Alabama receives takeover offer from U.S. microcap firm

Sep 20, 2017

2017-09-20 08:47 ET – News Release

Mr. Donald Baxter reports

ALABAMA GRAPHITE RECEIVES UNSOLICITED INDICATIVE PROPOSAL FOR ACQUISITION; BOARD OF DIRECTORS APPOINTS SPECIAL COMMITTEE

Alabama Graphite Corp. has appointed a special, independent committee, led by and comprising Dr. Gareth P. Hatch, CEng, FIMMM, FIET — an independent director of the company — to carefully review and consider an unsolicited, non-binding proposal that was received from a United States-based, arm’s-length, public, microcap, prerevenue, junior mining development company relating to a potential offer for all of the issued and outstanding common shares in the capital of the company. Pursuant to the terms of a confidentiality agreement and the Interested Party’s separate request, the Company is withholding the name of the Interested Party. According to publicly available records, the Interested Party has less than USD$7 million in unrestricted cash and a market capitalization of approximately USD$35 million.

The Interested Party’s indicative offer was conditional and non-binding. Pursuant to this offer, it was proposed that the shareholders of Alabama Graphite would receive no cash and would receive, in exchange for each common share of the Company (the “AGC Shares”), one-tenth (0.10) of one (1) common share of the Interested Party. In other words, under the terms of the proposal, ten (10) AGC Shares would be exchanged for one (1) common share of the Interested Party. If implemented, the shareholders of Alabama Graphite would become minority shareholders of the Interested Party.

The Special Committee, with the assistance of advisors and the full cooperation and support of the Company’s staff including the rest of the Board of Directors, will carefully review and consider the proposal by the Interested Party. While being respectful and prudent in regard to the Company’s financial resources, the Special Committee will, among other things: investigate the merit of the proposal; determine whether the offer fairly values the Company on an en bloc basis; investigate whether the all-stock consideration being offered is speculative in nature; consider whether it is reasonable to expect that the offer could be materially improved through negotiation; determine whether the Company is instead ready for an auction process or whether the Company’s present circumstances and timing would only result in an opportunistic, strong-armed and/or coercive offer as compared to what could reasonably be expected to be achieved once some additional progress and milestones are accomplished. In doing so, the Special Committee and the Board of Directors are determined to make decisions and take actions that are in the best interests of the Company taking into account the interests of the Company’s securities holders and other significant stakeholders.

Alabama Graphite did not initiate, nor has it encouraged any change of control conversations with the Interested Party. In addition, to the Company’s knowledge, no shareholder of the Company has agreed to a lock-up or support agreement with the Interested Party. There is no assurance that the Interested Party will actually proceed with making a formal offer and there is no assurance at this time that the Special Committee and/or the Board of Directors would support any such offer. There is also no assurance that the Special Committee will recommend that an auction process be commenced and it is quite possible that the Board of Directors will eventually determine that it is in the best interests of the Company at this time to continue to pursue its goals and business plans with no concurrent supplementary search for a change of control transaction in the near term.

ABOUT ALABAMA GRAPHITE CORP.

Alabama Graphite Corp. is a Canadian-based flake graphite exploration and development company as well as an aspiring battery materials production and technology company. The Company operates through its wholly owned subsidiary, Alabama Graphite Company Inc. (a company registered in the state of Alabama ). With an advancing flake graphite project in the United States of America, Alabama Graphite Corp intends to become a reliable, long-term U.S. supplier of specialty high-purity graphite products. A highly experienced team leads the Company with more than 100 years of combined graphite mining, graphite processing, specialty graphite products and applications, and graphite sales experience. Alabama Graphite Corp. is focused on the exploration and development of its flagship Coosa Graphite Project in Coosa County, Alabama, and its Bama Mine Project in Chilton County, Alabama as well the research and development of its proprietary manufacturing and technological processing process of battery materials. Alabama Graphite Corp. holds a 100% interest in the mineral rights for these two U.S.-based graphite projects, which are both located on private land. The two projects encompass more than 43,000 acres and are located in a geopolitically stable, mining-friendly jurisdiction with significant historical production of crystalline flake graphite in the flake graphite belt of central Alabama, also known as the Alabama Graphite Belt (source: U.S. Bureau of Mines). A significant portion of the Alabama deposits are characterized by graphite-bearing material that is oxidized and has been weathered into extremely soft rock. Both projects have infrastructure in place, are within close proximity to major highways, rail, power and water, and are approximately three hours (by truck or train) to the Port of Mobile, the Alabama Port Authority’s deep-seawater port and the ninth largest port by tonnage in the United States (source: U.S. Army Corps of Engineers/USACE). The state of Alabama’s hospitable climate allows for year-round mining operations and the world’s largest marble quarry (which operates 24 hours a day, 365 days a year in Sylacauga, Alabama), is located within a 30-minute drive of the Coosa Graphite Project. On November 30, 2015, Alabama Graphite Corp. announced the results of PEA for the Coosa Graphite Project, indicating a potentially low-cost project with potential positive economics. Please refer to the Company’s technical report titled “Alabama Graphite Corp. Preliminary Economic Assessment (PEA) on the Coosa graphite Project, Alabama, USA” dated November 27, 2015, prepared by independent engineering firms AGP Mining Consultants Inc. and Metal Mining Consultants Inc., and filed on SEDAR at www.sedar.com. Note: a Preliminary Economic Assessment or PEA is preliminary in nature, it includes inferred mineral resources that are considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty that the preliminary economic assessment will be realized.

* Inferred Mineral Resources represent material that is considered too speculative to be included in economic evaluations. Additional trenching and/or drilling will be required to convert Inferred Mineral Resources to Measured or Indicated Mineral Resources. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. There is no guarantee that all or any part of the Mineral Resource will be converted into a Mineral Reserve.

We seek Safe Harbor.

http://alabamagraphite.com/news-releases-2017/