VANCOUVER, BRITISH COLUMBIA / ACCESSWIRE / January 7, 2020 / Blue Lagoon Resources Inc. ("Blue Lagoon" or "Company") (CSE:BLLG; FSE:7BL; OTC:BLAGF) is pleased to announce that further to its news release dated November 26, 2019, the Company and Mag One Products Inc. ("MOPI") and its wholly owned subsidiary, Mag One Operations Inc. ("Mag One") have signed a definitive earn-in and operating agreement (the "Agreement") dated January 6, 2020. Pursuant to the Agreement, the Company may acquire up to a 70% equity interest in Mag One by purchasing up to $5.25 million of shares of Mag One, a wholly owned subsidiary of MOPI (the "Transaction").
Mag One is a private company existing under the laws of Quebec that has an exclusive license with Tech Magnesium and is currently testing its proprietary process for the production of pure magnesium metal (99.9% Mg) from mine tailings. Funds invested by Blue Lagoon would allow Mag One to rapidly complete this phase of test work and move towards larger scale pilot plant demonstration testing. Mag One has already done extensive pilot scale testing of its patent pending high purity magnesium oxide (MgO) and amorphous silica (SiO2) process from these tailings and will use the funds provided by Blue Lagoon to complete this work and begin engineering efforts towards a commercial scale demonstration facility.
Pursuant to the Agreement, Blue Lagoon may purchase a 50% interest in Mag One by making cash investments in Mag One as follows: $100,000 upon the initial closing (the "Closing Date") including stock exchange filings; $300,000 within 3 months of the Closing Date; $750,000 within 8 months of the Closing Date; $1.1 million within 12 months of the Closing Date; and $1.5 million within 18 months of the Closing Date. Blue Lagoon may acquire an additional 20% interest in Mag One, subject to MOPI obtaining shareholder approval, by making an additional payment of $1.5 million within 24 months of the Closing Date. Closing of the Transaction is subject to various conditions, including completion of due diligence investigations, receipt of all necessary corporate and regulatory approvals, and compliance with stock exchange requirements.
Upon the Closing Date, the board of Mag One will be reconstituted to include two directors nominated by Mag One and one director nominated by Blue Lagoon. Blue Lagoon may nominate an additional director upon earning a 50% interest in Mag One, and thereafter may nominate an additional fifth director upon earning a 70% interest in Mag One.
The parties agreed to enter into a shareholder agreement prior to the consideration payment due 8 months from the Closing Date. Mag One will be solely funded through investments by Blue Lagoon under the Agreement until it completes its 70% earn-in, and thereafter each party will be responsible to fund its pro-rata share of operations or alternatively have its interest diluted on a straight-line dilution basis. Any party whose interest is diluted below a 10% ownership interest in Mag One will have its equity interest converted into a 1.5% gross revenue royalty.
For further information, please contact:
President and Chief Executive Officer
The CSE has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
Certain information contained herein constitutes "forward-looking information" under Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the completion of closing conditions including due diligence, the execution of a shareholder agreement, and completion of the joint venture with Mag One. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "intends", "believes", "plans to", "expects" or "it is expected", or variations of such words and phrases or statements that certain actions, events or results "will" occur. Forward-looking statements are based on information as of the date such statements are made and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, to be different, including due to: the receipt of all necessary regulatory approvals, the ability to complete share purchase, capital expenditures and other costs, and financing and additional capital requirements. Readers should not place undue reliance on forward-looking statements and forward looking information. Blue Lagoon does not undertake to update any forward-looking statements or forward-looking information that are incorporated by reference herein, except as required by applicable securities laws.
SOURCE: Blue Lagoon Resources Inc.
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