ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On June 15, 2021, Red Metal Resources Ltd. (the Company) closed its non-brokered private placement (the Private Placement) of 6,460,872 Subscription Receipts (the Subscription Receipts) at a purchase price of CAD$0.15 per Subscription Receipt for gross proceeds of CAD$969,131.
In connection with the Private Placement, the Company entered into a subscription receipt agreement with Computershare Trust Company dated June 15, 2021 (the SR Agreement) pursuant to which the proceeds of the Private Placement (the Escrowed Funds) have been deposited in escrow. The Escrowed Funds will be held in escrow pending satisfaction of the escrow release conditions in full pursuant to the terms of the SR Agreement (the Escrow Release Conditions), including but not limited to the Company completing the listing of its common shares on a recognized stock exchange in Canada. Upon satisfaction of the Escrow Release Conditions (the Escrow Release Date), the Escrowed Funds, after deducting certain finder's fees payable in connection with the Private Placement, will be released to the Company and each Subscription Receipt will be automatically converted without any further action on the part of the holder thereof into one SR Unit (as defined below).
The foregoing description of the SR Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the form of SR Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
In connection with the Private Placement, the Company agreed to pay finders fees to certain registered broker dealers payable on the Escrow Release Date consisting of: (1) a cash commission in an amount equal to 7% of the gross proceeds raised from subscribers to the Private Placement who were introduced by such finders, and (2) finders warrants in an amount equal to 7% of the number of Subscription Receipts purchased by subscribers introduced by such finders to the Company (the Finder's Warrants). The Finder's Warrants will be on the same terms as the SR Warrants as defined below.
Each SR Unit will consist of one common share of the Company (each a Share) and one common share purchase warrant (each a SR Warrant). Each SR Warrant will entitle the holder thereof to purchase an additional common share of the Company at a price of CAD$0.30 per common share, if exercised during the first year following the Escrow Release Date, and at a price of CAD$0.60, if exercised during the second year following the Escrow Release Date. Pursuant to the terms of the Private Placement, in the event that the Company does not meet the Escrow Release Conditions by September 30, 2021 (or such later date as may be agreed to by the Company), the escrow agent shall return to the holders of the Subscription Receipts an amount equal to the aggregate purchase price paid for the Subscription Receipts held by each holder, and each Subscription Receipt shall be cancelled and be of no further force or effect. The SR Units and all underlying securities to be issued pursuant to the Private Placement will be subject to a four-month hold period under applicable Canadian securities laws.
A total of 6,460,872 Subscription Receipts were issued, the total number of Shares issuable upon conversion of the Subscription Receipts is 6,460,872, and the total number of Shares issuable upon the exercise of the SR Warrants is 6,460,872 in the aggregate.
None of the Subscription Receipts, Shares, SR Warrants nor the Shares issuable upon exercise or conversion thereof, has been registered under the Securities Act of 1933 and none may be offered or sold absent registration or an applicable exemption from registration. The Company does not plan to register the Subscription Receipts, Shares, SR Warrants or Shares issuable upon exercise or conversion thereof. Neither this Current Report on Form 8-K, nor the exhibit attached hereto, is an offer to sell or the solicitation of an offer to buy the securities described herein.
The Company intends to use the net proceeds from the Private Placement, including any proceeds resulting from a cash exercise of the SR Warrants, to advance the Company's flagship Carrizal copper-gold-cobalt property in Atacama, Chile, and general working capital purposes.
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