ESG Capital 1 Inc. Enters Into Letter of Intent to Complete Qualifying Transaction With Full Circle Lithium Inc., The Canadian Business Journal

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TORONTO, Nov. 07, 2022 (GLOBE NEWSWIRE) — ESG Capital 1 Inc. (“ESG Capital”) (TSXV: ESGO.P) is pleased to announce that it has entered into a binding letter of intent dated November 4, 2022 (the “LOI”) with Full Circle Lithium Inc. (“Full Circle”) pursuant to which ESG Capital proposes to acquire all of the issued and outstanding securities of Full Circle in exchange for the issuance of securities of ESG Capital, which will result in Full Circle becoming a wholly-owned subsidiary of ESG Capital (the “Transaction”). The Transaction, assuming the completion of the Private Placement (as defined below), will result in a reverse take-over of ESG Capital where the existing shareholders of Full Circle will own a majority of the outstanding common shares of ESG Capital (the “ESG Capital Common Shares”) and ESG Capital is anticipated to be renamed, subject to shareholder approval, a name to be determined by Full Circle (the “Resulting Issuer”). Upon completion of the Transaction, it is anticipated that the Resulting Issuer will be an industrial issuer focused on lithium and battery materials reintegration.

Trading of the ESG Capital Common Shares will be halted in accordance with the policies of the TSX Venture Exchange (the “TSXV”) and will remain halted until such time as all required documentation in connection with the Transaction has been filed with and accepted by the TSXV and permission to resume trading has been obtained from the TSXV.

The Qualifying Transaction

ESG Capital is a capital pool company and intends that the Transaction will constitute its “Qualifying Transaction” under the policies of the TSXV. The Transaction will not constitute a non-arm’s length qualifying transaction or a related party transaction pursuant to the policies of the TSXV.

Pursuant to the terms and conditions of the LOI, ESG Capital and Full Circle will negotiate and enter into a definitive agreement (the “Definitive Agreement”) incorporating the principal terms of the Transaction as described in the LOI and this press release. There is no assurance that a Definitive Agreement will be successfully negotiated or entered into. The LOI is expected to be superseded by the Definitive Agreement to be negotiated between the parties.

As consideration for the acquisition of all of the outstanding securities of Full Circle, holders of issued and outstanding common shares of Full Circle (“Full Circle Common Shares”) will receive one (1) Resulting Issuer common share (the “Resulting Issuer Common Shares”) for each one (1) Full Circle Common Share (the “Exchange Ratio”). Excluding any securities issued in connection with the Private Placement (as defined below), immediately prior to the closing of the Transaction, it is anticipated that: (i) assuming completion of the anticipated exercise of all convertible securities of ESG Capital, holders of ESG Capital Common Shares will hold 3,500,000 ESC Capital Common Shares; (ii) holders of the unexercised Full Circle incentive stock options will be entitled to receive an aggregate of approximately 1,500,000 incentive stock options of the Resulting Issuer pursuant to the Exchange Ratio; and (iii) holders of the Full Circle common share purchase warrants will be entitled to receive an aggregate of approximately 1,314,400 common share purchase warrants of the Resulting Issuer pursuant to the Exchange Ratio. The final structure of the Transaction is subject to the receipt of tax, corporate and securities law advice by both ESG Capital and Full Circle.   

Immediately prior to the completion of the Transaction, it is anticipated that: (i) ESG Capital will consolidate its issued and outstanding ESG Capital Common Shares on the basis of approximately 1.17 pre-consolidation ESG Capital Common Shares for each one (1) post-consolidation ESG Capital Common Share (the “ESG Capital Consolidation Ratio”) as a condition to the completion of the Transaction (the “ESG Capital Consolidation”).   All incentive stock options of ESG Capital are anticipated to be adjusted on the basis of the ESG Capital Consolidation Ratio.

It is a condition of the Transaction for Full Circle to close a concurrent brokered and/or non-brokered private placement (the “Private Placement”) through the offering of subscription receipts (“Subscription Receipts”) of Full Circle. Immediately prior to the closing of the Transaction and assuming the other conditions applicable to the Subscription Receipts have been satisfied or waived, each Subscription Receipt shall be deemed to be exercised, without payment of any additional consideration, for an equivalent number of Full Circle Common Shares. Further terms and conditions of the Private Placement will be announced by the parties at a later date.

About Full Circle Lithium Inc.

Full Circle is a private company incorporated under the laws of the Province of Ontario, is a battery material processing company focused on lithium and battery materials reintegration. Full Circle has three main business segments: lithium-ion battery recycling, secondary feedstock recycling and lithium refining. Full Circle also leases, and has a right of first refusal to purchase, a lithium carbonate processing facility in Nahunta, Georgia (the “Facility”). Full Circle is currently refurbishing the Facility in order to have a name plate capacity processing capacity of 2,000 tonnes of lithium carbonate which is expected to be fully operational before year-end. Full Circle is also working on a number of lithium processing provisional patent applications which will serve as the base of the full range of services that Full Circle intends to pursue in its three main business segments.

Full Circle is completing the audit of its financial statements for the fiscal year ended October 31, 2022 in accordance with international financial reporting standards (IFRS), as required by the policies of the TSXV and applicable securities laws. 

Insiders of the Resulting Issuer

Upon completion of the Transaction, it is anticipated that the board of directors of the Resulting Issuer will be reconstituted to consist of such directors as may be determined by Full Circle. The senior management team of the Resulting Issuer will consist of those officers appointed by the new board of directors of the Resulting Issuer concurrent with the closing of the Transaction.

Biographical information regarding yet to be determined directors and officers will be provided in a subsequent news release.

Significant Conditions to Closing

The completion of the Transaction is subject to a number of conditions precedent, including but not limited to satisfactory due diligence review, negotiation and execution of the Definitive Agreement and accompanying transaction documents, approval by the boards of directors of each of ESG Capital and Full Circle, approval of the shareholders of each of ESG Capital and Full Circle for all matters required in connection with the Transaction, including the ESG Capital Consolidation and name change, ESG Capital having a minimum of $275,000 of net working capital immediately prior to the closing the Transaction, obtaining necessary third party approvals, TSXV acceptance, closing of the Private Placement for minimum aggregate gross proceeds to be determined by the parties and preparation and filing of a management information circular or filing statement outlining the definitive terms of the Transaction and describing the business to be conducted by the Resulting Issuer following completion of the Transaction, in accordance with the policies of the TSXV. There can be no assurance that the Transaction or the Private Placement will be completed as proposed, or at all.

The obligations of ESG Capital and Full Circle pursuant to the LOI shall terminate in certain specified circumstances, including by mutual agreement of the partiers or in the event that a condition precedent to the Transaction is not met and the party in whose favour such condition precedent exists does not waive such condition precedent.

Sponsorship

Sponsorship of a Qualifying Transaction is required by the TSXV unless a waiver from the sponsorship requirement is obtained. ESG Capital intends to apply for a waiver from sponsorship for the Transaction. There is no assurance that a waiver from this requirement will be obtained.

Additional Information

This is an initial press release. ESG Capital plans to issue a comprehensive press release in accordance with Policy 2.4 once it has entered into the Definitive Agreement to provide, among other things, selected information respecting Full Circle, the Private Placement and the additional biographies of the anticipated directors and officers of the Resulting Issuer. Additional information with respect to Full Circle and the Transaction will be included in ESG Capital’s management information circular or filing statement to be filed in connection with the Transaction, which will be available under ESG Capital’s SEDAR profile at www.sedar.com.

About ESG Capital 1 Inc.

ESG Capital is a capital pool company created pursuant to the policies of the TSXV. It does not own any assets, other than cash or cash equivalents and its rights under the LOI. The principal business of ESG Capital is to identify and evaluate opportunities for the acquisition of an interest in assets or businesses and, once identified and evaluated, to negotiate an acquisition or participation subject to acceptance by the TSXV so as to complete a Qualifying Transaction in accordance with the policies of the TSXV.

Forward-Looking Statements Disclaimer

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Certain information in this press release may contain forward-looking statements. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. ESG Capital assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward looking-statements unless and until required by securities laws applicable to ESG Capital. Additional information identifying risks and uncertainties is contained in filings by ESG Capital with the Canadian securities regulators, which filings are available at www.sedar.com.

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and, if applicable pursuant to TSXV requirements, majority of the minority shareholder approval. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the filing statement or management information circular to be prepared in connection with the Transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSXV has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this press release.

The ESG Capital Common Shares will remain halted until such time as permission to resume trading has been obtained from the TSXV. ESG Capital is a reporting issuer in Alberta, British Columbia, and Ontario.

For more information about ESG Capital, please contact Robert Pollock, Chief Executive Officer, at:

Robert Pollock
President, CEO, CFO, Corporate Secretary and Director
E: [email protected]
T: 416 214-9672

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