BRZ Bearing Lithium Corp New

(TSXV: BRZ) Bearing Lithium Corp. (the "Company" or "Bearing") is pleased to announce it has entered into an arm’s-length definitive agreement (the "Agreement") dated June 21st 2022, with Lithium Power International Limited ("LPI") (Australian Securities reimbursement Exchange, (“ASX”), code LPI), its joint venture partner in the Maricunga Lithium Brine Project in Chile (the "Project"), pursuant to which LPI has agreed to acquire all of the issued and outstanding common shares of Bearing in an all share transaction to be completed by way of a statutory plan of arrangement (the "Transaction") under the provisions of the Business Corporations Act (British Columbia) as part of a three way transaction that consolidates 100% interest in the Project into a single entity (the “Consolidation”).

HIGHLIGHTS

• The merger of Bearing will be structured as a plan of arrangement whereby Bearing shareholders will receive 0.7 of an LPI share for every one Bearing share held (“Exchange Ratio”) (up to 94.5 million LPI shares) 1, and in addition Bearing shareholders will receive a cash distribution (by way of a capital return) estimated at C$0.02 per share.
• MSB SpA (a Chilean private entity which owns 31.31% interest in the Project) has also entered into a merger agreement with LPI whereby MSB SpA will receive 161.6 million LPI shares pursuant to the Consolidation. This transaction is subject to the approval of LPI shareholders.
• Based on the 1-month volume weighted average share price (“VWAP”) of Bearing and LPI at June 20th 2022 of C$0.218 and A$0.464 respectively, and current exchange rates, the value of the share consideration is C$0.293 per Bearing share, providing a total value of ~C$0.313 per share (including the capital return estimated at C$0.02 per share) – representing a 43% premium over Bearing’s 1-month VWAP price.
• Pursuant to the Agreement, LPI shares issued to Bearing shareholders are not subject to any hold period and will be freely tradable. 
• According to the Transaction, BRZ Options and Warrants which are not exercised prior to completion of the Transaction will remain outstanding and will automatically become exercisable for LPI ordinary shares based on the Exchange Ratio under their current terms.
• LPI announced in January 2022 that it intends to spin out its Western Australian lithium exploration assets into a separate entity with the expectation of unlocking accretive value for LPI shareholders. Should the spin-off take place, it will complete after closing of the Transaction, so Bearing shareholders holding LPI Shares at the time of the spin-out will then receive a pro-rated allocation of the shares in this new entity, subject to the terms of that transaction.

• Bearing currently has a 17.14% interest in the Project. As a result of the Consolidation, Bearing shareholders will have a 15.6% interest in LPI, which will hold:
  • 100% interest in the Project.
  • 100% interest in LPI’s Western Australian lithium exploration assets.
• Consolidating 100% of the Project into a single entity will eliminate the current fragmented ownership structure of the Project, which is expected to yield significant financial and corporate benefits, unlocking value for all of the joint venture stakeholders by creating one entity focused on advancing the Project, which will enhance the ability to arrange project financing, streamline the decision-making process and reduce overheads.
• Under the Agreement, LPI has agreed to fund 100% of the cash calls for the Project starting from January 2022 until completion which has provided approximately C$1 million of cash saving for Bearing. Consequently, Bearing estimates its net-cash balance at closing to be approximately C$2.6 million2, which will be distributed to Bearing shareholders as a capital return.
• The Consolidation has been unanimously endorsed by the Boards of all three shareholders of the Project: LPI, MSB SpA and Bearing.

Gil Playford, Chairman and CEO of Bearing stated: “The Bearing Board of Directors are in unanimous agreement with our MSB Joint Venture Partners, Lithium Power International (LPI) and Mr. Martin Borda the owner of MSB SpA to consolidate our ownership in MSB for an equity interest in ASX listed LPI, which will hold 100% of the Project. The Officers and Directors have agreed to vote in favor their stock and recommend to the Bearing Shareholders to vote in favor of the Transaction at the Annual and Special Shareholders Meeting to be held in September. The Board firmly believes the Bearing shareholders will benefit from the numerous advantages of consolidating 100% of the Project into LPI as well as substantially improved liquidity of LPI3."

Background

Bearing’s principal asset is its 17.14% interest in the Project. LPI is currently the majority partner in the Project with a 51.55% interest, along with a third joint venture partner (MSB SpA), who owns the remaining 31.31% interest (the "JV Partner"). Concurrently with the Agreement, LPI has also entered into a definitive agreement to acquire MSB SpA’s interest in the Project (the "JV Acquisition Agreement"), thereby consolidating a 100% interest of the Project into a single entity: LPI, following completion of the Consolidation.

Maricunga Lithium Brine Project

The Project is the most advanced, high-grade lithium salar in the Americas which is located in Salar de Maricunga, 170km northeast of Copiapó, in the Atacama Region of northern Chile. In January 2022, LPI announced the results of its updated Definitive Feasibility Study (“DFS”) for the Stage One Maricunga Lithium Brine Project, which supports 15,200 t/a production of battery grade lithium carbonate for 20 years. The DFS provides for a Project NPV (leveraged basis) of US$1.4B (after tax) at an 8% discount rate, providing an IRR of 39.6%, a 2-year payback and estimated steady-state annual EBITDA of US$324 million.

The study confirmed that Maricunga could be one of the world’s lowest-cost producers of lithium carbonate with an operating cost of US$3,718 per tonne not including credits from potassium chloride by-product. The Project will have an exceptional Environmental, Social, Governance (ESG) profile, aiming to achieving carbon neutrality, setting new standards for social/community relationships.

Fairness Opinion

The independent financial advisor to Bearing, Sequeira Partners (“Sequeira”), has provided a fairness opinion to the Board of Directors of Bearing dated June 19th 2022, which concludes that, based upon details of the Transaction [and such other matters as Sequeira], is of the opinion that the consideration to be received in the Transaction is fair, from a financial point of view, to the Bearing shareholders.

Exchange Ratio

Under the terms of the Agreement, Bearing shareholders will receive 0.7 of an ordinary share of LPI (each, an "LPI Share") for each one (1) common share in the capital of Bearing (each, a "Bearing Share") (the "Exchange Ratio").

The Transaction implies a value of the LPI Shares to be issued for Bearing of approximately $0.293 per Bearing Share on a fully-diluted basis (based on 1-month VWAP on June 21st, 2022 for Bearing of C$0.218 per share (excluding the capital distribution) and LPI of A$0.464 per share on their respective stock exchanges). In addition, each option and warrant to purchase a Bearing Share will entitle the holder thereof to receive LPI Shares upon exercise based upon the Exchange Ratio. Further discussion on options and warrants is provided under the heading “Options and Warrants” below

The implied price and premium for Bearing shareholders is based on a Canadian dollar/Australian dollar exchange rates using IRESS closing rates during the VWAP period.

Bearing Cash Distribution

Immediately prior to closing of the Transaction, Bearing intends to distribute approximately C$2.6 million to its shareholders, by way of a capital return (representing approximately C$0.02 per Bearing share)4.

Options and Warrants

Any Option or Warrant which is not exercised prior to completion of the Transaction shall continue to be governed by and be subject to the terms of the applicable Option or Warrant agreements but will automatically become exercisable for LPI Shares based on the Exchange Ratio.

The distribution of available excess cash to Bearing shareholders under the Transaction does not include cash received from the exercise of Options or Warrants post this announcement of the Bearing Transaction. Any funds received by Bearing from the exercise of its Options or Warrants between announcement of the Transaction and completion are to remain in the business on completion of the Transaction.

Highlights of the Consolidated Company

• As consideration for the Transaction, LPI will issue up to 76.3 million LPI Shares for Bearing’s common shares on issue, and up to a maximum 18.2 million LPI Shares for the Options and Warrants assuming all Options and Warrants are exercised prior to completion of the Transaction, for a total of 94.5 million LPI Shares.
• The consolidation of 100% of the Project into LPI will provide benefits to Bearing Shareholders from enhanced market positioning, larger free float and trading liquidity, broader research coverage, deeper access to debt and equity capital markets and potential inclusion in relevant ASX indices.

• The consolidated company will be able to source funding from a wider range of capital partners than any of the Project partners would be able to access on their own.

Spin off of LPI’s Western Australian lithium Exploration assets

On January 12th 2022, LPI announced to the ASX that it intends to spin out its Western Australian lithium exploration assets (“WA Spin-off”) into a separate entity ("DemergeCo") with the intention of unlocking strategic value of these assets and to allow LPI to focus on developing the flagship Maricunga project in Chile. LPI have undertaken that this spin off will occur subsequent to the Closing of the Transaction with Bearing, and as such, Bearing shareholders holding LPI Shares at the time of the spin-out will participate in the WA Spin-off and will receive their pro-rated allocation of shares in DemergeCo.

LPI’s Western Australian lithium exploration assets comprise:

• Greenbushes tenements cover approximately 40,000 hectares located immediately along strike from the Talison mine which is the world’s largest hard rock lithium producer owned by Albemarle and Tianqi of China.
• Pilgangoora tenements cover approximately 14,000 hectares adjacent to assets owned by Pilbara Minerals

Further information can be found on LPI’s website at https://lithiumpowerinternational.com

Required Approvals and Timeline

The implementation of the Transaction will be subject to the approval of at least 66 ⅔% of the votes cast by holders of Bearing Shares at an annual and special meeting of Bearing shareholders expected to take place in August or September, 2022. In addition to the shareholder approvals, the Transaction is also subject to the receipt of certain regulatory, court and stock exchange approvals and other closing conditions customary in transactions of this nature. The Transaction is expected to close in September 2022.

Although under ASX listing rules, the Transaction would be subject to the approval of LPI shareholders (a simple majority vote of those shareholders attending being required), LPI has undertaken to seek a waiver of this requirement from ASX as soon as practical. If a waiver is not granted, the directors of LPI have undertaken to enter into voting support agreements with Bearing committing to vote their shares in favor of the Transaction at the meeting of LPI shareholders.

The issuance of LPI Shares under the JV Acquisition Agreement is subject to the approval of the LPI shareholders and the receipt of certain regulatory, court and stock exchange approvals, and other closing conditions customary in transactions of this nature.

Agreement – other provisions

The Agreement includes a non-solicitation covenant of Bearing and gives Bearing the right to accept a superior proposal in certain circumstances and terminate the Agreement in exchange for a C$2.5 million termination fee. LPI has a five-business day right to match any superior proposal. The Agreement also includes the mutual payment of C$1 million in respect of reimbursement expenses related to the Transaction in certain circumstances. Bearing has the right to terminate the Agreement if the JV Acquisition Agreement does not proceed.

The WA Spin-off will be executed after the Transaction and, as such, should the Transaction complete Bearing shareholders will receive a pro-rata interest in the DemergeCo.

Further information regarding the Transaction will be contained in an information circular ("Circular") that Bearing will prepare, file and mail in due course to its shareholders in connection with the annual and special meeting of the Bearing shareholders to be held to consider the Transaction. All shareholders are urged to read the information circular once available as it will contain additional important information concerning the Transaction. The Agreement will be filed on the SEDAR profiles of Bearing on the SEDAR website at www.sedar.com.

Proforma Holdings

Post Consolidation, Bearing shareholders will hold a ~15.6%5 interest in the proforma LPI that will hold 100% of the Project.

Entity	MaximumNumber of Shares(millions)	% Interest inProformaLPI
LPI Current Ordinary Shareholders	349.1	57.7%
MSB SpA	161.66	26.7%
Bearing Shareholders	94.57	15.6%
Total LPI Ordinary Shares Outstanding	605.2	100.0%

Indicative Timetable

LPI Shareholder Meeting to approve the Consolidation transactions	August 2022
Bearing Shareholder Meeting to approve the Transaction	August / September 2022
Completion of the Transaction	September 2022
WA Spin-off	Post completion of the Transaction

Bearing Board of Directors’ Recommendation and Voting Support

The Transaction has been unanimously approved by the Bearing Board of Directors, which will be recommending shareholders to vote in favor of the Transaction at the upcoming annual and special meeting of Bearing shareholders.

Directors and officers of Bearing, representing 10.3% of the Bearing shares on issue have also indicated their support for the Transaction, via voting and support agreements, confirming their intent to vote in favor.

LPI Board of Directors’ Recommendation

The Transaction has been approved by the LPI Board of Directors (other than Martin Borda who abstained due to his interest in the JV Acquisition Agreement), which will be recommending that LPI shareholders vote in favor of the Consolidation at the upcoming shareholder meeting.

Statement of LPI

LPI’s Chairman, David Hannon said: “We are extremely pleased to have reached an agreement with both MSB SpA and Bearing to consolidate 100% ownership of Maricunga. The updated DFS released on 20 January 2022 demonstrates that Maricunga could be one of the lowest cost producers of lithium carbonate in the world, with the Project’s strong economics underpinning a highly attractive asset.”Statement of MSB SpA

Martin Borda, the owner of MSB SpA (current 31.13% owner of the Project) and a director and substantial shareholder of LPI, said: “I am excited to consolidate ownership of Maricunga in a logical transaction that places the Company ideally to pursue the development of the Project and greatly enhances LPI’s ability to deliver the full value of the Maricunga project to LPI’s shareholders.”

Advisors

DS Lawyers Canada LLP acted as legal advisors and Torretti y Cia acted as Chilean legal advisors to Bearing in relation to this transaction.

Other

There may be potential tax consequences associated with the Transaction. See "Forward-Looking Information and Disclaimers" below.

For more information, please visit www.bearinglithium.com and www.sedar.com BRZ.V.

For more Information, please contact:

Ray BaterinaCorporate SecretaryInfo@bearinglithium.com604-262-8835

Forward-Looking Information and Disclaimers

Certain information contained in this news release may be deemed “forward-looking” within the meaning of applicable securities laws. Forward-looking statements and information relate to future events and future performance and reflect Bearing and LPI’s expectations regarding the execution of business strategy, future development and construction, future growth, estimated costs, results of operations, the terms of the Transaction, the anticipated cash distribution, the anticipated WA Spin-off, business prospects and opportunities of Bearing, LPI and the JV Partner. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects" or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "estimates" or "intends", or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved) are not statements of historical fact and may be forward- looking statements.

Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those expressed in the forward-looking statements and information. They include, among others, the accuracy of mineral reserve and resource estimates and related assumptions, inherent operating risks, the failure to obtain shareholder, regulatory or court approvals in connection with the Transaction, adverse changes in the construction timetable or progress at the Project, and those risk factors identified in Bearing’s Management Discussion and Analysis, prepared and filed with securities regulators which is available on SEDAR at www.sedar.com under the Bearing’s name.

Forward-looking statements are not a guarantee of future performance and involve a number of risks and uncertainties, some of which are described herein. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause Bearing's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the risk that the Transaction is delayed or is not completed for any reason, the risk that the anticipated benefits of the Transaction are not realized, the risk that the cash distribution is less than anticipated or does not become payable for any reason, the risk that the WA Spin-off is not completed for any reason, the actual results of Bearing's future operations, factors beyond Bearing's control, and the risks identified in Bearing's management discussion and analysis for the period ended January 31, 2022 (the “MD&A”), which are available for viewing on SEDAR at www.sedar.com. There is no assurance that any amount will become payable under the cash distribution. Any forward-looking statements are made as of the date hereof and, except as required by law, Bearing assumes no obligation to publicly update or revise such statements to reflect new information, subsequent or otherwise.

There may be tax consequences for Bearing shareholders associated with the Transaction, including: (1) consequences associated with the exchange of shares of a Canadian corporation for shares of an Australian corporation; and (2) additional Chilean tax consequences for Bearing shareholders who own or control 10% or more of the Bearing Shares at closing date (inclusive of stock options, warrants, and Bearing Shares sold within 12 months prior to the closing of the Transaction). Shareholders should consult with their tax advisors and refer to the information contained in the Circular.

The mineral report for the Project dated January 7, 2022 referred to herein (and available on the Corporation's SEDAR profile) at www.sedar.com was prepared by Worley and Atacama Water for MSB and was prepared to provide a National Instrument 43-101 (“NI 43-101”) compliant Definitive Feasibility Study (“DFS”) of the Project. Resource estimates for the Project are for lithium and potassium contained in brine. The DFS report was prepared under the guidelines of NI 43-101 and in conformity with its standards.

All items related to geology, hydrogeology, mineral resources and reserves were prepared by Atacama Water. Peter Ehren was responsible for preparing all technical items related to brine chemistry and mineral processing. Capital and operating expenditures mentioned in the NI 43-101 report were estimated by Worley, relying on quotations requested from equipment, chemicals and other suppliers, as well as from its project data base. Worley relied extensively on Minera Salar Blanco and its consultants, as cited in the text of the study and the references, for information on future prices of lithium carbonate, legislation and tax in Chile, as well as for general project data and information. The report was reviewed by Mr. Marek Dworzanowski, CEng., BSc (Hons), HonFSAIMM, FIMMM of Worley, Mr. Peter Ehren, MSc, MAusIMM and Mr. Frits Reidel, CPG. Mr. Marek Dworzanowski, Mr. Peter Ehren and Mr. Frits Reidel are “qualified persons” (QP) and are independent of MSB as such terms are defined by NI 43-101.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the U.S. Securities Act or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available

Reader Advisory

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1 Assumes all outstanding options and warrants are exercised resulting in 135.1 million Bearing Shares. 2 The net-cash balance excludes any proceeds from the exercise of Bearing options and warrants.3 Over the last 20 trading days up to and including June 21st, 2022, Bearing averaged 22,585 shares traded daily (including two days with no trading volume), while LPI averaged 5.405 million shares traded daily or approximately 239 times more daily trading volume.4 Based on the fully diluted number of shares on issue. Assumes all outstanding options and warrants are exercised resulting in 135.1 million BRZ shares.6 Martin Borda, the owner of MSB SpA already holds ~16.3m shares in LPI. The number stated in this table only states the shares issued to MSB SpA as part of the Transactions. Post completion of the Transactions MSB SpA, controlled by Martin Borda, will hold an interest in LPI of 177.8m LPI shares 7 Shows fully diluted Bearing shares including all Options and Warrants, some Options and Warrants and not currently in-the-money based on the offer price.