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Subscription Rights:
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| | We will grant to each holder of record of our common shares at the close of business on October 19, 2021, the record date for this rights offering, at no charge, one non-transferable subscription right for each of our common shares owned by such holder on the record date. The subscription rights will be evidenced by non-transferable subscription rights certificates. As of the record date, there were 105,808,445 common shares were outstanding. Each subscription right shall consist of (i) a basic subscription privilege to purchase one common share at a subscription price of $0.24 per share and (ii) if the basic subscription privilege is exercised in full by a holder thereof, an oversubscription privilege to subscribe for an unlimited number of whole common shares at the subscription price that are not purchased by other | |
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holders, subject to (i) a maximum of 105,808,445 shares and (ii) the allocation among all holders properly exercising the oversubscription privilege, as described below.
If and to the extent that our shareholders exercise their subscription rights in full to purchase our common shares, we will issue 105,808,445 shares and receive gross proceeds of approximately $25.4 million in the rights offering. In that case, we will have approximately 211,716,890 common shares outstanding after the rights offering.
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Basic Subscription Privilege:
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| | Each subscription right entitles the holder to purchase one of our common shares for $0.24 per share, the subscription price, which shall be paid in cash. After the expiration date, the subscription rights will expire and have no value. We will not issue subscription rights to acquire fractional shares. | |
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Oversubscription Privilege:
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| | If you fully exercise your basic subscription privilege and other holders of subscription rights do not fully exercise their basic subscription privileges, the oversubscription privilege entitles you to purchase additional common shares that remain unsubscribed for at the expiration of the rights offering, subject to availability and pro rata allocation of shares among shareholders exercising the oversubscription privilege, at the same subscription price per share. If an insufficient number of shares are available to fully satisfy all oversubscription privilege exercises by holders thereof, the available shares will be distributed proportionately among shareholders who exercised their oversubscription privileges based on the number of shares each shareholder subscribed for under its basic subscription privilege. The subscription agent will return any excess payments by mail without interest or deduction as soon as practicable after the expiration of the subscription period. Fractional shares resulting from the exercise of the oversubscription privilege as to any subscription rights holder will be eliminated by rounding down to the nearest whole share. | |
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Subscription Price:
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| | $0.24 per share, which shall be paid in cash. In order to be effective, any payment related to the exercise of a right must clear prior to the expiration of the rights offering. | |
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Record Date:
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| | October 19, 2021. | |
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Expiration Date:
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| | 5:00 p.m., New York City time, on December 8, 2021, subject to extension or earlier termination. Subscription rights shall be irrevocable once they are exercised and shall continue to be irrevocable in the event the rights offering is extended. | |
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Participation of Directors, Officers and Significant Shareholder:
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| | All holders of our common shares as of the record date for the rights offering will receive, at no charge, the non-transferable subscription rights to purchase our common shares as described in this prospectus supplement. To the extent that our directors and officers held our common shares as of the record date, they will receive the subscription rights and, while they are under no obligation to do so, will be entitled to participate in the rights offering. Synchron, a significant shareholder of the Company, has advised the Company that it intends to participate in the rights offering, but Synchron has not entered into any agreement to do so. See “Risk Factors — Depending on the extent to which Synchron and holders other than Synchron exercise their subscription rights, Synchron may hold more than 50% of our outstanding common shares after the rights offering . . . .” | |
| Non-Transferability of Rights: | | |
The subscription rights are not transferable.
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No Revocation:
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| | Once you submit the form of rights certificate to exercise any subscription rights, you may not revoke, change or cancel your exercise or request a | |
| | | | refund of monies paid. All exercises of subscription rights are irrevocable, even if you later learn of information that you consider to be unfavorable to the exercise of your subscription rights. You should not exercise your subscription rights unless you are certain that you wish to purchase additional common shares at a subscription price of $0.24 per share. | |
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Amendment, Extension and Termination:
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| | We may extend the expiration date at any time after the record date. Subscription rights shall be irrevocable once they are exercised and shall continue to be irrevocable in the event that the rights offering is extended. We may also amend or modify the terms of the rights offering at any time prior to the expiration date, including if we extend the rights offering. We also reserve the right to terminate the rights offering at any time prior to the expiration date for any reason. In the event the rights offering is terminated, then the subscription agent will return all subscription funds without interest or deduction to those persons who exercised their subscription rights. | |
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Procedure for Exercising Rights:
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If you are a record holder of our common shares and you wish to exercise your subscription rights, you must complete the rights certificate and deliver it to the subscription agent, Broadridge Corporate Issuer Solutions, Inc., together with full payment for all the subscription rights you elect to exercise under your basic subscription privilege and oversubscription privilege prior to the expiration of the rights offering. You may deliver such subscription documents and payments by mail or commercial carrier. If you use the mail, we recommend that you use insured, registered mail, return receipt requested.
If you hold our common shares in “street name” through a broker, custodian bank or other nominee, you will not receive an actual subscription rights certificate. We will ask your broker, custodian bank or other nominees to notify you of the rights offering. As described in this prospectus supplement, you must instruct your broker, dealer, custodian bank or other nominee whether or not to exercise rights on your behalf. You should complete and return to your broker, custodian bank or other nominee the form entitled “Beneficial Owner Election Form.” You should receive this form from your broker, custodian bank or other nominee with the other rights offering materials. You should contact your broker, custodian bank or other nominee if you believe that you are entitled to participate in the rights offering but you have not received this form.
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Payment Adjustments:
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| | If you send a payment that is insufficient to purchase the number of shares requested, or if the number of shares requested is not specified in the rights certificate, the payment received will be applied to exercise your subscription rights to the extent of the payment. If the payment exceeds the amount necessary for the full exercise of your subscription rights, including any oversubscription privilege exercised and permitted, the subscription agent will return to you the excess funds without interest or a deduction therefrom. | |
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How Foreign Shareholders Can Exercise Rights:
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| | The subscription agent will not mail this prospectus supplement or the rights certificates to you if you are a shareholder whose address is outside the United States or Canada or if you have an Army Post Office or a Fleet Post Office address. Instead, we will have the subscription agent hold the subscription rights certificates for your account. To exercise your rights, you must notify the subscription agent prior to 5:00 p.m., New York City time, at least five business days prior to the expiration date, and establish to the satisfaction of the subscription agent that you are permitted to exercise your subscription rights under applicable law. If you do not follow these | |
| | | | procedures by such time, your rights will expire and will have no value. Please see “The Rights Offering — Foreign Shareholders.” | |
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Possible Restrictions on Exercise by Shareholders Residing in Certain States:
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| | We will not issue shares to any shareholder who is required to obtain prior clearance or approval from, or submit a notice to, any state or federal regulatory authority to acquire, own or control such shares if we determine that, as of the expiration date of the rights offering, such clearance or approval has not been satisfactorily obtained and any applicable waiting period has not expired. | |
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Material United States Federal Income Tax Consequences:
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| | A U.S. holder of our common shares likely will not recognize income, gain, or loss for United States federal income tax purposes in connection with the receipt or exercise of subscription rights in the rights offering. For a detailed discussion, please see “Material United States Federal Income Tax Consequences.” You should consult your tax advisor as to the particular consequences to you of the rights offering. | |
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Issuance of Our Common Shares:
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| | If you purchase shares through the rights offering, we will issue the underlying shares to you as soon as practicable after the completion of the rights offering. | |
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No Recommendations to Rights Holders:
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| | An investment in our common shares must be made according to your evaluation of your own best interests and after considering all of the information herein, including the “Risk Factors” section of this prospectus supplement. Neither we nor our board of directors is making any recommendation regarding whether you should exercise your subscription rights. | |
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Use of Proceeds:
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| | The net proceeds will be used for the permitting, licensing, engineering, construction and operation of a rare earth separation and processing demonstration plant near the Company’s Bear Lodge REE Project and other general corporate purposes, with a portion to be used for the prepayment of outstanding indebtedness. Please see “Use of Proceeds” for a further explanation of our intended use of proceeds from this rights offering. | |
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Subscription Agent and Information Agent:
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| | Broadridge Corporate Issuer Solutions, Inc. will serve as the subscription agent and information agent in the rights offering. Computershare Investor Services Inc. will serve as a co-subscription agent in the rights offering with respect to those who hold our common shares in “street name” through a securities broker or dealer, bank or trust company or other participant in the book-based system administered by CDS. | |
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Risk Factors:
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| | Before investing in our common shares, you should carefully read and consider the information set forth in “Risk Factors” beginning on page S-18 of this prospectus supplement and beginning on page 9 of the accompanying prospectus, and all other information appearing elsewhere and incorporated by reference in this prospectus supplement and the accompanying prospectus. | |
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Trading of Common Shares:
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| | Our common shares are quoted on the OTCQB Venture Marketplace under the symbol “REEMF,” and the shares to be issued in connection with this rights offering will also be quoted on the OTCQB Venture Marketplace under the same symbol. | |
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Percentage of Maximum
Gross Proceeds Raised in Rights Offering |
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($ in thousands)
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15%
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50%
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75%
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100%
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Gross proceeds
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| | | $ | 3,809 | | | | | $ | 12,697 | | | | | $ | 19,045 | | | | | $ | 25,394 | | |
Estimated fees and expenses
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| | | | 300 | | | | | | 300 | | | | | | 300 | | | | | | 300 | | |
Net proceeds
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| | | $ | 3,509 | | | | | $ | 12,397 | | | | | $ | 18,746 | | | | | $ | 25,094 | | |
Intended use of net proceeds, listed in order of priority: | | | | | | | | | | | | | | | | | | | | | | | | | |
Prepayment of outstanding indebtedness(1)
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| | | | 1,012 | | | | | | 1,012 | | | | | | 1,012 | | | | | | 1,012 | | |
Permitting, licensing, engineering, construction and operation of rare earth separation and processing demonstration plant(2)
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| | | | 497 | | | | | | 9,385 | | | | | | 15,733 | | | | | | 22,082 | | |
General corporate purposes
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| | | | 2,000 | | | | | | 2,000 | | | | | | 2,000 | | | | | | 2,000 | | |
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Subscription price
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| | | | | | | | | $ | 0.24 | | |
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Net tangible book value per share as of September 30, 2021
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| | | $ | (0.002) | | | | | | | | |
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Increase in net tangible book value attributable to this rights offering
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| | | | 0.12 | | | | | | | | |
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As-adjusted net tangible book value per share after giving effect to the rights offering
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| | | | | | | | | | 0.12 | | |
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Dilution in net tangible book value per share to existing shareholders who participate in the rights offering
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| | | | | | | | | $ | 0.12 | | |
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As of September 30, 2021
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($ in thousands)
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Actual
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As Adjusted
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Pro Forma As
Further Adjusted |
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(unaudited)
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(unaudited)
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(unaudited)
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Cash and cash equivalents
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| | | $ | 447 | | | | | $ | 1,447 | | | | | $ | 26,541 | | |
Debt
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| | | $ | — | | | | | $ | 1,000 | | | | | $ | 1,000 | | |
Shareholders’ equity
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| | | | (254) | | | | | | (254) | | | | | | 24,840 | | |
Total capitalization
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| | | $ | (254) | | | | | $ | 1,445 | | | | | $ | 25,840 | | |
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