Appia Signs Binding Term Sheet to Sell a 45% Interest in Its PCH REE Project, Brazil

Executive Summary

• Appia Rare Earths & Uranium Corp. has signed a binding term sheet to sell a 45% interest in its Brazilian subsidiary, Appia Brasil Rare Earths Mineracao Ltda (holding the PCH Project), to Ultra Rare Earth Inc.
• The transaction involves Ultra acquiring a 50% total interest in Appia Brasil (45% from Appia, 5% from Antonio Vitor Junior), leaving Appia and Antonio with 25% each.
• Ultra will provide $8 million in total capital: $6 million for exploration to a Prefeasibility Study (PFS) and $2 million via a private placement of Appia units.

Key Details

• Transaction Structure: Ultra Rare Earth Inc. acquires a 50% interest in Appia Brasil. Appia sells 45%, and Antonio Vitor Junior sells 5%. Post-transaction ownership of Appia Brasil is: Ultra (50%), Appia (25%), Antonio (25%).
• Capital Injection ($6 Million): Ultra deposits US $6 million into a bank account in Brazil controlled by Appia Brasil. These funds are designated to fund exploration on the PCH Project up to the completion of a Prefeasibility Study (PFS).
• Private Placement ($2 Million): Ultra invests US $2 million into an Appia unit private placement.
  • Units Issued: 5,520,000 units.
  • Price: $0.50 CAD per unit.
  • Composition: Each unit consists of one common share and one-half warrant.
  • Warrant Terms: Each full warrant is exercisable at $0.70 CAD for 24 months.
  • Use of Proceeds: General working capital for Appia.
• Beko Settlement: Appia issues 1 million common shares to Beko Invest Ltd. to release Appia from future obligations under the existing Quotaholders Agreement, specifically the obligation to issue US $1,250,000 worth of stock and 1.5 million shares upon reaching a 60 million tonne resource estimate.
• NSR Rights: Beko grants Appia a right of first refusal on the 1% Net Smelter Return (NSR) held by Beko. If Appia exercises this right, Ultra gains a right of first refusal on any subsequent sale of that NSR by Appia.
• Governance: A five-person technical committee is established for the PCH Project. Ultra appoints two representatives (50% votes), Appia appoints one (25% votes), and Antonio appoints one (25% votes). Mr. Don Hains serves as the fifth member with tie-breaking authority.
• Future Acquisition Option: Upon completion of a PFS, Ultra has the right to acquire 100% of Appia Brasil by issuing a 25% equity interest in Ultra to Appia and a 25% equity interest to Antonio.
• Dilution Protection: If further funds are needed for the PFS, Appia and Antonio have pro rata participation rights to maintain their 25% stakes in Ultra. Subsequent financings by Ultra must be at no less than a 20% premium to the initial transaction price.
• Board Representation: Appia and Antonio each have the right to appoint one director to the Board of Directors of Ultra.
• Closing Conditions: The transaction is subject to regulatory approval, satisfactory due diligence (to be completed by September 30, 2025), and definitive agreements. Ultra has until October 15, 2025, to deliver a Closing Notice. The transaction is scheduled to close on or before October 31, 2025.
• Drilling: Appia will continue its current Auger drilling program until Closing, with expenditures reimbursed from the US $6 million fund.

Notable Quotes

• "Ultra is a Delaware US corporation established by Regent Advisors LLC and Bermuda based Regent Mercantile Holdings Limited, long-standing investors in the mining sector, for the purpose of funding the acquisition and development of the PCH rare earth deposit. The rationale for ownership of the PCH Project by a US company is to better access more favourable US capital markets for the development of the PCH Project. Appia believes that this Transaction will allow for a significantly better realization of value for Appia's shareholders." — Tom Drivas, CEO