| | | Mason to Acquire Graphene Tech from Thomas Swan through Black Swan Graphene Inc.
2021-07-26 10:55 ET - News Release
Mr. Fahad al-Tamimi reports
MASON GRAPHITE ANNOUNCES INVESTMENT IN NEW GRAPHENE VENTURE
Mason Graphite Inc. has launched Black Swan Graphene Inc. and executed, on July 21, 2021, of a definitive agreement pursuant to which Mason Graphite has agreed, through Black Swan Graphene, to purchase strategic assets related to a patented graphene processing technology from Thomas Swan & Co. Ltd., a leading United Kingdom based specialty chemical company founded in 1926 exporting today to over 80 countries.
On closing of the joint venture transaction, Mason Graphite and Thomas Swan will own respectively 66.67 per cent and 33.33 per cent of Black Swan Graphene, which is expected to proceed to a going-public transaction in the coming months.
Since 2012, Thomas Swan has been developing a graphene processing technology, which has now been upscaled three times, from lab scale, through pilot scale to commercial scale. The process allows for the production of high performance graphene at a cost sufficiently low to engender rapid commercial penetration in industrial applications requiring large volumes of graphene and, in turn, requiring large volumes of graphite. The graphene produced by Thomas Swan has reached significant commercial achievements, having undergone thorough customer testing and qualification processes by globally recognized companies in different manufacturing sectors and electronics, notably for mobile handsets, and is expected to be widely used in off-the-shelf products in a near future.
The potential for battery applications was also recently evidenced with the announcement of a collaboration agreement with Johnson Matthey PLC, to use the graphene developed by Thomas Swan to enhance the overall performance of traditional lithium-ion and next-generation batteries (see a joint press release issued on June 22, 2021). Johnson Matthey, an FTSE 100 company listed on the London Stock Exchange, is a global leader in sustainable technologies and innovative battery materials that are expected to significantly improve range and cost of electric vehicles.
In addition to the assets related to the graphene processing technology and associated know-how to be sold to Black Swan Graphene, Thomas Swan will also contribute its exclusive production and commercialization expertise while providing access to subject matter expertise, such as access to personnel and technical support, and deliverables from its operation in northern England. Black Swan Graphene aims to establish a large-scale commercial production facility in Quebec, Canada, in order to leverage the province's competitive and green hydroelectricity as well as the proximity of Mason Graphite's planned production sites. These factors are key and will accelerate the production and commercialization of the graphene developed by Thomas Swan by integrating the supply chain and lowering production costs.
Graphene was first isolated in 2004 in Manchester, United Kingdom, leading to the award of the Nobel Prize in Physics to the two physicists behind the achievement. Similar to the emergence of carbon-fibre technologies of the 1990s, the ability to produce large quantities of graphene at low cost is critical to large-scale commercialization.
Graphene can notably be used to strengthen polymers with obvious applications in the lightweighting of the transportation industry. The polymer additive market is approximately $46-billion (U.S.) annually. Graphene also renders plastics recyclable and is expected to play a significant role in the global effort from governments worldwide to ban single-use plastics. Graphene is also a replacement of carbon black, which has an annual market of more than $17-billion (U.S.). Moreover, graphene is expected to support a breakthrough in lithium-ion battery technology as it allows for a meaningful increase in the silicon content of the battery anode, hence improving battery performance.
Furthermore, graphene can be used in concrete, resulting in a stronger, significantly less permeable and longer-lasting concrete able to achieve equivalent strength while using less volume of materials. As concrete is responsible for approximately 8 per cent of global greenhouse gas emissions, the reduction of concrete usage is paramount in the fight against climate change. Black Swan Graphene will benefit from an established and exclusive commercial relationship between Thomas Swan and Concrene Ltd., a United Kingdom based private nanotechnology company, which has developed a breakthrough graphene-based solution for the concrete industry.
Harry Swan, chief executive officer and owner of Thomas Swan, commented: "After a thorough review of the carbon industry and a long discussion process with several market participants, we are very excited to start this new venture with Mason Graphite, which is advancing a unique graphite project, developing a broad range of carbon-related products and working with several high-profile technical partners. This partnership creates a more efficient supply chain, which will solidify and accelerate the deployment of our graphene processing technology within a burgeoning industry."
Fahad al-Tamimi, chairman of Mason Graphite, commented: "We couldn't be more excited to embark on this new venture with Thomas Swan, a highly respected and dynamic company, in the promising world of graphene. Graphene is no longer theoretical, but undergoing a transformative progress in applications, production and commercialization. Yet, very few companies are able to produce high performance graphene at a cost sufficiently low to penetrate industrial markets; I believe Black Swan Graphene will be one of them. Not only this new venture is expected to create meaningful graphite demand and is therefore a natural extension of the Lac Gueret graphite project, but it truly transforms the company's potential as it elevates Mason to a pre-eminent position within the fastest-growing segment of the carbon industry."
Corporate leadership
The board of Black Swan Graphene will comprise two nominees from Thomas Swan and four nominees from Mason Graphite.
Thomas Swan's nominees are expected to be Harry Swan, chief executive officer and owner of Thomas Swan, and Michael Edwards, business director, advanced materials, of Thomas Swan. Mason Graphite's nominees are expected to be Peter Damouni, executive director of Mason Graphite; Dr. David Deak, an expert in materials science with significant experience in battery materials, including having led special supply chain projects and battery engineering programs for Gigafactory 1 at Tesla Inc. (see full biography herein); Roy McDowall, a director of Mason Graphite; and Simon Marcotte. While Mr. Marcotte will remain as a consultant to Mason Graphite and continue to support specific initiatives undertaken by the company in recent months, for the sake of impartiality, he will step down from the board of Mason Graphite, effective immediately, and will join the board of Black Swan Graphene on the closing of the transaction. Francois Perron will join the board of Mason Graphite, effective immediately (see biography herein).
Mr. al-Tamimi added: "I also take this opportunity to welcome Francois to the board of Mason Graphite. His experience and insight in the mining industry, especially in Quebec, are sure to be highly valuable to the company."
Details of the transaction
On closing of the transaction, Thomas Swan will receive three million British pounds and shares representing 33.33 per cent of Black Swan Graphene's issued and outstanding capital. Closing of the transaction is expected to take place on or around Aug. 19, 2021. Mason Graphite will also invest $2.5-million in Black Swan Graphene for working capital purposes and will hold a 66.67-per-cent equity interest in Black Swan Graphene.
On closing of the transaction, among other things: (i) Black Swan Graphene will enter into a licence agreement with Trinity College Dublin for the production of exfoliated defect-free, non-oxidized 2-D materials in large quantities (the TCD licence), currently covered under a licence agreement between Trinity College Dublin and Thomas Swan; (ii) Black Swan Graphene and Thomas Swan will also enter into, among other things, the services agreement, a licence agreement, whereby Black Swan Graphene will license the graphene processing technology to Thomas Swan for a production of up to 1,000 tonnes per year, and a sublicence agreement, whereby Black Swan Graphene will sublicense the TCD licence to Thomas Swan; and (iii) Black Swan Graphene, Thomas Swan and Mr. al-Tamimi will enter into an option agreement, pursuant to which: (a) Thomas Swan will be granted a put option to be exercised concurrently with or immediately within 30 days following the closing of the transaction to sell shares of Black Swan Graphene representing up to 8.33 per cent of the outstanding shares of Black Swan Graphene to Mr. al-Tamimi or any assignee of Mr. al-Tamimi for a cash consideration of up to 562,000 British pounds; and (b) Mr. al-Tamimi or any assignee of Mr. al-Tamimi will be granted a call option to acquire from Thomas Swan shares of Black Swan Graphene representing up to 8.33 per cent of the outstanding shares of Black Swan Graphene for a cash consideration of up to 562,000 British pounds during this same period; with the put option and the call option being combinable to result in up to all of the shares of Black Swan Graphene representing 8.33 per cent of the outstanding shares of Black Swan Graphene to be purchasable by Mr. al-Tamimi or any assignee of Mr. al-Tamimi under the option agreement.
Dr. David Deak
Dr. Deak is president of Marbex LLC, running a portfolio of projects at the interface between mining, energy and technology domains -- with a special focus on lithium and related battery materials. Dr. Deak has built his career advancing initiatives in lithium mining, renewable energy, energy storage and electric vehicles. He was recently the chief technology officer and senior vice-president of Lithium Americas Corp., where he spearheaded technical, project and marketing developments of two major lithium assets in Nevada and Argentina. Before Lithium Americas, Dr. Deak led special supply chain projects and battery engineering programs for Gigafactory 1 at Tesla. Prior to working in the electric vehicle business, he managed product and process development programs for Ambri Inc., a energy storage start-up backed by Bill Gates and spun out of the Massachusetts Institute of Technology. Dr. Deak has also acted as a consultant for multinational engineering conglomerates, start-ups, government entities and institutional investors, involving projects from technology scouting to materials supply chain analysis. His professional career started in the chief technology officer's office at Siemens Wind Power in Denmark, where he focused on supplier technology development and component warranty cases. Dr. Deak holds a DPhil in materials science from Oxford University and a BASc in engineering science from the University of Toronto.
Francois Perron
Mr. Perron is currently president and chief executive officer of Lucky Minerals Inc., a company listed on the TSX Venture Exchange, as well as chairman of Northern Superior Resources Inc. and president and a director of Goldstar Minerals Inc., both of which are TSX-V-listed companies advancing assets in the province of Quebec. Prior to his corporate involvement, Mr. Perron was managing resource-focused portfolios for National Bank Alternative Investments and various resource funds for the Caisse de depot et placement du Quebec from 2001 to 2007. In 2006, he was recognized by Brendan Woods International as a Top Gun asset manager in mining. In 2008, Mr. Perron was appointed president and chief executive officer of Golden Goose Resources Inc., a TSX-V-listed company that was subsequently acquired by Kodiak Exploration Ltd. in 2010. In 2011, he became the president and chief executive officer of QMX Gold Corp., a TSX-V-listed company, which was advancing the Snow Lake mine in Manitoba and the Lac Herbin mine in Quebec. Mr. Perron holds a bachelor of science in computer science from McMaster University (1986) and an MBA from the Ecole des Hautes Etudes Commerciales in Montreal (1992).
Related party transaction, review and approval process
The grant of the put option to Thomas Swan and the call option to Mr. al-Tamimi under the option agreement may be considered to be a related party transaction for purposes of Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions (in Quebec, Regulation 61-101, Protection of Minority Security Holders in Special Transactions). Mason Graphite is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101, respectively, in reliance on sections 5.5(a) and 5.7(b) of MI 61-101, respectively, as the fair market value of the put option or the call option, if exercised in full, is not more than 25 per cent of the company's market capitalization.
The board of the company formed a special committee comprising Tayfun Eldem, lead director of Mason Graphite, Peter Damouni and Roy McDowall to consider and make a recommendation with respect to the transaction, including the option agreement. Based in part on the unanimous recommendation of the members of the special committee, the transaction has been unanimously approved by the board of Mason Graphite, with Mr. al-Tamimi not participating in the discussions on the option agreement and any related matters and abstaining from voting on such matters.
About Mason Graphite Inc.
Mason Graphite is a Canadian corporation dedicated to the production and transformation of natural graphite. Its strategy includes the development of value-added products, notably for green technologies like transport electrification. The company also owns 100 per cent of the rights to the Lac Gueret graphite deposit, one of the richest in the world. The company is managed by an experienced team cumulating many decades of experience in graphite, covering production, sales, as well as research and development.
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