First Phosphate Closes Second Tranche of Oversubscribed Private Placement for Total Current Financing of $7.5 Million

Saguenay, Quebec - Newsfile Corp. - January 2, 2024 - First Phosphate Corp. (CSE: PHOS) (OTC: FRSPF) (FSE: KD0) ("First Phosphate" or the "Company") is pleased to announce that it has closed a second tranche (the "Second Tranche") of its non-brokered private placement financing (the "Offering"), as further described in the Company's news release dated December 14 and 22, 2023.

The offering including the Second Tranche were largely oversubscribed by a factor of 275%. As part of the Second Tranche, the Company issued 3,090,438 Hard-Dollar Units and 12,560,000 Flow-Through Shares for aggregate gross proceeds of $7,516,175 between the two tranches of Offering.

"We are pleased by this large vote of confidence placed in First Phosphate by existing and new shareholders including a number of institutional investors," says Company CEO, John Passalacqua. "We are now in position to be able to drill this winter and begin uncovering the full extent of the Bégin-Lamarche high-purity igneous rock phosphate horizon at only 70 km from the deep-sea Port of Saguenay. In our experience, proximity to port and access to infrastructure and workforce are the single largest determinants for the economic viability of any phosphate project. Bégin-Lamarche has all these strong requisites. We feel that it will become the first phosphate mine to see production in Quebec. We are now in a position to accelerate its development."

In connection with the Second Tranche, the Company paid $330,880.00 in finder's fees, issued 369,840 Compensation Shares, and issued 1,179,400 Compensation Warrants, exercisable at a price of $0.50 per common share of the Company, until December 31, 2025, subject to an Accelerated Expiry Date.

A potential final tranche of the financing is scheduled for closing on or about January 10, 2024.

Insider Participation

In connection with the closing of the Second Tranche, Gilles Laverdiere, the Chief Geologist of the Company, has purchased a total of 50,000 Flow-Through Shares, and Jerome Cliché, Vice-President, Business Development has purchased 62,500 Hard-Dollar Units.

Insider Line of Credit

The Company has also completed a credit agreement ("Credit Agreement") intended to provide the working capital that may be required to facilitate the development that this oversubscribed Offering allows. The agreement with members of its management team and board of directors (the "Lenders") enables the Company to establish a secured revolving credit facility of $2,100,000 (the "Credit Facility") to be advanced in installments.

The Credit Facility is due January 1, 2026, bears interest at a rate of the greater of 8% or prime plus 2% per annum, with prime established by the Bank of Canada, and is secured by first ranking security over the Company's receivables from the Government of Canada and the Province of Quebec including in respect of goods and services tax.

In consideration for providing the Credit Facility, the Company will grant 5,250,000 warrants ("LOC Warrants") to the Lenders, comprised of the CEO, CFO/CAO, and the Chairman of the Company. Each LOC Warrant will be exercisable into one Common Share (a "LOC Share") at an exercise price $0.40 (the "Exercise Price") for a period of five years from the date of issuance and will be non-transferable. 1,750,000 LOC Warrants will be granted to each Lender to vest immediately upon issuance. The remaining issued but unvested LOC Warrants will vest by dividing the amount of any advance under the Credit Facility by the exercise price of the LOC Warrants. All of the LOC Warrants and LOC Shares will be subject to a hold period of four months plus one day. The issuance and exercise of the LOC Warrants are subject to the rules of CSE Policy.

The Company's Board of Directors considered and unanimously approved the Credit Agreement, with the directors who have an interest in the transaction abstaining from such approval.

RSU and Option Grants

The Company also announces today that it has approved the grant of 2,204,000 restricted stock units of the Company (the "RSUs") in lieu of any and full cash salary and 3,110,000 options to purchase common shares (the "Options") at the exercise price of $0.40 to certain eligible persons of the Company.

1,881,100 RSUs will vest on in 4 tranches (25% on each of May 31, 2024; August 31, 2024; November 31, 2024; and February 28, 2025); 73,000 RSUs will vest in 3 tranches (33.3% after each of 3, 6 and 9 months of December 1, 2023); and 250,000 RSUs will vest as follows: 75,000 RSUs will vest on February 28, 2024, 87,500 will vest on May 31, 2024, and 87,500 will vest on August 31, 2024.

2,800,000 Options have an expiry date of December 29, 2028, 25% of the Options will vest every 6 months for 2 years; 150,000 Options have a 3 year term, with such Options to vest as follows, 37,500 at the end of 7.5 months, (August 31, 2024) and 37,500 every 6 months thereafter; and 160,000 Options have an expiry date December 29, 2026, and 25% of the Options will vest every 6 months for 2 years.

The terms of the RSUs and Options granted are in accordance with the Company's Omnibus Equity Incentive Plan as approved by disinterested shareholders at the Company's annual and special meeting of shareholders held on August 25, 2023. All securities issued are subject to a statutory hold period of four months plus one day from the date of issuance, in accordance with applicable securities legislation.

Debt Settlement

The Company settled $511,918.29 of amounts owing to various arm's length creditors for 1,279,796 Common Shares at the deemed price of $0.40 per share.

Related Party Transactions

As related parties of the Company received Hard-Dollar Units, Flow-Through Shares, Common Shares, Warrants, LOC Warrants, LOC Shares, RSUs, and Options in connection in connection with the Offering, RSU and Option Grants, and Line of Credit, the transactions are considered related party transactions for the purposes of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The participation of the related parties of the Company are exempt from the formal valuation and minority shareholder approval requirements provided under MI 61-101 in accordance with sections 5.5(a) and 5.7(1)(a) of MI 61-101. The Company is relying on an exemption from the formal valuation requirements of MI 61-101 available because the fair market value of the issued Hard-Dollar Units, Flow-Through Shares, common shares, Warrants, LOC Warrants, LOC Shares, RSUs, and Options to the related parties pertaining to the transactions does not exceed 25% of the Company's market capitalization, as determined in accordance with MI 61-101. The Company did not file a material change report related to the transactions more than 21 days before the expected closing of the transactions as required by MI 61-101 but believes that this shorter period is reasonable and necessary in the circumstances as the Company wishes to improve its financial position by reducing its accrued liabilities as soon as possible, to incentivize the retaining of key personnel, and to close the overall transaction in short order for sound business reasons.

All securities issued under the Offering will be subject to a four-month and one day statutory hold period in accordance with applicable securities laws. The securities issued pursuant to the Offering have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any U.S. state securities laws and may not be offered or sold in the United States absent registration or an available exemption from the registration requirement of the U.S. Securities Act and applicable U.S. state securities laws. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, such securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities being offered have not been, nor will they be, registered under the 1933 Act and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from the registration requirements of the 1933 Act, and applicable state securities laws.

Corrective Disclosure

This press release contains corrective disclosure to the following:

• Private Placement: The Initial Tranche and Second Tranche of the financing were largely oversubscribed inclusively by a factor of 275% (previously stated as 375%)
• Finder's Fees: In connection with the Second Tranche, the Company paid $330,880.00 in finder's fees, issued 369,840 Compensation Shares, and issued 1,179,400 Compensation Warrants, exercisable at a price of $0.50 per common share of the Company, until December 31, 2025, subject to an Accelerated Expiry Date (previously stated as $137,600 in finder's fees, 895,000 Compensation Shares, and 646,000 Compensation Warrants)
• Insider Line of Credit: 1,750,000 LOC Warrants will be granted to each Lender (previously stated as 2,625,000)

發佈者對本公告的內容承擔全部責任

About First Phosphate Corp.

source: First Phosphate Corp.