreement signed by them in connection with Pyrophyte’s initial public offering, pursuant to which, among other things, the Sponsor agreed to (i) appear at the Pyrophyte Shareholders Meeting or otherwise cause the Covered Shares (as defined below) to be counted as present thereat for the purposes of establishing a quorum, (ii) vote all SPAC Class A Ordinary Shares, or any securities convertible into, exercisable or exchangeable for SPAC Class A Ordinary Shares, held by it or acquired after the date of the Sponsor Support Agreement (the “Covered Shares”) at the Pyrophyte Shareholders Meeting (or execute and deliver a written consent, if applicable, causing to be voted) (v) in favor of any circumstances upon which a consent or other approval is required under the organizational documents of Pyrophyte or otherwise sought in furtherance of the Proposed Transactions, (w) in favor of the adoption and approval of the Proposed Transactions and each other proposal related to the Proposed Transactions necessary or reasonably requested by Pyrophyte for the consummation of the Proposed Transactions, (x) against any alternative transactions or actions reasonably expected to impede, interfere with, delay, postpone or adversely impact the Proposed Transaction or result in a breach of any covenant, representation or warranty of Pyrophyte under the Business Combination Agreement or result in any of the closing conditions of the Business Combination Agreement not being fulfilled, (y) against any change in the dividend policy or capitalization of, including the voting rights of, any class of shares of Pyrophyte, and (z) against any change in business, management or the board of directors of the Pyrophyte, in each of clause (y) and (z) other than in connection with the Proposed Transactions, (iii) not transfer the SPAC Class A Ordinary Shares until the earlier of (a) termination of the Business Combination Agreement and (b) termination of the Sponsor Support Agreement upon mutual written agreement of the parties thereto, (iv) not redeem any Covered Shares owned by it in connection with approval of the Proposed Transactions by Pyrophyte’s shareholders, (v) not transfer any Covered Shares (other than Pubco Class A Common Shares issued upon exercise of any private placement warrants held by the Sponsor) until the earlier of (A) one year after the Closing, (B) the first day the last sale price of Pubco Class A Common Shares equals or exceeds $12.00 per share for any 20 trading days within a 30-day trading period commencing at least 150 days after the Closing or (C) after the Closing, the date on which Pubco completes a liquidation, amalgamation, share exchange or similar transaction resulting in the shareholders of Pubco having the right to exchange their shares for consideration, and (vi) not transfer any private placement warrants (or Pubco Class A Common Shares issued or issuable upon exercise of such warrants) held by it until 30 days after the Closing.
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In addition, the Sponsor has agreed to subject a number of SPAC Class A Ordinary Shares held by it on the date of execution of the Sponsor Support Agreement (“Restricted Owned Shares”) to certain restrictions, to the extent such shares are used to obtain any additional PIPE Financing or other financing arrangements in connection with consummation of the Proposed Transactions; provided that in no event shall the aggregate number of Restricted Owned Shares equal more than 4,025,000 SPAC Class A Ordinary Shares (the “Maximum Restricted Owned Shares”). If, prior to the Closing, the sum of all Available Closing Cash raised from the PIPE Investment, any non-redemption agreements (including the Non-Redemption Agreement) and any other cash and cash equivalents of Pyrophyte (including the proceeds of any securities funded in connection with the Closing but excluding, for the avoidance of doubt, (I) the Royalty Agreement Proceeds (as defined in the Business Combination Agreement), (II) proceeds received from any flow-through common shares (other than to the extent that any incentive equity interests are issued in connection with such issuance) and (III) any Indebtedness (as defined in the Business Combination Agreement) funded in connection with the Closing) (collectively, the “SPAC Proceeds”) is less than $70,000,000, then (i) the number of Restricted Owned Shares shall be equal to the actual number of SPAC Class A Ordinary Shares that were used to secure such SPAC Proceeds, up to (but not exceeding) an amount equal to the Maximum Restricted Owned Shares (the “Incentive Owned Shares”), and (ii) a number of SPAC Class A Ordinary Shares owned by Sponsor equal to (x) 4,025,000 minus (y) the number of Incentive Owned Shares shall be automatically forfeited and deemed transferred to Pyrophyte for cancellation for no consideration. If, prior to Closing, the sum of the Available Closing Cash raised from the SPAC Proceeds is equal to or greater than $70,000,000, then the number of Restricted Owned Shares shall be equal to the Incentive Owned Shares.
In connection with the Closing, each Restricted Owned Share will be exchanged on a one-for-one basis for Pubco Class A Common Shares pursuant to the Business Combination and the Plan of Arrangement and such shares will be subject to forfeiture or release as follows: (i) half of the Restricted Owned Shares will be released to the Sponsor on the first day that the Trading Price (as defined in the Business Combination Agreement) is at least $12.50, (ii) the other half of the Restricted Owned Shares will be released from forfeiture on the first day that the Trading Price is at least $15.00, in each case during the period commencing on the Closing Date and ending on the date that is three (3) years after the Closing Date (the “End Date”), and (iii) after the End Date, any Restricted Owned Shares that have not been released to the Sponsor pursuant to clauses (i) or (ii) above will be automatically forfeited for no consideration.
The foregoing description of the Sponsor Support Agreement is qualified in its entirety by reference to the full text of the Sponsor Support Agreement, a copy of which is included as Exhibit 10.5 to this Current Report on Form 8-K and is incorporated herein by reference.
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Sio Securityholder Support Agreements
In connection with the execution of the Business Combination Agreement, on November 13, 2023, Pyrophyte, Sio, and certain securityholders of Sio entered into support agreements (the “Sio Securityholder Support Agreements”), pursuant to which, among other things, such shareholders agreed to vote (or cause to be voted) all of their Sio shares and other voting securities of Sio (“Subject Securities”) in favor of the special resolution of Sio shareholders in respect of the Plan of Arrangement, to be considered at Sio’s shareholders meeting to approve the Proposed Transaction. Additionally, such shareholders have agreed, among other things, not to, prior to the Closing, (a) transfer any of their Subject Securities (or enter into any agreement, arrangement or understanding in connection therewith other than pursuant to the Plan of Arrangement), subject to certain customary exceptions, or (b) enter into any voting arrangement that is inconsistent with the Sio Securityholder Support Agreements. Sio covenants in the Business Combination Agreement that it will use commercially reasonable efforts to obtain Sio Securityholder Support Agreements from at least 66 ⅔% of its shareholders as promptly as possible, but in any event, within five days of the execution date of the Business Combination Agreement.
The foregoing description of the Sio Securityholder Support Agreements is qualified in its entirety by reference to the full text of the form of Sio Securityholder Support Agreements Support Agreement, a copy of which is included as Exhibit 10.6 to this Current Report on Form 8-K and is incorporated herein by reference.
Amended and Restated Registration Rights Agreement
Concurrently with the Closing, Pyrophyte will amend and restate its registration rights agreement, dated October 26, 2021 (as amended and restated, the “Registration Rights Agreement”), pursuant to which Pubco will agree that, within 15 business days after the Closing, Pubco will file with the SEC (at Pubco’s sole cost and expense) a registration statement registering the resale of certain securities held by or issuable to certain existing shareholders of Pyrophyte (the “Resale Registration Statement”), and Pubco will use its commercially reasonable efforts to have the Resale Registration Statement declared effective as soon as reasonably practicable after the filing thereof. In certain circumstances, the holders can demand Pubco’s assistance with underwritten offerings and block trades. The holders will be entitled to customary piggyback registration rights.
The foregoing description of the Registration Rights Agreement is qualified in its entirety by reference to the full text of the form of Registration Rights Agreement, a copy of which is included as Exhibit G to the Business Combination Agreement, filed as Exhibit 2.1 to this Current Report on Form 8-K, and incorporated herein by reference.
Lock-Up Agreement
On the Closing Date, existing shareholders of Sio owning 1% or more of the Sio Common Shares outstanding immediately prior to the Sio Amalgamation will enter into a Lock-Up Agreement (the “Lock-Up Agreement”) with Pubco pursuant to which they will agree, subject to certain customary exceptions, not to (i) effect any sale of, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidation with respect to or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the SEC promulgated thereunder with respect to, any securities of Pubco, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any securities of Pubco, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise or (iii) make any public announcement of any intention to effect any transaction specified in clause (i) or (ii), until the earlier of (a) six months after the Closing or (b) the date that the last sale price of the Pubco Class A Common Shares equals or exceeds $12.00 per share (as adjusted for share subdivisions, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-day trading period provided, however, that the restrictions set forth in each of (i), (ii), and (iii) shall not apply to 10% of the aggregate amount of securities held by such shareholders on the Closing Date.
The foregoing description of the form of Lock-Up Agreement is qualified in its entirety by reference to the full text of the form of Lock-Up Agreement, a copy of which is filed as Exhibit 10.4 to this Current Report on Form 8-K and is incorporated herein by reference.
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Item 3.02 Unregistered Sales of Equity Securities
The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein. The SPAC Class A Ordinary Shares issuable in connection with the Non-Redemption Agreement and the Pubco Class A Common Shares issuable in connection with the PIPE Investment will not be registered under the Securities Act, in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.
Item 7.01 Regulation FD Disclosure
Attached as Exhibits 96.1 and 96.2 hereto and incorporated by reference herein are copies of the technical report summaries for Sio’s BRU Property and DEN Property, each dated October 6, 2023 (collectively, the “Technical Report Summaries”), which were prepared in accordance with Subpart 1300 of Regulation S-K (“S-K 1300”) by qualified persons of Stantec Consulting Ltd. The Technical Report Summaries are based on mineral resources. Unlike mineral reserves, mineral resources do not have demonstrated economic viability. The economic analysis in the Technical Report Summaries includes inferred mineral resources that are considered too speculative geologically to have modifying factors applied to them that would enable them to be categorized as mineral reserves. There is no certainty that such economic assessments will be realized.
On November 13, 2023, Pyrophyte and Sio issued a joint press release announcing the execution of the Business Combination Agreement.
In addition, attached as Exhibit 99.2 hereto and incorporated by reference herein is the investor presentation, dated November 2023, that will be used by Pyrophyte and Sio with respect to the Business Combination.
The information in this Item 7.01, including Exhibits 96.1, 96.2, 99.1 and 99.2, is furnished and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liabilities under that section, and shall not be deemed to be incorporated by reference into the filings of Pyrophyte under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filings. This Current Report on Form 8-K will not be deemed an admission as to the materiality of any information of the information in this Item 7.01, including Exhibits 96.1, 96.2, 99.1 and 99.2.
Additional Information about the Proposed Transactions and Where to Find It
In connection with the Proposed Transactions, Sio Newco intends to file the Registration Statement, which will include a preliminary proxy statement of Pyrophyte and a preliminary prospectus of Sio Newco, and after the Registration Statement is declared effective, Pyrophyte will mail the definitive proxy statement/prospectus relating to the Proposed Transactions to Pyrophyte’s shareholders as of a record date to be established for voting on the Proposed Transactions. The Registration Statement, including the proxy statement/prospectus contained therein, will contain important information about the Proposed Transactions and the other matters to be voted upon at Pyrophyte Shareholders Meeting. This communication does not contain all the information that should be considered concerning the Proposed Transactions and other matters and is not intended to provide the basis for any investment decision or any other decision in respect of such matters. Pyrophyte and Sio Newco may also file other documents with the SEC regarding the Proposed Transactions. Pyrophyte’s shareholders and other interested persons are advised to read, when available, the Registration Statement, including the preliminary proxy statement/prospectus contained therein, and the amendments thereto and the definitive proxy statement/prospectus and other documents filed in connection with the Proposed Transactions, as these materials will contain important information about Pyrophyte, Sio, Pyrophyte Newco, Pubco and the Proposed Transactions.
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Pyrophyte’s shareholders and other interested persons will be able to obtain copies of the Registration Statement, including the preliminary proxy statement/prospectus contained therein, the definitive proxy statement/prospectus and other documents filed or that will be filed with the SEC, free of charge, by Pyrophyte and Sio Newco through the website maintained by the SEC at www.sec.gov.
Participants in Solicitation
Pyrophyte, Sio, Sio Newco and their respective directors and officers may be deemed participants in the solicitation of proxies of Company shareholders in connection with the Proposed Transactions. More detailed information regarding the directors and officers of Pyrophyte, and a description of their interests in Pyrophyte, is contained in Pyrophyte’s filings with the SEC, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC on April 12, 2023, and is available free of charge at the SEC’s website at www.sec.gov. Information regarding the persons who may, under SEC rules, be deemed participants in the solicitation of proxies of Pyrophyte’s shareholders in connection with the Proposed Transactions and other matters to be voted upon at the Company Shareholders Meeting will be set forth in the Registration Statement for the Proposed Transactions when available.
Forward-Looking Statements
This Current Report on Form 8-K includes certain statements that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act. Forward-looking statements include, but are not limited to, statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements may include, for example, statements about the Pyrophyte or Sio’s ability to effectuate the Proposed Transactions discussed in this document; the benefits of the Proposed Transactions; the future financial performance of Pubco (which will be the go-forward public company following the completion of the business combination) following the transactions; changes in Sio’s strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management. These forward-looking statements are based on information available as of the date of this document, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing Pyrophyte, Sio or Pubco’s views as of any subsequent date, and none of Pyrophyte, Sio or Pubco undertakes any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Neither Pubco nor Pyrophyte gives any assurance that either Pubco or Pyrophyte will achieve its expectations. You should not place undue reliance on these forward-looking statements. As a result of a number of known and unknown risks and uncertainties, Pubco’s actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include: (i) the timing to complete the Proposed Transactions by Pyrophyte’s business combination deadline and the potential failure to obtain an extension of the business combination deadline if sought by Pyrophyte; (ii) the occurrence of any event, change or other circumstances that could give rise to the termination of the definitive agreements relating to the Proposed Transactions; (iii) the outcome of any legal, regulatory or governmental proceedings that may be instituted against Pubco, Pyrophyte, Sio or any investigation or inquiry following announcement of the Proposed Transactions, including in connection with the Proposed Transactions; (iv) the inability to complete the Proposed Transactions due to the failure to obtain approval of Pyrophyte’s or Sio’s shareholders; (v) Sio’s and Pubco’s success in retaining or recruiting, or changes required in, its officers, key employees or directors following the Proposed Transactions; (vi) the ability of the parties to obtain the listing of Pubco’s common shares and warrants on the Stock Exchange upon the Closing; (vii) the risk that the Proposed Transactions disrupts current plans and operations of Sio; (viii) the ability to recognize the anticipated benefits of the Proposed Transactions; (ix) unexpected costs related to the Proposed Transactions; (x) the amount of redemptions by Pyrophyte’s public shareholders being greater than expected; (xi) the management and board composition of Pubco following completion of the Proposed Transactions; (xii) limited liquidity and trading of Pubco’s securities; (xiii) geopolitical risk and changes in applicable laws or regulations; (xiv) the possibility that Sio or Pyrophyte may be adversely affected by other economic, business, and/or competitive factors; (xv) operational risks; (xvi) litigation and regulatory enforcement risks, including the diversion of management time and attention and the additional costs and demands on Sio’s resources; (xvii) the risk that the consummation of the Proposed Transactions is substantially delayed or does not occur; and (xix) other risks and uncertainties indicated from time to time in the Registration Statement, including those under “Risk Factors” therein, and in Pyrophyte’s other filings with the SEC.
No Offer or Solicitation
This communication relates to a Proposed Transactions between Sio and Pyrophyte. This document does not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the Proposed Transactions. This document does not constitute an offer to sell or exchange, or the solicitation of an offer to buy or exchange, any securities, nor shall there be any offer, sale or exchange of securities in any state or jurisdiction in which such offer, solicitation, sale or exchange would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities will be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act or an exemption therefrom.
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Item 9.01 Financial Statements and Exhibits
(d) Exhibits. The following exhibits are filed with this Current Report on Form 8-K:
* | Certain schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished supplementally to the SEC upon request. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
PYROPHYTE ACQUISITION CORP. | |||
Date: November 13, 2023 | By: | /s/ Sten Gustafson | |
Name: | Sten Gustafson | ||
Title: | Chief Financial Officer |
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Exhibit 2.1
BUSINESS COMBINATION AGREEMENT
by and among
PYROPHYTE ACQUISITION CORP.,
SIO SILICA CORPORATION,
SNOWBANK NEWCO ALBERTA ULC,
and
SIO SILICA INCORPORATED
Dated as of November 13, 2023
Table of Contents
Page | ||
Article I DEFINITIONS | 4 | |
Section 1.01 | Certain Definitions | 4 |
Section 1.02 | Further Definitions | 19 |
Section 1.03 | Construction | 22 |
Article II THE ARRANGEMENT; THE TRANSACTIONS; CLOSING | 23 | |
Section 2.01 | The Arrangement | 23 |
Section 2.02 | The Interim Order | 23 |
Section 2.03 | The Company Shareholders Meeting | 24 |
Section 2.04 | Company Information Circular | 24 |
Section 2.05 | The Final Order | 25 |
Section 2.06 | Court Proceedings | 26 |
Section 2.07 | Transactions | 26 |
Section 2.08 | Payment Schedule | 28 |
Section 2.09 | Exchange Agent | 28 |
Section 2.10 | Company Earnout Shares | 28 |
Section 2.11 | Intentionally Omitted | 30 |
Section 2.12 | Withholding | 30 |
Article III REPRESENTATIONS AND WARRANTIES OF THE COMPANY | 31 | |
Section 3.01 | Organization and Qualification; Subsidiaries | 31 |
Section 3.02 | Organizational Documents | 31 |
Section 3.03 | Capitalization | 31 |
Section 3.04 | Authority Relative to this Agreement | 32 |
Section 3.05 | No Conflict; Required Filings and Consents | 33 |
Section 3.06 | Permits; Compliance | 33 |
Section 3.07 | Financial Statements | 34 |
Section 3.08 | Absence of Certain Changes or Events | 34 |
Section 3.09 | Absence of Litigation | 35 |
Section 3.10 | Employee Benefit Plans | 35 |
Section 3.11 | Labor and Employment Matters | 36 |
Section 3.12 | Interest in Properties and Mineral Rights | 38 |
Section 3.13 | Rights-of-Way | 41 |
Section 3.14 | Intellectual Property | 41 |
Section 3.15 | Taxes | 43 |
Section 3.16 | Environmental Matters | 45 |
Section 3.17 | Material Contracts | 45 |
Section 3.18 | Insurance | 47 |
Section 3.19 | Board Approval; Vote Required. | 48 |
Section 3.20 | Certain Business Practices | 48 |
Section 3.21 | Interested Party Transactions | 49 |
Section 3.22 | Exchange Act | 49 |
Section 3.23 | Brokers | 49 |
Section 3.24 | Sexual Harassment and Misconduct | 49 |
Section 3.25 | Solvency | 50 |
Section 3.26 | Records | 50 |
Section 3.27 | Company’s and Sio NewCo’s Reliance | 50 |
Section 3.28 | Exclusivity of Representations and Warranties | 50 |
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Page | ||
Article IV REPRESENTATIONS AND WARRANTIES OF SPAC | 51 | |
Section 4.01 | Corporate Organization | 51 |
Section 4.02 | Organizational Documents | 51 |
Section 4.03 | Capitalization | 51 |
Section 4.04 | Authority Relative to This Agreement | 52 |
Section 4.05 | No Conflict; Required Filings and Consents | 52 |
Section 4.06 | Compliance | 53 |
Section 4.07 | SEC Filings; Financial Statements; Sarbanes-Oxley | 53 |
Section 4.08 | Absence of Certain Changes or Events | 55 |
Section 4.09 | Absence of Litigation | 55 |
Section 4.10 | Board Approval; Vote Required | 55 |
Section 4.11 | Brokers | 56 |
Section 4.12 | SPAC Trust Account | 56 |
Section 4.13 | Employees | 56 |
Section 4.14 | Taxes | 57 |
Section 4.15 | Registration and Listing | 59 |
Section 4.16 | Business Activities; Assets | 59 |
Section 4.17 | Material Contracts | 59 |
Section 4.18 | Certain Business Practices | 60 |
Section 4.19 | Interested Party Transactions | 61 |
Section 4.20 | Solvency | 61 |
Section 4.21 | Sexual Harassment and Misconduct | 61 |
Section 4.22 | Records | 61 |
Section 4.23 | Insurance | 62 |
Section 4.24 | SPAC’s and NewCo’s Independent Investigation and Reliance | 62 |
Section 4.25 | Investment Canada Act | 62 |
Article V CONDUCT OF BUSINESS | 63 | |
Section 5.01 | Conduct of Business by the Company | 63 |
Section 5.02 | Conduct of Business by SPAC | 66 |
Section 5.03 | Conduct of Business by NewCo and Sio NewCo | 68 |
Section 5.04 | Domestication | 68 |
Section 5.05 | Claims Against Trust Account | 68 |
Section 5.06 | Change of Name | 69 |
Article VI ADDITIONAL AGREEMENTS | 69 | |
Section 6.01 | Registration Statement / Proxy Statement | 69 |
Section 6.02 | SPAC Shareholders Meeting | 71 |
Section 6.03 | Access to Information; Confidentiality | 72 |
Section 6.04 | Exclusivity | 72 |
Section 6.05 | Employee Matters | 73 |
Section 6.06 | Directors’ and Officers’ Indemnification | 74 |
Section 6.07 | Notification of Certain Matters | 75 |
Section 6.08 | Further Action; Reasonable Best Efforts | 76 |
Section 6.09 | Public Announcements | 76 |
Section 6.10 | Stock Exchange Listing | 76 |
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Page | ||
Section 6.11 | Trust Account | 77 |
Section 6.12 | Certain Actions | 77 |
Section 6.13 | Intended Tax Treatment | 77 |
Section 6.14 | Post-Closing Officers and Directors | 78 |
Section 6.15 | NewCo and Sio NewCo Shareholder Approvals | 78 |
Section 6.16 | Transferred Information | 78 |
Section 6.17 | Additional SPAC Extension | 79 |
Section 6.18 | PFIC Status | 79 |
Section 6.19 | GRA | 79 |
Section 6.20 | Tax Matters | 79 |
Section 6.21 | Alternative Financing | 79 |
Section 6.22 | Financing Cooperation | 80 |
Section 6.23 | Extraction Permit | 80 |
Section 6.24 | Support Agreements | 80 |
Article VII CONDITIONS TO THE TRANSACTIONS | 81 | |
Section 7.01 | Conditions to the Obligations of Each Party | 81 |
Section 7.02 | Conditions to the Obligations of SPAC and NewCo | 82 |
Section 7.03 | Conditions to the Obligations of the Company | 83 |
Article VIII TERMINATION, AMENDMENT AND WAIVER | 84 | |
Section 8.01 | Termination | 84 |
Section 8.02 | Effect of Termination | 85 |
Section 8.03 | Expenses | 85 |
Section 8.04 | Amendment | 85 |
Section 8.05 | Waiver | 85 |
Article IX GENERAL PROVISIONS | 86 | |
Section 9.01 | Notices | 86 |
Section 9.02 | Nonsurvival of Representations, Warranties and Covenants | 86 |
Section 9.03 | Severability | 87 |
Section 9.04 | Entire Agreement; Assignment | 87 |
Section 9.05 | Parties in Interest | 87 |
Section 9.06 | Governing Law | 87 |
Section 9.07 | Waiver of Jury Trial | 87 |
Section 9.08 | Headings | 88 |
Section 9.09 | Counterparts | 88 |
Section 9.10 | Specific Performance | 88 |
Section 9.11 | No Recourse | 88 |
EXHIBITS
Exhibit A – Form of PIPE Subscription Agreement
Exhibit B – Form of Domestication Articles
Exhibit C – Form of New SPAC Articles
Exhibit D – Form of Company Closing Articles
Exhibit E – Form of Lock-Up Agreement
Exhibit F – Form of New SPAC Closing Articles
Exhibit G – Form of Registration Rights Agreement
Exhibit H – Form of Plan of Arrangement
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This BUSINESS COMBINATION AGREEMENT, dated as of November 13, 2023 (this “Agreement”), is by and among Pyrophyte Acquisition Corp., a Cayman Islands exempted company (“SPAC”), Sio Silica Corporation, an Alberta corporation (the “Company”), Snowbank NewCo Alberta ULC, an Alberta unlimited liability corporation (“NewCo”), and Sio Silica Incorporated, an Alberta corporation (“Sio NewCo” and, together with SPAC, the Company and NewCo, collectively, the “Parties”). Capitalized terms used but not otherwise defined herein have the meanings set forth in Article I.
BACKGROUND
NewCo is a newly formed Alberta unlimited liability corporation formed solely for the purposes of engaging in the Transactions and wholly owned by SPAC.
Sio NewCo is a newly formed Alberta corporation formed solely for the purposes of engaging in the Transactions and wholly owned by Feisal Somji, a nominee of the Company (the “Nominee”).
Concurrently with the execution of this Agreement, Riverstone Credit Partners II – Direct, L.P. (“Lender”) is executing and delivering a debt financing commitment letter (the “Commitment Letter”) in favor of the Company, pursuant to which Lender has committed to provide, subject only to the terms and conditions set forth therein, the full amount of the debt financing stated therein (the “Debt Financing”).
Concurrently with the execution of this Agreement, certain accredited investors (collectively, the “PIPE Investors”) are entering into subscription agreements, substantially in the form attached hereto as Exhibit A (the “PIPE Subscription Agreements”), pursuant to which, among other things, each PIPE Investor is agreeing to subscribe for and purchase on the Closing Date, and Sio NewCo is agreeing to issue and sell to each such PIPE Investor on the Closing Date (after giving effect to the SPAC Amalgamation (as defined below)), the number of New SPAC Class A Common Shares (as defined below) set forth in the applicable Subscription Agreement in exchange for the purchase price set forth therein (such equity financing, the “PIPE Financing”), in each case, on the terms and subject to the conditions set forth therein, for an aggregate purchase price of $20,122,474.
Prior to or concurrently with the execution of this Agreement, the Company is entering into royalty agreements (the “Royalty Agreements”) with the Persons identified on Section 1.01(d) of the Company Disclosure Schedules for aggregate proceeds of approximately $40,000,000 (the “Royalty Agreement Proceeds”).
On or prior to the SPAC Amalgamation, SPAC is entering into a non-redemption agreement with a holder of SPAC Class A Ordinary Shares (the “Non-Redemption Agreement”).
Prior to the SPAC Amalgamation and subject to the terms and conditions of this Agreement, SPAC shall transfer by way of continuation from the Cayman Islands to Alberta in accordance with the Cayman Islands Companies Act (as revised) (the “Companies Act”) and continue as an Alberta corporation in accordance with the applicable provisions of the Business Corporations Act (Alberta) (the “ABCA”) (such transfer by way of continuation and domestication, including all matters necessary or ancillary in order to effect such transfer by way of continuation and domestication, the “Domestication”).
Concurrently with and as part of the Domestication, SPAC shall file articles in substantially the form attached hereto as Exhibit B hereto (the “Domestication Articles”).
Following the Domestication and subject to the terms and conditions of this Agreement, (i) SPAC shall amalgamate with Sio NewCo (the “SPAC Amalgamation”) to form one corporate entity (“New SPAC”), except that the legal existence of Sio NewCo will not cease and Sio NewCo will survive the SPAC Amalgamation as New SPAC, (ii) the articles of New SPAC will be the articles substantially in the form attached hereto as Exhibit C (the “New SPAC Articles”), (iii) the officers and directors of SPAC shall become the officers and directors of New SPAC, and (iv) New SPAC shall assume the SPAC Warrant Agreement and enter into such amendments thereto as are necessary to give effect to the SPAC Amalgamation, in each case upon and subject to the other terms and conditions set forth in this Agreement, the Plan of Arrangement, the PIPE Subscription Agreements, the SPAC Warrant Agreement and in accordance with the provisions of applicable Law.
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Pursuant to the SPAC Amalgamation, (i) each then issued and outstanding SPAC Class A Common Share shall be exchanged, on a one-for-one basis, for a Class A common share in the authorized share capital of New SPAC (the “New SPAC Class A Common Shares”), (ii) each then issued and outstanding SPAC Warrant shall be exchanged for a warrant to acquire one New SPAC Class A Common Share pursuant to the SPAC Warrant Agreement (the “New SPAC Warrants”), (iii) each then issued and outstanding SPAC Unit shall be exchanged for a unit of New SPAC representing one New SPAC Class A Common Share and one-half of one New SPAC Warrant (the “New SPAC Units”), (iv) each common share of Sio NewCo held by the Nominee will be exchanged for one New SPAC Class A Common Share, and (v) immediately thereafter, the New SPAC Class A Common Share held by the Nominee will be purchased for cancellation for cash equal to the subscription price for the common share of Sio NewCo, in each case upon and subject to the other terms and conditions set forth in this Agreement, the Plan of Arrangement and in accordance with the provisions of applicable Law.
On the Closing Date, prior to the Company Amalgamation and subject to the terms and conditions of this Agreement, the Company Warrants and Company Options shall be exercised on a cashless basis for Company Common Shares in accordance with the Plan of Arrangement (the “Company Warrant and Option Settlement”).
On the Closing Date, following the Company Warrant and Option Settlement, and subject to the terms and conditions of this Agreement, (i) the Company and NewCo shall amalgamate (the “Company Amalgamation” and, together with the SPAC Amalgamation, the “Amalgamations”) to form one corporate entity (the “Amalgamated Company”), except that the legal existence of the Company will not cease and the Company will survive the Company Amalgamation as the Amalgamated Company, (ii) the articles of the Amalgamated Company will be the articles substantially in the form attached hereto as Exhibit D (the “Company Closing Articles”), and (iii) the directors and officers of the Amalgamated Company shall be designated by the Company, all in accordance with the terms of the Plan of Arrangement.
Pursuant to the Company Amalgamation, (i) each then issued and outstanding Company Common Share (other than the Interim Company Shares) shall be exchanged for (x) a number of New SPAC Class A Common Shares equal to the Company Common Share Exchange Ratio and (y) a number of Company Earnout Shares equal to the Company Earnout Exchange Ratio, (ii) each then issued and outstanding Company RSU shall become exercisable for a number of New SPAC Class A Common Shares (rounded up or down to the nearest whole share) equal to the number of Company Common Shares subject to the applicable Company RSU multiplied by the Company Common Share Exchange Ratio, (iii) each Unexercised Company Warrant shall remain outstanding and shall automatically in accordance with its terms become a warrant to acquire New SPAC Class A Common Shares, and (iv) each then issued and outstanding Interim Company Share shall be exchanged for a number of New SPAC Class A Common Shares equal to the Company Common Share Exchange Ratio.
On the Closing Date, New SPAC shall issue and sell to each PIPE Investor the number of New SPAC Class A Common Shares set forth in the applicable PIPE Subscription Agreement in exchange for the purchase price set forth therein.
On the Closing Date, the Company and one or more Debt Financing Sources shall enter into a credit agreement on substantially the terms described in or contemplated by the Commitment Letter (the “Credit Agreement”) and such Debt Financing Source(s) shall fund the amounts contemplated thereby to be available at Closing subject to the terms and conditions of the Credit Agreement and funded in whole or in part at Closing.
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On the Closing Date, the counterparties to the Royalty Agreements shall fund the Royalty Agreement Proceeds to the Company.
New SPAC and each of the Lock-Up Shareholders shall become bound by a lock-up agreement in substantially the form attached hereto as Exhibit E hereto (the “Lock-Up Agreement”) in accordance with the terms of the Plan of Arrangement.
Concurrently with the Company Amalgamation, (i) the New SPAC Articles shall be replaced with the articles in substantially the form attached hereto as Exhibit F (the “New SPAC Closing Articles”) in accordance with the terms of the Plan of Arrangement, (ii) the directors of the New SPAC immediately prior to the Company Amalgamation will resign and be replaced by seven (7) individuals to be designated in the manner set forth in the New SPAC Closing Articles prior to the Closing (the “Post-Closing Directors”), and (iii) the officers of New SPAC immediately prior to the Company Amalgamation will resign and be replaced by the officers of the Company prior to the Closing (collectively with the Post-Closing Directors, the “Post-Closing Officers and Directors”).
The Parties intend that: (a) for U.S. federal and applicable state and local income Tax purposes, (i) the Domestication and the SPAC Amalgamation each qualify as a “reorganization” within the meaning of Section 368(a)(1)(F) of the Code, (ii) the Company Amalgamation qualify as a “reorganization” within the meaning of Section 368(a) of the Code and the Company be the surviving entity of the “reorganization”, and (iii) this Agreement and the Plan of Arrangement constitute, and are hereby adopted as, a “plan of reorganization” within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3(a) (collectively, the “Intended U.S. Tax Treatment”), and (b) for Canadian income Tax purposes, each of the Amalgamations are intended to (i) qualify as an amalgamation within the meaning of section 87 of the Canadian Tax Act and for the purposes of the ABCA, and (ii) be governed by subsections 87(1), 87(2), 87(4), 87(5) and 87(9) of the Canadian Tax Act (collectively, the “Intended Canadian Tax Treatment” and together with the Intended U.S. Tax Treatment, the “Intended Tax Treatment”).
The Board of Directors of the Company (the “Company Board”) has unanimously (i) determined that the Transactions are in the best interests of the Company and are fair to the Company Shareholders, (ii) approved this Agreement, the Ancillary Agreements to which the Company is or will be a party and the Transactions and (iii) resolved to recommend that the Company Shareholders vote in favor of the Arrangement Resolution.
The Board of Directors of SPAC (the “SPAC Board”) has unanimously (i) determined that the Transactions are in the commercial interests of SPAC and are fair to the SPAC Shareholders, (ii) approved this Agreement, the Ancillary Agreements to which SPAC is or will be a party and the Transactions and (iii) directed that the Transaction Proposals be submitted for consideration by the SPAC Shareholders at the SPAC Shareholders Meeting and recommended that SPAC Shareholders approve and adopt each of the Transaction Proposals at the SPAC Shareholders Meeting.
The Board of Directors of Sio NewCo (the “Sio NewCo Board”) has unanimously (i) determined that the Transactions are in the best interests of Sio NewCo, (ii) approved this Agreement, the Ancillary Agreements to which Sio NewCo is or will be a party and the Transactions and (iii) recommended the approval of this Agreement, the Ancillary Agreements to which Sio NewCo is or will be a party and the Transactions by the sole shareholder of Sio NewCo.
The Board of Directors of NewCo (the “NewCo Board”) has unanimously (i) determined that the Transactions are in the best interests of NewCo, (ii) approved this Agreement, the Ancillary Agreements to which NewCo is or will be a party and the Transactions and (iii) recommended the approval of this Agreement, the Ancillary Agreements to which NewCo is or will be a party and the Transactions by the sole shareholder of NewCo.
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Concurrently with the execution and delivery of this Agreement, the Sponsor, NewCo and the Company are entering into a letter agreement, dated as of the date hereof (the “Sponsor Letter”), pursuant to which, among other things, (i) the Sponsor has agreed to waive the anti-dilution rights set forth in SPAC’s Amended and Restated Memorandum and Articles of Association adopted on October 26, 2021 (the “SPAC Memorandum and Articles of Association”) with respect to Sponsor Shares that may be triggered by the Transactions; (ii) the Sponsor has agreed to vote all Sponsor Shares held by it in favor of each of the Transaction Proposals; and (iii) the Sponsor has agreed to subject certain of the Sponsor Shares to restrictions until the occurrence of certain conditions.
SPAC, the Company, and the Key Company Shareholders will use commercially reasonable efforts, as promptly as possible (and in any event, within five days of the date of this Agreement) following the date of this Agreement, to enter into agreements (the “Support Agreements”), pursuant to which, among other things, each such Key Company Shareholder will agree to support and vote in favor of the Arrangement Resolution.
Concurrently with the Closing, New SPAC and certain Company Shareholders and SPAC Shareholders shall enter into a registration rights agreement in substantially the form attached hereto as Exhibit G hereto (the “Registration Rights Agreement”).
The Parties intend to complete the Amalgamations and the other Transactions pursuant to the Plan of Arrangement.
AGREEMENT
In consideration of the foregoing and the mutual covenants and agreements herein contained, the Parties hereto hereby agree as follows:
Article
I
DEFINITIONS
Section 1.01 Certain Definitions. For purposes of this Agreement:
“Affiliate” of a specified Person means a Person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.
“Ancillary Agreements” means the Plan of Arrangement, the Support Agreements, the Sponsor Letter, the Lock-Up Agreement, the Registration Rights Agreement, the PIPE Subscription Agreements, the Royalty Agreements, the Non-Redemption Agreement, the Commitment Letter, the Credit Agreement and all other agreements, certificates and instruments executed and delivered by SPAC, NewCo, Sio NewCo or the Company in connection with the Transactions and specifically contemplated by this Agreement.
“Anti-Corruption Laws” means: (i) the U.S. Foreign Corrupt Practices Act of 1977, as amended (“FCPA”); (ii) the UK Bribery Act 2010 (“UKBA”); (iii) the Corruption of Foreign Publics Official Act (Canada), the Criminal Code (Canada), and the Extractive Sector Transparency Measures Act (Canada); (iv) Laws adopted in furtherance of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions; and (v) all other applicable, similar or equivalent anti-corruption or anti-bribery Laws of any jurisdiction.
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“Anti-Money Laundering Laws” means financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970 (also known as the Bank Secrecy Act), as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), the anti-money laundering statutes of all applicable jurisdictions (defined by virtue of such entity’s jurisdiction of incorporation or its conduct of business operations), the rules and regulations thereunder, and any related or similar rules or regulations, issued, administered or enforced by any governmental agency.
“Arrangement” means an arrangement under section 193 of the ABCA on the terms and subject to the conditions set forth in the Plan of Arrangement, subject to any amendments or variations to the Plan of Arrangement made in accordance with the terms of this Agreement and the Plan of Arrangement or made at the directions of the Court in the Interim Order or Final Order with the prior written consent of SPAC and the Company, such consent not to be unreasonably withheld, conditioned or delayed.
“Arrangement Resolution” means (i) in the case of the Company, the special resolution of the Company Shareholders in respect of the Arrangement to be considered at the Company Shareholders Meeting, and (ii) in the case of SPAC, the special resolution of SPAC Shareholders to be considered at the SPAC Shareholders Meeting; in each case, including any amendments or variations thereto made in accordance with the Agreement or made at the direction of the Court in the Interim Order, with the consent of the Company and SPAC, each acting reasonably.
“As-Converted Company Options” means the number of Company Common Shares that are issuable upon the exercise of Company Options that are unexpired, issued and outstanding as of immediately prior to the Company Amalgamation Effective Time minus a number of Company Common Shares with a fair market value equal to the aggregate exercise price (determined with reference to the US dollar to the Canadian dollar exchange rate reported by the Bank of Canada at the close of business on the date that is two (2) Business Days prior to the Closing Date) of all Company Options if they were so exercised, in each case, assuming that the fair market value of one Company Common Share equals (x) the Company Common Share Exchange Ratio multiplied by (y) $10.25.
“As-Converted Company RSUs” means the number of Company Common Shares that are issuable upon the exercise of Company RSUs that are unexpired, issued and outstanding as of immediately prior to the Company Amalgamation Effective Time.
“As-Converted Company Warrants” means the number of Company Common Shares that are issuable upon the exercise of any Unexercised Company Warrants issued and outstanding as of immediately prior to the Company Amalgamation Effective Time minus a number of Company Common Shares with a fair market value equal to the aggregate exercise price (determined with reference to the US dollar to the Canadian dollar exchange rate reported by the Bank of Canada at the close of business on the date that is two (2) Business Days prior to the Closing Date) of all such Unexercised Company Warrants if they were so exercised.
“Available Closing Cash” means an amount equal to: (a) the funds contained in the Trust Account as of the Company Amalgamation Effective Time (but, for the avoidance of doubt, prior to the payment of any cash to satisfy the redemptions of any Redemption Shares pursuant to the SPAC Redemption); plus (b) all other cash and cash equivalents of SPAC, including the proceeds of any securities or Indebtedness funded in connection with the Closing (excluding, for the avoidance of doubt, any amount otherwise included in the Available Closing Cash pursuant to clauses (a) and (e) of this definition); plus (c) the proceeds received on or before the Company Amalgamation Effective Time from and pursuant to the Royalty Agreements, including, without limitation, the Royalty Agreement Proceeds; plus (d) the proceeds received as a result of the PIPE Financing; plus (e) the available amount under the Credit Agreement; plus (f) the proceeds received as a result of the issuance of any Interim Company Shares or Flow-Through Shares; minus (g) the aggregate amount of cash required to be paid to satisfy the redemptions of any Redemption Shares pursuant to the SPAC Redemption; minus (h) the Transaction Expenses.
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“Business Data” means all business information and data, including Personal Information and Confidential Information that is accessed, collected, used, stored, shared, distributed, transferred, disclosed, destroyed, disposed of or otherwise processed by or on behalf of the Company in the course of the conduct of the business of the Company.
“Business Day” means a day except a Saturday, Sunday or other day on which the SEC in Washington, D.C. or banks in the City of New York in the United States of America or the City of Calgary in Alberta, Canada are required by Law to be closed.
“Business Systems” means all Software, computer hardware (whether general or special purpose), electronic data processors, databases, communications, telecommunications, networks, interfaces, platforms, workstations, hubs, switches, servers, peripherals, information technology, operational technology and computer systems, including any outsourced systems and processes, and any Software and systems provided via the cloud or “as a service”, that are owned or administered by the Company and used in the conduct of the business of the Company.
“Canadian Tax Act” means the Income Tax Act (Canada) and the regulations made thereunder.
“CASL” means an act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act (S.C. 2010, c.23).
“Change of Control” means any transaction or series of transactions (i) in which the holders of all of the outstanding voting securities of New SPAC immediately prior to the consummation of such transaction do not directly or indirectly (including through Affiliates) own beneficially or of record immediately upon the consummation of such transaction a majority of the combined outstanding voting securities of the surviving entity in such transaction or of a parent of the surviving entity in such transaction, (ii) in which a majority of New SPAC’s voting securities (outstanding after such transaction) are transferred to or acquired by any Person, or any two or more Persons acting as a “group” (as defined in the Exchange Act), and all Affiliates of such Person or Persons (each, for purposes of this definition, a “Group”), (iii) constituting a merger, consolidation, reorganization or other business combination, however effected, following which any Person or Group of Persons (other than the Parties hereto or their respective Subsidiaries) has direct or indirect beneficial ownership of securities (or rights convertible into or exchangeable into securities) representing more than fifty percent (50%) of the voting power of or economic rights or interests in New SPAC or the Amalgamated Company or the surviving Person after such merger, consolidation, reorganization or combination or (iv) the result of which is a sale of all or substantially all of the assets of New SPAC to any Third Party.
“Code” means the United States Internal Revenue Code of 1986, as amended.
“Company Articles” means the articles of amalgamation of the Company dated February 9, 2021, as may be amended from time to time.
“Company Broker Warrants” means the 30,000 issued and outstanding warrants to purchase Company Common Shares.
“Company Common Share Exchange Ratio” means the quotient obtained by (A) dividing (i) the Company Valuation by (ii) $10.25, and then (B) by further dividing the resulting number of New SPAC Class A Common Shares established in (A) above by the Fully-Diluted Company Common Shares.
“Company Common Shares” means the common shares in the authorized share capital of the Company.
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“Company Dissent Rights” means the rights of dissent granted to the Company Shareholders in respect of the Arrangement described in the Plan of Arrangement.
“Company Earnout Exchange Ratio” means the quotient obtained by dividing (i) 6,585,366 by (ii) the Fully-Diluted Company Common Shares.
“Company Information Circular” means the notice of the Company Shareholders Meeting to be sent to the Company Shareholders, and the accompanying management information circular to be prepared in connection with the Company Shareholders Meeting, together with any amendments thereto or supplements thereof in accordance with the terms of this Agreement.
“Company IP” means, collectively, all Company-Owned IP and Company-Licensed IP.
“Company-Licensed IP” means all Intellectual Property owned or purported to be owned by a third party and either licensed to the Company or to which the Company otherwise has a valid right to use.
“Company Material Adverse Effect” means any event, state of facts, development, condition, occurrence, circumstance, change or effect (collectively, “Effect”) that, individually or in the aggregate with all other Effects, (i) has had or would reasonably be expected to have a material adverse effect on the business, condition (financial or otherwise), assets, liabilities or results of operations of the Company taken as a whole, or (ii) would reasonably be expected to prevent, materially delay or materially impede the performance by the Company of its obligations under this Agreement or the consummation of the Transactions; provided, however, that, with respect to clause (i), none of the following shall be deemed to constitute, alone or in combination, or be taken into account in the determination of whether, there is, has been or will be a Company Material Adverse Effect: (a) any change or proposed change in or change in the interpretation of any Law, GAAP or IFRS applicable to the Company; (b) Effects generally affecting the industries in which the Company operates; (c) any downturn in general economic conditions, including changes in the credit, debt, securities, financial or capital markets (including changes in interest or exchange rates, prices of any security or market index or commodity or any disruption of such markets); (d) any geopolitical conditions, outbreak of hostilities, acts of war, sabotage, cyberterrorism, terrorism, military actions, earthquakes, volcanic activity, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires or other natural disasters, weather conditions, epidemics, pandemics and other force majeure events (with respect to the COVID-19 pandemic, solely to the extent such Effect first arises after the date hereof); (e) any Effect attributable to the announcement, execution, or delivery of the Transactions (provided that this clause (e) shall not apply to any representation or warranty to the extent the purpose of such representation or warranty is to address the consequences resulting from this Agreement or the consummation of the Transactions); (f) any failure to meet any projections, forecasts, guidance, estimates, milestones, budgets or financial or operating predictions of revenue, earnings, cash flow or cash position, provided that this clause (f) shall not prevent a determination that any Effect underlying such failure has resulted in a Company Material Adverse Effect, or (g) any actions taken, or failures to take action, or such other Effects, in each case, which SPAC has requested in writing, except in the cases of clauses (a) through (f), such items shall be taken into account in the determination to the extent that the Company is disproportionately affected thereby as compared with other participants in the industries in which the Company operates.
“Company Options” means all options to purchase Company Common Shares, whether or not exercisable and whether or not vested, granted under the Company Share Option Plan.
“Company Outstanding Shares” means the total number of Company Common Shares outstanding immediately prior to the Company Amalgamation Effective Time.
“Company-Owned IP” means all Intellectual Property owned or purported to be owned by the Company.
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“Company Required Approval” means approval by at least two-thirds of the votes cast on the Arrangement Resolution by Company Shareholders, voting as a single class, present in person or represented by proxy at the Company Shareholders Meeting.
“Company RSUs” means all restricted share units to acquire Company Common Shares, whether or not exercisable and whether or not vested, granted under the Company Share Award Plan.
“Company Share Award Plan” means the Company’s Restricted Share Unit Plan – September 2018, as may be amended from time to time.
“Company Share Option Plan” means the share option plan of the Company, effective March 24, 2017, as may have been amended, supplemented or modified from time to time.
“Company Shareholder Warrants” means the 2,834,901 issued and outstanding warrants to purchase Company Common Shares.
“Company Shareholders” means, collectively, the holders of Company Common Shares as of any determination time prior to the Closing.
“Company Shareholders Meeting” means the meeting of the Company Shareholders, including any adjournment or postponement thereof in accordance with the terms of this Agreement, that is to be convened as provided by the Interim Order to consider, and if deemed or otherwise advisable approve, the Arrangement Resolution.
“Company Transaction Expenses” means, except as otherwise set forth in this Agreement, all reasonable and documented third-party, out-of-pocket fees and expenses incurred in connection with, or otherwise related to, the Transactions, the negotiation and preparation of this Agreement and the Ancillary Agreements and the performance and compliance with this Agreement and the Ancillary Agreements and conditions contained herein and therein, including the fees, expenses and disbursements of legal counsel, reserve evaluators, auditors and accountants, due diligence expenses, advisory and consulting fees (including financial advisors) and expenses, and other third-party fees, including, but not limited to, any tail policy in respect of the D&O Insurance as contemplated by Section 6.06(b) and any “go-forward” D&O Insurance contemplated by Section 6.06(c), in each case, of each of the Company and Sio NewCo, and any and all filing fees payable by the Company or Sio NewCo, or any of their respective Affiliates to Governmental Authorities in connection with the Transactions.
“Company Valuation” means $675,000,000.
“Company Warrants” means, collectively, the Company Broker Warrants and the Company Shareholder Warrants.
“Confidential Information” means any information, knowledge or data concerning the businesses or affairs of (i) the Company that is not in the public domain, or (ii) any Suppliers or customers of the Company that is subject to restrictions on use or disclosure to third parties in any currently enforceable written confidentiality agreements with the Company.
“Contract” means any written agreement, contract, instrument, subcontract, arrangement, undertaking, lease or sublease, license or other legal commitment or understanding that is binding upon a Person or any of their properties or assets.
“control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, or as trustee or executor, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by Contract or otherwise.
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“Court” means the Alberta Court of King’s Bench.
“Current Employee” means an employee of the Company.
“Debt Financing Sources” means the entity or entities that have committed (or may in the future commit, including pursuant to one or more loan syndications) to provide or arrange or otherwise entered (or may in the future enter) into agreements in connection with all or any part of the Debt Financing or other financings in connection with the transactions contemplated hereby, including the parties to any indentures or credit agreements or any joinder, assignment, transfer or participation agreements, entered pursuant thereto or relating thereto, together with their respective Affiliates, and their respective Affiliates’ officers, directors, employees, agents and representatives and their respective successors and assigns.
“Debt-to-Other Cash Ratio” means, at the time of determination, the ratio of (a) the available amount under the Credit Agreement to be funded in connection with the Closing, to (b) an amount equal to the sum of (i) Available Closing Cash that results from proceeds of all sources other than in connection with the Credit Agreement and (ii) Transaction Expenses.
“Deferred Underwriting Fees” means the amount of deferred underwriting fees held in the Trust Account and payable to the underwriters of SPAC’s initial public offering upon consummation of the Transactions.
“Disabling Devices” means Software viruses, time bombs, logic bombs, trojan horses, trap doors, back doors, worms, spyware, or other computer instructions, intentional devices or techniques that are designed to threaten, infect, assault, vandalize, defraud, disrupt, damage, disable, maliciously encumber, hack into, incapacitate, infiltrate or slow or shut down a computer system or any component of such computer system, including any such device affecting system security or compromising or disclosing Business Data in an unauthorized manner, other than those incorporated by the Company or the applicable third party intentionally to protect Company IP from misuse.
“Earnout Issue Price” means the deemed issue price of the New SPAC Class A Common Shares to be issued in connection with the Company Earnout, which shall be $10.25 per New SPAC Class A Common Share.
“Emergency Actions” means any action (or omission) required on an emergency basis for the prevention of an immediate and material danger to any natural Person or material damage to any asset or property.
“Employee Benefit Plan” means any employee benefit plan, program, agreement or arrangement, including any bonus, profit sharing, stock option, stock purchase, restricted stock, phantom stock, shadow equity, other equity-based compensation arrangement, performance award, incentive, deferred compensation, pension plan or scheme or insurance, life, accident, critical illness, retiree medical or life insurance, death or disability benefit, short term or long term disability, health or welfare (including hospitalization, prescription drug and dental), employee assistance, retirement, retirement savings, retirement, termination pay, severance, redundancy, retention, change in control, employment, consulting, employee loan, educational assistance, vehicle, fringe benefit, sick leave, sick pay, expatriate benefit, vacation pay, vacation plans or arrangements and any other employee benefit plans, programs or arrangements, whether written or unwritten, registered or non-registered, funded or unfunded, insured or uninsured.
“Environment” means the air, surface water, ground water, body of water, any land (including surface land and sub-surface strata), soil or underground space, all living organisms and the interacting natural systems that include components of the air, land, water and inorganic matters and living organisms, and the environment or natural environment as defined in any Environmental Law.
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“Environmental Laws” means Laws regulating or pertaining to pollution, the Environment, any Hazardous Substance, natural resources, endangered or threatened species, or health and safety.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“EU Dual Use Regulation” means Regulation (EU) No 2021/821.
“Ex-Im Laws” means all applicable Laws relating to export, re-export, transfer, and import controls, including but not limited to the U.S. Department of Commerce Export Administration Regulations, the customs and import Laws administered by U.S. Customs and Border Protection, the Export and Import Permits Act (Canada), the customs and import Laws administered by the Canada Border Services Agency, the EU Dual Use Regulation, the customs and import Laws administered by His Majesty’s Revenue and Customs and any similar Laws of any other relevant Governmental Authority.
“Extraction Permit” means a license under the Environment Act (Manitoba) applied for by or on behalf of the Company that would permit the Company to extract high purity silica sand from the Winnipeg Sandstone geological formation situated within the Company’s mining claims and leases located southwest of Vivian, Manitoba at an annual extraction rate of up to 1.34 million tonnes.
“Final Order” means the final order of the Court pursuant to section 193 of the ABCA, approving the Arrangement, in a form acceptable to SPAC and the Company, as such order may be amended, modified, supplemented or varied by the Court with the consent of SPAC and the Company, such consent not to be unreasonably withheld, conditioned or delayed, at any time prior to the Closing or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or amended, on appeal, provided that any such affirmation or amendment is acceptable to each of SPAC and the Company, each acting reasonably.
“First SPAC Extension” means the approval of SPAC Shareholders to extend the deadline for SPAC to consummate its initial business combination to a date after April 29, 2023 in accordance with the SPAC Organizational Documents so as to permit the consummation of the Transactions.
“Fraud” means, with respect to any Person, fraud by such Person with respect to any Transaction Document, applying the common law of the State of New York in the United States of America.
“Fully-Diluted Company Common Shares” means the sum of (i) the As-Converted Company RSUs, (ii) the number of Company Common Shares issued and outstanding immediately prior to the Company Amalgamation Effective Time, which shall (x) include any Company Common Shares issued in connection with the Company Warrant and Option Settlement and (y) exclude the Interim Company Shares, and (iii) the As-Converted Company Warrants.
“GAAP” means generally accepted accounting principles as in effect in the United States of America from time to time.
“Government Official” means any officer or employee of a Governmental Authority, a public international organization, or any department or agency thereof or any Person acting in an official capacity for such government or organization, including (i) a foreign official as defined in the FCPA; (ii) a foreign public official as defined in the UKBA; (iii) a foreign public official as defined in the Corruption of Foreign Public Officials Act (Canada) and a public officer as defined in the Criminal Code (Canada); (iv) an officer or employee of a government-owned, controlled, operated enterprise, such as a national oil company; and (v) any non-U.S. political party, any party official or representative of a non-U.S. political party, or any candidate for a non-U.S. political office.
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“Hazardous Substances” means substances, materials or waste defined, regulated listed or prohibited by Environmental Laws, including pollutants, contaminants, chemicals, deleterious substances, dangerous goods, hazardous or industrial toxic wastes, materials or substances, solid wastes, tailings, wasterock, radioactive materials, flammable substances, explosives, petroleum, petroleum products, petroleum derivatives (or synthetic substitutes), petroleum byproducts, petroleum breakdown products, polychlorinated biphenyls, chlorinated solvents, hydrogen sulphide, arsenic, cadmium, lead, mercury, asbestos, asbestos containing materials, urea-formaldehyde insulation, mold, radon, per- and polyfluoroalkyl substances, words of similar meaning or effect to the foregoing, and any other material, substance, pollutant or contaminant that could result in liability under Environmental Law.
“IFRS” means International Financial Reporting Standards as issued by the International Accounting Standards Board, as incorporated in the CPA Canada Handbook at the relevant time.
“Indebtedness” means, with respect to any Person, all obligations and liabilities of such Person (i) for borrowed money, or evidenced by notes, bonds, debentures or similar instruments (including the outstanding principal amount thereof, plus any related interest, fees, expenses and prepayment premiums or penalties created, issued, or incurred in respect thereof), (ii) in respect of “earn-out” obligations and other obligations for the deferred purchase price of property, goods or services, (iii) for any indebtedness evidenced by any letter of credit, performance bond, surety bond, bank guarantees or similar instrument to the extent drawn or called, (iv) under capital leases, (v) with respect to net cash payment obligations under swaps, options, derivatives and other hedging agreements or arrangements that will be payable upon termination thereof (assuming they were terminated as of such date), (vi) for deferred revenues, (vii) in respect of dividend payable balances, or (viii) in the nature of guarantees of or pledges and grants of security interests with respect to the obligations and liabilities described in clauses (i) through (vii) above of any other Person.
“Insolvency Event” means, (i) in relation to an entity:
(a) the entity goes, or proposes to go, into bankruptcy or liquidation;
(b) an order is made or an effective resolution is passed for the winding up or dissolution without winding up (otherwise than for the purposes of a solvent reconstruction or amalgamation) of the entity;
(c) a receiver, receiver and manager, judicial manager, liquidator, trustee, administrator or like official is appointed, or threatened or expected to be appointed, over the entity, the whole or a substantial part of the undertaking or property of the entity, or any application is made to a court for an order, or an order is made, or a meeting is convened, or a resolution is passed, for the purpose of appointing such a Person;
(d) the holder of a Lien takes possession of the whole or substantial part of the undertaking or property of the entity;
(e) a writ of execution is issued against the entity or any of the entity’s assets;
(f) the entity is unable, or admits in writing its inability or failure, to pay its debts generally as they become due;
(g) the entity commits an act of bankruptcy under the Bankruptcy and Insolvency Act (Canada);
(h) the entity makes a general assignment for the benefit of creditors;
(i) the entity proposes or takes any steps to implement a reorganization or arrangement or other compromise with its creditors or any class of them, whether pursuant to the Companies’ Creditors Arrangement Act (Canada) or similar legislation in any jurisdiction or otherwise;
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(j) the entity is declared or taken under applicable Law to be insolvent or the entity’s board of directors resolve that it is, or is likely to become insolvent; or
(k) an event that is the effective equivalent of an event described in paragraphs (a) to (j) above occurs in respect of the entity under the Laws applicable to it; and
(l) in relation to a natural person, the person is made bankrupt, declared bankrupt or files a petition for relief under bankruptcy Laws, a certificate is issued for the summary administration of the person’s estate or an equivalent or similar event to any of the foregoing occurs in respect of the person under the Laws applicable to it.
“Intellectual Property” means (i) all patents, patent applications and patent disclosures, together with all reissues, continuations, continuations-in-part, divisionals, revisions, extensions or reexaminations thereof, (ii) trademarks and service marks, trade dress, logos, trade names, corporate names, brands, slogans, and other source identifiers together with all translations, adaptations, derivations, combinations and other variants of the foregoing, and all applications, registrations, and renewals in connection therewith, together with all of the goodwill associated with the foregoing, (iii) copyrights, and other rights in works of authorship (whether or not copyrightable), and moral rights, and registrations and applications for registration, renewals and extensions thereof, (iv) trade secrets, proprietary know-how (including ideas, formulas, compositions, inventions (whether or not patentable or reduced to practice)), and database protection rights, (v) Internet domain name registrations, (vi) rights of privacy (excluding those arising under Privacy/Data Security Laws) and publicity and all other intellectual property or proprietary rights of any kind or description, and (vii) all legal rights arising from clauses (i) through (vi) above, including the right to prosecute, enforce and perfect such interests and rights to sue, oppose, cancel, interfere, enjoin and collect damages based upon such interests, including such rights based on past infringement, if any, in connection with any of the foregoing.
“Interim Order” means the interim order of the Court contemplated by Section 2.02 and made pursuant to section 193 of the ABCA, providing for, among other things, the calling and holding of the Company Shareholders Meeting, as the same may be amended, modified, supplemented or varied by the Court with the consent of SPAC and the Company, such consent not to be unreasonably withheld, conditioned or delayed, provided that any such amendment is reasonably acceptable to each of SPAC and the Company.
“Investment Canada Act” means the Investment Canada Act (Canada) and the regulations made thereunder.
“Key Company Shareholders” means the persons and entities listed on Section 1.01(a) of the Company Disclosure Schedule.
“knowledge” or “to the knowledge” of a Person means (a) in the case of the Company, the actual knowledge of the Persons listed on Section 1.01(b) of the Company Disclosure Schedule after reasonable inquiry of direct reports, and (b) in the case of SPAC, the actual knowledge of the Persons listed on Section 1.01(a) of the SPAC Disclosure Schedule after reasonable inquiry of direct reports.
“Law” means any federal, national, state, county, municipal, provincial, local, foreign or multinational, statute, constitution, common law, ordinance, code, decree, order, judgment, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Authority.
“Lien” means any (i) lien, security interest, mortgage, pledge, adverse claim, lease, license, tenancy or possessory interest, purchase right, transfer restriction, conditional sales obligation, easement, restriction, covenant, condition, levy, debt, attachment or other encumbrance of any kind that secures the payment or performance of an obligation (other than those created under applicable securities laws), (ii) any security for payment of money, performance of obligations or protection against default (including a mortgage, bill of sale, charge, lien, pledge, trust, power or retention of title arrangement, right of set-off, assignment of income, garnishee order, monetary claim and flawed deposit arrangement), or (iii) any Contract granting or creating anything referred to in the foregoing clause (a); provided that a Lien shall not include, in any event, royalty interests in the Property and/or the Mineral Rights.
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“Lock-Up Shareholders” means the persons and entities listed in Schedule A to the Lock-Up Agreement.
“made available” means (i) with respect to documents made available to SPAC, that such documents were posted in the Virtual Data Room, and (ii) with respect to documents made available to the Company, that such documents were provided to the Representatives of the Company or disclosed in the SPAC SEC Reports, in each case at or prior to 5:00 p.m., New York time, on the date that is two (2) Business Days prior to the date of this Agreement.
“NewCo Organizational Documents” means the incorporation and constitutional documents of NewCo.
“Occupational Health and Safety Laws” means all Laws relating in full or part to workplace safety, the protection of workers, or worker health and safety, including the Occupational Health and Safety Act (Alberta) and the regulations thereto, including the Occupational Health and Safety Code and Occupational Health and Safety Regulation.
“Ordinary Course” means, with respect to any Person, the ordinary course of business consistent with such Person’s past custom and practice.
“Ordinary Resolution” means a resolution passed by at least a majority of SPAC Shareholders, being entitled to do so, by attending and voting in person or, where proxies are allowed, by proxy at the SPAC Shareholders Meeting.
“Permitted Liens” means (i) such imperfections of title, easements, encumbrances, Liens or restrictions that do not and would not, individually or in the aggregate, materially impair the current use, operation, value or marketability of the Company’s assets, Property and Leased Real Property (but in all events excluding monetary Liens), (ii) the Liens set forth in Section 1.01(c) of the Company Disclosure Schedule, (iii) materialmen’s, mechanics’, carriers’, workmen’s, warehousemen’s, repairmen’s, landlord’s and other similar Liens arising in the Ordinary Course, or deposits to obtain the release of such Liens, for amounts not yet due or that are being contested in good faith in appropriate proceedings, and for which appropriate reserves have been made in accordance with GAAP or IFRS, (iv) Liens for current Taxes not yet due and delinquent, or if delinquent, being contested in good faith by appropriate proceedings and for which appropriate reserves have been made in accordance with GAAP or IFRS, (v) zoning, entitlement, conservation restriction and other land use and Environmental Laws promulgated by Governmental Authorities that do not and would not, individually or in the aggregate, materially impair the current use, operation, value or marketability of the Company’s assets, Property and Leased Real Property (vi) non-exclusive licenses (or sublicenses) of Company-Owned IP granted in the Ordinary Course, (vii) non-monetary Liens, encumbrances and restrictions on real property (including easements, covenants, rights of way and similar restrictions of record), that do not and would not, individually or in the aggregate, materially impair the current use, operation, value or marketability of the Company’s assets, (viii) Liens identified in the Financial Statements, and for which appropriate reserves have been made in accordance with GAAP or IFRS, (ix) all non-monetary registrations, encumbrances and instruments registered or pending registration against title to the Property and Leased Real Property that do not and would not, individually or in the aggregate, materially impair the current use, operation or occupancy of the Company’s assets, including without limitation the Property and Leased Real Property, that are subject thereto (but in all events excluding monetary Liens), (x) any conditions and covenants imposed by such mining legislation and regulation as may be applicable to Property and the Mineral Rights; provided the same are complied with in all material respects; (xi) Liens on concentrates, minerals or the proceeds of sale of such concentrates or minerals arising or granted pursuant to a processing arrangement, in each case, entered into in the ordinary course of business and upon usual and arm’s length market terms, securing the payment of the applicable Party’s portion of the fees, costs and expenses attributable to the processing of such concentrates or minerals under any such processing arrangement; provided that: (A) such Liens relate to obligations which are at such time not past due or the validity of which are being contested in good faith by appropriate proceedings; and (B) reserves are being maintained in accordance with IFRS against such Liens, (xii) Liens securing capital lease obligations, and indebtedness assumed as part of, or issued or incurred to pay or provide funds to pay, all or a part of the purchase price of any equipment hereafter or previously acquired (for the avoidance of doubt such Liens shall only be permitted on the assets financed pursuant to the foregoing) and (xiii) Liens on leases, subleases, easements, licenses, rights of use, rights to access and rights of way arising from the provisions of such agreements or benefiting or created by any superior estate, right or interests that do not and would not, individually or in the aggregate, materially impair the use of the Company’s assets that are subject hereto.
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“Person” means an individual, corporation, partnership, limited partnership, limited liability company, syndicate, person (including, without limitation, a “person” as defined in Section 13(d)(3) of the Exchange Act), trust, association or entity or government, political subdivision, agency or instrumentality of a government or Governmental Authority.
“Personal Information” means (i) information about an identified or identifiable individual or household (e.g., name, address, telephone number, email address, financial account number, government-issued identifier), (ii) any other data used or intended to be used or which allows one to identify, contact, or precisely locate an individual or household, including any internet protocol address or other persistent identifiers, and (iii) any other similar information or data regulated by Privacy/Data Security Laws.
“Plan of Arrangement” means the Plan of Arrangement in substantially the form attached as Exhibit H hereto, subject to any amendments or variations to such plan made in accordance with this Agreement and the Plan of Arrangement or made at the direction of the Court in the Final Order with the prior written consent of the Company and SPAC, each acting reasonably.
“Privacy/Data Security Laws” means all Laws governing the receipt, collection, use, storage, handling, processing, sharing, security, use, disclosure, protection or transfer of Personal Information or the security of Company’s Business Systems, including the following Laws and their implementing regulations: the CAN-SPAM Act, CASL, the Personal Information Protection and Electronic Documents Act (S.C. 2000, c.5), the Personal Information Protection Act, SA 2003, c P-6.5, California Consumer Privacy Act, and any ancillary rules, binding guidelines, orders, directions, directives, codes of conduct or other instruments made or issued by a Governmental Authority under the foregoing instruments, state or provincial data security Laws, state or provincial data breach notification Laws, and the General Data Protection Regulation (EU) 2016/679.
“Redemption Rights” means the redemption rights provided for in Article 51 of the SPAC Memorandum and Articles of Association.
“Registered Intellectual Property” means all Intellectual Property that is the subject of registration (or an application for registration) by a Governmental Authority or, for domain names, a private registrar.
“Registrar” means the Registrar of Corporations for the Province of Alberta or the Deputy Registrar of Corporations appointed under section 263 of the ABCA.
“Sanctioned Jurisdiction” means at any time, a country, region or territory which is itself the subject or target of any comprehensive Sanctions.
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“Sanctioned Person” means at any time any Person that is: (i) listed on any Sanctions-related list of designated or blocked Persons administered by a Governmental Authority (including, but not limited to, the U.S. Department of Treasury’s Office of Foreign Assets Control’s (“OFAC”) Specially Designated Nationals List, Non-SDN Menu-Based Sanctions List, Sectoral Sanctions Identifications List, and Foreign Sanctions Evaders List, the Regulations under the Special Economic Measures Act (Canada), Justice for Victims of Corruption Foreign Officials Act (Canada), United Nations Act (Canada), and Freezing of Assets of Corrupt Foreign Officials Act (Canada), the Regulations Establishing a List of Entities under the Criminal Code (Canada), the Denied Persons, Entity, and Unverified Lists of the U.S. Department of Commerce’s Bureau of Industry and Security, the Debarred List of the U.S. Department of State’s Directorate of Defense Trade Controls, any list of sanctioned persons administered and maintained by the U.S. Department of State relating to nonproliferation, terrorism and the EU Consolidated Financial Sanctions List), (ii) the government of, located in, resident in, or organized under the laws of a Sanctioned Jurisdiction, or (iii) directly or indirectly owned (50% or more) or controlled (as such term is used in the applicable Sanctions and any formal guidance associated with the same) by, or acting for or on behalf of, or at the direction of, a Person or Persons described in clauses (i) through (iii).
“Sanctions” means any and all trade, economic and financial sanctions Laws, regulations, embargoes, and restrictive measures imposed, administered, enacted or enforced by (i) the United States of America (including without limitation OFAC, the U.S. Department of State, and the U.S. Department of Commerce), (ii) Canada, (iii) the European Union and any European Union member states, (iv) the United Nations Security Council, or (v) the United Kingdom (including His Majesty’s Treasury).
“Sio NewCo Organizational Documents” means the incorporation and constitutional documents of Sio NewCo.
“Software” means all computer software (in any format, including object code, byte code or source code), and related system and user documentation.
“SPAC Amalgamation Certificate” means a certificate of the Company, dated as of the date of the SPAC Amalgamation, signed by a director or officer of the Company, certifying (on the Company’s behalf and without personal liability) that: (i) the representations and warranties of the Company contained in (a) Section 3.01, Section 3.02, Section 3.03(e), Section 3.04, and Section 3.23, in each case, solely with respect to Sio NewCo, are true and correct in all material respects as of the date hereof and the SPAC Amalgamation Effective Time as though made on and as of such date (except to the extent that any such representation or warranty expressly shall be so made as of an earlier date, in which case such representation and warranty is true and correct as of such specified date), (b) Section 3.08(a), solely with respect to Sio NewCo, is true and correct in all respects except for de minimis inaccuracies as of the date hereof and as of the SPAC Amalgamation Effective Time as though made on and as of such date (except to the extent that any such representation or warranty expressly is made as of an earlier date, in which case such representation and warranty shall be so true and correct as of such earlier date), and (c) Section 3.05, Section 3.08(b)(iii) and Section 3.19(b), in each case, solely with respect to Sio NewCo, are true and correct in all respects (without giving effect to any “materiality,” “Company Material Adverse Effect” or similar qualifiers contained in any such representations and warranties) as of the date hereof and the SPAC Amalgamation Effective Time as though made on and as of such date (except to the extent that any such representation or warranty expressly shall be so made as of an earlier date, in which case such representation and warranty is true and correct as of such specified date), except where the failures of any such representations and warranties to be so true and correct, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect, and (ii) the Company and Sio NewCo have performed or complied in all material respects with the agreements and covenants set forth in Section 5.03 and Section 6.15(a) prior to the SPAC Amalgamation Effective Time.
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“SPAC Amalgamation Conditions Precedent” means the conditions set forth in Section 7.01(a) through Section 7.01(f), in each case, with respect to the SPAC Amalgamation.
“SPAC Amalgamation Effective Time” has the meaning ascribed thereto in the Plan of Arrangement.
“SPAC Class A Common Shares” means, following the Domestication, SPAC’s Class A common shares.
“SPAC Class A Ordinary Shares” means SPAC’s Class A ordinary shares, par value $0.0001 per share.
“SPAC Class B Ordinary Shares” means SPAC’s Class B ordinary shares, par value $0.0001 per share.
“SPAC Disclosure Schedule” means SPAC’s disclosure schedule delivered by SPAC in connection with this Agreement.
“SPAC Extension” means, collectively, the First SPAC Extension and any Additional SPAC Extension.
“SPAC Material Adverse Effect” means any Effect that, individually or in the aggregate with all other Effects, (i) has had or would reasonably be expected to have a material adverse effect on the business, condition (financial or otherwise), assets, liabilities or results of operations of SPAC taken as a whole, or (ii) would reasonably be expected to prevent, materially delay or materially impede the performance by SPAC of its obligations under this Agreement or the consummation of the Transactions; provided, however, that, with respect to clause (i), none of the following shall be deemed to constitute, alone or in combination, or be taken into account in the determination of whether, there is, has been or will be a SPAC Material Adverse Effect: (a) any change or proposed change in or change in the interpretation of any Law, GAAP or IFRS applicable to SPAC; (b) Effects generally affecting the industries in which SPAC operates; (c) any downturn in general economic conditions, including changes in the credit, debt, securities, financial or capital markets (including changes in interest or exchange rates, prices of any security or market index or commodity or any disruption of such markets); (d) any geopolitical conditions, outbreak of hostilities, acts of war, sabotage, cyberterrorism, terrorism, military actions, earthquakes, volcanic activity, hurricanes, tsunamis, tornadoes, floods, mudslides, wild fires or other natural disasters, weather conditions, epidemics, pandemics and other force majeure events (with respect to the COVID-19 pandemic, solely to the extent such Effect first arises after the date hereof); (e) any Effect attributable to the announcement, execution, or delivery of the Transactions (provided that this clause (e) shall not apply to any representation or warranty to the extent the purpose of such representation or warranty is to address the consequences resulting from this Agreement or the consummation of the Transactions); (f) any failure to meet any projections, forecasts, guidance, estimates, milestones, budgets or financial or operating predictions of revenue, earnings, cash flow or cash position, provided that this clause (f) shall not prevent a determination that any Effect underlying such failure has resulted in a SPAC Material Adverse Effect or (g) any actions taken, or failures to take action, or such other Effects, in each case, which the Company has requested in writing; except in the cases of clauses (a) through (f), such items shall be taken into account in the determination to the extent that SPAC is disproportionately affected thereby as compared with other participants in the industries in which SPAC operates.
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“SPAC Organizational Documents” means the incorporation and constitutional documents of SPAC (including, (i) prior to the Domestication, the SPAC Memorandum and Articles of Association and the Trust Agreement, (ii) after the Domestication and prior to the SPAC Amalgamation Effective Time, the Domestication Articles and the Trust Agreement, and (iii) after the SPAC Amalgamation Effective Time, the New SPAC Articles and the Trust Agreement).
“SPAC Shareholder Approval” means (i) with respect to the approval of the Domestication, including the Domestication Articles, in each case by separate Special Resolution and (ii) with respect to the Business Combination Proposal, in each case by separate Ordinary Resolution.
“SPAC Shareholders” means collectively, the holders of SPAC Class A Ordinary Shares and, following the Domestication, the holders of SPAC Class A Common Shares and, following the SPAC Amalgamation, the holders of New SPAC Class A Common Shares.
“SPAC Transaction Expenses” means, except as otherwise set forth in this Agreement, all reasonable and documented third-party, out-of-pocket fees and expenses incurred in connection with, or otherwise related to, the SPAC’s initial public offering, any alternative business combinations considered by SPAC prior to the date of this Agreement and the Transactions, including the negotiation and preparation of this Agreement and the Ancillary Agreements and the performance and compliance with this Agreement, any SPAC Extension (including, for the avoidance of doubt, any payment made by SPAC (whether in cash or in the form of warrants) in connection with any loan or deposit into the Trust Account for purposes of any such SPAC Extension or expenses incurred in connection therewith), and the Ancillary Agreements, and conditions contained herein and therein, including the fees, expenses and disbursements of legal counsel, auditors and accountants, due diligence expenses, advisory and consulting fees and expenses, other third-party fees, including, but not limited to, the SPAC Tail Policy, and any Deferred Underwriting Fees, in each case of SPAC and NewCo, and any and all filing fees payable by SPAC or NewCo or any of their Affiliates to Governmental Authorities in connection with the Transactions.
“SPAC Unit” means one SPAC Class A Ordinary Share (or, following the Domestication, one SPAC Class A Common Share) and one-half of one SPAC Warrant.
“SPAC Warrant Agreement” means that certain warrant agreement dated October 26, 2021 by and between SPAC and Continental Stock Transfer & Trust Company.
“SPAC Warrants” means the whole warrants to purchase SPAC Class A Ordinary Shares (or, following the Domestication, SPAC Class A Common Shares) as contemplated under the SPAC Warrant Agreement, with each whole warrant exercisable for one SPAC Class A Ordinary Share (or, following the Domestication, SPAC Class A Common Shares) at an exercise price of $11.50.
“Special Resolution” means a resolution passed by at least two-thirds of SPAC Shareholders as, being entitled to do so, attend and vote in person or, where proxies are allowed, by proxy at the SPAC Shareholders Meeting.
“Sponsor” means Pyrophyte Acquisition LLC, a Delaware limited liability company.
“Sponsor Shares” means (i) if prior to the Domestication, 5,031,250 SPAC Class A Ordinary Shares, (ii) if after the Domestication and prior to the SPAC Amalgamation, 5,031,250 SPAC Class A Common Shares, or (iii) if after the SPAC Amalgamation, 5,031,250 New SPAC Class A Common Shares, in each case, that are owned beneficially by the Sponsor.
“Subsidiary” of any Person means, with respect to such Person, any Affiliate controlled by such Person, directly or indirectly, through one or more intermediaries.
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“Supplier” means any Person that supplies inventory or other materials or personal property, components, or other goods or services (including, design, development and manufacturing services) that comprise or are utilized in the business of the Company.
“Tax” means any and all taxes, duties, levies, assessments, fees or other charges imposed by any Taxing Authority or by any statutory, governmental, state, provincial, federal, cantonal, municipal, local or similar authority of any jurisdiction, including income, capital stock, capital gains, profits, estimated, business, occupation, corporate, capital, gross receipts, transfer, stamp, registration, employment, payroll, unemployment, social security (or similar), employment insurance premiums, workers compensation, disability, Canada Pension Plan, Quebec Pension Plan or other similar contributions, withholding, occupancy, license, severance, production, ad valorem, excise, windfall profits, customs duties, real property, personal property, sales, use, turnover, value added, goods and services and franchise taxes, and alternative or add-on minimum and estimated taxes, whether disputed or not, together with all interest, penalties and additions to tax imposed with respect thereto.
“Tax Return” means any federal, state, local, provincial or non-Canadian return, declaration, disclosure, report, form, statement, claim for refund, election, information return or statement, or other document relating to Taxes, including any schedule, estimate or attachment thereto and any amendment or supplement thereof, in each case provided or required to be provided to a Taxing Authority.
“Taxing Authority” means, with respect to any Tax, any Governmental Authority or other authority competent to impose such Tax or responsible for the administration and/or collection of such Tax or enforcement of any Law in relation to Tax.
“Third Party” means any Person other than one of the Parties.
“Trading Price” means the share price equal to the volume weighted average closing sale price of one share of New SPAC Class A Common Shares as reported on the New York Stock Exchange (or the exchange on which the shares of New SPAC Class A Common Shares are then listed) for a period of at least 20 trading days out of 30 consecutive trading days ending on the trading day immediately prior to the date of determination (as adjusted as appropriate to reflect any stock splits, reverse stock splits, stock dividends (including any dividend or distribution of securities convertible into New SPAC Class A Common Shares), extraordinary cash dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change or transaction with respect to New SPAC Class A Common Shares).
“Transaction Documents” means this Agreement, including all Schedules and Exhibits hereto, the Company Disclosure Schedule, the SPAC Disclosure Schedule, the Ancillary Agreements, and all other agreements, certificates and instruments executed and delivered by SPAC, NewCo, Sio NewCo or the Company in connection with the Transactions and specifically contemplated by this Agreement.
“Transactions” means the Domestication, the Arrangement, and the other transactions contemplated by this Agreement and the Transaction Documents.
“Transferred Information” means any Personal Information disclosed or conveyed to one Party or any of its representatives or agents (a “Recipient”) by or on behalf of another Party (a “Disclosing Party”) in anticipation of, as a result of, or in conjunction with, the Transactions.
“Treasury Regulations” means the United States Treasury regulations issued pursuant to the Code.
“Unexercised Company Warrants” means any Company Warrant that is not exercised pursuant to the Company Warrant and Option Settlement.
“Virtual Data Room” means the virtual data room established by the Company and hosted by Datasite, access to which was given to SPAC in connection with its due diligence investigation of the Company relating to the Transactions.
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Section 1.02 Further Definitions. The following terms have the meaning set forth in the Sections set forth below:
Defined Term | Location of Definition | |
ABCA | Recitals | |
Acceleration Event | Section 2.10(f) | |
Action | Section 3.09 | |
Additional SPAC Extension | Section 6.17 | |
Agreement | Preamble | |
Alternative Financing | Section 6.21 | |
Alternative Transaction | Section 6.04 | |
Amalgamated Company | Recitals | |
Amalgamations | Recitals | |
Blue Sky Laws | Section 3.05(b) | |
Business Combination Proposal | Section 6.02 | |
Change in Recommendation | Section 6.02 | |
Claims | Section 5.05 | |
Closing | Section 2.07(a) | |
Closing Date | Section 2.07(a) | |
Commitment Letter | Preamble | |
Companies Act | Recitals | |
Company | Preamble | |
Company Amalgamation | Recitals | |
Company Amalgamation Effective Time | Section 2.07(g)(iv) | |
Company Board | Recitals | |
Company Certificates | Section 2.09(a) | |
Company Closing Articles | Recitals | |
Company Disclosure Schedule | Article III | |
Company Earnout | Section 2.10(a) | |
Company Earnout Period | Section 2.10(b)(i) | |
Company Earnout Shares | Section 2.10(a) | |
Company Indemnified Persons | Section 6.06(a) | |
Company Interested Party Transaction | Section 3.21(a) | |
Company Permits | Section 3.06 | |
Company Warrant and Option Settlement | Recitals | |
Confidentiality Agreement | Section 6.03(b) | |
Continuing Employees | Section 6.05(a) | |
Contracting Parties | Section 9.11 | |
Credit Agreement | Recitals | |
D&O Insurance | Section 6.06(b) | |
Data Security Requirements | Section 3.14(h) | |
Debt Financing Sources | Section 6.22 | |
Domestication | Recitals | |
Domestication Articles | Recitals |
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Defined Term | Location of Definition | |
Equity Interests | Section 3.03(a) | |
Exchange Act | Section 3.05(b) | |
Exchange Agent | Section 2.09 | |
Financial Statements | Section 3.07(a) | |
Flow-Through Shares | Section 5.01(b)(iii) | |
Governmental Authority | Section 3.05(b) | |
IFRS | Section 3.07(a) | |
Indemnified Liabilities | Section 6.06(f) | |
Indemnified Parties | Section 6.06(f) | |
Insurance Policies | Section 3.18(a) | |
Intended Canadian Tax Treatment | Recitals | |
Intended Tax Treatment | Recitals | |
Intended U.S. Tax Treatment | Recitals | |
Interim Company Shares | Section 5.01(b)(iii) | |
Interim Period | Section 5.01 | |
Leased Real Property | Section 3.12(b) | |
Lender | Recitals | |
Lock-Up Agreement | Recitals | |
Material Contracts | Section 3.17(a) | |
Maximum Annual Premium | Section 6.06(b) | |
Mineral Rights | Section 3.12(a) | |
New SPAC | Recitals | |
New SPAC Articles | Recitals | |
New SPAC Class A Common Shares | Recitals | |
New SPAC Closing Articles | Recitals | |
New SPAC Units | Recitals | |
New SPAC Warrants | Recitals | |
NewCo | Preamble | |
NewCo Board | Recitals | |
NewCo Shareholder Approval | Section 3.19(b) | |
Nominee | Recitals | |
Nonparty Affiliates | Section 9.11 | |
Non-Redemption Agreement | Recitals | |
Outside Date | Section 8.01(b) | |
Parties | Preamble | |
Payment Schedule | Section 2.08 | |
PFIC | Section 6.18 | |
PIPE Financing | Recitals | |
PIPE Investors | Recitals | |
PIPE Subscription Agreement | Recitals | |
Plans | Section 3.10(a) |
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Defined Term | Location of Definition | |
Post-Closing Directors | Recitals | |
Post-Closing Officers and Directors | Recitals | |
Property | Section 3.12(a) | |
Redemption Shares | Section 2.07(h) | |
Registration Rights Agreement | Recitals | |
Registration Statement / Proxy Statement | Section 6.01(a) | |
Remedies Exceptions | Section 3.04 | |
Representatives | Section 6.03(a) | |
Rights-of-Way | Section 3.13 | |
Royalty Agreements | Recitals | |
SEC | Section 4.07(a) | |
Securities Act | Section 2.02 | |
Sio NewCo | Preamble | |
Sio NewCo Board | Recitals | |
Sio NewCo Shareholder Approval | Section 3.19(b) | |
SPAC | Preamble | |
SPAC Amalgamation | Recitals | |
SPAC Board | Recitals | |
SPAC Board Recommendation | Section 6.02 | |
SPAC Indemnified Persons | Section 6.06(a) | |
SPAC Information | Section 2.04(e) | |
SPAC Interested Party Transaction | Section 4.19(a) | |
SPAC Insurance Policies | Section 4.23(a) | |
SPAC Material Contracts | Section 4.17(a) | |
SPAC Maximum Annual Premium | Section 6.06(c) | |
SPAC Memorandum and Articles of Association | Recitals | |
SPAC Preference Shares | Section 4.03(a) | |
SPAC Redemption | Section 2.07(h) | |
SPAC SEC Reports | Section 4.07(a) | |
SPAC Shareholders Meeting | Section 6.02 | |
SPAC Tail Policy | Section 6.06(c) | |
Sponsor Letter | Recitals | |
Support Agreements | Recitals | |
Tax Incentive | Section 6.02 | |
Terminating Company Breach | Section 8.01(f) | |
Terminating SPAC Breach | Section 8.01(g) | |
Transaction Proposals | Section 6.02 | |
Transaction Expenses | Section 8.03 | |
Transfer Restriction | Section 2.10(g) | |
Transfer Taxes | Section 6.19 | |
Trust Account | Section 4.12 | |
Trust Agreement | Section 4.12 | |
Trustee | Section 4.12 | |
Withholding Agent | Section 2.12 |
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Section 1.03 Construction.
(a) Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender, (ii) words using the singular or plural number also include the plural or singular number, respectively, (iii) the definitions contained in this Agreement are applicable to the other grammatical forms of such terms, (iv) the terms “hereof,” “herein,” “hereby,” “hereto” and derivative or similar words refer to this entire Agreement, (v) the terms “Article,” “Section,” “Schedule” and “Exhibit” refer to the specified Article, Section, Schedule or Exhibit of or to this Agreement, (vi) the word “including” means “including without limitation,” (vii) the word “or” shall be disjunctive but not exclusive, (viii) references to agreements and other documents shall be deemed to include all subsequent amendments and other modifications thereto and (ix) references to any Law shall include all rules and regulations promulgated thereunder and references to any Law shall be construed as including all statutory, legal, and regulatory provisions consolidating, amending or replacing such Law. Unless otherwise indicated, all references to “$” or dollars refer to United States dollars.
(b) The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent and no rule of strict construction shall be applied against any Party.
(c) Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified, and when counting days, the date of commencement will not be included as a full day for purposes of computing any applicable time periods (except as otherwise may be required under any applicable Law). If any action is to be taken or given on or by a particular calendar day, and such calendar day is not a Business Day, then such action may be deferred until the next Business Day.
(d) All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP or IFRS, as applicable.
(e) Unless the context of this Agreement otherwise requires, references to statutes shall include all regulations promulgated thereunder and references to statutes or regulations shall be construed as including all statutory and regulatory provisions consolidating, amending or replacing the statute or regulation.
(f) References in Articles IV through IX to (i) “SPAC” shall refer to Pyrophyte Acquisition Corp. for all periods prior to the completion of the SPAC Amalgamation and to New SPAC for all periods after the completion of the SPAC Amalgamation; provided that the foregoing shall not apply to the representations and warranties set forth in Sections 4.03, 4.04, 4.05, 4.06, 4.07, 4.09, 4.10 and 4.11, and (ii) “SPAC Class A Ordinary Shares,” “SPAC Class B Ordinary Shares,” “SPAC Warrants” and “SPAC Units” shall refer to such securities solely for periods prior to the SPAC Amalgamation.
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Article
II
THE ARRANGEMENT; THE TRANSACTIONS; CLOSING
Section 2.01 The Arrangement. Upon the terms and subject to the conditions set forth in Article VII, following the Domestication, SPAC, the Company, NewCo and Sio NewCo shall proceed to effect the Arrangement under section 193 of the ABCA on the terms contained in the Plan of Arrangement. In the event of any conflict between the terms of this Agreement and the Plan of Arrangement, the Plan of Arrangement shall govern. Commencing at the Arrangement Effective Time (as defined in the Plan of Arrangement), the Parties shall each effect and carry out the steps, actions and/or transactions to be carried out by them pursuant to the Plan of Arrangement.
Section 2.02 The Interim Order. No later than three (3) Business Days after the date that the Registration Statement / Proxy Statement is declared effective under the Securities Act of 1933, as amended (the “Securities Act”), the Company shall apply in a manner reasonably acceptable to SPAC pursuant to section 193 of the ABCA and, in cooperation with SPAC, prepare, file and diligently pursue an application to the Court for the Interim Order in respect of the Arrangement, which shall provide, among other things:
(a) for the Persons to whom notice is to be provided in respect of the Arrangement and the Company Shareholders Meeting, including the Company Shareholders, the directors and auditors of the Company and the Registrar, and for the manner in which such notice is to be provided to such Persons, such notice to include, among other things, that such Persons have a right to appear at the hearing before the Court at which the fairness of the Arrangement will be adjudged;
(b) that the required level of approval for the Arrangement Resolution shall be the Company Required Approval;
(c) that, in all other respects, the terms, restrictions and conditions of the Company Articles and the bylaws of the Company, including quorum requirements and all other matters, shall apply in respect of the Company Shareholders Meeting;
(d) for the notice requirements with respect to the presentation of the application to the Court for the Final Order;
(e) that the Company Shareholders Meeting may be adjourned or postponed from time to time by the Company in accordance with the terms of this Agreement without the need for additional approval of the Court;
(f) that the record date for the Company Shareholders entitled to notice of and to vote at the Company Shareholders Meeting will not change in respect of any adjournment(s) or postponement(s) of the Company Shareholders Meeting, unless required by the Court or applicable Law;
(g) that the Company Shareholders Meeting may be held in person or be a virtual meeting or hybrid meeting whereby all Company Shareholders may join virtually;
(h) for the grant of the Company Dissent Rights to registered Company Shareholders as set forth in the Plan of Arrangement; and
(i) for such other matters as the Parties may agree are reasonably necessary to complete the Transactions.
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Section 2.03 The Company Shareholders Meeting.
(a) Subject to the terms of this Agreement, the Interim Order and the provision of the SPAC Information, the Company shall convene and conduct the Company Shareholders Meeting in accordance with the Company Articles, the bylaws of the Company, applicable Laws and the Interim Order as soon as reasonably practicable (but acknowledging that the Company may apply to the Court for an Interim Order as late as three (3) Business Days after the Registration Statement / Proxy Statement is declared effective under the Securities Act), and shall not adjourn, postpone or cancel (or propose the adjournment, postponement or cancellation of) the Company Shareholders Meeting without the prior written consent of SPAC (not to be unreasonably withheld, delayed or conditioned), except in the case of an adjournment as required for quorum purposes. The Company shall consult with SPAC in fixing the record date for the Company Shareholders Meeting and the date of the Company Shareholders Meeting, give notice to SPAC of the Company Shareholders Meeting and allow SPAC’s Representatives to attend the Company Shareholders Meeting. The Company shall use its reasonable best efforts to obtain the Company Required Approval in respect of the Arrangement Resolution, including instructing the management proxyholders named in the Company Information Circular to vote any discretionary or blank proxy submitted by Company Shareholders in favor of such action, and shall take all other action reasonably necessary or advisable to secure the Company Required Approval in respect of the Arrangement Resolution.
(b) The Company shall provide SPAC with (i) updates with respect to the aggregate tally of the proxies received by the Company in respect of the Arrangement Resolution, (ii) updates with respect to any communication (written or oral) from any Company Shareholder in opposition to the Arrangement, (iii) any written notice of dissent or purported exercise by any Company Shareholder of Company Dissent Rights received by the Company, (iv) the right to demand postponement or adjournment of the Company Shareholders Meeting if, based on the tally of proxies, the Company will not receive the Company Required Approval in respect of the Arrangement Resolution; provided that the Company Shareholders Meeting, so postponed or adjourned, shall not be later than (A) five (5) Business Days prior to the Outside Date or (B) ten (10) days from the date of the first Company Shareholders Meeting, and (v) the right to review and comment on all communications sent to Company Shareholders in connection with the Company Shareholders Meeting.
(c) Unless required by Law, the Company shall not make any payment or settlement offer, or agree to any payment or settlement, prior to the Closing Date with respect to any claims regarding the Arrangement or Company Dissent Rights without the prior written consent of SPAC.
(d) The Company shall not change the record date for the Company Common Shares entitled to vote at the Company Shareholders Meeting in connection with any adjournment or postponement of the Company Shareholders Meeting unless required by the Court or applicable Law.
Section 2.04 Company Information Circular.
(a) The Company shall promptly following execution of this Agreement prepare and complete, in good faith consultation with SPAC, the Company Information Circular together with any other documents required by applicable Law in connection with the Company Shareholders Meeting and the Arrangement, and the Company shall, as promptly as practicable after obtaining the Interim Order, cause the Company Information Circular and such other documents to be sent to each Company Shareholder and other Person as required by the Interim Order and applicable Law.
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(b) The Company shall use reasonable best efforts to ensure in all material respects, that the Company Information Circular (i) complies with the Company Articles, the Interim Order and applicable Law, except with respect to SPAC Information included in the Company Information Circular, which SPAC will ensure complies with applicable Law, (ii) does not contain an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made, except with respect to SPAC Information included in the Company Information Circular, which SPAC will ensure does not contain an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made, (iii) provides the Company Shareholders with sufficient information (explained in sufficient detail) to permit them to form a reasoned judgement concerning the matters to be placed before the Company Shareholders Meeting and (iv) states any material interest of each director and officer, whether as director, officer, securityholder or creditor of the Company, to the extent required by applicable Law.
(c) The Company shall ensure that the Company Information Circular includes a statement that the Company Board has unanimously (i) determined that the Arrangement and the Transactions are in the best interests of the Company and the Arrangement is fair to the Company Shareholders, and (ii) recommended that the Company Shareholders vote in favor of the Arrangement Resolution.
(d) The Company shall, subject to the terms of this Agreement, ensure that the Company Information Circular includes a statement that each of the Key Company Shareholders has entered into a Support Agreement pursuant to which, among other things, such Key Company Shareholder (i) will not transfer its Company Common Shares (other than certain permitted transfers), (ii) will vote its Company Common Shares in favor of the Arrangement Resolution and any other resolutions necessary to effect this Agreement, the Plan of Arrangement and the other Transactions and (iii) will not exercise, and will waive, Company Dissent Rights.
(e) SPAC shall assist the Company in the preparation of the Company Information Circular, including obtaining and furnishing to the Company any information with respect to SPAC required to be included under applicable Laws in the Company Information Circular (the “SPAC Information”). The Company shall give SPAC and its legal counsel a reasonable opportunity to review and comment on drafts of the Company Information Circular and other related documents, and shall accept the reasonable comments made by SPAC and its counsel, and the Company further agrees that all information relating to SPAC included in the Company Information Circular must be in a form and content reasonably satisfactory to SPAC. The Company shall provide SPAC with a final copy of the Company Information Circular in connection with its mailing to the Company Shareholders.
(f) Each Party shall promptly notify the other Parties if it becomes aware that the Company Information Circular contains an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made, or otherwise requires an amendment or supplement. The Parties shall cooperate in the preparation of any such amendment or supplement as required or appropriate, and the Company shall promptly deliver or otherwise disseminate any such amendment or supplement to the Company Shareholders as required by the Court or applicable Law.
Section 2.05 The Final Order. If: (a) the Interim Order is obtained; and (b) the Arrangement Resolution is approved at the Company Shareholders Meeting by Company Shareholders as provided for in the Interim Order and as required by applicable Law, then the Company shall, in consultation with SPAC, take all steps necessary or desirable to submit the Arrangement to the Court and diligently pursue an application for the Final Order pursuant to section 193 of the ABCA, as soon as reasonably practicable, but in any event not later than the later of: (i) three (3) Business Days after the date on which the Arrangement Resolution is passed at the Company Shareholders Meeting as provided for in the Interim Order; and (ii) three (3) Business Days after the receipt of SPAC Shareholder Approval.
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Section 2.06 Court Proceedings.
(a) In connection with all Court proceedings relating to obtaining the Interim Order or the Final Order, the Company shall: (i) diligently pursue the Interim Order and the Final Order; (ii) provide SPAC’s legal counsel with a reasonable opportunity to review and comment upon drafts of all material to be filed with the Court in connection with the Arrangement, and accept the reasonable comments of SPAC and its legal counsel; (iii) provide SPAC copies of any notice of appearance, evidence or other documents served on it or its legal counsel in respect of the application for the Interim Order or the Final Order or any appeal from them, and any notice, written or oral, indicating the intention of any Person to appeal, or oppose the granting of, the Interim Order or the Final Order; (iv) ensure that all material filed with the Court in connection with the Arrangement is consistent with this Agreement and the Plan of Arrangement; (v) not file any material with the Court in connection with the Arrangement or serve any such material, and will not agree to modify or amend any materials so filed or served, except as contemplated by this Agreement or with SPAC’s prior written consent, such consent not to be unreasonably withheld, conditioned or delayed; provided that SPAC is not required to agree or consent to any increase or variation in the form of the consideration payable hereunder or other modification or amendment to such filed or served materials that expands or increases its obligations, or diminishes or limits its rights, set forth in any such filed or served materials or under this Agreement or the Arrangement; (vi) subject to this Agreement, oppose any proposal from any Person that the Final Order contain any provision inconsistent with the Arrangement or this Agreement, and if at any time after the issuance of the Final Order and prior to the Closing, the Company is required by the terms of the Final Order or by applicable Law to return to Court with respect to the Final Order, it will do so only after notice to, and in good faith consultation and cooperation with SPAC; and (vii) not object to legal counsel to SPAC making such submissions on the hearing of the motion for the Interim Order and the application for the Final Order as such counsel considers appropriate, provided SPAC advises the Company of the nature of any such submissions prior to the hearing and such submissions are consistent with this Agreement and the Plan of Arrangement.
(b) Subject to the terms of this Agreement, SPAC will cooperate with, and assist, the Company in seeking the Interim Order and the Final Order, including by providing the Company on a timely basis any information reasonably required or requested to be supplied by SPAC in connection therewith.
Section 2.07 Transactions.
(a) As promptly as practicable, but in no event later than three (3) Business Days, after the satisfaction or, if permissible, waiver of the conditions set forth in Article VII (other than those conditions that by their nature are to be satisfied at the Closing, it being understood that the occurrence of the Closing shall remain subject to the satisfaction or, if permissible, waiver of such conditions at the Closing), a closing (the “Closing”) shall be held by electronic exchange of deliverables and release of signatures for the purpose of confirming the satisfaction or, if permissible, waiver, as the case may be, of the conditions set forth in Article VII. The date on which the Closing shall occur is referred to herein as the “Closing Date”.
(b) Prior to the Domestication, pursuant to the SPAC Organizational Documents, each SPAC Class A Common Share issued and outstanding with respect to which a SPAC Shareholder has validly exercised and not revoked its Redemption Rights (the “Redemption Shares”) shall be redeemed and the holder thereof shall be entitled to receive from SPAC, in cash, an amount per share calculated in accordance with such shareholder’s Redemption Rights and as promptly as practicable SPAC shall make such cash payments in respect of each such Redemption Share (the “SPAC Redemption”).
(c) Not later than one (1) Business Day prior to the Closing Date, SPAC shall complete the Domestication upon the terms and subject to the conditions set forth in this Agreement.
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(d) Not later than one (1) Business Day prior to the Closing Date, following the Domestication, the Company shall provide SPAC the SPAC Amalgamation Certificate and, subject only to the satisfaction or waiver of the SPAC Amalgamation Conditions Precedent, (A) the SPAC Amalgamation shall occur, (B) New SPAC shall adopt the New SPAC Articles, (C) the officers and directors of SPAC shall become the officers and directors of New SPAC, (D) New SPAC shall assume the SPAC Warrant Agreement and enter into such amendments thereto as are necessary to give effect to the SPAC Amalgamation and (E) the New SPAC Class A Common Shares received by the Nominee in connection with the SPAC Amalgamation will be purchased for cancellation for cash equal to the subscription price for the common shares of Sio NewCo, in each case upon the terms and subject to the conditions set forth in the Plan of Arrangement.
(e) On the Closing Date, the PIPE Financing shall be effected, such that New SPAC shall issue and sell to each PIPE Investor the number of New SPAC Class A Common Shares set forth in the applicable PIPE Subscription Agreement in exchange for the purchase price set forth therein.
(f) On the Closing Date, the Credit Agreement shall be duly and validly executed and delivered by the Company, enforceable against the Company and the relevant Debt Financing Source(s) in accordance with its terms and, subject only to the conditions expressly stated therein, the Debt Financing, in the amounts set forth therein, shall be available.
(g) On the Closing Date, the Royalty Agreement Proceeds shall be delivered to the Company in immediately available funds.
(h) On the Closing Date, as set forth in the Plan of Arrangement, the following shall occur in the order set forth below:
(i) the Company Warrant and Option Settlement;
(ii) the Company Amalgamation, including the adoption of the Company Closing Articles (the occurrence of such event, being the “Company Amalgamation Effective Time”);
(iii) the New SPAC Articles shall be replaced with the New SPAC Closing Articles; and
(iv) New SPAC and each Lock-Up Shareholder shall become bound by the Lock-Up Agreement.
(i) In the event that the New SPAC Class A Common Share and New SPAC Warrants comprising a single New SPAC Unit have not been detached so as to permit separate transferability or trading thereof prior to the Company Amalgamation Effective Time, then effective at the Company Amalgamation Effective Time, any and all New SPAC Units shall be automatically detached and broken out into their constituent parts, such that a holder of one New SPAC Unit shall thereupon hold one New SPAC Class A Common Share and one-half of one New SPAC Warrant.
(j) On the Closing Date, at the Company Amalgamation Effective Time, each officer and director of the New SPAC immediately prior to the Company Amalgamation Effective Time shall resign and be replaced by the Post-Closing Officers and Directors.
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Section 2.08 Payment Schedule. At least two (2) Business Days prior to the Closing, the Company shall deliver to SPAC a schedule setting forth with respect to each registered holder of Company Common Shares (the “Payment Schedule”): (a) the name and address of record of such holder, (b) the total number of Company Outstanding Shares of each class or series held by such holder as of immediately prior to the Company Amalgamation Effective Time, and (c) the number of (i) New SPAC Class A Common Shares and (ii) Company Earnout Shares issuable to each holder of Company Outstanding Shares (as applicable pursuant to the terms of this Agreement) based on the applicable exchange ratios set forth in the Plan of Arrangement. The Payment Schedule shall be subject to review and approval by SPAC, acting reasonably. The Company will review any comments to the Payment Schedule provided by SPAC and consider and incorporate in good faith any reasonable comments proposed by SPAC. Once approved by SPAC and the Company, SPAC, NewCo, Sio NewCo and New SPAC shall be entitled to rely fully on the Payment Schedule for purposes of this Agreement and the Plan of Arrangement and all payments required to be made hereunder and thereunder, and none of SPAC, NewCo, Sio NewCo, New SPAC or any of their respective Affiliates shall, absent manifest error of which such Party was actually aware, have any liability to any Person for any payment made in accordance with the calculations set forth in the Payment Schedule for the benefit of the holders of Company Outstanding Shares pursuant to this Article II and the Plan of Arrangement based on the Payment Schedule (including with respect to any claim that the Payment Schedule or such other written instruction is incomplete or inaccurate).
Section 2.09 Exchange Agent.
(a) As promptly as reasonably practicable following the date of this Agreement, the Company shall appoint an exchange agent reasonably acceptable (such acceptance, not to be unreasonably withheld, conditioned or delayed) to SPAC (the “Exchange Agent”) and enter into an exchange agent agreement with the Exchange Agent for the purpose of exchanging certificates, if any, representing the Company Common Shares (“Company Certificates”) and each Company Common Share held in book-entry form on the share transfer books of the Company immediately prior to the Closing, in either case, for New SPAC Class A Common Shares and Company Earnout Shares based on the applicable exchange ratios set forth in the Plan of Arrangement.
(b) Concurrently with mailing the Company Information Circular, the Company shall mail or otherwise deliver, or shall cause to be mailed or otherwise delivered, a letter of transmittal to the Company Shareholders.
(c) In accordance with the Plan of Arrangement, New SPAC shall deposit, or cause to be deposited, with the Exchange Agent, for the benefit of the Company Shareholders and for exchange in accordance with this Section 2.09 through the Exchange Agent, evidence of New SPAC Class A Common Shares and Company Earnout Shares in book-entry form representing the portion of the consideration issuable pursuant to the Plan of Arrangement.
Section 2.10 Company Earnout Shares.
(a) Pursuant to the Company Amalgamation and this Agreement, there shall be issued to each Company Shareholder who holds Company Common Shares (excluding Interim Company Shares) a pro rata portion of an aggregate of 6,585,366 shares of New SPAC Class A Common Shares (without duplication) valued at the Earnout Issue Price (the “Company Earnout Shares”), subject to the forfeiture provisions set forth in Section 2.10(d) (the “Company Earnout”).
(b) The Company Earnout Shares shall be subject to the following vesting conditions:
(i) if, at any time during the period commencing on the Closing Date and ending on the date that is five (5) years after the Closing Date (the “Company Earnout Period”), the Trading Price is greater than or equal to $12.50, then fifty percent (50%) of the Company Earnout Shares held by each holder of Company Earnout Shares shall immediately vest and no longer be subject to the forfeiture conditions provided in Section 2.10(d); and
(ii) if, at any time during the Company Earnout Period, the Trading Price is greater than or equal to $15.00, then the remaining fifty percent (50%) of the Company Earnout Shares held by each holder of Company Earnout Shares shall immediately vest and no longer be subject to the forfeiture conditions provided in Section 2.10(d).
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(c) For the avoidance of doubt, if the vesting conditions applicable to more than one of the provisions of Section 2.10(b) have been satisfied at any one time, then all of the Company Earnout Shares subject to such satisfied vesting conditions shall immediately vest and no longer be subject to the forfeiture conditions provided in Section 2.10(d).
(d) If, upon the expiration of the Company Earnout Period, the vesting of any of the Company Earnout Shares has not occurred, then the applicable Company Earnout Shares that failed to vest pursuant to Section 2.10(b)(i) or Section 2.10(b)(ii), as applicable, shall be automatically forfeited and deemed transferred to New SPAC for cancellation for no consideration, and no Person (other than New SPAC) shall have any further right with respect thereto.
(e) If, during the Company Earnout Period, the New SPAC Class A Common Shares outstanding as of immediately following the Company Amalgamation Effective Time shall have been changed into a different number of shares or a different class, by reason of any stock split, split-up, reverse stock split, stock dividend or distribution of New SPAC Class A Common Shares or Company Earnout Shares, or securities convertible into any such securities, reorganization, recapitalization, reclassification or other like change, or if any similar event shall have occurred, then the applicable Trading Price specified in Section 2.10(b) shall be equitably adjusted to reflect such change.
(f) If, during the applicable portion of the Company Earnout Period, there is a Change of Control that will result in the holders of New SPAC Class A Common Shares receiving a per share price equal to or in excess of the applicable Trading Price required in connection with an applicable vesting event (an “Acceleration Event”), then, immediately prior to the consummation of such Change of Control, any applicable Company Earnout Shares that have not previously been vested shall be deemed vested; provided that such Company Earnout Shares shall be deemed vested (and such vesting event achieved) only to the extent that the price per share of New SPAC Class A Common Shares in the Change of Control equals or exceeds the applicable Trading Price required in connection with such vesting event (inclusive of any escrows, holdbacks or fixed deferred purchase price, but exclusive of any contingent deferred purchase price, earnouts or the like); provided, further, that, if and to the extent such price is payable in whole or in part in the form of consideration other than cash, the price for such non-cash consideration shall be (i) with respect to any securities, (A) the average of the closing prices of the sales of such securities on all securities exchanges on which such securities are then listed, averaged over a period of 21 days consisting of the day as of which such value is being determined and the 20 consecutive trading days preceding such day, or (B) if the information contemplated by the preceding clause (A) is not practically available, then the fair value of such securities as of the date of valuation as determined in accordance with the succeeding clause (ii), and (ii) with respect to any other non-cash assets, the fair value thereof as of the date of valuation, as determined by an independent, nationally recognized investment banking firm selected by the then board of directors of New SPAC, on the basis of an orderly sale to a willing, unaffiliated buyer in an arm’s-length transaction, taking into account all factors determinative of value as the investment banking firm determines relevant. For the avoidance of doubt, in the event of a Change of Control, including where the consideration payable is other than a specified price per share, for purposes of determining whether a Trading Price required in connection with an applicable vesting event has been achieved, the price per paid per share of New SPAC Class A Common Shares shall be calculated taking into account all of the Company Earnout Shares (whether or not then vested).
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(g) For so long as any Company Earnout Shares remain subject to the vesting and forfeiture conditions specified in Section 2.10(b) and Section 2.10(d), the holder thereof shall be entitled to: (i) exercise the voting rights carried by such Company Earnout Shares; (ii) receive any dividends or other distributions in respect of such Company Earnout Shares; and (iii) shall (A) be treated as the owner of Company Earnout Shares for income Tax purposes unless and until such shares are forfeited, and (B) shall file all Tax Returns consistent with such treatment. For the avoidance of doubt, prior to vesting in accordance with the terms of this Section 2.10, holders of the Company Earnout Shares shall not be entitled to transfer such shares, and such shares shall bear a legend prohibiting transfer until such time as the vesting conditions with respect to such shares have been satisfied (the “Transfer Restriction”). Any attempted transfer in violation of the Transfer Restriction shall be void ab initio. For the avoidance of doubt, New SPAC, the Company and any other applicable withholding agent shall each be entitled to deduct and withhold from any amounts payable or distributions made in respect of the Company Earnout Shares.
Section 2.11 Intentionally Omitted.
Section 2.12 Withholding. Notwithstanding anything in this Agreement to the contrary, each of the Parties, their Affiliates and the Exchange Agent (each a “Withholding Agent”) shall be entitled to deduct and withhold (or cause to be deducted and withheld) from the consideration (including shares, warrants, options or other property) otherwise payable, issuable or transferable pursuant to this Agreement such amounts as it is required to deduct and withhold with respect to such payment, issuance or transfer under the Code, the Tax Act, or other provision of applicable U.S. Law with respect to Taxes; provided that, except with respect to withholding or deducting on any amounts treated as compensation for services, if the applicable Withholding Agent determines that any payment, issuance or transfer hereunder is subject to deduction and/or withholding, then such Withholding Agent shall use commercially reasonable efforts to (i) provide notice to the applicable recipient as soon as reasonably practicable after such determination and (ii) cooperate with the applicable recipient to reduce or eliminate any such deduction or withholding to the extent permitted by applicable Law. Any amounts so deducted and withheld shall be timely remitted to the applicable Governmental Authority. To the extent that amounts are so deducted or withheld and timely paid to the applicable Governmental Authority, such deducted or withheld amounts shall be treated for all purposes of this Agreement as having been paid, issued or transferred to the person in respect of which such deduction and withholding was made. The applicable Withholding Agent is hereby authorized to dispose of such portion of any share or other security payable, issuable or transferable pursuant to this Agreement as is necessary to provide sufficient funds to such Withholding Agent as is necessary to provide sufficient funds to such Withholding Agent to enable it to comply with such deduction and withholding requirement and such Withholding Agent shall use commercially reasonable efforts to notify the other Parties of such disposition and shall remit the applicable portion of the net proceeds of such sale to the appropriate Governmental Authority and, if applicable, any portion of such net proceeds that is not required to be so remitted shall be paid to the Party entitled to receive such consideration. The Parties agree to provide any necessary Tax forms, including IRS Form W-9 or the appropriate IRS Form W-8, as applicable, or any similar information, including any forms or information for Canadian or other non-U.S. applicable Law purposes as reasonably determined by the Withholding Agent. Any amounts so withheld shall be timely remitted to the applicable Governmental Authority. To the extent a Withholding Agent becomes aware of any obligation to deduct or withhold from amounts otherwise payable, issuable or transferable pursuant to this Plan of Arrangement, the Withholding Agent shall notify the other relevant Persons as soon as reasonably practicable, and such Persons shall reasonably cooperate to obtain any certificates or other documentation required in respect of such withholding obligation.
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Article
III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company’s disclosure schedule delivered by the Company in connection with this Agreement (the “Company Disclosure Schedule”) (provided that any matter required to be disclosed for purposes of Section 3.01, Section 3.02, Section 3.03 or Section 3.04 shall only be disclosed by specific disclosure in the corresponding section of the Company Disclosure Schedule), the Company hereby represents and warrants to each of SPAC and NewCo as follows:
Section 3.01 Organization and Qualification; Subsidiaries.
(a) Each of the Company and Sio NewCo is a corporation duly incorporated, validly existing and in good standing under the Laws of Alberta, Canada and has the requisite corporate power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted. Each of the Company and Sio NewCo is duly qualified or licensed to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for such failures to be so qualified or licensed and in good standing that would not individually or in the aggregate be expected to have a Company Material Adverse Effect.
(b) The Company does not own, or have any Equity Interests in, any Person.
Section 3.02 Organizational Documents. Each of the Company and Sio NewCo has, prior to the date of this Agreement, made available to SPAC a complete and correct copy of the certificate of amalgamation and all amendments thereto, and the bylaws of the Company or Sio Newco, as applicable, together with each of their complete minute books, including true and correct minutes of each shareholder’s and director’s meetings, and share register. Such certificate of amalgamation and all amendments thereto, and bylaws are in full force and effect. Neither the Company nor Sio NewCo is in material violation of any of the provisions of its certificate of amalgamation or bylaws. The Company and Sio NewCo have each conducted its business in compliance with its organizational documents, except for such failures, individually or in the aggregate, which have not had, and would not reasonably be expected to have, a Company Material Adverse Effect.
Section 3.03 Capitalization.
(a) A true and complete list of all the equity interests, including Company Common Shares, Company Warrants, Company RSUs and Company Options, issued or outstanding in the Company (the “Equity Interests”) as of the date of this Agreement and the identity of the Persons that are the holders thereof is set forth in Section 3.03(a) of the Company Disclosure Schedule, and there are no Equity Interests issued or outstanding in the Company as of the date of this Agreement except as set forth thereon. With respect to each Company RSU and Company Option, Section 3.03(a) of the Company Disclosure Schedule also lists (i) the date of grant and named of holder, (ii) any applicable exercise (or similar) price, (iii) any applicable expiration (or similar) date, (iv) whether each Company RSU and Company Option is vested or unvested together with any applicable vesting schedule (including acceleration provisions), and (v) the number and class or series of Company Common Shares issuable upon exercise or settlement. With respect to each Company Warrant, Section 3.03(a) of the Company Disclosure Schedule also lists (i) any applicable exercise (or similar) price, (ii) any applicable expiration (or similar) date, and (iii) the number and class or series of Company Common Shares issuable upon exercise of each Company Warrant. All such Equity Interests (i) are duly authorized, validly issued, fully paid and, in respect of the Company Common Shares, nonassessable, (ii) were issued and granted or allotted free and clear of all Liens, options, rights of first offer and refusal, other than transfer restrictions under applicable securities Laws, the Company Articles and in respect of the Company Options and Company RSUs, the form of grant agreements, and (iii) were issued and granted or allotted in compliance in all material respects with applicable securities Laws, the Company Share Award Plan and/or the Company Share Option Plan, as applicable, the forms of agreement used thereunder, and other applicable Law and all preemptive rights and other requirements set forth in applicable Contracts to which the Company is a Party and the Company Articles.
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(b) Except as set forth in Section 3.03(a) or Section 3.03(b) of the Company Disclosure Schedule, and except for this Agreement and the Plan of Arrangement, (i) there are no options, warrants, preemptive rights, calls, convertible securities, conversion rights or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued Equity Interests of either the Company or Sio NewCo or obligating either the Company or Sio NewCo to issue or sell Equity Interests of, or other equity or voting interests in, or any securities convertible into or exchangeable or exercisable for Equity Interests of, the Company or Sio NewCo, and (ii) neither the Company nor Sio NewCo is party to, or otherwise bound by, and has granted, any equity appreciation rights, participations, phantom equity, restricted shares, restricted share units, performance shares, contingent value rights or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any Equity Interests in the Company or Sio NewCo. There are no voting trusts, voting agreements, proxies, shareholder agreements or other agreements to which the Company or Sio NewCo is a party or, to the Company’s or Sio NewCo’s knowledge, among any holder of Equity Interests or other securities of the Company or Sio NewCo to which the Company or Sio NewCo, as applicable, is not a party, with respect to the voting or transfer of such the Equity Interests or other securities.
(c) Except as set forth in Section 3.03(c) of the Company Disclosure Schedule, there are no outstanding contractual obligations of the Company or Sio NewCo to repurchase, redeem or otherwise acquire any Equity Interests of the Company or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other Person. Neither the Company nor Sio NewCo has (i) redeemed or repaid any Equity Interest contrary to its organizational documents or the terms of issue of any Equity Interest, (ii) bought back any shares or reduced its share capital or passed any resolution for the reduction of its share capital, or (iii) agreed or offered, whether or not subject to any condition, to do any of the matters referred to in the foregoing clauses (i) and (ii).
(d) Section 3.03(d) of the Company Disclosure Schedule sets forth a list of all Indebtedness of the Company as of the date of this Agreement, including the principal amount of such Indebtedness, the outstanding balance as of the date of this Agreement, and the debtor and the creditor thereof.
(e) As of the date of this Agreement, one hundred (100) common shares of Sio NewCo are issued and outstanding. At all times prior to the SPAC Amalgamation Effective Time, no other Equity Interests of Sio NewCo shall be issued or outstanding. The outstanding common shares of Sio NewCo (i) are duly authorized, validly issued, fully paid and nonassessable, (ii) were issued and granted or allotted to the Nominee, and are legally and beneficially owned by the Nominee, free and clear of all Liens, options, rights of first offer and refusal, other than transfer restrictions under applicable securities Laws and the organizational documents of Sio NewCo and (iii) were issued and granted or allotted in compliance in all material respects with applicable securities Laws and other applicable Law and all preemptive rights and other requirements set forth in applicable Contracts to which Sio NewCo is a party and the organizational documents of Sio NewCo
Section 3.04 Authority Relative to this Agreement. Each of the Company and Sio NewCo has all necessary corporate power and authority to execute and deliver this Agreement and, subject to the Company Required Approval of the Arrangement Resolution and consents required under the terms of the Material Contracts and set forth in Section 3.04, Section 3.05(b) and Section 3.05(c) of the Company Disclosure Schedule, to perform its obligations hereunder and to consummate the Transactions. The execution and delivery of this Agreement by the Company and Sio NewCo and the consummation by the Company, and Sio NewCo of the Transactions have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of the Company or Sio NewCo are necessary to authorize this Agreement or to consummate the Transactions (other than the Company Required Approval of the Arrangement Resolution and receipt of the Sio NewCo Shareholder Approval). This Agreement has been duly and validly executed and delivered by the Company and Sio NewCo and, assuming the due authorization, execution and delivery by SPAC and NewCo, constitutes a legal, valid and binding obligation of the Company and Sio NewCo, enforceable against the Company and Sio NewCo in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, by general equitable principles (the “Remedies Exceptions”).
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Section 3.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by each of the Company and Sio NewCo does not and, subject to receipt of the Company Required Approval and the consents, approvals, authorizations or permits, filings and notifications, expiration or termination of waiting periods after filings and other actions contemplated by Section 3.05(a), Section 3.05(b) and Section 3.05(c), the performance of the Transactions by the Company and Sio NewCo will not (i) conflict with or violate the articles or bylaws or any equivalent organizational documents of the Company, (ii) assuming that all consents, approvals, authorizations, expiration or termination of waiting periods and other actions described in Section 3.05(b) have been obtained and all filings and obligations described in Section 3.05(b) have been made, conflict with or violate any Law applicable to the Company or by which any property or asset of the Company is bound or affected, or (iii) result in any breach of or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien (other than any Permitted Lien) on any property or asset of the Company pursuant to, any Contract, permit, franchise or other instrument or obligation to which the Company is a party or by which any asset or property of the Company is bound or affected, except, with respect to clauses (a)(ii) and (a)(iii) for any such conflicts, violations, breaches, defaults or other occurrences which would not have or reasonably be expected to have a Company Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company and Sio NewCo does not, and the performance of the Transactions by the Company will not, require any consent, approval, authorization or permit of, or filing with or notification to, or expiration or termination of any waiting period by, any U.S. or non-U.S.: (i) nation, state, commonwealth, province, territory, region, county, city, municipality, district, or other jurisdiction of any nature; (ii) federal, state, local, municipal, foreign or other government; or (iii) governmental, quasi-governmental, public or statutory authority of any nature (including any governmental division, department, agency, regulatory or administrative authority, commission, instrumentality, official, organization, unit, body, or entity and any court, judicial or arbitral body, or other tribunal) (a “Governmental Authority”), except (A) for applicable requirements, if any, of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Securities Act, state securities or “blue sky” laws (“Blue Sky Laws”) and Canadian securities Laws, (B) receipt of the Interim Order and Final Order from the Court, the filing of any documents required by or in connection with obtaining the Final Order or the Interim Order, and filings required pursuant to the Plan of Arrangement, (C) as set forth in Section 3.05(b) of the Company Disclosure Schedule and (D) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not, individually or in the aggregate, have or reasonably be expected to have a Company Material Adverse Effect.
(c) Except as set forth in Section 3.05(c) of the Company Disclosure Schedule, no consent or approval from, or notice to, any third party under any Material Contract of the Company is required to be obtained or made by the Company in connection with the execution and delivery of this Agreement by Company or the consummation of the Transactions.
Section 3.06 Permits; Compliance. Other than as set forth in part 1 of Section 3.06 of the Company Disclosure Schedule, the Company is and, since January 1, 2021, has been in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders of any Governmental Authority necessary for the Company to own, lease and operate its properties or to carry on its business as it is now being or is intended to be conducted (the “Company Permits”), each of which is set forth in part 2 of Section 3.06 of the Company Disclosure Schedule, except where the failure to have such Company Permits would not reasonably be expected to have a Company Material Adverse Effect. The Company does not have knowledge of any reason why it might not be issued the Extraction Permit or any Company Permit. No suspension or cancellation of any of the Company Permits is pending or, to the knowledge of the Company, threatened in writing. The Company is not, and has not been since January 1, 2020, in conflict with, or in default, breach or violation of (a) any Law, including Ex-Im Laws, applicable to the Company or by which any property or asset of the Company is bound or affected, or (b) any Material Contract or Company Permit; except, in each case, for any such conflicts, defaults, breaches or violations that would not have or would not reasonably be expected to have a Company Material Adverse Effect.
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Section 3.07 Financial Statements.
(a) The Company has made available to SPAC true and complete copies of (i) the audited balance sheet of the Company as of December 31, 2021 and December 31, 2022, and the related audited consolidated statements of operations and cash flows of the Company for each of the years then ended, and (ii) the unaudited balance sheet of the Company as of June 30, 2023 and the related unaudited consolidated statements of operations and cash flows of the Company for the six-month period then ended (collectively, the “Financial Statements”), each of which are set forth as Section 3.07(a) of the Company Disclosure Schedule. Each of the Financial Statements (A) was prepared in accordance with IFRS as issued by the International Accounting Standards Board, applied on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto) and (B) fairly presents, in all material respects, the financial position, results of operations and cash flows of the Company as at the date thereof and for the period indicated therein.
(b) Except as and to the extent reflected or reserved for in the Financial Statements, the Company does not have any liability or obligation of a nature (whether accrued, absolute, contingent or otherwise) required to be reflected on a balance sheet prepared in accordance with IFRS, except for: (i) liabilities that were incurred in the Ordinary Course since December 31, 2022 (and in any event do not relate to breach of Contract, tort or noncompliance with Law), (ii) obligations for future performance under any Contract to which the Company is a party (and in any event do not relate to breach of Contract, tort or noncompliance with Law), (iii) that will be paid off or discharged prior to or at the Closing, (iv) arising under this Agreement and/or the performance by the Company of its obligations hereunder, (v) arising under the Ancillary Agreements and/or the performance by the Company of its obligations thereunder, or (vi) such other liabilities and obligations which are not, individually or in the aggregate, expected to have a Company Material Adverse Effect.
(c) Since January 1, 2020, (i) the Company has not received any complaint, allegation, assertion or claim regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or its internal accounting controls, including any such complaint, allegation, assertion or claim that the Company has engaged in questionable accounting or auditing practices and (ii) there have been no internal unresolved, material investigations regarding accounting or revenue recognition discussed with, reviewed by or initiated at the direction of the chief executive officer, chief financial officer, general counsel, the Company Board or any committee thereof.
Section 3.08 Absence of Certain Changes or Events.
(a) Sio NewCo was formed on March 16, 2023, solely for the purpose of engaging in the Transactions and is, and will be at all times prior to the SPAC Amalgamation, wholly owned by the Nominee. Since the date of its incorporation, Sio NewCo has not engaged, and at all times prior to the SPAC Amalgamation will not engage, in any activities other than the execution of this Agreement and the other Transaction Documents to which Sio NewCo is party, the performance of its obligations hereunder and thereunder in furtherance of the Transactions, and matters ancillary thereto. Sio NewCo does not have, and prior to the SPAC Amalgamation will not have, any operations, assets, liabilities or obligations of any nature other than those incurred in connection with its formation and pursuant to this Agreement and the Transactions.
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(b) Since December 31, 2022 and on and prior to the date of this Agreement, except as expressly contemplated by this Agreement or any of the Ancillary Agreements, (i) the Company has conducted its businesses in all material respects in the Ordinary Course, (ii) the Company has not sold, assigned, transferred, permitted to lapse, abandoned, or otherwise disposed of any right, title, or interest in or to any of its material assets other than in the Ordinary Course, and (iii) there has not been a Company Material Adverse Effect; and (iv) the Company has not taken any action that, if taken after the date of this Agreement, would constitute a material breach of any of the covenants set forth in Sections 5.01(b)(ii), (iv), (v), (vi), (vii), (viii), (x), (xiii), (xiv), (xv), (xvi), (xvii), (xviii) and, only with respect to the covenants in each of the foregoing subsections of Section 5.01(b), (xix).
Section 3.09 Absence of Litigation. Except as disclosed in Section 3.09 of the Company Disclosure Schedule, there is no litigation, suit, claim, charge, action, proceeding, arbitration, audit or material complaint, grievance, action or investigation by or before any Governmental Authority (an “Action”) pending or, to the knowledge of the Company, threatened against the Company, or any property or asset of the Company. Neither the Company nor any property or asset of the Company is subject to any continuing order of, consent decree, settlement agreement or other similar written agreement with, or, to the knowledge of the Company, continuing investigation by, any Governmental Authority, or any material order, writ, judgment, injunction, decree, determination or award of any Governmental Authority.
Section 3.10 Employee Benefit Plans.
(a) Section 3.10(a) of the Company Disclosure Schedule lists, as of the date of this Agreement, all Employee Benefit Plans that are maintained, sponsored, contributed to or required to be contributed to the Company for the benefit of any current or former employee, officer, director and/or consultant of the Company, or under which the Company has or could reasonably be expected to incur any liability (contingent or otherwise) (collectively, whether or not material, the “Plans”). The Company has not, within the past six (6) years, maintained, sponsored, contributed to, or was required to contribute to Employee Benefit Plans primarily for the benefit of current or former employees in the United States of America, including Employee Benefit Plans subject to ERISA or the Code.
(b) With respect to each Plan, the Company has made available to SPAC, if applicable a true and complete copy of the current plan document and all amendments thereto, together with all material agreements or documents relating thereto. The Company has not made any express commitment to create any new Plan or to modify, change or terminate any Plan, other than with respect to a modification, change or termination required by applicable Law. Subject to the requirements of applicable Laws, no provision of any Plan or of any Contract, and no act or omission of the Company limits, impairs, modifies or otherwise affects the right of the Company to unilaterally amend or terminate any Plan.
(c) None of the Plans is or was within the past six (6) years, nor does the Company have or reasonably expect to have any liability or obligation under, (i) a “registered pension plan” as defined in subsection 248(1) of the Canadian Tax Act, (ii) a “deferred profit sharing plan”, a plan providing a “retiring allowance” or a “retirement compensation arrangement”, each as defined as subsection 248(1) of the Canadian Tax Act, (iii) a multi-employer pension plan within the meaning of any applicable federal or provincial pension benefits standards legislation in Canada, or (iv) any Plan that contains a “defined benefit provision” as defined in subsection 147.1(1) of the Canadian Tax Act.
(d) Except as set forth in Section 3.10(d) of the Company Disclosure Schedule, the Company is not or will not be obligated, whether under any Plan or otherwise, to pay any bonus, separation, severance, redundancy, termination, change in control, retention, or similar benefits to any Person directly as a result of the Transactions, nor will any Transaction accelerate the funding of or the time of payment or vesting, or increase the amount, of any equity award, benefit or other compensation due from the Company to any individual.
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(e) Except as set forth in Section 3.10(e) of the Company Disclosure Schedule, none of the Plans provides, nor does the Company have or reasonably expect to have any obligation to provide, retiree life or medical to any current or former employee, officer, director or consultant of the Company or their respective beneficiaries or dependents after termination of employment or service except as may be required by applicable Law.
(f) Each Plan is and has been within the past six (6) years maintained, administered, funded, communicated and invested (where applicable) in compliance, in all material respects, in accordance with its terms and the requirements of all applicable Laws. The Company has performed, in all material respects, all obligations required to be performed by it under, is not in any material respect in default under or in violation of, and has no knowledge of any default or violation in any material respect by the Company or other party to, any Plan. No Action is pending or, to the knowledge of the Company, threatened with respect to any Plan (other than claims for benefits in the Ordinary Course) and, to the knowledge of the Company, no fact or event exists that could reasonably be expected to give rise to any such Action. No fact or circumstance exists that could adversely affect the Tax preferred status of any Plan and no Taxes, penalties or fees are owing or exigible under any Plan.
(g) All contributions, premiums or payments required to be made or remitted with respect to any Plan have been timely made or remitted to the extent due or properly accrued on the financial statements of the Company. The Company has no actual or potential unfunded liabilities with respect to any of the Plans and no accumulated funding deficiencies exist in any Plan.
(h) All employee data necessary to administer each Plan in accordance with its terms and conditions and applicable Laws is in possession of the Company and all such data is complete and correct in all material respects, and is in a form that is sufficient for the proper administration of each Plan.
Section 3.11 Labor and Employment Matters.
(a) Section 3.11(a) of the Company Disclosure Schedule contains a true, correct and complete list of all employees of the Company as of the date of this Agreement, including any employee who is on a leave of absence of any nature, authorized or unauthorized, which sets forth for each such individual the following: (1) employing entity; (2) title or position (including whether full- or part-time); (3) location of employment; (4) hire date; (5) age; (6) current annualized base salary or (if paid on an hourly basis) hourly rate of pay; (7) details of any visa or other work permit (including type of visa and expiration date, as applicable); (8) the period of notice to terminate his or her employment if other than the requirement to provide notice required under common law; (9) eligibility to receive incentive compensation (including commissions, bonuses, equity incentives and other variable pay); and (10) incentive payment history over the past year. With respect to all Current Employees who are on disability leave, maternity leave or any other authorized or unauthorized leaves, the Company has made available to SPAC a true, correct and complete list of: (1) the reason for the employee’s leave, if known by the Company; (2) date the leave started; and (3) expected return date (where available).
(b) Section 3.11(b) of the Company Disclosure Schedule contains a true, correct and complete list of all Persons who provide services to the Company in the capacity of an independent contractor as of the date of this Agreement (including those who have entered into written agreements with the Company), which sets forth for each Person: (1) a description of the services provided and the location where such services are provided; (2) the compensation applicable for such services; and (3) details of any Contract applicable to such services. All Persons characterized and treated by the Company as independent contractors are listed in Section 3.11(b) of the Company Disclosure Schedule. Each independent contractor has been properly classified as an independent contractor and the Company has not received any notice from any Governmental Authority disputing such classification. Each individual who is classified by the Company as an independent contractor has been properly classified for purposes of participation and benefit accrual under each Plan.
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(c) No offer of employment or engagement has been made by the Company that has not yet been accepted, or which has been accepted but the employment or engagement has not yet started. No employee of the Company or other Persons who provide services to the Company has stated that they will resign or retire or cease to provide work or services as a result of the closing of the transactions contemplated by this Agreement.
(d) To operate and manage the business of the Company as currently operated and managed, the Company does not require the assistance of any individuals or Persons other than those set forth on Section 3.11(a) and Section 3.11(b) of the Company Disclosure Schedule.
(e) Correct and complete copies of all written employment agreements and independent contractor agreements for the individuals and Persons set out in Section 3.11(a) and Section 3.11(b) of the Company Disclosure Schedule have been made available to SPAC, as well as handbooks and any other material policies, procedures or rules, which apply to any Person employed or engaged by the Company.
(f) As of the date of this Agreement and during all times during the three (3)-year period immediately prior to the date hereof, all compensation, including wages, overtime pay, general holiday pay, vacation pay, sick pay, commissions and bonuses, Taxes and Employee Benefit Plan contributions or payments, due and payable to or in respect of all employees and former employees of, and all other Persons who have provided services to, the Company for services performed on or prior to the date of this Agreement have been paid in full (or accrued in full in the Company’s financial statements) in all material respects.
(g) No employee of the Company or other Persons who provide services with respect to the Company are or have ever been represented by a labor union, works council, trade union, industrial organization, or similar representative of employees with respect to his or her employment with the Company, and the Company is not and has never been a party to, subject to, or bound by a collective bargaining agreement, collective agreement, workplace agreement or any other Contract with a labor union, works council, trade union, industrial organization, or similar representative of employees. As of the date of this Agreement, and during the three (3)-year period immediately prior to this Agreement, there are or were no strikes, lockouts, work stoppages, slowdowns or other labor disputes existing or, to the Company’s knowledge, threatened, against the Company with respect to any employees of the Company or any other individuals who have provided services with respect to the Company. As of the date of this Agreement and during the three (3)-year period immediately prior to this Agreement, there have been no union certification or representation petitions pending with a Governmental Authority or demands for recognition as the bargaining unit representative with respect to the Company and any of their respective employees and, to the Company’s knowledge, no union organizing campaign or similar effort is or has been threatened with respect to any of their respective employees. Other than as set forth in Section 3.11(g) of the Company Disclosure Schedule, the Company has not been involved in any dispute with any labor union, works council, trade union, industrial organization, or similar representative of employees, in each case, at any time within the three-year period immediately prior to this Agreement.
(h) There are no Actions pending or, to the knowledge of the Company, threatened against the Company by any of their respective current or former employees or any other Persons who have provided services to the Company.
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(i) The Company is and has been since January 1, 2020 in all material respects, in compliance with all applicable Laws relating to labor and employment, including (i) all applicable Occupational Health and Safety Laws and all other applicable Laws, including Laws relating to wages and hours of work, anti-discrimination, anti-harassment, anti-retaliation, collective bargaining, employee leave, immigration, recordkeeping, workers’ compensation, meal and rest periods, employee notices, payroll documents, termination or discharge, severance or redundancy obligations, social insurance obligations, vacation and holiday pay, information and consultation, occupational health and safety, tax withholding, and classification of employees, workers and contractors and (ii) all applicable industrial Laws, industrial awards, statutes, company policies, codes of conduct and applicable agreements for all employees engaged in the business of the Company, and the Company is not liable for any arrears of wages, penalties or other sums for failure to comply with any of the foregoing.
(j) The Company has not closed any plant or facility, effectuated any layoffs of employees or implemented any mass or group termination, early retirement or separation during the three (3)-year period immediately prior to this Agreement, and the Company has not planned or announced any such action or program for the future.
(k) Neither the Company nor any property or asset of the Company is or has been the subject of an investigation, inspection, order (including stop work, stop use or stop supply orders) by any Governmental Authority pursuant to Occupational Health and Safety Laws, and there are no charges, penalties, or orders under Occupational Health and Safety Laws pending or outstanding against the Company or any current or former employees of the Company. There have been no injuries, incidents, or events reported or required to be reported to a Governmental Authority pursuant to any Occupational Health and Safety Laws regarding the Company.
(l) Other than as set forth in Section 3.11(l) of the Company Disclosure Schedule, the Company is not subject to any current or pending or, to the knowledge of the Company, threatened Actions, class actions, grievances, complaints, audits, or statutorily imposed self-assessments, administrative proceedings or other proceedings in connection with the employment or engagement of any current or former applicant, officer, director, employee, volunteer, intern or independent contractor of the Company. There are no outstanding judgments or orders under any Law or settlement or pending settlement requiring the reinstatement of or requiring the taking of any action, or the refraining from taking any action, or which place a financial obligation upon the Company, in respect of any current or former applicant, officer, director, employee, volunteer, intern or independent contractor of the Company.
(m) The Company does not contribute or have any obligation to contribute to any fund for a Plan that is a defined benefit plan in respect of the Current Employees and the Company is not liable to contribute in respect of any such defined benefit plan or fund.
(n) The Company is not liable to pay any allowance, annuity, benefit, lump sum, pension, premium or other payment in respect of the death, disability, retirement, resignation, dismissal or cessation of employment of any past or present employees of the Company or other person other than pursuant to any Plan set out in Section 3.10(a) of the Company Disclosure Schedule.
(o) There are no overdue or unpaid pension or superannuation-related contributions, statutory or otherwise (including any Taxes) due on the part of the Company or any Current Employee or independent contractor of the Company (if applicable) that are outstanding and unpaid. There are no loans made to employees or other Persons who provide services to the Company or guarantees provided by the Company for the benefit of any such Persons.
Section 3.12 Interest in Properties and Mineral Rights.
(a) The Company’s real properties (the “Property”) and all of the Company’s mineral interests and rights, in each case, either existing under contract, by operation of Law or otherwise (collectively, and where material, the “Mineral Rights”), are set out in Section 3.12(a) of the Company Disclosure Schedule. The Company does not own or have any interest in any other material real property or any material mineral interests and rights.
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(b) Section 3.12(a) of the Company Disclosure Schedule sets forth a true, complete and correct list as of the date of this Agreement of all real property leased, subleased, licensed and/or otherwise used or occupied (whether as tenant, subtenant, licensee or pursuant to any other occupancy arrangement (whether written or otherwise)), including all amendments, terminations and modifications thereof, by the Company in connection with the operation of its business as it is now being conducted (collectively, including the improvements thereon, the “Leased Real Property”).
(c) The Company has a valid and enforceable leasehold interest in each Leased Real Property under which it is a lessee, free and clear of any Liens other than Permitted Liens.
(d) Each lease for the Leased Real Property is in full force and effect, and is valid, binding and enforceable in accordance with its terms.
(e) There is not, under any lease, any existing default or event of default (or event that, with or without notice or lapse of time, or both, would constitute a default) of the Company or any of its subsidiaries, and the Company has not received any written notice of any default or event of default (that with or without notice or lapse of time, or both, would constitute a default) by the Company under any of the leases for the Leased Real Property that are currently in effect and eligible to be assumed, except as would not individually or in aggregate be expected to have a Company Material Adverse Effect.
(f) There are no pending or, to the Company’s knowledge, threatened proceedings to take all or any material portion of the Leased Real Property, the Mineral Rights or any interest therein by eminent domain or any condemnation proceeding or any sale or disposition in lieu thereof.
(g) There has been no default or event that with or without notice or lapse of time or both, would constitute a material default by the Company or any subsidiary under any of the leases for the Leased Real Property, except as would not individually or in the aggregate be expected to have a Company Material Adverse Effect.
(h) As presently conducted, the operations of the Company on the Property or the Leased Real Property, including improvements thereon, do not violate in any material respect any applicable building code, zoning requirement or other law relating to such property or operations thereon, and any such non-violation is not dependent on so-called non-conforming use exceptions.
(i) Other than as set out in Section 3.12(i) of the Company Disclosure Schedule, no person has any right of first refusal, undertaking or commitment or any right or privilege capable of becoming such, to purchase any real property (or any material portion thereof or interest therein) or any of the material assets owned or, to the Company’s knowledge, leased or otherwise held, by the Company, or any part thereof or material interest therein.
(j) There are no material disputes regarding boundaries, easements, covenants or other matters relating to any real property owned or, to the Company’s knowledge, leased by, the Company.
(k) Other than the Extraction Permit, surface rights to be acquired in the ordinary course of business and as otherwise set out in Section 3.12(k) of the Company Disclosure Schedule, no other property rights are necessary for the exploration, exploitation, development and production of the mineral deposits in the material properties of the Company that comprise the Mineral Rights.
(l) Other than the Extraction Permit and as set forth on Section 3.12(l) of the Company Disclosure Schedule, the Company holds all of the necessary permits to operate and commercially exploit minerals from the Property in accordance with, and subject to the limitations that may be set out in, the Extraction Permit and the limitations set out in Company Permits.
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(m) The Company is the sole legal and beneficial owner of all right, title and interest in and to the Property and the Mineral Rights, free and clear of any Liens other than Permitted Liens.
(n) All of the Mineral Rights have been properly located and recorded in compliance with applicable Law and are comprised of valid and subsisting mineral claims.
(o) The Property and the Mineral Rights are in good standing under applicable Law and, to the Company’s knowledge, all material filings with Governmental Authorities in respect thereof due prior to the date hereof have been filed, all work required to be performed and filed in respect thereof prior to the date hereof has been performed and filed, all Taxes, rentals, fees, expenditures and other payments in respect thereof due prior to the date hereof have been paid or incurred and all filings in respect thereof have been made.
(p) There is no adverse claim against or challenge to the title to or ownership of the Property or any of the Mineral Rights.
(q) Other than pursuant to the rights granted under the Royalty Agreements, the Company has the exclusive right to deal with the Property and all of the Mineral Rights.
(r) Other than as set out in Section 3.12(r) of the Company Disclosure Schedule, no person other than the Company has any interest in the Property or any of the Mineral Rights or any right to acquire any such interest.
(s) Other than as set out in Section 3.12(s) of the Company Disclosure Schedule, no person has any back-in rights, earn-in rights, rights of first refusal, rights of first offer, unrecorded outstanding options, or similar provisions or rights which would affect the Company’s interest in the Property or any of the Mineral Rights.
(t) Other than as set out in Section 3.12(t) of the Company Disclosure Schedule, there are no proceedings pending or, to the knowledge of the Company, threatened against third parties affecting any such Property or Leased Real Property and, to the knowledge of the Company, the Company is not aware of any facts which might result in such proceeding.
(u) Subject to the award and terms and conditions of the Extraction Permit and other than as set forth on Section 3.12(u) of the Company Disclosure Schedule, there are no material restrictions on the ability of the Company to use, transfer or exploit the Property or any of the Mineral Rights, except pursuant to the applicable Law and the terms of the relevant Mineral Rights.
(v) The Company has not received any notice, whether written or oral, from any Governmental Authority of any revocation or intention to revoke any interest of the Company in any of the Property or any of the Mineral Rights.
(w) The Company has not received any compliance orders, citations or notices relating to non-compliance or alleged non-compliance of any Mineral Rights.
(x) Other than as set out in Section 3.12(x) of the Company Disclosure Schedule and surface rights to be acquired in the ordinary course of business, the Company has all surface rights, including fee simple estates, leases, easements, rights of way and permits or licenses from landowners or Governmental Authorities permitting the use of land by the Company, and mineral interests that are required to exploit the development potential of the Property and the Mineral Rights and no third party or group holds any such rights that would be required by the Company to develop the Property or any of the Mineral Rights.
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(y) Section 3.12(y) of the Company Disclosure Schedule sets out a complete list of all rentals, royalties, overriding royalty interests, production payments, net profits, interest burdens, payments and obligations with respect to the Mineral Rights subject to a Royalty Agreement. Other than the Royalty Agreements, there are no rentals, royalties, overriding royalty interests, production payments, net profits, interest burdens, payments and obligations with respect to the Mineral Rights. Company has furnished or made available to SPAC true and complete copies of each Royalty Agreement, including amendments thereto that are material in nature.
Section 3.13 Rights-of-Way. The Company has such consents, easements, rights-of-way, permits and licenses from each Person (collectively “Rights-of-Way”) as are sufficient to conduct its business as presently conducted, except for such Rights-of-Way the absence of which would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company has fulfilled and performed all its material obligations with respect to such Rights-of-Way and its business, as presently conducted, does not violate any of the Rights-of-Way and no event has occurred that allows, or after notice or lapse of time would allow, revocation or termination thereof or would result in any impairment of the rights of the holder of any such Rights-of-Way, except for such revocations, terminations and impairments that would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
Section 3.14 Intellectual Property.
(a) Section 3.14(a) of the Company Disclosure Schedule sets forth a correct list of all: (i) Registered Intellectual Property constituting Company-Owned IP (showing in each, as applicable, the filing date, date of issuance, registration or application number, and jurisdiction), (ii) written Contracts currently in effect granting a right, license or other permission to use any material Company-Licensed IP, including the Software of any other Person (other than generally commercially available Software with aggregate annual license and maintenance fees of less than $75,000); and (iii) Software constituting Company-Owned IP that is otherwise material to the business of the Company, as such business is currently being conducted or proposed to be conducted. The Company IP constitutes all Intellectual Property required for the conduct of the business of the Company as such business is currently being conducted or proposed to be conducted.
(b) The Company solely owns and possesses, free and clear of all Liens (other than Permitted Liens), all right, title and interest in and to the Company-Owned IP. All Company-Owned IP is subsisting and, to the knowledge of the Company, valid and enforceable. The Company is unaware of any facts or circumstances which would be reasonably likely to result in the loss or expiration of material Company-Owned IP except for ordinary expirations of Registered Intellectual Property and other Intellectual Property expiring in the Ordinary Course.
(c) The Company has taken and takes commercially reasonable actions to maintain, protect and enforce its Intellectual Property rights, including the secrecy of its trade secrets and other Confidential Information. The Company has not disclosed any trade secrets or other Confidential Information that is otherwise material to the business of the Company to any other Person other than pursuant to a written confidentiality agreement under which such other Person agrees to maintain the confidentiality and protect such Confidential Information. All Persons who have participated in or contributed to the creation, authorship, conception, invention, reduction to practice, or development, for or on behalf the Company, of any Intellectual Property, in whole or in part, have executed and delivered to the Company a written agreement (A) restricting the disclosure and use by such Person of any Company IP and trade secrets of the Company and (B) providing for the irrevocable and unconditional assignment by such Person to the Company of all right, title, and interest in and to all Intellectual Property arising out of such Person’s employment by, engagement by, or contract with the Company, or where such rights, including moral rights (or other similar rights), are incapable of assignment, they have been irrevocably and unconditionally waived by such Person.
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(d) As of the date of this Agreement, there have been no claims filed and served, or threatened in writing, against the Company by any Person contesting the validity, use, ownership, enforceability, patentability or registrability of any of the Company-Owned IP, alleging any infringement or misappropriation of, or other violation of, any Intellectual Property of other Persons (including any unsolicited demands or offers to license any Intellectual Property from any other Person). To the knowledge of the Company, (A) the operation of the business of the Company has not and does not infringe, misappropriate or otherwise violate, any Intellectual Property of other Persons, and (B) no other Person has infringed, misappropriated or violated any of the Company-Owned IP. The Company has not received written notice of any of the foregoing set forth in this Section 3.14(d).
(e) Neither the Company nor, to the Company’s knowledge, any other Person is in material breach or in material default of any Contract specified in Section 3.14(a).
(f) Each item of Company IP will continue to be owned by or licensed to the Company on identical terms and conditions immediately following the Closing Date as are in effect immediately prior to the Closing Date.
(g) The Company maintains commercially reasonable disaster recovery, business continuity and risk assessment plans, procedures and facilities. All of such plans and procedures have been proven reasonably effective upon testing in all material respects. There has not been any material failure with respect to any of the Business Systems that has not been remedied or replaced in all material respects.
(h) The Company currently complies and previously has complied in all material respects with (A) all Privacy/Data Security Laws applicable to the Company, (B) any applicable privacy or other policies of the Company concerning the collection, dissemination, storage or use of Personal Information or other Business Data, including any policies or disclosures posted to websites or other media maintained or published by the Company, (C) industry standards to which the Company is bound, and (D) all contractual commitments that the Company has entered into or is otherwise bound with respect to privacy and/or data security (collectively, the “Data Security Requirements”). The Company has implemented commercially reasonable safeguards designed to protect the security, integrity and confidentiality of the Business Systems and any Business Data stored thereon, including, where applicable, implementing procedures preventing unauthorized access and the introduction of Disabling Devices, adopting disaster recovery and business continuity plans, and the taking and storing on-site and off-site of back-up copies of data considered by the Company to be critical. Such safeguards comply with all Privacy/Data Security Laws. The Company’s employees and contractors receive reasonable training on information security issues. The Company has not (x) experienced any material unauthorized access, security incident, or use of any of the Business Systems, or unauthorized acquisition, destruction, damage, disclosure, loss, corruption, alteration, or use of any material Business Data stored on the Business Systems; or (y) been subject to, provided, or received written notice of any audits, proceedings or investigations by any Governmental Authority or any Person, or received any claims or complaints regarding the collection, dissemination, storage, processing, or use of Personal Information, or the violation of any applicable Data Security Requirements and, to the Company’s knowledge, there is no reasonable basis for the same.
(i) The Company (i) owns or possesses all right, title and interest in and to the Business Data constituting Company-Owned IP free and clear of any restrictions other than those imposed by applicable Privacy/Data Security Laws or (ii) has the right, as applicable, to use, exploit, publish, reproduce, distribute, license, sell and create derivative works of the Business Data, in whole or in part, in the same manner in which the Company has used, exploited, published, reproduced, distributed, licensed, sold and created derivative works of such Business Data prior to the Closing Date. Other than any applicable limitations or prohibitions imposed by Privacy/Data Security Laws, the Company is not subject to any Data Security Requirements or other legal obligations that would prohibit NewCo from receiving or using Personal Information or other Business Data held by the Company after the Closing Date, in the same manner in which the Company received and used such Personal Information and such Business Data prior to the Closing Date or result in liabilities in connection with Data Security Requirements.
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Section 3.15 Taxes.
(a) All material Tax Returns required to be filed by (or with respect to) the Company have been duly and timely filed (taking into account any valid extension of time to file), and all such Tax Returns are true, correct and complete in all material respects. All material Taxes due and payable by (or with respect to) the Company, or for which the Company may be liable, have been timely paid in full to the appropriate Taxing Authority. All material Taxes which are not yet due and payable have been (i) for periods covered by the Financial Statements, adequately accrued and reserved on the Financial Statements in accordance with IFRS, and (ii) for periods not covered by the Financial Statements, accrued on the books and records of the Company, in each case as of the date of this Agreement. The Company has withheld and paid to the appropriate Taxing Authority all material Taxes required to have been withheld and paid in connection with any amounts paid or owing to any current or former employee, independent contractor, creditor, equity holder or other Person, and has complied in all material respects with all applicable Law relating to the withholding and remittance and related reporting requirements with respect to such Taxes. The Company has collected all material sales, use, employment, value added, goods and services, and similar Taxes required to be collected and timely remitted all such Taxes collected to the appropriate Taxing Authority in accordance with applicable Law. The Company has not taken advantage of any Law enacted in connection with COVID-19 that has the result of temporarily reducing (or temporarily delaying the due date of) any material payment obligation of the Company to any Taxing Authority.
(b) Other than as a beneficiary thereto, the Company is not a party to, or bound by, any Tax indemnity, Tax sharing or Tax allocation agreement or similar Contract (other than any such Contract entered into in the Ordinary Course and not primarily relating to Taxes).
(c) The Company will not be required to include any material item of income in, or exclude any material item of deduction or loss from, taxable income, or make any adjustment under Section 481 of the Code (or any similar provision of state, local or non-U.S. Law), for any Tax period (or portion thereof) beginning after the Closing Date(or, in the case of any taxable period beginning on or before and ending after the Closing Date, the portion of such period beginning after the Closing Date) as a result of any: (i) change in method of accounting made prior to the Closing, including by reason of the application of Section 481 of the Code (or any analogous provision of state, local or foreign Law); (ii) settlement or other agreement with any Taxing Authority made prior to the Closing; (iii) disposition made, payment received or deferred revenue recognized prior to the Closing; or (iv) transaction occurring prior to the Closing between or among members of any affiliated, consolidated, combined or unitary group for U.S. federal, state, local or non-U.S. Tax purposes of which the Company is or was a member.
(d) The Company has not been a member of an affiliated, consolidated, combined or unitary group for U.S. federal, state, local or non-U.S. Tax purposes. The Company does not have any liability for the Taxes of any Person (other than the Company) as a result of being a member of a consolidated group, fiscal unity or unified group (including pursuant to Treasury Regulations Section 1.1502-6 or any similar provision of state, local or non-U.S. Law), as a transferee or successor, by Contract (other than any such Contract entered into in the Ordinary Course and not primarily relating to Taxes) or otherwise.
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(e) All payments by, to or among the Company, and its Affiliates are in material compliance with all relevant transfer pricing requirements imposed by any Taxing Authority, including the execution and maintenance of contemporaneous documentation substantiating the transfer pricing practices and methodologies.
(f) The Company is not a party to any material ruling or similar agreement or arrangement with a Governmental Authority, and the Company does not have any request for a material ruling in respect of Taxes pending between it and any Governmental Authority.
(g) Except as set forth in Section 3.15(g) of the Company Disclosure Schedule, no audit, examination, investigation, litigation or other administrative or judicial proceeding in respect of Taxes or Tax matters is pending, being conducted or has been announced or threatened in writing with respect to the Company (and, to the knowledge of the Company, no such audit, examination investigation, litigation or other administrative or judicial proceeding is contemplated). There is no outstanding claim, assessment, deficiency or proposed adjustment against the Company for any material amount of Tax, and no such claim, assessment or deficiency has been asserted or threatened in writing or, to the knowledge of the Company, is contemplated, by any Taxing Authority.
(h) The Company has not waived any statute of limitations with respect to Taxes or agreed to any extension of time with respect to the assessment or collection of any Tax, other than in the Ordinary Course or for automatic extensions of time to file income Tax Returns.
(i) There are no Liens or encumbrances for Taxes upon any of the assets of the Company except for Permitted Liens.
(j) The Company has not received written notice of any claim from a Taxing Authority in a jurisdiction in which the Company does not file Tax Returns stating that the Company is or may be subject to Tax in such jurisdiction.
(k) To the knowledge of the Company, the Company is not subject to Tax in any country other than its country of incorporation, organization or formation by virtue of having employees, a permanent establishment, other place of business or similar presence in that country.
(l) The Company has not participated in a “reportable transaction” within the meaning of Treasury Regulation 1.6011-4(b) (or any corresponding or similar provision of state, local or non-U.S. Law).
(m) The Company is in material compliance with all terms and conditions of any Tax incentives (including those based on COVID-19 relief), Tax exemption, Tax holiday or other Tax reduction arrangement, agreement or order (each, a “Tax Incentive”) and the consummation of the Transactions will not have any adverse effect on the continued validity and effectiveness of any such Tax Incentive.
(n) None of Sections 80 to 80.04, both inclusive, of the Canadian Tax Act have applied or will apply to the Company. The Company has no material unpaid amounts that may be required to be included in income under Section 78 of the Canadian Tax Act.
(o) The Company has not acquired property from any Person in circumstances where the Company did or could have become liable for any Taxes payable by that Person pursuant to Section 160 of the Canadian Tax Act.
(p) The Company is a registrant for purposes of the Excise Tax Act (Canada). All material input tax credits claimed by the Company pursuant to the Excise Tax Act (Canada) have been proper, correctly calculated and documented in accordance with the requirements of the Excise Tax Act (Canada).
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(q) The Company has not taken any action that could reasonably be expected to prevent the applicable elements of the Transactions from qualifying for the Intended Tax Treatment, provided the foregoing representation will not prevent the Company from taking any actions required by this Agreement or any Ancillary Agreement. To the Company’s knowledge, as of the date hereof, there are not any facts or circumstances that could reasonably be expected to prevent the applicable elements of the Transactions from qualifying for the Intended Tax Treatment, provided the foregoing representation will not prevent the Company from taking any actions required by this Agreement or any Ancillary Agreement.
(r) The Company is a “taxable Canadian corporation” as that term is defined in the Canadian Tax Act.
Section 3.16 Environmental Matters. Except as set forth in Section 3.16 of the Company Disclosure Schedule, (a) the Company and each property and facility owned, leased or operated by the Company are and have been in compliance with Environmental Law; (b) none of the properties or facilities currently owned, leased or operated by the Company (including, without limitation, soils and surface and ground waters) contain any Hazardous Substance which requires reporting, investigation, remediation, monitoring or other response action pursuant to applicable Environmental Laws, or which could give rise to a liability of the Company under Environmental Laws; (c) the Company is not actually or, to the Company’s knowledge, allegedly currently liable pursuant to applicable Environmental Laws for any off site contamination by, or release or presence of, Hazardous Substances; (d) the Company has obtained, holds, and is and has been in material compliance with, all franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certifications, approvals, agreements, and orders required under applicable Environmental Law and as required for the ownership, lease, operation or use of the business or assets of the Company as presently conducted; (e) all such franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certifications, approvals and orders are in full force and effect; (f) there are no Actions pending or, to the Company’s knowledge, threatened that may result in the cancellation, revocation or suspension of any such franchise, grant, authorization, license, permit, easement, variance, exception, consent, certifications, approval or order; (g) neither the Company nor any property or facility owned, leased or operated by the Company is the subject of any pending or, to the Company’s knowledge, threatened Action alleging any violation or, or liability under, Environmental Laws or the cancellation, revocation or suspension of any environmental permits, licenses, certifications, approvals, agreements or other authorizations required; (h) there are no above-ground or underground storage tanks at, on or under any property or facility currently or, to the Company’s knowledge, formerly owned, leased or operated by the Company; and (i) the Company has not agreed to indemnify any Person or assumed by Contract the liability of any Third Party arising under Environmental Law nor has the Company entered into or agreed to any consent, settlement or other agreement relating to compliance with or liabilities under any Environmental Law. The Company provided SPAC with all franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders required under applicable Environmental Law, and all environmental assessments, reports, studies, audits, sampling data, liability analyses, memoranda and other evaluations in its possession or control relating to the Company, any of the Company’s products or activities or any properties or facilities currently owned, leased or operated by the Company.
Section 3.17 Material Contracts.
(a) Section 3.17(a) of the Company Disclosure Schedule lists, as of the date of this Agreement, the following types of Contracts to which the Company is a party or bound (such Contracts as are required to be set forth on Section 3.17(a) of the Company Disclosure Schedule being the “Material Contracts”):
(i) each Contract that provides for the acquisition, disposition, license, use, distribution, provision or outsourcing of goods (including silica), assets, services, rights or properties with respect to which the Company reasonably expects that it will make payments in excess of $100,000 annually or $500,000 in the aggregate for the remaining term of such contract;
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(ii) each Contract (A) with any of the Affiliates of the Company or (B) pursuant to which the Company receives any “preferred pricing” or similar benefit that is utilized by the Company in the Ordinary Course;
(iii) all Contracts evidencing Indebtedness, and any pledge agreements, security agreements or other collateral agreements in which the Company granted to any Person a security interest in or Lien on any of the material property or assets of the Company, and all Contracts guarantying the debts or other obligations of any Person;
(iv) each Contract involving the pending acquisition or sale of (or option to purchase or sell) any material amount of the assets of the Company, taken as a whole, other than contracts by the Company in the Ordinary Course;
(v) each contract for any interest rate, commodity or currency protection (including any swaps, collars, caps or similar hedging obligations);
(vi) all partnership, joint venture or similar agreements, other than any customary joint operating agreements or unit agreements of the Company entered into in the Ordinary Course;
(vii) all Contracts with any Governmental Authority to which the Company is a party, other than any Company Permits, or under which the Company is directly or indirectly, to the knowledge of the Company, providing goods, services, Software, or other items to or for use by a Governmental Authority;
(viii) all Contracts awarded by the Company to a third party in the performance of a contract with a Governmental Authority;
(ix) all Contracts that (A) limit, or purport to limit, the ability of the Company to compete in any line of business or with any Person or entity or in any geographic area or during any period of time, excluding customary confidentiality agreements and Contracts that contain customary confidentiality clauses, (B) require the Company to conduct any business on a “most favored nations” basis with any third party or (C) provide for “exclusivity” or any similar requirement in favor of any third party, except in the case of each of clauses (A), (B), and (C) for such restrictions, requirements and provisions that are not material to the Company;
(x) all Contracts that result in any Person holding an irrevocable power of attorney from the Company that relates to the Company or its business;
(xi) all leases of personal or real property that involve annual payments of $100,000 or more in a twelve (12)-month period;
(xii) all Contracts involving use of any Company-Licensed IP required to be listed in Section 3.14(a) of the Company Disclosure Schedule;
(xiii) Contracts which involve the license or grant of rights to Company-Owned IP by the Company other than non-exclusive licenses (or sublicenses) of Company-Owned IP granted in the Ordinary Course;
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(xiv) all Contracts that relate to the direct or indirect issuance, acquisition or disposition of any securities or business (whether by merger, issuance or sale of stock, sale of assets or otherwise) and under which there are surviving obligations of the Company;
(xv) all Contracts relating to a Company Interested Party Transaction;
(xvi) all Contracts involving any resolution or settlement of any actual or threatened Action or other dispute that require payment in excess of $100,000 or impose continuing obligations on the Company, including injunctive or other non-monetary relief;
(xvii) all Contracts pursuant to which the Company is obligated to develop any Intellectual Property to be owned by any third party;
(xviii) Contracts for the development of Company-Owned IP for the benefit of the Company (other than Contracts of employment, with the exception of the employment contracts of Brent Bullen and Laura Weeden); and
(xix) Contract pursuant to which the Company agrees to jointly own any Intellectual Property with any third party.
(b) (i) Each Material Contract is a legal, valid and binding obligation of the Company and the Company is not in material breach or violation of, or default under, any Material Contract nor has any Material Contract been canceled by the other party; (ii) to the Company’s knowledge, no other party is in material breach or violation of, or default under, any Material Contract; and (iii) the Company has not received any written, or to the knowledge of the Company, oral claim of default under any such Material Contract, except for any such conflicts, violations, breaches, defaults or other occurrences which would not be expected to result in a Company Material Adverse Effect. No party to a Material Contract has given written notice of or, to the knowledge of the Company, threatened (x) any potential exercise of termination rights with respect to any Material Contract or (ii) any non-renewal or modification of any Material Contract.
(c) The Company has furnished or made available to SPAC true and complete copies of all Material Contracts, including amendments thereto that are material in nature.
Section 3.18 Insurance.
(a) Section 3.18(a) of the Company Disclosure Schedule sets forth, with respect to each insurance policy under which the Company is an insured (the “Insurance Policies”), a named insured or otherwise the principal beneficiary of coverage as of the date of this Agreement, (i) the names of the insurer, the principal insured and each named insured; (ii) the policy number; (iii) the period, scope and amount of coverage; and (iv) the premium most recently charged.
(b) With respect to each such Insurance Policy, except as would not be expected to result in a Company Material Adverse Effect: (i) the policy is legal, valid, binding and enforceable in accordance with its terms (subject to the Remedies Exceptions) and is in full force and effect; (ii) the Company is not in material breach or default (including any such breach or default with respect to the payment of premiums or the giving of notice), and no event has occurred which, with notice or the lapse of time, would constitute such a breach or default, or permit termination or modification, under the policy; and (iii) to the knowledge of the Company, no insurer on the policy has been declared insolvent or placed in receivership, conservatorship or liquidation.
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Section 3.19 Board Approval; Vote Required.
(a) The Company has made available to SPAC a complete and correct copy of the resolutions of the Company Board approving the Agreement and the Transactions contemplated by the Plan of Arrangement. Subject to the terms of the Interim Order, if the Company Required Approval in respect of the Arrangement Resolution is obtained, no additional approval or vote from any holders of any class or series of authorized shares of the Company would then be necessary to adopt this Agreement or the Plan of Arrangement and approve the Transactions. As of the date hereof, the Key Company Shareholders are the registered holders of at least sixty-six and two-thirds percent (66 2/3%) of the Company Common Shares as of the date hereof.
(b) Sio NewCo has made available to SPAC a complete and correct copy of the resolutions of the Sio NewCo Board in respect of the Transactions, which such resolutions were duly adopted by written resolution and have not been subsequently rescinded or modified in any way. The only vote of the holders of any class or series of authorized shares of Sio NewCo necessary to adopt this Agreement and the Plan of Arrangement and approve the Transactions is the affirmative vote or prior written resolution of the sole shareholder of Sio NewCo as at the date hereof (the “Sio NewCo Shareholder Approval”).
Section 3.20 Certain Business Practices.
(a) Neither the Company nor, to the knowledge of the Company, any of its officers, directors or employees or other agent acting on behalf of the Company is currently violating, or during the past five (5) years violated, whether directly or indirectly, any applicable Sanctions or Ex-Im Laws. Neither the Company nor any of its officers, directors, or to the knowledge of the Company, any employees or any agent acting on behalf of the Company is currently, or has been in the last five (5) years: (i) a Sanctioned Person; or (ii) engaging in dealings with any Sanctioned Person, to the extent such activities violate Sanctions or Ex-Im Laws applicable to any party to this Agreement. There are not now and have not been in the last five (5) years any proceedings, investigations, or disclosures to, by or before any Governmental Authority involving the Company or, to the knowledge of the Company, any of its directors, officers or employees relating to Sanctions or Ex-Im Laws, nor to the Company’s knowledge, is such a proceeding, investigation or disclosure pending or threatened. The Company has obtained export licenses and other authorizations as required by, and otherwise has operated, and is presently, in compliance with Ex-Im Laws. The Company has implemented and maintains in effect policies and procedures reasonably designed to promote compliance with Sanctions and Ex-Im Laws.
(b) Neither the Company nor, to the Company’s knowledge, its officers or directors have in the past five (5) years directly or indirectly offered, paid, promised to pay, or authorized the payment of anything of value, including cash, checks, wire transfers, tangible or intangible gifts, favors, entertainment or services (including any facilitation payments) to any Person, including any Government Official, or any employee or representative of a Governmental Authority, or any Person acting for or on behalf of any Government Official while knowing (as defined in the FCPA) or having reason to know that all or some portion would be used for the purpose of: (a) influencing any act or decision of a Government Official or other person, including a decision to fail to perform official functions; (b) inducing any Government Official or other person to do or omit to do any act in violation of the lawful duty of such official; or (c) inducing any Government Official to use influence with any government, department, agency or instrumentality in order to assist the Company or any other Person in obtaining or retaining business with, or directing business to any Person or otherwise securing for any Person an improper advantage.
(c) There have been no demands, claims, actions, legal proceedings or investigations by or before any Governmental Authority or any arbitrator involving the Company or, to the Company’s knowledge, its directors or officers relating to the Anti-Corruption Laws in the past five (5) years nor are there any pending or, to the knowledge of the Company, threatened in writing. In the past five (5) years, no civil, criminal, or administrative penalties have been imposed on the Company with respect to violations of applicable Anti-Corruption Laws, or applicable Anti-Money Laundering Laws, nor have any disclosures been submitted to any other Governmental Authority with respect to violations of such laws.
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(d) The Company has conducted its businesses in compliance with applicable Anti-Corruption Laws and Anti-Money Laundering Laws and have instituted and maintain policies and procedures designed to promote and achieve compliance with such laws.
(e) The operations of the Company are and have been conducted in material compliance with all Anti-Money Laundering Laws and Sanctions. The Company and, to the Company’s knowledge, its directors and officers have not knowingly falsified any entry in any book, record or account of the Company, and all such entries fairly and accurately reflect the relevant transactions and dispositions of the Company’s assets in reasonable detail.
(f) No director, officer or employee of the Company is a Government Official.
Section 3.21 Interested Party Transactions.
(a) Except for employment relationships and the payment of compensation, benefits and expense reimbursements and advances in the Ordinary Course or as set forth in Section 3.21(a) of the Company Disclosure Schedule, no director, officer or other Affiliate of the Company has, directly or indirectly: (i) an economic interest in any Person that has furnished or sold, or furnishes or sells, services or products that the Company furnishes or sells, or proposes to furnish or sell; (ii) an economic interest in any Person that purchases from or sells or furnishes to, the Company, any goods or services; (iii) a beneficial interest in any Material Contract; or (iv) any contractual or other arrangement with the Company (including any “preferred pricing” or similar benefit enjoyed by the Company as a result of any such affiliation) (each such transaction, a “Company Interested Party Transaction”). The Company has not, since January 1, 2020, (x) extended or maintained credit, arranged for the extension of credit or renewed an extension of credit in the form of a personal loan to or for any director or executive officer (or equivalent thereof) of the Company; or (y) materially modified any term of any such extension or maintenance of credit. There are no contracts or arrangements between the Company on the one hand and any immediate family member of any director, officer of the Company on the other hand.
(b) Except as set forth in Section 3.21(b) of the Company Disclosure Schedule, there are no transactions, Contracts, arrangements or understandings between the Company and any other Person, which grant or purport to grant any board observer or management rights.
Section 3.22 Exchange Act. The Company is not currently (nor has it previously been) subject to the requirements of Section 12 of the Exchange Act.
Section 3.23 Brokers. Except as set forth on Section 3.23 of the Company Disclosure Schedule, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of the Company or any of its Affiliates.
Section 3.24 Sexual Harassment and Misconduct. The Company has not entered into a settlement agreement with a current or former employee, intern, volunteer, applicant, officer, director or other Person who provides services to the Company resolving allegations of sexual harassment or other misconduct by an employee, intern, volunteer, officer, director or other Person who provides services to the Company, and there are no, and since January 1, 2022 there have not been any, Actions pending or, to the knowledge of the Company, threatened, against the Company involving allegations of sexual harassment or other misconduct by an employee, intern, volunteer, applicant, officer, director or other Person who provides services to the Company.
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Section 3.25 Solvency. The Company is not the subject of an Insolvency Event and, to the knowledge of the Company, there are no circumstances that justify the Company being the subject of an Insolvency Event.
Section 3.26 Records.
(a) The records of the Company: (i) are in the possession or under the control of the Company; (ii) have been properly maintained in all material respects in accordance with all applicable Laws in Canada; (iii) do not contain any material inaccuracies; and (iv) include all material information required or under, or to comply in all material respects with, or to support any filing made or required to be made under any applicable Law in Canada.
(b) Each material document or filing that is required by Law to have been delivered or made to any Governmental Authority by the Company has been duly delivered or made.
Section 3.27 Company’s and Sio NewCo’s Reliance. None of the Company or Sio NewCo is relying on any statement, representation or warranty, oral or written, express or implied, made by SPAC or any of its Subsidiaries or any of their respective Representatives, except as expressly set forth in Article IV (as modified by the SPAC Disclosure Schedule), in the Transaction Documents or in the corresponding representations and warranties contained in the certificate delivered pursuant to Section 7.03. Neither SPAC nor any of its respective shareholders, Affiliates or Representatives shall have any liability to any of the Company or Sio NewCo or any of their respective shareholders, Affiliates or Representatives resulting from the use of any information, documents or materials made available to the Company or Sio NewCo or any of their Representatives, whether orally or in writing, in any confidential information memoranda, “data rooms,” management presentations, due diligence discussions or in any other form in expectation of the Transactions, except as expressly set forth in this Agreement (as modified by the SPAC Disclosure Schedule), the Transaction Documents or in any certificate delivered by SPAC pursuant to this Agreement. The Company and Sio NewCo acknowledge that, except as expressly set forth in this Agreement (as modified by the SPAC Disclosure Schedule) or in any certificate delivered by SPAC pursuant to this Agreement, neither SPAC nor any of its shareholders, Affiliates or Representatives is making, directly or indirectly, any representation or warranty with respect to any estimates, projections or forecasts involving SPAC and/or any of its Subsidiaries.
Section 3.28 Exclusivity of Representations and Warranties. Except as otherwise expressly provided in this Article III (as modified by the Company Disclosure Schedule), the Company hereby expressly disclaims and negates any other express or implied representation or warranty whatsoever (whether at Law or in equity) with respect to the Company, its Affiliates, and any matter relating to any of them, including their affairs, the condition, value or quality of the assets, liabilities, financial condition or results of operations, or with respect to the accuracy or completeness of any other information made available to SPAC, NewCo, their respective Affiliates or any of their respective Representatives by, or on behalf of, the Company, and any such representations or warranties are expressly disclaimed. Without limiting the generality of the foregoing, except as expressly set forth in this Agreement (as modified by the Company Disclosure Schedule) or in any certificate delivered by the Company pursuant to this Agreement, neither the Company nor any other Person on behalf of the Company has made or makes any representation or warranty, whether express or implied, with respect to any projections, forecasts, estimates or budgets made available to SPAC, NewCo, their respective Affiliates or any of their respective Representatives of future revenues, future results of operations (or any component thereof), future cash flows or future financial condition (or any component thereof) of the Company (including the reasonableness of the assumptions underlying any of the foregoing), whether or not included in any management presentation or in any other information made available to SPAC, NewCo, their respective Affiliates or any of their respective Representatives or any other Person, and any such representations or warranties are expressly disclaimed.
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Article
IV
REPRESENTATIONS AND WARRANTIES OF SPAC
Except as set forth in the SPAC Disclosure Schedule or the SPAC SEC Reports (to the extent the qualifying nature of such disclosure is readily apparent from the content of such SPAC SEC Reports, but excluding disclosures referred to in “Forward-Looking Statements”, “Risk Factors” and any other disclosures therein to the extent they are of a predictive or cautionary nature or related to forward-looking statements), SPAC hereby represents and warrants to each of the Company and Sio NewCo as follows:
Section 4.01 Corporate Organization.
(a) Each of SPAC and NewCo is a corporation, exempted company or unlimited liability corporation, duly incorporated or organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization and has the requisite corporate power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted. Each of SPAC and NewCo is duly qualified or licensed to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for such failures to be so qualified or licensed and in good standing that would not individually or in the aggregate be expected to have a SPAC Material Adverse Effect.
(b) NewCo is the only Subsidiary of SPAC. Except for NewCo, SPAC does not directly or indirectly own any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest in, any corporation, partnership, joint venture or business association or other Person.
Section 4.02 Organizational Documents. SPAC has, prior to the date of this Agreement, made available to the Company complete and correct copies of the SPAC Organizational Documents and the NewCo Organizational Documents. The SPAC Organizational Documents and the NewCo Organizational Documents are in full force and effect. Neither SPAC nor NewCo is in material violation of any of the provisions of the SPAC Organizational Documents or the NewCo Organizational Documents, as applicable. SPAC and NewCo have conducted their business in compliance with the SPAC Organizational Documents or the NewCo Organizational Documents, respectively, except for such failures, individually or in the aggregate which have not had, and would not reasonably be expected to have, a SPAC Material Adverse Effect.
Section 4.03 Capitalization.
(a) The authorized share capital of SPAC consists of (i) 200,000,000 SPAC Class A Ordinary Shares, (ii) 20,000,000 SPAC Class B Ordinary Shares and (iii) 1,000,000 preference shares, par value $0.0001 per share (“SPAC Preference Shares”). As of the date of this Agreement, (i) 14,005,087 SPAC Class A Ordinary Shares are issued and outstanding, all of which are validly issued, fully paid and non-assessable and not subject to any preemptive rights, (ii) no SPAC Class B Ordinary Shares are issued and outstanding, (iii) no SPAC Class A Ordinary Shares or SPAC Class B Ordinary Shares are held in the treasury of SPAC, (iv) 20,218,750 SPAC Warrants (consisting of 10,062,500 of public warrants and 10,156,250 of private placement warrants) are issued and outstanding, and (v) 20,218,750 SPAC Class A Ordinary Shares are reserved for future issuance pursuant to SPAC Warrants. As of the date of this Agreement, there are no SPAC Preference Shares issued and outstanding. Each SPAC Warrant is exercisable for one SPAC Class A Ordinary Share at an exercise price of $11.50, subject to the terms of such SPAC Warrant and the SPAC Warrant Agreement.
(b) All outstanding SPAC Class A Ordinary Shares, SPAC Units, and SPAC Warrants have been issued and granted in compliance with all applicable securities Laws and other applicable Laws and were issued free and clear of all Liens other than transfer restrictions under applicable securities Laws and the SPAC Organizational Documents.
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(c) Except for the SPAC Warrants, SPAC has not issued any options, warrants, preemptive rights, calls, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued share capital of SPAC or obligating SPAC to issue or sell any share capital of, or other Equity Interests in, SPAC. All SPAC Class A Ordinary Shares subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and non-assessable. SPAC is not a party to, or otherwise bound by, and SPAC has not granted, any equity appreciation rights, participations, phantom equity or similar rights. Except for the letter agreement entered into by and among SPAC, Sponsor and the other parties thereto in connection with SPAC’s initial public offering, the Sponsor Letter, the Non-Redemption Agreement and any other agreement set forth in the SPAC SEC Reports, SPAC is not a party to any voting trusts, voting agreements, proxies, shareholder agreements or other agreements with respect to the voting or transfer of SPAC Class A Ordinary Shares or any of the Equity Interests or other securities of SPAC. Except with respect to the Redemption Rights and SPAC Warrants, there are no outstanding contractual obligations of SPAC to repurchase, redeem or otherwise acquire any SPAC Class A Ordinary Shares. There are no outstanding contractual obligations of SPAC to make any investment (in the form of a loan, capital contribution or otherwise) in any Person.
(d) As of the date of this Agreement, one common share of NewCo is issued and outstanding. At all times prior to the Company Amalgamation Effective Time, no other Equity Interests of NewCo shall be issued or outstanding. The outstanding common share of NewCo (i) is duly authorized, validly issued, fully paid and nonassessable, (ii) was issued and granted or allotted to SPAC, and is legally and beneficially owned by SPAC, free and clear of all Liens, options, rights of first offer and refusal, other than transfer restrictions under applicable securities Laws and the NewCo Organizational Documents and (iii) was issued and granted or allotted in compliance in all material respects with applicable securities Laws and other applicable Law and all preemptive rights and other requirements set forth in applicable Contracts to which NewCo is a party and the NewCo Organizational Documents.
Section 4.04 Authority Relative to This Agreement. Each of SPAC and NewCo has all necessary corporate or limited company power and authority to execute and deliver this Agreement and, subject to the receipt of SPAC Shareholder Approval and the NewCo Shareholder Approval, to perform its obligations hereunder and to consummate the Transactions. The execution and delivery of this Agreement by SPAC and NewCo and the consummation by SPAC and NewCo of the Transactions have been, subject to the receipt of SPAC Shareholder Approval and the NewCo Shareholder Approval, duly and validly authorized by all necessary corporate or limited company action and no other corporate or limited company proceedings on the part of SPAC or NewCo are necessary to authorize this Agreement or to consummate the Transactions (other than the SPAC Shareholders Meeting to be convened and the receipt of SPAC Shareholder Approval at the SPAC Shareholders Meeting and the NewCo Shareholder Approval). This Agreement has been duly and validly executed and delivered by SPAC and NewCo and, assuming due authorization, execution and delivery by the Company and Sio NewCo, constitutes a legal, valid and binding obligation of SPAC and NewCo enforceable against SPAC and NewCo in accordance with its terms subject to the Remedies Exceptions.
Section 4.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by each of SPAC and NewCo does not, and the performance of the Transactions by SPAC and NewCo will not, subject to receipt of SPAC Shareholder Approval and the NewCo Shareholder Approval, (i) conflict with or violate the SPAC Organizational Documents or the Sio NewCo Organizational Documents, (ii) assuming that all consents, approvals, authorizations, expiration or termination of waiting periods and other actions described in Section 4.05(b) have been obtained and all filings and obligations described in Section 4.05(b) have been made, conflict with or violate any Law applicable to SPAC or NewCo or by which any of their property or assets is bound or affected, or (iii) result in any breach of, or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien on any property or asset of SPAC or NewCo pursuant to, any note, bond, mortgage, indenture, Contract, lease, license, permit, franchise or other instrument or obligation to which SPAC or NewCo is a party or by which SPAC or NewCo or any asset or property is bound or affected, except, with respect to clauses (a)(ii) and (a)(iii), for any such conflicts, violations, breaches, defaults or other occurrences which would not have or reasonably be expected to have a SPAC Material Adverse Effect.
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(b) The execution and delivery of this Agreement by SPAC and NewCo does not, and the performance of the Transactions by SPAC and NewCo will not, require any consent, approval, authorization or permit of, or filing with or notification to, or expiration or termination of any waiting period by, any Governmental Authority, except (i) for applicable requirements, if any, of the Exchange Act, the Securities Act, Blue Sky Laws and Canadian securities Laws; (ii) in connection with the Domestication, the applicable requirements and required filing with and approval of the Registrar of Companies in the Cayman Islands in accordance with the Companies Act and the applicable requirements and required approval of the Alberta Corporate Registrar in accordance with the ABCA; (iii) receipt of the Interim Order and Final Order from the Court, the filing of any documents required by or in connection with obtaining the Final Order or the Interim Order, and filings required pursuant to the Plan of Arrangement and (iv) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not, individually or in the aggregate, have or reasonably be expected to have a SPAC Material Adverse Effect.
Section 4.06 Compliance. Neither SPAC nor NewCo is or has been in conflict with, or in default, breach or violation of (a) any Law applicable to SPAC or NewCo or by which any property or asset of SPAC or NewCo is bound or affected including Anti-Corruption Laws, Anti-Money Laundering Laws, and Sanctions, or (b) any note, bond, mortgage, indenture, Contract, lease, license, permit, franchise or other instrument or obligation to which SPAC or NewCo is a party or by which SPAC or NewCo or any property or asset of SPAC or NewCo is bound, except, in each case, for any such conflicts, defaults, breaches or violations that would not have or reasonably be expected to have a SPAC Material Adverse Effect. SPAC and NewCo are in possession of all material franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders of any Governmental Authority necessary for SPAC, and NewCo to own, lease and operate their respective properties or to carry on their respective businesses as they are now being conducted.
Section 4.07 SEC Filings; Financial Statements; Sarbanes-Oxley.
(a) SPAC has timely filed all forms, reports, schedules, statements and other documents, including any exhibits and schedules thereto, required to be filed or furnished by it with the Securities and Exchange Commission (the “SEC”) since October 22, 2021, together with any amendments, restatements or supplements thereto (collectively, the “SPAC SEC Reports”). SPAC has heretofore made available to the Company true and correct copies of all amendments and modifications that have not been filed by SPAC with the SEC to all agreements, documents and other instruments that previously had been filed by SPAC with the SEC and are currently in effect. As of their respective dates, and as of the date of any amendment or filing that superseded the initial filing, the SPAC SEC Reports (i) complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act and the Sarbanes-Oxley Act, and the rules and regulations promulgated thereunder, and (ii) did not, at the time they were filed, or, if amended, as of the date of such amendment, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, in the case of any SPAC SEC Report that is a registration statement, or include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in the case of any other SPAC SEC Report. Each director and executive officer of SPAC has filed with the SEC on a timely basis all documents required with respect to SPAC by Section 16(a) of the Exchange Act and the rules and regulations thereunder.
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(b) Each of the financial statements (including, in each case, any notes thereto) contained in the SPAC SEC Reports was prepared in accordance with GAAP (applied on a consistent basis) and Regulation S-X and Regulation S-K, as applicable, throughout the periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited financial statements, as permitted by Form 10-Q of the SEC) and each fairly presents, in all material respects, the financial position, results of operations, changes in shareholder equity and cash flows of SPAC as at the respective dates thereof and for the respective periods indicated therein (subject, in the case of unaudited statements, to normal and recurring year-end adjustments which have not had, and would not reasonably be expected to individually or in the aggregate be material). SPAC has no off-balance sheet arrangements that are not disclosed in the SPAC SEC Reports.
(c) Except as and to the extent set forth in the SPAC SEC Reports, SPAC does not have any liability or obligation of a nature (whether accrued, absolute, contingent or otherwise) required to be reflected on a balance sheet prepared in accordance with GAAP, except for (A) liabilities, debts and obligations that have arisen since the date of the most recent balance sheet included in the financial statements (including, in each case, any notes thereto) contained in the SPAC SEC Reports in the Ordinary Course; (B) liabilities, debts and obligations incurred in connection with the Transactions; and (C) liabilities for fees and expenses incurred in connection with the Transactions.
(d) Since its initial public offering, SPAC has complied in all material respects with the applicable listing and corporate governance rules and regulations of the New York Stock Exchange.
(e) SPAC has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 and Rule 15d-15 under the Exchange Act). Such disclosure controls and procedures are designed to ensure that material information relating to SPAC and other material information required to be disclosed by SPAC in the reports and other documents that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that all such material information is accumulated and communicated to SPAC’s principal executive officer and its principal financial officer as appropriate to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act. Such disclosure controls and procedures are effective in timely alerting SPAC’s principal executive officer and principal financial officer to material information required to be included in SPAC’s periodic reports required under the Exchange Act.
(f) SPAC maintains systems of internal control over financial reporting that are sufficient to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including policies and procedures sufficient to provide reasonable assurance: (i) that SPAC maintains records that in reasonable detail accurately and fairly reflect, in all material respects, its transactions and dispositions of assets; (ii) that transactions are recorded as necessary to permit the preparation of financial statements in conformity with GAAP; (iii) that receipts and expenditures are being made only in accordance with authorizations of management and its board of directors; and (iv) regarding prevention or timely detection of unauthorized acquisition, use or disposition of its assets that could have a material effect on its financial statements. SPAC has delivered to the Company a true and complete copy of any disclosure (or, if unwritten, a summary thereof) by any representative of SPAC to SPAC’s independent auditors relating to any material weaknesses in internal controls and any significant deficiencies in the design or operation of internal controls that would adversely affect the ability of SPAC to record, process, summarize and report financial data. SPAC has no knowledge of any fraud or whistle-blower allegations, whether or not material, that involve management or other employees or consultants who have or had a significant role in the internal control over financial reporting of SPAC. Since October 22, 2021, there have been no material changes in SPAC’s internal control over financial reporting.
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(g) There are no outstanding loans or other extensions of credit made by SPAC to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of SPAC, and SPAC has not taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.
(h) Neither SPAC (including any employee thereof) nor SPAC’s independent auditors has identified or been made aware of (i) any significant deficiency or material weakness in the system of internal accounting controls utilized by SPAC, (ii) any fraud, whether or not material, that involves SPAC’s management or other employees who have a role in the preparation of financial statements or the internal accounting controls utilized by SPAC or (iii) any claim or allegation regarding any of the foregoing.
(i) As of the date hereof, there are no outstanding comments from the SEC with respect to the SPAC SEC Reports. To the knowledge of SPAC, none of the SPAC SEC Reports filed on or prior to the date hereof is subject to ongoing SEC review or investigation as of the date hereof.
Section 4.08 Absence of Certain Changes or Events.
(a) NewCo was formed on October 20, 2023, solely for the purpose of engaging in the Transactions and is, and will be at all times prior to the Company Amalgamation, wholly owned by SPAC or New SPAC. Since the date of its organization, NewCo has not engaged, and at all times prior to the Company Amalgamation will not engage, in any activities other than the execution of this Agreement and the other Transaction Documents to which NewCo is party, the performance of its obligations hereunder and thereunder in furtherance of the Transactions, and matters ancillary thereto. NewCo does not have, and prior to the Company Amalgamation will not have, any operations, assets, liabilities or obligations of any nature other than those incurred in connection with its formation and pursuant to this Agreement and the Transactions.
(b) Since October 22, 2021 and prior to the date of this Agreement, except as expressly contemplated by this Agreement, (i) SPAC has conducted its business in all material respects in the Ordinary Course, (ii) there has not been a SPAC Material Adverse Effect, and (iii) SPAC has not taken any action that, if taken after the date of this Agreement, would constitute a material breach of any of the covenants sets forth in Section 5.02.
Section 4.09 Absence of Litigation. There is no Action pending or, to the knowledge of SPAC, threatened against SPAC or NewCo, or any property or asset of SPAC, or NewCo. Neither SPAC nor NewCo nor any material property or asset of SPAC or NewCo is subject to any material continuing order of, consent decree, settlement agreement or other similar written agreement with or, to the knowledge of SPAC, continuing investigation by, any Governmental Authority or any material order, writ, judgement, injunction, decree, determination or award of any Governmental Authority.
Section 4.10 Board Approval; Vote Required.
(a) The SPAC Board has made available to the Company a complete and correct copy of the resolutions of the SPAC Board in respect of the Transactions, which such resolutions were duly adopted by written consent and have not been subsequently rescinded or modified in any way. The only vote of the holders of any class or series of share capital of SPAC necessary to approve the Transactions is SPAC Shareholder Approval.
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(b) NewCo has made available to the Company a complete and correct copy of the resolutions of the NewCo Board, in respect of the Transactions, which such resolutions were duly adopted by written consent and have not been subsequently rescinded or modified in any way. The only vote of the holders of any interest of NewCo necessary to adopt this Agreement and the Plan of Arrangement and approve the Transactions is the affirmative vote or prior written consent of the sole shareholder of NewCo as at the date hereof (the “NewCo Shareholder Approval”).
Section 4.11 Brokers. Except as set forth on Section 4.11 of the SPAC Disclosure Schedule, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of SPAC or NewCo.
Section 4.12 SPAC Trust Account. As of the date of this Agreement, SPAC has no less than $97,766,636.83 in the trust account established by SPAC for the benefit of its public shareholders (including, if applicable, an aggregate of approximately $8,443,750 of Deferred Underwriting Fees) maintained at J.P. Morgan Chase Bank, N.A. (the “Trust Account”). The monies of such Trust Account are invested in United States Government securities or money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 and held in trust by Continental Stock Transfer & Trust Company (the “Trustee”) pursuant to the Investment Management Trust Agreement, dated as of October 26, 2021, between SPAC and the Trustee (the “Trust Agreement”). The Trust Agreement has not been amended or modified and is valid and in full force and effect and is enforceable in accordance with its terms, subject to the Remedies Exceptions. SPAC has complied in all material respects with the terms of the Trust Agreement and is not in breach thereof or default thereunder and there does not exist any event which, with the giving of notice or the lapse of time, would constitute such a breach or default by SPAC or the Trustee. There are no separate Contracts, side letters or other agreements or understandings (whether written or unwritten, express or implied): (i) between SPAC and the Trustee that would cause the description of the Trust Agreement in the SPAC SEC Reports to be inaccurate in any material respect; or (ii) that would entitle any Person (other than the public shareholders of SPAC who shall have elected to redeem their public shares pursuant to the SPAC Organizational Documents and the underwriters of SPAC’s initial public offering) to any portion of the proceeds in the Trust Account. Prior to the Closing, none of the funds held in the Trust Account may be released except: (A) to pay any Taxes owed by SPAC as a result of assets of SPAC or interest or other income earned on the assets of SPAC; and (B) upon the exercise of Redemption Rights in accordance with the provisions of the SPAC Organizational Documents. To SPAC’s knowledge, as of the date of this Agreement, following the Closing, no shareholder of SPAC shall be entitled to receive any amount from the Trust Account except to the extent such shareholder has exercised its Redemption Rights. There are no Actions pending or, to the knowledge of SPAC, threatened in writing with respect to the Trust Account. Upon consummation of the Transactions and notice thereof to the Trustee pursuant to the Trust Agreement, SPAC shall cause the Trustee to, and the Trustee shall thereupon be obligated to, release to SPAC as promptly as practicable, the funds in the Trust Account in accordance with the Trust Agreement at which point the Trust Account shall terminate; provided, however, that the liabilities and obligations of SPAC due and owing or incurred at or prior to the Closing shall be paid as and when due, including all amounts payable (a) to shareholders of SPAC who shall have exercised their Redemption Rights, (b) with respect to filings, applications and/or other actions taken pursuant to this Agreement required under Law, (c) to the Trustee for fees and costs incurred in accordance with the Trust Agreement, and (d) to third parties (e.g., professionals, printers, etc.) who have rendered services to SPAC in connection with its efforts to effect the Transactions. SPAC has no reason to believe that any of the conditions to the use of funds in the Trust Account will not be satisfied or funds available in the Trust Account will not be available to SPAC at the Closing.
Section 4.13 Employees. Other than any officers as described in the SPAC SEC Reports, SPAC and NewCo have no, and have never had any, employees on their payroll, and have not retained any contractors, other than consultants and advisors in the Ordinary Course. Other than reimbursement of any out-of-pocket expenses incurred by SPAC’s officers and directors in connection with activities on SPAC’s behalf in an aggregate amount not in excess of the amount of cash held by SPAC outside of the Trust Account, SPAC and NewCo have no unsatisfied material liability with respect to any officer or director. SPAC and NewCo have never and do not currently maintain, sponsor, or contribute to any Employee Benefit Plan.
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Section 4.14 Taxes.
(a) All material Tax Returns required to be filed by (or with respect to) SPAC have been duly and timely filed (taking into account any valid extension of time to file), and all such Tax Returns are true, correct and complete in all material respects. All material Taxes due and payable by (or with respect to) SPAC, or for which SPAC may be liable, have been timely paid in full to the appropriate Taxing Authority. All material Taxes which are not yet due and payable have been (i) for periods covered by SPAC’s financial statements, adequately accrued and reserved on SPAC’s financial statements in accordance with GAAP, and (ii) for periods not covered by SPAC’s financial statements, accrued on the books and records of SPAC, in each case as of the date of this Agreement. SPAC has withheld and paid to the appropriate Taxing Authority all material Taxes required to have been withheld and paid in connection with any amounts paid or owing to any current or former employee, independent contractor, creditor, equity holder or other Person, and has complied in all material respects with all applicable Law relating to the withholding and remittance and related reporting requirements with respect to such Taxes. SPAC has collected all material sales, use, employment, value added, goods and services, and similar Taxes required to be collected and timely remitted all such Taxes collected to the appropriate Taxing Authority in accordance with applicable Law. SPAC has not taken advantage of any Law enacted in connection with COVID-19 that has the result of temporarily reducing (or temporarily delaying the due date of) any material payment obligation of SPAC to any Taxing Authority.
(b) Other than as a beneficiary thereto, SPAC is not a party to, or bound by, any Tax indemnity, Tax sharing or Tax allocation agreement or similar Contract (other than any such Contract entered into in the Ordinary Course and not primarily relating to Taxes).
(c) SPAC will not be required to include any material item of income in, or exclude any material item of deduction or loss from, taxable income, or make any adjustment under Section 481 of the Code (or any similar provision of state, local or non-U.S. Law), for any Tax period (or portion thereof) beginning after the Closing Date (or, in the case of any taxable period beginning on or before and ending after the Closing Date, the portion of such period beginning after the Closing Date) as a result of any: (i) change in method of accounting made prior to the Closing, including by reason of the application of Section 481 of the Code (or any analogous provision of state, local or foreign Law); (ii) settlement or other agreement with any Taxing Authority made prior to the Closing; (iii) disposition made, payment received or deferred revenue recognized prior to the Closing; or (iv) transaction occurring prior to the Closing between or among members of any affiliated, consolidated, combined or unitary group for U.S. federal, state, local or non-U.S. Tax purposes of which SPAC is or was a member.
(d) SPAC has not been a member of an affiliated, consolidated, combined or unitary group for U.S. federal, state, local or non-U.S. Tax purposes. SPAC does not have any liability for the Taxes of any Person (other than SPAC) as a result of being a member of a consolidated group, fiscal unity or unified group (including pursuant to Treasury Regulations Section 1.1502-6 or any similar provision of state, local or non-U.S. Law), as a transferee or successor, by Contract (other than any such Contract entered into in the Ordinary Course and not primarily relating to Taxes) or otherwise.
(e) SPAC is not a party to any material ruling or similar agreement or arrangement with a Governmental Authority, and SPAC has no request for a material ruling in respect of Taxes pending between it and any Governmental Authority.
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(f) No audit, examination, investigation, litigation or other administrative or judicial proceeding in respect of Taxes or Tax matters is pending, being conducted or has been announced or threatened in writing with respect to SPAC (and, to the knowledge of SPAC, no such audit, examination, investigation, litigation or other administrative or judicial proceeding is contemplated). There is no outstanding claim, assessment, deficiency or proposed adjustment against SPAC for any material amount of Taxes, and no such claim, assessment or deficiency has been asserted or threatened in writing or, to the knowledge of SPAC, is contemplated by any Taxing Authority.
(g) SPAC has not waived any statute of limitations with respect to Taxes or agreed to any extension of time with respect to the assessment or collection of any Tax, other than in the Ordinary Course or for automatic extensions of time to file income Tax Returns.
(h) There are no Liens or encumbrances for Taxes upon any of the assets of SPAC except for Permitted Liens.
(i) SPAC has not received written notice of any claim from a Taxing Authority in a jurisdiction in which SPAC does not file Tax Returns stating that SPAC is or may be subject to Tax in such jurisdiction.
(j) To the knowledge of SPAC, SPAC is not subject to Tax in any country other than its country of incorporation, organization or formation by virtue of having employees, a permanent establishment, other place of business or similar presence in that country.
(k) SPAC is in material compliance with all terms and conditions of any Tax Incentives and the consummation of the Transactions will not have any adverse effect on the continued validity and effectiveness of any such Tax Incentive.
(l) SPAC has not participated in a “reportable transaction” within the meaning of Treasury Regulation 1.6011-4(b) (or any corresponding or similar provision of state, local or non-U.S. Law).
(m) None of Sections 80 to 80.04, both inclusive, of the Canadian Tax Act have applied or will apply to SPAC. SPAC has no material unpaid amounts that may be required to be included in income under Section 78 of the Canadian Tax Act.
(n) SPAC has not acquired property from any Person in circumstances where SPAC did or could have become liable for any Taxes payable by that Person pursuant to Section 160 of the Canadian Tax Act.
(o) SPAC has not taken any action that could reasonably be expected to prevent the applicable elements of the Transactions from qualifying for the Intended Tax Treatment, provided the foregoing representation will not prevent SPAC from taking any actions required by this Agreement or any Ancillary Agreement. To SPAC’s knowledge, as of the date hereof, there are not any facts or circumstances that could reasonably be expected to prevent the applicable elements of the Transactions from qualifying for the Intended Tax Treatment, provided the foregoing representation will not prevent SPAC from taking any actions required by this Agreement or any Ancillary Agreement.
(p) On the Closing Date, SPAC will be a “taxable Canadian corporation” as that term is defined in the Canadian Tax Act.
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Section 4.15 Registration and Listing. The issued and outstanding SPAC Units are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on the New York Stock Exchange under the symbol “PHYT. U”. The issued and outstanding SPAC Class A Ordinary Shares are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on the New York Stock Exchange under the symbol “PHYT”. The issued and outstanding SPAC Warrants are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on the New York Stock Exchange under the symbol “PHYT WS”. As of the date of this Agreement, there is no Action pending or, to the knowledge of SPAC, threatened in writing against SPAC by the New York Stock Exchange or the SEC with respect to any intention by such entity to deregister SPAC Units, SPAC Class A Ordinary Shares, or SPAC Warrants or terminate the listing of SPAC on the New York Stock Exchange. Other than the Transactions, none of SPAC or any of its Affiliates has taken any action in an attempt to terminate the registration of SPAC Units, SPAC Class A Ordinary Shares, or SPAC Warrants under the Exchange Act.
Section 4.16 Business Activities; Assets. Since its incorporation, SPAC has not conducted any business activities other than activities (a) in connection with or incident or related to its incorporation or continuing corporate (or similar) existence, (b) directed toward the accomplishment of a business combination, including those incident or related to or incurred in connection with the negotiation, preparation or execution of this Agreement or any Ancillary Agreements, the performance of its covenants or agreements in this Agreement or any Ancillary Agreement or the consummation of the Transactions or (c) those that are administrative, ministerial or otherwise immaterial in nature. Except as set forth in the SPAC Organizational Documents, there is no Contract binding upon SPAC or to which SPAC is a party which has or would reasonably be expected to have the effect of prohibiting or materially impairing any business practice of it or its Subsidiaries, any acquisition of property by it or its Subsidiaries or the conduct of business by it or its Subsidiaries (including, in each case, following the Closing). SPAC does not own any real property. SPAC does not own any material property or assets, other than its interest in the Trust Account. All property and assets owned by SPAC is owned free and clear of any Lien.
Section 4.17 Material Contracts.
(a) Section 4.17 of the SPAC Disclosure Schedule lists, as of the date of this Agreement, lists all material Contracts to which SPAC is a party or by which SPAC or any of its assets or properties is bound, including without limitation any the following types of Contracts to which SPAC is a party or bound (such Contracts as are required to be set forth on Section 4.17 of the SPAC Disclosure Schedule being the “SPAC Material Contracts”):
(i) each Contract to which SPAC is a party (other than this Agreement) that is of a type that would be required to be included as an exhibit to a registration statement on Form S-1 pursuant to Items 601(b)(2), (4), (9) or (10) of Regulation S-K promulgated under the Securities Act if such a registration statement was filed by SPAC on the date of this Agreement;
(ii) each Contract with any of the Affiliates of SPAC;
(iii) all Contracts evidencing Indebtedness, and any pledge agreements, security agreements or other collateral agreements in which SPAC granted to any Person a security interest in or Lien on any of the material property or assets of SPAC, and all Contracts guarantying the debts or other obligations of any Person;
(iv) all Contracts that limit, or purport to limit, the ability of SPAC to compete in any line of business or with any Person or entity or in any geographic area or during any period of time, excluding customary confidentiality agreements and Contracts that contain customary confidentiality clauses;
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(v) all Contracts relating to a SPAC Interested Party Transaction; and
(vi) all Contracts involving any resolution or settlement of any actual or threatened Action or other dispute which require payment in excess of $100,000 or impose continuing obligations on SPAC, including injunctive or other non-monetary relief.
(b) (i) Each SPAC Material Contract is a legal, valid and binding obligation of SPAC and, to the knowledge of SPAC, the other parties thereto, and SPAC is not in breach or violation of, or default under, any SPAC Material Contract nor has any SPAC Material Contract been canceled by the other party; (ii) to SPAC’s knowledge, no other party is in breach or violation of, or default under, any SPAC Material Contract; and (iii) SPAC has not received any written, or to the knowledge of SPAC, oral claim of default under any such SPAC Material Contract, except for any such conflicts, violations, breaches, defaults or other occurrences which would not be expected to result in a SPAC Material Adverse Effect. No party to a SPAC Material Contract has given written notice of or, to the knowledge of SPAC, threatened (i) any potential exercise of termination rights with respect to any SPAC Material Contract or (ii) any non-renewal or modification of any SPAC Material Contract.
(c) SPAC has furnished or made available to the Company true and complete copies of all SPAC Material Contracts, including amendments thereto that are material in nature.
Section 4.18 Certain Business Practices.
(a) Neither SPAC nor, to the knowledge of SPAC, any of its officers, directors, employees or, to the knowledge of SPAC, any other agent acting on behalf of SPAC, is currently violating or, during the past five (5) years, violated, whether directly or indirectly, any applicable Sanctions or Ex-Im Laws. Neither SPAC nor any of its officers, directors, or employees, nor, to the knowledge of SPAC, any other agent acting on behalf of SPAC, is currently, or has been in the last five (5) years: (i) a Sanctioned Person; or (ii) engaging in dealings with any Sanctioned Person, to the extent such activities violate applicable Sanctions or Ex-Im Laws. There are not now and have not been in the last five (5) years any proceedings, investigations, or disclosures by or before any Governmental Authority involving SPAC or, to SPAC’s knowledge, any of its directors or officers, relating to Sanctions or Ex-Im Laws nor, to SPAC’s knowledge, is such a proceeding, investigation, or disclosure pending or threatened.
(b) Neither SPAC nor, to the knowledge of SPAC, any of its directors or officers have in the past five (5) years directly or indirectly offered, paid, promised to pay or authorized the payment of anything of value, including cash, checks, wire transfers, tangible or intangible gifts, favors, entertainment or services (including any facilitation payments) to any Person, including any Government Official, or any employee or representative of a Governmental Authority, or any Person acting for or on behalf of any Government Official while knowing (as defined in the FCPA) or having reason to know that all or some portion would be used for the purpose of: (a) influencing any act or decision of a Government Official or other person, including a decision to fail to perform official functions; (b) inducing any Government Official or other person to do or omit to do any act in violation of the lawful duty of such official; or (c) inducing any Government Official to use influence with any government, department, agency or instrumentality in order to assist SPAC or any other Person in obtaining or retaining business with, or directing business to any Person or otherwise securing for any Person an improper advantage.
(c) There have been no demands, claims, actions, legal proceedings or investigations by or before any Governmental Authority or any arbitrator involving SPAC or, to its knowledge, its directors or officers relating to the Anti-Corruption Laws in the past five (5) years nor are there any pending or, to the knowledge of SPAC, threatened in writing. In the past five (5) years, no civil, criminal or administrative penalties have been imposed on SPAC with respect to violations of applicable Anti-Corruption Laws, or applicable Anti-Money Laundering Laws, nor have any disclosures been submitted to any other Governmental Authority with respect to violations of such laws.
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(d) SPAC has conducted its business in compliance with applicable Anti-Corruption Laws and Anti-Money Laundering Laws and have instituted and maintain policies and procedures designed to promote and achieve compliance with such laws.
(e) The operations of SPAC is and has been conducted in material compliance with all Anti-Money Laundering Laws and Sanctions. SPAC and, to its knowledge, its directors and officers have not knowingly falsified any entry in any book, record or account of SPAC, and all such entries fairly and accurately reflect the relevant transactions and dispositions of SPAC’s assets in reasonable detail.
(f) No director or officer of SPAC is a Government Official.
Section 4.19 Interested Party Transactions.
(a) Except for the payment of compensation, benefits and expense reimbursements and advances in the Ordinary Course, no director, officer or other Affiliate of SPAC has or has had, directly or indirectly: (i) an economic interest in any Person that has furnished or sold, or furnishes or sells, services or products that SPAC furnishes or sells, or proposes to furnish or sell; (ii) an economic interest in any Person that purchases from or sells or furnishes to, SPAC, any goods or services; (iii) a beneficial interest in any Material Contract; or (iv) any contractual or other arrangement with SPAC (including any “preferred pricing” or similar benefit enjoyed by SPAC as a result of any such affiliation) (each such transaction, a “SPAC Interested Party Transaction”). The Company has not, since incorporation, (x) extended or maintained credit, arranged for the extension of credit or renewed an extension of credit in the form of a personal loan to or for any director or executive officer (or equivalent thereof) of SPAC; or (y) materially modified any term of any such extension or maintenance of credit. There are no contracts or arrangements between SPAC on the one hand and any immediate family member of any director, officer of SPAC on the other hand.
(b) There are no transactions, Contracts, arrangements or understandings between SPAC, on the one hand, and any other Person, on the other hand, which grant or purport to grant any board observer or management rights.
Section 4.20 Solvency. SPAC is not the subject of an Insolvency Event and, to the knowledge of SPAC, there are no circumstances that justify SPAC being the subject of an Insolvency Event.
Section 4.21 Sexual Harassment and Misconduct. (a) SPAC has not entered into a settlement agreement with a current or former officer or director of SPAC, resolving allegations of sexual harassment or other misconduct by an officer or director of SPAC, and (b) there are no and, since the formation of SPAC, there have not been any Actions pending or, to the knowledge of SPAC, threatened, against SPAC, in each case, involving allegations of sexual harassment or other misconduct by an officer or director of SPAC.
Section 4.22 Records.
(a) The records of SPAC: (i) are in the possession or under the control of SPAC; (ii) have been properly maintained in all material respects in accordance with all applicable Laws of the Cayman Islands or any other jurisdiction in which SPAC operates; (iii) do not contain any material inaccuracies; and (iv) include all material information required or under, or to comply in all material respects with, or to support any filing made or required to be made under, any applicable Law in the Cayman Islands or any other jurisdiction in which SPAC operates.
(b) Each material document or filing which is required by Law to have been delivered or made to any Governmental Authority by SPAC has been duly delivered or made.
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Section 4.23 Insurance.
(a) Section 4.23 of the SPAC Disclosure Schedule sets forth, with respect to each material insurance policy under which SPAC is an insured (the “SPAC Insurance Policies”), a named insured or otherwise the principal beneficiary of coverage as of the date of this Agreement, (i) the names of the insurer, the principal insured and each named insured; (ii) the policy number; (iii) the period, scope and amount of coverage; and (iv) the premium most recently charged.
(b) With respect to each such SPAC Insurance Policy, except as would not be expected to result in a SPAC Material Adverse Effect: (i) the policy is legal, valid, binding and enforceable in accordance with its terms (subject to the Remedies Exceptions) and, except for policies that have expired under their terms in the Ordinary Course, is in full force and effect; (ii) SPAC is not in material breach or default (including any such breach or default with respect to the payment of premiums or the giving of notice), and no event has occurred which, with notice or the lapse of time, would constitute such a breach or default, or permit termination or modification, under the policy; and (iii) to the knowledge of SPAC, no insurer on the policy has been declared insolvent or placed in receivership, conservatorship or liquidation.
Section 4.24 SPAC’s and NewCo’s Independent Investigation and Reliance. Each of SPAC and NewCo is a sophisticated purchaser and has made its own independent investigation, review and analysis regarding the Company and the Transactions, which investigation, review and analysis were conducted by SPAC and NewCo together with expert advisors, including legal counsel, that they have engaged for such purpose. SPAC and NewCo and its Representatives have been provided with full and complete access to the Representatives, properties, offices, plants and other facilities, books and records of the Company and other information that they have requested in connection with their investigation of the Company and the Transactions. None of SPAC or NewCo is relying on any statement, representation or warranty, oral or written, express or implied, made by the Company or any of its Representatives, except as expressly set forth in Article III (as modified by the Company Disclosure Schedule), in the Transaction Documents or in the corresponding representations and warranties contained in the certificate delivered pursuant to Section 7.02, and each of SPAC and NewCo specifically disclaims that it is relying upon or has relied upon any such other representations or warranties that may have been made by any Person, and acknowledges and agrees that the Company and Sio NewCo have specifically disclaimed and do hereby specifically disclaim any such other representation or warranty made by any Person. None of the Company, Sio NewCo, nor any of their respective shareholders, Affiliates or Representatives shall have any liability to SPAC, NewCo or any of their respective shareholders, Affiliates or Representatives resulting from the use of any information, documents or materials made available to SPAC, NewCo or any of their Representatives, whether orally or in writing, in any confidential information memoranda, “data rooms,” management presentations, due diligence discussions or in any other form in expectation of the Transactions, except as expressly set forth in this Agreement (as modified by the Company Disclosure Schedule), the Transaction Documents or in any certificate delivered by the Company pursuant to this Agreement. SPAC and NewCo acknowledge that, except as expressly set forth in this Agreement (as modified by the Company Disclosure Schedule) or any certificate delivered by the Company pursuant to this Agreement, none of the Company, Sio NewCo, nor any of their respective shareholders, Affiliates or Representatives is making, directly or indirectly, any representation or warranty with respect to any estimates, projections or forecasts involving the Company.
Section 4.25 Investment Canada Act. SPAC is a “trade agreement investor” and is not a “state-owned enterprise” as such terms are defined in the Investment Canada Act.
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Article
V
CONDUCT OF BUSINESS
Section 5.01 Conduct of Business by the Company.
(a) The Company agrees that it shall, and shall cause Sio NewCo to, during the period from the date of this Agreement and continuing until the earlier of (x) the Closing and (y) the valid termination of this Agreement pursuant to Section 8.01 (the “Interim Period”), except (1) as may be required or expressly contemplated by any other provision of this Agreement or any Ancillary Agreement, (2) as set forth in Section 5.01 of the Company Disclosure Schedule, (3) as required by applicable Law (including as may be requested or compelled by any Governmental Authority) (provided that prior to taking any material actions that the Company intends to take, to the extent the Company intends to take such actions in reliance on this clause (3), the Company shall use reasonable best efforts to provide advance notice to and consult with SPAC (if reasonably practicable) prior to taking such actions), or (4) to the extent that SPAC shall otherwise consent in writing (which consent shall not be unreasonably conditioned, withheld or delayed); provided that SPAC shall be deemed to have consented in writing if it provides no response within seven (7) days after the Company has made a request for such consent in writing:
(i) conduct its business in the Ordinary Course; and
(ii) use its reasonable best efforts to preserve substantially intact the business organization of the Company, to keep available the services of the current officers, key employees, service partners and consultants of the Company, to preserve the current relationships of the Company with customers, Suppliers and other Persons with which the Company has significant business relations, and to maintain in effect all Mineral Rights, Leased Real Property and Company Permits and Insurance Policies (in such amounts and with such deductibles as are currently maintained).
(b) By way of amplification and not limitation, except (1) as may be required or expressly contemplated by any other provision of this Agreement or any Ancillary Agreement, (2) as set forth in Section 5.01 of the Company Disclosure Schedule, (3) as required by applicable Law (including as may be requested or compelled by any Governmental Authority), and (4) for any actions taken reasonably and in good faith to respond to Emergency Actions (provided that prior to taking any material actions that the Company intends to take, to the extent the Company intends to take such actions in reliance on this clause (4), the Company shall use, and shall cause Sio NewCo to use, reasonable best efforts to provide advance notice to and consult with SPAC (if reasonably practicable), prior to taking such actions and shall otherwise promptly inform SPAC upon taking any such action), the Company shall not, and shall cause Sio NewCo not to, during the Interim Period, directly or indirectly, do any of the following without the prior written consent of SPAC (which consent shall not be unreasonably conditioned, withheld or delayed), provided that SPAC shall be deemed to have consented in writing if it provides no response within five (5) Business Days after the Company has made a request for such consent in writing:
(i) amend or otherwise change any organizational documents of the Company or Sio NewCo;
(ii) adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or Sio NewCo;
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(iii) other than (1) the issuance of Company Common Shares in an aggregate amount of up to $10,000,000 (the “Interim Company Shares”) and (2) entering into subscription agreements with one or more investors, pursuant to which, among other things, Sio NewCo will issue and sell to each such investor on the Closing Date (after giving effect to the SPAC Amalgamation) a number of flow-through New SPAC Class A Common Shares (the “Flow-Through Shares”) as set forth in each such subscription agreement in an aggregate amount of up to $10,000,000, issue, sell, pledge, dispose of, grant or encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of, (A) any Equity Interests of the Company or Sio NewCo, or any options, warrants, convertible securities or other rights of any kind to acquire any Equity Interest (including, without limitation, any phantom interest), of the Company or Sio NewCo; or (B) any material assets of the Company or Sio NewCo, other than pursuant to the exercise or settlement (as applicable) of Company Options, Company RSUs or Company Warrants, that are outstanding as of the date of this Agreement in accordance with their terms;
(iv) form any Subsidiary or acquire any Equity Interest or other interest in any other entity or enter into a joint venture with any other entity;
(v) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock or shares, property or otherwise, with respect to any of its Equity Interests;
(vi) reclassify, combine, consolidate, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its Equity Interests other than purchases of Company Common Shares in satisfaction of the payment of the exercise price or tax withholdings upon the exercise or vesting of Company Options or Company RSUs in accordance with their terms;
(vii) (A) acquire (including without limitation, by merger, consolidation or acquisition of stock or shares or substantially all of the assets or any other business combination) any corporation, partnership, other business organization or any division thereof; (B) other than incurring Indebtedness of up to, in the aggregate, three million dollars ($3,000,000), incur any Indebtedness or issue any debt securities or assume, guarantee or endorse, or otherwise become responsible for, the obligations of any Person, or make any loans or advances other than the reimbursement of expenses of employees in the Ordinary Course, or intentionally grant any security interest in any of its assets; or (C) merge, consolidate, combine or amalgamate with any Person;
(viii) other than in the Ordinary Course, as required under the terms of any Employee Benefit Plan in effect on the date hereof (or any Employee Benefit Plan adopted or amended after the date hereof in accordance with this Agreement) or as contemplated by clause (a) above, (A) grant any increase in the compensation, incentives or benefits payable or to become payable to any current or former director, officer, employee or independent contractor receiving annual compensation equal to or greater than $100,000, (B) enter into any new or materially amend any existing, employment, retention, bonus, change in control, severance, redundancy or termination agreement with any current or former director, officer, employee or independent contractor receiving annual compensation equal to or greater than $100,000, (C) accelerate or commit to accelerate the funding, payment, or vesting of any compensation or benefits to any current or former director, officer, employee or independent contractor, (D) establish or become obligated under any collective bargaining agreement, collective agreement, or other Contract with a labor union, trade union, works council, industrial organization, or similar representative of employees; (E) hire any new employees holding an executive position; or (E) transfer or terminate the employment or engagement of any employee holding an executive position other than any such termination for cause;
(ix) adopt, amend and/or terminate any material Employee Benefit Plan except as may be required by applicable Law, or is necessary in order to consummate the Transactions, or health and welfare plan renewals in the Ordinary Course;
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(x) make any change in any method of financial accounting or financial accounting principles, policies, procedures or practices, except as required by a concurrent amendment in IFRS or applicable Law made subsequent to the date hereof, as agreed to by its independent accountants, or in the Ordinary Course;
(xi) (A) amend any material Tax Return, (B) change any material method of Tax accounting, (C) make, change or rescind any material election relating to Taxes, (D) settle or compromise any Tax audit, assessment, Tax claim or other controversy relating to a material amount of Taxes, (E) enter into any “closing agreement” as described in Section 7121 of the Code (or any similar provision of state, local or non-U.S. Law) in respect of a material amount of Taxes or enter into any Tax sharing or similar agreement (other than customary commercial Contracts entered into in the ordinary course of business not primarily related to Taxes), (F) surrender or allow to expire any right to claim a refund of Taxes, (G) extend or waive any statute of limitations applicable to any period within which a claim, assessment or reassessment of a material amount of Taxes may be issued or in respect of any material Tax attribute that would reasonably be expected to give rise to any claim or assessment of Taxes, (H) incur any liability for Taxes other than in the ordinary course of business, or (I) prepare any Tax Return in a manner inconsistent with past practice;
(xii) other than in the Ordinary Course, (A) amend, or modify or consent to the termination (excluding any expiration in accordance with its terms) of, any Material Contract or amend, waive, modify or consent to the termination (excluding any expiration in accordance with its terms) of the Company’s material rights thereunder, or (B) enter into any Contract that would have been a Material Contract had it been entered into prior to the date of this Agreement;
(xiii) materially amend or modify any Mineral Right or terminate any Mineral Right or Company Permit;
(xiv) other than in the Ordinary Course, allow to lapse, abandon, fail to maintain the existence of, or fail to use commercially reasonable efforts to protect, its interest in, and the existence and enforceability of, Company-Owned IP to the extent such Company-Owned IP remains material to the conduct of the businesses of the Company;
(xv) enter into any material new line of business outside of the business currently conducted by the Company as of the date of this Agreement;
(xvi) voluntarily fail to maintain, cancel or materially change coverage under any material insurance policy in form and amount equivalent in all material respects to the insurance coverage currently maintained with respect to the Company and its assets and properties;
(xvii) fail to keep current and in full force and effect, or to comply in all material respects with the requirements of, any Company Permit that is material to the conduct of the business of the Company as currently conducted;
(xviii) waive, release, assign, settle or compromise any Action, other than waivers, releases, assignments, settlements or compromises that are solely monetary in nature and do not exceed $100,000 individually or $500,000 in the aggregate; or
(xix) enter into any formal or informal agreement or otherwise make a binding commitment to do any of the foregoing.
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Nothing herein shall require the Company or Sio NewCo to obtain consent from SPAC to do any of the foregoing if obtaining such consent might reasonably be expected to violate applicable Law, and nothing contained in this Section 5.01 shall give to SPAC, directly or indirectly, the right to control or direct the ordinary course of business operations of the Company prior to the Closing Date. Prior to the Closing Date, each of SPAC and the Company shall exercise, consistent with the terms and conditions hereof, complete control and supervision of its respective operations, as required by Law.
Section 5.02 Conduct of Business by SPAC. Except as expressly contemplated by any other provision of this Agreement or any Ancillary Agreement and except as required by applicable Law (including as may be requested or compelled by any Governmental Authority), SPAC agrees that during the Interim Period, unless the Company shall otherwise consent in writing (which consent shall not be unreasonably withheld, delayed or conditioned), the businesses of SPAC and NewCo shall be conducted in the Ordinary Course. By way of amplification and not limitation, except as expressly contemplated by any other provision of this Agreement or any Ancillary Agreement and as required by applicable Law (including as may be requested or compelled by any Governmental Authority), SPAC shall not, and SPAC shall cause NewCo not to, during the Interim Period, directly or indirectly, do any of the following without the prior written consent of the Company, which consent shall not be unreasonably withheld, delayed or conditioned:
(i) amend or otherwise change the SPAC Organizational Documents or the NewCo Organizational Documents (other than as necessary to effectuate a SPAC Extension);
(ii) adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of SPAC or NewCo, except as required by the SPAC Organizational Documents;
(iii) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock or shares, property or otherwise, with respect to any of its Equity Interests, other than redemptions from the funds in the Trust Account that are required pursuant to the SPAC Organizational Documents;
(iv) reclassify, combine, consolidate, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of any of its Equity Interests or any Equity Interests in NewCo, except for redemptions from the funds in the Trust Account;
(v) form any Subsidiary or acquire any Equity Interest or other interest in any other entity or enter into a joint venture with any other entity;
(vi) issue, sell, pledge, dispose of, grant or encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of, any Equity Interests or other securities of SPAC or NewCo, or any options, warrants, convertible securities or other rights of any kind to acquire any Equity Interests or any other ownership interest (including, without limitation, any phantom interest), of SPAC or NewCo, except in connection with a loan from the Sponsor or an Affiliate thereof or certain of SPAC’s officers and directors to finance the SPAC Transaction Expenses;
(vii) (A) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or shares or substantially all of the assets or any other business combination) any corporation, partnership, other business organization or any division thereof or enter into any strategic joint ventures, partnerships or alliances with any other Person, or (B) merge, consolidate, combine or amalgamate with any Person or authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation, dissolution or winding-up, except as required by the SPAC Organizational Documents;
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(viii) incur any Indebtedness or assume, guarantee or endorse, or otherwise become responsible for, the obligations of any Person or Persons, issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of SPAC or NewCo, as applicable, or enter into any “keep well” or other agreement to maintain any financial statement condition or enter into any arrangement having the economic effect of any of the foregoing, in each case, except a loan from the Sponsor or an Affiliate thereof or certain of SPAC’s officers and directors to finance the SPAC Transaction Expenses;
(ix) merge, consolidate, combine or amalgamate with any Person;
(x) make any change in any method of financial accounting or financial accounting principles, policies, procedures or practices, except as required by a concurrent amendment in GAAP or applicable Law made subsequent to the date hereof, as agreed to by its independent accountants;
(xi) (A) amend any material Tax Return, (B) change any material method of Tax accounting, (C) make, change or rescind any material election relating to Taxes, (D) settle or compromise any Tax audit, assessment, Tax claim or other controversy relating to a material amount of Taxes, (E) enter into any “closing agreement” as described in Section 7121 of the Code (or any similar provision of state, local or non-U.S. Law) in respect of a material amount of Taxes or enter into any Tax sharing or similar agreement (other than customary commercial Contracts entered into in the ordinary course of business not primarily related to Taxes), (F) surrender or allow to expire any right to claim a refund of Taxes, (G) extend or waive any statute of limitations applicable to any period within which a claim, assessment or reassessment of a material amount of Taxes may be issued or in respect of any material Tax attribute that would reasonably be expected to give rise to any claim or assessment of Taxes, (H) incur any liability for Taxes other than in the ordinary course of business; or (I) prepare any Tax Return in a manner inconsistent with past practice;
(xii) amend the Trust Agreement or any other agreement related to the Trust Account;
(xiii) other than in the Ordinary Course, (A) amend, or modify or consent to the termination (excluding any expiration in accordance with its terms) of any SPAC Material Contract or amend, waive, modify or consent to the termination (excluding any expiration in accordance with its terms) of SPAC’s material rights thereunder, or (B) enter into any Contract that would have been a SPAC Material Contract had it been entered into prior to the date of this Agreement;
(xiv) adopt enter into or incur any liability with respect to any Employee Benefit Plans;
(xv) waive, release, assign, settle or compromise any Action, other than waivers, releases, assignments, settlements or compromises that are solely monetary in nature and do not exceed $100,000 individually or $500,000 in the aggregate;
(xvi) other than in the Ordinary Course or in a form consistent with SPAC’s public filings with the SEC, enter into any indemnification agreements with the directors and officers of SPAC; or
(xvii) enter into any formal or informal agreement or otherwise make a binding commitment to do any of the foregoing.
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Nothing herein shall require SPAC to obtain consent from the Company to do any of the foregoing if obtaining such consent might reasonably be expected to violate applicable Law, and nothing contained in this Section 5.02 shall give to the Company, directly or indirectly, the right to control or direct the ordinary course of business operations of SPAC prior to the Closing Date. Prior to the Closing Date, each of SPAC and the Company shall exercise, consistent with the terms and conditions hereof, complete control and supervision of its respective operations, as required by Law.
Section 5.03 Conduct of Business by NewCo and Sio NewCo. During the Interim Period, none of NewCo or Sio NewCo shall engage in any activities other than the execution of any Transaction Documents to which it is party and the performance of its obligations hereunder and thereunder in furtherance of the Transactions (and matters ancillary thereto).
Section 5.04 Domestication.
(a) Subject to obtaining SPAC Shareholder Approval, prior to the SPAC Amalgamation, SPAC shall take all actions necessary to cause the Domestication to become effective in accordance with the applicable provisions of the ABCA and the Companies Act, including by (i) making and procuring all those filings required to be made, including with the Registrar of Companies in the Cayman Islands, as required under the Companies Act in connection with the Domestication and the Alberta Corporate Registrar and (ii) obtaining a Certificate of Continuation issued pursuant to section 188 of the ABCA. The Domestication shall be effective upon obtaining the Certificate of Continuation issued pursuant to section 188 of the ABCA.
(b) For the avoidance of doubt (i) any reference in this Agreement to SPAC Class A Ordinary Shares for periods from and after the Domestication and prior to the SPAC Amalgamation will be deemed to refer to SPAC Class A Common Shares; and (ii) any reference in this Agreement to SPAC Class A Ordinary Shares, SPAC Units or SPAC Warrants for periods from and after the SPAC Amalgamation will be deemed to refer to the New SPAC Class A Common Shares, New SPAC Units and New SPAC Warrants (respectively).
Section 5.05 Claims Against Trust Account. The Company and Sio NewCo agree that, notwithstanding any other provision contained in this Agreement, the Company and Sio NewCo do not have, and shall not at any time prior to the Closing have, any claim to, or make any claim against, the funds in the Trust Account, regardless of whether such claim arises as a result of, in connection with or relating in any way to, the business relationship between the Company and/or Sio NewCo on the one hand, and SPAC and/or NewCo on the other hand, this Agreement, or any other agreement or any other matter, and regardless of whether such claim arises based on Contract, tort, equity or any other theory of legal liability (any and all such claims are collectively referred to in this Section 5.05 as the “Claims”). Notwithstanding any other provision contained in this Agreement, each of the Company and Sio NewCo hereby irrevocably waives any Claim it and its Affiliates may have, now or in the future and will not seek recourse against the funds in the Trust Account for any reason whatsoever in respect thereof; provided, however, that the foregoing waiver will not limit or prohibit the Company or Sio NewCo from pursuing a claim against SPAC, NewCo or any other person (a) for legal relief against monies or other assets of SPAC held outside of the Trust Account (including any funds that have been released from the Trust Account and any assets that have been purchased or acquired with any such funds) or for specific performance or other equitable relief in connection with the Transactions (including a claim for SPAC or NewCo to specifically perform their obligations under this Agreement and cause the disbursement of the balance of the funds in the Trust Account (after giving effect to the Redemption Rights)) or for Fraud or (b) for damages for breach of this Agreement against SPAC, NewCo or any of their respective successor entities in the event this Agreement is terminated for any reason and SPAC consummates, directly or indirectly, a business combination transaction, whether by way of a purchase of assets or securities or merger, consolidation or otherwise, with another party. In the event that the Company, Sio NewCo, or any of their Affiliates commences any Action against or involving the funds in the Trust Account in violation of the foregoing, SPAC shall be entitled to recover from the Company and Sio NewCo the associated reasonable legal fees and costs in connection with any such Action, in the event SPAC prevails in such Action.
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Section 5.06 Change of Name. In the event the conditions precedent set out in Article VII of this Agreement are not satisfied or waived, and the Parties do not proceed with the steps set forth in Section 3.2 of the Plan of Arrangement and the SPAC Amalgamation has occurred, SPAC shall take all actions necessary to cause New SPAC to change the name of New SPAC to a name that does not include a reference to “Sio Silica” concurrently with termination of this Agreement.
Article
VI
ADDITIONAL AGREEMENTS
Section 6.01 Registration Statement / Proxy Statement.
(a) As promptly as reasonably practicable after the date hereof, SPAC, the Company and Sio NewCo shall prepare and mutually agree upon (such agreement not to be unreasonably withheld, conditioned or delayed), and Sio NewCo shall file with the SEC, a registration statement on Form F-4 relating to the Transactions (the “Registration Statement / Proxy Statement”) (it being understood that the Registration Statement / Proxy Statement shall include a proxy statement / prospectus which will be included therein as a prospectus with respect to Sio NewCo and which will be used as a proxy statement with respect to the SPAC Shareholders Meeting to adopt and approve the Transaction Proposals (as defined below) and other matters reasonably related to the Transaction Proposals, all in accordance with and as required by SPAC’s Organizational Documents, any related agreements with Sponsor and its Affiliates, applicable Law, and any applicable rules and regulations of the SEC and the New York Stock Exchange). Each of SPAC, Sio NewCo and the Company shall use its reasonable best efforts to: (i) cause the Registration Statement / Proxy Statement to comply in all material respects with the applicable rules and regulations promulgated by the SEC; (ii) promptly notify the other of, cooperate with each other with respect to and respond promptly to any comments of the SEC or its staff; (iii) have the Registration Statement / Proxy Statement declared effective under the Securities Act as promptly as reasonably practicable after it is filed with the SEC; and (iv) keep the Registration Statement / Proxy Statement effective through the Closing in order to permit the consummation of the Transactions. Each of SPAC, Sio NewCo and the Company shall promptly furnish the other all information concerning such Party, its Subsidiaries, Representatives and shareholders that may be required or reasonably requested in connection with any action contemplated by this Section 6.01; provided, however, that none of SPAC, Sio NewCo nor the Company shall use any such information for any purposes other than those contemplated by this Agreement unless: (A) such Party obtains the prior written consent of the other to such use (which consent shall not be unreasonably withheld, conditioned or delayed); or (B) to the extent that use of such information is required to avoid violation of applicable Law. Sio NewCo shall promptly advise the Company and SPAC of the time of effectiveness of the Registration Statement / Proxy Statement, the issuance of any stop order relating thereto or the suspension of the qualification of the securities covered by the Registration Statement / Proxy Statement for offering or sale in any jurisdiction, and each of Sio NewCo, SPAC and the Company shall use its reasonable best efforts to have any such stop order or suspension lifted, reversed or otherwise terminated.
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(b) Unless required by the relevant law, no filing of, or amendment or supplement to, the Registration Statement / Proxy Statement will be made by Sio NewCo, the Company or SPAC without the approval of the other Parties (such approval not to be unreasonably withheld, conditioned or delayed). Each of Sio NewCo, the Company and SPAC will advise the other Parties, promptly after it receives notice thereof, of any request by the SEC for amendment of the Registration Statement / Proxy Statement or comments thereon and responses thereto or requests by the SEC for additional information. Each of Sio NewCo, the Company and SPAC shall, as promptly as practicable after receipt thereof, supply the other Parties with copies of all written correspondence between it or any of its Representatives, on the one hand, and the SEC or the staff of the SEC, on the other hand, or, if not in writing, a description of such communication. Unless required by the applicable Law, no response to any comments from the SEC or the staff of the SEC relating to the Registration Statement / Proxy Statement will be made by Sio NewCo, the Company or SPAC without the prior consent of the other Parties (such consent not to be unreasonably withheld, conditioned or delayed), and without providing the other Parties a reasonable opportunity to review and comment thereon unless pursuant to a telephone call initiated by the SEC.
(c) SPAC represents that the information supplied by SPAC and NewCo for inclusion in the Registration Statement / Proxy Statement shall not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, at (i) the time the Registration Statement / Proxy Statement is declared effective, (ii) the time the Registration Statement / Proxy Statement (or any amendment thereof or supplement thereto) is first mailed to SPAC Shareholders, and (iii) the time of the Closing. If, at any time prior to the SPAC Shareholders Meeting, any event or circumstance relating to SPAC, NewCo or their officers or directors should be discovered by SPAC which should be set forth in an amendment or a supplement to the Registration Statement / Proxy Statement, SPAC shall promptly inform the Company. All documents that SPAC is responsible for filing with the SEC in connection with the Transactions shall comply as to form and substance in all material respects with the applicable requirements of the Securities Act and the Exchange Act.
(d) The Company represents that the information supplied by the Company and Sio NewCo for inclusion in the Registration Statement / Proxy Statement shall not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, at (i) the time the Registration Statement / Proxy Statement is declared effective, (ii) the time the Registration Statement / Proxy Statement (or any amendment thereof or supplement thereto) is first mailed to SPAC Shareholders, and (iii) the time of the Closing. If, at any time prior to the SPAC Shareholders Meeting, any event or circumstance relating to the Company or its officers or directors should be discovered by the Company which should be set forth in an amendment or a supplement to the Registration Statement / Proxy Statement, the Company shall promptly inform SPAC. All documents that Sio NewCo is responsible for filing with the SEC in connection with the Transactions shall comply as to form and substance in all material respects with the applicable requirements of the Securities Act and the Exchange Act.
(e) If either Party sends any material communication regarding Tax consequences related to the Transactions to its equity holders, including the Company Information Circular, each Party shall (x) allow each other Party to review and comment on any such communication (and revise such communication in good faith to reflect any such reasonable comments), and (y) to the maximum extent reasonably permissible in such communication, explicitly state in such communication that (1) the Tax consequences of the Transactions are not free from doubt, (2) none of the Parties, their equity holders, any of their Affiliates or any of their Representatives is providing any advice, disclosure, assurance, representation or warranty regarding the Tax consequences of the Transactions, and (3) each such recipient should consult with and rely solely upon its own Tax advisors as to the Tax consequences of the Transactions.
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Section 6.02 SPAC Shareholders Meeting. SPAC shall: (i) take all action necessary under applicable Law and the SPAC Organizational Documents to call, give notice of, convene and hold a meeting of SPAC Shareholders (the “SPAC Shareholders Meeting”) to seek (A) approval of the Domestication, including the Domestication Articles, (B) approval of the proposed business combination (which includes the approval and adoption of this Agreement and the Transactions, including the approval of the Arrangement Resolution) (the “Business Combination Proposal”), (C) the adjournment of the SPAC Shareholders Meeting, if necessary, to permit further solicitation of proxies because there are not sufficient votes to approve and adopt any of the foregoing (and if put, such proposal will be put before any of the foregoing proposals) and (D) approval of any other proposals reasonably agreed by SPAC and the Company to be necessary or appropriate in connection with the Transactions (such proposals in clauses (A) through (D), together, the “Transaction Proposals”), which SPAC Shareholders Meeting shall be held as promptly in accordance with the SPAC Organizational Documents as reasonably practicable following the date the Registration Statement / Proxy Statement is declared effective by the SEC (and conditioned upon such declaration of effectiveness); and (ii) submit the Transaction Proposals to, and use its reasonable best efforts to solicit proxies in favor of such Transaction Proposals from, SPAC Shareholders at SPAC Shareholders Meeting. SPAC shall, through SPAC Board, include a statement in the Registration Statement / Proxy Statement to the effect that SPAC Board, recommends that SPAC Shareholders vote in favor of the Transaction Proposals (the “SPAC Board Recommendation”). The SPAC Board shall not change, withdraw, withhold, qualify or modify in a manner adverse to the Company, the SPAC Board Recommendation (a “Change in Recommendation”); provided, however, that at any time prior to obtaining the SPAC Shareholder Approval, the SPAC Board may make a Change in Recommendation in response to any material event, change, fact, condition, occurrence or circumstance (A) that does not relate to an Alternative Transaction, (B) that does not relate to any change in the market price or trading volume of SPAC’s securities (it being understood that this clause (B) shall not prevent a determination that any event underlying such change constitutes an Intervening Event) and (C) (x) first occurring after the date hereof or (y) first actually known by the SPAC Board following the date hereof, if the SPAC Board determines in good faith that a failure to make such Change in Recommendation would constitute a breach by the SPAC Board of its fiduciary obligations under applicable Law (an “Intervening Event”); provided, however, that the SPAC Board may not make a Change in Recommendation unless SPAC notifies the Company in writing at least five (5) Business Days before taking that action of its intention to do so (such period from the time the Intervening Event notice is delivered until 5:00 p.m., New York time on the fifth (5th) Business Day from the date of such notice, it being understood that any material development with respect to such Intervening Event shall require a new notice with an additional four (4) Business Day period from the date of such notice), and specifies the reasons therefor, and negotiates, and causes its financial and legal advisors to negotiate, with the Company in good faith during the applicable notice period (to the extent the Company seeks to negotiate) regarding any revisions to the terms of the Transactions proposed by the Company so as to obviate the need for a Change in Recommendation and, following such good faith negotiations, the SPAC Board determines in good faith, after consultation with its outside legal counsel, that a failure to make a Change in Recommendation would continue to constitute a breach by the SPAC Board of its fiduciary obligations under applicable Law (provided that such notification would not, after consultation with its outside legal counsel, constitute a breach by the SPAC Board of its fiduciary obligations under applicable Law or constitute a breach of any applicable Law). Notwithstanding anything to the contrary contained in this Agreement, (a) SPAC may postpone or adjourn the SPAC Shareholders Meeting (1) to the extent necessary to ensure that any required supplement or amendment to the Registration Statement / Proxy Statement is provided to SPAC Shareholders or if, as of the time for which the SPAC Shareholders Meeting is scheduled, there are insufficient SPAC Class A Ordinary Shares represented (either in person or by proxy) to constitute a quorum necessary to conduct business at such meeting, or (2) in order to solicit additional proxies from SPAC Shareholders in favor of the adoption of each of the Transaction Proposals and (b) SPAC shall provide the Company with (i) updates with respect to the aggregate tally of the proxies received by SPAC in respect of the Transaction Proposals, (ii) updates with respect to any communication (written or oral) from any SPAC Shareholder in opposition to the Transaction Proposals, (iii) the right to reasonably demand postponement or adjournment of the SPAC Shareholders Meeting if, based on the tally of proxies, SPAC will not receive SPAC Shareholder Approval in respect of the Business Combination Proposal; provided that the SPAC Shareholders Meeting, so postponed or adjourned at the request of the Company, shall not be later than (A) five (5) Business Days prior to the Outside Date or (B) ten (10) days from the date of the first SPAC Shareholders Meeting, and (iv) the right to review and comment on all communications sent to SPAC Shareholders in connection with the SPAC Shareholders Meeting.
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Section 6.03 Access to Information; Confidentiality.
(a) During the Interim Period, the Company, SPAC, NewCo and Sio NewCo shall (and shall cause their respective Subsidiaries to): (i) provide to the other Party (and the other Party’s officers, directors, employees, accountants, consultants, legal counsel, agents and other representatives, collectively, “Representatives”) reasonable access at reasonable times upon prior notice to the officers, employees, agents, properties, offices and other facilities of such Party and its Subsidiaries and to the books and records thereof; and (ii) furnish promptly to the other Party such information concerning the business, properties, Contracts, assets, liabilities, personnel and other aspects of such Party and its Subsidiaries as the other Party or its Representatives may reasonably request. Notwithstanding the foregoing, neither the Company nor SPAC shall be required to provide access to or disclose information where the access or disclosure would jeopardize the protection of attorney-client privilege or contravene applicable Law (it being agreed that the Parties shall use their reasonable best efforts to cause such information to be provided in a manner that would not result in such jeopardy or contravention).
(b) All information obtained by the Parties pursuant to this Section 6.03 shall be kept confidential in accordance with the Confidentiality Agreement, dated January 10, 2022, by and between the Company and SPAC (the “Confidentiality Agreement”).
(c) Notwithstanding anything in this Agreement to the contrary, each Party (and its respective Representatives) may consult any Tax advisor as is reasonably necessary regarding the Tax treatment and Tax structure of the Transactions and may disclose to such advisor as is reasonably necessary, the Intended Tax Treatment and Tax structure of the Transactions and all materials (including any Tax analysis) that are provided relating to such treatment or structure, in each case in accordance with the Confidentiality Agreement.
Section 6.04 Exclusivity. During the Interim Period, the Parties shall not, and shall cause their respective Subsidiaries and its and their respective Representatives not to, directly or indirectly, (a) enter into, solicit, initiate or continue any discussions or negotiations with, or encourage or respond to any inquiries, indications of interest, offers or proposals by, or participate in any negotiations with, or provide any information to, or otherwise cooperate in any way with, any Person or other entity or “group” within the meaning of Section 13(d) of the Exchange Act, concerning an Alternative Transaction, (b) enter into any agreement regarding, continue or otherwise participate in any discussions regarding, or furnish to any Person any information with respect to, or cooperate in any way that would otherwise reasonably be expected to lead to, or in response to, any Alternative Transaction, (c) commence, continue or renew any due diligence investigation regarding any Alternative Transaction, (d) furnish any non-public information regarding such Party or its Subsidiaries, and its and their respective businesses, operations, assets, liabilities, financial condition, prospects or employees in connection with, or that would reasonably be expected to lead to, an Alternative Transaction to any Person or group (other than a Party and its Representatives), (e) release any Third Party from, or waive any provision of, any confidentiality agreement to which such Party is a party or (f) otherwise cooperate in any way with, or assist or participate in, or knowingly facilitate or encourage any effort or attempt by any Third Party to do or seek to do any of the foregoing or seek to circumvent this Section 6.04; provided that the execution, delivery and performance of this Agreement and the Transaction Documents and the consummation of the Transactions shall not be deemed a violation of this Section 6.04. For purposes of this Agreement, an “Alternative Transaction” shall mean (i) with respect to the Company, (x) the issuance, sale or transfer to or investment by any Person in any newly issued or currently outstanding Equity Interest in the Company (whether by merger, recapitalization, tender offer or otherwise), (y) the sale or transfer of any assets of the Company to any Person (except, in the cases of clauses (x) and (y) with respect to any de minimis transfers of Equity Interests or assets or any issuance, sale, transfer, investment of Equity Interests or assets permitted by the terms of this Agreement, the Support Agreements or the Plan of Arrangement), or (z) any merger or business combination between the Company and any other Person, and (ii) with respect to SPAC, any direct or indirect acquisition of assets or business of any Person, whether by way of a purchase of assets or securities or merger, consolidation or otherwise, that would constitute an “initial business combination” as defined in SPAC’s prospectus for its initial public offering. Each Party shall, and shall cause its Subsidiaries and its and their respective Affiliates and Representatives to, immediately cease any and all existing discussions or negotiations with any Person conducted heretofore with respect to any Alternative Transaction. Each Party also agrees that it shall promptly request each Person (other than the Parties and their respective Representatives) that since January 1, 2022 has executed a confidentiality agreement in connection with its consideration of an Alternative Transaction to return or destroy all confidential information furnished to such Person by or on behalf of it prior to the date hereof (to the extent so permitted under, and in accordance with the terms of, such confidentiality agreement). If a Party or any of its Subsidiaries or any of its or their respective Representatives receives any inquiry or proposal with respect to an Alternative Transaction at any time during the Interim Period, then such Party shall (A) promptly (and in no event later than forty-eight (48) hours after such Party becomes aware of such inquiry or proposal) notify the other Party and describe the material terms and conditions of any such Alternative Transaction in reasonable detail (including the identity of any person or entity making such inquiry or proposal) and (B) keep the other Party fully informed on a current basis (within forty-eight (48) hours) of any modifications to such offer or information. Without limiting the foregoing, the Parties agree that any violation of the restrictions set forth in this Section 6.04 by a Party or any of its Subsidiaries or its or their respective Affiliates or Representatives shall be deemed to be a breach of this Section 6.04 by such Party.
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Section 6.05 Employee Matters.
(a) New SPAC shall, or shall cause its applicable Subsidiary to, provide the employees of the Company who remain employed immediately after the Closing (the “Continuing Employees”), with continuing employment on substantially similar terms to their current employment, and credit for purposes of eligibility to participate, vesting and determining entitlement to or the level of benefits, as applicable, but not for purposes of benefit accrual, under any Employee Benefit Plan established or maintained by New SPAC or any of its Subsidiaries (excluding any retiree health plans or programs, or defined benefit pension plans or programs) for their service accrued or deemed accrued prior to the Closing with the Company or any Company Subsidiary; provided, however, that such crediting of service shall not operate to duplicate any benefit or the funding of any such benefit for the same period of service. In addition, subject to the terms of all governing documents and the consent of the applicable insurer, New SPAC shall use reasonable best efforts to (i) cause to be waived any eligibility waiting periods, any evidence of insurability requirements and the application of any pre-existing condition limitations under each of the Employee Benefit Plans established or maintained by New SPAC or any of its Subsidiaries that cover the Continuing Employees or their dependents to the extent satisfied or waived under those health and welfare benefit plans in which such Continuing Employee currently participates, and (ii) cause any eligible expenses incurred by any Continuing Employee and his or her covered dependents, during the portion of the plan year in which the Closing occurs, under those health and welfare benefit plans in which such Continuing Employee currently participates to be taken into account under those health and welfare benefit plans in which such Continuing Employee participates subsequent to the Closing Date for purposes of satisfying all deductible, coinsurance, and maximum out-of-pocket requirements applicable to such Continuing Employee and his or her covered dependents for the applicable plan year. Following the Closing, New SPAC shall honor all accrued but unused vacation and other paid time off of the Continuing Employees that existed immediately prior to the Closing.
(b) Prior to the Closing, Sio NewCo (or New SPAC as its successor) shall adopt a customary equity incentive plan that is reasonably acceptable to the Company and SPAC. The initial number of shares of Sio NewCo (or New SPAC as its successor) reserved for issuance under the equity incentive plan shall be equal to 10% of the total number of shares of Sio NewCo (or New SPAC as its successor) outstanding immediately following the Closing.
(c) The provisions of this Section 6.05 are solely for the benefit of the Parties to the Agreement, and nothing contained in this Agreement, express or implied, shall confer upon any Current Employee or Continuing Employee or legal representative or beneficiary or dependent thereof, or any other Person, any rights or remedies of any nature or kind whatsoever under or by reason of this Agreement, whether as a third-party beneficiary or otherwise, including, without limitation, any right to employment or continued employment for any specified period, or level of compensation or benefits. Nothing contained in this Agreement, express or implied, shall constitute an amendment or modification of any Employee Benefit Plan of the Company or shall require the Company, SPAC, NewCo, Sio NewCo or any of their respective Subsidiaries to continue any Plan or other employee benefit arrangements, or prevent their amendment, modification or termination.
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Section 6.06 Directors’ and Officers’ Indemnification.
(a) Following the Closing, the organizational documents of New SPAC shall, to the fullest extent permitted under applicable Law, contain provisions no less favorable with respect to indemnification, advancement or expense reimbursement of individuals who, at or prior to the Closing, were directors, officers, employees, fiduciaries or agents of SPAC or any Subsidiary of SPAC (“SPAC Indemnified Persons”) than are set forth in the SPAC Organizational Documents, and such provisions shall not thereafter be amended, repealed or otherwise modified for a period of six (6) years from the Closing in any manner that would affect adversely the rights thereunder of the SPAC Indemnified Persons, unless such modification shall be required by applicable Law. With respect to the provisions of the organizational documents of the Company or the Amalgamated Company, as applicable, and any agreement or contract relating to indemnification, advancement or expense reimbursement of individuals who, at or prior to the Closing, were directors, officers, employees, fiduciaries or agents of the Company (“Company Indemnified Persons”), such provisions shall not be amended, repealed or otherwise modified for a period of six (6) years from the Closing in any manner that would affect adversely the rights thereunder of the Company Indemnified Persons, unless such modification shall be required by applicable Law. For a period of six (6) years from the Closing, the New SPAC shall defend, indemnify and hold harmless each present and former director and officer of the Company, SPAC, NewCo and Sio NewCo against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, alleged against such directors or officers in their capacity as such and arising out of or pertaining to matters existing or occurring at or prior to the Closing, whether asserted or claimed prior to, at or after the Closing, to the fullest permitted under applicable Law (including the advancing of expenses as incurred to the fullest extent permitted under applicable Law).
(b) Prior to the Closing, the Company may purchase a prepaid “tail” policy or policies in respect of the Company’s current directors’ and officers’ liability insurance (“D&O Insurance”) covering those Persons who are currently covered by the Company’s D&O Insurance (true, correct and complete copies of which have been heretofore made available to SPAC or its agents or Representatives) on terms not less favorable than the terms of such current insurance coverage, except that in no event shall the Company pay a premium for such insurance in excess of 300% of the aggregate annual premium attributable to the Company for coverage of the Company and the Amalgamated Company under such insurance policy or policies for the most recent policy year (the “Maximum Annual Premium”). If the premium of such insurance coverage exceeds the Maximum Annual Premium, then the Company may obtain a “tail” policy or policies with the greatest coverage available for a cost not exceeding the Maximum Annual Premium from an insurance carrier with the same or better credit rating as the Company’s current directors’ and officers’ liability insurance carrier. The New SPAC shall maintain any such “tail” policy or policies in full force and effect for a period of no less than six (6) years after the Closing and continue to honor its obligations thereunder. From and after the date of this Agreement, NewCo, SPAC and the Company shall cooperate in good faith with respect to any efforts to obtain the insurance described in this Section 6.06(b), including but not limited to providing access to insurance broker presentations, underwriter quotes for such insurance, and draft policies for such insurance.
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(c) Prior to or in connection with the Closing, SPAC or NewCo shall purchase a prepaid “tail” policy (a “SPAC Tail Policy”) with respect to the D&O Insurance covering those persons who are currently covered by SPAC’s D&O Insurance policies (true, correct and complete copies of which have been heretofore made available to the Company or its agents or Representatives) on terms not less favorable than the terms of such current insurance coverage, except that in no event shall SPAC pay a premium for such insurance in excess of 300% of the aggregate annual premium attributable to SPAC for coverage of SPAC under such insurance policy or policies for the most recent policy year (the “SPAC Maximum Annual Premium”). If the premium of such insurance coverage exceeds the SPAC Maximum Annual Premium, then SPAC may obtain a “tail” policy or policies with the greatest coverage available for a cost not exceeding the SPAC Maximum Annual Premium from an insurance carrier with the same or better credit rating as SPAC’s current directors’ and officers’ liability insurance carrier. The New SPAC shall maintain such SPAC Tail Policy in full force and effect for a period of no less than six (6) years after the Closing and continue to honor its obligations thereunder.
(d) Prior to or in connection with the Closing, the Company shall purchase “go-forward” D&O Insurance to cover the Post-Closing Officers and Directors of New SPAC. From and after the date of this Agreement, NewCo, SPAC, and the Company shall cooperate in good faith with respect to any efforts to obtain the insurance described in this Section 6.06(d), including providing access to insurance broker presentations, underwriter quotes for such insurance, and draft policies for such insurance.
(e) On the Closing Date, New SPAC shall (i) enter into customary indemnification agreements reasonably satisfactory to each of the Company and New SPAC with the Post-Closing Officers and Directors, and (ii) assume all rights and obligations of SPAC under all indemnification agreements then in effect between SPAC and any Person who is or was a director or officer of SPAC prior to the SPAC Amalgamation Effective Time and that have either been (a) made available to the Company prior to the date hereof or (b) entered into after the date hereof in accordance with Section 5.02, which indemnification agreements shall continue to be effective following the Closing.
(f) For a period of six (6) years from the Closing, New SPAC shall defend, indemnify and hold harmless the Sponsor, its Affiliates, and their respective present and former directors and officers (the “Indemnified Parties”) against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities (“Indemnified Liabilities”) incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of or pertaining to the Transactions and the Sponsor’s ownership of equity securities of SPAC, or its control or ability to influence SPAC, whether asserted or claimed prior to, at or after the Closing, to the fullest extent permitted by applicable law (including the advancing of expenses as incurred to the fullest extent permitted under applicable Law); provided that the foregoing shall not apply to (i) any Indemnified Liabilities to the extent arising out of any breach by the Sponsor of the Sponsor Letter or any other agreement between the Sponsor, on the one hand, and the Company or New SPAC or any of their respective Subsidiaries, on the other hand, or (ii) Fraud of an Indemnified Party; in each case, for the foregoing clauses (i) and (ii), solely if such breach or fraud is established by a final, non-appealable judgment.
Section 6.07 Notification of Certain Matters. The Company shall give prompt notice to SPAC, and SPAC shall give prompt notice to the Company, of any event which a Party becomes aware of during the Interim Period, the occurrence or non-occurrence of which causes or would reasonably be expected to cause any of the conditions set forth in Article VII to fail.
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Section 6.08 Further Action; Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions of this Agreement, each of the Parties shall use its reasonable best efforts to take, or cause to be taken, appropriate action, and to do, or cause to be done, such things as are necessary, proper or advisable under applicable Laws or otherwise, and each shall cooperate with the other, to consummate and make effective the Transactions, including, without limitation, using its reasonable best efforts to obtain all permits, consents, approvals, authorizations, qualifications and orders of, and the expiration or termination of waiting periods by, Governmental Authorities and parties to Contracts with the Company as set forth in Section 3.05 necessary for the consummation of the Transactions and to fulfill the conditions to the Transactions. In case, at any time after the Closing, any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors of each Party shall use their reasonable best efforts to take all such action. Subject to the terms and conditions of this Agreement, the Parties agree to use their reasonable best efforts (except where a different efforts standard is specifically contemplated by this Agreement, in which case such different standard shall apply) to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective the Transactions and cause the conditions to the Transactions to be satisfied.
(b) Each of the Parties shall keep each other apprised of the status of matters relating to the Transactions, including promptly notifying the other Parties of any communication it or any of its Affiliates receives from any Governmental Authority relating to the matters that are the subject of this Agreement and permitting the other Parties to review in advance, and to the extent practicable consult about, any proposed communication by such Party to any Governmental Authority in connection with the Transactions. No Party to this Agreement shall agree to participate in any meeting, or video or telephone conference, with any Governmental Authority in respect of any filings, investigation or other inquiry unless it consults with the other Parties in advance and, to the extent permitted by such Governmental Authority, gives the other Parties the opportunity to attend and participate at such meeting or conference. Subject to the terms of the Confidentiality Agreement, the Parties shall coordinate and cooperate fully with each other in exchanging such information and providing such assistance as the other Parties may reasonably request in connection with the foregoing. Subject to the terms of the Confidentiality Agreement, the Parties shall provide each other with copies of all material correspondence, filings or communications, including any documents, information and data contained therewith, between them or any of their Representatives, on the one hand, and any Governmental Authority, on the other hand, with respect to this Agreement and the Transactions. No Party shall take or cause to be taken any action before any Governmental Authority that is inconsistent with or intended to delay its action on requests for a consent or the consummation of the Transactions.
Section 6.09 Public Announcements. The initial press release relating to this Agreement shall be a joint press release the text of which has been agreed to by each of SPAC and the Company. Thereafter, during the Interim Period, unless otherwise prohibited by applicable Law or the requirements of the New York Stock Exchange, each Party shall use its reasonable best efforts to consult with each other Party before issuing any press release or otherwise making any public statements (including through social media platforms) with respect to this Agreement and the Transactions, and shall not issue any such press release or make any such public statement (including through social media platforms) without the prior written consent of the other Parties. Furthermore, nothing contained in this Section 6.09 shall prevent SPAC or the Company and/or their respective Affiliates from furnishing customary or other reasonable information concerning the Transactions to their investors and prospective investors that is substantively consistent with public statements previously consented to by the other Party in accordance with this Section 6.09.
Section 6.10 Stock Exchange Listing. During the Interim Period, SPAC shall use reasonable best efforts to ensure that SPAC remains listed as a public company on, and for SPAC Class A Ordinary Shares and SPAC Units to be tradable over, the New York Stock Exchange. During the Interim Period, the Parties shall use reasonable best efforts to have New SPAC listed on the New York Stock Exchange, or another national securities exchange mutually agreed to by the Parties in writing, as of the SPAC Amalgamation Effective Time.
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Section 6.11 Trust Account. SPAC shall provide notice to the Trustee in accordance with the Trust Agreement and shall deliver any other documents, opinions or notices required to be delivered to the Trustee pursuant to the Trust Agreement and cause the Trustee, immediately following the Company Amalgamation Effective Time to, and the Trustee shall thereupon be obligated to, transfer all the funds in the Trust Account as directed by SPAC and thereafter shall cause the Trust Account and the Trust Agreement to terminate.
Section 6.12 Certain Actions.
(a) Immediately prior to the Closing, the Company shall, and shall cause its Affiliates to, terminate or cause to be terminated all of the agreements set forth on Section 6.12(a) of the Company Disclosure Schedule. No such agreement (including any provision thereof which purports to survive termination) shall be of any further force or effect after the Closing, and the Company shall be released from all liabilities thereunder effective as of the Closing.
(b) Prior to the Closing, the Company shall use reasonable best efforts to obtain and maintain in full force and effect all consents, approvals, ratifications, notices, waivers or other authorizations required as a result of the consummation of the Transactions under any Contract to which the Company is a party or by which any of their respective assets are bound, and shall cooperate in good faith with all reasonable requests of SPAC related to the same; provided, however, that the Company shall not be required to expend money (other than costs and expenses associated with compliance with this Section 6.12(b)), commence, defend or participate in any litigation, or offer or grant any material accommodation (financial or otherwise) to any third party in connection with obtaining any consent therefrom in connection with the Transactions. In connection with the actions contemplated by this Section 6.12(b), the Company shall not, without the prior written consent of SPAC (which shall not be unreasonably conditioned, withheld or delayed), enter into any (i) amendment to the applicable Contract or (ii) agreement, or otherwise agree to any accommodation or concession that requires any payments by, or imposes any obligations, liabilities or restrictions (including any limitations on commercial or business activities) on, NewCo or the Company prior to or following the Closing.
Section 6.13 Intended Tax Treatment. This Agreement and the Plan of Arrangement are intended to constitute, and the Parties hereto hereby adopt this Agreement and the Plan of Arrangement as, a “plan of reorganization” within the meaning of Treasury Regulations Sections 1.368-2(g) and 1.368-3(a). Each of the Parties shall use its reasonable best efforts to: (a) cause the Transactions contemplated by this Agreement to qualify for the Intended Tax Treatment; (b) except for actions required by this Agreement or any Ancillary Agreement, not (and shall not permit or cause any of their Affiliates, Subsidiaries or Representatives to) take or fail to take any action, or become obligated to take or fail to take any action, which action or failure could reasonably be expected to prevent the Transactions contemplated by this Agreement from qualifying for the Intended Tax Treatment; (c) report and file all relevant Tax Returns consistent with the Intended Tax Treatment (including attaching the statement described in Treasury Regulations Section 1.368-3(a) on or with its Tax Return for the taxation year of the Closing, as applicable) and take no position inconsistent with the Intended Tax Treatment (whether in audits, Tax Returns or otherwise), unless, solely in the case of the Intended U.S. Tax Treatment, required to do so pursuant to a “determination” within the meaning of Section 1313(a) of the Code, or, solely in the case of the Intended Canadian Tax Treatment, required to do so pursuant to applicable Law; and (d) cooperate with one another and their respective Tax advisors in connection with providing to SPAC, NewCo or the Company any opinion or other advice relating to the Tax consequences of the Transactions, including using reasonable best efforts to deliver to the relevant counsel certificates (dated as of the necessary date and signed by an officer of the Parties or their respective Affiliates, as applicable) containing such customary representations as are reasonably necessary or appropriate for such counsel to render such opinion or advice. If the SEC or any other Governmental Authority requests or requires that an opinion be provided on or prior to the Closing in respect of the Tax consequences of or related to the Transactions: (i) to the extent such opinion relates to SPAC or any equity holders thereof, SPAC will use its reasonable best efforts to cause its Tax advisors to provide any such opinion, subject to customary assumptions and limitations, and (ii) to the extent such opinion relates to the Company or any equity holders thereof, the Company will use its reasonable best efforts to cause its Tax advisors to provide any such opinion, subject to customary assumptions and limitations. Notwithstanding anything to the contrary in this Agreement, the delivery of a tax opinion or comfort letter that the Transactions qualify for the Intended Tax Treatment shall not be a condition to the Closing or otherwise to the consummation of the Transactions contemplated by this Agreement.
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Section 6.14 Post-Closing Officers and Directors. All officers and directors of New SPAC, in each case immediately prior to the Company Amalgamation Effective Time, shall execute written resignations effective as of the Company Amalgamation Effective Time. The Parties hereto shall take all necessary action so that immediately after the Company Amalgamation Effective Time, the Post-Closing Officers and Directors shall serve as the sole officers and directors of the New SPAC.
Section 6.15 NewCo and Sio NewCo Shareholder Approvals.
(a) Promptly following the execution of this Agreement, the Nominee shall deliver the Sio NewCo Shareholder Approval as the sole shareholder of Sio NewCo.
(b) Promptly following the execution of this Agreement, SPAC shall deliver the NewCo Shareholder Approval as the sole shareholder of NewCo.
Section 6.16 Transferred Information.
(a) Prior to the completion of the Transactions, each of the Parties covenants and agrees to: (i) use and disclose the Transferred Information solely for the purpose of reviewing and completing the Transactions, including for the purpose of determining to complete such Transactions; (ii) protect the Transferred Information by making reasonable security arrangements against such risks as unauthorized access, collection, use, disclosure, copying, modification, disposal or destruction; provided, however, that such arrangements include, at a minimum, safeguards that are appropriate to the sensitivity of the Transferred Information; and (iii) if the Transactions do not proceed, return the Transferred Information to the Disclosing Party or destroy it, at the Disclosing Party’s election, within a reasonable time.
(b) After the completion of the Transactions, the Recipient agrees to: (i) use and disclose the Transferred Information under its control only for those purposes for which the Transferred Information was initially collected, permitted to be used or disclosed, unless: (A) the Disclosing Party or Recipient have first notified the individual about whom the Transferred Information related of any additional purpose, and where required by applicable Law, obtained the consent of such individual to such additional purpose, or (B) such use or disclosure is permitted or authorized by applicable Law, without notice to, or consent from, such individual; (ii) protect the Transferred Information under its control by making reasonable security arrangements against such risks as unauthorized access, collection, use, disclosure, copying, modification, disposal or destruction; provided, however, that such arrangements include, at a minimum, safeguards that are appropriate to the sensitivity of such Transferred Information; and (iii) give effect to any withdrawal of consent made by an individual to whom the Transferred Information under its control relates.
(c) Where required by applicable Law, the Company further agrees to promptly notify the individuals about whom the Transferred Information relates that Transactions have taken place and that their Transferred Information has been disclosed.
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Section 6.17 Additional SPAC Extension. If either Party reasonably believes that the Closing will not occur on or before April 29, 2024, SPAC shall use commercially reasonable efforts to seek the approval of SPAC Shareholders to extend the deadline for SPAC to consummate its initial business combination to a date after April 29, 2024 in accordance with the SPAC Organizational Documents so as to permit the consummation of the Transactions (the “Additional SPAC Extension”).
Section 6.18 PFIC Status. In connection with the Company’s annual report filing on Form 20-F, (1) the Company shall use commercially reasonable efforts to determine its status as a “passive foreign investment company” within the meaning of Section 1297 of the Code (“PFIC”) and (2) the Company shall make such PFIC status determinations (if any) available to the shareholders of the Company electronically. If the Company determines that it is a PFIC for a taxable year ending on or after the Closing Date, the Company shall use commercially reasonable efforts to make electronically available a PFIC Annual Information Statement meeting the requirements of Treasury Regulation Section 1.1295-1(g), and provide such other information reasonably requested by the Company’s shareholders and their direct and/or indirect owners that are “United States” persons (within the meaning of Section 7701(a)(30) of the Code) and reasonably necessary to comply with the provisions of the Code with respect to PFICs, including making and complying with the requirements of a “Qualified Electing Fund” election pursuant to Section 1295 of the Code. Upon receiving a written request by a shareholder that has made (or whose direct and/or indirect owners have made) a “Qualified Electing Fund” election in accordance with applicable U.S. Treasury Regulations, the Company shall use commercially reasonable efforts to make available income statement and balance sheet data reasonably necessary for such shareholder (or direct and/or indirect owner of such share-holder) to comply with the requirements of such “Qualified Electing Fund” election. The obligations under this Section 6.18 shall survive after the Closing.
Section 6.19 GRA. Upon the written request of any shareholder of the Company that is required to enter into (and cause to be filed with the IRS) a gain recognition agreement in accordance with Treasury Regulations section 1.367(a)-8 in order for the transactions contemplated by this Agreement to be tax-deferred for U.S. federal income tax purposes, the Company shall (a) use commercially reasonable efforts to furnish to such shareholder (to the extent such written request includes the contact information of such shareholder) such information as such shareholder reasonably requests in connection with such shareholder’s preparation of a gain recognition agreement, and (b) use commercially reasonable efforts to provide such shareholder with the information reasonably requested by such shareholder for purposes of determining whether there has been a gain “triggering event” under the terms of such shareholder’s gain recognition agreement.
Section 6.20 Tax Matters. The Parties shall ensure that all transfer, documentary, sales, use, real property, stamp, registration and other similar Taxes, fees and costs (including any associated penalties and interest) (“Transfer Taxes”) incurred in connection with this Agreement are timely paid in full to the applicable Taxing Authority, and the party responsible under applicable Law shall file all necessary Tax Returns with respect to all such Taxes, and, if required by applicable Law, the other party will cooperate and join in the execution of any such Tax Returns.
Section 6.21 Alternative Financing. In the event any portion of the Debt Financing becomes unavailable on the terms and conditions contemplated in the Commitment Letter for any reason, the Parties shall use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all thing necessary, proper or advisable to arrange to obtain alternative financing from alternative sources (the “Alternative Financing”) in an amount equal to or greater than the amount set forth in the Commitment Letter, which commitment letter related to the Alternative Financing would not reasonably be expected to prevent, impede or delay the consummation of such Alternative Financing or the transactions contemplated by this Agreement. As applicable, references in this Agreement (other than with respect to representations in this Agreement made by the Company that speak as of the date hereof) (A) to the Debt Financing shall include any such Alternative Financing, (B) to the Commitment Letter shall include any commitment letter related to the Alternative Financing, and (C) the Debt Financing Sources shall include the persons providing or arranging the Alternative Financing.
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Section 6.22 Financing Cooperation. Prior to the Closing, the Company shall use reasonable best efforts to provide to SPAC such reasonable cooperation as may be requested by SPAC and that is customary for financings of the type contemplated in connection with the arrangement of the Debt Financing contemplated by the Commitment Letter, including (i) participating (and using reasonable efforts to make the officers of the Company available to participate) in a reasonable number of meetings (including customary one-on-one meetings with the Debt Financing Sources and representatives of the Company), presentations, due diligence sessions, and meetings with prospective lenders or rating agencies in connection with the Debt Financing; (ii) providing to SPAC financial statements, financial data and pertinent information about the Company of the type customarily required for the Debt Financing, in all cases as may be reasonably requested by the Debt Financing Sources and that are reasonably available to the Company; (iii) furnishing at least five (5) Business Days prior to the Closing Date all documentation and other information required under applicable “know your customer” and anti-money laundering rules and regulations, including the U.S.A. Patriot Act of 2001 to the extent reasonably requested by SPAC; (iv) obtaining customary evidence of authority, customary officer’s certificates and customary insurance certificates and cooperating with SPAC’s legal counsel in connection with customary legal opinions; (v) obtaining and delivering to the Debt Financing Sources at the Closing a certificate of the chief financial officer of the Company in a form reasonably required by the Debt Financing Sources with respect to solvency matters; (vi) executing and delivering and assisting in the preparation of one or more credit agreements, pledge and security documents, guarantees, mortgages and other definitive financing documents as may be reasonably requested by SPAC and taking of all corporation actions by the Company with respect to entering such definitive financing documents and otherwise necessary to permit consummation of the Debt Financing (including with respect to the grant of security) so long as such agreements and documents do not become effective prior to the Closing, and furnishing such other information as is reasonably requested by SPAC to permit the consummation of the Debt Financing; and (vii) assisting the Debt Financing Sources with their customary and reasonable due diligence in connection with the Debt Financing; provided, that no obligation of the Company under any such definitive financing documents, including any pledge and security documents, shall be effective until the Closing Date; provided, further, that nothing herein shall require the Company to (A) take any action that would be effective prior to the Closing to the extent it would, in the Company’s reasonable judgment, interfere unreasonably with the business or operations of the Company, (B) waive or amend any terms of this Agreement, (C) authorize, execute, and/or deliver any certificate, document or instrument pursuant to such Debt Financing that will be effective prior to the Closing, (D) take any action that would conflict with any applicable law, the organizational documents of the Company or result in the contravention of, or would reasonably be expected to result in the violation or breach of, or default under, any material contract to which the Company is a party or (E) prepare, assist in the preparation of, or otherwise provide (1) any information that is not in the possession of the Company or (2) any other information to the extent such disclosure (x) may result in a waiver of attorney-client privilege, work product doctrine or similar privilege or (y) may violate any applicable law or any confidentiality obligation of the Company.
Section 6.23 Extraction Permit. Prior to the Closing, the Company shall use best efforts to take, or cause to be taken, all actions, and do or cause to be done all things, reasonably necessary, proper or advisable on its part under applicable Laws to obtain the Extraction Permit.
Section 6.24 Support Agreements. The Company will use commercially reasonable efforts to, as promptly as possible (and in any event, within five days of the date of this Agreement) following the date of this Agreement, procure executed Support Agreements from the Key Company Shareholders.
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Article
VII
CONDITIONS TO THE TRANSACTIONS
Section 7.01 Conditions to the Obligations of Each Party. The obligations of the Company, SPAC, NewCo and Sio NewCo to consummate the Amalgamations are subject to the satisfaction or waiver (where permissible) at or prior to the SPAC Amalgamation Effective Time of the following conditions (provided that the condition set forth in Section 7.01(g)(ii) shall be satisfied at or prior to the Company Amalgamation Effective Time):
(a) Company Required Approval. The Company Required Approval of the Arrangement Resolution shall have been obtained at the Company Shareholders Meeting in accordance with the Interim Order and applicable Law and a certified copy of such Arrangement Resolution shall have been delivered to SPAC.
(b) Final Order. The Final Order shall have been granted in form and substance satisfactory to the Parties, acting reasonably, and the Final Order shall not have been set aside or modified in a manner unacceptable to the Parties, acting reasonably, on appeal or otherwise.
(c) SPAC Shareholder Approval. SPAC Shareholder Approval shall have been obtained at the SPAC Shareholders Meeting in accordance with the Registration Statement / Proxy Statement, the Companies Act, the SPAC Organizational Documents and the rules and regulations of the New York Stock Exchange and a certified copy of such Arrangement Resolution shall have been delivered to the Company.
(d) No Order. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law, rule, regulation, judgment, decree, executive order or award which is then in effect and has the effect of making the Transactions, illegal or otherwise prohibiting consummation of the Transactions.
(e) Stock Exchange Listing. The New SPAC Class A Common Shares shall have been accepted for listing on the New York Stock Exchange, or another national securities exchange mutually agreed to by the Parties in writing, as of the Closing Date.
(f) Registration Statement / Proxy Statement. The Registration Statement / Proxy Statement shall have been declared effective under the Securities Act. No stop order suspending the effectiveness of the Registration Statement / Proxy Statement shall be in effect, and no proceedings for purposes of suspending the effectiveness of the Registration Statement / Proxy Statement shall have been initiated or be threatened in writing by the SEC.
(g) Pre-Closing Transactions. (i) The Domestication shall have been consummated in accordance with this Agreement and (ii) the SPAC Amalgamation shall have been consummated in accordance with this Agreement and the Plan of Arrangement, as applicable.
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Section 7.02 Conditions to the Obligations of SPAC and NewCo. The obligations of SPAC and NewCo to consummate the Amalgamations are subject to the satisfaction or waiver (where permissible) of the following additional conditions:
(a) Representations and Warranties. The representations and warranties of the Company contained in (x) Section 3.01 (Organization and Qualification; Subsidiaries), Section 3.02 (Organizational Documents), Section 3.03 (Capitalization) (other than Section 3.03(a) and Section 3.03(b)), Section 3.04 (Authority Relative to this Agreement), Section 3.05(a)(i) (No Conflict; Required Filings and Consents), Section 3.20 (Certain Business Practices), and Section 3.23 (Brokers) shall each be true and correct in all material respects as of the date hereof, the SPAC Amalgamation Effective Time and the Company Amalgamation Effective Time as though made on and as of such date (except to the extent of any changes that reflect actions permitted in accordance with Section 5.01 and except to the extent that any such representation or warranty expressly is made as of an earlier date, in which case such representation and warranty shall be true and correct as of such specified date), (y) Section 3.03(a) (Capitalization), Section 3.03(b) (Capitalization), and Section 3.08(a) (Absence of Certain Changes or Events) shall each be true and correct in all respects except for de minimis inaccuracies as of the date hereof, the SPAC Amalgamation Effective Time and the Company Amalgamation Effective Time as though made on and as of such date (except to the extent of any changes that reflect actions permitted in accordance with Section 5.01 and except to the extent that any such representation or warranty expressly is made as of an earlier date, in which case such representation and warranty shall be true and correct as of such specified date) and (z) the other provisions of Article III shall be true and correct in all respects (without giving effect to any “materiality,” “Company Material Adverse Effect” or similar qualifiers contained in any such representations and warranties) as of the date hereof, the SPAC Amalgamation Effective Time and the Company Amalgamation Effective Time as though made on and as of such date (except to the extent that any such representation or warranty expressly is made as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), except where the failures of any such representations and warranties to be so true and correct, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect; provided that for purposes of this Section 7.02(a), a representation or warranty made with respect to NewCo that was true and correct (to the applicable standard set forth above) as of the SPAC Amalgamation Effective Time shall be deemed to be true and correct as of the Company Amalgamation Effective Time.
(b) Agreements and Covenants.
(i) The Company shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Company Amalgamation Effective Time.
(ii) Sio NewCo shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to SPAC Amalgamation Effective Time.
(c) Officer Certificate. The Company shall have delivered to SPAC a certificate, dated the Closing Date, signed by an officer of the Company, certifying (on the Company’s behalf and without personal liability) as to the satisfaction of the conditions specified in Section 7.02(a), Section 7.02(b) and Section 7.02(d).
(d) Material Adverse Effect. No Company Material Adverse Effect shall have occurred during the Interim Period.
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Section 7.03 Conditions to the Obligations of the Company. The obligations of the Company to consummate the Amalgamations are subject to the satisfaction or waiver (where permissible) of the following additional conditions:
(a) Representations and Warranties. The representations and warranties of SPAC contained in (x) Section 4.01 (Corporate Organization), Section 4.02 (Organizational Documents), Section 4.03(d) (Capitalization), Section 4.04 (Authority Relative to This Agreement), Section 4.05(a)(i) (No Conflict; Required Filings and Consents), Section 4.10 (Board Approval; Vote Required), and Section 4.11 (Brokers) shall each be true and correct in all material respects as of the date hereof, the SPAC Amalgamation Effective Time and the Company Amalgamation Effective Time as though made on and as of such date (except to the extent of any changes that reflect actions permitted in accordance with Section 5.02 and except to the extent that any such representation or warranty expressly is made as of an earlier date, in which case such representation and warranty shall be true and correct as of such specified date), (y) Section 4.03(a) (Capitalization), Section 4.03(b) (Capitalization), Section 4.03(c) (Capitalization), and Section 4.08(a) (Absence of Certain Changes or Events) shall each be true and correct in all respects except for de minimis inaccuracies as of the date hereof, the SPAC Amalgamation Effective Time and as of the Company Amalgamation Effective Time as though made on and as of such date (except to the extent of any changes that reflect actions permitted in accordance with Section 5.02 and except to the extent that any such representation or warranty expressly is made as of an earlier date, in which case such representation and warranty shall be true and correct as of such specified date) and (z) the other provisions of Article IV shall be true and correct in all respects (without giving effect to any “materiality,” “SPAC Material Adverse Effect” or similar qualifiers contained in any such representations and warranties) as of the date hereof, the SPAC Amalgamation Effective Time and the Company Amalgamation Effective Time as though made on and as of such date (except to the extent that any such representation or warranty expressly is made as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), except where the failures of any such representations and warranties to be so true and correct, individually or in the aggregate, would not reasonably be expected to have a SPAC Material Adverse Effect; provided that, for purposes of this Section 7.03(a), a representation or warranty made with respect to SPAC that was true and correct (to the applicable standard set forth above) as of the SPAC Amalgamation Effective Time shall be deemed to be true and correct as of the Company Amalgamation Effective Time.
(b) Agreements and Covenants.
(i) SPAC shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the SPAC Amalgamation Effective Time.
(ii) NewCo shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Company Amalgamation Effective Time.
(c) Officer Certificate. New SPAC shall have delivered to the Company a certificate, dated the Closing Date, signed by the former Chief Executive Officer of SPAC and current Chief Executive Officer of New SPAC, certifying (on SPAC’s behalf and without personal liability) as to the satisfaction of the conditions specified in Section 7.03(a), Section 7.03(b), Section 7.03(d) and Section 7.03(e).
(d) Director Resignations. Each officer and director of New SPAC, in each case immediately prior to the Company Amalgamation Effective Time, shall deliver to the Company an executed written resignation, in form and substance reasonably satisfactory to the Company, effective as of the Company Amalgamation Effective Time.
(e) Material Adverse Effect. No SPAC Material Adverse Effect shall have occurred during the Interim Period.
(f) Minimum Closing Cash. The Available Closing Cash to be available for use at Closing shall be equal to an amount no less than one hundred thirty million dollars ($130,000,000); provided that the Debt-to-Other Cash Ratio shall be no greater than 0.5882.
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Article
VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.01 Termination. This Agreement may be terminated and the Transactions may be abandoned at any time prior to the Company Amalgamation Effective Time, notwithstanding any requisite approval and adoption of this Agreement and the Transactions by the shareholders of SPAC or the Company, as follows:
(a) by mutual written consent of SPAC and the Company;
(b) by either SPAC or the Company if the Company Amalgamation Effective Time shall not have occurred prior to November 13, 2024 (the “Outside Date”); provided, however, that this Agreement may not be terminated under this Section 8.01(b) by or on behalf of any Party that either directly or indirectly through its Affiliates is in breach or violation of any representation, warranty, covenant, agreement or obligation contained herein and such breach or violation is the principal cause of the failure of a condition set forth in Article VII on or prior to the Outside Date, provided further, however, that, in the event that the SEC has not declared effective under the Securities Act the Registration Statement by the date which is sixty (60) days prior to the Outside Date, then either the Company or SPAC may extend the Outside Date for an additional sixty-five (65) days by written notice to the other Party (email sufficient);
(c) by either SPAC or the Company if any Governmental Authority shall have enacted, issued, promulgated, enforced or entered any injunction, order, decree or ruling (whether temporary, preliminary or permanent) which has become final and nonappealable and has the effect of permanently restraining, enjoining or otherwise prohibiting the Transactions, except that, for greater certainty, this termination right shall not apply as a result of the refusal (for any reason or no reason) of the Court to issue a Final Order in respect of the Plan of Arrangement;
(d) by either SPAC or the Company if SPAC Shareholder Approval of the Transaction Proposals is not obtained at the SPAC Shareholders Meeting in accordance with the Registration Statement / Proxy Statement, the Companies Act, the SPAC Memorandum and Articles of Association and the rules and regulations of the New York Stock Exchange, except that the right to terminate this Agreement under this Section 8.01(d) shall not be available to any Party whose failure to fulfill any of its obligations or breach of any of its representations and warranties under this Agreement has been the cause of, or resulted in, the failure to receive SPAC Shareholder Approval;
(e) by either SPAC or the Company if the Company Required Approval in respect of the Arrangement Resolution shall not have been obtained at the Company Shareholders Meeting in accordance with the Interim Order and applicable Law except that the right to terminate this Agreement under this Section 8.01(e) shall not be available to any Party whose failure to fulfill any of its obligations or breach of any of its representations and warranties under this Agreement has been the cause of, or resulted in, the failure to receive the Company Shareholder Approval;
(f) by SPAC upon a breach of any representation, warranty, covenant or agreement on the part of the Company or Sio NewCo set forth in this Agreement, or if any representation or warranty of the Company or Sio NewCo shall have become untrue, in either case such that the conditions set forth in Section 7.02 would not be satisfied (“Terminating Company Breach”); provided that SPAC has not waived such Terminating Company Breach and SPAC or NewCo is not then in material breach of their representations, warranties, covenants or agreements in this Agreement; provided, further, that, if such Terminating Company Breach is curable by the Company or Sio NewCo, SPAC may not terminate this Agreement under this Section 8.01(f) for so long as the Company or Sio NewCo continues to exercise commercially reasonable efforts to cure such breach, unless such breach is not cured by the earlier of thirty (30) days after notice of such breach is provided by SPAC to the Company and the Outside Date (it being understood that SPAC may not terminate this Agreement pursuant to this Section 8.01(f) if it shall have materially breached this Agreement and such breach has not been cured);
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(g) by the Company upon a breach of any representation, warranty, covenant or agreement on the part of SPAC or NewCo set forth in this Agreement, or if any representation or warranty of SPAC or NewCo shall have become untrue, in either case such that the conditions set forth in Section 7.03 would not be satisfied (“Terminating SPAC Breach”); provided that the Company has not waived such Terminating SPAC Breach and the Company or Sio NewCo are not then in material breach of their representations, warranties, covenants or agreements in this Agreement; provided, however, that, if such Terminating SPAC Breach is curable by SPAC or NewCo, the Company may not terminate this Agreement under this Section 8.01(g) for so long as SPAC or NewCo continue to exercise their reasonable efforts to cure such breach, unless such breach is not cured by the earlier of thirty (30) days after notice of such breach is provided by the Company to SPAC and the Outside Date (it being understood that the Company may not terminate this Agreement pursuant to this Section 8.01(g) if it shall have materially breached this Agreement and such breach has not been cured); and
(h) by the Company, at any time prior to SPAC’s receipt of SPAC Shareholder Approval, if SPAC or the SPAC Board effects a Change in Recommendation.
Section 8.02 Effect of Termination. In the event of the termination of this Agreement pursuant to Section 8.01, this Agreement shall forthwith become void, and there shall be no liability under this Agreement on the part of any Party, except (i) as set forth in Article IX, and any corresponding definitions set forth in Article I, (ii) in the case of termination subsequent to a willful and material breach of this Agreement by a Party or (iii) in the case of Fraud.
Section 8.03 Expenses. Except as set forth in this Section 8.03, all expenses incurred in connection with this Agreement and the Transactions shall be paid by the Party incurring such expenses; provided that if the Closing shall occur, New SPAC shall pay or cause to be paid: (i) SPAC Transaction Expenses; (ii) the Company Transaction Expenses; and (iii) all fees, expenses and reserves incurred in connection with, or otherwise related to, the Debt Financing (collectively, the “Transaction Expenses”).
Section 8.04 Amendment. This Agreement may be amended in writing by the Parties at any time prior to the Company Amalgamation Effective Time. This Agreement may not be amended except by an instrument in writing signed by each of the Parties.
Section 8.05 Waiver. At any time prior to the Closing, (a) SPAC may (i) extend the time for the performance of any obligation or other act of the Company or Sio NewCo, (ii) waive any inaccuracy in the representations and warranties of the Company or Sio NewCo contained herein or in any document delivered by the Company or Sio NewCo pursuant hereto and (iii) waive compliance with any agreement of the Company or Sio NewCo or any condition to its own obligations contained herein and (b) the Company may (i) extend the time for the performance of any obligation or other act of SPAC or NewCo, (ii) waive any inaccuracy in the representations and warranties of SPAC or NewCo contained herein or in any document delivered by SPAC or NewCo pursuant hereto and (iii) waive compliance with any agreement of SPAC or NewCo or any condition to its own obligations contained herein. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the Party or Parties to be bound thereby. Any such waiver shall constitute a waiver only with respect to the specific matter described in such writing and shall in no way impair the rights of the Party granting such waiver in any other respect or at any other time. Neither the waiver by any of the Parties of a breach of or a default under any of the provisions of this Agreement, nor the failure by any of the Parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder, shall be construed as a waiver of any other breach or default of a similar nature, or as a waiver of any of such provisions, rights or privileges hereunder. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that each Party may otherwise have at law or in equity.
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Article
IX
GENERAL PROVISIONS
Section 9.01 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by email or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 9.01):
if to SPAC or NewCo:
3262 Westheimer Road, Suite 706 Houston, TX 77098 Attention: Bernard J. Duroc-Danner; Sten L. Gustafson Email: bernard.duroc-danner@pyrophytespac.com; sten.gustafson@pyrophytespac.com
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with a copy to:
White & Case LLP 1221 Avenue of the Americas New York, NY 10020-1095 Attention: Elliott M. Smith; Morgan U. Hollins Email: elliott.smith@whitecase.com; morgan.hollins@whitecase.com |
if to the Company or Sio NewCo:
Suite 1930, 440 – 2nd Avenue SW Calgary, Alberta T2P 5E9 Canada Attention: Feisal Somji Email: fsomji@siosilica.com
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with a copy to:
DLA Piper LLP (US) 1251 Avenue of the Americas, 27th Floor New York, NY 10020 Attention: Daniel Kenney; Christopher Giordano; Stephen Alicanti Email: daniel.kenney@dlapiper.com; christopher.giordano@us.dlapiper.com; stephen.alicanti@us.dlapiper.com |
Section 9.02 Nonsurvival of Representations, Warranties and Covenants. None of the representations, warranties, covenants, obligations or other agreements in this Agreement or in any certificate, statement or instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such representations, warranties, covenants, obligations, agreements and other provisions, shall survive the Closing and all such representations, warranties, covenants, obligations or other agreements shall terminate and expire upon the occurrence of the Closing (and there shall be no liability after the Closing in respect thereof), except for (a) those covenants and agreements contained herein that by their terms expressly apply in whole or in part after the Closing and then only with respect to any breaches occurring after the Closing and (b) this Article IX and any corresponding definitions set forth in Article I.
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Section 9.03 Severability. If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of law, or public policy, in whole or in part, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transactions is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the Transactions be consummated as originally contemplated to the fullest extent possible.
Section 9.04 Entire Agreement; Assignment. This Agreement and the Ancillary Agreements constitute the entire agreement among the Parties with respect to the subject matter hereof and supersede, except as set forth in Section 6.03(b), all prior and contemporaneous agreements and undertakings, both written and oral, among the Parties, or any of them, with respect to the subject matter hereof, except for the Confidentiality Agreement. No Party shall assign, grant or otherwise transfer the benefit of the whole or any part of this Agreement or any of the rights hereunder (whether pursuant to a merger, by operation of Law or otherwise) to any Person (other than another Party by operation of Law pursuant to the Amalgamations) without the prior express written consent of the other Parties.
Section 9.05 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each Party, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, other than Section 2.12, Section 6.05(a), Section 6.06, Section 6.13, Section 8.03 and Section 9.11 (which is intended to be for the benefit of the Persons covered thereby and may be enforced by such Persons and in the case of Section 6.13 and Section 8.03, the Key Company Shareholders in consideration for entering into the Support Agreements).
Section 9.06 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to Contracts executed in and to be performed in that State, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of Delaware, except to the extent mandatorily governed by the laws of the Province of Alberta and the federal laws of Canada applicable therein, including the provisions relating to the Arrangement and the Plan of Arrangement (except that the Companies Act shall also apply to the Domestication). All legal actions and proceedings arising out of or relating to this Agreement shall be heard and determined exclusively in any Court of Chancery of the State of Delaware; provided, that if jurisdiction is not then available in a Court of Chancery of the State of Delaware, then any such Action may be brought in any federal court located in the State of Delaware or any other Delaware state court. The Parties hereby (a) irrevocably submit to the exclusive jurisdiction of the aforesaid courts for themselves and with respect to their respective properties for the purpose of any Action arising out of or relating to this Agreement brought by any Party, and (b) agree not to commence any Action relating thereto except in the courts described above in the State of Delaware, other than Actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in the State of Delaware as described herein. Each of the Parties further agrees that notice as provided herein shall constitute sufficient service of process and the Parties further waive any argument that such service is insufficient. Each of the Parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any Action arising out of or relating to this Agreement or the Transactions, (i) any claim that it is not personally subject to the jurisdiction of the courts in the State of Delaware as described herein for any reason, (ii) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) that (A) the Action in any such court is brought in an inconvenient forum, (B) the venue of such Action is improper or (C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
Section 9.07 Waiver of Jury Trial. Each of the Parties hereby waives to the fullest extent permitted by applicable Law any right it may have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement or the Transactions. Each of the Parties (a) certifies that no representative, agent or attorney of any other Party has represented, expressly or otherwise, that such other Party would not, in the event of litigation, seek to enforce that foregoing waiver and (b) acknowledges that it and the other Parties hereto have been induced to enter into this Agreement and the Transactions, as applicable, by, among other things, the mutual waivers and certifications in this Section 9.07.
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Section 9.08 Headings. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.
Section 9.09 Counterparts. This Agreement may be executed and delivered (including executed manually or electronically via DocuSign or other similar services and delivered by facsimile or portable document format (pdf) transmission) in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
Section 9.10 Specific Performance.
(a) The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof, and, accordingly, that the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof (including the Parties’ obligation to consummate the Transactions) without proof of actual damages or otherwise, in addition to any other remedy to which they are entitled at Law or in equity as expressly permitted in this Agreement. Each of the Parties hereby further waives (i) any defense in any action for specific performance that a remedy at Law would be adequate and (ii) any requirement under any Law to post security or a bond as a prerequisite to obtaining equitable relief.
(b) Notwithstanding anything to the contrary in this Agreement, if prior to the Outside Date any Party initiates an Action to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, then the Outside Date shall be automatically extended by: (A) the amount of time during which such Action is pending plus twenty (20) Business Days; or (B) such other time period established by the court presiding over such Action.
Section 9.11 No Recourse. All claims, obligations, liabilities, or causes of action (whether in Contract or in tort, in Law or in equity or otherwise, or granted by statute or otherwise, whether by or through attempted piercing of the corporate, limited partnership or limited liability company veil or any other theory or doctrine, including alter ego or otherwise) that may be based upon, in respect of, arise under, out or by reason of, be connected with, or relate in any manner to this Agreement or the other Transaction Documents, or the negotiation, execution, or performance or non-performance of this Agreement or the other Transaction Documents (including any representation or warranty made in, in connection with, or as an inducement to, this Agreement or the other Transaction Documents), may be made only against (and such representations and warranties are those solely of) the Persons that are expressly identified as parties to this Agreement or the applicable Transaction Document (the “Contracting Parties”) except as set forth in this Section 9.11. In no event shall any Contracting Party have any shared or vicarious liability for the actions or omissions of any other Person. No Person who is not a Contracting Party, including without limitation any current, former or future director, officer, employee, incorporator, member, partner, manager, stockholder, shareholder, Affiliate, agent, financing source, attorney or Representative or assignee of any Contracting Party, or any current, former or future director, officer, employee, incorporator, member, partner, manager, stockholder, shareholder, Affiliate, agent, financing source, attorney or Representative or assignee of any of the foregoing (collectively, the “Nonparty Affiliates”), shall have any liability (whether in Contract or in tort, in Law or in equity or otherwise, or granted by statute or otherwise, whether by or through attempted piercing of the corporate, limited partnership or limited liability company veil or any other theory or doctrine, including alter ego or otherwise) for any obligations or liabilities arising under, out of, in connection with, or related in any manner to this Agreement or the other Transaction Documents or for any claim based on, in respect of, or by reason of this Agreement or the other Transaction Documents or their negotiation, execution, performance, or breach, except with respect to willful misconduct or Fraud against the Person who committed such willful misconduct or Fraud, and, to the maximum extent permitted by applicable Law; and each party waives and releases all such liabilities, claims, causes of action and obligations against any such Nonparty Affiliates. The Parties acknowledge and agree that the Nonparty Affiliates are intended third-party beneficiaries of this Section 9.11. Notwithstanding anything to the contrary herein, none of the Contracting Parties or any Nonparty Affiliate shall be responsible or liable for any multiple, consequential, indirect, special, statutory, exemplary or punitive damages which may be alleged as a result of this Agreement, the Transaction Documents or any other agreement referenced herein or therein or the transactions contemplated hereunder or thereunder, or the termination or abandonment of any of the foregoing, except with respect to willful misconduct or Fraud against the Person who committed such willful misconduct or Fraud, and, to the maximum extent permitted by applicable Law.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
PYROPHYTE ACQUISITION CORP. | ||
By: | /s/ Sten Gustafson | |
Name: | Sten Gustafson | |
Title: | Chief Financial Officer and Director | |
SIO SILICA CORPORATION | ||
By: | /s/ Feisal Somji | |
Name: | Feisal Somji | |
Title: | President and CEO | |
SNOWBANK NEWCO ALBERTA ULC | ||
By: | /s/ Sten Gustafson | |
Name: | Sten Gustafson | |
Title: | Manager | |
SIO SILICA INCORPORATED | ||
By: | /s/ Feisal Somji | |
Name: | Feisal Somji | |
Title: | President and CEO |
[Signature Page to Business Combination Agreement]
Exhibit A
Form of PIPE Subscription Agreement
[See Form 8-K Exhibits 10.1 and 10.2]
Exhibit B
Form of Domestication Articles
See Attached
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Articles of Continuance Business Corporations Act |
Section 188 |
This information is collected in accordance with the Business Corporations Act. It is required to convert an extra-provincial corporation to an Alberta corporation for the purpose of issuance of a certificate of continuance. Collection is authorized under s. 33(a) of the Freedom of Information and Protection of Privacy Act. Questions about the collection can be directed to Service Alberta Contact Centre staff at cr@gov.ab.ca or 780-427-7013 (toll-free 310-0000 within Alberta).
1. | Name of Corporation |
PYROPHYTE ACQUISITION CORP. |
2. | The classes of shares, and any maximum number of shares that the corporation is authorized to issue: |
See Schedule re Authorized Shares |
3. | Restrictions on share transfers (if there are no restrictions, enter “NONE”): |
None |
4. | Number, or minimum and maximum number of directors: |
Minimum: 3 Maximum: 9 |
5. | If the corporation is restricted FROM carrying on a certain business or restricted TO carrying on a certain business, specify the restrictions (if there are no restrictions, enter “NONE”): |
None |
6. | Other rules or provisions (if there are no restrictions, enter “NONE”): |
See Schedule re Other Provisions |
7. | If a change of name is effected, indicate previous name: |
8. | Current Extra-Provincial Registration (if applicable): |
Corporation’s Name on Alberta Extra-Provincial Registration | Alberta Corporate Access Number |
9. | Current Jurisdiction Information |
Name (if different from the corporation’s name as stated above) | Registration Number in Current Jurisdiction |
PYROPHYTE ACQUISITION CORP. | 371601 |
Jurisdiction | Date of Formation in Current Jurisdiction (yyyy-mm-dd) |
Cayman Islands | 2021-02-12 |
10. | Authorized Representative/Authorized Signing Authority for the Corporation |
Name | Relationship to Corporation | ||
Date of submission | Signature |
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SCHEDULE RE AUTHORIZED SHARES
The authorized capital of the Corporation shall consist of an unlimited number of Class A Common voting shares, an unlimited number of Class B Common non-voting shares and an unlimited number of Preferred shares, issuable in series, all shares without nominal or par value.
Definitions:
a. | “Business Combination”: means a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination involving the Corporation, with one or more businesses or entities (the “target business”), which Business Combination must not be solely effectuated with another blank cheque corporation or a similar corporation with nominal operations. |
b. | “Equity-linked Securities” means any debt or equity securities that are convertible, exercisable or exchangeable for Class A Shares issued in a financing transaction in connection with a Business Combination, including but not limited to a private placement of equity or debt. |
c. | “IPO” means the Corporation’s initial public offering of securities. |
The rights, privileges, restrictions and conditions attaching to the shares are as set out herein.
1. | The rights, privileges, restrictions and conditions attaching to the Class A Common voting shares (the “Class A Shares”) are as follows: |
(a) | Payment of Dividends: The holders of the Class A Shares shall be entitled to receive dividends if, as and when declared by the board of directors of the Corporation out of the assets of the Corporation properly applicable to the payment of dividends in such amounts and payable in such manner as the board of directors may from time to time determine. Subject to the rights of the holders of any other class of shares of the Corporation entitled to receive dividends in priority to or concurrently with the holders of the Class A Shares, the board of directors may in its sole discretion declare dividends on the Class A Shares to the exclusion of any other class of shares of the Corporation. |
(b) | Participation upon Liquidation, Dissolution or Winding Up: In the event of the liquidation, dissolution or winding up of the Corporation or other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs, the holders of the Class A Shares shall, subject to the rights of the holders of any other class of shares of the Corporation entitled to receive assets of the Corporation upon such a distribution in priority to or concurrently with the holders of the Class A Shares, be entitled to participate in the distribution. Such distribution shall be made in equal amounts per share on all the Class A Shares at the time outstanding without preference or distinction. |
(c) | Voting Rights: The holders of the Class A Shares shall be entitled to receive notice of and to attend all annual and special meetings of the shareholders of the Corporation and to one (1) vote in respect of each Class A Share held at all such meetings. |
2. | The rights, privileges, restrictions and conditions attaching to the Class B Common non-voting shares (the “Class B Shares”) are as follows: |
(a) | Payment of Dividends: The holders of the Class B Shares shall be entitled to receive dividends if, as and when declared by the board of directors of the Corporation out of the assets of the Corporation properly applicable to the payment of dividends in such amounts and payable in such manner as the board of directors may from time to time determine. Subject to the rights of the holders of any other class of shares of the Corporation entitled to receive dividends in priority to or concurrently with the holders of the Class B Shares, the board of directors may in its sole discretion declare dividends on the Class B Shares to the exclusion of any other class of shares of the Corporation. |
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(b) | Participation upon Liquidation, Dissolution or Winding Up: In the event of the liquidation, dissolution or winding up of the Corporation or other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs, the holders of the Class B Shares shall, subject to the rights of the holders of any other class of shares of the Corporation entitled to receive assets of the Corporation upon such a distribution in priority to or concurrently with the holders of the Class B Shares, be entitled to participate in the distribution. Such distribution shall be made in equal amounts per share on all the Class B Shares at the time outstanding without preference or distinction. |
(c) | Class B Share Conversion: |
(i) | The rights attaching to the Class A Shares and Class B Shares shall rank pari passu in all respects, and the Class A Shares and Class B Shares shall vote together as a single class on all matters with the exception that the holder of a Class B Share shall have the Conversion Rights referred to in this Article. |
(ii) | Class B Shares shall automatically convert into Class A Shares on a one-for-one basis (the “Initial Conversion Ratio”) automatically on the day of the closing of a Business Combination. |
(iii) | Notwithstanding the Initial Conversion Ratio, in the case that additional Class A Shares or any other Equity-linked Securities, are issued or deemed issued in excess of the amounts issued in the IPO (including pursuant to the Over-Allotment Option) and related to or in connection with the closing of a Business Combination, all Class B Shares in issue shall automatically convert into Class A Shares at the time of the closing of a Business Combination, the ratio for which the Class B Shares shall convert into Class A Shares will be adjusted so that the number of Class A Shares issuable upon the conversion of all Class B Shares will equal, in the aggregate, 25 per cent of the sum of: (a) the total number of all Class A Shares in issue upon completion of the IPO (including any Class A Shares issued pursuant to the Over-Allotment Option and excluding any Class A Shares underlying the private placement warrants issued to the Sponsor); plus (b) all Class A Shares issued or deemed issued or issuable upon conversion or exercise of any Equity-linked Securities or rights issued or deemed issued in connection with a Business Combination, excluding any Shares or Equity-linked Securities or rights issued, or to be issued, to any seller in a Business Combination, any private placement-equivalent warrants issued to the Sponsor or an affiliate of the Sponsor or to the Corporation’s officers and directors upon conversion of working capital loans made to the Corporation; minus (c) the number of shares redeemed in connection with a Business Combination, provided that such conversion of Class B Shares into Class A Shares shall never be less than the Initial Conversion Ratio. |
(iv) | Notwithstanding anything to the contrary contained herein, the foregoing adjustment to the Initial Conversion Ratio may be waived as to any particular issuance or deemed issuance of additional Class A Shares or Equity-linked Securities by the written consent or agreement of holders of a majority of the Class B Shares then in issue consenting or agreeing separately as a separate class. |
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(v) | The foregoing conversion ratio shall also be adjusted to account for any subdivision (by share split, subdivision, exchange, capitalisation, rights issue, reclassification, recapitalisation or otherwise) or combination (by reverse share split, share consolidation, exchange, reclassification, recapitalisation or otherwise) or similar reclassification or recapitalisation of the Class A Shares in issue into a greater or lesser number of shares occurring after the original filing of the Articles without a proportionate and corresponding subdivision, combination or similar reclassification or recapitalisation of the Class B Shares in issue. |
(vi) | Each Class B Share shall convert into its pro rata number of Class A Shares pursuant to this Article. The pro rata share for each holder of Class B Shares will be determined as follows: each Class B Share shall convert into such number of Class A Shares as is equal to the product of 1 multiplied by a fraction, the numerator of which shall be the total number of Class A Shares into which all of the Class B Shares in issue shall be converted pursuant to this Article and the denominator of which shall be the total number of Class B Shares in issue at the time of conversion. |
(vii) | References in this Article to “converted”, “conversion” or “exchange” shall mean the compulsory redemption without notice of Class B Shares of any Shareholder and, on behalf of such Shareholders, automatic application of such redemption proceeds in paying for such new Class A Shares into which the Class B Shares have been converted or exchanged at a price per Class B Share necessary to give effect to a conversion or exchange calculated on the basis that the Class A Shares to be issued as part of the conversion or exchange will be issued at par. The Class A Shares to be issued on an exchange or conversion shall be registered in the name of such Shareholder or in such name as the Shareholder may direct. |
(viii) | Notwithstanding anything to the contrary in this Article, in no event may any Class B Share convert into Class A Shares at a ratio that is less than one-for-one. |
3. | The rights, privileges, restrictions and conditions attaching to the Preferred shares (the “Preferred Shares”) are as follows: |
(a) | Series: The Preferred Shares may at any time and from time to time be issued in one or more series. Subject to the provisions of clauses 3(a) and (b), the board of directors of the Corporation may from time to time before the issue thereof fix the number of shares in, and determine the designation, rights, privileges, restrictions and conditions attaching to the shares of, each series of Preferred Shares. |
(b) | Idem: The Preferred Shares shall be entitled to priority over the Class A and Class B Shares and all other shares ranking junior to the Preferred Shares with respect to the payment of dividends and the distribution of assets of the Corporation in the event of any liquidation, dissolution or winding up of the Corporation or other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs. |
(c) | Idem: The Preferred Shares of each series shall rank on a parity with the Preferred Shares of every other series with respect to priority in the payment of dividends and in the distribution of assets of the Corporation in the event of any liquidation, dissolution or winding up of the Corporation or other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs. |
B-4
SCHEDULE RE OTHER PROVISIONS
Appointment of Additional Directors
2. | The directors may, between annual general meetings, appoint one or more additional directors of the Corporation to serve until the next annual meeting, but the number of additional directors shall not at any time exceed one-third of the number of directors who held office at the expiration of the last annual meeting of the Corporation. |
Lien on Shares
3. | The Corporation has a lien on the shares of a shareholder or their legal representative for a debt of that shareholder to the Corporation, provided that such lien shall be released in respect of shares transferred by such shareholder (or their legal representative) as permitted pursuant to the terms of these Articles. |
Meetings outside Alberta
4. | Meetings of directors and shareholders may be held outside Alberta. |
Waiver of Business Opportunity
5. | To the fullest extent permitted by Business Corporations Act (Alberta) (“Act”), no individual serving as a Director or an Officer (“Management”) shall have any duty, except and to the extent expressly assumed by contract, to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as the Corporation. To the fullest extent permitted by the Act, the Corporation renounces any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, any potential transaction or matter which may be a corporate opportunity for Management, on the one hand, and the Corporation, on the other. Except to the extent expressly assumed by contract, to the fullest extent permitted by the Act, Management shall have no duty to communicate or offer any such corporate opportunity to the Corporation and shall not be liable to the Corporation or its shareholders for breach of any fiduciary duty as a shareholder, director and/or officer solely by reason of the fact that such party pursues or acquires such corporate opportunity for itself, himself or herself, directs such corporate opportunity to another person, or does not communicate information regarding such corporate opportunity to the corporation. |
6. | The Corporation renounces any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, any potential transaction or matter which may be a corporate opportunity for both the Corporation and Management, about which a director and/or officer who is also a shareholder of Management acquires knowledge. |
7. | To the extent a court might hold that the conduct of any activity related to a corporate opportunity that is renounced in this Article to be a breach of duty to the Corporation or its shareholder, the Corporation hereby waives, to the fullest extent permitted by Act, any and all claims and causes of action that the Corporation may have for such activities. To the fullest extent permitted by Act, the provisions of this Article apply equally to activities conducted in the future and that have been conducted in the past. |
Business Combination
8. | Definitions: |
The following words and phrases shall have the respective meanings ascribed to them as follows:
a. | “Business Combination”: means a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination involving the Corporation, with one or more businesses or entities (the “target business”), which Business Combination must not be solely effectuated with another blank cheque corporation or a similar corporation with nominal operations. |
B-5
b. | “Exchange Act” means the United States Securities Exchange Act of 1934, as amended, or any similar U.S. federal statute and the rules and regulations of the Securities and Exchange Commission thereunder, all as the same shall be in effect at the time. |
c. | “Founders” means all the shareholders immediately prior to the consummation of the IPO. |
d. | “IPO” means the Corporation’s initial public offering of securities. |
e. | “Public Share”: means a Class A Common Shares (as described in the Articles) issued as part of the units issued in the IPO. |
f. | “Sponsor” means Pyrophyte Acquisition LLC, a Cayman Islands exempted company, and its successors or assigns. |
g. | “Trust Account”: means the trust account established by the Corporation upon the consummation of its IPO and into which a certain amount of the net proceeds of the IPO, together with a certain amount of the proceeds of a private placement of warrants simultaneously with the closing date of the IPO, was deposited. |
9. | Notwithstanding any other provision of the Articles, this Article shall apply during the period commencing upon the adoption of the Articles and terminating upon the first to occur of the consummation of a Business Combination and the full distribution of the Trust Account pursuant to this Article. In the event of a conflict between this Article and any other Articles, the provisions of this Article shall prevail. |
10. | Prior to the consummation of a Business Combination, the Corporation shall either: |
a. | submit such Business Combination to its Shareholders for approval; or |
b. | provide Shareholders with the opportunity to have their Shares repurchased by means of a tender offer for a per-Share repurchase price payable in cash, equal to the aggregate amount then on deposit in the Trust Account, calculated as of two business days prior to the consummation of such Business Combination, including interest earned on the Trust Account (net of taxes paid or payable, if any), divided by the number of then issued Public Shares, provided that the Corporation shall not repurchase Public Shares in an amount that would cause the Corporation’s net tangible assets to be less than US$5,000,001. |
11. | If the Corporation initiates any tender offer in accordance with Rule 13e-4 and Regulation 14E of the Exchange Act in connection with a proposed Business Combination, it shall file tender offer documents with the Securities and Exchange Commission prior to completing such Business Combination which contain substantially the same financial and other information about such Business Combination and the redemption rights as is required under Regulation 14A of the Exchange Act. If, alternatively, the Corporation holds a general meeting to approve a proposed Business Combination, the Corporation will conduct any redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, and not pursuant to the tender offer rules, and file proxy materials with the Securities and Exchange Commission. |
12. | At a general meeting called for the purposes of approving a Business Combination pursuant to this Article, in the event that such Business Combination is approved by Ordinary Resolution, the Corporation shall be authorised to consummate such Business Combination. |
B-6
13. | Any Shareholder holding Public Shares who is not the Sponsor, a Founder, Officer or Director may, at least two business days’ prior to any vote on a Business Combination, elect to have their Public Shares redeemed for cash, in accordance with any applicable requirements provided for in the related proxy materials (the “IPO Redemption”), provided that no such Shareholder acting together with any Affiliate of his or any other person with whom he is acting in concert or as a partnership, limited partnership, syndicate, or other group for the purposes of acquiring, holding, or disposing of Shares may exercise this redemption right with respect to more than 15 per cent of the Public Shares in the aggregate without the prior consent of the Corporation and provided further that any beneficial holder of Public Shares on whose behalf a redemption right is being exercised must identify itself to the Corporation in connection with any redemption election in order to validly redeem such Public Shares. If so demanded, the Corporation shall pay any such redeeming Shareholder, regardless of whether he is voting for or against such proposed Business Combination, a per-Share redemption price payable in cash, equal to the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to the consummation of the Business Combination, including interest earned on the Trust Account (such interest shall be net of taxes payable) and not previously released to the Corporation to pay its taxes, divided by the number of then issued Public Shares (such redemption price being referred to herein as the “Redemption Price”), but only in the event that the applicable proposed Business Combination is approved and consummated. The Corporation shall not redeem Public Shares that would cause the Corporation’s net tangible assets to be less than US$5,000,001 following such redemptions (the “Redemption Limitation”). |
14. | A Shareholder may not withdraw a Redemption Notice once submitted to the Corporation unless the Directors determine (in their sole discretion) to permit the withdrawal of such redemption request (which they may do in whole or in part). |
15. | In the event that the Corporation does not consummate a Business Combination by April 29, 2024, or such later time as the Shareholders may approve in accordance with the Articles, the Corporation shall: |
a. | cease all operations except for the purpose of winding up; |
b. | as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-Share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Corporation (less taxes payable and up to US$100,000 of interest to pay dissolution expenses), divided by the number of then Public Shares in issue, which redemption will completely extinguish public Shareholders’ rights as Shareholders (including the right to receive further liquidation distributions, if any); and |
c. | as promptly as reasonably possible following such redemption, subject to the approval of the Corporation’s remaining Shareholders and the Directors, liquidate and dissolve, |
subject in each case to its obligations under Alberta laws to provide for claims of creditors and other requirements of the Act.
16. | In the event that any amendment is made to this Article: |
a. | to modify the substance or timing of the Corporation’s obligation to allow redemption in connection with a Business Combination or redeem 100 per cent of the Public Shares if the Corporation does not consummate a Business Combination by April 29, 2024, or such later time as the Shareholders may approve in accordance with the Articles; or |
b. | with respect to any other provision relating to Shareholders’ rights or pre-Business Combination activity, |
each holder of Public Shares who is not the Sponsor, a Founder, Officer or Director shall be provided with the opportunity to redeem their Public Shares upon the approval or effectiveness of any such amendment at a per-Share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Corporation to pay its taxes, divided by the number of then outstanding Public Shares. The Corporation’s ability to provide such redemption in this Article is subject to the Redemption Limitation.
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17. | A holder of Public Shares shall be entitled to receive distributions from the Trust Account only in the event of an IPO Redemption, a repurchase of Shares by means of a tender offer pursuant to this Article, or a distribution of the Trust Account pursuant to this Article. In no other circumstance shall a holder of Public Shares have any right or interest of any kind in the Trust Account. |
18. | After the issue of Public Shares, and prior to the consummation of a Business Combination, the Corporation shall not issue additional Shares or any other securities that would entitle the holders thereof to: |
a. | receive funds from the Trust Account; or |
b. | vote as a class with Public Shares on a Business Combination. |
19. | A Director may vote in respect of a Business Combination in which such Director has a conflict of interest with respect to the evaluation of such Business Combination. Such Director must disclose such interest or conflict to the other Directors. |
20. | A Business Combination must not be effectuated solely with another blank cheque Corporation or a similar Corporation with nominal operations. |
B-8
Exhibit C
Form of New SPAC Articles
See Attached
Articles of Amalgamation
Business Corporations Act
Sections 181 and 187
This information is collected in accordance with the Business Corporations Act. It is required to collect an amalgamated Alberta corporation’s articles for the purpose of issuing a certificate of amalgamation. Collection is authorized under s. 33(a) of the Freedom of Information and Protection of Privacy Act. Questions about the collection can be directed to Service Alberta Contact Centre staff at cr@gov.ab.ca or 780-427-7013 (toll-free 310-0000 within Alberta).
1. | Name of Amalgamated Corporation |
SIO SILICA INCORPORATED |
2. | The classes of shares, and any maximum number of shares that the corporation is authorized to issue: |
SCHEDULE “A” ATTACHED. |
3. | Restrictions on share transfers (if any): |
NONE. |
4. | Number, or minimum and maximum number of directors that the corporation may have: |
Min: 3 Max: 11 |
5. | If the corporation is restricted FROM carrying on a certain business or restricted TO carrying on a certain business, specify the restrictions |
None. NONE. |
6. | Other rules or provisions (if any): |
SCHEDULE “B” ATTACHED |
7. | Amalgamating Corporations |
Name | Corporate Access Number |
SIO SILICA INCORPORATED | 2025016003 |
PYROPHYTE ACQUISITION CORP. | [to be obtained following the Domestication] |
8. Authorized Representative/Authorized Signing Authority for the Corporation
Last Name, First Name, Middle Name | Relationship to Corporation | |
Telephone Number (optional) | Email Address (optional) | |
Date of submission (yyyy-mm-dd) | Signature |
C-1
SCHEDULE “A”
THE CLASSES OF SHARES AND ANY MAXIMUM NUMBER OF SHARES THAT THE CORPORATION IS AUTHORIZED TO ISSUE ARE:
1. | An unlimited number of Class A Common shares, the holders of which are entitled: |
(a) | to receive notice of and to attend and vote at all meetings of shareholders, except meetings at which only holders of a specified class of shares are entitled to vote; |
(b) | to receive any dividend declared by the Corporation on this class of shares; provided that the Corporation shall be entitled to declare dividends on the Preferred shares, or on any of such classes of shares without being obliged to declare any dividends on the Class A Common shares of the Corporation; |
(c) | subject to the rights, privileges, restrictions and conditions attaching to any other class of shares of the Corporation, to receive the remaining property of the Corporation upon dissolution in equal rank with the holders of all other Class A Common shares of the Corporation; and |
(d) | to the rights, privileges and restrictions normally attached to common shares; |
2. | An unlimited number of Preferred shares, which as a class, have attached thereto the following rights, privileges, restrictions and conditions: |
(a) | the Preferred shares may from time to time be issued in one or more series, and the Directors may fix from time to time before such issue the number of Preferred shares which is to comprise each series and the designation, rights, privileges, restrictions and conditions attaching to each series of Preferred shares including, without limiting the generality of the foregoing, any voting rights, the rate or amount of dividends or the method of calculating dividends, the dates of payment thereof, the terms and conditions of redemption, purchase and conversion if any, and any sinking fund or other provisions; |
(b) | the Preferred shares of each series shall, with respect to the payment of dividends and the distribution of assets or return of capital in the event of liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or any other return of capital or distribution of the assets of the Corporation amongst its shareholders for the purpose of winding up its affairs, be entitled to preference over the voting and non-voting common shares and over any other shares of the Corporation ranking by their terms junior to the Preferred shares of that series. The Preferred shares of any series may also be given such other preferences, not inconsistent with these Articles, over the Class A Common shares and any other such Preferred shares as may be fixed in accordance with clause (2)(a); and |
(c) | if any cumulative dividends or amounts payable on the return of capital in respect of a series of Preferred shares are not paid in full, all series of Preferred shares shall participate rateably in respect of accumulated dividends and return of capital. |
C-2
SCHEDULE “B”
OTHER RULES OR PROVISIONS (IF ANY):
(a) The Directors may, between Annual General Meetings, appoint 1 or more additional Directors of the Corporation to serve until the next Annual General Meeting, but the number of additional Directors shall not at any time exceed 1/3 of the number of Directors who held office at the expiration of the last Annual Meeting of the Corporation.
(b) Meetings of shareholders of the Corporation shall be held anywhere in or outside of Canada that the directors determine.
C-3
Exhibit D
Form of Company Closing Articles
See Attached
![]() |
Articles of Amalgamation |
Business Corporations Act
Sections 181 and 187
This information is collected in accordance with the Business Corporations Act. It is required to collect an amalgamated Alberta corporation’s articles for the purpose of issuing a certificate of amalgamation. Collection is authorized under s. 33(a) of the Freedom of Information and Protection of Privacy Act. Questions about the collection can be directed to Service Alberta Contact Centre staff at cr@gov.ab.ca or 780-427-7013 (toll-free 310-0000 within Alberta).
1. | Name of Amalgamated Corporation |
SIO SILICA CORPORATION |
2. | The classes of shares, and any maximum number of shares that the corporation is authorized to issue: |
SCHEDULE “A” ATTACHED. |
3. | Restrictions on share transfers (if any): |
NO SHARES OF THE CORPORATION SHALL BE TRANSFERRED WITHOUT THE APPROVAL OF THE BOARD OF DIRECTORS. |
4. | Number, or minimum and maximum number of directors that the corporation may have: |
Min: 1 Max: 11 |
5. | If the corporation is restricted FROM carrying on a certain business or restricted TO carrying on a certain business, specify the restrictions |
None. NONE. |
6. | Other rules or provisions (if any): |
SCHEDULE “B” ATTACHED. |
7. | Amalgamating Corporations |
Name | Corporate Access Number |
SIO SILICA CORPORATION | 2023231802 |
SNOWBANK NEWCO ALBERTA ULC |
2025557766 |
8. | Authorized Representative/Authorized Signing Authority for the Corporation |
Last Name, First Name, Middle Name | Relationship to Corporation | |
Telephone Number(optional) | Email Address (optional) | |
Date of submission (yyyy-mm-dd) | Signature |
D-1
SCHEDULE “A”
THE CLASSES OF SHARES AND ANY MAXIMUM NUMBER OF SHARES THAT THE CORPORATION IS AUTHORIZED TO ISSUE ARE:
1. | An unlimited number of Common shares, the holders of which are entitled: |
(a) | to receive notice of and to attend and vote at all meetings of shareholders, except meetings at which only holders of a specified class of shares are entitled to vote; | |
(b) | to receive any dividend declared by the Corporation on this class of shares; provided that the Corporation shall be entitled to declare dividends on the Preferred shares, or on any of such classes of shares without being obliged to declare any dividends on the Common shares of the Corporation; | |
(c) | subject to the rights, privileges, restrictions and conditions attaching to any other class of shares of the Corporation, to receive the remaining property of the Corporation upon dissolution in equal rank with the holders of all other Common shares of the Corporation; and | |
(d) | to the rights, privileges and restrictions normally attached to common shares; |
2. | An unlimited number of Preferred shares, which as a class, have attached thereto the following rights, privileges, restrictions and conditions: |
(a) | the Preferred shares may from time to time be issued in one or more series, and the Directors may fix from time to time before such issue the number of Preferred shares which is to comprise each series and the designation, rights, privileges, restrictions and conditions attaching to each series of Preferred shares including, without limiting the generality of the foregoing, any voting rights, the rate or amount of dividends or the method of calculating dividends, the dates of payment thereof, the terms and conditions of redemption, purchase and conversion if any, and any sinking fund or other provisions; | |
(b) | the Preferred shares of each series shall, with respect to the payment of dividends and the distribution of assets or return of capital in the event of liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or any other return of capital or distribution of the assets of the Corporation amongst its shareholders for the purpose of winding up its affairs, be entitled to preference over the voting and non-voting Common shares and over any other shares of the Corporation ranking by their terms junior to the Preferred shares of that series. The Preferred shares of any series may also be given such other preferences, not inconsistent with these Articles, over the Common shares and any other such Preferred shares as may be fixed in accordance with clause (2)(a); and | |
(c) | if any cumulative dividends or amounts payable on the return of capital in respect of a series of Preferred shares are not paid in full, all series of Preferred shares shall participate rateably in respect of accumulated dividends and return of capital. |
D-2
SCHEDULE “B”
OTHER RULES OR PROVISIONS (IF ANY):
(a) The Directors may, between Annual General Meetings, appoint 1 or more additional Directors of the Corporation to serve until the next Annual General Meeting, but the number of additional Directors shall not at any time exceed 1/3 of the number of Directors who held office at the expiration of the last Annual Meeting of the Corporation.
(b) Meetings of shareholders of the Corporation shall be held anywhere in or outside of Canada that the directors determine.
D-3
Exhibit E
Form of Lock-Up Agreement
[See Form 8-K Exhibit 10.4]
Exhibit F
Form of New SPAC Closing Articles
See Attached
![]() |
Restated Articles of Incorporation |
Business Corporations Act Section 180 |
This information is collected in accordance with the Business Corporations Act. It is required to update an Alberta corporation’s articles for the purpose of issuing a certificate of restated articles. Collection is authorized under s. 33(a) of the Freedom of Information and Protection of Privacy Act. Questions about the collection can be directed to Service Alberta Contact Centre staff at cr@gov.ab.ca or 780-427-7013 (toll-free 310-0000 within Alberta).
1. | Name of Corporation | 2. Corporate Access Number |
Sio Silica Corporation | [insert corporate access number] |
3. | The classes of shares, and any maximum number of shares that the corporation is authorized to issue: |
See Schedule “A” attached hereto |
4. | Restrictions on share transfers (if any): |
None |
5. | Number, or minimum and maximum number of directors: |
Minimum: three (3) - Maximum eleven (11) |
6. | If the corporation is restricted FROM carrying on a certain business or restricted TO carrying on a certain business, specify the restrictions |
None. |
7. | Other rules or provisions (if any): |
See Schedule “B” attached hereto |
These restated articles of incorporation consolidate and supercede the articles of incorporation as previously amended. These restated articles of incorporation do not substantively change the content or meaning of the articles of incorporation as previously amended.
8. | Authorized Representative/Authorized Signing Authority for the Corporation |
Last Name, First Name, Middle Name | Relationship to Corporation | |
Telephone Number(optional) | Email Address (optional) | |
Date of submission (yyyy-mm-dd) | Signature |
F-1
SCHEDULE “A”
THE CLASSES OF SHARES AND ANY MAXIMUM NUMBER OF SHARES THAT THE CORPORATION IS AUTHORIZED TO ISSUE ARE:
1. | An unlimited number of Class A Common shares, the holders of which are entitled: |
(a) | to receive notice of and to attend and vote at all meetings of shareholders, except meetings at which only holders of a specified class of shares are entitled to vote; |
(b) | to receive any dividend declared by the Corporation on this class of shares; provided that the Corporation shall be entitled to declare dividends on the Preferred shares, or on any of such classes of shares without being obliged to declare any dividends on the Class A Common shares of the Corporation; |
(c) | subject to the rights, privileges, restrictions and conditions attaching to any other class of shares of the Corporation, to receive the remaining property of the Corporation upon dissolution in equal rank with the holders of all other Class A Common shares of the Corporation; and |
(d) | to the rights, privileges and restrictions normally attached to common shares; |
2. | An unlimited number of Preferred shares, which as a class, have attached thereto the following rights, privileges, restrictions and conditions: |
(a) | the Preferred shares may from time to time be issued in one or more series, and the Directors may fix from time to time before such issue the number of Preferred shares which is to comprise each series and the designation, rights, privileges, restrictions and conditions attaching to each series of Preferred shares including, without limiting the generality of the foregoing, any voting rights, the rate or amount of dividends or the method of calculating dividends, the dates of payment thereof, the terms and conditions of redemption, purchase and conversion if any, and any sinking fund or other provisions; |
(b) | the Preferred shares of each series shall, with respect to the payment of dividends and the distribution of assets or return of capital in the event of liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or any other return of capital or distribution of the assets of the Corporation amongst its shareholders for the purpose of winding up its affairs, be entitled to preference over the voting and non-voting common shares and over any other shares of the Corporation ranking by their terms junior to the Preferred shares of that series. The Preferred shares of any series may also be given such other preferences, not inconsistent with these Articles, over the Class A Common shares and any other such Preferred shares as may be fixed in accordance with clause (2)(a); and |
(c) | if any cumulative dividends or amounts payable on the return of capital in respect of a series of Preferred shares are not paid in full, all series of Preferred shares shall participate rateably in respect of accumulated dividends and return of capital. |
F-2
SCHEDULE “B”
OTHER RULES OR PROVISIONS (IF ANY):
(a) The Directors may, between Annual General Meetings, appoint 1 or more additional Directors of the Corporation to serve until the next Annual General Meeting, but the number of additional Directors shall not at any time exceed 1/3 of the number of Directors who held office at the expiration of the last Annual Meeting of the Corporation.
(b) Meetings of shareholders of the Corporation shall be held anywhere in or outside of Canada that the directors determine.
F-3
Exhibit G
Form of Registration Rights Agreement
See Attached
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of November 13, 2023, is made and entered into by and among Sio Silica Corporation, an Alberta corporation (such entity, following the Business Combination (as defined below), the “Company”), Pyrophyte Acquisition LLC, a Delaware limited liability company (the “Sponsor”), and the undersigned parties listed under Holder on the signature pages hereto (each such party, together with the Sponsor and any person or entity who hereafter becomes a party to this Agreement pursuant to Section 5.2 of this Agreement, a “Holder” and collectively, the “Holders”).
RECITALS
WHEREAS, on October 26, 2021, Pyrophyte Acquisition Corp., a Cayman Islands exempted company (the “SPAC”), the Sponsor and certain other security holders named therein (the “SPAC Holders”) entered into that certain Registration Rights Agreement (the “SPAC Registration Rights Agreement”), pursuant to which the SPAC granted the Sponsor and the SPAC Holders certain registration rights with respect to certain securities of the SPAC;
WHEREAS, on November 13, 2023, the SPAC, Sio Silica Corporation, an Alberta corporation (“Sio Silica”), Sio Silica Incorporated, an Alberta corporation wholly owned by Feisal Somji, a nominee of Sio Silica (such entity, prior to the Business Combination, “Sio NewCo”), and Snowbank NewCo Alberta ULC, an Alberta unlimited liability corporation wholly owned by the SPAC (“NewCo”), entered into that certain Business Combination Agreement (as amended, the “BCA”), pursuant to which, among other things, on or about the date hereof, (i) SPAC transferred by way of continuation from the Cayman Islands to Alberta and domesticated as an Alberta corporation, (ii) SPAC amalgamated with Sio NewCo to form the Company and (iii) Sio Silica amalgamated with NewCo to form a new wholly-owned subsidiary of the Company (collectively, the “Business Combination”);
WHEREAS, after the closing of the Business Combination (the “Closing”), the Holders own Class A common shares in the authorized share capital of the Company (“Common Shares”) and warrants to purchase [●] Common Shares (the “Private Placement Warrants”); and
WHEREAS, in connection with the Closing, the Company and the SPAC Holders desire to amend and restate the SPAC Registration Rights Agreement in its entirety as set forth herein, and the other Holders desire to enter into this Agreement, pursuant to which the Company shall grant the Holders certain registration rights with respect to certain securities of the Company, as set forth in this Agreement.
NOW, THEREFORE, in consideration of the representations, covenants and agreements contained herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The terms defined in this Article I shall, for all purposes of this Agreement, have the respective meanings set forth below:
“Action” shall mean material litigation, suit, claim, charge, complaint, grievance, action, proceeding, arbitration, audit or investigation by or before any Governmental Authority.
“Agreement” shall have the meaning given in the Preamble.
“BCA” shall have the meaning given in the Recitals.
“Block Trade” shall have the meaning given to it in subsection 2.3.1 of this Agreement.
“Board” shall mean the board of directors of the Company.
“Business Combination” shall have the meaning given in the Recitals.
“Commission” shall mean the United States Securities and Exchange Commission.
“Common Shares” shall have the meaning given in the Recitals.
“Company” shall have the meaning given in the Preamble.
“Demanding Holder” shall mean any Holder or group of Holders that together elects to dispose of Registrable Securities having an aggregate value of at least US$40 million, at the time of the Underwritten Demand, under a Shelf Registration pursuant to an Underwritten Offering.
“Effectiveness Period” shall have the meaning given in subsection 3.1.1 of this Agreement.
“Exchange Act” shall mean the United States Securities Exchange Act of 1934, as it may be amended from time to time.
“Financial Counterparty” shall have the meaning given in subsection 2.3.1 of this Agreement.
“Governmental Authority” shall mean any governmental, quasi-governmental, public or statutory authority of any nature (including any governmental division, department, agency, regulatory or administrative authority, commission, instrumentality, official, organization, unit, body, or entity and any court, judicial or arbitral body, or other tribunal).
“Holder Indemnified Persons” shall have the meaning given in subsection 4.1.1 of this Agreement.
“Holder Information” shall have the meaning given in subsection 4.1.2 of this Agreement.
“Holders” shall have the meaning given in the Preamble.
“Maximum Number of Securities” shall have the meaning given in subsection 2.1.3 of this Agreement.
“Misstatement” shall mean an untrue statement of a material fact or an omission to state a material fact required to be stated in a Shelf Registration or Prospectus, or necessary to make the statements in a Shelf Registration or Prospectus (in the light of the circumstances under which they were made) not misleading.
“NewCo” shall have the meaning given in the Recitals.
“Other Coordinated Offering” shall have the meaning given to it in subsection 2.3.1 of this Agreement.
“Piggyback Registration” shall have the meaning given in subsection 2.2.1 of this Agreement.
“Private Placement Warrants” shall have the meaning given in the Recitals.
“Pro Rata” shall have the meaning given in subsection 2.1.3 of this Agreement.
“Prospectus” shall mean the prospectus included in any Registration Statement as supplemented by any and all prospectus supplements and as amended by any and all post-effective amendments and including all material incorporated by reference in such prospectus.
G-2
“Registrable Security” shall mean (a) the Private Placement Warrants (including any Common Shares issued or issuable upon the exercise of any such Private Placement Warrants) held by a Holder immediately following the Closing, (b) any outstanding Common Shares held by a Holder immediately following the Closing (including any Common Shares issued or issuable upon exercise of any other outstanding equity securities of the Company (other than equity securities issued pursuant to an employee stock option or other benefit plan) held by a Holder immediately following the Closing), (c) any equity securities (including the Common Shares issued or issuable upon the exercise of any such equity security) of the Company issuable immediately following the Closing upon conversion of any working capital loans in an amount up to US$1,500,000 in the aggregate made to the SPAC by a Holder and (d) any other equity security of the Company issued or issuable with respect to any such Common Shares held by a Holder immediately following the Closing by way of a share sub-division or share dividend or in connection with a combination of shares, recapitalization, merger, consolidation or reorganization; provided, however, that, as to any particular Registrable Securities, such securities shall cease to be Registrable Securities when: (A) a Shelf Registration with respect to the sale of such securities shall have become effective under U.S. Securities Law and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Shelf Registration; (B) such securities shall have been otherwise transferred, new certificates for such securities not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of such securities shall not require registration under U.S. Securities Law; (C) such securities shall have ceased to be outstanding; or (D) such securities may be sold without registration pursuant to U.S. Securities Law, including Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission) without limitation as to the manner of sale or the amount of such securities that may be sold and without the requirement for the Company to be in compliance with the current public information required under Rule 144(c)(i) or Rule 144(i)(2).
“Registration” shall mean a qualification or registration, as applicable, effected by preparing and filing a prospectus, registration statement or similar document in compliance with the requirements of U.S. Securities Law, and any such prospectus or registration statement having been declared effective by, or become effective pursuant to rules promulgated by, the Commission.
“Registration Expenses” shall mean the out-of-pocket expenses of a Registration, including, without limitation, the following:
(A) all registration and filing fees (including fees with respect to filings required to be made with the Financial Industry Regulatory Authority, Inc. and any securities exchange on which the Common Shares are then listed);
(B) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel for the Underwriters in connection with blue sky qualifications of Registrable Securities);
(C) printing, translating, messenger, telephone and delivery expenses;
(D) fees and disbursements of counsel for the Company;
(E) fees and disbursements of all independent registered public accountants of the Company incurred specifically in connection with such Registration; and
(F) reasonable fees and expenses of one (1) U.S. legal counsel and one (1) Canadian legal counsel selected by the majority-in-interest of Registrable Securities held by the Demanding Holders initiating an Underwritten Demand to be registered for offer and sale in the applicable Underwritten Offering, not to exceed US$50,000 for each such counsel, with respect to any one Underwritten Offering.
“Registration Statement” shall mean any registration statement under the Securities Act that covers the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such registration statement, and all exhibits to and all material incorporated by reference in such registration statement.
“Requesting Holder” shall have the meaning given in subsection 2.1.2 of this Agreement.
“Securities Act” shall mean the United States Securities Act of 1933, as amended from time to time.
“Shelf Registration” shall have the meaning given in subsection 2.1.1.
G-3
“Sio NewCo” shall have the meaning given in the Recitals.
“Sio Silica” shall have the meaning given in the Recitals.
“SPAC” shall have the meaning given in the Preamble.
“SPAC Holders” shall have the meaning given in the Recitals.
“SPAC Registration Rights Agreement” shall have the meaning given in the Recitals.
“Sponsor” shall have the meaning given in the Preamble.
“Suspension Event” shall have the meaning given in Section 3.4 of this Agreement.
“Underwriter” shall mean a securities dealer who purchases any Registrable Securities as principal in an Underwritten Offering and not as part of such dealer’s market-making activities.
“Underwritten Demand” shall have the meaning given in subsection 2.1.2 of this Agreement.
“Underwritten Offering” shall mean a Registration in which securities of the Company are sold to an Underwriter in a firm commitment underwriting for distribution to the public.
“U.S. Securities Law” shall mean, collectively, (a) the Securities Act and the applicable rules and regulations promulgated thereunder, and (b) the Exchange Act and the applicable rules and regulations promulgated thereunder.
ARTICLE II
REGISTRATIONS
2.1 Registration.
2.1.1 Shelf Registration. (a) The Company agrees that within fifteen (15) business days after the consummation of the Business Combination, the Company will file with the Commission (at the Company’s sole cost and expense) a Registration Statement under the Securities Act registering the resale of all Registrable Securities in the United States (the “Shelf Registration”).
(b) The Company shall use its commercially reasonable efforts to cause such Registration Statement to become effective by the Commission as soon as reasonably practicable after the initial filing of such Registration Statement. Subject to the limitations contained in this Agreement, the Company shall effect any Shelf Registration on such appropriate registration form of the Commission (a) as shall be selected by the Company and (b) as shall permit the resale or other disposition of the Registrable Securities by the Holders. If at any time a Shelf Registration filed with the Commission pursuant to Section 2.1.1 is effective and a Holder provides written notice to the Company that it intends to effect an offering of all or part of the Registrable Securities included on such Shelf Registration, the Company will use its commercially reasonable efforts to amend or supplement the Shelf Registration as may be necessary in order to enable such offering to take place in accordance with the terms of this Agreement.
G-4
2.1.2 Underwritten Offering. Subject to the provisions of subsection 2.1.3 and Section 2.3 of this Agreement, any Demanding Holder may make a written demand to the Company for an Underwritten Offering pursuant to a Shelf Registration filed with the Commission in accordance with Section 2.1.1 of this Agreement (an “Underwritten Demand”). The Company shall, within five (5) days of the Company’s receipt of the Underwritten Demand, notify, in writing, all other Holders of such demand, and each Holder who thereafter wishes to include all or a portion of such Holder’s Registrable Securities in such Underwritten Offering pursuant to an Underwritten Demand (each such Holder that includes all or a portion of such Holder’s Registrable Securities in such Underwritten Offering, a “Requesting Holder”) shall so notify the Company, in writing, within three (3) days after the receipt by the Holder of the notice from the Company. Upon receipt by the Company of any such written notification from a Requesting Holder(s), such Requesting Holder(s) shall be entitled to have their Registrable Securities included in the Underwritten Offering pursuant to an Underwritten Demand. All such Holders proposing to distribute their Registrable Securities through an Underwritten Offering under this subsection 2.1.2 shall enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering by the Company in consultation with the Demanding Holders initiating the Underwritten Offering. Notwithstanding the foregoing, the Company is not obligated to effect (i) more than an aggregate of three (3) Underwritten Offerings pursuant to this subsection 2.1.2 in any twelve (12)-month period, (ii) any Underwritten Offering unless the aggregate proceeds expected to be received from the sale of the Registrable Securities requested to be included in such Underwritten Offering equals or exceeds US$40 million, or (iii) an Underwritten Offering pursuant to this subsection 2.1.2 within ninety (90) days after the closing of an Underwritten Offering.
2.1.3 Reduction of Underwritten Offering. If the managing Underwriter or Underwriters in an Underwritten Offering pursuant to an Underwritten Demand, in good faith, advises or advise the Company, the Demanding Holders, the Requesting Holders and other persons or entities holding Common Shares or other equity securities of the Company that the Company is obligated to include pursuant to separate written contractual arrangements with such persons or entities (if any) in writing that the dollar amount or number of Registrable Securities or other equity securities of the Company requested to be included in such Underwritten Offering exceeds the maximum dollar amount or maximum number of equity securities of the Company that can be sold in the Underwritten Offering without adversely affecting the proposed offering price, the timing, the distribution method or the probability of success of such offering (such maximum dollar amount or maximum number of such securities, as applicable, the “Maximum Number of Securities”), then the Company shall include in such Underwritten Offering, as follows: (i) first, the Registrable Securities of the Demanding Holders and the Requesting Holders (if any) (pro rata based on the respective number of Registrable Securities that each Demanding Holder and Requesting Holder (if any) has requested be included in such Underwritten Offering and the aggregate number of Registrable Securities that the Demanding Holders and Requesting Holders have requested be included in such Underwritten Offering (such proportion is referred to herein as “Pro Rata”)) that can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), Common Shares or other equity securities of the Company that the Company desires to sell and that can be sold without exceeding the Maximum Number of Securities; and (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), Common Shares or other equity securities of the Company held by other persons or entities that the Company is obligated to include pursuant to separate written contractual arrangements with such persons or entities and that can be sold without exceeding the Maximum Number of Securities.
2.1.4 Registration Withdrawal. Prior to the filing of the applicable “red herring” prospectus used for marketing such Underwritten Offering, a majority-in-interest of the Demanding Holders initiating an Underwritten Offering pursuant to subsection 2.1.2 of this Agreement shall have the right to withdraw from such Underwritten Offering for any or no reason whatsoever upon written notification to the Company of their intention to withdraw from such Underwritten Offering prior to the launch of such Underwritten Offering. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with an Underwritten Demand prior to its withdrawal under this subsection 2.1.4.
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2.2 Piggyback Registration.
2.2.1 Piggyback Rights. If the Company proposes to (i) file a registration statement, prospectus or prospectus supplement under U.S. Securities Law with respect to the Registration of equity securities of the Company, or securities or other obligations exercisable or exchangeable for, or convertible into equity securities of the Company, for its own account or for the account of shareholders of the Company, other than a registration statement, prospectus or prospectus supplement (A) filed in connection with any employee stock option or other benefit plan, (B) pursuant to a registration statement on Form F-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), (C) for an exchange offer or offering of securities solely to the Company’s existing shareholders, (D) for an offering of debt that is convertible into equity securities of the Company or (E) for a dividend reinvestment plan, or (ii) consummate an Underwritten Offering for its own account or for the account of shareholders of the Company (other than pursuant to the terms of this Agreement), then the Company shall give written notice of such proposed action to all of the Holders of Registrable Securities as soon as practicable (but in the case of filing a registration statement, prospectus or prospectus supplement, not less than five (5) days before the anticipated filing date of such registration statement, prospectus or prospectus supplement), which notice shall (x) describe the amount and type of securities to be included, the intended method(s) of distribution and the name of the proposed managing Underwriter or Underwriters, if any, and (y) offer to all of the Holders of Registrable Securities the opportunity to register the sale of such number of Registrable Securities as such Holders may request in writing within (a) three (3) days in the case of filing a registration statement, prospectus or prospectus supplement and (b) two (2) days in the case of an Underwritten Offering (unless such offering is an overnight or bought Underwritten Offering, then one (1) day), in each case after receipt of such written notice (such Registration, a “Piggyback Registration”). The Company shall, in good faith, cause such Registrable Securities to be included in such Piggyback Registration and shall use its commercially reasonable efforts to cause the managing Underwriter or Underwriters of a proposed Underwritten Offering to permit the Registrable Securities requested by the Holders pursuant to this subsection 2.2.1 to be included in a Piggyback Registration on the same terms and conditions as any similar securities of the Company included in such Piggyback Registration and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. If no written request for inclusion from a Holder is received within the specified time, each such Holder shall have no further right to participate in such Piggyback Registration. All such Holders proposing to include Registrable Securities in an Underwritten Offering under this subsection 2.2.1 shall enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering by the Company.
2.2.2 Reduction of Piggyback Registration. If the managing Underwriter or Underwriters in an Underwritten Offering that is to be a Piggyback Registration, in good faith, advises the Company and the Holders of Registrable Securities participating in the Piggyback Registration in writing that the dollar amount or number of shares of the equity securities of the Company that the Company desires to sell, taken together with (i) the shares of equity securities of the Company, if any, as to which Registration or Underwritten Offering has been demanded pursuant to separate written contractual arrangements with persons or entities other than the Holders of Registrable Securities hereunder, (ii) the Registrable Securities as to which Registration or Underwritten Offering has been requested pursuant to Section 2.2 of this Agreement and (iii) the shares of equity securities of the Company, if any, as to which Registration or Underwritten Offering has been requested pursuant to separate written contractual piggyback registration rights of other shareholders of the Company, exceeds the Maximum Number of Securities, then:
(a) If the Registration or Underwritten Offering is undertaken for the Company’s account, the Company shall include in any such Registration or Underwritten Offering (A) first, the Common Shares or other equity securities of the Company that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to subsection 2.2.1 of this Agreement, Pro Rata, which can be sold without exceeding the Maximum Number of Securities; and (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), Common Shares or other equity securities of the Company, if any, as to which Registration or Underwritten Offering has been requested pursuant to written contractual piggyback registration rights of other shareholders of the Company, which can be sold without exceeding the Maximum Number of Securities; or
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(b) If the Registration or Underwritten Offering is pursuant to a request by persons or entities other than the Holders of Registrable Securities, then the Company shall include in any such Registration or Underwritten Offering (A) first, Common Shares or other equity securities of the Company, if any, of such requesting persons or entities, other than the Holders of Registrable Securities, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to subsection 2.2.1 of this Agreement, Pro Rata, which can be sold without exceeding the Maximum Number of Securities; (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), Common Shares or other equity securities of the Company that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (D) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A), (B) and (C), Common Shares or other equity securities of the Company for the account of other persons or entities that the Company is obligated to register pursuant to separate written contractual arrangements with such persons or entities, which can be sold without exceeding the Maximum Number of Securities.
2.2.3 Piggyback Registration Withdrawal. Any Holder of Registrable Securities shall have the right to withdraw from a Piggyback Registration for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of his, her or its intention to withdraw from such Piggyback Registration prior to, as applicable, the effectiveness of the registration statement, prospectus or prospectus supplement filed with the Commission with respect to such Piggyback Registration or the launch of the Underwritten Offering with respect to such Piggyback Registration. The Company (whether on its own good faith determination or as the result of a request for withdrawal by persons or entities pursuant to separate written contractual obligations) may withdraw a registration statement, prospectus or prospectus supplement filed with the Commission in connection with a Piggyback Registration at any time prior to the effectiveness of such registration statement, prospectus or prospectus supplement or abandon an Underwritten Offering in connection with a Piggyback Registration at any time prior to the launch of such Underwritten Offering. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with the Piggyback Registration prior to its withdrawal under this subsection 2.2.3.
2.2.4 Unlimited Piggyback Registration Rights. For purposes of clarity, any Registration or Underwritten Offering effected pursuant to Section 2.2 of this Agreement shall not be counted as an Underwritten Offering pursuant to an Underwritten Demand effected under Section 2.1 of this Agreement.
2.3 Block Trades and Other Coordinated Offerings.
2.3.1 Notwithstanding any other provision of this Article II, but subject to Section 2.4 and Section 3.4, at any time and from time to time when an effective Shelf Registration is on file with the Commission, if a Demanding Holder wishes to engage in (a) an underwritten registered offering not involving a “roadshow,” an offer commonly known as a “block trade” (a “Block Trade”) or (b) an “at the market” or similar registered offering through a broker, sales agent or distribution agent, whether as agent or principal, (an “Other Coordinated Offering”), in each case, (x) with a total offering price reasonably expected to exceed, in the aggregate, US$40 million or (y) covering all remaining Registrable Securities held by the Demanding Holder, then if such Demanding Holder requires any assistance from the Company pursuant to this Section 2.3, such Holder shall notify the Company of the Block Trade or Other Coordinated Offering at least five (5) business days prior to the day such offering is to commence and, as promptly as reasonably practicable, the Company shall use its commercially reasonable efforts to facilitate such Block Trade or Other Coordinated Offering; provided that the Demanding Holders representing a majority of the Registrable Securities wishing to engage in the Block Trade or Other Coordinated Offering shall use commercially reasonable efforts to work with the Company and any Underwriters or brokers, sales agents or placement agents (each, a “Financial Counterparty”) prior to making such request in order to facilitate preparation of the registration statement, prospectus and other offering documentation related to the Block Trade or Other Coordinated Offering.
2.3.2 Prior to the filing of the applicable “red herring” prospectus or prospectus supplement used in connection with a Block Trade or Other Coordinated Offering, a majority-in interest of the Demanding Holders initiating such Block Trade or Other Coordinated Offering shall have the right to submit a written notice of withdrawal to the Company, the Underwriter or Underwriters (if any) and Financial Counterparty (if any) of their intention to withdraw from such Block Trade or Other Coordinated Offering. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with a Block Trade or Other Coordinated Offering prior to its withdrawal under this subsection 2.3.2.
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2.3.3 Notwithstanding anything to the contrary in this Agreement, Section 2.2 shall not apply to a Block Trade or Other Coordinated Offering initiated by a Demanding Holder pursuant to Section 2.3 of this Agreement.
2.3.4 The Demanding Holder in a Block Trade or Other Coordinated Offering shall have the right to select the Underwriters and Financial Counterparty (if any) for such Block Trade or Other Coordinated Offering (in each case, which shall consist of one or more reputable nationally recognized investment banks).
2.3.5 A Holder in the aggregate may demand no more than four (4) Block Trades or Other Coordinated Offerings pursuant to this Section 2.3 in any twelve (12) month period. For the avoidance of doubt, any Block Trade or Other Coordinated Offering effected pursuant to this Section 2.3 shall not be counted as a demand for an Underwritten Offering pursuant to subsection 2.1.2 hereof.
2.4 Restrictions on Registration Rights. If (A) the Holders have requested an Underwritten Offering pursuant to an Underwritten Demand and the Company and the Holders are unable to obtain the commitment of underwriters to firmly underwrite the offer; (B) the filing, initial effectiveness, or continued use of a Shelf Registration in respect of such Underwritten Offering at any time would require the inclusion in such Shelf Registration of financial statements that are unavailable to the Company for reasons beyond the Company’s control; or (C) the Holders have requested an Underwritten Offering pursuant to an Underwritten Demand and in the good faith judgment of a majority of the Board that such Underwritten Offering would be seriously detrimental to the Company and the Board concludes as a result that it is essential to defer the filing of such Shelf Registration or the undertaking of such Underwritten Offering at such time, then in each case the Company shall furnish to such Holders a certificate signed by the Chief Executive Officer or the Chief Financial Officer stating that in the good faith judgment of the majority of the Board it would be seriously detrimental to the Company for such Shelf Registration to be filed or to undertake such Underwritten Offering in the near future and that it is therefore essential to defer the filing of such Shelf Registration or undertaking of such Underwritten Offering. In such event, the Company shall have the right to defer such filing or offering for a period of not more than thirty (30) days; provided, however, that the Company shall not defer its obligation in this manner more than twice in any twelve (12)-month period.
2.5 Legends. In connection with any sale or other disposition of the Registrable Securities by a Holder pursuant to Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission) after the expiration or termination of any lock-up period applicable to the Registrable Securities, and upon compliance by the Holder with the requirements of this Section 2.5, if requested by the Holder, the Company shall cause the transfer agent for the Registrable Securities (the “Transfer Agent”) to remove any restrictive legends related to the book entry account holding such Registrable Securities and make a new, unlegended entry for such book entry shares sold or disposed of without restrictive legends within two (2) trading days of any such request therefor from the Holder; provided that the Company and the Transfer Agent have timely received from the Holder customary representations and other documentation reasonably acceptable to the Company and the Transfer Agent in connection therewith. Subject to receipt from the Holder by the Company and the Transfer Agent of customary representations and other documentation reasonably acceptable to the Company and the Transfer Agent in connection therewith after the expiration or termination of any lock-up period applicable to the Registrable Securities, the Holder may request that the Company remove any legend from the book entry position evidencing its Registrable Securities and the Company will, if required by the Transfer Agent, use its commercially reasonable efforts cause an opinion of the Company’s counsel be provided, in a form reasonably acceptable to the Transfer Agent, to the effect that the removal of such restrictive legends in such circumstances may be effected under the Securities Act, following the earliest of such time as such Registrable Securities (i) are subject to or have been or are about to be sold pursuant to an effective registration statement or (ii) have been or are about to be sold pursuant to Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission). If restrictive legends are no longer required for such Registrable Securities pursuant to the foregoing, the Company shall, in accordance with the provisions of this section and within two (2) trading days of any request therefor from the Holder accompanied by such customary and reasonably acceptable representations and other documentation referred to above establishing that restrictive legends are no longer required, deliver to the Transfer Agent irrevocable instructions that the Transfer Agent shall make a new, unlegended entry for such book entry shares. The Company shall be responsible for the fees of its Transfer Agent, its legal counsel and all DTC fees associated with such issuance.
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ARTICLE III
COMPANY PROCEDURES
3.1 General Procedures. The Company shall use its commercially reasonable efforts to effect such Registration to permit the sale of such Registrable Securities in accordance with the intended plan of distribution thereof, and pursuant thereto the Company shall, as expeditiously as possible and to the extent applicable:
3.1.1 prepare and file with the Commission, within the time frame required by Section 2.1.1, in the English language a Registration Statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such Shelf Registration to become effective and remain effective, including filing a replacement Shelf Registration, if necessary, until all Registrable Securities covered by such Shelf Registration have been sold or are no longer outstanding (such period, the “Effectiveness Period”);
3.1.2 prepare and file with the Commission such amendments and post-effective amendments to the Shelf Registration and such supplements to the Prospectus, as may be reasonably requested by the Demanding Holders or any Underwriter or as may be required by U.S. Securities Law to keep the Shelf Registration effective until all Registrable Securities covered by such Shelf Registration are sold in accordance with the intended plan of distribution set forth in such Shelf Registration or supplement to the Prospectus or are no longer outstanding;
3.1.3 prior to filing a Shelf Registration or Prospectus, or any amendment or supplement thereto, as applicable, furnish without charge to the Underwriters or Financial Counterparty, if any, and the Holders of Registrable Securities included in such Registration or Underwritten Offering or Block Trade or Other Coordinated Offering, and such Holders’ legal counsel, copies of such Shelf Registration or Prospectus, as applicable, proposed to be filed, each amendment and supplement to such Shelf Registration (in each case including all exhibits thereto and documents incorporated by reference therein), Prospectus (including each preliminary Prospectus) and such other documents as the Underwriters and the Holders of Registrable Securities included in such Registration or the legal counsel for any such Holders may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holders; provided, that the Company will not have any obligation to provide any document pursuant to this clause that is available on the Company’s SEDAR page or the Commission’s EDGAR system;
3.1.4 prior to any Registration of Registrable Securities, use its commercially reasonable efforts to (i) register or qualify the Registrable Securities covered by the Shelf Registration under such securities or “blue sky” laws of such jurisdictions of the United States as the Holders of Registrable Securities included in such Shelf Registration (in light of their intended plan of distribution) may request and (ii) take such action necessary to cause such Registrable Securities covered by the Shelf Registration to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable the Holders of Registrable Securities included in such Shelf Registration to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify or take any action which would subject it to general service of process or taxation in any such jurisdiction where it is not then otherwise so subject;
3.1.5 cause all such Registrable Securities to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed;
3.1.6 provide a transfer agent or warrant agent, as applicable, and registrar for all such Registrable Securities no later than the effective date of the applicable Shelf Registration;
3.1.7 advise each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop or cease trade order by the Commission suspending the effectiveness of a Shelf Registration or the initiation or threatening of any proceeding for such purpose and promptly use its commercially reasonable efforts to prevent the issuance of any stop or cease trade order or to obtain its withdrawal if such stop or cease trade order should be issued;
3.1.8 during the Effectiveness Period, furnish a conformed copy of each filing of any Shelf Registration or Prospectus or any amendment or supplement to such Shelf Registration or Prospectus or any document that is to be incorporated by reference into such Shelf Registration or Prospectus, promptly after such filing of such documents with the Commission to each seller of such Registrable Securities or its counsel; provided, that the Company will not have any obligation to provide any document pursuant to this clause that is available on the Commission’s EDGAR system;
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3.1.9 notify the Holders at any time when a Prospectus relating to such Shelf Registration is required to be delivered under U.S. Securities Law;
3.1.10 in accordance with Section 3.4 of this Agreement, notify the Holders of the happening of any event as a result of which a Misstatement exists, and then to correct such Misstatement as set forth in Section 3.4 of this Agreement;
3.1.11 in the event of an Underwritten Offering, a Block Trade, an Other Coordinated Offering, or sale by a Financial Counterparty pursuant to such Registration, permit a representative of the Holders (such representative to be selected by a majority-in-interest of the participating Holders), the Underwriters or other Financial Counterparty facilitating such Underwritten Offering, Block Trade, Other Coordinated Offering or other sale pursuant to such Registration, if any, and any attorney, consultant or accountant retained by such Holders or Underwriter to participate, at each such person’s or entity’s own expense, in the preparation of the Shelf Registration and/or Prospectus and cause the Company’s officers, directors and employees to supply all information reasonably requested by any such representative, Underwriter, Financial Counterparty, attorney, consultant or accountant in connection with the Registration; provided, however, that such representatives or Underwriters or Financial Counterparty enter into confidentiality agreements, in form and substance reasonably satisfactory to the Company, prior to the release or disclosure of any such information;
3.1.12 obtain a comfort letter from the Company’s independent registered public accountants in the event of an Underwritten Offering, a Block Trade, an Other Coordinated Offering or sale by a Financial Counterparty pursuant to such Registration (subject to such Financial Counterparty providing such certification or representation reasonably requested by the Company’s independent registered public accountants and the Company’s counsel), in customary form and covering such matters of the type customarily covered by comfort letters as the managing Underwriter may reasonably request, and reasonably satisfactory to a majority-in-interest of the participating Holders;
3.1.13 in the event of an Underwritten Offering, a Block Trade, an Other Coordinated Offering or sale by a Financial Counterparty pursuant to such Registration, on the date the Registrable Securities are delivered for sale pursuant to such Registration, obtain an opinion and negative assurance letter, dated such date, of counsel representing the Company for the purposes of such Registration, addressed to the participating Holders or the Financial Counterparty, if any, and the Underwriters, if any, covering such legal matters with respect to the Registration in respect of which such opinion or negative assurance letter is being given as the participating Holders, Financial Counterparty or Underwriter may reasonably request and as are customarily included in such opinions and negative assurance letters, and reasonably satisfactory to such participating Holders, Financial Counterparty or Underwriter;
3.1.14 in the event of an Underwritten Offering or a Block Trade, or an Other Coordinated Offering or sale by a Financial Counterparty pursuant to such Registration to which the Company has consented, to the extent reasonably requested by such Financial Counterparty in order to engage in such offering, allow the Underwriters or Financial Counterparty to conduct customary “underwriter’s due diligence” with respect to the Company;
3.1.15 in the event of any Underwritten Offering, a Block Trade, an Other Coordinated Offering or sale by a Financial Counterparty pursuant to such Registration, enter into and perform its obligations under an underwriting agreement or other purchase or sales agreement, in usual and customary form, with the managing Underwriter or the Financial Counterparty of such offering or sale;
3.1.16 make available to its security holders, as soon as reasonably practicable, an earning statement covering the period of at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Shelf Registration which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any successor rule promulgated thereafter by the Commission);
3.1.17 use its reasonable efforts to make available senior executives of the Company to participate in customary “road show” presentations that may be reasonably requested by the Underwriter in any Underwritten Offering; and
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3.1.18 otherwise, in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the Holders, in connection with such Registration.
Notwithstanding the foregoing, the Company shall not be required to provide any documents or information to an Underwriter or Financial Counterparty if such Underwriter or Financial Counterparty has not then been named with respect to the applicable Underwritten Offering or other offering involving a registration as an Underwriter or Financial Counterparty, as applicable.
3.2 Registration Expenses. The Registration Expenses in respect of all Registrations shall be borne by the Company. It is acknowledged by the Holders that the Holders shall bear all incremental selling expenses relating to the sale of Registrable Securities, such as Underwriters’ commissions and discounts, brokerage fees, Underwriter marketing costs and, other than as set forth in the definition of “Registration Expenses,” all reasonable fees and expenses of any legal counsel representing the Holders.
3.3 Requirements for Participation in Underwritten Offerings. Notwithstanding anything in this Agreement to the contrary, if any Holder does not timely provide the Company with its requested Holder Information upon reasonable notice, the Company may exclude such Holder’s Registrable Securities from the applicable Shelf Registration or Prospectus or if the Company determines, based on the advice of counsel, that such information is necessary or advisable to effect the registration and such Holder continues thereafter to withhold such information. No person may participate in any Underwritten Offering for equity securities of the Company pursuant to a Registration initiated by the Company hereunder unless such person (i) agrees to sell such person’s securities on the basis provided in any underwriting arrangements approved by the Company and (ii) completes and executes all customary questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting agreements and other customary documents as may be reasonably required under the terms of such underwriting arrangements.
3.4 Suspension of Sales. Notwithstanding anything to the contrary in this Agreement, the Company shall be entitled to (A) delay or postpone the (i) initial effectiveness of any Shelf Registration or (ii) launch of any Underwritten Offering, in each case, filed or requested pursuant to this Agreement, and (B) from time to time to require the Holders not to sell under any Shelf Registration or Prospectus or to suspend the effectiveness thereof, if the negotiation or consummation of a transaction by the Company or its subsidiaries is pending or an event has occurred, which negotiation, consummation or event, the Board reasonably believes, upon the advice of legal counsel, would require additional disclosure by the Company in the applicable Shelf Registration or Prospectus of material information that the Company has a bona fide business purpose for keeping confidential and the non-disclosure of which in the Shelf Registration or Prospectus be expected, in the reasonable determination of the Board, upon the advice of legal counsel, to cause the Shelf Registration or Prospectus to fail to comply with applicable disclosure requirements (each such circumstance, a “Suspension Event”); provided, however, that the Company may not delay or suspend a Shelf Registration or Prospectus or Underwritten Offering on more than two occasions, for more than sixty (60) consecutive calendar days, or more than ninety (90) total calendar days, in each case during any twelve-month period. Upon receipt of any written notice from the Company of a Suspension Event while a Shelf Registration filed pursuant to this Agreement is effective or if as a result of a Suspension Event a Misstatement exists, each Holder agrees that (i) it will immediately discontinue offers and sales of Registered Securities under each Shelf Registration filed pursuant to this Agreement until the Holder receives copies of a supplemental or amended Prospectus (which the Company agrees to promptly prepare) that corrects the relevant misstatements or omissions and receives notice that any post-effective amendment has become effective or unless otherwise notified by the Company that it may resume such offers and sales and (ii) it will maintain the confidentiality of information included in such written notice delivered by the Company unless otherwise required by law or subpoena. If so directed by the Company, the Holders will deliver to the Company or, in Holders’ sole discretion destroy, all copies of each Prospectus covering Registrable Securities in Holders’ possession; provided, however, that this obligation to deliver or destroy shall not apply (A) to the extent the Holders are required to retain a copy of such Prospectus, (x) to comply with applicable legal, regulatory, self-regulatory or professional requirements or (y) in accordance with a bona fide pre-existing document retention policy or (B) to copies stored electronically on archival servers as a result of automatic data back-up.
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3.5 Reporting Obligations. As long as any Holder shall own Registrable Securities, the Company, at all times while it shall be a reporting company under the Exchange Act, covenants to use commercially reasonable efforts to file timely (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange Act. The Company further covenants that it shall take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell shares of Registrable Securities held by such Holder without registration under U.S. Securities Law and within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission), including providing any legal opinions. Upon the request of any Holder, the Company shall deliver to such Holder a written certification of a duly authorized officer as to whether it has complied with such requirements.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
4.1 Indemnification.
4.1.1 The Company agrees to indemnify, to the extent permitted by law, each Holder of Registrable Securities, its officers and directors and each person who controls such Holder (within the meaning of the Securities Act) (collectively, the “Holder Indemnified Persons”) against all losses, claims, damages, liabilities and out-of-pocket expenses (including reasonable outside attorneys’ fees and inclusive of all reasonable outside attorneys’ fees arising out of the enforcement of each such persons’ rights under this Section 4.1) resulting from any Misstatement or alleged Misstatement, except insofar as the same are caused by or contained in any information furnished in writing to the Company by or on behalf of such Holder Indemnified Person specifically for use therein.
4.1.2 In connection with any Shelf Registration or filing of a Prospectus in which a Holder of Registrable Securities is participating, such Holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Shelf Registration or Prospectus (“Holder Information”) and, to the extent permitted by law, shall, severally and not jointly, indemnify the Company, its directors and officers and agents and each person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and out-of-pocket expenses (including reasonable outside attorneys’ fees and inclusive of all reasonable outside attorneys’ fees arising out of the enforcement of each such persons’ rights under this Section 4.1) resulting from any Misstatement or alleged Misstatement, but only to the extent that the same are made in reliance on and in conformity with information relating to the Holder so furnished in writing to the Company by or on behalf of such Holder specifically for use therein. In no event shall the liability of any selling Holder hereunder be greater in amount than the net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Shelf Registration or Prospectus, as applicable, giving rise to such indemnification obligation.
4.1.3 Any person entitled to indemnification herein shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim or there may be reasonable defenses available to the indemnified party that are different from or additional to those available to the indemnifying party, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one outside counsel (and one local counsel in the applicable jurisdiction) for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.
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4.1.4 The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person of such indemnified party and shall survive the transfer of securities.
4.1.5 If the indemnification provided under Section 4.1 of this Agreement is held by a court of competent jurisdiction to be unavailable to an indemnified party in respect of any losses, claims, damages, liabilities and expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall to the extent permitted by law contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or such indemnified party and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action; provided, however, that the liability of any Holder under this subsection 4.1.5 shall be limited to the amount of the net proceeds received by such Holder in such offering giving rise to such liability. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in subsections 4.1.1, 4.1.2 and 4.1.3 of this Agreement, any legal or other fees, charges or out-of-pocket expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this subsection 4.1.5 were determined by pro rata allocation or by any other method of allocation, which does not take account of the equitable considerations referred to in this subsection 4.1.5. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this subsection 4.1.5 from any person who was not guilty of such fraudulent misrepresentation.
ARTICLE V
MISCELLANEOUS
5.1 Notices. Any notice or communication under this Agreement must be in writing and given by (i) deposit in the mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested, (ii) delivery in person or by courier service providing evidence of delivery or (iii) transmission by hand delivery, telecopy, telegram, facsimile or email. Each notice or communication that is mailed, delivered or transmitted in the manner described above shall be deemed sufficiently given, served, sent, and received, in the case of mailed notices, on the third (3rd) business day following the date on which it is mailed, in the case of notices delivered by courier service, hand delivery, telecopy or telegram, at such time as it is delivered to the addressee (with the delivery receipt or the affidavit of messenger) or at such time as delivery is refused by the addressee upon presentation, and in the case of notices delivered by facsimile or email, at such time as it is successfully transmitted to the addressee. Any notice or communication under this Agreement must be addressed, if to the Sponsor, to: Pyrophyte Acquisition LLC, 3262 Westheimer Road, Suite 706, Houston, Texas 77098, or by email at: sten.gustafson@pyrophytespac.com, if to the Company, to: Suite 1930, 440 – 2nd Avenue SW, Calgary, AB, T2P 5E9, or by email at: feisal@somji.ca, and, if to any Holder, to the address of such Holder as it appears in the applicable register for the Registrable Securities or such other address as may be designated in writing by such Holder (including on the signature pages hereto). Any party may change its address for notice at any time and from time to time by written notice to the other parties hereto, and such change of address shall become effective thirty (30) days after delivery of such notice as provided in this Section 5.1.
5.2 Assignment; No Third-Party Beneficiaries.
5.2.1 This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part.
5.2.2 This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and its successors.
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5.2.3 This Agreement shall not confer any rights or benefits on any persons that are not parties hereto or do not hereafter become a party to this Agreement pursuant to Section 5.2 of this Agreement.
5.2.4 No assignment by any party hereto of such party’s rights, duties and obligations hereunder shall be binding upon or obligate the Company unless and until the Company shall have received (i) written notice provided in accordance with Section 5.1 of this Agreement and (ii) the written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement (which may be accomplished by an executed joinder to this Agreement from the applicable assignee in the form of Exhibit A attached hereto (a “Joinder”)). Any transfer or assignment made other than as provided in this Section 5.2 shall be null and void.
5.3 Counterparts. This Agreement may be executed in multiple counterparts (including facsimile or PDF counterparts), each of which shall be deemed an original, and all of which together shall constitute the same instrument, but only one of which need be produced.
5.4 Governing Law; Venue. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS EXECUTED IN AND TO BE PERFORMED IN THAT STATE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAW OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE. ALL LEGAL ACTIONS AND PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE HEARD AND DETERMINED EXCLUSIVELY IN ANY COURT OF CHANCERY OF THE STATE OF DELAWARE; PROVIDED, THAT IF JURISDICTION IS NOT THEN AVAILABLE IN A COURT OF CHANCERY OF THE STATE OF DELAWARE, THEN ANY SUCH ACTION MAY BE BROUGHT IN ANY FEDERAL COURT LOCATED IN THE STATE OF DELAWARE OR ANY OTHER DELAWARE STATE COURT. THE PARTIES HEREBY (A) IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS FOR THEMSELVES AND WITH RESPECT TO THEIR RESPECTIVE PROPERTIES FOR THE PURPOSE OF ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT BROUGHT BY ANY PARTY, AND (B) AGREE NOT TO COMMENCE ANY ACTION RELATING THERETO EXCEPT IN THE COURTS DESCRIBED ABOVE IN THE STATE OF DELAWARE, OTHER THAN ACTIONS IN ANY COURT OF COMPETENT JURISDICTION TO ENFORCE ANY JUDGMENT, DECREE OR AWARD RENDERED BY ANY SUCH COURT IN DELAWARE AS DESCRIBED HEREIN. EACH OF THE PARTIES FURTHER AGREES THAT NOTICE AS PROVIDED HEREIN SHALL CONSTITUTE SUFFICIENT SERVICE OF PROCESS AND THE PARTIES FURTHER WAIVE ANY ARGUMENT THAT SUCH SERVICE IS INSUFFICIENT. EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION OR AS A DEFENSE, COUNTERCLAIM OR OTHERWISE, IN ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS, (I) ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF THE COURTS IN THE STATE OF DELAWARE AS DESCRIBED HEREIN FOR ANY REASON, (II) THAT IT OR ITS PROPERTY IS EXEMPT OR IMMUNE FROM JURISDICTION OF ANY SUCH COURT OR FROM ANY LEGAL PROCESS COMMENCED IN SUCH COURTS (WHETHER THROUGH SERVICE OF NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OF JUDGMENT, EXECUTION OF JUDGMENT OR OTHERWISE) AND (III) THAT (A) THE ACTION IN ANY SUCH COURT IS BROUGHT IN AN INCONVENIENT FORUM, (B) THE VENUE OF SUCH ACTION IS IMPROPER OR (C) THIS AGREEMENT, OR THE SUBJECT MATTER HEREOF, MAY NOT BE ENFORCED IN OR BY SUCH COURTS.
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5.5 Amendments and Modifications. Upon the written consent of the Company and the Holders of at least a majority in interest of the total Registrable Securities at the time in question, compliance with any of the provisions, covenants and conditions set forth in this Agreement may be waived, or any of such provisions, covenants or conditions may be amended or modified; provided, however, that notwithstanding the foregoing, any amendment hereto or waiver hereof that adversely affects one Holder, solely in his, her or its capacity as a holder of the shares of capital stock of the Company, in a manner that is materially different from the other Holders (in such capacity) shall require the consent of the Holder so affected. No course of dealing between any Holder or the Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the Company. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party.
5.6 Other Registration Rights. The Company represents and warrants that no person, other than (a) a Holder of Registrable Securities, and (b) the holders of the Company’s warrants pursuant to that certain Warrant Agreement, dated as of October 26, 2021, by and between the SPAC and Continental Stock Transfer & Trust Company, and assigned to and assumed by the Company on or about the date hereof, has any right to require the Company to register any securities of the Company for sale or to include such securities of the Company in any Registration filed by the Company for the sale of securities for its own account or for the account of any other person. Further, the Company represents and warrants that this Agreement supersedes any other registration rights agreement, including the SPAC Registration Rights Agreement, or agreement with similar terms and conditions and in the event of a conflict between any such agreement or agreements and this Agreement, the terms of this Agreement shall prevail.
5.7 Term. This Agreement shall terminate upon the earlier of (i) the fifth anniversary of the date of this Agreement and (ii) with respect to any Holder, the date as of which such Holder ceases to hold any Registrable Securities. The provisions of Article IV shall survive any termination.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first written above.
COMPANY: | ||
SIO SILICA CORPORATION, an Alberta corporation | ||
By: | ||
Name: | ||
Title: |
SPONSOR: | ||
Pyrophyte Acquisition LLC, a Delaware limited liability company | ||
By: | ||
Name: | ||
Title: |
[Signature Page to Registration Rights Agreement]
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HOLDERS: | ||
[●] | ||
By: | ||
Name: | ||
Title: | ||
Address: | [***] |
[Signature Page to Registration Rights Agreement]
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Exhibit A
Joinder
The undersigned is executing and delivering this Joinder pursuant to the Amended and Restated Registration Rights Agreement, dated as of [●], 2023 (as amended, modified and waived from time to time, the “Agreement”), by and among Sio Silica Corporation, an Alberta corporation (the “Company”), Pyrophyte Acquisition LLC, a Delaware limited liability company, and the persons named as parties therein (including pursuant to other Joinders). Capitalized terms herein shall have the meaning set forth in the Agreement.
By executing and delivering this Joinder to the Company, the undersigned hereby agrees to become a party to, to be bound by, and to comply with the provisions of, the Agreement as a Holder in the same manner as if the undersigned were an original signatory to the Agreement, and the undersigned will be deemed for all purposes to be a Holder, and the undersigned’s ____ [Common Shares][Private Placement Warrants] will be deemed for all purposes to be Registrable Securities under the Agreement.
Accordingly, the undersigned has executed and delivered this Joinder as of the ___ day of ____________, 20___.
[ ] | ||
By: | ||
Name: | ||
Title: |
Agreed and Accepted as of
[ ], 20__
SIO SILICA CORPORATION | ||
By: | ||
Name: | ||
Title: |
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Exhibit H
Form of Plan of Arrangement
See Attached
H-1
PLAN OF ARRANGEMENT
UNDER SECTION 193 OF THE
BUSINESS CORPORATIONS ACT (ALBERTA)
Article
1
INTERPRETATION
1.1 | Definitions |
In this Plan of Arrangement, any capitalized term used herein and not defined in this Section 1.1 shall have the meaning ascribed thereto in the Business Combination Agreement. Unless the context otherwise requires, the following words and phrases used in this Plan of Arrangement shall have the meanings hereinafter set out:
“ABCA” means the Business Corporations Act (Alberta);
“Affected Securities” means, collectively, the Company Common Shares, the Interim Company Shares, the Company Options, the Company Warrants, the Company RSUs, the SPAC Class A Common Shares, the SPAC Units, the SPAC Warrants, the NewCo Common Shares and the Sio NewCo Common Shares;
“Affected Securityholders” means, collectively, the Company Securityholders, the SPAC Securityholders, the Sio NewCo Shareholders and the NewCo Shareholders;
“Amalgamated Company” has the meaning ascribed thereto in Section 3.2(d);
“Arrangement” means an arrangement under section 193 of the ABCA on the terms and subject to the conditions set forth in this Plan of Arrangement, subject to any amendments or variations to this Plan of Arrangement made in accordance with the terms of the Business Combination Agreement and this Plan of Arrangement or made at the direction of the Court in the Interim Order or Final Order with the prior written consent of SPAC and the Company, such consent not to be unreasonably withheld, conditioned or delayed;
“Arrangement Effective Time” means 12:00:01 A.M. (Calgary time) on the Effective Date or such other time as the Company and SPAC may agree upon in writing;
“Articles of Arrangement” means the articles of arrangement in respect of the Arrangement required under section 193(4.1) of the ABCA to be filed with the Registrar after the Final Order has been granted and all other conditions precedent to the Arrangement have been satisfied or waived, to give effect to the Arrangement;
“As-Converted Company RSUs” means the number of Company Common Shares that are issuable upon the exercise of Company RSUs that are unexpired, issued and outstanding as of immediately prior to the Company Amalgamation Effective Time;
“As-Converted Company Warrants” means the number of Company Common Shares that are issuable upon the exercise of any Unexercised Company Warrants issued and outstanding as of immediately prior to the Company Amalgamation Effective Time minus a number of Company Common Shares with a fair market value equal to the aggregate exercise price (determined with reference to the US dollar to the Canadian dollar exchange rate reported by the Bank of Canada at the close of business on the date that is two (2) Business Days prior to the Closing Date) of all such Unexercised Company Warrants if they were so exercised, in each case, assuming that the fair market value of one Company Common Share equals (x) the Company Common Share Exchange Ratio multiplied by (y) $10.25;
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“Business Combination Agreement” means the business combination agreement made as of t, 2023 by and among the Company, NewCo, SPAC and Sio NewCo, including all exhibits and schedules annexed thereto, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof;
“Business Day” has the meaning given to such term in the Business Combination Agreement;
“Certificate” means the first certificate or other proof of filing to be issued by the Registrar pursuant to section 193(11) or section 193(12) of the ABCA in respect of the Articles of Arrangement on the Effective Date;
“Closing” has the meaning given to such term in the Business Combination Agreement;
“Closing Conditions” means the conditions precedent set out in Article VII of the Business Combination Agreement;
“Closing Date” means the date on which Closing occurs which, for greater certainty, shall be, subject to the satisfaction or waiver of the Closing Conditions, one Business Day following the Effective Date;
“Closing Time” means 12:00:01 A.M. (Calgary time) on the Closing Date or such other time as the Company and SPAC may agree upon in writing;
“Code” means the United States Internal Revenue Code of 1986;
“Company” means Sio Silica Corporation, a corporation amalgamated under the laws of the Province of Alberta;
“Company Amalgamation” has the meaning ascribed thereto in Section 3.2(d);
“Company Amalgamation Effective Time” has the meaning ascribed thereto in Section 3.2(d);
“Company Arrangement Resolution” means the special resolution of the Company Shareholders approving the Plan of Arrangement which is to be considered at the Company Shareholders Meeting;
“Company Articles” means the articles of amalgamation of the Company dated February 9, 2021, as may be amended from time to time;
“Company Broker Warrants” means the 30,000 issued and outstanding warrants to purchase Company Common Shares;
“Company Closing Articles” means the articles substantially in the form attached as Exhibit D to the Business Combination Agreement;
“Company Common Share Exchange Ratio” means the quotient obtained by (A) dividing (i) the Company Valuation by (ii) $10.25 and then (B) by further dividing the resulting number of New SPAC Class A Common Shares established in (A) above by (C) the Fully-Diluted Company Common Shares;
“Company Common Shares” means the common shares in the authorized share capital of the Company;
“Company Dissent Rights” has the meaning ascribed to such term in Section 4.1;
“Company Dissenting Shareholder” means a registered holder of Company Common Shares who dissents in respect of the Company Arrangement Resolution in strict compliance with the Company Dissent Rights, and who is ultimately entitled to be paid fair value for their Company Common Shares;
“Company Earnout Exchange Ratio” means the quotient by dividing (i) 6,585,366 by (ii) the Fully-Diluted Company Common Shares;
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“Company Optionholders” means, at any time, the holders of Company Options;
“Company Options” means all options to purchase Company Common Shares, whether or not exercisable and whether or not vested, granted under the Company Share Option Plan;
“Company RSUs” means all restricted share units to acquire Company Common Shares, whether or not exercisable and whether or not vested, granted under the Company Share Award Plan;
“Company Securityholders” means, collectively, the Company Shareholders, the Company Warrantholders, the Company Optionholders and holders of Company RSUs;
“Company Share Award Plan” means the Company’s Restricted Share Unit Plan – September 2018, as may be amended from time to time;
“Company Share Option Plan” means the share option plan of the Company, effective March 24, 2017, as may have been amended, supplemented or modified from time to time;
“Company Shareholders” means, collectively, at any time, the holders of Company Common Shares and the holders of Interim Company Shares as of any determination time prior to the Closing;
“Company Shareholders Meeting” means the meeting of the Company Shareholders, including any adjournment or postponement thereof in accordance with the terms of the Business Combination Agreement, that is to be convened as provided by the Interim Order to consider, and if deemed or otherwise advisable approve, the Arrangement Resolution;
“Company Shareholder Warrants” means the 2,834,901 issued and outstanding warrants to purchase Company Common Shares;
“Company Valuation” means $675,000,000;
“Company Warrant and Option Settlement” means the cashless exercise of the Company Warrants in accordance with Section 3.2(b), and the cashless exercise of the Company Options in accordance with Section 3.2(c);
“Company Warrantholders” means, at any time, the holders of Company Broker Warrants and Company Warrants outstanding at such time;
“Company Warrants” means, collectively, the Company Broker Warrants and the Company Shareholder Warrants;
“Court” means the Alberta Court of King’s Bench;
“Effective Date” means the date on which the Articles of Arrangement are filed with the Registrar;
“Exchange Agent” means the exchange agent appointed by the Company in accordance with the terms of the Business Combination Agreement;
“Final Order” means the final order of the Court pursuant to section 193 of the ABCA, approving the Arrangement, in a form acceptable to SPAC and the Company, as such order may be amended, modified, supplemented or varied by the Court with the consent of SPAC and the Company, such consent not to be unreasonably withheld, conditioned or delayed, at any time prior to the Closing or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or amended, on appeal, provided that any such affirmation or amendment is acceptable to each of SPAC and the Company, each acting reasonably;
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“Flow-Through Shares” has the meaning given to such term in the Business Combination Agreement;
“Fully-Diluted Company Common Share Price” means the quotient obtained by dividing (A) the Company Valuation by (B) the Fully-Diluted Company Common Shares;
“Fully-Diluted Company Common Shares” means the sum of (i) the As-Converted Company RSUs, and (ii) the number of Company Common Shares issued and outstanding immediately prior to the Company Amalgamation Effective Time, which shall (x) include any Company Common Shares issued in connection with the Company Warrant and Option Settlement and (y) exclude the Interim Company Shares; and (iii) the As-Converted Company Warrants;
“holder”, when used with reference to any securities of a Person, means the holder of such securities shown from time to time in the securities register maintained by or on behalf of such Person in respect of such securities;
“Interim Company Shares” has the meaning given to such term in the Business Combination Agreement;
“Interim Order” means the interim order of the Court contemplated by Section 2.02 of the Business Combination Agreement and made pursuant to section 193 of the ABCA, providing for, among other things, the calling and holding of the Company Shareholders Meeting, as the same may be amended, modified, supplemented or varied by the Court with the consent of SPAC and the Company, such consent not to be unreasonably withheld, conditioned or delayed, provided that any such amendment is reasonably acceptable to each of SPAC and the Company;
“Letter of Transmittal” means a letter of transmittal to be sent by the Company to Company Shareholders in connection with the Arrangement;
“Lock-Up Agreement” means the lock-up agreement substantially in the form attached as Exhibit E to the Business Combination Agreement;
“Lock-Up Shareholders” means the persons and entities listed in Schedule 1 to the Business Combination Agreement;
“NewCo” means Snowbank NewCo Alberta ULC, a corporation incorporated under the laws of the Province of Alberta;
“NewCo Common Shares” means common shares in the authorized share capital of NewCo;
“NewCo Shareholders” means holders of NewCo Common Shares;
“New SPAC” has the meaning ascribed thereto in Section 3.1(a);
“New SPAC Articles” means the articles in substantially the form attached as Exhibit C to the Business Combination Agreement;
“New SPAC Class A Common Shares” has the meaning ascribed thereto in Section 3.1(a)(xiii);
“New SPAC Closing Articles” means the articles in substantially the form attached as Exhibit F to the Business Combination Agreement;
“New SPAC Company Warrant” has the meaning ascribed thereto in Section 3.2(d)(xiv);
“Nominee” has the meaning given to such term in the Business Combination Agreement;
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“Post-Closing Directors” means the individuals set forth in Exhibit A to this Plan of Arrangement;
“Post-Closing Officers” means the individuals set forth in Exhibit A to this Plan of Arrangement;
“PIPE Investor” has the meaning given to such term in the Business Combination Agreement;
“PIPE Subscription Agreement” has the meaning given to such term in the Business Combination Agreement;
“Registrar” means the Registrar of Corporations for the Province of Alberta or the Deputy Registrar of Corporations appointed under section 263 of the ABCA;
“Sio NewCo” means Sio Silica Incorporated a corporation incorporated under the laws of the Province of Alberta;
“Sio NewCo Common Shares” means common shares in the authorized share capital of Sio NewCo;
“Sio NewCo Shareholder” means a holder of Sio NewCo Common Shares;
“SPAC” means Pyrophyte Acquisition Corp., a Cayman Islands exempted company which shall be a corporation continued under the ABCA prior to the Closing Date;
“SPAC Amalgamation” has the meaning ascribed thereto in Section 3.1(a);
“SPAC Amalgamation Effective Time” has the meaning ascribed thereto in Section 3.1(a);
“SPAC Class A Common Shares” means the Class A common shares in the authorized share capital of SPAC;
“SPAC Securityholders” means, collectively, the SPAC Shareholders, the SPAC Warrantholders and the SPAC Unitholders;
“SPAC Shareholders” means, at any time, the holders of SPAC Class A Common Shares issued and outstanding at such time;
“SPAC Shareholders Meeting” has the meaning given to such term in the Business Combination Agreement;
“SPAC Unit” means one SPAC Class A Common Share and one-half of one SPAC Warrant;
“SPAC Unitholders” means, at any time, the holders of SPAC Units outstanding at such time;
“SPAC Warrant Agreement” means that certain warrant agreement dated October 26, 2021 by and between SPAC and Continental Stock Transfer & Trust Company;
“SPAC Warrantholders” means, at any time, the holders of SPAC Warrants outstanding at such time;
“SPAC Warrants” means the whole warrants to purchase SPAC Class A Common Shares as contemplated under the SPAC Warrant Agreement, with each whole warrant exercisable for one SPAC Class A Common Share at an exercise price of $11.50;
“Tax Act” means the Income Tax Act (Canada) and the regulations made thereunder, as now in effect and as they may be promulgated or amended from time to time;
“Unexercised Company Warrants” means any Company Warrants that is not exercised pursuant to the Company Warrant and Option Settlement; and
“Withholding Agent” has the meaning ascribed to such term in Section 6.2.
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1.2 | Interpretation |
In this Plan of Arrangement, unless otherwise expressly stated or the context otherwise requires:
(a) | the division of this Plan of Arrangement into Articles and Sections and the further division thereof into subsections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Plan of Arrangement. Unless otherwise indicated, any reference in this Plan of Arrangement to an Article, Section or subsection refers to the specified Article, Section or subsection to this Plan of Arrangement; |
(b) | time periods within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period commences and including the day on which the period ends. Where the last day of any such time period is not a Business Day, such time period shall be extended to the next Business Day following the day on which it would otherwise end; |
(c) | the terms “hereof’, “herein”, “hereunder” and similar expressions refer to this Plan of Arrangement and not to any particular section or other portion hereof and include any agreement or instrument supplementary or ancillary hereto; |
(d) | words importing the singular number only shall include the plural and vice versa and words importing the use of any gender shall include all genders; |
(e) | the word “including” means “including, without limiting the generality of the foregoing”; |
(f) | a reference to a statute is to that statute as now enacted or as the statute may from time to time be amended, re-enacted or replaced and includes any regulation, rule or policy made thereunder; and |
(g) | all references to cash or currency in this Plan of Arrangement are to United States dollars unless otherwise indicated. |
Article
2
BUSINESS COMBINATION AGREEMENT AND BINDING EFFECT
2.1 | Business Combination Agreement |
This Plan of Arrangement is made pursuant to and subject to the provisions of the Business Combination Agreement and constitutes an arrangement as referred to in Section 193 of the ABCA. If there is any inconsistency or conflict between the provisions of this Plan of Arrangement and the provisions of the Business Combination Agreement, the provisions of this Plan of Arrangement shall govern.
2.2 | Binding Effect |
This Plan of Arrangement and the Arrangement, upon the filing of the Articles of Arrangement and the issuance of the Certificate, shall become effective commencing at the Arrangement Effective Time and shall be binding without any further authorization, act or formality on the part of the Court or any Person, on the Affected Securityholders (including Company Dissenting Shareholders), SPAC, NewCo, the Company, Sio NewCo and New SPAC from and after the Arrangement Effective Time.
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2.3 | Filing of Articles of Arrangement |
The Certificate shall be conclusive evidence that the Arrangement has become effective and that each of the steps, events or transactions set out in Section 3.1 and, subject to the satisfaction or waiver of the Closing Conditions, Section 3.2, have become effective in the sequence and at the times set out therein.
Article
3
ARRANGEMENT
3.1 | Effective Date Transactions |
Subject to the satisfaction or waiver of the Closing Conditions, commencing at the Arrangement Effective Time on the Effective Date, the following transactions shall occur and shall be deemed to occur at the times and in the order set out below without any further authorization, act or formality required on the part of any Person, except as otherwise expressly provided herein:
(a) | SPAC shall amalgamate with Sio NewCo (the “SPAC Amalgamation Effective Time”) to form one corporate entity (“New SPAC”) with the same effect as if they had amalgamated under section 181 of the ABCA (the “SPAC Amalgamation”), except that the separate legal existence of Sio NewCo shall not cease and Sio NewCo shall survive the SPAC Amalgamation as New SPAC notwithstanding the issue by the Registrar of a certificate of amalgamation and the assignment of a new corporate access number to New SPAC (and for the avoidance of doubt, the SPAC Amalgamation is intended to qualify as an amalgamation as defined in subsection 87(1) of the Tax Act, be governed by subsections 87(1), 87(2), 87(4) and 87(5) of the Tax Act, as applicable, and qualify as a “reorganization” within the meaning of Section 368(a)(1)(F) of the Code), and upon the SPAC Amalgamation becoming effective: |
(i) | without limiting the generality of the foregoing, Sio NewCo shall survive the SPAC Amalgamation as New SPAC; |
(ii) | the properties, rights and interests of Sio NewCo shall continue to be the properties, rights and interests of New SPAC provided that the SPAC Amalgamation shall not constitute an assignment by operation of law, a transfer or any other disposition of the properties, rights or interests of Sio NewCo to New SPAC; |
(iii) | the separate legal existence of SPAC shall cease without SPAC being liquidated or wound up, and the property, rights and interests of SPAC shall become the property, rights and interests of New SPAC provided that the SPAC Amalgamation shall not constitute an assignment by operation of law, a transfer or any other disposition of the properties, rights or interests of SPAC to New SPAC; |
(iv) | New SPAC shall continue to be liable for the obligations of each of SPAC and Sio NewCo; |
(v) | any existing cause of action, claim or liability to prosecution is unaffected by the SPAC Amalgamation; |
(vi) | a civil, criminal or administrative action or proceeding pending by or against either Sio NewCo or SPAC prior to the SPAC Amalgamation may be continued to be prosecuted by or against New SPAC; |
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(vii) | a conviction against, or a ruling, order or judgment in favour of or against, either Sio NewCo or SPAC may be enforced by or against New SPAC; |
(viii) | the name of New SPAC shall be Sio Silica Incorporated; |
(ix) | the registered office of New SPAC shall be the registered office of SPAC; |
(x) | the articles of amalgamation of New SPAC shall be the New SPAC Articles and the certificate of amalgamation of New SPAC is deemed to be the certificate of incorporation of New SPAC; |
(xi) | the by-laws of New SPAC shall be the bylaws of Sio NewCo; |
(xii) | the size of the board of directors of New SPAC shall be t directors, and the directors of SPAC shall be the current directors of New SPAC, to hold office until the next annual meeting of the shareholders of New SPAC or until their successors are elected or appointed; |
(xiii) | each SPAC Class A Common Share outstanding immediately prior to the SPAC Amalgamation shall be exchanged for one fully paid and non-assessable Class A common share in the authorized share capital of New SPAC (a “New SPAC Class A Common Share”), the holders of the SPAC Class A Common Shares so exchanged shall be added as registered holders of New SPAC Class A Common Shares on the securities register of New SPAC, and each SPAC Class A Common Share so exchanged shall be, and shall be deemed to be, cancelled without any repayment of capital; |
(xiv) | each Sio NewCo Common Share held by the Nominee and outstanding immediately prior to the SPAC Amalgamation shall be exchanged for one New SPAC Class A Common Share, the holders of the Sio NewCo Common Shares so exchanged shall be added as registered holders of New SPAC Class A Common Shares on the securities register of New SPAC, and each Sio NewCo Common Share so exchanged shall be, and shall be deemed to be, cancelled without any repayment of capital; |
(xv) | there shall be added to the stated capital of the New SPAC Class A Common Shares, in respect of the New SPAC Class A Common Shares issued by New SPAC to the former holders of SPAC Class A Common Shares and Sio NewCo Common Shares, an amount equal to the aggregate paid-up capital (for the purposes of the Tax Act) of the SPAC Class A Common Shares and Sio NewCo Common Shares immediately prior to such exchange; |
(xvi) | each SPAC Warrant outstanding immediately prior to the SPAC Amalgamation shall be exchanged for one warrant to acquire one New SPAC Class A Common Share (a “New SPAC Warrant”), and each SPAC Warrant so exchanged shall be, and shall be deemed to be, cancelled. Each New SPAC Warrant shall continue to be governed by the terms of the SPAC Warrant Agreement, any restriction on the exercise of any SPAC Warrant so replaced shall continue in full force and effect and the term, exercisability, vesting schedule and other provisions that applied to such SPAC Warrant shall otherwise remain unchanged as a result of the replacement of such SPAC Warrant; and |
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(xvii) | each SPAC Unit outstanding immediately prior to the SPAC Amalgamation shall be exchanged for one unit of New SPAC representing one New SPAC Class A Common Share and one-half of one New SPAC Warrant (a “New SPAC Unit”), and each SPAC Unit so exchanged shall be, and shall be deemed to be, cancelled; |
(b) | no certificates will be issued to represent the New SPAC Class A Common Shares or New SPAC Warrants and the certificates formerly representing the SPAC Class A Common Shares, Sio NewCo Common Shares and SPAC Warrants shall, following the Arrangement Effective Time, be deemed to represent the New SPAC Class A Common Shares and New SPAC Warrants, respectively; and |
(c) | the New SPAC Class A Common Share issued to the Nominee in exchange for its Sio NewCo Common Share pursuant to the SPAC Amalgamation shall be purchased by New SPAC in consideration for the payment by New SPAC to the Nominee of $1.00, the Nominee shall be removed as a registered holder of New SPAC Class A Common Shares on the securities register of New SPAC and the New SPAC Class A Common Share so purchased shall be, and shall be deemed to be, cancelled. |
3.2 | Closing Date Transactions |
Following completion of the steps set out in Section 3.1, and subject to the satisfaction or waiver of the Closing Conditions, the transactions set out in this Section 3.2 shall occur starting at the Closing Time and thereafter shall be deemed to occur in successive five minute intervals in the order set out below without any further authorization, act or formality required on the part of any Person:
(a) | each Company Common Share held by a Company Dissenting Shareholder shall be, and shall be deemed to be, surrendered to the Company by the holder thereof, and each such Company Common Share so surrendered shall be cancelled and thereupon each such Company Dissenting Shareholder shall cease to have any rights as a holder of such Company Common Shares other than a claim against the Company in an amount determined and payable in accordance with Article 4, and the name of such Company Dissenting Shareholder shall be removed as the registered holder of such Company Common Shares from the securities register of the Company; |
(b) | in respect of the Company Warrants outstanding immediately prior to the Closing Time, each Company Warrant shall be, and shall be deemed to be, exercised on a cashless basis for a number of Company Common Shares determined by the formula (A-B)/A, where A is equal to the Fully-Diluted Company Common Share Price and B is equal to the applicable exercise price (determined with reference to the US dollar to Canadian dollar exchange rate reported by the Bank of Canada two Business Days prior to the Closing Date) of such Company Warrant, the holder of each such Company Warrant shall be removed as the holder from the register of Company Warrants maintained by or on behalf of the Company, and the Company shall update the register of Company Common Shares maintained by or on behalf of the Company to reflect the number of Company Common Shares issued to the holder upon the cashless exercise of such Company Warrant; |
(c) | in respect of the Company Options outstanding immediately prior to the Closing Time, each Company Option shall be, and shall be deemed to be, exercised on a cashless basis for a number of Company Common Shares determined by the formula (A-B)/A, where A is equal to the Fully-Diluted Company Common Share Price and B is equal to the applicable exercise price (determined with reference to the US dollar to Canadian dollar exchange rate reported by the Bank of Canada two Business Days prior to the Closing Date) of such Company Option, the holder of each such Company Option shall be removed as the holder from the register of Company Options maintained by or on behalf of the Company, and the Company shall update the register of Company Common Shares maintained by or on behalf of the Company to reflect the number of Company Common Shares issued to the holder upon the cashless exercise of such Company Option; |
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(d) | immediately following step (c) above (the “Company Amalgamation Effective Time”), the Company shall amalgamate with NewCo to form a corporation (“Amalgamated Company”) with the same effect as if they had amalgamated under section 181 of the ABCA (the “Company Amalgamation”), except that the separate legal existence of the Company shall not cease and the Company shall survive the Company Amalgamation as the Amalgamated Company notwithstanding the issue by the Registrar of a certificate of amalgamation and the assignment of a new corporate access number to the Amalgamated Company (and for the avoidance of doubt, the Company Amalgamation is intended to qualify as an amalgamation as defined in subsection 87(1) of the Tax Act, be governed by subsections 87(1), 87(2), 87(4), 87(5) and 87(9) of the Tax Act, as applicable, and qualify as a “reorganization” within the meaning of Section 368(a) of the Code), and upon the Company Amalgamation becoming effective: |
(i) | without limiting the generality of the foregoing, the Company shall survive the Company Amalgamation as the Amalgamated Company; |
(ii) | the properties, rights and interests of the Company shall continue to be the properties, rights and interests of the Amalgamated Company provided that the Company Amalgamation shall not constitute an assignment by operation of law, a transfer or any other disposition of the properties, rights or interests of the Company to the Amalgamated Company; |
(iii) | the separate legal existence of NewCo shall cease without NewCo being liquidated or wound up, and the property, rights and interests of NewCo shall become the property, rights and interests of the Amalgamated Company provided that the Company Amalgamation shall not constitute an assignment by operation of law, a transfer or any other disposition of the properties, rights or interests of NewCo to the Amalgamated Company; |
(iv) | the Amalgamated Company shall continue to be liable for the liabilities and obligations of each of NewCo and the Company; |
(v) | any existing cause of action, claim or liability to prosecution is unaffected by the Company Amalgamation; |
(vi) | a civil, criminal or administrative action or proceeding pending by or against either NewCo or the Company prior to the Company Amalgamation may be continued to be prosecuted by or against the Amalgamated Company; |
(vii) | a conviction against, or a ruling, order or judgment in favour of or against, either NewCo or the Company may be enforced by or against the Amalgamated Company; |
(viii) | the name of the Amalgamated Company shall be Sio Silica Corporation; |
(ix) | the registered office of the Amalgamated Company shall be the same registered office as the Company; |
(x) | the articles of amalgamation of the Amalgamated Company shall be the Company Closing Articles and the certificate of amalgamation of the Amalgamated Company is deemed to be the certificate of incorporation of the Amalgamated Company; |
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(xi) | the by-laws of the Amalgamated Company shall be the same as the by-laws of NewCo; |
(xii) | the size of the board of directors of the Amalgamated Company shall be t directors, and t, t and t shall be the initial directors of the Amalgamated Company, to hold office until the next annual meeting of the shareholders of the Amalgamated Company or until their successors are elected or appointed; |
(xiii) | each Company RSU outstanding immediately prior to the Company Amalgamation Effective Time shall, in accordance with the Company Share Award Plan, become exercisable for a number of New SPAC Class A Common Shares (rounded up or down to the nearest whole New SPAC Class A Common Share, with a fraction of 0.5 rounded up) equal to (1) the number of Company Common Shares subject to the applicable Company RSU multiplied by (2) the Company Common Share Exchange Ratio; |
(xiv) | each Unexercised Company Warrant outstanding immediately prior to the Company Amalgamation Effective Time shall, automatically and in accordance with its terms, be exchanged for one warrant to acquire one New SPAC Class A Common Share (a “New SPAC Company Warrant”), and each Unexercised Company Warrant so exchanged shall be, and shall be deemed to be, cancelled. Each New SPAC Company Warrant shall continue to be governed by the terms of the warrant agreement as were applicable to the corresponding Unexercised Company Warrant prior to the Company Amalgamation Effective Time, any restriction on the exercise of any Unexercised Company Warrant so replaced shall continue in full force and effect and the term, exercisability, vesting schedule, and other provisions that applied to such Unexercised Company Warrant shall otherwise remain unchanged as a result of the replacement of such Unexercised Company Warrant; |
(xv) | each Company Common Share (other than the Interim Company Shares) outstanding immediately prior to the Company Amalgamation Effective Time (excluding, for the avoidance of doubt, any Company Common Share in respect of which the holder exercises Company Dissent Rights) shall be exchanged for (i) such number of New SPAC Class A Common Shares as is equal to the Company Common Share Exchange Ratio, and (ii) such number of Company Earnout Shares as is equal to the Company Earnout Exchange Ratio, and the holders of the Company Common Shares shall cease to have any rights as the registered holders of Company Common Shares and each holder of the Company Common Shares shall be added as a registered holder of New SPAC Class A Common Shares on the securities register of New SPAC; |
(xvi) | each Interim Company Share outstanding immediately prior to the Company Amalgamation Effective Time shall be exchanged for such number of New SPAC Class A Common Shares as is equal to the Company Common Share Exchange Ratio, and the holders of the Interim Company Shares shall cease to have any rights as the registered holders of Interim Company Shares and each holder of the Interim Company Shares shall be added as a registered holder of New SPAC Class A Common Shares on the securities register of New SPAC; |
(xvii) | an amount equal to the aggregate paid-up capital (for the purposes of the Tax Act) of the Company Common Shares (which includes the Interim Company Shares) outstanding immediately prior to the Company Amalgamation Effective Time (excluding, for the avoidance of doubt, any Company Common Share in respect of which the holder exercises Company Dissent Rights) shall be added to the stated capital of the New SPAC Class A Common Shares; |
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(xviii) | each NewCo Common Share outstanding immediately prior to the Company Amalgamation Effective Time shall be exchanged for one common share in the authorized share capital of the Amalgamated Company; and |
(xix) | an amount equal to the aggregate paid-up capital (for the purposes of the Tax Act) of the NewCo Common Shares and the Company Common Shares (which includes the Interim Company Shares) outstanding immediately prior to the Company Amalgamation Effective Time (excluding, for avoidance of doubt, any Company Common Share in respect of which the holder exercises Company Dissent Rights) shall be added to the stated capital of the common shares of the Amalgamated Company; |
(e) | New SPAC and each of the Lock-Up Shareholders shall be deemed to be party to and bound by the Lock-Up Agreement; |
(f) | New SPAC shall issue and sell to each PIPE Investor the number of New SPAC Class A Common Shares set forth in the applicable PIPE Subscription Agreement in exchange for the purchase price set forth therein; |
(g) | New SPAC shall issue and sell to each investor of Flow-Through Shares the number of Flow-Through Shares set forth in the applicable subscription agreement for Flow-Through Shares in exchange for the purchase price set forth therein; |
(h) | the New SPAC Articles shall be amended and restated substantially in the form of the New SPAC Closing Articles; |
(i) | the directors of New SPAC immediately prior to the Company Amalgamation Effective Time shall be deemed to have resigned and be replaced by the Post-Closing Directors, to hold office until the next annual meeting of the shareholders of New SPAC or until their successors are elected or appointed; |
(j) | the officers of New SPAC immediately prior to the Company Amalgamation Effective Time shall be deemed to have resigned and be replaced by the Post-Closing Officers; and |
(k) | if the New SPAC Class A Common Share and New SPAC Warrants comprising a single New SPAC Unit have not been detached so as to permit separate transferability or trading thereof prior to the Company Amalgamation Effective Time, then effective at the Company Amalgamation Effective Time, any and all New SPAC Units outstanding immediately prior to the Company Amalgamation Effective Time shall be automatically detached and broken out into their constituent parts, such that a holder of one New SPAC Unit shall thereupon hold one New SPAC Class A Common Share and one-half of one New SPAC Warrant. |
Subject to the satisfaction or waiver of the Closing Conditions, the transactions provided for in this Section 3.2 shall be deemed to occur on the Closing Date in the order set out above notwithstanding that certain of the procedures related hereto are not completed until after the Closing Date (and provided that none of the foregoing shall occur or shall be deemed to occur unless all of the foregoing occur and, if they occur, all of the foregoing shall be deemed to occur without further act or formality).
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Article
4
DISSENT RIGHTS
4.1 | Pursuant to the Interim Order, a registered holder of Company Common Shares may exercise dissent rights with respect to the Company Common Shares held by such holder (“Company Dissent Rights”) in connection with the Arrangement pursuant to and in accordance section 191 of the ABCA, all as the same may be modified by the Interim Order, the Final Order and this Section 4.1; provided that the written notice of dissent to the Company Arrangement Resolution contemplated by section 191(5) of the ABCA must be sent to and received by the Company not later than 5:00 P.M. (Calgary time) on the Business Day that is two (2) Business Days before the Company Shareholders Meeting. Company Shareholders who exercise Company Dissent Rights and who: |
(a) | are ultimately determined to be entitled to be paid fair value from the Company for the Company Common Shares in respect of which they have exercised Company Dissent Rights, will, notwithstanding anything to the contrary contained in Section 191 of the ABCA, be deemed to have irrevocably transferred such Company Common Shares to the Company pursuant to Section 3.2(a) in consideration of such fair value, and in no case will the Amalgamated Company, New SPAC or any other Person be required to recognize such holders as holders of Company Common Shares after the Closing Time, and each Company Dissenting Shareholder will cease to be entitled to the rights of a Company Shareholder in respect of the Company Common Shares in relation to which such Company Dissenting Shareholder has exercised Company Dissent Rights and the securities register of the Company shall be amended to reflect that such former holder is no longer the holder of such Company Common Shares as at and from the Closing Time; or |
(b) | are ultimately not entitled, for any reason, to be paid fair value for the Company Common Shares in respect of which they have exercised Company Dissent Rights, will be deemed to have participated in the Arrangement on the same basis as a Company Shareholder who has not exercised Company Dissent Rights. |
4.2 | For greater certainty, in addition to any other restrictions in the Interim Order and under Section 191 of the ABCA, none of the following shall be entitled to exercise Company Dissent Rights: (i) Company Shareholders who vote or have instructed a proxyholder to vote such Company Common Shares in favour of the Company Arrangement Resolution; (ii) the holders Company Options, Company Warrants and Company RSUs; and (iii) any other Person who is not a registered holder of Company Common Shares as of the record date for the Company Shareholders Meeting. A person may only exercise Company Dissent Rights in respect of all, and not less than all, of such person’s Company Common Shares. |
Article
5
CERTIFICATES AND PAYMENTS
5.1 | At or before the Closing Time, New SPAC shall deposit, or cause to be deposited, in escrow with the Exchange Agent, for the benefit of and to be held on behalf of the Company Securityholders entitled to receive New SPAC Class A Common Shares pursuant to Section 3.2(d), certificates representing, or other evidence regarding the issuance of, the New SPAC Class A Common Shares that such Company Securityholders are entitled to receive under the Arrangement (calculated without reference to whether any Company Shareholder has exercised Company Dissent Rights). |
5.2 | Upon the surrender to the Exchange Agent of a certificate (or where applicable, confirmation of book-entry only entries) which immediately prior to the Company Amalgamation Effective Time represented outstanding Company Common Shares, Company Warrants or Company Options, as applicable, together with a duly completed and executed Letter of Transmittal and such additional documents and instruments as the Exchange Agent may reasonably require, the Exchange Agent shall deliver with respect to a Company Shareholder, a Company Warrantholder or a Company Optionholder, book-entry only entries representing the New SPAC Class A Common Shares that such Company Securityholder is entitled to receive under the Arrangement, in each case, less any amounts required to be withheld pursuant to Section 6.2. |
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5.3 | Until surrendered as contemplated by this Article 5, each certificate which immediately prior to the Company Amalgamation Effective Time represented outstanding Company Common Shares, Company Warrants or Company Options shall be deemed at all times after the Company Amalgamation Effective Time to represent only the right to receive upon such surrender the New SPAC Class A Common Shares which such holder is entitled to receive pursuant to Section 5.2. |
5.4 | Any certificate formerly representing Company Common Shares, Company Warrants or Company Options that is not deposited, together with all other documents required hereunder, on or before the last Business Day before the third anniversary of the Closing Date, and any right or claim by or interest of any kind or nature, including the right of a former Company Shareholder, Company Warrantholder or Company Optionholder to receive certificates (or where applicable, confirmation of book-entry only entries) representing New SPAC Class A Common Shares to which such holder is entitled pursuant to the Arrangement, shall terminate and be deemed to be surrendered and forfeited to New SPAC for no consideration and in respect of such forfeited New SPAC Class A Common Shares, such New SPAC Class A Common Shares shall be cancelled. |
5.5 | No Company Shareholder, Company Warrantholder or Company Optionholder shall be entitled to receive any consideration with respect to the Company Common Shares, the Company Warrants or the Company Options other than the consideration to which such holder is entitled to receive under the Arrangement and, for greater certainty, no such holder will be entitled to receive any interest, dividend, premium or other payment in connection therewith. |
5.6 | All dividends payable with respect to any New SPAC Class A Common Shares allotted and issued pursuant to this Plan of Arrangement for which a certificate has not been issued shall be paid or delivered to the Exchange Agent to be held by the Exchange Agent in trust for the registered holder thereof. The Exchange Agent shall pay and deliver to any such registered holder, as soon as reasonably practicable after application therefor is made by the registered holder to the Exchange Agent in such form as the Exchange Agent may reasonably require, such dividends and any interest thereon to which such holder is entitled, net of applicable withholding and other taxes. |
5.7 | In no event shall any Person be entitled to a fractional New SPAC Class A Common Share. Where the aggregate number of New SPAC Class A Common Shares to be issued to a Person pursuant to the Plan of Arrangement would result in a fraction of a New SPAC Class A Common Share being issuable, the number of New SPAC Class A Common Shares to be received by such Person shall be rounded up or down to the nearest whole New SPAC Class A Common Share, with a fraction of 0.5 rounded up. No cash settlements shall be made with respect to fractional shares eliminated by rounding. |
5.8 | If any certificate which immediately prior to the Company Amalgamation Effective Time represented one or more outstanding Company Common Shares, Company Warrants or Company Options that were transferred pursuant to this Plan of Arrangement shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such certificate to be lost, stolen or destroyed, the Exchange Agent will pay and deliver, in exchange for such lost, stolen or destroyed certificate, the New SPAC Class A Common Shares which such holder is entitled to receive pursuant to Section 5.2, less any amounts required to be withheld pursuant to Section 6.2. When authorizing such payment and delivery in exchange for any lost, stolen or destroyed certificate, the Person to whom the payment is made shall, as a condition precedent to the delivery thereof, give a bond satisfactory to New SPAC and the Exchange Agent in such sum as New SPAC may direct, or otherwise indemnify New SPAC and the Exchange Agent in a manner satisfactory to New SPAC and the Exchange Agent, against any claim that may be made against New SPAC or the Exchange Agent with respect to the certificate alleged to have been lost, stolen or destroyed. |
5.9 | Following the Closing Time, New SPAC shall prepare a register of the holders of share awards to acquire New SPAC Class A Common Shares issued pursuant to Section 3.2(d)(xiii). Such register shall contain the name and address of each holder, the number of share awards, the vesting provisions and the expiry date of such share award. |
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Article
6
EFFECT OF THE ARRANGEMENT; WITHHOLDINGS
6.1 | From and after the Arrangement Effective Time: (a) this Plan of Arrangement shall take precedence and priority over any and all Affected Securities issued prior to the Arrangement Effective Time, (b) the rights and obligations of the Affected Securityholders, the Company, SPAC, NewCo, Sio NewCo, and any transfer agent or other exchange agent therefor in relation thereto (including the Exchange Agent), shall be solely as provided for in this Plan of Arrangement; and (c) all actions, causes of action, claims or proceedings (actual or contingent and whether or not previously asserted) based on or in any way relating to any Affected Securities shall be deemed to have been settled, compromised, released and determined without liability except as set forth in this Plan of Arrangement. |
6.2 | SPAC, New SPAC, the Company and, in each case, their Affiliates and the Exchange Agent (each, a “Withholding Agent”), shall be entitled to deduct and withhold (or cause to be deducted and withheld) from the consideration (including shares, warrants, options or other property) otherwise payable, issuable or transferable pursuant to this Plan of Arrangement such amounts as it is required to deduct and withhold with respect to such payment, issuance or transfer under the Code, the Tax Act, or other provision of applicable Law with respect to Taxes; provided, that, except with respect to withholding or deducting on any amounts treated as compensation for services, if the applicable Withholding Agent determines that any payment, issuance or transfer hereunder is subject to deduction and/or withholding, then such Withholding Agent shall use commercially reasonable efforts to (i) provide notice to the applicable recipient as soon as reasonably practicable after such determination and (ii) cooperate with the applicable recipient to reduce or eliminate any such deduction or withholding to the extent permitted by applicable Law. To the extent that amounts are so deducted or withheld and timely paid to the applicable Governmental Authority, such deducted or withheld amounts shall be treated for all purposes of this Plan of Arrangement as having been paid, issued or transferred to the Person in respect of which such deduction and withholding was made. The applicable Withholding Agent is hereby authorized to dispose of such portion of any share or other security payable, issuable or transferable pursuant to this Plan of Arrangement as is necessary to provide sufficient funds to such Withholding Agent to enable it to comply with such deduction and withholding requirement and such Withholding Agent shall use commercially reasonable efforts to notify the relevant Persons of such disposition and remit the applicable portion of the net proceeds of such sale to the appropriate Governmental Authority and, if applicable, any portion of such net proceeds that is not required to be so remitted shall be paid to the Person entitled to receive such consideration. SPAC, New SPAC, the Company and NewCo agree to provide any necessary Tax forms, including IRS Form W-9 or the appropriate series of IRS Form W-8, as applicable, or any similar information, including any forms or information for Canadian or other applicable Law purposes as the Withholding Agent reasonably determines. Any amounts so withheld shall be timely remitted to the applicable Governmental Authority. To the extent a Withholding Agent becomes aware of any obligation to deduct or withhold from amounts otherwise payable, issuable or transferable pursuant to this Plan of Arrangement, the Withholding Agent shall notify the other relevant Persons as soon as reasonably practicable, and such Persons shall reasonably cooperate to obtain any certificates or other documentation required in respect of such withholding obligation. |
Article
7
AMENDMENTS
7.1 | The Company and SPAC may amend, modify and/or supplement this Plan of Arrangement at any time and from time to time prior to the Arrangement Effective Time, provided that each such amendment, modification and/or supplement must: (a) be set out in writing; (b) be approved by the Company and SPAC, each acting reasonably; (c) be filed with the Court and, if made following the Company Shareholders Meeting, approved by the Court; and (d) be communicated to the Affected Securityholders if and as required by the Court. |
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7.2 | Any amendment, modification or supplement to this Plan of Arrangement may be proposed by the Company or SPAC at any time prior to the Company Shareholders Meeting or the SPAC Shareholders Meeting (provided that the Company or SPAC shall have consented thereto) with or without any other prior notice or communication, and if so proposed and accepted by the Persons voting at the Company Shareholders Meeting or the SPAC Shareholders Meeting, as applicable (other than as may be required under the Interim Order), shall become part of this Plan of Arrangement for all purposes. |
7.3 | Any amendment, modification or supplement to this Plan of Arrangement that is approved or directed by the Court following the Company Shareholders Meeting shall be effective only if: (a) it is consented to in writing by each of the Company and SPAC (in each case, acting reasonably); and (b) if required by the Court, it is consented to by some or all of the Company Securityholders or SPAC Securityholders voting in the manner directed by the Court. |
7.4 | Any amendment, modification or supplement to this Plan of Arrangement may be made following the Effective Date by New SPAC, provided that it concerns a matter which, in the reasonable opinion of New SPAC, is of an administrative nature required to better give effect to the implementation of this Plan of Arrangement. |
7.5 | This Plan of Arrangement may be withdrawn prior to the Arrangement Effective Time in accordance with the Business Combination Agreement. |
Article
8
FURTHER ASSURANCES
8.1 | Notwithstanding that the transactions and events set out herein shall occur and be deemed to occur in the order set out in this Plan of Arrangement without any further act or formality, each of the parties to the Business Combination Agreement shall make, do and execute, or cause to be made, done and executed, all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may reasonably be required by any of them in order further to document or evidence any of the transactions or events set out therein. |
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EXHIBIT A
POST-CLOSING DIRECTORS AND OFFICERS
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Exhibit 10.1
Execution Version
Friends & Family
FORM OF
SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT (this “Subscription Agreement”) is entered into on November 13, 2023, by and between Pyrophyte Acquisition Corp., a Cayman Islands exempted company (“Pyrophyte”), Sio Silica Corporation, an Alberta corporation (“Sio”), Sio Silica Incorporated., a newly-formed Alberta corporation formed solely for the purposes of engaging in the Transaction (as defined below) and wholly owned by Feisal Somji, a nominee of Sio (“Sio NewCo” and unless otherwise indicated or the context otherwise requires, by virtue of, and with effect from, the Assumption (as defined below), becoming effective, all references herein to Sio NewCo shall refer to the newly formed corporate entity resulting from the SPAC Amalgamation (as defined below), which is also referred to as the “Issuer”), and the undersigned subscriber (“Subscriber”).
WHEREAS, concurrently with the execution of this Subscription Agreement, Pyrophyte is entering into a definitive agreement (the “Business Combination Agreement”) with Sio, Snowbank NewCo Alberta ULC, an Alberta unlimited liability corporation and wholly-owned subsidiary of Pyrophyte (“NewCo”), and Sio NewCo, pursuant to which, among other things, (i) Pyrophyte shall transfer by way of continuation from the Cayman Islands to Alberta in accordance with the Cayman Islands Companies Act (as revised) and continue as an Alberta corporation in accordance with the applicable provisions of the Business Corporations Act (Alberta), (ii) Pyrophyte shall amalgamate with Sio NewCo (the “SPAC Amalgamation”) to form the Issuer, which shall, as a result of the SPAC Amalgamation and prior to the consummation of the transactions contemplated hereunder, assume all rights, covenants and obligations of Sio NewCo, including the rights, covenants and obligations under this Subscription Agreement and the Other Subscription Agreements (as defined below) (the “Assumption”) and (iii) Sio and NewCo shall amalgamate, and the entity resulting from such amalgamation shall be wholly-owned by the Issuer and continue the business operations currently undertaken by Sio (the transactions contemplated by the Business Combination Agreement, the “Transaction”);
WHEREAS, in connection with the Transaction, Subscriber desires to subscribe for and purchase, substantially concurrently with the consummation of the Transaction, that number of common shares of the Issuer (the “Issuer Common Shares”) set forth on the signature page hereto (the “Subscribed Securities”), for an aggregate purchase price of US$__________ (the “Purchase Price”), and Sio NewCo desires to, following the SPAC Amalgamation and Assumption, issue and sell to Subscriber the Subscribed Securities in consideration of the payment of the Purchase Price by or on behalf of Subscriber to the Issuer; and
WHEREAS, substantially concurrently with the execution of this Subscription Agreement, Sio NewCo and Pyrophyte are entering into one or more subscription agreements (the “Other Subscription Agreements” and, together with this Subscription Agreement, the “Subscription Agreements”) with certain other investors (the “Other Subscribers” and together with Subscriber, the “Subscribers”), pursuant to which such Subscribers have agreed to purchase on the closing date of the Transaction an aggregate of 3,114,258 Subscribed Securities an aggregate purchase price, inclusive of the Purchase Price of US$20,122,474 (the “Offering”).
NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants, and subject to the conditions, herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
Section 1. Subscription. Subject to the terms and conditions hereof, at the Closing (as defined below), Subscriber hereby subscribes for and agrees to purchase from Sio NewCo, and Sio NewCo hereby agrees to, following the SPAC Amalgamation and Assumption, issue and sell to Subscriber, upon the payment of the Purchase Price, the Subscribed Securities (such subscription and issuance, the “Subscription”).
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Section 2. Closing.
(a) The consummation of the Subscription contemplated hereby (the “Closing”) shall occur on the closing date of the Transaction (the “Closing Date”), substantially concurrently with and conditioned upon the effectiveness of the consummation of the Transaction.
(b) At least five (5) Business Days before the anticipated Closing Date, Sio NewCo shall deliver written notice to Subscriber (the “Closing Notice”) specifying (i) the anticipated Closing Date and (ii) the wire instructions for delivery of the Purchase Price to Sio NewCo. No later than three (3) Business Days prior to the anticipated Closing Date as set forth in the Closing Notice, Subscriber shall deliver the Purchase Price for the Subscribed Securities by wire transfer of United States dollars in immediately available funds to the account specified by Sio NewCo in the Closing Notice, and such funds shall be held by Sio NewCo in escrow, in a segregated non-interest bearing account until the Closing Date. In the event that the consummation of the Transaction does not occur within five (5) Business Days after the anticipated Closing Date specified in the Closing Notice, unless otherwise agreed to in writing by Pyrophyte, Sio NewCo and the Subscriber, Sio NewCo shall promptly (but in no event later than seven (7) Business Days after the anticipated Closing Date specified in the Closing Notice) return all of the funds so delivered by Subscriber to Sio NewCo by wire transfer in immediately available funds to the account specified by Subscriber, and any book entries representing the Subscribed Securities, if any, shall be deemed cancelled. Notwithstanding such return or cancellation (x) a failure to close on the anticipated Closing Date shall not, by itself, be deemed to be a failure of any of the conditions to Closing set forth in this Section 2 to be satisfied or waived on or prior to the Closing Date, and (y) unless and until this Subscription Agreement is terminated in accordance with Section 8 herein, Subscriber shall remain obligated to redeliver funds to Sio NewCo following Sio NewCo’s delivery to Subscriber of a new Closing Notice in accordance with this Section 2 and the Subscriber and Sio NewCo shall remain obligated to consummate the Closing upon satisfaction of the conditions set forth in this Section 2. For the purposes of this Subscription Agreement, “Business Day” means any day other than a Saturday or Sunday, or any other day on which banks located in New York, New York or governmental authorities in Canada are required or authorized by law to be closed for business.
(c) The Closing shall be subject to the satisfaction, or valid waiver in writing by each of the parties hereto, of the conditions that, on the Closing Date:
(i) | all conditions precedent to the closing of the Transaction set forth in Article VII of the Business Combination Agreement shall have been satisfied (as determined by the parties to the Business Combination Agreement) or waived in writing by the person(s) with the authority to make such waiver (other than those conditions which, by their nature, are to be satisfied at the closing of the Transaction pursuant to the Business Combination Agreement), and the closing of the Transaction shall be scheduled to occur substantially concurrently with the Closing; |
(ii) | no governmental authority shall have enacted, issued, promulgated, enforced or entered any judgment, order, law, rule or regulation which is then in effect and has the effect of making the consummation of the transactions contemplated hereby illegal or otherwise restraining or prohibiting consummation of the Subscription or the transactions contemplated hereby, and no governmental authority shall have instituted or threatened in writing a proceeding seeking to impose any such restraint or prohibition; |
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(iii) | a license under the Environment Act (Manitoba) has been obtained by Sio that would permit Sio to extract high purity silica sand from the Winnipeg Sandstone geological formation situated within Sio’s mining claims and leases located southwest of Vivian, Manitoba at an annual extraction rate of up to 1.34 million tonnes; and |
(iv) | the Issuer Common Shares shall be approved for listing on the New York Stock Exchange or another national securities exchange (the “Stock Exchange”) subject only to official notice of issuance. |
(d) The obligation of Sio NewCo to consummate the Closing shall be subject to the satisfaction or valid waiver in writing by Sio NewCo and Pyrophyte of the additional conditions that, on the Closing Date:
(i) | all representations and warranties of Subscriber contained in this Subscription Agreement shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality or Subscriber Material Adverse Effect (as defined below), which representations and warranties shall be true and correct in all respects as so qualified) at and as of the Closing Date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality or Subscriber Material Adverse Effect, which representations and warranties shall be true and correct in all respects as so qualified) as of such earlier date), and consummation of the Closing shall constitute a reaffirmation by Subscriber of each of the representations, warranties and agreements of Subscriber contained in this Subscription Agreement as of the Closing Date, but without giving effect to consummation of the Transaction, or as of such earlier date, as applicable, except, in each case, where the failure of such representations and warranties to be true and correct (whether as of the Closing Date or such earlier date), taken as a whole, does not result in a Subscriber Material Adverse Effect; |
(ii) | Subscriber shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Subscription Agreement to be performed, satisfied or complied with by it at or prior to the Closing; and |
(iii) | Subscriber shall have delivered the Purchase Price in compliance with the terms of this Subscription Agreement. |
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(e) The obligation of Subscriber to consummate the Closing shall be subject to the satisfaction or valid waiver in writing by Subscriber of the additional conditions that, on the Closing Date:
(i) | all representations and warranties of Sio NewCo and Pyrophyte contained in this Subscription Agreement shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality or Sio NewCo Material Adverse Effect or Pyrophyte Material Adverse Effect (in each case, as defined below), which representations and warranties shall be true and correct in all respects as so qualified) at and as of the Closing Date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality, Sio NewCo Material Adverse Effect or Pyrophyte Material Adverse Effect, which representations and warranties shall be true and correct in all respects as so qualified) as of such earlier date), and consummation of the Closing shall constitute a reaffirmation by Sio NewCo and Pyrophyte of each of their respective representations, warranties and agreements contained in this Subscription Agreement as of the Closing Date, but without giving effect to consummation of the Transaction, or as of such earlier date, as applicable, except, in each case, where the failure of such representations and warranties to be true and correct (whether as of the Closing Date or such earlier date), taken as a whole, does not result in a Sio NewCo Material Adverse Effect or a Pyrophyte Material Adverse Effect; |
(ii) | the Subscribed Securities shall not be subject to any contractual lock-up restrictions other than the restrictive legends related to securities law restrictions as set forth below; and |
(iii) | each of Sio NewCo (and when applicable, the Issuer) and Pyrophyte shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Subscription Agreement to be performed, satisfied or complied with by it at or prior to the Closing. |
(f) Prior to or at the Closing, the Subscriber shall deliver to Sio NewCo all such information as is reasonably requested in order for Sio NewCo to issue and allot the Subscribed Securities to the Subscriber, including, without limitation, the legal name of the person in whose name such Subscribed Securities are to be issued and allotted (or the Subscriber’s nominee in accordance with its delivery instructions) and a duly completed and executed Internal Revenue Service Form W-9 or appropriate Form W-8.
Each book-entry for Subscribed Securities shall contain a notation, and each certificate (if any) evidencing the Subscribed Securities shall be stamped or otherwise imprinted with a legend, in substantially the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE LATER OF (I) , 2023, AND (II) THE DATE THE ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.
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Section 3. Sio NewCo Representations and Warranties. Sio NewCo represents and warrants to Subscriber that:
(a) Sio NewCo (i) is validly existing and in good standing under the laws of its jurisdiction of incorporation, (ii) has the requisite corporate power and authority to own, lease and operate its properties, to carry on its business as it is now being conducted and to enter into and perform its obligations under this Subscription Agreement, and (iii) is duly licensed or qualified to conduct its business and, if applicable, is in good standing under the laws of each jurisdiction (other than its jurisdiction of incorporation and only to the extent such concept exists in such jurisdiction) in which the conduct of its business or the ownership of its properties or assets requires such license or qualification, except, with respect to the foregoing clause (iii), where the failure to be so licensed, qualified or in good standing would not reasonably be expected to have a Sio NewCo Material Adverse Effect. For purposes of this Subscription Agreement, a “Sio NewCo Material Adverse Effect” means an event, change, development, occurrence, condition or effect with respect to the Issuer and its subsidiaries that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on the business or financial condition of Sio NewCo and its subsidiaries, taken together as a whole (on a consolidated basis).
(b) As of the Closing Date, the Subscribed Securities will be duly authorized and, when issued and delivered to Subscriber against full payment therefor in accordance with the terms of this Subscription Agreement, will be validly issued, fully paid and non-assessable, free and clear of all liens or other restrictions (other than those arising under this Subscription Agreement, the governing and organizational documents of Sio NewCo or applicable securities laws and other than those imposed by or on Subscriber or Subscriber’s assets), and will not have been issued in violation of, or subject to, any preemptive or similar rights created under Sio NewCo’s governing and organizational documents or the laws of its jurisdiction of incorporation.
(c) This Subscription Agreement has been duly authorized and validly executed and delivered by Sio NewCo, and assuming the due authorization, execution and delivery of the same by Sio, Subscriber and Pyrophyte, this Subscription Agreement shall constitute the valid and legally binding obligation of Sio NewCo, enforceable against Sio NewCo in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors generally and by the availability of equitable remedies.
(d) Assuming the accuracy of the representations and warranties of Subscriber set forth in Section 6 of this Subscription Agreement, and the execution and delivery of this Subscription Agreement, the issuance, allotment and sale of the Subscribed Securities hereunder (upon satisfaction or valid waiver of the conditions set forth in Section 2), the compliance by Sio NewCo with all of the provisions of this Subscription Agreement and the consummation of the transactions contemplated herein will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of Sio NewCo pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which Sio NewCo is a party or by which Sio NewCo is bound or to which any of the property or assets of Sio NewCo is subject, (ii) result in any violation of the provisions of the organizational documents of Sio NewCo, or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over Sio NewCo or any of its properties that, in the case of clauses (i) and (iii), would reasonably be expected to have a Sio NewCo Material Adverse Effect.
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(e) Assuming the accuracy of the representations and warranties of Subscriber set forth in Section 6 of this Subscription Agreement, Sio NewCo is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other provincial, territorial, federal, state, local or other governmental authority, self-regulatory organization or other person in connection with the execution, delivery and performance of this Subscription Agreement (including, without limitation, the issuance of the Subscribed Securities)), other than (i) filings required by applicable state securities laws, (ii) the filing of the Registration Statement (as defined below) pursuant to Section 7 below, (iii) filings required by the Securities Act of 1933, as amended (the “Securities Act”), the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the rules of the United States Securities and Exchange Commission (the “SEC”), including the registration statement on Form F-4 with respect to the Transaction and the proxy statement/prospectus included therein, (iv) filings or consents required by the Stock Exchange, including with respect to obtaining shareholder approval of the Transaction, if applicable, (v) in respect of sales to a Subscriber that is located in the United States or is a U.S. Person as defined in Regulation S promulgated under the Securities Act (“Regulation S”) (such Subscriber a “U.S. Subscriber”), the filing of a Notice of Exempt Offering of Securities on Form D with the SEC under Regulation D of the Securities Act, if applicable, (vi) filings required to consummate the Transaction as provided under the Business Combination Agreement, (vii) the filing of notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”), if applicable, (viii) filings required under the securities laws and regulations of the provinces and territories of Canada (“Canadian Securities Laws”) and (ix) those filings, the failure of which to obtain would not reasonably be expected to have a Sio NewCo Material Adverse Effect.
(f) Except for such matters as have not had and would not reasonably be expected to have a Sio NewCo Material Adverse Effect, there is no (i) suit, action, proceeding or arbitration before a governmental authority or arbitrator pending, or, threatened in writing against Sio NewCo, (ii) judgment, decree, injunction, ruling or order of any governmental authority or arbitrator outstanding against Sio NewCo or (iii) written communication from a governmental entity that alleges that Sio NewCo is not in compliance or is in default or violation of any applicable law.
(g) Assuming the accuracy of Subscriber’s representations and warranties set forth in Section 6 of this Subscription Agreement, no registration under the Securities Act or any U.S. state securities (or Blue Sky) laws or a prospectus or other document under applicable Canadian Securities Laws is required for the offer and sale of the Subscribed Securities by the Issuer to Subscriber.
(h) Neither Sio NewCo nor any person acting on its behalf has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Subscribed Securities. The Subscribed Securities are not being offered in a manner involving a public offering under, or in a distribution in violation of, Canadian Securities Laws, the Securities Act or any state securities laws, as applicable. Neither Sio NewCo nor any person acting on Sio NewCo’s behalf has, directly or indirectly, at any time within the past six (6) months, made any offer or sale of any security or solicitation of any offer to buy any security under circumstances that would (i) eliminate the availability of the exemption from registration under Section 4(a)(2) or Regulation D, as applicable, under the Securities Act in connection with the offer and sale by Sio NewCo of the Subscribed Securities as contemplated hereby or (ii) cause the offering of the Subscribed Securities pursuant to this Subscription Agreement to be integrated with prior offerings by Sio NewCo for purposes of the Securities Act or any applicable shareholder approval provisions. Neither Sio NewCo nor any person acting on Sio NewCo’s behalf has offered or sold or will offer or sell any securities, or has taken or will take any other action, which would reasonably be expected to subject the offer, issuance or sale of the Subscribed Securities, as contemplated hereby, to the registration provisions of the Securities Act.
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(i) Sio NewCo is in compliance with all applicable laws and has not received any written communication from a governmental entity that alleges that Sio NewCo is not in compliance with, or is in default or violation of any applicable law, except where such non-compliance, default, or violation would not, individually or in the aggregate, reasonably be expected to have a Sio NewCo Material Adverse Effect.
(j) As of the Closing Date, the Issuer Common Shares will be eligible for clearing through The Depositary Trust Company (the “DTC”), through its Deposit/Withdrawal At Custodian (DWAC) system, and the Issuer will be eligible and participating in the Direct Registration System (DRS) of DTC with respect to the Issuer Common Shares.
(k) No broker or finder is entitled to any brokerage or finder’s fee or commission or any other payment solely in connection with the sale of the Subscribed Securities to Subscriber.
(l) As of their respective dates, or, if amended, as of the date of such amendment, which shall be deemed to supersede such original filing, each form, report, statement, schedule, prospectus, proxy, registration statement and other document required to be filed by Sio NewCo with the SEC on or prior to the Closing Date (collectively, as amended and/or restated since the time of their filing, the “Sio NewCo SEC Documents”) complied in all material respects with the requirements of the Securities Act and the Exchange Act, and the rules and regulations of the SEC promulgated thereunder, and none of Sio NewCo SEC Documents, when filed, or if amended prior to the Closing Date (such amended Sio NewCo SEC Documents, the “Amended Sio NewCo SEC Documents”), as of the date of such amendment with respect to those disclosures that were amended, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of Sio NewCo included in the Sio NewCo SEC Documents or, if amended, in the Amended Sio NewCo SEC Documents, comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of such filing and fairly present in all material respects the financial position of Sio NewCo as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments. There are no material outstanding or unresolved comments in comment letters from the staff of the Division of Corporation Finance (the “Staff”) of the SEC with respect to any of the Sio NewCo SEC Documents as of the date hereof.
(m) Except as provided in this Subscription Agreement, none of Sio NewCo or any of its affiliates, nor any person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the issuance of any of the Subscribed Securities under the Securities Act or a prospectus under Canadian Securities Laws, whether through integration with prior offerings pursuant to Rule 502(a) of the Securities Act or otherwise.
(n) As of the date hereof, the authorized share capital of Sio NewCo consists of an unlimited number of common shares and an unlimited number of preferred shares. As of the date hereof: 100 common shares were issued and outstanding. All 100 common shares issued and outstanding have been duly authorized and validly issued, are fully paid and non-assessable and are not subject to preemptive rights or similar. As of the date hereof, except as set forth above and pursuant to (1) the Other Subscription Agreements, or (2) the Business Combination Agreement, there are no outstanding options, warrants or other rights to subscribe for, purchase or acquire from Sio NewCo any shares or other equity interests in Sio NewCo (collectively, “Sio NewCo Equity Interests”) or securities convertible into or exchangeable or exercisable for Sio NewCo Equity Interests. Except as set forth in the Business Combination Agreement, as of the date hereof, Sio NewCo has no subsidiaries and does not own, directly or indirectly, interests or investments (whether equity or debt) in any person, whether incorporated or unincorporated. As of the date hereof, there are no shareholder agreements, voting trusts or other agreements or understandings to which Sio NewCo is a party or by which it is bound relating to the voting of any Sio NewCo Equity Interests, other than as contemplated by the Business Combination Agreement. There are no securities or instruments issued by or to which Sio NewCo is a party containing anti-dilution or similar provisions that will be triggered, by the issuance of (i) the Subscribed Securities, (ii) the shares to be issued pursuant to any Other Subscription Agreement, or (iii) the Transaction, except in each case for such anti-dilution or similar provisions the application of which has been effectively waived.
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(o) There is no suit, action, proceeding or investigation pending or, to the knowledge of Sio NewCo, threatened against Sio NewCo by the SEC, the Stock Exchange, the applicable securities commission or securities regulatory authority in each of the provinces and territories of Canada (the “Canadian Securities Regulators”), or other securities commission or securities regulatory authority with respect to any intention by such entity to prohibit the registration of the Issuer Common Shares or prohibit the listing of the Issuer Common Shares on the Stock Exchange.
(p) Upon consummation of the Transaction, the issued and outstanding Issuer Common Shares are expected to be registered pursuant to Section 12(b) of the Exchange Act and listed for trading on the Stock Exchange, subject only to official notice thereof.
(q) Sio NewCo is not, and immediately after receipt of payment for the Subscribed Securities and consummation of the Transaction, will not be, an “investment company” within the meaning of the Investment Company Act of 1940 (the “Investment Company Act”).
(r) Sio NewCo has not taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does Sio NewCo have any knowledge that any of its creditors intend to initiate involuntary bankruptcy proceedings.
(s) Sio NewCo shall apply the net proceeds received pursuant to this Subscription Agreement and the Other Subscription Agreements in compliance with all applicable financial recordkeeping and reporting requirements, including those of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the applicable anti-money laundering statutes of all jurisdictions where Sio NewCo or any of its subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines issued, administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering Laws”). Sio NewCo will not directly or indirectly use the proceeds received pursuant to this Subscription Agreement or the Other Subscription Agreements, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person (as defined below) (i) to fund or facilitate any activities of or business with any Person that, at the time of such funding or facilitation, is the subject or the target of Sanctions (as defined below), (ii) to fund or facilitate any activities or business in any Sanctioned Country (as defined below) or (iii) in any other manner that would reasonably be expected to result in a violation by any Person of Sanctions.
Section 4. Pyrophyte Representations and Warranties. Pyrophyte represents and warrants to Subscriber that:
(a) Pyrophyte (i) is validly existing and in good standing under the laws of its jurisdiction of incorporation, (ii) has the requisite corporate power and authority to own, lease and operate its properties, to carry on its business as it is now being conducted and to enter into and perform its obligations under this Subscription Agreement, and (iii) is duly licensed or qualified to conduct its business and, if applicable, is in good standing under the laws of each jurisdiction (other than its jurisdiction of incorporation and only to the extent such concept exists in such jurisdiction) in which the conduct of its business or the ownership of its properties or assets requires such license or qualification, except, with respect to the foregoing clause (iii), where the failure to be so licensed, qualified or in good standing would not reasonably be expected to have a Pyrophyte Material Adverse Effect. For purposes of this Subscription Agreement, a “Pyrophyte Material Adverse Effect” means an event, change, development, occurrence, condition or effect with respect to Pyrophyte and its subsidiaries that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on the business or financial condition of Pyrophyte and its subsidiaries, taken together as a whole (on a consolidated basis).
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(b) This Subscription Agreement has been duly authorized and validly executed and delivered by Pyrophyte, and assuming the due authorization, execution and delivery of the same by Subscriber, Sio and Sio NewCo this Subscription Agreement shall constitute the valid and legally binding obligation of Pyrophyte, enforceable against Pyrophyte in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors generally and by the availability of equitable remedies.
(c) Assuming the accuracy of the representations and warranties of Subscriber set forth in Section 6 of this Subscription Agreement, and the execution and delivery of this Subscription Agreement, the issuance, allotment and sale of the Subscribed Securities hereunder (upon satisfaction or valid waiver of the conditions set forth in Section 2), the compliance by Pyrophyte with all of the provisions of this Subscription Agreement and the consummation of the transactions contemplated herein will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of Pyrophyte pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which Pyrophyte is a party or by which Pyrophyte is bound or to which any of the property or assets of Pyrophyte is subject, (ii) result in any violation of the provisions of the organizational documents of Pyrophyte, or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over Pyrophyte or any of its properties that, in the case of clauses (i) and (iii), would reasonably be expected to have a Pyrophyte Material Adverse Effect
(d) Except for such matters as have not had and would not reasonably be expected to have a Pyrophyte Material Adverse Effect, there is no (i) suit, action, proceeding or arbitration before a governmental authority or arbitrator pending, or, threatened in writing against Pyrophyte, (ii) judgment, decree, injunction, ruling or order of any governmental authority or arbitrator outstanding against Pyrophyte or (iii) written communication from a governmental entity that alleges that Pyrophyte is not in compliance or is in default or violation of any applicable law.
(e) Pyrophyte is in compliance with all applicable laws and has not received any written communication from a governmental entity that alleges that Pyrophyte is not in compliance with, or is in default or violation of any applicable law, except where such non-compliance, default, or violation would not, individually or in the aggregate, reasonably be expected to have a Pyrophyte Material Adverse Effect.
(f) As of their respective dates, or, if amended, as of the date of such amendment, which shall be deemed to have superseded such original filing, each form, report, statement, schedule, prospectus, proxy, registration statement and other document required to be filed by Pyrophyte with the SEC on or prior to the Closing Date (collectively, as amended and/or restated since the time of their filing, the “Pyrophyte SEC Documents” and, together with the Sio NewCo SEC Documents, the “SEC Documents”) complied in all material respects with the requirements of the Securities Act and the Exchange Act, and the rules and regulations of the SEC promulgated thereunder, and none of the Pyrophyte SEC Documents, when filed, or if amended prior to the Closing Date (such amended Pyrophyte SEC Documents, the “Amended Pyrophyte SEC Documents”), as of the date of such amendment with respect to those disclosures that were amended, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of Pyrophyte included in the Pyrophyte SEC Documents or, if amended, in the Amended Pyrophyte SEC Documents, comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of such filing and fairly present in all material respects the financial position of Pyrophyte as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments. Pyrophyte has filed each report, statement, schedule, prospectus, and registration statement that Pyrophyte was required to file with the SEC since its initial registration of its Class A ordinary shares, par value $0.0001 per share (“Pyrophyte Class A Ordinary Shares”) with the SEC and through the date hereof. There are no material outstanding or unresolved comments in comment letters from the Staff with respect to any of the Pyrophyte SEC Documents as of the date hereof.
(g) Pyrophyte has not taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does Pyrophyte have any knowledge that any of its creditors intend to initiate involuntary bankruptcy proceedings.
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Section 5. Sio Representations and Warranties. Sio represents and warrants to Subscriber that:
(a) Sio (i) is validly existing and in good standing under the laws of its jurisdiction of incorporation, (ii) has the requisite corporate power and authority to own, lease and operate its properties, to carry on its business as it is now being conducted and to enter into and perform its obligations under this Subscription Agreement, and (iii) is duly licensed or qualified to conduct its business and, if applicable, is in good standing under the laws of each jurisdiction (other than its jurisdiction of incorporation) in which the conduct of its business or the ownership of its properties or assets requires such license or qualification, except, with respect to the foregoing clause (iii), where the failure to be so licensed, qualified or in good standing would not reasonably be expected to have a Sio Material Adverse Effect. For purposes of this Subscription Agreement, a “Sio Material Adverse Effect” means an event, change, development, occurrence, condition or effect with respect to Sio and its subsidiaries that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on the business or financial condition of Sio and its subsidiaries, taken together as a whole (on a consolidated basis).
(b) This Subscription Agreement has been duly authorized and validly executed and delivered by Sio, and assuming the due authorization, execution and delivery of the same by Subscriber, Pyrophyte and the Issuer this Subscription Agreement shall constitute the valid and legally binding obligation of Sio, enforceable against Sio in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors generally and by the availability of equitable remedies.
(c) Assuming the accuracy of the representations and warranties of Subscriber set forth in Section 6 of this Subscription Agreement, and the execution and delivery of this Subscription Agreement, the issuance, allotment and sale of the Subscribed Securities hereunder (upon satisfaction or valid waiver of the conditions set forth in Section 2), the compliance by Sio with all of the provisions of this Subscription Agreement and the consummation of the transactions contemplated herein will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of Sio pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which Sio is a party or by which Sio is bound or to which any of the property or assets of Sio is subject, (ii) result in any violation of the provisions of the organizational documents of Sio, or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over Sio or any of its properties that, in the case of clauses (i) and (iii), would reasonably be expected to have a Sio Material Adverse Effect.
(d) Except for such matters as have not had and would not reasonably be expected to have a Sio Material Adverse Effect, there is no (i) suit, action, proceeding or arbitration before a governmental authority or arbitrator pending, or, threatened against Sio, (ii) judgment, decree, injunction, ruling or order of any governmental authority or arbitrator outstanding against Sio or (iii) written communication from a governmental entity that alleges that Sio is not in compliance or is in default or violation of any applicable law.
(e) Sio is in compliance with all applicable laws and has not received any written communication from a governmental entity that alleges that Sio is not in compliance with, or is in default or violation of any applicable law, except where such non-compliance, default, or violation would not, individually or in the aggregate, reasonably be expected to have a Sio Material Adverse Effect.
(f) Sio has not taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does Sio have any knowledge that any of its creditors intend to initiate involuntary bankruptcy proceedings.
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Section 6. Subscriber Representations and Warranties. Subscriber represents and warrants to Sio, Sio NewCo and Pyrophyte that:
(a) If Subscriber is a legal entity, Subscriber (i) has been duly formed and is validly existing and in good standing under the laws of its jurisdiction of formation or incorporation and (ii) has the requisite power and authority to enter into, and perform its obligations under, this Subscription Agreement. If Subscriber is an individual, Subscriber has the legal competence and capacity to enter into and perform its obligations under this Subscription Agreement.
(b) If Subscriber is an entity, this Subscription Agreement has been duly authorized, validly executed and delivered by Subscriber. If Subscriber is an individual, Subscriber’s signature is genuine and the signatory has the legal competence and capacity to execute this Subscription Agreement. Assuming the due authorization, execution and delivery of the same by Sio, Sio NewCo and Pyrophyte, this Subscription Agreement shall constitute the valid and legally binding obligation of Subscriber, enforceable against Subscriber in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors generally and by the availability of equitable remedies.
(c) The execution, delivery and performance of this Subscription Agreement, the purchase of the Subscribed Securities hereunder, the compliance by Subscriber with all of the provisions of this Subscription Agreement and the consummation of the transactions contemplated herein will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of Subscriber pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which Subscriber is a party or by which Subscriber is bound or to which any of the property or assets of Subscriber is subject; (ii) if Subscriber is a legal entity, result in any violation of the provisions of the organizational documents of Subscriber; or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over Subscriber or any of its properties that in the case of clauses (i) and (iii), would have a Subscriber Material Adverse Effect. For purposes of this Subscription Agreement, a “Subscriber Material Adverse Effect” means an event, change, development, occurrence, condition or effect with respect to Subscriber that would reasonably be expected to have a material adverse effect on Subscriber’s ability to consummate the transactions contemplated hereby, including the purchase of the Subscribed Securities.
(d) The execution, delivery and performance of this Subscription Agreement, the purchase of the Subscribed Securities hereunder, the compliance by Subscriber with all of the provisions of this Subscription Agreement and the consummation of the transactions contemplated herein will not conflict with or result in a breach or violation of any relevant laws and regulations applicable to the issue and purchase of the Subscribed Securities, and the Subscriber will not cease to be in compliance if the Subscribed Securities are acquired.
(e) Subscriber (i) is a person to whom the Subscribed Securities may lawfully be offered and issued in compliance with applicable laws without lodgement, registration or other formality or filing with or by a governmental agency in any jurisdiction (subject to any post-closing filings required under Canadian Securities Laws); (ii) is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act), an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act) or a non-U.S. Person, as defined in Regulation S, in each case, satisfying the applicable requirements set forth on Annex A hereto, and accordingly Subscriber understands that the Subscription meets the exemptions from filing under FINRA Rule 5123(b)(1)(C) or (J), (iii) is acquiring the Subscribed Securities only for its own account and not for the account of others, or in the case of a Subscriber that is located in the United States or is a U.S. Person (as defined in Regulation S), if Subscriber is subscribing for the Subscribed Securities as a fiduciary or agent for one or more investor or trust accounts, each owner of such account is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act), an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act) or such other person that satisfies the requirements of Annex A hereto and Subscriber has sole investment discretion with respect to each such account, and the full power and authority to make the acknowledgements, representations and agreements herein on behalf of each owner of each such account, (iv) is not acquiring the Subscribed Securities with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or the Corporations Act, (v) was not created and is not being used solely to purchase or hold securities as an accredited investor as described in paragraph (m) of the definition of “accredited investor” in NI 45-106, (vi) in the case of a Subscriber located in Canada, is not a U.S. Person (as defined in Regulation S) and is not purchasing the Subscribed Securities on behalf of, or for the account or benefit of, a person located in the United States or that is a U.S. Person (as defined in Regulation S), (vii) is resident in or otherwise subject to applicable securities laws of the jurisdiction set out on the signature page hereto and (viii) has provided Sio NewCo and Pyrophyte with the requested information on Annex A and Annex B (to the extent applicable) following the signature page hereto and the information contained therein is accurate and complete. The Subscriber is not an entity formed for the specific purpose of acquiring the Subscribed Securities, unless such newly formed entity is an entity in which all of the equity owners are “accredited investors” (within the meaning of Rule 501(a) under the Securities Act).
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(f) Subscriber is an “accredited investor”, as such term is defined in National Instrument 45-106 – “Prospectus Exemptions” (“NI 45-106”) or, if the Subscriber is resident or otherwise subject to the securities laws of the Province of Ontario, Section 73.3(1) of the Securities Act (Ontario), and has concurrently executed and delivered a Representation Letter (for Accredited Investors) in the form attached as Annex C to this Subscription Agreement and has initialed or placed a check mark in Appendix A to Annex C indicating that the Subscriber satisfies one of the categories of “accredited investor” set forth in such definition (and in the case of a Subscriber that is an “accredited investor” pursuant to paragraphs (j), (k) or (l) in Appendix A to Annex C, a Risk Acknowledgement Form for Individual Accredited Investors attached hereto as Annex D).
(g) If Subscriber is a resident of or otherwise subject to applicable securities laws of any jurisdiction other than a Province of Canada or the United States, it confirms, represents and warrants that: (i) the Subscriber is knowledgeable of, or has been independently advised as to, the applicable securities laws of the jurisdiction in which the Subscriber is resident (the “International Jurisdiction”) and which would apply to the acquisition of the Subscribed Securities; and (ii) the Subscriber is purchasing the Subscribed Securities pursuant to exemptions from the prospectus or registration requirements or equivalent requirements under applicable securities laws or, if such is not applicable, the Subscriber is permitted to purchase the Subscribed Securities under the applicable securities laws of the International Jurisdiction without the need to rely on any exemptions; (iii) the applicable securities laws of the International Jurisdiction do not require the Issuer to make any filings or seek any approvals of any kind whatsoever from any securities regulator of any kind whatsoever in the International Jurisdiction in connection with the issue and sale or resale of the Subscribed Securities; and (iv) the purchase of the Subscribed Securities by the Subscriber does not trigger: (A) any obligation to prepare and file a prospectus or similar document, or any other report with respect to such purchase in the International Jurisdiction; or (B) any continuous disclosure reporting obligation of the Issuer in the International Jurisdiction; and (C) the Subscriber will, if requested by the Issuer, deliver to the Issuer a certificate or opinion of local counsel from the International Jurisdiction which will confirm the matters referred to in subsections (ii), (iii) and (iv) above to the satisfaction of the Issuer, acting reasonably.
(h) Subscriber acknowledges and agrees that the Subscribed Securities are being offered in a transaction not involving any public offering within the meaning of the Securities Act and that the Subscribed Securities have not been registered under the Securities Act, Canadian Securities Laws or the securities laws of any state, province or territory of Canada, or other jurisdiction and that Sio NewCo is not required to register the Subscribed Securities except as set forth in Section 7 of this Subscription Agreement. Subscriber acknowledges and agrees that the Subscribed Securities may not be offered, resold, transferred, pledged or otherwise disposed of by Subscriber in the United States absent an effective registration statement under the Securities Act or in Canada from four months and a day after Sio Newco becoming a “reporting issuer” in any province or territory of Canada, except (i) in respect of a sale by a U.S. Subscriber, to Sio NewCo or a subsidiary thereof, (ii) in respect of sales to a U.S. Subscriber, pursuant to an applicable exemption from the registration requirements of the Securities Act (including without limitation a private resale pursuant to so called “Section 4(a)1½”), provided that all of the applicable conditions thereof are met, (iii) in an ordinary course pledge such as a broker lien over account property generally, (iv) to non-U.S. Persons pursuant to offers and sales that occur outside the United States within the meaning of Regulation S, and, in each of clauses (i)-(iv), in accordance with any applicable securities laws of the states and other jurisdictions of the United States (including, if applicable, Canada Securities Laws), and that any certificates or account entries representing the Subscribed Securities shall contain a restrictive legend to such effect; or (v) in respect of any sale subject to applicable Canadian Securities Laws, pursuant to an applicable exemption from the prospectus requirements in Canada as provided for in NI 45-106. The Subscriber acknowledges and agrees that the Subscribed Securities may not be offered, resold, transferred, pledged or otherwise disposed of by Subscriber in Canada from four months and a day after Sio NewCo becoming a “reporting issuer” in any province or territory of Canada, except pursuant to an applicable exemption from the prospectus requirements in Canada as provided for in NI 45-106, and that any certificates or account entries representing the Subscribed Securities shall contain a restrictive legend to such effect. Subscriber acknowledges and agrees that the Subscribed Securities will be subject to these securities law transfer restrictions, and as a result of these transfer restrictions, Subscriber may not be able to readily offer, resell, transfer, pledge or otherwise dispose of the Subscribed Securities and may be required to bear the financial risk of an investment in the Subscribed Securities for an indefinite period of time. Subscriber acknowledges and agrees that the Subscribed Securities may not be immediately eligible for offer, resale, transfer, pledge or disposition pursuant to Rule 144 promulgated under the Securities Act, as amended (“Rule 144”), until the end of any applicable holding period. Subscriber acknowledges and agrees that it has been advised to consult legal counsel prior to making any offer, resale, pledge or transfer of any of the Subscribed Securities.
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(i) The funds being used to purchase the Subscribed Securities which will be paid by the Subscriber to Sio NewCo in accordance with the terms hereunder will not represent proceeds of crime for the purposes of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) (the “PCMLTFA”) and the Subscriber and the beneficial subscriber, if any, acknowledges that Sio NewCo may in the future be required by law to disclose the Subscriber’s or beneficial subscriber’s name and other information relating to this Subscription Agreement and the Subscriber’s subscription hereunder, on a confidential basis, pursuant to the PCMLTFA. To the best of its knowledge, none of the subscription funds to be provided by the Subscriber or the beneficial subscriber have been or will be derived from or related to any activity that is deemed criminal under the laws of Canada or any other jurisdiction or are being tendered on behalf of a person or entity who has not been identified to the Subscriber.
(j) Subscriber acknowledges and agrees that the sale and delivery of the Subscribed Securities is subject to applicable requirements under Canadian Securities Laws and is conditional upon such sale being exempt from the requirements of Canadian Securities Laws of the province or territory in which it resides or may be deemed to reside as to the filing and delivery of a prospectus and that the Subscribed Securities have not been qualified under a prospectus under Canadian Securities Laws. The Subscriber acknowledges that Sio NewCo, as of the date hereof, is not a “reporting issuer” in any jurisdiction in Canada, is not expected to become a “reporting issuer” in any jurisdiction of Canada as part of the Transaction (or otherwise) that such Subscribed Securities are subject to statutory resale restrictions under applicable Canadian Securities Laws of the province or territory in which the Subscriber resides or may be deemed to reside, which resale restrictions may apply outside of Canada, and the Subscriber covenants that it will not resell the Subscribed Securities except in compliance with such laws. Accordingly, such Subscribed Securities may be subject to an indefinite “hold period” under Canadian Securities Laws and, absent an exemption, Subscriber will not be able to resell the Subscribed Securities in Canada until expiration of the applicable “hold period” (which “hold period” will not commence to run until the Issuer has become a “reporting issuer” in Canada (which it has no obligation to become)).
(k) Subscriber understands and agrees that, pursuant to the Assumption, Subscriber is purchasing the Subscribed Securities directly from the Issuer. Subscriber further acknowledges that there have not been, and Subscriber hereby agrees that it is not relying on, any statements, representations, warranties, covenants or agreements made to Subscriber by Pyrophyte or Sio NewCo or its subsidiaries (collectively, the “Acquired Companies”), UBS Securities LLC (“UBS”), BMO Capital Markets Corp. (“BMO”) and Integral Wealth Securities Limited (“Integral”) or any of their respective affiliates or any control persons, officers, directors, employees, partners, agents or representatives, any other party to the Transaction or any other person or entity, expressly or by implication, other than those representations, warranties, covenants and agreements of Sio NewCo and Pyrophyte set forth in this Subscription Agreement. In addition, Subscriber is aware that Sio has engaged each of UBS, BMO. and Integral to act as placement agents solely in connection with certain Other Subscribers and the Other Subscription Agreements. Subscriber acknowledges and agrees that none of UBS, BMO or Integral are acting as placement agent to Subscriber and that no solicitation or recommendation of any type has been made by any of UBS, BMO or Integral to Subscriber.
(l) In the case of a Subscriber located in the United States or that is a U.S. Person (as defined in Regulation S), the Subscriber represents and warrants that its acquisition and holding of such Subscribed Securities will not constitute or result in a non-exempt prohibited transaction under section 406 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), or any applicable similar law.
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(m) In making its decision to purchase the Subscribed Securities, Subscriber has relied solely upon its independent investigation made by Subscriber and the representations of Sio NewCo, and Pyrophyte in Sections 3 and 4 of this Subscription Agreement, respectively. Subscriber acknowledges and agrees that Subscriber has received such information as Subscriber deems necessary in order to make an investment decision with respect to the Subscribed Securities, including with respect to Pyrophyte, the Acquired Companies and the Transaction, and made its own assessment and is satisfied concerning the relevant financial, tax and other economic considerations relevant to Subscriber’s investment in the Subscribed Securities. Without limiting the generality of the foregoing, Subscriber acknowledges that it has reviewed Sio NewCo’s and Pyrophyte’s filings with the SEC. Subscriber represents and agrees that Subscriber and Subscriber’s professional advisor(s), if any, have had the full opportunity to ask such questions, receive such answers and obtain such information as Subscriber and Subscriber’s professional advisor(s), if any, have deemed necessary to make an investment decision with respect to the Subscribed Securities. Subscriber acknowledges that certain information provided by Sio NewCo or Pyrophyte was based on projections, and such projections were prepared based on assumptions and estimates that are inherently uncertain and are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the projections. Subscriber further acknowledges that the information provided to Subscriber was preliminary and subject to change, including in the registration statement and the proxy statement and/or prospectus that will be filed with the SEC in connection with the Transaction (which will include substantial additional information about Pyrophyte, the Acquired Companies and the Transaction and will update and supersede the information previously provided to Subscriber, including without limitation with respect to any financial statements and other financial information (whether historical or in the form of financial forecasts or projections) of the Acquired Companies, which may have been prepared and reviewed solely by each of Pyrophyte and Sio NewCo and their respective officers and employees, as the case may be, and have not been reviewed by any outside party or, except as expressly set forth therein, certified or audited by an independent third-party auditor or audit firm), and that any changes to such information, including, without limitation, any changes based on updated information or changes in terms of the Transaction, shall in no way affect the Subscriber’s obligation to purchase the Subscribed Securities hereunder. Subscriber acknowledges and agrees that none of Pyrophyte, the Acquired Companies, the Advisors or any of their respective affiliates or any of such person’s or its affiliate’s control persons, officers, directors, employees or other representatives, legal counsel, financial advisors, accountants or agents (collectively, “Representatives”) has provided Subscriber with any information or advice with respect to the Subscribed Securities nor is such information or advice necessary or desired. None of Pyrophyte, the Acquired Companies or any of their respective affiliates or Representatives has made or makes any representation as to Pyrophyte or the Acquired Companies or the quality or value of the Subscribed Securities.
(n) Subscriber became aware of this offering of the Subscribed Securities solely by means of direct contact between Subscriber and Sio NewCo, Pyrophyte or by means of contact from a representative of the Issuer or Pyrophyte, and the Subscribed Securities were offered to Subscriber solely by direct contact between Subscriber and Sio NewCo, Pyrophyte or their respective representatives. Subscriber did not become aware of this offering of the Subscribed Securities, nor were the Subscribed Securities offered to Subscriber, by any other means. Subscriber acknowledges that Sio NewCo represents and warrants that the Subscribed Securities (i) were not offered by any form of general solicitation or general advertising (within the meaning of Regulation D of the Securities Act) and (ii) are not being offered in a manner involving a public offering under, or in a distribution in violation of, the Securities Act, any state securities laws or any Canadian Securities Laws.
(o) Subscriber acknowledges that it is aware that there are substantial risks incident to the purchase and ownership of the Subscribed Securities, including those set forth in the SEC Documents. Subscriber is able to fend for itself in the transactions contemplated herein and has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Subscribed Securities, and Subscriber has had an opportunity to seek, and has sought, such accounting, legal, business and tax advice as Subscriber has considered necessary to make an informed investment decision. Subscriber (i) in respect of sales to a U.S. Subscriber, is an “accredited investor” as defined in Rule 501(a) under the Securities Act or, in respect of all Subscribers, is a person that otherwise satisfies the requirements of Annex A hereto, (ii) is a sophisticated investor, experienced in investing in private equity transactions and capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities, and (iii) has exercised independent judgment in evaluating its participation in the purchase of the Subscribed Securities.
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(p) Subscriber has adequately analyzed and fully considered the risks of an investment in the Subscribed Securities and determined that the Subscribed Securities are a suitable investment for Subscriber and that Subscriber is able at this time and in the foreseeable future to bear the economic risk of a total loss of Subscriber’s investment in Sio NewCo. Subscriber acknowledges specifically that a possibility of total loss exists.
(q) Subscriber understands and agrees that no federal, state or provincial agency has passed upon or endorsed the merits of the offering of the Subscribed Securities or made any findings or determination as to the fairness of this investment.
(r) Subscriber is not (i) a person or entity named (a “Person”) on the List of Specially Designated Nationals and Blocked Persons administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) or in any Executive Order issued by the President of the United States and administered by OFAC (“OFAC List”), or a person or entity prohibited by any OFAC sanctions program, (ii) owned or controlled by, or acting on behalf of, a person, that is named on an OFAC List, (iii) organized, incorporated, established, located, resident or born in, or a citizen, national, or the government, including any political subdivision, agency, or instrumentality thereof, of, Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine, or any other country or territory embargoed or subject to substantial trade restrictions by the United States (each a “Sanctioned Country”), (iv) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (iii) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank. Subscriber agrees to provide law enforcement agencies, if requested thereby, such records as required by applicable law, provided that Subscriber is permitted to do so under applicable law (collectively “Sanctions”). If Subscriber is a financial institution subject to the Bank Secrecy Act (31 U.S.C. Section 5311 et seq.) (the “BSA”), as amended by the USA PATRIOT Act of 2001 (the “PATRIOT Act”), and its implementing regulations (collectively, the “BSA/PATRIOT Act”), the Subscriber maintains policies and procedures reasonably designed to comply with applicable obligations under the BSA/PATRIOT Act. To the extent required, Subscriber maintains policies and procedures reasonably designed for the screening of its investors against the OFAC sanctions programs, including the OFAC List. To the extent required, Subscriber maintains policies and procedures reasonably designed to ensure that the funds held by Subscriber and used to purchase the Subscribed Securities were legally derived.
(s) No foreign person (as defined in 31 C.F.R. Part 800.224) in which the national or subnational governments of a single foreign state have a substantial interest (as defined in 31 C.F.R. Part 800.244) will acquire a substantial interest in Sio NewCo as a result of the purchase and sale of Subscribed Securities hereunder such that a declaration to the Committee on Foreign Investment in the United States would be mandatory under 31 C.F.R. Part 800.401, and no foreign person will have control (as defined in 31 C.F.R. Part 800.208) over Pyrophyte from and after the Closing as a result of the purchase and sale of Subscribed Securities hereunder.
(t) In the case of a Subscriber located in the United States or that is a U.S. Person (as defined in Regulation S), if Subscriber is an employee benefit plan that is subject to Title I of ERISA, a plan, an individual retirement account or other arrangement that is subject to section 4975 of the Code or an employee benefit plan that is a governmental plan (as defined in section 3(32) of ERISA), a church plan (as defined in section 3(33) of ERISA), a non-U.S. plan (as described in section 4(b)(4) of ERISA) or other plan that is not subject to the foregoing but may be subject to provisions under any other federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of ERISA or the Code, or an entity whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement (each, a “Plan”) subject to the fiduciary or prohibited transaction provisions of ERISA or section 4975 of the Code, Subscriber represents and warrants that (i) it has not relied on Sio NewCo, Pyrophyte or any of their respective affiliates (the “Transaction Parties”) for investment advice or as the Plan’s fiduciary with respect to its decision to acquire and hold the Subscribed Securities, and none of the Transaction Parties shall at any time be relied upon as the Plan’s fiduciary with respect to any decision to acquire, continue to hold or transfer the Subscribed Securities and (ii) the decision to invest in the Subscribed Securities has been made at the recommendation or direction of an “independent fiduciary” (“Independent Fiduciary”) within the meaning of U.S. Code of Federal Regulations 29 C.F.R. section 2510.3 21(c), as amended from time to time (the “Fiduciary Rule”) who is (1) independent of the Transaction Parties; (2) is capable of evaluating investment risks independently, both in general and with respect to particular transactions and investment strategies (within the meaning of the Fiduciary Rule); (3) is a fiduciary (under ERISA and/or section 4975 of the Code) with respect to Subscriber’s investment in the Subscribed Securities and is responsible for exercising independent judgment in evaluating the investment in the Subscribed Securities; and (4) is aware of and acknowledges that (A) none of the Transaction Parties is undertaking to provide impartial investment advice, or to give advice in a fiduciary capacity, in connection with the purchaser’s or transferee’s investment in the Subscribed Securities, and (B) the Transaction Parties have a financial interest in the purchaser’s investment in the Subscribed Securities on account of the fees and other remuneration they expect to receive in connection with transactions contemplated by this Subscription Agreement.
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(u) Subscriber has and, when required to deliver payment at Closing pursuant to Section 2, Subscriber will have sufficient funds to pay the Purchase Price.
(v) Subscriber acknowledges that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, firm or corporation (including, without limitation, Sio NewCo, Pyrophyte, or any of their respective affiliates or any of its or their respective control persons, officers, directors, employees, agents or representatives), other than the representations and warranties of Sio NewCo and Pyrophyte contained in Sections 3 and 4 of this Subscription Agreement, respectively, in making its investment or decision to invest in Sio NewCo. Subscriber agrees that none of (i) any Other Subscriber pursuant to any Other Subscription Agreement or any other agreement related to the private placement of the Subscribed Securities (including the controlling persons, officers, directors, partners, agents or employees of any such Subscriber) nor (ii) Pyrophyte, the Acquired Companies, or any of their respective affiliates or Representatives, shall be liable (including, without limitation, for or with respect to any losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses or disbursements incurred by Subscriber, Sio NewCo, Pyrophyte or any other person or entity), whether in contract, tort or otherwise, or have any liability or obligation to Subscriber or any Other Subscriber, or any person claiming through Subscriber or any Other Subscriber, pursuant to this Subscription Agreement or related to the private placement of the Subscribed Securities, the negotiation hereof or the subject matter hereof, or the transactions contemplated hereby, for any action heretofore or hereafter taken or omitted to be taken by any of the foregoing in connection with the purchase of the Subscribed Securities.
(w) No broker or finder has acted on behalf of the Subscriber in connection with the sale of the Subscribed Securities pursuant to this Subscription Agreement in such a way as to create any liability Sio NewCo or Pyrophyte.
(x) Subscriber hereby agrees that neither it, nor any person or entity acting on its behalf or pursuant to any understanding with the Subscriber, shall, directly or indirectly, engage in any hedging activities, derivative transactions or execute any Short Sale or other transaction that would have a similar effect, with respect to the securities of Sio NewCo or Pyrophyte prior to the Closing or the earlier termination of this Subscription Agreement in accordance with its terms (other than pledges in the ordinary course of business as part of prime brokerage arrangements). “Short Sales” shall include, without limitation, all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act and all types of direct and indirect stock pledges (other than pledges in the ordinary course of business as part of prime brokerage arrangements), forward sale contracts, options, puts, calls, swaps and similar arrangements (including on a total return basis), and sales and other transactions through non-U.S. broker dealers or foreign regulated brokers.
(y) Except as expressly disclosed in a Schedule 13D or Schedule 13G (or amendments thereto) filed by Subscriber with the SEC with respect to the beneficial ownership of Pyrophyte’s outstanding securities prior to the date of this Subscription Agreement, Subscriber is not currently (and at all times through Closing will refrain from being or becoming) a member of a “group” (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of equity securities of Pyrophyte or Sio NewCo (within the meaning of Rule 13d-5(b)(1) under the Exchange Act).
(z) Subscriber will not acquire a substantial interest (as defined in 31 C.F.R. Part 800.244) in Pyrophyte or Sio NewCo as a result of the purchase and sale of the Subscribed Securities.
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(aa) Subscriber acknowledges its obligations under applicable securities laws with respect to the treatment of non-public information relating to Sio NewCo and Pyrophyte.
(bb) Subscriber acknowledges that (i) Pyrophyte, Sio NewCo and any of their respective affiliates, control persons, officers, directors, employees, agents or representatives currently may have, and later may come into possession of, information regarding Pyrophyte and Sio NewCo that is not known to Subscriber and that may be material to a decision to purchase the Subscribed Securities, (ii) Subscriber has determined to purchase the Subscribed Securities notwithstanding its lack of knowledge of such information, and (iii) none of Pyrophyte, Sio NewCo, or any of their respective affiliates, control persons, officers, directors, employees, agents or representatives shall have liability to Subscriber, and Subscriber hereby to the extent permitted by law waives and releases any claims it may have against Pyrophyte, Sio NewCo, and their respective affiliates, control persons, officers, directors, employees, agents or representatives, with respect to the nondisclosure of such information.
(cc) The Subscriber hereby acknowledges and is aware that UBS Securities LLC (“UBS”) acted as an underwriter in Pyrophyte’s initial public offering (“IPO”), for which role, UBS received compensation pursuant to the Underwriting Agreement, dated as of October 26, 2021, by and between Pyrophyte and UBS, as representative of the underwriters named therein (“Underwriting Agreement”), and pursuant to which, should a Transaction be consummated, UBS, as an IPO underwriter, will be entitled to receive its portion of the deferred underwriting compensation from Pyrophyte as provided in the Underwriting Agreement.
Section 7. Registration Rights.
(a) Sio NewCo agrees that, within thirty (30) calendar days following the Closing Date, the Issuer will file with the SEC (at the Issuer’s sole cost and expense) a registration statement (the “Registration Statement”) registering the resale by Subscriber of the Subscribed Securities (the “Registrable Securities”), and the Issuer shall use its commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable after the filing thereof, but in any event no later than sixty (60) calendar days after the Closing Date (the “Effectiveness Deadline”); provided, that the Effectiveness Deadline shall be extended to one hundred twenty (120) calendar days after the Closing Date if the Registration Statement is reviewed by, and comments thereto are provided from, the SEC; provided, further, that the Issuer shall have the Registration Statement declared effective within ten (10) Business Days after the date the Issuer is notified (orally or in writing, whichever is earlier) by the staff of the SEC that the Registration Statement will not be “reviewed” or will not be subject to further review; provided, further, that (i) if the Effectiveness Deadline falls on a Saturday, Sunday or other day that the SEC is closed for business, the Effectiveness Deadline shall be extended to the next Business Day on which the SEC is open for business and (ii) if the SEC is closed for operations due to a government shutdown, the Effectiveness Deadline shall be extended by the same number of Business Days that the SEC remains closed for. Upon Subscriber’s timely request, the Issuer shall provide a draft of the Registration Statement to the Subscriber for review at least two (2) Business Days in advance of the date of filing the Registration Statement with the SEC (the “Filing Date”), and Subscriber shall provide any comments on the Registration Statement to the Issuer no later than the day immediately preceding the Filing Date. Unless otherwise agreed to in writing by the Subscriber prior to the filing of the Registration Statement, the Subscriber shall not be identified as a statutory underwriter in the Registration Statement; provided, that if the SEC requests that Subscriber be identified as a statutory underwriter in the Registration Statement, Subscriber will have the opportunity to withdraw from the Registration Statement upon its prompt written request to the Issuer. Notwithstanding the foregoing, if the SEC prevents the Issuer from including any or all of the shares proposed to be registered under the Registration Statement due to limitations on the use of Rule 415 of the Securities Act for the resale of the Registrable Securities by the applicable shareholders or otherwise, such Registration Statement shall register for resale such number of Registrable Shares which is equal to the maximum number of Registrable Securities as is permitted by the SEC. In such event, the number of Registrable Securities or other shares to be registered for each selling shareholder named in the Registration Statement shall be reduced pro rata among all such selling shareholders and as promptly as practicable after being permitted to register additional shares under Rule 415 under the Securities Act, the Issuer shall amend the Registration Statement or file one or more new Registration Statement(s) (such amendment or new Registration Statement shall also be deemed to be a “Registration Statement” hereunder) to register such additional Registrable Securities and cause such amendment or Registration Statement(s) to become effective as promptly as practicable after the filing thereof.
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(b) Sio NewCo agrees that, except for such times as the Issuer is permitted hereunder to suspend the use of the prospectus forming part of a Registration Statement, the Issuer will use its commercially reasonable efforts to cause such Registration Statement to remain effective with respect to Subscriber, including to prepare and file any post-effective amendment to such Registration Statement or a supplement to the related prospectus such that the prospectus will not include any untrue statement or a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, until the earlier of (i) two (2) years from the effective date of the Registration Statement, (ii) the date on which Subscriber ceases to hold any Registrable Securities or (iii) on the first date on which the Subscriber can sell all of its Registrable Securities (or shares received in exchange therefor) under Rule 144 of the Securities Act without limitation as to the manner of sale or the amount of such securities that may be sold and without the requirement for the Issuer to be in compliance with the current public information required under Rule 144(c)(1) (or Rule 144(i)(2), if applicable) and the Issuer shall use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement as soon as reasonably practicable. For so long as the Registration Statement shall remain effective, the Issuer will use commercially reasonable efforts to file all reports, and provide all customary and reasonable cooperation, necessary to enable Subscriber to resell the Registrable Securities pursuant to the Registration Statement, qualify the Registrable Securities for listing on the NYSE and update or amend the Registration Statement as necessary to include Registrable Securities. The Issuer will use its commercially reasonable efforts to, for so long as the Subscriber holds Registrable Securities, make and keep public information available (as those terms are understood and defined in Rule 144) and file with the SEC in a timely manner all reports and other documents required of the Issuer under the Exchange Act so long as the Issuer remains subject to such requirements to enable the Subscriber to resell the Registrable Securities pursuant to Rule 144. The Subscriber agrees to disclose its beneficial ownership, as determined in accordance with Rule 13d-3 of the Exchange Act, of Registrable Securities to the Issuer (or its successor) upon request to assist the Issuer in making the determination described above.
(c) The Issuer’s obligations to include the Registrable Securities in the Registration Statement are contingent upon Subscriber furnishing in writing to the Issuer a completed selling shareholder questionnaire in customary form that contains such information regarding Subscriber, the securities of the Issuer held by Subscriber and the intended method of disposition of the Registrable Securities as shall be reasonably requested by the Issuer to effect the registration of the Registrable Securities, and Subscriber shall execute such documents in connection with such registration as the Issuer may reasonably request that are customary of a selling shareholder in similar situations, including providing that the Issuer shall be entitled to postpone and suspend the effectiveness or use of the Registration Statement (i) during any customary blackout or similar period or as permitted hereunder and (ii) as may be necessary in connection with the preparation and filing of any post-effective amendments to the Registration Statement to address any financial statement updates required by Item 8.A of Form 20-F; provided, that the Issuer shall request such information from Subscriber, including the selling shareholder questionnaire, at least five (5) Business Days prior to the anticipated Filing Date of the Registration Statement; and provided, further, under no circumstances shall Subscriber be required to sign any type of lock-up agreement. In the case of the registration effected by the Issuer pursuant to this Subscription Agreement, the Issuer shall, upon reasonable request, inform Subscriber as to the status of such registration. Subscriber shall not be entitled to use the Registration Statement for an underwritten offering of Registrable Securities. Notwithstanding anything to the contrary contained herein, the Issuer may delay or postpone filing of such Registration Statement, and from time to time require Subscriber not to sell under the Registration Statement or suspend the use of any such Registration Statement if it determines in good faith that in order for the registration statement to not contain a material misstatement or omission, an amendment thereto would be needed, or if such filing or use could materially affect a bona fide business or financing transaction of the Issuer or could require premature disclosure of information that would materially adversely affect the Issuer (each such circumstance, a “Suspension Event”); provided, that, (w) the Issuer shall not so delay filing or so suspend the use of the Registration Statement for a period of more than sixty (60) consecutive days or more than three (3) times in any three hundred sixty (360) day period, and (x) the Issuer shall use commercially reasonable efforts to make such registration statement available for the sale by the Subscriber of such securities as soon as practicable thereafter.
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(d) Upon receipt of any written notice from the Issuer of the happening of (i) an issuance by the SEC of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for such purpose, which notice shall be given no later than three (3) Business Days from the date of such event, (ii) any Suspension Event during the period that the Registration Statement is effective, which notice shall be given no later than three (3) Business Days from the date of such Suspension Event, or (iii) or if as a result of a Suspension Event the Registration Statement or related prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made (in the case of the prospectus) not misleading, the Subscriber agrees that (1) it will immediately discontinue offers and sales of the Registrable Securities under the Registration Statement until the Subscriber receives copies of a supplemental or amended prospectus (which the Issuer agrees to promptly prepare) that corrects the misstatement(s) or omission(s) referred to above and receives notice that any post-effective amendment has become effective or supplement has been filed or unless otherwise notified by the Issuer that it may resume such offers and sales, and (2) it will maintain the confidentiality of, and will not use, any information included in such written notice delivered by the Issuer unless otherwise required by law, subpoena or regulatory request or requirement. If so directed by the Issuer, the Subscriber will deliver to the Issuer or, in the Subscriber’s sole discretion destroy, all copies of the prospectus covering the Registrable Securities in the Subscriber’s possession; provided, however, that this obligation to deliver or destroy all copies of the prospectus covering the Registrable Securities shall not apply (w) to the extent the Subscriber is required to retain a copy of such prospectus (A) in order to comply with applicable legal, regulatory, self-regulatory or professional requirements or (B) in accordance with a bona fide pre-existing document retention policy or (x) to copies stored electronically on archival servers as a result of automatic data back-up.
(e) Subscriber may deliver written notice (an “Opt-Out Notice”) to the Issuer requesting that Subscriber not receive notices from the Issuer otherwise required by this Section 7; provided, however, that Subscriber may later revoke any such Opt-Out Notice in writing. Following receipt of an Opt-Out Notice from Subscriber (unless subsequently revoked), (i) the Issuer shall not deliver any such notices to Subscriber and Subscriber shall no longer be entitled to the rights associated with any such notice and (ii) each time prior to Subscriber’s intended use of an effective Registration Statement, Subscriber will notify the Issuer in writing at least two (2) Business Days in advance of such intended use, and if a notice of a Suspension Event was previously delivered (or would have been delivered but for the provisions of this Section 7(e)) and the related suspension period remains in effect, the Issuer will so notify Subscriber, within one (1) Business Day of Subscriber’s notification to the Issuer, by delivering to Subscriber a copy of such previous notice of Suspension Event, and thereafter will provide Subscriber with the related notice of the conclusion of such Suspension Event promptly following its availability
(f) For purposes of this Section 7 of this Subscription Agreement, (i) “Registrable Securities” shall mean, as of any date of determination, the Subscribed Securities (as defined in the recitals to this Subscription Agreement) and any other equity security issued or issuable with respect to the Registrable Securities by way of share split, dividend, distribution, recapitalization, merger, exchange, or replacement, and (ii) “Subscriber” shall include any affiliate of the Subscriber to which the rights under this Section 7 shall have been duly assigned.
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(g) Sio NewCo shall indemnify and hold harmless Subscriber (to the extent Subscriber is a seller under the Registration Statement), the officers, directors, members, managers, partners, agents, investment advisors and employees of Subscriber, each person who controls Subscriber (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members, managers, partners, agents and employees of each such controlling person, to the fullest extent permitted by applicable law, from and against any and all reasonable out-of-pocket losses, claims, damages, liabilities, costs (including, without limitation, reasonable and documented attorneys’ fees) and expenses (collectively, “Losses”) that arise out of or are based upon any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any prospectus included in the Registration Statement or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to the extent that such untrue statements, alleged untrue statements, omissions or alleged omissions are based upon information regarding Subscriber furnished in writing to Sio NewCo by or on behalf of Subscriber expressly for use therein or that Subscriber has omitted a material fact from such information. Sio NewCo shall notify Subscriber promptly of the institution, threat or assertion of any proceeding arising from or in connection with the transactions contemplated by this Section 7 of which Sio NewCo is aware. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of an indemnified party and shall survive the transfer of the Registrable Securities by Subscriber. Notwithstanding the forgoing, Sio NewCo’s indemnification obligations shall not apply to amounts paid in settlement of any Losses or action if such settlement is effected without the prior written consent of the Issuer (which consent shall not be unreasonably withheld or delayed).
(h) Subscriber shall, severally and not jointly with any Other Subscriber in the offering contemplated by this Subscription Agreement or selling shareholder named in the Registration Statement, indemnify and hold harmless Sio NewCo, its directors, officers, members, managers, partners, agents and employees, each person who controls Sio NewCo (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, members, managers, partners, agents or employees of such controlling persons, to the fullest extent permitted by applicable law, from and against all Losses arising out of or based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any prospectus included in the Registration Statement, or any form of prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus, or any form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading to the extent, but only to the extent, that such untrue statements, alleged untrue statements, omissions or alleged omissions are based upon information regarding Subscriber furnished in writing to Sio NewCo by or on behalf of Subscriber expressly for use therein. In no event shall the liability of Subscriber be greater in amount than the dollar amount of the net proceeds received by Subscriber upon the sale of the Registrable Securities giving rise to such indemnification obligation. Notwithstanding the forgoing, Subscriber’s indemnification obligations shall not apply to amounts paid in settlement of any Losses or action if such settlement is effected without the prior written consent of Subscriber (which consent shall not be unreasonably withheld or delayed).
(i) Any person or entity entitled to indemnification herein shall (A) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s or entity’s right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (B) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld, conditioned or delayed). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement), which settlement shall not include a statement or admission of fault and culpability on the part of such indemnified party, and which settlement shall include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.
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(j) The indemnification provided for under this Subscription Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person or entity of such indemnified party and shall survive the transfer of the Registrable Securities purchased pursuant to this Subscription Agreement.
(k) If the indemnification provided under this Section 7 from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations; provided, however, that the liability of the Subscriber shall be limited to the net proceeds received by the Subscriber from the sale of Registrable Securities giving rise to such indemnification obligation. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by (or not made by, in the case of an omission), or relates to information supplied by (or not supplied by, in the case of an omission), such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in this Section 7, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Section 7(k) from any person or entity who was not guilty of such fraudulent misrepresentation. Notwithstanding anything to the contrary herein, in no event will any party be liable for consequential, special, exemplary or punitive damages in connection with this Subscription Agreement or the transactions contemplated hereby.
Section 8. Termination. This Subscription Agreement shall terminate and be void and of no further force and effect, and all rights and obligations of the parties hereunder shall terminate without any further liability on the part of any party in respect thereof, upon the earlier of (a) such date and time as the Business Combination Agreement is terminated in accordance with its terms and (b) the mutual written agreement of the parties hereto to terminate this Subscription Agreement; provided, that nothing herein will relieve any party from liability for any willful breach hereof prior to the time of termination, and each party will be entitled to any remedies at law or in equity to recover losses, liabilities or damages arising from such breach. Sio NewCo shall notify Subscriber of the termination of the Business Combination Agreement promptly after the termination thereof. Upon the termination hereof in accordance with this Section 8, any monies paid by Subscriber to Sio NewCo in connection herewith shall promptly (and in any event within two (2) Business Days) be returned in full to Subscriber by wire transfer of U.S. dollars in immediately available funds to the account specified by Subscriber, without any deduction for or on account of any tax withholding, charges or set-off.
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Section 9. Trust Account Waiver. Subscriber hereby acknowledges that, as described in Pyrophyte’s prospectus relating to its IPO dated October 26, 2021 available at www.sec.gov, Pyrophyte has established a trust account (the “Trust Account”) containing the proceeds of the IPO and from certain private placements occurring simultaneously with the IPO (including interest accrued from time to time thereon) for the benefit of Pyrophyte, its public shareholders and certain other parties (including the underwriters of the IPO), and that, except as otherwise described in such prospectus, Pyrophyte may disburse monies from the Trust Account only to (x) its public shareholders in the event they elect to have their Pyrophyte Class A Ordinary Shares redeemed for cash in connection with the consummation of Pyrophyte’s initial business combination, an amendment to its amended and restated memorandum and articles of association to extend the deadline by which Pyrophyte must consummate its initial business combination, or Pyrophyte’s failure to consummate an initial business combination by such deadline, (y) pay certain taxes from time to time, or (z) Pyrophyte after or concurrently with the consummation of its initial business combination. For and in consideration of Pyrophyte entering into this Subscription Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Subscriber, on behalf of itself and its affiliates, hereby (a) agrees that it does not now and shall not at any time hereafter have any right, title, interest or claim of any kind in or to any assets held in the Trust Account, and shall not make any claim against the Trust Account, arising out or as a result of, in connection with or relating in any way to this Subscription Agreement, and regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability (any and all such claims are collectively referred to hereafter as the “Released Claims”), (b) irrevocably waives any Released Claims that it may have against the Trust Account now or in the future as a result of, or arising out of, this Subscription Agreement, and (c) will not seek recourse against the Trust Account as a result of, in connection with or relating in any way to this Subscription Agreement; provided, however, that nothing in this Section 9 shall (i) serve to limit or prohibit Subscriber’s right to pursue a claim against Pyrophyte for legal relief against assets held outside the Trust Account (so long as such claim would not affect Pyrophyte’s ability to fulfill its obligation to effectuate any redemption right with respect to any securities of Pyrophyte), for specific performance or other equitable relief, (ii) serve to limit or prohibit any claims that the Subscriber may have in the future against Pyrophyte’s assets or funds that are not held in the Trust Account (including any funds that have been released from the Trust Account and any assets that have been purchased or acquired with any such funds) (so long as such claim would not affect Pyrophyte’s ability to fulfill its obligation to effectuate any redemption right with respect to any securities of Pyrophyte) or (iii) be deemed to limit Subscriber’s right to distributions from the Trust Account in accordance with Pyrophyte’s amended and restated memorandum and articles of association in respect of any redemptions by Subscriber in respect of Pyrophyte Class A Ordinary Shares acquired by any means other than pursuant to this Subscription Agreement. Subscriber acknowledges and agrees that such irrevocable waiver is a material inducement to Pyrophyte to enter into this Subscription Agreement, and further intends and understands such waiver to be valid, binding, and enforceable against Subscriber in accordance with applicable law. Notwithstanding anything in this Subscription Agreement to the contrary, the provisions of this Section 9 shall survive termination of this Subscription Agreement.
Section 10. Miscellaneous.
(a) All notices, requests, demands, claims, and other communications hereunder shall be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given (i) when delivered personally to the recipient, (ii) when sent by electronic mail, with no mail undeliverable or other rejection notice, on the date of transmission to such recipient, if sent on a Business Day prior to 5:00 p.m. New York City time, or on the Business Day following the date of transmission, if sent on a day that is not a Business Day or after 5:00 p.m. New York City time on a Business Day, (iii) one (1) Business Day after being sent to the recipient via overnight mail by reputable overnight courier service (charges prepaid), or (iv) four (4) Business Days after being mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, and, in each case, addressed to the intended recipient at its address specified on the signature page hereof or to such electronic mail address or address as subsequently modified by written notice given in accordance with this Section 10(a). A courtesy electronic copy of any notice sent by methods (i), (iii), or (iv) above shall also be sent to the recipient via electronic mail if an electronic mail address is provided in the applicable signature page hereof or to an electronic mail address as subsequently modified by written notice given in accordance with this Section 10(a).
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(b) Subscriber acknowledges that Sio NewCo, Pyrophyte and others will rely on the acknowledgments, understandings, agreements, representations and warranties of Subscriber contained in this Subscription Agreement. Prior to the Closing, Subscriber agrees to promptly notify Sio NewCo and Pyrophyte if it becomes aware that any of the acknowledgments, understandings, agreements, representations and warranties of Subscriber set forth herein are no longer accurate in all material respects. Prior to the Closing, each of Sio NewCo and Pyrophyte agrees to promptly notify Subscriber if it becomes aware that any of their respective acknowledgments, understandings, agreements, representations and warranties set forth herein are no longer accurate in all material respects.
(c) Each of Sio NewCo Pyrophyte and Subscriber is irrevocably authorized to produce this Subscription Agreement or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.
(d) Each party hereto shall pay all of its own expenses in connection with this Subscription Agreement and the transactions contemplated herein.
(e) Sio NewCo shall be responsible for the fees of its transfer agent, stamp taxes, if applicable, and all of the DTC’s fees associated with the issuance of the Registrable Securities.
(f) Neither this Subscription Agreement nor any rights that may accrue to Subscriber hereunder (other than the Registrable Securities acquired hereunder and the rights set forth in Section 7) may be transferred or assigned by Subscriber. Neither this Subscription Agreement nor any rights that may accrue to Sio NewCo or Pyrophyte hereunder may be transferred or assigned by Pyrophyte (provided, that, for the avoidance of doubt, Sio NewCo or Pyrophyte may transfer its rights hereunder solely in connection with the consummation of the Transaction and the Assumption). Notwithstanding the foregoing, Subscriber may assign its rights and obligations under this Subscription Agreement to one or more of its affiliates (including other investment funds or accounts managed or advised by the investment manager who acts on behalf of Subscriber) or, with Sio NewCo’s prior written consent, to another person; provided, that in the case of any such assignment, the assignee(s) shall become a Subscriber hereunder and have the rights and obligations and be deemed to make the representations and warranties of Subscriber provided for herein to the extent of such assignment and provided further that no such assignment shall relieve the assigning Subscriber of its obligations hereunder if any such assignee fails to perform such obligations, unless Sio NewCo has given its prior written consent to such relief.
(g) All the agreements, representations and warranties made by each party hereto in this Subscription Agreement shall survive the Closing.
(h) Sio NewCo may request from Subscriber such additional information as Sio NewCo may reasonably deem necessary to evaluate the eligibility of Subscriber to acquire the Subscribed Securities and to register the Registrable Securities for resale, and Subscriber shall promptly provide such information as may be reasonably requested, to the extent readily available and to the extent consistent with its internal policies and procedures; provided, that Sio NewCo agrees to keep any such information provided by Subscriber confidential, except (A) as required by the federal securities laws, rules or regulations and (B) to the extent such disclosure is required by other laws, rules or regulations, at the request of the staff of the SEC or other regulatory agency or under the regulations of the Stock Exchange. Subscriber acknowledges that the Issuer and Pyrophyte may file a form of this Subscription Agreement with the SEC as an exhibit to a current or periodic report of the Issuer and/or Pyrophyte or a registration statement of the Issuer and/or Pyrophyte.
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(i) This Subscription Agreement may not be amended, modified or waived except by an instrument in writing, signed by each of the parties hereto.
(j) This Subscription Agreement constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof.
(k) Except as otherwise provided herein, this Subscription Agreement is intended for the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives, and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person. Except as set forth in Section 7, Section 10(b), Section 10(c), Section 10(f) and this Section 10(l) with respect to the persons specifically referenced therein, this Subscription Agreement shall not confer any rights or remedies upon any person other than the parties hereto, and their respective successors and assigns, and the parties hereto acknowledge that such persons so referenced are third party beneficiaries of this Subscription Agreement for the purposes of, and to the extent of, the rights granted to them, if any, pursuant to the applicable provisions.
(l) The parties hereto acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Subscription Agreement were not performed in accordance with their specific terms or were otherwise breached and that money or other legal remedies would not be an adequate remedy for such damage. It is accordingly agreed that the parties shall be entitled to equitable relief, including in the form of an injunction or injunctions to prevent breaches or threatened breaches of this Subscription Agreement and to enforce specifically the terms and provisions of this Subscription Agreement, this being in addition to any other remedy to which such party is entitled at law, in equity, in contract, in tort or otherwise. The parties hereto further acknowledge and agree: (x) to waive any requirement for the security or posting of any bond in connection with any such equitable remedy; (y) not to assert that a remedy of specific enforcement pursuant to this Section 10(n) is unenforceable, invalid, contrary to applicable law or inequitable for any reason; and (z) to waive any defenses in any action for specific performance, including the defense that a remedy at law would be adequate.
(m) If any provision of this Subscription Agreement shall be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Subscription Agreement shall not in any way be affected or impaired thereby and shall continue in full force and effect.
(n) No failure or delay by a party hereto in exercising any right, power or remedy under this Subscription Agreement, and no course of dealing between the parties hereto, shall operate as a waiver of any such right, power or remedy of such party. No single or partial exercise of any right, power or remedy under this Subscription Agreement by a party hereto, nor any abandonment or discontinuance of steps to enforce any such right, power or remedy, shall preclude such party from any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The election of any remedy by a party hereto shall not constitute a waiver of the right of such party to pursue other available remedies. No notice to or demand on a party not expressly required under this Subscription Agreement shall entitle the party receiving such notice or demand to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the party giving such notice or demand to any other or further action in any circumstances without such notice or demand.
(o) This Subscription Agreement may be executed and delivered in one or more counterparts (including by electronic mail, in .pdf or other electronic submission) and by different parties in separate counterparts, with the same effect as if all parties hereto had signed the same document. All counterparts so executed and delivered shall be construed together and shall constitute one and the same agreement.
(p) This Subscription Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the principles of conflicts of laws that would otherwise require the application of the law of any other state.
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(q) EACH PARTY AND ANY PERSON ASSERTING RIGHTS AS A THIRD PARTY BENEFICIARY HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OR RELATED TO THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY OR ANY AFFILIATE OF ANY OTHER SUCH PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. THE PARTIES AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS SUBSCRIPTION AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS SUBSCRIPTION AGREEMENT.
(r) The parties agree that all disputes, legal actions, suits and proceedings arising out of or relating to this Subscription Agreement must be brought exclusively in the Court of Chancery of the State of Delaware and any state appellate court therefrom within the State of Delaware (or, if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, any federal court within the State of Delaware or, in the event each federal court within the State of Delaware declines to accept jurisdiction over a particular matter, any state court within the State of Delaware) (collectively the “Designated Courts”). Each party hereby consents and submits to the exclusive jurisdiction of the Designated Courts. No legal action, suit or proceeding with respect to this Subscription Agreement may be brought in any other forum. Each party hereby irrevocably waives all claims of immunity from jurisdiction, and any objection which such party may now or hereafter have to the laying of venue of any suit, action or proceeding in any Designated Court, including any right to object on the basis that any dispute, action, suit or proceeding brought in the Designated Courts has been brought in an improper or inconvenient forum or venue. Each of the parties also agrees that delivery of any process, summons, notice or document to a party hereof in compliance with Section 10(a) of this Subscription Agreement shall be effective service of process for any action, suit or proceeding in a Designated Court with respect to any matters to which the parties have submitted to jurisdiction as set forth above.
(s) This Subscription Agreement may only be enforced against, and any claim, action, suit or other legal proceeding based upon, arising out of, or related to this Subscription Agreement, or the negotiation, execution or performance of this Subscription Agreement, may only be brought against the entities that are expressly named as parties hereto.
(t) Pyrophyte shall, by 9:00 a.m., New York City time, on the first (1st) Business Day immediately following the date of this Subscription Agreement, file with the SEC a Current Report on Form 8-K (the “Disclosure Document”) disclosing all material terms of this Subscription Agreement and the Other Subscription Agreements and the transactions contemplated hereby and thereby and the Transaction, and including as exhibits to the Disclosure Document, the form of this Subscription Agreement and the Other Subscription Agreement (in each case, without redaction). Notwithstanding anything in this Subscription Agreement to the contrary, neither Sio NewCo nor Pyrophyte shall publicly disclose the name of Subscriber or any of its affiliates or advisers, or include the name of Subscriber or any of its affiliates or advisers (i) in any press release, without the prior written consent of Subscriber and (ii) any filing with the SEC or any regulatory agency or trading market, without the prior written consent of Subscriber, except (A) as required by the federal securities laws, rules or regulations and (B) to the extent such disclosure is required by other laws, rules or regulations, at the request of the staff of the SEC or other regulatory agency or under the regulations of the Stock Exchange, in which case of clause (A) or (B), Sio NewCo or Pyrophyte, as the case may be, shall provide the Subscriber with prior written notice (including by e-mail) of such permitted disclosure, and shall reasonably consult with the Subscriber regarding such disclosure. Subscriber will promptly provide any information reasonably requested by either Sio NewCo or Pyrophyte for any regulatory application or filing made or approval sought in connection with the Transaction (including filings with the SEC).
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(u) The obligations of Subscriber under this Subscription Agreement are several and not joint with the obligations of any Other Subscriber or any other investor under the Other Subscription Agreements, and Subscriber shall not be responsible in any way for the performance of the obligations of any Other Subscriber under this Subscription Agreement or any Other Subscriber or other investor under the Other Subscription Agreements. The decision of Subscriber to purchase the Subscribed Securities pursuant to this Subscription Agreement has been made by Subscriber independently of any Other Subscriber or any other investor and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of Sio NewCo, Pyrophyte or any of their respective subsidiaries which may have been made or given by any Other Subscriber or investor or by any agent or employee of any Other Subscriber or investor, and neither Subscriber nor any of its agents or employees shall have any liability to any Other Subscriber or investor (or any other person) relating to or arising from any such information, materials, statements or opinions. Nothing contained herein or in any Other Subscription Agreement, and no action taken by Subscriber or Other Subscriber or other investor pursuant hereto or thereto, shall be deemed to constitute Subscriber and any Other Subscribers or other investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that Subscriber and any Other Subscribers or other investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Subscription Agreement and the Other Subscription Agreements. Subscriber acknowledges that no Other Subscriber has acted as agent for Subscriber in connection with making its investment hereunder and no Other Subscriber will be acting as agent of Subscriber in connection with monitoring its investment in the Subscribed Securities or enforcing its rights under this Subscription Agreement. Subscriber shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Subscription Agreement, and it shall not be necessary for any Other Subscriber or investor to be joined as an additional party in any proceeding for such purpose.
(v) The headings herein are for convenience only, do not constitute a part of this Subscription Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Subscription Agreement will be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rules of strict construction will be applied against any party. Unless the context otherwise requires, (i) all references to Sections, Schedules or Exhibits are to Sections, Schedules or Exhibits contained in or attached to this Subscription Agreement, (ii) each accounting term not otherwise defined in this Subscription Agreement has the meaning assigned to it in accordance with GAAP, (iii) words in the singular or plural include the singular and plural and pronouns stated in either the masculine, the feminine or neuter gender shall include the masculine, feminine and neuter, (iv) the use of the word “including” in this Subscription Agreement shall be by way of example rather than limitation, and (v) the word “or” shall not be exclusive.
[Signature pages follow.]
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IN WITNESS WHEREOF, each of the undersigned has accepted this Subscription Agreement as of the date first set forth above.
SIO SILICA CORPORATION | |||
By: | |||
Name: | |||
Title: |
Address for Notices: | |
Sio Silica Corporation | |
Suite 1930, 440 – 2nd Avenue SW | |
Calgary, Alberta | |
T2P 5E9 | |
Canada | |
Attention: Feisal Somji | |
Email: fsomji@siosilica.com | |
with a copy (not to constitute notice) to: | |
DLA Piper LLP (US) | |
1251 Avenue of the Americas, 27th Floor | |
New York, New York 10020 | |
Email: stephen.alicanti@us.dlapiper.com | |
Attention: Stephen Alicanti |
PYROPHYTE ACQUISITION CORP. | |||
By: | |||
Name: | |||
Title: |
Address for Notices: | |||
Pyrophyte Acquisition Corp. | |||
3262 Westheimer Road, Suite 706 | |||
Houston, Texas 77098 | |||
Email: sten.gustafson@pyrophytespac.com | |||
Attention: Sten Gustafson | |||
with a copy (not to constitute notice) to: | |||
White & Case LLP | |||
1221 Avenue of the Americas | |||
New York, New York 10020 | |||
Email: elliott.smith@whitecase.com | |||
Attention: Elliott Smith |
[Signature Page to Subscription Agreement]
Sio Silica Incorporated. | |||
By: | |||
Name: | |||
Title: |
Address for Notices: | |||
Sio Silica Incorporated. | |||
Suite 1930, 440 – 2nd Avenue SW | |||
Calgary, Alberta | |||
T2P 5E9 | |||
Canada | |||
Attention: Feisal Somji | |||
Email: fsomji@siosilica.com | |||
with a copy (not to constitute notice) to: | |||
DLA Piper LLP (US) | |||
1251 Avenue of the Americas, 27th Floor | |||
New York, New York 10020 | |||
Email: stephen.alicanti@us.dlapiper.com | |||
Attention: Stephen Alicanti |
[Signature Page to Subscription Agreement]
IN WITNESS WHEREOF, Subscriber has executed or caused this Subscription Agreement to be executed by its duly authorized representative as of the date set forth below.
Name of Subscriber: |
State/Province/Country of Formation or Domicile: | |
By: ________________________________ | ||
Name: ______________________________ | ||
Title: _______________________________ | ||
Name in which Subscribed Securities are to be registered (if different): | Date: ________, 2023 | |
Subscriber’s EIN (if applicable): | ||
Business Address-Street: | Mailing Address-Street (if different): | |
City, State, Zip OR Province, Postal Code: | City, State, Zip OR Province, Postal Code: | |
Attn: _______________________________ | Attn: _______________________________ | |
Telephone No.: | Telephone No.: | |
Email for notices: | Email for notices (if different): | |
Number of Subscribed Securities subscribed for: | ||
Aggregate Purchase Price: US$ | ||
Register the Subscribed Securities as set forth below: __________________________________________ (Name) __________________________________________ (Account reference, if applicable) __________________________________________ (Address) __________________________________________ |
Deliver the Subscribed Securities as set forth below: _______________________________________ (Name) _______________________________________ (Account reference, if applicable) _______________________________________ (Address) _______________________________________
|
[Signature Page to Subscription Agreement]
Exhibit 10.2
Execution Version
SUBSCRIPTION AGREEMENT
This SUBSCRIPTION AGREEMENT (this “Subscription Agreement”) is entered into on November 13, 2023, by and between Pyrophyte Acquisition Corp., a Cayman Islands exempted company (“Pyrophyte”), Sio Silica Corporation, an Alberta corporation (“Sio”), Sio Silica Incorporated, a newly-formed Alberta corporation formed solely for the purposes of engaging in the Transaction (as defined below) and wholly owned by Feisal Somji, a nominee of Sio (“Sio NewCo” and unless otherwise indicated or the context otherwise requires, by virtue of, and with effect from, the Assumption (as defined below), becoming effective, all references herein to Sio NewCo shall refer to the newly formed corporate entity resulting from the SPAC Amalgamation (as defined below), which is also referred to as the “Issuer”), and the undersigned subscriber (“Subscriber”).
WHEREAS, concurrently with the execution of this Subscription Agreement, Pyrophyte is entering into a definitive agreement (the “Business Combination Agreement”) with Sio, Snowbank NewCo Alberta ULC, an Alberta unlimited liability corporation and wholly-owned subsidiary of Pyrophyte (“NewCo”), and Sio NewCo, pursuant to which, among other things, (i) Pyrophyte shall transfer by way of continuation from the Cayman Islands to Alberta in accordance with the Cayman Islands Companies Act (as revised) and continue as an Alberta corporation in accordance with the applicable provisions of the Business Corporations Act (Alberta), (ii) Pyrophyte shall amalgamate with Sio NewCo (the “SPAC Amalgamation”) to form the Issuer, which shall, as a result of the SPAC Amalgamation and prior to the consummation of the transactions contemplated hereunder, assume all rights, covenants and obligations of Sio NewCo, including the rights, covenants and obligations under this Subscription Agreement and the Other Subscription Agreements (as defined below) (the “Assumption”) and (iii) Sio and NewCo shall amalgamate, and the entity resulting from such amalgamation shall be wholly-owned by the Issuer and continue the business operations currently undertaken by Sio (the transactions contemplated by the Business Combination Agreement, the “Transaction”);
WHEREAS, in connection with the Transaction, Subscriber desires to subscribe for and purchase, substantially concurrently with the consummation of the Transaction, that number of common shares of the Issuer (the “Issuer Common Shares”) set forth on the signature page hereto (the “Subscribed Securities”), for an aggregate purchase price of US$[●](the “Purchase Price”), and Sio NewCo desires to, following the SPAC Amalgamation and Assumption, issue and sell to Subscriber the Subscribed Securities in consideration of the payment of the Purchase Price by or on behalf of Subscriber to the Issuer; and
WHEREAS, substantially concurrently with the execution of this Subscription Agreement, Sio NewCo and Pyrophyte are entering into one or more subscription agreements (the “Other Subscription Agreements” and, together with this Subscription Agreement, the “Subscription Agreements”) with certain other investors (the “Other Subscribers” and together with Subscriber, the “Subscribers”), pursuant to which such Other Subscribers have agreed to purchase on the closing date of the Transaction an aggregate of 3,114,258 Subscribed Securities for an aggregate purchase price, inclusive of the Purchase Price, of US$20,122,474 (the “Offering”).
NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants, and subject to the conditions, herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
Section 1. Subscription. Subject to the terms and conditions hereof, at the Closing (as defined below), Subscriber hereby subscribes for and agrees to purchase from Sio NewCo, and Sio NewCo hereby agrees to, following the SPAC Amalgamation and Assumption, issue and sell to Subscriber, upon the payment of the Purchase Price, the Subscribed Securities (such subscription and issuance, the “Subscription”).
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Section 2. Closing.
(a) The consummation of the Subscription contemplated hereby (the “Closing”) shall occur on the closing date of the Transaction (the “Closing Date”), substantially concurrently with and conditioned upon the effectiveness of the consummation of the Transaction.
(b) At least five (5) Business Days before the anticipated Closing Date, Sio NewCo shall deliver written notice to Subscriber (the “Closing Notice”) specifying (i) the anticipated Closing Date and (ii) the wire instructions for delivery of the Purchase Price to Sio NewCo. No later than three (3) Business Days prior to the anticipated Closing Date as set forth in the Closing Notice, Subscriber shall deliver the Purchase Price for the Subscribed Securities by wire transfer of United States dollars in immediately available funds to the account specified by Sio NewCo in the Closing Notice, and such funds shall be held by Sio NewCo in escrow, in a segregated non-interest bearing account until the Closing Date. In the event that the consummation of the Transaction does not occur within five (5) Business Days after the anticipated Closing Date specified in the Closing Notice, unless otherwise agreed to in writing by Pyrophyte, Sio NewCo and the Subscriber, Sio NewCo shall promptly (but in no event later than seven (7) Business Days after the anticipated Closing Date specified in the Closing Notice) return all of the funds so delivered by Subscriber to Sio NewCo by wire transfer in immediately available funds to the account specified by Subscriber, and any book entries representing the Subscribed Securities, if any, shall be deemed cancelled. Notwithstanding such return or cancellation (x) a failure to close on the anticipated Closing Date shall not, by itself, be deemed to be a failure of any of the conditions to Closing set forth in this Section 2 to be satisfied or waived on or prior to the Closing Date, and (y) unless and until this Subscription Agreement is terminated in accordance with Section 8 herein, Subscriber shall remain obligated to redeliver funds to Sio NewCo following Sio NewCo’s delivery to Subscriber of a new Closing Notice in accordance with this Section 2 and the Subscriber and Sio NewCo shall remain obligated to consummate the Closing upon satisfaction of the conditions set forth in this Section 2. For the purposes of this Subscription Agreement, “Business Day” means any day other than a Saturday or Sunday, or any other day on which banks located in New York, New York or governmental authorities in Canada are required or authorized by law to be closed for business.
(c) The Closing shall be subject to the satisfaction, or valid waiver in writing by each of the parties hereto, of the conditions that, on the Closing Date:
(i) | all conditions precedent to the closing of the Transaction set forth in Article VII of the Business Combination Agreement shall have been satisfied (as determined by the parties to the Business Combination Agreement) or waived in writing by the person(s) with the authority to make such waiver (other than those conditions which, by their nature, are to be satisfied at the closing of the Transaction pursuant to the Business Combination Agreement), and the closing of the Transaction shall be scheduled to occur substantially concurrently with the Closing; |
(ii) | no governmental authority shall have enacted, issued, promulgated, enforced or entered any judgment, order, law, rule or regulation which is then in effect and has the effect of making the consummation of the transactions contemplated hereby illegal or otherwise restraining or prohibiting consummation of the Subscription or the transactions contemplated hereby, and no governmental authority shall have instituted or threatened in writing a proceeding seeking to impose any such restraint or prohibition; |
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(iii) | a license under the Environment Act (Manitoba) has been obtained by Sio that would permit Sio to extract high purity silica sand from the Winnipeg Sandstone geological formation situated within Sio’s mining claims and leases located southwest of Vivian, Manitoba at an annual extraction rate of up to 1.34 million tonnes; and |
(iv) | the Issuer Common Shares shall be approved for listing on the New York Stock Exchange, or another national securities exchange (the “Stock Exchange”), subject only to official notice of issuance. |
(d) The obligation of Sio NewCo to consummate the Closing shall be subject to the satisfaction or valid waiver in writing by Sio NewCo and Pyrophyte of the additional conditions that, on the Closing Date:
(i) | all representations and warranties of Subscriber contained in this Subscription Agreement shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality or Subscriber Material Adverse Effect (as defined below), which representations and warranties shall be true and correct in all respects as so qualified) at and as of the Closing Date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality or Subscriber Material Adverse Effect, which representations and warranties shall be true and correct in all respects as so qualified) as of such earlier date), and consummation of the Closing shall constitute a reaffirmation by Subscriber of each of the representations, warranties and agreements of Subscriber contained in this Subscription Agreement as of the Closing Date, but without giving effect to consummation of the Transaction, or as of such earlier date, as applicable, except, in each case, where the failure of such representations and warranties to be true and correct (whether as of the Closing Date or such earlier date), taken as a whole, does not result in a Subscriber Material Adverse Effect; |
(ii) | Subscriber shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Subscription Agreement to be performed, satisfied or complied with by it at or prior to the Closing; and |
(iii) | Subscriber shall have delivered the Purchase Price in compliance with the terms of this Subscription Agreement. |
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(e) The obligation of Subscriber to consummate the Closing shall be subject to the satisfaction or valid waiver in writing by Subscriber of the additional conditions that, on the Closing Date:
(i) | all representations and warranties of Sio NewCo and Pyrophyte contained in this Subscription Agreement shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality or Sio NewCo Material Adverse Effect or Pyrophyte Material Adverse Effect (in each case, as defined below), which representations and warranties shall be true and correct in all respects as so qualified) at and as of the Closing Date (except to the extent that any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality, Sio NewCo Material Adverse Effect or Pyrophyte Material Adverse Effect, which representations and warranties shall be true and correct in all respects as so qualified) as of such earlier date), and consummation of the Closing shall constitute a reaffirmation by Sio NewCo and Pyrophyte of each of their respective representations, warranties and agreements contained in this Subscription Agreement as of the Closing Date, but without giving effect to consummation of the Transaction, or as of such earlier date, as applicable, except, in each case, where the failure of such representations and warranties to be true and correct (whether as of the Closing Date or such earlier date), taken as a whole, does not result in a Sio NewCo Material Adverse Effect or a Pyrophyte Material Adverse Effect; |
(ii) | the Subscribed Securities shall not be subject to any contractual lock-up restrictions other than the restrictive legends related to securities law restrictions as set forth below; and |
(iii) | each of Sio NewCo (and when applicable, the Issuer) and Pyrophyte shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Subscription Agreement to be performed, satisfied or complied with by it at or prior to the Closing. |
(f) Prior to or at the Closing, the Subscriber shall deliver to Sio NewCo all such information as is reasonably requested in order for Sio NewCo to issue and allot the Subscribed Securities to the Subscriber, including, without limitation, the legal name of the person in whose name such Subscribed Securities are to be issued and allotted (or the Subscriber’s nominee in accordance with its delivery instructions) and a duly completed and executed Internal Revenue Service Form W-9 or appropriate Form W-8.
Each book-entry for Subscribed Securities shall contain a notation, and each certificate (if any) evidencing the Subscribed Securities shall be stamped or otherwise imprinted with a legend, in substantially the following form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE LATER OF (I) THE CLOSING DATE OF THE BUSINESS COMBINATION BETWEEN PYROPHYTE AND SIO SILICA CORPORATION, AND (II) THE DATE THE ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.
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Section 3. Sio NewCo Representations and Warranties. Sio NewCo represents and warrants to Subscriber that:
(a) Sio NewCo (i) is validly existing and in good standing under the laws of its jurisdiction of incorporation, (ii) has the requisite corporate power and authority to own, lease and operate its properties, to carry on its business as it is now being conducted and to enter into and perform its obligations under this Subscription Agreement, and (iii) is duly licensed or qualified to conduct its business and, if applicable, is in good standing under the laws of each jurisdiction (other than its jurisdiction of incorporation and only to the extent such concept exists in such jurisdiction) in which the conduct of its business or the ownership of its properties or assets requires such license or qualification, except, with respect to the foregoing clause (iii), where the failure to be so licensed, qualified or in good standing would not reasonably be expected to have a Sio NewCo Material Adverse Effect. For purposes of this Subscription Agreement, a “Sio NewCo Material Adverse Effect” means an event, change, development, occurrence, condition or effect with respect to the Issuer and its subsidiaries that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on the business or financial condition of Sio NewCo and its subsidiaries, taken together as a whole (on a consolidated basis).
(b) As of the Closing Date, the Subscribed Securities will be duly authorized and, when issued and delivered to Subscriber against full payment therefor in accordance with the terms of this Subscription Agreement, will be validly issued, fully paid and non-assessable, free and clear of all liens or other restrictions (other than those arising under this Subscription Agreement, the governing and organizational documents of Sio NewCo or applicable securities laws and other than those imposed by or on Subscriber or Subscriber’s assets), and will not have been issued in violation of, or subject to, any preemptive or similar rights created under Sio NewCo’s governing and organizational documents or the laws of its jurisdiction of incorporation.
(c) This Subscription Agreement has been duly authorized and validly executed and delivered by Sio NewCo, and assuming the due authorization, execution and delivery of the same by Sio, Subscriber and Pyrophyte, this Subscription Agreement shall constitute the valid and legally binding obligation of Sio NewCo, enforceable against Sio NewCo in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors generally and by the availability of equitable remedies.
(d) Assuming the accuracy of the representations and warranties of Subscriber set forth in Section 6 of this Subscription Agreement, and the execution and delivery of this Subscription Agreement, the issuance, allotment and sale of the Subscribed Securities hereunder (upon satisfaction or valid waiver of the conditions set forth in Section 2), the compliance by Sio NewCo with all of the provisions of this Subscription Agreement and the consummation of the transactions contemplated herein will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of Sio NewCo pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which Sio NewCo is a party or by which Sio NewCo is bound or to which any of the property or assets of Sio NewCo is subject, (ii) result in any violation of the provisions of the organizational documents of Sio NewCo, or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over Sio NewCo or any of its properties that, in the case of clauses (i) and (iii), would reasonably be expected to have a Sio NewCo Material Adverse Effect.
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(e) Assuming the accuracy of the representations and warranties of Subscriber set forth in Section 6 of this Subscription Agreement, Sio NewCo is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other provincial, territorial, federal, state, local or other governmental authority, self-regulatory organization or other person in connection with the execution, delivery and performance of this Subscription Agreement (including, without limitation, the issuance of the Subscribed Securities)), other than (i) filings required by applicable state securities laws, (ii) the filing of the Registration Statement (as defined below) pursuant to Section 7 below, (iii) filings required by the Securities Act of 1933, as amended (the “Securities Act”), the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the rules of the United States Securities and Exchange Commission (the “SEC”), including the registration statement on Form F-4 with respect to the Transaction and the proxy statement/prospectus included therein, (iv) filings or consents required by the Stock Exchange, including with respect to obtaining shareholder approval of the Transaction, if applicable, (v) in respect of sales to a Subscriber that is located in the United States or is a U.S. Person as defined in Regulation S promulgated under the Securities Act (“Regulation S”) (such Subscriber a “U.S. Subscriber”), the filing of a Notice of Exempt Offering of Securities on Form D with the SEC under Regulation D of the Securities Act, if applicable, (vi) filings required to consummate the Transaction as provided under the Business Combination Agreement, (vii) the filing of notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”), if applicable, (viii) filings required under the securities laws and regulations of the provinces and territories of Canada (“Canadian Securities Laws”) and (ix) those filings, the failure of which to obtain would not reasonably be expected to have a Sio NewCo Material Adverse Effect.
(f) Except for such matters as have not had and would not reasonably be expected to have a Sio NewCo Material Adverse Effect, there is no (i) suit, action, proceeding or arbitration before a governmental authority or arbitrator pending, or, threatened in writing against Sio NewCo, (ii) judgment, decree, injunction, ruling or order of any governmental authority or arbitrator outstanding against Sio NewCo or (iii) written communication from a governmental entity that alleges that Sio NewCo is not in compliance or is in default or violation of any applicable law.
(g) Assuming the accuracy of Subscriber’s representations and warranties set forth in Section 6 of this Subscription Agreement, no registration under the Securities Act or any U.S. state securities (or Blue Sky) laws or a prospectus or other document under applicable Canadian Securities Laws is required for the offer and sale of the Subscribed Securities by the Issuer to Subscriber.
(h) Neither Sio NewCo nor any person acting on its behalf has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Subscribed Securities. The Subscribed Securities are not being offered in a manner involving a public offering under, or in a distribution in violation of, Canadian Securities Laws, the Securities Act or any state securities laws, as applicable. Neither Sio NewCo nor any person acting on Sio NewCo’s behalf has, directly or indirectly, at any time within the past six (6) months, made any offer or sale of any security or solicitation of any offer to buy any security under circumstances that would (i) eliminate the availability of the exemption from registration under Section 4(a)(2) or Regulation D, as applicable, under the Securities Act in connection with the offer and sale by Sio NewCo of the Subscribed Securities as contemplated hereby or (ii) cause the offering of the Subscribed Securities pursuant to this Subscription Agreement to be integrated with prior offerings by Sio NewCo for purposes of the Securities Act or any applicable shareholder approval provisions. Neither Sio NewCo nor any person acting on Sio NewCo’s behalf has offered or sold or will offer or sell any securities, or has taken or will take any other action, which would reasonably be expected to subject the offer, issuance or sale of the Subscribed Securities, as contemplated hereby, to the registration provisions of the Securities Act.
(i) Sio NewCo is in compliance with all applicable laws and has not received any written communication from a governmental entity that alleges that Sio NewCo is not in compliance with, or is in default or violation of any applicable law, except where such non-compliance, default, or violation would not, individually or in the aggregate, reasonably be expected to have a Sio NewCo Material Adverse Effect.
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(j) As of the Closing Date, the Issuer Common Shares will be eligible for clearing through The Depositary Trust Company (the “DTC”), through its Deposit/Withdrawal At Custodian (DWAC) system, and the Issuer will be eligible and participating in the Direct Registration System (DRS) of DTC with respect to the Issuer Common Shares.
(k) Except for UBS Securities LLC (“UBS”) and BMO Capital Markets Corp. (each, a “Placement Agent” and together, the “Placement Agents”), no broker or finder is entitled to any brokerage or finder’s fee or commission or any other payment solely in connection with the sale of the Subscribed Securities to Subscriber.
(l) As of their respective dates, or, if amended, as of the date of such amendment, which shall be deemed to supersede such original filing, each form, report, statement, schedule, prospectus, proxy, registration statement and other document required to be filed by Sio NewCo with the SEC on or prior to the Closing Date (collectively, as amended and/or restated since the time of their filing, the “Sio NewCo SEC Documents”) complied in all material respects with the requirements of the Securities Act and the Exchange Act, and the rules and regulations of the SEC promulgated thereunder, and none of Sio NewCo SEC Documents, when filed, or if amended prior to the Closing Date (such amended Sio NewCo SEC Documents, the “Amended Sio NewCo SEC Documents”), as of the date of such amendment with respect to those disclosures that were amended, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of Sio NewCo included in the Sio NewCo SEC Documents or, if amended, in the Amended Sio NewCo SEC Documents, comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of such filing and fairly present in all material respects the financial position of Sio NewCo as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments. There are no material outstanding or unresolved comments in comment letters from the staff of the Division of Corporation Finance (the “Staff”) of the SEC with respect to any of the Sio NewCo SEC Documents as of the date hereof.
(m) Except as provided in this Subscription Agreement, none of Sio NewCo or any of its affiliates, nor any person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the issuance of any of the Subscribed Securities under the Securities Act or a prospectus under Canadian Securities Laws, whether through integration with prior offerings pursuant to Rule 502(a) of the Securities Act or otherwise.
(n) As of the date hereof, the authorized share capital of Sio NewCo consists of an unlimited number of common shares and an unlimited number of preferred shares. As of the date hereof: 100 common shares were issued and outstanding. All 100 common shares issued and outstanding have been duly authorized and validly issued, are fully paid and non-assessable and are not subject to preemptive rights or similar. As of the date hereof, except as set forth above and pursuant to (1) the Other Subscription Agreements, or (2) the Business Combination Agreement, there are no outstanding options, warrants or other rights to subscribe for, purchase or acquire from Sio NewCo any shares or other equity interests in Sio NewCo (collectively, “Sio NewCo Equity Interests”) or securities convertible into or exchangeable or exercisable for Sio NewCo Equity Interests. Except as set forth in the Business Combination Agreement, as of the date hereof, Sio NewCo has no subsidiaries and does not own, directly or indirectly, interests or investments (whether equity or debt) in any person, whether incorporated or unincorporated. As of the date hereof, there are no shareholder agreements, voting trusts or other agreements or understandings to which Sio NewCo is a party or by which it is bound relating to the voting of any Sio NewCo Equity Interests, other than as contemplated by the Business Combination Agreement. There are no securities or instruments issued by or to which Sio NewCo is a party containing anti-dilution or similar provisions that will be triggered, by the issuance of (i) the Subscribed Securities, (ii) the shares to be issued pursuant to any Other Subscription Agreement, or (iii) the Transaction, except in each case for such anti-dilution or similar provisions the application of which has been effectively waived.
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(o) There is no suit, action, proceeding or investigation pending or, to the knowledge of Sio NewCo, threatened against Sio NewCo by the SEC, the Stock Exchange, the applicable securities commission or securities regulatory authority in each of the provinces and territories of Canada (the “Canadian Securities Regulators”), or other securities commission or securities regulatory authority with respect to any intention by such entity to prohibit the registration of the Issuer Common Shares or prohibit the listing of the Issuer Common Shares on the Stock Exchange.
(p) Upon consummation of the Transaction, the issued and outstanding Issuer Common Shares are expected to be registered pursuant to Section 12(b) of the Exchange Act and listed for trading on the Stock Exchange, subject only to official notice thereof.
(q) Sio NewCo is not, and immediately after receipt of payment for the Subscribed Securities and consummation of the Transaction, will not be, an “investment company” within the meaning of the Investment Company Act of 1940 (the “Investment Company Act”).
(r) Sio NewCo has not taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does Sio NewCo have any knowledge that any of its creditors intend to initiate involuntary bankruptcy proceedings.
(s) Sio NewCo shall apply the net proceeds received pursuant to this Subscription Agreement and the Other Subscription Agreements in compliance with all applicable financial recordkeeping and reporting requirements, including those of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the applicable anti-money laundering statutes of all jurisdictions where Sio NewCo or any of its subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules, regulations or guidelines issued, administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering Laws”). Sio NewCo will not directly or indirectly use the proceeds received pursuant to this Subscription Agreement or the Other Subscription Agreements, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person (as defined below) (i) to fund or facilitate any activities of or business with any Person that, at the time of such funding or facilitation, is the subject or the target of Sanctions (as defined below), (ii) to fund or facilitate any activities or business in any Sanctioned Country (as defined below) or (iii) in any other manner that would reasonably be expected to result in a violation by any Person of Sanctions.
(t) Other than with respect to an aggregate of up to $10,000,000 in flow-through common shares to be issued by the Issuer to certain Canadian investors on or about the Closing Date, (i) Sio NewCo has not entered into any subscription agreement, side letter or other agreement with any Other Subscriber or any other investor in connection with such Other Subscriber’s or investor’s direct or indirect investment in Sio NewCo other than the Other Subscription Agreements and (ii) the Other Subscription Agreements (and any amendments thereto) reflect the same per share purchase price and other terms with respect to the purchase of the Subscribed Securities that are no more favorable to the Subscriber thereunder than the terms of this Subscription Agreement, other than terms particular to the regulatory requirements of such Subscriber or its affiliates or related funds.
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Section 4. Pyrophyte Representations and Warranties. Pyrophyte represents and warrants to Subscriber that:
(a) Pyrophyte (i) is validly existing and in good standing under the laws of its jurisdiction of incorporation, (ii) has the requisite corporate power and authority to own, lease and operate its properties, to carry on its business as it is now being conducted and to enter into and perform its obligations under this Subscription Agreement, and (iii) is duly licensed or qualified to conduct its business and, if applicable, is in good standing under the laws of each jurisdiction (other than its jurisdiction of incorporation and only to the extent such concept exists in such jurisdiction) in which the conduct of its business or the ownership of its properties or assets requires such license or qualification, except, with respect to the foregoing clause (iii), where the failure to be so licensed, qualified or in good standing would not reasonably be expected to have a Pyrophyte Material Adverse Effect. For purposes of this Subscription Agreement, a “Pyrophyte Material Adverse Effect” means an event, change, development, occurrence, condition or effect with respect to Pyrophyte and its subsidiaries that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on the business or financial condition of Pyrophyte and its subsidiaries, taken together as a whole (on a consolidated basis).
(b) This Subscription Agreement has been duly authorized and validly executed and delivered by Pyrophyte, and assuming the due authorization, execution and delivery of the same by Subscriber, Sio and Sio NewCo this Subscription Agreement shall constitute the valid and legally binding obligation of Pyrophyte, enforceable against Pyrophyte in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors generally and by the availability of equitable remedies.
(c) Assuming the accuracy of the representations and warranties of Subscriber set forth in Section 6 of this Subscription Agreement, and the execution and delivery of this Subscription Agreement, the issuance, allotment and sale of the Subscribed Securities hereunder (upon satisfaction or valid waiver of the conditions set forth in Section 2), the compliance by Pyrophyte with all of the provisions of this Subscription Agreement and the consummation of the transactions contemplated herein will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of Pyrophyte pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which Pyrophyte is a party or by which Pyrophyte is bound or to which any of the property or assets of Pyrophyte is subject, (ii) result in any violation of the provisions of the organizational documents of Pyrophyte, or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over Pyrophyte or any of its properties that, in the case of clauses (i) and (iii), would reasonably be expected to have a Pyrophyte Material Adverse Effect
(d) Except for such matters as have not had and would not reasonably be expected to have a Pyrophyte Material Adverse Effect, there is no (i) suit, action, proceeding or arbitration before a governmental authority or arbitrator pending, or, threatened in writing against Pyrophyte, (ii) judgment, decree, injunction, ruling or order of any governmental authority or arbitrator outstanding against Pyrophyte or (iii) written communication from a governmental entity that alleges that Pyrophyte is not in compliance or is in default or violation of any applicable law.
(e) Pyrophyte is in compliance with all applicable laws and has not received any written communication from a governmental entity that alleges that Pyrophyte is not in compliance with, or is in default or violation of any applicable law, except where such non-compliance, default, or violation would not, individually or in the aggregate, reasonably be expected to have a Pyrophyte Material Adverse Effect.
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(f) As of their respective dates, or, if amended, as of the date of such amendment, which shall be deemed to have superseded such original filing, each form, report, statement, schedule, prospectus, proxy, registration statement and other document required to be filed by Pyrophyte with the SEC on or prior to the Closing Date (collectively, as amended and/or restated since the time of their filing, the “Pyrophyte SEC Documents” and, together with the Sio NewCo SEC Documents, the “SEC Documents”) complied in all material respects with the requirements of the Securities Act and the Exchange Act, and the rules and regulations of the SEC promulgated thereunder, and none of the Pyrophyte SEC Documents, when filed, or if amended prior to the Closing Date (such amended Pyrophyte SEC Documents, the “Amended Pyrophyte SEC Documents”), as of the date of such amendment with respect to those disclosures that were amended, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of Pyrophyte included in the Pyrophyte SEC Documents or, if amended, in the Amended Pyrophyte SEC Documents, comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of such filing and fairly present in all material respects the financial position of Pyrophyte as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments. Pyrophyte has filed each report, statement, schedule, prospectus, and registration statement that Pyrophyte was required to file with the SEC since its initial registration of its Class A ordinary shares, par value $0.0001 per share (“Pyrophyte Class A Ordinary Shares”) with the SEC and through the date hereof. There are no material outstanding or unresolved comments in comment letters from the Staff with respect to any of the Pyrophyte SEC Documents as of the date hereof.
(g) Pyrophyte has not taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does Pyrophyte have any knowledge that any of its creditors intend to initiate involuntary bankruptcy proceedings.
Section 5. Sio Representations and Warranties. Sio represents and warrants to Subscriber that:
(a) Sio (i) is validly existing and in good standing under the laws of its jurisdiction of incorporation, (ii) has the requisite corporate power and authority to own, lease and operate its properties, to carry on its business as it is now being conducted and to enter into and perform its obligations under this Subscription Agreement, and (iii) is duly licensed or qualified to conduct its business and, if applicable, is in good standing under the laws of each jurisdiction (other than its jurisdiction of incorporation) in which the conduct of its business or the ownership of its properties or assets requires such license or qualification, except, with respect to the foregoing clause (iii), where the failure to be so licensed, qualified or in good standing would not reasonably be expected to have a Sio Material Adverse Effect. For purposes of this Subscription Agreement, a “Sio Material Adverse Effect” means an event, change, development, occurrence, condition or effect with respect to Sio and its subsidiaries that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on the business or financial condition of Sio and its subsidiaries, taken together as a whole (on a consolidated basis).
(b) This Subscription Agreement has been duly authorized and validly executed and delivered by Sio, and assuming the due authorization, execution and delivery of the same by Subscriber, Pyrophyte and the Issuer this Subscription Agreement shall constitute the valid and legally binding obligation of Sio, enforceable against Sio in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors generally and by the availability of equitable remedies.
(c) Assuming the accuracy of the representations and warranties of Subscriber set forth in Section 6 of this Subscription Agreement, and the execution and delivery of this Subscription Agreement, the issuance, allotment and sale of the Subscribed Securities hereunder (upon satisfaction or valid waiver of the conditions set forth in Section 2), the compliance by Sio with all of the provisions of this Subscription Agreement and the consummation of the transactions contemplated herein will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of Sio pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which Sio is a party or by which Sio is bound or to which any of the property or assets of Sio is subject, (ii) result in any violation of the provisions of the organizational documents of Sio, or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over Sio or any of its properties that, in the case of clauses (i) and (iii), would reasonably be expected to have a Sio Material Adverse Effect.
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(d) Except for such matters as have not had and would not reasonably be expected to have a Sio Material Adverse Effect, there is no (i) suit, action, proceeding or arbitration before a governmental authority or arbitrator pending, or, threatened against Sio, (ii) judgment, decree, injunction, ruling or order of any governmental authority or arbitrator outstanding against Sio or (iii) written communication from a governmental entity that alleges that Sio is not in compliance or is in default or violation of any applicable law.
(e) Sio is in compliance with all applicable laws and has not received any written communication from a governmental entity that alleges that Sio is not in compliance with, or is in default or violation of any applicable law, except where such non-compliance, default, or violation would not, individually or in the aggregate, reasonably be expected to have a Sio Material Adverse Effect.
(f) Sio has not taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does Sio have any knowledge that any of its creditors intend to initiate involuntary bankruptcy proceedings.
Section 6. Subscriber Representations and Warranties. Subscriber represents and warrants to Sio, Sio NewCo and Pyrophyte that:
(a) If Subscriber is a legal entity, Subscriber (i) has been duly formed and is validly existing and in good standing under the laws of its jurisdiction of formation or incorporation and (ii) has the requisite power and authority to enter into, and perform its obligations under, this Subscription Agreement. If Subscriber is an individual, Subscriber has the legal competence and capacity to enter into and perform its obligations under this Subscription Agreement.
(b) If Subscriber is an entity, this Subscription Agreement has been duly authorized, validly executed and delivered by Subscriber. If Subscriber is an individual, Subscriber’s signature is genuine and the signatory has the legal competence and capacity to execute this Subscription Agreement. Assuming the due authorization, execution and delivery of the same by Sio, Sio NewCo and Pyrophyte, this Subscription Agreement shall constitute the valid and legally binding obligation of Subscriber, enforceable against Subscriber in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors generally and by the availability of equitable remedies.
(c) The execution, delivery and performance of this Subscription Agreement, the purchase of the Subscribed Securities hereunder, the compliance by Subscriber with all of the provisions of this Subscription Agreement and the consummation of the transactions contemplated herein will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of Subscriber pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which Subscriber is a party or by which Subscriber is bound or to which any of the property or assets of Subscriber is subject; (ii) if Subscriber is a legal entity, result in any violation of the provisions of the organizational documents of Subscriber; or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over Subscriber or any of its properties that in the case of clauses (i) and (iii), would have a Subscriber Material Adverse Effect. For purposes of this Subscription Agreement, a “Subscriber Material Adverse Effect” means an event, change, development, occurrence, condition or effect with respect to Subscriber that would reasonably be expected to have a material adverse effect on Subscriber’s ability to consummate the transactions contemplated hereby, including the purchase of the Subscribed Securities.
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(d) The execution, delivery and performance of this Subscription Agreement, the purchase of the Subscribed Securities hereunder, the compliance by Subscriber with all of the provisions of this Subscription Agreement and the consummation of the transactions contemplated herein will not conflict with or result in a breach or violation of any relevant laws and regulations applicable to the issue and purchase of the Subscribed Securities, and the Subscriber will not cease to be in compliance if the Subscribed Securities are acquired.
(e) Subscriber (i) is a person to whom the Subscribed Securities may lawfully be offered and issued in compliance with applicable laws without lodgement, registration or other formality or filing with or by a governmental agency in any jurisdiction (subject to any post-closing filings required under Canadian Securities Laws); (ii) is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act), an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act) or a non-U.S. Person, as defined in Regulation S, in each case, satisfying the applicable requirements set forth on Annex A hereto, and accordingly Subscriber understands that the Subscription meets the exemptions from filing under FINRA Rule 5123(b)(1)(C) or (J), (iii) is acquiring the Subscribed Securities only for its own account and not for the account of others, or in the case of a Subscriber that is located in the United States or is a U.S. Person (as defined in Regulation S), if Subscriber is subscribing for the Subscribed Securities as a fiduciary or agent for one or more investor or trust accounts, each owner of such account is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act), an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act) or such other person that satisfies the requirements of Annex A hereto and Subscriber has sole investment discretion with respect to each such account, and the full power and authority to make the acknowledgements, representations and agreements herein on behalf of each owner of each such account, (iv) is not acquiring the Subscribed Securities with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or the Corporations Act, (v) was not created and is not being used solely to purchase or hold securities as an accredited investor as described in paragraph (m) of the definition of “accredited investor” in NI 45-106, (vi) in the case of a Subscriber located in Canada, is not a U.S. Person (as defined in Regulation S) and is not purchasing the Subscribed Securities on behalf of, or for the account or benefit of, a person located in the United States or that is a U.S. Person (as defined in Regulation S), (vii) is resident in or otherwise subject to applicable securities laws of the jurisdiction set out on the signature page hereto and (viii) has provided Sio NewCo and Pyrophyte with the requested information on Annex A and Annex B (to the extent applicable) following the signature page hereto and the information contained therein is accurate and complete. The Subscriber is not an entity formed for the specific purpose of acquiring the Subscribed Securities, unless such newly formed entity is an entity in which all of the equity owners are “accredited investors” (within the meaning of Rule 501(a) under the Securities Act).
(f) Subscriber is an “accredited investor”, as such term is defined in National Instrument 45-106 – “Prospectus Exemptions” (“NI 45-106”) or, if the Subscriber is resident or otherwise subject to the securities laws of the Province of Ontario, Section 73.3(1) of the Securities Act (Ontario), and has concurrently executed and delivered a Representation Letter (for Accredited Investors) in the form attached as Annex C to this Subscription Agreement and has initialed or placed a check mark in Appendix A to Annex C indicating that the Subscriber satisfies one of the categories of “accredited investor” set forth in such definition (and in the case of a Subscriber that is an “accredited investor” pursuant to paragraphs (j), (k) or (l) in Appendix A to Annex C, a Risk Acknowledgement Form for Individual Accredited Investors attached hereto as Annex D).
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(g) If Subscriber is a resident of or otherwise subject to applicable securities laws of any jurisdiction other than a Province of Canada or the United States, it confirms, represents and warrants that: (i) the Subscriber is knowledgeable of, or has been independently advised as to, the applicable securities laws of the jurisdiction in which the Subscriber is resident (the “International Jurisdiction”) and which would apply to the acquisition of the Subscribed Securities; and (ii) the Subscriber is purchasing the Subscribed Securities pursuant to exemptions from the prospectus or registration requirements or equivalent requirements under applicable securities laws or, if such is not applicable, the Subscriber is permitted to purchase the Subscribed Securities under the applicable securities laws of the International Jurisdiction without the need to rely on any exemptions; (iii) the applicable securities laws of the International Jurisdiction do not require the Issuer to make any filings or seek any approvals of any kind whatsoever from any securities regulator of any kind whatsoever in the International Jurisdiction in connection with the issue and sale or resale of the Subscribed Securities; and (iv) the purchase of the Subscribed Securities by the Subscriber does not trigger: (A) any obligation to prepare and file a prospectus or similar document, or any other report with respect to such purchase in the International Jurisdiction; or (B) any continuous disclosure reporting obligation of the Issuer in the International Jurisdiction; and (C) the Subscriber will, if requested by the Issuer, deliver to the Issuer a certificate or opinion of local counsel from the International Jurisdiction which will confirm the matters referred to in subsections (ii), (iii) and (iv) above to the satisfaction of the Issuer, acting reasonably.
(h) Subscriber acknowledges and agrees that the Subscribed Securities are being offered in a transaction not involving any public offering within the meaning of the Securities Act and that the Subscribed Securities have not been registered under the Securities Act, Canadian Securities Laws or the securities laws of any state, province or territory of Canada, or other jurisdiction and that Sio NewCo is not required to register the Subscribed Securities except as set forth in Section 7 of this Subscription Agreement. Subscriber acknowledges and agrees that the Subscribed Securities may not be offered, resold, transferred, pledged or otherwise disposed of by Subscriber in the United States absent an effective registration statement under the Securities Act or in Canada from four months and a day after Sio Newco becoming a "reporting issuer" in any province or territory of Canada, except (i) in respect of a sale by a U.S. Subscriber, to Sio NewCo or a subsidiary thereof, (ii) in respect of sales to a U.S. Subscriber, pursuant to an applicable exemption from the registration requirements of the Securities Act (including without limitation a private resale pursuant to so called “Section 4(a)1½”), provided that all of the applicable conditions thereof are met, (iii) in an ordinary course pledge such as a broker lien over account property generally, (iv) to non-U.S. Persons pursuant to offers and sales that occur outside the United States within the meaning of Regulation S, and, in each of clauses (i)-(iv), in accordance with any applicable securities laws of the states and other jurisdictions of the United States (including, if applicable, Canada Securities Laws), and that any certificates or account entries representing the Subscribed Securities shall contain a restrictive legend to such effect; or (v) in respect of any sale subject to applicable Canadian Securities Laws, pursuant to an applicable exemption from the prospectus requirements in Canada as provided for in NI 45-106. The Subscriber acknowledges and agrees that the Subscribed Securities may not be offered, resold, transferred, pledged or otherwise disposed of by Subscriber in Canada from four months and a day after Sio NewCo becoming a “reporting issuer” in any province or territory of Canada, except pursuant to an applicable exemption from the prospectus requirements in Canada as provided for in NI 45-106, and that any certificates or account entries representing the Subscribed Securities shall contain a restrictive legend to such effect. Subscriber acknowledges and agrees that the Subscribed Securities will be subject to these securities law transfer restrictions, and as a result of these transfer restrictions, Subscriber may not be able to readily offer, resell, transfer, pledge or otherwise dispose of the Subscribed Securities and may be required to bear the financial risk of an investment in the Subscribed Securities for an indefinite period of time. Subscriber acknowledges and agrees that the Subscribed Securities may not be immediately eligible for offer, resale, transfer, pledge or disposition pursuant to Rule 144 promulgated under the Securities Act, as amended (“Rule 144”), until the end of any applicable holding period. Subscriber acknowledges and agrees that it has been advised to consult legal counsel prior to making any offer, resale, pledge or transfer of any of the Subscribed Securities.
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(i) The funds being used to purchase the Subscribed Securities which will be paid by the Subscriber to Sio NewCo in accordance with the terms hereunder will not represent proceeds of crime for the purposes of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) (the “PCMLTFA”) and the Subscriber and the beneficial subscriber, if any, acknowledges that Sio NewCo may in the future be required by law to disclose the Subscriber’s or beneficial subscriber’s name and other information relating to this Subscription Agreement and the Subscriber’s subscription hereunder, on a confidential basis, pursuant to the PCMLTFA. To the best of its knowledge, none of the subscription funds to be provided by the Subscriber or the beneficial subscriber have been or will be derived from or related to any activity that is deemed criminal under the laws of Canada or any other jurisdiction or are being tendered on behalf of a person or entity who has not been identified to the Subscriber.
(j) Subscriber acknowledges and agrees that the sale and delivery of the Subscribed Securities is subject to applicable requirements under Canadian Securities Laws and is conditional upon such sale being exempt from the requirements of Canadian Securities Laws of the province or territory in which it resides or may be deemed to reside as to the filing and delivery of a prospectus and that the Subscribed Securities have not been qualified under a prospectus under Canadian Securities Laws. The Subscriber acknowledges that Sio NewCo, as of the date hereof, is not a “reporting issuer” in any jurisdiction in Canada, is not expected to become a “reporting issuer” in any jurisdiction of Canada as part of the Transaction (or otherwise) that such Subscribed Securities are subject to statutory resale restrictions under applicable Canadian Securities Laws of the province or territory in which the Subscriber resides or may be deemed to reside, which resale restrictions may apply outside of Canada, and the Subscriber covenants that it will not resell the Subscribed Securities except in compliance with such laws. Accordingly, such Subscribed Securities may be subject to an indefinite “hold period” under Canadian Securities Laws and, absent an exemption, Subscriber will not be able to resell the Subscribed Securities in Canada until expiration of the applicable “hold period” (which “hold period” will not commence to run until the Issuer has become a “reporting issuer” in Canada (which it has no obligation to become)).
(k) Subscriber understands and agrees that, pursuant to the Assumption, Subscriber is purchasing the Subscribed Securities directly from the Issuer. Subscriber further acknowledges that there have not been, and Subscriber hereby agrees that it is not relying on, any statements, representations, warranties, covenants or agreements made to Subscriber by Pyrophyte or Sio NewCo or its subsidiaries (collectively, the “Acquired Companies”), the Placement Agents or any of their respective affiliates or any control persons, officers, directors, employees, partners, agents or representatives, any other party to the Transaction or any other person or entity, expressly or by implication, other than those representations, warranties, covenants and agreements of Sio NewCo and Pyrophyte set forth in this Subscription Agreement.
(l) In the case of a Subscriber located in the United States or that is a U.S. Person (as defined in Regulation S), the Subscriber represents and warrants that its acquisition and holding of such Subscribed Securities will not constitute or result in a non-exempt prohibited transaction under section 406 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), or any applicable similar law.
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(m) In making its decision to purchase the Subscribed Securities, Subscriber has relied solely upon its independent investigation made by Subscriber and the representations of Sio NewCo, and Pyrophyte in Sections 3 and 4 of this Subscription Agreement, respectively. Subscriber acknowledges and agrees that Subscriber has received such information as Subscriber deems necessary in order to make an investment decision with respect to the Subscribed Securities, including with respect to Pyrophyte, the Acquired Companies and the Transaction, and made its own assessment and is satisfied concerning the relevant financial, tax and other economic considerations relevant to Subscriber’s investment in the Subscribed Securities. Without limiting the generality of the foregoing, Subscriber acknowledges that it has reviewed Sio NewCo’s and Pyrophyte’s filings with the SEC. Subscriber represents and agrees that Subscriber and Subscriber’s professional advisor(s), if any, have had the full opportunity to ask such questions, receive such answers and obtain such information as Subscriber and Subscriber’s professional advisor(s), if any, have deemed necessary to make an investment decision with respect to the Subscribed Securities. Subscriber acknowledges that certain information provided by Sio NewCo or Pyrophyte was based on projections, and such projections were prepared based on assumptions and estimates that are inherently uncertain and are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the projections. Subscriber further acknowledges that the information provided to Subscriber was preliminary and subject to change, including in the registration statement and the proxy statement and/or prospectus that will be filed with the SEC in connection with the Transaction (which will include substantial additional information about Pyrophyte, the Acquired Companies and the Transaction and will update and supersede the information previously provided to Subscriber, including without limitation with respect to any financial statements and other financial information (whether historical or in the form of financial forecasts or projections) of the Acquired Companies, which may have been prepared and reviewed solely by each of Pyrophyte and Sio NewCo and their respective officers and employees, as the case may be, and have not been reviewed by the Placement Agents or any outside party or, except as expressly set forth therein, certified or audited by an independent third-party auditor or audit firm.), and that any changes to such information, including, without limitation, any changes based on updated information or changes in terms of the Transaction, shall in no way affect the Subscriber’s obligation to purchase the Subscribed Securities hereunder. Subscriber acknowledges and agrees that none of Pyrophyte, the Acquired Companies or the Placement Agents or any of their respective affiliates or any of such person’s or its affiliate’s control persons, officers, directors, employees or other representatives, legal counsel, financial advisors, accountants or agents (collectively, “Representatives”) has provided Subscriber with any information or advice with respect to the Subscribed Securities nor is such information or advice necessary or desired. None of Pyrophyte, the Acquired Companies, the Placement Agents or any of their respective affiliates or Representatives has made or makes any representation as to Pyrophyte or the Acquired Companies or the quality or value of the Subscribed Securities. In connection with the issuance of the Subscribed Securities to Subscriber, neither the Placement Agents nor any of their respective affiliates has acted as a financial advisor or fiduciary to Subscriber. Subscriber further acknowledges that neither Integral Wealth Securities Limited nor any of its affiliates is acting as a placement agent in connection with the offer and sale of the Subscribed Securities, nor making any recommendation in respect of the Subscribed Securities.
(n) Subscriber became aware of this offering of the Subscribed Securities solely by means of direct contact between Subscriber and Sio NewCo, Pyrophyte or by means of contact from a representative of the Issuer or Pyrophyte, and the Subscribed Securities were offered to Subscriber solely by direct contact between Subscriber and Sio NewCo, Pyrophyte or their respective representatives. Subscriber did not become aware of this offering of the Subscribed Securities, nor were the Subscribed Securities offered to Subscriber, by any other means. Subscriber acknowledges that Sio NewCo represents and warrants that the Subscribed Securities (i) were not offered by any form of general solicitation or general advertising (within the meaning of Regulation D of the Securities Act) and (ii) are not being offered in a manner involving a public offering under, or in a distribution in violation of, the Securities Act, any state securities laws or any Canadian Securities Laws.
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(o) Subscriber acknowledges that it is aware that there are substantial risks incident to the purchase and ownership of the Subscribed Securities, including those set forth in the SEC Documents. Subscriber is able to fend for itself in the transactions contemplated herein and has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Subscribed Securities, and Subscriber has had an opportunity to seek, and has sought, such accounting, legal, business and tax advice as Subscriber has considered necessary to make an informed investment decision. Subscriber (i) in respect of sales to a U.S. Subscriber, is an institutional account as defined in FINRA Rule 4512(c), an “accredited investor” as defined in Rule 501(a) under the Securities Act or, in respect of all Subscribers, is a person that otherwise satisfies the requirements of Annex A hereto, (ii) is a sophisticated investor, experienced in investing in private equity transactions and capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities, and (iii) has exercised independent judgment in evaluating its participation in the purchase of the Subscribed Securities. Subscriber understands and acknowledges that the purchase and sale of the Subscribed Securities hereunder meets, in respect of sales to a U.S. Subscriber, (i) the exemptions from filing under FINRA Rule 5123(b)(1)(A) and (ii) the institutional customer exemption under FINRA Rule 2111(b).
(p) Subscriber has adequately analyzed and fully considered the risks of an investment in the Subscribed Securities and determined that the Subscribed Securities are a suitable investment for Subscriber and that Subscriber is able at this time and in the foreseeable future to bear the economic risk of a total loss of Subscriber’s investment in Sio NewCo. Subscriber acknowledges specifically that a possibility of total loss exists.
(q) Subscriber understands and agrees that no federal, state or provincial agency has passed upon or endorsed the merits of the offering of the Subscribed Securities or made any findings or determination as to the fairness of this investment.
(r) Subscriber is not (i) a person or entity named (a “Person”) on the List of Specially Designated Nationals and Blocked Persons administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) or in any Executive Order issued by the President of the United States and administered by OFAC (“OFAC List”), or a person or entity prohibited by any OFAC sanctions program, (ii) owned or controlled by, or acting on behalf of, a person, that is named on an OFAC List, (iii) organized, incorporated, established, located, resident or born in, or a citizen, national, or the government, including any political subdivision, agency, or instrumentality thereof, of, Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine, or any other country or territory embargoed or subject to substantial trade restrictions by the United States (each a “Sanctioned Country”), (iv) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (iii) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank. Subscriber agrees to provide law enforcement agencies, if requested thereby, such records as required by applicable law, provided that Subscriber is permitted to do so under applicable law (collectively “Sanctions”). If Subscriber is a financial institution subject to the Bank Secrecy Act (31 U.S.C. Section 5311 et seq.) (the “BSA”), as amended by the USA PATRIOT Act of 2001 (the “PATRIOT Act”), and its implementing regulations (collectively, the “BSA/PATRIOT Act”), the Subscriber maintains policies and procedures reasonably designed to comply with applicable obligations under the BSA/PATRIOT Act. To the extent required, Subscriber maintains policies and procedures reasonably designed for the screening of its investors against the OFAC sanctions programs, including the OFAC List. To the extent required, Subscriber maintains policies and procedures reasonably designed to ensure that the funds held by Subscriber and used to purchase the Subscribed Securities were legally derived.
(s) No foreign person (as defined in 31 C.F.R. Part 800.224) in which the national or subnational governments of a single foreign state have a substantial interest (as defined in 31 C.F.R. Part 800.244) will acquire a substantial interest in Sio NewCo as a result of the purchase and sale of Subscribed Securities hereunder such that a declaration to the Committee on Foreign Investment in the United States would be mandatory under 31 C.F.R. Part 800.401, and no foreign person will have control (as defined in 31 C.F.R. Part 800.208) over Pyrophyte from and after the Closing as a result of the purchase and sale of Subscribed Securities hereunder.
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(t) In the case of a Subscriber located in the United States or that is a U.S. Person (as defined in Regulation S), if Subscriber is an employee benefit plan that is subject to Title I of ERISA, a plan, an individual retirement account or other arrangement that is subject to section 4975 of the Code or an employee benefit plan that is a governmental plan (as defined in section 3(32) of ERISA), a church plan (as defined in section 3(33) of ERISA), a non-U.S. plan (as described in section 4(b)(4) of ERISA) or other plan that is not subject to the foregoing but may be subject to provisions under any other federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of ERISA or the Code, or an entity whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement (each, a “Plan”) subject to the fiduciary or prohibited transaction provisions of ERISA or section 4975 of the Code, Subscriber represents and warrants that (i) it has not relied on Sio NewCo, Pyrophyte or any of their respective affiliates (the “Transaction Parties”) for investment advice or as the Plan’s fiduciary with respect to its decision to acquire and hold the Subscribed Securities, and none of the Transaction Parties shall at any time be relied upon as the Plan’s fiduciary with respect to any decision to acquire, continue to hold or transfer the Subscribed Securities and (ii) the decision to invest in the Subscribed Securities has been made at the recommendation or direction of an “independent fiduciary” (“Independent Fiduciary”) within the meaning of U.S. Code of Federal Regulations 29 C.F.R. section 2510.3 21(c), as amended from time to time (the “Fiduciary Rule”) who is (1) independent of the Transaction Parties; (2) is capable of evaluating investment risks independently, both in general and with respect to particular transactions and investment strategies (within the meaning of the Fiduciary Rule); (3) is a fiduciary (under ERISA and/or section 4975 of the Code) with respect to Subscriber’s investment in the Subscribed Securities and is responsible for exercising independent judgment in evaluating the investment in the Subscribed Securities; and (4) is aware of and acknowledges that (A) none of the Transaction Parties is undertaking to provide impartial investment advice, or to give advice in a fiduciary capacity, in connection with the purchaser’s or transferee’s investment in the Subscribed Securities, and (B) the Transaction Parties have a financial interest in the purchaser’s investment in the Subscribed Securities on account of the fees and other remuneration they expect to receive in connection with transactions contemplated by this Subscription Agreement.
(u) Subscriber has and, when required to deliver payment at Closing pursuant to Section 2, Subscriber will have sufficient funds to pay the Purchase Price.
(v) Subscriber acknowledges that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, firm or corporation (including, without limitation, Sio NewCo, Pyrophyte, the Placement Agents, or any of their respective affiliates or any of its or their respective control persons, officers, directors, employees, agents or representatives), other than the representations and warranties of Sio NewCo and Pyrophyte contained in Sections 3 and 4 of this Subscription Agreement, respectively, in making its investment or decision to invest in Sio NewCo. Subscriber agrees that none of (i) any Other Subscriber pursuant to any Other Subscription Agreement or any other agreement related to the private placement of the Subscribed Securities (including the controlling persons, officers, directors, partners, agents or employees of any such Subscriber) nor (ii) Pyrophyte, the Acquired Companies, the Placement Agents or any of their respective affiliates or Representatives, shall be liable (including, without limitation, for or with respect to any losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses or disbursements incurred by Subscriber, Sio NewCo, Pyrophyte or any other person or entity), whether in contract, tort or otherwise, or have any liability or obligation to Subscriber or any Other Subscriber, or any person claiming through Subscriber or any Other Subscriber, pursuant to this Subscription Agreement or related to the private placement of the Subscribed Securities, the negotiation hereof or the subject matter hereof, or the transactions contemplated hereby, for any action heretofore or hereafter taken or omitted to be taken by any of the foregoing in connection with the purchase of the Subscribed Securities.
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(w) No broker or finder has acted on behalf of the Subscriber in connection with the sale of the Subscribed Securities pursuant to this Subscription Agreement in such a way as to create any liability Sio NewCo or Pyrophyte.
(x) Subscriber hereby agrees that neither it, nor any person or entity acting on its behalf or pursuant to any understanding with the Subscriber, shall, directly or indirectly, engage in any hedging activities, derivative transactions or execute any Short Sale or other transaction that would have a similar effect, with respect to the securities of Sio NewCo or Pyrophyte prior to the Closing or the earlier termination of this Subscription Agreement in accordance with its terms (other than pledges in the ordinary course of business as part of prime brokerage arrangements). “Short Sales” shall include, without limitation, all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act and all types of direct and indirect stock pledges (other than pledges in the ordinary course of business as part of prime brokerage arrangements), forward sale contracts, options, puts, calls, swaps and similar arrangements (including on a total return basis), and sales and other transactions through non-U.S. broker dealers or foreign regulated brokers.
(y) Except as expressly disclosed in a Schedule 13D or Schedule 13G (or amendments thereto) filed by Subscriber with the SEC with respect to the beneficial ownership of Pyrophyte’s outstanding securities prior to the date of this Subscription Agreement, Subscriber is not currently (and at all times through Closing will refrain from being or becoming) a member of a “group” (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of equity securities of Pyrophyte or Sio NewCo (within the meaning of Rule 13d-5(b)(1) under the Exchange Act).
(z) Subscriber will not acquire a substantial interest (as defined in 31 C.F.R. Part 800.244) in Pyrophyte or Sio NewCo as a result of the purchase and sale of the Subscribed Securities.
(aa) Subscriber acknowledges its obligations under applicable securities laws with respect to the treatment of non-public information relating to Sio NewCo and Pyrophyte.
(bb) Subscriber acknowledges that (i) Pyrophyte, Sio NewCo and the Placement Agents, and any of their respective affiliates, control persons, officers, directors, employees, agents or representatives currently may have, and later may come into possession of, information regarding Pyrophyte and Sio NewCo that is not known to Subscriber and that may be material to a decision to purchase the Subscribed Securities, (ii) Subscriber has determined to purchase the Subscribed Securities notwithstanding its lack of knowledge of such information, and (iii) none of Pyrophyte, Sio NewCo, or the Placement Agents or any of their respective affiliates, control persons, officers, directors, employees, agents or representatives shall have liability to Subscriber, and Subscriber hereby to the extent permitted by law waives and releases any claims it may have against Pyrophyte, Sio NewCo, the Placement Agents and their respective affiliates, control persons, officers, directors, employees, agents or representatives, with respect to the nondisclosure of such information.
(cc) The Subscriber acknowledges and agrees that (a) the Placement Agents are acting solely in their capacity as placement agents with respect to the issuance and sale of the Subscribed Securities pursuant to this Subscription Agreement and the Other Subscription Agreements and no Placement Agent is acting as an underwriter or in any other capacity and is not and shall not be construed as a fiduciary to the Subscriber, Pyrophyte or any other person or entity in connection with this offering of the Subscribed Securities or the Transaction; (b) the Placement Agents have not made and will not make any representation or warranty, whether express or implied, of any kind or character to the Subscriber and has not provided any advice or recommendation in connection with this offering of the Subscribed Securities or the Transaction; (c) the Placement Agents will have no responsibility with respect to (i) any representations, warranties or agreements made by any person or entity under or in connection with the offering of the Subscribed Securities, the Transaction or any of the documents furnished pursuant thereto or in connection therewith or the execution, legality, validity or enforceability (with respect to any person) of any thereof, or (ii) the business, affairs, financial condition, operations, properties or prospects of, or any other matter concerning Pyrophyte, this offering of the Subscribed Securities, or the Transaction.
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(dd) The Subscriber hereby acknowledges and is aware that the Placement Agents are acting as Sio NewCo’s placement agents and Pyrophyte’s financial advisors.
(ee) The Subscriber hereby acknowledges and is aware that UBS acted as an underwriter in Pyrophyte’s initial public offering (“IPO”), for which role, UBS received compensation pursuant to the Underwriting Agreement, dated as of October 26, 2021, by and between Pyrophyte and UBS, as representative of the underwriters named therein (“Underwriting Agreement”), and pursuant to which, should a Transaction be consummated, UBS, as an IPO underwriter, will be entitled to receive its portion of the deferred underwriting compensation from Pyrophyte as provided in the Underwriting Agreement.
(ff) Subscriber acknowledges and agrees that no Placement Agent shall have any liability or obligation (including without limitation, for or with respect to any losses, claims, damages, obligations, penalties, judgments, awards, liabilities, costs, expenses or disbursements incurred by the Subscriber, Sio NewCo, Pyrophyte or any other person or entity), whether in contract, tort, under federal or state securities laws or otherwise, to the Subscriber, or to any person claiming through the Subscriber, for any action heretofore or hereafter taken or omitted to be taken by any of them in respect of this offering of the Subscribed Securities or the Transaction. Subscriber agrees not to commence any litigation or bring any claim against the Placement Agents in any court or any other forum which relates to, may arise out of, or is in connection with, the Subscription. This undertaking is given freely and after obtaining independent legal advice.
Section 7. Registration Rights.
(a) Sio NewCo agrees that, within thirty (30) calendar days following the Closing Date, the Issuer will file with the SEC (at the Issuer’s sole cost and expense) a registration statement (the “Registration Statement”) registering the resale by Subscriber of the Subscribed Securities (the “Registrable Securities”), and the Issuer shall use its commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable after the filing thereof, but in any event no later than sixty (60) calendar days after the Closing Date (the “Effectiveness Deadline”); provided, that the Effectiveness Deadline shall be extended to one hundred twenty (120) calendar days after the Closing Date if the Registration Statement is reviewed by, and comments thereto are provided from, the SEC; provided, further, that the Issuer shall have the Registration Statement declared effective within ten (10) Business Days after the date the Issuer is notified (orally or in writing, whichever is earlier) by the staff of the SEC that the Registration Statement will not be “reviewed” or will not be subject to further review; provided, further, that (i) if the Effectiveness Deadline falls on a Saturday, Sunday or other day that the SEC is closed for business, the Effectiveness Deadline shall be extended to the next Business Day on which the SEC is open for business and (ii) if the SEC is closed for operations due to a government shutdown, the Effectiveness Deadline shall be extended by the same number of Business Days that the SEC remains closed for. Upon Subscriber’s timely request, the Issuer shall provide a draft of the Registration Statement to the Subscriber for review at least two (2) Business Days in advance of the date of filing the Registration Statement with the SEC (the “Filing Date”), and Subscriber shall provide any comments on the Registration Statement to the Issuer no later than the day immediately preceding the Filing Date. Unless otherwise agreed to in writing by the Subscriber prior to the filing of the Registration Statement, the Subscriber shall not be identified as a statutory underwriter in the Registration Statement; provided, that if the SEC requests that Subscriber be identified as a statutory underwriter in the Registration Statement, Subscriber will have the opportunity to withdraw from the Registration Statement upon its prompt written request to the Issuer. Notwithstanding the foregoing, if the SEC prevents the Issuer from including any or all of the shares proposed to be registered under the Registration Statement due to limitations on the use of Rule 415 of the Securities Act for the resale of the Registrable Securities by the applicable shareholders or otherwise, such Registration Statement shall register for resale such number of Registrable Shares which is equal to the maximum number of Registrable Securities as is permitted by the SEC. In such event, the number of Registrable Securities or other shares to be registered for each selling shareholder named in the Registration Statement shall be reduced pro rata among all such selling shareholders and as promptly as practicable after being permitted to register additional shares under Rule 415 under the Securities Act, the Issuer shall amend the Registration Statement or file one or more new Registration Statement(s) (such amendment or new Registration Statement shall also be deemed to be a “Registration Statement” hereunder) to register such additional Registrable Securities and cause such amendment or Registration Statement(s) to become effective as promptly as practicable after the filing thereof.
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(b) Sio NewCo agrees that, except for such times as the Issuer is permitted hereunder to suspend the use of the prospectus forming part of a Registration Statement, the Issuer will use its commercially reasonable efforts to cause such Registration Statement to remain effective with respect to Subscriber, including to prepare and file any post-effective amendment to such Registration Statement or a supplement to the related prospectus such that the prospectus will not include any untrue statement or a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, until the earlier of (i) two (2) years from the effective date of the Registration Statement, (ii) the date on which Subscriber ceases to hold any Registrable Securities or (iii) on the first date on which the Subscriber can sell all of its Registrable Securities (or shares received in exchange therefor) under Rule 144 of the Securities Act without limitation as to the manner of sale or the amount of such securities that may be sold and without the requirement for the Issuer to be in compliance with the current public information required under Rule 144(c)(1) (or Rule 144(i)(2), if applicable) and the Issuer shall use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement as soon as reasonably practicable. For so long as the Registration Statement shall remain effective, the Issuer will use commercially reasonable efforts to file all reports, and provide all customary and reasonable cooperation, necessary to enable Subscriber to resell the Registrable Securities pursuant to the Registration Statement, qualify the Registrable Securities for listing on the NYSE and update or amend the Registration Statement as necessary to include Registrable Securities. The Issuer will use its commercially reasonable efforts to, for so long as the Subscriber holds Registrable Securities, make and keep public information available (as those terms are understood and defined in Rule 144) and file with the SEC in a timely manner all reports and other documents required of the Issuer under the Exchange Act so long as the Issuer remains subject to such requirements to enable the Subscriber to resell the Registrable Securities pursuant to Rule 144. The Subscriber agrees to disclose its beneficial ownership, as determined in accordance with Rule 13d-3 of the Exchange Act, of Registrable Securities to the Issuer (or its successor) upon request to assist the Issuer in making the determination described above.
(c) The Issuer’s obligations to include the Registrable Securities in the Registration Statement are contingent upon Subscriber furnishing in writing to the Issuer a completed selling shareholder questionnaire in customary form that contains such information regarding Subscriber, the securities of the Issuer held by Subscriber and the intended method of disposition of the Registrable Securities as shall be reasonably requested by the Issuer to effect the registration of the Registrable Securities, and Subscriber shall execute such documents in connection with such registration as the Issuer may reasonably request that are customary of a selling shareholder in similar situations, including providing that the Issuer shall be entitled to postpone and suspend the effectiveness or use of the Registration Statement (i) during any customary blackout or similar period or as permitted hereunder and (ii) as may be necessary in connection with the preparation and filing of any post-effective amendments to the Registration Statement to address any financial statement updates required by Item 8.A of Form 20-F; provided, that the Issuer shall request such information from Subscriber, including the selling shareholder questionnaire, at least five (5) Business Days prior to the anticipated Filing Date of the Registration Statement; and provided, further, under no circumstances shall Subscriber be required to sign any type of lock-up agreement. In the case of the registration effected by the Issuer pursuant to this Subscription Agreement, the Issuer shall, upon reasonable request, inform Subscriber as to the status of such registration. Subscriber shall not be entitled to use the Registration Statement for an underwritten offering of Registrable Securities. Notwithstanding anything to the contrary contained herein, the Issuer may delay or postpone filing of such Registration Statement, and from time to time require Subscriber not to sell under the Registration Statement or suspend the use of any such Registration Statement if it determines in good faith that in order for the registration statement to not contain a material misstatement or omission, an amendment thereto would be needed, or if such filing or use could materially affect a bona fide business or financing transaction of the Issuer or could require premature disclosure of information that would materially adversely affect the Issuer (each such circumstance, a “Suspension Event”); provided, that, (w) the Issuer shall not so delay filing or so suspend the use of the Registration Statement for a period of more than sixty (60) consecutive days or more than three (3) times in any three hundred sixty (360) day period, and (x) the Issuer shall use commercially reasonable efforts to make such registration statement available for the sale by the Subscriber of such securities as soon as practicable thereafter.
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(d) Upon receipt of any written notice from the Issuer of the happening of (i) an issuance by the SEC of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for such purpose, which notice shall be given no later than three (3) Business Days from the date of such event, (ii) any Suspension Event during the period that the Registration Statement is effective, which notice shall be given no later than three (3) Business Days from the date of such Suspension Event, or (iii) or if as a result of a Suspension Event the Registration Statement or related prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made (in the case of the prospectus) not misleading, the Subscriber agrees that (1) it will immediately discontinue offers and sales of the Registrable Securities under the Registration Statement until the Subscriber receives copies of a supplemental or amended prospectus (which the Issuer agrees to promptly prepare) that corrects the misstatement(s) or omission(s) referred to above and receives notice that any post-effective amendment has become effective or supplement has been filed or unless otherwise notified by the Issuer that it may resume such offers and sales, and (2) it will maintain the confidentiality of, and will not use, any information included in such written notice delivered by the Issuer unless otherwise required by law, subpoena or regulatory request or requirement. If so directed by the Issuer, the Subscriber will deliver to the Issuer or, in the Subscriber’s sole discretion destroy, all copies of the prospectus covering the Registrable Securities in the Subscriber’s possession; provided, however, that this obligation to deliver or destroy all copies of the prospectus covering the Registrable Securities shall not apply (w) to the extent the Subscriber is required to retain a copy of such prospectus (A) in order to comply with applicable legal, regulatory, self-regulatory or professional requirements or (B) in accordance with a bona fide pre-existing document retention policy or (x) to copies stored electronically on archival servers as a result of automatic data back-up.
(e) Subscriber may deliver written notice (an “Opt-Out Notice”) to the Issuer requesting that Subscriber not receive notices from the Issuer otherwise required by this Section 7; provided, however, that Subscriber may later revoke any such Opt-Out Notice in writing. Following receipt of an Opt-Out Notice from Subscriber (unless subsequently revoked), (i) the Issuer shall not deliver any such notices to Subscriber and Subscriber shall no longer be entitled to the rights associated with any such notice and (ii) each time prior to Subscriber’s intended use of an effective Registration Statement, Subscriber will notify the Issuer in writing at least two (2) Business Days in advance of such intended use, and if a notice of a Suspension Event was previously delivered (or would have been delivered but for the provisions of this Section 7(e)) and the related suspension period remains in effect, the Issuer will so notify Subscriber, within one (1) Business Day of Subscriber’s notification to the Issuer, by delivering to Subscriber a copy of such previous notice of Suspension Event, and thereafter will provide Subscriber with the related notice of the conclusion of such Suspension Event promptly following its availability
(f) For purposes of this Section 7 of this Subscription Agreement, (i) “Registrable Securities” shall mean, as of any date of determination, the Subscribed Securities (as defined in the recitals to this Subscription Agreement) and any other equity security issued or issuable with respect to the Registrable Securities by way of share split, dividend, distribution, recapitalization, merger, exchange, or replacement, and (ii) “Subscriber” shall include any affiliate of the Subscriber to which the rights under this Section 7 shall have been duly assigned.
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(g) Sio NewCo shall indemnify and hold harmless Subscriber (to the extent Subscriber is a seller under the Registration Statement), the officers, directors, members, managers, partners, agents, investment advisors and employees of Subscriber, each person who controls Subscriber (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members, managers, partners, agents and employees of each such controlling person, to the fullest extent permitted by applicable law, from and against any and all reasonable out-of-pocket losses, claims, damages, liabilities, costs (including, without limitation, reasonable and documented attorneys’ fees) and expenses (collectively, “Losses”) that arise out of or are based upon any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any prospectus included in the Registration Statement or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to the extent that such untrue statements, alleged untrue statements, omissions or alleged omissions are based upon information regarding Subscriber furnished in writing to Sio NewCo by or on behalf of Subscriber expressly for use therein or that Subscriber has omitted a material fact from such information. Sio NewCo shall notify Subscriber promptly of the institution, threat or assertion of any proceeding arising from or in connection with the transactions contemplated by this Section 7 of which Sio NewCo is aware. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of an indemnified party and shall survive the transfer of the Registrable Securities by Subscriber. Notwithstanding the forgoing, Sio NewCo’s indemnification obligations shall not apply to amounts paid in settlement of any Losses or action if such settlement is effected without the prior written consent of the Issuer (which consent shall not be unreasonably withheld or delayed).
(h) Subscriber shall, severally and not jointly with any Other Subscriber in the offering contemplated by this Subscription Agreement or selling shareholder named in the Registration Statement, indemnify and hold harmless Sio NewCo, its directors, officers, members, managers, partners, agents and employees, each person who controls Sio NewCo (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, members, managers, partners, agents or employees of such controlling persons, to the fullest extent permitted by applicable law, from and against all Losses arising out of or based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any prospectus included in the Registration Statement, or any form of prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus, or any form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading to the extent, but only to the extent, that such untrue statements, alleged untrue statements, omissions or alleged omissions are based upon information regarding Subscriber furnished in writing to Sio NewCo by or on behalf of Subscriber expressly for use therein. In no event shall the liability of Subscriber be greater in amount than the dollar amount of the net proceeds received by Subscriber upon the sale of the Registrable Securities giving rise to such indemnification obligation. Notwithstanding the forgoing, Subscriber’s indemnification obligations shall not apply to amounts paid in settlement of any Losses or action if such settlement is effected without the prior written consent of Subscriber (which consent shall not be unreasonably withheld or delayed).
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(i) Any person or entity entitled to indemnification herein shall (A) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s or entity’s right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (B) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld, conditioned or delayed). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement), which settlement shall not include a statement or admission of fault and culpability on the part of such indemnified party, and which settlement shall include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.
(j) The indemnification provided for under this Subscription Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person or entity of such indemnified party and shall survive the transfer of the Registrable Securities purchased pursuant to this Subscription Agreement.
(k) If the indemnification provided under this Section 7 from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations; provided, however, that the liability of the Subscriber shall be limited to the net proceeds received by the Subscriber from the sale of Registrable Securities giving rise to such indemnification obligation. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by (or not made by, in the case of an omission), or relates to information supplied by (or not supplied by, in the case of an omission), such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in this Section 7, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Section 7(k) from any person or entity who was not guilty of such fraudulent misrepresentation. Notwithstanding anything to the contrary herein, in no event will any party be liable for consequential, special, exemplary or punitive damages in connection with this Subscription Agreement or the transactions contemplated hereby.
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Section 8. Termination. This Subscription Agreement shall terminate and be void and of no further force and effect, and all rights and obligations of the parties hereunder shall terminate without any further liability on the part of any party in respect thereof, upon the earlier of (a) such date and time as the Business Combination Agreement is terminated in accordance with its terms and (b) the mutual written agreement of the parties hereto to terminate this Subscription Agreement; provided, that nothing herein will relieve any party from liability for any willful breach hereof prior to the time of termination, and each party will be entitled to any remedies at law or in equity to recover losses, liabilities or damages arising from such breach. Sio NewCo shall notify Subscriber of the termination of the Business Combination Agreement promptly after the termination thereof. Upon the termination hereof in accordance with this Section 8, any monies paid by Subscriber to Sio NewCo in connection herewith shall promptly (and in any event within two (2) Business Days) be returned in full to Subscriber by wire transfer of U.S. dollars in immediately available funds to the account specified by Subscriber, without any deduction for or on account of any tax withholding, charges or set-off.
Section 9. Trust Account Waiver. Subscriber hereby acknowledges that, as described in Pyrophyte’s prospectus relating to its IPO dated October 26, 2021 available at www.sec.gov, Pyrophyte has established a trust account (the “Trust Account”) containing the proceeds of the IPO and from certain private placements occurring simultaneously with the IPO (including interest accrued from time to time thereon) for the benefit of Pyrophyte, its public shareholders and certain other parties (including the underwriters of the IPO), and that, except as otherwise described in such prospectus, Pyrophyte may disburse monies from the Trust Account only to (x) its public shareholders in the event they elect to have their Pyrophyte Class A Ordinary Shares redeemed for cash in connection with the consummation of Pyrophyte’s initial business combination, an amendment to its amended and restated memorandum and articles of association to extend the deadline by which Pyrophyte must consummate its initial business combination, or Pyrophyte’s failure to consummate an initial business combination by such deadline, (y) pay certain taxes from time to time, or (z) Pyrophyte after or concurrently with the consummation of its initial business combination. For and in consideration of Pyrophyte entering into this Subscription Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Subscriber, on behalf of itself and its affiliates, hereby (a) agrees that it does not now and shall not at any time hereafter have any right, title, interest or claim of any kind in or to any assets held in the Trust Account, and shall not make any claim against the Trust Account, arising out or as a result of, in connection with or relating in any way to this Subscription Agreement, and regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability (any and all such claims are collectively referred to hereafter as the “Released Claims”), (b) irrevocably waives any Released Claims that it may have against the Trust Account now or in the future as a result of, or arising out of, this Subscription Agreement, and (c) will not seek recourse against the Trust Account as a result of, in connection with or relating in any way to this Subscription Agreement; provided, however, that nothing in this Section 9 shall (i) serve to limit or prohibit Subscriber’s right to pursue a claim against Pyrophyte for legal relief against assets held outside the Trust Account (so long as such claim would not affect Pyrophyte’s ability to fulfill its obligation to effectuate any redemption right with respect to any securities of Pyrophyte), for specific performance or other equitable relief, (ii) serve to limit or prohibit any claims that the Subscriber may have in the future against Pyrophyte’s assets or funds that are not held in the Trust Account (including any funds that have been released from the Trust Account and any assets that have been purchased or acquired with any such funds) (so long as such claim would not affect Pyrophyte’s ability to fulfill its obligation to effectuate any redemption right with respect to any securities of Pyrophyte) or (iii) be deemed to limit Subscriber’s right to distributions from the Trust Account in accordance with Pyrophyte’s amended and restated memorandum and articles of association in respect of any redemptions by Subscriber in respect of Pyrophyte Class A Ordinary Shares acquired by any means other than pursuant to this Subscription Agreement. Subscriber acknowledges and agrees that such irrevocable waiver is a material inducement to Pyrophyte to enter into this Subscription Agreement, and further intends and understands such waiver to be valid, binding, and enforceable against Subscriber in accordance with applicable law. Notwithstanding anything in this Subscription Agreement to the contrary, the provisions of this Section 9 shall survive termination of this Subscription Agreement.
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Section 10. Miscellaneous.
(a) All notices, requests, demands, claims, and other communications hereunder shall be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given (i) when delivered personally to the recipient, (ii) when sent by electronic mail, with no mail undeliverable or other rejection notice, on the date of transmission to such recipient, if sent on a Business Day prior to 5:00 p.m. New York City time, or on the Business Day following the date of transmission, if sent on a day that is not a Business Day or after 5:00 p.m. New York City time on a Business Day, (iii) one (1) Business Day after being sent to the recipient via overnight mail by reputable overnight courier service (charges prepaid), or (iv) four (4) Business Days after being mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, and, in each case, addressed to the intended recipient at its address specified on the signature page hereof or to such electronic mail address or address as subsequently modified by written notice given in accordance with this Section 10(a). A courtesy electronic copy of any notice sent by methods (i), (iii), or (iv) above shall also be sent to the recipient via electronic mail if an electronic mail address is provided in the applicable signature page hereof or to an electronic mail address as subsequently modified by written notice given in accordance with this Section 10(a).
(b) Subscriber acknowledges that Sio NewCo, Pyrophyte, the Placement Agents and others will rely on the acknowledgments, understandings, agreements, representations and warranties of Subscriber contained in this Subscription Agreement. Prior to the Closing, Subscriber agrees to promptly notify Sio NewCo, Pyrophyte and the Placement Agents if it becomes aware that any of the acknowledgments, understandings, agreements, representations and warranties of Subscriber set forth herein are no longer accurate in all material respects. Prior to the Closing, each of Sio NewCo and Pyrophyte agrees to promptly notify Subscriber and the Placement Agents if it becomes aware that any of their respective acknowledgments, understandings, agreements, representations and warranties set forth herein are no longer accurate in all material respects.
(c) Each of Sio NewCo Pyrophyte, the Placement Agents and Subscriber is irrevocably authorized to produce this Subscription Agreement or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.
(d) Each party hereto shall pay all of its own expenses in connection with this Subscription Agreement and the transactions contemplated herein.
(e) Sio NewCo shall be responsible for the fees of its transfer agent, stamp taxes, if applicable, and all of the DTC’s fees associated with the issuance of the Registrable Securities.
(f) Subscriber understands and agrees that (i) no disclosure or offering document has been prepared by the Placement Agents or any of their respective affiliates in connection with the offer and sale of the Registrable Securities; (ii) the Placement Agents and their respective directors, officers, employees, representatives and controlling persons have made no independent investigation with respect to Pyrophyte, Sio NewCo, the Transactions or the Registrable Securities or the accuracy, completeness or adequacy of any information supplied to Subscriber by Sio NewCo or Pyrophyte; and (iii) in connection with the issue and purchase of the Registrable Securities, the Placement Agents have not acted as the Subscriber’s financial advisor, tax advisor or fiduciary.
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(g) Neither this Subscription Agreement nor any rights that may accrue to Subscriber hereunder (other than the Registrable Securities acquired hereunder and the rights set forth in Section 7) may be transferred or assigned by Subscriber. Neither this Subscription Agreement nor any rights that may accrue to Sio NewCo or Pyrophyte hereunder may be transferred or assigned by Pyrophyte (provided, that, for the avoidance of doubt, Sio NewCo or Pyrophyte may transfer its rights hereunder solely in connection with the consummation of the Transaction and the Assumption). Notwithstanding the foregoing, Subscriber may assign its rights and obligations under this Subscription Agreement to one or more of its affiliates (including other investment funds or accounts managed or advised by the investment manager who acts on behalf of Subscriber) or, with Sio NewCo’s prior written consent, to another person; provided, that in the case of any such assignment, the assignee(s) shall become a Subscriber hereunder and have the rights and obligations and be deemed to make the representations and warranties of Subscriber provided for herein to the extent of such assignment and provided further that no such assignment shall relieve the assigning Subscriber of its obligations hereunder if any such assignee fails to perform such obligations, unless Sio NewCo has given its prior written consent to such relief.
(h) All the agreements, representations and warranties made by each party hereto in this Subscription Agreement shall survive the Closing.
(i) Sio NewCo may request from Subscriber such additional information as Sio NewCo may reasonably deem necessary to evaluate the eligibility of Subscriber to acquire the Subscribed Securities and to register the Registrable Securities for resale, and Subscriber shall promptly provide such information as may be reasonably requested, to the extent readily available and to the extent consistent with its internal policies and procedures; provided, that Sio NewCo agrees to keep any such information provided by Subscriber confidential, except (A) as required by the federal securities laws, rules or regulations and (B) to the extent such disclosure is required by other laws, rules or regulations, at the request of the staff of the SEC or other regulatory agency or under the regulations of the Stock Exchange. Subscriber acknowledges that the Issuer and Pyrophyte may file a form of this Subscription Agreement with the SEC as an exhibit to a current or periodic report of the Issuer and/or Pyrophyte or a registration statement of the Issuer and/or Pyrophyte.
(j) This Subscription Agreement may not be amended, modified or waived except by an instrument in writing, signed by each of the parties hereto.
(k) This Subscription Agreement constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof.
(l) Except as otherwise provided herein, this Subscription Agreement is intended for the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives, and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person. Except as set forth in Section 7, Section 10(b), Section 10(c), Section 10(f) and this Section 10(l) with respect to the persons specifically referenced therein, this Subscription Agreement shall not confer any rights or remedies upon any person other than the parties hereto, and their respective successors and assigns, and the parties hereto acknowledge that such persons so referenced are third party beneficiaries of this Subscription Agreement for the purposes of, and to the extent of, the rights granted to them, if any, pursuant to the applicable provisions.
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(m) Each of Sio NewCo, Pyrophyte and Subscriber further acknowledge and agree that the Placement Agents are a third-party beneficiary of the representations and warranties of Sio NewCo, Pyrophyte and the Subscriber contained in this Subscription Agreement.
(n) The parties hereto acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Subscription Agreement were not performed in accordance with their specific terms or were otherwise breached and that money or other legal remedies would not be an adequate remedy for such damage. It is accordingly agreed that the parties shall be entitled to equitable relief, including in the form of an injunction or injunctions to prevent breaches or threatened breaches of this Subscription Agreement and to enforce specifically the terms and provisions of this Subscription Agreement, this being in addition to any other remedy to which such party is entitled at law, in equity, in contract, in tort or otherwise. The parties hereto further acknowledge and agree: (x) to waive any requirement for the security or posting of any bond in connection with any such equitable remedy; (y) not to assert that a remedy of specific enforcement pursuant to this Section 10(n) is unenforceable, invalid, contrary to applicable law or inequitable for any reason; and (z) to waive any defenses in any action for specific performance, including the defense that a remedy at law would be adequate.
(o) If any provision of this Subscription Agreement shall be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Subscription Agreement shall not in any way be affected or impaired thereby and shall continue in full force and effect.
(p) No failure or delay by a party hereto in exercising any right, power or remedy under this Subscription Agreement, and no course of dealing between the parties hereto, shall operate as a waiver of any such right, power or remedy of such party. No single or partial exercise of any right, power or remedy under this Subscription Agreement by a party hereto, nor any abandonment or discontinuance of steps to enforce any such right, power or remedy, shall preclude such party from any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The election of any remedy by a party hereto shall not constitute a waiver of the right of such party to pursue other available remedies. No notice to or demand on a party not expressly required under this Subscription Agreement shall entitle the party receiving such notice or demand to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the party giving such notice or demand to any other or further action in any circumstances without such notice or demand.
(q) This Subscription Agreement may be executed and delivered in one or more counterparts (including by electronic mail, in .pdf or other electronic submission) and by different parties in separate counterparts, with the same effect as if all parties hereto had signed the same document. All counterparts so executed and delivered shall be construed together and shall constitute one and the same agreement.
(r) This Subscription Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the principles of conflicts of laws that would otherwise require the application of the law of any other state.
(s) EACH PARTY AND ANY PERSON ASSERTING RIGHTS AS A THIRD PARTY BENEFICIARY HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OR RELATED TO THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY OR ANY AFFILIATE OF ANY OTHER SUCH PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. THE PARTIES AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS SUBSCRIPTION AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS SUBSCRIPTION AGREEMENT.
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(t) The parties agree that all disputes, legal actions, suits and proceedings arising out of or relating to this Subscription Agreement must be brought exclusively in the Court of Chancery of the State of Delaware and any state appellate court therefrom within the State of Delaware (or, if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, any federal court within the State of Delaware or, in the event each federal court within the State of Delaware declines to accept jurisdiction over a particular matter, any state court within the State of Delaware) (collectively the “Designated Courts”). Each party hereby consents and submits to the exclusive jurisdiction of the Designated Courts. No legal action, suit or proceeding with respect to this Subscription Agreement may be brought in any other forum. Each party hereby irrevocably waives all claims of immunity from jurisdiction, and any objection which such party may now or hereafter have to the laying of venue of any suit, action or proceeding in any Designated Court, including any right to object on the basis that any dispute, action, suit or proceeding brought in the Designated Courts has been brought in an improper or inconvenient forum or venue. Each of the parties also agrees that delivery of any process, summons, notice or document to a party hereof in compliance with Section 10(a) of this Subscription Agreement shall be effective service of process for any action, suit or proceeding in a Designated Court with respect to any matters to which the parties have submitted to jurisdiction as set forth above.
(u) This Subscription Agreement may only be enforced against, and any claim, action, suit or other legal proceeding based upon, arising out of, or related to this Subscription Agreement, or the negotiation, execution or performance of this Subscription Agreement, may only be brought against the entities that are expressly named as parties hereto.
(v) Pyrophyte shall, by 9:00 a.m., New York City time, on the first (1st) Business Day immediately following the date of this Subscription Agreement, file with the SEC a Current Report on Form 8-K (the “Disclosure Document”) disclosing all material terms of this Subscription Agreement and the Other Subscription Agreements and the transactions contemplated hereby and thereby and the Transaction, and including as exhibits to the Disclosure Document, the form of this Subscription Agreement and the Other Subscription Agreement (in each case, without redaction). Notwithstanding anything in this Subscription Agreement to the contrary, neither Sio NewCo nor Pyrophyte shall publicly disclose the name of Subscriber or any of its affiliates or advisers, or include the name of Subscriber or any of its affiliates or advisers (i) in any press release, without the prior written consent of Subscriber and (ii) any filing with the SEC or any regulatory agency or trading market, without the prior written consent of Subscriber, except (A) as required by the federal securities laws, rules or regulations and (B) to the extent such disclosure is required by other laws, rules or regulations, at the request of the staff of the SEC or other regulatory agency or under the regulations of the Stock Exchange, in which case of clause (A) or (B), Sio NewCo or Pyrophyte, as the case may be, shall provide the Subscriber with prior written notice (including by e-mail) of such permitted disclosure, and shall reasonably consult with the Subscriber regarding such disclosure. Subscriber will promptly provide any information reasonably requested by either Sio NewCo or Pyrophyte for any regulatory application or filing made or approval sought in connection with the Transaction (including filings with the SEC).
(w) The obligations of Subscriber under this Subscription Agreement are several and not joint with the obligations of any Other Subscriber or any other investor under the Other Subscription Agreements, and Subscriber shall not be responsible in any way for the performance of the obligations of any Other Subscriber under this Subscription Agreement or any Other Subscriber or other investor under the Other Subscription Agreements. The decision of Subscriber to purchase the Subscribed Securities pursuant to this Subscription Agreement has been made by Subscriber independently of any Other Subscriber or any other investor and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of Sio NewCo, Pyrophyte or any of their respective subsidiaries which may have been made or given by any Other Subscriber or investor or by any agent or employee of any Other Subscriber or investor, and neither Subscriber nor any of its agents or employees shall have any liability to any Other Subscriber or investor (or any other person) relating to or arising from any such information, materials, statements or opinions. Nothing contained herein or in any Other Subscription Agreement, and no action taken by Subscriber or Other Subscriber or other investor pursuant hereto or thereto, shall be deemed to constitute Subscriber and any Other Subscribers or other investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that Subscriber and any Other Subscribers or other investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Subscription Agreement and the Other Subscription Agreements. Subscriber acknowledges that no Other Subscriber has acted as agent for Subscriber in connection with making its investment hereunder and no Other Subscriber will be acting as agent of Subscriber in connection with monitoring its investment in the Subscribed Securities or enforcing its rights under this Subscription Agreement. Subscriber shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Subscription Agreement, and it shall not be necessary for any Other Subscriber or investor to be joined as an additional party in any proceeding for such purpose.
(x) The headings herein are for convenience only, do not constitute a part of this Subscription Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Subscription Agreement will be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rules of strict construction will be applied against any party. Unless the context otherwise requires, (i) all references to Sections, Schedules or Exhibits are to Sections, Schedules or Exhibits contained in or attached to this Subscription Agreement, (ii) each accounting term not otherwise defined in this Subscription Agreement has the meaning assigned to it in accordance with GAAP, (iii) words in the singular or plural include the singular and plural and pronouns stated in either the masculine, the feminine or neuter gender shall include the masculine, feminine and neuter, (iv) the use of the word “including” in this Subscription Agreement shall be by way of example rather than limitation, and (v) the word “or” shall not be exclusive.
[Signature pages follow.]
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IN WITNESS WHEREOF, each of the undersigned has accepted this Subscription Agreement as of the date first set forth above.
SIO SILICA CORPORATION | |||
By: | |||
Name: | |||
Title: |
Address for Notices: | |
Sio Silica Corporation | |
Suite 1930, 440 – 2nd Avenue SW | |
Calgary, Alberta | |
T2P 5E9 | |
Canada | |
Attention: Feisal Somji | |
Email: fsomji@siosilica.com | |
with a copy (not to constitute notice) to: | |
DLA Piper LLP (US) | |
1251 Avenue of the Americas, 27th Floor | |
New York, New York 10020 | |
Email: stephen.alicanti@us.dlapiper.com | |
Attention: Stephen Alicanti |
PYROPHYTE ACQUISITION CORP. | |||
By: | |||
Name: | |||
Title: |
Address for Notices: | |
Pyrophyte Acquisition Corp. | |
3262 Westheimer Road, Suite 706 | |
Houston, Texas 77098 | |
Email: sten.gustafson@pyrophytespac.com | |
Attention: Sten Gustafson | |
with a copy (not to constitute notice) to: | |
White & Case LLP | |
1221 Avenue of the Americas | |
New York, New York 10020 | |
Email: elliott.smith@whitecase.com | |
Attention: Elliott Smith |
[Signature Page to Subscription Agreement]
Sio Silica Incorporated | |||
By: | |||
Name: | |||
Title: |
Address for Notices: | |
Sio Silica Incorporated | |
Suite 1930, 440 – 2nd Avenue SW | |
Calgary, Alberta | |
T2P 5E9 | |
Canada | |
Attention: Feisal Somji | |
Email: fsomji@siosilica.com | |
with a copy (not to constitute notice) to: | |
DLA Piper LLP (US) | |
1251 Avenue of the Americas, 27th Floor | |
New York, New York 10020 | |
Email: stephen.alicanti@us.dlapiper.com | |
Attention: Stephen Alicanti |
[Signature Page to Subscription Agreement]
IN WITNESS WHEREOF, Subscriber has executed or caused this Subscription Agreement to be executed by its duly authorized representative as of the date set forth below.
Name of Subscriber: | State/Province/Country of Formation or Domicile: | |
By: ________________________________ | ||
Name: ______________________________ | ||
Title: _______________________________ | ||
Name in which Subscribed Securities are to be registered (if different): | Date: ________, 2023 | |
Subscriber’s EIN (if applicable): | ||
Business Address-Street: | Mailing Address-Street (if different): | |
City, State, Zip OR Province, Postal Code: | City, State, Zip OR Province, Postal Code: | |
Attn: _______________________________ | Attn: _______________________________ | |
Telephone No.: | Telephone No.: | |
Email for notices: | Email for notices (if different): | |
Number of Subscribed Securities subscribed for: | ||
Aggregate Purchase Price: US$ | ||
Register the Subscribed Securities as set forth below: _________________________________________ (Name) _________________________________________ (Account reference, if applicable) _________________________________________ (Address) _________________________________________
|
Deliver the Subscribed Securities as set forth below: _________________________________________ (Name) _________________________________________ (Account reference, if applicable) _________________________________________ (Address) _________________________________________
|
[Signature Page to Subscription Agreement]
Exhibit 10.3
NON-REDEMPTION AGREEMENT
THIS NON-REDEMPTION AGREEMENT (this “Agreement”) is made and entered into as of November 13, 2023 by and among Pyrophyte Acquisition Corp., a Cayman Islands exempted company (“Pyrophyte” or the “Issuer”), Verition Multi-Strategy Master Fund Ltd., a Cayman Islands exempted company with limited liability and a holder of certain Pyrophyte Class A Shares (as defined below) (the “Pyrophyte Shareholder”), and Sio Silica Incorporated, a newly-formed Alberta corporation formed solely for the purposes of engaging in the Transaction (as defined below) and wholly owned by Feisal Somji, a nominee of Sio (as defined below) (“Sio Newco” and following the consummation of the transactions contemplated by the Business Combination Agreement (as defined below), “New SPAC”). Each of Pyrophyte, the Pyrophyte Shareholder, and Sio Newco will individually be referred to herein as a “Party” and, collectively, as the “Parties”. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Business Combination Agreement.
WHEREAS, concurrently with the execution and delivery of this Agreement, Pyrophyte, Sio Silica Corporation, an Alberta corporation (“Sio”), Sio Newco and Snowbank Newco Alberta ULC, an Alberta unlimited liability corporation and wholly-owned subsidiary of Pyrophyte (“Pyrophyte Newco”), entered into a Business Combination Agreement, dated as of the date hereof (as amended, modified, supplemented or waived from time to time in accordance with its terms, the “Business Combination Agreement”), pursuant to which, among other things, (i) Pyrophyte shall transfer by way of continuation from the Cayman Islands to Alberta in accordance with the Cayman Islands Companies Act (as revised) and continue as an Alberta corporation in accordance with the applicable provisions of the Business Corporations Act (Alberta), (ii) Pyrophyte shall amalgamate with Sio Newco (the “SPAC Amalgamation”) to form New SPAC, which shall, as a result of the SPAC Amalgamation and prior to the consummation of the transactions contemplated hereunder, assume all rights, covenants and obligations of Sio Newco, including the rights, covenants and obligations under this Agreement (the “Assumption”) and (iii) Sio and Pyrophyte Newco shall amalgamate, and the entity resulting from such amalgamation shall be wholly owned by New SPAC and continue the business operations currently undertaken by Sio (such transactions contemplated by the Business Combination Agreement, the “Transaction”);
WHEREAS, concurrently with the execution and delivery of this Agreement, certain accredited investors (collectively, the “PIPE Investors”) are each entering into a subscription agreement, substantially in the form attached to the Business Combination Agreement (the “Subscription Agreement” and collectively, the “Subscription Agreements”) with Pyrophyte and Sio Newco, pursuant to which, among other things, the PIPE Investors have agreed, subject to the satisfaction or waiver of the conditions set forth therein, to subscribe for and purchase, and Sio Newco has agreed, following the SPAC Amalgamation and Assumption and substantially concurrently with the consummation of the Transaction, to issue and sell to the PIPE Investors the number of common shares of Sio Newco (the “Sio Newco Common Shares”) provided for in the applicable Subscription Agreement in exchange for the purchase price set forth therein (the equity financing under the Subscription Agreements is hereinafter referred to as the “PIPE Financing”), in each case on the terms and subject to the conditions set forth in the relevant Subscription Agreement;
WHEREAS, as of the date of this Agreement, the Pyrophyte Acquisition LLC, a Delaware limited liability company (the “Sponsor”), owns 5,031,250 Class A ordinary shares, par value $0.0001 per share, of Pyrophyte (the “Pyrophyte Class A Shares”);
WHEREAS, as of the date hereof, the Pyrophyte Shareholder is the beneficial owner of 100,000 Pyrophyte Class A Shares (collectively, the “Subject Pyrophyte Ordinary Shares”);
WHEREAS, in connection with the Transaction, Pyrophyte’s shareholders will have the opportunity to redeem their ordinary shares of Pyrophyte in connection with Pyrophyte’s extraordinary general meeting of shareholders to approve the Transaction;
WHEREAS, pursuant to the SPAC Amalgamation, each then issued and outstanding Pyrophyte Class A Share will be exchanged, on a one-for-one basis, for Sio Newco Common Shares; and
WHEREAS, in consideration of the Pyrophyte Shareholder’s commitment to, among other things, not redeem the Subject Pyrophyte Ordinary Shares, and subject to the conditions set forth herein, Pyrophyte desires to issue and sell and the Pyrophyte Shareholder desires to subscribe for the Additional Shares (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants, and subject to the conditions, herein contained, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
1. | Agreement to Vote. The Pyrophyte Shareholder hereby unconditionally and irrevocably agrees, with effect from the date hereof and until the earlier of (x) the date on which this Agreement is terminated in accordance with Section 7 hereof and (y) the Closing Date (the “Voting and Lock-Up Period”), to be present at any meeting of the shareholders of Pyrophyte, and to vote (in person or by proxy), or consent to any action by written consent or resolution with respect to, all of the Subject Pyrophyte Ordinary Shares (i) in favor of the Transaction Proposals (as defined in the Business Combination Agreement) and (ii) in opposition to any and all other proposals (1) that could reasonably be expected to delay, impair, or adversely affect the ability of Pyrophyte to consummate the transactions contemplated by the Business Combination Agreement or any Ancillary Agreement (as defined in the Business Combination Agreement) or (2) which are in competition with or materially inconsistent with the Business Combination Agreement, the Transaction and the transactions contemplated thereby, provided that the obligations set forth in this Section 1 shall terminate if there is an Intervening Event that causes a Change in Recommendation. |
2. | No Redemption. The Pyrophyte Shareholder hereby agrees that it shall not redeem, or submit a request to Pyrophyte’s transfer agent or otherwise exercise any right to redeem, any Subject Pyrophyte Equity Security. Prior to the Closing and after the last date for redemption of Pyrophyte Class A Shares, the Pyrophyte Shareholder shall deliver to Pyrophyte and Sio Newco evidence that it continues to hold the Subject Pyrophyte Ordinary Shares and that such Subject Pyrophyte Ordinary Shares have not been submitted for redemption. For the avoidance of doubt, the restrictions set forth in this Section 2 shall not apply to any Pyrophyte Class A Shares held by the Pyrophyte Shareholder other than the Subject Pyrophyte Ordinary Shares. |
3. | Lock-Up of Subject Pyrophyte Ordinary Shares. The Pyrophyte Shareholder hereby agrees that, with effect from the date hereof and during the Voting and Lock-Up Period, it shall not, directly or indirectly (including by operation of law), (i) sell, assign, transfer, exchange, offer, assign, swap, convert, place a lien on, pledge, or otherwise dispose or encumber any of the Subject Pyrophyte Ordinary Shares, (ii) deposit any of the Subject Pyrophyte Ordinary Shares into a voting trust or enter into a voting agreement or arrangement or grant any proxy or power of attorney with respect to any of the Subject Pyrophyte Ordinary Shares that conflicts with any of the covenants or agreements set forth in this Agreement, (iii) publicly announce any intention to effect, or enter into any contract, option or other arrangement or undertaking with respect to, any transaction specified in clause (i) or (ii) with respect to the Subject Pyrophyte Ordinary Shares, (iv) engage in any hedging or other transaction which is designed to, or which would (either alone or in connection with one or more events, developments or events (including the satisfaction or waiver of any conditions precedent)), lead to or result in a sale or disposition of the Subject Pyrophyte Ordinary Shares even if such Subject Pyrophyte Ordinary Shares would be disposed of by a Person (as defined in the Business Combination Agreement) other than the Pyrophyte Shareholder or (v) take any action that would have the effect of preventing or materially delaying the performance of its obligations under this Agreement (the covenants under (i)-(v) hereof, the “Lock-Up”). For the avoidance of doubt, the restrictions set forth in this Section 3 shall not apply to any Pyrophyte Class A Shares held by the Pyrophyte Shareholder other than the Subject Pyrophyte Ordinary Shares. |
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4. | Issuance and Subscription. |
4.1 | In consideration of the Pyrophyte Shareholder’s performance of its obligations described herein, Pyrophyte agrees to issue and sell and the Pyrophyte Shareholder agrees to subscribe for, immediately prior to the Domestication, an additional 58,570 Pyrophyte Class A Shares (the “Additional Shares”), on the terms and subject to the conditions set forth in this Agreement. Each of the Parties hereto acknowledges and agrees that the Additional Shares will be issued in accordance with the terms of this Agreement. |
4.2 | The consummation of the transactions contemplated in this Section 4 shall occur immediately prior to the Domestication. Upon written notice from (or on behalf of) Pyrophyte to the Pyrophyte Shareholder (the “Closing Notice”) at least five (5) Business Days prior to the date that Pyrophyte reasonably expects all conditions to the consummation of the Amalgamations to be satisfied (the “Expected Closing Date”), the Pyrophyte Shareholder shall deliver to Pyrophyte no later than two (2) Business Days prior to the date that Pyrophyte reasonably expects the Domestication to occur any information that is reasonably requested in the Closing Notice in order for Pyrophyte to issue the Additional Shares including, without limitation, the legal name of the person in whose name such Additional Shares are to be issued and allotted (or the Pyrophyte Shareholder’s nominee in accordance with its delivery instructions) and a duly completed and executed Internal Revenue Service Form W-9 or Form W-8, as applicable. On the Closing Date, prior to the Domestication, Pyrophyte shall issue to the Pyrophyte Shareholder (or the funds and accounts designated by the Pyrophyte Shareholder if so designated by the Pyrophyte Shareholder, or its nominee in accordance with its delivery instructions) or to a custodian designated by the Pyrophyte Shareholder, as applicable, the Additional Shares, free and clear of any liens or other restrictions whatsoever (other than those arising under this Agreement, the governing and organizational documents of Pyrophyte and state or federal securities laws), which Additional Shares, unless otherwise determined by Pyrophyte, shall be uncertificated, with record ownership reflected only in the register of shareholders of Pyrophyte. |
4.3 | In connection with the SPAC Amalgamation and the Closing of the Transaction, each then issued and outstanding Pyrophyte Class A Share, including the Additional Shares, will be exchanged, on a one-for-one basis, for Sio Newco Common Shares. Sio Newco shall provide evidence from its transfer agent showing the Pyrophyte Shareholder as the owner of the Additional Shares (which shares shall be Sio Newco Common Shares after the Transaction) on and as of the Closing Date within two (2) Business Days of the Closing Date. If the Transaction is not consummated within five (5) Business Days after the Expected Closing Date, any Additional Shares that had been issued shall be cancelled. |
4.4 | The obligations of Pyrophyte and Sio Newco pursuant to this Section 4 shall be subject to the satisfaction, or waiver by Pyrophyte and Sio Newco, of the following conditions: |
(a) | the Pyrophyte Shareholder shall have fully complied with, performed and satisfied its obligations set out in Sections 1-3 hereof, and shall have performed, satisfied and complied in all material respects with all other covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by it at or prior to the date of the Domestication; and |
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(b) | all representations and warranties of the Pyrophyte Shareholder contained in this Agreement shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality, which representations and warranties shall be true and correct in all respects) at and as of the date of the Domestication (except for representations and warranties made as of a specific date, which shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality, which representations and warranties shall be true and correct in all respects) as of such date). |
4.5 | The consummation of the transactions pursuant to this Section 4 shall be subject to the satisfaction, or waiver in writing by each of the parties hereto, of the conditions that, on the date of the Domestication: |
(a) | all conditions precedent to the closing of the Transaction set forth in Article VII of the Business Combination Agreement shall have been satisfied (as determined by the parties to the Business Combination Agreement) or waived in writing by the person(s) with the authority to make such waiver (other than those conditions which, by their nature, are to be satisfied at the closing of the Transaction pursuant to the Business Combination Agreement), and the closing of the Transaction shall be scheduled to occur substantially concurrently with the Closing; |
(b) | no governmental authority shall have enacted, issued, promulgated, enforced or entered any judgment, order, law, rule or regulation which is then in effect and has the effect of making the consummation of the transactions contemplated hereby illegal or otherwise restraining or prohibiting consummation of the transactions contemplated hereby, and no governmental authority shall have instituted or threatened in writing a proceeding seeking to impose any such restraint or prohibition; |
(c) | a license under the Environment Act (Manitoba) has been obtained by Sio that would permit Sio to extract high purity silica sand from the Winnipeg Sandstone geological formation situated within Sio’s mining claims and leases located southwest of Vivian, Manitoba at an annual extraction rate of up to 1.34 million tonnes; and |
(d) | the Sio Newco Common Shares shall be approved for listing on the New York Stock Exchange or such other national securities exchange as agreed to by Pyrophyte and Sio (the “Stock Exchange”), subject only to official notice of issuance. |
4.6 | The obligations of the Pyrophyte Shareholder pursuant to this Section 4 shall be subject to the satisfaction, or waiver by the Pyrophyte Shareholder, of the following conditions |
(a) | each of Pyrophyte and Sio Newco shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by it at or prior to the date of the Domestication; and |
(b) | all representations and warranties of each of Pyrophyte and Sio Newco contained in this Agreement shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality, which representations and warranties shall be true and correct in all respects) at and as of the date of the Domestication (except for representations and warranties made as of a specific date, which shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality, which representations and warranties shall be true and correct in all respects) as of such date). |
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5. | Representations and Warranties. |
5.1 | Pyrophyte Representations and Warranties. Pyrophyte represents and warrants as of the date hereof and as of the Closing Date to the Pyrophyte Shareholder as follows: |
(a) | Pyrophyte (i) is validly existing and in good standing under the laws of its jurisdiction of incorporation, (ii) has the requisite corporate power and authority to own, lease and operate its properties, to carry on its business as it is now being conducted and to enter into and perform its obligations under this Agreement, and (iii) is duly licensed or qualified to conduct its business and, if applicable, is in good standing under the laws of each jurisdiction (other than its jurisdiction of incorporation and only to the extent such concept exists in such jurisdiction) in which the conduct of its business or the ownership of its properties or assets requires such license or qualification, except, with respect to the foregoing clause (iii), where the failure to be so licensed, qualified or in good standing would not reasonably be expected to have a Pyrophyte Material Adverse Effect. For purposes of this Agreement, a “Pyrophyte Material Adverse Effect” means an event, change, development, occurrence, condition or effect with respect to Pyrophyte and its subsidiaries that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on the business or financial condition of Pyrophyte and its subsidiaries, taken together as a whole (on a consolidated basis). |
(b) | As of the Closing Date, the Pyrophyte Class A Shares representing the Additional Shares will be duly authorized and, when issued and delivered to the Pyrophyte Shareholder against full payment therefor in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable, free and clear of all liens or other restrictions (other than those arising under this Agreement, the governing and organizational documents of Pyrophyte or applicable securities laws and other than those imposed by or on the Pyrophyte Shareholder or the Pyrophyte Shareholder’s assets), and will not have been issued in violation of, or subject to, any preemptive or similar rights created under Pyrophyte’s governing and organizational documents or the laws of its jurisdiction of incorporation. |
(c) | This Agreement and the Business Combination Agreement (the “Transaction Documents”) have been duly authorized, validly executed and delivered by Pyrophyte and, assuming that the Transaction Documents constitute valid and binding obligations of the other parties thereto, are valid and legally binding obligations of Pyrophyte, and are enforceable against Pyrophyte in accordance with their terms, except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally and (ii) principles of equity, whether considered at law or equity. |
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(d) | Assuming the accuracy of the representations and warranties of Sio Newco and the Pyrophyte Shareholder set forth in Section 5.2 and Section 5.3, respectively, of this Agreement, the execution and delivery of this Agreement, the issuance and allotment of the Additional Shares hereunder (upon satisfaction or waiver of the conditions set forth in Section 2), the compliance by Pyrophyte with all of the provisions of this Agreement and the consummation of the transactions contemplated herein will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of Pyrophyte pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which Pyrophyte is a party or by which Pyrophyte is bound or to which any of the property or assets of Pyrophyte is subject, (ii) result in any violation of the provisions of the organizational documents of Pyrophyte, or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over Pyrophyte or any of its properties that, in the case of clauses (i) and (iii), would reasonably be expected to have a Pyrophyte Material Adverse Effect or materially impact the consummation of the Tranasction. |
(e) | As of the date hereof, the authorized share capital of Pyrophyte consists of (i) 200,000,000 Pyrophyte Class A Shares, (ii) 20,000,000 Class B ordinary shares of Pyrophyte, par value $0.0001 per share (“Pyrophyte Class B Shares”), and (iii) 1,000,000 preference shares, par value $0.0001 per share. As of the date hereof, (i) 14,005,087 Pyrophyte Class A Shares, (ii) no Pyrophyte Class B Shares are issued and outstanding, all of which are validly issued, fully paid and non-assessable and not subject to any preemptive rights. As of the date of this Agreement, there are no preference shares of Pyrophyte issued and outstanding. As of the date hereof and, except as described in the Pyrophyte SEC Documents (as defined below) and pursuant to the Business Combination Agreement, at the Closing Date, there are no outstanding options, warrants or other rights to subscribe for, purchase or acquire from Pyrophyte any shares or other equity interests in Pyrophyte (collectively, “Pyrophyte Equity Interests”) or securities convertible into or exchangeable or exercisable for Pyrophyte Equity Interests. Except as set forth in the Business Combination Agreement, as of the date hereof and as of the Closing, Pyrophyte has no subsidiaries and does not own, directly or indirectly, interests or investments (whether equity or debt) in any person, whether incorporated or unincorporated. Except as described in the Pyrophyte SEC Documents, as of the date hereof and as of the Closing Date, there are no shareholder agreements, voting trusts or other agreements or understandings to which Pyrophyte is a party or by which it is bound relating to the voting of any Pyrophyte Equity Interests, other than as contemplated by the Business Combination Agreement. There are no securities or instruments issued by or to which Pyrophyte is a party containing anti-dilution or similar provisions that will be triggered by the issuance of the Additional Shares or the Transaction, except in each case for such anti-dilution or similar provisions the application of which has been effectively waived. |
(f) | Assuming the accuracy of the representations and warranties of Sio Newco and the Pyrophyte Shareholder set forth in Section 5.2 and Section 5.3, respectively of this Agreement, Pyrophyte is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other provincial, territorial, federal, state, local or other governmental authority, self-regulatory organization or other person in connection with the execution, delivery and performance of this Agreement (including, without limitation, the issuance of the Additional Shares), other than (i) filings required by applicable state securities laws, (ii) the filing of the Registration Statement (as defined below), (iii) filings required by the Securities Act of 1933, as amended (the “Securities Act”), the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the rules of the United States Securities and Exchange Commission (the “SEC”), including the registration statement on Form F-4 with respect to the Transaction and the proxy statement/prospectus included therein, (iv) filings or consents required by the Stock Exchange, including with respect to obtaining shareholder approval of the Transaction, if applicable, (v) if the Pyrophyte Shareholder is located in the United States or is a U.S. Person as defined in Regulation S promulgated under the Securities Act (“Regulation S”) (such Pyrophyte Shareholder, a “U.S. Shareholder”), the filing of a Notice of Exempt Offering of Securities on Form D with the SEC under Regulation D under the Securities Act, if applicable, (vi) filings required to consummate the Transaction as provided under the Business Combination Agreement, (vii) the filing of notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”), if applicable, and (viii) those filings, the failure of which to obtain would not reasonably be expected to have a Pyrophyte Material Adverse Effect. |
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(g) | Except for such matters as have not had and would not reasonably be expected to have a Pyrophyte Material Adverse Effect, there is no (i) suit, action, proceeding or arbitration before a governmental authority or arbitrator pending, or, threatened in writing against Pyrophyte, (ii) judgment, decree, injunction, ruling or order of any governmental authority or arbitrator outstanding against Pyrophyte or (iii) written communication from a governmental entity that alleges that Pyrophyte is not in compliance or is in default or violation of any applicable law. |
(h) | Pyrophyte is in compliance with all applicable laws and has not received any written communication from a governmental entity that alleges that Pyrophyte is not in compliance with, or is in default or violation of any applicable law, except where such non-compliance, default, or violation would not, individually or in the aggregate, reasonably be expected to have a Pyrophyte Material Adverse Effect. |
(i) | As of their respective dates, or, if amended, as of the date of such amendment, which shall be deemed to have superseded such original filing, each form, report, statement, schedule, prospectus, proxy, registration statement and other document required to be filed by Pyrophyte with the SEC on or prior to the Closing Date (collectively, as amended and/or restated since the time of their filing, the “Pyrophyte SEC Documents” and, together with the Sio Newco SEC Documents (as defined below), the “SEC Documents”) complied in all material respects with the requirements of the Securities Act (as defined below) and the Exchange Act (as defined below), and the rules and regulations of the SEC promulgated thereunder, and none of the Pyrophyte SEC Documents, when filed, or if amended prior to the Closing Date (such amended Pyrophyte SEC Documents, the “Amended Pyrophyte SEC Documents”), as of the date of such amendment with respect to those disclosures that were amended, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of Pyrophyte included in the Pyrophyte SEC Documents or, if amended, in the Amended Pyrophyte SEC Documents, comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of such filing and fairly present in all material respects the financial position of Pyrophyte as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments. Pyrophyte has filed each report, statement, schedule, prospectus, and registration statement that Pyrophyte was required to file with the SEC since its initial registration of the Pyrophyte Class A Shares with the SEC and through the date hereof. There are no material outstanding or unresolved comments in comment letters from the Staff (as defined below) with respect to any of the Pyrophyte SEC Documents. |
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(j) | Pyrophyte has not taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does Pyrophyte have any knowledge that any of its creditors intends to initiate involuntary bankruptcy proceedings. |
(k) | No broker or finder is entitled to any brokerage or finder’s fee or commission or any other payment solely in connection with the issuance of the Additional Shares to the Pyrophyte Shareholder. |
(l) | Except as provided in this Agreement and the Subscription Agreements, none of Pyrophyte or any of its affiliates, nor any person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the issuance of any of the Additional Shares under the Securities Act, whether through integration with prior offerings pursuant to Rule 502(a) of the Securities Act or otherwise. |
(m) | The issued and outstanding Pyrophyte Class A Ordinary Shares are registered pursuant to Section 12(b) of the Exchange Act and are listed for trading on the New York Stock Exchange under the symbol “PHYT.” As of the date of this Agreement, there is no action pending or, to the knowledge of Pyrophyte, threatened in writing against Pyrophyte by the New York Stock Exchange or the SEC with respect to any intention by such entity to deregister the Pyrophyte Class A Ordinary Shares or terminate the listing of Pyrophyte on the New York Stock Exchange. |
(n) | Pyrophyte is not, and immediately after consummation of the transactions contemplated by this Agreement, will not be, an “investment company” within the meaning of the Investment Company Act of 1940 (the “Investment Company Act”). |
(o) | Pyrophyte has not taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does Pyrophyte have any knowledge that any of its creditors intends to initiate involuntary bankruptcy proceedings. |
(p) | Pyrophyte has not entered into any non-redemption agreement with any other investor on terms that are more favorable to such other investor as to the Pyrophyte Shareholder hereunder. |
5.2 | Sio Newco Representations and Warranties. Sio Newco represents and warrants as of the date hereof and as of the Closing Date to the Pyrophyte Shareholder as follows: |
(a) | Sio Newco (i) is validly existing and in good standing under the laws of its jurisdiction of incorporation, (ii) has the requisite corporate power and authority to own, lease and operate its properties, to carry on its business as it is now being conducted and to enter into and perform its obligations under this Agreement, and (iii) is duly licensed or qualified to conduct its business and, if applicable, is in good standing under the laws of each jurisdiction (other than its jurisdiction of incorporation and only to the extent such concept exists in such jurisdiction) in which the conduct of its business or the ownership of its properties or assets requires such license or qualification, except, with respect to the foregoing clause (iii), where the failure to be so licensed, qualified or in good standing would not reasonably be expected to have a Sio Newco Material Adverse Effect. For purposes of this Agreement, a “Sio Newco Material Adverse Effect” means an event, change, development, occurrence, condition or effect with respect to Sio Newco and its subsidiaries that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on the business or financial condition of Sio Newco and its subsidiaries, taken together as a whole (on a consolidated basis). |
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(b) | As of the Closing Date, the Sio Newco Common Shares that will be exchanged for the Additional Shares pursuant to the Transaction will be duly authorized and, when issued and delivered to the Pyrophyte Shareholder against full payment therefor in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable, free and clear of all liens or other restrictions (other than those arising under this Agreement, the governing and organizational documents of Sio Newco or applicable securities laws and other than those imposed by or on the Pyrophyte Shareholder or the Pyrophyte Shareholder’s assets), and will not have been issued in violation of, or subject to, any preemptive or similar rights created under Sio Newco’s governing and organizational documents or the laws of its jurisdiction of incorporation. |
(c) | This Agreement has been duly authorized and validly executed and delivered by Sio Newco, and assuming the due authorization, execution and delivery of the same by Sio, the Pyrophyte Shareholder and Pyrophyte, this Agreement shall constitute the valid and legally binding obligation of Sio Newco, enforceable against Sio Newco in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors generally and by the availability of equitable remedies. |
(d) | Assuming the accuracy of the representations and warranties of Pyrophyte and the Pyrophyte Shareholder set forth in Section 5.1 and Section 5.3, respectively, of this Agreement, and the execution and delivery of this Agreement, the issuance and allotment of the Additional Shares hereunder (upon satisfaction or waiver of the conditions set forth in Section 2), the compliance by Sio Newco with all of the provisions of this Agreement and the consummation of the transactions contemplated herein will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of Sio Newco pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which Sio Newco is a party or by which Sio Newco is bound or to which any of the property or assets of Sio Newco is subject, (ii) result in any violation of the provisions of the organizational documents of Sio Newco, or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over Sio Newco or any of its properties that, in the case of clauses (i) and (iii), would reasonably be expected to have a Sio Newco Material Adverse Effect. |
(e) | Assuming the accuracy of the representations and warranties of Pyrophyte and the Pyrophyte Shareholder set forth in Section 5.1 and Section 5.3, respectively, of this Agreement, Sio Newco is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other provincial, territorial, federal, state, local or other governmental authority, self-regulatory organization or other person in connection with the execution, delivery and performance of this Agreement (including, without limitation, the issuance of the Additional Shares pursuant to the Transaction), other than (i) filings required by applicable state securities laws, (ii) the filing of the Registration Statement, (iii) filings required by the Securities Act, the Exchange Act, the rules of the SEC, including the registration statement on Form F-4 with respect to the Transaction and the proxy statement/prospectus included therein, (iv) filings or consents required by the Stock Exchange, including with respect to obtaining shareholder approval of the Transaction, if applicable, (v) if the Pyrophyte Shareholder is located in the United States or is a U.S. Shareholder, the filing of a Notice of Exempt Offering of Securities on Form D with the SEC under Regulation D under the Securities Act, if applicable, (vi) filings required to consummate the Transaction as provided under the Business Combination Agreement, (vii) the filing of notification under the HSR Act, if applicable, and (viii) those filings, the failure of which to obtain would not reasonably be expected to have a Sio Newco Material Adverse Effect. |
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(f) | Except for such matters as have not had and would not reasonably be expected to have a Sio Newco Material Adverse Effect, there is no (i) suit, action, proceeding or arbitration before a governmental authority or arbitrator pending, or, threatened in writing against Sio Newco, (ii) judgment, decree, injunction, ruling or order of any governmental authority or arbitrator outstanding against Sio Newco or (iii) written communication from a governmental entity that alleges that Sio Newco is not in compliance or is in default or violation of any applicable law. |
(g) | Sio Newco is in compliance with all applicable laws and has not received any written communication from a governmental entity that alleges that Sio Newco is not in compliance with, or is in default or violation of any applicable law, except where such non-compliance, default, or violation would not, individually or in the aggregate, reasonably be expected to have a Sio Newco Material Adverse Effect. |
(h) | As of the Closing Date, the Sio Newco Common Shares will be eligible for clearing through The Depositary Trust Company (the “DTC”), through its Deposit/Withdrawal At Custodian (DWAC) system, and New SPAC will be eligible and participating in the Direct Registration System (DRS) of DTC with respect to the Sio Newco Common Shares. |
(i) | As of their respective dates, or, if amended, as of the date of such amendment, which shall be deemed to supersede such original filing, each form, report, statement, schedule, prospectus, proxy, registration statement and other document required to be filed by Sio Newco with the SEC on or prior to the Closing Date (collectively, as amended and/or restated since the time of their filing, the “Sio Newco SEC Documents”) complied in all material respects with the requirements of the Securities Act and the Exchange Act, and the rules and regulations of the SEC promulgated thereunder, and none of Sio Newco SEC Documents, when filed, or if amended prior to the Closing Date (such amended Sio Newco SEC Documents, the “Amended Sio Newco SEC Documents”), as of the date of such amendment with respect to those disclosures that were amended, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of Sio Newco included in the Sio Newco SEC Documents or, if amended, in the Amended Sio Newco SEC Documents, comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of such filing and fairly present in all material respects the financial position of Sio Newco as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments. There are no material outstanding or unresolved comments in comment letters from the staff of the Division of Corporation Finance (the “Staff”) of the SEC with respect to any of the Sio Newco SEC Documents as of the date hereof. |
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(j) | As of the date hereof, the authorized share capital of Sio Newco consists of an unlimited number of common shares and an unlimited number of preferred shares. As of the date hereof: 100 common shares were issued and outstanding. All 100 common shares issued and outstanding have been duly authorized and validly issued, are fully paid and non-assessable and are not subject to preemptive rights or similar. As of the date hereof, except pursuant to (1) the Subscription Agreements, or (2) the Business Combination Agreement, there are no outstanding options, warrants or other rights to subscribe for, purchase or acquire from Sio Newco any shares or other equity interests in Sio Newco (collectively, “Sio Newco Equity Interests”) or securities convertible into or exchangeable or exercisable for Sio Newco Equity Interests. Except as set forth in the Business Combination Agreement, as of the date hereof, Sio Newco has no subsidiaries and does not own, directly or indirectly, interests or investments (whether equity or debt) in any person, whether incorporated or unincorporated. As of the date hereof, there are no shareholder agreements, voting trusts or other agreements or understandings to which Sio Newco is a party or by which it is bound relating to the voting of any Sio Newco Equity Interests, other than as contemplated by the Business Combination Agreement. There are no securities or instruments issued by or to which Sio Newco is a party containing anti-dilution or similar provisions that will be triggered, by the issuance of the Additional Shares, or the Transaction, except in each case for such anti-dilution or similar provisions the application of which has been effectively waived. |
(k) | There is no suit, action, proceeding or investigation pending or, to the knowledge of Sio Newco, threatened against Sio Newco by the SEC, the Stock Exchange, the applicable securities commission or securities regulatory authority in each of the provinces and territories of Canada, or other securities commission or securities regulatory authority with respect to any intention by such entity to prohibit the registration of the Sio Newco Common Shares or prohibit the listing of the Sio Newco Common Shares on the Stock Exchange. |
(l) | Upon consummation of the Transaction, the issued and outstanding Sio Newco Common Shares are expected to be registered pursuant to Section 12(b) of the Exchange Act and listed for trading on the Stock Exchange, subject only to official notice thereof. |
(m) | Sio Newco is not, and immediately after consummation of the Transaction, will not be, an “investment company” within the meaning of the Investment Company Act. |
(n) | Sio Newco has not taken any steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does Sio Newco have any knowledge that any of its creditors intends to initiate involuntary bankruptcy proceedings. |
5.3 | Pyrophyte Shareholder Representations and Warranties. The Pyrophyte Shareholder hereby represents and warrants as of the date hereof and as of the Closing Date to Pyrophyte and Sio Newco as follows: |
(a) | If the Pyrophyte Shareholder is a legal entity, the Pyrophyte Shareholder (i) has been duly formed and is validly existing and in good standing under the laws of its jurisdiction of formation or incorporation and (ii) has the requisite power and authority to enter into, and perform its obligations under, this Agreement. If the Pyrophyte Shareholder is an individual, the Pyrophyte Shareholder has the legal competence and capacity to enter into and perform its obligations under this Agreement. |
(b) | If the Pyrophyte Shareholder is an entity, this Agreement has been duly authorized, validly executed and delivered by the Pyrophyte Shareholder. If the Pyrophyte Shareholder is an individual, the Pyrophyte Shareholder’s signature is genuine and the signatory has the legal competence and capacity to execute this Agreement. Assuming the due authorization, execution and delivery of the same by Sio, Sio Newco and Pyrophyte, this Agreement shall constitute the valid and legally binding obligation of the Pyrophyte Shareholder, enforceable against the Pyrophyte Shareholder in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors generally and by the availability of equitable remedies. |
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(c) | The execution, delivery and performance of this Agreement, and the execution of the transactions contemplated herein do not and will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Pyrophyte Shareholder pursuant to the terms of any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which the Pyrophyte Shareholder is a party or by which the Pyrophyte Shareholder is bound or to which any of the property or assets of the Pyrophyte Shareholder is subject; (ii) if the Pyrophyte Shareholder is a legal entity, result in any violation of the provisions of the organizational documents of the Pyrophyte Shareholder; or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over the Pyrophyte Shareholder or any of its properties that in the case of clauses (i) and (iii), would have a Pyrophyte Shareholder Material Adverse Effect. For purposes of this Agreement, a “Pyrophyte Shareholder Material Adverse Effect” means an event, change, development, occurrence, condition or effect with respect to the Pyrophyte Shareholder that would reasonably be expected to have a material adverse effect on the Pyrophyte Shareholder’s ability to consummate the transactions contemplated hereby. |
(d) | The execution, delivery and performance of this Agreement, the receipt of the Additional Shares hereunder, the compliance by the Pyrophyte Shareholder with all of the provisions of this Agreement and the consummation of the transactions contemplated herein will not conflict with or result in a breach or violation of any relevant laws and regulations applicable to the issue of the Additional Shares, and the Pyrophyte Shareholder will not cease to be in compliance if the Additional Shares are acquired. |
(e) | The Pyrophyte Shareholder (i) is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act), an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act) or a non-U.S. Person, as defined in Regulation S, in each case, satisfying the applicable requirements set forth on Annex A hereto, and accordingly the Pyrophyte Shareholder understands that the issuance of the Additional Shares hereunder meets the exemptions from filing under FINRA Rule 5123(b)(1)(C) or (J), (ii) is acquiring the Additional Shares only for its own account and not for the account of others, or in the case of a Pyrophyte Shareholder that is located in the United States or is a U.S. Person (as defined in Regulation S), if the Pyrophyte Shareholder is receiving the Additional Shares as a fiduciary or agent for one or more investor or trust accounts, each owner of such account is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act), an “accredited investor” (within the meaning of Rule 501(a) under the Securities Act) or such other person that satisfies the requirements of Annex A hereto and the Pyrophyte Shareholder has sole investment discretion with respect to each such account, and the full power and authority to make the acknowledgements, representations and agreements herein on behalf of each owner of each such account, (iii) is not acquiring the Additional Shares with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act, (iv) is resident in or otherwise subject to applicable securities laws of the jurisdiction set out on the signature page hereto and (v) has provided Sio Newco and Pyrophyte with the requested information on Annex A and Annex B (to the extent applicable) following the signature page hereto and the information contained therein is accurate and complete. The Pyrophyte Shareholder is not an entity formed for the specific purpose of acquiring the Additional Shares, unless such newly formed entity is an entity in which all of the equity owners are “accredited investors” (within the meaning of Rule 501(a) under the Securities Act). |
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(f) | If the Pyrophyte Shareholder is a resident of or otherwise subject to applicable securities laws of any jurisdiction other than the United States, it confirms, represents and warrants that: (i) the Pyrophyte Shareholder is knowledgeable of, or has been independently advised as to, the applicable securities laws of the jurisdiction in which the Pyrophyte Shareholder is resident (the “International Jurisdiction”) and which would apply to the acquisition of the Additional Shares; and (ii) the Pyrophyte Shareholder is acquiring the Additional Shares pursuant to exemptions from the prospectus or registration requirements or equivalent requirements under applicable securities laws or, if such is not applicable, the Pyrophyte Shareholder is permitted to acquire the Additional Shares under the applicable securities laws of the International Jurisdiction without the need to rely on any exemptions; (iii) the applicable securities laws of the International Jurisdiction do not require Pyrophyte and Sio Newco to make any filings or seek any approvals of any kind whatsoever from any securities regulator of any kind whatsoever in the International Jurisdiction in connection with the issue and sale or resale of the Additional Shares; and (iv) the acquisition of the Additional Shares by the Pyrophyte Shareholder does not trigger: (A) any obligation to prepare and file a prospectus or similar document, or any other report with respect to such acquisition in the International Jurisdiction; or (B) any continuous disclosure reporting obligation of the Issuer in the International Jurisdiction; and (C) the Pyrophyte Shareholder will, if requested by the Issuer, deliver to the Issuer a certificate or opinion of local counsel from the International Jurisdiction which will confirm the matters referred to in subsections (ii), (iii) and (iv) above to the satisfaction of the Issuer, acting reasonably. |
(g) | The Pyrophyte Shareholder acknowledges and agrees that the Additional Shares are being issued in a transaction not involving any public offering within the meaning of the Securities Act and that the Additional Shares have not been registered under the Securities Act or the securities laws of any state, province or territory of Canada, or other jurisdiction and that Sio Newco is not required to register the Additional Shares except as set forth in Section 6 of this Agreement. The Pyrophyte Shareholder acknowledges and agrees that the Additional Shares may not be offered, resold, transferred, pledged or otherwise disposed of by the Pyrophyte Shareholder in the United States absent an effective registration statement under the Securities Act or in Canada from four months and a day after Sio Newco becoming a “reporting issuer” in any province or territory of Canada, except (i) in respect of a sale by a U.S. Shareholder, to Sio Newco or a subsidiary thereof, (ii) in respect of sales to a U.S. Shareholder, pursuant to an applicable exemption from the registration requirements of the Securities Act (including without limitation a private resale pursuant to so called “Section 4(a)1½”), provided that all of the applicable conditions thereof are met, (iii) in an ordinary course pledge such as a broker lien over account property generally, (iv) to non-U.S. Persons pursuant to offers and sales that occur outside the United States within the meaning of Regulation S, and, in each of clauses (i)-(iv), in accordance with any applicable securities laws of the states and other jurisdictions of the United States (including, if applicable, Canada Securities Laws), and that any certificates or account entries representing the Additional Shares shall contain a restrictive legend to such effect; or (v) in respect of any sale subject to applicable securities laws and regulations of the provinces and territories of Canada, pursuant to an applicable exemption from the prospectus requirements in Canada as provided for in NI 45-106. The Pyrophyte Shareholder acknowledges and agrees that the Additional Shares may not be offered, resold, transferred, pledged or otherwise disposed of by the Pyrophyte Shareholder in Canada from four months and a day after Sio Newco becoming a “reporting issuer” in any province or territory of Canada, except pursuant to an applicable exemption from the prospectus requirements in Canada as provided for in NI 45-106, and that any certificates or account entries representing the Additional Shares shall contain a restrictive legend to such effect. The Pyrophyte Shareholder acknowledges and agrees that the Additional Shares will be subject to these securities law transfer restrictions, and as a result of these transfer restrictions, the Pyrophyte Shareholder may not be able to readily offer, resell, transfer, pledge or otherwise dispose of the Additional Shares and may be required to bear the financial risk of an investment in the Additional Shares for an indefinite period of time. The Pyrophyte Shareholder acknowledges and agrees that the Additional Shares may not be immediately eligible for offer, resale, transfer, pledge or disposition pursuant to Rule 144 promulgated under the Securities Act, as amended (“Rule 144”), until the end of any applicable holding period. The Pyrophyte Shareholder acknowledges and agrees that it has been advised to consult legal counsel prior to making any offer, resale, pledge or transfer of any of the Additional Shares. |
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(h) | The Pyrophyte Shareholder understands and agrees that the Pyrophyte Shareholder is acquiring the Additional Shares directly from Pyrophyte. The Pyrophyte Shareholder further acknowledges that, except pursuant to Sections 5.1 and 5.2 hereto, there have been no representations, warranties, covenants or agreements made to the Pyrophyte Shareholder by Pyrophyte, Sio Newco, Sio or any of their respective affiliates or any control persons, officers, directors, employees, partners, agents or representatives, expressly or by implication. |
(i) | The Pyrophyte Shareholder further acknowledges that there have not been, and the Pyrophyte Shareholder hereby agrees that it is not relying on, any statements, representations, warranties, covenants or agreements made to the Pyrophyte Shareholder by Pyrophyte or Sio Newco or its subsidiaries (collectively, the “Acquired Companies”) or any of their respective affiliates or any control persons, officers, directors, employees, partners, agents or representatives, any other party to the Transaction or any other person or entity, expressly or by implication, other than those representations, warranties, covenants and agreements of Sio Newco and Pyrophyte set forth in this Agreement. |
(j) | In the case of a Pyrophyte Shareholder located in the United States or that is a U.S. Person (as defined in Regulation S), the Pyrophyte Shareholder represents and warrants that its acquisition and holding of such Additional Shares will not constitute or result in a non-exempt prohibited transaction under section 406 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), or any applicable similar law. |
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(k) | In making its decision to enter into this Agreement and acquire the Additional Shares, the Pyrophyte Shareholder has relied solely upon its independent investigation made by the Pyrophyte Shareholder and the representations of Pyrophyte, and Sio Newco in Sections 5.1 and 5.2 of this Agreement, respectively. The Pyrophyte Shareholder acknowledges and agrees that the Pyrophyte Shareholder has received such information as the Pyrophyte Shareholder deems necessary in order to make an investment decision with respect to the Additional Shares, including with respect to Pyrophyte, the Acquired Companies and the Transaction, and made its own assessment and is satisfied concerning the relevant financial, tax and other economic considerations relevant to the Pyrophyte Shareholder’s investment in the Additional Shares. Without limiting the generality of the foregoing, the Pyrophyte Shareholder acknowledges that it has reviewed Sio Newco’s and Pyrophyte’s filings with the SEC. The Pyrophyte Shareholder represents and agrees that the Pyrophyte Shareholder and the Pyrophyte Shareholder’s professional advisor(s), if any, have had the full opportunity to ask such questions, receive such answers and obtain such information as the Pyrophyte Shareholder and the Pyrophyte Shareholder’s professional advisor(s), if any, have deemed necessary to make an investment decision with respect to the Additional Shares. The Pyrophyte Shareholder acknowledges that certain information provided by Sio Newco or Pyrophyte was based on projections, and such projections were prepared based on assumptions and estimates that are inherently uncertain and are subject to a wide variety of significant business, economic and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the projections. The Pyrophyte Shareholder further acknowledges that the information provided to the Pyrophyte Shareholder was preliminary and subject to change, including in the registration statement and the proxy statement and/or prospectus that will be filed with the SEC in connection with the Transaction (which will include substantial additional information about Pyrophyte, the Acquired Companies and the Transaction and will update and supersede the information previously provided to the Pyrophyte Shareholder, including without limitation with respect to any financial statements and other financial information (whether historical or in the form of financial forecasts or projections) of the Acquired Companies, which may have been prepared and reviewed solely by each of Pyrophyte and Sio Newco and their respective officers and employees, as the case may be, and have not been reviewed by any outside party or, except as expressly set forth therein, certified or audited by an independent third-party auditor or audit firm), and that any changes to such information, including, without limitation, any changes based on updated information or changes in terms of the Transaction, shall in no way affect the Pyrophyte Shareholder’s obligation to comply with the terms of this Agreement. |
(l) | The Pyrophyte Shareholder became aware of transactions contemplated by this Agreement solely by means of direct contact between the Pyrophyte Shareholder and Sio Newco, Pyrophyte or by means of contact from a representative of Sio Newco or Pyrophyte, and the Additional Shares were offered to the Pyrophyte Shareholder solely by direct contact between the Pyrophyte Shareholder and Sio Newco, Pyrophyte or their respective representatives. The Pyrophyte Shareholder did not become aware of the transactions contemplated by this Agreement, nor were the Additional Shares offered to the Pyrophyte Shareholder, by any other means. The Pyrophyte Shareholder acknowledges that Pyrophyte represents and warrants that the Additional Shares (i) were not offered by any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) and (ii) are not being offered in a manner involving a public offering under, or in a distribution in violation of, the Securities Act or any state securities laws. |
(m) | If the Pyrophyte Shareholder is or is acting on behalf of a Plan, the Pyrophyte Shareholder represents and warrants that none of Pyrophyte, Sio Newco, Sio or any of their respective affiliates (the “Transaction Parties”) has acted as the Plan’s fiduciary, or has been relied on for advice, with respect to its decision to acquire and hold the Additional Shares, and none of the Transaction Parties shall at any time be relied upon as the Plan’s fiduciary with respect to any decision to acquire, continue to hold or transfer the Additional Shares. |
(n) | [Reserved]. |
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(o) | The Pyrophyte Shareholder acknowledges that it is aware that there are substantial risks incident to the ownership of the Additional Shares, including those set forth in the SEC Documents. The Pyrophyte Shareholder is able to fend for itself in the transactions contemplated herein and has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Additional Shares, and the Pyrophyte Shareholder has had an opportunity to seek, and has sought, such accounting, legal, business and tax advice as the Pyrophyte Shareholder has considered necessary to make an informed investment decision. The Pyrophyte Shareholder (i) in respect of issuances to a U.S. Shareholder, is an institutional account as defined in FINRA Rule 4512(c), an “accredited investor” as defined in Rule 501(a) under the Securities Act or is a person that otherwise satisfies the requirements of Annex A hereto, (ii) is a sophisticated investor, experienced in investing in private equity transactions and capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities, and (iii) has exercised independent judgment in evaluating its participation in the transactions contemplated by this Agreement, including the acquisition of the Additional Shares. The Pyrophyte Shareholder understands and acknowledges that the issuance of the Additional Shares hereunder meets, in respect of issuances to a U.S. Shareholder, (i) the exemptions from filing under FINRA Rule 5123(b)(1)(A) and (ii) the institutional customer exemption under FINRA Rule 2111(b). |
(p) | The Pyrophyte Shareholder has adequately analyzed and fully considered the risks of an investment in the Additional Shares and determined that the Additional Shares are a suitable investment for the Pyrophyte Shareholder and that the Pyrophyte Shareholder is able at this time and in the foreseeable future to bear the economic risk of a total loss of the Pyrophyte Shareholder’s investment in Pyrophyte. The Pyrophyte Shareholder acknowledges specifically that a possibility of total loss exists. |
(q) | The Pyrophyte Shareholder understands and agrees that no federal, state or provincial agency has passed upon or endorsed the merits of the issuance of the Additional Shares or made any findings or determination as to the fairness of this investment. |
(r) | The Pyrophyte Shareholder is not (i) a person or entity named (a “Person”) on the List of Specially Designated Nationals and Blocked Persons administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) or in any Executive Order issued by the President of the United States and administered by OFAC (“OFAC List”), or a person or entity prohibited by any OFAC sanctions program, (ii) owned or controlled by, or acting on behalf of, a person, that is named on an OFAC List, (iii) organized, incorporated, established, located, resident or born in, or a citizen, national, or the government, including any political subdivision, agency, or instrumentality thereof, of, Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine, or any other country or territory embargoed or subject to substantial trade restrictions by the United States (each a “Sanctioned Country”), (iv) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (iii) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank. The Pyrophyte Shareholder agrees to provide law enforcement agencies, if requested thereby, such records as required by applicable law, provided that the Pyrophyte Shareholder is permitted to do so under applicable law (collectively “Sanctions”). If the Pyrophyte Shareholder is a financial institution subject to the Bank Secrecy Act (31 U.S.C. Section 5311 et seq.) (the “BSA”), as amended by the USA PATRIOT Act of 2001 (the “PATRIOT Act”), and its implementing regulations (collectively, the “BSA/PATRIOT Act”), the Pyrophyte Shareholder maintains policies and procedures reasonably designed to comply with applicable obligations under the BSA/PATRIOT Act. To the extent required, the Pyrophyte Shareholder maintains policies and procedures reasonably designed for the screening of its investors against the OFAC sanctions programs, including the OFAC List. To the extent required, the Pyrophyte Shareholder maintains policies and procedures reasonably designed to ensure that the funds held by the Pyrophyte Shareholder and used to purchase the Additional Shares were legally derived. |
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(s) | No foreign person (as defined in 31 C.F.R. Part 800.224) in which the national or subnational governments of a single foreign state have a substantial interest (as defined in 31 C.F.R. Part 800.244) will acquire a substantial interest in Sio Newco as a result of the issuance of the Additional Shares hereunder such that a declaration to the Committee on Foreign Investment in the United States would be mandatory under 31 C.F.R. Part 800.401, and no foreign person will have control (as defined in 31 C.F.R. Part 800.208) over Pyrophyte from and after the Closing as a result of the issuance of the Additional Shares hereunder. |
(t) | In the case of a Pyrophyte Shareholder located in the United States or that is a U.S. Person (as defined in Regulation S), if the Pyrophyte Shareholder is an employee benefit plan that is subject to Title I of ERISA, a plan, an individual retirement account or other arrangement that is subject to section 4975 of the Code or an employee benefit plan that is a governmental plan (as defined in section 3(32) of ERISA), a church plan (as defined in section 3(33) of ERISA), a non-U.S. plan (as described in section 4(b)(4) of ERISA) or other plan that is not subject to the foregoing but may be subject to provisions under any other federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of ERISA or the Code, or an entity whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement (each, a “Plan”) subject to the fiduciary or prohibited transaction provisions of ERISA or section 4975 of the Code, the Pyrophyte Shareholder represents and warrants that (i) it has not relied on Sio Newco, Pyrophyte or any of their respective affiliates (the “Transaction Parties”) for investment advice or as the Plan’s fiduciary with respect to its decision to acquire and hold the Additional Shares, and none of the Transaction Parties shall at any time be relied upon as the Plan’s fiduciary with respect to any decision to acquire, continue to hold or transfer the Additional Shares and (ii) the decision to invest in the Additional Shares has been made at the recommendation or direction of an “independent fiduciary” (“Independent Fiduciary”) within the meaning of U.S. Code of Federal Regulations 29 C.F.R. section 2510.3 21(c), as amended from time to time (the “Fiduciary Rule”) who is (1) independent of the Transaction Parties; (2) is capable of evaluating investment risks independently, both in general and with respect to particular transactions and investment strategies (within the meaning of the Fiduciary Rule); (3) is a fiduciary (under ERISA and/or section 4975 of the Code) with respect to the Pyrophyte Shareholder’s investment in the Additional Shares and is responsible for exercising independent judgment in evaluating the investment in the Additional Shares; and (4) is aware of and acknowledges that (A) none of the Transaction Parties is undertaking to provide impartial investment advice, or to give advice in a fiduciary capacity, in connection with the acquirer’s or transferee’s investment in the Additional Shares, and (B) the Transaction Parties have a financial interest in the acquirer’s investment in the Additional Shares on account of the fees and other remuneration they expect to receive in connection with transactions contemplated by this Agreement. |
(u) | The Pyrophyte Shareholder acknowledges that it is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, firm or corporation (including, without limitation, Sio Newco or Pyrophyte or any of their respective affiliates or any of its or their respective control persons, officers, directors, employees, agents or representatives), other than the representations and warranties of and Pyrophyte and Sio Newco contained in Sections 5.1 and 5.2 of this Agreement, respectively, in making its investment or decision to invest in Pyrophyte. |
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(v) | No broker or finder has acted on behalf of the Pyrophyte Shareholder in connection with the issuance of the Additional Shares pursuant to this Agreement in such a way as to create any liability Sio Newco or Pyrophyte. |
(w) | The Pyrophyte Shareholder hereby agrees that neither it, nor any person or entity acting on its behalf or pursuant to any understanding with the Pyrophyte Shareholder, shall, directly or indirectly, engage in any hedging activities, derivative transactions or execute any Short Sale or other transaction that would have a similar effect, with respect to the securities of Sio Newco or the Subject Pyrophyte Ordinary Shares prior to the Closing or the earlier termination of this Agreement in accordance with its terms. “Short Sales” shall include, without limitation, all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act and all types of direct and indirect stock pledges (other than pledges in the ordinary course of business as part of prime brokerage arrangements), forward sale contracts, options, puts, calls, swaps and similar arrangements (including on a total return basis), and sales and other transactions through non-U.S. broker dealers or foreign regulated brokers. |
(x) | Except as expressly disclosed in a Schedule 13D or Schedule 13G (or amendments thereto) filed by the Pyrophyte Shareholder with the SEC with respect to the beneficial ownership of Pyrophyte’s outstanding securities prior to the date of this Agreement, the Pyrophyte Shareholder is not currently (and at all times through Closing will refrain from being or becoming) a member of a “group” (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of equity securities of Pyrophyte or Sio Newco (within the meaning of Rule 13d-5(b)(1) under the Exchange Act). |
(y) | The Pyrophyte Shareholder will not acquire a substantial interest (as defined in 31 C.F.R. Part 800.244) in Pyrophyte or Sio Newco as a result of the issuance of the Additional Shares. |
(z) | The Pyrophyte Shareholder acknowledges its obligations under applicable securities laws with respect to the treatment of non-public information relating to Sio Newco and Pyrophyte. |
(aa) | The Pyrophyte Shareholder acknowledges that (i) Pyrophyte and Sio Newco, and any of their respective affiliates, control persons, officers, directors, employees, agents or representatives currently may have, and later may come into possession of, information regarding Pyrophyte and Sio Newco that is not known to the Pyrophyte Shareholder and that may be material to a decision to enter into this Agreement and (ii) the Pyrophyte Shareholder has determined to enter into this Agreement notwithstanding its lack of knowledge of such information. |
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6. | Registration Rights. |
6.1 | Sio Newco agrees that, within thirty (30) calendar days following the Closing Date, New SPAC will file with the SEC (at New SPAC’s sole cost and expense) a registration statement (the “Registration Statement”) registering the resale by the Pyrophyte Shareholder of the Additional Shares (the “Registrable Securities”), and New SPAC shall use its commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable after the filing thereof, but in any event no later than sixty (60) calendar days after the Closing Date (the “Effectiveness Deadline”); provided, that the Effectiveness Deadline shall be extended to one hundred twenty (120) calendar days after the Closing Date if the Registration Statement is reviewed by, and comments thereto are provided from, the SEC; provided, further, that New SPAC shall have the Registration Statement declared effective within ten (10) Business Days after the date New SPAC is notified (orally or in writing, whichever is earlier) by the staff of the SEC that the Registration Statement will not be “reviewed” or will not be subject to further review; provided, further, that (i) if the Effectiveness Deadline falls on a Saturday, Sunday or other day that the SEC is closed for business, the Effectiveness Deadline shall be extended to the next Business Day on which the SEC is open for business and (ii) if the SEC is closed for operations due to a government shutdown, the Effectiveness Deadline shall be extended by the same number of Business Days in which the SEC remains closed. Upon the Pyrophyte Shareholder’s timely request, New SPAC shall provide a draft of the Registration Statement to the Pyrophyte Shareholder for review at least two (2) Business Days in advance of the date of filing the Registration Statement with the SEC (the “Filing Date”), and the Pyrophyte Shareholder shall provide any comments on the Registration Statement to New SPAC no later than the day immediately preceding the Filing Date. Unless otherwise agreed to in writing by the Pyrophyte Shareholder prior to the filing of the Registration Statement, the Pyrophyte Shareholder shall not be identified as a statutory underwriter in the Registration Statement; provided, that if the SEC requests that the Pyrophyte Shareholder be identified as a statutory underwriter in the Registration Statement, the Pyrophyte Shareholder will have the opportunity to withdraw from the Registration Statement upon its prompt written request to New SPAC. Notwithstanding the foregoing, if the SEC prevents New SPAC from including any or all of the shares proposed to be registered under the Registration Statement due to limitations on the use of Rule 415 of the Securities Act for the resale of the Registrable Securities by the applicable shareholders or otherwise, such Registration Statement shall register for resale such number of Registrable Securities which is equal to the maximum number of Registrable Securities as is permitted by the SEC. In such event, the number of Registrable Securities or other shares to be registered for each selling shareholder named in the Registration Statement shall be reduced pro rata among all such selling shareholders and as promptly as practicable after being permitted to register additional shares under Rule 415 under the Securities Act, New SPAC shall amend the Registration Statement or file one or more new Registration Statement(s) (such amendment or new Registration Statement shall also be deemed to be a “Registration Statement” hereunder) to register such additional Registrable Securities and cause such amendment or Registration Statement(s) to become effective as promptly as practicable after the filing thereof. |
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6.2 | Sio Newco agrees that, except for such times as New SPAC is permitted hereunder to suspend the use of the prospectus forming part of a Registration Statement, New SPAC will use its commercially reasonable efforts to cause such Registration Statement to remain effective with respect to the Pyrophyte Shareholder, including to prepare and file any post-effective amendment to such Registration Statement or a supplement to the related prospectus such that the prospectus will not include any untrue statement or a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, until the earlier of (i) two (2) years from the effective date of the Registration Statement, (ii) the date on which the Pyrophyte Shareholder ceases to hold any Registrable Securities or (iii) on the first date on which the Pyrophyte Shareholder can sell all of its Registrable Securities (or shares received in exchange therefor) under Rule 144 of the Securities Act without limitation as to the manner of sale or the amount of such securities that may be sold and without the requirement for New SPAC to be in compliance with the current public information required under Rule 144(c)(1) (or Rule 144(i)(2), if applicable) and New SPAC shall use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement as soon as reasonably practicable. For so long as the Registration Statement shall remain effective, New SPAC will use commercially reasonable efforts to file all reports, and provide all customary and reasonable cooperation, necessary to enable the Pyrophyte Shareholder to resell the Registrable Securities pursuant to the Registration Statement, qualify the Registrable Securities for listing on the Stock Exchange and update or amend the Registration Statement as necessary to include Registrable Securities. New SPAC will use its commercially reasonable efforts to, for so long as the Pyrophyte Shareholder holds Registrable Securities, make and keep public information available (as those terms are understood and defined in Rule 144) and file with the SEC in a timely manner all reports and other documents required of New SPAC under the Exchange Act so long as New SPAC remains subject to such requirements to enable the Pyrophyte Shareholder to resell the Registrable Securities pursuant to Rule 144. The Pyrophyte Shareholder agrees to disclose its beneficial ownership, as determined in accordance with Rule 13d-3 of the Exchange Act, of Registrable Securities to New SPAC (or its successor) upon request to assist New SPAC in making the determination described above. |
6.3 | New SPAC’s obligations to include the Registrable Securities in the Registration Statement are contingent upon the Pyrophyte Shareholder furnishing in writing to New SPAC a completed selling shareholder questionnaire in customary form that contains such information regarding the Pyrophyte Shareholder, the securities of New SPAC held by the Pyrophyte Shareholder and the intended method of disposition of the Registrable Securities as shall be reasonably requested by New SPAC to effect the registration of the Registrable Securities, and the Pyrophyte Shareholder shall execute such documents in connection with such registration as New SPAC may reasonably request that are customary of a selling shareholder in similar situations, including providing that New SPAC shall be entitled to postpone and suspend the effectiveness or use of the Registration Statement (i) during any customary blackout or similar period or as permitted hereunder and (ii) as may be necessary in connection with the preparation and filing of any post-effective amendments to the Registration Statement to address any financial statement updates required by Item 8.A of Form 20-F; provided, that New SPAC shall request such information from the Pyrophyte Shareholder, including the selling shareholder questionnaire, at least five (5) Business Days prior to the anticipated Filing Date of the Registration Statement; and provided, further, under no circumstances shall the Pyrophyte Shareholder be required to sign any type of lock-up agreement. In the case of the registration effected by New SPAC pursuant to this Agreement, New SPAC shall, upon reasonable request, inform the Pyrophyte Shareholder as to the status of such registration. The Pyrophyte Shareholder shall not be entitled to use the Registration Statement for an underwritten offering of Registrable Securities. Notwithstanding anything to the contrary contained herein, New SPAC may delay or postpone filing of such Registration Statement, and from time to time require the Pyrophyte Shareholder not to sell under the Registration Statement or suspend the use of any such Registration Statement if it determines in good faith that in order for the registration statement to not contain a material misstatement or omission, an amendment thereto would be needed, or if such filing or use could materially affect a bona fide business or financing transaction of New SPAC or could require premature disclosure of information that would materially adversely affect New SPAC (each such circumstance, a “Suspension Event”); provided, that, (x) New SPAC shall not so delay filing or so suspend the use of the Registration Statement for a period of more than sixty (60) consecutive days or more than three (3) times in any three hundred sixty (360) day period, and (y) New SPAC shall use commercially reasonable efforts to make such registration statement available for the sale by the Pyrophyte Shareholder of such securities as soon as practicable thereafter. |
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6.4 | Upon receipt of any written notice from New SPAC of the happening of (i) an issuance by the SEC of any stop order suspending the effectiveness of any Registration Statement or the initiation of any proceedings for such purpose, which notice shall be given no later than three (3) Business Days from the date of such event, (ii) any Suspension Event during the period that the Registration Statement is effective, which notice shall be given no later than three (3) Business Days from the date of such Suspension Event, or (iii) or if as a result of a Suspension Event the Registration Statement or related prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made (in the case of the prospectus) not misleading, the Pyrophyte Shareholder agrees that (1) it will immediately discontinue offers and sales of the Registrable Securities under the Registration Statement until the Pyrophyte Shareholder receives copies of a supplemental or amended prospectus (which New SPAC agrees to promptly prepare) that corrects the misstatement(s) or omission(s) referred to above and receives notice that any post-effective amendment has become effective or supplement has been filed or unless otherwise notified by New SPAC that it may resume such offers and sales, and (2) it will maintain the confidentiality of, and will not use, any information included in such written notice delivered by New SPAC unless otherwise required by law, subpoena or regulatory request or requirement; provided no notice given pursuant to this Section 6 shall contain material non-public information concerning New SPAC. If so directed by New SPAC, the Pyrophyte Shareholder will deliver to New SPAC or, in the Pyrophyte Shareholder’s sole discretion destroy, all copies of the prospectus covering the Registrable Securities in the Pyrophyte Shareholder’s possession; provided, however, that this obligation to deliver or destroy all copies of the prospectus covering the Registrable Securities shall not apply (w) to the extent the Pyrophyte Shareholder is required to retain a copy of such prospectus (A) in order to comply with applicable legal, regulatory, self-regulatory or professional requirements or (B) in accordance with a bona fide pre-existing document retention policy or (x) to copies stored electronically on archival servers as a result of automatic data back-up. |
6.5 | The Pyrophyte Shareholder may deliver written notice (an “Opt-Out Notice”) to New SPAC requesting that the Pyrophyte Shareholder not receive notices from New SPAC otherwise required by this Section 6; provided, however, that the Pyrophyte Shareholder may later revoke any such Opt-Out Notice in writing. Following receipt of an Opt-Out Notice from the Pyrophyte Shareholder (unless subsequently revoked), (i) New SPAC shall not deliver any such notices to the Pyrophyte Shareholder and the Pyrophyte Shareholder shall no longer be entitled to the rights associated with any such notice and (ii) each time prior to the Pyrophyte Shareholder’s intended use of an effective Registration Statement, the Pyrophyte Shareholder will notify New SPAC in writing at least two (2) Business Days in advance of such intended use, and if a notice of a Suspension Event was previously delivered (or would have been delivered but for the provisions of this Section 6.5) and the related suspension period remains in effect, New SPAC will so notify the Pyrophyte Shareholder, within one (1) Business Day of the Pyrophyte Shareholder’s notification to New SPAC, by delivering to the Pyrophyte Shareholder a copy of such previous notice of Suspension Event, and thereafter will provide the Pyrophyte Shareholder with the related notice of the conclusion of such Suspension Event promptly following its availability. |
6.6 | For purposes of this Section 6, (i) “Registrable Securities” shall mean, as of any date of determination, the Additional Shares and any other equity security issued or issuable with respect to the Registrable Securities by way of share split, dividend, distribution, recapitalization, merger, exchange, or replacement, and (ii) “the Pyrophyte Shareholder” shall include any affiliate of the Pyrophyte Shareholder to which the rights under this Section 6 shall have been duly assigned. |
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6.7 | Sio Newco shall indemnify and hold harmless the Pyrophyte Shareholder (to the extent the Pyrophyte Shareholder is a seller under the Registration Statement), the officers, directors, members, managers, partners, agents, investment advisors and employees of the Pyrophyte Shareholder, each person who controls the Pyrophyte Shareholder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members, managers, partners, agents and employees of each such controlling person, to the fullest extent permitted by applicable law, from and against any and all reasonable out-of-pocket losses, claims, damages, liabilities, costs (including, without limitation, reasonable and documented attorneys’ fees) and expenses (collectively, “Losses”) that arise out of or are based upon any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any prospectus included in the Registration Statement or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to the extent that such untrue statements, alleged untrue statements, omissions or alleged omissions are based upon information regarding the Pyrophyte Shareholder furnished in writing to Sio Newco by or on behalf of the Pyrophyte Shareholder expressly for use therein or that the Pyrophyte Shareholder has omitted a material fact from such information. Sio Newco shall notify the Pyrophyte Shareholder promptly of the institution, threat or assertion of any proceeding arising from or in connection with the transactions contemplated by this Section 6 of which Sio Newco is aware. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of an indemnified party and shall survive the transfer of the Registrable Securities by the Pyrophyte Shareholder. Notwithstanding the forgoing, Sio Newco’s indemnification obligations shall not apply to amounts paid in settlement of any Losses or action if such settlement is effected without the prior written consent of New SPAC (which consent shall not be unreasonably withheld or delayed). |
6.8 | The Pyrophyte Shareholder shall, severally and not jointly with any selling shareholder named in the Registration Statement, indemnify and hold harmless Sio Newco, its directors, officers, members, managers, partners, agents and employees, each person who controls Sio Newco (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, members, managers, partners, agents or employees of such controlling persons, to the fullest extent permitted by applicable law, from and against all Losses arising out of or based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any prospectus included in the Registration Statement, or any form of prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus, or any form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading to the extent, but only to the extent, that such untrue statements, alleged untrue statements, omissions or alleged omissions are based upon information regarding the Pyrophyte Shareholder furnished in writing to Sio Newco by or on behalf of the Pyrophyte Shareholder expressly for use therein. In no event shall the liability of the Pyrophyte Shareholder be greater in amount than the dollar amount of the net proceeds received by the Pyrophyte Shareholder upon the sale of the Registrable Securities giving rise to such indemnification obligation. Notwithstanding the forgoing, the Pyrophyte Shareholder’s indemnification obligations shall not apply to amounts paid in settlement of any Losses or action if such settlement is effected without the prior written consent of the Pyrophyte Shareholder (which consent shall not be unreasonably withheld or delayed). |
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6.9 | Any Person or entity entitled to indemnification herein shall (A) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s or entity’s right to indemnification hereunder to the extent such failure has not prejudiced the indemnifying party) and (B) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld, conditioned or delayed). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party (which consent shall not be unreasonably withheld or delayed), consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement), which settlement shall not include a statement or admission of fault and culpability on the part of such indemnified party, and which settlement shall include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. |
6.10 | The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person or entity of such indemnified party and shall survive the transfer of the Registrable Securities acquired pursuant to this Agreement. |
6.11 | If the indemnification provided under this Section 6 from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations; provided, however, that the liability of the Pyrophyte Shareholder shall be limited to the net proceeds received by the Pyrophyte Shareholder from the sale of Registrable Securities giving rise to such contribution obligation. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by (or not made by, in the case of an omission), or relates to information supplied by (or not supplied by, in the case of an omission), such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in this Section 7, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this Section 6.11 from any person or entity who was not guilty of such fraudulent misrepresentation. Notwithstanding anything to the contrary herein, in no event will any party be liable for consequential, special, exemplary or punitive damages in connection with this Agreement or the transactions contemplated hereby. |
7. | Termination. This Agreement shall terminate and be void and of no further force and effect, and all rights and obligations of the parties hereunder shall terminate without any further liability on the part of any party in respect thereof, upon the earlier of (a) such date and time as the Business Combination Agreement is terminated in accordance with its terms and (b) the mutual written agreement of the parties hereto to terminate this Agreement; provided, that nothing herein will relieve any party from liability for any willful breach hereof prior to the time of termination, and each party will be entitled to any remedies at law or in equity to recover losses, liabilities or damages arising from such breach. Pyrophyte shall notify the Pyrophyte Shareholder of the termination of the Business Combination Agreement promptly after the termination thereof. |
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8. | Trust Account Waiver. The Pyrophyte Shareholder hereby acknowledges that, as described in Pyrophyte’s prospectus relating to its initial public offering (the “IPO”) dated October 26, 2021 available at www.sec.gov, Pyrophyte has established a trust account (the “Trust Account”) containing the proceeds of the IPO and from certain private placements occurring simultaneously with the IPO (including interest accrued from time to time thereon) for the benefit of Pyrophyte, its public shareholders and certain other parties (including the underwriters of the IPO), and that, except as otherwise described in such prospectus, Pyrophyte may disburse monies from the Trust Account only to (x) its public shareholders in the event they elect to have their Pyrophyte Class A Shares redeemed for cash in connection with the consummation of Pyrophyte’s initial business combination, an amendment to its amended and restated memorandum and articles of association to extend the deadline by which Pyrophyte must consummate its initial business combination, or Pyrophyte’s failure to consummate an initial business combination by such deadline, (y) pay certain taxes from time to time, or (z) Pyrophyte after or concurrently with the consummation of its initial business combination. For and in consideration of Pyrophyte entering into this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Pyrophyte Shareholder, on behalf of itself and its affiliates, hereby (a) agrees that it does not now and shall not at any time hereafter have any right, title, interest or claim of any kind in or to any assets held in the Trust Account, and shall not make any claim against the Trust Account, arising out or as a result of, in connection with or relating in any way to this Agreement, and regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability (any and all such claims are collectively referred to hereafter as the “Released Claims”), (b) irrevocably waives any Released Claims that it may have against the Trust Account now or in the future as a result of, or arising out of, this Agreement, and (c) will not seek recourse against the Trust Account as a result of, in connection with or relating in any way to this Agreement; provided, however, that nothing in this Section 8 shall (i) serve to limit or prohibit the Pyrophyte Shareholder’s right to pursue a claim against Pyrophyte for legal relief against assets held outside the Trust Account (so long as such claim would not affect Pyrophyte’s ability to fulfill its obligation to effectuate any redemption right with respect to any securities of Pyrophyte), for specific performance or other equitable relief, (ii) serve to limit or prohibit any claims that the Pyrophyte Shareholder may have in the future against Pyrophyte’s assets or funds that are not held in the Trust Account (including any funds that have been released from the Trust Account and any assets that have been purchased or acquired with any such funds) (so long as such claim would not affect Pyrophyte’s ability to fulfill its obligation to effectuate any redemption right with respect to any securities of Pyrophyte) or (iii) be deemed to limit the Pyrophyte Shareholder’s right to distributions from the Trust Account in accordance with Pyrophyte’s amended and restated memorandum and articles of association in respect of any redemptions by the Pyrophyte Shareholder in respect of Pyrophyte Class A Shares acquired by any means other than pursuant to this Agreement. The Pyrophyte Shareholder acknowledges and agrees that such irrevocable waiver is a material inducement to Pyrophyte to enter into this Agreement, and further intends and understands such waiver to be valid, binding, and enforceable against the Pyrophyte Shareholder in accordance with applicable law. Notwithstanding anything in this Agreement to the contrary, the provisions of this Section 8 shall survive termination of this Agreement. |
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9. | Miscellaneous. |
9.1 | All notices, requests, demands, claims, and other communications hereunder shall be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given (i) when delivered personally to the recipient, (ii) when sent by electronic mail, with no mail undeliverable or other rejection notice, on the date of transmission to such recipient, if sent on a Business Day prior to 5:00 p.m. New York City time, or on the Business Day following the date of transmission, if sent on a day that is not a Business Day or after 5:00 p.m. New York City time on a Business Day, (iii) one (1) Business Day after being sent to the recipient via overnight mail by reputable overnight courier service (charges prepaid), or (iv) four (4) Business Days after being mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, and, in each case, addressed to the intended recipient at its address specified on the signature page hereof or to such electronic mail address or address as subsequently modified by written notice given in accordance with this Section 9.1. A courtesy electronic copy of any notice sent by methods (i), (iii), or (iv) above shall also be sent to the recipient via electronic mail if an electronic mail address is provided in the applicable signature page hereof or to an electronic mail address as subsequently modified by written notice given in accordance with this Section 9.1. |
9.2 | The Pyrophyte Shareholder acknowledges that Sio Newco and Pyrophyte will rely on the acknowledgments, understandings, agreements, representations and warranties of the Pyrophyte Shareholder contained in this Agreement. Prior to the Closing, the Pyrophyte Shareholder agrees to promptly notify Sio Newco and Pyrophyte if it becomes aware that any of the acknowledgments, understandings, agreements, representations and warranties of the Pyrophyte Shareholder set forth herein are no longer accurate in all material respects. Sio Newco and Pyrophyte acknowledge that the Pyrophyte Shareholder will rely on the acknowledgments, understandings, agreements, representations and warranties of Sio Newco and Pyrophyte contained in this Agreement. Prior to the Closing, each of Sio Newco and Pyrophyte agrees to promptly notify the Pyrophyte Shareholder if it becomes aware that any of their respective acknowledgments, understandings, agreements, representations and warranties set forth herein are no longer accurate in all material respects. |
9.3 | Each of Sio Newco, Pyrophyte and the Pyrophyte Shareholder is irrevocably authorized to produce this Agreement or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. |
9.4 | Each party hereto shall pay all of its own expenses in connection with this Agreement and the transactions contemplated herein. |
9.5 | Sio Newco shall be responsible for the fees of its transfer agent, stamp taxes, if applicable, and all of the DTC’s fees associated with the issuance of the Registrable Securities. |
9.6 | Neither this Agreement nor any rights that may accrue to the Pyrophyte Shareholder hereunder (other than the Registrable Securities acquired hereunder and the rights set forth in Section 6) may be transferred or assigned by the Pyrophyte Shareholder. Neither this Agreement nor any rights that may accrue to Sio Newco or Pyrophyte hereunder may be transferred or assigned by Pyrophyte (provided, that, for the avoidance of doubt, Sio Newco or Pyrophyte may transfer its rights hereunder solely in connection with the consummation of the Transaction and the Assumption). Notwithstanding the foregoing, the Pyrophyte Shareholder may assign its rights and obligations under this Agreement to one or more of its affiliates (including other investment funds or accounts managed or advised by the investment manager who acts on behalf of the Pyrophyte Shareholder) or, with Sio Newco’s prior written consent, to another person; provided, that in the case of any such assignment, the assignee(s) shall become a the Pyrophyte Shareholder hereunder and have the rights and obligations and be deemed to make the representations and warranties of the Pyrophyte Shareholder provided for herein to the extent of such assignment and provided further that no such assignment shall relieve the assigning the Pyrophyte Shareholder of its obligations hereunder if any such assignee fails to perform such obligations, unless Sio Newco has given its prior written consent to such relief. |
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9.7 | All the agreements, representations and warranties made by each party hereto in this Agreement shall survive the Closing. |
9.8 | Sio Newco may request from the Pyrophyte Shareholder such additional information as Sio Newco may reasonably deem necessary to evaluate the eligibility of the Pyrophyte Shareholder to acquire the Additional Shares and to register the Registrable Securities for resale, and the Pyrophyte Shareholder shall promptly provide such information as may be reasonably requested, to the extent readily available and to the extent consistent with its internal policies and procedures; provided, that Sio Newco agrees to keep any such information provided by the Pyrophyte Shareholder confidential, except (A) as required by the federal securities laws, rules or regulations and (B) to the extent such disclosure is required by other laws, rules or regulations, at the request of the staff of the SEC or other regulatory agency or under the regulations of the Stock Exchange. The Pyrophyte Shareholder acknowledges that Sio Newco and Pyrophyte may file a form of this Agreement with the SEC as an exhibit to a current or periodic report of Sio Newco and/or Pyrophyte or a registration statement of Sio Newco and/or Pyrophyte. |
9.9 | This Agreement may not be amended, modified or waived except by an instrument in writing, signed by each of the parties hereto. |
9.10 | This Agreement constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof. |
9.11 | Except as otherwise provided herein, this Agreement is intended for the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives, and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person. Except as provide herein, this Agreement shall not confer any rights or remedies upon any person other than the parties hereto, and their respective successors and assigns, and the parties hereto acknowledge that such persons so referenced are third party beneficiaries of this Agreement for the purposes of, and to the extent of, the rights granted to them, if any, pursuant to the applicable provisions. |
9.12 | The parties hereto acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached and that money or other legal remedies would not be an adequate remedy for such damage. It is accordingly agreed that the parties shall be entitled to equitable relief, including in the form of an injunction or injunctions to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which such party is entitled at law, in equity, in contract, in tort or otherwise. The parties hereto further acknowledge and agree: (x) to waive any requirement for the security or posting of any bond in connection with any such equitable remedy; (y) not to assert that a remedy of specific enforcement pursuant to this Section 9.12 is unenforceable, invalid, contrary to applicable law or inequitable for any reason; and (z) to waive any defenses in any action for specific performance, including the defense that a remedy at law would be adequate. |
9.13 | If any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby and shall continue in full force and effect. |
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9.14 | No failure or delay by a party hereto in exercising any right, power or remedy under this Agreement, and no course of dealing between the parties hereto, shall operate as a waiver of any such right, power or remedy of such party. No single or partial exercise of any right, power or remedy under this Agreement by a party hereto, nor any abandonment or discontinuance of steps to enforce any such right, power or remedy, shall preclude such party from any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The election of any remedy by a party hereto shall not constitute a waiver of the right of such party to pursue other available remedies. No notice to or demand on a party not expressly required under this Agreement shall entitle the party receiving such notice or demand to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the party giving such notice or demand to any other or further action in any circumstances without such notice or demand. |
9.15 | This Agreement may be executed and delivered in one or more counterparts (including by electronic mail, in .pdf or other electronic submission) and by different parties in separate counterparts, with the same effect as if all parties hereto had signed the same document. All counterparts so executed and delivered shall be construed together and shall constitute one and the same agreement. |
9.16 | This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the principles of conflicts of laws that would otherwise require the application of the law of any other state. |
9.17 | EACH PARTY AND ANY PERSON ASSERTING RIGHTS AS A THIRD PARTY BENEFICIARY HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OR RELATED TO THIS SUBSCRIPTION AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY OR ANY AFFILIATE OF ANY OTHER SUCH PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE. THE PARTIES AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS SUBSCRIPTION AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS SUBSCRIPTION AGREEMENT. |
9.18 | The parties agree that all disputes, legal actions, suits and proceedings arising out of or relating to this Agreement must be brought exclusively in the Court of Chancery of the State of Delaware and any state appellate court therefrom within the State of Delaware (or, if the Court of Chancery of the State of Delaware declines to accept jurisdiction over a particular matter, any federal court within the State of Delaware or, in the event each federal court within the State of Delaware declines to accept jurisdiction over a particular matter, any state court within the State of Delaware) (collectively the “Designated Courts”). Each party hereby consents and submits to the exclusive jurisdiction of the Designated Courts. No legal action, suit or proceeding with respect to this Agreement may be brought in any other forum. Each party hereby irrevocably waives all claims of immunity from jurisdiction, and any objection which such party may now or hereafter have to the laying of venue of any suit, action or proceeding in any Designated Court, including any right to object on the basis that any dispute, action, suit or proceeding brought in the Designated Courts has been brought in an improper or inconvenient forum or venue. Each of the parties also agrees that delivery of any process, summons, notice or document to a party hereof in compliance with Section 10.1 of this Agreement shall be effective service of process for any action, suit or proceeding in a Designated Court with respect to any matters to which the parties have submitted to jurisdiction as set forth above. |
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9.19 | This Agreement may only be enforced against, and any claim, action, suit or other legal proceeding based upon, arising out of, or related to this Agreement, or the negotiation, execution or performance of this Agreement, may only be brought against the entities that are expressly named as parties hereto. |
9.20 | Pyrophyte shall, by 9:00 a.m., New York City time, on the first (1st) Business Day immediately following the date of this Agreement, file with the SEC a Current Report on Form 8-K (the “Disclosure Document”) disclosing all material terms of this Agreement and the transactions contemplated hereby and thereby and the Transaction, and including as exhibits to the Disclosure Document, the form of this Agreement and the Other Agreement (in each case, without redaction). Notwithstanding anything in this Agreement to the contrary, neither Sio Newco nor Pyrophyte shall publicly disclose the name of the Pyrophyte Shareholder or any of its affiliates or advisers, or include the name of the Pyrophyte Shareholder or any of its affiliates or advisers (i) in any press release, without the prior written consent of the Pyrophyte Shareholder and (ii) any filing with the SEC or any regulatory agency or trading market, without the prior written consent of the Pyrophyte Shareholder, except (A) as required by the federal securities laws, rules or regulations and (B) to the extent such disclosure is required by other laws, rules or regulations, at the request of the staff of the SEC or other regulatory agency or under the regulations of the Stock Exchange, in which case of clause (A) or (B), Sio Newco or Pyrophyte, as the case may be, shall provide the Pyrophyte Shareholder with prior written notice (including by e-mail) of such permitted disclosure, and shall reasonably consult with the Pyrophyte Shareholder regarding such disclosure. The Pyrophyte Shareholder will promptly provide any information reasonably requested by either Sio Newco or Pyrophyte for any regulatory application or filing made or approval sought in connection with the Transaction (including filings with the SEC). |
9.21 | The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rules of strict construction will be applied against any party. Unless the context otherwise requires, (i) all references to Sections, Schedules or Exhibits are to Sections, Schedules or Exhibits contained in or attached to this Agreement, (ii) each accounting term not otherwise defined in this Agreement has the meaning assigned to it in accordance with GAAP, (iii) words in the singular or plural include the singular and plural and pronouns stated in either the masculine, the feminine or neuter gender shall include the masculine, feminine and neuter, (iv) the use of the word “including” in this Agreement shall be by way of example rather than limitation, and (v) the word “or” shall not be exclusive. |
[signature page follows]
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be duly executed on its behalf as of the day and year first above written.
PYROPHYTE ACQUISITION CORP. | |||
By: | /s/ Sten Gustafson | ||
Name: | Sten Gustafson | ||
Title: | Chief Financial Officer |
Address for Notices: | |
Pyrophyte Acquisition Corp. | |
3262 Westheimer Road, Suite 706 | |
Houston, Texas 77098 | |
Attention: Sten Gustafson | |
with a copy (not to constitute notice) to: | |
White & Case LLP | |
1221 Avenue of the Americas | |
New York, New York 10020 | |
Attention: Elliott Smith |
Sio Silica Incorporated | |||
By: | /s/ Feisal Somji | ||
Name: | Feisal Somji | ||
Title: | Director |
Address for Notices: | |
Sio Silica Incorporated | |
Suite 1930, 440 – 2nd Avenue SW | |
Calgary, Alberta | |
T2P 5E9 | |
Canada | |
Attention: Feisal Somji | |
with a copy (not to constitute notice) to: | |
DLA Piper LLP (US) | |
1251 Avenue of the Americas, 27th Floor | |
New York, New York 10020 | |
Attention: Stephen Alicanti |
VERITION MULTI-STRATEGY MASTER FUND LTD. | |||
By: | Verition Fund Management, LLC, solely in its capacity as investment manager | ||
By: | /s/ William Anderson | ||
Name: | William Anderson | ||
Title: | Chief Financial Officer |
Address for Notices: | |
VERITION MULTI-STRATEGY MASTER FUND LTD. | |
c/o Verition Fund Management LLC | |
One American Lane | |
Greenwich, CT 06831 |
Exhibit 10.4
LOCK-UP AGREEMENT
This Lock-Up Agreement (this “Agreement”) is made and entered into as of November 13, by and among the Lock-Up Shareholders (as defined in the Business Combination Agreement) (each, a “Lock-Up Party” and, collectively, the “Lock-Up Parties”) and Sio Silica Incorporated, an Alberta corporation (such entity, following the Business Combination (as defined below), “New SPAC”). Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Business Combination Agreement (as defined below).
RECITALS
WHEREAS, on November 13, 2023, Pyrophyte Acquisition Corp., a Cayman Islands exempted company (“SPAC”), Sio Silica Corporation, an Alberta corporation (the “Company”), Sio Silica Incorporated, an Alberta corporation and wholly owned subsidiary of the Company (such entity, prior to the Business Combination, “Sio NewCo”), and Snowbank Newco Alberta ULC, an Alberta unlimited liability corporation and wholly owned subsidiary of SPAC (“NewCo”), entered into a Business Combination Agreement (the “Business Combination Agreement”), pursuant to which, among other things, on or about the date hereof, (i) SPAC transferred by way of continuation from the Cayman Islands to Alberta and domesticated as an Alberta corporation, (ii) SPAC amalgamated with Sio NewCo to form New SPAC, and (iii) the Company amalgamated with NewCo to form a wholly-owned subsidiary of New SPAC (collectively, the “Business Combination”);
WHEREAS, as of the date hereof, each Lock-Up Party Beneficially Owns (as defined below) such number of New SPAC Class A Common Shares as set forth on its signature page;
WHEREAS, in connection with the Business Combination, pursuant to the Plan of Arrangement, each Lock-Up Party will become bound by this Agreement with respect to all Lock-Up Securities (as defined below); and
WHEREAS, in connection with the Transactions, each party hereto has determined that it is in its best interests to enter into this Agreement to set forth certain understandings among the parties with respect to restrictions on transfer of Lock-Up Securities.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth below and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, do hereby agree as follows:
1. Definitions. When used in this Agreement, the following terms in all of their tenses, cases and correlative forms shall have the meanings assigned to them in this Section 1 or elsewhere in this Agreement.
“Affiliate” of a specified Person means a Person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person (provided, that if a Lock-Up Party is a venture capital, private equity or angel fund, no portfolio company of such Lock-Up Party will be deemed an Affiliate of such Lock-Up Party).
“Beneficially Own” has the meaning set forth in Rule 13d-3 promulgated under the Exchange Act.
“New SPAC Securities” means (a) the Class A common shares in the authorized share capital of New SPAC (“New SPAC Common Shares”), (b) any option or right to acquire New SPAC Common Shares, (c) any New SPAC Class A Common Shares issued or issuable upon the exercise of any option or other right to acquire such New SPAC Class A Common Shares and (d) any equity securities of New SPAC that may be issued or distributed or be issuable with respect to the securities referred to in clause (a), (b) or (c) by way of conversion, dividend, share split or other distribution, merger, consolidation, exchange, recapitalization or reclassification or similar transaction.
“Family Member” means with respect to any individual, a spouse, lineal descendant (whether natural or adopted) or spouse of a lineal descendant of such individual or any trust created for the benefit of such individual or of which any of the foregoing is a beneficiary.
“Lock-Up Securities” means any New SPAC Securities Beneficially Owned by a Lock-Up Party as of the date hereof, other than 10% of the aggregate amount of such New SPAC Securities and any New SPAC Securities acquired in open market transactions.
“Permitted Transferee” means with respect to any Person, (a) if the Person is an individual, any Family Member, trust, or other entity formed for estate planning purposes for the primary benefit of a Family Member of such Person; (b) any Affiliate of such Person or any investment fund or other entity directly or indirectly controlled or managed by such Person or such Person’s Affiliate, including a registered retirement savings plan, (c) any Affiliate of any Family Member of such Person, (d) if the Person is a corporation, partnership, limited liability company or other business entity, (i) its direct or indirect shareholders, partners, members or other equityholders, (ii) its officers or directors or an Affiliate or Family Member of such entity’s officers or directors, (iii) its employees or employees of its Affiliates; or (iv) another corporation, partnership, limited liability company, trust or other business entity that controls, is controlled by or is under common control or management with such Person; (e) if the Person is a trust or a trustee of a trust, a trustor or beneficiary of the trust, the designated nominee of a beneficiary of such trust, or the estate of a beneficiary of such trust; and (f) New SPAC in connection with the repurchase of New SPAC Common Shares issued pursuant to equity awards granted under an equity incentive plan or other equity award plan or pursuant to loan agreements between New SPAC and certain employees of New SPAC.
“Transfer” shall mean (a) the sale of, offer to sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the SEC promulgated thereunder with respect to, any security, (b) the entry into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (c) the public announcement of any intention to effect any transaction specified in clause (a) or (b), excluding entry into this Agreement and the consummation of the transactions contemplated hereby.
2. Lock-Up.
2.1 Lock-Up. Each Lock-Up Party severally, and not jointly, agrees with New SPAC not to effect any Transfer of any Lock-Up Securities Beneficially Owned or otherwise held by such Lock-Up Party during the Lock-Up Period (as defined below); provided, that such prohibition shall not apply to Transfers permitted pursuant to Section 2.2. The “Lock-Up Period” shall be the period commencing on the date hereof and ending on the earlier of: (a) the date that is six (6) months following the date hereof; and (b) the date that the last sale price of New SPAC Common Shares equals or exceeds US$12.00 per share (as adjusted for share subdivisions, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-day trading period.
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2.2 Permitted Transfers. Notwithstanding anything to the contrary contained in this Agreement, during the Lock-Up Period, each Lock-Up Party may (a) Transfer, without the consent of New SPAC, any of such Lock-Up Party’s Lock-Up Securities (i) to any of such Lock-Up Party’s Permitted Transferees, upon written notice to New SPAC, or (ii) (A) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual, or for estate planning purposes; (B) in the case of an individual, pursuant to a qualified domestic relations order; (C) in the case of an individual, by gift to a charitable organization; (D) in the case of an entity, by virtue of the laws of the jurisdiction of the entity’s organization and the entity’s organizational documents upon dissolution of the entity; or (E) pursuant to any liquidation, merger, share exchange or other similar transaction which results in all of New SPAC’s shareholders having the right to exchange their New SPAC Securities for cash, securities or other property subsequent to the Business Combination, or (b) enter into any trading plan providing for the sale of New SPAC Common Shares by the Lock-Up Party, which trading plan meets the requirements of Rule 10b5-1(c) of the Exchange Act, provided, however, that (x) such plan does not provide for, or permit, the sale of any New SPAC Common Shares during the Lock-Up Period and (y) New SPAC shall not be required to effect, and the Lock-Up Party shall not effect or cause to be effected, any public filing, report or other public announcement regarding the establishment of the trading plan; provided, that in connection with any Transfer of such Lock-Up Securities pursuant to clause (a)(i), (a)(ii)(A), (a)(ii)(B), (a)(ii)(C) or (a)(ii)(D) above, the restrictions and obligations contained in Section 2.1 and this Section 2.2 will continue to apply to such Lock-Up Securities after any Transfer of such Lock-Up Securities and such transferee shall execute and deliver a lock-up agreement substantially in the form of this Agreement for the balance of the Lock-Up Period. Notwithstanding the foregoing provisions of this Section 2.2, a Lock-Up Party may not make a Transfer to a Permitted Transferee or otherwise pursuant to this Section 2.2 if such Transfer has as a purpose the avoidance of, or is otherwise undertaken in contemplation of avoiding, the restrictions on Transfers in this Agreement (it being understood that the purpose of this provision includes prohibiting the Transfer to a Permitted Transferee (1) that has been formed to facilitate a material change with respect to who or which entities Beneficially Own the Lock-Up Securities, or (2) followed by a change in the relationship between the Lock-Up Party and the Permitted Transferee (or a change of control of such Lock-Up Party or Permitted Transferee) after the Transfer with the result and effect that the Lock-Up Party has indirectly made a Transfer of Lock-Up Securities by using a Permitted Transferee, which Transfer would not have been directly permitted under this Section 2 had such change in such relationship occurred prior to such Transfer).
2.3 Legends. Any certificates representing the Lock-Up Securities shall have endorsed thereon legends substantially as follows:
“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A LOCK-UP AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF DURING THE TERM OF THE LOCK-UP EXCEPT IN ACCORDANCE WITH THE TERMS OF THE LOCK-UP AGREEMENT BETWEEN THE COMPANY AND SECURITYHOLDER.”
3. New SPAC Board Release. Notwithstanding anything in this Agreement to the contrary, it is understood and agreed that the Board of Directors of New SPAC shall be entitled to release any Lock-Up Party from any or all of its obligations hereunder on behalf of New SPAC, provided, however, that if one Lock-Up Party is released, the other Lock-Up Parties shall also be similarly released to the same relative extent as the released Lock-Up Party.
4. Fiduciary Duties. The covenants and agreements set forth herein shall not prevent any Lock-Up Party or designee of any Lock-Up Party from serving on the Board of Directors of New SPAC or from taking any action, subject to the provisions of the Business Combination Agreement, while acting in such Person’s capacity as a director of New SPAC. Each Lock-Up Party is entering into this Agreement solely in its capacity as the owner of New SPAC Securities following the consummation of the Business Combination.
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5. Termination. This Agreement shall terminate upon the expiration of the Lock-Up Period. Upon termination of this Agreement, none of the parties hereto shall have any further obligations or liabilities under this Agreement; provided, that nothing in this Section 5 shall relieve any party hereto of liability for any willful material breach of this Agreement prior to its termination.
6. Miscellaneous.
6.1 Severability. In the event that any term, provision, covenant or restriction of this Agreement, or the application thereof, is held to be illegal, invalid or unenforceable under any present or future Law: (a) such provision will be fully severable; (b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof; and (c) all other provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order than the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
6.2 Non-survival. None of the covenants, obligations or other agreements in this Agreement or in any schedule, statement, instrument or other document delivered pursuant to this Agreement shall survive the termination of this Agreement.
6.3 Assignment. No party hereto may assign, directly or indirectly, including by operation of Law, either this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of the other parties hereto, except with respect to a Transfer completed in accordance with Section 2.2. Subject to the first sentence of this Section 6.3, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Any assignment in violation of this Section 6.3 shall be void ab initio.
6.4 Amendments and Modifications. This Agreement may be amended by the parties hereto at any time by execution of an instrument in writing signed by (1) New SPAC and (2) Lock-Up Parties holding 75% of New SPAC Common Shares (assuming the exercise and conversion of all then-outstanding New SPAC Securities) that are then subject to this Agreement. Any such amendment shall be binding on all the Lock-Up Parties; provided, that no amendment shall be binding upon any Lock-Up Party to the extent that it materially increases any obligation upon, or otherwise materially adversely changes the rights of, such Lock-Up Party, except upon the written consent of such Lock-Up Party.
6.5 Specific Performance. The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof, and, accordingly, that the parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any court in the Court of King’s Bench of Alberta without proof of actual damages or otherwise, in addition to any other remedy to which they are entitled at Law or in equity as expressly permitted in this Agreement. Each of the parties hereby further waives (a) any defense in any action for specific performance that a remedy at Law would be adequate and (b) any requirement under any Law to post security or a bond as a prerequisite to obtaining equitable relief.
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6.6 Notices. All notices, consents and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by email (provided no “bounceback” or notice of non-delivery is received) or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 6.6):
If to New SPAC:
Suite 1930, 440 – 2nd Avenue SW Calgary, Alberta T2P 5E9 Canada Attention: Feisal Somji
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With a copy to:
DLA Piper LLP (US) 1251 Avenue of the Americas, 27th Floor New York, NY 10020 Attention: Daniel Kenney; Christopher Giordano; Stephen Alicanti |
If to a Lock-Up Party, to the address for notice set forth on Schedule A hereto, with a copy (which shall not constitute notice) to:
DLA Piper LLP (US)
1251 Avenue of the Americas, 27th Floor
New York, NY 10020
Attention: Daniel Kenney; Christopher Giordano; Stephen Alicanti
6.7 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the Province of Alberta. All legal actions and proceedings arising out of or relating to this Agreement shall be heard and determined exclusively in Court of King’s Bench of Alberta. The Parties hereto (a) irrevocably submit to the exclusive jurisdiction of the aforesaid courts for themselves and with respect to their respective properties for the purpose of any Action arising out of or relating to this Agreement brought by any Party, and (b) agree not to commence any Action relating thereto except in the courts described above in the Province of Alberta, other than Actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in the Province of Alberta as described herein. Each of the Parties further agrees that notice as provided herein shall constitute sufficient service of process and the Parties further waive any argument that such service is insufficient. Each of the Parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any Action arising out of or relating to this Agreement or the Transactions, (i) any claim that it is not personally subject to the jurisdiction of the courts in the Province of Alberta as described herein for any reason, (ii) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) that (A) the Action in any such court is brought in an inconvenient forum, (B) the venue of such Action is improper or (C) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
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6.8 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 6.8.
6.9 Entire Agreement; Third-Party Beneficiaries. This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, both written and oral, among the parties hereto with respect to the subject matter hereof and is not intended to confer upon any other Person other than the parties hereto any rights or remedies.
6.10 Counterparts. This Agreement may be executed and delivered (including by facsimile or portable document format (pdf) transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
6.11 Effect of Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
6.12 Expenses. Except as otherwise set forth in this Agreement, all fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party hereto incurring such expenses.
6.13 Further Assurances. At the request of New SPAC, in the case of any Lock-Up Party, or at the request of the Lock-Up Parties, in the case of New SPAC, and without further consideration, each party shall execute and deliver or cause to be executed and delivered such additional documents and instruments and take such further action as may be reasonably necessary to consummate the transactions contemplated by this Agreement.
6.14 Waiver. No failure or delay on the part of any party to exercise any power, right, privilege or remedy under this Agreement shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy. No party shall be deemed to have waived any claim available to such party arising out of this Agreement, or any power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument duly executed and delivered on behalf of such waiving party; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given.
6.15 Several Liability. The liability of any Lock-Up Party hereunder is several (and not joint). Notwithstanding any other provision of this Agreement, in no event will any Lock-Up Party be liable for any other Lock-Up Party’s breach of such other Lock-Up Party’s covenants or agreements contained in this Agreement.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.
NEW SPAC: | |||
SIO SILICA INCORPORATED | |||
By: | |||
Name: | |||
Title: |
Signature Page to Lock-Up Agreement
LOCK-UP PARTY: | |
Signature | |
Printed Name of Person Signing | |
(Indicate capacity of person signing if signing as custodian or trustee, or on behalf of an entity) | |
No. of Beneficially Owned Shares |
Signature Page to Lock-Up Agreement
SCHEDULE A
LOCK-UP PARTIES1
No. | Name | No. of Shares Held | Address | |||
1 | The parties agree that each Sio shareholder holding more than 1% of Sio equity immediately prior to the Company Amalgamation Effective Time will execute this Lock-Up Agreement. |
SCH A-1
Exhibit 10.5
SPONSOR SUPPORT AGREEMENT
THIS SPONSOR SUPPORT AGREEMENT (this “Agreement”), dated as of November 13, 2023, is entered into by and among Sio Silica Incorporated, an Alberta corporation (“Sio Silica Incorporated”), Sio Silica Corporation, an Alberta corporation (the “Company”), Pyrophyte Acquisition LLC, a Delaware limited liability company (“Sponsor”), Pyrophyte Acquisition Corp., a Cayman Islands exempted company (“SPAC”), and, solely for the purpose of Section 25, the undersigned individuals, each of whom is a member of SPAC’s board of directors and/or management team (each of the undersigned individuals, an “Insider” and collectively, the “Insiders”).
RECITALS
WHEREAS, as of the date hereof, Sponsor is the record and “beneficial owner” (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended (together with the rules and regulations promulgated thereunder, the “Exchange Act”)) of and is entitled to dispose of and vote, in the aggregate, 5,031,250 SPAC Class A Ordinary Shares (the “Owned Shares”; the Owned Shares and any additional SPAC Class A Ordinary Shares (or any securities convertible into or exercisable or exchangeable for SPAC Class A Ordinary Shares) in which Sponsor acquires record or beneficial ownership after the date hereof, including by purchase, as a result of a share dividend, share subdivision, recapitalization, consolidation, reclassification, exchange or change of such shares, or upon exercise, conversion or exchange of any securities (including any warrants), the “Covered Shares”). For the avoidance of doubt, SPAC Class A Ordinary Shares shall be referred to as SPAC Class A Common Shares following the Domestication and shall be included within the definition of “Owned Shares”;
WHEREAS, concurrently herewith, SPAC, the Company, Snowbank NewCo Alberta ULC, an Alberta unlimited liability corporation, and Sio Silica Incorporated are entering into a Business Combination Agreement (as amended, supplemented, restated or otherwise modified from time to time, the “Business Combination Agreement”; capitalized terms used but not otherwise defined in this Agreement shall have the meanings ascribed to them in the Business Combination Agreement), pursuant to which, by means of the Arrangement, Sio Silica Incorporated and SPAC will amalgamate (the “SPAC Amalgamation”) at the SPAC Amalgamation Effective Time, with Sio Silica Incorporated continuing as the surviving company after the SPAC Amalgamation, followed by an amalgamation of the Company and NewCo (the “Company Amalgamation” and, collectively with the SPAC Amalgamation, the “Amalgamations”) at the Company Amalgamation Effective Time, with the Company continuing as the surviving company after the Company Amalgamation;
WHEREAS, SPAC, the Sponsor and the Insiders are party to that certain letter agreement, dated as of October 26, 2021 (the “Insider Letter”), and, pursuant to Section 13 of the Insider Letter, wish to amend the Insider Letter as set forth in Section 25 hereto; and
WHEREAS, as a condition and inducement to the willingness of SPAC and the Company to enter into the Business Combination Agreement, Sio Silica Incorporated, the Company and Sponsor are entering into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, Sio Silica Incorporated, the Company and Sponsor hereby agree as follows:
1. Agreement to Vote. Subject to the earlier termination of this Agreement in accordance with Section 5, Sponsor, in its capacity as a shareholder of SPAC, irrevocably and unconditionally agrees that, at the SPAC Shareholders Meeting, which shall be convened for the purpose of obtaining the SPAC Shareholder Approval (whether annual or extraordinary and whether or not an adjourned or postponed meeting, however called and including any adjournment or postponement thereof), Sponsor shall:
(a) if and when the SPAC Shareholders Meeting is held, appear at such meeting or otherwise cause the Covered Shares to be counted as present thereat for the purpose of establishing a quorum;
(b) vote, or cause to be voted, at the SPAC Shareholders Meeting (or execute and deliver a written consent, if applicable, causing to be voted) all of the Covered Shares owned as of the record date for such meeting in favor of each of the Transaction Proposals and any other matters necessary or reasonably requested by SPAC for the consummation of the Transactions, including any actions necessary to effectuate the matters contemplated by the Transaction Proposals;
(c) vote, or cause to be voted, at the SPAC Shareholders Meeting (or execute and deliver a written consent, if applicable, causing to be voted), all of the Covered Shares owned as of the record date for such meeting against (i) any Alternative Transaction and (ii) any other action that would reasonably be expected to (A) impede, interfere with, delay, postpone or adversely affect the Transactions or result in a breach of any covenant, representation or warranty or other obligation or agreement of SPAC under the Business Combination Agreement or result in any of the conditions set forth in Article VII of the Business Combination Agreement not being fulfilled, (B) result in a breach of any covenant, representation or warranty or other obligation or agreement of it contained in this Agreement or (C) change in any manner the dividend policy or capitalization of, including the voting rights of, any class of shares of SPAC (other than as contemplated by the Business Combination Agreement);
(d) in any other circumstances upon which a consent or other approval is required under the SPAC Organizational Documents or otherwise sought in furtherance of the Transactions, vote, consent or approve (or cause to be voted, consented or approved) all of Sponsor’s Covered Shares owned at such time in favor thereof;
(e) vote (or execute and return an action by written resolution), or cause to be voted at such meeting, or validly execute and return and cause such written resolution to be granted with respect to, all of such Covered Shares against any change in business, management or the SPAC Board (other than in connection with the Business Combination and the other proposals related to the Business Combination); and
(f) not redeem any Covered Shares owned by it in connection with such SPAC Shareholder Approval.
The obligations of Sponsor specified in Section 1 shall apply whether or not the Amalgamations or any action described above is recommended by the board of directors of SPAC or any committee thereof or the board of directors of SPAC or any committee thereof has previously recommended the Amalgamations or such action but changed its recommendation.
2. Restricted New SPAC Sponsor Shares.
(a) For the purposes of this Agreement, “Restricted Owned Shares” shall mean the number of Owned Shares held by Sponsor that will become subject to the restrictions pursuant hereto as of the SPAC Amalgamation Effective Time in connection with obtaining (i) the PIPE Financing under one or more PIPE Subscription Agreements, (ii) non-redemption agreements or (iii) any other sources of Available Closing Cash; provided, however, that (A) in no event shall the aggregate number of Restricted Owned Shares equal more than 4,025,000 Owned Shares (the “Maximum Restricted Owned Shares”), (B) if, prior to the Closing, the sum of all Available Closing Cash raised from the PIPE Financing, any non-redemption agreements (including the Non-Redemption Agreement) and any other cash and cash equivalents of SPAC (including the proceeds of any securities funded in connection with the Closing but excluding, for the avoidance of doubt, (I) the Royalty Agreement Proceeds, (II) proceeds received from any flow-through common shares (other than to the extent that any incentive equity interests are issued in connection with such issuance) and (III) any Indebtedness funded in connection with the Closing) (collectively, the “SPAC Proceeds”) is less than $70,000,000, then (1) the number of Restricted Owned Shares shall be equal to the actual number of Owned Shares that were used to secure such SPAC Proceeds, up to (but not exceeding) an amount equal to the Maximum Restricted Owned Shares (the “Incentive Owned Shares”), and (2) a number of Owned Shares equal to (x) 4,025,000 minus (y) the number of Incentive Owned Shares shall be automatically forfeited and deemed transferred to SPAC for cancellation for no consideration, and (C) if, prior to the Closing, the sum of the Available Closing Cash raised from the SPAC Proceeds is equal to or greater than $70,000,000, then the number of Restricted Owned Shares shall be equal to the Incentive Owned Shares. At least two Business Days prior to the Company Amalgamation, Sponsor shall deliver to the Company a statement setting forth the estimated number of Restricted Owned Shares. For the avoidance of doubt, the parties agree that, for as long as the Restricted Owned Shares remaining outstanding, Sponsor (or its permitted transferee pursuant to a Permitted Transfer (defined below)) shall remain the owner thereof.
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(b) Sponsor acknowledges and agrees that, in accordance with the terms and conditions of the Business Combination Agreement and the Plan of Arrangement, at the SPAC Amalgamation Effective Time, pursuant to, and in accordance with, the terms of the Business Combination Agreement, each Restricted Owned Share shall be exchanged, on a one-for-one basis, for a New SPAC Class A Common Share, which SPAC Class A Common Shares shall be subject to forfeiture or release in accordance with Section 3 (the “Restricted New SPAC Sponsor Shares”).
(c) Other than pursuant to a Permitted Transfer, Sponsor shall not, directly or indirectly, sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either voluntarily or involuntarily, any of the Restricted New SPAC Sponsor Shares unless and until such Restricted New SPAC Sponsor Shares are released to Sponsor pursuant to Section 3.
3. Release of Restricted New SPAC Sponsor Shares.
(a) Within five Business Days after the occurrence of a Restriction Release Event (defined below), the Company shall provide written notice to Sponsor setting forth in reasonable detail such Restriction Release Event and the number of Restricted New SPAC Sponsor Shares in respect of which the transfer restrictions set forth in Section 2(c) and the forfeiture provisions set forth in Section 3(d) (collectively, the “Restrictions”) will be released and terminated.
(b) The Restricted New SPAC Sponsor Shares shall be automatically released from the Restrictions as follows:
(i) if, at any time during the period commencing on the Closing Date and ending on the date that is three years after the Closing Date (the “Sponsor Earnout Period”), the Trading Price is greater than or equal to $12.50, then fifty percent (50%) of the Restricted New SPAC Sponsor Shares shall immediately be released from the Restrictions and no longer be subject to the forfeiture conditions set forth in this Agreement; and
(ii) if, at any time during the Sponsor Earnout Period, the Trading Price is greater than or equal to $15.00, then the remaining fifty percent (50%) of the Restricted New SPAC Sponsor Shares shall immediately be released from the Restrictions and no longer be subject to the forfeiture conditions provided in this Agreement.
The occurrence of either clause (i) or (ii) shall be referred to herein as a “Restriction Release Event.”
(c) For the avoidance of doubt, if the release conditions set forth in Section 3(b)(ii) have been satisfied, then all of the Restricted New SPAC Sponsor Shares shall immediately and automatically be released from, and no longer be subject to the Restrictions.
(d) If, upon the expiration of the Sponsor Earnout Period, any Restricted New SPAC Sponsor Shares remain subject to the Restrictions and were not released pursuant to Section 3(b), then such Restricted New SPAC Sponsor Shares shall be automatically forfeited and deemed transferred to New SPAC for cancellation for no consideration, and no Person (other than New SPAC) shall have any further right with respect thereto.
(e) If, during the Sponsor Earnout Period, the New SPAC Class A Common Shares outstanding as of immediately following the Company Amalgamation Effective Time shall have been changed into a different number of shares or a different class, by reason of any share subdivision, share consolidation, stock or share dividend or distribution of New SPAC Class A Common Shares or Restricted New SPAC Sponsor Shares, or securities convertible into any such securities, reorganization, recapitalization, reclassification or other like change, or if any similar event shall have occurred, then the applicable Trading Price specified in Section 3(b) shall be equitably adjusted to reflect such change.
(f) If, during the Sponsor Earnout Period, there is a Change of Control that will result in an Acceleration Event, then, immediately prior to the consummation of such Change of Control, any Restricted New SPAC Sponsor Shares that have not previously been released from Restrictions shall be deemed released and no longer subject to the forfeiture conditions set forth in this Agreement and the Sponsor Earnout Period shall be deemed terminated; provided that such Restricted New SPAC Sponsor Shares shall be deemed released (and such Restriction Release Event achieved) only to the extent that the price per share of New SPAC Class A Common Shares in the Change of Control equals or exceeds the applicable Trading Price required in connection with such Restriction Release Event (inclusive of any escrows, holdbacks or fixed deferred purchase price, but exclusive of any contingent deferred purchase price, earnouts or the like); provided, further, that, if and to the extent such price is payable in whole or in part in the form of consideration other than cash, the price for such non-cash consideration shall be (i) with respect to any securities, (A) the average of the closing prices of the sales of such securities on all securities exchanges on which such securities are then listed, averaged over a period of 21 days consisting of the day as of which such value is being determined and the 20 consecutive trading days preceding such day, or (B) if the information contemplated by the preceding clause (A) is not practically available, then the fair value of such securities as of the date of valuation as determined in accordance with the succeeding clause (ii), and (ii) with respect to any other non-cash assets, the fair value thereof as of the date of valuation, as determined by an independent, nationally recognized investment banking firm selected by the then board of directors of New SPAC, on the basis of an orderly sale to a willing, unaffiliated buyer in an arm’s-length transaction, taking into account all factors determinative of value as the investment banking firm determines relevant. For the avoidance of doubt, in the event of a Change of Control, including where the consideration payable is other than a specified price per share, for purposes of determining whether a Trading Price required in connection with an applicable Restriction Release Event has been achieved, the price per paid per share of New SPAC Class A Common Shares shall be calculated taking into account all of the Restricted New SPAC Sponsor Shares (whether or not then released). For the avoidance of doubt, prior to release of a Restricted New SPAC Sponsor Share in accordance with the terms of Section 3, such Restricted New SPAC Sponsor Share shall bear a legend prohibiting transfer until such time as the Restrictions with respect to such Restricted New SPAC Sponsor Share no longer apply. As soon as practicable, and in any event within two Business Days after the occurrence of a Restriction Release Event, New SPAC shall remove, or cause to be removed, any such legend from the books and records of New SPAC evidencing the Restricted New SPAC Sponsor Shares that have been released.
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(g) For so long as any Restricted New SPAC Sponsor Shares remain subject to the Restrictions, the parties hereto agree that Sponsor (or its permitted transferee pursuant to a Permitted Transfer) (i) shall be entitled to exercise the voting rights carried by such Restricted New SPAC Sponsor Shares and (ii) shall (A) be treated as the owner of the Restricted New SPAC Sponsor Shares for income tax purposes unless and until such shares are forfeited pursuant to Section 3(b) or Section 3(d), and (B) shall file all tax returns consistent with such treatment.
4. No Inconsistent Agreements. Sponsor hereby covenants and agrees that Sponsor shall not, at any time prior to the Termination Date (as defined below), (a) enter into any voting agreement or voting trust with respect to any of Sponsor’s Covered Shares that is inconsistent with Sponsor’s obligations pursuant to this Agreement, (b) grant a proxy or power of attorney with respect to any of Sponsor’s Covered Shares that is inconsistent with Sponsor’s obligations pursuant to this Agreement, or (c) enter into any agreement or undertaking that is otherwise inconsistent with, or would interfere with, or prohibit or prevent it from satisfying, its obligations pursuant to this Agreement.
5. Termination. This Agreement shall terminate, and no party shall have any further obligations or liabilities under this Agreement, upon the earliest of (a) the termination of the Business Combination Agreement in accordance with its terms prior to the Closing and (b) the time that this Agreement is terminated upon the mutual written agreement of the Company, Sio Silica Incorporated and Sponsor (the earliest such date under clauses (a) and (b) being referred to herein as the “Termination Date”); provided that termination of this Agreement shall not relieve any party hereto from any liability for any willful breach of, or actual fraud in connection with, this Agreement prior to such termination.
6. Representations and Warranties of Sponsor. Sponsor hereby represents and warrants to the Company and Sio Silica Incorporated as of the date hereof as follows:
(a) Sponsor is the legal and beneficial owner of, and has good, valid and marketable title to, the Covered Shares, free and clear of Liens other than as created by this Agreement and Permitted Liens. As of the date hereof, other than the Covered Shares and 10,156,250 private placement warrants held by it, Sponsor does not own beneficially or of record any share capital of SPAC (or any securities, including warrants exercisable, convertible or exchangeable into share capital of SPAC).
(b) Sponsor (i) except as provided in this Agreement, has full voting power, full power of disposition and full power to issue instructions with respect to the matters set forth herein, in each case, with respect to Sponsor’s Covered Shares, (ii) has not entered into any voting agreement or voting trust or any other agreement or arrangement, including any proxy, consent or power of attorney, with respect to any of Sponsor’s Covered Shares that is inconsistent with Sponsor’s obligations pursuant to this Agreement, (iii) has not granted a proxy or power of attorney with respect to any of Sponsor’s Covered Shares that is inconsistent with Sponsor’s obligations pursuant to this Agreement, and has no knowledge and is not aware of any such proxy or power of attorney in effect, and (iv) has not entered into any agreement or undertaking that is otherwise inconsistent with, or would interfere with, or prohibit or prevent it from satisfying, its obligations pursuant to this Agreement, and has no knowledge and is not aware of any such agreement or undertaking.
(c) Sponsor (i) is a legal entity duly organized, validly existing and, to the extent such concept is applicable, in good standing under the applicable Law of the jurisdiction of its organization, and (ii) has all requisite corporate or other power and authority and has taken all corporate or other action necessary in order to, execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by Sponsor and constitutes a valid and binding agreement of Sponsor enforceable against Sponsor in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar requirements under applicable Law affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity.
(d) Other than the filings, notices and reports pursuant to, in compliance with or required to be made under the Exchange Act, if any, no filings, notices, reports, consents, registrations, approvals, permits, waivers, expirations of waiting periods or authorizations are required to be obtained by Sponsor from, or to be given by Sponsor to, or be made by Sponsor with, any Governmental Authority in connection with the execution, delivery and performance by Sponsor of this Agreement, the consummation of the transactions contemplated hereby or the Amalgamations and the other transactions contemplated by the Business Combination Agreement.
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(e) The execution, delivery and performance of this Agreement by Sponsor do not, and the consummation of the transactions contemplated hereby or the Amalgamations and the other Transactions contemplated by the Business Combination Agreement will not, constitute or result in (i) a breach or violation of, or a default under, the Organizational Documents of Sponsor, (ii) with or without notice, lapse of time or both, a breach or violation of, a termination (or right of termination) of or a default under, the loss of any benefit under, the creation, modification or acceleration of any obligations under or the creation of a Lien on any of the properties, rights or assets of Sponsor pursuant to any Contract binding upon Sponsor or, assuming (solely with respect to performance of this Agreement and the transactions contemplated hereby), compliance with the matters referred to in Section 6(c), under any requirements of applicable Law to which Sponsor is subject, or (iii) any change in the rights or obligations of any party under any Contract legally binding upon Sponsor, except, in the case of clause (ii) or (iii) directly above, for any such breach, violation, termination, default, creation, acceleration or change that would not, individually or in the aggregate, reasonably be expected to prevent or materially delay or impair Sponsor’s ability to perform its obligations hereunder or to consummate the transactions contemplated hereby, the consummation of the Amalgamations or the other Transactions contemplated by the Business Combination Agreement.
(f) As of the date of this Agreement, there is no Action pending against Sponsor or, to the knowledge of Sponsor, threatened against Sponsor that questions the ownership of Sponsor’s Owned Shares, that would reasonably be expected to question the validity of this Agreement or prevent or materially impair, enjoin or delay the ability of Sponsor to perform its obligations under this Agreement or to consummate the transactions contemplated hereby.
(g) Sponsor is a sophisticated stockholder and has adequate information concerning the business and financial condition of the Company and SPAC to make an informed decision regarding this Agreement and the other transactions contemplated by the Business Combination Agreement and has independently and based on such information as Sponsor has deemed appropriate, made its own analysis and decision to enter into this Agreement. Sponsor acknowledges that the Company and Sio Silica Incorporated have not made and do not make any representation or warranty, whether express or implied, of any kind or character except as expressly set forth in this Agreement. Sponsor acknowledges that the agreements contained herein with respect to the Covered Shares owned by Sponsor is irrevocable.
(h) Sponsor understands and acknowledges that Sio Silica Incorporated and the Company are entering into the Business Combination Agreement in reliance upon Sponsor’s execution and delivery of this Agreement and the representations, warranties, covenants and other agreements of Sponsor contained herein.
(i) No investment banker, broker, finder or other intermediary, other than UBS Securities LLC and BMO Financial Group, is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission for which Sio Silica Incorporated or the Company is or will be liable in connection with the transactions contemplated hereby based upon arrangements made by or, to the knowledge of Sponsor, on behalf of Sponsor.
7. Certain Covenants of Sponsor. Except in accordance with the terms of this Agreement, Sponsor hereby covenants and agrees as follows:
(a) Except as contemplated by Section 2 or the Business Combination Agreement, Sponsor shall not, directly or indirectly, Transfer (as defined below) any Covered Shares (other than New SPAC Class A Common Shares issued upon exercise of any private placement warrants held by the Sponsor) until the earlier of (i) one (1) year after the Closing, (ii) the date on which the last sale price of the New SPAC Class A Common Shares equals or exceeds $12.00 per share (as adjusted for share subdivisions, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-day trading period commencing at least 150 days after the Closing and (iii) the date on which New SPAC completes a liquidation, amalgamation, share exchange or other similar transaction that results in all of New SPAC’s shareholders having the right to exchange their shares for cash, securities or other property. The Sponsor further agrees that it shall not, directly or indirectly, Transfer any private placement warrants (or New SPAC Class A Common Shares issued or issuable upon exercise of such warrants) held by it until 30 days after the Closing. For purposes of this Agreement, “Transfer” shall mean (A) sell, transfer, pledge, encumber, assign, hedge, swap, convert or otherwise dispose of (including by merger (including by conversion into securities or other consideration), by tendering into any tender or exchange offer, by testamentary disposition, by operation of requirements under applicable Law or otherwise), either voluntarily or involuntarily, enter into any Contract or option with respect to the Transfer of any security or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 17 of the Exchange Act, with respect to any security; (B) publicly announce any intention to effect any transaction specified in clause (A) or (C) take any action that would make any representation or warranty of Sponsor contained herein untrue or incorrect or have the effect of preventing or disabling Sponsor from performing its obligations under this Agreement. Notwithstanding the foregoing, nothing herein shall prohibit a Transfer to an Affiliate or member of Sponsor (a “Permitted Transfer”); provided, that any Permitted Transfer shall be permitted only if, as a precondition to such Transfer, the transferee agrees in a writing, reasonably satisfactory in form and substance to the Company, to assume all of the obligations of Sponsor with respect to the transferred Covered Shares or private placement warrants, as applicable, under, and be bound by the terms of, this Agreement; provided, further, that any Transfer permitted under this Section 7(a) shall not relieve Sponsor of its obligations under this Agreement. Any Transfer in violation of this Section 7(a) with respect to Sponsor’s Covered Shares or private placement warrants shall be null and void. Nothing in this Agreement shall prohibit direct or indirect transfers of equity or other interests in Sponsor.
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(b) Sponsor hereby authorizes New SPAC to maintain a copy of this Agreement at either the executive office or the registered office of New SPAC.
(c) Sponsor shall not commence, join in, facilitate, assist or encourage, and shall take all actions necessary to opt out of any class in any class action with respect to, any claim, derivative or otherwise, against any of the Company, SPAC or any of their respective successors or assigns, challenging the validity of, or seeking to enjoin the operation of, any provision of this Agreement or alleging a breach of any fiduciary duty of any Person in connection with the evaluation, negotiation or entry into the Business Combination Agreement.
8. Further Assurances. From time to time, at a party’s request and without further consideration, the other parties hereto shall execute and deliver such additional documents and take all such further action as may be reasonably necessary to effect the actions and consummate the transactions contemplated by this Agreement and the Business Combination Agreement.
9. Disclosure. Sponsor hereby authorizes SPAC, Sio Silica Incorporated and the Company to publish and disclose in any announcement or disclosure required by the SEC (or as otherwise required by any applicable securities laws or any other securities authorities), or include in any document or information required to be filed with or furnished to the SEC or the NYSE, Sponsor’s identity and ownership of the Covered Shares and the nature of Sponsor’s obligations under this Agreement and, if deemed appropriate by SPAC, Sio Silica Incorporated or the Company a copy of this Agreement. Sponsor will promptly provide any information reasonably requested by SPAC or the Company for any regulatory application or filing made or approval sought in connection with the transactions contemplated by the Business Combination Agreement (including filings with the SEC or the NYSE).
10. Changes in Share Capital. In the event of a share subdivision, share dividend or distribution, or any change in SPAC’s share capital by reason of any subdivision, consolidation, recapitalization, reclassification, exchange of shares or the like, the terms “Owned Shares,” and “Covered Shares” shall be deemed to refer to and include such shares as well as all such share dividends and distributions and any securities into which or for which any or all of such shares may be changed or exchanged or which are received in such transaction.
11. Amendment and Modification. This Agreement may be amended, modified or supplemented only by an instrument in writing signed by Sio Silica Incorporated, the Company, SPAC and the Sponsor. Any party to this Agreement may, at any time prior to the Termination Date, waive any of the terms or conditions of this Agreement, or agree to an amendment or modification to this Agreement in the manner contemplated by this Section 11 or Section 12, as applicable.
12. Waiver. No failure or delay by any party hereto exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies which they would otherwise have hereunder. Any agreement on the part of a party hereto to any such waiver shall be valid only if set forth in a written instrument executed and delivered by such party.
13. Notices. All notices and other communications hereunder shall be in writing and shall be deemed given: (a) on the date established by the sender as having been delivered personally; (b) one Business Day after being sent by a nationally recognized overnight courier guaranteeing overnight delivery; (c) on the date sent, if sent by email, to the addresses below; or (d) on the fifth Business Day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications, to be valid, must be addressed as follows:
If to Sponsor, to:
c/o Pyrophyte Acquisition Corp.
3262 Westheimer Road, Ste. 706
Houston, Texas 77098
Attention: Bernard J. Duroc-Danner; Sten L. Gustafson
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with a copy (which shall not constitute notice) to:
White & Case LLP
1221 Avenue of the Americas
New York, New York 10020
Attention: Elliott Smith; Morgan Hollins
If to the Company or New SPAC, to:
Suite 1930, 440 – 2nd Avenue SW
Calgary, Alberta
T2P 5E9
Canada
Attention: Feisal Somji
with a copy (which shall not constitute notice) to:
DLA Piper LLP (US)
1251 Avenue of the Americas, 27th Floor
New York, NY 10020
Attention: Daniel Kenney; Christopher Giordano; Stephen Alicanti
14. No Ownership Interest. Nothing contained in this Agreement shall be deemed to vest in the Company any direct or indirect ownership or incidence of ownership of or with respect to the Covered Shares of Sponsor. All rights, ownership and economic benefits of and relating to the Covered Shares of Sponsor shall remain vested in and belong to Sponsor, and the Company shall have no authority to manage, direct, restrict, regulate, govern or administer any of the policies or operations of Sponsor or SPAC or exercise any power or authority to direct Sponsor in the voting or disposition of any of Sponsor’s Covered Shares, except as otherwise provided herein.
15. Entire Agreement. This Agreement and the Business Combination Agreement constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all other prior agreements and understandings, both written and oral, among the parties hereto with respect to the subject matter hereof. No representations, warranties, covenants, understandings, agreements, oral or otherwise, with respect to the subject matter contemplated by this Agreement exist between the parties hereto except as expressly set forth or referenced in this Agreement and the Business Combination Agreement. In the event of any inconsistency, conflict, or ambiguity as to the rights and obligations of the parties hereto under this Agreement and the Business Combination Agreement, the terms of this Agreement shall control and supersede any such inconsistency, conflict or ambiguity.
16. No Third-Party Beneficiaries. Sponsor hereby agrees that its representations, warranties and covenants set forth herein are solely for the benefit of the Company in accordance with and subject to the terms of this Agreement, and this Agreement is not intended to, and does not, confer upon any Person other than the parties hereto any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein, and the parties hereto hereby further agree that this Agreement may only be enforced against, and any Action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement may only be made against, the Persons expressly named as parties hereto.
17. Governing Law and Venue; Service of Process; Waiver of Jury Trial.
(a) This Agreement and the consummation the Transactions, and any action, suit, dispute, controversy or claim arising out of this Agreement and the consummation of the Transactions, or the validity, interpretation, breach or termination of this Agreement and the consummation of the Transactions, shall be governed by and construed in accordance with the internal law of the State of Delaware regardless of the law that might otherwise govern under applicable principles of conflicts of law thereof, except to the extent that the laws of the Cayman Islands, the laws of the Province of Alberta and the federal laws of Canada are mandatorily applicable.
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(b) Each of the parties hereto irrevocably consents to the exclusive jurisdiction and venue of the Court of Chancery the State of Delaware, or, if such court declines jurisdiction, then to any federal court located in the state of Delaware or any other Delaware state court in connection with any matter based upon or arising out of this Agreement, agrees that process may be served upon them in any manner authorized by the laws of the State of Delaware for such Person and waives and covenants not to assert or plead any objection which they might otherwise have to such manner of service of process. Each of the parties hereto may do so only if he, she or it hereby waives, and shall not assert as a defense in any legal dispute, that: (i) such Person is not personally subject to the jurisdiction of the above named courts for any reason; (ii) such Action may not be brought or is not maintainable in such court; (iii) such Person’s property is exempt or immune from execution; (iv) such Action is brought in an inconvenient forum; or (v) the venue of such Action is improper. Each of the parties hereto hereby agrees not to commence or prosecute any such Action, claim, cause of action or suit other than before one of the above-named courts, nor to make any motion or take any other action seeking or intending to cause the transfer or removal of any such Action, claim, cause of action or suit to any court other than one of the above-named courts, whether on the grounds of inconvenient forum or otherwise. Each of the parties hereto hereby consents to service of process in any such proceeding in any manner permitted by Delaware law, and further consents to service of process by nationally recognized overnight courier service guaranteeing overnight delivery, or by registered or certified mail, return receipt requested, at its address specified pursuant to Section 13. Notwithstanding the foregoing in this Section 17, any party hereto may commence any action, claim, cause of action or suit in a court other than the above-named courts solely for the purpose of enforcing an order or judgment issued by one of the above-named courts.
(c) TO THE EXTENT NOT PROHIBITED BY APPLICABLE LEGAL REQUIREMENTS WHICH CANNOT BE WAIVED, EACH OF THE PARTIES HERETO MAY DO SO ONLY IF HE, SHE OR IT IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY ON ANY CLAIMS OR COUNTERCLAIMS ASSERTED IN ANY LEGAL DISPUTE RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM RELATING THERETO, WHETHER NOW EXISTING OR HEREAFTER ARISING. IF THE SUBJECT MATTER OF ANY SUCH LEGAL DISPUTE IS ONE IN WHICH THE WAIVER OF JURY TRIAL IS PROHIBITED, NO PARTY HERETO SHALL ASSERT IN SUCH LEGAL DISPUTE A NONCOMPULSORY COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT. FURTHERMORE, NO PARTY HERETO SHALL SEEK TO CONSOLIDATE ANY SUCH LEGAL DISPUTE WITH A SEPARATE ACTION OR OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE WAIVED.
18. Assignment; Successors. No party hereto shall assign this Agreement or any part hereof without the prior written consent of the other parties; provided that, notwithstanding the foregoing, Sponsor may assign this Agreement without the prior written consent of the other parties hereto to an Affiliate or member of Sponsor. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns. Any attempted assignment in violation of the terms of this Section 18 shall be null and void, ab initio.
19. Non-Recourse. This Agreement may only be enforced against, and any claim or cause of action based upon, arising out of, or related to this Agreement or the transactions contemplated hereby may only be brought against, the entities that are expressly named as parties hereto, and then only with respect to the specific obligations set forth herein with respect to such party. Except to the extent a named party to this Agreement (and then only to the extent of the specific obligations undertaken by such named party in this Agreement), (a) no past, present or future director, officer, employee, incorporator, member, partner, shareholder, affiliate, agent, attorney, advisor or representative or affiliate of any named party to this Agreement and (b) no past, present or future director, officer, employee, incorporator, member, partner, shareholder, affiliate, agent, attorney, advisor or representative or affiliate of any of the foregoing shall have any liability (whether in contract, tort, equity or otherwise) for any one or more of the representations, warranties, covenants, agreements or other obligations or liabilities of any one or more of SPAC, the Company or Sponsor (or either of them) under this Agreement of or for any claim based on, arising out of, or related to this Agreement or the transactions contemplated hereby.
20. Enforcement. The parties hereto agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the parties do not perform their obligations under the provisions of this Agreement in accordance with its specified terms or otherwise breach such provisions. The parties hereto acknowledge and agree that (a) the parties shall be entitled to seek an injunction, specific performance, or other equitable relief, to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, including Sponsor’s obligation to vote its Covered Shares as provided in this Agreement, without proof of damages, prior to the valid termination of this Agreement, this being in addition to any other remedy to which they are entitled under this Agreement, and (b) the right of specific enforcement is an integral part of the transactions contemplated by this Agreement and without that right, none of the parties would have entered into this Agreement. Each party agrees that it will not oppose the granting of specific performance and other equitable relief on the basis that the other parties have an adequate remedy at applicable Law or that an award of specific performance is not an appropriate remedy for any reason at applicable Law or equity. The parties acknowledge and agree that any party seeking an injunction to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 20 shall not be required to provide any bond or other security in connection with any such injunction.
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21. Severability. Whenever possible, each provision of this Agreement will be interpreted in such a manner as to be effective and valid under applicable Law, but if any term or other provision of this Agreement is held to be invalid, illegal or unenforceable under applicable Law, all other provisions of this Agreement shall remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision of this Agreement is invalid, illegal or unenforceable under applicable Law, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
22. Counterparts. This Agreement and any amendment hereto may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement or any amendment hereto by electronic means, including docusign, e-mail, or scanned pages shall be effective as delivery of a manually executed counterpart to this Agreement or any amendment hereto.
23. Interpretation and Construction. The words “hereof,” “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement. References to Sections are to Sections of this Agreement unless otherwise specified. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. The definitions contained in this Agreement are applicable to the masculine as well as to the feminine and neuter genders of such term. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” whether or not they are in fact followed by those words or words of like import. “Writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any statute shall be deemed to refer to such statute and to any rules or regulations promulgated thereunder. References to any person include the successors and permitted assigns of that person. References from or through any date mean, unless otherwise specified, from and including such date or through and including such date, respectively. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.
24. Capacity as Sponsor. Notwithstanding anything herein to the contrary, Sponsor signs this Agreement solely in Sponsor’s capacity as a shareholder of SPAC, and not in any other capacity and this Agreement shall not limit or otherwise affect the actions of Sponsor or any affiliate, employee or designee of Sponsor or any of its affiliates in his or her capacity, if applicable, as an officer or director of SPAC or any other Person. Sponsor shall not be liable or responsible for any breach, default, or violation of any representation, warranty, covenant or agreement hereunder by any other shareholder that is entering into a similar Agreement and Sponsor shall solely be required to perform its obligations hereunder.
25. Insider Letter Amendment. SPAC, the Sponsor and the Insiders hereby agree that Section 7(a) of the Insider Letter is hereby amended by adding the following sentence at the end of that section:
“Notwithstanding anything to the contrary in this Section 7, the Founder Shares Lock-Up Period for the Sponsor shall be as set forth in Section 7(a) of that certain Sponsor Support Agreement, dated as of November 13, 2023 by and among the Company, the Sponsor, the Insiders, Sio Silica Incorporated and Sio Silica Corporation (the “Sponsor Support Agreement”) unless the Sponsor Support Agreement is terminated in accordance with Section 5 thereof.”
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed (where applicable, by their respective officers or other authorized Persons thereunto duly authorized) as of the date first written above.
PYROPHYTE ACQUISITION LLC | |||
By: | /s/ Sten Gustafson | ||
Name: | Sten Gustafson | ||
Title: | Manager |
[Signature Page to Sponsor Support Agreement]
SIO SILICA INCORPORATED | |||
By: | /s/ Feisal Somji | ||
Name: | Feisal Somji | ||
Title: | President and CEO |
[Signature Page to Sponsor Support Agreement]
SIO SILICA CORPORATION | |||
By: | /s/ Feisal Somji | ||
Name: | Feisal Somji | ||
Title: | President and CEO |
[Signature Page to Sponsor Support Agreement]
Solely for the purpose of Section 25: | |||
By: | /s/ Sten Gustafson | ||
Name: | Sten Gustafson |
[Signature Page to Sponsor Support Agreement]
Solely for the purpose of Section 25: | |||
By: | /s/ Thomas W. Major | ||
Name: | Thomas W. Major |
[Signature Page to Sponsor Support Agreement]
Solely for the purpose of Section 25: | |||
By: | /s/ Bernard J. Duroc-Danner | ||
Name: | Bernard J. Duroc-Danner |
[Signature Page to Sponsor Support Agreement]
Solely for the purpose of Section 25: | |||
By: | /s/ Bryan Guido Hassin | ||
Name: | Bryan Guido Hassin |
[Signature Page to Sponsor Support Agreement]
Solely for the purpose of Section 25: | |||
By: | /s/ Per Honung Pedersen | ||
Name: | Per Honung Pedersen |
[Signature Page to Sponsor Support Agreement]
Solely for the purpose of Section 25: | |||
By: | /s/ Adam Pierce | ||
Name: | Adam Pierce |
[Signature Page to Sponsor Support Agreement]
Exhibit 10.6
FORM OF SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT is made effective as of [____], 2023
BETWEEN:
PYROPHYTE ACQUISITION CORP., a Cayman Islands exempted company (“SPAC”)
- and –
SIO SILICA CORPORATION, an Alberta corporation (the “Company”)
- and –
[securityholder] (the “Securityholder”)
WHEREAS, concurrently with the execution and delivery of this Agreement, SPAC, the Company, Snowbank Newco Alberta ULC, an Alberta unlimited liability corporation (“NewCo”), and Sio Silica Incorporated, an Alberta corporation (“Sio NewCo”), have entered into a business combination agreement (as amended, supplemented, restated or otherwise modified from time to time, the “Business Combination Agreement”) regarding a proposed arrangement under section 193 of the Business Corporations Act (Alberta) pursuant to which, by means of the Arrangement, Sio NewCo and SPAC will amalgamate (the “SPAC Amalgamation”) at the SPAC Amalgamation Effective Time, with Sio NewCo continuing as the surviving company after the SPAC Amalgamation, followed by an amalgamation of the Company and NewCo (the “Company Amalgamation”) at the Company Amalgamation Effective Time, with the Company continuing as the surviving company after the Company Amalgamation;
WHEREAS, the Securityholder beneficially owns, or exercises control or direction over, the Company Common Shares, the Company Warrants, the Company Options and/or the Company RSUs set out in Schedule A hereto; and
WHEREAS, the Securityholder understands and acknowledges that SPAC and the Company are entering into the Business Combination Agreement in reliance upon the execution and delivery of this Agreement by the Securityholder and the terms and conditions contained herein and, in consideration for SPAC and the Company entering into the Business Combination Agreement and agreeing to the provisions of this Agreement, the Securityholder agrees to be bound by this Agreement, which sets out the terms and conditions upon which it has agreed, among other things, to support the Arrangement and to cause its Subject Securities to be voted in favor of the Arrangement.
NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each of the Parties), the Parties covenant and agree as follows:
1. Definitions
In this Agreement, any capitalized term used herein and not defined in this Section 1 shall have the meaning ascribed thereto in the Business Combination Agreement or the Plan of Arrangement, as applicable. Unless the context otherwise requires, the following words and phrases used in this Agreement (including the recitals hereto) shall have the meanings hereinafter set out:
“Agreement” means this support agreement, as amended, supplemented or modified from time to time;
“Business Combination Agreement” has the meaning ascribed thereto in the recitals to this Agreement;
“Company” has the meaning ascribed thereto in the recitals to this Agreement;
“New SPAC” has the meaning ascribed thereto in the recitals to this Agreement;
“NewCo” has the meaning ascribed thereto in the recitals to this Agreement;
“Party” means a party to this Agreement, and “Parties” means all parties to this Agreement;
“Registration Statement” means the Registration Statement on Form F-4, or other appropriate form, including any pre-effective or post-effective amendments or supplements thereto, to be filed with the U.S. Securities and Exchange Commission by Sio NewCo under the Securities Act of 1933, as amended, with respect to the transactions contemplated by the Business Combination Agreement;
“Relevant Securities” means Company Common Shares, Company Warrants, Company Options, Company RSUs and, if applicable after the date hereof, any other securities of the Company having voting rights in respect of the Arrangement under applicable Law;
“Securityholder” has the meaning ascribed thereto in the recitals to this Agreement;
“Sio NewCo” has the meaning ascribed thereto in the recitals to this Agreement;
“SPAC” has the meaning ascribed thereto in the recitals to this Agreement; and
“Subject Securities” means all Relevant Securities beneficially owned, or over which control or direction is exercised by the Securityholder, including any Relevant Securities that the Securityholder acquires beneficial ownership of, or control or direction over, after the date hereof.
2. Securityholder Covenants
Subject to the terms and conditions of this Agreement, the Securityholder hereby covenants and agrees, solely in the Securityholder’s capacity as securityholder of the Company and not in the Securityholder’s capacity as an officer or director of the Company, if applicable, with SPAC and the Company that, unless otherwise consented to in writing by SPAC and the Company the Securityholder shall:
(a) vote (or cause to be voted) all Subject Securities at any meeting of Company Shareholders called to vote on any of the matters described in clause (i), (ii) or (iii) below (and any other meeting of holders of any other Relevant Securities, as applicable, at which the Securityholder is entitled to vote in respect of any of the matters described in clause (i), (ii) or (iii) below), including the Company Shareholders Meeting, promptly following the time at which the Registration Statement shall have been declared effective and delivered or otherwise made available to the Company Shareholders: (i) for and in favor of the Arrangement Resolution and any other matter necessary for the consummation of the Arrangement; (ii) other than as contemplated in clause (i), against any business combination, arrangement, amalgamation, merger, consolidation, reorganization, recapitalization, liquidation, dissolution, winding-up, material asset sale or similar transaction involving the Company, or any issue of securities by the Company, or any resolution to approve, ratify or adopt any of the foregoing; and (iii) against any resolution, transaction or other action that is inconsistent with, or could reasonably be likely to impede, interfere with, delay, postpone, or adversely affect the Arrangement or any of the other matters and transactions contemplated by the Business Combination Agreement, including against any Alternative Transaction in respect of the Company, and, in each case, cause the Subject Securities to be counted as present at the Company Shareholders Meeting and any such other meeting of holders of any other Relevant Securities in respect of any of the matters described in clause (i), (ii) or (iii) above, as applicable, for quorum purposes;
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(b) without limiting paragraph 2(a): (i) duly deposit or deliver (or cause to be duly deposited or delivered) valid proxies, duly completed and executed, in respect of the Subject Securities, at least seven (7) calendar days prior to the Company Shareholders Meeting, directing that all of the Subject Securities, as applicable, be voted in favor of the Arrangement Resolution and any other matter necessary for the consummation of the Arrangement; (ii) upon SPAC’s written request, provide SPAC with confirmation of the deposit or delivery of valid proxies as aforesaid; and (iii) not take (or permit any Person on its behalf to take) any action to withdraw, amend or invalidate any proxy deposited or delivered pursuant to this Agreement;
(c) not sell, transfer, gift, assign, convey, pledge, hypothecate, encumber, grant a security interest in or option, or enter into any derivative transactions in respect of, or otherwise dispose of any right or interest (including any economic consequence of ownership) in, any of the Subject Securities, or enter into any agreement, arrangement or understanding in connection therewith other than pursuant to the Arrangement prior to the Closing or the termination of the Business Combination Agreement in accordance with the terms thereof, provided that: (i) the foregoing restriction shall not prevent the Securityholder from converting or exercising any of the Subject Securities in accordance with their terms; and (ii) the Securityholder may sell, gift, transfer, assign or convey any or all of the Subject Securities (to the extent permitted by the terms of the applicable Subject Securities) to an Affiliate or associate (as defined in the Securities Act) of the Securityholder, provided that such Affiliate or associate enters into an agreement with SPAC on the same terms as this agreement, or otherwise agrees with SPAC to be bound by the provisions hereof;
(d) not: (i) grant or agree to grant any proxy, power of attorney or other right to vote any of the Subject Securities, deposit any of its Subject Securities into a voting trust or pooling agreement, or enter into any agreement, arrangement or understanding with respect to the voting of any of its Subject Securities, that is inconsistent with, or would interfere with or prohibit or prevent the Securityholder from satisfying its obligations provided in, this Agreement; (ii) deposit or tender (or permit to be deposited or tendered) any securities of the Company to any take-over bid or other Alternative Transaction in respect of the Company; or (iii) requisition or join in the requisition of any meeting of the Company Shareholders or the holders of any other Relevant Securities;
(e) not: (i) take any action, that opposes or competes with, or could reasonably be expected to frustrate, impede, interfere with, delay, postpone, restrain, prevent or adversely affect the Arrangement or any of the other matters and transactions contemplated by the Business Combination Agreement; or (ii) act jointly or in concert with any Person or group of Persons with respect to voting securities of the Company or SPAC in opposition to or competition with the Arrangement or any of the other matters and transactions contemplated by the Business Combination Agreement, or in support of any Alternative Transaction in respect of the Company;
(f) not exercise or assert (or permit to be exercised or asserted on its behalf): (i) any Company Dissent Rights or any other rights of dissent or appraisal with respect to the Subject Securities in respect of the Arrangement or the Arrangement Resolution, all of which rights are hereby irrevocably waived by the Securityholder to the fullest extent permitted by Law; or (ii) any other rights or remedies with respect to the Subject Securities that are available pursuant to applicable Law that could reasonably be expected to frustrate, impede, interfere with, delay, postpone, restrain, prevent or adversely affect the Arrangement or any of the other matters and transactions contemplated by the Business Combination Agreement;
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(g) not: (i) withdraw, amend, modify or qualify, or publicly propose or state any intention to withdraw, amend, modify or qualify, its support for the Arrangement or any of the other matters and transactions contemplated by the Business Combination Agreement; or (ii) accept, approve, endorse, recommend or enter into, or publicly propose or state any intention to accept, approve, endorse, recommend or enter into, any publicly disclosed Alternative Transaction in respect of the Company, or make or enter into any agreement, arrangement or understanding, written or oral, in respect of an Alternative Transaction in respect of the Company;
(h) not: (i) solicit any proxies, or participate in any solicitation of proxies, with respect to the voting of any securities of the Company other than in favor of the Arrangement Resolution and the other matters and transactions contemplated by the Business Combination Agreement; or (ii) make any announcement or public disclosure with respect to any of the matters in this paragraph 2(h), except to the extent required by applicable Law;
(i) immediately cease all solicitations, encouragements, discussions, negotiations or other activities (including through any Affiliate or Representative), if any, with any Person other than SPAC and its Representatives, with respect to any Alternative Transaction in respect of the Company or expression of interest relating to an Alternative Transaction in respect of the Company, or any inquiry, proposal or offer that constitutes or would reasonably be expected to lead to, an Alternative Transaction in respect of the Company;
(j) not take or omit to take any action that would cause any of its representations or warranties set forth in Section 3 to become untrue or incorrect in any material respect, and promptly notify SPAC if any of its representations and warranties contained herein becomes untrue or incorrect in any material respect;
(k) not act jointly or in concert or otherwise knowingly cooperate in any way with, or assist (including by providing financial assistance), facilitate, encourage or participate in, any effort or attempt by any other Person or group of Persons to do or seek to do anything contrary to the foregoing; and
(l) not do indirectly, including through any Affiliate or Representative, that which it may not do directly by the terms of this Section 2, provided that, for certainty, any actions by any Representative of the Securityholder who is a director of the Company which are taken or omitted from being taken in such Representative’s capacity as a director of the Company shall not be deemed or interpreted to be indirect actions of the Securityholder hereunder.
3. Securityholder Representations and Warranties
The Securityholder represents and warrants to SPAC and the Company as follows, and acknowledges that SPAC is relying upon such representations and warranties in connection with the matters contemplated by this Agreement:
(a) the Securityholder has all necessary power, authority, right and capacity to execute and deliver this Agreement, and to perform its obligations hereunder and complete the transactions contemplated hereby;
(b) this Agreement has been duly executed and delivered by the Securityholder and constitutes a legal, valid and binding agreement of the Securityholder enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the rights of creditors generally and except that equitable remedies such as specific performance and injunction may be granted only in the discretion of a court of competent jurisdiction;
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(c) none of the execution, delivery or performance of this Agreement by the Securityholder, or completion of the transactions contemplated hereby, violates or constitutes a breach or default under, or conflicts with (or would with the giving of notice, the lapse of time or the happening of any other event or condition violate or constitute a breach or default under, of conflict with), any governing documents of the Securityholder or pursuant to any applicable Law, to which the Securityholder is bound, except in each case as would not impair the ability of the Securityholder to perform its obligations hereunder;
(d) as of the date hereof, the Securityholder beneficially owns, and exercises control and direction over the number of Subject Securities set forth opposite its name on Schedule A hereto;
(e) as of the date hereof, the Securityholder has the sole and exclusive right to sell and vote or direct the sale and voting of the Subject Securities set forth on Schedule A hereto;
(f) none of the Subject Securities are subject to any shareholders’ agreement, voting trust, pooling agreement or similar agreement, commitment, understanding or arrangement, or any right or privilege (by Law or contract) capable of becoming a shareholders’ agreement, voting trust, pooling agreement or similar agreement, commitment, understanding or arrangement, in each case, that are inconsistent with, or would interfere with, or prohibit or prevent it from satisfying its obligations pursuant to, this Agreement;
(g) there is no proxy in existence with respect to any of the Subject Securities;
(h) no Person has or, to the knowledge of the Securityholder, will at any time during the term of this Agreement have any agreement or option, or any right or privilege (by Law or contract) capable of becoming an agreement or option, for the purchase, acquisition or transfer of any of the Subject Securities, or any interest therein or right thereto (including any right to vote), other than pursuant to this Agreement and the Business Combination Agreement; and
(i) as of the date hereof, there is no claim, action, lawsuit or other legal proceeding in progress or pending or, to the knowledge of the Securityholder, threatened against it that adversely affects the Securityholder’s ability to enter into this Agreement and perform its obligations hereunder, or its title to any of the Subject Securities.
4. Representations and Warranties of SPAC
SPAC represents and warrants to the Securityholder as follows, and acknowledges that the Securityholder is relying upon such representations and warranties in connection with the matters contemplated by this Agreement:
(a) SPAC has all necessary power, authority, right and capacity to execute and deliver this Agreement, and to perform its obligations hereunder and complete the transactions contemplated hereby;
(b) this Agreement has been duly executed and delivered by SPAC and constitutes a legal, valid and binding agreement of SPAC enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the rights of creditors generally and except that equitable remedies such as specific performance and injunction may be granted only in the discretion of a court of competent jurisdiction;
(c) none of the execution, delivery or performance of this Agreement by SPAC, or completion of the transactions contemplated hereby, violates or constitutes a breach or default under, or conflicts with (or would with the giving of notice, the lapse of time or the happening of any other event or condition violate or constitute a breach or default under, of conflict with) any articles, bylaws, agreement, arrangement, deed, indenture, understanding or restriction of any kind, including pursuant to any applicable Law, to which SPAC is a party or by which it is bound, except in each case as would not impair the ability of SPAC to perform its obligations hereunder; and
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(d) there is no claim, action, lawsuit or other legal proceeding in progress or pending or, to the knowledge of SPAC, threatened against it or any of its affiliates that adversely affects SPAC’s ability to enter into this Agreement and perform its obligations hereunder.
5. Representations and Warranties of the Company
The Company represents and warrants to the Securityholder as follows, and acknowledges that the Securityholder is relying upon such representations and warranties in connection with the matters contemplated by this Agreement:
(a) the Company has all necessary power, authority, right and capacity to execute and deliver this Agreement, and to perform its obligations hereunder and complete the transactions contemplated hereby;
(b) this Agreement has been duly executed and delivered by the Company and constitutes a legal, valid and binding agreement of the Company enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the rights of creditors generally and except that equitable remedies such as specific performance and injunction may be granted only in the discretion of a court of competent jurisdiction;
(c) none of the execution, delivery or performance of this Agreement by the Company, or completion of the transactions contemplated hereby, violates or constitutes a breach or default under, or conflicts with (or would with the giving of notice, the lapse of time or the happening of any other event or condition violate or constitute a breach or default under, of conflict with) any articles, by-laws, agreement, arrangement, deed, indenture, understanding or restriction of any kind, including pursuant to any applicable Law, to which the Company is a party or by which it is bound, except in each case as would not impair the ability of the Company to perform its obligations hereunder; and
(d) there is no claim, action, lawsuit or other legal proceeding in progress or pending or, to the knowledge of the Company, threatened against it or any of its affiliates that adversely affects the Company’s ability to enter into this Agreement and perform its obligations hereunder.
6. Termination
(a) This Agreement and the Parties’ respective rights and obligations hereunder shall terminate on the earliest of:
(i) the mutual written consent of SPAC, the Company and the Securityholder, by instrument in writing signed by each Party, to terminate this Agreement;
(ii) notice being delivered by the Securityholder to SPAC and the Company if, following the date of this Agreement and without the prior written consent of the Securityholder, there is any amendment or modification to the Business Combination Agreement and the Arrangement that materially adversely affects the Securityholder, including, but not limited to, any amendment or modification (whether or not materially adverse to the Securityholder) to decrease the amount of, or change the form of, the consideration payable for the Subject Securities as set out in the Arrangement;
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(iii) the time (if any) at which the Business Combination Agreement is terminated in accordance with the terms thereof; and
(iv) the Closing.
(b) Upon termination or expiration of this Agreement, as applicable, neither Party shall have any further obligations or liabilities under this Agreement, provided, however, that: (i) the provisions of Sections 7 through 16 and 18, inclusive, shall survive termination of this Agreement, and (ii) nothing herein shall relieve a Party from liability for any breach of this Agreement that occurs prior to termination, or prejudice the rights of the other Parties as a result of any such breach. For the avoidance of doubt, the representations and warranties of the Securityholder and SPAC set forth in Sections 3 and 4 hereof shall not survive the termination of this Agreement.
(c) SPAC (and New SPAC as its successor) agree that the Securityholder is an intended third party beneficiary of the provision in Section 6.13 (Intended Tax Treatment) of the Business Combination Agreement and confirms that the obligations in Section 6.13 (Intended Tax Treatment) of the Business Combination Agreement that are to be performed post-Closing shall survive for the period set forth in the Business Combination Agreement.
7. Shares Subject to Plan of Arrangement
The Securityholder understands and acknowledges that, in accordance with the Plan of Arrangement: (a) the Company Warrant and Option Settlement shall be effected; (b) each Company RSU will become exercisable for a number of New SPAC Class A Common Shares equal to (i) the number of Company Common Shares subject to the applicable Company RSU multiplied by (ii) the Company Common Share Exchange Ratio; (c) all Subject Securities (after taking into account subsections (a) and (b) above) will be exchanged for New SPAC Class A Common Shares; and (d) the Securityholder will become bound by a lock-up agreement, substantially in the form attached to the Business Combination Agreement as Exhibit E, pursuant to which, among other things, the Securityholder will not be able to transfer such New SPAC Class A Common Shares during the period commencing on the Closing Date and ending on the date that six (6) months following the Closing Date.
8. Remedies
The Parties acknowledge and agree that, if any provision of this Agreement were not performed in accordance with the specific terms hereof or are otherwise breached, the non-breaching Parties would suffer irreparable harm for which monetary damages would not be an adequate remedy, and, accordingly, that the Parties shall be entitled to equitable relief, including remedies of specific performance and temporary and permanent injunctive relief to enforce performance and/or restrain any actual or threatened non-performance or other breach of the terms and provisions hereof without proof of actual damages or otherwise, in addition to any other remedy to which they are entitled at Law or in equity as expressly permitted in this Agreement. Each of the Parties hereby further waives: (a) any defense in any action for specific performance that a remedy at Law would be adequate; and (b) any requirement under any Law to post security or a bond as a prerequisite to obtaining equitable relief.
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9. Notices
All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by email or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 9):
(a) if to the Securityholder, to the address set forth on Schedule A hereto.
(b) if to SPAC:
Pyrophyte Acquisition Corp.
3262 Westheimer Road, Suite 706
Houston, TX 77098
Attention: Bernard J. Duroc-Danner; Sten L. Gustafson
with a copy to (which shall not constitute notice):
White & Case LLP
1221 Avenue of the Americas
New York, NY 10020-1095
Attention: Elliott M. Smith; Morgan U. Hollins
(c) if to the Company:
Sio Silica Corporation
Suite 1930, 440 – 2nd Avenue SW
Calgary, Alberta
T2P 5E9
Canada
Attention: Feisal Somji
with a copy to (which shall not constitute notice):
DLA Piper LLP (US)
1251 Avenue of the Americas, 27th Floor
New York, NY 10020
Attention: Daniel Kenney; Christopher Giordano; Stephen Alicanti
10. Interpretation
(a) Unless the context of this Agreement otherwise requires: (i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the definitions contained in this Agreement are applicable to the other grammatical forms of such terms; (iv) the terms “hereof”, “herein”, “hereby”, “hereto” and derivative or similar words refer to this entire Agreement; (v) the terms “Article”, “Section” and “Schedule” refer to the specified Article, Section, or Schedule of or to this Agreement; (vi) the word “including” means “including without limitation”; (vii) the word “or” shall be disjunctive but not exclusive; (viii) references to agreements and other documents shall be deemed to include all subsequent amendments and other modifications thereto; and (ix) references to any Law shall include all rules and regulations promulgated thereunder and references to any Law shall be construed as including all statutory, legal, and regulatory provisions consolidating, amending or replacing such Law.
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(b) All references to “$” or dollars refer to United States dollars.
(c) The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual intent and no rule of strict construction shall be applied against any Party.
(d) The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.
(e) Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified, and when counting days, the date of commencement will not be included as a full day for purposes of computing any applicable time periods (except as otherwise may be required under any applicable Law). If any action is to be taken or given on or by a particular calendar day, and such calendar day is not a Business Day, then such action may be deferred until the next Business Day.
11. Severability
If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of Law, or public policy, in whole or in part, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of this Agreement is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner.
12. Entire Agreement; Assignment
This Agreement constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and undertakings, both written and oral, among the Parties, or any of them, with respect to the subject matter hereof. No Party may assign, grant or otherwise transfer the benefit of the whole or any part of this Agreement or any of the rights hereunder (whether pursuant to a merger, by operation of Law or otherwise) to any Person without the prior express written consent of the other Parties.
13. Amendment
This Agreement may not be amended, modified or supplemented except by an instrument in writing signed by each of the Parties, and any attempt to make such amendment, modification or supplement without an instrument in writing signed by each of the Parties shall be null and void.
14. Parties in Interest
This Agreement shall be binding upon and inure solely to the benefit of each Party, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
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15. Governing Law
This Agreement shall be governed by, and construed in accordance with, the laws of the Province of Alberta. All legal actions and proceedings arising out of or relating to this Agreement shall be heard and determined exclusively in the Alberta Court of King’s Bench. The Parties hereby (a) irrevocably submit to the exclusive jurisdiction of the aforesaid courts for themselves and with respect to their respective properties for the purpose of any Action arising out of or relating to this Agreement brought by any Party, and (b) agree not to commence any Action relating thereto except in the courts described above in Alberta, other than Actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court in Alberta as described herein. Each of the Parties further agrees that notice as provided herein shall constitute sufficient service of process and the Parties further waive any argument that such service is insufficient. Each of the Parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any Action arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the courts in Alberta as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the Action in any such court is brought in an inconvenient forum, (ii) the venue of such Action is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
16. Costs and Expenses
Except to the extent set forth in the Business Combination Agreement, each Party shall bear and be solely responsible for the fees, charges and disbursements of its respective financial, legal and other advisors, and all other costs and expenses of any nature or kind whatsoever, howsoever incurred, in connection with the preparation, execution, delivery and performance of this Agreement and completion of the transactions contemplated hereby and by the Business Combination Agreement.
17. Disclosure
(a) The Securityholder agrees to promptly provide SPAC and the Company with any information pertaining to the Securityholder that SPAC or the Company may reasonably require for the preparation of any news release or disclosure document (including, without limitation, in connection with the SPAC Shareholders Meeting or the Company Shareholders Meeting, as the case may be) required to be filed by SPAC or the Company with any Governmental Authority in connection with the matters contemplated by this Agreement and to promptly notify SPAC and the Company of any required corrections to any such information provided by the Securityholder for use in any such disclosure document, if and to the extent that any such information shall have become false or misleading in any material respect. Except as required by applicable Law, no Party shall make any public announcement or statement with respect to this Agreement without the consent of the other Parties, which shall not be unreasonably withheld, conditioned or delayed.
(b) The Securityholder irrevocably and unconditionally consents to the public disclosure by SPAC and the Company: (i) of the existence of this Agreement, pursuant to applicable Law and the Court proceedings to be commenced under section 193 of the ABCA in respect of the Arrangement; (ii) of the details of this Agreement being set out in the news release announcing the entering into of the Business Combination Agreement, any documents filed by SPAC or the Company pursuant to applicable Law and materials filed with the Court; and (iii) to this Agreement being filed on the Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) and on the System for Electronic Document Analysis and Retrieval (SEDAR) pursuant to applicable Law, and with the Court.
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18. Fiduciary Duties
SPAC and the Company hereby agree and acknowledge that the Securityholder is bound hereunder solely in his capacity as a securityholder of the Company and that the provisions hereof shall not be deemed or interpreted to bind the Securityholder in his capacity as a director or officer of the Company (if the Securityholder holds such office) or restrict, limit or prohibit the Securityholder in his capacity as a director or officer of the Company (if the Securityholder holds such office) from fulfilling or exercising his fiduciary duties as a director or officer owing to the Company under applicable Laws.
19. Counterparts
This Agreement may be executed and delivered (including executed manually or electronically via DocuSign or other similar services and delivered by facsimile or portable document format (pdf) transmission) in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF the Parties have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
PYROPHYTE ACQUISITION CORP. | ||
By: | ||
Name: | ||
Title: | ||
SIO SILICA CORPORATION | ||
By: | ||
Name: | ||
Title: | ||
SECURITYHOLDER | ||
By: | ||
Name: | ||
Title: |
SCHEDULE A
SUBJECT SECURITIES
Name of Registered Securityholder/Securityholder:
Number of Subject Securities Held:
|
Company Common Shares | |
Company Broker Warrants | ||
Company Shareholder Warrants | ||
Company Options |
Address for Notice:
Telephone: | ||
Email: |
Exhibit 96.1
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TECHNICAL REPORT SUMMARY | ||
BRU PROPERTY | ||
MANITOBA, CANADA | ||
Submitted to: | ||
Sio Silica Corporation | ||
Report Date: | Effective Date: | |
October 6, 2023 | October 5, 2023 | |
Stantec Consulting Ltd. | ||
200, 325 – 25 Street SE | ||
Calgary, Alberta T2P 7H8 | ||
Tel: (403) 716-8000 | ||
Author(s): | ||
Ivan Minev, P. Geol. | ||
Keith Wilson, P. Eng. | ||
Derek Loveday, P. Geol. | ||
Project No. 129500488 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Important Notice
This notice is an integral component of the Sio Silica Corporation BRU Property Technical Report Summary (“Technical Report Summary” or “Report”) and should be read in its entirety and must accompany every copy made of the Technical Report Summary. The Technical Report Summary has been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (SEC) S-K 1300 Regulations.
The Technical Report Summary has been prepared for Sio Silica Corporation (Sio Silica) by Stantec Consulting Ltd. (Stantec). The Technical Report Summary is based on information and data supplied to Stantec by Sio Silica. The quality of information, conclusions, and estimates contained herein are consistent with the level of effort involved in the services of Stantec, based on: i) information available at the time of preparation of the Report, and ii) the assumptions, conditions, and qualifications set forth in this Report.
Each portion of the Technical Report Summary is intended for use by Sio Silica subject to the terms and conditions of its contract (December 5, 2022) with Stantec. Except for the purposes legislated under United States securities law, any other uses of the Technical Report Summary, by any third party, is at that party’s sole risk.
The results of the Technical Report Summary represent forward-looking information. The forward-looking information includes pricing assumptions, sales forecasts, projected capital and operating costs, mine life and production rates, and other assumptions. Readers are cautioned that actual results may vary from those presented. The factors and assumptions used to develop the forward-looking information, and the risks that could cause the actual results to differ materially are presented in the body of this Report.
Stantec has used their experience and industry expertise to produce the estimates in the Technical Report Summary. Where Stantec has made these estimates, they are subject to qualifications and assumptions, and it should also be noted that all estimates contained in the Technical Report Summary may be prone to fluctuations with time and changing industry circumstances.
This report was prepared by Stantec Consulting Ltd. (Stantec), a third-party firm comprising mining experts in accordance with § 229.1302(b)(1). Sio Silica has determined that Stantec meets the qualifications specified under the definition of qualified person in § 229.1300. References to the Qualified Person or QP in this report are references to Stantec and not to any individual employed at Stantec.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table of Contents
1 | EXECUTIVE SUMMARY | 1-1 | ||
2 | INTRODUCTION | 2-1 | ||
3 | PROPERTY DESCRIPTION | 3-1 | ||
3.1 | Description and Location | 3-1 | ||
3.2 | Mining Claims | 3-1 | ||
3.3 | Private Property | 3-7 | ||
3.4 | Underlying Agreements, Royalties and Encumbrances | 3-8 | ||
3.5 | Environmental Liabilities | 3-9 | ||
3.6 | Required Permits | 3-9 | ||
3.7 | Other Significant Factors and Risks | 3-9 | ||
4 | ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY | 4-1 | ||
4.1 | Topography, Elevation and Vegetation | 4-1 | ||
4.2 | Property Access and Proximity to Population Centers | 4-1 | ||
4.3 | Climate | 4-1 | ||
4.4 | Infrastructure | 4-2 | ||
5 | HISTORY | 5-1 | ||
5.1 | Historical Technical Reports and Preliminary Economic Assessments | 5-1 | ||
5.2 | Geotechnical Analysis | 5-2 | ||
6 | GEOLOGIC SETTING, MINERALIZATION AND DEPOSIT | 6-1 | ||
6.1 | Regional Stratigraphy | 6-1 | ||
6.2 | Structural Geology | 6-2 | ||
6.3 | Property Geology | 6-2 | ||
6.3.1 | Quaternary Sediments | 6-13 | ||
6.3.2 | Red River Formation | 6-13 | ||
6.3.3 | Winnipeg Formation | 6-14 | ||
6.3.4 | Granitoid | 6-14 | ||
6.4 | Deposit Types | 6-14 | ||
6.5 | Mineralization | 6-1 | ||
7 | EXPLORATION | 7-1 | ||
7.1 | Historical Hydrocarbon Drill Hole Results | 7-1 | ||
7.2 | Groundwater Information Network and Friesen Drilling Historical Data | 7-3 | ||
7.3 | Sio Silica 2017 Drilling Campaign summary | 7-3 | ||
7.4 | Sio Silica 2018 - 2019 Drilling Campaign Summary | 7-5 | ||
7.5 | Sio Silica 2019 Drilling Campaign summary | 7-6 | ||
7.6 | Sio Silica 2020 - 2021 Drill Campaign summary | 7-6 | ||
7.7 | Sio Silica 2022 Drill Campaign summary | 7-8 | ||
8 | SAMPLE PREPARATION, ANALYSES AND SECURITY | 8-1 | ||
8.1 | Sampling Method and approach | 8-1 |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
8.2 | 2017 and 2018 / 2019 Field Programs Sample Integrity | 8-1 | ||
8.3 | Laboratory Credentials, Testing Methodology, and Results | 8-2 | ||
8.3.1 | Loring Credentials, Testing Methodology, and 2017 Results | 8-2 | ||
8.3.2 | AGAT Credentials, Testing Methodology, and 2018 Results | 8-5 | ||
8.3.3 | 2020 AGAT XRF Analytical Methodology and Results | 8-7 | ||
8.3.4 | Sio Silica Internal Facility Credentials and Processing Methodology | 8-9 | ||
8.3.5 | 2022 Liquids Matter Whole Rock Analysis | 8-10 | ||
9 | DATA VERIFICATION | 9-1 | ||
9.1 | Site Visit and alignment on Field Procedures and Sampling Protocol | 9-1 | ||
9.2 | Sample Chain-of-Custody and Laboratory Results | 9-1 | ||
9.2.1 | Chain-of-Custody | 9-1 | ||
9.2.2 | Laboratory Results | 9-3 | ||
10 | MINERAL PROCESSING AND METALLURGICAL TESTING | 10-1 | ||
11 | MINERAL RESOURCE ESTIMATES | 11-1 | ||
11.1 | Computer Model Construction | 11-1 | ||
11.1.1 | Topographic and Lithological Horizons | 11-1 | ||
11.1.2 | Assay Data Compositing and Interpolation | 11-2 | ||
11.2 | Resource Estimation Approach | 11-2 | ||
11.3 | Mineral Resource Classification | 11-5 | ||
11.4 | Assessment of Reasonable Prospect for Eventual Economic Extraction | 11-5 | ||
11.5 | Estimation of Sand Volume | 11-8 | ||
11.6 | Mineral Resource Estimation | 11-8 | ||
12 | MINERAL RESERVE ESTIMATES | 12.1 | ||
12.1 | Development Plan | 12.1 | ||
13 | MINING METHODS | 13.1 | ||
13.1 | Overview | 13.1 | ||
13.2 | Geotechnical Analysis | 13.1 | ||
13.3 | Extraction Concept | 13.2 | ||
13.4 | Surface Development and Reclamation | 13.4 | ||
13.5 | Slurry Transportation | 13.4 | ||
14 | PROCESS AND RECOVERY METHODS | 14.1 | ||
14.1 | Well pad screening circuit | 14.1 | ||
14.2 | Wet Plant | 14.2 | ||
14.3 | Dry Screening plant | 14.10 | ||
14.4 | Storage and loadout | 14.10 | ||
14.5 | Plant Design and Construction | 14.10 | ||
14.6 | Rail design and construction | 14.10 | ||
15 | INFRASTRUCTURE | 15.1 | ||
15.1 | Rail | 15.1 | ||
15.2 | Power | 15.1 | ||
15.3 | Access | 15.1 |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
15.4 | Gas Line | 15.1 | ||
15.5 | Maintenance facility | 15.1 | ||
15.6 | Offices | 15.2 | ||
15.7 | Operations trailer | 15.2 | ||
15.8 | Process water Well | 15.2 | ||
16 | MARKET STUDIES | 16.1 | ||
16.1 | Introduction | 16.1 | ||
16.2 | Markets/ Demand | 16.1 | ||
16.3 | Competition | 16.1 | ||
16.4 | Contracts And Potential Offtakers | 16.2 | ||
17 | ENVIRONMENTAL STUDIES, PERMITTING AND PLANS, NEGOTIATIONS OR AGREEMENTS WITH LOCAL INDIVIDUALS OR GROUPS | 17-1 | ||
17.1 | Environmental Baseline Investigations | 17-1 | ||
17.2 | Permitting Requirements | 17-2 | ||
17.2.1 | Provincial | 17-2 | ||
17.2.2 | Federal | 17-3 | ||
17.2.3 | Municipal | 17-3 | ||
17.3 | Permitting Timelines | 17-4 | ||
17.4 | Social and Community Impacts | 17-4 | ||
18 | CAPITAL AND OPERATING COSTS | 18-1 | ||
18.1 | Cost Summary | 18-1 | ||
18.2 | Project Capital Costs | 18-1 | ||
18.2.1 | Capital Cost Summary – Phase 1 | 18-1 | ||
18.2.2 | Capital Cost Summary – Phase 2 | 18-2 | ||
18.2.3 | Contingency | 18-2 | ||
18.2.4 | Sustaining Costs | 18-3 | ||
18.3 | Project Operating Costs | 18-3 | ||
18.3.1 | Land Leasing | 18-3 | ||
18.3.2 | Land Preparation and Reclamation | 18-3 | ||
18.3.3 | Well Production | 18-3 | ||
18.3.4 | Wet process, Dry Process, and Loadout | 18-4 | ||
18.3.5 | Support Equipment | 18-4 | ||
18.3.6 | Rail & Port | 18-4 | ||
18.3.7 | Manpower | 18-5 | ||
18.3.8 | General and Administrative Costs | 18-5 | ||
18.3.9 | Operating cost Summary | 18-6 | ||
19 | ECONOMIC ANALYSIS | 19-1 | ||
19.1 | Assumptions | 19-1 | ||
19.2 | BRU Property Life | 19-2 | ||
19.3 | Royalties and Income Tax | 19-2 |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
19.4 | Economic Performance | 19-3 | |
19.5 | Sensitivity Analysis | 19-7 | |
20 | ADJACENT PROPERTIES | 20-1 | |
21 | OTHER RELEVANT DATA AND INFORMATION | 21-1 | |
22 | INTERPRETATION AND CONCLUSIONS | 22-1 | |
22.1 | PRODUCT PRICING AND COST ESCALATION | 22-1 | |
22.2 | TIMING OF REGULATORY APPROVALS | 22-1 | |
22.3 | Timing Of Project Development | 22-1 | |
22.4 | Development Of Extraction Process | 22-1 | |
22.5 | Confirmation Of Geotechnical Testing And Analysis | 22-2 | |
23 | RECOMMENDATIONS | 23-1 | |
23.1 | Phase 1: Geotechnical Testing And Analysis | 23-1 | |
23.2 | Phase 2: Engineering Bridging Studies | 23-2 | |
24 | REFERENCES | 24-1 | |
25 | RELIANCE ON INFORMATION PROVIDED BY THE REGISTRANT | 25-1 | |
25.1 | Regulatory Approval Process | 25-1 |
LIST OF TABLES
Table 1.1 | Summary of Analyses Completed by Year and Laboratory | 1-6 |
Table 1.2 | Summary of In-Place Carman Sand as of September 30, 2022 | 1-10 |
Table 1.3 | Sand Extraction Recommendations | 1-11 |
Table 1.4 | In-Place Mineral Resource Summary, as of September 30, 2022 | 1-11 |
Table 1.5 | Summary of Project Permitting Process Key Milestones | 1-16 |
Table 1.6 | Capital Cost Summary – Phase 1 (C$), no Contingency | 1-16 |
Table 1.7 | Capital Cost Summary – Phase 2 (C$), no Contingency | 1-17 |
Table 1.8 | Life of mine Operating Cost Summary, C$ | 1-18 |
Table 1.9 | Project Economics (C$) | 1-18 |
Table 1.10 | Key Project Metrics | 1-19 |
Table 1.11 | Cash Flow Summary | 1-20 |
Table 1.12 | Cost Estimate – Geotechnical Analysis | 1-24 |
Table 1.13 | Engineering Bridging Studies | 1-24 |
Table 3.1 | Active BRU Property Claims | 3-4 |
Table 4.1 | Mean Climate Data for Nearby Weather Stations | 4-2 |
Table 5.1 | Previous In-Place Mineral Resource Summary (May 8, 2019 and July 27, 2021) | 5-2 |
Table 6.1 | Property Lithology | 6-13 |
Table 7.1 | Sun Core Hole 4 Drilling Summary | 7-2 |
Table 7.2 | 2017 Drilling Program Summary | 7-4 |
Table 7.3 | September 2018 to January 2019 Drilling Campaign Summary | 7-5 |
Table 7.4 | 2019 Drilling Summary | 7-6 |
Table 7.5 | 2020 / 2021 Drill Holes | 7-8 |
Table 7.6 | 2022 Drill Holes | 7-8 |
Table 8.1 | Summary of Analyses Completed by Year and Laboratory | 8-2 |
Table 8.2 | 2017 Concentration of Major Oxides and LOI (wt %) by Fraction | 8-4 |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 8.3 | 2018 Mineralogical Assessment Results | 8-5 |
Table 8.4 | 2018 AGAT XRF Results – Concentration of Major Oxides and LOI (wt %) | 8-6 |
Table 8.5 | 2020 AGAT XRF Results – Concentration of Major Oxides and LOI (wt %) | 8-8 |
Table 8.6 | Samples Processed at Sio Silica Facilities | 8-9 |
Table 8.7 | Liquids Matter ICP-OES Summary Test Results | 8-11 |
Table 8.8 | Liquids Matter ICP-OES Point A 40/70 Test Results | 8-12 |
Table 8.9 | Liquids Matter ICP-OES Point B 40/70 Test Results | 8-13 |
Table 8.10 | Liquids Matter ICP-OES Point A-1 70/140 Test Results | 8-14 |
Table 8.11 | Liquids Matter ICP-OES Point B-1 70/140 Test Results | 8-15 |
Table 9.1 | 2017 Stim-Lab Sample Chain-of-Custody | 9-2 |
Table 9.2 | 2017 Loring Sample Chain-of-Custody | 9-2 |
Table 9.3 | Stim-Lab Sample Chain-of-Custody | 9-2 |
Table 9.4 | AGAT Sample Chain-of-Custody | 9-3 |
Table 11.1 | Summary of In-Place Carman Sand as of September 30, 2022 | 11-8 |
Table 11.2 | Sand Extraction Recommendations | 11-9 |
Table 11.3 | In-Place Mineral Resource Summary, as of September 30, 2022 | 11-10 |
Table 18.1 | Capital Cost Summary – Phase 1 (C$), no Contingency | 18-2 |
Table 18.2 | Capital Cost Summary – Phase 2 (C$), no Contingency | 18-2 |
Table 18.4 | Life of mine Operating Cost Summary, C$ | 18-6 |
Table 19.1 | Project Economics (C$) | 19-3 |
Table 19.2 | Key Project Metrics | 19-4 |
Table 19.3 | Cash Flow Summary | 19-5 |
Table 19.4 | After Tax NPV Sensitivity to Sale Price | 19-8 |
Table 23.1 | Cost Estimate – Geotechnical Analysis | 23-2 |
Table 23.2 | Engineering Bridging Studies | 23-2 |
LIST OF FIGURES
Figure 1-1 | Property Location Map | 1-2 |
Figure 1-2 | Mining Claims Map | 1-3 |
Figure 1-3 | Resource Distribution Map | 1-7 |
Figure 1-4 | Resource Classification Map | 1-8 |
Figure 3-1 | Property Location Map | 3-2 |
Figure 3-2 | Mining Claims Map | 3-3 |
Figure 4-1 | Infrastructure Map | 4-3 |
Figure 6-1 | Regional Geology Map | 6-3 |
Figure 6-2 | Carbonate Thickness Map | 6-4 |
Figure 6-3 | Sand Thickness Map | 6-5 |
Figure 6-4 | Overburden Thickness Map | 6-6 |
Figure 6-5 | Structure Map Top of Carbonate | 6-7 |
Figure 6-6 | Structure Map Top of Carman Sand | 6-8 |
Figure 6-7 | Cross Section A-A’ | 6-9 |
Figure 6-8 | Cross Section B-B’ | 6-10 |
Figure 6-9 | Cross Section C-C’ | 6-11 |
Figure 6-10 | Cross Section D-D’ | 6-12 |
Figure 7-1 | Drill Hole Location Map | 7-7 |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Figure 8-1 | SiO2 Content for 40/70 Fraction Distribution Map | 8-16 |
Figure 8-2 | SiO2 Content for 70/140 Fraction Distribution Map | 8-17 |
Figure 8-3 | Iron Content for 40/70 Fraction Distribution Map | 8-18 |
Figure 8-4 | Iron Content for 70/140 Fraction Distribution Map | 8-19 |
Figure 9-1 | 2017 Duplicate Sample Comparison Loring vs. Stim-Lab | 9-4 |
Figure 9-2 | 2018-2019 Duplicate Sample Comparison AGAT vs. Loring Lab | 9-5 |
Figure 9-3 | Sample Comparison Sio Silica vs. AGAT | 9-6 |
Figure 11-1 | 40/70 Fraction Distribution Map | 11-3 |
Figure 11-2 | 70/140 Fraction Distribution Map | 11-4 |
Figure 11-3 | Resource Distribution Map | 11-6 |
Figure 11-4 | Resource Classification Map | 11-7 |
Figure 13-1 | 25 Year Extraction Plan | 13-5 |
Figure 14.1 | Wellpad Extraction Flowsheet | 14-4 |
Figure 14.2 | Extraction Dewatering Flowsheet | 14-5 |
Figure 14.3 | Overland Transport Dewatering Flowsheet | 14-6 |
Figure 14.4 | Wet Plant Flowsheet | 14-7 |
Figure 14-5 | Dry Plant Flowsheet | 14-8 |
Figure 14-6 | Product Handling | 14-9 |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
SIGNATURE PAGE
This report titled “Technical Report Summary, BRU Property, Manitoba, Canada” with an effective date of October 5, 2023 was prepared by:
Stantec Consulting Ltd. | (signed) Stantec Consulting Ltd. |
Dated at Calgary, Alberta | |
October 6, 2023 |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
1 | EXECUTIVE SUMMARY |
Introduction
On Dec 5, 2022, Sio Silica Corporation (Sio Silica) contracted Stantec Consulting Ltd (Stantec) to prepare a Technical Report Summary regarding the Initial Assessment (IA) of the BRU Property. The Technical Report Summary was prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (SEC) reporting of material mining assets under regulation S-K 1300.
This Technical Report Summary focuses on the quantification of the resource as a source of high purity silica sand. High purity silica sand may be used in a wide range of industrial applications, including electronics, medical research, metals and alloys, specialty glass, and renewable energy.
Description and Location
The centre of the Property is located approximately 52 km east of the city of Winnipeg, Manitoba and is within the Rural Municipality of Springfield, as shown on Figure 1.1. The southern end of the Property is accessed from Winnipeg via the TransCanada Highway.
The Property encompasses 27,528 ha and is shown on National Topographic System Map Sheet 62H. The Property spans from 670606E to 690090E, and 5502592N to 5529032N, and the centre of the Property is approximately at 49.75917°N and 96.46818°E (UTM 14 U 682343E and 5514931N, NAD83).
Mineral Claims
The Property consists of 122 claims and are all within surveyed territory. Originally some claims were held under HD Minerals Ltd.; however, following the amalgamation of HD Minerals with Sio Silica Corporation, 100% of the claims that compose the Property are now retained under CanWhite Sands Corp., which is now Sio Silica Corporation. The location of the claims is shown on Figure 1.2
Topography, Elevation and Vegetation
The Property is located in the Boreal Plain Ecozone with the western edge of the Property in the Prairie Ecozone and the eastern edge in the Boreal Shield Ecozone. The Boreal Plain Ecozone is characterized by relatively flat lying to gently rolling plains and terraces formed by morainal diamicton deposits with lower areas composed of glaciolacustrine deposits (Smith et al., 1998).
Infrastructure
Winnipeg is the largest major city near the Property. Winnipeg, as of 2021, has a population of 749,607 residents in the metropolitan area, and provides all required major services to advance the project. The city of Winnipeg, located on the TransCanada Highway, is the home of the James Armstrong Richardson International Airport that has numerous domestic and international flights, and is a major North American rail transportation hub with a 20,000-acre facility that services Canadian National Railway, Canadian Pacific Railway, BNSF Railway and the locally maintained and operated Greater Winnipeg Water District Railway (Railway Association of Canada, 2017; Winnipeg, 2017).
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
History
Prior to Sio Silica securing the Property, the area within the BRU claims had not been subject to subsurface exploration for silica sands. There is however documentation that exploration for silica sand did occur directly to the south of the Property in the 1960’s (Underwood McLellan & Associates Limited, 1967).
Stantec has prepared the following reports for Sio Silica’s BRU Property. In chronological order these reports are:
● | Technical Report BRU Property Manitoba, Effective Date October 4, 2017 | |
● | Technical Report BRU Property Manitoba, Effective Date May 8, 2019 | |
● | Preliminary Economic Assessment BRU Property, Effective Date February 27, 2020 | |
● | Preliminary Economic Assessment BRU Property, Effective Date July 27, 2021 | |
● | Technical Report Initial Assessment BRU Property Manitoba, Effective Date August 27, 2021 | |
● | Technical Report BRU Property Manitoba, Effective Date September 30, 2022 | |
● | Technical Report Summary BRU Property, Effective Date September 30, 2022 |
These reports were prepared in accordance with the requirements of National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101).
Property Geology
Prior to 2017, the area had undergone little drilling, most of which was limited to water wells that were drilled on behalf of third parties. The lithological descriptions are primarily based on reliable holes that were drilled in the Project area by Sio Silica. In general, the stratigraphy of the Property is consistent; the major units are Quaternary sediments, carbonate and shale intervals of the Red River Formation, unconsolidated sand, sandstone, and shale of the Winnipeg Formation, and Archean-age granitoid basement. The upper unconsolidated sand interval of the Winnipeg Formation, which is known as the Carman Sand Member, is the subject of this report. The maximum Carman Sand Member depth within the property limit is 65-70 m and the average thickness is 22.3 m.
Mineralization
The stratigraphic target is the unconsolidated silica sand from the Carman Sand Member. The high purity of the sand makes it suitable for variety of usages and markets. The primary objective of the program was to delineate the quality of the sand and assess the extractable sand volumes.
Deposit Types
The Carman Sand Member is dominantly an unconsolidated laterally extensive unit across the Property, as validated through numerous drilling campaigns conducted by Sio Silica. Unconsolidated sand type deposits typically require no processing beyond cleaning and size sorting. The deposit appears to have limited geological variability and limited structural complexity.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Sio Silica Drilling Campaigns
Sio Silica conducted the first exploration drilling program during July and August 2017, which resulted in the completion of six vertical holes on the Property. Five of the boreholes were drilled using a dual rotary (DR) drill rig and a reverse circulation (RC) drill rig. A dual rotary drill rig was utilized to drill through the diamicton and the carbonate cap rock. The holes were cased to the top of the carbonate unit. Once the upper contact with the sand was intercepted, a RC rig with a cyclone was used to recover and collect samples of the sand. The remaining borehole,
DDH-10-17, was drilled to obtain geotechnical information about the carbonate unit above the Carman Sand Member.
A drilling campaign was completed between September 2018 and January 2019, in which 10 vertical holes were drilled on the BRU Property. Of these 10 holes, eight were DR / RC holes that were drilled to identify formation tops and to constrain sand samples, and two diamond drill holes were completed to document the geotechnical properties of the carbonate interval.
Nine holes were drilled between April 2019 and August 2019. The purpose of these drill holes was for extraction tests and aquifer monitoring. These drill holes were drilled in close proximity to other wells and provided similar lithological information, as a result some drill holes are excluded from the geological modelling.
Fifteen drill holes were completed between July 2020 and August 2021. Drill hole depths varied from 42 m to 76 m; all holes were drilled vertically. In addition to further constraining lithological depths, the main purpose of the drilling campaign was to further develop production and supply wells, as well as to complete sand, limestone, and shale monitoring wells.
Six vertical drill holes were completed during the last drill hole campaign in August 2022. Drill hole depths varied from 66 m to 83 m. The main purpose of the drilling campaigns was to increase the drill hole density and providing additional information on the depth and the thickness of the lithological units, as well as to collect samples for sand quality assessment.
Sample Preparation, Analyses and Security
Table 1.1 shows a summary of the number and type of analyses by year and laboratory. Loring, AGAT and Liquids Matter are independent laboratories.
Table 1.1
Summary of Analyses Completed by Year and Laboratory
Laboratory | Year | No. Samples | Analyses Type | |||
Loring | 2017 | 75 | PSD Sieve | |||
2017 | 15 | Inductively Coupled Plasma (ICP) Whole Rock | ||||
2019 | 10 | PSD Sieve | ||||
AGAT | 2019 | 6 | Bulk X-Ray Diffraction and X-Ray Fluorescence | |||
2018-2019 | 79 | PSD Sieve | ||||
2020 | 13 | X-Ray Fluorescence | ||||
Sio Silica | 2022 | 20 | PSD Sieve | |||
2020-2022 | 14 | 40/70 and 70/140 size fraction clean and magnetic separator | ||||
Liquids Matter | 2021-2022 | 56 | ICP Whole Rock on 40/70 and 70/140 size fraction |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
The Liquids Matter ICP-OES test results show that the magnetic separator used by Sio Silica was successful in increasing sand purity from a mean of 99.87% SiO2 to 99.91% SiO2 for the 40/70 size fraction, and 99.86% SiO2 to 99.91% SiO2 for the 70/140 size fraction.
Data Verification
Multiple site visits were conducted on the property by the QP. The exploration programs (involving collection of the field data, sample collection, and the implementation of chain-of- custody documentation during sample shipment), were observed during the site visits.
Provided analytical data were compared against the laboratory reports. The results from the different laboratories are compared to ensure consistency and accuracy of the analytical data.
Mineral Resource Estimates
The estimates presented below have been prepared in accordance with the requirements of the SEC S-K 1300 Regulations. For the purposes of estimating mineral resource within the Property, Stantec constructed a geological model utilizing all available drill hole data included in Section 5 and Section 7 of this report. The geologic model construction, resource estimation approach, criteria and assumptions taken into consideration during this resource estimation are outlined in the following sub-sections.
Mineral Resource Classification
Estimated resources are classified according to the confidence level that can be placed in each estimate. The classification template used in this study is based on the three-dimensional distance to the nearest drill hole that penetrates the top and the bottom of the Carman Sand, as well as the distance to the nearest sample that contains sand quality analytical data. The Carman Sand interval in the Property was classed as Measured using an 800 m radial distance from the nearest drill hole intersection with available sand quality data, classed as Indicated using a 1,600 m radial distance from the nearest drill hole intersection with available sand quality data and classed as Inferred using a 3,200 m radial distance from the nearest drill hole intersection with or without available sand quality data. Only drill holes listed in Section 7.1 and Section 7.3- 7.7 were used for resource classification. Due to the reduced reliability of the water-wells described in Section 7.2, this data was only used to define the contacts of the lithological units. Figure 1-3 shows the resource distribution map and Figure 1-4 shows the resource classification map. The resource estimate covers an area of approximately 13,000 ha.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Estimation of Sand Volume
The modeled volumes and weight of the Carman Sand within the resource area are shown in Table 1.2.
Table 1.2
Summary of In-Place Carman Sand as of September 30, 2022
In-Place Carman Sand Member in Mineable Lease Area | ||||||||
BRU Property | 40/70 mesh fraction | 70/140 mesh fraction | ||||||
Estimated Sand Volume (Mm3) | 1,628 | 1,098 | ||||||
Total Estimated Sand Volume (Mm3) | 2,726 | |||||||
Estimated Sand Weight (Mt) | 2,442 | 1,647 | ||||||
Total Estimated Sand Weight (Mt) | 4,089 |
Mineral Resource Estimation
The Mineral Resource estimate for the Project has been prepared in accordance with the SEC S- K 1300 regulations.
The results of the Preliminary Economic Assessment dated July 27,2021 indicate a positive economic outcome related to the potential development of a silica sand extraction and processing operation for the BRU Property. The QP believes the BRU Property continues to demonstrate a reasonable prospect for eventual economic extraction.
Geotechnical testing and analysis have resulted in the extraction recommendations as summarized in Table 11.2. The extraction holes are planned to be drilled in a pod or cluster of up to seven holes in one extraction pad area. The current planning basis is to extract between 3 K and 23 K tonnes of sand from an extraction cluster, depending on the thickness and structural integrity of the overlying limestone and diamicton material, before relocating to the next extraction pad.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 1.3
Sand Extraction Recommendations
Competent Limestone Thickness (m) | Quaternary Material Thickness (m) | Extractable
Sand Volume (m3) | Extractable
Sand Mass (t) | Distance Between Well Clusters (m) (Center to Center) | ||||||||||
>25 | 0-25 | 15,235 | 22,853 | 110 | ||||||||||
>25 | 25-35 | 12,485 | 18,728 | 107 | ||||||||||
>25 | >35 | 10,018 | 15,027 | 104 | ||||||||||
20-25 | 0-25 | 9,259 | 13,889 | 103 | ||||||||||
20-25 | 25-35 | 7,169 | 10,754 | 100 | ||||||||||
20-25 | >35 | 5,362 | 8,043 | 97 | ||||||||||
15-20 | 0-25 | 4,314 | 6,471 | 95 | ||||||||||
15-20 | 25-35 | 2,979 | 4,469 | 92 | ||||||||||
15-20 | >35 | 2,245 | 3,368 | 90 |
The mineral resource shown in Table 1.4, utilizing the extraction recommendations from Table 1.2, is reported as in-place tonnages. The calculated volumes were converted to tonnage by the application of a representative average in-place bulk density value of 1.5 g/cm3.
Table 1.4
In-Place Mineral Resource Summary, as of September 30, 2022
Mineral Resources (Mt) | ||||||||||||
BRU Property | 40/70 mesh fraction | 70/140 mesh fraction | Total | |||||||||
Measured | 6.5 | 4.7 | 11.2 | |||||||||
Indicated | 27.2 | 19.2 | 46.4 | |||||||||
Total Measured and Indicated | 57.6 | |||||||||||
Inferred | 55.1 | 36.8 | 91.9 | |||||||||
Total Inferred | 91.9 |
It should be noted that the drill hole information shows very consistent Carman Sand thickness, averaging 22.3 m. The laboratory results show low variability on the sand quality. The SiO2 content ranges between 99.75% to 99.93%, averaging 99.87% after washing and drying (Point A). The average SiO2 content after magnetic separation (Point B) is 99.91%. Analogical results are observed on the Fe analysis. The Fe content ranges between 52 ppm and 325 ppm with 197 ppm average after washing and drying. The average Fe content after magnetic separation is 55.1 ppm, ranging between 28.9 ppm and 99.5 ppm.
The accuracy of resource estimates is, in part, a function of the quality and quantity of available data and of engineering and geological interpretation and judgment. Given the data available at the time that this Technical Report Summary was prepared, the estimates presented herein are considered reasonable. However, this estimate should be accepted with the understanding that additional data and analysis available after the date of the estimates, may necessitate revision. These revisions may be material. There is no guarantee that all or any part of the estimated resources will be recoverable.
![]() | 1-10 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Mineral Reserve Estimation
This Technical Report does not include an estimate of reserves. The level of engineering does not support the preparation of a Pre-Feasibility Study; therefore, in accordance with the requirements of S-K 1300, the reported resources cannot be classified as reserves.
This section of the report includes estimates of recoverable sand tonnage for the BRU Property based on preliminary extraction plans, production schedules and processing plant and materials handling plans. These estimates are only intended for the purpose of completion of the cash flow forecasts presented in Section 19. These recoverable estimates are not, and should not be construed to be, estimates of reserves for the BRU Property. They do not comply with the Classification of Reserves as required under S-K 1300. It should be noted that there is no certainty that the estimated resources will be realized.
Development Plan
The 25-year development plan, that is discussed in more detail in Section 13, results in 66.4 Mt of clean (saleable) sand from the resource estimate. Stantec notes that the 25-year development plan only addresses a portion of the BRU Property resource. The remaining resource is available for development in further planning efforts.
This estimate of clean (saleable) silica sand is considered to be inclusive of the in-place mineral resource estimate detailed in Section 11. These production estimates are contained within the in- place mineral resource summary and cannot be added to the totals to result in additional resources tonnes.
The BRU Property will be developed using an underground extraction technique that involves drilling through the quaternary sediments, carbonate unit and shale, into the underlying sand. The extraction holes will be cased to the top of the sand and an extraction casing is then lowered into the sand. Air is injected into the extraction casing, approximately 10 m - 15 m above the bottom of the casing. Field tests have shown that the air injection process results in a slurry of sand, water, and air that rises to the surface. The solids content of the slurry ranges from 90% to 20% during the extraction trials. The average solids content is approximately 50%.
Sio Silica plans to commence extraction and processing operations in the 3rd Quarter of Year 0 with the first product sales planned for the 1st Quarter of 2025. The extraction and processing operations are planned to take place for eight months a year, April to November, while sales will take place year-round. The sales will be phased with 1.25 Mt of saleable product planned in Year 1, 2.50 Mt in Year 2, and 2.72 Mt in Year 3 and extending out the remainder of the 25-year plan. For the purposes of this Technical Report Summary, Year 0 is defined as 2024.
![]() | 1-11 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Geotechnical Analysis
The preliminary analysis indicates that:
● | Subsurface sand extraction should be limited to areas where the carbonate unit is more than 15 m in thickness. |
● | The analysis here assumes an overburden thickness of up to 25 m. Overburden thicker than this range should be reviewed case by case to assess potential for subsidence to occur following extraction. |
● | The diameter of the extraction voids should not extend beyond 60 m in any circumstance. This diameter should be reduced to 50 m as the carbonate unit thins to 15 m. |
● | The distance from the edge of one extraction void to the edge of the next extraction void should not be less than 60 m. |
● | An extraction void developed as per the above noted maximum diameter assumptions contains approximately 25,000 tonnes. |
The extraction layout was developed with these geotechnical criteria in mind. The author(s) would like to note that these geotechnical parameters and the resulting geotechnical analysis are based on geotechnical work completed for the Limestone caprock and assuming that the controlling failure mode is shear failure. Additional testing is recommended to support further analysis on the sandstone void space evolution, and the joint system in the limestone (to investigate for the possible presence of vertical jointing and if found, to assess its impact on stability). As stated above, evidence from testing in 2018/2019 suggests that the sandstone angle of repose is steeper than previously assumed, and related adjustments of the extraction plan which would lead to a more refined extraction layout might be required. In addition, more complex void shapes in the sandstone may be occurring with both steep and shallow side slopes.
Recovery Methods
The processing component of the BRU silica operation is guided by a modular and multi-stage recovery process. The four general areas are:
● | A modular well pad screening and dewatering plant for slurry preparation; |
● | A dewatering circuit or ‘wet plant’ for raw sand separation; |
● | A dry screening plant for final sizing and beneficiation; and |
● | The storage and loadout system. |
Based on preliminary analyses and modeling, extraction, handling and drying losses are estimated at seven (7) percent.
Markets and Contracts
Sio Silica is intending on producing high-quality premium silica sand for end use in the technology markets. The 99.99% SiO2 and low iron content (<100ppm Fe) are typically marketed to manufacturers of solar glass, smart glass for computing and mobile device applications, and semiconductors, among other uses, and receive a premium compared to 95% SiO2 purity. A confidential marketing study was completed by a third party, on behalf of Sio Silica, focused on the premium silica market
The global market for silica sand is approximately 350 million tonnes per annum, with approximately three quarters of that total in North America (112 million tonnes) and Asia Pacific (154 million tonnes), as of 2021. Of this global market, the high purity market consists of approximately 13 million tonnes per annum.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
The North American market for high purity, low iron silica has been in the 1 million tonne per annum range historically through 2021 and is anticipated to grow to 2 to 3 million tonnes per annum by 2025, principally driven by the photovoltaic market and technology applications.
Supply of high purity quartz to the Asian market has traditionally been supplied via Vietnam and Cambodia. Both countries have scaled back exports to China to strengthen their local manufacturing, resulting in a supply shortage in the rest of Asia and therefore higher delivered prices.
The anticipated growth in the high purity silica market has provided motivation to other potential sources of supply in Australia, according to the marketing report. It is anticipated that the supply from these to-be-developed proposed mines will require additional beneficiation, adding costs to the mine gate pricing. The timing and tonnage of this new supply and the level of the beneficiation, and associated costs, is uncertain. Australian mining companies are expected to be the primary exporter to China; however, it is unclear how much will materialize, according to the marketing study. In the future scenario, Australian mining companies may potentially have lower delivered costs compared to other international peers for solar glass applications, but will require beneficiation for smart glass applications, resulting in a higher delivered price.
There are only two mines in the US today capable of providing low iron silica sand (99.9% SiO2, <100 ppm) totaling approximately 1 million tonnes per annum of supply.
According to the marketing study, typical contracts are two-to-three-year renewable contracts indexed to inflation, and identified with a specific purity, quality, and quantity. In a similar fashion, there are typically penalties for not meeting these criteria. Sio Silica has provided Stantec with three documents related to their negotiations with potential customers for the silica sand produced from the Bru Property.
Agreement #1
The first document is a proposed sales and purchase agreement contract between Sio Silica and Company 1, that Sio Silica has indicated should be finalized in the fourth quarter of 2023. The document states a sales price of US$180 per MT FOB loading port for 500,000 MT per annum. When exchange rates and port and rail costs are considered, it equates to a mine gate price of CDN$149 per MT.
The initial term of this proposed agreement is from January 1, 2024 to December 21, 2026. Thereafter term of the agreement will be automatically renewed for an unlimited number of one (1) year terms unless terminated by either the buyer or the seller.
Agreement #2
The second document is a Memorandum of Understanding between Sio Silica and Company 2 and dated September 15, 2022. The document states a sales price of US$250 per MT FOB loading port for 800,000 MT per annum. When exchange rates and port and rail costs are considered, it equates to a mine gate price of CDN$240 per MT.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Both the buyer and the seller agree to use their best efforts to enter into a binding Sales Agreement in the first quarter of 2024.
Agreement #3
The third document is an engagement agreement between Sio Silica and Company 3 and dated November 1, 2022. The document states a sales price of US$200 per short ton FOB Mine Gate for 1,200,000 short tons per annum. The agreement also stipulates a service fee equal to 15% of the gross amount of the purchase price paid. When conversion to metric tonnes and the 15% fee are considered, it equates to a mine gate price of CDN$243.60 per MT.
The term of this agreement is unlimited unless terminated by either the buyer or the seller.
Product Pricing
Stantec used a weighted tonnage per annum price from all three agreements for the initial years of the analysis. A weighted tonnage per annum price for the last two agreements was used from 2030 until the end of the project life.
Product Quality
The first two agreements specify that the quality parameters for the delivered sand shall be a silicon dioxide (SiO2) percentage greater than or equal to 99.9% and Fe2O3 content less than or equal to 100 ppm.
It is the opinion of Stantec that given the results of the sand analysis discussed in Section 8, the sand pricing discussed above is applicable to the BRU Property resource and as such has been used in this Study.
Stantec does note, however, that confirmed sales agreements or contracts for the full levels of silica sand production that form the basis of this IA have yet to be finalized.
Environmental Studies, Permitting and Social or Community Impact
Sio Silica has engaged AECOM to provide consulting support through the regulatory approval process. This information is discussed further in Section 17. Refer to Table 1. 5 below for key project permitting milestones and projected dates.
Potential socioeconomic effects of the Project are assessed in the EAPs for the respective facility and extraction Project components that will be reviewed and considered by MBCC in the provincial review and licensing process. Sio Silica has a public ‘Vivian Sand Project’ website that provides updated information on the Project and a summary of the public outreach conducted by Sio Silica to date. Sio Silica has been and will continue to engage with local communities, associations, local businesses, and other interested parties, to share information about the Project and solicit input on improving Project design and/or address any concerns.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 1.5
Summary of Project Permitting Process Key Milestones
Component | Date | |
Provincial | ||
Submission of final Sand Extraction EAP to MBCC | July 2021 | |
Sio Silica Public Engagement Virtual Meeting – Sand Extraction Project | August 2021 | |
Technical Advisory Committee (TAC) and Public Review and Response to Sand Extraction EAP | September 2021 | |
Facilitated Public Meeting (potential requirement of MBCC) | September 2021 | |
Sio Silica Public Engagement In-Person Meeting – Sand Extraction Project | November 2021 | |
CEC Hearing Announcement for Sand Extraction | November 2021 | |
Issuance of Environment Act Licence for Facility Project | December 2021 | |
Sio Public Engagement – Close Neighbor Individual Meetings | Fall 2022 | |
Sio Silica Public Engagement Virtual Meeting – Q&A Webinar | February 2023 | |
Completed drafts for the following: Groundwater Monitoring and Impact Mitigation Plan, Progressive Well Abandonment Plan, Waste Characterization and Management Plan | February 2023 | |
Submitted Draft Closure Plan - Extraction | February 2023 | |
Clean Environment Commission (CEC) Hearings | February 2023 to March 2023 | |
CEC Recommendations | June 2023 | |
Submitted Draft Closure Plan - Facility | June 2023 | |
Municipal | ||
Municipal Board Zoning Appeal Hearing for Facility Project | October 2022 | |
Successful Zoning Result for Facility Property | March 2023 |
Capital and Operating Costs
The BRU project is developed in two phases to capture the initial production and a future expansion. Phase 1 capital encompasses equipment beginning at extraction well pad, including well rigs, the overland slurry line initial pump stations, booster pump and through to the wet and dry plant, as well as the silos, rail, and supporting infrastructure. Table 1.6, below, outlines the Phase 1 capital estimate by area. It should be noted that no contingency is applied in the table.
Table 1.6
Capital Cost Summary – Phase 1 (C$), no Contingency
Area | Summary Cost, (C$) | |||
Extraction | $ | 21.8 | M | |
Wet Plant | $ | 39.4 | M | |
Dry Plant | $ | 47.4 | M | |
Rail and TLO | $ | 25.3 | M | |
Overland Slurry Pipeline Controls | $ | 6.2 | M | |
Infrastructure | $ | 15.9 | M | |
Engineering, Project Management & Permitting | $ | 2.0 | M | |
Subtotal | $ | 158.0 | M |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
The capital costs for the second phase of development, Phase 2, are shown in Table 1.7 The same battery limits apply as in Phase 1, recognizing that portions of the rail and infrastructure is pre-invested in within the original phase.
Table 1.7
Capital Cost Summary – Phase 2 (C$), no Contingency
Area | Summary Cost, (C$) | |||
Extraction | $ | 21.8 | M | |
Wet Plant | $ | 34.4 | M | |
Dry Plant | $ | 38.0 | M | |
Rail and TLO | $ | 11.0 | M | |
Overland Slurry Pipeline Controls | $ | 0.0 | M | |
Infrastructure | $ | 0.0 | M | |
Engineering, Project Management & Permitting | $ | 0.5 | M | |
Subtotal | $ | 105.7 | M |
Engineering studies allowance of $0.5M is shown in Phase 2, although in the cashflow outlay, these studies are anticipated to occur as bridging studies ahead of Phase 2. As with the preceding Phase, the Phase 2 tally above does not include contingency.
A 7% contingency has been applied to most capital cost items to account for any unforeseen or otherwise unanticipated cost elements that could be associated with development and operation of the project. Contingency for Phase 1 totals $10.0M. A contingency was not applied to rail costs as these costs were supplied including a contingency.
The project team also developed the operating costs using construction lengths, land requirements, operating units, and process or dryer unit preliminary power and gas consumption. Areas of operating costs breakouts include:
● | Land leasing | |
● | Land prep and reclaim | |
● | Well Production | |
● | Slurry Transport | |
● | Wet Process | |
● | Support Equipment | |
● | Dry Process | |
● | Loadout | |
● | Rail Costs | |
● | Manpower | |
● | General and Administration |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
The total operating cost summary is shown in Table 1.8. In year 1, each extraction site utilizes dedicated supervision leading to higher initial costs. Extraction operation costs are reduced in later years as operations supervision is planned to be centralized. Slurry transport costs are lower in early years due to shorter slurry pumping distances. Dry processing costs are calculated based on the change from trucked propane in Year 1 while the gas line is developed. From Year 2 production onward, operating costs reflect that the installation of a natural gas pipeline and the use of natural gas as opposed to propane.
Table 1.8
Life of mine Operating Cost Summary, C$
Year 1 C$/tonne | Year 2 onward C$/tonne | |||||||
Extraction | $ | 12.53 | $ | 8.62 | ||||
Slurry Transport | $ | 1.74 | $ | 2.90 | ||||
Wet Processing | $ | 5.07 | $ | 5.07 | ||||
Dry Processing | $ | 11.99 | $ | 8.63 | ||||
Site Labor | $ | 1.28 | $ | 1.28 | ||||
Insurance | $ | 0.38 | $ | 0.38 | ||||
Total OPEX | $ | 32.99 | $ | 26.88 |
Economic Analyses
Sio Silica prepared the economic analyses for the BRU operation and provided the model to Stantec. Stantec reviewed the model to assess and determined it to be appropriate for the purposes of the IA. Section 19 outlines the specific inputs and assumptions for the analyses. The results of the Study base case economic analysis are shown in Table 1.9 Project Economics.
The economic performance of the project is positive up to the highest analyzed discount rate of 16%.
Table 1.9
Project Economics (C$)
Discount Rate | After Tax | |||||||
(%) | IRR | NPV | ||||||
6 | 96 | % | $ | 3,774,089,000 | ||||
8 | 96 | % | $ | 3,043,276,000 | ||||
10 | 96 | % | $ | 2,494,719,000 | ||||
12 | 96 | % | $ | 2,075,195,000 | ||||
14 | 96 | % | $ | 1,748,649,000 | ||||
16 | 96 | % | $ | 1,490,259,000 |
Stantec has not completed a rigorous analysis in order to select the project discount rate. However, Stantec notes that current normalized risk-free rate and equity risk premium, composed of 3.5% and 5.7% respectively which shows that the approximate cost of equity capital to be 9.2%. This rate does not account for project risks, industry risk, size and maturity of the operation to name a few. As such the appropriate discount rate for this study is likely in the range of 10-13%. Ultimately investors in the BRU Property will need to conduct their own discount rate analysis.
![]() | 1-17 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
The key project metrics and cash flow summary are summarized in Tables 1.10 and 1.11.
Table 1.10
Key Project Metrics
Economic Analysis | BRU | |||
Net Present Value (NPV), After-Tax | $ | 2,494,719,000 | ||
Internal Rate of Return (IRR), After-Tax | 96 | % | ||
Pay-Back Period (Years based on After-Tax) | 1.58 | |||
Capital Costs | ||||
Initial Capital (M) | 168.00 | |||
Expansion Capital (M) | 112.75 | |||
Operating Costs at Full Production | ||||
Extraction ($/MT ) | 8.62 | |||
Slurry Transport ($/MT) | 2.90 | |||
Wet Processing ($/MT) | 5.07 | |||
Dry Processing and Loadout ($/MT) | 8.63 | |||
Site Labor and Insurance ($/MT) | 1.66 | |||
Total Operating Cost ($/MT) | 26.88 | |||
Production Data | ||||
Life of Mine (Years) | 25 | |||
Annual Clean Saleable Tonnes Produced (MT) | 2,724,000 | |||
Total Clean Saleable Tonnes Produced (MT) | 66,398,000 |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 1.11
Cash Flow Summary
Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 | Year 10 | Year 11 | Year 12 | ||||||||||||||||||||||||||||||||||||||||
Period | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | 2035 | 2036 | |||||||||||||||||||||||||||||||||||||||
Raw Sand Production (Tonnes) | 549,000 | 1,465,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | |||||||||||||||||||||||||||||||||||||||
Sales Volumes (Tonnes) | - | 1,249,000 | 2,497,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | |||||||||||||||||||||||||||||||||||||||
Minegate Pricing ($/Tonne) | 223.53 | 223.53 | 223.53 | 223.53 | 223.53 | 223.53 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | |||||||||||||||||||||||||||||||||||||||
Minegate Revenue (M$) | - | 279 | 558 | 609 | 609 | 609 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | |||||||||||||||||||||||||||||||||||||||
Royalties (M$) | - | 12 | 16 | 10 | 10 | 10 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | |||||||||||||||||||||||||||||||||||||||
Mining Tax (M$) | - | - | 80 | 89 | 89 | 89 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | |||||||||||||||||||||||||||||||||||||||
Net Revenue (M$) | - | 267 | 462 | 510 | 510 | 510 | 553 | 553 | 553 | 553 | 553 | 553 | 553 | |||||||||||||||||||||||||||||||||||||||
Extraction Operating Costs (M$) | 8 | 22 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | |||||||||||||||||||||||||||||||||||||||
Wet Processing Operating Costs (M$) | 2 | 7 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | |||||||||||||||||||||||||||||||||||||||
Dry Processing and Loadout Operating Costs (M$) | - | 15 | 22 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | |||||||||||||||||||||||||||||||||||||||
Total Operating Costs (M$) | 10 | 44 | 72 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | |||||||||||||||||||||||||||||||||||||||
Manitoba Operations G&A (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Head office G&A (M$) | 4 | 4 | 3 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | |||||||||||||||||||||||||||||||||||||||
Total G&A (M$) | 4 | 4 | 3 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | |||||||||||||||||||||||||||||||||||||||
Cash Interest Expense (M$) | 12 | 12 | 6 | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Cash Income Tax (M$) | - | 33 | 88 | 106 | 109 | 111 | 124 | 125 | 126 | 127 | 127 | 128 | 128 | |||||||||||||||||||||||||||||||||||||||
Total Cash-flow (M$) | (26 | ) | 175 | 293 | 329 | 326 | 324 | 353 | 352 | 351 | 350 | 350 | 349 | 349 | ||||||||||||||||||||||||||||||||||||||
Cumulative Cash-Flow (M$) | (28 | ) | 147 | 440 | 768 | 1,094 | 1,418 | 1,770 | 2,122 | 2,473 | 2,823 | 3,173 | 3,522 | 3,871 | ||||||||||||||||||||||||||||||||||||||
Phase 1 Capital Expenditures (M$) | 166 | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Expansion Capital Expenditures (M$) | - | 86 | 27 | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Total Capital Expenditures (M$) | 166 | 86 | 27 | - | - | - | - | - | - | - | - | - | - |
![]() | 1-19 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Year 13 | Year 14 | Year 15 | Year 16 | Year 17 | Year 18 | Year 19 | Year 20 | Year 21 | Year 22 | Year 23 | Year 24 | Year 25 | ||||||||||||||||||||||||||||||||||||||||||||
Period | 2037 | 2038 | 2039 | 2040 | 2041 | 2042 | 2043 | 2044 | 2045 | 2046 | 2047 | 2048 | 2049 | Total | ||||||||||||||||||||||||||||||||||||||||||
Raw Sand Production (Tonnes) | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 72,310,000 | ||||||||||||||||||||||||||||||||||||||||||
Sales Volumes (Tonnes) | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 66,398,000 | ||||||||||||||||||||||||||||||||||||||||||
- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Minegate Pricing ($/Tonne) | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | |||||||||||||||||||||||||||||||||||||||||||
Minegate Revenue (M$) | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 15,878 | ||||||||||||||||||||||||||||||||||||||||||
Royalties (M$) | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 268 | ||||||||||||||||||||||||||||||||||||||||||
Mining Tax (M$) | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 2,303 | ||||||||||||||||||||||||||||||||||||||||||
Net Revenue (M$) | 553 | 553 | 553 | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 13,307 | ||||||||||||||||||||||||||||||||||||||||||
Extraction Operating Costs (M$) | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 907 | ||||||||||||||||||||||||||||||||||||||||||
Wet Processing Operating Costs (M$) | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 341 | ||||||||||||||||||||||||||||||||||||||||||
Dry Processing and Loadout Operating Costs (M$) | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 577 | ||||||||||||||||||||||||||||||||||||||||||
Total Operating Costs (M$) | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 1,825 | ||||||||||||||||||||||||||||||||||||||||||
Manitoba Operations G&A (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
Head office G&A (M$) | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 52 | ||||||||||||||||||||||||||||||||||||||||||
Total G&A (M$) | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 52 | ||||||||||||||||||||||||||||||||||||||||||
Cash Interest Expense (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | 30 | ||||||||||||||||||||||||||||||||||||||||||
Cash Income Tax (M$) | 128 | 128 | 128 | 128 | 128 | 128 | 129 | 129 | 129 | 129 | 129 | 129 | 129 | 3,002 | ||||||||||||||||||||||||||||||||||||||||||
Total Cash-flow (M$) | 349 | 349 | 349 | 348 | 348 | 348 | 348 | 348 | 348 | 348 | 348 | 348 | 348 | 8,398 | ||||||||||||||||||||||||||||||||||||||||||
Cumulative Cash-Flow (M$) | 4,220 | 4,569 | 4,917 | 5,265 | 5,613 | 5,961 | 6,309 | 6,657 | 7,005 | 7,352 | 7,700 | 8,048 | 8,396 | - | ||||||||||||||||||||||||||||||||||||||||||
Phase 1 Capital Expenditures (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | 166 | ||||||||||||||||||||||||||||||||||||||||||
Expansion Capital Expenditures (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | 113 | ||||||||||||||||||||||||||||||||||||||||||
Total Capital Expenditures (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | 279 |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Interpretation and Conclusions
This Study indicates a positive economic outcome related to the potential development of a silica sand extraction and processing operation for the BRU Property. The extraction plan addressed only a portion of the In-Situ Mineral Resource previously classified, as the entire BRU resource was not required for the 25-year development plan.
Stantec has identified the following risks that could potentially affect the projected economic viability of the BRU Property development.
Product Pricing and Cost Escalation
As indicated in Section 19 of this Study, the project economics are sensitive to the assumed pricing for silica sand and estimated project costs. A 30% reduction in product pricing combined with a 30% increase in project costs, after a 7% contingency (initial project capital) has been applied, results in positive economics.
Stantec has reviewed Sio Silica’s cost estimate and believes it captures reasonable Capex and Opex costs for the project as it is currently planned. However, the cost estimate is based on budgetary quotes provides by third party vendors and Sio Silica’s partners and assumes the project advances as per the current schedule.
Stantec understands that Sio Silica intends to proceed with the project development in 2024, partially based on the results of this Study. As such, the risks associated with cost escalation are not insignificant.
Timing Of Regulatory Approvals
Sio Silica and AECOM are pursuing a regulatory approval process that assumes project approval in late 2023 or early 2024.
If the regulatory process is extended beyond this timeframe, then it is likely that project development and resulting product sales would be delayed beyond the base case project schedule.
Timing of Project Development
Certain process and infrastructure components may be subject to longer lead times. These include rotary dryers, gas pipeline installation, and high voltage substations. The full capacity of the BRU operation and the resultant project economics are dependent on these components.
Development of Extraction Process
The current extraction process is based on the results from 14 drill holes completed from 2017 to 2021. Stantec has no reason to believe that the planned extraction process will not be successful. However, Stantec does note the risks to the project should the planned extraction rates be unachievable or unsustainable over the life and geographic extent of the Project.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Confirmation of Geotechnical Testing and Analysis
As discussed in Section 5.2, Stantec geotechnical engineers have completed a preliminary geotechnical analysis related to extraction of the sand resource on the BRU Property. The conclusions of this analysis are summarized below:
● | Based upon current information and assessments, Shear and Bending are the most probable failure modes with the potential to affect long-term stability. Unravelling, Caving, and Chimneying are not controlling failure modes for the BRU property due to the nature of the limestone caprock. |
● | The Bending failure mode is controlling the long-term stability of the post extraction cavity for the expected range of caprock and overburden thickness and material properties and the extraction depth in the sand. The stability analysis and extraction borehole spacing design were completed to achieve a factor of safety of 2.0, which is considered to be an acceptably conservative FOS for the project. |
● | The cavity after extraction is expected to further expand with time resulting in loose sand infilling the extracted void leaving a larger unsupported caprock span. Based on the assumption that the areas with factor of safety larger than 2 are stable in the long-term, approximately 5 m of additional raveling of the post extraction cavity walls is expected (by end of the design life of 100 years). Therefore, the unsupported caprock span will increase by 10 m with time after extraction. |
● | Based upon the results of geotechnical assessment and with the understanding that Sio Silica will follow guidance provided by Stantec including continuing to assess the geotechnical characteristics and performance of the sand deposit and overlying materials during the project life and to adjust design accordingly, no large-scale surface subsidence is expected to occur as a result of sand extraction. |
There is a potential that further geotechnical assessments may impact the current resource estimate, either positively or negatively. In particular, there remains uncertainty regarding the possible presence of vertical fractures in Limestone caprock, which to date has not been investigated or assessed. The presence of continuous vertical fractures in Limestone caprock above extraction voids has the potential to lead to caprock collapse which may propagate to the surface and produce settlement. In addition, there remains uncertainty regarding the long term performance of the extraction voids which may have complex void shapes and have the potential to propagate over larger than currently estimated distances.
Recommendations
Phase 1: Geotechnical Testing and Analysisand Resource Investigation and Analysis
Based on Sio Silica’s current development and production plans, all resources identified in the areas where the first 5 years of production will occur should be classified as Measured. Additional drill holes may be required to increase confidence in the resource estimates within these areas.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
As discussed in Section 5.2, Stantec geotechnical engineers completed a preliminary geotechnical analysis of the impact of extraction of the sand on the BRU Property. The recommendations from this analysis are summarized below:
● | Design and execute a site investigation and assess the results to confirm expected geotechnical performance. This investigation may include the following components: |
o | Data Collection: |
§ | Geotechnical borehole drilling, logging, photography, and sampling with vertical and inclined boreholes and SPT or CPT if needed – to characterize extents and properties of sandstone, caprock and overburden. |
§ | Acoustic and Optical Televiewer Survey of Geotechnical Boreholes – to characterize caprock structure. |
§ | Side Scan Sonar Survey – to monitor sand cavity shape and behavior. |
§ | Laboratory testing of selected samples of sandstone, caprock and overburden as required – to characterize properties of sandstone, caprock and overburden. |
§ | Installation and monitoring of Vibrating Wire Piezometers, Vertical Extensometers and Surface Monuments and Total Station or GPS Survey – to monitor changes in caprock and surface subsidence. |
o | Data Analysis: |
§ | Stability and settlement analysis to identify and assess for changes in assumptions related to vertical jointing (if found) in Limestone caprock, extraction void shape or other design assumptions. |
● | Develop and implement a Trigger Action Response Plan as follows: |
§ | Collected data review - to establish baseline values. |
§ | Trigger value range identification - low/moderate/high – green/yellow/red |
§ | Monitoring results verification and comparison against trigger values. |
● | Review the impact of potential vibration sources, such as rail traffic, to determine potential offsets from extraction areas. |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 1.12 shows the anticipated cost to complete the geotechnical analysis.
Table 1.12
Cost Estimate – Geotechnical Analysis
Task | Estimated Cost (C$) | |||
Geotechnical Analysis | $ | 500,000 |
Phase 2: Engineering Bridging Studies
Given that this economic assessment and analysis has been developed to an IA level, Stantec recommends that Sio Silica continues to more accurately define the CAPEX and OPEX estimate for the BRU Property and to secure relationships with contractors, vendors, and suppliers.
Table 1.13 provides cost estimates for these studies.
Table 1.13
Engineering Bridging Studies
Task | Estimated Cost (C$) | |||
Engineering Bridging Studies | 550,000 |
![]() | 1-24 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
2 | INTRODUCTION |
On Dec 5, 2022, Sio Silica Corporation (Sio Silica) contracted Stantec Consulting Ltd (Stantec) to prepare a Technical Report Summary regarding the Initial Assessment (IA) of the BRU Property. The Technical Report Summary was prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (SEC) reporting of material mining assets under regulation S-K 1300.
Stantec previously prepared a Preliminary Economic Assessment (PEA) for the BRU Property in August 2021. This report was prepared for CanWhite Sands Corp. On January 1, 2022, the company name was changed from CanWhite Sands Corp. to Sio Silica Corporation.
The author(s) note that this Study is preliminary in nature, that it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the estimated resources will be realized.
The accuracy of resource estimates is, in part, a function of the quality and quantity of available data and of engineering and geological interpretation and judgment. Given the data available at the time this report was prepared, the estimates presented herein are considered reasonable.
However, they should be accepted with the understanding that additional data and analysis available subsequent to the date of the estimates may necessitate revision. These revisions may be material. There is no guarantee that all or any part of the estimated resources will be recoverable.
![]() | 2-1 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
3 | PROPERTY DESCRIPTION |
3.1 | DESCRIPTION AND LOCATION |
The centre of the Property is located approximately 52 km east of the city of Winnipeg, Manitoba and is within the Rural Municipality of Springfield as shown on Figure 3.1. The southern end of the Property is accessed from Winnipeg via the TransCanada Highway.
The Property encompasses 27,528 ha and is shown on National Topographic System Map Sheet 62H. The Property spans from 670606E to 690090E, and 5502592N to 5529032N, and the centre of the Property is approximately at 49.75917°N and 96.46818°E (UTM 14 U 682343E and 5514931N, NAD83).
3.2 | MINING CLAIMS |
The Property consists of 122 claims and are all within surveyed territory. Originally some claims were held under HD Minerals Ltd.; however, following the amalgamation of HD Minerals with Sio Silica Corporation, 100% of the claims that comprise the Property are now retained by CanWhite Sands Corp., which is now Sio Silica Corporation.
Table 3.1 provides a summary of the active claims. The location of the claims are shown on Figure 3.2.
To maintain the claims in good standing, Sio Silica must fulfill the requirements of Manitoba Regulation 64/92, which includes the following obligations (Manitoba, 1992b):
● | The claim holder must spend $12.50 per hectare/year from year two to year 10, and then $25/year from year 11 and for each year thereafter. |
● | An annual assessment report detailing exploration activities and expenditures must be filed within the reporting period. The first assessment report must be filed within 60 days of the second anniversary of claim approval, with subsequent reports submitted annually. |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
![]() | 3-2 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
![]() | 3-3 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 3.1
Active BRU Property Claims
Claim Name | Disposition Number | Claim Type | Expiry Date | Area (ha) | ||||||
BRU 1 | SV12553 | Mining | 2024-12-03 | 271 | ||||||
BRU 2 | SV12554 | Mining | 2023-12-03 | 270 | ||||||
BRU 3 | SV12555 | Mining | 2023-12-03 | 253 | ||||||
BRU 4 | SV12556 | Mining | 2024-12-03 | 268 | ||||||
BRU 5 | SV14112 | Mining | 2024-01-31 | 69 | ||||||
BRU 9 | SV12561 | Mining | 2024-12-03 | 269 | ||||||
BRU 10 | SV12562 | Mining | 2024-12-03 | 269 | ||||||
BRU 11 | SV12563 | Mining | 2024-12-03 | 268 | ||||||
BRU 12 | SV12564 | Mining | 2024-12-03 | 269 | ||||||
BRU 13 | SV12565 | Mining | 2024-12-03 | 270 | ||||||
BRU 14 | SV12566 | Mining | 2024-12-03 | 266 | ||||||
BRU 15 | SV12567 | Mining | 2024-12-03 | 271 | ||||||
BRU 16 | SV12568 | Mining | 2024-12-03 | 68 | ||||||
BRU 17 | SV12569 | Mining | 2024-12-03 | 271 | ||||||
BRU 19 | SV12571 | Mining | 2024-12-03 | 64 | ||||||
BRU 20 | SV12572 | Mining | 2024-12-03 | 67 | ||||||
BRU 21 | SV12573 | Mining | 2024-12-03 | 49 | ||||||
BRU 22 | SV12574 | Mining | 2024-12-03 | 202 | ||||||
BRU 23 | SV12575 | Mining | 2024-12-03 | 138 | ||||||
BRU 24 | SV12576 | Mining | 2024-12-03 | 205 | ||||||
BRU 25 | SV12577 | Mining | 2024-12-03 | 238 | ||||||
BRU 27 | SV12579 | Mining | 2024-12-03 | 269 | ||||||
BRU 28 | SV12580 | Mining | 2024-12-03 | 134 | ||||||
BRU 29 | SV12581 | Mining | 2024-12-03 | 269 | ||||||
BRU 32 | SV12584 | Mining | 2024-12-03 | 72 | ||||||
BRU 34 | SV14113 | Mining | 2024-01-31 | 75 | ||||||
BRU 35 | SV12587 | Mining | 2024-12-03 | 281 | ||||||
BRU 36 | SV12588 | Mining | 2024-12-03 | 139 | ||||||
BRU 40 | SV12592 | Mining | 2024-12-03 | 33 | ||||||
BRU 41 | SV12593 | Mining | 2024-12-03 | 269 | ||||||
BRU 43 | SV12595 | Mining | 2024-12-03 | 270 | ||||||
BRU 44 | SV12596 | Mining | 2024-12-03 | 268 | ||||||
BRU 45 | SV12597 | Mining | 2024-12-03 | 70 | ||||||
BRU 46* | SV12598 | Mining | 2024-12-03 | 137 | ||||||
BRU 47 | SV12599 | Mining | 2024-12-03 | 136 |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 3.1 (Cont’d)
Claim Name | Disposition Number | Claim Type | Expiry Date | Area (ha) | ||||||
BRU 50 | SV12602 | Mining | 2024-12-03 | 230 | ||||||
BRU 52 | SV12604 | Mining | 2024-12-03 | 132 | ||||||
BRU 53 | SV12605 | Mining | 2024-12-03 | 271 | ||||||
BRU 54 | SV12606 | Mining | 2024-12-03 | 271 | ||||||
BRU 55 | SV12607 | Mining | 2024-12-03 | 267 | ||||||
BRU 56 | SV12608 | Mining | 2024-12-03 | 65 | ||||||
BRU 57 | SV12609 | Mining | 2024-12-03 | 269 | ||||||
BRU 58 | SV12610 | Mining | 2024-12-03 | 81 | ||||||
BRU 59 | SV12611 | Mining | 2024-12-03 | 236 | ||||||
BRU 60 | SV12612 | Mining | 2024-12-03 | 68 | ||||||
BRU 62 | SV12614 | Mining | 2024-12-03 | 140 | ||||||
BRU 63 | SV12615 | Mining | 2024-12-03 | 189 | ||||||
BRU 64 | SV12616 | Mining | 2024-12-03 | 269 | ||||||
BRU 65 | SV12617 | Mining | 2024-12-03 | 269 | ||||||
BRU 66 | SV12618 | Mining | 2024-12-03 | 269 | ||||||
BRU 67 | SV12619 | Mining | 2024-12-03 | 274 | ||||||
BRU 68 | SV12620 | Mining | 2024-12-03 | 268 | ||||||
BRU 69 | SV12621 | Mining | 2024-12-03 | 268 | ||||||
BRU 70 | SV12622 | Mining | 2024-12-03 | 259 | ||||||
BRU 71 | SV12623 | Mining | 2024-12-03 | 256 | ||||||
BRU 73 | SV12625 | Mining | 2024-12-03 | 267 | ||||||
BRU 74 | SV12626 | Mining | 2024-12-03 | 273 | ||||||
BRU 75 | SV12627 | Mining | 2024-12-03 | 271 | ||||||
BRU 77 | SV12629 | Mining | 2024-12-03 | 260 | ||||||
BRU 78 | SV12630 | Mining | 2024-12-03 | 265 | ||||||
BRU 79 | SV12631 | Mining | 2024-12-03 | 263 | ||||||
BRU 80 | SV12632 | Mining | 2024-12-03 | 272 | ||||||
BRU 81 | SV12664 | Mining | 2024-12-03 | 252 | ||||||
BRU 82 | SV12665 | Mining | 2021-12-03** | 247 | ||||||
BRU 83 | SV12666 | Mining | 2021-12-03** | 67 | ||||||
BRU 84 | SV12667 | Mining | 2024-12-03 | 251 | ||||||
BRU 85 | SV12668 | Mining | 2024-12-03 | 272 | ||||||
BRU 86 | SV12669 | Mining | 2024-12-03 | 274 | ||||||
BRU 90 | SV12673 | Mining | 2024-12-03 | 271 | ||||||
BRU 91 | SV12674 | Mining | 2024-12-03 | 271 |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 3.1 (Cont’d)
Claim Name | Disposition Number | Claim Type | Expiry Date | Area (ha) | ||||||
BRU 92 | SV12675 | Mining | 2021-12-03** | 236 | ||||||
BRU 93 | SV12676 | Mining | 2021-12-03** | 188 | ||||||
BRU 95 | SV12678 | Mining | 2024-12-03 | 103 | ||||||
BRU 96 | SV12679 | Mining | 2024-12-03 | 275 | ||||||
BRU 97 | SV12680 | Mining | 2024-12-03 | 206 | ||||||
BRU 101 | SV12684 | Mining | 2024-12-03 | 274 | ||||||
BRU 102 | SV12685 | Mining | 2024-12-03 | 233 | ||||||
BRU 103 | SV12686 | Mining | 2024-12-03 | 270 | ||||||
BRU 104 | SV12687 | Mining | 2024-12-03 | 272 | ||||||
BRU 105 | SV12688 | Mining | 2024-12-03 | 206 | ||||||
BRU 106 | SV12689 | Mining | 2024-12-03 | 268 | ||||||
BRU 108 | SV12691 | Mining | 2024-12-03 | 271 | ||||||
BRU 109 | SV12692 | Mining | 2024-12-03 | 223 | ||||||
BRU 110 | SV12693 | Mining | 2024-12-03 | 165 | ||||||
BRU 111 | SV12694 | Mining | 2024-12-03 | 266 | ||||||
BRU 112 | SV12695 | Mining | 2024-12-03 | 271 | ||||||
BRU 113 | SV12697 | Mining | 2024-12-03 | 267 | ||||||
BRU 114 | SV12696 | Mining | 2024-12-03 | 269 | ||||||
BRU 115 | SV12698 | Mining | 2024-12-03 | 266 | ||||||
BRU 116 | SV12699 | Mining | 2024-12-03 | 269 | ||||||
BRU 117 | SV12700 | Mining | 2024-12-03 | 266 | ||||||
BRU 118 | SV12701 | Mining | 2024-12-03 | 169 | ||||||
BRU 119 | SV12702 | Mining | 2024-12-03 | 272 | ||||||
BRU 120 | SV12633 | Mining | 2024-12-03 | 269 | ||||||
BRU 121 | SV12634 | Mining | 2024-12-03 | 271 | ||||||
BRU 122 | SV12635 | Mining | 2024-12-03 | 271 | ||||||
BRU 123 | SV12636 | Mining | 2024-12-03 | 269 | ||||||
BRU 124 | SV12637 | Mining | 2024-12-03 | 269 | ||||||
BRU 125 | SV12638 | Mining | 2024-12-03 | 203 | ||||||
BRU 126 | SV12639 | Mining | 2024-12-03 | 264 | ||||||
BRU 127 | SV12640 | Mining | 2024-12-03 | 261 | ||||||
BRU 128 | SV12641 | Mining | 2024-12-03 | 269 | ||||||
BRU 129 | SV12642 | Mining | 2024-12-03 | 268 | ||||||
BRU 130 | SV12643 | Mining | 2024-12-03 | 269 | ||||||
BRU 142 | SV12644 | Mining | 2024-12-03 | 270 |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 3.1 (Cont’d)
Claim Name | Disposition Number | Claim Type | Expiry Date | Area (ha) | ||||||
BRU 143 | SV12645 | Mining | 2024-12-03 | 272 | ||||||
BRU 144 | SV12646 | Mining | 2024-12-03 | 172 | ||||||
BRU 145 | SV12647 | Mining | 2024-12-03 | 268 | ||||||
BRU 146 | SV12648 | Mining | 2024-12-03 | 269 | ||||||
BRU 147 | SV12649 | Mining | 2024-12-03 | 265 | ||||||
BRU 148 | SV12650 | Mining | 2024-12-03 | 265 | ||||||
BRU 149 | SV12651 | Mining | 2024-12-03 | 267 | ||||||
BRU 150 | SV12652 | Mining | 2024-12-03 | 270 | ||||||
BRU 151 | SV12653 | Mining | 2024-12-03 | 66 | ||||||
BRU 152 | SV12654 | Mining | 2024-12-03 | 232 | ||||||
BRU 153 | SV12655 | Mining | 2024-12-03 | 269 | ||||||
BRU 154 | SV12656 | Mining | 2024-12-03 | 265 | ||||||
BRU 155 | SV12657 | Mining | 2024-12-03 | 139 | ||||||
BRU 156 | SV12658 | Mining | 2024-12-03 | 277 | ||||||
BRU 157 | SV12659 | Mining | 2024-12-03 | 269 | ||||||
BRU 158 | SV12660 | Mining | 2024-12-03 | 205 | ||||||
BRU 159 | SV12661 | Mining | 2024-12-03 | 236 | ||||||
Total Area: | 27,528 |
Note: | * Mislabeled on Gov’t Website as Bru 146 |
** Applied for Lease |
3.3 | PRIVATE PROPERTY |
Sio Silica also plans to develop silica from three privately owned parcels of land, the NE SEC 20 TWP 10 RGE 8 E1M, the SE SEC 20 TWP 10 RGE 8 E1M, and the NE SEC 30 TWP 10 RGE 8 E1M. Sio Silica has entered into a Minerals Rights Agreement for one of these parcels and is actively engaged in negotiations with the owners of the others parcels and expects to enter into definitive agreements before the end of 2024.
The silica sand resources associated with these parcels are included in the resource estimate and development plans in this IA. The resources associated with these parcels, are estimated at 1.2Mt or 0.8% of the total resource estimate.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
3.4 | UNDERLYING AGREEMENTS, ROYALTIES AND ENCUMBRANCES |
The information presented in this section was provided by Sio Silica personnel and has not been externally validated by independent legal counsel.
November 1, 2016 Production Royalty Agreement
On November 1, 2016, a production royalty agreement was signed between 1993505 Alberta Ltd. (Owner) and 1993502 Alberta Ltd. (Holder). The terms of this royalty agreement were that the Owner (now Sio Silica) is to grant, convey, and agree to pay the Holder a production royalty in respect of the Property equal to the greater of:
a) | two (2%) percent of the Actual Proceeds commencing on the date on which Commercial Production is achieved; or |
b) | $1.00 per ton of Product extracted from the Property. |
The BRU Production Royalty Agreement provides for an Advance Minimum Royalty payment as follows: 1) $50,000 on November 1, 2016, for the first year; 2) $75,000 on November 1, 2017 for the second year; and 3) $100,000 on November 1st of each subsequent year for the duration of the agreement.
Actual Proceeds is defined in the agreement as: i) in the case of Product sold or otherwise disposed of by Owner FOB Owner’s mine gate, the actual proceeds received by the Owner from such sale or other disposition of Product; or ii) in the case of Product sold or otherwise disposed of by Owner FOB a location other than Owner’s mine gate, the actual proceeds received by the Owner from such sale or other disposition of Product less reasonable operating costs incurred by Owner to transport the Product to such other sale location.
Commercial Production, as defined in the agreement, means and is deemed to be achieved, for the Property, on the first day of the month in which production of Product exceeds 10,000 tons.
April 6, 2018 Assignment, Novation, and Amending Agreements
The November 1, 2016, Production Agreement was replaced by four amended agreements. The 2% Actual Proceeds based on Commercial Production and the $1.00 per ton of Product extracted from the Property were divided into varying proportions in these agreements. In these agreements, the definition of Commercial Production was changed to mean “the first day of the month in which the Owner sells an amount of Product equal to, or greater than, 15,000 tons, subject to the Owner also selling an amount of Product in each of the three immediately following months equal to, or greater than, 15,000 tons, and the mine mill and processing facility is in the condition necessary for it to be capable of operating in a matter intended by management with the ability to sustain ongoing production.”
Royalty Rights buyback from the Founders
In July 2020, there was a transfer of certain founder’s royalty rights amongst the four founders that hold the royalty. On April 5, 2021, Sio Silica used its right of first refusal to purchase a portion of the founders’ royalties from the original holders. Sio Silica paid a total of $775,000 that included buyback of royalties for both the BRU and DEN properties. The remaining royalties equate to 1.34% of the Actual Proceeds commencing on the date on which Commercial Production is achieved or 67.19 cents per ton of Product extracted from the Property. The remaining Advance Minimum Royalty payment is $25,000 per year.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Third Party Confidential Royalty
In January 2021, Sio Silica entered into an overriding royalty agreement on the BRU Property with a confidential third party. Sio Silica received $5 million in exchange for an overriding royalty granted to third party that is a 3% interest in the BRU Properties, with payments of 3% of mine gate revenue until a payout of $15 million is achieved, at which time the royalty payment is reduced to 0.25% for the duration of the BRU Property life.
3.5 | ENVIRONMENTAL LIABILITIES |
Stantec is not aware of any known environmental liabilities that will affect access, title or the right or ability to perform work on the Property.
3.6 | REQUIRED PERMITS |
On June 19, 2018, Sio Silica received direction from the Resource Development Division, Mines and Geological Survey of Manitoba that the Carman Sand Member is a Crown mineral and is under the purview of The Mines and Minerals Act.
The following is a summary level list of the BRU Property permitting requirements:
● | Provincial |
o | Environment Act Proposal Vivian Sand Extraction Project (EAP) to Environment, Climate and Parks |
o | Public Engagement Meetings – Vivian Sand Extraction Project and Vivian Sand Facility Project |
o | Facilitated Public Meeting required by Environment Climate and Parks for Facility Project |
o | Draft Sand Extraction Closure Plan to Mining, Oil and Gas as a condition of issuance of Environment Act Licence (Filed February 2023) |
o | Technical Advisory Committee (TAC) and Public Review and Response to both Facility and Extraction Projects |
o | Issuance of Environment Act Licence for Vivian Sand Facility Project granted December 16, 2021. |
o | Clean Environment Commission process as requested by the Minster November 15, 2021, and Commission recommendation to grant Extraction Project Environment Act Licence expected early 2023. |
● | Municipal |
o | Conditional Use approval or other equivalent such as a bylaw amendment to provide for Permitted Use. Issuance of Development Permit |
o | Issuance of Building Permit(s) |
3.7 | OTHER SIGNIFICANT FACTORS AND RISKS |
Stantec is not aware of any other significant factors and risks that may affect access, title or the right or ability to perform work on the Property.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
4 | ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY |
4.1 | TOPOGRAPHY, ELEVATION AND VEGETATION |
The Property is located in the Boreal Plain Ecozone with the western edge of the Property in the Prairie Ecozone and the eastern edge in the Boreal Shield Ecozone. The Boreal Plain Ecozone is characterized by relatively flat lying to gently rolling plains and terraces formed by morainal diamicton deposits with lower areas composed of glaciolacustrine deposits (Smith et al., 1998).
The Property is within the Interlake Plain Ecoregion and the Steinbach Ecodistrict. The mean elevation of the Ecodistrict is 297 masl. The landforms in the Ecodistrict range from smooth, flat lying glaciolacustrine plain to gently undulating, water-worked glacial diamicton and glaciofluvial diamictons. Much of the diamicton in the Ecodistrict consists of extremely calcareous, cobbly and gravelly loamy diamicton underlain by sandy glaciolacustrine veneers. The western edge of the Property is in the Lake Manitoba Ecoregion. The Lake Manitoba Ecoregion is a flat lying to gently sloping, clayey glaciolacustine plain with a mean elevation of 236 masl. The Lake of the Woods Boreal Shield Ecoregion has a variable topography ranging from a flat lying to depressional glaciolacustrine plain with peatlands to a gently undulating water-worked glacial diamicton and fluvioglacial outwash plain (Smith et al., 1998).
The land use in the area is mixed rural and residential. Settlements include Steinbach and St. Anne. In lowland areas with good drainage, crops such as wheat, oil seeds and hay are grown. In areas where the soil is too stony to cultivate, the land is used for pasture and hay (Smith et al., 1998).
4.2 | PROPERTY ACCESS AND PROXIMITY TO POPULATION CENTERS |
The centre of the Property is located approximately 52 km east of the city of Winnipeg and is within the Rural Municipality of Springfield. The southern end of the Property is accessed from Winnipeg via the TransCanada Highway.
4.3 | CLIMATE |
There are four weather stations near the Property, which include Ostenfeld, Winnipeg International Airport, Steinbach and Beausejour. The weather station at Ostenfeld, Manitoba is the closest in proximity to the Property and is located at 49°49’ N and 96°29’ W.
The region typically has long cold winters and short, warm summers. The coldest months are December and January. The Environment Canada climate data from Ostenfeld records the average daily temperatures in December and January as -13.4oC and -16.7oC, respectively. The warmest months are July and August with daily average temperatures of 18.9oC and 18.0oC, respectively. The average precipitation varies from 104 mm in July and August to 17.3 mm in February (Environment Canada, 2017).
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 4.1 summarizes the Mean Climate data for the nearby weather stations (Environment Canada, 2017).
Table 4.1
Mean Climate Data for Nearby Weather Stations
Weather Station | ||||||||||||||||
Parameter | Ostenfeld | Winnipeg International Airport | Steinbach | Beausejour | ||||||||||||
Location (Longitude, Latitude) | 49°49’ N | 49°55’ N | 49°32’ N | 50°02’ N | ||||||||||||
96°29’ W | 97°14’ W | 96°46’ W | 96°28’ W | |||||||||||||
Annual Mean Daily Temperature (oC) | 2.7 | 3.0 | 2.8 | 2.8 | ||||||||||||
Annual Mean Daily Maximum Temperature (oC) | 8.5 | 8.7 | 8.7 | 8.6 | ||||||||||||
Annual Mean Daily Minimum Temperature (oC) | -3.1 | -2.7 | -3.1 | -3.1 | ||||||||||||
Annual Total Rainfall (mm) | 512.2 | 418.9 | 473.4 | 452.4 | ||||||||||||
Annual Total Snowfall (mm) | 122.7 | 113.7 | 107.1 | 117.8 | ||||||||||||
Total Precipitation (mm) | 634.9 | 521.1 | 580.5 | 570.3 |
4.4 | INFRASTRUCTURE |
Winnipeg is the largest major city near the Property. Winnipeg, as of 2021, has a population of 749,607 residents in the metropolitan area, and provides all required major services to advance the project. The city of Winnipeg, located on the TransCanada Highway, is the home of the James Armstrong Richardson International Airport that has numerous domestic and international flights, and is a major North American rail transportation hub with a 20,000-acre facility that services Canadian National Railway, Canadian Pacific Railway, BNSF Railway and the locally maintained and operated Greater Winnipeg Water District Railway (Railway Association of Canada, 2017; Winnipeg, 2017).
The city of Steinbach, which is located 58 km south-east of Winnipeg, has a population of approximately 17,806, as of 2021. Steinbach is primarily an agricultural community and has many services and commercial businesses, which includes Friesen Drillers Ltd. (Friesen) that has over 125 years of drilling, hydrogeological, and geological knowledge of the area.
Surface and subsurface infrastructure is well developed near the Property. Manitoba Hydro has proposed the final preferred route of the Manitoba-Minnesota Transmission Project through portions of the Property. High voltage transmission lines transect the Property. An operating Canadian National Railway line intersects the Property as shown on Figure 4.1. Rail lines provide access to western and southern markets.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
5 | HISTORY |
Prior to Sio Silica securing the Property, the area within the BRU claims had not been subject to subsurface exploration for silica sands. There is however documentation that exploration for silica sand did occur directly to the south of the Property in the 1960s (Underwood McLellan & Associates Limited, 1967).
5.1 | HISTORICAL TECHNICAL REPORTS AND PRELIMINARY ECONOMIC ASSESSMENTS |
Stantec has prepared the following reports for Sio Silica’s BRU Property. In chronological order these reports are:
● | Technical Report BRU Property Manitoba, Effective Date October 4, 2017 |
● | Technical Report BRU Property Manitoba, Effective Date May 8, 2019 |
● | Preliminary Economic Assessment BRU Property, Effective Date February 27, 2020 |
● | Preliminary Economic Assessment BRU Property, Effective Date July 27, 2021 |
● | Technical Report Initial Assessment BRU Property Manitoba, Effective Date August 27, 2021 |
● | Technical Report BRU Property Manitoba, Effective Date September 30, 2022 |
● | Technical Report Summary BRU Property, Effective Date September 30, 2022 |
These reports were prepared in accordance with the requirements of National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101) and the requirements of Securities and Exchange Commission (SEC) reporting of material mining assets under Regulation S-K 1300.
During the period from 2019 to 2021, Sio Silica transitioned to positioning the BRU Property as a potential source of high purity silica sand for industrial purposes as opposed to a natural sand proppant. As previously mentioned, the high purity silica sand may be used in a wide range of industrial applications including electronics, medical research, metals and alloys, specialty glass, and renewable energy.
The 2019 Technical Report and the 2021 Preliminary Economic Assessment both disclosed identical mineral resource estimates as shown in Table 5.1.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 5.1
Previous In-Place Mineral Resource Summary
(May 8, 2019 and July 27, 2021)
Mineral Resources (Mt) | ||||||||
BRU Property | 40/70 mesh fraction | 70/140 mesh fraction | ||||||
Indicated | 37 | 29 | ||||||
Total Indicated | 66 | |||||||
Inferred | 65 | 49 | ||||||
Total Inferred | 114 |
A comparison between the 2019/2021 resource estimates indicates an overall resource reduction of 18%. The primary reason for the resource reduction is the application of new geotechnical information and analyses used when estimating the extractable sand volumes. The QP believes this information and analysis, and the resultant extractable sand volumes are more representative of actual conditions. This analyses and the resulting resource estimate are discussed further in Section 11.
5.2 | GEOTECHNICAL ANALYSIS |
In January 2022, Stantec geotechnical engineers completed a geotechnical analysis related to the development of voids resulting from the sand extraction process. This analysis was presented to Sio Silica in a report entitled “Geotechnical Analysis for Sio Silica Extraction Project”. The conclusions of this analysis are summarized below:
● | Shear and Bending are the most probable failure modes with the potential to affect long- term stability. Unravelling, Caving, and Chimneying are not controlling failure modes for the BRU property based on the current understanding of the nature of the limestone caprock. |
● | The Bending failure mode is controlling the long-term stability of the post extraction cavity for the expected range of caprock and overburden thickness and material properties and the extraction depth in the sand. The stability analysis and extraction borehole spacing design were completed to achieve a factor of safety of 2.0, which is considered to be an acceptably conservative FOS for the project. |
● | The cavity after extraction is expected to further expand with time resulting in loose sand infilling the extracted void leaving a larger unsupported caprock span. Based on the assumption that the areas with factor of safety larger than 2 are stable in the long-term, approximately 5 m of additional raveling of the post extraction cavity walls is expected (by end of the design life of 100 years). Therefore, the unsupported caprock span will increase by 10 m with time after extraction. |
● | Based upon the results of geotechnical assessment and with the understanding that Sio Silica will follow guidance provided by Stantec including continuing to assess the geotechnical characteristics and performance of the sand deposit and overlying materials during the project life and to adjust design accordingly, no large-scale surface subsidence is expected to occur as a result of sand extraction. |
The results of this geotechnical analysis were utilized in the resource estimate presented in Section 11.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
6 | GEOLOGIC SETTING, MINERALIZATION AND DEPOSIT |
6.1 | REGIONAL STRATIGRAPHY |
The Winnipeg Formation was deposited in the Ordovician and is interpreted to be an erosionally isolated element of the North American cratonic platform succession that was deposited across the Transcontinental Arch (Bezys and Conley, 1998; Ozadetz and Haidl, 1989). The lowermost part of the Winnipeg Formation was deposited in a deltaic environment during a major transgression event (Bezys and Conley, 1998; Le Fever et al, 1987). With continued sea level rise, the deltaic deposits were overlain by marine shales and dolomitic limestone (Bezys and Conley, 1998).
The Winnipeg Formation, which is in southwestern Manitoba is at the base of the Williston Basin strata, is composed of interbedded sands and shales (Lapenskie, 2016). These sediments were deposited during the Middle Ordovician, in shallow marine seas. The shales are generally light olive-grey in colour, kaolinitic, with variable sand and silt content (Bezys and Conley, 1998). The sand units, the thickest of which is the Carman Sand Member, are typically mature, well rounded, quartz dominant, and poorly-to-nonconsolidated. The Carman Sand Member is a discrete, east- west trending bar-like sand body within the upper half of the Winnipeg Formation in southern Manitoba. The Carman Sand Member is continuous and relatively uniform throughout the region, extending approximately 240 km from west of the Sandilands Provincial Forest located at Range 8 East, to Pelican Lake that is located at Range 16 West. The corridor of the Carman Sand Member varies in width from less than 25 km to greater than 95 km (Bezys and Conley, 1998). The maximum reported thickness is 31 m (Natural Resources Canada, 2009). The Carman Sand Member occurs at depths less than 100 m along the subcrop belt, and dips towards to the west where it can be found at depths of greater than 800 m (Natural Resources Canada, 2004). The maximum Carman Sand Member depth within the property limit is 65-70m. The Carman Sand Member is truncated to the east by the basin edge as shown on Figure 6-1.
In the southwest corner of Manitoba, a thin wedge of the Deadwood Formation, which was deposited in the Cambrian Period, underlies the Winnipeg Formation (Bezys and Conley, 1998). According to Butler et al. (1955) the Deadwood Formation, in South Dakota, “consists of a basal conglomerate and buff sandstone 9 m thick, overlain by grey-green, thin bedded shale with limestone interbeds 79 m thick and topped with red-brown, very glauconitic quartz sandstone, usually thin-bedded, with random partings of green shale and Scolithos borings 40 m thick, for a total thickness of 128 m”. The Deadwood Formation that occurs in Manitoba is measured to be up to 30 m in thickness (Natural Resources Canada, 2004). Where the Deadwood Formation is not present, the Winnipeg Formation overlays the Precambrian basement.
Conformably overlying the Winnipeg Formation is the Ordovician aged Red River Formation, which is composed of limestones and dolomites (Bezys and Conley, 1998). The thickness of the Red River Formation is up to 215 m; however, along the northeastern erosional edge the formation thickness decreases to 50 m (Natural Resources Canada, 2015). The Red River Formation outcrops in central Manitoba, where it has been subdivided into the Dog Head Member, Cat Head Member, Selkirk Member and the Fort Garry Member. The Dog Head Member is primarily a basal fossiliferous, mottled limestone that is overlain by the cherty dolomite of the Cat Head Member. Overlying the Cat Head Member is the Selkirk Member, which is composed of a second sequence of fossiliferous, mottled, dolomitic limestones. The Cat Head Member becomes more calcareous in the south end of the outcrop belt where it becomes indistinguishable from the Dog Head and Selkirk Members. The Fort Garry Member, which directly overlies the Selkirk Member, consists of finely crystalline and micritic, variable argillaceous dolomites, with a medial zone of shaly dolomite breccias (Natural Resources Canada, 2015).
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Above the Red River Formation is the Quaternary diamicton, which ranges in composition from silty to rocky, and is calcareous (Matile and Keller, 2004).
6.2 | STRUCTURAL GEOLOGY |
The Ordovician strata in southwestern Manitoba generally trends east-west to slightly north-east. The Winnipeg Formation thins irregularly from approximately 68 m in thickness in southwestern Manitoba to zero at the formation’s northern limit. The thinning of the Winnipeg Formation coincides with irregular lithofacies changes, as lithologies change from being shale dominant in the southern area to sand dominant in the northern area. The lithofacies changes may result in differential compaction (Bezys and Conley, 1998).
6.3 | PROPERTY GEOLOGY |
Prior to 2017, the area had undergone little drilling, most of which was limited to water wells that were drilled on behalf of third parties. The units described below are primarily based on reliable holes that were drilled in the Project area by Sio Silica. In general, the stratigraphy of the Property is consistent; the major units are Quaternary sediments, carbonate and shale intervals of the Red River Formation, unconsolidated sand, sandstone, and shale of the Winnipeg Formation, and Archean-age granitoid basement. The upper unconsolidated sand interval of the Winnipeg Formation, which is known as the Carman Sand Member, is the target interval to be exploited.
Unit thickness maps are shown on Figure 6-2 and Figure 6-3 for the Red River carbonate unit and the Carman Sand Member, respectively. The diamicton (also referred as overburden) thickness map, which includes all materials above the limestone unit, is shown on Fig 6-4. Structure contour maps of the basal layers of the carbonate and Carman Sand Member are shown on Figure 6-5 and 6-6, respectively. North-south and east-west cross-sections are shown on Figures 6-7 to 6-10. Table 6.1 shows the units encountered on the Property.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 6.1
Property Lithology
Eon | Era | Period | Geologic Unit | Member | Lithology | |||||
Phanerozoic | Cenozoic | Quaternary | Diamicton | |||||||
Paleozoic | Ordovician | Red River | Selkirk, Cat Head, | Carbonate | ||||||
Formation | Dog Head members | Shale | ||||||||
Carman Sand Member | Sand | |||||||||
Winnipeg Formation |
Equiv. Ice Box Member |
Shale | ||||||||
Black Island Member | Sand | |||||||||
Archean | Granitoid |
6.3.1 | Quaternary Sediments |
The Pleistocene-aged diamicton is heterolithic, varies in material size distribution from silty to rocky, and typically has a calcareous component. In the Project area, the diamicton ranges from 5 m to 43 m in thickness.
6.3.2 | Red River Formation |
Carbonate (Selkirk, Cat Head, Dog Head members)
The carbonate unit, which is upper Ordovician in age, is in the lower Red River Formation. In Southern Manitoba, this unit is comprised of the Dog Head, Cat Head, and Selkirk members (Natural Resources Canada, 2015). The unit varies in composition from limestone to dolostone, contains bedding-parallel fractures, may contain some bedding-perpendicular (vertical) fractures and is vuggy in areas. Commonly, the bottom 1 m to 5 m interval contains shale interbeds within the carbonate unit. of an argillaceous carbonate unit occurs directly above the shale interval. Based on reliable drill holes, the carbonate unit total thickness ranges from 0 m to 48 m in the Project area.
Shale (Selkirk, Cat Head, Dog Head members)
A shale unit occurs directly beneath the carbonate unit. This shale unit forms the base of the Red River Formation and is proposed to be part of the Dog Head Member. This shale unit is highly fractured and friable. The colour of the shale varies through the interval, including brick red, greyish green, and bluish grey colourations. This shale interval, based on reliable historic drill holes as well as the 2017 and 2018 drill campaigns, varies in thickness from 0 m to 11 m.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
6.3.3 | Winnipeg Formation |
Sand (Carman Sand Member)
The unit encountered directly beneath the base of the Red River Formation is the Carman Sand Member (Natural Resources Canada, 2009a,b). The Carman Sand Member is in the upper section of the Winnipeg Formation. The Carman Sand Member is typically uncemented, well sorted, well-rounded, and typically has a fine to medium grain size. The Carman Sand Member in the Property was measured to have thicknesses between 20 m and 23 m. A basal cemented sandstone unit that typically ranges in thickness from 0.3 m to 0.5 m, was encountered in some of the drill holes.
Shale (Ice Box Member Equivalent)
A shale unit occurs directly beneath the Carman Sand Member. This unit is proposed to be equivalent to the Ice Box Member, which occurs as the middle unit in the Winnipeg Formation in North Dakota and Saskatchewan (Natural Resources Canada, 2004). The colouration of this shale unit varies significantly, including emerald green and dark brown colouration. The drilling of this unit was slow, supporting that this shale unit is more competent than previously encountered units. The thickness of this shale interval in the Project area, based on reliable drill holes that penetrated the entire unit, varies from 1 m to 24 m in thickness.
Sand (Black Island Member Equivalent)
An unconsolidated sand unit below the shale interval is proposed to be equivalent to the Black Island Member (Natural Resources Canada, 2009c). On the Property, is approximately 1 m thick, and is fine-grained, well sorted, and well-rounded. Commonly a cemented sandstone unit occurs either above or below this unconsolidated sand unit. This sandstone interval, where encountered, typically ranges in thickness from 0.3 m to 0.6 m.
6.3.4 | Granitoid |
Granitoid basement, which is Archean in age, is altered and in areas contains disseminated pyrite.
6.4 | DEPOSIT TYPES |
The Carman Sand Member is dominantly an unconsolidated laterally extensive unit across the Property, as validated through numerous drilling campaigns. Unconsolidated sand type deposits usually require no processing beyond cleaning and size sorting. The deposit appears to have limited geological variability and limited structural complexity.
The geological model that is being applied is similar to other aggregate materials that are laterally extensive and discussed in detail in Section 11.1
6.5 | MINERALIZATION |
The target interval is the unconsolidated silica sand from the Carman Sand Member. The high purity of the sand makes it suitable for variety of usages and markets. The primary objective of the program was to delineate the quality of the sand and assess the extractable sand volumes.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
7 | EXPLORATION |
As mentioned earlier, prior to Sio Silica securing the Property, the area within the BRU claims had not been drilled for silica sands. Publicly available drill hole information for the area, is associated with hydrocarbon exploration, as well as water-well drilling. The publicly available information for drill holes is summarized in Sections 7.1 and 7.2.
Sio Silica collected lithological information from 46 holes on the BRU property. The information for these drill holes is summarized in Sections 7.3 to 7.7.
7.1 | HISTORICAL HYDROCARBON DRILL HOLE RESULTS |
Within the Property limits, minor hydrocarbon exploration drilling has occurred that includes the Manitoba Sun Core Hole No. 4 (UWI: 100/16-03-010-07E1/00). Table 7.1 summarizes the information collected from the Manitoba Sun Core Hole No. 4.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 7.1
Sun Core Hole 4 Drilling Summary
Hole Name | Type | Core Size | Inclination at Collar | Date Started | Date Finished | Datum | Zone | Northing | Easting | Elevation (MASL) | Hole Depth (m) | Primary Sampled Interval (m) | |||||||||||||||||||||||||
Manitoba Sun Core Hole No. 4 | TC | N/A | -90° (Strat) | 1992-08 | 1992-08 | NAD 83 | 14 | 5,52,0342 | 676,748 | 269 | 108.81 | 56.39-79.83 |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
7.2 | GROUNDWATER INFORMATION NETWORK AND FRIESEN DRILLING HISTORICAL DATA |
Several water wells were drilled in and around the Property. Information for 1,697 water-wells within the proximity of the property was extracted from the Groundwater Information Network (GIN) database (GIN, 2019). The extracted well data includes lithology and collar information. The lithology information was reviewed, and 285 wells were identified as wells with unreliable data and were excluded from the modelling database.
In addition to the GIN data, information for 34 water-wells from Friesen was provided to Stantec by Sio Silica on March 13, 2019. Nineteen of these wells are away from the property and have been removed from the modeling database. In addition, two wells have been identified as wells with unreliable data.
The total number of wells from GIN and Friesen used in the modelling database is 1,425 and their location is shown on Figure 7-1.
7.3 | SIO SILICA 2017 DRILLING CAMPAIGN SUMMARY |
Sio Silica conducted an exploration drilling program during July and August 2017, which resulted in the completion of six vertical holes on the Property. Five of the boreholes were drilled using a dual rotary (DR) drill rig and a reverse circulation (RC) drill rig. A dual rotary drill rig was utilized to drill through the diamicton and the carbonate cap rock. The holes were cased to the top of the carbonate unit. Once the upper contact with the sand was intercepted, a RC rig with a cyclone was used to recover and collect samples of the sand.
The remaining borehole, DDH-10-17, was collared approximately 15 m away from BH-10-17, was drilled to obtain geotechnical information about the carbonate unit above the Carman Sand Member. A tricone (TC) bit was used to drill through the diamicton into the top of the carbonate unit. Following casing of the open hole, a diamond drill rig was used to core the carbonate unit and underlying shale unit. The hole was terminated when contact with the Carman Sand Member was reached.
Table 7.2 is a summary of information associated with the 2017 holes. Figure 7-1 shows the location of these drill holes.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 7.2
2017 Drilling Program Summary
Hole ID | Type | Core
| Inclination | Completion
| Datum | Zone | Northing | Easting | Elevation | Borehole Depth | Primary Sampled Interval (m) | |||||||||||||||||||||||
BH-02-17 | DR/RC | N/A | -90° | 2017-07-10 | NAD 83 | 14 | 5,521,220 | 679,749 | 271 | 103.17 | 56.69 – 79.55 | |||||||||||||||||||||||
BH-03-17 | DR/RC | N/A | -90° | 2017-07-6 | NAD 83 | 14 | 5,522,289 | 680,104 | 271 | 91.44 | 54.86 – 85.65 | |||||||||||||||||||||||
BH-09-17 | DR/RC | N/A | -90° | 2017-07-12 | NAD 83 | 14 | 5,523,942 | 680,026 | 271 | 99.36 | 56.39 – 77.72 | |||||||||||||||||||||||
BH-10-17 | DR/RC | N/A | -90° | 2017-08-11 | NAD 83 | 14 | 5,522,493 | 676,561 | 267 | 103.63 | 59.44 – 79.25 | |||||||||||||||||||||||
BH-14-17 | DR/RC | N/A | -90° | 2017-08-9 | NAD 83 | 14 | 5,523,718 | 676,561 | 266 | 78.33 | 52.73 – 57.91 | |||||||||||||||||||||||
DDH-10-17 | TC/DDH | HQ |
-90° | 2017-08-9 |
NAD 83 | 14 | 5,522,500 | 676,539 | 267 | 58.09 | Cored through the carbonate interval |
Figure 7-1
Drill Hole Location Map
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
7.4 | SIO SILICA 2018 - 2019 DRILLING CAMPAIGN SUMMARY |
A drilling campaign was completed between September 2018 and January 2019, in which 10 vertical holes were drilled on the BRU Property. Of these 10 holes, eight were DR / RC holes that were drilled to identify formation tops and to constrain sand samples, and two were diamond drill holes that were completed to document the geotechnical properties of the carbonate interval. The DR/RC wells were entered in the modeling database and the location of these drill holes are shown on Figure 7-1. Table 7.3 shows a summary of the holes.
Table 7.3
September 2018 to January 2019 Drilling Campaign Summary
Hole Name | Type | Core Size | Inclination at Collar | Completion
Date | Datum | Zone | Easting | Northing | Elevation (MASL) | Hole Depth (m) | Primary Sampled Interval (m) | |||||||||||||||||||||||
BRU 28-1 | DR/RC | N/A | -90 | 2019-01-08 | NAD83 | 14 | 674603 | 5526383 | 264 | 58.22 | 59.13 - 80.47 | |||||||||||||||||||||||
BRU 73-1 | DR/RC | N/A | -90 | 2018-10-10 | NAD83 | 14 | 683251 | 5522332 | 270 | 64.01 | 41.15 - 62.18 | |||||||||||||||||||||||
BRU 82-5 | DR/RC | N/A | -90 | 2018-09-28 | NAD83 | 14 | 679941 | 5524035 | 271 | 76.20 | not sampled | |||||||||||||||||||||||
BRU 101-1 | DR/RC | N/A | -90 | 2018-10-05 | NAD83 | 14 | 687675 | 5509374 | 284 | 60.96 | not sampled | |||||||||||||||||||||||
BRU 117-1 | DR/RC | N/A | -90 | 2018-10-15 | NAD83 | 14 | 680596 | 5513229 | 274 | 72.85 | 56.39 - 72.85 | |||||||||||||||||||||||
BRU 121-1 | DR/RC | N/A | -90 | 2018-12-10 | NAD83 | 14 | 686361 | 5515787 | 275 | 60.66 | 39.62 - 59.13 | |||||||||||||||||||||||
DR/DDH | HQ | -90 | 2018-11-21 | NAD83 | 14 | 686371 | 5515784 | 275 | 38.10 | Geotechnical core logged | ||||||||||||||||||||||||
BRU 126-1 | DR/RC | N/A | -90 | 2018-09-29 | NAD83 | 14 | 680029 | 5517260 | 271 | 78.94 | 57.91 - 77.42 | |||||||||||||||||||||||
BRU 146-1 | DR/RC | N/A | -90 | 2018-12-06 | NAD83 | 14 | 685004 | 5504541 | 286 | 75.29 | 51.82 - 72.85 | |||||||||||||||||||||||
DR/DDH | HQ | -90 | 2018-11-23 | NAD83 | 14 | 684974 | 5504985 | 286 | 50.29 | Geotechnical core logged |
Note: DR = Dual Rotary; RC = Reverse Circulation; DDH = Diamond Drill Hole
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
7.5 | SIO SILICA 2019 DRILLING CAMPAIGN SUMMARY |
Nine holes were drilled between April 2019 and August 2019. The purpose of these drill holes was for extraction tests and aquifer monitoring. Table 7.4 lists the drill hole attributes. The drill holes were drilled in close proximity to other wells and provide similar lithological information. Two of the drill holes (BRU 95-2 and BRU 95-3) are used in the geological modelling and their location is shown on Figure 7-1.
Table 7.4
2019 Drilling Summary
Hole Name | Type | Inclination at Collar | Completion Date | Datum | Zone | Easting | Northing | Hole Depth (m) | Drill Hole Purpose | |||||||||||||||||||
BRU 95-1 | DR/RC | -90 | 2019-06-07 | NAD83 | 14 | 682230 | 5527617 | 69.49 | Extraction Test | |||||||||||||||||||
BRU 95-2 | DR/RC | -90 | 2019-05-15 | NAD83 | 14 | 682237 | 5527618 | 70.10 | Extraction Test | |||||||||||||||||||
BRU 95-3 | DR/RC | -90 | 2019-05-23 | NAD83 | 14 | 682230 | 5527606 | 70.10 | Extraction Test | |||||||||||||||||||
BRU 95-4 | DR/RC | -90 | 2019-07-02 | NAD83 | 14 | 682231 | 5527623 | 54.25 | Aquifer Monitoring | |||||||||||||||||||
BRU 95-5 | DR/RC | -90 | 2019-06-26 | NAD83 | 14 | 682211 | 5527628 | 42.06 | Aquifer Monitoring | |||||||||||||||||||
BRU 82-9 | DR/RC | -90 | 2019-05-01 | NAD83 | 14 | 679908 | 5524067 | 59.44 | Aquifer Monitoring | |||||||||||||||||||
BRU 82-10 | DR/RC | -90 | 2019-08-09 | NAD83 | 14 | 679818 | 5524008 | 71.93 | Extraction Test | |||||||||||||||||||
BRU 82-11 | DR/RC | -90 | 2019-08-15 | NAD83 | 14 | 679803 | 5524041 | 67.97 | Extraction Test | |||||||||||||||||||
BRU 82-14 | DR/RC | -90 | 2019-08-22 | NAD83 | 14 | 679831 | 5524053 | 66.45 | Extraction Test |
7.6 | SIO SILICA 2020 - 2021 DRILL CAMPAIGN SUMMARY |
Fifteen drill holes were completed between July 2020 and August 2021. Drill hole depths varied from 42 m to 76 m; all holes were drilled vertically. In addition to further constraining lithological depths, the main purpose of the drilling campaigns was to further develop production and supply wells, as well as to complete sand, limestone, and shale monitoring wells. Table 7.5 shows the associated drill hole information from this campaign. Due to drill hole proximity to each other, the drill holes provide similar geological information and only drill holes BH 02B-20, BRU 154-1, BRU 92-1, BRU 95-7, BRU 95-8 and BRU 96-1 were selected to be used for the geological modeling and their location is shown on Figure 7-1.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
![]() | 7-7 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 7.5
2020 / 2021 Drill Holes
Hole Name | Completion Date | Datum | Zone | Easting | Northing | Hole Depth (m) | Limestone Top (m) | Shale Top (m) | Sand Top (m) | |||||||||||||||||||||||
BRU 154-1 | 2020-07-29 | NAD83 | 14 | 682501 | 5507439 | 72.50 | 38.10 | 54.56 | 57.00 | |||||||||||||||||||||||
BRU 154-2 | 2020-07-20 | NAD83 | 14 | 682472 | 5507474 | 66.14 | 37.80 | 54.86 | 57.30 | |||||||||||||||||||||||
BH 02B-20 | 2020-10-05 | NAD83 | 14 | 681658 | 5529326 | 71.17 | 34.14 | 48.16 | 53.34 | |||||||||||||||||||||||
BH 02C-20 | 2021-02-04 | NAD83 | 14 | 681653 | 5529326 | 55.78 | 35.66 | 51.20 | 53.00 | |||||||||||||||||||||||
BH 02D-20 | 2021-02-09 | NAD83 | 14 | 681664 | 5529324 | 59.74 | 35.36 | 50.29 | 54.56 | |||||||||||||||||||||||
BRU 96-1 | 2020-11-09 | NAD83 | 14 | 683058 | 5527790 | 53.34 | 35.05 | 43.28 | 46.02 | |||||||||||||||||||||||
BRU 92-2 | 2021-05-06 | NAD83 | 14 | 681567 | 5526457 | 57.61 | 33.22 | 47.85 | 51.51 | |||||||||||||||||||||||
BRU 92-3 | 2021-05-05 | NAD83 | 14 | 681584 | 5526475 | 57.61 | 33.22 | 47.85 | 51.51 | |||||||||||||||||||||||
BRU 92-8 | 2021-08-25 | NAD83 | 14 | 681632 | 5526383 | 56.69 | 32.92 | 47.55 | 50.60 | |||||||||||||||||||||||
BRU 96-2 | 2020-11-10 | NAD83 | 14 | 683065 | 5527790 | 41.76 | 35.05 | Not encountered | Not encountered | |||||||||||||||||||||||
BRU 95-6 | 2020-11-12 | NAD83 | 14 | 682193 | 5527627 | 57.00 | 36.88 | 46.33 | 49.07 | |||||||||||||||||||||||
BRU 95-7 | 2020-11-19 | NAD83 | 14 | 681863 | 5527616 | 75.00 | 36.00 | 49.07 | 52.12 | |||||||||||||||||||||||
BRU 95-8 | 2020-11-19 | NAD83 | 14 | 681949 | 5527630 | 55.09 | 35.40 | 49.07 | 52.12 | |||||||||||||||||||||||
BRU 95-9 | 2020-11-20 | NAD83 | 14 | 682208 | 5527622 | 47.24 | 36.88 | 45.72 | Not encountered | |||||||||||||||||||||||
BRU 92-1 | 2021-10-03 | NAD83 | 14 | 681479 | 5526513 | 75.60 | 31.70 | 48.46 | 51.50 |
7.7 | SIO SILICA 2022 DRILL CAMPAIGN SUMMARY |
Six vertical drill holes were completed between February 2022 and August 2022. Drill hole depths varied from 66 m to 83 m. The main purpose of the drilling campaign was to increase the drill hole density and provide additional information of the depth and the thickness of the lithological units, as well as to collect samples for the analytical data discussed in Section 8. The location of this infill drilling was selected to increase the confidence in the assurance of existence of the resources and improve the resource classification. Table 7.6 shows the associated drill hole information from this drilling campaign. The location of wells is shown on Figure 7-1.
Table 7.6
2022 Drill Holes
Hole Name | Completion Date | Datum | Zone | Easting | Northing | Hole Depth (m) | Limestone Top (m) | Shale Top (m) | Sand Top (m) | |||||||||||||||||||||||
BRU 13-1 | 2022-07-13 | NAD83 | 14 | 679585 | 5522428 | 79.55 | 35.97 | 53.95 | 56.69 | |||||||||||||||||||||||
BRU 3-1 | 2022-08-04 | NAD83 | 14 | 676446 | 5519679 | 82.60 | 43.89 | 60.96 | 63.70 | |||||||||||||||||||||||
BRU 81-1 | 2022-08-05 | NAD83 | 14 | 680962 | 5522630 | 67.06 | 29.87 | 49.38 | 51.51 | |||||||||||||||||||||||
BRU 83-1 | 2022-07-15 | NAD83 | 14 | 681277 | 5525191 | 70.41 | 27.43 | 45.11 | 48.16 | |||||||||||||||||||||||
BRU 92-12 | 2022-02-15 | NAD83 | 14 | 682109 | 5525978 | 67.06 | 35.05 | 49.68 | 52.73 | |||||||||||||||||||||||
BRU 93-1 | 2022-07-14 | NAD83 | 14 | 680969 | 5526355 | 66.45 | 30.48 | 49.68 | 50.04 |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
8 | SAMPLE PREPARATION, ANALYSES AND SECURITY |
8.1 | SAMPLING METHOD AND APPROACH |
Most drill hole samples collected by Sio Silica have been subject to sieve analysis for particle size distribution (PSD) analysis. In 2017, there were 75 samples that were sent from five of the drill holes to Loring Labs in Calgary, Alberta for sieve analyses. The 2018 / 2019 drill hole samples were sent to laboratories; 79 samples from six drill holes were tested by sieve analyses by AGAT in Calgary, Alberta, 10 duplicate samples were tested by sieve analyses by Loring, Alberta. Twenty (20) samples collected from the 2022 campaign drill holes were subject to PSD sieve analysis at Sio Silica’s internal facilities.
To complete PSD sieve analyses, a selected sieve stack is to be made up of no less than seven sieves of decreasing mesh size and is to include a pan and cover. This sieve stack is to be checked against a master sieve stack. A representative split sample of 100 g ± 20 g is to be selected; the material weight is to be recorded to within 0.1 g. The sample is to be placed at the top of the sieve stack with the lid and pan and is to be placed in the test sieve shaker for 10 minutes ± 5 seconds. Following this procedure, the material is to be weighed on each sieve and the resulting mass of each sieve is to be deducted from the weight for each fraction. The final cumulative mass is to be within 0.5% of the initial sample mass.
8.2 | 2017 AND 2018 / 2019 FIELD PROGRAMS SAMPLE INTEGRITY |
2017 to 2019 Programs
Sample collection was completed from the Carman Sand Member, typically at five-foot intervals, with the possible exception of the top and bottom interval at the contacts with the upper and lower shale units. Sample collection involved: 1) Collection of the sand from the RC cyclone; amalgamation of the sand a five-gallon pail; 2) Use of a soil auger to core through the sand in the five-gallon pail and collection of 1 and 2 kg samples; and 3) Completion of chain-of-custody documentation and transportation of the 1 kg sand sample to Calgary-based independent laboratories for sieve analyses.
2020 to 2021 Program
Twelve drill holes were completed between July 2020 and April 2021. Hole depths varied from 42 m to 76 m; all holes were drilled vertically. In addition to further constraining lithological depths, the main purpose of the drilling campaigns was to further develop production and supply wells, as well as to complete sand, limestone, and shale monitoring wells. Table 10.5 shows the associated drill hole information from this campaign. Only one representative Carman Sand Member sample (57.3 m to 66.1 m) from hole BRU 154-1 was subject to select sieve analysis (40/70 and 70/140 fractions) for cleaning and magnetic separation at Sio Silica’s internal facilities as described in Section 8.3.5.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
2022 Program
In 2022 twenty composited samples of the Carman Sand Member were collected from five holes (4 samples per hole). Sample depths ranged from 48.2 m to 63.7 m and sample intervals ranged from 13.4 m to 22.6 m. The sample collection method was the same as that for the prior 2017 to 2019 programs. These samples were subject to the same PSD sieve analysis at Sio Silica’s internal facilities. The PSD sieve analysis followed the same methodology as the prior 2019 to 2020 sampling programs.
8.3 | LABORATORY CREDENTIALS, TESTING METHODOLOGY, AND RESULTS |
Table 8.1 shows a summary of the number and type of analyses by year and laboratory. The following sections summarize the work completed by each laboratory.
Table 8.1
Summary of Analyses Completed by Year and Laboratory
Laboratory | Year | No. Samples | Analyses Type | |||
2017 | 75 | PSD Sieve | ||||
Loring | 2017 | 15 | Inductively Coupled Plasma (ICP) Whole Rock | |||
2019 | 10 | PSD Sieve | ||||
2019 | 6 | Bulk X-Ray Diffraction and X-Ray Fluorescence | ||||
AGAT | 2018-2019 | 79 | PSD Sieve | |||
2020 | 13 | X-Ray Fluorescence | ||||
Sio Silica | 2022 | 20 | PSD Sieve | |||
2020-2022 | 14 | 40/70 and 70/140 size fraction clean and magnetic separator | ||||
Liquids Matter | 2021-2022 | 56 | ICP Whole Rock on 40/70 and 70/140 size fraction |
8.3.1 | Loring Credentials, Testing Methodology, and 2017 Results |
Loring is an independent laboratory with ISO 9001:2008 accreditation (Certificate No. CERT- 0088592).
2017 Sieve Analyses
Loring completed 75 sieve samples in the 2017 program. Loring provided Stantec with calibration certificates and sieve calibration results for their working sieves as well as the working sieve certificate for the working sieves used to analyse the samples. Loring adhered to API recommended Practice 56-5.1 that is titled “Sieve Analysis, recommended Practices for Testing High-Strength Proppants used in Hydraulic Fracturing Operations”. Once received, Loring inventoried, dried, and weighed the material. The samples were then homogenized and screened (deslimed) through a 200-mesh sieve to separate the fines prior to splitting and completing sieve analyses.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Following desliming, samples were then split and reduced to approximately 100 g sample size; sieve analysis was then completed on this sample. The sample retained on the 200-mesh sieve was then dried and reweighed. The percent loss was calculated from the material washed through the sieve. The “pre” and “post” weights were recorded. With the exception of sample 42752, which had a loss of 5.9%, all samples had fine percentages less than 5%. Stantec normalized the sieve sample data to account for the material losses, then recalculated the bins.
2017 Whole Rock Analyses
Following completion of the sieve analyses, 15 samples were selected for Inductively Coupled Plasma (ICP) whole rock analysis, and following processing, were analysed by specific fraction sizes, which included 50/60, 60/70 and 70/80. The sample suite was selected from different depths of the Carman Sand Member, and from the different holes to ensure a spatial representation from across the tested portion of the Property.
To prepare the whole rock analysis sample, 200 g was extracted from the selected sample, was riffled, and pulverized to -140 U.S. standard mesh size sieve through use of a stainless-steel ring and puck pulveriser. Loring used an internal standard called WR-Internal Standard that was analysed to verify the analytical procedure accuracy prior to commencement of the testing, as well as after every 10 samples. In addition, Loring completed a rerun of sample 42830 to verify consistency in the analytical results.
The whole rock analyses, which were completed on the 15 samples, are shown in Table 8.2. The process involved in XRF sample preparation includes heating the sample in a crucible to 1050°C in the oven (Muffelofen) for at least an hour and then the desiccator to restrict the sample collection of atmospheric moisture. During the heating process, volatiles are driven from the sample during this ignition process. The volatiles that are burned off of the samples are termed Loss On Ignition (LOI), which include the compounds H2O, CO2, and the elements F, Cl, S as well as K and Na in the event that the sample is heated for too long. In Table 8.2, the source of the LOI wt. % is unknown, and may potentially be caused by trapped moisture that did not dehydrate during the drying process, trace organics and shale fragments that were not excluded from the sand during washing. The results from this study showed that SiO2 averaged 97.26% to 99.23%; the SiO2 content does not directly correlate to quartz abundance, as silica is present in other minerals such as feldspars.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 8.2
2017 Concentration of Major Oxides and LOI (wt %) by Fraction
Hole Name | Sample Number | Depth From (m) | Depth To (m) | Fraction | Al2O3 | CaO wt % | Fe2O3 | K2O | MgO wt % | MnO wt % | Na2O | P2O5 | SO3 | SiO2 | TiO2 | LOI
@ 1000°C | SUM | |||||||||||||||||||||||||||||||||||||||||||||||||
BH-03-17 | 42753 | 61.72 | 62.48 | 60/70 | 0.26 | 0.24 | 0.51 | 0.07 | 0.03 | 0.01 | 0.01 | 0.01 | 0.02 | 97.26 | 0.02 | 0.40 | 98.82 | |||||||||||||||||||||||||||||||||||||||||||||||||
BH-03-17 | 42758 | 68.58 | 70.10 | 70/80 | 0.17 | 0.07 | 0.27 | 0.07 | 0.02 | <0.01 | 0.01 | 0.01 | 0.02 | 98.94 | 0.02 | 0.17 | 99.77 | |||||||||||||||||||||||||||||||||||||||||||||||||
BH-03-17 | 42761 | 73.15 | 74.68 | 60/70 | 0.24 | 0.04 | 0.30 | 0.04 | 0.01 | <0.01 | 0.01 | <0.01 | 0.01 | 97.98 | 0.01 | 0.23 | 98.87 | |||||||||||||||||||||||||||||||||||||||||||||||||
BH-02-17 | 42765 | 57.91 | 59.44 | 60/70 | 0.21 | 0.04 | 0.28 | 0.05 | 0.01 | <0.01 | 0.03 | <0.01 | 0.01 | 98.77 | 0.02 | 0.20 | 99.62 | |||||||||||||||||||||||||||||||||||||||||||||||||
BH-02-17 | 42770 | 65.53 | 67.06 | 50/60 | 0.21 | 0.04 | 0.25 | 0.05 | 0.01 | <0.01 | 0.01 | 0.01 | 0.01 | 98.56 | 0.01 | 0.07 | 99.22 | |||||||||||||||||||||||||||||||||||||||||||||||||
BH-02-17 | 42775 | 73.15 | 74.68 | 50/60 | 0.24 | 0.04 | 0.22 | 0.06 | 0.01 | <0.01 | 0.02 | 0.01 | 0.02 | 98.06 | 0.01 | 0.20 | 98.89 | |||||||||||||||||||||||||||||||||||||||||||||||||
BH-09-17 | 42783 | 54.86 | 56.39 | 60/70 | 0.08 | 0.05 | 0.44 | 0.05 | 0.01 | <0.01 | 0.01 | 0.01 | 0.02 | 98.58 | 0.01 | 0.17 | 99.43 | |||||||||||||||||||||||||||||||||||||||||||||||||
BH-09-17 | 42790 | 65.53 | 67.06 | 70/80 | 0.27 | 0.05 | 0.38 | 0.05 | 0.01 | <0.01 | <0.01 | <0.01 | 0.02 | 98.31 | 0.02 | 0.20 | 99.31 | |||||||||||||||||||||||||||||||||||||||||||||||||
BH-09-17 | 42796 | 74.68 | 76.20 | 70/80 | 0.17 | 0.03 | 0.30 | 0.05 | 0.01 | <0.01 | 0.01 | <0.01 | 0.01 | 98.32 | 0.01 | 0.17 | 99.08 | |||||||||||||||||||||||||||||||||||||||||||||||||
BH-14-17 | 42805 | 56.39 | 57.91 | 60/70 | 0.22 | 0.04 | 0.26 | 0.05 | 0.01 | <0.01 | 0.01 | 0.01 | 0.02 | 99.23 | 0.02 | 0.10 | 99.96 | |||||||||||||||||||||||||||||||||||||||||||||||||
BH-14-17 | 42809 | 62.48 | 64.01 | 60/70 | 0.21 | 0.06 | 0.26 | 0.05 | 0.01 | <0.01 | 0.01 | 0.01 | 0.01 | 99.08 | 0.02 | 0.17 | 99.88 | |||||||||||||||||||||||||||||||||||||||||||||||||
BH-14-17 | 42814 | 70.10 | 71.63 | 70/80 | 0.22 | 0.03 | 0.27 | 0.06 | 0.01 | <0.01 | 0.01 | <0.01 | 0.01 | 99.16 | 0.02 | 0.24 | 100.03 | |||||||||||||||||||||||||||||||||||||||||||||||||
BH-10-17 | 42820 | 60.96 | 62.48 | 60/70 | 0.19 | 0.04 | 0.31 | 0.05 | 0.01 | <0.01 | 0.01 | 0.01 | 0.02 | 98.88 | 0.01 | 0.08 | 99.60 | |||||||||||||||||||||||||||||||||||||||||||||||||
BH-10-17 | 42824 | 68.58 | 70.10 | 70/80 | 0.25 | 0.04 | 0.24 | 0.06 | 0.01 | <0.01 | 0.01 | 0.01 | 0.01 | 99.03 | 0.02 | 0.20 | 99.88 | |||||||||||||||||||||||||||||||||||||||||||||||||
BH-10-17 | 42830 | 77.72 | 79.25 | 70/80 | 0.26 | 0.04 | 0.24 | 0.06 | 0.01 | <0.01 | 0.01 | <0.01 | 0.01 | 99.14 | 0.02 | 0.16 | 99.95 | |||||||||||||||||||||||||||||||||||||||||||||||||
BH-10-17 | 42830 | 77.72 | 79.25 | 70/80 | 0.28 | 0.05 | 0.25 | 0.06 | 0.01 | <0.01 | 0.01 | 0.0 | 0.01 | 98.73 | 0.02 | 0.21 | 99.62 |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
8.3.2 | AGAT Credentials, Testing Methodology, and 2018 Results |
AGAT completed sample preparation and sieve analysis. AGAT is an independent laboratory with ISO 9001:2015 (Certificate No. 0100019). The analyses by year and type are summarized in the following subsections.
2018 Sieve Analyses
In 2018, AGAT completed sieve analyses on 79 samples. AGAT inventoried, dried and processed the samples through a riffle splitter to obtain a representative sample size of approximately 100 g, as required for the sieve analyses. AGAT determined that the material contained clay-size material, but typically very low clay material based on mineralogical assessment. As such, AGAT determined that the material could be dry sieved using a sonic shaker, as outlined in API Recommended Practice 40, Section 7.3.1.
2018 Mineralogical Assessment
BRU-82-8 was drilled as an extraction well. Six samples were taken at three depths. The samples underwent sieve analysis followed by bulk X-ray diffraction (XRD) analysis to determine crystalline phases. XRD analyses is only able to identify crystalline material. The XRD samples were ran at high resolution and step time. This resulted in diffractograms with distinct peaks and low background noise. Table 8.3 summarizes the intervals from which the XRD was completed.
Table 8.3
2018 Mineralogical Assessment Results
Hole ID | AGAT ID | Depth From (m) | Depth To (m) | Date Sampled | SiO2 (%) | |||||||||||
BRU 82-8 | 19A19401-01 | 60.96 | 62.48 | 2018-12-16 | 100 | |||||||||||
BRU 82-8 | 19A19401-02 | 60.96 | 62.48 | 2018-12-16 | 100 | |||||||||||
BRU 82-8 | 19A19401-03 | 60.96 | 62.48 | 2018-12-16 | 100 | |||||||||||
BRU 82-8 | 19A19401-04 | 64.01 | 65.53 | 2018-12-17 | 100 | |||||||||||
BRU 82-8 | 19A19401-05 | 67.06 | 68.58 | 2018-12-17 | 100 | |||||||||||
BRU 82-8 | 19A19401-06 | 64.01 | 65.53 | 2018-12-18 | 100 |
The only mineral determined during the XRD analyses was quartz, which ranged in size from sand to silt. AGAT proposed that, due to the precision of the XRD equipment, the quartz component of the sample was most likely at ~99.5 ± 0.5%. There is no full Rietveld Refinement process for these results, as monomineralic samples cannot be refined.
2018 AGAT X-Ray Fluorescence Results
X-Ray Fluorescence (XRF) analyse was completed on the same six samples as those analysed by XRD. The process completed by AGAT during the XRF sample preparation includes heating the sample in a crucible to 1050°C in the oven (Muffelofen) for at least an hour and then the desiccator to restrict the sample collection of atmospheric moisture. During the heating process, volatiles are driven from the sample. The volatiles that are burned off of the samples are termed Loss On Ignition (LOI), which include the compounds H2O, CO2, and the elements F, Cl, S as well as K and Na in the event that the sample is heated for too long.
In Table 8.4, the source of the LOI wt. % is unknown, and may potentially be caused by trapped moisture that did not dehydrate during the drying process, trace organics and shale fragments that were not excluded from the sand during washing. Due to this uncertainty of the origin of the LOI concentration, the volatiles need to be included in the normalized major oxide weight percentage. The results from this study showed that the unnormalized SiO2 ranged from 99.47% to 99.82%; the SiO2 content does not directly correlate to quartz abundance, as silica is present in other minerals such as feldspars.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 8.4
2018 AGAT XRF Results – Concentration of Major Oxides and LOI (wt %)
Hole Name | AGAT Sample Number | Na2O (wt %) | MgO (wt %) | Al2O3 (wt %) | SiO2 (wt %) | P2O5 (wt %) | SO3 (wt %) | K2O (wt %) | CaO (wt %) | TiO2 (wt %) | Mn2O3 (wt%) | Fe2O3 (wt %) | LOI (wt %) | Sum (wt %) | ||||||||||||||||||||||||||||||||||||||||
BRU 82-8 | 19A19401-01 | 0.01 | 0.00 | 0.33 | 99.48 | 0.01 | 0.00 | 0.02 | 0.03 | 0.02 | 0.00 | 0.11 | 0.60 | 100.61 | ||||||||||||||||||||||||||||||||||||||||
BRU 82-8 | 19A19401-02 | 0.00 | 0.00 | 0.33 | 99.67 | 0.00 | 0.00 | 0.02 | 0.00 | 0.03 | 0.00 | 0.11 | 0.22 | 100.38 | ||||||||||||||||||||||||||||||||||||||||
BRU 82-8 | 19A19401-03 | 0.00 | 0.00 | 0.36 | 99.82 | 0.01 | 0.00 | 0.02 | 0.00 | 0.02 | 0.00 | 0.09 | 0.17 | 100.49 | ||||||||||||||||||||||||||||||||||||||||
BRU 82-8 | 19A19401-04 | 0.00 | 0.00 | 0.33 | 99.78 | 0.01 | 0.00 | 0.02 | 0.00 | 0.03 | 0.00 | 0.11 | 0.18 | 100.46 | ||||||||||||||||||||||||||||||||||||||||
BRU 82-8 | 19A19401-05 | 0.00 | 0.01 | 0.39 | 99.49 | 0.01 | 0.00 | 0.05 | 0.00 | 0.02 | 0.00 | 0.19 | 0.28 | 100.44 | ||||||||||||||||||||||||||||||||||||||||
BRU 82-8 | 19A19401-06 | 0.00 | 0.00 | 0.34 | 99.47 | 0.01 | 0.00 | 0.03 | 0.00 | 0.03 | 0.00 | 0.17 | 0.37 | 100.42 |
Note: LOI = Loss On Ignition
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
8.3.3 | 2020 AGAT XRF Analytical Methodology and Results |
Thirteen samples that were processed by Sio Silica were sent to AGAT laboratories for whole rock XRF analyses. The process completed by AGAT during the XRF sample preparation includes heating the sample in a crucible to 1050°C in the oven (Muffelofen) for at least an hour and then the desiccator to restrict the sample collection of atmospheric moisture. During the heating process, volatiles are driven from the sample during this ignition process. The volatiles that are burned off of the samples are termed Loss On Ignition (LOI), which include the compounds H2O, CO2, and the elements F, Cl, S as well as K and Na in the event that the sample is heated for too long.
Table 8.5 summarize the results of AGAT XRF results. The source of the LOI wt. % is unknown and may potentially be caused by trapped moisture that did not dehydrate during the drying process, trace organics and shale fragments that were not excluded from the sand during washing. Due to this uncertainty of the origin of the LOI concentration, the volatiles need to be included in the normalized major oxide weight percentage. The results from this study showed that unnormalized SiO2 ranged from 99.41% to 99.99% however, the SiO2 content does not directly correlate to quartz abundance, as silica is present in other minerals such as feldspars.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 8.5
2020 AGAT XRF Results – Concentration of Major Oxides and LOI (wt %)
Sample Identification | Na2O (wt %) | MgO (wt %) | Al2O3 (wt %) | SiO2 (wt %) | P2O5 (wt %) | SO3 (wt %) | K2O (wt %) | CaO (wt %) | TiO2 (wt %) | Mn2O3 (wt%) | Fe2O3 (wt %) | LOI (wt %) | Sum (wt %) | |||||||||||||||||||||||||||||||||||||||
4Arr | 0.00 | 0.00 | 0.13 | 99.83 | 0.01 | 0.00 | 0.01 | 0.00 | 0.03 | 0.00 | 0.00 | 0.12 | 100.13 | |||||||||||||||||||||||||||||||||||||||
April20_1A | 0.00 | 0.00 | 0.11 | 99.76 | 0.01 | 0.00 | 0.01 | 0.00 | 0.02 | 0.00 | 0.00 | 0.13 | 100.04 | |||||||||||||||||||||||||||||||||||||||
April20_1B | 0.00 | 0.00 | 0.11 | 99.59 | 0.01 | 0.00 | 0.01 | 0.00 | 0.02 | 0.00 | 0.00 | 0.31 | 100.05 | |||||||||||||||||||||||||||||||||||||||
April20_2A | 0.00 | 0.00 | 0.11 | 99.70 | 0.01 | 0.00 | 0.01 | 0.00 | 0.02 | 0.00 | 0.00 | 0.10 | 99.95 | |||||||||||||||||||||||||||||||||||||||
April20_2B | 0.00 | 0.00 | 0.11 | 99.41 | 0.01 | 0.00 | 0.01 | 0.00 | 0.02 | 0.00 | 0.00 | 0.37 | 99.93 | |||||||||||||||||||||||||||||||||||||||
April20_2C | 0.00 | 0.00 | 0.12 | 99.64 | 0.01 | 0.00 | 0.01 | 0.00 | 0.01 | 0.00 | 0.00 | 0.10 | 99.89 | |||||||||||||||||||||||||||||||||||||||
April20_2D | 0.00 | 0.00 | 0.09 | 99.99 | 0.01 | 0.00 | 0.01 | 0.00 | 0.02 | 0.00 | 0.00 | 0.05 | 100.17 | |||||||||||||||||||||||||||||||||||||||
April29_1A | 0.00 | 0.00 | 0.12 | 99.82 | 0.01 | 0.00 | 0.01 | 0.01 | 0.03 | 0.00 | 0.00 | 0.14 | 100.14 | |||||||||||||||||||||||||||||||||||||||
April29_1B | 0.00 | 0.00 | 0.11 | 99.86 | 0.01 | 0.00 | 0.01 | 0.00 | 0.02 | 0.00 | 0.00 | 0.11 | 100.12 | |||||||||||||||||||||||||||||||||||||||
April29_1C | 0.00 | 0.00 | 0.12 | 99.71 | 0.01 | 0.00 | 0.01 | 0.00 | 0.02 | 0.00 | 0.00 | 0.14 | 100.01 | |||||||||||||||||||||||||||||||||||||||
Sio SilicaMay6 | 0.00 | 0.00 | 0.05 | 99.86 | 0.01 | 0.00 | 0.01 | 0.01 | 0.02 | 0.00 | 0.00 | 0.12 | 100.08 | |||||||||||||||||||||||||||||||||||||||
Sio SilicaJune16 | 0.00 | 0.00 | 0.06 | 99.73 | 0.01 | 0.00 | 0.01 | 0.00 | 0.04 | 0.00 | 0.00 | 0.22 | 100.07 | |||||||||||||||||||||||||||||||||||||||
Sio SilicaJune17 | 0.00 | 0.00 | 0.06 | 99.73 | 0.01 | 0.00 | 0.01 | 0.00 | 0.06 | 0.00 | 0.00 | 0.10 | 99.97 |
Note: LOI = Loss On Ignition
![]() | 8-8 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
8.3.4 | Sio Silica Internal Facility Credentials and Processing Methodology |
Starting in 2020, personnel from Sio Silica developed an internal methodology to do bench scale test procedures for further purification of raw sand samples from the BRU Property at select sand size ranges, notably 40/70 and 70/140. The purpose of the sample processing was to generate a bench scale market ready sand product. In total 14 representative composite samples from within the Carman Sand Member were processed as shown in Table 8.6. The Sio Silica internal laboratory where these procedures were implemented is not an accredited facility and is not independent.
Table 8.6
Samples Processed at Sio Silica Facilities
Field | Carman Sand Member Interval (m) | |||||||||
Program Year | Hole ID | From | To | |||||||
2018-2019 | Bru-82-14 | 51.5 | 66.4 | |||||||
2018-2019 | Bru-73-1 | 41.1 | 62.2 | |||||||
2018-2019 | Bru-117-1 | 56.4 | 72.8 | |||||||
2018-2019 | Bru-126-1 | 57.9 | 77.4 | |||||||
2018-2019 | Bru-28-1 | 59.1 | 80.5 | |||||||
2018-2019 | Bru-146-1 | 51.8 | 72.8 | |||||||
2018-2019 | Bru-121-1 | 39.6 | 59.1 | |||||||
2020-2021 | Bru-154-1 | 57.3 | 66.1 | |||||||
2022 | Bru-3-1 | 63.7 | 82.3 | |||||||
2022 | Bru-81-1 | 51.5 | 67.1 | |||||||
2022 | Bru-92-8 | 50.6 | 56.7 | |||||||
2022 | Bru-13-1 | 56.7 | 79.2 | |||||||
2022 | Bru-83-1 | 48.2 | 70.1 | |||||||
2022 | Bru-93-1 | 53.0 | 66.4 | |||||||
Count | 14 | 14 | ||||||||
Minimum | 39.6 | 56.7 | ||||||||
Maximum | 63.7 | 82.3 | ||||||||
Mean | 52.8 | 70.0 |
The sample processing procedure as summarised from Sio Silica’s laboratory procedures internal document is described as follows:
1. | Ensure sample is completely dry, use oven if necessary. |
2. | Composite samples from individual well (~50-100g per sample totaling ~1.2kg. Sample number assigned and recorded in database. |
3. | Sieve samples at fractions 40/70 and 70/140 at an amplitude of 1.30mm for 15 minutes |
a. | Sieve #’s: 30, 40, 50, 60, 70, 80, 100, 140, Pan |
4. | Re-sieve the 40/70 and 70/140 sample separately at an amplitude of 1.30mm for 5 minutes |
a. | 40/70 sample Sieve #’s: 40, 70, Pan |
b. | 70/140 sample Sieve #’s: 70, 140, Pan |
5. | Water wash 40/70 sample using No. 70 and No. 325 wet sieve |
![]() | 8-9 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
6. | Water wash 70/140 sample using the No. 325 wet sieve until water (tap water) runs clear and there are no visible fines suspended in solution. |
7. | Transfer samples from steps 4 and 5 to anchor glass baking dishes to dry in oven at 375°F for ~1 hour. Lab Testing Point A (40/70 fraction) and A-1 (70/140 fraction) are taken. |
8. | Run each sample through the Eriez Dry High Intensity Rare Earth Roll Magnetic Separator three times. Lab Testing point B (40/70 fraction) and B-1 (70/140 fraction) are taken. Available equipment for drying includes a Quincy Lab 30GC 2.0 ft3 gravity convection oven capable of 450 F. Sieves are ASTM E11 standard and a Retsch AS 300 control sieve shaker is used that complies with ISO 9001 requirements. |
From the original 14 composite sand samples 56 test point samples were produced as outlined:
● | Point A: 14 samples at 40/70 fraction – sieved, water washed, and dried. |
● | Point A-1: 14 samples at 70/140 fraction – sieved, water washed, and dried. |
● | Point B: 14 samples at 40/70 fraction – Sieved, water washed, dried, and ran through dry magnetic separator. |
● | Point B-1: 14 samples at 70/140 fraction – Sieved, water washed, dried, and ran through dry magnetic separator. |
These 56 samples were then sent to Liquids Matter laboratory for whole rock analysis
8.3.5 | 2022 Liquids Matter Whole Rock Analysis |
Liquids Matter is an independent accredited laboratory located in Calgary, Alberta that was used by Sio Silica to complete whole rock analysis on 56 sized and cleaned samples. The whole rock analysis was completed using Inductively coupled plasma - optical emission spectrometry (ICP- OES). A summary of the ICP-OES test results comparing 40/70 and 70/140 size fractions before (Point A, A-1) and after magnetic separation (Point B, B-1) are shown in Table 11.7. All ICP-OES ion test results for all four sample types (Point A, B, A-1 and A-2) are presented in oxide form and are shown in Tables 11.8 through 11.11. The ICP-OES test results show that the magnetic separator by Sio Silica was successful in increasing sand purity from a mean of 99.87% SiO2 to 99.91% SiO2 for the 40/70 size fraction, and 99.86% SiO2 to 99.91% SiO2 for the 70/140 size fraction.
The spatial distribution SiO2 and iron content measurements received from Liquids Matter after magnetic separation (Step/Point B), are shown in Figures 8-1 through 8-4 for the 40/70 and 70/140 size fractions. The percentage of each size fraction in each sample site, listed in Table 8.6, is shown in the contour overlay at 3% intervals. Also posted at each sample site (drill hole) is the aluminum oxide content for those maps showing iron distribution (Figure 8-3 and Figure 8-4). The spatial trends in SiO2, iron oxide and size fraction percentages were derived from the grid model.
![]() | 8-10 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 8.7
Liquids Matter ICP-OES Summary Test Results
Point A 40/70 Fraction | Point B 40/70 Fraction | Point A-1 70/140 Fraction | Point B-1 70/140 Fraction | |||||||||||||||||||||||||||||||||||||||||||||
Parameter | wash and dry | wash, dry and magnetic separation | wash and dry | wash, dry and magnetic separation | ||||||||||||||||||||||||||||||||||||||||||||
SiO2 | Total Oxides | FeO2 | SiO2 | Total Oxides | FeO2 | SiO2 | Total Oxides | FeO2 | SiO2 | Total Oxides | FeO2 | |||||||||||||||||||||||||||||||||||||
(%) | (%) | (ppm) | (%) | (%) | (ppm) | (%) | (%) | (ppm) | (%) | (%) | (ppm) | |||||||||||||||||||||||||||||||||||||
Count | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | ||||||||||||||||||||||||||||||||||||
Minimum | 99.80 | 0.050 | 52.1 | 99.86 | 0.042 | 28.9 | 99.75 | 0.041 | 100.3 | 99.87 | 0.043 | 29.4 | ||||||||||||||||||||||||||||||||||||
Maximum | 99.93 | 0.263 | 323.0 | 99.95 | 0.167 | 99.5 | 99.92 | 0.319 | 325.3 | 99.95 | 0.149 | 76.4 | ||||||||||||||||||||||||||||||||||||
Mean | 99.87 | 0.136 | 194.1 | 99.91 | 0.085 | 55.1 | 99.86 | 0.139 | 201.4 | 99.91 | 0.094 | 55.2 | ||||||||||||||||||||||||||||||||||||
Std. Deviation | 0.04 | 0.066 | 80.2 | 0.03 | 0.035 | 19.1 | 0.04 | 0.070 | 71.4 | 0.03 | 0.034 | 15.1 |
![]() | 8-11 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 8.8
Liquids Matter ICP-OES Point A 40/70 Test Results
Sample Number | Hole ID | SiO2 (%) | S (ppm) | Mg (ppm) | B (ppm) | Ni (ppm) | Ba (ppm) | Mn (ppm) | Fe (ppm) | Cr (ppm) | Mo (ppm) | Al (ppm) | Ca (ppm) | Cu (ppm) | Ti (ppm) | Sr (ppm) | Zr (ppm) | Y (ppm) | Ce (ppm) | Li (ppm) | K (ppm) | Na (ppm) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22101 | Bru-82-14 | 99.81 | 76.7 | 85.1 | - | 0.81 | 0.38 | 0.83 | 137.4 | 2.13 | - | 1305 | 224 | 1.31 | 10.81 | 2.93 | 1.22 | 0.090 | 5.65 | 4.27 | 58.48 | 12.02 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2235 | Bru-73-1 | 99.90 | 86.3 | 38.2 | - | 0.43 | 3.81 | 1.20 | 241.8 | 1.50 | - | 467 | 96 | 2.31 | 4.89 | 2.29 | 3.36 | - | 2.04 | 1.01 | 17.58 | 11.29 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2241 | Bru-117-1 | 99.92 | 114.9 | 29.0 | 39.4 | 0.09 | - | 0.46 | 108.8 | 0.92 | - | 287 | 106 | 1.09 | 3.90 | 2.14 | 4.44 | - | 1.38 | 0.55 | 16.37 | 38.02 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2247 | Bru-126-1 | 99.85 | 104.7 | 95.1 | - | 0.16 | 0.01 | 1.63 | 217.8 | 1.02 | - | 489 | 522 | 1.99 | 7.45 | 2.71 | 0.96 | 0.005 | 2.15 | 1.37 | 14.45 | 22.11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2253 | Bru-28-1 | 99.87 | 82.6 | 37.3 | 9.5 | 0.48 | 0.62 | 0.96 | 174.1 | 1.63 | - | 835 | 124 | 1.72 | 7.83 | 3.10 | 0.78 | 0.031 | 4.42 | 3.04 | 24.48 | 27.48 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2259 | Bru-146-1 | 99.85 | 116.1 | 46.3 | - | 0.38 | 0.02 | 2.87 | 305.4 | 1.60 | - | 757 | 222 | 4.61 | 19.65 | 2.63 | 1.14 | 0.081 | 3.97 | 2.25 | 14.45 | 17.84 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2265 | Bru-121-1 | 99.89 | 103.0 | 42.8 | 8.5 | 0.14 | - | 2.70 | 323.0 | 1.14 | - | 338 | 224 | 3.43 | 5.16 | 2.01 | 0.84 | 0.076 | 2.63 | 0.71 | 14.99 | 31.69 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2271 | Bru-154-1 | 99.86 | 65.5 | 50.2 | 11.4 | 0.26 | - | 0.71 | 109.3 | 1.67 | - | 985 | 130 | 0.99 | 4.68 | 2.26 | 3.53 | 0.086 | 3.50 | 3.22 | 50.71 | 17.96 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22105 | Bru-3-1 | 99.86 | 56.1 | 61.0 | - | 0.27 | 0.19 | 2.30 | 222.6 | 1.53 | - | 719 | 324 | 0.65 | 16.71 | 3.55 | 1.28 | 0.134 | 5.63 | 2.34 | 17.74 | 1.59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22109 | Bru-81-1 | 99.87 | 69.9 | 65.5 | - | 0.16 | 0.21 | 1.63 | 139.0 | 1.13 | - | 487 | 475 | 1.13 | 5.81 | 3.46 | 0.98 | 0.167 | 5.64 | 1.33 | 24.23 | 7.84 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2283 | Bru-92-8 | 99.93 | 39.4 | 27.2 | - | 0.13 | - | 0.23 | 52.1 | 0.88 | - | 455 | 60 | 2.36 | 4.16 | 1.94 | 1.35 | 0.013 | 2.76 | 1.57 | 12.31 | - | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2289 | Bru-13-1 | 99.80 | 80.1 | 68.6 | - | 0.54 | 0.25 | 1.98 | 298.0 | 2.12 | - | 1175 | 308 | 1.30 | 11.58 | 3.07 | 8.35 | 0.064 | 5.43 | 4.70 | 16.58 | 8.64 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2293 | Bru-83-1 | 99.86 | 170.4 | 56.4 | - | 0.45 | 0.43 | 1.65 | 244.9 | 1.18 | - | 327 | 531 | 1.31 | 5.20 | 4.32 | 0.96 | 0.059 | 3.19 | 0.20 | 25.45 | 18.60 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2297 | Bru-93-1 | 99.85 | 57.7 | 97.2 | - | 0.27 | 0.55 | 1.44 | 142.7 | 1.35 | 0.153 | 657 | 467 | 1.09 | 5.61 | 4.59 | 0.99 | 0.040 | 3.72 | 2.26 | 16.51 | 45.70 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Count | n/a | 14 | 14 | 14 | 4 | 14 | 10 | 14 | 14 | 14 | 1 | 14 | 14 | 14 | 14 | 14 | 14 | 12 | 14 | 14 | 14 | 13 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Minimum | n/a | 99.80 | 39.4 | 27.2 | 8.5 | 0.09 | 0.01 | 0.23 | 52.1 | 0.88 | 0.153 | 287 | 60 | 0.65 | 3.90 | 1.94 | 0.78 | 0.005 | 1.38 | 0.20 | 12.31 | 1.59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maximum | n/a | 99.93 | 170.4 | 97.2 | 39.4 | 0.81 | 3.81 | 2.87 | 323.0 | 2.13 | 0.153 | 1305 | 531 | 4.61 | 19.65 | 4.59 | 8.35 | 0.167 | 5.65 | 4.70 | 58.48 | 45.70 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mean | n/a | 99.87 | 87.4 | 57.1 | 17.2 | 0.33 | 0.65 | 1.47 | 194.1 | 1.42 | 0.153 | 663 | 272 | 1.81 | 8.10 | 2.93 | 2.16 | 0.070 | 3.72 | 2.06 | 23.17 | 20.06 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Std. Deviation | n/a | 0.04 | 31.8 | 22.1 | 12.9 | 0.19 | 1.07 | 0.77 | 80.2 | 0.39 | - | 307 | 162 | 1.05 | 4.71 | 0.80 | 2.06 | 0.045 | 1.41 | 1.31 | 13.48 | 12.24 |
Note: The reported impurities contents are in an oxide form.
![]() | 8-12 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 8.9
Liquids Matter ICP-OES Point B 40/70 Test Results
Sample | Hole | SiO2 | S | Mg | B | Ni | Ba | Mn | Fe | Cr | Mo | Al | Ca | Cu | Ti | Sr | Zr | Y | Ce | Li | K | Na | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number | ID | (%) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22103 | Bru-82-14 | 99.86 | 77.6 | 65.7 | - | 0.57 | 0.20 | 0.47 | 82.6 | 1.54 | - | 924 | 193 | 1.56 | 4.74 | 2.56 | 1.03 | 0.082 | 4.74 | 3.34 | 42.84 | 5.58 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2237 | Bru-73-1 | 99.94 | 79.4 | 27.6 | - | 0.16 | - | 0.32 | 39.3 | 0.85 | - | 308 | 90 | 1.02 | 2.78 | 2.09 | 2.52 | 0.009 | 2.57 | 1.51 | 13.64 | 14.17 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2243 | Bru-117-1 | 99.94 | 110.6 | 20.2 | - | 0.13 | - | 0.18 | 55.8 | 0.83 | - | 299 | 55 | 0.87 | 2.83 | 1.84 | 0.30 | 0.001 | 2.84 | 1.01 | 10.65 | 8.76 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2249 | Bru-126-1 | 99.94 | 72.6 | 31.1 | - | 0.06 | - | 0.31 | 39.6 | 0.53 | - | 271 | 186 | 1.14 | 2.52 | 1.59 | 0.54 | 0.002 | 1.71 | 1.25 | 9.97 | 9.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2255 | Bru-28-1 | 99.95 | 82.2 | 27.5 | - | 0.24 | - | 0.35 | 63.2 | 0.72 | - | 258 | 75 | 1.07 | 2.12 | 2.50 | 0.40 | 0.020 | 2.46 | 0.81 | 13.90 | 10.59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2261 | Bru-146-1 | 99.93 | 96.8 | 22.0 | - | 0.28 | - | 0.32 | 47.7 | 0.95 | - | 383 | 124 | 4.56 | 3.10 | 2.03 | 1.08 | 0.064 | 2.82 | 1.65 | 13.63 | 18.30 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2267 | Bru-121-1 | 99.91 | 88.1 | 28.1 | - | 0.45 | - | 0.49 | 46.5 | 1.07 | - | 548 | 164 | 3.89 | 3.34 | 2.36 | 1.20 | 0.095 | 3.65 | 2.21 | 16.67 | 34.42 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2273 | Bru-154-1 | 99.90 | 59.9 | 54.9 | - | 0.14 | - | 0.46 | 73.2 | 1.32 | - | 692 | 108 | 0.91 | 2.91 | 2.10 | 0.44 | 0.064 | 3.04 | 2.23 | 29.09 | 1.84 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22107 | Bru-3-1 | 99.89 | 56.7 | 42.1 | - | 0.25 | 0.18 | 0.93 | 52.6 | 1.23 | - | 667 | 275 | 1.14 | 6.35 | 3.43 | 1.33 | 0.119 | 5.93 | 2.45 | 16.15 | 2.27 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22111 | Bru-81-1 | 99.90 | 64.4 | 50.9 | - | 0.15 | 0.17 | 1.10 | 65.9 | 1.05 | - | 412 | 366 | 1.42 | 4.65 | 3.38 | 1.80 | 0.178 | 5.57 | 1.17 | 21.41 | 1.29 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2285 | Bru-92-8 | 99.94 | 37.0 | 24.4 | - | 0.10 | - | 0.13 | 28.9 | 0.81 | - | 406 | 54 | 1.91 | 4.49 | 1.68 | 1.29 | 0.017 | 2.78 | 1.39 | 12.21 | 4.38 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2291 | Bru-13-1 | 99.93 | 35.8 | 36.1 | - | 0.14 | 0.24 | 0.27 | 38.2 | 0.69 | - | 358 | 173 | 1.36 | 2.79 | 3.14 | 1.19 | - | 1.48 | 0.61 | 13.06 | 21.18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2295 | Bru-83-1 | 99.90 | 88.0 | 43.2 | - | 0.28 | 0.54 | 0.67 | 99.5 | 1.20 | - | 517 | 228 | 1.45 | 4.64 | 4.41 | 0.94 | - | 4.18 | 1.04 | 26.33 | 21.62 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2299 | Bru-93-1 | 99.90 | 62.3 | 54.9 | - | 0.27 | 0.06 | 0.30 | 39.0 | 1.18 | - | 649 | 187 | 1.34 | 3.78 | 2.61 | 1.25 | 0.052 | 3.81 | 2.67 | 12.64 | 1.57 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Count | n/a | 14 | 14 | 14 | 0 | 14 | 6 | 14 | 14 | 14 | 0 | 14 | 14 | 14 | 14 | 14 | 14 | 12 | 14 | 14 | 14 | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Minimum | n/a | 99.86 | 35.8 | 20.2 | - | 0.06 | 0.06 | 0.13 | 28.9 | 0.53 | - | 258 | 54 | 0.87 | 2.12 | 1.59 | 0.30 | 0.001 | 1.48 | 0.61 | 9.97 | 1.29 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maximum | n/a | 99.95 | 110.6 | 65.7 | - | 0.57 | 0.54 | 1.10 | 99.5 | 1.54 | - | 924 | 366 | 4.56 | 6.35 | 4.41 | 2.52 | 0.178 | 5.93 | 3.34 | 42.84 | 34.42 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mean | n/a | 99.91 | 72.2 | 37.8 | - | 0.23 | 0.23 | 0.45 | 55.1 | 1.00 | - | 478 | 163 | 1.69 | 3.65 | 2.55 | 1.09 | 0.058 | 3.40 | 1.67 | 18.01 | 11.07 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Std. Deviation | n/a | 0.03 | 20.5 | 13.8 | - | 0.14 | 0.15 | 0.27 | 19.1 | 0.27 | - | 189 | 85 | 1.07 | 1.13 | 0.76 | 0.57 | 0.052 | 1.28 | 0.77 | 8.81 | 9.46 |
Note: The reported impurities contents are in an oxide form.
![]() | 8-13 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 8.10
Liquids Matter ICP-OES Point A-1 70/140 Test Results
Sample | Hole | SiO2 | S | Mg | B | Ni | Ba | Mn | Fe | Cr | Mo | Al | Ca | Cu | Ti | Sr | Zr | Y | Ce | Li | K | Na | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number | ID | (%) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22102 | Bru-82-14 | 99.75 | 72.9 | 83.6 | - | 0.95 | 0.38 | 9.82 | 323.6 | 3.12 | - | 1374 | 242 | 0.71 | 275.59 | 2.42 | 2.31 | 0.155 | 4.60 | 4.65 | 58.27 | 5.71 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2236 | Bru-73-1 | 99.92 | 83.6 | 39.1 | - | 0.35 | 1.35 | 1.74 | 139.7 | 1.41 | - | 305 | 130 | 1.92 | 34.57 | 1.86 | 2.27 | 0.029 | 1.24 | 1.33 | 18.22 | 9.54 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2242 | Bru-117-1 | 99.89 | 88.3 | 26.6 | - | 0.36 | 3.76 | 1.47 | 100.3 | 1.63 | - | 747 | 73 | 2.36 | 44.13 | 1.74 | 0.80 | 0.019 | 2.48 | 2.97 | 15.44 | 14.43 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2248 | Bru-126-1 | 99.86 | 102.5 | 57.6 | - | 0.32 | 1.41 | 3.11 | 155.9 | 1.49 | - | 663 | 259 | 2.58 | 75.21 | 2.50 | 1.05 | 0.041 | 1.79 | 2.19 | 18.23 | 13.89 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2254 | Bru-28-1 | 99.87 | 84.8 | 38.7 | - | 0.31 | 2.49 | 2.75 | 220.7 | 1.75 | - | 633 | 162 | 3.86 | 56.39 | 3.32 | 0.77 | 0.036 | 2.92 | 2.51 | 22.06 | 17.10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2260 | Bru-146-1 | 99.91 | 164.7 | 36.6 | - | 0.57 | 0.58 | 2.14 | 262.1 | 1.29 | - | 123 | 216 | 12.12 | 8.69 | 1.10 | 0.68 | 0.078 | 1.30 | 0.03 | 9.18 | 10.98 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2266 | Bru-121-1 | 99.88 | 112.1 | 37.1 | - | 0.44 | 0.27 | 2.34 | 247.1 | 1.69 | - | 586 | 188 | 8.48 | 25.74 | 2.11 | 0.88 | 0.093 | 3.39 | 2.36 | 14.91 | 15.38 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2272 | Bru-154-1 | 99.85 | 70.8 | 49.0 | - | 0.60 | - | 2.73 | 170.3 | 2.40 | - | 971 | 122 | 2.37 | 70.16 | 2.41 | 1.59 | 0.158 | 3.80 | 3.40 | 44.30 | 0.58 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22106 | Bru-3-1 | 99.81 | 60.9 | 63.1 | - | 0.52 | 0.26 | 8.07 | 325.3 | 2.30 | - | 950 | 250 | 0.99 | 227.59 | 2.40 | 2.33 | 0.139 | 4.78 | 3.27 | 19.91 | 1.33 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22110 | Bru-81-1 | 99.88 | 62.3 | 58.0 | - | 0.23 | 0.12 | 4.53 | 193.8 | 1.63 | 0.388 | 425 | 315 | 1.48 | 110.39 | 1.90 | 4.85 | 0.136 | 3.45 | 1.31 | 20.29 | 0.59 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2284 | Bru-92-8 | 99.90 | 44.2 | 29.0 | - | 0.28 | - | 4.36 | 134.0 | 1.82 | - | 542 | 70 | 1.14 | 120.50 | 1.87 | 1.47 | 0.063 | 2.49 | 1.85 | 14.69 | 5.90 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2290 | Bru-13-1 | 99.84 | 39.5 | 78.2 | 26.1 | 0.29 | 0.52 | 5.89 | 261.5 | 1.82 | - | 666 | 312 | 1.54 | 160.93 | 3.25 | 3.63 | 0.063 | 1.89 | 1.81 | 20.20 | 37.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2294 | Bru-83-1 | 99.83 | 82.6 | 53.5 | - | 0.45 | 0.42 | 4.06 | 179.8 | 1.76 | 0.354 | 453 | 802 | 1.46 | 54.61 | 3.66 | 4.22 | 0.082 | 2.81 | 0.75 | 30.74 | 21.46 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2298 | Bru-93-1 | 99.90 | 43.0 | 64.8 | - | 0.32 | 0.50 | 1.76 | 105.8 | 1.51 | - | 511 | 224 | 1.64 | 42.59 | 3.24 | 1.24 | 0.028 | 2.03 | 1.67 | 14.94 | 27.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Count | n/a | 14 | 14 | 14 | 1 | 14 | 12 | 14 | 14 | 14 | 2 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Minimum | n/a | 99.75 | 39.5 | 26.6 | 26.1 | 0.23 | 0.12 | 1.47 | 100.3 | 1.29 | 0.354 | 123 | 70 | 0.71 | 8.69 | 1.10 | 0.68 | 0.019 | 1.24 | 0.03 | 9.18 | 0.58 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maximum | n/a | 99.92 | 164.7 | 83.6 | 26.1 | 0.95 | 3.76 | 9.82 | 325.3 | 3.12 | 0.388 | 1374 | 802 | 12.12 | 275.59 | 3.66 | 4.85 | 0.158 | 4.78 | 4.65 | 58.27 | 37.16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mean | n/a | 99.86 | 79.4 | 51.1 | 26.1 | 0.43 | 1.00 | 3.91 | 201.4 | 1.83 | 0.371 | 639 | 240 | 3.05 | 93.36 | 2.41 | 2.01 | 0.080 | 2.78 | 2.15 | 22.96 | 12.93 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Std. Deviation | n/a | 0.04 | 31.5 | 16.9 | 0.0 | 0.18 | 1.05 | 2.41 | 71.4 | 0.46 | 0.017 | 298 | 173 | 3.13 | 75.95 | 0.70 | 1.31 | 0.048 | 1.08 | 1.14 | 12.75 | 10.15 |
Note: The reported impurities contents are in an oxide form.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 8.11
Liquids Matter ICP-OES Point B-1 70/140 Test Results
Sample Number | Hole ID | SiO2 (%) | S (ppm) | Mg (ppm) | B (ppm) | Ni (ppm) | Ba (ppm) | Mn (ppm) | Fe (ppm) | Cr (ppm) | Mo (ppm) | Al (ppm) | Ca (ppm) | Cu (ppm) | Ti (ppm) | Sr (ppm) | Zr (ppm) | Y (ppm) | Ce (ppm) | Li (ppm) | K (ppm) | Na (ppm) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22104 | Bru-82-14 | 99.89 | 50.1 | 50.1 | - | 0.56 | 0.00 | 0.40 | 76.4 | 1.48 | - | 789 | 125 | 0.62 | 4.76 | 1.78 | 2.53 | 0.047 | 3.33 | 2.55 | 40.25 | 0.41 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2238 | Bru-73-1 | 99.93 | 58.3 | 26.2 | - | 0.37 | 1.86 | 0.37 | 57.0 | 1.38 | - | 405 | 78 | 1.11 | 3.51 | 1.37 | 2.02 | 0.038 | 1.65 | 1.23 | 13.73 | 7.43 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2244 | Bru-117-1 | 99.95 | 75.5 | 24.6 | - | 0.10 | - | 0.20 | 29.4 | 0.73 | - | 263 | 65 | 2.02 | 2.63 | 1.06 | 1.71 | - | 1.25 | 1.66 | 8.14 | 11.04 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2250 | Bru-126-1 | 99.87 | 49.8 | 30.8 | - | 0.45 | 1.43 | 0.41 | 74.2 | 1.61 | - | 972 | 119 | 1.48 | 6.00 | 2.07 | 1.73 | 0.046 | 2.97 | 3.78 | 16.94 | 14.74 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2256 | Bru-28-1 | 99.94 | 74.1 | 28.0 | - | 0.12 | 0.04 | 0.33 | 64.7 | 0.89 | - | 369 | 71 | 4.16 | 2.73 | 1.26 | 0.52 | - | 1.88 | 1.58 | 16.28 | 7.45 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2262 | Bru-146-1 | 99.93 | 83.0 | 24.7 | - | 0.31 | - | 0.33 | 38.9 | 1.05 | - | 369 | 112 | 10.66 | 4.42 | 1.56 | 0.80 | 0.046 | 2.33 | 1.80 | 11.65 | 13.79 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2268 | Bru-121-1 | 99.91 | 81.8 | 26.8 | - | 0.28 | - | 0.41 | 37.6 | 1.25 | - | 569 | 138 | 7.91 | 4.09 | 1.88 | 0.90 | 0.070 | 3.37 | 2.67 | 14.47 | 20.18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2274 | Bru-154-1 | 99.91 | 37.3 | 35.5 | - | 0.21 | - | 0.22 | 55.9 | 1.29 | - | 652 | 76 | 2.40 | 3.76 | 1.68 | 0.45 | 0.019 | 2.68 | 2.23 | 26.39 | 7.62 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22108 | Bru-3-1 | 99.89 | 46.8 | 40.6 | - | 0.26 | - | 0.49 | 49.2 | 1.33 | - | 767 | 154 | 1.00 | 6.64 | 1.89 | 1.26 | 0.079 | 4.01 | 2.69 | 18.58 | 1.57 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22112 | Bru-81-1 | 99.88 | 51.0 | 53.7 | - | 0.32 | 0.18 | 0.68 | 72.6 | 1.73 | - | 751 | 194 | 1.72 | 7.80 | 2.21 | 1.58 | 0.111 | 4.49 | 2.42 | 25.62 | 14.08 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2286 | Bru-92-8 | 99.87 | 60.4 | 32.5 | 1.3 | 0.47 | 2.89 | 0.29 | 56.7 | 1.76 | - | 978 | 80 | 1.18 | 6.80 | 2.23 | 2.02 | 0.058 | 3.19 | 3.86 | 19.15 | 18.31 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2292 | Bru-13-1 | 99.92 | 35.8 | 45.3 | - | 0.14 | 0.22 | 0.28 | 40.5 | 0.89 | - | 462 | 157 | 1.57 | 3.30 | 2.76 | 1.81 | - | 1.32 | 1.10 | 14.18 | 19.09 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2296 | Bru-83-1 | 99.92 | 67.2 | 41.1 | - | 0.31 | 0.33 | 0.51 | 74.5 | 1.28 | - | 408 | 150 | 1.51 | 4.49 | 3.26 | 0.99 | - | 2.58 | 0.76 | 26.81 | 19.48 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
22100 | Bru-93-1 | 99.88 | 64.5 | 46.2 | - | 0.33 | 0.02 | 0.24 | 44.8 | 1.51 | - | 900 | 116 | 1.54 | 5.24 | 1.87 | 0.96 | 0.056 | 3.30 | 3.90 | 14.88 | 7.36 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Count | n/a | 14 | 14 | 14 | 1 | 14 | 9 | 14 | 14 | 14 | 0 | 14 | 14 | 14 | 14 | 14 | 14 | 10 | 14 | 14 | 14 | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Minimum | n/a | 99.87 | 35.8 | 24.6 | 1.3 | 0.10 | 0.00 | 0.20 | 29.4 | 0.73 | - | 263 | 65 | 0.62 | 2.63 | 1.06 | 0.45 | 0.019 | 1.25 | 0.76 | 8.14 | 0.41 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maximum | n/a | 99.95 | 83.0 | 53.7 | 1.3 | 0.56 | 2.89 | 0.68 | 76.4 | 1.76 | - | 978 | 194 | 10.66 | 7.80 | 3.26 | 2.53 | 0.111 | 4.49 | 3.90 | 40.25 | 20.18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mean | n/a | 99.91 | 59.7 | 36.2 | 1.3 | 0.30 | 0.77 | 0.37 | 55.2 | 1.30 | - | 618 | 117 | 2.78 | 4.73 | 1.92 | 1.38 | 0.057 | 2.74 | 2.30 | 19.08 | 11.61 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Std. Deviation | n/a | 0.03 | 14.8 | 9.6 | 0.0 | 0.13 | 0.98 | 0.12 | 15.1 | 0.31 | - | 235 | 38 | 2.82 | 1.53 | 0.56 | 0.60 | 0.024 | 0.94 | 0.99 | 7.94 | 6.28 |
Note: The reported impurities contents are in an oxide form.
![]() | 8-15 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
![]() | 8-16 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
![]() | 8-17 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
![]() | 8-18 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
![]() | 8-19 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
9 | DATA VERIFICATION |
9.1 | SITE VISIT AND ALIGNMENT ON FIELD PROCEDURES AND SAMPLING PROTOCOL |
A Stantec professional geologist assisted with and oversaw the portion of the program involving collection of the field data, sample collection, and the implementation of chain-of-custody documentation during sample shipment. To streamline the program, the Stantec professional geologist conducted a site visit to the Property on July 5 and 6, 2017, which was at the time that the Sio Silica field personnel were drilling BH-03-17; the first 2017 hole. The timing of this site visit provided the professional geologist the opportunity to align with the Sio Silica field crew on program procedures, as well as to instruct the drilling crew on the required rate of drilling to facilitate sample collection.
On June 10, 2022, the QP visited the Sio Silica’s laboratory in Calgary, Alberta, to review the laboratory equipment, and protocols with Sio Silica personnel. The Sio Silica laboratory is used to process the sand to a product that represents “market ready” sand. The process flow includes sample compositing, drying and sieve analysis. The Sio Silica lab is equipped with a magnetic separator to remove iron contaminant particles. It is the QP’s opinion that Sio Silica’s laboratory equipment, procedures, processes and personal are adequate for the performed analytical work. The QP requested that sieve tests on the retained samples that have been analyzed in AGAT laboratory be analyzed in Sio Silica’s lab to ensure consistency and accuracy of the results.
In 2022 Sio Silica used Liquids Matter laboratory to perform multiple ICP analysis. On June 10, 2022, the QP conducted a laboratory visit at Liquids Matter facility in Calgary, Alberta. Liquid Matter is an independent testing facility, member of the Professional Chemists of Alberta. It is the QP’s opinion that Liquids Matter’s laboratory equipment, procedures, processes and personal are adequate for the performed analytical work.
On August 3 and 4, 2022, the QP conducted a site visit on the property. The location of multiple exploration and production test drill holes were validated. Drilling and sampling procedure on two of the drill holes from 2022 drilling campaign were observed. Multiple locations with stockpiles of sand from the preliminary production wells were visited.
9.2 | SAMPLE CHAIN-OF-CUSTODY AND LABORATORY RESULTS |
9.2.1 | Chain-of-Custody |
In 2017, samples shipped to Stim-Lab were sent from Steinbach, Manitoba to Duncan, Oklahoma by Purolator Courier. The courier receipts were reviewed by Stantec to verify the shipment dates. Table 9.1 summarizes the date the samples were sent and received by Stim-Lab.
![]() | 9-1 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 9.1
2017 Stim-Lab Sample Chain-of-Custody
Hole ID | Sample | Dates Drilled | Date Shipped | Date Received | ||||
BH-03-17 | 42758 | July 4-6, 2017 | July 11, 2017 | July 12, 2017 | ||||
BH-02-17 | 42770 | July 7-10, 2017 | July 11, 2017 | July 12, 2017 | ||||
BH-09-17 | 42800/42801* | July 9-12, 2017 | July 13, 2017 | July 14, 2017 | ||||
BH-14-17 | 42817/42818* | August 8-9, 2017 | August 10, 2017 | August 11, 2017 | ||||
BH-10-17 | 42832 | August 10-11, 2017 | August 14, 2017 | August 15, 2017 | ||||
BH-03-17 | 42758 | July 4-6, 2017 | July 11, 2017 | July 12, 2017 | ||||
BH-02-17 | 42770 | July 7-10, 2017 | July 11, 2017 | July 12, 2017 | ||||
BH-09-17 | 42800/42801* | July 9-12, 2017 | July 13, 2017 | July 14, 2017 | ||||
BH-14-17 | 42817/42818* | August 8-9, 2017 | August 10, 2017 | August 11, 2017 | ||||
BH-10-17 | 42832 | August 10-11, 2017 | August 14, 2017 | August 15, 2017 |
Note: * Samples 42801 and 42818 were sent to Stim-Lab but not analyzed
Table 9.2 summarizes the date the samples were sent, and the date entered into Loring’s sample tracking system.
Table 9.2
2017 Loring Sample Chain-of-Custody
Hole ID | Batch Number |
Samples |
Date Shipped | Date Entered into Loring’s Sample Tracking System | ||||
BH-03-17/ BH-02-17 | A17-0717 | 42751-42778; 42833 | July 11, 2017 | July 13, 2017 | ||||
BH-03-17/ BH-02-17 | A17-0887 | 42751-42778; 42834 | July 11, 2017 | September 12, 2017 | ||||
BH-09-17 | A17-0722 | 42783-42799 | July 13, 2017 | July 17, 2017 | ||||
BH-09-17 | A17-0858 | 42783-42797 | July 13, 2017 | September 5, 2017 | ||||
BH-14-17/ BH-10-17 | A17-0859 | 42802-42831 | August 10, 2017 | September 5, 2017 | ||||
BH-10-17 | A17-0831 | 42833-42834 | August 14, 2017 | August 28, 2017 |
In 2018, samples that were slated for delivery to Stim-Lab were shipped from Steinbach, Manitoba to Duncan, Oklahoma by Purolator. The courier receipts were reviewed by Stantec to verify the shipment dates. Table 9.3 summarizes the date the samples were sent, and the date was received by Stim-Lab.
Table 9.3
Stim-Lab Sample Chain-of-Custody
Hole ID | Samples | Dates Drilled | Date Shipped | Date Received | ||||
BRU 117-1 | 14665-14675 | October 12-15, 2018 | November 19, 2018 | November 21, 2018 | ||||
BRU 146-1 | 14801-14814 | December 5-6, 2018 | January 21, 2019 | January 22, 2019 |
Shipment of samples was also reviewed for those sent to AGAT in 2018 and 2019. Samples that were slated for delivery to AGAT were shipped from Steinbach, Manitoba to Calgary, Alberta by Purolator. The courier receipts were reviewed by Stantec to verify the shipment dates. Table 9.4 summarizes the date the samples were shipped, received as confirmed by Purolator and the date entered AGAT’s sample tracking system.
![]() | 9-2 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 9.4
AGAT Sample Chain-of-Custody
Hole Name |
Sample Lists |
Drill Dates |
Date Shipped |
Date Received | Date Entered into AGAT’s Sample Tracking System | |||||
BRU 28-1 | 14830-14843 | November 20, 2018 - January 8, 2019 | January 11, 2019 | January 14, 2019 | January 14, 2019 | |||||
BRU 73-1 | 14651-14664 | October 9-10, 2018 | October 15, 2018 | October 17, 2018/ October 18, 2018 | November 3, 2018 | |||||
BRU 117-1 | 14665-14675 | October 12-15, 2018 | October 17, 2018 | October 18, 2018 | November 3, 2018 | |||||
BRU 121-1 | 14815-14827 | December 4-10, 2018 | December 17, 2018 | December 19, 2018 | January 9, 2019 | |||||
BRU 126-1 | 14618-14630 | September 27-29, 2018 | September 29, 2018 | October 3, 2018 | October 3, 2018 | |||||
BRU 146-1 | 14801-14814 | December 5-6, 2018 | December 7, 2018 | December 10, 2018 | January 9, 2019 |
The duplicate samples sent to Loring were hand delivered by a Sio Silica employee. A chain of custody was obtained with the signature of the receiver at Loring on March 1, 2019.
The 2020 and 2021 drilling campaign follows the established sample shipment procedure. The QP did not review the shipment receipt but has no reason to believe that the established sample shipment procedures from previous years were not followed.
In 2022, UPS services were used to ship the sand samples from Winnipeg to Sio Silica’s laboratory in Calgary. The sand samples from Sio Silicas’ laboratory to Liquid Matter laboratory are hand delivered by a Sio Silica employee. The email tracking system between Sio Silica and Liquid Matter, as well as the UPS tracking sheets have been reviewed by the QP.
The QP’s opinion is that the sample handling and sample security approach is adequate for this type of commodity.
9.2.2 | Laboratory Results |
The results from the different laboratories were compared to ensure consistency of the analytical data. The sieve results by fraction between Stim-Lab and Loring on the analyses of the 2017 twinned samples are compared and shown in Figure 9-1. Comparison of the duplicate samples between AGAT and Loring was also complete, and it is shown on Figure 9-2.
In 2022 Sio Silica conducted sieve analysis in the Sio Silica laboratory. To ensure consistency of the analytical data from samples tested in AGAT laboratory are tested in Sio Silica’s laboratory as well. The result of the comparison is shown on Figure 9-3.
Based on this comparison presented in Figures 9-1, 9-2 and 9-3 the QP has concluded that the sieve results for the sand analysed by Loring, Stim-Lab and Sio Silica laboratories have an acceptable level of accuracy and consistency.
![]() | 9-3 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
![]() | 9-4 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
![]() | 9-6 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
10 | MINERAL PROCESSING AND METALLURGICAL TESTING |
Refer to information provided in Section 8.3.4.
![]() | 10-1 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
11 | MINERAL RESOURCE ESTIMATES |
The estimates presented below have been prepared in accordance with the requirements of the SEC S-K 1300 Regulations.
The geologic model construction, resource estimation approach, criteria and assumptions taken into consideration during this resource estimation are outlined in the following sub-sections.
11.1 | COMPUTER MODEL CONSTRUCTION |
The geologic resource model was developed using Hexagon Mining’s geological modeling and mine planning software, MinePlan® version 15.80-7. MinePlan® (also known as MineSight) is widely used throughout the mining industry for digital resource model development. Hexagon Mining’s suite of interpretive and modeling tools is well-suited to meet the modeling requirements for the Property.
A gridded-surface modeling approach was used to evaluate and calculate resource estimates for the Carman Sand Member located within the Property. The 3D gridded-surface model consists of laterally contiguous cells (commonly called grids). The selected grid size is determined by the density of the drill hole data and extent of the property. The grid size for this assessment was 50 m x 50 m (x, y). Each grid has a fixed position of easting and northing within the model limits and contains a list of variables or numeric identifiers, such as the lithology thickness, percent of each sand fraction (product), and other pertinent information.
11.1.1 | Topographic and Lithological Horizons |
Topography data was downloaded from the Natural Resources Canada website in Canadian Digital Elevation Model (CDEM) format, spatial resolution is 0.75 arc seconds. These datasets were converted into a gridded-surface file within MinePlan®.
Based on the drill hole information, the surfaces representing the bottom of the first four lithological units in stratigraphic order were created: bottom of the Diamicton, bottom of the Carbonate (Red River Formation), the bottom of the Upper Shale (Red River Formation) and the bottom of the Carman Sand Member.
Elevation values were calculated at each drill hole location representing the bottom of the Diamicton, as well as the bottom of the Upper Shale (or the top of the Carman Sand Member). These elevation data were then used to create triangulated surface utilizing the “Implicit Modeler” tool in MinePlan®. The MinePlan’s “Implicit Modeler” tool uses a radial basis function interpolation algorithm. The triangulated surfaces were then converted into gridded surfaces.
The thickness of the Upper Shale was calculated based on the drill hole data. These calculated vertical thicknesses were used to create an isopach gridded surface of the Upper Shale using Inverse Distance Weighted algorithm with power of 2 (IDW2). The isopach gridded values of the Upper Shale were added to the elevation values of the bottom of the Upper Shale gridded surface to construct the elevation of the bottom of the Carbonate.
An isopach gridded surface of the Carman Sand Member was created using the vertical thickness value from the drill holes. The bottom of the Carman Sand Member was constructed by subtracting the interpolated isopach values of the Carman Sand Member from the elevation values of the bottom of the Upper Shale gridded surface.
![]() | 11-1 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
11.1.2 | Assay Data Compositing and Interpolation |
Sieve-derived laboratory data from the Carman Sand samples was used to create two sand size fraction (product) weight percent values: 40/70 and 70/140. For each sand product, a length weighted composited percent value was calculated for each drill hole.
An IDW4 interpolation was used to calculate each weight percent product for each grid. Figure 11-1 shows the 40/70 fraction distribution map and Figure 11-2 shows the 70/140 fraction distribution map.
11.2 | RESOURCE ESTIMATION APPROACH |
Stantec used the following approach to facilitate the estimation of resources:
● | Carman Sand unit thickness was estimated using all drill holes as discussed in Section 7 |
● | During the modeling process, the variations in the elevation of the top of the carbonate surface, caused by geological undulations and data collection inconsistencies in drill holes from GIN, were accounted for through application of a modeling methodology that averaged the elevation values over an area slightly larger than one quarter section (500m) |
● | Percentages of the different sand fractions were used in the constructed geological model as provided from the laboratory |
● | MinePlan® Software was used to construct a 3D geological computer model of the property to estimate in-place resources. The modeled gridded surfaces for top and bottom of the Carman Sand unit were used for volume estimation |
● | Volumes were converted to tonnage by the application of a representative average bulk density value of 1.5 g/cm3 |
● | The geological interpretations and the modeled volumes as well as the relationship between the model and the raw data were confirmed through cross-sectional review and statistical model validation |
● | This resource estimation only includes extractable sand volumes calculated using the criteria shown in Table 11.2 |
● | This resource estimation only includes those in-situ sand volumes found within the mining claims boundaries as shown on Figure 3-2 |
● | The drill hole spacing, the available assay data, and resource spatial distribution were considered in the resource classification |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
11.3 | MINERAL RESOURCE CLASSIFICATION |
SEC S-K 1300 Regulations are aligned with the Committee for Mineral Reserves International Reporting Standards (CRISCO, 2019) that defines a Mineral Resource as: “A Mineral Resource is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling. Mineral Resources are subdivided, in order of increasing geological confidence into Inferred, Indicated and Measured categories.”
The CRISCO definition for a Mineral Resources clearly outline that a solid material is considered a resource if there is clear identification of the economic interest in the deposit. For sand deposits this means that the nature of the database, technology for mining and mine planning, some degree of practical recovery constraints and the economic potential in current markets must be considered in order to identify a sand resource.
Resources are classified according to the confidence level that can be placed in each estimate. The classification template used in this study is based on the three-dimensional distance to the nearest drill hole that penetrates the top and the bottom of the Carman Sand, as well as the distance to the nearest sample that contains sieve-derived laboratory data.
The Carman Sand interval in the Property was classed as Measured using a 800 m radial distance from the nearest drill hole intersection with available sand quality data, classed as Indicated using a 1,600 m radial distance from the nearest drill hole intersection with available sand quality data and classed as Inferred using a 3,200 m radial distance from the nearest drill hole intersection with or without available sand quality data. Only drill holes listed in Section 7.1 and Section 7.3-7.7 were used for resource classification. Due to the reduced reliability of the water-wells described in Section 7.2, this data was only used to define the contacts of the lithological units.
Figure 11-3 shows the resource distribution map and Figure 11-4 shows the resource classification map. The resource estimate covers an area of approximately 13,000 ha.
11.4 | ASSESSMENT OF REASONABLE PROSPECT FOR EVENTUAL ECONOMIC EXTRACTION |
The results of this Technical Report Summary indicate a positive economic outcome related to the potential development of a silica sand extraction and processing operation for the BRU Property.
As such the QP believes the BRU Property continues to demonstrate a reasonable prospect for eventual economic extraction.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
11.5 | ESTIMATION OF SAND VOLUME |
The modeled volumes and weight of the Carman Sand within the resource area are shown in Table 11.1.
Table 11.1
Summary of In-Place Carman Sand as of September 30, 2022
In-Place Carman Sand Member in Mineable Lease Area | ||||||||
BRU Property | 40/70 mesh fraction | 70/140 mesh fraction | ||||||
Estimated Sand Volume (Mm3) | 1,628 | 1,098 | ||||||
Total Estimated Sand Volume (Mm3) | 2,726 | |||||||
Estimated Sand Weight (Mt) | 2,442 | 1,647 | ||||||
Total Estimated Sand Weight (Mt) | 4,089 |
The sand weights by fraction that are shown in Table 11.1 are not resources, as it is not technically feasible to produce the entire sand volume using the proposed extraction methods. The extractable sand volume and resource estimates are discussed in Section 11.6.
11.6 | MINERAL RESOURCE ESTIMATION |
Sio Silica plans to develop the BRU Property using an underground extraction technique that involves drilling through the quaternary sediments, a carbonate unit and shale, into the underlying sand. The extraction holes will be cased 5 m into the sand and an extraction casing is then lowered into the sand. Air is injected into the extraction casing through the drill string, approximately 3 m - 5 m above the bottom of the extraction casing. Field tests have shown that the air injection process results in a slurry of sand, water, and air that rises to the surface.
Geotechnical testing and analysis have resulted in the extraction recommendations as summarized in Table 11.2. The extraction holes are planned to be drilled in a pod or cluster of up to seven holes in one extraction pad area. The current planning basis is to extract between 3 K and 23 K tonnes of sand from an extraction cluster, depending on the thickness and structural integrity of the overlying limestone and diamicton material, before relocating to the next extraction pad.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 11.2
Sand Extraction Recommendations
Competent Limestone Thickness (m) | Quaternary Material Thickness (m) |
Extractable Sand Volume (m3) |
Extractable Sand Mass (t) | Distance Between Well Clusters (m) (Center to Center) | ||||||||||
>25 | 0-25 | 15,235 | 22,853 | 110 | ||||||||||
>25 | 25-35 | 12,485 | 18,728 | 107 | ||||||||||
>25 | >35 | 10,018 | 15,027 | 104 | ||||||||||
20-25 | 0-25 | 9,259 | 13,889 | 103 | ||||||||||
20-25 | 25-35 | 7,169 | 10,754 | 100 | ||||||||||
20-25 | >35 | 5,362 | 8,043 | 97 | ||||||||||
15-20 | 0-25 | 4,314 | 6,471 | 95 | ||||||||||
15-20 | 25-35 | 2,979 | 4,469 | 92 | ||||||||||
15-20 | >35 | 2,245 | 3,368 | 90 |
These extraction recommendations have been utilized to update the mineral resource estimate. Table 11.3 shows the estimate of the mineral resource for the Property as of September 30, 2022.
The mineral resource shown in Table 11.3 is reported as in-place tonnages. The calculated volumes were converted to tonnage by the application of representative average in-place bulk density value of 1.5 g/cm3.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 11.3
In-Place Mineral Resource Summary, as of September 30, 2022
Mineral Resources (Mt) | ||||||||||||
BRU Property | 40/70 mesh fraction | 70/140 mesh fraction | Total | |||||||||
Measured | 6.5 | 4.7 | 11.2 | |||||||||
Indicated | 27.2 | 19.2 | 46.4 | |||||||||
Total Measured and Indicated | 57.6 | |||||||||||
Inferred | 55.1 | 36.8 | 91.9 | |||||||||
Total Inferred | 91.9 |
The 40/70 and 70/140 size fractions were assessed during the preparation of this report, as some silica sand markets have preference on the product grain size.
The accuracy of resource estimates is, in part, a function of the quality and quantity of available data and of engineering and geological interpretation and judgment. Given the data available at the time that this Technical Report Summary was prepared, the estimates presented herein are considered reasonable. However, this estimate should be accepted with the understanding that additional data and analysis available after the date of the estimates, may necessitate revision. These revisions may be material. There is no guarantee that all or any part of the estimated resources will be recoverable.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
12 | MINERAL RESERVE ESTIMATES |
This Technical Report does not include an estimate of reserves. The level of engineering does not support the preparation of a Pre-Feasibility Study; therefore, in accordance with the requirements of S-K 1300, the reported resources cannot be classified as reserves.
This section of the report includes estimates of recoverable sand tonnage for the BRU Property based on preliminary extraction plans, production schedules and processing plant and materials handling plans. These estimates are only intended for the purpose of completion of the cash flow forecasts presented in Section 19. These recoverable estimates are not, and should not be construed to be, estimates of reserves for the BRU Property. They do not comply with the Classification of Reserves as required under S-K 1300. It should be noted that there is no certainty that the resource estimate will be realized.
12.1 | DEVELOPMENT PLAN |
The 25-year development plan, that is discussed in more detail in Section 13, results in 66.4 Mt of clean (saleable) sand from the resource estimate. Stantec notes that the 25-year development plan only addresses a portion of the BRU Property resource. The remaining resource is available for development in further planning efforts.
This estimate of clean (saleable) silica sand is considered to be inclusive of the in-place mineral resource estimate detailed in Section 11. These production estimates are contained within the in- place mineral resource summary and cannot be added to the totals to result in additional resources tonnes.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
13 | MINING METHODS |
13.1 | OVERVIEW |
Sio Silica plans to develop the BRU Property using an underground extraction technique that involves drilling through the quaternary sediments, carbonate unit and shale, into the underlying sand. The extraction holes will be cased to the top of the sand and an extraction casing is then lowered into the sand. Air is injected into the extraction casing, approximately 10 m - 15 m above the bottom of the casing. Field tests have shown that the air injection process results in a slurry of sand, water, and air that rises to the surface. The solids content of the slurry ranges from 90% to 20% during the extraction trials. The average solids content is approximately 50%.
The extraction holes are planned to be drilled in a pod or cluster of up to five holes in one extraction pad area. The current planning basis is to extract approximately 3,000 to 23,000 tonnes of sand from the extraction cluster before relocating to the next extraction pad.
Once the slurry reaches the surface, initial processing will remove any oversize or deleterious material such as sand concretions, shale, or chert before it is transported by an overland slurry pipeline to the wet process facility for further processing.
Following wet processing the sand will be stockpiled and fed into a drying and sizing plant where the sand will be separated into saleable fractions and then stored in loadout silos prior to being loaded onto trains for distribution.
Sio Silica plans to commence extraction and processing operations in the 3rd Quarter of Year 0 with the first product sales planned for the 1st Quarter of 2025. The extraction and processing operations are planned to take place for eight months a year, April to November, while sales will take place year-round. The sales will be phased with 1.25 Mt of saleable product planned in Year 1, 2.50 Mt in Year 2, and 2.72 Mt in Year 3 and extending out the remainder of the 25-year plan. For the purposes of this Technical Report Summary, Year 0 is defined as 2024.
13.2 | GEOTECHNICAL ANALYSIS |
Stantec completed a preliminary geotechnical analysis of the sand extraction techniques impact on subsurface conditions. The results of the analysis are used to provide recommendations for borehole spacing which are intended to limit surface subsidence to an acceptable level.
The preliminary analysis assumes that the shear failure of the Limestone caprock which overlies the sand is the most likely controlling failure mechanism. The analysis incorporated results from geotechnical tests conducted on the overlying Limestone (carbonate unit) as the performance of this unit was considered to be the governing factor in the analysis. The tests concluded that the carbonate unit has an average Geological Strength index (GSI) of between 55 and 65. It is important to note that based upon site specific borehole drilling results, the caprock does not appear to contain extensive vertical fracturing, however drilling has been limited to vertical boreholes which may fail to identify the presence of vertical fractures. The diamicton thickness also controls the loading on the extraction cavity and should be considered in determining the extraction cavity hole dimension.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
The analysis also assumed that the sandstone unit is unconsolidated and after extraction would form a cone with an angle of repose of 31 degrees from the horizontal. Extraction testing by Sio Silica in 2018 and 2019 indicates that there is likely some amount of consolidation within the sandstone unit, perhaps in discrete layers, or perhaps throughout the unit. The extraction tests also infer that voids formed from the extraction process are more complex than a simple conical void with an angle of repose of 31 degrees. Sio Silica completed a sonar survey of one of the boreholes (BRU 92-2) after sand extraction in May 2021. The testing suggests that the extraction voids may be steeper and could have a cylindrical or spherical shape particularly in the short term after extraction. Inspection of other boreholes sometime after sand extraction shows that the voids backfilled with sand; however, to date the mechanism of change in the shape of the extraction voids and source of backfilled sand in the cavities are not well understood.
Sio Silica completed an acoustic borehole image (ABI) and an optical borehole imaging (OBI) of the Limestone caprock in borehole BRU 92-1 in March 2021. The ABI/OBI survey identified horizontal bedding and joints in the caprock with no continuous orthogonal (vertical) joints. This and other boreholes are drilled vertically so there is potential for missing vertical or near vertical joints. Although some cross-bedding joints were identified in the survey, they are limited to a fractured zone potentially in Shale.
Sio Silica also completed surface surveys in the vicinity of the BRU 92-2 and BRU 92-3 (survey points at 5 m to 13 m distance from the boreholes) before and after sand extraction to measure possible resultant subsidence. Surface surveys showed subsidence close to the precision of the survey (1 mm vertical and 1 cm horizontal) due to sand extraction from BRU 92-2 and BRU 92-3 (with single hole arrangement). No test was completed with multi-hole arrangements.
The preliminary analysis indicates that:
● | Subsurface sand extraction should be limited to areas where the carbonate unit is more than 15 m in thickness. |
● | The analysis here assumes an overburden thickness of up to 25 m. Overburden thicker than this range should be reviewed case by case to assess potential for subsidence to occur following extraction. |
● | The diameter of the extraction voids should not extend beyond 60 m in any circumstance. This diameter should be reduced to 50 m as the carbonate unit thins to 15 m. |
● | The distance from the edge of one extraction void to the edge of the next extraction void should not be less than 60 m. |
● | An extraction void developed as per the above noted maximum diameter assumptionscontains approximately 25,000 tonnes. |
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
The extraction layout was developed with these geotechnical criteria in mind. The author(s) would like to note that these geotechnical parameters and the resulting geotechnical analysis are based on geotechnical work completed for the Limestone caprock and assuming that the controlling failure mode is shear failure. Additional testing is recommended to support further analysis on the sandstone void space evolution, and the joint system in the limestone (to investigate for the possible presence of vertical jointing and if found, to assess its impact on stability). As stated above, evidence from testing in 2018/2019 suggests that the sandstone angle of repose is steeper than previously assumed, and related adjustments of the extraction plan which would lead to a more refined extraction layout might be required. In addition, more complex void shapes in the sandstone may be occurring with both steep and shallow side slopes.
As a result of the minimum 15 m cut off for the thickness of the limestone to support overburden loading after sand extraction, and the additional potential for strength analysis on the sandstone layer, recommendations for further geotechnical investigation, testing and analysis will be discussed in the next section. The purpose of this additional assessment is to confirm the Limestone thickness in advance of mining operations, to test the (to date untested) presence of Limestone vertical fractures and the sandstone unit extraction void space and to confirm that other failure modes are not controlling the extraction void maximum size.
13.3 | EXTRACTION CONCEPT |
Sio Silica conducted 14 extraction tests in the period from 2017 to 2021. The results of these tests indicate that it is reasonable to expect extraction tonnages of approximately 4,500 tonnes from a single extraction well. The current concept involves drilling a central extraction well, surrounded by up to four additional extraction wells, depending on the exact geotechnical conditions of the specific area. The spacing of these wells would be approximately 15-20 m from the centre of one drill hole to the centre of the next well. These seven wells would form one extraction cluster or extraction pad where approximately 3,000 to 23,000 tonnes of sand will be produced.
The current planning basis utilizes relatively small-scale truck mounted drilling equipment to drill the extraction wells and to set the initial casing. Sio Silica is planning to retrofit a fleet of smaller drill rigs to serve as the primary extraction rigs. These drills will be capable of advancing the extraction casing into the sand unit, applying the necessary air to facilitate the air lifting of the sand slurry, and distributing the sand slurry to surface facilities central to the extraction cluster. These facilities would include the initial processing discussed above as well as mixing with water as required to achieve the appropriate solids content to facilitate overland slurry transport to the final process facilities.
A relocatable shack will be located at the extraction pad and will serve as a central control facility for the operating extraction wells, the initial processing, and sand slurry mixing and pumping.
The extraction process is planned to take place for eight months a year, April to November inclusive. During this time enough sand will be produced to supply the drying and sizing plant with enough product to operate on a year-round basis. This concept was developed to minimize the difficulties with operating a slurry system and wet process facility in the winter months.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
13.4 | SURFACE DEVELOPMENT AND RECLAMATION |
The planned production discussed above will require the surface development of approximately 230 ha in Year 0, 110 ha in Year 1 and averages 225 ha in Year 2 and until the end of the 25 year plan. Figure 13.1 illustrates the proposed surface development plan for the BRU property development. This development plan includes offsets from existing road infrastructure, high voltage transmission lines, and residential areas. Please note this development plan is subject to change as extraction progresses.
The land area required for development will be leased from the current owners for a total of three years. Land required for any specific production year will be leased the prior year. In this manner any pre-production development such as tree clearing/mulching, access road development, slurry pipeline layout, and extraction well drilling will take place one year in advance. In the year following the extraction season, closure and reclamation activities will take place. These activities will include extraction well abandonment, removal of all remaining infrastructure such as slurry and return water piping, and reclamation that is expected to include minor levelling, discing, and seeding to grass.
13.5 | SLURRY TRANSPORTATION |
Once the sand slurry reaches the surface and has undergone the initial treatment for the removal of oversize and deleterious materials, water will either be added to or removed from the slurry until it reaches the appropriate solids content for slurry transportation. Sio Silica will employ a network of high-density polyethylene (HDPE) pipe to transport the slurry overland to the main process facilities. In the early years of production this overland distance is between three and four km however it grows to approximately 15 km in the latter years of the project. The first stage slurry pumps will be located at the extraction pad. As the overland distance increases, booster pumps will be located as required along the route. The slurry transportation system has been designed to operate at approximately 25% solids. This allows the slurry process to be stopped and then restarted without having to empty the pipeline.
Once the slurry reaches the main process facilities it will be piped directly into the wet process facility for further treatment. As discussed, the extraction, slurry transport and wet process facilities will be operational 8 months of the year.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
14 | PROCESS AND RECOVERY METHODS |
The processing component of the BRU silica operation is guided by a modular and multi-stage recovery process. The four general areas are:
● | A modular well pad screening and dewatering plant for slurry preparation; |
● | A dewatering circuit or ‘wet plant’ for raw sand separation; |
● | A dry screening plant for final sizing and beneficiation; and |
● | The storage and loadout system. |
14.1 | WELL PAD SCREENING CIRCUIT |
The well pad screening circuit is a modular and relocatable system situated at a well pad. Each screening unit is comprised of a series of sumps, screens, and cyclones to ensure the overland slurry transport pipeline is properly fed in terms of size and slurry concentration. The operation is anticipated to have multiple units and several parallel trains of each unit. The units are identified alphanumerically, with a numeral for each unit, e.g. SUW1 identifies the number one (1) Sump (SU) at the well pad (W). A letter identifies one of the two trains, either A or B train. The well pad process is generally as follows:
Incoming slurry from extraction is delivered to a two deck 6‘x16’ protection screen resting atop at sump; overs from the screen are anticipated to be minimal and will be mainly various cobbles and conglomerates. Screen unders are collected in the sump and pumped to a three-part collection sump in the dewatering plant. The three-part collection sump comprises the initial step of the well pad dewatering plant, allowing the fines and sand to settle and thicken and the water to decant from the initial dilute slurry feed. The settled or thickened solids are pumped to feed a series of 20” cyclones, separating again the ultrafines and gravels. Overflow from the cyclones is recycled to the three-compartment sump for a closed loop circuit; underflow from the cyclones feeds a pair of dewatering screens in series. The sand is then prepared for overland slurry transport in the collection sump. Makeup water is added, diluting the slurry to 28% solids, and pumped to the wet plant.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 14.1 summarizes the key process equipment for the well pad and dewatering plant up to the overland slurry transport.
Table 14.1
Key Process Equipment – Well Pad and Dewatering Plant
Item | Identifier (# and train) | Notes/Capacity | ||
Sump, Well pad | SUW1/2/3/4/5 A&B | |||
Sand Screen | SCW1/2/3/4/5 A&B | 6‘x’16’ DD | ||
Sand transport pump | PW1/2/3/4/5 A&B | 4x6 60 HP | ||
Three compartment sump | SU02 A&B | |||
Return water pump to well pad | PW1/2/3/4/5 A&B | 4x6 40 HP | ||
Transport pump, DW plant | P02 A&B | 12x14 250 HP | ||
Sand Cyclone | CY2-1/2/3/4 A&B | 20” Krebs GMax | ||
Dewatering Screen | SC02-1/2 A&B | Tabor 8‘x12’ SD | ||
Collection sump | SU03 A&B | |||
Overland transport pump | P03 A&B | 8x10 250 HP |
Generally, the well pad circuit components from the initial sumps SUW 1/2/3/4/5 A&B and the well pad dewatering plant SU02 A&B through P03 A&B are anticipated to be in close vicinity to one another to facilitate inter-operability of allocated infrastructure. The return water pump and sand pumps are designed for approximately 1,500’ radius to allow some flexibility if required.
Overland transport pumps are intended to be staged on 3,000’ intervals. As the extraction process progresses further from the wet plant or additional head is encountered due to changing conditions, another booster pump arrangement is required. Preliminary designs indicate 14DR11 piping for the overland slurry transport.
14.2 | WET PLANT |
The wet plant receives the incoming slurry from the overland piping system. Similar to the dewatering plant, a three-part collection sump comprises the initial step of the wet plant, allowing the fines and sand to settle and thicken and the water to decant from the initial dilute slurry feed. The settled or thickened solids are pumped to feed a series of 20” cyclones in this case serving as dewatering and thickening cyclones. Overflow from the cyclones is recycled to the three-compartment sump and then to the clarifier; underflow from the cyclones feeds a pair of dewatering screens in series. Underflow from the screens returns to the three-compartment sump. Screen deck discharge is collected via conveyor to be stockpiled in the WIP pile. Cyclone underflow can also be diverted processing by wet high intensity magnetic separation (WHIMS) units, by Eriez, to reject the weakly magnetic and ferrous metal inclusions. The rejected material is collected and separated in a separate stream, with the remaining siliceous sand continuing forward to the WIP pile.
A fines thickener receives slurried fines from the cyclone overflow via the three-compartment sump. Based on the preliminary sizing, the deep cone thickener will settle the dilute fines entrained in the cyclone overflow, producing a thickened slurry. The slurry will be further dewatered by a pair of 2,000 mm plate presses in batch parallel mode, to provide sufficient capacity for the anticipated full throughput and to dewater to a handleable cake. Fines are handled by front-end loaders (FEL) to remove the produced cakes; clarified overflow will be recycled to the slurry transport system from the wet plant thickener and plate press system.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Wet plant key process equipment is identified in Table 14.2.
Table 14.2
Key Process Equipment – Wet Plant
Item | Identifier (# and train) | Notes/Capacity | ||
Three compartment sump | SU04 A&B | |||
Return water pump to well pad | PO 5 A&B | 10x12 125 HP | ||
Transport pump, Wet plant | P02 A&B | 10x12 250 HP | ||
Sand Cyclone | CY4-1/2/3/4 A&B | 20” Krebs GMax | ||
Dewatering Screen | SC04-1/2 A&B | Tabor 8‘x12’ SD | ||
Collection Conveyor | C101/102/103 | |||
Thickener/Clarifier | THK101 | 36’ dia. Deep cone. | ||
Mud Tank | MT101 | |||
Filter Press Sump Pump | SP102 | |||
Plate press | PP101/102 | 2,000 mm plate, 207 plates | ||
Wet high intensity magnet | WM 101/102 |
Figures 14.1 through 14.6 illustrate the anticipated process flow sheets.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
14.3 | DRY SCREENING PLANT |
Dry screening plant begins at the reclaim from the WIP pile. Raw sand is reclaimed from the WIP storage area via front end loaders and fed into a feed hopper with a vibrating grizzly feeder feeding an impactor to break any lumps or potentially conglomerated material while in the WIP storage area. A Louisville rotary dryer will drive off excess moisture, designed to take to nominally 2% moisture. The remaining dry plant is continued through bucket elevators to four parallel sets of Rotex sizing screens, for product sizing and separation prior to storage and loading operations. The key dry plant equipment is identified in Table 14.3.
Table 14.3
Key Process Equipment – Dry Plant
Item | Identifier (# and train) | Notes/Capacity | ||
Vibrating Grizzly | VGF201 | 62“x24’ grizzly | ||
Impactor | CR201 | Lippman 5165 Impactor | ||
Screen | C202 | 6‘x20’ 3 deck screen | ||
Rotary Dryer | DRY201 | |||
Screening | SCR202 through 209 | Rotex 5300 2 Deck screen |
The dry plant is partially enclosed, with the dryer and main screens and sizing contained within a building structure.
14.4 | STORAGE AND LOADOUT |
Storage and loading battery limits are fed by bucket elevators to four (4) of 3,000 tonne silos (each). These 100’ tall bolted silos are positioned to provide storage for the planned production in two independent trains of equal capacity. Each train of two silos is reclaimed via independent reclaim conveyors to two sets of two (total of four) rail loading batch silos. Each silo has 75 tonnes of capacity, allowing for a total of 150 tonnes of capacity on each loading track.
14.5 | PLANT DESIGN AND CONSTRUCTION |
Turnkey Process Solutions (TPS) has provided designs for the wet plant, dry plant, train loadout and the storage silos. TPS is experienced in plant specification, design and construction, and has worked with Sio Silica throughout the design process and engagement on the project.
TPS have developed plant simulations and models to assess the potential plant recovery. These models are based on TPS inspection of and analysis of the BRU project samples and historic test work. Based on this analysis, losses in yield have been accounted for as follows: 4% losses in extraction and wet handling and an additional 3% losses in drying and dry handling.
14.6 | RAIL DESIGN AND CONSTRUCTION |
The rail alignment has been developed by another design contractor, integrated with the Sio Silica team. Trans Energy Services has assessed the site to deliver potential rail services and initial track layouts. Initial concepts have been laid out for the dual loading systems and are laid out in the attached preliminary design schematics.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
15 | INFRASTRUCTURE |
15.1 | RAIL |
Rail designs were conceptualized by Trans Energy Services, an outside rail consultant contracted by Sio Silica to design an operating system for the rail operation. Generally, the design will interface with the existing Canadian National (CN) line and is compliant with the current CN design specifications. The design includes approximately 24,000 ft (7.3 km) of track implemented and constructed of two phases to coincide with the development of the project. The multi-loop design includes the capacity to store additional rail cars, or to adapt the operation to container-based loading with future expansion efforts. The current plan is to develop the initial 18,500 ft (5.6 km) in the Phase One construction effort, which will include the sub-grade, sub- ballast, and a perimeter access and inspection road, all compliant to CN design specifications. The additional 5,500 ft (1.8 km) will be built to expand storage and additional loading capacity during Phase Two.
15.2 | POWER |
Power to the extraction pad processing and booster pumps will be supplied by relocatable gensets, connected via feeder cables. Incoming power to the wet and dry plant is anticipated to connect to the nearest Manitoba Hydro lines. For the purposes of this report, a high voltage connection line of approximately 1 mile (1.6 km) was allowed for tie-in to the nearest high voltage connection. A substation, with step down transformer and control system, was provided to change to medium distribution voltage. An allowance was made for a power study with the local utility.
15.3 | ACCESS |
Site access is via local roads and highways. Considering that no local distribution of the final product is planned, the only access should be for Sio Silica workers, labourer’s, and vendors.
15.4 | GAS LINE |
Review of the available gas lines in the area indicate an approximate 22 km overland gas pipeline to provide the gas for the rotary dryer system at the Dry Plant. Stantec has allowed for the tie-in and construction of the line to the dry plant.
15.5 | MAINTENANCE FACILITY |
A simple maintenance facility designed from arched fabric structures has been designed to allow all weather access and maintenance on mobile equipment. Commonly, these structures are developed with a concrete slab on grade, with a minor curb wall either of blocking or poured structure, to develop an enclosed working surface. The area is planned for mobile equipment maintenance, as well as maintenance on pumps, skids, or electrical equipment.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
15.6 | OFFICES |
Office and lavatory space has been accounted for with three 24 ft x 60 ft units to house all site office and logistics, plus a single 12 ft x 32 ft lavatory trailer.
15.7 | OPERATIONS TRAILER |
An operations trailer at the at the extraction well pad has been conceptualized to provide an operating center for the drilling, screening, pumping and overland pipeline system.
15.8 | PROCESS WATER WELL |
Makeup water will be required at the plant site for initial startup and development. An allowance for one well at the plant site has been estimated.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
16 | MARKET STUDIES |
16.1 | INTRODUCTION |
Sio Silica is intending to produce high-quality premium silica sand for end use in the technology markets. The 99.9% SiO2 and low iron content (<100ppm Fe) are typically marketed to manufacturers of solar glass, smart glass for computing and mobile device applications, and semiconductors, among other uses, and receive a premium compared to 95% SiO2 purity. A confidential marketing study was completed by a third party, on behalf of Sio Silica, focused on the premium silica market and salient points are extracted from the study and discussed in further detail below.
16.2 | MARKETS/ DEMAND |
The global market for silica sand is approximately 350 million tonnes per annum, with approximately three quarters of that total in North America (112 million tonnes) and Asia Pacific (154 million tonnes), as of 2021. The growth has historically been at a compound annual growth rate (CAGR) of 3.6% over the past five years. Of this global market, the high purity market consists of approximately 13 million tonnes per annum.
The North American market for high purity, low iron silica has been in the 1 million tonne per annum range historically through 2021 and is anticipated to grow to 2 to 3 million tonnes per annum by 2025, principally driven by the photovoltaic market and technology applications. The growth of PV solar glass is projected at 30% CAGR principally driven by improved economics through manufacturing and new legislation supporting domestic solar PV manufacturing. A 15% compound annual growth rate is projected for smart (technology) glass applications, based on similar regulatory reforms and increased adoption rates.
16.3 | COMPETITION |
Supply of high purity quartz to the Asian market has traditionally been supplied via Vietnam and Cambodia. Both countries have scaled back exports to China to strengthen their local manufacturing, resulting in a supply shortage in the rest of Asia and therefore higher delivered prices. These higher prices have incented new mines in Australia, with as much as 10 million tonnes per annum potentially coming online by 2026. The anticipated growth in the high purity silica market has provided motivation to other potential sources of supply in Australia, according to the marketing report. It is anticipated that the supply from these to-be-developed proposed mines will require additional beneficiation, adding costs to the mine gate pricing. The timing and tonnage of this new supply and the level of the beneficiation, and associated costs, is uncertain. Australian mining companies are expected to be the primary exporter to China; however, it is unclear how much will materialize, according to the marketing study. In the future scenario, Australian mining companies may potentially have lower delivered costs compared to other international peers for solar glass applications, but will require beneficiation for smart glass applications, resulting in a higher delivered price.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
There are only two mines in the US today capable of providing low iron silica sand (99.9% SiO2, <100 ppm) totaling approximately 1 million tonnes per annum of supply. These two mines are:
● | US Silica mine in RockWood, MI. (0.45 Mtpa of production) |
● | Covia mine in Junction City, GA. (0.55 Mtpa of production) |
The risk of supply substitution for high purity markets is low. Recycled glass is only used for low purity applications. A very limited potential for quartz production of about 0.5 million tonnes per annum as byproduct of lithium production, although this stream is currently immature and will be subject to further verification and testing.
16.4 | CONTRACTS AND POTENTIAL OFFTAKERS |
According to the marketing study, typical contracts are two-to-three-year renewable contracts indexed to inflation, and identified with a specific purity, quality, and quantity. In a similar fashion, there are typically penalties for not meeting these criteria.
Sio Silica has provided Stantec with documents regarding product pricing agreements from three companies.
Agreement #1
The first document is a proposed sales and purchase agreement contract between Sio Silica and Company 1, that Sio Silica has indicated should be finalized in the fourth quarter of 2023. The document states a sales price of US$180 per MT FOB loading port for 500,000 MT per annum. When exchange rates and port and rail costs are considered, it equates to a mine gate price of CDN$149 per MT.
The initial term of this proposed agreement is from January 1, 2024 to December 21, 2026. Thereafter term of the agreement will be automatically renewed for an unlimited number of one (1) year terms unless terminated by either the buyer or the seller.
Agreement #2
The second document is a Memorandum of Understanding between Sio Silica and Company 2 and dated September 15, 2022. The document states a sales price of US$250 per MT FOB loading port for 800,000 MT per annum. When exchange rates and port and rail costs are considered, it equates to a mine gate price of CDN$240 per MT.
Both the buyer and the seller agree to use their best efforts to enter into a binding Sales Agreement in the first quarter of 2024.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Agreement #3
The third document is an engagement agreement between Sio Silica and Company 3 and dated November 1, 2022. The document states a sales price of US$200 per short ton FOB Mine Gate for 1,200,000 short tons per annum. The agreement also stipulates a service fee equal to 15% of the gross amount of the purchase price paid. When conversion to metric tonnes and the 15% fee are considered, it equates to a mine gate price of CDN$243.60 per MT.
The term of this agreement is unlimited unless terminated by either the buyer or the seller.
Product Pricing
Stantec used a weighted tonnage per annum price from all three agreements for the initial years of the analysis. A weighted tonnage per annum price for the last two agreements was used from 2030 until the end of the project life.
Product Quality
The first two agreements specify that the quality parameters for the delivered sand shall be a silicon dioxide (SiO2) percentage greater than or equal to 99.9% and Fe2O3 content less than or equal to 100 ppm.
It is the opinion of Stantec that given the results of the sand analysis discussed in Section 8, the sand pricing discussed above is applicable to the BRU Property resource and as such has been used in this Study.
Stantec does note, however, that confirmed sales agreements or contracts for the full levels of silica sand production that form the basis of this Study have yet to be finalized.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
17 | ENVIRONMENTAL STUDIES, PERMITTING AND PLANS, NEGOTIATIONS OR AGREEMENTS WITH LOCAL INDIVIDUALS OR GROUPS |
Sio Silica has engaged AECOM to provide consulting support through the regulatory approval process. The following is a summary of information provided by AECOM.
17.1 | ENVIRONMENTAL BASELINE INVESTIGATIONS |
Environmental baseline information for the Project area was obtained from the following:
● | Available desktop information, such as a previous fish and fish habitat survey (Milani, 2013) |
● | Environmental studies that overlapped with Project local and regional areas in 2018 |
o | Spring auditory amphibian survey (May 2018) focused in wetland areas |
o | Baseline noise data (May and August 2018) |
o | Summer vegetation survey (June 2018) in representative vegetation communities |
o | Fall vegetation survey (September and October 2018) with additional emphasis on wetland areas and the Project Site |
● | Heritage Resource Impact Assessment studies conducted by an archaeologist at the processing facility site (May 2020) and at the extraction site for extractions years to 2025 (May 2021) |
● | Hydrogeological and geochemical study to document existing groundwater flow and quality at the project site and evaluate the potential to impact groundwater quantity, quality and users of surface water and groundwater in the vicinity of the project (November - December 2020) |
Much of the Project area where the processing facility footprint, and extraction activities up to and including year 2025, will occur has been previously disturbed / cleared due to activities such as tree clearing and aggregate extraction. The remaining naturally vegetated areas are primarily woodlands with some low wet areas occurring that are typically dominated by dense willow and alders. The woodland areas feature trembling aspen and aspen-dominant / bur oak stands. Occasional tamarack, black spruce, balsam poplar and balsam fir / aspen-mixed wood stands also occur with common understory shrub species including American hazel, red-osier dogwood, wild rose and willow.
Considering the largely previously disturbed nature of the Project site and the application of environmental protection measures, such as clearing natural vegetation outside of the breeding season for migratory birds, potential impacts to wildlife and species at risk that may occur in the Project area can be mitigated. Progressive annual closure and rehabilitation of extraction wells and associated disturbed areas will also mitigate environmental effects.
The Heritage Resource Impact Assessments (HRIAs) for the processing facility, and extraction area for years up to and including 2025, recommended that Manitoba Heritage Resources Branch issue a clearance letter for both Project areas due to lack of occurrence of significant heritage resources in areas with highest probability of heritage resources occurrence, and low probability of Project impacts to heritage resources. The HRIA also recommended the development of a Heritage Resources Protection Plan to guide workers on mitigation actions that will need to be implemented should unknown heritage resources be discovered. A clearance letter for the processing facility site was issued by Historic Resources branch on June 28, 2020. A draft HRIA report will be issued to Historic Resources Branch in June 2021 for the extraction site for extractions years up to 2025.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Modeling results from the hydrogeological study using existing data supplemented by on-site pump test data obtained in 2020 and 2021 has determined that effects on groundwater quantity are anticipated to be relatively small, local, temporary and reversible, with groundwater levels simulated to recover shortly (20 to 80 days) with approximately 80% recovery approximately two days after operations end each year. Groundwater model simulations indicate that groundwater users beyond a radial distance of approximately 2.2 km from the active extraction wells are unlikely to experience any effects due to extraction activities, and for those within 2.2 km from the active extraction wells the magnitude of drawdown impacts is anticipated to be between 1 m and 5 m for the majority of the licensed water supply wells. The groundwater removed from the extraction well by air injection is separated from the sand at the dewatering station then passes through a UV treatment system before being immediately returned to the extraction well and to the sandstone aquifer the groundwater was originally extracted from. The groundwater is not exposed to the atmosphere after the UV treatment to prevent any potential for contamination (e.g. bacteria). The UV treatment is a technique commonly used in municipal water treatment facilities, including the city of Winnipeg.
Geochemical modeling indicated that operations would slightly reduce existing high levels of iron and manganese concentrations in the groundwater due to aeration and re-injection of treated water or mixing. Therefore, effects on groundwater quality are anticipated to produce relatively small positive changes in local groundwater chemistry and are temporary and reversible. In summary, potential effects on groundwater quantity and quality will be avoided or minimized with the application of the following mitigation, management and monitoring plans:
● | Waste Characterization and Management Plan |
o | To guide management of natural waste materials from drilling (standard practice for existing mining operations in Manitoba) |
● | Water Management Plan |
o | To balance operational water supply and demands |
● | Progressive Well Abandonment Plan |
o | To ensure groundwater remains protected as per regulatory requirements |
● | Groundwater Monitoring and Impact Mitigation Plan |
o | To confirm modeling predictions and proactively implement mitigation measures before any adverse effects occur to local water well users |
17.2 | PERMITTING REQUIREMENTS |
17.2.1 | Provincial |
The sand processing facility, and the extraction activities associated with the Project up to and including year 2025, will be reviewed by Manitoba Conservation and Climate (MBCC) and licensed separately under The Environment Act. No other permits / licenses from other provincial agencies can be issued for a project requiring licensing under The Environment Act until the project receives an Environment Act Licence.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
The sand processing facility is currently being reviewed under The Environment Act as a “manufacturing and industrial plant” which is a Class 2 development in Section 3 of the Classes of Development Regulation under group 4 “Manufacturing”. An Environment Act Licence application, including the required Environment Act Proposal (EAP), was submitted for MBCC Environmental Assessment Branch review on July 2, 2020. On October 15, 2020, MBCC required that Sio Silica hold a facilitated Public Meeting to present information on the facility Project and address public questions. On November 4, 2020, MBCC confirmed that a more formal Clean Environment Commission Hearing would not be required for the facility Project. Sio Silica held a facilitated virtual Public Meeting on December 15, 2020 and submitted a Public Meeting Report to MBCC on December 23, 2020.
The sand extraction activities associated with the Project, up to and including year 2025, will be reviewed under The Environment Act as a “mine” which is a Class 2 development in Section 3 of the Classes of Development Regulation under group 5 “Mining”. An Environment Act Licence application, including an EAP, for the extraction activities is anticipated to be submitted to MBCC Environmental Assessment Branch in July 2021.
Sand extraction activities are proposed to occur on private land within current mining claim areas issued to Sio Silica under provisions of The Mines and Minerals Act and under borehole licenses issued under Part 3 of the Drilling Regulation. A ‘Closure Plan’, as required in the Mine Closure Regulation under The Mines and Minerals Act, will be prepared and submitted to MBCC and Mines Branch for review and approval before sand extraction operations commence.
In addition to seeking licensing under The Environment Act, Sio Silica will apply to Manitoba for:
● | Water rights license(s) for the extraction and reinjection of groundwater; and |
● | Burning permits to dispose of woody debris will be sought, as required, in accordance with Section 19(1) of The Wildfires Act. |
17.2.2 | Federal |
No federal permits or approvals are expected to be required for the sand extraction activities.
Sio Silica is currently corresponding with the federal Impact Assessment Agency of Canada (IAAC) regarding the proposed area for the rail loop component of the sand processing facility. Under Section 54(b) in the Physical Activities Regulations under the Impact Assessment Act, construction of a new ‘railway yard’ with a total area of 50 ha or more is a ‘designated project’ and subject to review and approval under the Impact Assessment Act. Sio Silica anticipates that the final rail loop design will not trigger federal review under the Impact Assessment Act.
17.2.3 | Municipal |
Sio Silica applied to the Rural Municipality (RM) of Springfield in May 2022 to amend the Zoning By-law. A Municipal Board Hearing was held in October 2022 to determine if the Zoning By-law Amendment should be approved. In March 2023, the Municipal Board ruled in favor of the Zoning By-law Amendment. This amendment defines Sio Silica’s proposed Facility and Rail Loop as Permitted Use and will permit Sio Silica to construct and operate it’s proposed Facility and Rail Loop without a Conditional Use Permit from the Municipality.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Sio Silica is currently in negotiations with the RM of Springfield to put in place a Development Agreement for the facility. The RM of Springfield will require the submission, review, and approval of building permit(s) before construction can proceed on the processing facility.
17.3 | PERMITTING TIMELINES |
In consideration of the Project permitting requirements and activities completed to date as described above in Section 17.2, the expected permitting timelines are presented in Table 17-1.
Table 17.1
Summary of Project Permitting Process Key Milestones
Component | Date | |
Provincial | ||
Submission of final Sand Extraction EAP to MBCC | July, 2021 | |
Sio Silica Public Engagement Virtual Meeting – Sand Extraction Project | August, 2021 | |
Technical Advisory Committee (TAC) and Public Review and Response to Sand Extraction EAP | September, 2021 | |
Facilitated Public Meeting (potential requirement of MBCC) | September, 2021 | |
Sio Silica Public Engagement In-Person Meeting – Sand Extraction Project | November, 2021 | |
CEC Hearing Announcement for Sand Extraction | November, 2021 | |
Issuance of Environment Act Licence for Facility Project | December, 2021 | |
Sio Public Engagement – Close Neighbor Individual Meetings | Fall, 2022 | |
Sio Silica Public Engagement Virtual Meeting – Q&A Webinar | February, 2023 | |
Completed drafts for the following: Groundwater Monitoring and Impact Mitigation Plan, Progressive Well Abandonment Plan, Waste Characterization and Management Plan | February 2023 | |
Submitted Draft Closure Plan - Extraction | February, 2023 | |
Clean Environment Commission (CEC) Hearings | February, 2023 to March, 2023 | |
CEC Recommendations | June, 2023 | |
Submitted Draft Closure Plan - Facility | June, 2023 | |
Municipal | ||
Municipal Board Zoning Appeal Hearing for Facility Project | October, 2022 | |
Successful Zoning Result for Facility Property | March, 2023 |
17.4 | SOCIAL AND COMMUNITY IMPACTS |
Potential socioeconomic effects of the Project are assessed in the EAPs for the respective facility and extraction Project components that will be reviewed and considered by MBCC in the provincial review and licencing process. Sio Silica has a public ‘Vivian Sand Project’ website that provides updated information on the Project and a summary of the public outreach conducted by Sio Silica to date. Sio Silica has been and will continue to engage with local communities, associations, local businesses, and other interested parties, to share information about the Project and solicit input on improving Project design and/or address any concerns.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
18 | CAPITAL AND OPERATING COSTS |
18.1 | COST SUMMARY |
Initial Assessment level cost estimates were prepared for the development and operation of the BRU Project. Unit costs are expressed as dollars/clean tonne, unless specified otherwise.
The cost estimates and resulting cash flow analysis were prepared in constant 2023 Canadian dollars (C$). The exchange rate of US$0.77 to C$1.00 was used for the project.
The following sources and approaches were used:
● | Extraction and slurry pumping costs were based on estimates prepared by Sio Silica. Wet plant processing, dry plant processing and associated equipment, screening plant, silos, and rail loading systems were developed by Turnkey Process Solutions (TPS). TPS likewise developed budgetary estimates for capital construction and installation costs. |
● | Rail transportation costs were provided by CN. |
● | Rail siding construction estimates were provided by Trans Energy Services, Sio Silica’s independent consultant and rail specialist. These are based on preliminary designs and development work completed by Trans Energy. |
● | Other infrastructure and facilities estimates were compiled by Stantec based on vendor quotes, and discussions with Sio Silica. |
● | Operating expenses were estimated by Sio Silica. |
● | Labour costs, developed by Sio Silica, were based on knowledge of current labour agreements. |
● | Management and staff salaries were estimated by Sio Silica, based on Stantec input on current mining salaries in Western Canada, and in consultation with Sio Silica on their anticipated burden. |
● | Electricity rate for process facility operations provided by publicly available sources on Manitoba Hydro and through discussions between Sio Silica and the utility. |
18.2 | PROJECT CAPITAL COSTS |
The methods and procedures used to develop the capital cost estimate are described in the following subsections. Project capital costs were sourced from various vendors, and from Stantec’s database of capital costs.
18.2.1 | Capital Cost Summary – Phase 1 |
The capital cost summary for the BRU project extraction area is outlined in Table 18.1.
Phase 1 is developed to capture the 1.46 MTPA of insitu production, and requisite capital to extract, process, and load the product. The battery limits begin at extraction well pad, including well rigs, the overland slurry line initial pump stations, booster pump and through to the wet and dry plant, as well as the silos, rail, and supporting infrastructure.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
It should be noted that no contingency is applied in the table.
Table 18.1
Capital Cost Summary – Phase 1 (C$), no Contingency
Area | Summary Cost, (C$) | |||
Extraction | $ | 21.8 | M | |
Wet Plant | $ | 39.4 | M | |
Dry Plant | $ | 47.4 | M | |
Rail and TLO | $ | 25.3 | M | |
Overland Slurry Pipeline Controls | $ | 6.2 | M | |
Infrastructure | $ | 15.9 | M | |
Engineering, Project Management & Permitting | $ | 2.0 | M | |
Subtotal | $ | 158.0 | M |
18.2.2 | Capital Cost Summary – Phase 2 |
The capital costs for the second phase of development, Phase 2, are shown in Table 18.2. The same battery limits apply as in Phase 1, recognizing that portions of the rail and infrastructure is pre-invested in within the original phase.
Table 18.2
Capital Cost Summary – Phase 2 (C$), no Contingency
Area | Summary Cost, (C$) | |||
Extraction | $ | 21.8 | M | |
Wet Plant | $ | 34.4 | M | |
Dry Plant | $ | 38.0 | M | |
Rail and TLO | $ | 11.0 | M | |
Overland Slurry Pipeline Controls | $ | 0.0 | M | |
Infrastructure | $ | 0.0 | M | |
Engineering, Project Management & Permitting | $ | 0.5 | M | |
Subtotal | $ | 105.7 | M |
Engineering studies allowance of $0.5M is shown in Phase 2, although in the cashflow outlay, these studies are anticipated to occur as bridging studies ahead of Phase 2. As with the preceding Phase, the Phase 2 tally above does not include contingency.
18.2.3 | Contingency |
A 7% contingency has been applied to most capital cost items to account for any unforeseen or otherwise unanticipated cost elements that could be associated with development and operation of the project. Contingency for Phase 1 totals $10.0M. A contingency was not applied to rail costs as these costs were supplied including a contingency.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
18.2.4 | Sustaining Costs |
Sustaining costs are captured under the operating cost sections below including additional land, extraction wells, slurry line and booster pumps, and as well the plant repair and maintenance costs.
18.3 | PROJECT OPERATING COSTS |
The project team developed the operating costs using construction lengths, land requirements, operating units, and process or dryer unit preliminary power and gas consumption. Areas of operating costs breakouts include:
● | Land leasing |
● | Land prep and reclaim |
● | Well Production |
● | Slurry Transport |
● | Wet Process |
● | Support Equipment |
● | Dry Process |
● | Loadout |
● | Rail Costs |
● | Manpower |
● | General and Administration |
The diesel fuel cost assumption is $1.59/litre. Propane gas costs are estimated at $0.38/litre propane. Natural gas is estimated at $0.188/m3. As well, the power costs from Manitoba Power are indicative rates based on preliminary verbal discussions. The estimated power rate is $0.045
/ kW-hr.
18.3.1 | Land Leasing |
Land Leasing costs are based on the mine development plan, shown earlier in this study. The developed hectares are considered for the projected extraction plan, and a lease cost of $0.22/t is applied based on work by Sio Silica.
18.3.2 | Land Preparation and Reclamation |
Land prep and reclaim considers the mulching requirements for the area of the extraction development.
18.3.3 | Well Production |
Well production is a function of tonnes produced, and the phase of the project. Typical well costs were provided by the Sio Silica team. Drilling costs per well were estimate by Sio Silica at $14,759 per well; abandonment costs are estimated at $3,352 per well; personnel costs are estimated at $10,430 per well. Extraction area processing is planned to operate approximately 203 days per year to allow for the seasonal operating conditions of the pipeline and extraction pads.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Slurry transport through overland piping is based on an initial pumpstation at or near the wellpad, then booster pumps added or removed to maintain the slurry line velocity and head. A buildup of slurry pipeline costs include an operator at the well pad, an operator at the dewatering plant, and a maintenance operator roving the system. Each position will be repeated on day and night shift over the anticipated March to October timeframe.
18.3.4 | Wet process, Dry Process, and Loadout |
Wet process, Dry process and Loadout operating costs are an allowance for maintenance and consumables, as well as gas and power within the plant. Gas consumption is based on the current concept of the dry plant and heating load anticipated to run the dryers. The dryer gas cost is based on the assumption that Year 1 will require trucked propane gas; Year 2 onward will include gas delivered via pipeline at a lower cost rate. It should be noted that the Wet process includes a magnetic separation or beneficiation stage at $0.72 per tonne.
18.3.5 | Support Equipment |
Support equipment consists of the mobile equipment that is required to operate the mine, and their upkeep and fuel consumption. The mobile equipment required for the Phase 1 development includes:
● | Skidsteer Loader (1) |
● | Pickup truck (3) |
● | Service Truck (1) |
● | Manlift (1) |
● | Water Truck (1) |
● | Off road forklift (1) |
● | Railcar mover (1) |
● | 982M (2) |
Additional equipment, such as an additional loader are added as the process expands to Phase 2.
18.3.6 | Rail & Port |
Sio Silica has utilized rail costs of $65 per clean tonne and port costs of $20 per clean tonne for sand delivered to ports in Vancouver. Rail costs to other destinations in North America will vary. Sio Silica has adopted a mine gate pricing scenario for this IA.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
18.3.7 | Manpower |
Manpower estimates are based on staffing at the wet, dry and rail loadout areas, with overall support from salaried management. Wellpad staffing is accounted for in the cost per well estimate noted above. Staffing levels for the Phase 1 and Phase 2 developments are shown in the Table 18.3 outlining anticipated or projected roles and responsibilities. The reader should note that annual salary is provided for professional staff, while and hourly rates are provided for the labour positions.
Table 18.3
Phase 1 Manpower Roster and Costs
Manpower | ||||
Role | Number of Employees |
Straight-time Compensation, incl. Fringes C$ and C$/hr | ||
Plant Manager | 1 | $218,400 annual | ||
Accountant | 1 | $154,700 annual | ||
Lab Manager | 1 | $147,000 annual | ||
Foreman | 4 | $145,600 annual | ||
Field Geologist | 4 | $119,000 annual | ||
Lab assistant | 1 | $84,000 annual | ||
Quality Control | 2 | $36 / hr | ||
Plant Operator | 4 | $46 / hr | ||
Utility | 8 | $49 / hr | ||
Loadout / Rail | 4 | $44 / hr | ||
Laborer / Bagging | 2 | $40 / hr | ||
Maintenance 2 | 2 | $49 / hr | ||
Mobile Equipment | 4 | $42 / hr | ||
Health and Safety Manager | 1 | $140,000 annual | ||
Environmental Compliance | 1 | $130,000 annual | ||
Land Management | 1 | $110,000 annual | ||
Logistics Coordinator | 1 | $90,000 annual | ||
Warehouse Manager | 1 | $80,000 annual | ||
Warehouse Assistant | 1 | $65,000 annual | ||
Asset (Equipment) Manager | 1 | $120,000 annual | ||
Mechanic | 1 | $110,000 annual | ||
Jr Mechanic | 1 | $90,000 annual | ||
Mill Wright | 1 | $140,000 annual | ||
Welder | 1 | $100,000 annual | ||
Helper | 1 | $65,000 annual | ||
Electrician | 1 | $120,000 annual | ||
Secretary Front Office | 1 | $55,000 annual | ||
Hydrogeologist | 1 | $140,000 annual | ||
Field Technology Support | 1 | $90,000 annual | ||
Heavy Equipment Operator | 1 | $100,000 annual | ||
Total | 55 |
18.3.8 | General and Administrative Costs |
General and administrative expenses for the BRU project are developed on an annual allowance of $3,600,000. The G&A costs are intended to cover items such as legal services, financial support, marketing, office supplies, consultants, and other items.
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
18.3.9 | Operating cost Summary |
The total operating cost summary is shown in Table 18.4. In year 1, each extraction site utilizes dedicated supervision leading to higher initial costs. Extraction operation costs are reduced in later years as operations supervision is planned to be centralized. Slurry transport costs are lower in early years due to shorter slurry pumping distances. Dry processing costs are calculated based on the change from trucked propane in Year 1 while the gas line is developed. From Year 2 production onward, operating costs reflect that the installation of a natural gas pipeline and the use of natural gas as opposed to propane.
Table 18.4
Life of mine Operating Cost Summary, C$
Year 1 C$/tonne |
Year 2 onward C$/tonne |
|||||||
Extraction | $ | 12.53 | $ | 8.62 | ||||
Slurry Transport | $ | 1.74 | $ | 2.90 | ||||
Wet Processing | $ | 5.07 | $ | 5.07 | ||||
Dry Processing | $ | 11.99 | $ | 8.63 | ||||
Site Labor | $ | 1.28 | $ | 1.28 | ||||
Insurance | $ | 0.38 | $ | 0.38 | ||||
Total OPEX | $ | 32.99 | $ | 26.88 |
![]() | 18-6 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
19 | ECONOMIC ANALYSIS |
Sio Silica prepared the economic analyses for the BRU operation and provided the model to Stantec. Stantec reviewed the model and determined it to be appropriate for the purposes of this Study.
The economic analyses for this study includes the calculation of Net Present Value (NPV) on a before and after-tax basis. The estimates assume that production, cost targets, pricing and sales goals are achieved. Any deviation from those values affects the determination of NPV.
A cash-flow forecast has been developed for the life of the project. This includes a one-year pre- production phase (prior to sales). The production period is 25 years. The NPV is calculated in Year 0, the first year of pre-production. This is 2024 in the project schedule.
19.1 | ASSUMPTIONS |
19.1.1 | Exchange Rate |
Stantec has utilized an exchange rate of 1.30 to convert US dollars to CDN dollars.
19.1.2 | Rail Transportation Costs |
Sio Silica solicited a quotation from Canadian National Railway (CN) for the transportation of silica sand from the BRU Property to port destinations in Vancouver, British Columbia. This quotation was factored to include both fuel and rail car rentals, resulting in a rail rate of C$ 65/tonne.
19.1.3 | Port Costs |
Sio Silica solicited estimates from Vancouver port experts for the unloading of silica sand from bulk railcars and packaging in FIBC super sack bags. As a result, port costs of C$ 20/tonne were used in the IA.
19.1.4 | Product Pricing |
Sio Silica has provided Stantec with documents regarding product pricing agreements from three companies.
Agreement #1
The first document is a proposed sales and purchase agreement contract between Sio Silica and Company 1, that Sio Silica has indicated should be finalized in the fourth quarter of 2023. The document states a sales price of US$180 per MT FOB loading port for 500,000 MT per annum. When exchange rates and port and rail costs are considered, it equates to a mine gate price of CDN$149 per MT.
![]() | 19-1 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Agreement #2
The second document is a Memorandum of Understanding between Sio Silica and Company 2 and dated September 15, 2022. The document states a sales price of US$250 per MT FOB loading port for 800,000 MT per annum. When exchange rates and port and rail costs are considered, it equates to a mine gate price of CDN$240 per MT.
Both the buyer and the seller agree to use their best efforts to enter into a binding Sales Agreement in the first quarter of 2024.
Agreement #3
The third document is an engagement agreement between Sio Silica and Company 3 and dated November 1, 2022. The document states a sales price of US$200 per short ton FOB Mine Gate for 1,200,000 short tons per annum. The agreement also stipulates a service fee equal to 15% of the gross amount of the purchase price paid. When conversion to metric tonnes and the 15% fee are considered, it equates to a mine gate price of CDN$243.60 per MT.
The term of this agreement is unlimited unless terminated by either the buyer or the seller.
Product Pricing
Stantec used a weighted tonnage per annum price from all three agreements for the initial years of the analysis. A weighted tonnage per annum price for the last two agreements was used from 2030 until the end of the project life.
Product Quality
The first two agreements specify that the quality parameters for the delivered sand shall be a silicon dioxide (SiO2) percentage greater than or equal to 99.9% and Fe2O3 content less than or equal to 100 ppm.
19.2 | BRU PROPERTY LIFE |
Sio Silica plans to commence extraction and processing operations in the 3rd Quarter of Year 0 with the first product sales planned for the 1st Quarter of 2025. The extraction and processing operations are planned to take place for eight months a year, April to November, while sales will take place year-round. The sales will be phased with 1.25 Mt of saleable product planned in Year 1, 2.50 Mt in Year 2, and 2.72 Mt in Year 3 and extending out the remainder of the 25-year plan. For the purposes of this Technical Report Summary, Year 0 is defined as 2024.Project Payback
The forecasted project payback occurs in 2026, 1.6 years after facility construction is completed and commercial operations commence.
19.3 | ROYALTIES AND INCOME TAX |
19.3.1 | Royalties |
Sio Silica has applied the royalties as discussed in Section 3. These royalties equate to 1.34% and 3.0% of pre-tax revenue.
![]() | 19-2 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
19.3.2 | Mineral Tax |
Mineral taxes have been applied as per the requirements of the province of Manitoba.
In summary the tax applies at the following rates, where mining profit is:
● | < $50 million; tax = mining profit x 10%. |
● | $50 to $55 million; tax = (mining profit - $50,000,000) x 65% + $5,000,000. |
● | Between $55 and $100 million; tax = mining profit x 15%. |
● | $100 to $105 million; tax = (mining profit - $100,000,000) x 57% + $15,000,000. |
● | $105 million; tax = mining profit x 17%. |
A ‘new mine tax holiday’ is in effect which provides that no Mining Tax is payable on new mines until the mining operator has recovered its initial investment.
19.3.3 | Taxes |
Federal Canadian and Manitoba income taxes were calculated on a project basis in accordance with the applicable tax laws. The calculation assumes the following:
● | A federal income tax rate of 15% |
● | A Manitoba income tax rate of 12% |
19.4 | ECONOMIC PERFORMANCE |
The results of the Study base case economic analysis are shown in Table 19.1 Project Economics. The economic performance of the project is positive up to the highest analyzed discount rate of 16%.
Table 19.1
Project Economics (C$)
Discount Rate | After Tax | |||||||
(%) | IRR | NPV | ||||||
6 | 96 | % | $ | 3,774,089,000 | ||||
8 | 96 | % | $ | 3,043,276,000 | ||||
10 | 96 | % | $ | 2,494,719,000 | ||||
12 | 96 | % | $ | 2,075,195,000 | ||||
14 | 96 | % | $ | 1,748,649,000 | ||||
16 | 96 | % | $ | 1,490,259,000 |
Stantec has not completed a rigorous analysis in order to select the project discount rate. However, Stantec notes that current normalized risk-free rate and equity risk premium, composed of 3.5% and 5.7% respectively which shows that the approximate cost of equity capital to be 9.2%. This rate does not account for project risks, industry risk, size and maturity of the operation to name a few. As such the appropriate discount rate for this study is likely in the range of 10-13%. Ultimately investors in the BRU Property will need to conduct their own discount rate analysis.
![]() | 19-3 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
The key project metrics and cash flow summary are summarized in Tables 19.2 and 19.3
Table 19.2
Key Project Metrics
Economic Analysis | BRU | |||
Net Present Value (NPV), After-Tax | $ | 2,494,719,000 | ||
Internal Rate of Return (IRR), After-Tax | 96 | % | ||
Pay-Back Period (Years based on After-Tax) | 1.58 | |||
Capital Costs | ||||
Initial Capital (M) | 168.00 | |||
Expansion Capital (M) | 112.75 | |||
Operating Costs at Full Production | ||||
Extraction ($/MT ) | 8.62 | |||
Slurry Transport ($/MT) | 2.90 | |||
Wet Processing ($/MT) | 5.07 | |||
Dry Processing and Loadout ($/MT) | 8.63 | |||
Site Labor and Insurance ($/MT) | 1.66 | |||
Total Operating Cost ($/MT) | 26.88 | |||
Production Data | ||||
Life of Mine (Years) | 25 | |||
Annual Clean Saleable Tonnes Produced (MT) | 2,724,000 | |||
Total Clean Saleable Tonnes Produced (MT) | 66,398,000 |
![]() | 19-4 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 19.3
Cash Flow Summary
Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 | Year 10 | Year 11 | Year 12 | ||||||||||||||||||||||||||||||||||||||||
Period | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034 | 2035 | 2036 | |||||||||||||||||||||||||||||||||||||||
Raw Sand Production (Tonnes) | 549,000 | 1,465,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | |||||||||||||||||||||||||||||||||||||||
Sales Volumes (Tonnes) | - | 1,249,000 | 2,497,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | |||||||||||||||||||||||||||||||||||||||
Minegate Pricing ($/Tonne) | 223.53 | 223.53 | 223.53 | 223.53 | 223.53 | 223.53 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | |||||||||||||||||||||||||||||||||||||||
Minegate Revenue (M$) | - | 279 | 558 | 609 | 609 | 609 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | |||||||||||||||||||||||||||||||||||||||
Royalties (M$) | - | 12 | 16 | 10 | 10 | 10 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | |||||||||||||||||||||||||||||||||||||||
Mining Tax (M$) | - | - | 80 | 89 | 89 | 89 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | |||||||||||||||||||||||||||||||||||||||
Net Revenue (M$) | - | 267 | 462 | 510 | 510 | 510 | 553 | 553 | 553 | 553 | 553 | 553 | 553 | |||||||||||||||||||||||||||||||||||||||
Extraction Operating Costs (M$) | 8 | 22 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | |||||||||||||||||||||||||||||||||||||||
Wet Processing Operating Costs (M$) | 2 | 7 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | |||||||||||||||||||||||||||||||||||||||
Dry Processing and Loadout Operating Costs (M$) | - | 15 | 22 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | |||||||||||||||||||||||||||||||||||||||
Total Operating Costs (M$) | 10 | 44 | 72 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | |||||||||||||||||||||||||||||||||||||||
Manitoba Operations G&A (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Head office G&A (M$) | 4 | 4 | 3 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | |||||||||||||||||||||||||||||||||||||||
Total G&A (M$) | 4 | 4 | 3 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | |||||||||||||||||||||||||||||||||||||||
Cash Interest Expense (M$) | 12 | 12 | 6 | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Cash Income Tax (M$) | - | 33 | 88 | 106 | 109 | 111 | 124 | 125 | 126 | 127 | 127 | 128 | 128 | |||||||||||||||||||||||||||||||||||||||
Total Cash-flow (M$) | (26 | ) | 175 | 293 | 329 | 326 | 324 | 353 | 352 | 351 | 350 | 350 | 349 | 349 | ||||||||||||||||||||||||||||||||||||||
Cumulative Cash-Flow (M$) | (28 | ) | 147 | 440 | 768 | 1,094 | 1,418 | 1,770 | 2,122 | 2,473 | 2,823 | 3,173 | 3,522 | 3,871 | ||||||||||||||||||||||||||||||||||||||
Phase 1 Capital Expenditures (M$) | 166 | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Expansion Capital Expenditures (M$) | - | 86 | 27 | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Total Capital Expenditures (M$) | 166 | 86 | 27 | - | - | - | - | - | - | - | - | - | - |
![]() | 19-5 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 19.3 (Cont’d)
Year 13 | Year 14 | Year 15 | Year 16 | Year 17 | Year 18 | Year 19 | Year 20 | Year 21 | Year 22 | Year 23 | Year 24 | Year 25 | ||||||||||||||||||||||||||||||||||||||||||||
Period | 2037 | 2038 | 2039 | 2040 | 2041 | 2042 | 2043 | 2044 | 2045 | 2046 | 2047 | 2048 | 2049 | Total | ||||||||||||||||||||||||||||||||||||||||||
Raw Sand Production (Tonnes) | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 72,310,000 | ||||||||||||||||||||||||||||||||||||||||||
Sales Volumes (Tonnes) | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 66,398,000 | ||||||||||||||||||||||||||||||||||||||||||
Minegate Pricing ($/Tonne) | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | |||||||||||||||||||||||||||||||||||||||||||
Minegate Revenue (M$) | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 15,878 | ||||||||||||||||||||||||||||||||||||||||||
Royalties (M$) | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 268 | ||||||||||||||||||||||||||||||||||||||||||
Mining Tax (M$) | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 2,303 | ||||||||||||||||||||||||||||||||||||||||||
Net Revenue (M$) | 553 | 553 | 553 | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 13,307 | ||||||||||||||||||||||||||||||||||||||||||
Extraction Operating Costs (M$) | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 907 | ||||||||||||||||||||||||||||||||||||||||||
Wet Processing Operating Costs (M$) | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 341 | ||||||||||||||||||||||||||||||||||||||||||
Dry Processing and Loadout Operating Costs (M$) | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 577 | ||||||||||||||||||||||||||||||||||||||||||
Total Operating Costs (M$) | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 1,825 | ||||||||||||||||||||||||||||||||||||||||||
Manitoba Operations G&A (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
Head office G&A (M$) | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 52 | ||||||||||||||||||||||||||||||||||||||||||
Total G&A (M$) | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 52 | ||||||||||||||||||||||||||||||||||||||||||
Cash Interest Expense (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | 30 | ||||||||||||||||||||||||||||||||||||||||||
Cash Income Tax (M$) | 128 | 128 | 128 | 128 | 128 | 128 | 129 | 129 | 129 | 129 | 129 | 129 | 129 | 3,002 | ||||||||||||||||||||||||||||||||||||||||||
Total Cash-flow (M$) | 349 | 349 | 349 | 348 | 348 | 348 | 348 | 348 | 348 | 348 | 348 | 348 | 348 | 8,398 | ||||||||||||||||||||||||||||||||||||||||||
Cumulative Cash-Flow (M$) | 4,220 | 4,569 | 4,917 | 5,265 | 5,613 | 5,961 | 6,309 | 6,657 | 7,005 | 7,352 | 7,700 | 8,048 | 8,396 | - | ||||||||||||||||||||||||||||||||||||||||||
Phase 1 Capital Expenditures (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | 166 | ||||||||||||||||||||||||||||||||||||||||||
Expansion Capital Expenditures (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | 113 | ||||||||||||||||||||||||||||||||||||||||||
Total Capital Expenditures (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | 279 |
![]() | 19-6 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
19.5 | SENSITIVITY ANALYSIS |
High-level sensitivity analyses were carried out to determine the impact that changes in product pricing and overall costs (capital and operating) would have on the economic performance of the project. The analyses were carried out to determine the effect on the after-tax IRR and NPV 10 values.
Stantec notes that the project economics remain positive all under circumstances modeled herein.
![]() | 19-7 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 19.4
After Tax NPV Sensitivity to Sale Price
Product Pricing | |||||||||||||||||||||||||||||
Project Costs | -30% | -20% | -10% | 0% | 10% | 20% | 30% | ||||||||||||||||||||||
-30 | % | 1,589,823,000 | 1,896,351,000 | 2,202,402,000 | 2,508,558,000 | 2,814,831,000 | 3,091,714,000 | 3,394,492,000 | |||||||||||||||||||||
-20 | % | 1,585,073,000 | 1,891,683,000 | 2,197,799,000 | 2,504,008,000 | 2,810,323,000 | 3,087,387,000 | 3,390,266,000 | |||||||||||||||||||||
-10 | % | 1,580,251,000 | 1,886,948,000 | 2,193,131,000 | 2,499,395,000 | 2,805,755,000 | 3,083,016,000 | 3,386,007,000 | |||||||||||||||||||||
-5 | % | 1,577,813,000 | 1,884,555,000 | 2,190,773,000 | 2,497,065,000 | 2,803,448,000 | 3,080,815,000 | 3,383,865,000 | |||||||||||||||||||||
0 | % | 1,575,357,000 | 1,882,145,000 | 2,188,398,000 | 2,494,719,000 | 2,801,126,000 | 3,078,603,000 | 3,381,717,000 | |||||||||||||||||||||
5 | % | 1,572,882,000 | 1,879,718,000 | 2,186,007,000 | 2,492,358,000 | 2,798,788,000 | 3,076,381,000 | 3,379,562,000 | |||||||||||||||||||||
10 | % | 1,570,390,000 | 1,877,274,000 | 2,183,600,000 | 2,489,981,000 | 2,796,436,000 | 3,074,150,000 | 3,377,401,000 | |||||||||||||||||||||
20 | % | 1,565,349,000 | 1,872,334,000 | 2,178,737,000 | 2,485,180,000 | 2,791,685,000 | 3,069,662,000 | 3,373,067,000 | |||||||||||||||||||||
30 | % | 1,560,235,000 | 1,867,325,000 | 2,173,808,000 | 2,480,316,000 | 2,786,873,000 | 3,065,142,000 | 3,368,721,000 |
![]() | 19-8 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
20 | ADJACENT PROPERTIES |
There are no properties exploiting silica sand adjacent to the BRU Property
![]() | 20-1 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
21 | OTHER RELEVANT DATA AND INFORMATION |
All relevant information is included in this Report.
![]() | 21-1 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
22 | INTERPRETATION AND CONCLUSIONS |
This Study indicates a positive economic outcome related to the potential development of a silica sand extraction and processing operation for the BRU Property. The extraction plan addressed only a portion of the In-Situ Mineral Resource previously classified, as the entire BRU resource was not required for the 25-year development plan.
Stantec has identified the following risks that could potentially affect the projected economic viability of the BRU Property development.
22.1 | PRODUCT PRICING AND COST ESCALATION |
As indicated in Section 19 of this Study, the project economics are sensitive to the assumed pricing for silica sand and estimated project costs. A 30% reduction in product pricing combined with a 30% increase in project costs, after a 7% contingency (initial project capital) has been applied, results in positive economics.
Stantec has reviewed Sio Silica’s cost estimate and believes it captures reasonable Capex and Opex costs for the project as it is currently planned. However, the cost estimate is based on budgetary quotes provides by third party vendors and Sio Silica’s partners and assumes the project advances as per the current schedule.
Stantec understands that Sio Silica intends to proceed with the project development in 2024, partially based on the results of this Study. As such, the risks associated with cost escalation are not insignificant.
22.2 | TIMING OF REGULATORY APPROVALS |
Sio Silica and AECOM are pursuing a regulatory approval process that assumes project approval in late 2023 or early 2024.
If the regulatory process is extended beyond this timeframe, then it is likely that project development and resulting product sales would be delayed beyond the base case project schedule.
22.3 | TIMING OF PROJECT DEVELOPMENT |
Certain process and infrastructure components may be subject to longer lead times. These include rotary dryers, gas pipeline installation, and high voltage substations. The full capacity of the BRU operation and the resultant project economics are dependent on these components.
22.4 | DEVELOPMENT OF EXTRACTION PROCESS |
The current extraction process is based on the results from 14 drill holes completed from 2017 to 2021. Stantec has no reason to believe that the planned extraction process will not be successful. However, Stantec does note the risks to the project should the planned extraction rates be unachievable or unsustainable over the life and geographic extent of the Project.
![]() | 22-1 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
22.5 | CONFIRMATION OF GEOTECHNICAL TESTING AND ANALYSIS |
As discussed in Section 5.2, Stantec geotechnical engineers have completed a preliminary geotechnical analysis related to extraction of the sand resource on the BRU Property. The conclusions of this analysis are summarized below:
● | Based upon current information and assessments, Shear and Bending are the most probable failure modes with the potential to affect long-term stability. Unravelling, Caving, and Chimneying are not controlling failure modes for the BRU property due to the nature of the limestone caprock. |
● | The Bending failure mode is controlling the long-term stability of the post extraction cavity for the expected range of caprock and overburden thickness and material properties and the extraction depth in the sand. The stability analysis and extraction borehole spacing design were completed to achieve a factor of safety of 2.0, which is considered to be an acceptably conservative FOS for the project. |
● | The cavity after extraction is expected to further expand with time resulting in loose sand infilling the extracted void leaving a larger unsupported caprock span. Based on the assumption that the areas with factor of safety larger than 2 are stable in the long-term, approximately 5 m of additional raveling of the post extraction cavity walls is expected (by end of the design life of 100 years). Therefore, the unsupported caprock span will increase by 10 m with time after extraction. |
● | Based upon the results of geotechnical assessment and with the understanding that Sio Silica will follow guidance provided by Stantec including continuing to assess the geotechnical characteristics and performance of the sand deposit and overlying materials during the project life and to adjust design accordingly, no large-scale surface subsidence is expected to occur as a result of sand extraction. |
There is a potential that further geotechnical assessments may impact the current resource estimate, either positively or negatively. In particular, there remains uncertainty regarding the possible presence of vertical fractures in Limestone caprock, which to date has not been investigated or assessed. The presence of continuous vertical fractures in Limestone caprock above extraction voids has the potential to lead to caprock collapse which may propagate to the surface and produce settlement. In addition, there remains uncertainty regarding the long term performance of the extraction voids which may have complex void shapes and have the potential to propagate over larger than currently estimated distances.
![]() | 22-2 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
23 | RECOMMENDATIONS |
23.1 | PHASE 1: GEOTECHNICAL AND RESOURCE INVESTIGATION AND ANALYSIS |
Based on Sio Silica’s current development and production plans, all resources identified in the areas where the first 5 years of production will occur should be classified as Measured. Additional drill holes may be required to increase confidence in the resource estimates within these areas.
As discussed in Section 5.2, Stantec geotechnical engineers completed a preliminary geotechnical analysis of the impact of extraction of the sand on the BRU Property. The recommendations from this analysis are summarized below:
● | Design and execute a site investigation and assess the results to confirm expected geotechnical performance. This investigation may include the following components: |
o | Data Collection: |
§ | Geotechnical borehole drilling, logging, photography, and sampling with vertical and inclined boreholes and SPT or CPT if needed – to characterize extents and properties of sandstone, caprock and overburden. |
§ | Acoustic and Optical Televiewer Survey of Geotechnical Boreholes – to characterize caprock structure. |
§ | Side Scan Sonar Survey – to monitor sand cavity shape and behavior. |
§ | Laboratory testing of selected samples of sandstone, caprock and overburden as required – to characterize properties of sandstone, caprock and overburden. |
§ | Installation and monitoring of Vibrating Wire Piezometers, Vertical Extensometers and Surface Monuments and Total Station or GPS Survey – to monitor changes in caprock and surface subsidence. |
o | Data Analysis: |
§ | Stability and settlement analysis to identify and assess for changes in assumptions related to vertical jointing (if found) in Limestone caprock, extraction void shape or other design assumptions. |
● | Develop and implement a Trigger Action Response Plan as follows: |
§ | Collected data review - to establish baseline values. |
§ | Trigger value range identification - low/moderate/high – green/yellow/red |
§ | Monitoring results verification and comparison against trigger values. |
● | Review the impact of potential vibration sources, such as rail traffic, to determine potential offsets from extraction areas. |
![]() | 23-1 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Table 23.1 shows the anticipated cost to complete the geotechnical analysis.
Table 23.1
Cost Estimate – Geotechnical Analysis
Task | Estimated Cost (C$) | |||
Geotechnical Analysis | $ | 500,000 |
23.2 | PHASE 2: ENGINEERING BRIDGING STUDIES |
Stantec recommends that Sio Silica continues to more accurately define the CAPEX and OPEX estimate for the BRU Property and to secure relationships with contractors, vendors, and suppliers.
Table 23.2 provides cost estimates for these studies.
Table 23.2 Engineering Bridging Studies
Task | Estimated Cost (C$) | |||
Engineering Bridging Studies | 550,000 |
![]() | 23-2 |
TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
24 | REFERENCES |
Bezys, R.K. and Conley, G.G., 1998. Geology of the Ordovician Winnipeg Formation in Manitoba; Manitoba Energy and Mines, Stratigraphic Map Series, Ow-1, 1:2 000 000.
Butler, J.R., Battin, R.L., Plank, R.F., and Winston, D.B., 1955. Lithologic correlation of Middle and Lower Paleozoic rocks. Swartz, Joe. And others, eds, South Dakota Black Hills: North Dakota Geological Society Annual Field Conference Guidebook 3. Pp. 38-42.
Canadian Securities Administrators, 2011. National Instrument 43-101 Standards of Disclosure for Mineral Projects, Form 43-101F1, Technical Report, and Companion Policy 43-101.
CIM Standing Committee on Reserve Definitions. 2010. CIM Definition Standards - For Mineral Resources and Mineral Reserves.
Environment Canada, 2017. Canadian Climate Normals or Averages 1981-2010. Stations: Ostenfeld, Winnipeg International Airport, Steinbach, Beausejour, CDA. Accessed August 2017. http://www.climate.weatheroffice.ec.gc.ca/climate_normals/index_e.html
Groundwater Information Network (GIN), 2019. Groundwater Information Network. Data obtained on March 13, 2019. http://gin.gw-info.net/service/api_ngwds:gin2/en/gin.html
Krumbein, W.C. and Sloss, L., L., 1963. Stratigraphy and Sedimentation, 2nd ed., W.H. Freeman, San Francisco.
Lapenskie, K. 2016: Preliminary investigations into the high-purity silica sand of the Winnipeg Formation, southern Manitoba; in Report of Activities 2016, Manitoba Growth, Enterprise and Trade, Manitoba Geological Survey, p. 176 - 180.
Le Fever, R.D., Thompson, S.C., and Anderson, D.B., 1978. Earliest Paleozoic history of the Williston Basin in North Dakota; in 5th International Williston Basin Symposium Proceeding, Special Publication No. 9, p. 147-156.
Manitoba, 1992a. M.R. 63/92. Drilling Regulation. Mines and Minerals Act (C.C.S.M. c. M162). Queen’s Printer. Accessed September 20, 2017. https://web2.gov.mb.ca/laws/regs/current/_pdf-regs.php?reg=63/92
Manitoba, 1992b. MR 64/92. Mineral Disposition and Mineral Lease Regulation 1992. Mines and Minerals Act (C.C.S.M. c. M162). Queen’s Printer. Accessed September 18, 2017. http://web2.gov.mb.ca/laws/regs/current/_pdf-regs.php?reg=64/92
Matile G.L.D., and Keller G.R., 2004. Surficial Geology Compilation Map Series. Manitoba Geological Survey, GIS Map Gallery. Geographic Information System. http://www.gov.mb.ca/iem/geo/gis/sgcms/legend.html
Natural Resources Canada, 2004. Ice Box Member. CSPG Lexicon of Canadian Stratigraphy, Volume 4, western Canada, including eastern British Columbia, Alberta, Saskatchewan and southern Manitoba; D.J. Glass (editor). Contributor: D.F. Paterson. http://weblex.nrcan.gc.ca/html/006000/GSCC00053006881.html
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
Natural Resources Canada, 2009a. Winnipeg Formation. CSPG Lexicon of Canadian Stratigraphy, Volume 4, western Canada, including eastern British Columbia, Alberta, Saskatchewan and southern Manitoba; D.J. Glass (editor). Contributor: D.F. Paterson. http://weblex.nrcan.gc.ca/html/016000/GSCC00053016596.html
Natural Resources Canada, 2009b. Carman Sand Member. CSPG Lexicon of Canadian Geological Stratigraphy. Volume 4, western Canada, including eastern British Columbia, Alberta, Saskatchewan and southern Manitoba; D.J. Glass (editor). Contributor: H.R. McCabe. http://weblex.rncan.gc.ca/html/002000/GSCC00053002494.html
Natural Resources Canada, 2009c. Black Island Member. CSPG Lexicon of Canadian Stratigraphy, Volume 4, western Canada, including eastern British Columbia, Alberta, Saskatchewan and southern Manitoba; D.J. Glass (editor). Contributor: D.F. Paterson. http://weblex.nrcan.gc.ca/html/001000/GSCC00053001436.html
Natural Resources Canada, 2015. Red River Formation. CSPG Lexicon of Canadian Geological Names. CSPG Lexicon of Canadian Geological Stratigraphy. Volume 4, western Canada, including eastern British Columbia, Alberta, Saskatchewan and southern Manitoba; D.J. Glass (editor). Contributor: H.R. McCabe. http://weblex.nrcan.gc.ca/html/012000/GSCC00053012586.html
Ozadetz, K.G., and Haidl, F.M., 1989. Tippecanoe Sequence: Middle Ordovician to lowest Devonian: vestiges of a great epeiric sea, Chapter 8; in Western Canada Sedimentary Basin: a case study (B.D. Ricketts, ed.); Canadian Society of Petroleum Geologist, Special Bulletin No. 30, p. 121-137.
Railway Association of Canada (RAC), 2017. RAC Canadian Rail Atlas. Accessed October 12, 2017 https://rac.jmaponline.net/canadianrailatlas/
Smith R.E., Veldhuis H., Mills G.F., Eilers R.G., Fraser W.R., Lelyk G.W., 1998. Terrestrial Ecozones, Ecoregions and Ecodistricts of Manitoba. An Ecological Stratification of Manitoba’s Natural Landscapes. Research Branch Technical Bulletin 1998-9E. Land Resource Unit. Brandon Research Centre, Research Branch. Agriculture and Agri-Food Canada. pp. 127, 202-204, 260.
Underwood McLellan & Associates Limited, 1967. A Feasibility Study of Recovery and Utilization of the St. Anne Silica Sand Deposits. Project No. 41 60 0751 01/02. pp. 52.
Winnipeg. 2017. The Greater Winnipeg Water District Railway. Water and Waste Department. Accessed October 12, 2017 http://www.winnipeg.ca/waterandwaste/dept/railway.stm
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TECHNICAL REPORT SUMMARY, BRU PROPERTY, MANITOBA, CANADA
25 | RELIANCE ON INFORMATION PROVIDED BY THE REGISTRANT |
The qualified persons who prepared this Study relied on input prepared by an expert who is not a qualified person as it relates to this Study. This input relates the regulatory approval process for the BRU Project.
25.1 | REGULATORY APPROVAL PROCESS |
Sio Silica has engaged AECOM Canada Ltd. (AECOM) to provide consulting support through the regulatory approval process. Mr. Cliff Samoiloff, Mining Market Lead and Senior Scientist at AECOM leads this support and has provided information related to:
● | a summary of environmental studies and a discussion of known environmental issues that could impact development of the BRU Property, |
● | a discussion relating to project permitting requirements, |
● | an estimate of the permitting process timelines, and |
● | a discussion of potential social or community related requirements and plans for the BRU Property development and the status of negotiations or agreements with local communities. |
|
25-1 |
Exhibit 96.2
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||
TECHNICAL REPORT SUMMARY | ||
DEN PROPERTY | ||
MANITOBA, CANADA | ||
Submitted to: | ||
Sio Silica Corporation | ||
Report Date: | Effective Date: | |
October 8, 2023 | October 6, 2023 | |
Stantec Consulting Ltd. | ||
200, 325 – 25 Street SE | ||
Calgary, Alberta T2P 7H8 | ||
Tel: (403) 716-8000 | ||
Author(s): | ||
Ivan Minev, P. Geol. | ||
Keith Wilson, P. Eng. | ||
Derek Loveday, P. Geol. | ||
Project No. 129500488 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Important Notice
This notice is an integral component of the Sio Silica Corporation DEN Property Technical Report Summary (“Technical Report Summary” or “Report”) and should be read in its entirety and must accompany every copy made of the Technical Report Summary. The Technical Report Summary has been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (SEC) S-K 1300 Regulations.
The Technical Report Summary has been prepared for Sio Silica Corporation (Sio Silica) by Stantec Consulting Ltd. (Stantec). The Technical Report Summary is based on information and data supplied to Stantec by Sio Silica. The quality of information, conclusions, and estimates contained herein are consistent with the level of effort involved in the services of Stantec, based on: i) information available at the time of preparation of the Report, and ii) the assumptions, conditions, and qualifications set forth in this Report.
Each portion of the Technical Report Summary is intended for use by Sio Silica subject to the terms and conditions of its contract (December 5, 2022) with Stantec. Except for the purposes legislated under United States securities law, any other uses of the Technical Report Summary, by any third party, is at that party’s sole risk.
The results of the Technical Report Summary represent forward-looking information. The forward-looking information includes pricing assumptions, sales forecasts, projected capital and operating costs, mine life and production rates, and other assumptions. Readers are cautioned that actual results may vary from those presented. The factors and assumptions used to develop the forward-looking information, and the risks that could cause the actual results to differ materially are presented in the body of this Report.
Stantec has used their experience and industry expertise to produce the estimates in the Technical Report Summary. Where Stantec has made these estimates, they are subject to qualifications and assumptions, and it should also be noted that all estimates contained in the Technical Report Summary may be prone to fluctuations with time and changing industry circumstances
This report was prepared by Stantec Consulting Ltd. (Stantec), a third-party firm comprising mining experts in accordance with § 229.1302(b)(1). Sio Silica has determined that Stantec meets the qualifications specified under the definition of qualified person in § 229.1300. References to the Qualified Person or QP in this report are references to Stantec and not to any individual employed at Stantec.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table of Contents
1 | EXECUTIVE SUMMARY | 1-1 | ||
2 | INTRODUCTION | 2-1 | ||
3 | PROPERTY DESCRIPTION | 3-1 | ||
3.1 | Description and Location | 3-1 | ||
3.2 | Mining Claims | 3-1 | ||
3.3 | Underlying Agreements, Royalties and Encumbrances | 3-11 | ||
3.4 | Environmental Liabilities | 3-13 | ||
3.5 | Required Permits | 3-13 | ||
3.6 | Other Significant Factors and Risks | 3-13 | ||
4 | ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY | 4-1 | ||
4.1 | Topography, Elevation and Vegetation | 4-1 | ||
4.2 | Property Access and Proximity to Population Centers | 4-1 | ||
4.3 | Climate | 4-1 | ||
4.4 | Infrastructure | 4-2 | ||
5 | HISTORY | 5-1 | ||
5.1 | 1967 Norlica Minerals Company Ltd. Feasibility Study | 5-1 | ||
5.2 | 2004 to 2007 North Star Diamonds | 5-4 | ||
5.3 | Historical Technical Reports | 5-4 | ||
6 | GEOLOGIC SETTING, MINERALIZATION AND DEPOSIT | 6-1 | ||
6.1 | Regional Stratigraphy | 6-1 | ||
6.2 | Structural Geology | 6-2 | ||
6.3 | Property Geology | 6-2 | ||
6.3.1 | Quaternary Sediments | 6-13 | ||
6.3.2 | Red River Formation | 6-13 | ||
6.3.3 | Winnipeg Formation | 6-14 | ||
6.3.4 | Granitoid | 6-14 | ||
6.4 | Deposit Types | 6-14 | ||
6.5 | Mineralization | 6-15 | ||
7 | EXPLORATION | 7-1 | ||
7.1 | Groundwater Information Network and Friesen Drilling Historical Data | 7-1 | ||
7.2 | Sio Silica 2018 Drilling Campaign Summary | 7-1 | ||
7.3 | Sio Silica 2021 - 2022 Drill Campaign summary | 7-4 | ||
8 | SAMPLE PREPARATION, ANALYSES AND SECURITY | 8-1 | ||
8.1 | Sampling Method and approach | 8-1 | ||
8.2 | 2018 Field Programs Sample Integrity | 8-1 | ||
8.3 | Laboratory Credentials, Testing Methodology, and Results | 8-2 | ||
8.3.1 | AGAT Credentials and Testing Methodology | 8-2 | ||
8.3.2 | Sio Silica Internal Facility Credentials and Processing Methodology | 8-2 | ||
8.3.3 | Liquids Matter Whole Rock Analysis | 8-4 |
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
9 | DATA VERIFICATION | 9-1 | ||
9.1 | Site Visit and alignment on Field Procedures and Sampling Protocol | 9-1 | ||
9.2 | Sample Chain-of-Custody and Laboratory Results | 9-1 | ||
9.2.1 | Chain-of-Custody | 9-1 | ||
9.2.2 | Laboratory Results | 9-2 | ||
10 | MINERAL PROCESSING AND METALLURGICAL TESTING | 10-1 | ||
11 | MINERAL RESOURCE ESTIMATES | 11-1 | ||
11.1 | Computer Model Construction | 11-1 | ||
11.1.1 | Topographic and Lithological Horizons | 11-1 | ||
11.1.2 | Assay Data Compositing and Interpolation | 11-2 | ||
11.2 | Resource Estimation Approach | 11-2 | ||
11.3 | Mineral Resource Classification | 11-5 | ||
11.4 | Geotechnical Analysis | 11-5 | ||
11.5 | Assessment of Reasonable Prospect for Eventual Economic Extraction | 11-6 | ||
11.6 | Estimation of Sand Volume | 11-9 | ||
11.7 | Mineral Resource Estimation | 11-9 | ||
12 | MINERAL RESERVE ESTIMATES | 12-1 | ||
12.1 | Development Plan | 12-1 | ||
13 | MINING METHODS | 13-1 | ||
13.1 | Overview | 13-1 | ||
13.2 | Geotechnical Analysis | 13-1 | ||
13.3 | Extraction Concept | 13-3 | ||
13.4 | Surface Development and Reclamation | 13-3 | ||
13.5 | Slurry Transportation | 13-4 | ||
14 | PROCESS AND RECOVERY METHODS | 14-1 | ||
14.1 | Well pad screening circuit | 14-1 | ||
14.2 | Wet Plant | 14-2 | ||
14.3 | Dry Screening plant | 14-10 | ||
14.4 | Storage and loadout | 14-10 | ||
14.5 | Plant Design and Construction | 14-10 | ||
14.6 | Rail design and construction | 14-10 | ||
15 | INFRASTRUCTURE | 15-1 | ||
15.1 | Rail | 15-1 | ||
15.2 | Power | 15-1 | ||
15.3 | Access | 15-1 | ||
15.4 | Gas Line | 15-1 | ||
15.5 | Maintenance facility | 15-1 | ||
15.6 | Offices | 15-2 | ||
15.7 | Operations trailer | 15-2 | ||
15.8 | Process water Well | 15-2 |
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
16 | MARKET STUDIES | 16-1 | ||
16.1 | Introduction | 16-1 | ||
16.2 | MARKETS/ DEMAND | 16-1 | ||
16.3 | COMPETITION | 16-1 | ||
16.4 | CONTRACTS and POTENTIAL OFFTAKERS | 16-2 | ||
17 | ENVIRONMENTAL STUDIES, PERMITTING AND PLANS, NEGOTIATIONS OR AGREEMENTS WITH LOCAL INDIVIDUALS OR GROUPS | 17-1 | ||
18 | CAPITAL AND OPERATING COSTS | 18-2 | ||
18.1 | Cost Summary | 18-2 | ||
18.2 | Project Capital Costs | 18-2 | ||
18.2.1 | Capital Cost Summary | 18-2 | ||
18.2.2 | Contingency | 18-3 | ||
18.2.3 | Sustaining Costs | 18-3 | ||
18.3 | Project Operating Costs | 18-3 | ||
18.3.1 | Land Leasing | 18-4 | ||
18.3.2 | Land Preparation and Reclamation | 18-4 | ||
18.3.3 | Well Production | 18-4 | ||
18.3.4 | Wet process, Dry Process, and Loadout | 18-4 | ||
18.3.5 | Support Equipment | 18-5 | ||
18.3.6 | Rail & Port | 18-5 | ||
18.3.7 | Manpower | 18-5 | ||
18.3.8 | General and Administrative Costs | 18-6 | ||
18.3.9 | Operating cost Summary | 18-6 | ||
19 | ECONOMIC ANALYSIS | 19-1 | ||
19.1 | Assumptions | 19-1 | ||
19.2 | DEN Property Life | 19-2 | ||
19.3 | Project Payback | 19-2 | ||
19.4 | Royalties and Income Tax | 19-2 | ||
19.5 | Economic Performance | 19-3 | ||
19.6 | Sensitivity Analysis | 19-6 | ||
20 | ADJACENT PROPERTIES | 20-1 | ||
21 | OTHER RELEVANT DATA AND INFORMATION | 21-1 | ||
22 | INTERPRETATION AND CONCLUSIONS | 22-1 | ||
22.1 | Product Pricing And Cost Escalation | 22-1 | ||
22.2 | Timing Of Project Development | 22-1 | ||
22.3 | Development Of Extraction Process | 22-1 | ||
22.4 | Confirmation Of Geotechnical Testing And Analysis | 22-1 | ||
23 | RECOMMENDATIONS | 23-1 | ||
23.1 | Phase 1: Geotechnical Testing and Analysis | 23-1 | ||
24 | REFERENCES | 24-1 | ||
25 | RELIANCE ON INFORMATION PROVIDED BY THE REGISTRANT | 25-1 |
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
LIST OF TABLES
Table 1.1 | Summary of Analyses Completed by Year and Laboratory | 1-5 |
Table 1.2 | Summary of In-Place Carman Sand as of February, 2023 | 1-9 |
Table 1.3 | Sand Extraction Recommendations | 1-11 |
Table 1.4 | In-Place Mineral Resource Summary | 1-12 |
Table 1.5 | Capital Cost Summary – (C$), no Contingency | 1-15 |
Table 1.6 | Life of mine Operating Cost Summary, C$ | 1-16 |
Table 1.7 | Project Economics (C$) | 1-17 |
Table 1.8 | Key Project Metrics | 1-18 |
Table 1.9 | Cash Flow Summary | 1-19 |
Table 1.10 | Cost Estimate – Geotechnical Analysis | 1-3 |
Table 1.11 | Engineering Bridging Studies | 1-3 |
Table 3.1 | Active DEN Property Claims | 3-4 |
Table 4.1 | Mean Climate Data for Nearby Weather Stations | 4-2 |
Table 5.1 | Norlica Minerals Company Ltd. Drilling Summary | 5-1 |
Table 5.2 | Norlica Laboratory Results of Chemical Quantitative Analyses | 5-2 |
Table 5.3 | North Star Diamonds Cancelled Mining Claims | 5-4 |
Table 5.4 | Historic In-Place Mineral Resource Summary, as of May 8, 2019 | 5-5 |
Table 6.1 | Property Lithology | 6-13 |
Table 7.1 | 2018 Drilling Campaign Summary | 7-3 |
Table 7.2 | 2021 - 2022 Drilling Campaign Summary | 7-4 |
Table 8.1 | Summary of Analyses Completed by Year and Laboratory | 8-2 |
Table 8.2 | Samples PSD Tested at Sio Silica Facilities | 8-3 |
Table 8.3 | Samples Processed at Sio Silica Facilities | 8-4 |
Table 8.4 | Liquids Matter ICP-OES Summary Test Results | 8-6 |
Table 8.5 | Liquids Matter ICP-OES Point A 40/70 Test Results | 8-7 |
Table 8.6 | Liquids Matter ICP-OES Point B 40/70 Test Results | 8-8 |
Table 8.7 | Liquids Matter ICP-OES Point A-1 70/140 Test Results | 8-9 |
Table 8.8 | Liquids Matter ICP-OES Point B-1 70/140 Test Results | 8-10 |
Table 9.1 | 2018 AGAT Sample Chain-of-Custody | 9-2 |
Table 11.1 | Summary of In-Place Carman Sand | 11-9 |
Table 11.2 | Sand Extraction Recommendations | 11-10 |
Table 11.3 | In-Place Mineral Resource Summary | 11-11 |
Table 14.1 | Key Process Equipment – Well Pad and Dewatering Plant | 14-2 |
Table 14.2 | Key Process Equipment – Wet Plant | 14-3 |
Table 14.3 | Key Process Equipment – Dry Plant | 14-10 |
Table 18.1 | Capital Cost Summary – (C$), no Contingency | 18-3 |
Table 18.2 | Manpower Roster and Costs | 18-6 |
Table 18.3 | Life of mine Operating Cost Summary, C$ | 18-7 |
Table 19.1 | Project Economics (C$) | 19-3 |
Table 19.2 | Key Project Metrics | 19-4 |
Table 19.3 | Cash Flow Summary | 19-5 |
Table 19.4 | After Tax NPV Sensitivity to Sale Price | 19-7 |
Table 23.1 | Cost Estimate – Geotechnical Analysis | 23-1 |
Table 23.2 | Engineering Bridging Studies | 23-2 |
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
LIST OF FIGURES
Figure 1-1 | Property Location Map | 1-2 |
Figure 1-2 | Mining Claims Map | 1-3 |
Figure 1-3 | Resource Distribution Map | 1-7 |
Figure 1-4 | Resource Classification Map | 1-8 |
Figure 3-1 | Property Location Map | 3-2 |
Figure 3-2 | Mining Claims Map | 3-3 |
Figure 4-1 | Infrastructure Map | 4-3 |
Figure 6-1 | Regional Geology Map | 6-3 |
Figure 6-2 | Carbonate Thickness Map | 6-4 |
Figure 6-3 | Sand Thickness Map | 6-5 |
Figure 6-4 | Overburden Thickness Map | 6-6 |
Figure 6-5 | Structure Map Top of Carbonate | 6-7 |
Figure 6-6 | Structure Map Top of Carman Sand | 6-8 |
Figure 6-7 | Cross Section A-A’ | 6-9 |
Figure 6-8 | Cross Section B-B’ | 6-10 |
Figure 6-9 | Cross Section C-C’ | 6-11 |
Figure 6-10 | Cross Section D-D’ | 6-12 |
Figure 7-1 | Drill Hole Location Map | 7-3 |
Figure 8-1 | SiO2 Content for 40/70 Fraction Distribution Map | 8-5 |
Figure 8-2 | SiO2 Content for 70/140 Fraction Distribution Map | 8-6 |
Figure 8-3 | Iron Content for 40/70 Fraction Distribution Map | 8-7 |
Figure 8-4 | Iron Content for 70/140 Fraction Distribution Map | 8-8 |
Figure 9-1 | 2017 Duplicate Sample Comparison Loring vs. Stim-Lab | 9-13 |
Figure 9-2 | 2018-2019 Duplicate Sample Comparison AGAT vs. Loring Lab | 9-14 |
Figure 9-3 | Sample Comparison Sio Silica vs. AGAT | 9-15 |
Figure 11-1 | 40/70 Fraction Distribution Map | 11-3 |
Figure 11-2 | 70/140 Fraction Distribution Map | 11-4 |
Figure 11-3 | Resource Distribution Map | 11-7 |
Figure 11-4 | Resource Classification Map | 11-8 |
Figure 13-1 | 24 Year Extraction Plan | 13-5 |
Figure 14-1 | Wellpad Extraction Flowsheet | 14-4 |
Figure 14-2 | Extraction Dewatering Flowsheet | 14-5 |
Figure 14-3 | Overland Transport Dewatering Flowsheet | 14-6 |
Figure 14-4 | Wet Plant | 14-7 |
Figure 14-5 | Dry Plant | 14-8 |
Figure 14-6 | Product Handling | 14-9 |
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
SIGNATURE PAGE
This report titled “Technical Report Summary, Den Property, Manitoba, Canada” with an effective date of October 6, 2023 was prepared by:
Stantec Consulting Ltd. | (signed) Stantec Consulting Ltd. |
Dated at Calgary, Alberta | |
October 8, 2023 |
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
1 | EXECUTIVE SUMMARY |
Introduction
On Dec 5, 2022, Sio Silica Corporation (Sio Silica) contracted Stantec Consulting Ltd. (Stantec) to prepare a Technical Report Summary regarding the Initial Assessment (IA) of the DEN Property. The Technical Report Summary was prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (SEC) reporting of material mining assets under regulation S-K 1300.
This Technical Report Summary focuses on the quantification of the resource as a source of high purity silica sand. High purity silica sand may be used in a wide range of industrial applications, including electronics, medical research, metals and alloys, specialty glass, and renewable energy.
Description and Location
The centre of the Property is located approximately 60 km southeast of the city of Winnipeg, Manitoba within the Rural Municipalities of Ste. Anne, Hanover and La Broquerie. The Property is accessed from Winnipeg by the Trans-Canada Highway, and PR 210 for the northern section of the Property, and Provincial Highway 12 for the southern section of the Property. The general property location is shown on Figure 1.1.
The Property encompasses 63,750 hectares (157,530 acres) and is shown on NTS Map Sheet 62. The main block of the Property expands from 654,900E to 693,250E, and 5,459,450N to 5,502,750N, and the centre of the Property is at 49.451287°N and -96.513671°E (UTM 14 U 680,199E and 5,480,597N), as shown on Figure 1-2.
Mineral Claims
The Property, which consists of 278 claims, are all in surveyed territory. The Property is held by CanWhite, which is now Sio Silica. The locations of the claims are shown on Figure 1.2.
Infrastructure
Winnipeg is the largest major city near the Property. Winnipeg, as of 2021, has a population of 749,607 residents in the metropolitan area (Statistics Canada, 2023), and provides all required major services to advance the project. The city of Winnipeg, located on the TransCanada Highway, is the home of the James Armstrong Richardson International Airport that has numerous domestic and international flights, and is a major North American rail transportation hub with a 20,000-acre facility that services Canadian National Railway, Canadian Pacific Railway, BNSF Railway and the locally maintained and operated Greater Winnipeg Water District Railway (Railway Association of Canada, 2017; Winnipeg, 2017).
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
History
Prior to Sio Silica securing the current DEN Property, the area to the north was staked and drilled to assess the viability of the sand for use as a natural proppant. Norlica Minerals Company Ltd. (Norlica) conducted an exploration program and feasibility study in 1967. North Star Diamonds had previously staked an area on the western edge of the current Property.
In 2019 Stantec completed a Technical Report prepared in accordance with the requirements of National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101) for the DEN Property. In 2023, Stantec completed a Technical Report Summary prepared in accordance with the requirements of U.S. Securities and Exchange Commission (SEC) reporting of material mining assets under regulation S-K 1300.
Property Geology
Prior to 2017, most of the drilling in the area was limited to water wells that were drilled on behalf of third parties. The units described below are primarily based on reliable holes that were drilled in the Project area by Sio Silica. In general, the stratigraphy of the Property is consistent; the major units are Quaternary sediments, carbonate and shale intervals of the Red River Formation, unconsolidated sand, sandstone, and shale of the Winnipeg Formation, and Archean-age granitoid basement. The upper unconsolidated sand interval of the Winnipeg Formation, which is known as the Carman Sand Member, is the target interval to be exploited. The average Carman Sand Member depth within the property limit is 54 m and the average thickness is 26 m.
Mineralization
The stratigraphic target is the unconsolidated silica sand from the Carman Sand Member. The high purity of the sand makes it suitable for variety of usages and markets. The primary objective of the program was to delineate the quality of the sand and assess the extractable sand volumes.
Deposit Types
The Carman Sand Member is dominantly an unconsolidated laterally extensive unit across the Property, as validated through numerous drilling campaigns conducted by Sio Silica. Unconsolidated sand type deposits typically require no processing beyond cleaning and size sorting. The deposit appears to have limited geological variability and limited structural complexity.
Sio Silica Drilling Campaigns
A drilling campaign was initiated in September 2018. During this campaign, 15 holes were drilled on the DEN Property. Of the 15 holes drilled, 14 were Dual Rotary (DR) / Reverse Circulation (RC) holes that were drilled to identify formation tops and to constrain sand samples, and one was a diamond drill hole (DEN 216-1) to evaluate the geotechnical properties of the carbonate interval.
Twenty drill holes were completed between 2021 and 2022. The majority were drilled as exploration holes. Three drill holes (Den-117-1, Den-120-1 and Den-204-1) were cored but none intersected the bottom of the Carman Sand Member. Two of the drill holes (Den-120-1 and Den-169-1) were drilled close to the edge of the Carman Sand Member and the sand was not intersected. Eight of the twenty wells were able to intersect the bottom of the Carman Sand Member.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Sample Preparation, Analyses and Security
Table 1.1 shows a summary of the number and type of analyses by year and laboratory. AGAT, Liquids Matter and Loring are independent laboratories.
Table 1.1
Summary of Analyses Completed by Year and Laboratory
Laboratory | Year | No. Samples | Analyses Type | |||
AGAT | 2018 | 198 | Sieve Analysis | |||
Loring | 2018 | 5 | Sieve Analysis | |||
Sio Silica |
2018* | 8 | Sieve Analysis | |||
2021-2022 | 33 | 40/70 and 70/140 size fraction clean and magnetic separator | ||||
Liquids Matter |
2021-2022 |
80 |
ICP Whole Rock on 40/70 and 70/140 size fraction |
The Liquids Matter ICP-OES test results show that the magnetic separator used by Sio Silica was successful in increasing sand purity from a mean of 99.89% SiO2 to 99.92% SiO2 for the 40/70 size fraction, and 99.84% SiO2 to 99.92% SiO2 for the 70/140 size fraction.
Data Verification
A Stantec professional geologist assisted with and oversaw the portion of the program involving collection of the field data, sample collection, and the implementation of chain-of-custody documentation during sample shipment. The Stantec professional geologist conducted a site visit to the Property on September 25 and 26, 2018 to align with the Sio Silica field crew on program procedures, as well as to instruct the drilling crew on the required rate of drilling to facilitate sample collection.
On June 10, 2022, the QP visited the Sio Silica’s laboratory in Calgary, Alberta, and the Liquids Matter facility in Calgary, Alberta. It is the QP’s opinion that both the Sio Silica and Liquids Matter laboratories have laboratory equipment, procedures, processes and personnel that are adequate for the performed analytical work. Provided analytical data were compared against the laboratory reports. The results from the different laboratories are compared to ensure consistency and accuracy of the analytical data.
On January 25, 2023, the QP conducted a site visit on the Property. All the drill hole sites were rehabilitated. The drill hole location of one monitoring well was validated. The sample storage facility was also visited.
Mineral Resource Estimates
Estimated resources are classified according to the confidence level that can be placed in each estimate. The classification template used in this study is based on the three-dimensional distance to the nearest drill hole that penetrates the top and the bottom of the Carman Sand, as well as the distance to the nearest sample that contains sand quality analytical data. The Carman Sand interval in the Property was classed as Indicated using a 1,600 m radial distance from the nearest drill hole intersection with available sand quality data and classed as Inferred using a 3,200 m radial distance from the nearest drill hole intersection with or without available sand quality data. Only drill holes listed in Section 7.2 and Section 7.3 were used for resource classification. Due to the reduced reliability of the water-wells described in Section 7.1, this data was only used to define the contacts of the lithological units. Figure 1.3 shows the resource distribution map and Figure 1.4 shows the resource classification map. The resource estimate covers an area of approximately 29,600 ha.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Estimation of Sand Volume
The modeled volumes and weight of the Carman Sand within the resource area are shown in Table 1.2.
Table 1.2
Summary of In-Place Carman Sand as of February, 2023
In-Place Carman Sand Member in Mineable Lease Area | ||||||||
DEN Property | 40/70 mesh fraction | 70/140 mesh fraction | ||||||
Estimated Sand Volume (Mm3) | 4,910 | 2,532 | ||||||
Total Estimated Sand Volume (Mm3) | 7,442 | |||||||
Estimated Sand Weight (Mt) | 7,365 | 3,798 | ||||||
Total Estimated Sand Weight (Mt) | 11,163 |
Mineral Resource Estimates
The Mineral Resource estimate for the Project has been prepared in accordance with the SEC S- K 1300 regulations. The QP believes the DEN Property demonstrates a reasonable prospect for eventual economic extraction.
Preliminary geotechnical analysis for the DEN property has resulted in the extraction recommendations as summarized in Table 1.3. The extraction holes are planned to be drilled in a pod or cluster of up to thirteen holes in one extraction pad area. The current planning basis is to extract between 1 K and 33 K tonnes of sand from an extraction cluster, depending on the thickness of the overlying limestone and diamicton material, before relocating to the next extraction pad.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 1.3
Sand Extraction Recommendations
Competent Limestone Thickness (m) |
Quaternary
Material Thickness (m) |
Extractable
Sand Volume (m3) |
Extractable
Sand Mass (t) |
Distance Between Well Clusters (m) (Center to Center) |
||||||||||
>50 | 0-65 | 36,156 | 54,235 | 127 | ||||||||||
>50 | >65 | 34,674 | 52,012 | 126 | ||||||||||
45-50 | 0-55 | 33,224 | 49,836 | 125 | ||||||||||
45-50 | 55-65 | 29,061 | 43,591 | 122 | ||||||||||
45-50 | >65 | 27,736 | 41,603 | 121 | ||||||||||
40-45 | 0-45 | 29,061 | 43,591 | 122 | ||||||||||
40-45 | 45-55 | 26,442 | 39,663 | 120 | ||||||||||
40-45 | 55-65 | 23,949 | 35,924 | 118 | ||||||||||
40-45 | >65 | 21,582 | 32,373 | 116 | ||||||||||
35-40 | 0-45 | 22,750 | 34,125 | 117 | ||||||||||
35-40 | 45-55 | 20,446 | 30,669 | 115 | ||||||||||
35-40 | 55-65 | 17,225 | 25,837 | 112 | ||||||||||
35-40 | >65 | 16,214 | 24,321 | 111 | ||||||||||
30-35 | 0-45 | 15,235 | 22,852 | 110 | ||||||||||
30-35 | 45-55 | 13,370 | 20,056 | 108 | ||||||||||
30-35 | 55-65 | 11,632 | 17,447 | 106 | ||||||||||
30-35 | >65 | 10,809 | 16,214 | 105 | ||||||||||
25-30 | 0-25 | 15,235 | 22,852 | 110 | ||||||||||
25-30 | 25-35 | 12,485 | 18,728 | 107 | ||||||||||
25-30 | 35-45 | 10,018 | 15,028 | 104 | ||||||||||
25-30 | 45-55 | 8,531 | 12,796 | 102 | ||||||||||
25-30 | 55-65 | 7,169 | 10,754 | 100 | ||||||||||
25-30 | >65 | 6,535 | 9,803 | 99 | ||||||||||
20-25 | 0-25 | 9,259 | 13,888 | 103 | ||||||||||
20-25 | 25-35 | 7,169 | 10,754 | 100 | ||||||||||
20-25 | 35-45 | 5,362 | 8,043 | 97 | ||||||||||
20-25 | 45-55 | 4,822 | 7,234 | 96 | ||||||||||
20-25 | 55-65 | 3,838 | 5,757 | 94 | ||||||||||
20-25 | >65 | 3,392 | 5,089 | 93 | ||||||||||
15-20 | 0-25 | 4,314 | 6,472 | 95 | ||||||||||
15-20 | 25-35 | 2,979 | 4,468 | 92 | ||||||||||
15-20 | 35-45 | 2,245 | 3,368 | 90 | ||||||||||
15-20 | 45-55 | 1,925 | 2,888 | 89 | ||||||||||
15-20 | 55-65 | 1,379 | 2,069 | 87 | ||||||||||
15-20 | >65 | 1,379 | 2,069 | 87 |
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
The mineral resource shown in Table 1.4 is reported as in-place tonnages. The calculated volumes were converted to tonnage by the application of representative average in-place bulk density value of 1.5 g/cm3.
Table 1.4
In-Place Mineral Resource Summary
Mineral Resources (Mt) | ||||||||||||
DEN Property | 40/70 mesh fraction | 70/140 mesh fraction | Total | |||||||||
Measured | 0.0 | 0.0 | 0.0 | |||||||||
Indicated | 55.8 | 32.6 | 88.4 | |||||||||
Total Measured and Indicated | 88.4 | |||||||||||
Inferred | 169.8 | 82.9 | 252.7 | |||||||||
Total Inferred | 252.7 |
It should be noted that the drill hole information shows very consistent Carman Sand thickness, averaging 26 m. The laboratory results show low variability on the sand quality. The SiO2 content ranges between 99.51% to 99.96%, averaging 99.89% after washing and drying. The average SiO2 content after magnetic separation is 99.92%. Analogical results are observed on the Fe analysis. The Fe content ranges between 34.53 ppm and 397.0 ppm with 143.6 ppm average after washing and drying. The average Fe content after magnetic separation is 86.1 ppm, ranging between 27.1 ppm and 266.7 ppm.
The accuracy of resource estimates is, in part, a function of the quality and quantity of available data and of engineering and geological interpretation and judgment. Given the data available at the time that this Technical Report Summary was prepared, the estimates presented herein are considered reasonable. However, this estimate should be accepted with the understanding that additional data and analysis available after the date of the estimates, may necessitate revision. These revisions may be material. There is no guarantee that all or any part of the estimated resources will be recoverable.
Mineral Reserve Estimation
This Technical Report does not include an estimate of reserves. The level of engineering does not support the preparation of a Pre-Feasibility Study; therefore, in accordance with the requirements of S-K 1300, the reported resources cannot be classified as reserves.
This section of the report includes estimates of recoverable sand tonnage for the DEN Property based on preliminary extraction plans, production schedules and processing plant and materials handling plans. These estimates are only intended for the purpose of completion of the cash flow forecasts presented in Section 19. These recoverable estimates are not, and should not be construed to be, estimates of reserves for the DEN Property. They do not comply with the Classification of Reserves as required under S-K 1300. It should be noted that there is no certainty that the resource estimate will be realized.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Development Plan
The 25-year development plan, that is discussed in more detail in Section 13, results in the sale of 2.72 Mt of clean (saleable) sand each year, totaling 65.4 Mt over the life of the project. Stantec notes that the 25-year development plan only addresses a portion of the DEN Property resource. The remaining resource is available for development in further planning efforts.
This estimate of clean (saleable) silica sand is considered to be inclusive of the in-place mineral resource estimate detailed in Section 11. These production estimates are contained within the in- place mineral resource summary and cannot be added to the totals to result in additional resources tonnes.
The DEN Property will be developed using an underground extraction technique that involves drilling through the quaternary sediments, carbonate unit and shale, into the underlying sand. The extraction holes will be cased to the top of the sand and an extraction casing is then lowered into the sand. Air is injected into the extraction casing, approximately 3 m - 5 m above the bottom of the casing. Field tests conducted at the neighboring BRU property have shown that the air injection process results in a slurry of sand, water, and air that rises to the surface. The solids content of the slurry ranges from 90% to 20% during the extraction trials. The average solids content is approximately 50%.
Sio Silica plans to commence extraction operations in the 2nd Quarter of Year 0, processing operations in the 3rd Quarter of Year 0 with the first product sales planned for the 1st Quarter of Year 1. The extraction and processing operations are planned to take place for eight months a year, April to November, while sales will take place year-round. The sales will commence with 2.72 Mt of saleable product planned in Year 1 and extending out the remainder of the 25-year plan. For the purposes of this Technical Report Summary, Year 0 is defined as 2026.
Geotechnical Analysis
Stantec completed a preliminary geotechnical analysis of the sand extraction techniques impact on subsurface conditions. The results of the analysis are used to provide recommendations for borehole spacing which are intended to limit surface subsidence to an acceptable level.
The preliminary analysis indicates that:
● | Subsurface sand extraction should be limited to areas where the carbonate unit is more than 15 m in thickness. |
● | The analysis here assumes an overburden thickness of up to 25 m. Overburden thicker than this range should be reviewed case by case to assess potential for subsidence to occur following extraction. |
● | The distance from the edge of one extraction void to the edge of the next extraction void should not be less than 60 m. |
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
The extraction layout was developed with these geotechnical criteria in mind. The author(s) would like to note that these geotechnical parameters and the resulting geotechnical analysis are based on geotechnical work completed for the Limestone caprock and assuming that the controlling failure mode is shear failure. Additional testing is recommended to support further analysis on the sandstone void space evolution, and the joint system in the limestone (to investigate for the possible presence of vertical jointing and if found, to assess its impact on stability). As stated above, evidence from testing in 2018/2019 suggests that the sandstone angle of repose is steeper than previously assumed, and related adjustments of the extraction plan which would lead to a more refined extraction layout might be required. In addition, more complex void shapes in the sandstone may be occurring with both steep and shallow side slopes.
As a result of the minimum 15 m cut off for the thickness of the limestone to support overburden loading after sand extraction, and the additional potential for strength analysis on the sandstone layer, further geotechnical investigation, testing and analysis will be required. The purpose of this additional assessment is to confirm the Limestone thickness in advance of mining operations, to test the (to date untested) presence of Limestone vertical fractures and the sandstone unit extraction void space and to confirm that other failure modes are not controlling the extraction void maximum size.
Recovery Methods
The processing component of the DEN silica operation is guided by a modular and multi-stage recovery process. The four general areas are:
● | A modular well pad screening and dewatering plant for slurry preparation; |
● | A dewatering circuit or ‘wet plant’ for raw sand separation; |
● | A dry screening plant for final sizing and beneficiation; and |
● | The storage and loadout system. |
Based on preliminary analyses and modeling, extraction, handling and drying losses are estimated at seven (7) percent.
Markets and Contracts
Sio Silica is intending on producing high-quality premium silica sand for end use in the technology markets. The 99.99% SiO2 and low iron content (<100ppm Fe) are typically marketed to manufacturers of solar glass, smart glass for computing and mobile device applications, and semiconductors, among other uses, and receive a premium compared to 95% SiO2 purity. A confidential marketing study was completed by a third party, on behalf of Sio Silica, focused on the premium silica market.
The global market for silica sand is approximately 350 million tonnes per annum, with approximately three quarters of that total in North America (112 million tonnes) and Asia Pacific (154 million tonnes), as of 2021. Of this global market, the high purity market consists of approximately 13 million tonnes per annum.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
The North American market for high purity, low iron silica has been in the 1 million tonne per annum range historically through 2021 and is anticipated to grow to 2 to 3 million tonnes per annum by 2025, principally driven by the photovoltaic market and technology applications.
Supply of high purity quartz to the Asian market has traditionally been supplied via Vietnam and Cambodia. Both countries have scaled back exports to China to strengthen their local manufacturing, resulting in a supply shortage in the rest of Asia and therefore higher delivered prices.
The anticipated growth in the high purity silica market has provided motivation to other potential sources of supply in Australia, according to the marketing report. It is anticipated that the supply from these to-be-developed proposed mines will require additional beneficiation, adding costs to the mine gate pricing. The timing and tonnage of this new supply and the level of the beneficiation, and associated costs, is uncertain. Australian mining companies are expected to be the primary exporter to China; however, it is unclear how much will materialize, according to the marketing study. In the future scenario, Australian mining companies may potentially have lower delivered costs compared to other international peers for solar glass applications, but will require beneficiation for smart glass applications, resulting in a higher delivered price.
There are only two mines in the US today capable of providing low iron silica sand (99.9% SiO2, <100 ppm) totaling approximately 1 million tonnes per annum of supply.
According to the marketing study, typical contracts are two-to-three-year renewable contracts indexed to inflation, and identified with a specific purity, quality, and quantity. In a similar fashion, there are typically penalties for not meeting these criteria. Sio Silica has provided Stantec with three documents related to their negotiations with potential customers for the silica sand produced from the DEN Property.
Agreement #1
The first document is a proposed sales and purchase agreement contract between Sio Silica and Company 1, that Sio Silica has indicated should be finalized in the fourth quarter of 2023. The document states a sales price of US$180 per MT FOB loading port for 500,000 MT per annum. When exchange rates and port and rail costs are considered, it equates to a mine gate price of CDN$149 per MT.
The initial term of this proposed agreement is from January 1, 2024 to December 21, 2026. Thereafter term of the agreement will be automatically renewed for an unlimited number of one (1) year terms unless terminated by either the buyer or the seller.
Agreement #2
The second document is a Memorandum of Understanding between Sio Silica and Company 2 and dated September 15, 2022. The document states a sales price of US$250 per MT FOB loading port for 800,000 MT per annum. When exchange rates and port and rail costs are considered, it equates to a mine gate price of CDN$240 per MT.
Both the buyer and the seller agree to use their best efforts to enter into a binding Sales Agreement in the first quarter of 2024.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Agreement #3
The third document is an engagement agreement between Sio Silica and Company 3 and dated November 1, 2022. The document states a sales price of US$200 per short ton FOB Mine Gate for 1,200,000 short tons per annum. The agreement also stipulates a service fee equal to 15% of the gross amount of the purchase price paid. When conversion to metric tonnes and the 15% fee are considered, it equates to a mine gate price of CDN$243.60 per MT.
The term of this agreement is unlimited unless terminated by either the buyer or the seller.
Product Pricing
Stantec used a weighted tonnage per annum price from all three agreements for the initial years of the analysis. A weighted tonnage per annum price for the last two agreements was used from 2030 until the end of the project life.
Product Quality
The first two agreements specify that the quality parameters for the delivered sand shall be a silicon dioxide (SiO2) percentage greater than or equal to 99.9% and Fe2O3 content less than or equal to 100 ppm.
It is the opinion of Stantec that given the results of the sand analysis discussed in Section 8, the sand pricing discussed above is applicable to the DEN Property resource and as such has been used in this Study.
Stantec does note, however, that confirmed sales agreements or contracts for the full levels of silica sand production that form the basis of this Study have yet to be finalized.
Environmental Studies, Permitting and Social or Community Impact
Sio Silica has engaged AECOM to provide consulting support through the regulatory approval process. The regulatory approval process for the adjoining BRU property has advanced significantly. Although the regulatory process for the DEN Property has not yet commenced, Stantec envisions that it will be materially similar to the BRU process. For further details please refer to the Technical Report Summary BRU Property Manitoba, Canada.
Capital and Operating Costs
The DEN project capital encompasses equipment beginning at extraction well pad, including well rigs, the overland slurry line initial pump stations, booster pump and through to the wet and dry plant, as well as the silos, rail, and supporting infrastructure. Table 1.5, below, outlines the capital estimate by area. It should be noted that no contingency is applied in the table.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 1.5
Capital Cost Summary – (C$), no Contingency
Area | Summary Cost, (C$) | |||
Extraction | $ | 43.5M | ||
Wet Plant | $ | 73.8M | ||
Dry Plant | $ | 85.4M | ||
Rail and TLO | $ | 36.3M | ||
Overland Slurry Pipeline Controls | $ | 6.2M | ||
Infrastructure | $ | 15.9M | ||
Engineering, Project Management & Permitting | $ | 2.5M | ||
Total | $ | 263.6M |
A 7% contingency has been applied to most capital cost items to account for any unforeseen or otherwise unanticipated cost elements that could be associated with development and operation of the project. Contingency for the project totals $17.2M. A contingency was not applied to rail costs as these costs were supplied with contingency included.
The project team also developed the operating costs using construction lengths, land requirements, operating units, and process or dryer unit preliminary power and gas consumption. Areas of operating costs breakouts include:
● | Land leasing |
● | Land prep and reclaim |
● | Well Production |
● | Slurry Transport |
● | Wet Process |
● | Support Equipment |
● | Dry Process |
● | Loadout |
● | Rail Costs |
● | Manpower |
● | General and Administration |
The total operating cost summary is shown in Table 1.6. In year 1, each extraction site utilizes dedicated supervision leading to higher initial costs. Extraction operation costs are reduced in later years as operations supervision is planned to be centralized. Slurry transport costs are lower in early years due to shorter slurry pumping distances. Dry processing costs are calculated based on the change from trucked propane in Year 1 while the gas line is developed. From Year 2 production onward, operating costs reflect that the installation of a natural gas pipeline and the use of natural gas as opposed to propane.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 1.6
Life of mine Operating Cost Summary, C$
Year 1 C$/tonne | Year 2 onward C$/tonne | |||||||
Extraction | $ | 12.53 | $ | 8.62 | ||||
Slurry Transport | $ | 1.74 | $ | 2.90 | ||||
Wet Processing | $ | 5.07 | $ | 5.07 | ||||
Dry Processing | $ | 11.99 | $ | 8.63 | ||||
Site Labor | $ | 1.28 | $ | 1.28 | ||||
Insurance | $ | 0.38 | $ | 0.38 | ||||
Total OPEX | $ | 32.99 | $ | 26.88 |
Economic Analyses
Sio Silica prepared the economic analyses for the DEN operation and provided the model to Stantec. Stantec reviewed the model to assess and determined it to be appropriate for the purposes of the IA. Section 19 outlines the specific inputs and assumptions for the analyses. The results of the Study base case economic analysis are shown in Table 1.7 Project Economics. The economic performance of the project is positive up to the highest analyzed discount rate of 16%.
Table 1.7
Project Economics (C$)
Discount Rate | After Tax | ||||||||
(%) | IRR | NPV | |||||||
6 | 99 | % | $ | 3,849,723,000 | |||||
8 | 99 | % | $ | 3,132,092,000 | |||||
10 | 99 | % | $ | 2,588,786,000 | |||||
12 | 99 | % | $ | 2,169,955,000 | |||||
14 | 99 | % | $ | 1,841,529,000 | |||||
16 | 99 | % | $ | 1,579,856,000 |
Stantec has not completed a rigorous analysis in order to select the project discount rate. However, Stantec notes that current normalized risk-free rate and equity risk premium, composed of 3.5% and 5.7% respectively which shows that the approximate cost of equity capital to be 9.2%. This rate does not account for project risks, industry risk, size and maturity of the operation to name a few. As such the appropriate discount rate for this study is likely in the range of 10-13%. Ultimately investors in the DEN Property will need to conduct their own discount rate analysis.
The key project metrics and cash flow summary are summarized in Tables 1.8 and 1.9.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 1.8
Key Project Metrics
Economic Analysis | DEN | |||
Net Present Value (NPV), After-Tax | $ | 2,588,786,000 | ||
Internal Rate of Return (IRR), After-Tax | 99 | % | ||
Pay-Back Period (Years based on After-Tax) | 1.00 | |||
Capital Costs | ||||
Initial Capital (M) | 280.75 | |||
Expansion Capital (M) | N/A | |||
Operating Costs at Full Production | ||||
Extraction ($/MT ) | 8.62 | |||
Slurry Transport ($/MT) | 2.90 | |||
Wet Processing ($/MT) | 5.07 | |||
Dry Processing and Loadout ($/MT) | 8.63 | |||
Site Labor and Insurance ($/MT) | 1.66 | |||
Total Operating Cost ($/MT) | 26.88 | |||
Production Data | ||||
Life of Mine (Years) | 25 | |||
Annual Clean Saleable Tonnes Produced (MT) | 2,724,000 | |||
Total Clean Saleable Tonnes Produced (MT) | 65,376,000 |
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 1.9
Cash Flow Summary
Period | Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 | Year 10 | Year 11 | Year 12 | |||||||||||||||||||||||||||||||||||||||
Raw Sand Production (Tonnes) | - | 1,831,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | |||||||||||||||||||||||||||||||||||||||
Sales Volumes (Tonnes) | - | - | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | |||||||||||||||||||||||||||||||||||||||
Minegate Pricing ($/Tonne) | 223.53 | 223.53 | 223.53 | 223.53 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | |||||||||||||||||||||||||||||||||||||||
Minegate Revenue (M$) | - | - | 609 | 609 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | |||||||||||||||||||||||||||||||||||||||
Royalties (M$)™ | - | - | 24 | 10 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | |||||||||||||||||||||||||||||||||||||||
Mining Tax (M$) | - | - | 86 | 89 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | |||||||||||||||||||||||||||||||||||||||
Net Revenue (M$) | - | - | 499 | 510 | 553 | 553 | 553 | 553 | 553 | 553 | 553 | 553 | 553 | |||||||||||||||||||||||||||||||||||||||
Extraction Operating Costs (M$) | - | 28 | 44 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | |||||||||||||||||||||||||||||||||||||||
Wet Processing Operating Costs (M$) | - | 3 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | |||||||||||||||||||||||||||||||||||||||
Dry Processing and Loadout Operating Costs (M$) | - | - | 33 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | |||||||||||||||||||||||||||||||||||||||
Total Operating Costs (M$) | - | 31 | 91 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | |||||||||||||||||||||||||||||||||||||||
Manitoba Operations G&A (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Head office G&A (M$) | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | |||||||||||||||||||||||||||||||||||||||
Total G&A (M$) | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | |||||||||||||||||||||||||||||||||||||||
Cash Interest Expense (M$) | 3 | 21 | 21 | 2 | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Cash Income Tax (M$) | (1 | ) | (14 | ) | 69 | 103 | 118 | 121 | 123 | 124 | 125 | 126 | 127 | 127 | 128 | |||||||||||||||||||||||||||||||||||||
Total Cash-flow (M$) | (4 | ) | (39 | ) | 317 | 330 | 359 | 356 | 354 | 353 | 352 | 351 | 350 | 350 | 349 | |||||||||||||||||||||||||||||||||||||
Cumulative Cash-Flow (M$) | (4 | ) | (43 | ) | 273 | 604 | 963 | 1,319 | 1,673 | 2,026 | 2,377 | 2,728 | 3,078 | 3,427 | 3,777 | |||||||||||||||||||||||||||||||||||||
Phase 1 Capital Expenditures (M$) | 21 | 260 | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Expansion Capital Expenditures (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Total Capital Expenditures (M$) | 21 | 260 | - | - | - | - | - | - | - | - | - | - | - |
![]() | 1-18 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Period | Year 13 | Year 14 | Year 15 | Year 16 | Year 17 | Year 18 | Year 19 | Year 20 | Year 21 | Year 22 | Year 23 | Year 24 | Year 25 | Total | ||||||||||||||||||||||||||||||||||||||||||
Raw Sand Production (Tonnes) | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 72,127,000 | ||||||||||||||||||||||||||||||||||||||||||
Sales Volumes (Tonnes) | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 65,376,000 | ||||||||||||||||||||||||||||||||||||||||||
Minegate Pricing ($/Tonne) | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | |||||||||||||||||||||||||||||||||||||||||||
Minegate Revenue (M$) | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 15,753 | ||||||||||||||||||||||||||||||||||||||||||
Royalties (M$) | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 265 | ||||||||||||||||||||||||||||||||||||||||||
Mining Tax (M$) | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 2,327 | ||||||||||||||||||||||||||||||||||||||||||
Net Revenue (M$) | 553 | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 13,161 | ||||||||||||||||||||||||||||||||||||||||||
Extraction Operating Costs (M$) | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 912 | ||||||||||||||||||||||||||||||||||||||||||
Wet Processing Operating Costs (M$) | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 335 | ||||||||||||||||||||||||||||||||||||||||||
Dry Processing and Loadout Operating Costs (M$) | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 573 | ||||||||||||||||||||||||||||||||||||||||||
Total Operating Costs (M$) | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 1,821 | ||||||||||||||||||||||||||||||||||||||||||
Manitoba Operations G&A (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
Head office G&A (M$) | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 47 | ||||||||||||||||||||||||||||||||||||||||||
Total G&A (M$) | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 47 | ||||||||||||||||||||||||||||||||||||||||||
Cash Interest Expense (M$) | - | - | - | - | - | - | - | - | - | - | - | 47 | ||||||||||||||||||||||||||||||||||||||||||||
Cash Income Tax (M$) | 128 | 128 | 128 | 128 | 128 | 128 | 128 | 129 | 129 | 129 | 129 | 129 | 129 | 2,945 | ||||||||||||||||||||||||||||||||||||||||||
Total Cash-flow (M$) | 349 | 348 | 348 | 348 | 348 | 348 | 348 | 348 | 348 | 348 | 348 | 348 | 348 | 8,302 | ||||||||||||||||||||||||||||||||||||||||||
Cumulative Cash-Flow (M$) | 4,126 | 4,474 | 4,822 | 5,170 | 5,518 | 5,866 | 6,214 | 6,562 | 6,910 | 7,258 | 7,606 | 7,953 | 8,301 | - | ||||||||||||||||||||||||||||||||||||||||||
Phase 1 Capital Expenditures (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | 281 | ||||||||||||||||||||||||||||||||||||||||||
Expansion Capital Expenditures (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
Total Capital Expenditures (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | 281 |
![]() | 1-19 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Interpretation and Conclusions
This Study indicates a positive economic outcome related to the potential development of a silica sand extraction and processing operation for the DEN Property. The extraction plan addressed only a portion of the In-Situ Mineral Resource previously classified, as the entire DEN resource was not required for the 25-year development plan.
Stantec has identified the following risks that could potentially affect the projected economic viability of the DEN Property development.
Product Pricing and Cost Escalation
As indicated in Section 19 of this Study, the project economics are sensitive to the assumed pricing for silica sand and estimated project costs. A 30% reduction in product pricing combined with a 30% increase in project costs, after a 7% contingency (initial project capital) has been applied, and results in positive economics.
Stantec has reviewed Sio Silica’s cost estimate and believes it captures reasonable Capex and Opex costs for the project as it is currently planned. However, the cost estimate is based on budgetary quotes provided by third party vendors and Sio Silica’s partners and assumes the project advances as per the current schedule.
Stantec understands that Sio Silica intends to proceed with the project development in 2026, partially based on the results of this Study. As such, the risks associated with cost escalation are not insignificant.
Timing of Project Development
Certain process and infrastructure components may be subject to longer lead times. These include rotary dryers, gas pipeline installation, and high voltage substations. The full capacity of the DEN operation and the resultant project economics are dependent on these components.
Development of Extraction Process
The current extraction process is based on the results from 14 drill holes completed on the BRU Property from 2017 to 2021. Stantec has no reason to believe that the planned extraction process will not be successful. However, Stantec does note the risks to the project should the planned extraction rates be unachievable or unsustainable over the life and geographic extent of the Project.
Confirmation of Geotechnical Testing and Analysis
As discussed in Section 11.4, Stantec geotechnical engineers completed a preliminary geotechnical analysis related to extraction of the sand resource on the adjacent BRU Property. A similar program has not yet occurred for the DEN Property. Stantec used the BRU results and DEN geological interpretation and completed a high-level preliminary analysis of the DEN conditions and these results were used to inform the current resource estimate.
![]() | 1-20 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
The conclusions of the previous BRU analysis are summarized below:
● | Based upon current information and assessments, Shear and Bending are the most probable failure modes with the potential to affect long-term stability. Unravelling, Caving, and Chimneying are not controlling failure modes for the BRU property due to the nature of the limestone caprock. |
● | The Bending failure mode is controlling the long-term stability of the post extraction cavity for the expected range of caprock and overburden thickness and material properties and the extraction depth in the sand. The stability analysis and extraction borehole spacing design were completed to achieve a factor of safety of 2.0, which is considered to be an acceptably conservative FOS for the project. |
● | The cavity after extraction is expected to further expand with time resulting in loose sand infilling the extracted void leaving a larger unsupported caprock span. Based on the assumption that the areas with factor of safety larger than 2 are stable in the long-term, approximately 5 m of additional raveling of the post extraction cavity walls is expected (by end of the design life of 100 years). Therefore, the unsupported caprock span will increase by 10 m with time after extraction. |
● | Based upon the results of geotechnical assessment and with the understanding that Sio Silica will follow guidance provided by Stantec including continuing to assess the geotechnical characteristics and performance of the sand deposit and overlying materials during the project life and to adjust design accordingly, no large-scale surface subsidence is expected to occur as a result of sand extraction. |
There is a potential that further geotechnical assessments may impact the current resource estimate, either positively or negatively. In particular, there remains uncertainty regarding the possible presence of vertical fractures in Limestone caprock, which to date has not been investigated or assessed. The presence of continuous vertical fractures in Limestone caprock above extraction voids has the potential to lead to caprock collapse which may propagate to the surface and produce settlement. In addition, there remains uncertainty regarding the long term performance of the extraction voids which may have complex void shapes and have the potential to propagate over larger than currently estimated distances.
Recommendations
Phase 1: Geotechnical and Resource Investigation and Analysis
Based on Sio Silica’s current development and production plans, all resources identified in the areas where the first 5 years of production will occur should be classified as Measured. Additional drill holes may be required to increase confidence in the resource estimates within these areas.
![]() | 1-21 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Stantec geotechnical engineers completed a preliminary geotechnical analysis of the impact of extraction of the sand on the BRU Property. The recommendations from this analysis, which also apply to the DEN Property, are summarized below:
● | Design and execute a site investigation and assess the results to confirm expected geotechnical performance. This investigation may include the following components: |
o | Data Collection: |
§ | Geotechnical borehole drilling, logging, photography, and sampling with vertical and inclined boreholes and SPT or CPT if needed – to characterize extents and properties of sandstone, caprock and overburden. |
§ | Acoustic and Optical Televiewer Survey of Geotechnical Boreholes – to characterize caprock structure. |
§ | Side Scan Sonar Survey – to monitor sand cavity shape and behavior. |
§ | Laboratory testing of selected samples of sandstone, caprock and overburden as required – to characterize properties of sandstone, caprock and overburden. |
§ | Installation and monitoring of Vibrating Wire Piezometers, Vertical Extensometers and Surface Monuments and Total Station or GPS Survey – to monitor changes in caprock and surface subsidence. |
o | Data Analysis: | |
§ | Stability and settlement analysis to identify and assess for changes in assumptions related to vertical jointing (if found) in Limestone caprock, extraction void shape or other design assumptions. |
● | Develop and implement a Trigger Action Response Plan as follows: |
§ | Collected data review - to establish baseline values. |
§ | Trigger value range identification - low/moderate/high – green/yellow/red |
§ | Monitoring results verification and comparison against trigger values. |
● | Review the impact of potential vibration sources, such as rail traffic, to determine potential offsets from extraction areas. |
Table 1.10 shows the anticipated cost to complete the geotechnical analysis.
Table 1.10
Cost Estimate – Geotechnical Analysis
Task | Estimated Cost (C$) | |||
Geotechnical Analysis | 500,000 |
Phase 2: Engineering Bridging Studies
Stantec recommends that Sio Silica continues to more accurately define the CAPEX and OPEX estimate for the DEN Property and to secure relationships with contractors, vendors, and suppliers.
Table 1.11 provides cost estimates for these studies.
Table 1.11
Engineering Bridging Studies
Task | Estimated Cost (C$) | |||
Engineering Bridging Studies | 550,000 |
![]() | 1-22 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
2 | INTRODUCTION |
On Dec 5, 2022, Sio Silica Corporation (Sio Silica) contracted Stantec Consulting Ltd (Stantec) to prepare a Technical Report Summary regarding the Initial Assessment (IA) for the DEN Property. The Technical Report Summary was prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (SEC) reporting of material mining assets under regulation S-K 1300.
The author(s) note that this Study is preliminary in nature, that it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the resource estimates will be realized.
The accuracy of resource estimates is, in part, a function of the quality and quantity of available data and of engineering and geological interpretation and judgment. Given the data available at the time this report was prepared, the estimates presented herein are considered reasonable. However, they should be accepted with the understanding that additional data and analysis available subsequent to the date of the estimates may necessitate revision. These revisions may be material. There is no guarantee that all or any part of the estimated resources will be recoverable.
![]() | 2-1 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
3 | PROPERTY DESCRIPTION |
3.1 | Description and Location |
The centre of the Property is located approximately 60 km southeast of the city of Winnipeg, Manitoba within the Rural Municipalities of Ste. Anne, Hanover and La Broquerie. The Property is accessed from Winnipeg by the Trans-Canada Highway, and PR 210 for the northern section of the Property, and Provincial Highway 12 for the southern section of the Property. The general property location is shown on Figure 3-1.
The Property encompasses 63,750 hectares (157,530 acres) and is shown on NTS Map Sheet 62. The main block of the Property expands from 654,900E to 693,250E, and 5,459,450N to 5,502,750N, and the centre of the Property is at 49.451287°N and -96.513671°E (UTM 14 U 680,199E and 5,480,597N), as shown on Figure 3-2.
3.2 | Mining Claims |
The Property, which consists of 278 claims, are all in surveyed territory. The Property is held by CanWhite, which is now Sio Silica. Table 3.1 provides a summary of the active claims. The locations of the claims are shown on Figure 3.2.
To maintain the claims in good standing, Sio Silica must fulfill the requirements of Manitoba Regulation 64/92, which includes the following obligations (Manitoba, 1992b):
● | The claim holder must spend $12.50 per hectare/year from year two to year 10, and then $25 per hectare/year from year 11 and for each year thereafter. |
● | An annual assessment report detailing exploration activities and expenditures must be filed within the reporting period. The first assessment report must be filed within 60 days of the second anniversary of claim approval, with subsequent reports submitted annually. |
![]() | 3-1 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
![]() | 3-2 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
![]() | 3-3 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 3.1
Active DEN Property Claims
Claim Name |
Disposition Number |
Claim Type |
Expiry Date |
Area
(ha) | ||||
DEN 1 | SV14008 | Mining | 11/2/2023 | 128 | ||||
DEN 2 | SV14005 | Mining | 11/2/2023 | 256 | ||||
DEN 3 | SV14006 | Mining | 11/2/2023 | 256 | ||||
DEN 4 | SV14004 | Mining | 11/2/2023 | 256 | ||||
DEN 5 | SV14007 | Mining | 11/2/2023 | 133 | ||||
DEN 6 | SV14009 | Mining | 11/2/2023 | 134 | ||||
DEN 7 | SV14010 | Mining | 11/2/2023 | 256 | ||||
DEN 8 | SV14015 | Mining | 11/2/2023 | 207 | ||||
DEN 9 | SV14011 | Mining | 11/2/2023 | 256 | ||||
DEN 10 | SV14012 | Mining | 11/2/2023 | 256 | ||||
DEN 11 | SV14013 | Mining | 11/2/2023 | 68 | ||||
DEN 12 | SV14014 | Mining | 11/2/2023 | 192 | ||||
DEN 13 | SV14016 | Mining | 11/2/2023 | 132 | ||||
DEN 14 | SV14017 | Mining | 11/2/2023 | 138 | ||||
DEN 15 | SV14018 | Mining | 11/2/2023 | 256 | ||||
DEN 16 | SV14019 | Mining | 11/2/2023 | 276 | ||||
DEN 17 | SV14020 | Mining | 11/2/2023 | 143 | ||||
DEN 18 | SV14021 | Mining | 11/2/2023 | 276 | ||||
DEN 19 | SV14022 | Mining | 11/2/2023 | 276 | ||||
DEN 20 | SV14023 | Mining | 11/2/2023 | 276 | ||||
DEN 21 | SV14024 | Mining | 11/2/2023 | 276 | ||||
DEN 22 | SV14025 | Mining | 11/2/2023 | 276 | ||||
DEN 23 | SV14026 | Mining | 11/2/2023 | 276 | ||||
DEN 24 | SV14027 | Mining | 11/2/2023 | 276 | ||||
DEN 25 | SV14028 | Mining | 11/2/2023 | 75 | ||||
DEN 26 | SV14029 | Mining | 11/2/2023 | 276 | ||||
DEN 27 | SV14030 | Mining | 11/2/2023 | 256 | ||||
DEN 28 | SV14031 | Mining | 11/2/2023 | 276 | ||||
DEN 30 | SV14033 | Mining | 11/2/2023 | 276 | ||||
DEN 31 | SV14034 | Mining | 11/2/2023 | 276 | ||||
DEN 32 | SV14035 | Mining | 11/2/2023 | 276 | ||||
DEN 33 | SV14036 | Mining | 11/2/2023 | 276 | ||||
DEN 34 | SV14037 | Mining | 11/2/2023 | 276 | ||||
DEN 36 | SV14039 | Mining | 11/2/2023 | 138 | ||||
DEN 37 | SV14040 | Mining | 11/2/2023 | 276 |
![]() | 3-4 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 3.1 (Cont’d)
Claim
Name |
Disposition
Number |
Claim
Type |
Expiry
Date |
Area
(ha) | ||||
DEN 38 | SV14041 | Mining | 11/2/2023 | 276 | ||||
DEN 39 | SV14042 | Mining | 11/2/2023 | 276 | ||||
DEN 41 | SV14043 | Mining | 11/2/2023 | 276 | ||||
DEN 42 | SV14044 | Mining | 11/2/2023 | 276 | ||||
DEN 43 | SV14045 | Mining | 11/2/2023 | 276 | ||||
DEN 44 | SV14046 | Mining | 11/2/2023 | 276 | ||||
DEN 45 | SV14047 | Mining | 11/2/2023 | 276 | ||||
DEN 46 | SV12454 | Mining | 11/29/2023 | 269 | ||||
DEN 47 | SV14048 | Mining | 11/2/2023 | 276 | ||||
DEN 48 | SV14049 | Mining | 11/2/2023 | 256 | ||||
DEN 49 | SV14050 | Mining | 11/2/2023 | 276 | ||||
DEN 50 | SV14051 | Mining | 11/2/2023 | 276 | ||||
DEN 51 | SV14052 | Mining | 11/2/2023 | 276 | ||||
DEN 52 | SV14053 | Mining | 11/2/2023 | 276 | ||||
DEN 53 | SV14054 | Mining | 11/2/2023 | 276 | ||||
DEN 54 | SV14055 | Mining | 11/2/2023 | 276 | ||||
DEN 55 | SV12463 | Mining | 11/29/2023 | 267 | ||||
DEN 56 | SV12464 | Mining | 11/29/2023 | 273 | ||||
DEN 57 | SV12465 | Mining | 11/29/2023 | 267 | ||||
DEN 58 | SV12466 | Mining | 11/29/2023 | 262 | ||||
DEN 59 | SV14056 | Mining | 11/2/2023 | 276 | ||||
DEN 60 | SV14057 | Mining | 11/2/2023 | 276 | ||||
DEN 61 | SV14058 | Mining | 11/2/2023 | 276 | ||||
DEN 62 | SV14059 | Mining | 11/2/2023 | 276 | ||||
DEN 63 | SV14060 | Mining | 11/2/2023 | 276 | ||||
DEN 64 | SV14061 | Mining | 11/2/2023 | 276 | ||||
DEN 65 | SV14062 | Mining | 11/2/2023 | 276 | ||||
DEN 66 | SV14063 | Mining | 11/2/2023 | 276 | ||||
DEN 67 | SV12475 | Mining | 11/29/2023 | 271 | ||||
DEN 68 | SV12476 | Mining | 11/29/2023 | 268 | ||||
DEN 69 | SV12477 | Mining | 11/29/2023 | 267 | ||||
DEN 70 | SV12478 | Mining | 11/29/2023 | 69 | ||||
DEN 71 | SV14064 | Mining | 11/2/2023 | 276 | ||||
DEN 72 | SV14065 | Mining | 11/2/2023 | 276 | ||||
DEN 73 | SV14066 | Mining | 11/2/2023 | 276 | ||||
DEN 74 | SV14067 | Mining | 11/2/2023 | 276 |
![]() | 3-5 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 3.1 (Cont’d)
Claim Name |
Disposition Number |
Claim
Type |
Expiry
Date |
Area
(ha) | ||||
DEN 75 | SV14068 | Mining | 11/2/2023 | 207 | ||||
DEN 76 | SV14069 | Mining | 11/2/2023 | 256 | ||||
DEN 77 | SV14070 | Mining | 11/2/2023 | 256 | ||||
DEN 78 | SV12486 | Mining | 11/29/2023 | 273 | ||||
DEN 79 | SV12487 | Mining | 11/29/2023 | 270 | ||||
DEN 80 | SV12488 | Mining | 11/29/2023 | 203 | ||||
DEN 81 | SV14071 | Mining | 11/2/2023 | 132 | ||||
DEN 82 | SV14072 | Mining | 11/2/2023 | 136 | ||||
DEN 83 | SV12491 | Mining | 11/29/2023 | 134 | ||||
DEN 84 | SV12492 | Mining | 11/29/2023 | 269 | ||||
DEN 85 | SV14073 | Mining | 11/2/2023 | 276 | ||||
DEN 86 | SV14074 | Mining | 11/2/2023 | 256 | ||||
DEN 87 | SV14075 | Mining | 11/2/2023 | 256 | ||||
DEN 88 | SV14076 | Mining | 11/2/2023 | 256 | ||||
DEN 89 | SV14077 | Mining | 11/2/2023 | 256 | ||||
DEN 90 | SV14078 | Mining | 11/2/2023 | 256 | ||||
DEN 91 | SV14079 | Mining | 11/2/2023 | 276 | ||||
DEN 92 | SV14080 | Mining | 11/2/2023 | 256 | ||||
DEN 93 | SV14081 | Mining | 11/2/2023 | 256 | ||||
DEN 94 | SV14082 | Mining | 11/2/2023 | 256 | ||||
DEN 95 | SV14083 | Mining | 11/2/2023 | 276 | ||||
DEN 96 | SV14084 | Mining | 11/2/2023 | 256 | ||||
DEN 97 | SV14183 | Mining | 7/17/2024 | 276 | ||||
DEN 101 | SV12509 | Mining | 11/29/2023 | 64 | ||||
DEN 102 | SV12510 | Mining | 11/29/2023 | 268 | ||||
DEN 103 | SV12511 | Mining | 11/29/2023 | 276 | ||||
DEN 104 | SV14085 | Mining | 11/2/2023 | 256 | ||||
DEN 105 | SV14086 | Mining | 11/2/2023 | 256 | ||||
DEN 106 | SV12514 | Mining | 11/29/2023 | 274 | ||||
DEN 107 | SV12515 | Mining | 11/29/2023 | 264 | ||||
DEN 108 | SV12516 | Mining | 11/29/2023 | 278 | ||||
DEN 109 | SV12517 | Mining | 11/29/2023 | 268 | ||||
DEN 110 | SV12518 | Mining | 11/29/2023 | 265 | ||||
DEN 111 | SV12519 | Mining | 11/29/2023 | 272 | ||||
DEN 112 | SV12520 | Mining | 11/29/2023 | 266 | ||||
DEN 113 | SV12521 | Mining | 11/29/2023 | 275 |
![]() | 3-6 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 3.1 (Cont’d)
Claim
Name |
Disposition
Number |
Claim Type |
Expiry Date |
Area (ha) | ||||
DEN 114 | SV12522 | Mining | 11/29/2023 | 273 | ||||
DEN 115 | SV12523 | Mining | 11/29/2023 | 279 | ||||
DEN 116 | SV12524 | Mining | 11/29/2023 | 262 | ||||
DEN 117 | SV12525 | Mining | 11/29/2023 | 270 | ||||
DEN 118 | SV12526 | Mining | 11/29/2023 | 235 | ||||
DEN 119 | SV12527 | Mining | 11/29/2023 | 261 | ||||
DEN 120 | SV12528 | Mining | 11/29/2023 | 265 | ||||
DEN 121 | SV12529 | Mining | 11/29/2023 | 269 | ||||
DEN 122 | SV12530 | Mining | 11/29/2023 | 266 | ||||
DEN 123 | SV12531 | Mining | 11/29/2023 | 269 | ||||
DEN 124 | SV12532 | Mining | 11/29/2023 | 268 | ||||
DEN 125 | SV12533 | Mining | 11/29/2023 | 274 | ||||
DEN 126 | SV12534 | Mining | 11/29/2023 | 270 | ||||
DEN 127 | SV12535 | Mining | 11/29/2023 | 273 | ||||
DEN 128 | SV12536 | Mining | 11/29/2023 | 271 | ||||
DEN 129 | SV12537 | Mining | 11/29/2023 | 253 | ||||
DEN 130 | SV12538 | Mining | 11/29/2023 | 273 | ||||
DEN 131 | SV12540 | Mining | 11/29/2023 | 262 | ||||
DEN 132 | SV12539 | Mining | 11/29/2023 | 273 | ||||
DEN 133 | SV12541 | Mining | 11/29/2023 | 265 | ||||
DEN 134 | SV12542 | Mining | 11/29/2023 | 264 | ||||
DEN 135 | SV12543 | Mining | 11/29/2023 | 269 | ||||
DEN 136 | SV12544 | Mining | 11/29/2023 | 277 | ||||
DEN 137 | SV12545 | Mining | 11/29/2023 | 261 | ||||
DEN 138 | SV12546 | Mining | 11/29/2023 | 272 | ||||
DEN 139 | SV12547 | Mining | 11/29/2023 | 270 | ||||
DEN 140 | SV12548 | Mining | 11/29/2023 | 268 | ||||
DEN 141 | SV12549 | Mining | 11/29/2023 | 264 | ||||
DEN 142 | SV12550 | Mining | 11/29/2023 | 257 | ||||
DEN 143 | SV12551 | Mining | 11/29/2023 | 265 | ||||
DEN 144 | SV12552 | Mining | 11/29/2023 | 234 | ||||
DEN 145 | SV12286 | Mining | 11/28/2023 | 267 | ||||
DEN 146 | SV12287 | Mining | 11/28/2023 | 268 | ||||
DEN 147 | SV12288 | Mining | 11/28/2023 | 271 | ||||
DEN 148 | SV12289 | Mining | 11/28/2023 | 266 | ||||
DEN 149 | SV12290 | Mining | 11/28/2023 | 267 |
![]() | 3-7 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 3.1 (Cont’d)
Claim
Name |
Disposition Number |
Claim Type |
Expiry Date |
Area (ha) | ||||
DEN 150 | SV12291 | Mining | 11/28/2023 | 267 | ||||
DEN 151 | SV12292 | Mining | 11/28/2023 | 266 | ||||
DEN 152 | SV12293 | Mining | 11/28/2023 | 269 | ||||
DEN 153 | SV12294 | Mining | 11/28/2023 | 138 | ||||
DEN 154 | SV12295 | Mining | 11/28/2023 | 267 | ||||
DEN 155 | SV12296 | Mining | 11/28/2023 | 271 | ||||
DEN 156 | SV12297 | Mining | 11/28/2023 | 268 | ||||
DEN 157 | SV12299 | Mining | 11/28/2023 | 266 | ||||
DEN 158 | SV12300 | Mining | 11/28/2023 | 268 | ||||
DEN 159 | SV12301 | Mining | 11/28/2023 | 68 | ||||
DEN 160 | SV12302 | Mining | 11/28/2023 | 270 | ||||
DEN 161 | SV12303 | Mining | 11/28/2023 | 263 | ||||
DEN 162 | SV12304 | Mining | 11/28/2023 | 270 | ||||
DEN 163 | SV12305 | Mining | 11/28/2023 | 65 | ||||
DEN 179 | SV12321 | Mining | 11/28/2023 | 275 | ||||
DEN 180 | SV12322 | Mining | 11/28/2023 | 272 | ||||
DEN 181 | SV12323 | Mining | 11/28/2023 | 272 | ||||
DEN 183 | SV12355 | Mining | 11/28/2023 | 268 | ||||
DEN 184 | SV12356 | Mining | 11/28/2023 | 268 | ||||
DEN 185 | SV12357 | Mining | 11/28/2023 | 269 | ||||
DEN 186 | SV12358 | Mining | 11/28/2023 | 269 | ||||
DEN 187 | SV12359 | Mining | 11/28/2023 | 272 | ||||
DEN 188 | SV12360 | Mining | 11/28/2023 | 267 | ||||
DEN 189 | SV12361 | Mining | 11/28/2023 | 272 | ||||
DEN 190 | SV12362 | Mining | 11/28/2023 | 268 | ||||
DEN 191 | SV12363 | Mining | 11/28/2023 | 264 | ||||
DEN 192 | SV12364 | Mining | 11/28/2023 | 270 | ||||
DEN 193 | SV12365 | Mining | 11/28/2023 | 271 | ||||
DEN 194 | SV12366 | Mining | 11/28/2023 | 268 | ||||
DEN 195 | SV12367 | Mining | 11/28/2023 | 276 | ||||
DEN 196 | SV12368 | Mining | 11/28/2023 | 271 | ||||
DEN 197 | SV12369 | Mining | 11/28/2023 | 260 | ||||
DEN 198 | SV12370 | Mining | 11/28/2023 | 272 | ||||
DEN 199 | SV12371 | Mining | 11/28/2023 | 266 | ||||
DEN 201 | SV12373 | Mining | 11/28/2023 | 130 | ||||
DEN 202 | SV12374 | Mining | 11/28/2023 | 134 |
![]() | 3-8 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 3.1 (Cont’d)
Claim Name |
Disposition Number |
Claim Type |
Expiry Date |
Area (ha) | ||||
DEN 203 | SV12375 | Mining | 11/28/2023 | 269 | ||||
DEN 204 | SV12376 | Mining | 11/28/2023 | 269 | ||||
DEN 205 | SV12377 | Mining | 11/28/2023 | 268 | ||||
DEN 206 | SV12378 | Mining | 11/28/2023 | 272 | ||||
DEN 207 | SV12379 | Mining | 11/28/2023 | 266 | ||||
DEN 208 | SV12380 | Mining | 11/28/2023 | 205 | ||||
DEN 209 | SV12381 | Mining | 11/28/2023 | 263 | ||||
DEN 212 | SV12384 | Mining | 11/28/2023 | 268 | ||||
DEN 213 | SV12385 | Mining | 11/28/2023 | 270 | ||||
DEN 214 | SV12386 | Mining | 11/28/2023 | 134 | ||||
DEN 215 | SV12387 | Mining | 11/28/2023 | 268 | ||||
DEN 216 | SV12388 | Mining | 11/28/2023 | 235 | ||||
DEN 217 | SV12389 | Mining | 11/28/2023 | 204 | ||||
DEN 218 | SV12390 | Mining | 11/28/2023 | 136 | ||||
DEN 219 | SV12391 | Mining | 11/28/2023 | 131 | ||||
DEN 220 | SV12392 | Mining | 11/28/2023 | 250 | ||||
DEN 221 | SV12393 | Mining | 11/28/2023 | 232 | ||||
DEN 223 | SV12395 | Mining | 11/28/2023 | 132 | ||||
DEN 224 | SV12396 | Mining | 11/28/2023 | 177 | ||||
DEN 225 | SV12397 | Mining | 11/28/2023 | 202 | ||||
DEN 226 | SV12398 | Mining | 11/28/2023 | 269 | ||||
DEN 227 | SV12399 | Mining | 11/28/2023 | 67 | ||||
DEN 228 | SV12400 | Mining | 11/28/2023 | 134 | ||||
DEN 229 | SV12401 | Mining | 11/28/2023 | 272 | ||||
DEN 230 | SV12402 | Mining | 11/28/2023 | 151 | ||||
DEN 231 | SV12403 | Mining | 11/28/2023 | 271 | ||||
DEN 233 | SV12405 | Mining | 11/28/2023 | 221 | ||||
DEN 234 | SV12406 | Mining | 11/28/2023 | 55 | ||||
DEN 235 | SV12407 | Mining | 11/28/2023 | 115 | ||||
DEN 236 | SV12408 | Mining | 11/28/2023 | 180 | ||||
DEN 237 | SV12409 | Mining | 11/28/2023 | 71 | ||||
DEN 238 | SV12410 | Mining | 11/28/2023 | 211 | ||||
DEN 239 | SV12411 | Mining | 11/28/2023 | 272 | ||||
DEN 240 | SV12412 | Mining | 11/28/2023 | 271 | ||||
DEN 241 | SV12413 | Mining | 11/28/2023 | 187 | ||||
DEN 242 | SV12414 | Mining | 11/28/2023 | 269 |
![]() | 3-9 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 3.1 (Cont’d)
Claim Name |
Disposition Number |
Claim Type |
Expiry Date |
Area (ha) | ||||
DEN 243 | SV12415 | Mining | 11/28/2023 | 275 | ||||
DEN 244 | SV12416 | Mining | 11/28/2023 | 270 | ||||
DEN 245 | SV12417 | Mining | 11/28/2023 | 251 | ||||
DEN 246 | SV12710 | Mining | 12/16/2023 | 260 | ||||
DEN 268 | SV12711 | Mining | 12/16/2023 | 205 | ||||
DEN 269 | SV13512 | Mining | 9/17/2023 | 202 | ||||
DEN 270 | SV13513 | Mining | 9/17/2023 | 70 | ||||
DEN 271 | SV13514 | Mining | 9/17/2023 | 269 | ||||
DEN 272 | SV13515 | Mining | 9/17/2023 | 136 | ||||
DEN 273 | SV13516 | Mining | 9/17/2023 | 131 | ||||
DEN 274 | SV13517 | Mining | 9/17/2023 | 250 | ||||
DEN 275 | SV13518 | Mining | 9/18/2023 | 65 | ||||
DEN 276 | SV13519 | Mining | 9/18/2023 | 48 | ||||
DEN 277 | SV13520 | Mining | 9/18/2023 | 69 | ||||
DEN 278 | SV13521 | Mining | 9/18/2023 | 66 | ||||
DEN 279 | SV13522 | Mining | 9/18/2023 | 201 | ||||
DEN 280 | SV13523 | Mining | 9/18/2023 | 266 | ||||
DEN 281 | SV13524 | Mining | 9/18/2023 | 65 | ||||
DEN 282 | SV13525 | Mining | 9/18/2023 | 132 | ||||
DEN 283 | SV13526 | Mining | 9/18/2023 | 16 | ||||
DEN 284 | SV13527 | Mining | 9/18/2023 | 32 | ||||
DEN 285 | SV13528 | Mining | 9/18/2023 | 274 | ||||
DEN 286 | SV13529 | Mining | 9/18/2023 | 265 | ||||
DEN 287 | SV14362 | Mining | Pending | 70 | ||||
DEN 288 | SV14363 | Mining | Pending | 65 | ||||
DEN 289 | SV14364 | Mining | Pending | 65 | ||||
DEN 290 | SV14108 | Mining | 12/12/2023 | 276 | ||||
DEN 291 | SV14109 | Mining | 12/12/2023 | 276 | ||||
DEN 292 | SV14110 | Mining | 12/12/2023 | 138 | ||||
DEN293 | SV13915 | Mining | 6/1/2023 | 256 | ||||
DEN294 | SV13916 | Mining | 6/1/2023 | 256 | ||||
DEN295 | SV13917 | Mining | 6/1/2023 | 256 | ||||
DEN296 | SV13918 | Mining | 6/1/2023 | 256 | ||||
DEN297 | SV13919 | Mining | 6/1/2023 | 256 | ||||
DEN298 | SV13920 | Mining | 6/1/2023 | 256 | ||||
DEN299 | SV13921 | Mining | 6/1/2023 | 256 |
![]() | 3-10 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 3.1 (Cont’d)
Claim Name |
Disposition Number |
Claim Type |
Expiry Date |
Area (ha) | ||||
DEN300 | SV13922 | Mining | 6/1/2023 | 256 | ||||
DEN301 | SV13923 | Mining | 6/1/2023 | 256 | ||||
DEN302 | SV13924 | Mining | 6/1/2023 | 256 | ||||
DEN303 | SV13926 | Mining | 6/1/2023 | 256 | ||||
DEN304 | SV13925 | Mining | 6/1/2023 | 256 | ||||
DEN 305 | SV13927 | Mining | 6/1/2023 | 256 | ||||
DEN306 | SV13928 | Mining | 6/1/2023 | 256 | ||||
DEN307 | SV13929 | Mining | 6/1/2023 | 256 | ||||
DEN308 | SV13930 | Mining | 6/1/2023 | 256 | ||||
DEN309 | SV13931 | Mining | 6/1/2023 | 136 | ||||
DEN310 | SV13932 | Mining | 6/1/2023 | 256 | ||||
DEN311 | SV13933 | Mining | 6/1/2023 | 140 | ||||
DEN312 | SV14196 | Mining | 7/31/2024 | 75 | ||||
DEN313 | SV13961 | Mining | 6/25/2023 | 194 | ||||
DEN314 | SV13962 | Mining | 6/25/2023 | 258 | ||||
DEN315 | SV13963 | Mining | 6/25/2023 | 65 | ||||
DEN316 | SV13964 | Mining | 6/25/2023 | 175 | ||||
DEN317 | SV13965 | Mining | 6/25/2023 | 64 | ||||
DEN318 | SV13967 | Mining | 6/25/2023 | 256 | ||||
DEN 319 | SV13974 | Mining | 6/25/2023 | 64 | ||||
DEN275A | SV13975 | Mining | 6/25/2023 | 192 | ||||
DEN 276A | SV13976 | Mining | 6/25/2023 | 166 | ||||
DEN277A | SV13977 | Mining | 6/25/2023 | 190 | ||||
DEN278A | SV13985 | Mining | 6/25/2023 | 189 | ||||
DEN282A | SV13978 | Mining | 6/25/2023 | 66 | ||||
DEN 287A | SV14276 | Mining | 8/21/2024 | 69 | ||||
DEN 288A | SV14277 | Mining | 8/21/2024 | 53 | ||||
Total Area | 63,743 |
3.3 | Underlying Agreements, Royalties and Encumbrances |
The information presented in this section was provided by Sio Silica personnel and has not been externally validated by independent legal counsel.
November 1, 2016 Production Royalty Agreement
On November 1, 2016, a production royalty agreement was signed between 1993505 Alberta Ltd. (Owner) and 1993502 Alberta Ltd. (Holder). The terms of this royalty agreement were that the Owner (now Sio Silica) is to grant, convey, and agree to pay the Holder a production royalty in respect of the Property equal to the greater of:
a) | two (2%) percent of the Actual Proceeds commencing on the date on which Commercial Production is achieved; or |
b) | $1.00 per ton of Product extracted from the Property. |
![]() | 3-11 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
The Production Royalty Agreement provides for an Advance Minimum Royalty payment as follows: 1) $50,000 on November 1, 2016, for the first year; 2) $75,000 on November 1, 2017 for the second year; and 3) $100,000 on November 1st of each subsequent year for the duration of the agreement.
Actual Proceeds is defined in the agreement as: i) in the case of Product sold or otherwise disposed of by Owner FOB Owner’s mine gate, the actual proceeds received by the Owner from such sale or other disposition of Product; or ii) in the case of Product sold or otherwise disposed of by Owner FOB a location other than Owner’s mine gate, the actual proceeds received by the Owner from such sale or other disposition of Product less reasonable operating costs incurred by Owner to transport the Product to such other sale location.
Commercial Production, as defined in the agreement, means and is deemed to be achieved, for the Property, on the first day of the month in which production of Product exceeds 10,000 tons.
April 6, 2018 Assignment, Novation, and Amending Agreements
The November 1, 2016, Production Agreement was replaced by four amended agreements. The 2% Actual Proceeds based on Commercial Production and the $1.00 per ton of Product extracted from the Property were divided into varying proportions in these agreements. In these agreements, the definition of Commercial Production was changed to mean “the first day of the month in which the Owner sells an amount of Product equal to, or greater than, 15,000 tons, subject to the Owner also selling an amount of Product in each of the three immediately following months equal to, or greater than, 15,000 tons, and the mine mill and processing facility is in the condition necessary for it to be capable of operating in a matter intended by management with the ability to sustain ongoing production.”
Royalty Rights buyback from the Founders
In July 2020, there was a transfer of certain founder’s royalty rights amongst the four founders that hold the royalty. On April 5, 2021, Sio Silica used its right of first refusal to purchase a portion of the founders’ royalties from the original holders. Sio Silica paid a total of $775,000 that included buyback of royalties for both the BRU and DEN properties. The remaining royalties equate to 1.34% of the Actual Proceeds commencing on the date on which Commercial Production is achieved or 67.19 cents per ton of Product extracted from the Property. The remaining Advance Minimum Royalty payment is $25,000 per year.
![]() | 3-12 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
3.4 | Environmental Liabilities |
Stantec is not aware of any known environmental liabilities that will affect access, title or the right or ability to perform work on the Property.
3.5 | Required Permits |
On June 19, 2018, Sio Silica received direction from the Resource Development Division, Mines and Geological Survey of Manitoba that the Carman Sand Member is a Crown mineral and is under the purview of The Mines and Minerals Act.
The BRU Property Technical Report Summary, completed by Stantec in October 2023 discusses the permitting requirements for the BRU Property in detail. Stantec understands that the DEN Property would be subject to similar requirements. The following is a summary of those requirements:
● | Provincial |
o | Environment Act Proposal Vivian Sand Extraction Project (EAP) to Environment, Climate and Parks |
o | Environment Act Proposal Vivian Sand Facility Project (EAP) to Environment, Climate and Parks |
o | Public Engagement Meetings – Vivian Sand Extraction Project and Vivian Sand Facility Project |
o | Draft Sand Extraction Closure Plan to Mining, Oil and Gas as a condition of issuance of Environment Act Licence |
o | Technical Advisory Committee (TAC) and Public Review and Response to both Facility and Extraction Projects |
o | Issuance of Environment Act Licence (EAL) for Vivian Sand Facility Project and Extraction Project (Bru Facility project EAL granted December 16, 2021.) |
● | Municipal |
o | Conditional Use approval or other equivalent such as a bylaw amendment to provide for Permitted Use. Issuance of Development Permit |
o | Issuance of Building Permit(s) |
3.6 | Other Significant Factors and Risks |
Stantec is not aware of any other significant factors and risks that may affect access, title or the right or ability to perform work on the Property.
![]() | 3-13 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
4 | ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY |
4.1 | Topography, Elevation and Vegetation |
The Property is located in the Boreal Plain Ecozone with the western edge of the Property in the Prairie Ecozone and the eastern edge in the Boreal Shield Ecozone. The Boreal Plain Ecozone is characterized by relatively flat lying to gently rolling plains and terraces formed by morainal diamicton deposits with lower areas composed of glaciolacustrine deposits (Smith et al., 1998).
The Property is within the Interlake Plain Ecoregion and the Steinbach Ecodistrict. The mean elevation of the Ecodistrict is 297 masl. The landforms in the Ecodistrict range from smooth, flat lying glaciolacustrine plain to gently undulating, water-worked glacial diamicton and glaciofluvial diamictons. Much of the diamicton in the Ecodistrict consists of extremely calcareous, cobbly and gravelly loamy diamicton underlain by sandy glaciolacustrine veneers. The western edge of the Property is in the Lake Manitoba Ecoregion. The Lake Manitoba Ecoregion is a flat lying to gently sloping, clayey glaciolacustine plain with a mean elevation of 236 masl. The Lake of the Woods Boreal Shield Ecoregion has a variable topography ranging from a flat lying to depressional glaciolacustrine plain with peatlands to a gently undulating water-worked glacial diamicton and fluvioglacial outwash plain (Smith et al., 1998).
The land use in the area is mixed rural and residential. Settlements include Steinbach and St. Anne. In lowland areas with good drainage, crops such as wheat, oil seeds and hay are grown. In areas where the soil is too stony to cultivate, the land is used for pasture and hay (Smith et al., 1998).
4.2 | Property Access and Proximity to Population Centers |
The centre of the Property is located approximately 60 km southeast of the city of Winnipeg, Manitoba within the Rural Municipalities of Ste. Anne, Hanover and La Broquerie. The Property is accessed from Winnipeg by the Trans Canada Highway, and PR 210 for the northern section of the Property, and Provincial Highway 12 for the southern section of the Property.
4.3 | Climate |
There are four weather stations near the Property, which include Ostenfeld, Winnipeg International Airport, Steinbach and Beausejour. The weather station at Ostenfeld, Manitoba is the closest in proximity to the Property and is located at 49°49' N and 96°29' W.
The region typically has long cold winters and short, warm summers. The coldest months are December and January. The Environment Canada climate data (Canadian Climate Normals 1981-2010 Station Data) from Ostenfeld records the average daily temperatures in December and January as -13.4oC and -16.7oC, respectively. The warmest months are July and August with daily average temperatures of 18.9oC and 18.0oC, respectively. The average precipitation varies from 104 mm in July and August to 17.3 mm in February (Environment Canada, 2023).
![]() | 4-1 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 4.1 summarizes the Mean Climate data for the nearby weather stations (Environment Canada, 2023).
Table 4.1
Mean Climate Data for Nearby Weather Stations
| Weather Station | |||||||
Parameter |
Ostenfeld | Winnipeg International Airport | Steinbach |
Beausejour | ||||
Location (Longitude, Latitude) | 49°49' N 96°29' W | 49°55'N 97°14'W | 49°32' N 96°46' W | 50°02' N 96°28' W | ||||
Annual Mean Daily Temperature (oC) | 2.7 | 3.0 | 2.8 | 2.8 | ||||
Annual Mean Daily Maximum Temperature (oC) | 8.5 | 8.7 | 8.7 | 8.6 | ||||
Annual Mean Daily Minimum Temperature (oC) | -3.1 | -2.7 | -3.1 | -3.1 | ||||
Annual Total Rainfall (mm) | 512.2 | 418.9 | 473.4 | 452.4 | ||||
Annual Total Snowfall (mm) | 122.7 | 113.7 | 107.1 | 117.8 | ||||
Total Precipitation (mm) | 634.9 | 521.1 | 580.5 | 570.3 |
4.4 | Infrastructure |
Winnipeg is the largest major city near the Property. Winnipeg, as of 2021, has a population of 749,607 residents in the metropolitan area (Statistics Canada, 2023), and provides all required major services to advance the project. The city of Winnipeg, located on the TransCanada Highway, is the home of the James Armstrong Richardson International Airport that has numerous domestic and international flights, and is a major North American rail transportation hub with a 20,000-acre facility that services Canadian National Railway, Canadian Pacific Railway, BNSF Railway and the locally maintained and operated Greater Winnipeg Water District Railway (Railway Association of Canada, 2017; Winnipeg, 2017).
The city of Steinbach, which is located 58 km south-east of Winnipeg, has a population of approximately 17,806, as of 2021. Steinbach is primarily an agricultural community and has many services and commercial businesses, which includes Friesen Drillers Ltd. (Friesen) that has over 125 years of drilling, hydrogeological, and geological knowledge of the area.
Surface and subsurface infrastructure is well developed near the Property. Manitoba Hydro has proposed the final preferred route of the Manitoba-Minnesota Transmission Project through portions of the Property. High voltage transmission lines transect the Property. An operating Canadian National Railway line intersects the Property as shown on Figure 4.1. Rail lines provide access to western and southern markets.
![]() | 4-2 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
![]() | 4-3 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
5 | HISTORY |
Prior to Sio Silica securing the current DEN Property, the area to the north was staked and drilled to assess the viability of the sand for use as a natural proppant. Norlica Minerals Company Ltd. (Norlica) conducted an exploration program and feasibility study in 1967. North Star Diamonds had previously staked an area on the western edge of the current Property. In 2019 Stantec completed a Technical Report prepared in accordance with the requirements of National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101) for the DEN Property.
5.1 | 1967 Norlica Minerals Company Ltd. Feasibility Study |
Norlica retained Underwood McLennan & Associates Ltd (Underwood) to conduct a feasibility study of recovery and utilization of the Ste. Anne Silica Sand Deposits (1967). Norlica obtained surface and mineral permits and Underwood conducted a sand exploration program that consisted of five test holes in January 1967. A summary of the test hole information is found in Table 5.1.
Table 5.1
Norlica Minerals Company Ltd. Drilling Summary
Hole ID | Easting | Northing | Hole Depth (m) | Drill Year | ||||
TH-1 | 676680.8 | 5495030 | 80.01 | 1967 | ||||
TH-2 | 677157.1 | 5494289 | 75.2856 | 1967 | ||||
TH-3 | 677093.6 | 5495739 | 78.486 | 1967 | ||||
TH-4 | 676448 | 5495718 | 78.486 | 1967 | ||||
TH-5 | 676215.2 | 5494310 | 85.344 | 1967 |
The sand was sampled and sent to three independent testing laboratories, which included National Testing Laboratories (NTL) in Winnipeg, Coast Eldridge, Engineers & Chemists Ltd. in Vancouver and J.T. Donald & Co. Ltd in Montreal. A quantitative analysis of the sand for Fe2O3, Al2O3, CaO, MgO, TiO2, Cr, Co, and SiO2 was completed. Typically, very low iron content occurred in the samples; with exception of samples that contained shale contamination. The amount of Al2O3 averaged 0.40%. The CaO content was typically low, with exception of hole TH- 3 where >2% occurred in Sample A. Table 5.2 summarizes the contents of the impurities.
A production pump test was performed on TH-4. The production pump test found that the sandstone was cemented more than anticipated, but the shallow top layer of the sandstone was less rigid, and the flow of sand was encountered. A downhole photographic study was performed to confirm the findings of the production test. At the time of this study, it was determined that the conditions were not economically feasible for extraction of silica sand (Underwood, 1967).
Sieve analyses was performed on the sand and was sent to Underwood McLellan & Associates Soil Laboratory. A statistical analysis was performed and found that an average of 94% of grains passed through the 40 mesh and is retained on the 80 mesh (Underwood, 1967).
![]() | 5-1 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
A calculation of the available quantities of silica sand in Township 7 Range EPM found an average thickness of 21 yards or 19.20 m and a total volume of 40,000,000 cubic yards or 30,582,194.3 m3 (Underwood, 1967).
Table 5.2
Norlica Laboratory Results of Chemical Quantitative Analyses
Hole ID | Sample ID | Fe2O3 % | Al2O3 % | CaO % | MgO % | TiO2 % | Cr % | Co % |
Laboratory | |||||||||
TH-1 | A | 0.05 | 0.14 | 0.14 | 0.01 | 0.01 | 0.00 | 0.00 | TNL | |||||||||
TH-1 | B | 0.04 | 0.31 | 0.16 | 0.00 | 0.01 | 0.00 | 0.00 | TNL | |||||||||
TH-1 | C | 0.04 | 0.41 | 0.08 | 0.08 | 0.01 | 0.00 | 0.00 | TNL | |||||||||
TH-1 | D | 0.04 | 0.38 | 0.04 | 0.11 | 0.01 | 0.00 | 0.00 | TNL | |||||||||
TH-1 | E | 0.04 | 0.38 | 0.04 | 0.00 | 0.01 | 0.00 | 0.00 | TNL | |||||||||
TH-2 | A | 0.04 | 0.62 | 0.01 | 0.01 | 0.02 | 0.00 | 0.00 | Coast Eldridge | |||||||||
TH-2 | A | 0.05 | 0.43 | 0.07 | -0.01 | 0.01 | 0.00 | 0.00 | TNL | |||||||||
TH-2 | A | 0.05 | 0.33 | 0.01 | 0.01 | 0.04 | 0.00 | 0.00 | J.T. Donald | |||||||||
TH-2 | B | 0.04 | 0.65 | 0.01 | 0.01 | 0.02 | 0.00 | 0.00 | Coast Eldridge | |||||||||
TH-2 | B | 0.04 | 0.43 | 0.08 | 0.01 | 0.01 | 0.00 | 0.00 | TNL | |||||||||
TH-2 | B | 0.21 | 0.29 | 0.04 | 0.01 | 0.04 | 0.00 | 0.00 | J.T. Donald | |||||||||
TH-2 | C | 0.05 | 0.68 | -0.01 | 0.02 | 0.02 | 0.00 | 0.00 | Coast Eldridge | |||||||||
TH-2 | C | 0.03 | 0.35 | 0.04 | -0.01 | 0.01 | 0.00 | 0.00 | TNL | |||||||||
TH-2 | C | 0.04 | 0.00 | 0.08 | 0.02 | 0.02 | 0.00 | 0.00 | J.T. Donald | |||||||||
TH-3 | A | 0.47 | 0.97 | 2.07 | 0.81 | 0.01 | 0.00 | 0.00 | Coast Eldridge | |||||||||
TH-3 | A | 0.43 | 0.72 | 2.23 | 0.15 | 0.01 | 0.00 | 0.00 | TNL | |||||||||
TH-3 | A | 0.52 | 0.64 | 2.13 | 0.44 | 0.03 | 0.00 | 0.00 | J.T. Donald | |||||||||
TH-3 | B | 0.20 | 0.61 | 0.56 | 0.75 | 0.03 | 0.00 | 0.00 | Coast Eldridge | |||||||||
TH-3 | B | 0.18 | 0.38 | 0.66 | 0.01 | 0.01 | 0.00 | 0.00 | TNL | |||||||||
TH-3 | B | 0.21 | 0.22 | 0.52 | 0.11 | 0.03 | 0.00 | 0.00 | J.T. Donald | |||||||||
TH-3 | C | 0.07 | 0.51 | -0.01 | 0.02 | 0.01 | 0.00 | 0.00 | Coast Eldridge | |||||||||
TH-3 | C | 0.05 | 0.44 | 0.06 | 0.04 | 0.01 | 0.00 | 0.00 | TNL | |||||||||
TH-3 | C | 0.07 | 0.31 | 0.03 | 0.01 | 0.02 | 0.00 | 0.00 | J.T. Donald | |||||||||
TH-3 | D | 0.09 | 0.59 | 0.35 | 0.05 | 0.02 | 0.00 | 0.00 | Coast Eldridge | |||||||||
TH-3 | D | 0.04 | 0.46 | 0.17 | 0.01 | 0.01 | 0.00 | 0.00 | TNL | |||||||||
TH-3 | D | 0.08 | 0.34 | 0.18 | 0.05 | 0.03 | 0.00 | 0.00 | J.T. Donald | |||||||||
TH-3 | E | 0.10 | 0.22 | -0.01 | 0.02 | 0.01 | 0.00 | 0.00 | Coast Eldridge | |||||||||
TH-3 | E | 0.04 | 0.46 | 0.11 | 0.01 | 0.01 | 0.00 | 0.00 | TNL | |||||||||
TH-3 | E | 0.07 | 0.21 | 0.02 | 0.02 | 0.02 | 0.00 | 0.00 | J.T. Donald |
![]() | 5-2 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 5.2 (Cont’d)
Hole ID | Sample ID | Fe2 O3 % | Al2O3 % | CaO % | MgO % | TiO2 % | Cr % | Co % | Laboratory | |||||||||
TH-4 | A | 0.03 | 1.02 | -0.01 | 0.00 | 0.02 | 0.00 | 0.00 | Coast Eldridge | |||||||||
TH-4 | A | 0.04 | 0.35 | 0.03 | 0.02 | 0.00 | 0.00 | 0.00 | TNL | |||||||||
TH-4 | A | 0.05 | 0.29 | -0.01 | -0.01 | 0.02 | 0.00 | 0.00 | J.T. Donald | |||||||||
TH-4 | A | 0.03 | 1.02 | -0.01 | 0.00 | 0.02 | 0.00 | 0.00 | Coast Eldridge | |||||||||
TH-4 | A | 0.04 | 0.35 | 0.03 | 0.02 | 0.00 | 0.00 | 0.00 | TNL | |||||||||
TH-4 | A | 0.05 | 0.29 | -0.01 | -0.01 | 0.02 | 0.00 | 0.00 | J.T. Donald | |||||||||
TH-4 | B | 0.04 | 0.82 | -0.01 | 0.00 | 0.02 | 0.00 | 0.00 | Coast Eldridge | |||||||||
TH-4 | B | 0.04 | 0.36 | 0.03 | 0.02 | 0.00 | 0.00 | 0.00 | TNL | |||||||||
TH-4 | B | 0.08 | 0.24 | -0.01 | -0.01 | 0.03 | 0.00 | 0.00 | J.T. Donald | |||||||||
TH-4 | C | 0.04 | 0.76 | -0.01 | 0.01 | 0.02 | 0.00 | 0.00 | Coast Eldridge | |||||||||
TH-4 | C | 0.04 | 0.40 | 0.04 | 0.02 | 0.00 | 0.00 | 0.00 | TNL | |||||||||
TH-4 | C | 0.04 | 0.26 | -0.01 | -0.01 | 0.03 | 0.00 | 0.00 | J.T. Donald | |||||||||
TH-4 | D | 0.06 | 0.74 | -0.01 | 0.01 | 0.01 | 0.00 | 0.00 | Coast Eldridge | |||||||||
TH-4 | D | 0.07 | 0.38 | 0.05 | 0.02 | 0.00 | 0.00 | 0.00 | TNL | |||||||||
TH-4 | D | 0.08 | 0.24 | -0.01 | -0.01 | 0.02 | 0.00 | 0.00 | J.T. Donald | |||||||||
TH-4 | E | 0.05 | 0.80 | -0.01 | 0.01 | 0.02 | 0.00 | 0.00 | Coast Eldridge | |||||||||
TH-4 | E | 0.07 | 0.25 | 0.03 | 0.02 | 0.00 | 0.00 | 0.00 | TNL | |||||||||
TH-4 | E | 0.09 | 0.24 | -0.01 | -0.01 | 0.02 | 0.00 | 0.00 | J.T. Donald | |||||||||
TH-5 | A | 0.09 | 0.52 | 0.21 | 0.04 | 0.02 | 0.00 | 0.00 | Coast Eldridge | |||||||||
TH-5 | A | 0.06 | 0.62 | 0.22 | 0.11 | 0.01 | 0.00 | 0.00 | TNL | |||||||||
TH-5 | A | 0.12 | 0.48 | 0.30 | 0.06 | 0.04 | 0.00 | 0.00 | J.T. Donald | |||||||||
TH-5 | B | 0.15 | 0.78 | 0.67 | 0.06 | 0.02 | 0.00 | 0.00 | Coast Eldridge | |||||||||
TH-5 | B | 0.04 | 0.61 | 0.25 | 0.06 | 0.01 | 0.00 | 0.00 | TNL | |||||||||
TH-5 | B | 0.14 | 0.56 | 0.70 | 0.20 | 0.04 | 0.00 | 0.00 | J.T. Donald | |||||||||
TH-5 | C | 0.07 | 0.31 | -0.01 | 0.01 | 0.02 | 0.00 | 0.00 | Coast Eldridge | |||||||||
TH-5 | C | 0.03 | 0.48 | 0.09 | 0.01 | 0.01 | 0.00 | 0.00 | TNL | |||||||||
TH-5 | C | 0.02 | 0.32 | 0.09 | 0.04 | 0.02 | 0.00 | 0.00 | J.T. Donald | |||||||||
TH-5 | D | 0.11 | 0.58 | -0.01 | 0.02 | 0.02 | 0.00 | 0.00 | Coast Eldridge | |||||||||
TH-5 | D | 0.08 | 0.47 | 0.05 | 0.03 | 0.01 | 0.00 | 0.00 | TNL | |||||||||
TH-5 | D | 0.18 | 0.31 | 0.04 | 0.03 | 0.03 | 0.00 | 0.00 | J.T. Donald |
Source: Underwood, 1967
![]() | 5-3 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
5.2 | 2004 to 2007 North Star Diamonds |
North Star Diamonds staked 16 claims for diamond exploration in November 2004. These claims were cancelled in January 2007. No assessment reports were found on the property. Table 5.3 is a summary of the cancelled mineral claims.
Table 5.3
North Star Diamonds Cancelled Mining Claims
Claim Name | Disposition Number | Lease Type | Map Number | Issue Date | Expiry Date | Area (ha) | ||||||||
KIANA 3 | SV10537 | Mining Claim | 62H07NW | 2004-11-04 | 2007-01-03 | 272 | ||||||||
KIANA 5 | SV10538 | Mining Claim | 62H07NW | 2004-11-04 | 2007-01-03 | 137 | ||||||||
KIANA 8 | SV10539 | Mining Claim | 62H07NW | 2004-11-04 | 2007-01-03 | 272 | ||||||||
KIANA 9 | SV10540 | Mining Claim | 62H07NW | 2004-11-04 | 2007-01-03 | 278 | ||||||||
KIANA 11 | SV10541 | Mining Claim | 62H07NE | 2004-11-04 | 2007-01-03 | 272 | ||||||||
KIANA 12 | SV10542 | Mining Claim | 62H07NE, 62H07NW | 2004-11-04 | 2007-01-03 | 140 | ||||||||
KIANA 15 | SV10543 | Mining Claim | 62H07NE | 2004-11-04 | 2007-01-03 | 278 | ||||||||
KIANA 16 | SV10544 | Mining Claim | 62H07NE | 2004-11-04 | 2007-01-03 | 140 | ||||||||
KIANA 17 | SV10545 | Mining Claim | 62H07NE | 2004-11-04 | 2007-01-03 | 203 | ||||||||
KIANA 18 | SV10546 | Mining Claim | 62H07NE | 2004-11-04 | 2007-01-03 | 208 | ||||||||
KIANA 19 | SV10547 | Mining Claim | 62H07NE | 2004-11-04 | 2007-01-03 | 269 | ||||||||
KIANA 21 | SV10548 | Mining Claim | 62H07NE | 2004-11-04 | 2007-01-03 | 274 | ||||||||
KIANA 22 | SV10549 | Mining Claim | 62H07NE | 2004-11-04 | 2007-01-03 | 65 | ||||||||
KIANA23 | SV10550 | Mining Claim | 62H07NE | 2004-11-04 | 2007-01-03 | 208 | ||||||||
KIANA 24 | SV10551 | Mining Claim | 62H07NE | 2004-11-04 | 2007-01-03 | 275 | ||||||||
KIANA 29 | SV10556 | Mining Claim | 62H07NE | 2004-11-08 | 2007-01-07 | 68 | ||||||||
Total Area | 3,359 |
5.3 | Historical Technical Reports |
In 2019 Stantec completed a Technical Report for the DEN Property.
During the period from 2019 to 2021, Sio Silica transitioned to positioning the DEN Property as a potential source of high purity silica sand for industrial purposes as opposed to a natural sand proppant. As previously mentioned, the high purity silica sand may be used in a wide range of industrial applications including electronics, medical research, metals and alloys, specialty glass, and renewable energy.
The 2019 Technical Report disclosed mineral resource estimates as shown in Table 5.4.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 5.4
Historic In-Place Mineral Resource Summary, as of May 8, 2019
| Mineral Resources (Mt) | |||||||
DEN Property | 40/70 mesh Fraction | 70/140 mesh fraction | ||||||
Inferred | 235 | 117 | ||||||
Total Inferred | 351 |
A comparison between the 2019/2021 resource estimates indicates an overall resource reduction. The primary reason for the resource reduction is the application of new geotechnical information and analyses used when estimating the extractable sand volumes. The QP believes that applying this new geotechnical information and analysis, and the resultant extractable sand volumes are more representative of actual conditions. This analyses and the resulting resource estimate are discussed further in Section 11.
The resource reduction is partially offset by the addition of new mineral claims and new drill holes, which significantly increased the resource footprint.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
6 | GEOLOGIC SETTING, MINERALIZATION AND DEPOSIT |
6.1 | Regional Stratigraphy |
The Winnipeg Formation was deposited in the Ordovician and is interpreted to be an erosionally isolated element of the North American cratonic platform succession that was deposited across the Transcontinental Arch (Bezys and Conley, 1998; Ozadetz and Haidl, 1989). The lowermost part of the Winnipeg Formation was deposited in a deltaic environment during a major transgression event (Bezys and Conley, 1998; Le Fever et al, 1987). With continued sea level rise, the deltaic deposits were overlain by marine shales and dolomitic limestone (Bezys and Conley, 1998).
The Winnipeg Formation, which is in southwestern Manitoba and at the base of the Williston Basin strata, is composed of interbedded sands and shales (Lapenskie, 2016). These Middle Ordovician sediments were deposited in shallow marine seas. The shales are generally light olive-grey in colour, kaolinitic, with variable sand and silt content (Bezys and Conley, 1998). The sand units, the thickest of which is the Carman Sand Member, are typically mature, well rounded, quartz dominant, and poorly-to-nonconsolidated. The Carman Sand Member is a discrete, east- west trending bar-like sand body within the upper half of the Winnipeg Formation in southern Manitoba. The Carman Sand Member is continuous and relatively uniform throughout the region, extending approximately 240 km from west of the Sandilands Provincial Forest located at Range 8 East, to Pelican Lake that is located at Range 16 West. The corridor of the Carman Sand Member varies in width from less than 25 km to greater than 95 km (Bezys and Conley, 1998). The maximum reported thickness is 31 m (Natural Resources Canada, 2009). The Carman Sand Member occurs at depths less than 100 m along the subcrop belt, and dips towards to the west where it can be found at depths of greater than 800 m (Natural Resources Canada, 2004). The maximum Carman Sand Member depth within the property limit is 85-90 m. The Carman Sand Member is truncated to the east by the basin edge as shown on Figure 6-1.
In the southwest corner of Manitoba, a thin wedge of the Deadwood Formation, which was deposited in the Cambrian Period, underlies the Winnipeg Formation (Bezys and Conley, 1998). According to Butler et al. (1955) the Deadwood Formation, in South Dakota, “consists of a basal conglomerate and buff sandstone 9 m thick, overlain by grey-green, thin bedded shale with limestone interbeds 79 m thick and topped with red-brown, very glauconitic quartz sandstone, usually thin-bedded, with random partings of green shale and Scolithos borings 40 m thick, for a total thickness of 128 m”. The Deadwood Formation that occurs in Manitoba is measured to be up to 30 m in thickness (Natural Resources Canada, 2004). Where the Deadwood Formation is not present, the Winnipeg Formation overlays the Precambrian basement.
![]() | 6-1 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Conformably overlying the Winnipeg Formation is the Ordovician aged Red River Formation, which is composed of limestones and dolomites (Bezys and Conley, 1998). The thickness of the Red River Formation is up to 215 m; however, along the northeastern erosional edge the formation thickness decreases to 50 m (Natural Resources Canada, 2015). The Red River Formation outcrops in central Manitoba, where it has been subdivided into the Dog Head Member, Cat Head Member, Selkirk Member and the Fort Garry Member. The Dog Head Member is primarily a basal fossiliferous, mottled limestone that is overlain by the cherty dolomite of the Cat Head Member. Overlying the Cat Head Member is the Selkirk Member, which is composed of a second sequence of fossiliferous, mottled, dolomitic limestones. The Cat Head Member becomes more calcareous in the south end of the outcrop belt where it becomes indistinguishable from the Dog Head and Selkirk Members. The Fort Garry Member, which directly overlies the Selkirk Member, consists of finely crystalline and micritic, variable argillaceous dolomites, with a medial zone of shaly dolomite breccias (Natural Resources Canada, 2015).
Above the Red River Formation is the Quaternary diamicton, which ranges in composition from silty to rocky, and is calcareous (Matile and Keller, 2004).
6.2 | Structural Geology |
The Ordovician strata in southwestern Manitoba generally trends east-west to slightly north-east. The Winnipeg Formation thins irregularly from approximately 68 m in thickness in southwestern Manitoba to zero at the formation’s northern limit. The thinning of the Winnipeg Formation coincides with irregular lithofacies changes, as lithologies change from being shale dominant in the southern area to sand dominant in the northern area. The lithofacies changes may result in differential compaction (Bezys and Conley, 1998).
6.3 | Property Geology |
Prior to 2017, most of the drilling in the area was limited to water wells that were drilled on behalf of third parties. The units described below are primarily based on reliable holes that were drilled in the Project area by Sio Silica. In general, the stratigraphy of the Property is consistent; the major units are Quaternary sediments, carbonate and shale intervals of the Red River Formation, unconsolidated sand, sandstone, and shale of the Winnipeg Formation, and Archean-age granitoid basement. The upper unconsolidated sand interval of the Winnipeg Formation, which is known as the Carman Sand Member, is the target interval to be exploited.
Unit thickness maps are shown on Figure 6-2 and Figure 6-3 for the Red River carbonate unit and the Carman Sand Member, respectively. The diamicton (also referred as overburden) thickness map, which includes all materials above the limestone unit, is shown on Fig 6-4. Structure contour maps of the top of the carbonate and Carman Sand Member are shown on Figure 6-5 and 6-6, respectively. North-south and east-west cross-sections are shown on Figures 6-7 to 6-10. Table 6.1 shows the units encountered on the Property.
![]() | 6-2 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
![]() | 6-3 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
![]() | 6-5 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
![]() | 6-7 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
![]() | 6-8 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
![]() | 6-9 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
![]() | 6-10 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
![]() | 6-11 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
![]() | 6-12 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 6.1
Property Lithology
Eon | Era | Period | Geologic Unit | Member | Lithology | |||||
Cenozoic | Quaternary | Diamicton | ||||||||
Red River Formation | Selkirk, Cat Head, Dog Head members | Carbonate | ||||||||
Phanerozoic | Shale | |||||||||
Paleozoic | Ordovician | Carman Sand Member | Sand | |||||||
Winnipeg Formation | Equiv. Ice Box Member | Shale | ||||||||
Black Island Member | Sand | |||||||||
Archean | Granitoid |
6.3.1 | Quaternary Sediments |
The Pleistocene-aged diamicton is heterolithic, varies in material size distribution from silty to rocky, and typically has a calcareous component. In the Project area, the diamicton ranges from 5 m to 75 m in thickness.
6.3.2 | Red River Formation |
Carbonate (Selkirk, Cat Head, Dog Head members)
The carbonate unit, which is upper Ordovician in age, is in the lower Red River Formation. In Southern Manitoba, this unit is comprised of the Dog Head, Cat Head, and Selkirk members (Natural Resources Canada, 2015). The unit varies in composition from limestone to dolostone, contains bedding-parallel fractures, may contain some bedding-perpendicular (vertical) fractures and is vuggy in areas. Commonly, the bottom 1 m to 5 m interval contains shale interbeds within the carbonate unit. of an argillaceous carbonate unit occurs directly above the shale interval. Based on the drill holes data, the carbonate unit total thickness ranges from 0 m to 35 m in the Project area.
Shale (Selkirk, Cat Head, Dog Head members)
A shale unit occurs directly beneath the carbonate unit. This shale unit forms the base of the Red River Formation and is proposed to be part of the Dog Head Member. This shale unit is highly fractured and friable. The colour of the shale varies through the interval, including brick red, greyish green, and bluish grey colourations. This shale interval, based on reliable historic drill holes as well as the 2017 and 2018 drill campaigns, varies in thickness from 0 m to 11 m.
![]() | 6-13 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
6.3.3 | Winnipeg Formation |
Sand (Carman Sand Member)
The unit encountered directly beneath the base of the Red River Formation is the Carman Sand Member (Natural Resources Canada, 2009a,b). The Carman Sand Member is in the upper section of the Winnipeg Formation. The Carman Sand Member is sand or poorly consolidated sandstone, which is well sorted, well-rounded, and typically has a fine to medium grain size. The Carman Sand Member in the Property was measured to have thicknesses between 20 m and 33 m. A basal cemented sandstone unit that typically ranges in thickness from 0.3 m to 0.5 m, was encountered in some of the drill holes.
Shale (Ice Box Member Equivalent)
A shale unit occurs directly beneath the Carman Sand Member. This unit is proposed to be equivalent to the Ice Box Member, which occurs as the middle unit in the Winnipeg Formation in North Dakota and Saskatchewan (Natural Resources Canada, 2004). The colouration of this shale unit varies significantly, including emerald green and dark brown colouration. The drilling through this unit was slow, indicating that this shale unit is more competent than previously encountered shale intervals. The thickness of this shale interval in the Project area, based on reliable drill holes that penetrated the entire unit, varies from 1 m to 25 m in thickness.
Sand (Black Island Member Equivalent)
An unconsolidated sand unit below the shale interval is proposed to be equivalent to the Black Island Member (Natural Resources Canada, 2009c). On the Property, is approximately 1 m thick, and is fine-grained, well sorted, and well-rounded. Commonly a cemented sandstone unit occurs either above or below this unconsolidated sand unit. This sandstone interval, where encountered, typically ranges in thickness from 0.3 m to 0.6 m.
6.3.4 | Granitoid |
Granitoid basement, which is Archean in age, is altered and in areas contains disseminated pyrite.
6.4 | Deposit Types |
The Carman Sand Member is dominantly an unconsolidated laterally extensive unit across the Property, as validated through numerous drilling campaigns. Unconsolidated sand type deposits usually require no processing beyond cleaning and size sorting. The deposit appears to have limited geological variability and limited structural complexity.
The geological model that is being applied is similar to other aggregate materials that are laterally extensive and discussed in detail in Section 11.1
6.5 | Mineralization |
The target interval is the unconsolidated silica sand from the Carman Sand Member. The high purity of the sand makes it suitable for variety of usages and markets. The primary objective of the program was to delineate the quality of the sand and assess the extractable sand volumes.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
7 | EXPLORATION |
As mentioned earlier, prior to Sio Silica securing the Property, the area within the DEN claims had not been drilled for silica sands. Publicly available drill hole information for the area, is associated with water-well drilling. The publicly available information for drill holes is summarized in Section 7.1.
Sio Silica collected lithological information from 34 holes on the DEN property. The information for these drill holes is summarized in Section 7.2 and 7.3.
7.1 | Groundwater Information Network and Friesen Drilling Historical Data |
Several water wells were drilled in and around the Property. Information for 3,590 water-wells within the proximity of the property was extracted from the Groundwater Information Network (GIN) database (GIN, 2019). The extracted well data includes lithology and collar information. The lithology information was reviewed, and 984 wells were identified as wells with unreliable data and were excluded from the modelling database.
In addition to the GIN data, information for 4 water-wells from Friesen was provided to Stantec by Sio Silica on March 13, 2019.
The total number of wells from GIN and Friesen used in the modelling database is 2,610 and their location is shown on Figure 7-1.
7.2 | Sio Silica 2018 Drilling Campaign Summary |
A drilling campaign was initiated in September 2018. During this campaign, 15 holes were drilled on the DEN Property. Of the 15 holes drilled, 14 were Dual Rotary (DR) / Reverse Circulation (RC) holes that were drilled to identify formation tops and to constrain sand samples, and one was a diamond drill hole (DEN 216-1) to evaluate the geotechnical properties of the carbonate interval.
Table 7.1 shows a summary of the holes drilled by Sio Silica during the 2018 Drilling Campaign and Figure 7-1 shows the location of the drill holes.
![]() | 7-1 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
![]() | 7-2 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 7.1
2018 Drilling Campaign Summary
Hole Name |
Type | Core Size |
Collar Inclination |
Spud Date |
Datum | Zone | Easting | Northing | Elevation (MASL) |
Hole Depth (m) |
Primary Sampled Interval (m) | |||||||||||
DEN-57-1 | DR/RC | N/A | -90 | 24-Sep-18 | NAD83 | 14 | 669259 | 5473506 | 291 | 126.49 | 99.06 - 124.05 | |||||||||||
DEN -84-1 | DR/RC | N/A | -90 | 23-Nov-18 | NAD83 | 14 | 669149 | 5483394 | 279 | 49.38 | 91.14 - 92.66 | |||||||||||
DEN-109-1 | DR/RC | N/A | -90 | 27-Nov-18 | NAD83 | 14 | 677550 | 5468705 | 303 | 75.29 | 77.42 - 104.85 | |||||||||||
DEN-115-1 | DR/RC | N/A | -90 | 23-Oct-18 | NAD83 | 14 | 674217 | 5471313 | 298 | 121.62 | 94.18 - 121.31 | |||||||||||
DEN-130-1 | DR/RC | N/A | -90 | 17-Oct-18 | NAD83 | 14 | 674026 | 5476181 | 294 | 118.87 | 91.14 - 117.04 | |||||||||||
DEN-134-1 | DR/RC | N/A | -90 | 21-Nov-18 | NAD83 | 14 | 679682 | 5474851 | 302 | 85.04 | 81.69 - 109.42 | |||||||||||
DEN-143-1 | DR/RC | N/A | -90 | 29-Oct-18 | NAD83 | 14 | 678176 | 5478941 | 297 | 101.80 | 77.72 - 100.28 | |||||||||||
DEN-166-1 | DR/RC | N/A | -90 | 20-Nov-18 | NAD83 | 14 | 686332 | 5463497 | 310 | 89.92 | not sampled | |||||||||||
DEN-178-1 | DR/RC | N/A | -90 | 28-Nov-18 | NAD83 | 14 | 680991 | 5468206 | 308 | 67.06 | 69.80 - 91.14 | |||||||||||
DEN-189-1 | DR/RC | N/A | -90 | 12-Nov-18 | NAD83 | 14 | 683094 | 5474886 | 304 | 72.85 | 74.37 - 75.90 | |||||||||||
DEN-209-1 | DR/RC | N/A | -90 | 22-Nov-18 | NAD83 | 14 | 688072 | 5483034 | 296 | 42.98 | 59.13 - 72.85 | |||||||||||
DEN-216-1 | DR/RC | N/A | -90 | 30-Nov-18 | NAD83 | 14 | 681912 | 5484439 | 290 | 63.09 | 66.75 - 94.18 | |||||||||||
DR/DDH | HQ | -90 | 12-Nov-18 | NAD83 | 14 | 681848 | 5484381 | 64.62 | Geotechnical core logged | |||||||||||||
DEN-223-1 | DR/RC | N/A | -90 | 7-Nov-18 | NAD83 | 14 | 687202 | 5487867 | 297 | 77.42 | 59.44 - 75.90 | |||||||||||
DEN-243-1 | DR/RC | N/A | -90 | 1-Oct-18 | NAD83 | 14 | 686353 | 5493625 | 298 | 83.82 | 59.44 - 81.99 |
Note: DR = Dual Rotary; RC = Reverse Circulation; DDH = Diamond Drill Hole
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
7.3 | Sio Silica 2021 - 2022 Drill Campaign summary |
Twenty drill holes were completed between 2021 and 2022. Drill hole depths varied from 62 m to 122 m; all holes were drilled vertically. The majority of the holes were drilled as exploration holes. Three drill holes (Den-117-1, Den-120-1 and Den-204-1) were cored but none of them were able to intersect the bottom of the Carman Sand Member. Two of the drill holes (Den-120-1 and Den-169-1) were drilled close to the edge of the Carman Sand Member and the sand was not intersected. Eight of the twenty wells were able to intersect the bottom of the Carman Sand Member. The location of the drill holes, listed in Table 7.2, is shown on Figure 7-1.
Table 7.2
2021 - 2022 Drilling Campaign Summary
Hole Name | Type | Datum | Zone | Easting | Northing | Elevation (MASL) |
Hole Depth (m) | |||||||
Den-117-1 | Core | NAD83 | 14 | 671,009.6 | 5,470,371.2 | 294 | 109.73 | |||||||
Den-120-1 | Core | NAD83 | 14 | 677,322.2 | 5,473,066.6 | 298 | 86.11 | |||||||
Den-128-1 | 5” | NAD83 | 14 | 671,780.3 | 5,474,434.3 | 291 | 121.92 | |||||||
Den-147-1 | RC | NAD83 | 14 | 675,775.5 | 5,481,129.7 | 292 | 117.04 | |||||||
Den-150-1 | RC | NAD83 | 14 | 671,417.6 | 5,480,002.0 | 287 | 121.92 | |||||||
Den-169-1 | Dry Well | NAD83 | 14 | 683,345.7 | 5,463,491.3 | 309 | 120.40 | |||||||
Den-181-1 | 5” | NAD83 | 14 | 685,687.3 | 5,470,076.7 | 309 | 103.63 | |||||||
Den-186-1 | 5” | NAD83 | 14 | 680,759.7 | 5,473,222.5 | 305 | 106.98 | |||||||
Den-193-1 | 5” | NAD83 | 14 | 683,970.9 | 5,476,438.7 | 303 | 79.25 | |||||||
Den-204-1 | Core | NAD83 | 14 | 682,945.2 | 5,480,007.5 | 299 | 67.06 | |||||||
Den-208-1 | 5” | NAD83 | 14 | 686,200.6 | 5,483,233.6 | 293 | 67.06 | |||||||
Den-226-1 | 5” | NAD83 | 14 | 683,166.6 | 5,486,507.2 | 282 | 67.06 | |||||||
Den-233-1 | 5” | NAD83 | 14 | 687,436.3 | 5,490,716.6 | 299 | 82.91 | |||||||
Den-240-1 | 5” | NAD83 | 14 | 685,776.9 | 5,491,402.0 | 298 | 72.24 | |||||||
Den-245-1 | RC | NAD83 | 14 | 682,339.3 | 5,493,980.0 | 283 | 73.15 | |||||||
Den-269-1 | RC | NAD83 | 14 | 676,397.3 | 5,486,820.3 | 288 | 97.54 | |||||||
Den-304-1 | RC | NAD83 | 14 | 684,483.3 | 5,497,767.2 | 289 | 62.18 | |||||||
Den-304-2 | Monitoring | NAD83 | 14 | 684,491.1 | 5,497,730.6 | 289 | 66.45 | |||||||
Den-318-1 | 5” | NAD83 | 14 | 672,988.6 | 5,493,982.7 | 268 | 78.64 | |||||||
Den-319-1 | RC | NAD83 | 14 | 680,312.5 | 5,494,189.5 | 276 | 83.82 |
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
8 | Sample Preparation, Analyses and Security |
8.1 | Sampling Method and approach |
Most drill hole samples collected by Sio Silica have been subject to sieve analysis for particle size distribution (PSD) analysis. In 2018, there were 198 samples collected at five-foot intervals from 15 drill holes that are sent to AGAT laboratory in Calgary, Alberta for sieve analyses. Five of the duplicate samples were tested by Loring laboratory in Calgary, Alberta. In 2021-2022 program, 33 composite samples were collected and were subject to sieve analysis at Sio Silica’s internal facilities. Additional details are presented in the following subsections.
To complete PSD sieve analyses, a selected sieve stack is to be made up of no less than seven sieves of decreasing mesh size and is to include a pan and cover. This sieve stack is to be checked against a master sieve stack. A representative split sample of 100 g ± 20 g is to be selected; the material weight is to be recorded to within 0.1 g. The sample is to be placed at the top of the sieve stack with the lid and pan and is to be placed in the test sieve shaker for 10 minutes ± 5 seconds. Following this procedure, the material is to be weighed on each sieve and the resulting mass of each sieve is to be deducted from the weight for each fraction. The final cumulative mass is to be within 0.5% of the initial sample mass.
Total of 80 composited sample from 20 drill holes were prepared in Sio Silica laboratory and sent Liquids Matter laboratory for Whole Rock Analysis. Additional details are presented in Sub- section 8.3.3.
8.2 | 2018 Field Programs Sample Integrity |
2018 Program
Sample collection was completed from the Carman Sand Member, typically at five-foot intervals, except for the top and bottom interval at the contacts with the upper and lower shale units. Sample collection from 13 drill holes involved: 1) Collection of the sand from the RC cyclone; amalgamation of the sand a five-gallon pail; 2) Use of a soil auger to core through the sand in the five-gallon pail and collection of 1 and 2 kg samples; and 3) Completion of chain-of-custody documentation and transportation of the 1 kg sand sample to AGAT laboratory in Calgary for sieve analyses. In 2023, composited samples for each hole were prepared in Sio Silica’s laboratory for further ICP testing at the Liquids Matter laboratory in Calgary.
2021 and 2022 Programs
The 2018 program demonstrated vertical sand quality homogeneity of the Carman Sand Member. As a result, during 2021-2022 program, thirty-three composited samples of the Carman Sand Member were collected from eleven holes (3 samples per hole). The depth of the beginning of the sampled intervals ranged from 53.0 m to 95.7 m and the depth of the end of the sample interval ranged from 73.2 m to 121.0 m. As some of the drill holes didn’t intersect the bottom of the Carman Sand Member, the length of the sample intervals ranged from 3.0 m to 34.7 m. All samples were subject to PSD sieve analysis at Sio Silica’s internal facilities in Calgary, and then sent for ICP testing at the Liquids Matter laboratory.
![]() | 8-1 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
8.3 | Laboratory Credentials, Testing Methodology, and Results |
Table 8.1 shows a summary of the number and type of analyses by year and laboratory. The following sections summarize the work completed by each laboratory.
Table 8.1
Summary of Analyses Completed by Year and Laboratory
Laboratory | Year | No. Samples | Analyses Type | |||
AGAT | 2018 | 198 | Sieve Analysis | |||
Loring | 2018 | 5 | Sieve Analysis | |||
Sio Silica | 2018* | 8 | Sieve Analysis | |||
2021-2022 | 33 | 40/70 and 70/140 size fraction clean and magnetic separator | ||||
Liquids Matter | 2021-2022 | 80 | ICP Whole Rock on 40/70 and 70/140 size fraction |
8.3.1 | AGAT Credentials and Testing Methodology |
AGAT completed sample preparation and sieve analysis for all samples collected during the 2018 drilling program. AGAT is an independent laboratory with ISO 9001:2015 (Certificate No. 0100019).
In 2018, AGAT completed sieve analyses on 198 samples. AGAT inventoried, dried and processed the samples through a riffle splitter to obtain a representative sample size of approximately 100 g, as required for the sieve analyses. AGAT determined that the samples contained clay-size material, but typically very low clay material based on mineralogical assessment. As such, AGAT determined that the material could be dry sieved using a sonic shaker, as outlined in Section 7.3.1 of the API Recommended Practice 40.
8.3.2 | Sio Silica Internal Facility Credentials and Processing Methodology |
Starting in 2020, personnel from Sio Silica developed an internal methodology to do bench scale test procedures for further purification of raw sand samples from the DEN Property at select sand size ranges, notably 40/70 and 70/140. The purpose of the sample processing was to generate a bench scale market ready sand product. In total 13 representative composite samples from within the Carman Sand Member were processed as shown in Table 8.2. All samples were subject to PSD tests in the Sio Silica laboratory.
The Sio Silica internal laboratory where these procedures were implemented is not an accredited facility and is not independent. Section 9 discusses the accuracy and consistency of the Sio Silica laboratory results.
![]() | 8-2 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 8.2
Samples PSD Tested at Sio Silica Facilities
Carman Sand Member Interval (m) | ||||||||||
Field Program Year | Hole ID | From | To | |||||||
2018 | Den-57-1 | 99.06 | 124.05 | |||||||
2018 | Den-130-1 | 91.14 | 117.04 | |||||||
2021-2022 | Den-319-1 | 58.52 | 82.91 | |||||||
2021-2022 | Den-318-1 | 64.62 | 78.64 | |||||||
2021-2022 | Den-304-1 | 59.13 | 62.18 | |||||||
2021-2022 | Den-269-1 | 74.37 | 95.10 | |||||||
2021-2022 | Den-245-1 | 53.04 | 73.15 | |||||||
2021-2022 | Den-240-1 | 58.52 | 72.24 | |||||||
2021-2022 | Den-226-1 | 55.17 | 67.06 | |||||||
2021-2022 | Den-193-1 | 69.80 | 79.25 | |||||||
2021-2022 | Den-150-1 | 93.57 | 121.01 | |||||||
2021-2022 | Den-147-1 | 82.30 | 117.04 | |||||||
2021-2022 | Den-128-1 | 95.71 | 119.79 | |||||||
Count | 13 | 13 | ||||||||
Minimum | 53.04 | 62.18 | ||||||||
Maximum | 99.06 | 124.05 | ||||||||
Mean | 73.46 | 93.03 |
The sample processing procedure as summarised from Sio Silica’s laboratory procedures internal document is described as follows:
1. | Ensure sample is completely dry, use oven if necessary. |
2. | Composite samples from individual well (~50-100g per sample totaling ~1.2kg. Sample number assigned and recorded in database. |
3. | Sieve samples at fractions 40/70 and 70/140 at an amplitude of 1.30mm for 15 minutes |
a. | Sieve #’s: 30, 40, 50, 60, 70, 80, 100, 140, Pan |
4. | Re-sieve the 40/70 and 70/140 sample separately at an amplitude of 1.30mm for 5 minutes. |
a. | 40/70 sample Sieve #’s: 40, 70, Pan |
b. | 70/140 sample Sieve #’s: 70, 140, Pan |
5. | Water wash 40/70 sample using No. 70 and No. 325 wet sieve. |
6. | Water wash 70/140 sample using the No. 325 wet sieve until water (tap water) runs clear and there are no visible fines suspended in solution. |
7. | Transfer samples from steps 4 and 5 to anchor glass baking dishes to dry in oven at 375°F for ~1 hour. Lab Testing Point A (40/70 fraction) and A-1 (70/140 fraction) are taken. |
8. | Run each sample through the Eriez Dry High Intensity Rare Earth Roll Magnetic Separator three times. Lab Testing point B (40/70 fraction) and B-1 (70/140 fraction) are taken. |
Available equipment for drying includes a Quincy Lab 30GC 2.0 ft3 gravity convection oven capable of 450 F. Sieves are ASTM E11 standard and a Retsch AS 300 control sieve shaker is used that complies with ISO 9001 requirements.
![]() | 8-3 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
From the original 13 composite sand samples, 52 ICP test point samples were produced as outlined:
● | Point A: 13 samples at 40/70 fraction – sieved, water washed, and dried. |
● | Point A-1: 13 samples at 70/140 fraction – sieved, water washed, and dried. |
● | Point B: 13 samples at 40/70 fraction – Sieved, water washed, dried, and ran through dry magnetic separator. |
● | Point B-1: 13 samples at 70/140 fraction – Sieved, water washed, dried, and ran through dry magnetic separator. |
These 52 samples were then sent to Liquids Matter laboratory for whole rock analysis.
Seven additional composited samples from the 2018 program were also processed in the Sio Silica laboratory and 28 ICP test point samples were prepared, using the same sample preparation approach as described above, and sent to Liquids Matter laboratory for whole rock analysis. Table 8.3 shows the additional 7 samples.
Table 8.3
Samples Processed at Sio Silica Facilities
Carman Sand Member Interval (m) | ||||||||||
Field Program Year | Hole ID | From | To | |||||||
2018 | Den-109-1 | 77.42 | 104.85 | |||||||
2018 | Den-115-1 | 94.18 | 121.31 | |||||||
2018 | Den-134-1 | 80.16 | 110.03 | |||||||
2018 | Den-143-1 | 77.11 | 100.89 | |||||||
2018 | Den-189-1 | 74.07 | 100.28 | |||||||
2018 | Den-216-1 | 66.14 | 94.18 | |||||||
2018 | Den-84-1 | 89.92 | 106.38 | |||||||
Count | 7 | 7 | ||||||||
Minimum | 66.14 | 94.18 | ||||||||
Maximum | 94.18 | 121.31 | ||||||||
Mean | 79.86 | 105.42 |
8.3.3 | Liquids Matter Whole Rock Analysis |
Liquids Matter is an independent accredited laboratory located in Calgary, Alberta, that was used by Sio Silica to complete whole rock analysis on 80 sized and cleaned samples. The whole rock analysis was completed using Inductively coupled plasma - optical emission spectrometry (ICP- OES). A summary of the ICP-OES test results comparing 40/70 and 70/140 size fractions before (Point A, A-1) and after magnetic separation (Point B, B-1) are shown in Table 8.4. All ICP-OES ion test results for all four sample types (Point A, B, A-1 and A-2) are presented in oxide form and are shown in Table 8.5 through Table 8.8. The ICP-OES test results show that the magnetic separator by Sio Silica was successful in increasing sand purity from a mean of 99.89% SiO2 to 99.92% SiO2 for the 40/70 size fraction, and 99.84% SiO2 to 99.92% SiO2 for the 70/140 size fraction. It should be noted that the sample collected from drill hole DEN-318-1 shows anomalous results and has been interpreted as a contaminated sample and excluded from the interpolated data set used in sand quality evaluation.
The spatial distribution of SiO2, Fe and Al content measurements, received from Liquids Matter after magnetic separation (Step/Point B), are shown in Figure 8-1 to Figure 8-6 for the 40/70 and 70/140 size fractions. The results from Den-245-1 were closely reviewed and flagged as abnormal with possible sample contamination. The ICP results from Den-245-1 samples were excluded from the data interpolation. The percentage of each size fraction in each sample site, listed in Table 8.3, is shown in the contour overlay at 3% intervals.
![]() | 8-4 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 8.4
Liquids Matter ICP-OES Summary Test Results
Point A 40/70 Fraction | Point B 40/70 Fraction | Point A-1 70/140 Fraction | Point B-1 70/140 Fraction | |||||||||||||||||||||||||||||||||||||||||||||
Parameter | wash and dry | wash, dry and magnetic separation | wash and dry | wash, dry and magnetic separation | ||||||||||||||||||||||||||||||||||||||||||||
SiO2 | Total Oxides | FeO2 | SiO2 | Total Oxides | FeO2 | SiO2 | Total Oxides | FeO2 | SiO2 | Total Oxides | FeO2 | |||||||||||||||||||||||||||||||||||||
(%) | (%) | (ppm) | (%) | (%) | (ppm) | (%) | (%) | (ppm) | (%) | (%) | (ppm) | |||||||||||||||||||||||||||||||||||||
Count | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | ||||||||||||||||||||||||||||||||||||
Minimum | 99.51 | 0.041 | 34.53 | 99.69 | 0.035 | 27.1 | 99.89 | 0.054 | 58.3 | 99.64 | 0.040 | 34.4 | ||||||||||||||||||||||||||||||||||||
Maximum | 99.96 | 0.486 | 397.0 | 99.97 | 0.309 | 266.7 | 99.95 | 1.114 | 917.5 | 99.96 | 0.357 | 398.8 | ||||||||||||||||||||||||||||||||||||
Mean | 99.89 | 0.106 | 143.6 | 99.92 | 0.076 | 86.1 | 99.84 | 0.163 | 234.1 | 99.92 | 0.081 | 97.4 | ||||||||||||||||||||||||||||||||||||
Std. Deviation | 0.10 | 0.097 | 99.51 | 0.06 | 0.060 | 57.8 | 0.23 | 0.228 | 205.5 | 0.07 | 0.069 | 84.7 |
![]() | 8-5 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 8.5
Liquids Matter ICP-OES Point A 40/70 Test Results
Sample | Hole | SiO2 | S | Mg | Ni | Ba | Mn | Fe | Cr | Al | Ca | Cu | Ti | Sr | Y | Ce | Li | K | Na | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
ID | ID | (%) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22164 | Den-57-1 | 99.96 | 42.45 | 21.94 | 0.21 | ND | 0.96 | 86.43 | 1.38 | 153.26 | 61.74 | 0.31 | 2.25 | 0.72 | ND | ND | 0.55 | 20.08 | 11.84 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22168 | Den-84-1 | 99.92 | 40.16 | 37.51 | 0.47 | ND | 0.49 | 291.74 | 1.74 | 192.69 | 188.57 | 2.80 | 4.67 | 0.82 | 0.04 | 2.23 | ND | 33.82 | 20.84 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22172 | Den-109-1 | 99.93 | 101.17 | 30.42 | 0.15 | ND | 0.76 | 138.47 | 1.27 | 189.25 | 109.61 | 0.38 | 2.26 | 0.89 | 0.04 | 4.31 | 0.09 | 26.68 | 26.68 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22176 | Den-115-1 | 99.94 | 25.19 | 31.37 | 0.15 | ND | 0.47 | 156.62 | 1.89 | 222.97 | 135.52 | 0.51 | 5.16 | 1.27 | 0.02 | 3.09 | 0.10 | 32.43 | 15.83 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22180 | Den-130-1 | 99.94 | 52.27 | 37.11 | 0.19 | ND | 0.88 | 86.03 | 1.41 | 170.87 | 243.46 | 0.34 | 4.04 | 2.73 | 0.03 | 3.16 | 0.08 | 23.02 | 15.58 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22184 | Den-134-1 | 99.92 | 41.41 | 91.64 | 0.28 | ND | 0.96 | 95.03 | 1.54 | 214.65 | 299.01 | 0.53 | 8.68 | 4.13 | 0.05 | 2.90 | 0.07 | 40.88 | 22.48 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22188 | Den-143-1 | 99.95 | 34.38 | 24.27 | 0.13 | ND | 0.20 | 34.53 | 1.25 | 224.22 | 92.72 | 1.46 | 3.83 | 3.70 | 0.03 | 2.23 | 0.33 | 22.35 | 20.76 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22196 | Den-189-1 | 99.95 | 27.20 | 28.24 | 0.31 | ND | 0.25 | 42.84 | 1.53 | 188.70 | 109.05 | 0.41 | 2.86 | 2.39 | 0.03 | 1.84 | ND | 26.72 | 19.02 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22204 | Den-216-1 | 99.92 | 21.86 | 27.71 | 0.16 | 0.30 | 0.47 | 75.33 | 1.16 | 455.45 | 86.83 | 3.55 | 7.17 | 3.21 | 0.06 | 4.75 | 0.82 | 33.73 | 25.55 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22216 | Den-304-1 | 99.88 | 8.56 | 67.16 | 0.23 | 0.68 | 1.01 | 112.55 | 1.28 | 625.04 | 219.89 | 0.24 | 11.06 | 2.99 | 0.08 | 2.37 | 0.89 | 87.46 | 27.30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22220 | Den-147-1 | 99.93 | ND | 32.26 | 0.37 | 0.76 | 1.41 | 134.19 | 1.79 | 296.17 | 145.26 | 0.64 | 7.19 | 4.28 | 0.04 | 1.81 | ND | 25.36 | 15.46 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22224 | Den-150-1 | 99.95 | ND | 30.10 | 0.20 | 0.37 | 0.44 | 88.39 | 1.26 | 189.39 | 73.90 | 2.59 | 4.01 | 1.53 | 0.03 | 1.85 | ND | 22.39 | 19.62 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22228 | Den-269-1 | 99.88 | ND | 34.61 | 0.30 | 1.16 | 1.65 | 136.59 | 1.34 | 574.89 | 384.62 | 0.95 | 8.48 | 2.50 | 0.06 | 2.93 | 0.78 | 21.56 | 13.44 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22232 | Den-319-1 | 99.83 | ND | 80.87 | 0.48 | 0.83 | 2.04 | 306.76 | 1.87 | 791.71 | 415.28 | 1.10 | 6.79 | 2.49 | 0.07 | 2.65 | 1.64 | 39.79 | 27.76 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22236 | Den-128-1 | 99.87 | 36.49 | 81.52 | 0.43 | 0.82 | 1.50 | 296.85 | 1.73 | 282.76 | 476.22 | 0.86 | 5.13 | 1.76 | 0.06 | 2.90 | ND | 46.02 | 7.39 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22240 | Den-193-1 | 99.95 | ND | 35.29 | 0.17 | 0.83 | 0.45 | 59.59 | 1.58 | 222.35 | 97.55 | 0.29 | 6.21 | 3.47 | 0.07 | 4.03 | ND | 23.90 | 11.48 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22244 | Den-226-1 | 99.89 | 78.62 | 25.04 | 0.77 | 0.89 | 0.68 | 129.66 | 2.06 | 713.74 | 119.63 | 0.45 | 5.37 | 2.82 | 0.11 | 2.85 | 1.60 | 25.43 | 11.57 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22248 | Den-240-1 | 99.84 | 0.58 | 45.53 | 0.50 | 0.93 | 1.37 | 124.97 | 1.56 | 969.40 | 298.86 | 0.64 | 6.75 | 2.56 | 0.15 | 3.07 | 2.78 | 28.40 | 29.68 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22252 | Den-245-1 | 99.91 | ND | 21.53 | 0.32 | 0.48 | 0.54 | 77.88 | 1.09 | 689.34 | 65.03 | 0.41 | 4.60 | 1.72 | 0.04 | 1.78 | 1.89 | 9.02 | 3.03 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22256 | Den-318-1* | 99.51 | 385.28 | 256.46 | 0.56 | 0.86 | 3.72 | 396.97 | 2.83 | 1017.23 | 2690.51 | 4.08 | 11.29 | 2.71 | 0.17 | 2.69 | 2.70 | 47.68 | 13.54 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Count | n/a | 20 | 14 | 20 | 20 | 12 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 19 | 19 | 14 | 20 | 20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Min | n/a | 99.51 | 0.58 | 21.53 | 0.13 | 0.30 | 0.20 | 34.53 | 1.09 | 153.26 | 61.74 | 0.24 | 2.25 | 0.72 | 0.02 | 1.78 | 0.07 | 9.02 | 3.03 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Max | n/a | 99.96 | 385.28 | 256.46 | 0.77 | 1.16 | 3.72 | 396.97 | 2.83 | 1017.23 | 2690.51 | 4.08 | 11.29 | 4.28 | 0.17 | 4.75 | 2.78 | 87.46 | 29.68 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mean | n/a | 99.89 | 63.97 | 52.03 | 0.32 | 0.74 | 1.01 | 143.57 | 1.58 | 419.20 | 315.66 | 1.13 | 5.89 | 2.43 | 0.06 | 2.81 | 1.02 | 31.84 | 17.94 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Std Deviation | n/a | 0.10 | 96.02 | 52.62 | 0.17 | 0.25 | 0.81 | 99.51 | 0.40 | 286.56 | 572.71 | 1.16 | 2.58 | 1.06 | 0.04 | 0.84 | 0.95 | 16.11 | 7.28 |
Note: ND = Not Detected. Limits of detection are the following: S: 0.038 ppm; Ba: 0.001 ppm; Y: 0.000 ppm; Ce: 0.050 ppm; Li: 0.003; Na: 0.094. Summary statistics include only analyses above the limit of detection. The reported impurities are in oxide form.
*NOTE: Drill hole DEN-318 sample is interpreted as contaminated and has been excluded from the interpolated data set used in sand quality evaluation.
![]() | 8-6 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 8.6
Liquids Matter ICP-OES Point B 40/70 Test Results
Sample | Hole | SiO2 | S | Mg | Ni | Ba | Mn | Fe | Cr | Al | Ca | Cu | Ti | Sr | Y | Ce | Li | K | Na | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
ID | ID | (%) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22166 | Den-57-1 | 99.97 | 17.45 | 21.66 | 0.19 | ND | 0.46 | 52.68 | 1.18 | 129.47 | 98.15 | 3.22 | 1.89 | 0.69 | 0.03 | 4.01 | 0.33 | 17.37 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22170 | Den-84-1 | 99.94 | 1.97 | 27.66 | 0.41 | 0.46 | 0.47 | 266.72 | 1.72 | 181.13 | 126.99 | 3.18 | 4.58 | 0.87 | 0.03 | 1.90 | ND | 26.47 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22174 | Den-109-1 | 99.95 | 81.22 | 24.32 | 0.20 | ND | 0.41 | 97.40 | 1.19 | 166.07 | 55.21 | 0.24 | 1.80 | 0.84 | 0.03 | 3.95 | 0.28 | 19.78 | 10.47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22178 | Den-115-1 | 99.95 | 20.03 | 21.64 | 0.15 | ND | 0.26 | 149.20 | 1.82 | 184.64 | 45.88 | 0.08 | 3.18 | 1.00 | 0.03 | 3.06 | 0.31 | 24.32 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22182 | Den-130-1 | 99.96 | 21.56 | 23.26 | 0.16 | ND | 0.36 | 45.14 | 1.50 | 187.73 | 94.21 | 0.24 | 3.20 | 3.17 | 0.05 | 3.17 | 0.30 | 20.21 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22186 | Den-134-1 | 99.95 | 16.82 | 47.34 | 0.30 | ND | 0.28 | 50.20 | 1.75 | 250.99 | 125.53 | 0.36 | 4.51 | 5.25 | 0.04 | 3.89 | 0.31 | 37.35 | 5.28 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22190 | Den-143-1 | 99.96 | 16.85 | 22.99 | 0.16 | ND | 0.19 | 27.10 | 1.42 | 239.11 | 71.51 | 1.40 | 3.99 | 4.25 | 0.03 | 1.97 | 0.37 | 22.04 | 4.67 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22198 | Den-189-1 | 99.94 | 22.78 | 35.63 | 0.33 | ND | 0.22 | 45.72 | 1.97 | 318.85 | 84.04 | 0.40 | 5.09 | 3.35 | 0.05 | 3.45 | 0.35 | 29.85 | 5.06 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22206 | Den-216-1 | 99.93 | 19.53 | 25.07 | 0.23 | 0.16 | 0.30 | 55.79 | 1.26 | 450.83 | 40.90 | 3.42 | 4.49 | 2.82 | 0.06 | 3.54 | 0.89 | 25.37 | 14.52 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22218 | Den-304-1 | 99.91 | ND | 62.47 | 0.19 | 0.72 | 0.50 | 84.11 | 1.11 | 537.79 | 105.50 | 0.23 | 4.99 | 2.82 | 0.07 | 2.45 | 0.76 | 72.82 | 4.67 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22222 | Den-147-1 | 99.95 | ND | 27.58 | 0.29 | 0.72 | 0.37 | 51.76 | 1.52 | 250.92 | 102.40 | 0.53 | 4.77 | 4.18 | 0.04 | 1.56 | ND | 19.43 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22226 | Den-150-1 | 99.96 | ND | 29.23 | 0.24 | 0.30 | 0.36 | 70.06 | 1.31 | 208.15 | 47.77 | 2.41 | 5.02 | 1.74 | 0.04 | 2.46 | ND | 17.67 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22230 | Den-269-1 | 99.93 | ND | 31.78 | 0.25 | 0.92 | 0.82 | 100.10 | 1.11 | 407.94 | 144.89 | 0.99 | 4.93 | 2.50 | 0.06 | 2.56 | 0.38 | 15.13 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22234 | Den-319-1 | 99.90 | ND | 51.08 | 0.23 | 0.74 | 0.62 | 176.45 | 1.23 | 515.48 | 215.46 | 1.22 | 3.58 | 2.41 | 0.05 | 1.96 | 0.60 | 29.85 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22238 | Den-128-1 | 99.93 | 15.84 | 41.92 | 0.28 | 0.92 | 0.69 | 91.56 | 1.23 | 232.76 | 310.86 | 0.90 | 3.28 | 1.56 | 0.05 | 2.71 | ND | 35.24 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22242 | Den-193-1 | 99.96 | ND | 36.11 | 0.17 | 0.80 | 0.23 | 37.68 | 1.69 | 247.96 | 71.74 | 0.28 | 6.35 | 3.80 | 0.07 | 4.32 | ND | 21.61 | 3.11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22246 | Den-226-1 | 99.89 | 40.44 | 28.17 | 0.72 | 0.89 | 0.60 | 84.46 | 2.07 | 753.09 | 120.11 | 0.56 | 4.82 | 3.01 | 0.10 | 2.58 | 1.63 | 22.46 | 1.70 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22250 | Den-240-1 | 99.90 | ND | 35.46 | 0.22 | 0.79 | 0.87 | 68.32 | 1.29 | 711.55 | 184.84 | 0.80 | 4.34 | 2.46 | 0.09 | 2.33 | 1.55 | 19.36 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22254 | Den-245-1 | 99.91 | ND | 22.43 | 0.34 | 0.54 | 0.25 | 38.25 | 1.15 | 812.78 | 41.35 | 0.20 | 4.80 | 1.95 | 0.05 | 2.03 | 2.39 | 6.25 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22258 | Den-318-1 | 99.69 | 52.74 | 69.22 | 0.37 | 0.74 | 1.58 | 129.79 | 2.23 | 1011.76 | 1746.97 | 0.79 | 4.94 | 2.52 | 0.11 | 2.39 | 2.77 | 45.45 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Count | n/a | 20 | 12 | 20 | 20 | 13 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 15 | 20 | 8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Min | n/a | 99.69 | 1.97 | 21.64 | 0.15 | 0.16 | 0.19 | 27.10 | 1.11 | 129.47 | 40.90 | 0.08 | 1.80 | 0.69 | 0.03 | 1.56 | 0.28 | 6.25 | 1.70 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Max | n/a | 99.97 | 81.22 | 69.22 | 0.72 | 0.92 | 1.58 | 266.72 | 2.23 | 1011.76 | 1746.97 | 3.42 | 6.35 | 5.25 | 0.11 | 4.32 | 2.77 | 72.82 | 14.52 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mean | n/a | 99.92 | 27.27 | 34.25 | 0.27 | 0.67 | 0.49 | 86.13 | 1.49 | 389.95 | 191.71 | 1.07 | 4.23 | 2.56 | 0.05 | 2.81 | 0.88 | 26.40 | 6.19 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Std Deviation | n/a | 0.06 | 21.28 | 13.73 | 0.13 | 0.24 | 0.32 | 57.83 | 0.34 | 254.57 | 372.02 | 1.09 | 1.11 | 1.25 | 0.02 | 0.81 | 0.82 | 13.90 | 4.21 |
Note: ND = Not Detected. Limits of detection are the following: S: 0.038 ppm; Ba: 0.001 ppm; Y: 0.000 ppm; Ce: 0.050 ppm; Li: 0.003; Na: 0.094. Summary statistics include only analyses above the limit of detection. The reported impurities are in oxide form.
![]() | 8-7 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 8.7
Liquids Matter ICP-OES Point A-1 70/140 Test Results
Sample | Hole | SiO2 | S | Mg | Ni | Ba | Mn | Fe | Cr | Al | Ca | Cu | Ti | Sr | Y | Ce | Li | K | Na | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
ID | ID | (%) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22165 | Den-57-1 | 99.93 | 28.38 | 31.43 | 0.27 | ND | 1.82 | 133.81 | 2.20 | 278.28 | 101.77 | 0.54 | 31.05 | 1.35 | 0.04 | 5.67 | 0.39 | 29.35 | 20.72 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22169 | Den-84-1 | 99.87 | 76.49 | 51.78 | 0.82 | 0.04 | 1.92 | 593.35 | 2.40 | 242.73 | 200.38 | 1.31 | 43.27 | 1.03 | 0.07 | 2.01 | ND | 48.78 | 13.85 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22173 | Den-109-1 | 99.91 | 65.00 | 43.94 | 0.29 | ND | 1.15 | 121.95 | 1.65 | 333.42 | 209.08 | 0.38 | 17.74 | 1.40 | 0.05 | 4.67 | 0.37 | 43.07 | 24.14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22177 | Den-115-1 | 99.87 | 40.03 | 41.23 | 0.30 | ND | 4.14 | 375.00 | 3.47 | 288.17 | 289.07 | 0.49 | 114.51 | 1.90 | 0.06 | 3.64 | 0.05 | 40.11 | 45.47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22181 | Den-130-1 | 99.85 | 75.17 | 41.15 | 0.44 | 2.05 | 13.66 | 384.07 | 5.59 | 236.04 | 219.46 | 1.31 | 430.12 | 4.05 | 0.21 | 5.06 | 0.07 | 30.11 | 26.23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22185 | Den-134-1 | 99.86 | 43.90 | 149.82 | 0.46 | 1.69 | 2.30 | 155.66 | 2.19 | 356.27 | 502.53 | 1.40 | 44.24 | 6.47 | 0.09 | 5.17 | 0.17 | 50.45 | 18.82 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22189 | Den-143-1 | 99.94 | 30.97 | 29.85 | 0.21 | ND | 1.17 | 71.64 | 1.74 | 274.45 | 82.15 | 0.89 | 36.33 | 4.61 | 0.07 | 2.68 | 0.30 | 27.27 | 15.57 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22197 | Den-189-1 | 99.93 | 29.19 | 41.31 | 0.38 | 0.16 | 0.82 | 97.51 | 1.92 | 304.03 | 122.60 | 0.14 | 20.22 | 3.17 | 0.06 | 2.91 | 0.28 | 42.46 | 23.91 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22205 | Den-216-1 | 99.95 | 14.90 | 21.81 | 0.13 | 0.39 | 0.61 | 58.26 | 1.00 | 302.11 | 73.54 | 0.62 | 14.18 | 2.97 | 0.06 | 3.97 | 0.45 | 23.51 | 17.41 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22217 | Den-304-1 | 99.85 | 6.34 | 80.83 | 0.28 | 0.90 | 4.41 | 203.97 | 2.01 | 629.32 | 324.31 | 0.27 | 111.75 | 3.18 | 0.11 | 2.32 | 0.79 | 106.68 | 13.60 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22221 | Den-147-1 | 99.93 | ND | 30.86 | 0.34 | 0.90 | 1.82 | 124.52 | 1.58 | 250.54 | 157.33 | 0.57 | 32.52 | 4.00 | 0.05 | 1.26 | ND | 23.52 | 8.97 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22225 | Den-150-1 | 99.92 | ND | 38.42 | 0.34 | 0.60 | 3.56 | 201.16 | 1.94 | 270.31 | 97.66 | 0.62 | 106.08 | 2.07 | 0.05 | 2.55 | ND | 26.33 | 10.70 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22229 | Den-269-1 | 99.85 | 0.60 | 39.76 | 0.39 | 1.32 | 3.34 | 208.47 | 1.76 | 532.62 | 584.88 | 0.76 | 39.93 | 3.14 | 0.09 | 3.34 | 0.72 | 24.46 | 11.66 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22233 | Den-319-1 | 99.85 | ND | 45.94 | 0.54 | 0.81 | 1.29 | 208.63 | 1.87 | 1043.83 | 152.51 | 0.46 | 22.32 | 2.61 | 0.08 | 3.20 | 2.62 | 29.23 | 10.39 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22237 | Den-128-1 | 99.90 | 11.44 | 69.23 | 0.37 | 0.91 | 1.44 | 170.61 | 1.54 | 300.89 | 391.48 | 0.66 | 11.52 | 1.38 | 0.07 | 2.66 | ND | 50.02 | 8.93 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22241 | Den-193-1 | 99.92 | ND | 44.11 | 0.30 | 1.07 | 3.33 | 140.58 | 2.31 | 265.67 | 141.78 | 0.59 | 108.17 | 3.29 | 0.10 | 3.69 | ND | 26.67 | 6.03 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22245 | Den-226-1 | 99.86 | 57.70 | 31.17 | 1.04 | 1.20 | 1.64 | 174.24 | 2.88 | 875.73 | 172.34 | 0.78 | 30.24 | 3.07 | 0.17 | 3.61 | 2.23 | 24.33 | 10.16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22249 | Den-240-1 | 99.78 | 3.84 | 60.54 | 0.68 | 1.25 | 4.32 | 267.67 | 2.44 | 1334.48 | 350.10 | 0.48 | 105.15 | 3.04 | 0.22 | 4.09 | 4.22 | 27.68 | 21.70 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22253 | Den-245-1 | 99.87 | ND | 24.59 | 0.51 | 0.63 | 0.90 | 72.59 | 1.55 | 1057.70 | 83.99 | 0.45 | 21.85 | 2.26 | 0.06 | 2.91 | 3.30 | 11.01 | 5.61 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22257 | Den-318-1 | 98.89 | 829.66 | 1223.02 | 0.73 | 2.34 | 15.22 | 917.52 | 5.67 | 1325.98 | 6545.81 | 3.12 | 119.90 | 4.02 | 0.39 | 4.56 | 2.82 | 66.52 | 27.33 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Count | n/a | 20 | 15 | 20 | 20 | 16 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 15 | 20 | 20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Min | n/a | 98.89 | 0.60 | 21.81 | 0.13 | 0.04 | 0.61 | 58.26 | 1.00 | 236.04 | 73.54 | 0.14 | 11.52 | 1.03 | 0.04 | 1.26 | 0.05 | 11.01 | 5.61 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Max | n/a | 99.95 | 829.66 | 1223.02 | 1.04 | 2.34 | 15.22 | 917.52 | 5.67 | 1334.48 | 6545.81 | 3.12 | 430.12 | 6.47 | 0.39 | 5.67 | 4.22 | 106.68 | 45.47 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mean | n/a | 99.84 | 87.57 | 107.04 | 0.44 | 1.02 | 3.44 | 234.06 | 2.39 | 525.13 | 540.14 | 0.79 | 73.06 | 2.95 | 0.11 | 3.50 | 1.25 | 37.58 | 17.06 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Std Deviation | n/a | 0.23 | 206.83 | 264.15 | 0.22 | 0.63 | 3.96 | 205.46 | 1.23 | 380.30 | 1420.82 | 0.64 | 92.90 | 1.31 | 0.09 | 1.14 | 1.38 | 20.79 | 9.47 |
Note: ND = Not Detected. Limits of detection are the following: S: 0.038 ppm; Ba: 0.001 ppm; Y: 0.000 ppm; Ce: 0.050 ppm; Li: 0.003; Na: 0.094. Summary statistics include only analyses above the limit of detection. The reported impurities are in oxide form.
![]() | 8-8 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 8.8
Liquids Matter ICP-OES Point B-1 70/140 Test Results
Sample | Hole | SiO2 | S | Mg | Ni | Ba | Mn | Fe | Cr | Al | Ca | Cu | Ti | Sr | Y | Ce | Li | K | Na | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
ID | ID | (%) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | (ppm) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22167 | Den-57-1 | 99.95 | 17.29 | 29.80 | 0.23 | ND | 0.47 | 64.85 | 1.65 | 232.92 | 64.31 | 0.46 | 4.23 | 1.04 | 0.05 | 5.31 | 0.42 | 29.87 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22171 | Den-84-1 | 99.92 | 16.07 | 32.97 | 0.68 | ND | 0.52 | 398.83 | 2.15 | 238.08 | 65.79 | 1.02 | 6.95 | 1.07 | 0.04 | 1.75 | 0.36 | 41.97 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22175 | Den-109-1 | 99.96 | 27.19 | 28.01 | 0.20 | ND | 0.41 | 66.00 | 1.26 | 216.15 | 50.84 | 0.24 | 2.79 | 1.03 | 0.04 | 3.99 | 0.42 | 23.51 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22179 | Den-115-1 | 99.93 | 18.98 | 28.53 | 0.21 | ND | 0.30 | 216.60 | 2.45 | 250.49 | 38.66 | 0.23 | 5.44 | 1.56 | 0.03 | 3.15 | 0.32 | 32.61 | 23.65 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22183 | Den-130-1 | 99.96 | 17.52 | 26.83 | 0.23 | ND | 0.41 | 50.25 | 1.68 | 184.71 | 79.92 | 0.23 | 4.78 | 2.93 | 0.05 | 3.40 | 0.41 | 20.48 | 1.52 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22187 | Den-134-1 | 99.92 | 20.50 | 66.89 | 0.35 | ND | 0.37 | 57.05 | 1.98 | 293.86 | 267.64 | 0.46 | 5.77 | 6.29 | 0.04 | 4.41 | 0.32 | 41.54 | 6.49 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22191 | Den-143-1 | 99.96 | 19.68 | 24.97 | 0.23 | ND | 0.26 | 34.44 | 1.54 | 218.79 | 64.08 | 0.74 | 4.74 | 4.23 | 0.04 | 1.94 | 0.33 | 22.33 | 2.34 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22199 | Den-189-1 | 99.95 | 23.86 | 36.31 | 0.56 | 0.01 | 0.35 | 63.47 | 1.77 | 226.94 | 94.83 | 0.21 | 2.53 | 2.94 | 0.04 | 1.54 | 0.26 | 31.95 | 12.98 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22207 | Den-216-1 | 99.95 | 8.80 | 20.66 | 0.11 | 0.52 | 0.22 | 40.76 | 0.96 | 321.96 | 34.96 | 0.61 | 3.87 | 3.04 | 0.06 | 3.94 | 0.80 | 18.74 | 1.25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22219 | Den-304-1 | 99.90 | ND | 68.66 | 0.22 | 0.70 | 0.52 | 97.65 | 1.28 | 611.82 | 119.10 | 0.12 | 5.32 | 3.16 | 0.07 | 2.60 | 0.89 | 88.54 | 6.86 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22223 | Den-147-1 | 99.95 | ND | 28.26 | 0.30 | 0.77 | 0.37 | 64.30 | 1.51 | 273.49 | 64.92 | 0.39 | 6.32 | 4.70 | 0.04 | 2.07 | ND | 21.13 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22227 | Den-150-1 | 99.96 | ND | 30.53 | 0.29 | 0.37 | 0.41 | 81.36 | 1.48 | 223.49 | 53.43 | 0.62 | 6.04 | 1.84 | 0.05 | 2.91 | ND | 20.30 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22231 | Den-269-1 | 99.92 | ND | 34.72 | 0.34 | 1.11 | 0.75 | 145.42 | 1.46 | 489.39 | 75.29 | 0.71 | 7.15 | 3.11 | 0.06 | 3.18 | 0.57 | 21.25 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22235 | Den-319-1 | 99.90 | ND | 34.46 | 0.29 | 0.66 | 0.44 | 164.62 | 1.41 | 742.63 | 58.40 | 0.51 | 6.50 | 2.47 | 0.05 | 2.47 | 1.28 | 23.69 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22239 | Den-128-1 | 99.95 | ND | 40.22 | 0.26 | 0.75 | 0.45 | 72.28 | 1.10 | 241.60 | 110.86 | 0.57 | 3.77 | 1.19 | 0.05 | 2.37 | ND | 39.37 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22243 | Den-193-1 | 99.96 | ND | 37.29 | 0.26 | 0.79 | 0.24 | 41.96 | 1.81 | 244.30 | 61.30 | 0.56 | 7.61 | 3.24 | 0.07 | 3.35 | ND | 24.26 | 11.15 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22247 | Den-226-1 | 99.90 | 11.02 | 29.94 | 0.80 | 0.93 | 0.50 | 64.96 | 2.21 | 785.18 | 93.75 | 0.83 | 8.44 | 2.88 | 0.09 | 2.63 | 1.74 | 19.30 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22251 | Den-240-1 | 99.90 | ND | 39.36 | 0.29 | 0.87 | 0.53 | 67.56 | 1.32 | 780.69 | 114.21 | 0.55 | 7.58 | 2.55 | 0.07 | 2.30 | 1.91 | 18.90 | ND | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22255 | Den-245-1 | 99.91 | ND | 22.70 | 0.35 | 0.53 | 0.25 | 42.64 | 1.33 | 806.56 | 46.90 | 0.44 | 3.92 | 2.29 | 0.04 | 2.26 | 1.94 | 7.60 | 0.71 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
22259 | Den-318-1 | 99.64 | 23.54 | 76.95 | 0.34 | 0.90 | 1.72 | 112.97 | 2.47 | 1066.56 | 2211.47 | 0.74 | 6.01 | 2.96 | 0.13 | 2.78 | 3.06 | 47.34 | 8.31 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Count | n/a | 20 | 11 | 20 | 20 | 13 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 20 | 16 | 20 | 10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Min | n/a | 99.64 | 8.80 | 20.66 | 0.11 | 0.01 | 0.22 | 34.44 | 0.96 | 184.71 | 34.96 | 0.12 | 2.53 | 1.03 | 0.03 | 1.54 | 0.26 | 7.60 | 0.71 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Max | n/a | 99.96 | 27.19 | 76.95 | 0.80 | 1.11 | 1.72 | 398.83 | 2.47 | 1066.56 | 2211.47 | 1.02 | 8.44 | 6.29 | 0.13 | 5.31 | 3.06 | 88.54 | 23.65 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mean | n/a | 99.92 | 18.59 | 36.90 | 0.33 | 0.69 | 0.47 | 97.40 | 1.64 | 422.48 | 188.53 | 0.51 | 5.49 | 2.73 | 0.05 | 2.92 | 0.94 | 29.73 | 7.53 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Std Deviation | n/a | 0.07 | 5.42 | 15.61 | 0.17 | 0.28 | 0.32 | 84.71 | 0.43 | 271.09 | 478.76 | 0.23 | 1.65 | 1.32 | 0.02 | 0.95 | 0.82 | 16.98 | 7.10 |
Note: ND = Not Detected. Limits of detection are the following: S: 0.038 ppm; Ba: 0.001 ppm; Y: 0.000 ppm; Ce: 0.050 ppm; Li: 0.003; Na: 0.094. Summary statistics include only analyses above the limit of detection. The reported impurities are in oxide form.
![]() | 8-9 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
![]() | 8-10 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
![]() | 8-11 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
![]() | 8-12 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
![]() | 8-13 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
![]() | 8-14 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
![]() | 8-15 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
9 | DATA VERIFICATION |
9.1 | Site Visit and alignment on Field Procedures and Sampling Protocol |
A Stantec professional geologist assisted with and oversaw the portion of the program involving collection of the field data, sample collection, and the implementation of chain-of-custody documentation during sample shipment. To streamline the program, the Stantec professional geologist conducted a site visit to the Property on September 25 and 26, 2018, which was at the time that the Sio Silica field personnel were drilling DEN 57-1; the first 2018 hole. The timing of this site visit provided the professional geologist the opportunity to align with the Sio Silica field crew on program procedures, as well as to instruct the drilling crew on the required rate of drilling to facilitate sample collection.
On June 10, 2022, the QP visited the Sio Silica’s laboratory in Calgary, Alberta, to review the laboratory equipment, and protocols with Sio Silica personnel. The Sio Silica laboratory is used to process the sand to a product that represents “market ready” sand. The process flow includes sample compositing, drying and sieve analysis. The Sio Silica lab is equipped with a magnetic separator to remove iron contaminant particles. It is the QP’s opinion that Sio Silica’s laboratory equipment, procedures, processes and personal are adequate for the performed analytical work. The QP requested that sieve tests on the retained samples that have been analyzed in AGAT laboratory be analyzed in Sio Silica’s lab to ensure consistency and accuracy of the results generated in the Sio Silica’s laboratory.
In 2022 and 2023 Sio Silica used Liquids Matter laboratory to perform multiple ICP analyses. On June 10, 2022, the QP conducted a laboratory visit at Liquids Matter facility in Calgary, Alberta. Liquid Matter is an independent testing facility, and a member of the Professional Chemists of Alberta. It is the QP’s opinion that Liquids Matter’s laboratory equipment, procedures, processes and personal are adequate for the performed analytical work.
On January 25, 2023, the QP conducted a site visit on the Property. All of the drill hole sites were rehabilitated. The drill hole location of the monitoring well was validated. The sample storage facility was also visited.
9.2 | Sample Chain-of-Custody and Laboratory Results |
9.2.1 | Chain-of-Custody |
All 2018 samples shipped to AGAT were sent from Steinbach, Manitoba to Calgary, Alberta by Purolator. The courier receipts were reviewed by Stantec to verify the shipment dates. Table 9.1 summarizes the date the samples were sent and received by AGAT.
![]() | 9-1 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 9.1
2018 AGAT Sample Chain-of-Custody
Hole Name | Samples | Hole Spud Date | Sample Shipment Date | Date Samples Received | ||||
DEN 57-1 | 14601-14617 | September 24, 2018 | September 26, 2018 | September 27, 2018 | ||||
DEN 84-1 | 14728-14737 | November 23, 2018 | January 11, 2019 | January 14, 2019 | ||||
DEN 109-1 | 14902-14919 | November 27, 2018 | January 21, 2019 | January 23, 2019 | ||||
DEN 115-1 | 14694-14711 | October 23-25, 2018 | November 1, 2018 | November 5, 2018 | ||||
DEN 130-1 | 14677-14693 | October 17-19, 2018 | November 1, 2018 | November 5, 2018 | ||||
DEN 134-1 | 14779; 14763-14778; 14798-14799 | November 21, 2018 | January 21, 2019 | January 23, 2019 | ||||
DEN 143-1 | 14712-14726 | October 29-31, 2018 | November 1, 2018 | November 5, 2018 | ||||
DEN 178-1 | 14921-14934 | November 28, 2018 | January 21, 2019 | January 23, 2019 | ||||
DEN 189-1 | 14963-14979 | November 12, 2018 | January 16, 2019 | January 18, 2019 | ||||
DEN 209-1 | 14953-14961 | November 22, 2018 | January 16, 2019 | January 18, 2019 | ||||
DEN 216-1 | 14780-14797 | November 30, 2018 | January 16, 2019 | January 18, 2019 | ||||
DEN 223-1 | 14750-14760 | November 7, 2018 | November 14, 2018 | November 16, 2018 | ||||
DEN 243-1 | 14631-14645 | October 1, 2018 | October 4, 2018 | October 9, 2018 |
The five duplicate samples sent to Loring were hand delivered by a Sio Silica employee. A chain of custody was obtained with the signature of the receiver at Loring on March 1, 2019.
The 2021 and 2022 drilling campaign follows the established sample shipment procedure. The QP did not review the shipment receipt but has no reason to believe that the established sample shipment procedures from previous years were not followed.
In 2022, UPS services were used to ship the sand samples from Winnipeg to Sio Silica’s laboratory in Calgary. The sand samples from Sio Silicas’ laboratory to Liquid Matter laboratory are hand delivered by a Sio Silica employee. The email tracking system between Sio Silica and Liquid Matter, as well as the UPS tracking sheets have been reviewed by the QP.
The QP’s opinion is that the sample handling and sample security approach is adequate for this type of commodity.
9.2.2 | Laboratory Results |
The results from the different laboratories were compared to ensure consistency of the analytical data. The sieve results by fraction between AGAT and Loring laboratories on the analyses of the 2018 duplicate samples are compared and shown in Figure 9-1.
In 2022 and 2023 Sio Silica conducted sieve analysis in the Sio Silica laboratory. To ensure consistency of the analytical data, samples tested in AGAT laboratory are tested in Sio Silica’s laboratory as well. The result of the comparison is shown on Figure 9-2.
Additional sample results from the BRU property tested in AGAT and Sio Silica laboratories were also compared to evaluate the consistency of the analytical data received from these laboratories. The result of the comparison is shown on Figures 9-3.
Based on this comparison presented in Figures 9-1 and 9-2 the QP has concluded that the sieve results for the sand analysed by Loring and Sio Silica laboratories have an acceptable level of accuracy and consistency.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
10 | MINERAL PROCESSING AND METALLURGICAL TESTING |
This Technical Report Summary does not include a discussion of mineral processing and metallurgical testing. However, Section 8.3.2 provides details on the bench scale procedures, developed by Sio Silica, for further purification of raw sand samples from the DEN Property and generate market ready sand product.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
11 | MINERAL RESOURCE ESTIMATES |
The estimates presented below have been prepared in accordance with the requirements of the SEC S-K 1300 Regulations. The geologic model construction, resource estimation approach, criteria and assumptions taken into consideration during this resource estimation are outlined in the following sub-sections.
11.1 | Computer Model Construction |
The geologic resource model was developed using Hexagon Mining’s geological modeling and mine planning software, MinePlan® version 15.80-7. MinePlan® (also known as MineSight) is widely used throughout the mining industry for digital resource model development. Hexagon Mining’s suite of interpretive and modeling tools is well-suited to meet the modeling requirements for the Property.
A gridded-surface modeling approach was used to evaluate and calculate resource estimates for the Carman Sand Member located within the Property. The 3D gridded-surface model consists of laterally contiguous cells (commonly called grids). The selected grid size is determined by the density of the drill hole data and extent of the property. The grid size for this assessment was 50 m x 50 m (x, y). Each grid has a fixed position of easting and northing within the model limits and contains a list of variables or numeric identifiers, such as the lithology thickness, percent of each sand fraction (product), and other pertinent information.
11.1.1 | Topographic and Lithological Horizons |
Topography data was downloaded from the Natural Resources Canada website in Canadian Digital Elevation Model (CDEM) format, spatial resolution is 0.75 arc seconds. These datasets were converted into a gridded-surface file within MinePlan®.
Based on the drill hole information, the surfaces representing the bottom of the first four lithological units in stratigraphic order were created: bottom of the Diamicton, bottom of the Carbonate (Red River Formation), the bottom of the Upper Shale (Red River Formation) and the bottom of the Carman Sand Member.
Elevation values were calculated at each drill hole location representing the bottom of the Diamicton, as well as the bottom of the Upper Shale (or the top of the Carman Sand Member). These elevation data were then used to create triangulated surface utilizing the “Implicit Modeler” tool in MinePlan®. The MinePlan’s “Implicit Modeler” tool uses a radial basis function interpolation algorithm. The triangulated surfaces were then converted into gridded surfaces.
The thickness of the Upper Shale was calculated based on the drill hole data. These calculated vertical thicknesses were used to create an isopach gridded surface of the Upper Shale using Inverse Distance Weighted algorithm with power of 2 (IDW2). The isopach gridded values of the Upper Shale were added to the elevation values of the bottom of the Upper Shale gridded surface to construct the elevation of the bottom of the Carbonate.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
An isopach gridded surface of the Carman Sand Member was created using the vertical thickness value from the drill holes. The bottom of the Carman Sand Member was constructed by subtracting the interpolated isopach values of the Carman Sand Member from the elevation values of the bottom of the Upper Shale gridded surface.
11.1.2 | Assay Data Compositing and Interpolation |
Sieve-derived laboratory data from the Carman Sand samples was used to create two sand size fraction (product) weight percent values: 40/70 and 70/140. For each sand product, a length weighted composited percent value was calculated for each drill hole. An IDW4 interpolation was used to calculate each weight percent product for each model grid. Figure 11-1 shows the 40/70 fraction distribution map and Figure 11-2 shows the 70/140 fraction distribution map.
The ICP-OES tested samples were composited samples of the entire Carman Sand Member interval for each drill hole, so no additional compositing was required prior to interpolating the data into the model grids. An IDW4 interpolation was used to calculate SiO2, Fe and Al value for each model grid. The interpolation results are shown in Figures 8-1 through 8-4.
11.2 | Resource Estimation Approach |
Stantec used the following approach to facilitate the estimation of resources:
● | Carman Sand unit thickness was estimated using all drill holes as discussed in Section 7 |
● | During the modeling process, the variations in the elevation of the top of the carbonate surface, caused by geological undulations and data collection inconsistencies in drill holes from GIN, were accounted for through application of a modeling methodology that averaged the elevation values over an area slightly larger than one quarter section (500m) |
● | Percentages of the different sand fractions were used in the constructed geological model as provided from the laboratory |
● | MinePlan® Software was used to construct a 3D geological computer model of the property to estimate in-place resources. The modeled gridded surfaces for top and bottom of the Carman Sand unit were used for volume estimation |
● | Volumes were converted to tonnage by the application of a representative average bulk density value of 1.5 g/cm3 |
● | The geological interpretations and the modeled volumes as well as the relationship between the model and the raw data were confirmed through cross-sectional review and statistical model validation |
● | This resource estimation only includes extractable sand volumes calculated using the criteria shown in Table 11.2, which are based on the geotechnical analysis discussed in Section 11.4 |
● | This resource estimation only includes those in-situ sand volumes found within the mining claims boundaries as shown on Figure 3.2 |
● | The drill hole spacing, the available assay data, and resource spatial distribution were considered in the resource classification |
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
11.3 | Mineral Resource Classification |
SEC S-K 1300 Regulations are aligned with the Committee for Mineral Reserves International Reporting Standards (CRISCO, 2019) that defines a Mineral Resource as: “A Mineral Resource is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling. Mineral Resources are subdivided, in order of increasing geological confidence into Inferred, Indicated and Measured categories.”
The CRISCO definition for a Mineral Resources clearly outline that a solid material is considered a resource if there is clear identification of the economic interest in the deposit. For sand deposits this means that the nature of the database, technology for mining and mine planning, some degree of practical recovery constraints and the economic potential in current markets must be considered in order to identify a sand resource.
Resources are classified according to the confidence level that can be placed in each estimate. The classification template used in this study is based on the three-dimensional distance to the nearest drill hole that penetrates the top and the bottom of the Carman Sand, as well as the distance to the nearest sample that contains sieve-derived laboratory data.
The Carman Sand interval in the Property was classed as Indicated using a 1,600 m radial distance from the nearest drill hole intersection with available sand quality data and classed as Inferred using a 3,200 m radial distance from the nearest drill hole intersection with or without available sand quality data. Only drill holes listed in Section 7.2 and Section 7.3 were used for resource classification. Due to the reduced reliability of the water-wells described in Section 7.1, this data was only used to define the contacts of the lithological units.
Figure 11-3 shows the resource distribution map and Figure 11-4 shows the resource classification map. The resource estimate covers an area of approximately 29,600 ha.
11.4 | GEOTECHNICAL Analysis |
In January 2022, Stantec completed a geotechnical stability analysis related to the development of voids resulting from the sand extraction process at the BRU Property. This analysis was presented to Sio Silica in the report “Geotechnical Analysis for Sio Silica Extraction Project” (Stantec 2022).
A similar program of geotechnical sampling and analysis has not yet occurred for the DEN Property. Utilizing the most recent DEN geological interpretation and the results of the BRU geotechnical analysis, Stantec’s geotechnical engineers completed a preliminary high-level analysis of the DEN conditions, and these results were used to inform the current resource estimate. Stantec notes that this geotechnical analysis, and the resulting resource estimate is highly dependent on the DEN site specific geotechnical conditions. Additional geotechnical analysis and assessment is required to confirm cavity behavior, the structure and strength of the limestone caprock, the movement of water in around the extraction voids, the safe distance between adjacent cavities, the range of possible failure modes and other geotechnical conditions.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
There is a potential that further geotechnical assessments may impact the current resource estimate, either positively or negatively.
It is important to note that the Stantec geotechnical assessment for BRU was reviewed by 3rd party experts from AECOM and Arcadis who generally agreed with the results, conclusions and recommendations, and recommended additional investigations and analysis for the next stage of the geotechnical design.
11.5 | Assessment of Reasonable Prospect for Eventual Economic Extraction |
The results of this Technical Report Summary indicate a positive economic outcome related to the potential development of a silica sand extraction and processing operation for the DEN Property.
As such the QP believes the DEN Property continues to demonstrate a reasonable prospect for eventual economic extraction.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
11.6 | Estimation of Sand Volume |
The modeled volumes and weight of the Carman Sand within the resource area are shown in Table 11.1.
Table 11.1
Summary of In-Place Carman Sand
In-Place Carman Sand Member in Mineable Lease Area | ||||||||
DEN Property | 40/70 mesh fraction | 70/140 mesh fraction | ||||||
Estimated Sand Volume (Mm3) | 4,910 | 2,532 | ||||||
Total Estimated Sand Volume (Mm3) | 7,442 | |||||||
Estimated Sand Weight (Mt) | 7,365 | 3,798 | ||||||
Total Estimated Sand Weight (Mt) | 11,163 |
The sand weights by fraction that are shown in Table 11.1 are not resources, as it is not technically feasible to produce the entire sand volume using the proposed extraction methods. The extractable sand volume and resource estimates are discussed in Section 11.6.
11.7 | Mineral Resource Estimation |
Sio Silica plans to develop the DEN Property using an underground extraction technique that involves drilling through the quaternary sediments, a carbonate unit and shale, into the underlying sand. The extraction holes will be cased 5 m into the sand and an extraction casing is then lowered into the sand. Air is injected into the extraction casing through the drill string, approximately 3 m - 5 m above the bottom of the extraction casing. Field tests have shown that the air injection process results in a slurry of sand, water, and air that rises to the surface.
In previous resource estimates for the DEN Property Stantec utilized a minimum 15 m carbonate unit thickness as a cut-off along with a 5.6% recovery factor. This methodology was based on initial geotechnical assessments along with an initial understanding of how voids might develop during the sand extraction process.
Preliminary geotechnical analysis for the DEN property has resulted in the extraction recommendations as summarized in Table 11.2. The extraction holes are planned to be drilled in a pod or cluster of up to thirteen holes in one extraction pad area. The current planning basis is to extract between 1 K and 33 K tonnes of sand from an extraction cluster, depending on the thickness and structural integrity of the overlying limestone and diamicton material, before relocating to the next extraction pad.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 11.2
Sand Extraction Recommendations
Competent | Quaternary |
Extractable Sand |
Extractable Sand | Distance
Between | ||||
>50 | 0-65 | 36,156 | 54,235 | 127 | ||||
>50 | >65 | 34,674 | 52,012 | 126 | ||||
45-50 | 0-55 | 33,224 | 49,836 | 125 | ||||
45-50 | 55-65 | 29,061 | 43,591 | 122 | ||||
45-50 | >65 | 27,736 | 41,603 | 121 | ||||
40-45 | 0-45 | 29,061 | 43,591 | 122 | ||||
40-45 | 45-55 | 26,442 | 39,663 | 120 | ||||
40-45 | 55-65 | 23,949 | 35,924 | 118 | ||||
40-45 | >65 | 21,582 | 32,373 | 116 | ||||
35-40 | 0-45 | 22,750 | 34,125 | 117 | ||||
35-40 | 45-55 | 20,446 | 30,669 | 115 | ||||
35-40 | 55-65 | 17,225 | 25,837 | 112 | ||||
35-40 | >65 | 16,214 | 24,321 | 111 | ||||
30-35 | 0-45 | 15,235 | 22,852 | 110 | ||||
30-35 | 45-55 | 13,370 | 20,056 | 108 | ||||
30-35 | 55-65 | 11,632 | 17,447 | 106 | ||||
30-35 | >65 | 10,809 | 16,214 | 105 | ||||
25-30 | 0-25 | 15,235 | 22,852 | 110 | ||||
25-30 | 25-35 | 12,485 | 18,728 | 107 | ||||
25-30 | 35-45 | 10,018 | 15,028 | 104 | ||||
25-30 | 45-55 | 8,531 | 12,796 | 102 | ||||
25-30 | 55-65 | 7,169 | 10,754 | 100 | ||||
25-30 | >65 | 6,535 | 9,803 | 99 | ||||
20-25 | 0-25 | 9,259 | 13,888 | 103 | ||||
20-25 | 25-35 | 7,169 | 10,754 | 100 | ||||
20-25 | 35-45 | 5,362 | 8,043 | 97 | ||||
20-25 | 45-55 | 4,822 | 7,234 | 96 | ||||
20-25 | 55-65 | 3,838 | 5,757 | 94 | ||||
20-25 | >65 | 3,392 | 5,089 | 93 | ||||
15-20 | 0-25 | 4,314 | 6,472 | 95 | ||||
15-20 | 25-35 | 2,979 | 4,468 | 92 | ||||
15-20 | 35-45 | 2,245 | 3,368 | 90 | ||||
15-20 | 45-55 | 1,925 | 2,888 | 89 | ||||
15-20 | 55-65 | 1,379 | 2,069 | 87 | ||||
15-20 | >65 | 1,379 | 2,069 | 87 |
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
These extraction recommendations have been utilized to update the mineral resource estimate. Table 11.3 shows the estimate of the mineral resource for the Property as of February 21, 2023.
The mineral resource shown in Table 11.3 is reported as in-place tonnages. The calculated volumes were converted to tonnage by the application of representative average in-place bulk density value of 1.5 g/cm3.
Table 11.3
In-Place Mineral Resource Summary
Mineral Resources (Mt) | ||||||||||||
DEN Property | 40/70 mesh fraction | 70/140 mesh fraction | Total | |||||||||
Measured | 0.0 | 0.0 | 0.0 | |||||||||
Indicated | 55.8 | 32.6 | 88.4 | |||||||||
Total Measured and Indicated | 88.4 | |||||||||||
Inferred | 169.8 | 82.9 | 252.7 | |||||||||
Total Inferred | 252.7 |
The 40/70 and 70/140 size fractions were assessed during the preparation of this report, as some silica sand markets have preference on the product grain size.
The accuracy of resource estimates is, in part, a function of the quality and quantity of available data and of engineering and geological interpretation and judgment. Given the data available at the time that this Technical Report Summary was prepared, the estimates presented herein are considered reasonable. However, this estimate should be accepted with the understanding that additional data and analysis available after the date of the estimates, may necessitate revision. These revisions may be material. There is no guarantee that all or any part of the estimated resources will be recoverable.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
12 | MINERAL RESERVE ESTIMATES |
This Technical Report Summary does not include an estimate of reserves. The level of engineering does not support the preparation of a Pre-Feasibility Study; therefore, in accordance with the requirements of S-K 1300, the reported resources cannot be classified as reserves.
This section of the report includes estimates of recoverable sand tonnage for the DEN Property based on preliminary extraction plans, production schedules and processing plant and materials handling plans. These estimates are only intended for the purpose of completion of the cash flow forecasts presented in Section 19. These recoverable estimates are not, and should not be construed to be, estimates of reserves for the DEN Property. They do not comply with the Classification of Reserves as required under S-K 1300. It should be noted that there is no certainty that the resource estimate will be realized.
12.1 | Development Plan |
The 25-year development plan, that is discussed in more detail in Section 13, results in the sale of 2.72 Mt of clean (saleable) sand each year, totaling 65.4 Mt over the life of the project. Stantec notes that the 25-year development plan only addresses a portion of the DEN Property resource. The remaining resource is available for development in further planning efforts.
This estimate of clean (saleable) silica sand is considered to be inclusive of the in-place mineral resource estimate detailed in Section 11. These production estimates are contained within the in- place mineral resource summary and cannot be added to the totals to result in additional resources tonnes.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
13 | MINING METHODS |
13.1 | Overview |
Sio Silica plans to develop the DEN Property using an underground extraction technique that involves drilling through the quaternary sediments, carbonate unit and shale, into the underlying sand. The extraction holes will be cased to the top of the sand and an extraction casing is then lowered into the sand. Air is injected into the extraction casing, approximately 3 m - 5 m above the bottom of the casing. Field tests at the BRU Property have shown that the air injection process results in a slurry of sand, water, and air that rises to the surface. The solids content of the slurry ranges from 90% to 20% during the extraction trials. The average solids content is approximately 50%.
The extraction holes are planned to be drilled in a pod or cluster of up to five holes in one extraction pad area. The current planning basis is to extract approximately 3,000 to 55,000 tonnes of sand from the extraction cluster before relocating to the next extraction pad.
Once the slurry reaches the surface, initial processing will remove any oversize or deleterious material such as sand concretions, shale, or chert before it is transported by an overland slurry pipeline to the wet process facility for further processing.
Following wet processing the sand will be stockpiled and fed into a drying and sizing plant where the sand will be separated into saleable fractions and then stored in loadout silos prior to being loaded onto trains for distribution.
Sio Silica plans to commence extraction operations in the 2nd Quarter of Year 0, processing operations in the 3rd Quarter of Year 0 with the first product sales planned for the 1st Quarter of Year 1. The extraction and processing operations are planned to take place for eight months a year, April to November, while sales will take place year-round. The sales will commence with 2.72 Mt of saleable product planned in Year 1 and extending out the remainder of the 25-year plan. For the purposes of this Technical Report Summary, Year 0 is defined as 2026.
13.2 | Geotechnical Analysis |
Stantec completed a preliminary geotechnical analysis of the sand extraction techniques impact on subsurface conditions. The results of the analysis are used to provide recommendations for borehole spacing which are intended to limit surface subsidence to an acceptable level.
The preliminary analysis assumes that the shear failure of the Limestone caprock which overlies the sand is the most likely controlling failure mechanism. The analysis incorporated results from geotechnical tests conducted on the overlying Limestone (carbonate unit) as the performance of this unit was considered to be the governing factor in the analysis. The tests concluded that the carbonate unit has an average Geological Strength index (GSI) of between 55 and 65. It is important to note that based upon site specific borehole drilling results, the caprock does not appear to contain extensive vertical fracturing, however drilling has been limited to vertical boreholes which may fail to identify the presence of vertical fractures. The diamicton thickness also controls the loading on the extraction cavity and should be considered in determining the extraction cavity hole dimension.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
The analysis also assumed that the sandstone unit is unconsolidated and after extraction would form a cone with an angle of repose of 31 degrees from the horizontal. Extraction testing by Sio Silica in 2018 and 2019 indicates that there is likely some amount of consolidation within the sandstone unit, perhaps in discrete layers, or perhaps throughout the unit. The extraction tests also infer that voids formed from the extraction process are more complex than a simple conical void with an angle of repose of 31 degrees. Sio Silica completed a sonar survey of one of the boreholes (BRU 92-2) after sand extraction in May 2021. The testing suggests that the extraction voids may be steeper and could have a cylindrical or spherical shape particularly in the short term after extraction. Inspection of other boreholes sometime after sand extraction shows that the voids backfilled with sand; however, to date the mechanism of change in the shape of the extraction voids and source of backfilled sand in the cavities are not well understood.
Sio Silica completed an acoustic borehole image (ABI) and an optical borehole imaging (OBI) of the Limestone cap rock in borehole BRU 92-1 in March 2021. The ABI/OBI survey identified horizontal bedding and joints in the cap rock with no continuous orthogonal (vertical) joints. This and other boreholes are drilled vertically so there is potential for missing vertical or near vertical joints. Although some cross-bedding joints were identified in the survey, they are limited to a fractured zone potentially in Shale.
Sio Silica also completed surface surveys in the vicinity of the BRU 92-2 and BRU 92-3 (survey points at 5 m to 13 m distance from the boreholes) before and after sand extraction to measure possible resultant subsidence. Surface surveys showed subsidence close to the precision of the survey (1 mm vertical and 1 cm horizontal) due to sand extraction from BRU 92-2 and BRU 92-3 (with single hole arrangement). No test was completed with multi-hole arrangements.
The preliminary analysis indicates that:
● | Subsurface sand extraction should be limited to areas where the carbonate unit is more than 15 m in thickness. |
● | The analysis here assumes an overburden thickness of up to 25 m. Overburden thicker than this range should be reviewed case by case to assess potential for subsidence to occur following extraction. |
● | The distance from the edge of one extraction void to the edge of the next extraction void should not be less than 60 m. |
The extraction layout was developed with these geotechnical criteria in mind. The author(s) would like to note that these geotechnical parameters and the resulting geotechnical analysis are based on geotechnical work completed for the Limestone caprock and assuming that the controlling failure mode is shear failure. Additional testing is recommended to support further analysis on the sandstone void space evolution, and the joint system in the limestone (to investigate for the possible presence of vertical jointing and if found, to assess its impact on stability). As stated above, evidence from testing in 2018/2019 suggests that the sandstone angle of repose is steeper than previously assumed, and related adjustments of the extraction plan which would lead to a more refined extraction layout might be required. In addition, more complex void shapes in the sandstone may be occurring with both steep and shallow side slopes.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
As a result of the minimum 15 m cut off for the thickness of the limestone to support overburden loading after sand extraction, and the additional potential for strength analysis on the sandstone layer, recommendations for further geotechnical investigation, testing and analysis will be discussed in the next section. The purpose of this additional assessment is to confirm the Limestone thickness in advance of mining operations, to test the (to date untested) presence of Limestone vertical fractures and the sandstone unit extraction void space and to confirm that other failure modes are not controlling the extraction void maximum size.
13.3 | Extraction Concept |
Sio Silica conducted 14 extraction tests in the period from 2017 to 2021. The results of these tests indicate that it is reasonable to expect extraction tonnages of approximately 4,500 tonnes from a single extraction well. The current concept involves drilling a central extraction well, surrounded by up to 11 additional extraction wells, depending on the exact geotechnical conditions of the specific area. The spacing of these wells would be approximately 15-20 m from the centre of one drill hole to the centre of the next well. These seven wells would form one extraction cluster or extraction pad where approximately 3,000 to 55,000 tonnes of sand will be produced.
The current planning basis utilizes relatively small-scale truck mounted drilling equipment to drill the extraction wells and to set the initial casing. Sio Silica is planning to retrofit a fleet of smaller drill rigs to serve as the primary extraction rigs. These drills will be capable of advancing the extraction casing into the sand unit, applying the necessary air to facilitate the air lifting of the sand slurry, and distributing the sand slurry to surface facilities central to the extraction cluster. These facilities would include the initial processing discussed above as well as mixing with water as required to achieve the appropriate solids content to facilitate overland slurry transport to the final process facilities.
A relocatable shack will be located at the extraction pad and will serve as a central control facility for the operating extraction wells, the initial processing, and sand slurry mixing and pumping.
The extraction process is planned to take place for eight months a year, April to November inclusive. During this time enough sand will be produced to supply the drying and sizing plant with enough product to operate on a year-round basis. This concept was developed to minimize the difficulties with operating a slurry system and wet process facility in the winter months.
13.4 | Surface Development and Reclamation |
The planned production discussed above will require the surface development of approximately 290 ha in Year 0, and averages 200 ha in Year 1 and until the end of the 25 year plan. Figure 13.1 illustrates the proposed surface development plan for the DEN property development. This development plan includes offsets from existing road infrastructure, high voltage transmission lines, and residential areas. Please note this development plan is subject to change as extraction progresses.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
The land area required for development will be leased from the current owners for a total of three years. Land required for any specific production year will be leased the prior year. In this manner any pre-production development such as tree clearing/mulching, access road development, slurry pipeline layout, and extraction well drilling will take place one year in advance. In the year following the extraction season, closure and reclamation activities will take place. These activities will include extraction well abandonment, removal of all remaining infrastructure such as slurry and return water piping, and reclamation that is expected to include minor levelling, discing, and seeding to grass.
13.5 | Slurry Transportation |
Once the sand slurry reaches the surface and has undergone the initial treatment for the removal of oversize and deleterious materials, water will either be added to or removed from the slurry until it reaches the appropriate solids content for slurry transportation. Sio Silica will employ a network of high-density polyethylene (HDPE) pipe to transport the slurry overland to the main process facilities. In the early years of production this overland distance is between three and four km however it grows to approximately 15 km in the latter years of the project. The first stage slurry pumps will be located at the extraction pad. As the overland distance increases, booster pumps will be located as required along the route. The slurry transportation system has been designed to operate at approximately 25% solids. This allows the slurry process to be stopped and then restarted without having to empty the pipeline.
Once the slurry reaches the main process facilities it will be piped directly into the wet process facility for further treatment. As discussed, the extraction, slurry transport and wet process facilities will be operational 8 months of the year.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
14 | PROCESS AND RECOVERY METHODS |
Details related to the process and recovery methods utilized for the DEN Property have been assumed to be similar to methods developed for the BRU Property.
The processing component of the DEN silica operation is guided by a modular and multi-stage recovery process. The four general areas are:
● | A modular well pad screening and dewatering plant for slurry preparation; |
● | A dewatering circuit or ‘wet plant’ for raw sand separation; |
● | A dry screening plant for final sizing and beneficiation; and |
● | The storage and loadout system. |
14.1 | Well pad screening circuit |
The well pad screening circuit is a modular and relocatable system situated at a well pad. Each screening unit is comprised of a series of sumps, screens, and cyclones to ensure the overland slurry transport pipeline is properly fed in terms of size and slurry concentration. The operation is anticipated to have multiple units and several parallel trains of each unit. The units are identified alphanumerically, with a numeral for each unit, e.g. SUW1 identifies the number one (1) Sump (SU) at the well pad (W). A letter identifies one of the two trains, either A or B train. The well pad process is generally as follows:
Incoming slurry from extraction is delivered to a two deck 6’x16’ protection screen resting atop at sump; overs from the screen are anticipated to be minimal and will be mainly various cobbles and conglomerates. Screen unders are collected in the sump and pumped to a three-part collection sump in the dewatering plant. The three-part collection sump comprises the initial step of the well pad dewatering plant, allowing the fines and sand to settle and thicken and the water to decant from the initial dilute slurry feed. The settled or thickened solids are pumped to feed a series of 20” cyclones, separating again the ultrafines and gravels. Overflow from the cyclones is recycled to the three-compartment sump for a closed loop circuit; underflow from the cyclones feeds a pair of dewatering screens in series. The sand is then prepared for overland slurry transport in the collection sump. Makeup water is added, diluting the slurry to 28% solids, and pumped to the wet plant.
Table 14.1 summarizes the key process equipment for the well pad and dewatering plant up to the overland slurry transport.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 14.1
Key Process Equipment – Well Pad and Dewatering Plant
Item | Identifier (# and train) | Notes/Capacity | ||
Sump, Well pad | SUW1/2/3/4/5 A&B | |||
Sand Screen | SCW1/2/3/4/5 A&B | 6’x’16’ DD | ||
Sand transport pump | PW1/2/3/4/5 A&B | 4x6 60 HP | ||
Three compartment sump | SU02 A&B | |||
Return water pump to well pad | PW1/2/3/4/5 A&B | 4x6 40 HP | ||
Transport pump, DW plant | P02 A&B | 12x14 250 HP | ||
Sand Cyclone | CY2-1/2/3/4 A&B | 20” Krebs GMax | ||
Dewatering Screen | SC02-1/2 A&B | Tabor 8’x12’ SD | ||
Collection sump | SU03 A&B | |||
Overland transport pump | P03 A&B | 8x10 250 HP |
Generally, the well pad circuit components from the initial sumps SUW 1/2/3/4/5 A&B and the well pad dewatering plant SU02 A&B through P03 A&B are anticipated to be in close vicinity to one another to facilitate inter-operability of allocated infrastructure. The return water pump and sand pumps are designed for approximately 1,500’ radius to allow some flexibility if required.
Overland transport pumps are intended to be staged on 3,000’ intervals. As the extraction process progresses further from the wet plant or additional head is encountered due to changing conditions, another booster pump arrangement is required. Preliminary designs indicate 14DR11 piping for the overland slurry transport.
14.2 | Wet Plant |
The wet plant receives the incoming slurry from the overland piping system. Similar to the dewatering plant, a three-part collection sump comprises the initial step of the wet plant, allowing the fines and sand to settle and thicken and the water to decant from the initial dilute slurry feed. The settled or thickened solids are pumped to feed a series of 20” cyclones in this case serving as dewatering and thickening cyclones. Overflow from the cyclones is recycled to the three- compartment sump and then to the clarifier; underflow from the cyclones feeds a pair of dewatering screens in series. Underflow from the screens returns to the three-compartment sump. Screen deck discharge is collected via conveyor to be stockpiled in the WIP pile. Cyclone underflow can also be diverted processing by wet high intensity magnetic separation (WHIMS) units, by Eriez, to reject the weakly magnetic and ferrous metal inclusions. The rejected material is collected and separated in a separate stream, with the remaining siliceous sand continuing forward to the WIP pile.
A fines thickener receives slurried fines from the cyclone overflow via the three-compartment sump. Based on the preliminary sizing, the deep cone thickener will settle the dilute fines entrained in the cyclone overflow, producing a thickened slurry. The slurry will be further dewatered by a pair of 2,000 mm plate presses in batch parallel mode, to provide sufficient capacity for the anticipated full throughput and to dewater to a handleable cake. Fines are handled by front-end loaders (FEL) to remove the produced cakes; clarified overflow will be recycled to the slurry transport system from the wet plant thickener and plate press system.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Wet plant key process equipment is identified in Table 14.2.
Table 14.2
Key Process Equipment – Wet Plant
Item | Identifier (# and train) | Notes/Capacity | ||
Three compartment sump | SU04 A&B | |||
Return water pump to well pad | PO 5 A&B | 10x12 125 HP | ||
Transport pump, Wet plant | P02 A&B | 10x12 250 HP | ||
Sand Cyclone | CY4-1/2/3/4 A&B | 20” Krebs GMax | ||
Dewatering Screen | SC04-1/2 A&B | Tabor 8’x12’ SD | ||
Collection Conveyor | C101/102/103 | |||
Thickener/Clarifier | THK101 | 36’ dia. Deep cone. | ||
Mud Tank | MT101 | |||
Filter Press Sump Pump | SP102 | |||
Plate press | PP101/102 | 2,000 mm plate, 207 plates | ||
Wet high intensity magnet | WM 101/102 |
Figures 14.1 through 14.6 illustrate the anticipated process flow sheets.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
14.3 | Dry Screening plant |
Dry screening plant begins at the reclaim from the WIP pile. Raw sand is reclaimed from the WIP storage area via front end loaders and fed into a feed hopper with a vibrating grizzly feeder feeding an impactor to break any lumps or potentially conglomerated material while in the WIP storage area. A Louisville rotary dryer will drive off excess moisture, designed to take to nominally 2% moisture. The remaining dry plant is continued through bucket elevators to four parallel sets of Rotex sizing screens, for product sizing and separation prior to storage and loading operations. The key dry plant equipment is identified in Table 14.3.
Table 14.3
Key Process Equipment – Dry Plant
Item | Identifier (# and train) | Notes/Capacity | ||
Vibrating Grizzly | VGF201 | 62”x24’ grizzly | ||
Impactor | CR201 | Lippman 5165 Impactor | ||
Screen | C202 | 6’x20’ 3 deck screen | ||
Rotary Dryer | DRY201 | |||
Screening | SCR202 through 209 | Rotex 5300 2 Deck screen |
The dry plant is partially enclosed, with the dryer and main screens and sizing contained within a building structure.
14.4 | Storage and loadout |
Storage and loading battery limits are fed by bucket elevators to four (4) of 3,000 tonne silos (each). These 100’ tall bolted silos are positioned to provide storage for the planned production in two independent trains of equal capacity. Each train of two silos is reclaimed via independent reclaim conveyors to two sets of two (total of four) rail loading batch silos. Each silo has 75 tonnes of capacity, allowing for a total of 150 tonnes of capacity on each loading track.
14.5 | Plant Design and Construction |
Turnkey Process Solutions (TPS) has provided designs for the wet plant, dry plant, train loadout and the storage silos. TPS is experienced in plant specification, design and construction, and has worked with Sio Silica throughout the design process and engagement on the project.
TPS have developed plant simulations and models to assess the potential plant recovery. These models are based on TPS inspection of and analysis of the DEN project samples and historic test work. Based on this analysis, losses in yield have been accounted for as follows: 4% losses in extraction and wet handling and an additional 3% losses in drying and dry handling.
14.6 | Rail design and construction |
The rail alignment has been developed by another design contractor, integrated with the Sio Silica team. Trans Energy Services has assessed the site to deliver potential rail services and initial track layouts. Initial concepts have been laid out for the dual loading systems and are laid out in the attached preliminary design schematics.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
15 | INFRASTRUCTURE |
Details related to the infrastructure for the DEN Property have been assumed to be similar to the infrastructure required for the BRU Property.
15.1 | Rail |
Rail designs were conceptualized by Trans Energy Services, an outside rail consultant contracted by Sio Silica to design an operating system for the rail operation. Generally, the design will interface with the existing Canadian Pacific (CP) line and is compliant with the current CP design specifications. The design includes track and sub-grade, sub-ballast, and a perimeter access and inspection road, all compliant to CP design specifications. The multi-loop design includes the capacity to store additional rail cars, or to adapt the operation to container-based loading with future expansion efforts.
15.2 | Power |
Power to the extraction pad processing and booster pumps will be supplied by relocatable gensets, connected via feeder cables. Incoming power to the wet and dry plant is anticipated to connect to the nearest Manitoba Hydro lines. For the purposes of this report, a high voltage connection line of approximately 1 mile (1.6 km) was allowed for tie-in to the nearest high voltage connection. A substation, with step down transformer and control system, was provided to change to medium distribution voltage. An allowance was made for a power study with the local utility.
15.3 | Access |
Site access is via local roads and highways. Considering that no local distribution of the final product is planned, the only access should be for Sio Silica workers, labourer’s, and vendors.
15.4 | Gas Line |
Review of the available gas lines in the area indicate an approximate 22 km overland gas pipeline to provide the gas for the rotary dryer system at the Dry Plant. Stantec has allowed for the tie-in and construction of the line to the dry plant.
15.5 | Maintenance facility |
A simple maintenance facility designed from arched fabric structures has been designed to allow all weather access and maintenance on mobile equipment. Commonly, these structures are developed with a concrete slab on grade, with a minor curb wall either of blocking or poured structure, to develop an enclosed working surface. The area is planned for mobile equipment maintenance, as well as maintenance on pumps, skids, or electrical equipment.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
15.6 | Offices |
Office and lavatory space has been accounted for with three 24 ft x 60 ft units to house all site office and logistics, plus a single 12 ft x 32 ft lavatory trailer.
15.7 | Operations trailer |
An operations trailer at the at the extraction well pad has been conceptualized to provide an operating center for the drilling, screening, pumping and overland pipeline system.
15.8 | Process water Well |
Makeup water will be required at the plant site for initial startup and development. An allowance for one well at the plant site has been estimated.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
16 | MARKET STUDIES |
16.1 | Introduction |
Sio Silica is intending on producing high-quality premium silica sand for end use in the technology markets. The 99.9% SiO2 and low iron content (<100ppm Fe) are typically marketed to manufacturers of solar glass, smart glass for computing and mobile device applications, and semiconductors, among other uses, and receive a premium compared to 95% SiO2 purity. A confidential marketing study was completed by a third party, on behalf of Sio Silica, focused on the premium silica market and salient points are extracted from the study and discussed in further detail below.
16.2 | MARKETS/ DEMAND |
The global market for silica sand is approximately 350 million tonnes per annum, with approximately three quarters of that total in North America (112 million tonnes) and Asia Pacific (154 million tonnes), as of 2021. The growth has historically been at a compound annual growth rate (CAGR) of 3.6% over the past five years. Of this global market, the high purity market consists of approximately 13 million tonnes per annum.
The North American market for high purity, low iron silica has been in the 1 million tonne per annum range historically through 2021 and is anticipated to grow to 2 to 3 million tonnes per annum by 2025, principally driven by the photovoltaic market and technology applications. The growth of PV solar glass is projected at 30% CAGR principally driven by improved economics through manufacturing and new legislation supporting domestic solar PV manufacturing. A 15% compound annual growth rate is projected for smart (technology) glass applications, based on similar regulatory reforms and increased adoption rates.
16.3 | COMPETITION |
Supply of high purity quartz to the Asian market has traditionally been supplied via Vietnam and Cambodia. Both countries have scaled back exports to China to strengthen their local manufacturing, resulting in a supply shortage in the rest of Asia and therefore higher delivered prices. These higher prices have incented new mines in Australia, with as much as 10 million tonnes per annum potentially coming online by 2026. The anticipated growth in the high purity silica market has provided motivation to other potential sources of supply in Australia, according to the marketing report. It is anticipated that the supply from these to-be-developed proposed mines will require additional beneficiation, adding costs to the mine gate pricing. The timing and tonnage of this new supply and the level of the beneficiation, and associated costs, is uncertain. Australian mining companies are expected to be the primary exporter to China; however, it is unclear how much will materialize, according to the marketing study. In the future scenario, Australian mining companies may potentially have lower delivered costs compared to other international peers for solar glass applications, but will require beneficiation for smart glass applications, resulting in a higher delivered price.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
There are only two mines in the US today capable of providing low iron silica sand (99.9% SiO2, <100 ppm) totaling approximately 1 million tonnes per annum of supply. These two mines are:
● | US Silica mine in RockWood, MI. (0.45 Mtpa of production) |
● | Covia mine in Junction City, GA. (0.55 Mtpa of production) |
The risk of supply substitution for high purity markets is low. Recycled glass is only used for low purity applications. A very limited potential for quartz production of about 0.5 million tonnes per annum as byproduct of lithium production, although this stream is currently immature and will be subject to further verification and testing.
16.4 | CONTRACTS and POTENTIAL OFFTAKERS |
According to the marketing study, typical contracts are two-to-three-year renewable contracts indexed to inflation, and identified with a specific purity, quality, and quantity. In a similar fashion, there are typically penalties for not meeting these criteria.
Sio Silica has provided Stantec with documents regarding product pricing agreements from three companies.
Agreement #1
The first document is a proposed sales and purchase agreement contract between Sio Silica and Company 1, that Sio Silica has indicated should be finalized in the fourth quarter of 2023. The document states a sales price of US$180 per MT FOB loading port for 500,000 MT per annum. When exchange rates and port and rail costs are considered, it equates to a mine gate price of CDN$149 per MT.
The initial term of this proposed agreement is from January 1, 2024 to December 21, 2026. Thereafter term of the agreement will be automatically renewed for an unlimited number of one (1) year terms unless terminated by either the buyer or the seller.
Agreement #2
The second document is a Memorandum of Understanding between Sio Silica and Company 2 and dated September 15, 2022. The document states a sales price of US$250 per MT FOB loading port for 800,000 MT per annum. When exchange rates and port and rail costs are considered, it equates to a mine gate price of CDN$240 per MT.
Both the buyer and the seller agree to use their best efforts to enter into a binding Sales Agreement in the first quarter of 2024.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Agreement #3
The third document is an engagement agreement between Sio Silica and Company 3 and dated November 1, 2022. The document states a sales price of US$200 per short ton FOB Mine Gate for 1,200,000 short tons per annum. The agreement also stipulates a service fee equal to 15% of the gross amount of the purchase price paid. When conversion to metric tonnes and the 15% fee are considered, it equates to a mine gate price of CDN$243.60 per MT.
The term of this agreement is unlimited unless terminated by either the buyer or the seller.
Product Pricing
Stantec used a weighted tonnage per annum price from all three agreements for the initial years of the analysis. A weighted tonnage per annum price for the last two agreements was used from 2030 until the end of the project life.
Product Quality
The first two agreements specify that the quality parameters for the delivered sand shall be a silicon dioxide (SiO2) percentage greater than or equal to 99.9% and Fe2O3 content less than or equal to 100 ppm.
It is the opinion of Stantec that given the results of the sand analysis discussed in Section 8, the sand pricing discussed above is applicable to the DEN Property resource and as such has been used in this Study.
Stantec does note, however, that confirmed sales agreements or contracts for the full levels of silica sand production that form the basis of this Study have yet to be finalized.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
17 | ENVIRONMENTAL STUDIES, PERMITTING AND PLANS, NEGOTIATIONS OR AGREEMENTS WITH LOCAL INDIVIDUALS OR GROUPS |
Sio Silica has engaged AECOM to provide consulting support through the regulatory approval process.
The regulatory approval process for the adjoining BRU property has advanced significantly. Although the regulatory process for the DEN Property has not yet commenced, Stantec envisions that it will be materially similar to the BRU process. For further details please refer to the Technical Report Summary BRU Property Manitoba, Canada.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
18 | CAPITAL AND OPERATING COSTS |
18.1 | Cost Summary |
Cost estimates were prepared for the development and operation of the DEN Project. Unit costs are expressed as dollars/clean tonne, unless specified otherwise.
The cost estimates and resulting cash flow analysis were prepared in constant 2023 Canadian dollars (C$). The exchange rate of US$0.77 to C$1.00 was used for the project.
The following sources and approaches were used:
● | Extraction and slurry pumping costs were based on estimates prepared by Sio Silica. Wet plant processing, dry plant processing and associated equipment, screening plant, silos, and rail loading systems were developed by Turnkey Process Solutions (TPS). TPS likewise developed budgetary estimates for capital construction and installation costs. |
● | Rail transportation costs were provided by CN. |
● | Rail siding construction estimates were provided by Trans Energy Services, Sio Silica’s independent consultant and rail specialist. These are based on preliminary designs and development work completed by Trans Energy. |
● | Other infrastructure and facilities estimates were compiled by Stantec based on vendor quotes, and discussions with Sio Silica. |
● | Operating expenses were estimated by Sio Silica. |
● | Labour costs, developed by Sio Silica, were based on knowledge of current labour agreements. |
● | Management and staff salaries were estimated by Sio Silica, based on Stantec input on current mining salaries in Western Canada, and in consultation with Sio Silica on their anticipated burden. |
● | Electricity rate for process facility operations provided by publicly available sources on Manitoba Hydro and through discussions between Sio Silica and the utility. |
18.2 | Project Capital Costs |
The methods and procedures used to develop the capital cost estimate are described in the following subsections. Project capital costs were sourced from various vendors, and from Stantec’s database of capital costs.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
18.2.1 | Capital Cost Summary |
The capital cost summary for the DEN project extraction area is outlined in Table 18.1.
The DEN project has been developed to capture the 2.93 MTPA of insitu production, and requisite capital to extract, process, and load the product. The battery limits begin at extraction well pad, including well rigs, the overland slurry line initial pump stations, booster pump and through to the wet and dry plant, as well as the silos, rail, and supporting infrastructure.
It should be noted that no contingency is applied in the table.
Table 18.1
Capital Cost Summary – (C$), no Contingency
Area | Summary Cost, (C$) | |||
Extraction | $ | 43.5M | ||
Wet Plant | $ | 73.8M | ||
Dry Plant | $ | 85.4M | ||
Rail and TLO | $ | 36.3M | ||
Overland Slurry Pipeline Controls | $ | 6.2M | ||
Infrastructure | $ | 15.9M | ||
Engineering, Project Management & Permitting | $ | 2.5M | ||
Total | $ | 263.6M |
18.2.2 | Contingency |
A 7% contingency has been applied to all capital cost items to account for any unforeseen or otherwise unanticipated cost elements that could be associated with development and operation of the project. Contingency for the DEN project totals $17.2M.
18.2.3 | Sustaining Costs |
Sustaining costs are captured under the operating cost sections below including additional land, extraction wells, slurry line and booster pumps, and as well the plant repair and maintenance costs.
18.3 | Project Operating Costs |
The project team developed the operating costs using construction lengths, land requirements, operating units, and process or dryer unit preliminary power and gas consumption. Areas of operating costs breakouts include:
● | Land leasing | |
● | Land prep and reclaim | |
● | Well Production | |
● | Slurry Transport | |
● | Wet Process | |
● | Support Equipment | |
● | Dry Process |
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
● | Loadout | |
● | Rail Costs | |
● | Manpower | |
● | General and Administration |
The diesel fuel cost assumption is $1.59/litre. Propane gas costs are estimated at $0.38/litre propane. Natural gas is estimated at $0.188/m3. As well, the power costs from Manitoba Power are indicative rates based on preliminary verbal discussions. The estimated power rate is $0.045/ kW-hr.
18.3.1 | Land Leasing |
Land Leasing costs are based on the mine development plan, shown earlier in this study. The developed hectares are considered for the projected extraction plan, and a lease cost of $0.22/t is applied based on work by Sio Silica.
18.3.2 | Land Preparation and Reclamation |
Land prep and reclaim considers the mulching requirements for the area of the extraction development.
18.3.3 | Well Production |
Well production is a function of tonnes produced, and the phase of the project. Typical well costs were provided by the Sio Silica team. Drilling costs per well were estimate by Sio Silica at $14,759 per well; abandonment costs are estimated at $3,352 per well; personnel costs are estimated at $10,430 per well. Extraction area processing is planned to operate approximately 203 days per year to allow for the seasonal operating conditions of the pipeline and extraction pads.
Slurry transport through overland piping is based on an initial pumpstation at or near the wellpad, then booster pumps added or removed to maintain the slurry line velocity and head. A buildup of slurry pipeline costs include an operator at the well pad, an operator at the dewatering plant, and a maintenance operator roving the system. Each position will be repeated on day and night shift over the anticipated March to October timeframe.
18.3.4 | Wet process, Dry Process, and Loadout |
Wet process, Dry process and Loadout operating costs are an allowance for maintenance and consumables, as well as gas and power within the plant. Gas consumption is based on the current concept of the dry plant and heating load anticipated to run the dryers. The dryer gas cost is based on the assumption that Year 1 will require trucked propane gas; Year 2 onward will include gas delivered via pipeline at a lower cost rate. It should be noted that the Wet process includes a magnetic separation or beneficiation stage at $0.72 per tonne.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
18.3.5 | Support Equipment |
Support equipment consists of the mobile equipment that is required to operate the mine, and their upkeep and fuel consumption. The mobile equipment required for the project includes:
● | Skidsteer Loader (1) |
● | Pickup truck (3) |
● | Service Truck (1) |
● | Manlift (1) |
● | Water Truck (1) |
● | Off road forklift (1) |
● | Railcar mover (1) |
● | 982M (2) |
18.3.6 | Rail & Port |
Sio Silica has utilized rail costs of $65 per clean tonne and port costs of $20 per clean tonne for sand delivered to ports in Vancouver. Rail costs to other destinations in North America will vary. Sio Silica has adopted a mine gate pricing scenario for this IA.
18.3.7 | Manpower |
Manpower estimates are based on staffing at the wet, dry and rail loadout areas, with overall support from salaried management. Wellpad staffing is accounted for in the cost per well estimate noted above. Staffing levels for the project are shown in the Table 18.3 outlining anticipated projected roles and responsibilities. The reader should note that annual salary is provided for professional staff while hourly rates are provided for the labour positions.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 18.2 Manpower Roster and Costs
Manpower | ||||
Role | Number of Employees | Straight-time Compensation, incl. Fringes C$ and C$/hr | ||
Plant Manager | 1 | $218,400 annual | ||
Accountant | 1 | $154,700 annual | ||
Lab Manager | 1 | $147,000 annual | ||
Foreman | 4 | $145,600 annual | ||
Field Geologist | 4 | $119,000 annual | ||
Lab assistant | 1 | $84,000 annual | ||
Quality Control | 2 | $36 / hr | ||
Plant Operator | 4 | $46 / hr | ||
Utility | 8 | $49 / hr | ||
Loadout / Rail | 4 | $44 / hr | ||
Laborer / Bagging | 2 | $40 / hr | ||
Maintenance 2 | 2 | $49 / hr | ||
Mobile Equipment | 4 | $42 / hr | ||
Health and Safety Manager | 1 | $140,000 annual | ||
Environmental Compliance | 1 | $130,000 annual | ||
Land Management | 1 | $110,000 annual | ||
Logistics Coordinator | 1 | $90,000 annual | ||
Warehouse Manager | 1 | $80,000 annual | ||
Warehouse Assistant | 1 | $65,000 annual | ||
Asset (Equipment) Manager | 1 | $120,000 annual | ||
Mechanic | 1 | $110,000 annual | ||
Jr Mechanic | 1 | $90,000 annual | ||
Mill Wright | 1 | $140,000 annual | ||
Welder | 1 | $100,000 annual | ||
Helper | 1 | $65,000 annual | ||
Electrician | 1 | $120,000 annual | ||
Secretary Front Office | 1 | $55,000 annual | ||
Hydrogeologist | 1 | $140,000 annual | ||
Field Technology Support | 1 | $90,000 annual | ||
Heavy Equipment Operator | 1 | $100,000 annual | ||
Total | 55 |
18.3.8 | General and Administrative Costs |
General and administrative expenses for the DEN project were developed on an annual allowance of $1,800,000. The G&A costs are intended to cover items such as legal services, financial support, marketing, office supplies, consultants, and other items.
18.3.9 | Operating cost Summary |
The total operating cost summary is shown in Table 18.4. In year 1, each extraction site utilizes dedicated supervision leading to higher initial costs. Extraction operation costs are reduced in later years as operations supervision is planned to be centralized. Slurry transport costs are lower in early years due to shorter slurry pumping distances. Dry processing costs are calculated based on the change from trucked propane in Year 1 while the gas line is developed. From Year 2 production onward, operating costs reflect that the installation of a natural gas pipeline and the use of natural gas as opposed to propane.
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 18.3
Life of mine Operating Cost Summary, C$
Year 1 C$/tonne |
Year 2 onward C$/tonne |
|||||||
Extraction | $ | 12.53 | $ | 8.62 | ||||
Slurry Transport | $ | 1.74 | $ | 2.90 | ||||
Wet Processing | $ | 5.07 | $ | 5.07 | ||||
Dry Processing | $ | 11.99 | $ | 8.63 | ||||
Site Labor | $ | 1.28 | $ | 1.28 | ||||
Insurance | $ | 0.38 | $ | 0.38 | ||||
Total OPEX | $ | 32.99 | $ | 26.88 |
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
19 | ECONOMIC ANALYSIS |
Sio Silica prepared the economic analyses for the DEN operation and provided the model to Stantec. Stantec reviewed the model and determined it to be appropriate for the purposes of the Study.
The economic analyses for this study includes the calculation of Net Present Value (NPV) on a before and after-tax basis. The estimates assume that production, cost targets, pricing and sales goals are achieved. Any deviation from those values affects the determination of NPV.
A cash-flow forecast has been developed for the life of the project. This includes a one-year pre- production phase (prior to sales). The production period is 25 years. The NPV is calculated in Year 0, the first year of pre-production. This is 2026 in the project schedule.
19.1 | Assumptions |
19.1.1 | Exchange Rate |
Stantec has utilized an exchange rate of 1.30 to convert US dollars to CDN dollars.
19.1.2 | Rail Transportation Costs |
Sio Silica solicited a quotation from Canadian National Railway (CN) for the transportation of silica sand from the DEN Property to port destinations in Vancouver, British Columbia. This quotation was factored to include both fuel and rail car rentals, resulting in a rail rate of C$ 65/tonne.
19.1.3 | Port Costs |
Sio Silica solicited estimates from Vancouver port experts for the unloading of silica sand from bulk railcars and packaging in FIBC super sack bags. As a result, port costs of C$ 20/tonne were used in the IA.
19.1.4 | Product Pricing |
Sio Silica has provided Stantec with documents regarding product pricing agreements from three companies.
Agreement #1
The first document is a proposed sales and purchase agreement contract between Sio Silica and Company 1, that Sio Silica has indicated should be finalized in the fourth quarter of 2023. The document states a sales price of US$180 per MT FOB loading port for 500,000 MT per annum. When exchange rates and port and rail costs are considered, it equates to a mine gate price of CDN$149 per MT.
Both the buyer and the seller agree to use their best efforts to enter into a binding Sales Agreement in the first quarter of 2024.
![]() | 19-1 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Agreement #2
The second document is a Memorandum of Understanding between Sio Silica and Company 2 and dated September 15, 2022. The document states a sales price of US$250 per MT FOB loading port for 800,000 MT per annum. When exchange rates and port and rail costs are considered, it equates to a mine gate price of CDN$240 per MT.
Agreement #3
The third document is an engagement agreement between Sio Silica and Company 3 and dated November 1, 2022. The document states a sales price of US$200 per short ton FOB Mine Gate for 1,200,000 short tons per annum. The agreement also stipulates a service fee equal to 15% of the gross amount of the purchase price paid. When conversion to metric tonnes and the 15% fee are considered, it equates to a mine gate price of CDN$243.60 per MT.
The term of this agreement is unlimited unless terminated by either the buyer or the seller.
Product Pricing
Stantec used a weighted tonnage per annum price from all three agreements for the initial years of the analysis. A weighted tonnage per annum price for the last two agreements was used from 2030 until the end of the project life.
Product Quality
The first two agreements specify that the quality parameters for the delivered sand shall be a silicon dioxide (SiO2) percentage greater than or equal to 99.9% and Fe2O3 content less than or equal to 100 ppm.
19.2 | DEN Property Life |
Sio silica plans to commence extraction operations in the 2nd quarter of year 0, processing operations in the 3rd quarter of year 0 with the first product sales planned for the 1st quarter of year 1. The extraction and processing operations are planned to take place for eight months a year, April to November, while sales will take place year-round. The sales will commence with 2.72 mt of saleable product planned in year 1 and extending out the remainder of the 25-year plan. For the purposes of this technical report summary, year 0 is defined as 2026.project payback
The forecasted project payback occurs in 2029, 1.00 years after facility construction is completed and commercial operations commence.
19.3 | Royalties and Income Tax |
19.3.1 | Royalties |
Sio Silica has applied the royalties as discussed in Section 3. These royalties equate to 1.34% and 3.0% of pre-tax revenue.
![]() | 19-2 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
19.3.2 | Mineral Tax |
Mineral taxes have been applied as per the requirements of the province of Manitoba.
In summary the tax applies at the following rates, where mining profit is:
● | < $50 million; tax = mining profit x 10%. |
● | $50 to $55 million; tax = (mining profit - $50,000,000) x 65% + $5,000,000. |
● | Between $55 and $100 million; tax = mining profit x 15%. |
● | $100 to $105 million; tax = (mining profit - $100,000,000) x 57% + $15,000,000. |
● | $105 million; tax = mining profit x 17%. |
A ‘new mine tax holiday’ is in effect which provides that no Mining Tax is payable on new mines until the mining operator has recovered its initial investment.
19.3.3 | Taxes |
Federal Canadian and Manitoba income taxes were calculated on a project basis in accordance with the applicable tax laws. The calculation assumes the following:
● | A federal income tax rate of 15% |
● | A Manitoba income tax rate of 12% |
19.4 | Economic Performance |
The results of the Study base case economic analysis are shown in Table 19.1 Project Economics. The economic performance of the project is positive up to the highest analyzed discount rate of 16%.
Table 19.1
Project Economics (C$)
Discount Rate | After Tax | |||||||
(%) | IRR | NPV | ||||||
6 | 99 | % | $ | 3,849,723,000 | ||||
8 | 99 | % | $ | 3,132,092,000 | ||||
10 | 99 | % | $ | 2,588,786,000 | ||||
12 | 99 | % | $ | 2,169,955,000 | ||||
14 | 99 | % | $ | 1,841,529,000 | ||||
16 | 99 | % | $ | 1,579,856,000 |
![]() | 19-3 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Stantec has not completed a rigorous analysis in order to select the project discount rate. However, Stantec notes that current normalized risk-free rate and equity risk premium, composed of 3.5% and 5.7% respectively which shows that the approximate cost of equity capital to be 9.2%. This rate does not account for project risks, industry risk, size and maturity of the operation to name a few. As such the appropriate discount rate for this study is likely in the range of 10-13%. Ultimately investors in the DEN Property will need to conduct their own discount rate analysis.
The key project metrics and cash flow summary are summarized in Tables 19.2 and 19.3
Table 19.2
Key Project Metrics
Economic Analysis | DEN | |||
Net Present Value (NPV), After-Tax | $ | 2,588,786,000 | ||
Internal Rate of Return (IRR), After-Tax | 99 | % | ||
Pay-Back Period (Years based on After-Tax) | 1.00 | |||
Capital Costs | ||||
Initial Capital (M) | 280.75 | |||
Expansion Capital (M) | N/A | |||
Operating Costs at Full Production | ||||
Extraction ($/MT ) | 8.62 | |||
Slurry Transport ($/MT) | 2.90 | |||
Wet Processing ($/MT) | 5.07 | |||
Dry Processing and Loadout ($/MT) | 8.63 | |||
Site Labor and Insurance ($/MT) | 1.66 | |||
Total Operating Cost ($/MT) | 26.88 | |||
Production Data | ||||
Life of Mine (Years) | 25 | |||
Annual Clean Saleable Tonnes Produced (MT) | 2,724,000 | |||
Total Clean Saleable Tonnes Produced (MT) | 65,376,000 |
![]() | 19-4 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 19.3 Cash Flow Summary
Period | Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 | Year 10 | Year 11 | Year 12 | |||||||||||||||||||||||||||||||||||||||
Raw Sand Production (Tonnes) | - | 1,831,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | |||||||||||||||||||||||||||||||||||||||
Sales Volumes (Tonnes) | - | - | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | |||||||||||||||||||||||||||||||||||||||
Minegate Pricing ($/Tonne) | 223.53 | 223.53 | 223.53 | 223.53 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | |||||||||||||||||||||||||||||||||||||||
Minegate Revenue (M$) | - | - | 609 | 609 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | |||||||||||||||||||||||||||||||||||||||
Royalties (M$) | - | - | 24 | 10 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | |||||||||||||||||||||||||||||||||||||||
Mining Tax (M$) | - | - | 86 | 89 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | |||||||||||||||||||||||||||||||||||||||
Net Revenue (M$) | - | - | 499 | 510 | 553 | 553 | 553 | 553 | 553 | 553 | 553 | 553 | 553 | |||||||||||||||||||||||||||||||||||||||
Extraction Operating Costs (M$) | - | 28 | 44 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | |||||||||||||||||||||||||||||||||||||||
Wet Processing Operating Costs (M$) | - | 3 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | |||||||||||||||||||||||||||||||||||||||
Dry Processing and Loadout Operating Costs (M$) | - | - | 33 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | |||||||||||||||||||||||||||||||||||||||
Total Operating Costs (M$) | - | 31 | 91 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | |||||||||||||||||||||||||||||||||||||||
Manitoba Operations G&A (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Head office G&A (M$) | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | |||||||||||||||||||||||||||||||||||||||
Total G&A (M$) | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | |||||||||||||||||||||||||||||||||||||||
Cash Interest Expense (M$) | 3 | 21 | 21 | 2 | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Cash Income Tax (M$) | (1 | ) | (14 | ) | 69 | 103 | 118 | 121 | 123 | 124 | 125 | 126 | 127 | 127 | 128 | |||||||||||||||||||||||||||||||||||||
Total Cash-flow (M$) | (4 | ) | (39 | ) | 317 | 330 | 359 | 356 | 354 | 353 | 352 | 351 | 350 | 350 | 349 | |||||||||||||||||||||||||||||||||||||
Cumulative Cash-Flow (M$) | (4 | ) | (43 | ) | 273 | 604 | 963 | 1,319 | 1,673 | 2,026 | 2,377 | 2,728 | 3,078 | 3,427 | 3,777 | |||||||||||||||||||||||||||||||||||||
Phase 1 Capital Expenditures (M$) | 21 | 260 | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Expansion Capital Expenditures (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
Total Capital Expenditures (M$) | 21 | 260 | - | - | - | - | - | - | - | - | - | - | - |
![]() | 19-5 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Period | Year 13 | Year 14 | Year 15 | Year 16 | Year 17 | Year 18 | Year 19 | Year 20 | Year 21 | Year 22 | Year 23 | Year 24 | Year 25 | Total | ||||||||||||||||||||||||||||||||||||||||||
Raw Sand Production (Tonnes) | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 2,929,000 | 72,127,000 | ||||||||||||||||||||||||||||||||||||||||||
Sales Volumes (Tonnes) | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 2,724,000 | 65,376,000 | ||||||||||||||||||||||||||||||||||||||||||
Minegate Pricing ($/Tonne) | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | 242.55 | |||||||||||||||||||||||||||||||||||||||||||
Minegate Revenue (M$) | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 661 | 15,753 | ||||||||||||||||||||||||||||||||||||||||||
Royalties (M$) | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 11 | 265 | ||||||||||||||||||||||||||||||||||||||||||
Mining Tax (M$) | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 98 | 2,327 | ||||||||||||||||||||||||||||||||||||||||||
Net Revenue (M$) | 553 | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 552 | 13,161 | ||||||||||||||||||||||||||||||||||||||||||
Extraction Operating Costs (M$) | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 37 | 912 | ||||||||||||||||||||||||||||||||||||||||||
Wet Processing Operating Costs (M$) | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 14 | 335 | ||||||||||||||||||||||||||||||||||||||||||
Dry Processing and Loadout Operating Costs (M$) | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 24 | 573 | ||||||||||||||||||||||||||||||||||||||||||
Total Operating Costs (M$) | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 74 | 1,821 | ||||||||||||||||||||||||||||||||||||||||||
Manitoba Operations G&A (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
Head office G&A (M$) | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 47 | ||||||||||||||||||||||||||||||||||||||||||
Total G&A (M$) | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 2 | 47 | ||||||||||||||||||||||||||||||||||||||||||
Cash Interest Expense (M$) | - | - | - | - | - | - | - | - | - | - | - | 47 | ||||||||||||||||||||||||||||||||||||||||||||
Cash Income Tax (M$) | 128 | 128 | 128 | 128 | 128 | 128 | 128 | 129 | 129 | 129 | 129 | 129 | 129 | 2,945 | ||||||||||||||||||||||||||||||||||||||||||
Total Cash-flow (M$) | 349 | 348 | 348 | 348 | 348 | 348 | 348 | 348 | 348 | 348 | 348 | 348 | 348 | 8,302 | ||||||||||||||||||||||||||||||||||||||||||
Cumulative Cash-Flow (M$) | 4,126 | 4,474 | 4,822 | 5,170 | 5,518 | 5,866 | 6,214 | 6,562 | 6,910 | 7,258 | 7,606 | 7,953 | 8,301 | - | ||||||||||||||||||||||||||||||||||||||||||
Phase 1 Capital Expenditures (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | 281 | ||||||||||||||||||||||||||||||||||||||||||
Expansion Capital Expenditures (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||
Total Capital Expenditures (M$) | - | - | - | - | - | - | - | - | - | - | - | - | - | 281 |
![]() | 19-6 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
19.5 | Sensitivity Analysis |
High-level sensitivity analyses were carried out to determine the impact that changes in product pricing and overall costs (capital and operating) would have on the economic performance of the project. The analyses were carried out to determine the effect on the after-tax IRR and NPV 10 values.
Stantec notes that the project economics remain positive all under circumstances modeled herein.
![]() | 19-7 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 19.4
After Tax NPV Sensitivity to Sale Price
Product Pricing | ||||||||||||||||||||||||||||||||
-30% | -20% | -10% | 0% | 10% | 20% | 30% | ||||||||||||||||||||||||||
-30 | % | 1,696,467,000 | 2,004,291,000 | 2,312,358,000 | 2,619,873,000 | 2,927,520,000 | 3,234,302,000 | 3,542,159,000 | ||||||||||||||||||||||||
-20 | % | 1,683,156,000 | 1,991,056,000 | 2,299,178,000 | 2,606,737,000 | 2,914,419,000 | 3,221,229,000 | 3,529,109,000 | ||||||||||||||||||||||||
-10 | % | 1,673,360,000 | 1,981,340,000 | 2,289,521,000 | 2,597,126,000 | 2,904,845,000 | 3,211,684,000 | 3,519,589,000 | ||||||||||||||||||||||||
Project | -5 | % | 1,668,992,000 | 1,977,014,000 | 2,285,225,000 | 2,592,854,000 | 2,900,593,000 | 3,207,446,000 | 3,515,365,000 | |||||||||||||||||||||||
Costs | 0 | % | 1,664,825,000 | 1,972,889,000 | 2,281,132,000 | 2,588,786,000 | 2,896,544,000 | 3,203,413,000 | 3,511,344,000 | |||||||||||||||||||||||
5 | % | 1,660,799,000 | 1,968,908,000 | 2,277,183,000 | 2,584,861,000 | 2,892,639,000 | 3,199,524,000 | 3,507,469,000 | ||||||||||||||||||||||||
10 | % | 1,656,876,000 | 1,965,030,000 | 2,273,338,000 | 2,581,042,000 | 2,888,840,000 | 3,195,741,000 | 3,503,700,000 | ||||||||||||||||||||||||
20 | % | 1,649,242,000 | 1,957,489,000 | 2,265,865,000 | 2,573,623,000 | 2,881,464,000 | 3,188,398,000 | 3,496,385,000 | ||||||||||||||||||||||||
30 | % | 1,641,790,000 | 1,950,136,000 | 2,258,584,000 | 2,566,398,000 | 2,874,282,000 | 3,181,251,000 | 3,489,268,000 |
![]() | 19-8 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
20 | ADJACENT PROPERTIES |
There are no properties exploiting silica sand adjacent to the DEN Property.
![]() | 20-1 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
21 | OTHER RELEVANT DATA AND INFORMATION |
All relevant information is included in this Report.
![]() | 21-1 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
22 | INTERPRETATION AND CONCLUSIONS |
This Study indicates a positive economic outcome related to the potential development of a silica sand extraction and processing operation for the DEN Property. The extraction plan addressed only a portion of the In-Situ Mineral Resource previously classified, as the entire DEN resource was not required for the 25-year development plan.
Stantec has identified the following risks that could potentially affect the projected economic viability of the DEN Property development.
22.1 | Product Pricing And Cost Escalation |
As indicated in Section 19 of this Study, the project economics are sensitive to the assumed pricing for silica sand and estimated project costs. A 30% reduction in product pricing combined with a 30% increase in project costs, after a 7% contingency (initial project capital) has been applied, results in positive economics.
Stantec has reviewed Sio Silica’s cost estimate and believes it captures reasonable Capex and Opex costs for the project as it is currently planned. However, the cost estimate is based on budgetary quotes provides by third party vendors and Sio Silica’s partners and assumes the project advances as per the current schedule.
Stantec understands that Sio Silica intends to proceed with the project development commencing in 2026, partially based on the results of this Study. As such, the risks associated with cost escalation are not insignificant.
22.2 | Timing Of Project Development |
Certain process and infrastructure components may be subject to longer lead times. These include rotary dryers, gas pipeline installation, and high voltage substations. The full capacity of the DEN operation and the resultant project economics are dependent on these components.
22.3 | Development Of Extraction Process |
The current extraction process is based on the results from 14 drill holes completed on the BRU Property from 2017 to 2021. Stantec has no reason to believe that the planned extraction process will not be successful. However, Stantec does note the risks to the project should the planned extraction rates be unachievable or unsustainable over the life and geographic extent of the Project.
22.4 | Confirmation Of Geotechnical Testing And Analysis |
As discussed in Section 11.4, Stantec geotechnical engineers completed a preliminary geotechnical analysis related to extraction of the sand resource on the adjacent BRU Property. A similar program has not yet occurred for the DEN Property. Stantec used the BRU results and DEN geological interpretation and completed a high-level preliminary analysis of the DEN conditions and these results were used to inform the current resource estimate.
![]() | 22-1 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
The conclusions of the previous BRU analysis are summarized below:
● | Based upon current information and assessments, Shear and Bending are the most probable failure modes with the potential to affect long-term stability. Unravelling, Caving, and Chimneying are not controlling failure modes for the BRU property due to the nature of the limestone caprock. |
● | The Bending failure mode is controlling the long-term stability of the post extraction cavity for the expected range of caprock and overburden thickness and material properties and the extraction depth in the sand. The stability analysis and extraction borehole spacing design were completed to achieve a factor of safety of 2.0, which is considered to be an acceptably conservative FOS for the project. |
● | The cavity after extraction is expected to further expand with time resulting in loose sand infilling the extracted void leaving a larger unsupported caprock span. Based on the assumption that the areas with factor of safety larger than 2 are stable in the long-term, approximately 5 m of additional raveling of the post extraction cavity walls is expected (by end of the design life of 100 years). Therefore, the unsupported caprock span will increase by 10 m with time after extraction. |
● | Based upon the results of geotechnical assessment and with the understanding that Sio Silica will follow guidance provided by Stantec including continuing to assess the geotechnical characteristics and performance of the sand deposit and overlying materials during the project life and to adjust design accordingly, no large-scale surface subsidence is expected to occur as a result of sand extraction. |
There is a potential that further geotechnical assessments may impact the current resource estimate, either positively or negatively. In particular, there remains uncertainty regarding the possible presence of vertical fractures in Limestone caprock, which to date has not been investigated or assessed. The presence of continuous vertical fractures in Limestone caprock above extraction voids has the potential to lead to caprock collapse which may propagate to the surface and produce settlement. In addition, there remains uncertainty regarding the long term performance of the extraction voids which may have complex void shapes and have the potential to propagate over larger than currently estimated distances.
![]() | 22-2 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
23 | RECOMMENDATIONS |
23.1 | PHASE 1: GEOTECHNICAL AND RESOURCE INVESTIGATION AND ANALYSIS |
Based on Sio Silica’s current development and production plans, all resources identified in the areas where the first 5 years of production will occur should be classified as Measured. Additional drill holes may be required to increase confidence in the resource estimates within these areas.
Stantec geotechnical engineers completed a preliminary geotechnical analysis of the impact of extraction of the sand on the BRU Property. The recommendations from this analysis, which also apply to the DEN Property, are summarized below:
● | Design and execute a site investigation and assess the results to confirm expected geotechnical performance. This investigation may include the following components: |
o | Data Collection: |
● | Geotechnical borehole drilling, logging, photography, and sampling with vertical and inclined boreholes and SPT or CPT if needed – to characterize extents and properties of sandstone, caprock and overburden. |
● | Acoustic and Optical Televiewer Survey of Geotechnical Boreholes – to characterize caprock structure. |
● | Side Scan Sonar Survey – to monitor sand cavity shape and behavior. |
● | Laboratory testing of selected samples of sandstone, caprock and overburden as required – to characterize properties of sandstone, caprock and overburden. |
● | Installation and monitoring of Vibrating Wire Piezometers, Vertical Extensometers and Surface Monuments and Total Station or GPS Survey – to monitor changes in caprock and surface subsidence. |
o | Data Analysis: |
● | Stability and settlement analysis to identify and assess for changes in assumptions related to vertical jointing (if found) in Limestone caprock, extraction void shape or other design assumptions. |
● | Develop and implement a Trigger Action Response Plan as follows: |
● | Collected data review - to establish baseline values. |
● | Trigger value range identification - low/moderate/high – green/yellow/red |
● | Monitoring results verification and comparison against trigger values. |
● | Review the impact of potential vibration sources, such as rail traffic, to determine potential offsets from extraction areas. |
![]() | 23-1 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Table 23.1 shows the anticipated cost to complete the geotechnical analysis.
Table 23.1
Cost Estimate – Geotechnical Analysis
Task | Estimated Cost (C$) | |||
Geotechnical Analysis | 500,000 |
23.2 | PHASE 2: ENGINEERING BRIDGING STUDIES |
Stantec recommends that Sio Silica continues to more accurately define the CAPEX and OPEX estimate for the DEN Property and to secure relationships with contractors, vendors, and suppliers.
Table 23.2 provides cost estimates for these studies.
Table 23.2
Engineering Bridging Studies
Task | Estimated Cost (C$) | |||
Engineering Bridging Studies | 550,000 |
![]() | 23-2 |
TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
24 | REFERENCES |
Bezys, R.K. and Conley, G.G., 1998. Geology of the Ordovician Winnipeg Formation in Manitoba; Manitoba Energy and Mines, Stratigraphic Map Series, Ow-1, 1:2 000 000.
Butler, J.R., Battin, R.L., Plank, R.F., and Winston, D.B., 1955. Lithologic correlation of Middle and Lower Paleozoic rocks. Swartz, Joe. And others, eds, South Dakota Black Hills: North Dakota Geological Society Annual Field Conference Guidebook 3. Pp. 38-42.
Canadian Securities Administrators, 2011. National Instrument 43-101 Standards of Disclosure for Mineral Projects, Form 43-101F1, Technical Report, and Companion Policy 43-101.
CIM Standing Committee on Reserve Definitions. 2010. CIM Definition Standards - For Mineral Resources and Mineral Reserves.
Environment Canada, 2017. Canadian Climate Normals or Averages 1981-2010. Stations: Ostenfeld, Winnipeg International Airport, Steinbach, Beausejour, CDA. Accessed August 2017. http://www.climate.weatheroffice.ec.gc.ca/climate_normals/index_e.html
Groundwater Information Network (GIN), 2019. Groundwater Information Network. Data obtained on March 13, 2019. http://gin.gw-info.net/service/api_ngwds:gin2/en/gin.html
Krumbein, W.C. and Sloss, L., L., 1963. Stratigraphy and Sedimentation, 2nd ed., W.H. Freeman, San Francisco.
Lapenskie, K. 2016: Preliminary investigations into the high-purity silica sand of the Winnipeg Formation, southern Manitoba; in Report of Activities 2016, Manitoba Growth, Enterprise and Trade, Manitoba Geological Survey, p. 176 - 180.
Le Fever, R.D., Thompson, S.C., and Anderson, D.B., 1978. Earliest Paleozoic history of the Williston Basin in North Dakota; in 5th International Williston Basin Symposium Proceeding, Special Publication No. 9, p. 147-156.
Manitoba, 1992a. M.R. 63/92. Drilling Regulation. Mines and Minerals Act (C.C.S.M. c. M162). Queen’s Printer. Accessed September 20, 2017. https://web2.gov.mb.ca/laws/regs/current/_pdf-regs.php?reg=63/92
Manitoba, 1992b. MR 64/92. Mineral Disposition and Mineral Lease Regulation 1992. Mines and Minerals Act (C.C.S.M. c. M162). Queen’s Printer. Accessed September 18, 2017. http://web2.gov.mb.ca/laws/regs/current/_pdf-regs.php?reg=64/92
Matile G.L.D., and Keller G.R., 2004. Surficial Geology Compilation Map Series. Manitoba Geological Survey, GIS Map Gallery. Geographic Information System. http://www.gov.mb.ca/iem/geo/gis/sgcms/legend.html
Natural Resources Canada, 2004. Ice Box Member. CSPG Lexicon of Canadian Stratigraphy, Volume 4, western Canada, including eastern British Columbia, Alberta, Saskatchewan and southern Manitoba; D.J. Glass (editor). Contributor: D.F. Paterson. http://weblex.nrcan.gc.ca/html/006000/GSCC00053006881.html
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
Natural Resources Canada, 2009a. Winnipeg Formation. CSPG Lexicon of Canadian Stratigraphy, Volume 4, western Canada, including eastern British Columbia, Alberta, Saskatchewan and southern Manitoba; D.J. Glass (editor). Contributor: D.F. Paterson. http://weblex.nrcan.gc.ca/html/016000/GSCC00053016596.html
Natural Resources Canada, 2009b. Carman Sand Member. CSPG Lexicon of Canadian Geological Stratigraphy. Volume 4, western Canada, including eastern British Columbia, Alberta, Saskatchewan and southern Manitoba; D.J. Glass (editor). Contributor: H.R. McCabe. http://weblex.rncan.gc.ca/html/002000/GSCC00053002494.html
Natural Resources Canada, 2009c. Black Island Member. CSPG Lexicon of Canadian Stratigraphy, Volume 4, western Canada, including eastern British Columbia, Alberta, Saskatchewan and southern Manitoba; D.J. Glass (editor). Contributor: D.F. Paterson. http://weblex.nrcan.gc.ca/html/001000/GSCC00053001436.html
Natural Resources Canada, 2015. Red River Formation. CSPG Lexicon of Canadian Geological Names. CSPG Lexicon of Canadian Geological Stratigraphy. Volume 4, western Canada, including eastern British Columbia, Alberta, Saskatchewan and southern Manitoba; D.J. Glass (editor). Contributor: H.R. McCabe. http://weblex.nrcan.gc.ca/html/012000/GSCC00053012586.html
Ozadetz, K.G., and Haidl, F.M., 1989. Tippecanoe Sequence: Middle Ordovician to lowest Devonian: vestiges of a great epeiric sea, Chapter 8; in Western Canada Sedimentary Basin: a case study (B.D. Ricketts, ed.); Canadian Society of Petroleum Geologist, Special Bulletin No. 30, p. 121-137.
Railway Association of Canada (RAC), 2017. RAC Canadian Rail Atlas. Accessed October 12, 2017 https://rac.jmaponline.net/canadianrailatlas/
Smith R.E., Veldhuis H., Mills G.F., Eilers R.G., Fraser W.R., Lelyk G.W., 1998. Terrestrial Ecozones, Ecoregions and Ecodistricts of Manitoba. An Ecological Stratification of Manitoba’s Natural Landscapes. Research Branch Technical Bulletin 1998-9E. Land Resource Unit. Brandon Research Centre, Research Branch. Agriculture and Agri-Food Canada. pp. 127, 202-204, 260.
Underwood McLellan & Associates Limited, 1967. A Feasibility Study of Recovery and Utilization of the St. Anne Silica Sand Deposits. Project No. 41 60 0751 01/02. pp. 52.
Winnipeg. 2017. The Greater Winnipeg Water District Railway. Water and Waste Department. Accessed October 12, 2017 http://www.winnipeg.ca/waterandwaste/dept/railway.stm
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TECHNICAL REPORT SUMMARY, DEN PROPERTY, MANITOBA, CANADA
25 | RELIANCE ON INFORMATION PROVIDED BY THE REGISTRANT |
The Qualified Persons did not rely on a report, opinion or statement of another expert who is not a Qualified Person or on information provided by the issuer, concerning legal, political, environmental, or tax matters.
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Exhibit 99.1
SIO
SILICA CORPORATION TO GO PUBLIC VIA BUSINESS COMBINATION WITH PYROPHYTE ACQUISITION CORP., ACCELERATING MISSION TO DISRUPT THE MARKET
FOR HIGH-PURITY QUARTZ SILICA, A CRITICAL MINERAL
IN THE WORLD’S TRANSITION TO NET ZERO
● | Proceeds from the Business Combination Expected to Accelerate Sio’s Entrance into the High-Purity Crystalline Quartz Market and Its Mission Toward Becoming an Environmentally Friendly, Low Cost, Canadian-Based Producer of High-Purity Quartz Silica |
● | Sio's High-Purity Quartz Silica is an Essential Element for Photovoltaics, Solar Panels, Semiconductors, Batteries and Other Green Technologies Expected to Help Achieve Global Net Zero Targets |
● | Sio’s Sustainable Operations, Cutting-Edge Technologies and Low-Cost Advantage are Expected to Make Considerable Inroads to Contribute to a Decarbonized Future |
● | Approximately $150 Million of Gross Capital, Comprised of Equity, Debt, Royalties and Sio’s Cash on Hand, has been Secured from a Variety of Institutional and Individual Accredited Investors, including Riverstone Credit Partners, HITE Hedge Asset Management and a Large Canadian Pension Fund, and an Additional $10 Million Is Expected to be Secured Through Flow-Through Equity from a Variety of Individual Accredited Investors, to Support the Construction of the First Phase of its Extraction and Processing Facility. |
● | Terms of the Business Combination Imply an Enterprise Value of $708 Million and Equity Value of $758 Million for the Combined Company |
● | Valuation Represents an ~80% Discount to a ~$3.9 Billion Net Present Value Estimated by Stantec Inc. (TSX, NYSE: STN) (“Stantec”) Based on a Portion of the ~146 Million Tonnes of High-Purity Quartz Silica Measured & Indicated Resources and ~345 Million Tonnes of High-Purity Quartz Silica Inferred Resources |
Calgary, Alberta and Houston, Texas, November 13, 2023— Sio Silica Corporation (“Sio” or the “Company”), a Canadian-based company that seeks to become a global leader in the production and supply of environmentally and ethically produced high-purity quartz silica, and Pyrophyte Acquisition Corp. (“Pyrophyte”) (NYSE: PYHT), a special purpose acquisition company, announced today that they have entered into a definitive agreement (the “Business Combination Agreement”) for a business combination (the “Business Combination”). The terms of the Business Combination reflect an implied enterprise value of $708 million and equity value of $758 million for the combined company, an approximate 80% discount to the net present value described above and includes approximately $150 million of gross capital including equity, debt, royalties and Sio’s cash on hand and additional $10 million expected flow-through equity from a variety of institutional and individual accredited investors. Following the closing (the “Closing”) of the Business Combination, such proceeds are expected to be used to fully fund the construction of the first phase of Sio’s extraction and processing facility in Winnipeg, Manitoba. Upon Closing, the name of the combined company will be Sio Silica Incorporated, and its common shares and warrants are expected to be listed on the New York Stock Exchange under the tickers “SIOS” and “SIOS WS,” respectively. Unless otherwise specified, all amounts in this press release are in U.S. dollars.
Company Overview
Sio has approximately 15.2 billion tonnes of in situ high-purity silica including an estimated ~146 million tonne measured and indicated resource and an estimated ~345 million tonne inferred resource and intends to initiate a mining plan that ensures a comprehensive and active environmental stewardship over the years to come. Once the processing facility becomes operational, Sio expects to become a leading environmentally friendly producer of high-purity quartz silica, a unique natural resource and critical mineral. Sio plans to leverage its patent-pending extraction process using proven technology to extract and process silica that exceeds 99.9% purity, providing a significant cost advantage within its industry. Sio’s extraction method will not require truck traffic, surface mining, tunneling, dust generation, or chemical cleansing. In combination with its extraction and processing facility using renewable electricity, natural gas, and efficient processing, Sio expects to make considerable inroads to contribute to a low carbon future. Anticipated applications for Sio’s high-purity quartz silica include photovoltaics, solar panels, semiconductors, electronics and batteries.
Global decarbonization drivers, regulatory changes, energy transition, and major anticipated semiconductor investments in North America are all expected to be significant catalysts driving demand and creating a robust long-term growth outlook for Sio’s high-purity quartz silica products. Sio intends to use proceeds from the transaction to complete the construction of Phase 1 of its facility in Winnipeg, Manitoba, which it expects to complete less than 18 months after Closing. Based on signed and pending customer agreements, all production at Phase 1 is expected to be fully contracted.
Sio Investment Highlights:
● | Expects to become a leader in the rapidly expanding high-purity quartz silica industry with no current plans to rely on government subsidies. |
● | High-purity quartz silica currently represents a $30 billion total addressable market by 2030 for photovoltaics, solar panels, semiconductors and batteries. |
● | With 146 million tonne measured and indicated resource and 345 million tonne inferred resource, Sio’s development plan has a multi-generational resource life. |
● | Net Present Value of ~$3.9 billion according to engineering estimates from Stantec, based on sustainable mining practices and only a portion of available resources being mined over a 25-year mine life. |
● | With approximately $150 million of gross capital and additional $10 million expected flow-through equity, Sio anticipates to be fully funded and fully permitted by government authorities at Closing to complete Phase 1 of its production facility. |
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● | Strong demand for high-purity quartz silica with 100% of Phase 1 of its production facility fully allocated under signed and pending offtake agreements/MOUs and marketing agreements. |
● | Significant cost advantage through efficient mining, extraction, processing and energy utilization to achieve quartz silica purity that exceeds 99.9%. |
● | Location of production facility creates logistical and rail advantages with easy access to ports on both coasts and closer than competitors to several important markets within North America. |
● | Low capital intensity and robust operating economics are expected to deliver attractive returns to all stakeholders. |
● | As published in its annual sustainability reports, Sio strives to be an ESG leader in the industry with what is expected to be one of the world’s most environmentally friendly silica mining operations, given no harmful chemical wash process, no tailings pond, no open pit and no silica dust concerns from mining operations. |
● | Highly experienced leadership team and a board of directors with a proven record of creating shareholder value. |
Commentary
“We are excited to partner with Pyrophyte to become a leading producer of high-purity quartz silica,” said Feisal Somji, Chief Executive Officer of Sio. “Our streamlined approach to creating environmentally responsible solutions has attracted high profile strategic alliances, which puts us at an important inflection point in our growth trajectory. These solutions follow the Manitoba Clean Environment Commission’s recommendations, and the Company is working with the Province of Manitoba to finalize an extraction license that will exemplify the commitment and practices of the Company to be a leader in environmental protection. We will continue to work with the Province of Manitoba and its stakeholders to put the Province on the global stage as a major contributor to achieving global net zero targets through decarbonization initiatives that require high-purity silica. The combination of being fully funded and fully permitted is expected to fuel the next phase of our expansion in high-purity quartz silica extraction and processing. We believe that our combination with Pyrophyte will allow us to scale our production to meet strong customer demand and expand our high-purity quartz silica products to a wide range of applications, such as solar panels, semiconductors, and lithium-silicon batteries, with a long runway for profitable growth in the years ahead. We believe that this Business Combination will put Sio in a position to execute further on our strategic priorities and to support our growth over the long-term.”
Chairman of Pyrophyte, Dr. Bernard J. Duroc-Danner, said, “Sio’s extensive high-purity quartz silica deposit just south of Winnipeg Manitoba is a remarkable gift of nature. Based on Stantec’s report, the deposit is very large and exceptionally consistent throughout. The silica ore comes out at naturally occurring high-purity levels with very low levels of contaminants. The deposit is very shallow allowing for a production process which is exceptionally simple, very low cost and environmentally low impact. The beneficiation needs are minimal, consisting of just a magnetic separation process and washing. No chemicals are required in the entire extraction and beneficiation processes while reclamation postproduction is immediate. We believe that Sio’s supply of high-purity quartz silica will benefit from very strong secular demand growth trends in North America and worldwide. Located next to extensive railroad infrastructure, the deposit is ideally located for ease of railway transportation to the West, South and East. Once operational, we expect Sio’s facility to combine an ideal transportation location, very low ore production costs, strong secular growth trends in demand and low-impact environmental footprint. We searched long and hard for the right candidate to combine with Pyrophyte and its energy transition mission. Sio fulfilled all our criteria. We are proud to join Sio on its journey to supply what is becoming in many countries around the world one of the most important strategic minerals for the world’s energy transition.”
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Christopher Abbate, Co-Head of Riverstone Credit Partners, noted, “We are excited to support Sio in its mission to deliver this critical mineral that is required by a number of key growth areas, from semiconductors to several key industries driving decarbonization, among others. As we evaluated the opportunity, we were particularly drawn to its vast, high-quality resource, with its low-cost development, guided by a high-quality management team that can draw upon the considerable experience from the Pyrophyte team in growing companies. We look forward to the bright future ahead.”
Transaction Summary
The terms of the Business Combination imply an enterprise value of $708 million and equity value of $758 million for the combined company. Approximately $150 million of gross capital, comprised of equity, debt, royalties and Sio’s cash on hand, has been secured from a variety of institutional and individual accredited investors, including a credit facility provided by Riverstone Credit Partners, and other financing from HITE Hedge Asset Management and a large Canadian pension fund, and an additional $10 million is expected to be secured from flow-through equity from a variety of individual accredited investors, to support the construction of the first phase of its extraction and processing facility. Availability under the credit facility with Riverstone Credit Partners is subject to certain conditions. In an effort to further strengthen its capital base and reduce debt levels, Sio and Pyrophyte may raise additional equity capital through incremental PIPE investments along with the potential contribution of up to approximately $97 million of cash currently held in Pyrophyte’s trust account, subject to redemptions by Pyrophyte shareholders that have not entered into non-redemption agreements.
The Business Combination, which has been unanimously approved by the Boards of Directors of Sio and Pyrophyte, is subject to approval by Pyrophyte's and Sio’s shareholders and other customary closing conditions. CEO Feisal Somji will continue to lead Sio, supported by a team of experienced operators. Pyrophyte’s leadership team will actively introduce key relationships to help accelerate Sio’s growth.
Advisors
BMO Nesbitt Burns Inc. is acting as exclusive Financial Advisor to Sio. UBS Securities LLC is acting as capital markets advisor to Pyrophyte. Integral Wealth Securities Limited acted as Sio’s exclusive financial advisor in procuring and negotiating royalty financing, and, as an advisor to Sio in respect of the business combination agreement. BMO Capital Markets Corp., UBS Securities LLC and Integral Wealth Securities Limited are acting as joint placement agents on the PIPE. DLA Piper (Canada) LLP and DLA Piper (US) are acting as legal advisors to Sio. White & Case LLP is acting as legal advisor to Pyrophyte. Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to BMO Capital Markets Corp. and UBS Securities LLC.
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About Sio Silica
Sio Silica is a Canadian-based high-purity quartz silica producer committed to offering superior products and practicing sustainable development. The Company’s extraction of silica will not require truck traffic, surface mining, tunneling, dust generation or chemical cleansing. Combined with its facility using renewable electricity, natural gas, and efficient processing, Sio Silica expects to contribute to a low-carbon future.
About Pyrophyte Acquisition Corp.
Pyrophyte Acquisition Corp. is a blank check company whose business purpose is to effect a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities. Pyrophyte is primarily focused on target companies that serve the growing segments in the energy transition ecosystem. For more information, please visit https://www.pyrophytespac.com
Additional Information about the Business Combination and Where to Find It
In connection with the Business Combination, Sio Silica Incorporated, a newly-formed Alberta corporation formed solely for the purpose of engaging in the Business Combination (“Pubco”) intends to file a registration statement on Form F-4 (the “Registration Statement”) with the U.S. Securities and Exchange Commission (the “SEC”), which will include a preliminary proxy statement of Pyrophyte and a preliminary prospectus of Pubco, and after the Registration Statement is declared effective, Pyrophyte will mail the definitive proxy statement/prospectus relating to the Business Combination to Pyrophyte’s shareholders as of a record date to be established for voting on the Business Combination. The Registration Statement, including the proxy statement/prospectus contained therein, will contain important information about the Business Combination and the other matters to be voted upon at Pyrophyte’s meeting of shareholders convened to approve the Business Combination (the “Pyrophyte Shareholders Meeting”). This communication does not contain all the information that should be considered concerning the Business Combination and other matters and is not intended to provide the basis for any investment decision or any other decision in respect of such matters. Pyrophyte and Pubco may also file other documents with the SEC regarding the Business Combination. Pyrophyte’s shareholders and other interested persons are advised to read, when available, the Registration Statement, including the preliminary proxy statement/prospectus contained therein, and the amendments thereto and the definitive proxy statement/prospectus and other documents filed in connection with the Business Combination, as these materials will contain important information about Pyrophyte, Sio, Pubco and the Business Combination.
Pyrophyte’s shareholders and other interested persons will be able to obtain copies of the Registration Statement, including the preliminary proxy statement/prospectus contained therein, the definitive proxy statement/prospectus and other documents filed or that will be filed with the SEC, free of charge, by Pyrophyte and Pubco through the website maintained by the SEC at www.sec.gov.
Technical Information
Keith Wilson, P. Eng., a consulting engineer, is a Qualified Person as defined by S-K 1300 and NI 43-101 and has reviewed, approved and verified the scientific and technical information in this press release.
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The technical report summaries for the Company’s BRU and DEN Properties, supporting the mineral resources included in this release, are expected to be filed under Sio’s profile on SEDAR+, which is available through the website maintained by the Canadian Securities Administrators at www.sedar.com, as well as by Sio and Pyrophyte on the SEC’s EDGAR system, which is available through the website maintained by the SEC at www.sec.gov. The technical report summaries, authored by Stantec Consulting Ltd., have been prepared in accordance with the requirements of the SEC S-K 1300 Regulation. The qualified persons involved in the preparation of the technical and scientific disclosure included in this press release, and the related technical report summaries, have followed industry accepted practices for verifying that the data used is suitable for the purposes used. For readers to fully understand the technical information in this press release they should read these technical reports in their entirety when they are available on SEDAR+ and EDGAR, including all qualifications, assumptions, exclusions, and risks that relate to the technical and scientific information set out in the summaries. The technical report summaries are intended to be read as a whole and sections should not be read or relied upon out of context.
Forward-Looking Statements
Certain statements made in this press release are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements may include, for example, statements about the Pyrophyte or Sio’s ability to effectuate the Business Combination discussed in this document; the benefits of the Business Combination; the future financial performance of Pubco following the Business Combination; changes in Sio’s strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management. These forward-looking statements are based on information available as of the date of this document, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing Pyrophyte, Sio or Pubco’s views as of any subsequent date, and none of Pyrophyte, Sio or Pubco undertakes any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Neither Pubco nor Pyrophyte gives any assurance that either Pubco or Pyrophyte will achieve its expectations. You should not place undue reliance on these forward-looking statements. As a result of a number of known and unknown risks and uncertainties, Pubco’s actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include: (i) the timing to complete the Business Combination by Pyrophyte’s business combination deadline and the potential failure to obtain an extension of the business combination deadline if sought by Pyrophyte; (ii) the occurrence of any event, change or other circumstances that could give rise to the termination of the definitive agreements relating to the Business Combination; (iii) the outcome of any legal, regulatory or governmental proceedings that may be instituted against Pubco, Pyrophyte, Sio or any investigation or inquiry following announcement of the Business Combination, including in connection with the Business Combination; (iv) the inability to complete the Business Combination due to the failure to obtain approval of Pyrophyte’s or Sio’s shareholders; (v) Sio’s and Pubco’s success in retaining or recruiting, or changes required in, its officers, key employees or directors following the Business Combination; (vi) the ability of the parties to obtain the listing of Pubco’s common shares and warrants on a national securities exchange upon the Closing; (vii) the risk that the Business Combination disrupts current plans and operations of Sio; (viii) the ability to recognize the anticipated benefits of the Business Combination; (ix) unexpected costs related to the Business Combination; (x) the amount of redemptions by Pyrophyte’s public shareholders at the Pyrophyte Shareholders Meeting being greater than expected; (xi) the management and board composition of Pubco following completion of the Business Combination; (xii) limited liquidity and trading of Pubco’s securities; (xiii) geopolitical risk and changes in applicable laws or regulations; (xiv) the possibility that Sio or Pyrophyte may be adversely affected by other economic, business, and/or competitive factors; (xv) changes in mineral resource estimates and operational risks; (xvi) litigation and regulatory enforcement risks, including the diversion of management time and attention and the additional costs and demands on Sio’s resources; (xvii) the risk that the consummation of the Business Combination is substantially delayed or does not occur; and (xix) other risks and uncertainties indicated from time to time in the Registration Statement to be filed by Pubco, including those under “Risk Factors” therein, and in Pyrophyte’s filings with the SEC.
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Participants in Solicitation
Pyrophyte, Sio, Pubco and their respective directors and officers may be deemed participants in the solicitation of proxies of Pyrophyte’s shareholders in connection with the Business Combination. More detailed information regarding the directors and officers of Pyrophyte, and a description of their interests in Pyrophyte, is contained in Pyrophyte’s filings with the SEC, including its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC on April 12, 2023, and is available free of charge at the SEC’s website at www.sec.gov. Information regarding the persons who may, under SEC rules, be deemed participants in the solicitation of proxies of Pyrophyte’s shareholders in connection with the proposed Business Combination and other matters to be voted upon at Pyrophyte Shareholders Meeting will be set forth in the Registration Statement when available.
INVESTMENT IN ANY SECURITIES DESCRIBED HEREIN HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY OTHER REGULATORY AUTHORITY NOR HAS ANY AUTHORITY PASSED UPON OR ENDORSED THE MERITS OF THE OFFERING THEREOF OR THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED HEREIN. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
No Offer or Solicitation
This communication relates to the Business Combination between Sio and Pyrophyte. This document does not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the Business Combination. This document does not constitute an offer to sell or exchange, or the solicitation of an offer to buy or exchange, any securities, nor shall there be any offer, sale or exchange of securities in any state or jurisdiction in which such offer, solicitation, sale or exchange would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities will be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act or an exemption therefrom.
Investor and Media Contact
Rodny
Nacier / Brad Cray, ICR Inc.
(825) 540-5469
investors@siosilica.com
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Exhibit 99.2
Unit References: $: U.S. Dollars t: metric tonnes Mt: million metric tonnes
• Vivian Sand Project is a large, continuous high purity, low cost silica deposit with low impact silica extraction and beneficiation processes without harmful chemicals • 99.91% (1) purity silica consistent throughout the entire deposit, following a minimal cost beneficiation process Asset • Sio Silica is developing its 100% owned Vivian Sand high purity silica project located southeast of Winnipeg, Canada • Compelling economics supported by customer offtake agreement/MOU and marketing agreement Company • Silica with high purity above 99.9% is critical to energy transition and strategic industries • Sio expects to produce high purity silica, with applications across many established and emerging industries including semi - conductors, solar panels, and lithium - silicon battery technology Product 1. After water wash and magnetic separation.
99.86% 99.91% Natural Purity Purity After Magnetic Separation $30 bn TAM by 2030 Source: BRU 2023 TRS, DEN 2023 TRS, management estimates, Sio 2020 Sustainability Report, Sio 2021 Sustainability Report, Sio 2022 Sustainability Report 1. Natural purity after water wash. 2. Phase 1 capital, see BRU 2023 TRS. 2022 ESG Report Published x No open pit, no dust, no trace x No heavy machinery, no truck traffic x No harmful chemicals x No water waste
FEISAL SOMJI, B.SC., MBA PRESIDENT & CEO, FOUNDING DIRECTOR • • TODD HIRTLE, CPA, CA CFO • • BRENT BULLEN, B.COMM., MBA COO & DIRECTOR • • LAURA WEEDEN, P.ENG VP OPERATIONS • • THOMAS BUCHANAN CHAIRMAN • • • ROBERT STAN DIRECTOR • • • CAROLYN MOORE - ROBIN DIRECTOR • • DAVID FILMON, K.C. DIRECTOR • • • MICHAEL PYLE, MBA, ICD.D . DIRECTOR • • •
$80 mm $40 mm $31 mm • energy, infrastructure and energy transition over $2 billion • over 60 companies • up to $80 mm debt backstop facility STEN L. GUSTAFSON CEO • • • DR. BERNARD DUROC - DANNER CHAIRMAN • • • Steve Webster & Other Investors Debt Backstop Up to Royalty (2) • Leading North American royalty company ▪ Royalty interests spanning multiple provinces and states 300 industry operators • wholly - owned by large Canadian pension fund ▪ • Sio shareholders, Pyrophyte, Steve Webster and select investors • Flow - Through equity 1. Indications of interest are non - binding and no assurance can be given that any such indicated investment will be consummated for the full amount or at all. 2. Includes $30 mm committed by well known royalty partners as well as $10 mm from a royalty company with a focus on decarboniza tio n projects and existing Sio shareholders. 60+ $2 bn delivering growth support of a variety of energy transition solutions Existing Investors; PIPE and Flow - Through Equity
Phase 1 Fully Permitted Phase 1 Construction Ready Enterprise Value of $708 mm, reflecting an ~80% discount 1H Phase 1 to be fully permitted and capex expected to be fully funded ▪ Sio will be cash flow positive once Phase 1 construction is completed and operations have commenced (expected less than 18 months post - close) ▪ to be funded internally operating cash flow ▪ fully - permitted ▪ 100% of the construction capital indicated rapidly and securely deliver highly - demanded high purity silica to key sectors 100% Phase 1 Production Allocated Source: BRU 2023 TRS, DEN 2023 TRS 1. Pro - forma enterprise value build on slide 34. 2. BRU property and DEN property combined NPV at 10% discount rate. 3. Emerging Lithium Producers include: Core Lithium, Lithium Argentina, Sayona , and Sigma Lithium. 4. Specialty Materials Producers include: IGO (lithium), Lynas (rare earth), MP Materials (rare earth), and Pilbara (lithium). 5. After water wash. 6. 100% phase 1 production allocated through offtake agreement/MOU and marketing agreement. Expected Project Status at Transaction Close P P P P Phase 1 Construction Fully Funded
Low Quality Glass Rubber Agriculture & Food Coatings, Adhesive, Sealants Foundation Sand Energy Source: Allied Market Research, BRU 2023 TRS, Data Bridge Market Research, DEN 2023 TRS, management estimates, Marketwatch , Verified Market Research 1. Average across segments. 2. After water wash. ~$30 bn TAM by 2030; 7.5% Annual Growth Source Beneficiation Silicon Product Select End Products (1)
Source: BRU 2023 TRS, DEN 2023 TRS, management estimates 1. Cost breakdown on slide 27, extraction & processing costs including water wash cost are expected to be $20.68/t. 2. Patent pending novel application of proven technology. Beneficiation: ~$95 - 110/t Beneficiation: $0.55/t
Price Ultra High Purity (99.999%+) $1,000+/t Industrial Grade (95 – 99%) Sio Target Market Purity Sio’s silica is naturally occurring at 99.86% purity after water wash and will reach 99.91% purity after a simple magnetic separation process absent of harmful chemicals ▪ Further beneficiation testing has shown results above 99.995% (4N) purity reaching 99.9986% Sio is targeting the high purity segment of the silica market with end products such as semiconductors, solar panels, and lithium - silicon battery technology ▪ Significantly higher product sale price and margins compared to industrial silica products Major upcoming semiconductor investments in North America driving domestic demand growth catalyzed by new regulatory changes 70% of each commercial solar panel comprises glass sheeting made from high purity silica ▪ Estimated 200 kt of high purity silica is needed for 1GW of new solar capacity Decarbonization / energy transition projects are expected to drive long term growth in demand for high purity silica ▪ Use of silica in battery developments pushing for higher density battery, quick charge and higher cycle life without battery breakdown drives greater high purity silica demand 99.91% Source: BRU 2023 TRS, DEN 2023 TRS, management estimates 1. BRU 2023 TRS first 5 years minegate pricing, TRS pricing based on offtake MOUs and marketing agreement. 2. Purity achieved with further beneficiation. $4,000+/t Super High Purity (99.995%+) <$50/t 99.9986% (2) $100 - $250+/t High Purity (99.9 - 99.99%) Sio TRS Economic Model: $172/t (1)
Sio Positioned to Become One of the Lowest Cost Suppliers of High Purity Silica to APAC Source: Accenture, BRU 2023 TRS, DEN 2023 TRS, management estimates Note: Stantec TRS USD/CAD exchange ratio of 1.30x. 1. To reach >99.90% purity. 2. BRU 2023 TRS, DEN 2023 TRS; year 2 onward. 3. Includes extraction, slurry transport, wet processing, dry processing and labor & insurance. 4. Magnetic separation cost ($0.55/t). Despite close proximity to the Asian markets, Australian supply has low purity and requires costly beneficiation process ▪ Offtake agreement and MOU in place with APAC customers expected to support robust immediate cash flow as North American market grows Higher transportation costs offset by nominal beneficiation cost Sio’s Total Cost: ~$87/t Sio (2) Competitors Costs (1) ~$21/t (3) ~$25/t Extraction & Processing ~$65/t ~$35/t Transportation ~$1/t (4) ~$100/t Beneficiation ~$87/t ~$160/t Total
Sio Positioned to Become One of the Lowest Cost Producers of High Purity Silica in The World Locations MB GA Junction City (Covia) Winnipeg (Sio) Rockwood (U.S. Silica) MI Source: BRU 2023 TRS, DEN 2023 TRS, management estimates Note: Recovery % represents amount extracted as a % of raw mined. 1. BRU production expected to begin 2026; DEN production expected to begin 2028. 2. BRU 2023 TRS, inclusive of Phase 1 & Phase 2, Note: Phase 2 extraction permit application expected to follow successful opera tio n of Phase 1. 3. Measured and indicated resources only (BRU 2023 TRS); inferred resources of 91.9 Mt at BRU Property. 4. BRU 2023 TRS, 1.34 Mtpa for Phase 1 and additional 1.34 Mtpa for Phase 2. 5. Measured and indicated resources only (DEN 2023 TRS); inferred resources of 252.7 Mt at DEN Property. 6. Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022. 7. Inflation Reduction Act. ▪ ▪ Current North American supply dynamics unable to meet growing demand catalyzed by regulatory conditions Potentially reaching 100+ years of mine life with inferred mineral resource conversion
Domestic production of silicon based chips is key to national security and preventing supply chain issues Only 12% of global chip demand are currently manufactured in the U.S., compared to 37% in the 1990s Shortages of semiconductors dented U.S. economic growth by nearly a quarter - trillion dollars in 2021 Companies to receive a 25% tax credit for investments in semiconductor manufacturing and processing equipment, providing $24 billion for business over 5 years $50 billion over 5 years to expand semiconductor manufacturing, $11 billion for advanced R&D and $39 billion to drive domestic production ~$370 billion in clean energy and decarbonization investment, to enhance U.S. energy security and spur development of domestic energy production and storage supply chain Installation of 950 million solar panels, 120,000 wind turbines, and 2,300 grid - scale battery energy storage plants by 2030 Supports ~$28 billion new manufacturing investments by corporations in the electric vehicle, battery, and solar manufacturing sectors post the signing of the IRA Wood Mackenzie forecasts renewable energy investments to total $1.2 trillion by 2035, solar energy investment will increase by two - thirds because of the law Source: Business Korea, CNBC, company disclosure, New York Times, regulatory disclosure, Reuters, The Wall Street Journal
Semiconductors Solar Energy Lithium - Silicon Battery Technology Source: Bloomberg, BRU 2023 TRS, company filings, DEN 2023 TRS, management estimates, Mckinsey • Lithium - silicon batteries expected to hold 50% more charge vs traditional graphite anode batteries with significantly faster charging time • Solar power generation growing 14% annually 2020 - 2030 • North American photovoltaic market to reach $121 bn by 2027, growing at 22% CAGR • Global market projected to grow from $600 billion in 2021 to over $1 trillion by 2030, at a CAGR of 6 - 8% Growth • Investment by legacy automakers to advance silicon based battery research & development • Inflation Reduction Act driving investment in the U.S. • North American manufacturing bolstered by a new wave of funding provided by the CHIPS act Catalyst • $400 mm Series C funding for Group14 led by Porsche • Sila Nano to construct a new battery material factory to support production of up to 500,000 EVs • First Solar investing $1 bn in U.S. manufacturing facility • GlobalFoundries, Intel, Samsung, TSMC, and TI have announced new semiconductor production facilities in the U.S. Activity • ≥99.9% • ≥99.9% • ≥99.9% Purity Requirements • Undergoing product testing for ultra high purity suitable for battery technology implementation • MOU signed with RCT Solutions for the building of North America’s largest solar panel plant in Manitoba, a $3 bn investment • In early conceptual design and implementation talks with largest integrated solar glass manufacturer outside of China • Sio currently has an offtake agreement and an offtake MOU with two semiconductor companies
Generational High Purity Asset Supported with Offtake Agreement/MOU and Marketing Agreement Capex Fully Funded & Low Capital Intensity Project with Robust Economics Logistical and Rail Advantage Internationally Recognized Partners ESG Leader Forging an Environmentally Friendly Future Source: BRU 2023 TRS, DEN 2023 TRS 1. BRU 2023 TRS, DEN 2023 TRS. 2. BRU production expected to begin 2026; DEN production expected to begin 2028. 3. Both BRU and DEN properties. 4. BRU property only.
▪ ▪ ▪ Note: Events without checkmark anticipated to occur. 1. Based on management estimates as of Oct 2023. 2. Manitoba Clean Environment Commission. 3. Phase 2 permit expected Q3 2025 following successful operation of Phase 1. Milestones Date P BRU & DEN TR Summary Refreshed Oct ‘23 P 2022 Sustainability Report Published Aug ’23 P CEC Report Completed Jun ’23 P Offtake Agreement Signed May ’23 P BRU & DEN Updated TR Summary May ’23 P CEC (2) Hearing Complete Mar ’23 P RCT Partnership MOU Signed Feb ’23 P 2021 Sustainability Report Published Nov ’22 P Marketing Agreement Signed Nov ’22 P MOU#2 Signed Sep ’22 P Geo Technical Report Completed Jan ‘22 P Facility Use Permit Received Dec ’21 P Drilling Partnership Confirmed Aug ’21 P MOU#1 Signed Jun ’21 P Facility Process Design Completed Apr ‘21
0.5 0.5 0.8 1.3 1.1 2.4 0.7 3.1 2.2 5.3 0 1 2 3 4 5 6 Semiconductor Company 1 Semiconductor Company 2 Intermediary Company RCT Solutions Additional Demand Saleable Sand Production (Mt) Source: BRU 2023 TRS, DEN 2023 TRS, management estimates Note: Additional demand based on management estimates. 1. Offtake agreement (“Offtake Agreement”) entered into which remains subject to ratification by Sio’s Board. This agreement contemplates an increase in offtake volume to 1Mtpa subject to the agreement of Sio and the offtaker . 2. Indicated long term offtake of ~2.7 Mtpa . Facility 1 – Phase 1 (1.34 Mtpa) Facility 1 and Facility 2 (5.4 Mtpa) Facility 1 – Phase 2 (2.7 Mtpa) Cash Flow Positive RCT Solutions has signed an MOU with Sio for the building of North America’s largest solar panel plant in Manitoba, a $3 bn investment that would generate up to 8,000 jobs RCT Solutions has served as a strategic partner on renewable energy investors to establish more than 30 GW of factory execution and installation
Sio’s High Purity Silica is Key to Advanced Silicon Products Source: Allied Market Research, Data Bridge Market Research, management estimates, Marketwatch, Verified Market Research 1. To management’s best knowledge.
Environmental Priorities Social Priorities Governance Priorities Sio is Dedicated Being at the Forefront of ESG Focused Companies
Sio Expects to Construct a Modern, Low Environmental Impact Facility to Supply the Demand for High Purity Silica Source: Sio 2020 Sustainability Report, Sio 2021 Sustainability Report, Sio 2022 Sustainability Report No open pit, no dust, no trace Patent Pending Borehole Extraction No heavy machinery, no truck traffic, no dust Pipe Transport No harmful chemicals, no toxic residual ponds, no water discharged on surface Simple Wash Process No water waste, minimal site draw on water from source reservoir Water Recycling Feisal Somji - CEO
101 205 405 210 501 625 302 100 247 12 1 207 200 249 205 302 203 59 217 614 216 216 52 403 23 205 15 N BRU Property Aly Property DEN Property Winnipeg Springfield Ste. Anne Ste. Agathe La Broqeurie Marchand Zhoda St Malo Richer Central North American Location on Major Railways a Significant Competitive Advantage GWWD Canadian Pacific Canadian National 2 nd Facility Site 1 st Facility Site Claims undergoing conversion to mining leases (1,2) 1. Ordinary course process to convert claims into mining leases in progress, completion expected ahead of planned construction s tar t date. 2. First 5 years of planned production, rolling conversion to leases in 5 year tranches thereafter. Claims: BRU DEN ALY
Sio expected to extract 4.5 kt of silica per well through its patent pending production process 4,500 t / Well extracted 3 - stage process with proven technologies $6.63/t Extraction Costs No heavy machinery, no truck traffic, no dust $2.23/t Slurry Transport Costs Simple water wash without harmful chemicals $3.90/t Wet Processing Costs Energy efficient drying process $6.64/t Dry Processing Costs Efficient & safe labor practices $1.28/t Site Labor & Insurance Environmentally friendly extraction and processing $20.68/t Total Extraction and Processing Costs Low electricity costs to operate magnetic separation $0.55/t Magnetic Separation Costs Sio TRS economics with growth potential $172/t (3) Mine Gate Price High gross margin due to Sio’s high natural purity and low cost production process ~90% Gross Margin Source: BRU 2023 TRS, DEN 2023 TRS , Sio 2022 Sustainability Report 1. BRU 2023 TRS and DEN 2023 TRS; year 2 onward. 2. Extraction methodology has not previously been implemented at an industrial level. 3. Based on BRU 2023 TRS first 5 years minegate pricing, TRS pricing based on offtake MOUs and marketing agreement. x x x x x
Source: BRU 2023 TRS, DEN 2023 TRS
TILL LIMESTONE AQUIFER SHALE SANDSTONE AQUIFER SHALE PRECAMBRIAN Note: Groundwater used for Processing Facility domestic usage (sinks, toilets and showers), and for emergency fire suppressio n (on demand short - term use). 1. Maximum of 5 wells in each cluster; patent pending novel application of proven technology. 2. Dust/Fines contained within the enclosed Dry Plant dust capture system. 3. Dust/Fines confined in silo dust capture system. EXTRACTION (1) PROCESSING SURFACE 90 ft (27m) 168 ft (51m) 177 ft (54m) 250 ft (76m) Air from compressor Outer casing Inner casing UV treated sandstone water returned to sandstone Production pipe Air line Sand and sandstone water Grout seal for sandstone / limestone isolation Production pipe Extraction Zone Extraction Zone Sand Wash & Dry Facility Water Washing Dry Plant (2) Silos (3) Railroad Out Silica Sand Bulk Product Storage (Wet) Recycled Water Recycled Water Enclosed Transport Line 1 2 6 5 7 8 Magnetic Separation UV treated sandstone water Sand & Water Separation 3 4
Source: BRU 2023 TRS, DEN 2023 TRS 1. Amount shown converted to USD from CAD at Stantec TRS exchange ratio of 1.30x. 2. Expected to be fully funded post De - SPAC process and concurrent financing. $129 $87 Facility 1 - Phase 1 Facility 1 - Phase 2 Phase 1 capex expected to be fully funded (2) Phase 2 expected to be funded internally through cash flow
$215 $429 $468 $937 $937 2025E 2026E 2027E 2028E 2029E 1.2 2.5 2.7 5.4 5.4 2025E 2026E 2027E 2028E 2029E Excludes any Potential Upside from Vertical Integration Source: BRU 2023 TRS, DEN 2023 TRS Note: TRS pricing based on offtake MOUs and marketing agreement. Note: Phase 2 extraction permit application expected to follow successful operation of Phase 1. Note: Stantec TRS USD/CAD exchange ratio of 1.30x. Note: DEN Year 0 indicates 2026E in the project schedule. 1. Based on BRU 2023 TRS and DEN 2023 TRS Minegate Revenue converted to USD. Phase 1 Phase 2 Facility 1 & 2 Phase 1 Phase 2 Facility 1 & 2
$135 $222 $223 $495 $503 2025E 2026E 2027E 2028E 2029E $169 $296 $310 $648 $669 79% 69% 66% 69% 71% 2025E 2026E 2027E 2028E 2029E EBITDA (US$ mm) EBITDA Margin (%) Excludes any Potential Upside from Vertical Integration Source: BRU 2023 TRS, DEN 2023 TRS Note: TRS pricing based on offtake MOUs and marketing agreement. Note: Phase 2 extraction permit application expected to follow successful operation of Phase 1. Note: Stantec TRS USD/CAD exchange ratio of 1.30x. Note: DEN Year 0 indicates 2026E in the project schedule. 1. Based on BRU 2023 TRS and DEN 2023 TRS, calculated as sum of Total Cash - Flow, Cash Interest Expense and Cash Income Tax, converted to USD. 2. Calculated as EBITDA over Revenue. 3. Based on BRU 2023 TRS and DEN 2023 TRS Total Cash - Flow in USD. Phase 1 Phase 2 Facility 1 & 2 Phase 1 Phase 2 Facility 1 & 2
E xis S P HYT Spo nso r 7% P I P E + NRA 3% Flow - Th r o u g h 1% $ mill io n s, e xc e p t p e r share v al u e s Uses Sources $675 Sio Rollover Equity (3) $675 Sio Rollover Equity (3) 12 L i qu idity Reser v e ( 8 ) 40 Royalty (4) 21 Est. Tra n s a cti o n Expenses 80 D ebt B ackst o p 129 Ca s h to B ala n ce Sh eet + Pre fun ded Exp . (7) 21 PIPE + N o n - Rede m pti o n A g ree m e n t (5) 10 Flow - Through Equity (6) 11 S io Pre - Existi n g Ca s h + Pref u n ded Exp . (7) Total Uses $837 Total Sources $837 73.9 Total Shares Outstanding $10.25 Share Price $758 PF Mar k et Capita l izati o n 80 (+ ) PF D ebt 129 ( - ) PF Ca s h $708 PF Ent e rpr i se Va lu e N o t e : S t a n t e c T R S U S D / C A D e x c h a n ge r a t io o f 1 . 3 0 x . 1. ~60% P/NAV discount to emerging lithium producers (Core Lithium, Lithium Argentina, Sayona, and Sigma Lithium) median and ~75% P/NAV discount to specialty materials producers (IGO (lithium), Lynas (rare earth), MP Materials (rare earth), and Pilbara (lithium)) median. 2. Assumes 100% redemptions of Pyrophyt's shares at closing and not secured under non - redemption agreements or otherwise. 3. Includes ownership from exercise of pre - existing Sio warrants. 4. Includes $30 mm committed by well known royalty partners as well as $10 mm from a royalty company with a focus on decarbonization projects and existing Sio shareholders. 5. Includes $20 mm committed PIPE and $1mm committed non - redemption agreement. 6. Includes $3mm of indications from existing Sio shareholders and anticipated $7 mm t o b e r aise d. 7. Includes ~CAD$13.5 mm cash on balance sheet and ~CAD$1.2 prefunded expenses on phase 1 facility construction. 8. A ss u m e s l iq u idit y r e s e r ve e q u a l t o 1 5 % o f d e b t b a ck s t op . Sio to combine with Pyrophyte at a pro forma Equity Value of $758 mm, with existing holders rolling over 100% of their equity Phase 1 facility construction to be fully funded with proceeds available upon close of the Transaction ~$160 mm of gross capital comprising equity, debt, royalties, and cash on hand – Investors include existing Sio shareholders, Pyrophyte, Riverstone, a large Canadian pension fund, Steve Webster, and others – Includes $3mm of indicated and $7mm of expected flow - through equity capital Sio intends to raise additional equity capital for general corporate purposes and to reduce debt backstop draw via: Retained cash from Pyrophyt's current trust of $97 mm Incremental PIPE Non - redemption agreements Sio’s attractive valuation of 0.19x P/NAV (~60% - 75% discount to peers (1) ) has significant potential for a re - rating as it progresses towards production
Source: BRU 2023 TRS, company disclosure, DEN 2023 TRS, FactSet, street research 1. Includes Piedmont (fully funded, not permitted) and Lithium Americas (permitted, not fully funded). 2. Copper Developers include: Filo, Foran , Ivanhoe Electric, NGEx , Marimaca , SolGold , Trilogy, and Western Copper. 3. Emerging Lithium Producers include: Core Lithium, Lithium Argentina, Sayona , and Sigma Lithium. 4. Specialty Materials Producers include: IGO (lithium), Lynas (rare earth), MP Materials (rare earth), and Pilbara (lithium). $169 mm 2025E EBITDA $215 mm 2025E Revenue 0.19x P/NAV 79% 2025E EBITDA Margin 41% 2025E - 2027E Avg. EBITDA Growth
0.19x 0.27x 0.44x 0.54x 0.51x 0.77x 0.79x Sio Fully Funded & Not Permitted Lithium Developer Copper Developers Median Permitted & Not Fully Funded Lithium Developer Emerging Lithium Producers Median Copper Intermediate Producers Median Specialty Materials Producers Median Significant re - rate potential once Sio is in production (1) (5) Source: BRU 2023 TRS, company disclosure, DEN 2023 TRS, FactSet, street research 1. Fully Funded & Not Permitted: Piedmont, based on funding and permitting for Piedmont Ghana. 2. Copper Developers include: Filo, Foran, Ivanhoe Electric, NGEx, Marimaca, SolGold, Trilogy, and Western Copper. 3. Permitted & Not Fully Funded: Lithium Americas, based on funding and permitting for Thacker Pass. 4. Emerging Lithium Producers include: Core Lithium, Lithium Argentina, Sayona , and Sigma Lithium. 5. Copper Intermediates include: Capstone Copper, Hudbay , Ivanhoe Mines, and Lundin Mining. 6. Specialty Materials Producers include: IGO (lithium), Lynas (rare earth), MP Materials (rare earth), Pilbara (lithium). 7. BRU Phase 1 expected to be fully permitted and capex fully funded, includes $3mm of indicated and $7mm of expected flow - through equity capital. (2) (3) (4) (6) Research community overwhelmingly values mining companies by Price to Net Asset Value (P/NAV) 76% 75% 62% 64% 57% 29% Sio P/NAV Discount P P P P P Fully Funded P P P P P Fully Permitted P P P 2026 2025 - 2031 2025 2025 Initial Production P P 2024 ? ? ? 2025 Commercial Production P P ? ? ? ? 2028 Large Scale (7) (7)
Currency Shown in Canadian Dollars Source: BRU 2023 TRS 1. Full production is year 2 and onwards.
Currency Shown in Canadian Dollars Source: BRU 2023 TRS
Currency Shown in Canadian Dollars Source: DEN 2023 TRS 1. Full production is year 2 and onwards.
Currency Shown in Canadian Dollars Source: DEN 2023 TRS Note: DEN Year 0 indicates 2026E in the project schedule.