Alabama Graphite closes $2.87-million private placement

Jul 2, 2015

ALABAMA GRAPHITE ANNOUNCES CLOSING OF $2.875 MILLION BROKERED PRIVATE PLACEMENT

Alabama Graphite Corp. has closed its private placement as previously announced on June 17, 2015, led by First Republic Capital Corp., to raise gross proceeds of $2,875,000, which amount includes First Republic’s option to have sold such number of additional units as is equal to 15 per cent of the units sold under the private placement.

The Company issued 14,375,000 Units at a price of $0.20 per Unit to raise gross proceeds of $2,875,000. Each Unit is comprised of: (i) one common share of the Company (a “Share”); and (ii) one-half of one common share purchase warrant of the Company, with each whole common share purchase warrant (a “Warrant”) entitling the holder to purchase one additional common share of the Company at an exercise price of $0.35 until June 30, 2018 (the “Warrant Expiry Date”). In the event that the closing price of the Company’s common shares on the TSX Venture Exchange (or such other exchange on which the Company’s common shares may become traded) is $0.75 or greater per common share during any 20 consecutive trading day period at any time subsequent to four months and one day after the closing date, the Warrants will expire, at the sole discretion of the Company, at 4:00 p.m. (Vancouver time) on the 30th day after the date on which the Company provides notice of such accelerated expiry to the holders of the Warrants.

Related parties to Company subscribed for 455,000 Units in the Private Placement which in total is less than 25% of the Company’s market capitalization. The Company is therefore relying upon exemptions from the valuation and minority shareholder approval requirements contained in sections 5.5(a) and 5.7(1)(a) of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions.

The net proceeds from the sale of the Units will be used towards a drilling program on the Company’s Coosa & Bama Graphite Projects in Alabama, USA, the preparation of an updated mineral resource estimate for the Coosa Project, metallurgical testing both at the Coosa and Bama Projects, a preliminary economic assessment on the Coosa project, value added graphite (including battery/storage applications) & graphene initiatives and for working capital.

In connection with the Private Placement, the Company paid cash compensation of (i) a corporate finance fee equal to 2.5% of the gross proceeds raised from the sale of all Units, including Additional Units, to First Republic, and (ii) a sales commission equal to 5% of the gross proceeds raised from the sale of all Units, including Additional Units, under the Private Placement to First Republic and members of the selling group, and as additional compensation for acting as agent, the Company issued Agent’s warrants (the “Compensation Warrants”) to First Republic to purchase Units (the “Compensation Units”) comprised of (i) corporate finance Compensation Units equal to 2.5% of the total number of Units sold under the Private Placement (including Additional Units) at a price of $0.20 per Compensation Unit for a term of 24 months following the closing (the “Compensation Warrant Expiry Date”), and (ii) selling Compensation Units equal to 5% of the total number of Units sold under the Private Placement (including Additional Units) at a price of $0.20 per Compensation Unit until the Compensation Warrant Expiry Date. Each Compensation Unit consists of one common share of the Company (a “Compensation Unit Share”) and one-half of one share purchase warrant, each whole warrant (a “Compensation Unit Warrant”) entitling the holder thereof to purchase one common share of the Company at a price of $0.35 per share (an “Compensation Unit Warrant Share”) for a period of 36 months from issuance of the Compensation Unit Warrants.

All securities issued pursuant to the Private Placement will be subject to a four-month hold period expiring October 31, 2015.

A material change report will be filed less than 21 days prior to the closing of the Private Placement. The shorter period was necessary in order to permit the Company to close the Private Placement in a timeframe consistent with usual market practice for transactions of this nature.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities offered pursuant to the Private Placement have not been, and will not be, registered under the United States Securities Act of 1933, as amended or any U.S. state securities laws and may not be offered or sold in the United States or to United States persons absent registration or any applicable exemption from the registration requirement of the U.S. Securities Act and applicable U.S. state securities laws.

http://alabamagraphite.com/news/