KWG Announces Proposed Investment Acquisition

Rhea-AI Summary

KWG Resources (CSE: CACR), operating as The Canadian Chrome Company, has announced plans to acquire up to 50% equity in Newcon International Ltd. (Newcon Optik) in two stages. The first stage involves acquiring a 25% indirect interest valued at approximately CA$14 million, paid in CCC Multiple-Voting Shares at a 15% premium to current trading prices.

Newcon Optik, a manufacturer of night optical equipment and laser-based rangefinders for military and police organizations, has demonstrated strong financial performance with annual net income between $2.9-$6.1 million over the past five years. Additionally, KWG announced a private placement offering of up to 3 million Units at $10.00 each, with each Unit comprising four CCC Multiple-Voting Shares and two Warrants.

Positive

• Acquisition target Newcon Optik shows consistent profitability with net income of $2.9-$6.1 million over last 5 years
• Investment expected to provide steady dividend income stream to support operations
• Strategic acquisition at 15% premium to current trading price indicates value proposition
• Target company has strong growth prospects and established market position in military/police equipment

Negative

• Significant dilution potential through share issuance for acquisition and private placement
• Diversification into optical equipment manufacturing represents departure from core mining business
• Transaction requires multiple approvals and conditions to be met
• Execution risk in managing investment in different industry sector

Toronto, Ontario--(Newsfile Corp. - June 24, 2025) - KWG Resources Inc. (CSE: CACR) (CSE: CACR.A), which carries on business as The Canadian Chrome Company ("CCC", "KWG" or the "Company"), announces that it proposes to acquire, in two stages to assure conformity with terms of a shareholders' agreement, up to 50% of the equity of Newcon International Ltd. ("Newcon"), which carries on business as Newcon Optik, in exchange for CCC Multiple-Voting Shares to be issued from treasury at a 15% premium to CCC's current volume weighted average trading price. A letter of intent was signed today to acquire an initial 25% indirect interest assuming certain underlying options are exercised, and is proposed to be completed following execution of a definitive agreement, satisfying all conditions and receiving all necessary approvals. The estimated value of this first 25% tranche at present market prices, based on a formula agreed upon and to be supported by a fairness opinion to be obtained prior to closing, would be approximately CA$14 million.

The proposed transaction is not intended to constitute or result in a change of business for CCC as CCC intends to continue to focus on its business of mineral exploration involving the acquisition of interests in, and the exploration, evaluation and development of, large scale mineral deposits of chromite and other base metals and minerals including the large chromite deposits it controls in Ontario's Ring of Fire. It is the objective of the proposed transaction to provide a source of cash-flow to be derived from dividends to be paid by Newcon and, in the longer term should the opportunity present itself, a liquidation of the investment in Newcon. Newcon Optik is a night optical equipment manufacturer and a world leader in laser-based rangefinders which are sold to military and police organizations in many countries. With annual net income ranging between $2.9 million and $6.1 million over the last five years, and excellent growth prospects, including in 2025, it has shown itself to be a profitable business and is expected to provide a steady flow of dividend income to its shareholders. This income will assist CCC with its cash needs rather than relying totally on periodic private placements in these challenging capital markets. The business is also believed to have excellent growth prospects with interesting possibilities for strategic development.

The Company also announces a proposed private placement of Units, each Unit being comprised of four CCC Multiple-Voting Shares and two Warrants (each Warrant exercisable for the purchase of one further such share at any time within 12 months after closing of the first tranche of the private placement or a change of control, whichever first occurs, upon payment of $4.00). Up to 3 million Units priced at $10.00 each will be offered to Accredited Investors and other investors qualified to purchase such securities on a prospectus-exempt basis.

About The Canadian Chrome Company:
KWG, which carries on business as The Canadian Chrome Company, is an exploration stage company that is focused on identification, acquisition, consolidation, exploration, development and evaluation of large-scale deposits of minerals including chromite, base metals and strategic minerals and, where applicable, in the development of transportation and electrification links to access remote areas where these deposits may be located. The Canadian Chrome Company is a registered business style of KWG Resources Inc.

For further information, please contact:
Bruce Hodgman, Vice-President: 416-642-3575 ~ info@canadachrome.com

Forward-Looking Statements: Information set forth in this news release may involve forward-looking statements under applicable securities laws. The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this document are made as of the date of this document and KWG disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities legislation. Although management believes that the expectations represented in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct.

Disclaimer: Neither the Canadian Securities Exchange nor its Regulation Services Provider (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this news release.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/256730

FAQ

What is the value of KWG Resources' proposed acquisition of Newcon Optik?

The first 25% tranche is valued at approximately CA$14 million, with plans to acquire up to 50% equity in total.

How will KWG Resources (KWGBF) finance the Newcon Optik acquisition?

The acquisition will be financed through the issuance of CCC Multiple-Voting Shares from treasury at a 15% premium to current volume weighted average trading price.

What is Newcon Optik's financial performance?

Newcon Optik has demonstrated consistent profitability with annual net income ranging between $2.9 million and $6.1 million over the last five years.

What is the structure of KWG Resources' new private placement offering?

The company is offering up to 3 million Units at $10.00 each, with each Unit including four CCC Multiple-Voting Shares and two Warrants exercisable at $4.00 within 12 months.

How will the Newcon Optik acquisition benefit KWG Resources shareholders?

The acquisition is expected to provide steady dividend income from Newcon's operations, reducing reliance on private placements for funding, with potential for long-term value through eventual liquidation.