Item 1.01 Entry into a Material Definitive Agreement.
On November 7, 2022, Western Magnesium Corporation (the "Company") entered into
the transaction set forth in the Securities Purchase Agreement (the "Securities
Purchase Agreement") it entered into with an investor (the "Purchaser") for the
sale of the Company's convertible debenture in the principal amount of
$3,748,561.00 (the "November 2022 Convertible Debenture") for a subscription
amount of $3,748,561.00. The transaction provided for in the Securities Purchase
Agreement closed on November 11, 2022.
The November 2022 Convertible Debenture bears interest at the rate of 15% per
annum, matures on April 7, 2024 and is convertible (principal, and interest) at
any time after the issuance date and, upon receipt of TSX Venture Exchange
approval, into shares of the Company's Common Stock at a conversion price equal
to the greater of (i) $0.09 per share and (ii) the minimum conversion price
permitted by the TSX Venture Exchange at the time of conversion (should the
Company's Common Stock then be listed on such exchange), subject to adjustment
as provided therein (the "Conversion Price"). In addition, upon each conversion
of the November 2022 Convertible Debenture, the holder is entitled to receive a
Warrant (the "November 2022 Warrants") to purchase a number of shares of Common
Stock equal to 100% of the conversion shares being issued on such conversion.
November 2022 Warrants
Upon each conversion of the November 2022 Convertible Debenture, the Company
will issue to the holder of the November 2022 Convertible Debenture, a Warrant
to purchase a number of shares of the Company's Common Stock equal to 100% of
the conversion shares being issued on such conversion at a per share exercise
price of $0.17, subject to adjustment as provided for in the 2022 Warrant and
discussed below
The holders may exercise the November 2022 Warrants on a cashless basis at any
time that there is not an effective registration statement covering the
underlying shares of Common Stock and the volume weighted average price of the
Company's Common Stock is greater than the exercise price at the time of
exercise. The November 2022 Warrants are not exercisable, however, if the number
of shares to be issued to the holder upon such exercise, together with all other
shares then owned by the holder and the Company's affiliates, would result in
the holder beneficially owning more than 9.99% of the Company's outstanding
Common Stock. The holder may increase or decrease this ownership limitation to
any percentage not exceeding 9.99% upon 61 days prior written notice to us.
Registration Rights Agreement
Under the terms of the Registration Rights Agreement the Company entered into in
connection with the Securities Purchase Agreement, the Company agreed to file a
registration statement with the U.S. Securities and Exchange Commission (the
"SEC") by December 7, 2022, covering the public resale of the shares of Common
Stock underlying the November 2022 Convertible Debenture issued to the investor
upon its conversion, the November 2022 Warrants issuable upon conversion of the
November 2022 Convertible Debenture and any capital stock of the Company issued
or issuable with respect to its Common Stock, the November 2022 Convertible
Debentures or the November 2022 Warrants as a result of any stock split, stock
dividend, recapitalization, exchange or similar event or otherwise (the
"Underlying Shares"), all to the extent permissible under SEC rules, and to use
the Company's best efforts to cause the registration statement to be declared
effective no later than January 23, 2023 if the SEC does not review the
registration statement or by March 7, 2023 if the SEC reviews the registration
statement.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No. Description
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Certain confidential information has been excluded from this exhibit because
it is both (i) not material and (ii) would be competitively harmful if publicly
disclosed.
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