Ucore Updates and Reiterates Position on Acquisition of IBC
Halifax, February 21, 2019 - Ucore Rare Metals Inc. (TSXV: UCU) (OTCQX: UURAF) ("Ucore" or the "Company") announces its acknowledgement of a press release issued by IBC Advanced Technologies, Inc. ("IBC") on February 20, 2019, at 9:00 AM EST. This press release purports to announce IBC's decision to terminate the letter agreement, dated March 14, 2015, between Ucore and IBC, entitled "Option to Purchase IBC", as amended and extended (the "Option Agreement").
"This is not an unexpected maneuver on the part of IBC, as Ucore exercises its contractual right to acquire the target company," said Jim McKenzie, President and CEO of Ucore. "We believe IBC has materially appreciated in value since the execution of the Option Agreement. As with all assets experiencing appreciation, the vendor may be tempted to seek a progressively higher purchase price, or free agency, after a deal has already been fully secured."
"In turn, all corporate acquisitions will experience an inflection point prior to the completion of sale, when motivated parties will attempt to cast doubt on the unfolding events," continued McKenzie. "This is understandable and within the bounds of expectation. A frequent strategy is to allege 'manufactured breaches' by the purchaser. In the case at hand, IBC has approached Ucore with a number of professed material breaches, all of which Ucore categorically denies and contrary to IBC's claims, have been adequately addressed. Further, the major financial backers of Ucore have reviewed the IBC agreements and concur that allegations of material breach are invented and without merit."
"These financiers stand solidly behind Ucore," concluded McKenzie. " We have their full support for the Company's vision and plan to transition as a leading provider of advanced mineral separation products and services to the mining and minerals extraction sectors."
Background
Both sides in this contractual dispute are seeking court intervention to resolve the dispute and enforce compliance with the agreements between the parties. Ucore asserts the Option Agreement is a valid and enforceable agreement that has the express contractual support of IBC shareholders holding a majority of the shares of IBC. IBC alleges that the Option Agreement has been materially breached and is therefore subject to termination by IBC. The parties are also seeking redress for activities related to the Option Agreement and a completely separate and contractually independent letter agreement, dated April 29, 2014, between Ucore and IBC, entitled "Research Projects, Pilot Plant, Separation Plant and Prospective Joint Operating Enterprise", as amended (the "Research Agreement").
As mentioned in Ucore's earlier press releases and the Company's 2018 Q3 MD&A (filed on SEDAR on Nov. 29, 2018), the Company has retained the services of the international law firm of Dorsey & Whitney LLP as Ucore's U.S. legal counsel (with offices in Utah and Alaska) to facilitate the intended exercise of the Company's option to purchase IBC. Ucore believes that during the years in which IBC and Ucore have been working together, the business potential of IBC in the metals extraction and purification industry has increased immensely, thereby making decisions about short-term business objectives, day-to-day control and determining the priority of the parties' prospective joint venture projects a challenge to agree upon in regard to the implementation and launch of the high profile and co-marketed joint venture that had been earlier agreed to by the parties pursuant to the Research Agreement.
In addition, the financial opportunities and business potential that have emerged in the metals extraction and purification industry generally (especially in regard to technology metals such as lithium, cobalt, tungsten, and many more) have made it compelling for the Company to intend to exercise its option to acquire IBC. Ucore and IBC have exchanged detailed listings about concerns and sensitivities regarding the agreements between them, the mechanics and deliverables of the due diligence process inherent in the acquisition, as well as expectations regarding the transfer of the ownership of IBC. IBC has stated that it believes that the parties are on divergent paths and has demanded that the Company waive its rights under the Option Agreement or otherwise terminate the agreement. The Company does not intend to do so.
In late 2018, IBC attempted to assert that both the Option Agreement and the Research Agreement had already been terminated. The Company indicated that there are no written or verbal agreements to terminate either of these agreements, and reiterated that it will not be swayed in its intention to exercise the mutually binding and fully executed Option Agreement. IBC's press release of yesterday is contradictory to its earlier allegations that the Option Agreement had already been terminated by the parties, and adds substantial proof to Ucore's assertion that IBC's claim of termination in 2018 had no founding.
In early 2019, subsequent activities included: (i) Ucore's press release dated February 14, 2019 which was entitled "Ucore Initiates Acquisition of IBC"; (ii) Ucore's February 14, 2019 issuance of a Notice of Commencement related to the acquisition of IBC and the subsequent due diligence review process, and (iii) IBC's February 19, 2019, filing of a complaint in the Third District Court of the State of Utah alleging contractual, common law and statutory claims against Ucore. As referred to in Ucore's press releases dated November 28, 2018, December 11, 2018, and February 14, 2019, the interpretation of the contractual relationship between Ucore and IBC has come to include applications and complaints to the courts in both Nova Scotia and Utah.
Arbitration & Enforcement
Aside from the current court actions and applications in Nova Scotia and Utah, both the Research Agreement and the Option Agreement have arbitration clauses that may provide and allow for an orderly and structured forum to resolve these differences. The Company is hopeful that a structured approach to good-faith settlement negotiations, whether that being formal mediation, arbitration or otherwise, will expedite a satisfactory resolution between the parties that will allow for development of the opportunities that both parties envisioned at the onset of engaging in the various agreements amongst these parties.
About Ucore
Ucore Rare Metals is a development-phase company focused on rare metals resources, extraction and beneficiation technologies with near term potential for production, growth and scalability. The Company has a 100% ownership stake in the Bokan-Dotson Ridge Rare Earth Project. On March 31, 2014, Ucore announced the unanimous support of the Alaska State Legislature for Senate Bill 99 (2014), which authorized the AIDEA to issue up to USD $145 Million in bonds for the infrastructure and construction costs of the Bokan-Dotson Ridge Rare Earth Project.
Ucore's vision and plan is to transition as a leading nanotechnology company that provides mineral separation products and services to the mining and mineral extraction industry. This vision includes the development of a Strategic Metals Complex (initially announced on Nov. 15, 2016) in Ketchikan, Alaska and the development of the Company's rare earth minerals property located at Bokan Mountain in Alaska (technical report filed on SEDAR on March 14, 2013).
For further information, please contact Mr. Jim McKenzie, President & CEO of Ucore Rare Metals Inc. at: +1 (902) 482-5214 or visit http://www.ucore.com.
Cautionary Notes
This press release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts, that address future business acquisition activities (including related required financings), timelines, litigation outcomes, events or developments that the Company expects, are forward looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance or results and actual results or developments may differ materially from those in forward-looking statements. Ucore has assumed that it will in the near future be able to obtain interim financing and sufficient additional financing to acquire IBC in compliance with the terms contemplated in the existing agreements with IBC and its shareholders holding a majority of its shares. Ucore has also assumed that there will be no material adverse findings in its upcoming expected comprehensive due diligence review of IBC. Factors that could cause actual results to differ materially from those in forward-looking statements include: Ucore not being able to raise sufficient funds to acquire IBC (including the non-acquisition payments owed under the previous and existing agreements); adverse capital market conditions; unexpected due diligence findings; unexpected or adverse outcomes in the currently outstanding litigation matters between Ucore and IBC; resistance to or noncompliance by IBC or its key shareholders with the existing agreements; the emergence of alternative superior metallurgy and mineral separation technologies; the inability of IBC to retain its key staff members and clients; the inability of IBC to protect its intellectual property; unexpected transaction costs or other deal completion setbacks; the availability and procurement of any required interim financing that may be required; and general economic, market or business conditions.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined by the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/42979