CULICO METALS AND KHARROUBA COPPER COMPANY ANNOUNCE MERGER TO CREATE A HIGH-GRADE MOROCCAN COPPER MINING AND EXPLORATION COMPANY

Culico Metals Inc. (TSXV: CLCO) announced on September 9, 2026, that it has entered into a definitive agreement dated September 8, 2026, to merge with private Kharrouba Copper Company Inc. (KCC). The transaction is structured as a merger of equals through a plan of arrangement of KCC under the Business Corporations Act (Ontario). Under the terms, KCC shareholders will receive 0.389 Culico common shares for each KCC share held.

On a fully diluted basis, post-merger ownership is expected to consist of approximately 44% existing Culico shareholders and 56% existing KCC shareholders. The pro forma implied market capitalization is approximately C$121 million, based on the five-day volume-weighted average price of Culico shares as of September 8, 2026. The combined company is expected to have approximately 232.8 million shares outstanding on an undiluted basis, comprising 80.7 million shares for existing Culico shareholders, 140.1 million shares for KCC shareholders, and 12.0 million shares for concurrent financing subscribers.

Leadership for the combined entity will include Paul Andre Huet as Executive Chairman, Scott Hand as Vice Chairman, Frank Marzoli as President, and Carl Gernandt as CFO. The board of directors will consist of six members, split evenly between nominees from Culico and KCC.

The merger combines Culico’s assets with KCC’s operating and exploration properties. KCC’s Kharrouba Complex is a producing mine featuring five shafts, two ramps, an open-cast mine, and a central processing facility with a capacity of approximately 400 tonnes per day, producing arsenic-free copper concentrate. KCC also holds the 47 km² Koudiat El Harcha exploration property, which is less than 10% explored and contains three targets: Aouinet Feddah, Sidi Makhlouf (Iron Hat), and Stanton-Craig.

Historical data for the Aouinet Feddah target, a 4 km outcropping shear zone, shows intersections of 15-25% copper over 3-5 metre core lengths. A 1,400 tonne bulk sample from this area returned 1.7% copper. At Sidi Makhlouf, which has a 2 km strike, drill hole SC-CF03 intersected 0.4 metres of 36.49% copper. The Stanton-Craig target is a multi-kilometre shear zone that has never been drill-tested.

Financially, the transaction includes a concurrent private placement of 30,720,721 KCC shares at US$0.125 per share, generating gross proceeds of approximately US$3.8 million. The combined company is expected to hold approximately US$16.1 million in cash and available liquidity. Culico will repay KCC’s existing shareholder loan of approximately US$3.9 million at closing, leaving the combined company debt-free.

Closing is expected on or before December 31, 2026, subject to shareholder approvals, court approval, TSXV acceptance, and other conditions. The transaction may constitute a reverse take-over or a change of business.

Culico Metals Inc. (CLCO) is undergoing a transformative reverse-takeover-style merger that shifts the company from a thinly capitalized investment holding entity into a Moroccan copper mining and exploration vehicle. Prior-period MD&A context indicates Culico had near-zero operating revenue and was a going-concern issuer. In the first quarter of 2026, general and administrative expenses were approximately C$2.4 million, including C$1.9 million in share-based compensation. Culico’s primary assets prior to the transaction included an AGS shareholding, a minority stake in KCC, a 1% lithium royalty on Kali Metals properties, and a conditional Dumont payment right. Based on approximately 80.7 million existing Culico shares trading at C$0.44, the standalone market capitalization was approximately C$35.5 million.

The merger materially alters the company’s size, business mix, and risk profile. The pro forma market capitalization rises to approximately C$121 million, while existing Culico shareholders will be diluted to approximately 44% of the combined company. Culico gains a producing asset, a processing facility, toll-processing optionality, and district-scale copper exploration upside. The concurrent financing is priced at US$0.125 per KCC share, which is equivalent to roughly US$0.321 per Culico share at the 0.389 exchange ratio. This price point is close to the last close, indicating it is not an obviously discounted strategic entry.

Critical caveats remain regarding the transaction. KCC’s 2025 financials are unaudited and non-consolidated, showing approximately C$25.8 million in total assets, C$5.2 million in total liabilities, and a C$1.4 million net loss. KCC’s investment in its operating subsidiary, Kharrouba Copper Mining S.A.R.L., is carried at approximately C$25.6 million through equity and debt; however, the underlying operating subsidiary’s financials are not provided. The reported US$16.1 million liquidity figure is not entirely cash, as it includes approximately US$12.5 million of AGS shares, which would need to be sold to become cash. Additionally, the exploration story is early-stage, with no mineral resource or reserve defined, historical grades unverified, and a bulk sample that was selective and tested at a non-independent internal laboratory. The transaction is strategically meaningful and market-cap significant but carries execution, financing, and disclosure risks.

Culico Metals Inc. (CLCO) was originally established as an early-stage Canadian mining investment holding company following the combination of Karora Resources and Westgold in August 2024. Prior to the merger, the company held AGS shares, an approximately 8% interest in KCC, a 1% lithium royalty on certain Kali Metals interests, and a Dumont project tail payment right. It did not operate a flagship mine and generated near-zero operating revenue.

The combined entity’s primary operating asset is now the Kharrouba Complex in Morocco, which features underground and open-cast mining operations alongside a central grinding and flotation plant that produces copper concentrate. The company’s growth asset is Koudiat El Harcha, a 47 km² exploration property within a total 158 km² land package. The exploration thesis focuses on high-grade copper veins along multiple shear zones, with several targets slated for drilling in a district where less than 10% of the area has been historically explored.