Highland Critical signs definitive deal for spinout

Executive Summary

• Highland Critical Minerals Corp. has entered into a definitive arrangement agreement to spin out its wholly owned subsidiary, Highland Red Lake Gold Corp., via a statutory plan of arrangement under the BC Business Corporations Act.
• Shareholders will receive a distribution of Class A common shares, Highland Red Lake common shares, and Highland Red Lake warrants (exercisable at $0.15/share for five years) on a pro-rata basis, retaining their proportionate ownership in the combined entities.
• The spin-out aims to allow Highland Red Lake to operate as a separate reporting issuer focused on gold exploration in the Red Lake district, while Highland Critical Minerals continues its lithium and other mineral exploration activities.

Key Details

• Transaction Structure: Statutory plan of arrangement under the Business Corporations Act (British Columbia).
• Distribution Ratio: Each prearrangement common share is exchanged for:
  • 1 Class A common share of Highland Critical Minerals.
  • 0.5 Highland Red Lake common share.
  • 0.5 Highland Red Lake warrant (exercisable at $0.15/share for 5 years).
• RSU Treatment: Unexchanged RSUs will be converted into RSUs for 1 Class A common share and 1 RSU for 0.5 Highland Red Lake share and 0.5 Highland Red Lake warrant per original RSU.
• Warrant Treatment: Outstanding Highland warrants will result in holders receiving 1 Class A common share and 0.5 Highland Red Lake share/warrant for each prearrangement share issuable upon exercise.
• Share Count Estimates:
  • Aggregate distribution to securityholders: ~15,635,416 Highland Red Lake shares and ~15,635,416 warrants.
  • Shares retained by Highland Critical Minerals: ~2,614,584 Highland Red Lake shares.
• Timeline:
  • Agreement Date: August 19, 2025.
  • Proposed Distribution Record Date: August 26, 2025.
  • Shareholder Meeting: To be convened to approve the arrangement.
• Corporate Changes:
  • Highland Red Lake will become a separate reporting issuer in British Columbia and Ontario.
  • Article amendments will rename Highland common shares and create a new share class with identical terms.
  • Each prearrangement common share will have two votes attaching to it.
• Highland Red Lake Assets & Strategy:
  • Focus: Development of gold district properties in Red Lake, Ontario.
  • Property Interest: 100% interest in 3,366 hectares of mining claims in the Red Lake gold district, plus an additional 1,400 hectares staked adjacent to the property.
  • Exploration Budget: $150,000 initial program for mapping, prospecting, rock sampling, airborne magnetics, and soil surveys to evaluate till-covered terrain for lode gold structures.
  • Funding: Plans to undertake one or more private placement offerings to finance exploration and working capital.
• Highland Critical Minerals Ongoing Activities:
  • Church Property (Quetico District, Ontario): Mobile metal ions soil sampling program to identify lithium anomalies in areas with no exposed bedrock.
  • Sy Property (Yathkyed Lake Greenstone Belt, Nunavut): Design and evaluation of an initial exploration program on this recently acquired property.

Notable Quotes

• "We are always looking for ways to deliver value to our shareholders. The arrangement aims to enhance shareholder value, offering stakes in two new highly prospective gold properties located in two established gold production areas of Canada, and we are hopeful that continued exploration work would result in future gold discoveries. Shareholders will retain proportionate ownership in the company, and receive a stock dividend consisting of Highland Red Lake shares and Highland Red Lake warrants, allowing stakeholders the opportunity to benefit from potential successes and value appreciation in both companies each in diverse and distinct environments," says Ted Yew, the company's chief executive officer.