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Rider 2 Investment Capital Corp. Signs Definitive Agreement for Proposed Qualifying Transaction with D Block Discoveries Inc.



  

Calgary, Alberta – TheNewswire - October 13, 2021 .  Rider 2 Investment Capital Corp. (“Rider 2” or the “Company”) (TSXV:RIDR.P), a capital pool company, is pleased to announce that its previously announced letter of intent with D Block Discoveries Inc. (“D Block”) dated May 10, 2021 (the “D Block LOI”) has been superseded by a definitive agreement (the “Definitive Agreement”) dated October 12, 2021 between Rider 2, ‎2839749 Ontario ‎ Ltd., a wholly-owned subsidiary of Rider 2, and D Block.  Pursuant to the Definitive Agreement, Rider 2 and D Block intend to complete a business combination intended to constitute Rider 2’s Qualifying Transaction, as such term is defined in Policy 2.4 of the Corporate Finance Manual of the TSX Venture Exchange (the “Proposed Transaction”).  The Proposed Transaction will result in Rider 2 acquiring all of the issued and outstanding equity shares of D Block (the “D Block Shares”) in exchange for common shares of Rider 2 (each, an “Rider 2 Share”).

The Proposed Transaction is subject to, among other things, receipt of the requisite shareholder approval of D Block, final approval of the TSX Venture Exchange (the “Exchange”) and standard closing conditions, including the conditions described below.  Subject to satisfactory completion of due diligence, the parties expect to close the Proposed Transaction on or before November 30, 2021 (or such other date as may be mutually agreed in writing between Rider 2 and D Block) (“Closing”).

Upon completion of the Proposed Transaction, Rider 2 will continue on with the business of D Block (the Company after completion of the Proposed Transaction is referred to herein as the “Resulting Issuer”).

The Proposed Transaction

Pursuant to the Proposed Transaction, the Resulting Issuer will acquire all of the issued and outstanding D Block Shares such that each shareholder and warrantholder of D Block (including those becoming shareholders as a result of the Offering as defined below) (each, a “D Block Shareholder” and “D Block Warrantholder”, as applicable) will receive one common share of the Resulting Issuer or a warrant of the Resulting Issuer, as applicable (each, respectively, a “Resulting Issuer Share” or “Resulting Issuer Warrant”.  

It is anticipated that a total of 44,219,999 Rider 2 Shares will be issued in exchange for all the D Block Shares (with a deemed price of $0.20 per Rider 2 Share) plus additional Rider 2 Shares issuable in exchange for D Block Shares issued in connection with the Offering (described below).  Upon completion of the Proposed Transaction, the former D Block Shareholders will hold approximately 88% of the Resulting Issuer Shares basis (without giving effect to the Offering (as defined herein)) and the Rider 2 Shareholders will hold approximately 12% of the Resulting Issuer Shares basis (without giving effect to the Offering).  Upon Closing, the name of the Resulting Issuer will be changed to “Metal Energy Corp.” or such other name as may be acceptable to Rider 2, D Block and the Exchange.

All Rider 2 Shares issued pursuant to the Proposed Transaction will be freely tradable under applicable Canadian securities legislation but may be subject to an Exchange imposed restriction on resale. In addition, certain Rider 2 Shares issued in the United States or to or for the benefit of U.S. Persons (as such term is defined under Regulation S of the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) will be “restricted securities” within the meaning of Rule 144(a)(3) of the U.S. Securities Act.

Certain of the Rider 2 Shares to be issued to the D Block Shareholders pursuant to the Proposed Transaction, including up to 100% of the securities to be issued to “Principals” (as defined under applicable laws), may also be subject to escrow provisions imposed pursuant to the policies of the Exchange.

The Proposed Transaction is not a Non Arm’s Length Qualifying Transaction pursuant to Section 2.1 of the Policy and, as such, the Company is not required to obtain shareholder approval for the Proposed Transaction. However, the Company held a meeting of shareholders on September 29, 2021 (the “Meeting”) to approve certain matters ancillary to the Proposed Transaction, including the export from Alberta to Ontario, a name change, and a 20% fixed number stock option plan to be effective upon Closing.  All of these matters were passed at the Meeting.

None of the securities to be issued pursuant to the Proposed Transaction have been or will be registered under the U.S. Securities Act, or any state securities laws, and any securities issued pursuant to the Proposed Transaction are anticipated to be issued in reliance upon available exemptions from such registration requirements pursuant to Section 3(a)(10) of the U.S. Securities Act and applicable exemptions under state securities laws. This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities.

Equity Financing

In connection the Proposed Transaction, D Block (and Rider 2) is undergoing a non-brokered private placement financing (the “Offering”) for gross proceeds of a minimum of $3,000,000 and a maximum of $7,000,000.

The Offering includes:

(1)        a flow-through component (the “Flow-Through Component”), which is comprised of up to 29,166,667 flow-through units (the “Flow-Through Units”) at a price of $0.24 per Flow-Through Unit. Each Flow Through Unit is comprised of one flow-through common share (each, a “Flow Through Share”) and ½ of a non-flow through share purchase warrant. Each whole warrant is exercisable for one non-flow through common share (each, a “Share”) at an exercise price of $0.30 for a term of 24 months after the closing; and

(2)        a non-flow through component (the “Non-Flow Through Component”), which is comprised of up to 35,000,000 non-flow through units (the “Non-Flow Through Units”) at a price of $0.20 per Non-Flow Through Unit. Each Non-Flow Through Unit is comprised one Share and ½ of a non-flow through warrant. Each whole warrant will be exercisable for one Share at an exercise price of $0.30 for a term of 24 months after the closing.

All, or a portion, of the Flow-Through Component may be conducted by Rider 2 at Closing of the Transaction.

The Flow-Through Shares will entitle the holder to receive the tax benefits applicable to flow-through shares, in accordance with provisions of the Income Tax Act (Canada) .

The net proceeds of the Offering are expected to be used to advance exploration on the Resulting Issuer’s properties and for working capital and general corporate purposes.

Conditions to Proposed Transaction

Prior to completion of the Proposed Transaction (and as conditions of closing), among other things:

  1. 1. the Resulting Issuer shall meet the initial listing requirements of a Tier 2 Exchange mining issuer pursuant to Policy 2.1 of the Exchange; 

  2. 2. Rider 2 will have taken all necessary steps to have its name changed to “Metal Energy Corp.” or such other name as the parties may determine and which is acceptable to the Exchange and applicable regulatory authorities; 

  3. 3. the completion of the Minimum Offering; 

  4. 4. the transfer within escrow of up to 2,000,000 Rider 2 Shares to principals of D Block;         

  5. 5. all of the current directors and officers of Rider 2 will have resigned and the incoming directors and officers of the Resulting Issuer shall have been appointed;  

  6. 6. receipt of all required consents, waiver and approvals from the Exchange, any securities regulatory authority and any other third party having jurisdiction, including approval from the Exchange for the Proposed Transaction as its Qualifying Transaction and the listing of the Resulting Issuer shares on the Exchange. 

Sponsorship of a Qualifying Transaction of a capital pool company is required by the Exchange unless exempt in accordance with Exchange policies. The parties will be seeking an exemption of any requirement for a Sponsor, but in the event an exemption is not available, will seek a sponsorship relationship for this transaction with an Exchange member firm, and will update the markets accordingly.

Other than the Offering there are no financing arrangements for or in conjunction with the Qualifying Transaction nor are there any deposits, advances or loans made or to be made by the Parties in connection with the Qualifying Transaction.‎

About D Block

D Block was incorporated by articles of incorporation pursuant to the Business Corporations Act (Ontario) on January 5, 2021.   D Block holds interests in two properties.

 

The Manibridge Property

On May 31, 2021, D Block entered into an Option Agreement with respect to the Manibridge Property. CanAlaska Uranium Ltd. (“CanAlaska”) agreed to grant D Block an option to earn up to a 100% interest in the Manibridge Property subject to a 2% net smelter royalty.

 

The Option Agreement contains three defined earn-in stages. Stage 1 allows D Block to acquire a 49% interest in the Manibridge Property. To meet the requirements of Stage 1, D Block must: pay $30,000 to CanAlaska, issue and deliver $175,000 of Resulting Issuer common shares, and incur $500,000 of expenditures related to the exploration of the Manibridge Property. The Option Agreement also requires D Block hold a 100% interest in the Strange Property as described below and Schedule G. Stage 2 allows D Block to earn an additional 21% interest in the Manibridge Property by paying to CanAlaska an additional $50,000, issuing an additional 1,500,000 Resulting Issuer common shares and incurring an additional $1,500,000 in explorational expenditures. Stage 3 allows D Block to earn an additional 30% interest in the Manibridge Property by paying to CanAlaska an additional $100,000, issuing to CanAlaska an additional 5,000,000 Resulting Issuer common shares, and incurring an additional $2,000,000 in explorational expenditures.

 

After successful completion of either of Stage 1 or Stage 2 of the Option Agreement, ‎and if D Block does not enter the subsequent stage, a joint venture will be formed pursuant to a Joint Venture Agreement as described in the Option Agreement. D Block will contribute to the expenditures of the joint venture an amount which is equal to D Block’s interest in the Manibridge Property. CanAlaska will contribute to the expenditures of the joint venture an amount which is equal to CanAlaska’s interest in the Manibridge Property.

 

The Manibridge Property is 4,368 ha and is located 20 km south of the community of Wabowden, Manitoba. During 2019, CanAlaska retained APEX to prepare a technical report compliant with NI 43-101 and specific to the Manibridge Property.

 

The Strange Property

On April 30, 2021 D Block entered into a Mining Option Agreement with San Corp. to acquire the rights, title and interest in the Strange Property. D Block owns a 100% interest in the Strange Property.

 

A portion of the property is under option from three individuals (the “Optioners”). San Corp. entered into an option agreement dated with the Optioners on November 30, 2020. This option agreement requires the Optionee (D Block) to i) make cash payments to the Optionors of $15,000 within five days of November 30, 2020, $30,000 on or before 12 months after November 30, 2020, $100,000 on or before the 24 months after the November 30, 2020 and $250,000 on or before 36 months after November 30, 2020, ii) Conduct one diamond drill hole in Block A and B on or before 36 months after November 30, 2020, and iii) Issue an aggregate total of 850,000 to the Optionors of the Agreement on or before 36 months after November 20, 2020. When these obligations are satisfied, the Optionor is to transfer a 100% interest in the Mining Claims to the Resulting Issuer. At the outset, Optionor is entitled to a 2% NSR on each of Blocks A & B, however the Optionee has a ‎right to buy back half (50% of the 2% NSR) on either or both Blocks at a price of $2,000,000 per Block.‎

 

The Strange Property is a 11,800 ha area located 55km southwest of the community of Thunder Bay Ontario. D Block retained Clark Expl. Consulting Inc. to prepare a technical report compliant with NI 43-101 and specific to the Strange Property.

 

Financial Information of D Block

 

The following table summarizes selected unaudited financial information for D Block (as at the periods indicated.  D Block was incorporated in 2021 and therefore there are no prior years):

Balance Sheet (C$)

   


June 30, 2021

Current Assets

   

$1,124,412

Total Assets

   

$1,124,412

Current Liabilities

   

$50,651

Total Liabilities

   

$50,561

Total Shareholders’ Equity

   

$1,073,761

Revenue

   

Nil

Net Comprehensive Loss

   

$(639,139)

Loss per share

   

$(0.03)

 

Proposed Management of the Resulting Issuer

Subject to Exchange approval, it is currently anticipated that all of the current officers and all of the current directors of Rider 2 will resign from their respective positions with Rider 2. It is currently anticipated that Insiders (as such term is defined in the policies of the Exchange) of the Resulting Issuer will be as follows:

Stephen Stewart - 43 - Director of the Resulting Issuer and Chair of the Board

Stephen has been involved in natural resource development and finance for ‎over fifteen years. He is ‎currently the CEO of Orefinders Resources Inc. and QC Copper & Gold Inc., ‎both listed on the TSX ‎Venture Exchange. He is also Director of Mistango River Resources and Baselode Energy. ‎

Stephen is the Chairman of the Young Mining ‎Professionals global group.  Stephen holds a BA from the ‎Western University, an MBA from the ‎University of Toronto's Rotman School of Management and a ‎M.Sc. from the University of ‎Florida's Hough Graduate School of Business.

James Sykes – 41 – Chief Executive Officer

Mr. Sykes has been involved in uranium exploration for over 15 years, specifically in the Athabasca Basin in Saskatchewan. He is most notably recognized from his prominent roles for NexGen Energy's Arrow deposit discovery and having provided the first 3D geological model on Hathor's Roughrider deposits. Mr. Sykes was previously Vice President Exploration and Development at Appia Energy Corp. from 2016 to 2021 and is currently CEO of Baselode Energy Corp. since June, 2020. He holds a Bachelor of Science in Geology and Earth Science from Dalhousie University. Mr. Sykes will be an independent contractor of the Resulting Issuer and anticipates dedicating approximately 50% of his time to the affairs of the Resulting Issuer.

 

Alexander Stewart - 77 - Director of the Resulting Issuer

Alex has over 50 years of experience in the practice of corporate and ‎securities law and natural ‎resource investments. He has been a director of numerous public ‎companies on various exchanges ‎including Nasdaq, AMEX, TSX and TSXV. For the last fifteen ‎years he has focused exclusively on the ‎mining and metals sector and has been instrumental in ‎sourcing, funding and developing high-quality ‎mineral assets in North and South America. In the ‎past he was the founder, seed financier and ‎principal behind a number of mining projects ‎including the Cote Lake Project, acquired by IAMGOLD in ‎‎2012 and the Eagle ‎One polymetallic project now owned by Noront Resources. He ‎holds a Bachelor of Arts degree ‎from Western University, a Juris Doctor degree from the University of ‎Toronto Law School and ‎a Diploma, LCE, from the University of Madrid.‎

Jeffrey Potwarka – 59 – Chief Financial Officer and Corporate Secretary

Jeffrey Potwarka is a Chartered Professional Accountant and Certified Management Accountant with ‎over 20 years of financial experience with small cap public companies in Canada. From 2013 to 2015 he ‎was director of Winston Resources Inc., a junior mining company. From 2005 to 2009 he was Chief ‎Financial Officer of Ausnoram Holdings Ltd., a Canadian publicly listed investment company. Previously, ‎he was a principal with a private merchant banking company which focused on financing and consulting ‎to public companies. He is a graduate of the University of Waterloo with an Honours Bachelor of ‎Mathematics degree. ‎

Charles Beaudry – 63 – Director of the Resulting Issuer

Mr. Beaudry is a P. Geo with over 35 years' experience in project generation, business development, ‎exploration geochemistry and hands-on project management. Mr. Beaudry is currently VP Exploration ‎at Orefinders Resources Inc. and the Vendor. He previously held the position of General Manager of ‎new business opportunities with IAMGOLD Corporation from 2008 until 2009, after having spent nearly ‎‎17 years in various capacities for Noranda-Falconbridge-Xstrata, including as country manager of Brazil ‎from 1996 to 2001 and manager of the Frieda River Project in Papua New Guinea from 2005 to 2006. He ‎holds a Bachelor of Science in Geology from the University of Ottawa and a Master of Geology from ‎McGill University. ‎

Further Information

All information contained in this news release with respect to Rider 2 and D Block was supplied by the parties respectively, for inclusion herein, and each party and its directors and officers have relied on the other party for any information concerning the other party.

For further information about the Company please contact:

Rider 2 Investment Capital Corp.

David Antony

‎403.617.1541

 

For further information about D Block please contact:

 

D Block Discoveries Inc.

Stephen Stewart ‎

‎416-644-1567‎

 

All information contained in this news release with respect to Rider 2 and D Block was supplied by the parties, respectively, for inclusion herein, and Rider 2 and its directors and officers have relied on D Block for any information concerning such party.

Completion of the Qualifying Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange requirements, majority of the minority shareholder approval. Where applicable, the Qualifying Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this press release.  

This news release contains forward-looking statements relating to the timing and completion of the Proposed Transaction, the future operations of the Company and other statements that are not historical facts. Forward-looking statements are often identified by terms such as "will", "may", "should", "anticipate", "expects" and similar expressions. All statements other than statements of historical fact, included in this release, including, without limitation, statements regarding the Proposed Transaction and the future plans and objectives of the Company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations include the failure to satisfy the conditions to completion of the Proposed Transaction set forth above and other risks detailed from time to time in the filings made by the Company with securities regulations.

The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company. As a result, the Company cannot guarantee that the Proposed Transaction will be completed on the terms and within the time disclosed herein or at all.  The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release and the Company will update or revise publicly any of the included forward-looking statements as expressly required by Canadian securities law.

NOT FOR DISSEMINATION IN THE U.S. OR THROUGH U.S. NEWSWIRES