Prismo Metals Inc. (CSE: PRIZ) has signed a non-binding letter of intent with Vizsla Silver Corp. According to the LOI, Vizsla will make a significant investment in Prismo Metals for $2 million by purchasing 4 million Prismo Metals units, with Vizsla having the first option to purchase the Palos Verdes property from Prismo Metals. On or around December 16, 2022, the parties are expected to sign the definitive agreements, and shortly after that, the Strategic Investment will be closed. In order to complete the Strategic Investment, the parties must first enter into definitive agreements and obtain all necessary regulatory and third-party approvals and consents.
Four million units of Prismo have been agreed to be subscribed for by Vizsla, each consisting of 1 common share and 1/2 warrant. Each warrant entitles the holder to purchase one common share of Prismo for C$0.75 for two years. Vizsla will issue 1,000,000 common shares in Prismo in exchange for C$500,000 in cash at closing to finance the Strategic Investment. Prismo’s ownership will be 17.03% on a partially diluted basis following the Strategic Investment. On a fundamental basis, Prismo’s ownership will be 12.04%. Vizsla will receive common shares, and Prismo will receive Consideration Shares. Those shares will be subject to a four-month hold period and an optional twenty-four-month hold period, with 25% released every six months.
Vizsla will fund a technical committee led by Prismo and Vizsla to study the combined land packages, regardless of ownership. Prismo and Vizsla will each nominate a member of a technical committee. The parties must agree on the third nominee. One director will be nominated to Prismo’s board by Vizsla. During the ROFR, Vizsla will be permitted to maintain its current level of ownership in Prismo, provided that Prismo’s ownership by Vizsla is at least 10% for more than 60 consecutive days. During future financing rounds, Vizsla will be allowed to maintain its current ownership level in Prismo, provided that it maintains at least 10% of the company’s equity. Vizsla and its affiliates may designate a purchaser for any proposed sale of Consideration Shares by Prismo. Prismo may designate a purchaser for Vizsla’s proposed sale of Prismo shares.