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Montauk Metals Secures Litigation Funding Against the Republic of Colombia

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/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES /

TORONTO, Nov. 09, 2023 (GLOBE NEWSWIRE) — Montauk Metals Inc. (TSX-V: MTK) (the “Firm” or “Montauk”) is happy to announce that it has secured litigation funding for its arbitration proceedings (the “Arbitration”) introduced by the Firm towards the Republic of Colombia (“Colombia”) to implement the Firm’s rights to compensation beneath the Canada-Colombia Free Commerce Settlement (the “FTA”), as beforehand described in its information releases of March 27, 2018, February 25, 2019, February 10, 2020, November 23, 2021, September 1, 2023 and October 5, 2023, and topic to sure situations and approvals as famous beneath.

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Background of the Declare

Montauk contends that Colombia breached its obligations owed to the Firm, together with particular obligations beneath the FTA. The claims embrace Colombia’s refusal or failure to compensate the Firm for the losses incurred as a consequence of Colombia’s prohibition of mining within the páramos (excessive altitude eco-systems). On March 21, 2018, Montauk filed a Request for Arbitration towards the Republic of Colombia earlier than the Worldwide Centre for Settlement of Funding Disputes (“ICSID”).

The Arbitration is being performed in two phases. Section One will decide whether or not the ICSID Tribunal adjudicating Montauk’s claims (the “Tribunal”) beneath the FTA has jurisdiction over this case and whether or not Colombia has breached its obligations beneath the FTA and is answerable for compensation to the Firm. Assuming that ICSID decides in favour of Montauk in Section 1 (the “Section 1 Resolution”), Section 2 will contain figuring out the quantum of damages awarded to Montauk to compensate it for losses incurred. The Firm estimates it has suffered greater than USD $16 million in sunk prices and whole lack of the worth of as much as USD $180 million within the Reina de Oro undertaking, in addition to authorized and arbitration charges. Sometimes, an arbitral award will embrace an award of prices payable by the unsuccessful celebration to the profitable celebration to reimburse it for its authorized and arbitration charges.

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Sure prices of the proceedings, together with arbitration charges and disbursements, have exceeded the Firm’s unique estimates because the Firm was additionally required to pay Colombia’s 50% share of the arbitration charges. The Firm should make an extra cost of US$200,000 to ICSID (the “ICSID Fee”) earlier than a ruling on Section 1 is rendered. If the Firm fails to pay the required quantity of US$ 200,000 to acquire a ruling on or earlier than November 9, 2023 (the “Fee Deadline”), the ICSID Performing Secretary-Normal could train its discretion to discontinue the Arbitration. The ICSID Fee is predicted to consequence within the issuance of a choice on jurisdiction and legal responsibility.

Extension of the Fee Deadline

The Firm expects to use as we speak to ICSID to request an extension to the Fee Deadline (the “Extension”). The Firm shunned submitting an Extension utility till it had obtained a litigation funding dedication, with such dedication being obtained as we speak following the approval of the Omni’s (as outlined beneath) funding committee. The Firm strongly believes within the deserves of its case and has obtained litigation funding to fund the ICSID Fee, topic to sure situations as famous beneath. The Firm is optimistic that ICSID will contemplate the Extension request.

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Litigation Funding

Montauk has entered right into a mortgage and choice settlement (the “Mortgage Settlement”) with Omni Bridgeway (Fund 5) Canada Investments Ltd. (“Omni”), pursuant to which Omni has agreed to lend the Firm US$200,000 (the “Mortgage Quantity”) to fund the ICSID Fee to ensure that the Tribunal to render a ruling on Section One.

The Mortgage Quantity will accrue curiosity at a fee of twenty p.c (20%), compounded yearly. Within the occasion the Tribunal within the Arbitration finds that it doesn’t have jurisdiction over the dispute and/or that Colombia didn’t breach its duties to the Firm and/or any final result which in any other case renders a Section 2 Election (as outlined beneath) non-viable within the sole view of Omni, the Mortgage Quantity and any and all accrued curiosity have to be repaid by the Firm inside sixty (60) days after Omni notifies the Firm that Omni won’t make the Section 2 Election. The reimbursement of the Mortgage Quantity and any such accrued curiosity shall be payable no matter whether or not the Arbitration is profitable and is a recourse obligation of the Firm, payable from any and all belongings of the Firm. In reference to the Mortgage Settlement, the Firm will ship a promissory be aware (the “Observe”) to Omni evidencing its obligation to repay Omni the Mortgage Quantity and any accrued curiosity.

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As well as, the Firm has granted Omni an choice, exercisable within the sole discretion of Omni (the “Section 2 Election”) to supply litigation funding to the Firm pursuant to a litigation funding settlement (the “LFA”). The LFA is predicted to supply an preliminary quantity of as much as US$2,325,000 (the “Non-Recourse Funding Quantity”) topic to sure situations. The Non-Recourse Funding Quantity could also be elevated in sure circumstances as could also be agreed upon between the Company and Omni.

If Omni elects to supply the Non-Recourse Funding Quantity for Section 2 and the enforcement of any award obtained by the Firm within the Arbitration, the Mortgage Quantity and curiosity shall be repaid by way of proceeds recovered within the litigation (and within the occasion there are not any proceeds recovered within the litigation, such quantity inclusive of such curiosity shall be payable by the Firm on the conclusion of the litigation).

Omni’s return on the Non-Recourse Funding Quantity (the “Omni Return”) will probably be restricted solely to restoration from the amount of cash for which the Arbitration is settled, or for which a remaining, non- appealable award is given in favour of the Company (the “Litigation Proceeds”). The Omni Return shall be an quantity calculated because the sum of (i) a a number of of the quantities truly incurred of the Non-Recourse Litigation Funding Quantity and (ii) a share of the gross restoration proceeds, each calculated when the restoration proceeds are obtained, as set out within the desk beneath:

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Months A number of Proportion
0-12 2.0x 12 %
12-24 3.0x 14 %
24+ 3.5x 16 %

The Litigation Proceeds, if obtained, will probably be disbursed within the following order of precedence: (a) Omni shall be reimbursed the Recourse Mortgage and the quantities truly incurred of the Non-Recourse Funding Quantity; (b) Omni shall be paid the Omni Return and authorized counsel shall be paid their authorized charges; and (c) the steadiness shall be paid to the Company.

In reference to the Mortgage Settlement, Observe and LFA, the Firm has agreed to grant Omni a unbroken first precedence safety curiosity over any and all belongings of the Firm (whether or not presently held or acquired after the date hereof), together with the Firm’s curiosity in any Litigation Proceeds.

The Mortgage Settlement is topic to sure situations and the receipt of all crucial approvals and regulatory approvals, together with the approval of the TSX Enterprise Alternate and the approval of the shareholders of the Firm. The LFA is topic to the foregoing situations and approvals and is topic to the settlement of the definitive LFA. The principal phrases and situations and the LFA have been agreed upon within the Mortgage Settlement. The Firm has scheduled a particular assembly of shareholders to be held on December 14, 2023 (the “Assembly”) at which shareholders of the Firm will vote to ratify the Mortgage Settlement and approve the LFA. Extra data pertaining to the Mortgage Settlement and LFA could also be discovered within the administration data round pertaining to the Assembly that’s anticipated to be out there on the Firm’s profile on SEDAR+ on or round November 22, 2023.

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The Firm can’t assure that it is going to be profitable on the Arbitration, or that the estimated quantities disclosed herein won’t be revised because the Arbitration proceeds. The Firm additionally can’t assure that it is going to be capable of recuperate all or a part of its authorized and arbitration prices from Colombia even whether it is profitable on the Arbitration. Assuming the Extension is granted and the Arbitration proceeds, the ruling from the Tribunal can be anticipated to be on or concerning the first quarter of 2024. Administration of the Firm will proceed to supply updates on materials developments of the standing of the Arbitration.

RISK DISCLOSURE STATEMENT: This present day, the Firm’s cost obligations are considerably in extra of its money balances and it has no different belongings. The Firm shouldn’t be solvent and can’t proceed as a going concern.   Buying and selling in shares of the Firm and any funding within the Firm is extremely speculative. No buying and selling in securities of the Firm or funding ought to be made with out having the ability to lose all the quantity of such funds. See beneath, “Cautionary Observe Relating to Ahead-Trying Statements”. Traders are suggested to hunt skilled recommendation earlier than making any choice to commerce in or spend money on the securities of the Firm.

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Montauk Metals Inc.
Mari Doren
VP Administration
775-748-5221
mdoren@montaukmetalsinc.com
www.galwaygoldinc.com

Cautionary Observe Relating to Ahead-Trying Statements:
This Information Launch contains sure “forward-looking statements” which aren’t comprised of historic information. Ahead-looking statements embrace estimates and statements that describe Montauk’s future plans, aims or objectives, together with phrases to the impact that Montauk or administration expects a said situation or consequence to happen. Ahead-looking statements could also be recognized by such phrases as “believes”, “anticipates”, “expects”, “estimates”, “could”, “may”, “would”, “will”, or “plan”. Since forward-looking statements are primarily based on assumptions and handle future occasions and situations, by their very nature they contain inherent dangers and uncertainties. Though these statements are primarily based on data at present out there to Montauk, Montauk gives no assurance that precise outcomes will meet administration’s expectations. Dangers, uncertainties and different components concerned with forward-looking data may trigger precise occasions, outcomes, efficiency, prospects and alternatives to vary materially from these expressed or implied by such forward-looking data. Ahead wanting data on this information launch contains, however shouldn’t be restricted to, the standing of the Arbitration, the deserves and the related prices of continuous the Arbitration, the provision of funding for persevering with the Arbitration, the anticipated timelines for Arbitration selections and outcomes, and the Firm’s potential to function an lively enterprise assuming an unfavourable consequence from the Arbitration. Components that would trigger precise outcomes to vary materially from such forward-looking data embrace, however are usually not restricted to: the shortcoming to reinstitute the Arbitration for any cause;
prices of the Arbitration for quantities that are in extra of anticipated quantities; an incapacity on the a part of the Firm to succeed on Section One and Section Two of the Arbitration and the ensuing failure to recuperate damages in respect of the termination of the Reina de Oro undertaking with an entire lack of all prices incurred in respect of the Arbitration; any change within the authorized panorama which may render the Firm’s pursuit of the Arbitration roughly promising; any change within the laws, coverage and/or jurisprudence of Colombia and/or Canada which may influence the power of the Firm to recuperate damages in respect of the termination of the Reina de Oro undertaking; failure to acquire approvals for the litigation financing by Omni, together with the all crucial regulatory approvals, approval of the TSXV and approval of the shareholders of the Firm; failure the settle the phrases and situations of the LFA, failure to acquire the Extension, failure of Omni to train the Section 2 Election to supply litigation funding for Section 2; fluctuations in forex change charges diminishing the power to make use of of the proceeds of the litigation funding as described; political dangers; uncertainties referring to the provision and prices of financing wanted sooner or later; adjustments in fairness markets; inflation; adjustments in change charges; fluctuations in commodity costs; assuming an unsuccessful consequence on the Arbitration, the Firm could don’t have any industrial operations and has no historical past of revenue, whereas retaining vital liabilities in reference to the Arbitration; dangers of a fabric opposed change to the Firm’s potential to develop its properties or generate income resulting from an unfavourable consequence on the Arbitration; the power to proceed as a going concern assuming an unfavourable consequence on the Arbitration; and people dangers set out in Montauk’s public paperwork filed on SEDAR+. Though Montauk has tried to establish essential components that would trigger precise actions, occasions, or outcomes to vary materially from these described within the forward-looking data, there could also be different components that trigger actions, occasions, or outcomes to not be as anticipated, estimated, or meant. There might be no assurance that forward-looking data will show to be correct. The forward-looking data contained herein is introduced for the needs of aiding buyers in understanding Montauk’s plans, aims, and objectives and is probably not acceptable for different functions. Accordingly, readers mustn’t place undue reliance on forward-looking data. Montauk doesn’t undertake to replace any forward-looking data, besides in accordance with relevant securities legal guidelines.

Neither TSX Enterprise Alternate nor its Regulation Companies Supplier (as that time period is outlined within the insurance policies of the TSX Enterprise Alternate) accepts duty for the adequacy or accuracy of this launch.


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