Geomega Enters Into Patent Ownership and Royalty Agreement with CTO and Closes First Tranche of Convertible Debenture Financing

MONTREAL, QUEBEC, Aug 14, 2017 (Marketwired via COMTEX) — MONTREAL, QUEBEC–(Marketwired – Aug. 14, 2017) – Geomega Resources Inc. (“GéoMégA” or the “Corporation”) (GMA) is pleased to announce that the Corporation and Innord entered into a patent ownership and royalty agreement with its Chief Technology Officer, Dr. Pouya Hajiani, to insure the long-term development and commercialization of the Corporation’s proprietary rare earths extraction and separation technologies (the “Agreement”). In addition, the Corporation announces that it has closed a first tranche of $235,000 of a non-brokered private placement (the “Offering”) of units (the “Units”). Each Unit is comprised of one unsecured convertible debenture (each a “Convertible Debenture”) in the principal amount of $1,000 and 5,000 common share purchase warrants (the “Warrants”).

The Offering

The Convertible Debentures have a two (2) year maturity date (the “Maturity Date”) and bear an interest of 10% per annum, compounded quarterly and payable quarterly in arrears. The Corporation has the option to pay such interest by delivering such number of common shares of the Corporation (the “Common Shares”) as may be required, at an issue price per share based upon the 20-day volume weighted average price (“VWAP”) of the Corporation’s common shares on the TSX Venture Exchange (“TSXV”) on the due date of the quarterly interest payment. Any such interest payment in Common Shares shall be subject to the approval of the TSXV.

Each Warrant will entitle the holder to purchase one Common Share (each a “Warrant Share”) at a price of $0.10 per Warrant Share for a period of twelve (12) months from the closing of the Offering and thereafter at a price of $0.12 per Warrant Share until the date which is twenty-four (24) months from the closing of the Offering.

The Convertible Debentures will be convertible into Common Shares at the option of the holder at any time prior to the close of business on the Maturity Date based on the following conversion price, subject to adjustment in certain events (the “Conversion Price”): (i) at a price of $0.10 per Common Share if converted during the period of twelve (12) months from the closing of the Offering; and (ii) at a price of $0.12 per Common Share if converted during period following the twelve month (12) anniversary of the closing of the Offering until the date which is twenty-four (24) months from the closing of the Offering.

The Convertible Debentures will be subject to redemption, in whole or in part, by the Corporation should the Corporation realize gross proceeds from a subsequent private placement of securities or as a result of the exercise of the Warrants in an amount equal to the gross proceeds of the Offering at any time following the closing of the Offering upon giving the holders of the Convertible Debentures not less than 30 and not more than 60 days’ prior written notice, at a price equal to the then outstanding principal amount of the Convertible Debentures plus all accrued and unpaid interest up to and including the redemption date plus a redemption premium as follows: (i) 10% during the first six (6) months following the closing of the Offering; (ii) 5% from the six (6) month anniversary of the closing of the Offering to the twelve month (12) anniversary following the closing of the Offering; (iii) 3% following the twelve month (12) anniversary following the closing of the Offering until the Maturity Date. A holder of Convertible Debentures may elect to convert its Convertible Debentures by providing the Corporation with a written notice to that effect within five (5) business days of the receipt by the holder of the redemption notice.

Certain members of the board and executive management of the Corporation, being Gilles Gingras, a director of the Corporation, Kiril Mugerman, the President and Chief Executive Officer, and Ingrid Martin, the Chief Financial Officer, have participated in this first closing of the Offering in the aggregate amount of $60,000 (the “Insiders’ Participation”). The Insiders’ Participation is considered a “related party transaction” under Regulation 61-101 respecting Protection of Minority Security Holders in Special Transactions (Québec) (“Regulation 61-101”) and the corresponding Policy 5.9 of the TSXV; however, the Insiders’ Participation is exempt from the formal valuation and minority shareholder approval requirements provided under Regulation 61-101 in accordance with sections 5.5(a) and 5.7(1)(a) of said Regulation 61-101. The exemption is based on the fact that neither the market value of the Insiders’ Participation nor the consideration paid therefor exceeds 25% of the Corporation’s market capitalization. The Corporation did not file a material change report at least 21 days prior to the first closing of the Offering since the Insiders’ Participation was not determined at that moment and the Corporation wished to close the Offering on an expedited basis for sound business reasons.

The Corporation intends to use the proceeds from this Offering to advance the ongoing research and development work being undertaken by Dr. Hajiani and Innord, to secure additional Provincial and Federal supported funding for the Corporation’s and Innord’s objectives and for ongoing working capital needs.

The securities issued in connection with the Offering will be subject to a four-month hold period, in accordance with applicable securities laws.

The Patent Ownership and Royalty Agreement

The Agreement will replace the 2013 agreement (see January 14, 2014 press release) that granted Dr. Hajiani 1,000,000 common…