OFFER TO PURCHASE FOR CASH
All Outstanding Shares of Common Stock of RIDGELINE COBALT INC. at $2.50 Per Share Net in Cash by TORCHLIGHT MINING CORP.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON JUNE 14, 2024, UNLESS THE OFFER IS EXTENDED.
This Offer to Purchase and the related Letter of Transmittal are being filed with the Securities and Exchange Commission (the "SEC") as part of a Tender Offer Statement on Schedule TO (Acc. No. 0001193125-24-072841) on March 14, 2024.
Torchlight Mining Corp., a corporation organized under the laws of the Province of British Columbia, Canada ("Torchlight," "TMC," or the "Offeror"), with its principal executive offices at 1200 – 885 West Georgia Street, Vancouver, BC V6C 3E8, Canada, hereby offers to purchase all outstanding shares of common stock, par value $0.001 per share (the "Shares"), of Ridgeline Cobalt Inc., a Delaware corporation ("Ridgeline," "RCI," or the "Company"), at a price of $2.50 per Share, net to the seller in cash (the "Offer Price"), without interest and less any applicable withholding taxes, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer").
Ridgeline Cobalt Inc. is a Delaware corporation with its principal executive offices located at 44 Lakeshore Drive, Suite 300, Marquette, MI 49855. RCI common stock is listed and traded on NYSE American under the ticker symbol "RCI."
The Offer is being made for all 18,000,000 outstanding Shares of common stock, par value $0.001 per share, of Ridgeline Cobalt Inc.
The Offer Price of $2.50 per Share represents:
(i) a premium of approximately 38.89% over the closing price of $1.80 per Share on NYSE American on March 13, 2024, the last full trading day prior to the public announcement of the Offer; and
(ii) a premium of approximately 45.35% over the 30-day volume-weighted average price ("VWAP") of $1.72 per Share as of March 13, 2024.
The aggregate consideration for all outstanding Shares pursuant to the Offer is $45,000,000.
The Offer is not subject to any financing condition. Torchlight has sufficient funds available from cash on hand and its existing revolving credit facility to consummate the Offer and pay all related fees and expenses.
The Depositary for the Offer is:
Hargrove Depositary Services, Inc. 55 Water Street New York, NY 10041
The Information Agent for the Offer is: to be designated.
IMPORTANT
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Offer or passed upon the fairness or merits of the Offer or the adequacy or accuracy of the information contained in this Offer to Purchase. Any representation to the contrary is a criminal offense.
March 14, 2024
SUMMARY TERM SHEET
The following is a summary of certain material terms of the Offer. This summary is provided for the convenience of stockholders of Ridgeline Cobalt Inc. and is qualified in its entirety by, and should be read together with, the more detailed information contained elsewhere in this Offer to Purchase and in the related Letter of Transmittal. Stockholders are urged to read this Offer to Purchase and the Letter of Transmittal in their entirety, and to consult with their own financial, tax, and legal advisors, before deciding whether to tender their Shares.
The Offer. Torchlight Mining Corp., a corporation organized under the laws of the Province of British Columbia, Canada, is offering to purchase all outstanding shares of common stock, par value $0.001 per share, of Ridgeline Cobalt Inc., a Delaware corporation, for $2.50 per Share, net to the seller in cash, without interest and less any applicable withholding taxes (the "Offer Price"), upon the terms and subject to the conditions described in this Offer to Purchase and in the related Letter of Transmittal.
The Offeror. Torchlight Mining Corp. ("Torchlight" or "TMC") is a diversified mining and specialty chemicals company listed on the Toronto Stock Exchange (TSX: TMC.TO) and the New York Stock Exchange (NYSE: TMC). Torchlight is headquartered in Vancouver, British Columbia, Canada, and has a market capitalization of approximately C$3.1 billion as of March 2024. For the fiscal year ended December 31, 2023, Torchlight reported consolidated revenue of C$1.87 billion, of which approximately 68% was attributable to its mining operations (gold, copper, and cobalt across seven producing mines in Canada, Chile, and Zambia) and approximately 32% was attributable to its specialty chemicals processing business (two processing facilities in Ontario and British Columbia). Additional information regarding Torchlight is set forth in Section 8 of this Offer to Purchase.
The Target. Ridgeline Cobalt Inc. ("Ridgeline" or "RCI") is a corporation incorporated under the laws of the State of Delaware and headquartered in Marquette, Michigan. RCI common stock is listed and traded on NYSE American under the ticker symbol "RCI." Ridgeline is a junior mining company principally engaged in the exploration and development of cobalt and nickel properties in Northern Ontario, Canada, and the Upper Peninsula of Michigan, USA. For the fiscal year ended December 31, 2023, Ridgeline reported revenue of $1.2 million, principally from toll-processing arrangements and pilot production activities. As of December 31, 2023, Ridgeline had cash on hand of approximately $4.6 million. Additional information regarding Ridgeline is set forth in Section 7 of this Offer to Purchase.
Offer Price. $2.50 per Share in cash, net to the seller, without interest and less any applicable withholding taxes.
Number of Shares Sought. All 18,000,000 outstanding Shares of common stock, par value $0.001 per share, of Ridgeline Cobalt Inc.
Total Offer Consideration. $45,000,000 (18,000,000 Shares multiplied by $2.50 per Share).
Premium Information.
• 38.89% premium to the undisturbed closing price of $1.80 per Share on NYSE American on March 13, 2024 (the last full trading day prior to the public announcement of the Offer).
• 45.35% premium to the 30-day volume-weighted average price ("VWAP") of $1.72 per Share as of March 13, 2024.
Minimum Condition. The obligation of Torchlight to accept for payment and pay for Shares validly tendered and not withdrawn pursuant to the Offer is conditioned upon, among other things, the number of Shares validly tendered and not withdrawn, together with any Shares then owned by Torchlight and its subsidiaries, representing at least a majority of the total number of outstanding Shares on a fully diluted basis. The fully diluted share count is 23,000,000, calculated as follows:
• 18,000,000 Shares of common stock outstanding;
• 3,900,000 Shares issuable upon conversion of the 6.5% senior secured convertible notes due June 30, 2026, held by Pinnacle Venture Resources Fund II, LP; and
• 1,100,000 Shares issuable upon exercise of outstanding stock options and warrants.
Accordingly, the Minimum Condition threshold is 11,500,001 Shares.
Current Ownership. As of the date of this Offer to Purchase, Torchlight owns 0 Shares of RCI common stock (0.0% of outstanding Shares).
Financing. The Offer is not subject to any financing condition. Torchlight intends to fund the Offer from a combination of available cash on hand and a draw on its existing revolving credit facility. See Section 9 for additional details.
Expiration Date. The Offer will expire at 12:00 midnight, Eastern Time, on June 14, 2024, unless extended or earlier terminated in accordance with the terms of the Offer (the "Expiration Date"). See Section 1.2 for additional details.
Post-Offer Merger. If, following consummation of the Offer, Torchlight acquires at least 90% of the outstanding Shares, Torchlight intends to effect a "short-form" merger of Ridgeline with and into Torchlight (or a wholly owned subsidiary of Torchlight) pursuant to Section 253 of the Delaware General Corporation Law (the "DGCL"), without a vote of the stockholders of Ridgeline. If Torchlight acquires between the Minimum Condition threshold and 90% of the outstanding Shares, Torchlight intends to effect a "long-form" merger under Section 251 of the DGCL, which would require a vote of Ridgeline's stockholders. Because Torchlight would, in that case, own a majority of the outstanding Shares, Torchlight would have sufficient voting power to approve such merger without the affirmative vote of any other stockholder. See Section 11 for additional details.
Conditions to the Offer. The Offer is subject to the following conditions, each of which is described in greater detail in Section 13 of this Offer to Purchase:
• The Minimum Condition;
• Expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act");
• Receipt of clearance under the Investment Canada Act, R.S.C. 1985, c. 28 (1st Supp.) (the "Investment Canada Act");
• The absence of any material adverse effect with respect to Ridgeline;
• The absence of any order, injunction, decree, or judgment of any court or governmental authority prohibiting or restraining the Offer or the subsequent merger;
• The accuracy in all material respects of the representations and warranties of Ridgeline as of the closing date; and
• Other customary conditions.
Depositary. Hargrove Depositary Services, Inc., 55 Water Street, New York, NY 10041.
Transfer Agent for RCI. Dominion Transfer & Trust Co., 1100 Centre Street, Suite 600, Wilmington, DE 19805.
Tax Consequences. The receipt of cash in exchange for Shares pursuant to the Offer will generally be a taxable transaction for U.S. federal income tax purposes. Stockholders are urged to consult their own tax advisors regarding the tax consequences of tendering their Shares. See Section 5 for a summary of the material U.S. federal income tax consequences of the Offer.
SECTION 1 — TERMS OF THE OFFER
1.1 Price and Number of Shares
Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), Torchlight Mining Corp. hereby offers to purchase all 18,000,000 outstanding shares of common stock, par value $0.001 per share (the "Shares"), of Ridgeline Cobalt Inc. ("Ridgeline" or "RCI"), a Delaware corporation, at a price of $2.50 per Share, net to the seller in cash (the "Offer Price"), without interest and less any applicable withholding taxes.
The aggregate consideration payable by Torchlight for all 18,000,000 outstanding Shares pursuant to the Offer is $45,000,000. All Shares validly tendered and not properly withdrawn prior to the Expiration Date (as defined below) will, subject to the satisfaction or waiver of all conditions to the Offer, be accepted for payment and paid for in accordance with the procedures set forth in Section 2 of this Offer to Purchase.
The term "net to the seller in cash" means that a tendering stockholder will receive the Offer Price in cash, reduced only by any applicable federal, state, local, or foreign tax withholding amounts required to be withheld by the Depositary or Torchlight. Torchlight will not pay any interest on the Offer Price, regardless of any extension of the Offer or any delay in making payment for Shares accepted for payment.
Tendering stockholders who hold Shares registered in their own name and who tender directly to the Depositary will not be obligated to pay brokerage fees, commissions, or similar expenses in connection with the tender. Stockholders who hold Shares through a broker, dealer, commercial bank, trust company, or other nominee are urged to consult such institution as to whether it charges any fees or commissions in connection with tendering Shares on their behalf.
1.2 Expiration Date
The Offer will expire at 12:00 midnight, Eastern Time, on June 14, 2024 (the "Expiration Date"), unless extended or earlier terminated in accordance with Section 1.3 below. For purposes of this Offer to Purchase, the term "Expiration Date" means 12:00 midnight, Eastern Time, on June 14, 2024, or, if the Offer is extended, such later time and date to which the Offer is extended.
For the avoidance of doubt, the Expiration Date of 12:00 midnight, Eastern Time, on June 14, 2024, means the end of the day on June 14, 2024 — that is, one minute after 11:59 p.m., Eastern Time, on June 14, 2024 — in accordance with Rule 14d-1(g)(3) under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Torchlight reserves the right to extend the Offer from time to time, in its sole discretion, for any reason, by giving oral or written notice of extension to the Depositary and by making a public announcement thereof as described in Section 1.3 below.
1.3 Extension, Termination, and Amendment
Torchlight expressly reserves the right, in its sole discretion (subject to applicable law and any restrictions contained in the definitive Offer-to-Purchase Agreement when executed), at any time and from time to time, to:
(a) extend the Offer for any period if, at the then-scheduled Expiration Date, any condition to the Offer set forth in Section 13 has not been satisfied or waived;
(b) delay acceptance for payment of, or, regardless of whether such Shares were theretofore accepted for payment, delay payment for, any Shares pending resolution of any SEC comments on the Schedule TO or any other regulatory matter;
(c) terminate the Offer if, in Torchlight's reasonable judgment, any of the conditions to the Offer set forth in Section 13 have not been satisfied or waived prior to the Expiration Date and are incapable of being satisfied;
(d) waive any condition to the Offer, to the extent waivable in accordance with Section 13; or
(e) amend the Offer in any respect, including by increasing or decreasing the Offer Price, increasing or decreasing the number of Shares sought, or changing the terms and conditions of the Offer.
Torchlight must extend the Offer for any period required by applicable rules and regulations of the SEC, the staff thereof, NYSE American, or any other applicable regulatory authority. In particular, under Rule 14e-1(a) under the Exchange Act, the Offer must remain open for at least twenty (20) business days from the date the Offer is first published, sent, or given to stockholders. In addition, under Rule 14d-6(c) under the Exchange Act, if Torchlight makes a material change in the terms of the Offer or the information concerning the Offer, or if it waives a material condition to the Offer, Torchlight will extend the Offer to the extent required by Rules 14d-4(d), 14d-6(c), and 14e-1 under the Exchange Act. In accordance with SEC staff interpretive guidance, a material change made with respect to the percentage of securities sought, the consideration offered, or the dealer's soliciting fee will require that the Offer remain open for at least ten (10) business days from the date of such change.
Any extension, delay, termination, waiver, or amendment of the Offer will be followed as promptly as practicable by public announcement thereof, consistent with the requirements of Rule 14d-4(d) and Rule 14e-1(d) under the Exchange Act. In the case of an extension of the Offer, such announcement shall be issued no later than 9:00 a.m., Eastern Time, on the next business day after the previously scheduled Expiration Date, in accordance with Rule 14e-1(d) under the Exchange Act. The form and manner of any such public announcement will be at Torchlight's discretion, but may include, without limitation, a press release, a filing with the SEC, or any other method reasonably calculated to inform stockholders of such event.
Torchlight acknowledges that any amendment to the Offer that constitutes a material change to the information previously disclosed to stockholders will require the dissemination of additional disclosure materials and/or the extension of the Offer to the extent required under applicable federal securities laws.
1.4 Minimum Condition
The obligation of Torchlight to accept for payment and to pay for Shares validly tendered and not withdrawn pursuant to the Offer is conditioned upon (the "Minimum Condition") the number of Shares validly tendered and not withdrawn, together with any Shares then owned by Torchlight and its subsidiaries, representing at least a majority of the total number of outstanding Shares on a fully diluted basis as of the Expiration Date.
For purposes of this Offer to Purchase, the fully diluted share count is calculated as follows:
The Minimum Condition requires that at least a majority of 23,000,000 fully diluted Shares — that is, at least 11,500,001 Shares — be validly tendered and not withdrawn as of the Expiration Date. Because Torchlight does not currently own any Shares of RCI common stock, the Minimum Condition will be satisfied only if at least 11,500,001 Shares are validly tendered by stockholders.
Torchlight has structured the Minimum Condition on a fully diluted basis to ensure that, upon consummation of the Offer, Torchlight will own a sufficient number of Shares to approve a subsequent merger of Ridgeline with and into Torchlight (or a wholly owned subsidiary of Torchlight) without the affirmative vote of any other stockholder.
As of the date of this Offer to Purchase, Torchlight does not own, beneficially or of record, any Shares of RCI common stock.
1.5 No Proration
Because the Offer is being made for all outstanding Shares of RCI common stock and is not subject to a maximum number of Shares, no proration of tendered Shares is expected. In the event that applicable SEC rules and regulations require proration of Shares accepted for payment in the Offer, Torchlight will comply with such rules and regulations. In such event, Torchlight will issue a public announcement regarding the terms and mechanics of any required proration.
SECTION 2 — ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
2.1 Acceptance. Subject to the terms and conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), Torchlight will accept for payment all Shares validly tendered and not withdrawn pursuant to the Offer promptly after the Expiration Date (as may be extended). In the event that the conditions to the Offer set forth in Section 13 have been satisfied or waived as of the Expiration Date, Torchlight will accept for payment, and will pay for, all Shares validly tendered and not withdrawn as promptly as practicable after such date.
Payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the aggregate Offer Price for all such Shares with Hargrove Depositary Services, Inc. (the "Depositary"), which will act as the paying agent for tendering stockholders for purposes of the Offer. Upon receipt of funds from Torchlight, the Depositary will distribute payment to tendering stockholders in the manner described in Section 2.2 below.
For purposes of the Offer, Torchlight will be deemed to have accepted for payment Shares validly tendered and not withdrawn when, as, and if it gives oral or written notice thereof to the Depositary. Under no circumstances will Torchlight be required to accept for payment or pay for any Shares unless and until all conditions to the Offer set forth in Section 13 have been satisfied or waived.
2.2 Payment. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment will be made by the Depositary by check drawn on a U.S. bank or, at the election of the tendering stockholder (if such election is available through the Depositary's systems), by wire transfer of immediately available funds to a bank account designated by the tendering stockholder. Under no circumstances will interest be paid on the Offer Price, regardless of any extension of the Offer or any delay in making payment for Shares accepted for payment.
Any applicable federal, state, local, or foreign tax withholding amounts required to be deducted or withheld under applicable law will be deducted from the Offer Price payable to the tendering stockholder and remitted to the applicable taxing authority. Tendering stockholders should consult Section 5 of this Offer to Purchase for a summary of the material U.S. federal income tax consequences of the Offer.
Torchlight will pay all charges and expenses of the Depositary incurred in connection with the Offer, including, without limitation, fees and expenses relating to the distribution of the Offer Price to tendering stockholders. Tendering stockholders will not be charged any fee by the Depositary in connection with the tender of Shares; however, stockholders who hold Shares through a broker, dealer, commercial bank, trust company, or other nominee may be charged fees by such institution, and stockholders are encouraged to consult their financial intermediary regarding any such fees.
2.3 Timing. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of:
(a) certificates representing such Shares (the "Share Certificates"), or timely confirmation of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company ("DTC") pursuant to the procedures described in Section 3.2 below (a "Book-Entry Confirmation");
(b) a properly completed and duly executed Letter of Transmittal (or a facsimile thereof), with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message (as defined below); and
(c) any other documents required by the Letter of Transmittal or by the instructions thereto.
The term "Agent's Message" means a message transmitted by DTC to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that DTC has received an express acknowledgment from the participant in DTC tendering Shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that Torchlight may enforce such agreement against such participant.
If the Depositary is unable to verify the identity or authority of any person purporting to tender Shares, or if there is any deficiency or irregularity in the tender documents, Torchlight will have the right, in its sole discretion, to reject such tender or to require the submission of additional documentation prior to accepting such tender.
SECTION 3 — PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES
3.1 Valid Tender
For Shares to be validly tendered pursuant to the Offer, the Depositary must receive, at its address set forth on the back cover of this Offer to Purchase, prior to the Expiration Date:
(a) a properly completed and duly executed Letter of Transmittal (or a facsimile thereof), together with any required signature guarantees (see Section 3.4 below), or, in the case of a book-entry transfer effected pursuant to the procedures described in Section 3.2 below, an Agent's Message; and
(b) either:
(i) Share Certificates representing the Shares tendered; or
(ii) a Book-Entry Confirmation with respect to such Shares (see Section 3.2 below); or
(iii) the documents required for a guaranteed delivery (see Section 3.3 below).
Registered Holders. Stockholders who hold Share Certificates registered in their own name may tender their Shares by delivering Share Certificates, together with a properly completed and duly executed Letter of Transmittal and any other required documents, to the Depositary at its address set forth on the back cover of this Offer to Purchase, prior to the Expiration Date. The Letter of Transmittal must be signed by the registered holder(s) exactly as the name(s) appear(s) on the Share Certificate(s), or by a person authorized to sign on behalf of the registered holder(s) pursuant to a power of attorney or other evidence of authority acceptable to Torchlight and the Depositary.
Beneficial Holders. Stockholders who hold Shares through a broker, dealer, commercial bank, trust company, or other nominee should contact such institution and instruct it to tender the Shares on the stockholder's behalf. In many cases, the nominee will be able to tender the Shares by book-entry transfer through DTC.
The method of delivery of Share Certificates, the Letter of Transmittal, and all other required documents, including delivery through DTC, is at the election and risk of the tendering stockholder. Delivery will be deemed made only when actually received by the Depositary (or, in the case of a book-entry transfer, when the Book-Entry Confirmation is received by the Depositary). If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery.
3.2 Book-Entry Transfer
The Depositary will establish an account (or will utilize an existing account) at DTC with respect to the Shares for purposes of the Offer within two (2) business days after the date of this Offer to Purchase. Any financial institution that is a participant in DTC's system may make book-entry delivery of Shares by causing DTC to transfer such Shares into the Depositary's account at DTC in accordance with DTC's Automated Tender Offer Program ("ATOP") procedures for such transfer. However, although delivery of Shares may be effected through book-entry transfer into the Depositary's account at DTC, the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message in lieu of a Letter of Transmittal, and any other required documents, must in any case be transmitted to and received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date, or the tendering stockholder must comply with the guaranteed delivery procedures described in Section 3.3 below.
Delivery of documents to DTC does not constitute delivery to the Depositary. No alternative, conditional, or contingent tenders will be accepted.
3.3 Guaranteed Delivery
Stockholders who wish to tender their Shares pursuant to the Offer but whose Share Certificates are not immediately available, or who cannot deliver all required documents to the Depositary prior to the Expiration Date, or who cannot complete the procedures for book-entry transfer on a timely basis, may nevertheless tender their Shares by following the guaranteed delivery procedures set forth below:
(a) Such tender must be made by or through an Eligible Institution (as defined in Section 3.4 below).
(b) Prior to the Expiration Date, the Depositary must receive (by mail, hand delivery, overnight courier, or facsimile) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form provided by Torchlight (which is available from the Depositary upon request), including:
(i) the name(s) and address(es) of the registered holder(s) of the Shares to be tendered;
(ii) the certificate number(s), if available, and the total number of Shares to be tendered; and
(iii) a guarantee by the Eligible Institution that delivery of the Share Certificates (or Book-Entry Confirmation) for such Shares, together with a properly completed and duly executed Letter of Transmittal (or an Agent's Message) and any other required documents, will be made to the Depositary within two (2) NYSE American trading days after the date of execution of the Notice of Guaranteed Delivery.
(c) Within two (2) NYSE American trading days after the date of execution of the Notice of Guaranteed Delivery, the tendering stockholder must deliver to the Depositary the Share Certificates (or Book-Entry Confirmation) representing the tendered Shares, together with a properly completed and duly executed Letter of Transmittal (or an Agent's Message) and any other required documents.
Failure to complete the guaranteed delivery procedures within the timeframes set forth above will invalidate the tender, and such Shares will not be deemed validly tendered for purposes of the Offer.
3.4 Signature Guarantees
Signatures on all Letters of Transmittal must be guaranteed by a financial institution (including most commercial banks, savings associations, and brokerage houses) that is a member in good standing of a recognized Medallion Signature Guarantee Program approved by the Securities Transfer Association Inc., including the Security Transfer Agents Medallion Program, the Stock Exchanges Medallion Program, and the New York Stock Exchange Medallion Signature Program, or by any other "eligible guarantor institution" as such term is defined in Rule 17Ad-15 under the Exchange Act (each, an "Eligible Institution"), unless:
(a) the Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this Section 3.4, includes any participant in DTC whose name appears on a security position listing as the owner of such Shares) of the Shares tendered and such holder(s) have not completed the box entitled "Special Payment Instructions" or "Special Delivery Instructions" on the Letter of Transmittal; or
(b) the Shares are tendered for the account of an Eligible Institution.
If the Letter of Transmittal is signed by a person other than the registered holder of the Shares, or if payment is to be made, or Share Certificates for untendered Shares are to be issued, to a person other than the registered holder, the Share Certificates must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on the Share Certificates, with the signatures on such certificates or stock powers guaranteed by an Eligible Institution.
3.5 Transfer Agent
The transfer agent and registrar for RCI common stock is Dominion Transfer & Trust Co., with its principal offices located at 1100 Centre Street, Suite 600, Wilmington, DE 19805. Stockholders who have questions regarding the ownership, registration, or transfer of their Shares, or who need information about their Share Certificates, should contact Dominion Transfer & Trust Co. directly. Stockholders who have lost their Share Certificates should also contact Dominion Transfer & Trust Co. to arrange for the issuance of replacement certificates or the procurement of an indemnity bond, as described in Instruction 8 of the Instructions to the Letter of Transmittal.
3.6 Miscellaneous Tender Matters
All questions as to the validity, form, eligibility (including time of receipt), and acceptance for payment of any tender of Shares will be determined by Torchlight in its sole and absolute discretion, which determination will be final and binding on all parties. Torchlight reserves the absolute right to reject any and all tenders of Shares that it determines are not in proper form or the acceptance for payment of which may, in the opinion of Torchlight's counsel, be unlawful. Torchlight also reserves the absolute right to waive any defects or irregularities in the tender of Shares, whether or not similar defects or irregularities are waived in the case of other stockholders. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived to the satisfaction of Torchlight.
None of Torchlight, the Depositary, the Information Agent, or any other person will be under any obligation to give notice of any defects or irregularities in tenders or will incur any liability for failure to give any such notice. Torchlight's interpretation of the terms and conditions of the Offer, including the Letter of Transmittal, the Notice of Guaranteed Delivery, and the instructions thereto, will be final and binding on all parties.
The method of delivery of Share Certificates, the Letter of Transmittal, and all other required documents, including delivery through DTC, is at the election and risk of the tendering stockholder, and the delivery will be deemed made only when actually received by the Depositary. If delivery is by mail, registered mail with return receipt requested, properly insured, is strongly recommended. In all cases, sufficient time should be allowed to ensure timely delivery.
By executing the Letter of Transmittal (or, in the case of a book-entry transfer, by delivery of an Agent's Message), the tendering stockholder irrevocably appoints the designees of Torchlight as such stockholder's attorneys-in-fact and proxies, with full power of substitution, to the full extent of such stockholder's rights with respect to the tendered Shares and any and all dividends, distributions, rights, other Shares, or other securities issued or issuable in respect of such Shares on or after the date of this Offer to Purchase. All such powers of attorney and proxies are considered coupled with an interest in the tendered Shares and are irrevocable.
All tendering stockholders, by execution of the Letter of Transmittal (or by delivery of an Agent's Message), waive any right to receive notice of acceptance of their tendered Shares for payment.
SECTION 4 — WITHDRAWAL RIGHTS
4.1 Right to Withdraw
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date (as it may be extended). After the Expiration Date, tenders are irrevocable, except that, pursuant to Section 14(d)(5) of the Exchange Act, Shares may be withdrawn at any time after May 13, 2024 (which is the 60th day after the commencement of the Offer) if not yet accepted for payment by Torchlight.
Torchlight expects to accept for payment and pay for Shares validly tendered and not withdrawn promptly after the Expiration Date, assuming that the conditions to the Offer have been satisfied or waived. If Torchlight extends the Offer, is delayed in its acceptance for payment of, or payment for, Shares, or is unable to accept for payment or pay for Shares for any reason, then, without prejudice to Torchlight's rights under the Offer, tendered Shares may be retained by the Depositary on behalf of Torchlight and may not be withdrawn except to the extent that tendering stockholders are entitled to and duly exercise withdrawal rights as described in this Section 4.
4.2 Procedure for Withdrawal
For a withdrawal of Shares to be effective, a written notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date (or, in the case of withdrawals pursuant to Section 14(d)(5) of the Exchange Act, after May 13, 2024, to the extent the Shares have not yet been accepted for payment). Any such notice of withdrawal must:
(a) specify the name of the person who tendered the Shares to be withdrawn;
(b) state the number of Shares to be withdrawn and, if Share Certificates have been delivered to the Depositary, the certificate number(s) for such Share Certificates, as well as the name(s) in which such Share Certificate(s) are registered, if different from the name of the person who tendered the Shares;
(c) if the Shares were tendered through book-entry transfer into the Depositary's account at DTC, specify the name and number of the account at DTC to be credited with the withdrawn Shares and otherwise comply with DTC's procedures for withdrawal; and
(d) be signed by the person who tendered the Shares being withdrawn in the same manner as the original signature on the Letter of Transmittal by which such Shares were tendered (including any required signature guarantees), or be accompanied by evidence satisfactory to Torchlight that the person withdrawing the tender has succeeded to the beneficial ownership of the Shares.
All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by Torchlight, in its sole discretion, which determination will be final and binding. None of Torchlight, the Depositary, the Information Agent, or any other person will be under any obligation to give notice of any defects or irregularities in any notice of withdrawal or will incur any liability for failure to give any such notice.
Withdrawals of Shares may not be rescinded, and any Shares properly withdrawn will thereafter be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered at any time prior to the Expiration Date by following the procedures described in Section 3 above.
If Torchlight extends the Offer, is delayed in its acceptance for payment of Shares, or is unable to accept for payment Shares pursuant to the Offer for any reason, then, without prejudice to Torchlight's rights under the Offer, the Depositary may, nevertheless, on behalf of Torchlight, retain tendered Shares, and such Shares may not be withdrawn except to the extent that tendering stockholders are entitled to withdrawal rights as set forth in this Section 4.
SECTION 5 — MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
5.1 General. The following is a summary of the material U.S. federal income tax consequences to holders of Shares who tender their Shares pursuant to the Offer and receive cash in exchange therefor. This summary is based on the Internal Revenue Code of 1986, as amended (the "Code"), applicable Treasury regulations, administrative interpretations, and judicial decisions, all as in effect on the date hereof and all of which are subject to change or differing interpretation, possibly with retroactive effect. This summary does not purport to be a complete analysis of all potential U.S. federal income tax consequences of the Offer, nor does it address any tax consequences arising under any state, local, or non-U.S. tax laws, or under any U.S. federal tax laws other than those pertaining to income taxes (such as estate and gift taxes).
This summary applies only to holders who hold their Shares as "capital assets" within the meaning of Section 1221 of the Code (generally, property held for investment). This summary does not address all U.S. federal income tax consequences that may be relevant to particular holders in light of their individual circumstances, nor does it address the tax treatment of holders subject to special rules under the Code, including, without limitation:
• banks, financial institutions, insurance companies, and other financial services entities;
• tax-exempt organizations, including individual retirement accounts and other tax-deferred accounts;
• regulated investment companies and real estate investment trusts;
• pass-through entities, including partnerships, S corporations, and their partners, members, or shareholders;
• brokers and dealers in securities or foreign currencies;
• U.S. persons whose functional currency is not the U.S. dollar;
• persons who hold Shares as part of a hedge, straddle, constructive sale, or other risk-reduction or integrated transaction;
• persons who acquired their Shares through the exercise of employee stock options or otherwise as compensation; and
• persons who are subject to the alternative minimum tax.
STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE SPECIFIC TAX CONSEQUENCES OF THE OFFER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF U.S. FEDERAL, STATE, LOCAL, AND NON-U.S. TAX LAWS.
For purposes of this summary, a "U.S. Holder" is a beneficial owner of Shares who is, for U.S. federal income tax purposes: (i) an individual citizen or resident of the United States; (ii) a corporation (or other entity taxable as a corporation) created or organized in or under the laws of the United States, any state thereof, or the District of Columbia; (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source; or (iv) a trust (A) if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more "United States persons" (as defined in the Code) have the authority to control all substantial decisions of the trust, or (B) that has a valid election in effect under applicable Treasury regulations to be treated as a United States person. A "Non-U.S. Holder" is any beneficial owner of Shares that is not a U.S. Holder and is not a partnership for U.S. federal income tax purposes.
5.2 U.S. Holders
The exchange of Shares for cash pursuant to the Offer will be a taxable transaction for U.S. federal income tax purposes. A U.S. Holder who tenders Shares in the Offer and receives the Offer Price in exchange therefor will generally recognize gain or loss in an amount equal to the difference between:
(a) the amount of cash received by such U.S. Holder ($2.50 per Share); and
(b) such U.S. Holder's adjusted tax basis in the Shares surrendered.
Any gain or loss will be capital gain or loss and will be long-term capital gain or loss if, as of the date of the exchange, the U.S. Holder has held the Shares for more than one year. Long-term capital gains recognized by non-corporate U.S. Holders are currently eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations under the Code.
If a U.S. Holder acquired different blocks of Shares at different times or at different prices, such U.S. Holder must determine gain or loss separately for each block of Shares tendered.
In addition, for taxable years beginning after December 31, 2012, certain U.S. Holders who are individuals, estates, or trusts and whose income exceeds certain thresholds are subject to a 3.8% Medicare contribution tax on "net investment income," which includes, among other things, capital gains from the disposition of Shares. U.S. Holders are encouraged to consult their own tax advisors regarding the applicability of this additional tax to their specific circumstances.
5.3 Non-U.S. Holders
A Non-U.S. Holder who tenders Shares pursuant to the Offer generally will not be subject to U.S. federal income tax on any gain realized in the exchange, unless:
(a) the gain is effectively connected with the Non-U.S. Holder's conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States), in which case the gain will be taxed on a net-income basis at the regular graduated U.S. federal income tax rates applicable to U.S. persons, and, in the case of a Non-U.S. Holder that is a corporation, may also be subject to the 30% branch profits tax (or such lower rate as may be specified by an applicable income tax treaty);
(b) the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of the exchange and certain other conditions are met, in which case the gain may be subject to a flat 30% U.S. federal income tax (or such lower rate as may be specified by an applicable income tax treaty); or
(c) Ridgeline is, or has been within the shorter of the five-year period ending on the date of the exchange or the Non-U.S. Holder's holding period, a "United States real property holding corporation" ("USRPHC") within the meaning of Section 897 of the Code.
FIRPTA Considerations. Given that Ridgeline holds mining properties located in the United States (specifically, the Iron Lake Project in Baraga County, Michigan), Ridgeline may be classified as a USRPHC under the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"). If Ridgeline is a USRPHC, gain recognized by a Non-U.S. Holder on the exchange of Shares for cash may be subject to U.S. federal income tax under FIRPTA, unless RCI common stock is treated as "regularly traded" on an established securities market within the meaning of Section 897(c)(3) of the Code, and the Non-U.S. Holder held, actually or constructively, no more than 5% of such regularly traded stock at any time during the shorter of the five-year period ending on the date of the exchange or the Non-U.S. Holder's holding period for the Shares. RCI common stock is listed and traded on NYSE American, which is an "established securities market" for these purposes.
Non-U.S. Holders are urged to consult their own tax advisors regarding the application of FIRPTA to their specific circumstances.
5.4 Information Reporting and Backup Withholding
The Depositary will be required to report to the IRS and to each tendering stockholder the amount of any cash payments made to such stockholder pursuant to the Offer. Backup withholding at the then-applicable rate (currently 24%) may apply to such payments unless the tendering stockholder:
(a) is a corporation or other exempt payee and, when required, demonstrates this fact; or
(b) provides a correct taxpayer identification number ("TIN") on a properly completed IRS Form W-9 (or Substitute Form W-9 included in the Letter of Transmittal) and certifies under penalties of perjury that such TIN is correct and that such stockholder is not subject to backup withholding.
Each tendering U.S. Holder should complete and sign the Substitute Form W-9 included in the Letter of Transmittal to avoid backup withholding. Non-U.S. Holders should complete and submit IRS Form W-8BEN (or W-8BEN-E, in the case of entities) or other applicable IRS Form W-8 in order to establish an exemption from backup withholding. Copies of such forms may be obtained from the Depositary or from the IRS website at www.irs.gov.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against the stockholder's U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.
SECTION 6 — PRICE RANGE OF SHARES; DIVIDENDS
6.1 Market Price
RCI common stock is listed and traded on NYSE American under the ticker symbol "RCI." The following table sets forth, for the periods indicated, the high and low closing prices of RCI common stock as reported by NYSE American:
On March 13, 2024, the last full trading day before the public announcement of the Offer, the closing price of RCI common stock on NYSE American was $1.80 per Share. The 30-day volume-weighted average price ("VWAP") as of March 13, 2024 was $1.72 per Share.
Based on the closing price of $1.80 per Share on March 13, 2024, and the 18,000,000 Shares outstanding, RCI's pre-announcement market capitalization was approximately $32,400,000.
The Offer Price of $2.50 per Share represents:
• a premium of approximately 38.89% to the closing price of $1.80 per Share on March 13, 2024; and
• a premium of approximately 45.35% to the 30-day VWAP of $1.72 per Share.
Stockholders are urged to obtain a current market quotation for RCI common stock before deciding whether to tender their Shares. The market price of Shares may fluctuate significantly, and no assurance can be given as to the future market price of the Shares.
6.2 Dividends. Ridgeline has not declared or paid any cash dividends on its common stock since its inception. According to Ridgeline's publicly available filings with the SEC, Ridgeline does not anticipate declaring or paying any cash dividends on its common stock in the foreseeable future. Ridgeline is not expected to declare or pay any dividends prior to the consummation of the Offer or the subsequent merger.
As described in Section 14 of this Offer to Purchase, if Ridgeline declares or pays any dividend or makes any distribution with respect to its Shares on or after the date of this Offer to Purchase, the Offer Price may be reduced by the per-share amount of any such dividend or distribution.
SECTION 7 — CERTAIN INFORMATION CONCERNING RIDGELINE COBALT INC.
7.1 General. Ridgeline Cobalt Inc. is a corporation incorporated under the laws of the State of Delaware. Ridgeline's registered agent in Delaware is National Corporate Filing Services, Inc., 1209 Orange Street, Wilmington, DE 19801. Ridgeline's principal executive offices are located at 44 Lakeshore Drive, Suite 300, Marquette, MI 49855. Ridgeline's Employer Identification Number ("EIN") is 83-2196504.
Ridgeline is a junior mining company principally engaged in the exploration and development of cobalt and nickel properties in Northern Ontario, Canada, and the Upper Peninsula of Michigan, USA. Ridgeline's common stock is listed and traded on NYSE American under the ticker symbol "RCI."
The information set forth in this Section 7 has been derived from Ridgeline's publicly available filings with the SEC, including Ridgeline's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, its Quarterly Reports on Form 10-Q, and its Current Reports on Form 8-K. Torchlight has not independently verified this information and does not assume any responsibility for the accuracy or completeness thereof. Stockholders and other interested parties are encouraged to review Ridgeline's filings with the SEC, which are available at the SEC's website at www.sec.gov.
7.2 Properties. Ridgeline holds interests in two principal mineral exploration properties:
Hawk Ridge Project. The Hawk Ridge Project is a 12,400-hectare cobalt-nickel exploration property located in the Timiskaming District of Northern Ontario, Canada. The property is comprised of 65 mining claims registered under the Ontario Mining Act, bearing claim numbers 4271883 through 4271947. According to Ridgeline's publicly available technical reports, a National Instrument 43-101 compliant technical report dated April 15, 2023 disclosed an indicated mineral resource of approximately 28,600 tonnes of contained cobalt equivalent at the Hawk Ridge Project. The Hawk Ridge Project is located approximately 40 kilometers northeast of the town of Cobalt, Ontario, within the traditional territory of the Temagami First Nation. The property is accessible by gravel logging road from Highway 11 and is proximate to existing electrical grid infrastructure and the Ontario Northland Railway.
Iron Lake Project. The Iron Lake Project is a 3,200-hectare nickel-cobalt property located in Baraga County, Michigan, in the Upper Peninsula of Michigan, USA. The property is held under Michigan Department of Environment, Great Lakes, and Energy (EGLE) Mineral Lease Nos. ML-2021-0334 and ML-2021-0335, which were originally granted in 2021 and are subject to annual rental payments and work commitments. The Iron Lake Project is in an early stage of exploration, and no mineral resource has been defined to date. Initial geochemical sampling and geophysical survey work was completed in the fall of 2022, and a first-phase drill program is planned for the 2024 field season, subject to permitting.
7.3 Financial Information
The following summary financial information for Ridgeline has been derived from Ridgeline's publicly available SEC filings and has not been independently verified by Torchlight:
• Fiscal Year 2023 Revenue: $1,200,000, primarily derived from toll-processing arrangements with a third-party mineral processing facility and limited pilot production activities at the Hawk Ridge Project.
• Cash on Hand (as of December 31, 2023): $4,600,000.
• Total Debt: $7,800,000 in aggregate principal amount of 6.5% Senior Secured Convertible Notes due June 30, 2026 (the "Convertible Notes"), issued under an indenture dated June 30, 2022, held by Pinnacle Venture Resources Fund II, LP. The Convertible Notes are convertible at the election of the holder at any time into shares of RCI common stock at a conversion price of $2.00 per Share, representing an aggregate of 3,900,000 Shares issuable upon conversion.
• Outstanding Stock Options and Warrants: Options and warrants to acquire an aggregate of 1,100,000 Shares are currently outstanding under Ridgeline's equity compensation plans and certain warrant agreements.
• Shares Outstanding: 18,000,000 Shares of common stock, par value $0.001 per Share.
Ridgeline's independent registered public accounting firm is Aldgate Pryor LLP, CPA, located at 211 West Fort Street, Suite 500, Detroit, MI 48226. The lead engagement partner for the Ridgeline audit is Dennis Pryor, CPA.
7.4 Directors and Officers