Automata Rare Earth Corp. Initiates Up to CAD $2.5 Million Non-Brokered Private Placement to Advance Key Canadian Critical Minerals Projects

Private Placement Structure: Non-Flow-Through and Flow-Through Units

The private placement consists of two components: up to 4,545,455 non-flow-through units ("Units") priced at $0.33 each, targeting gross proceeds of up to $1.5 million; and between 2,222,223 and 3,333,333 flow-through units ("FT Units") priced at $0.45 each, aiming to raise between $1.0 million and $1.5 million depending on subscriptions. Combined, these components could generate total gross proceeds of CAD $2.5 million.

Each non-flow-through Unit includes one common share plus one full common share purchase warrant. Each FT Unit comprises one flow-through common share and one-half of a warrant, meaning two FT Units are required to receive one full warrant. Both warrant types have an exercise price of $0.475 per share and expire 24 months after issuance. The price difference between standard units ($0.33) and flow-through units ($0.45) reflects the tax advantages associated with flow-through shares under Canadian tax and securities laws.

Tax Benefits of Flow-Through Shares Under Canadian Income Tax Act

The flow-through portion qualifies as "flow-through critical mineral mining expenditures" under the Income Tax Act (Canada), allowing the company to renounce eligible exploration expenses to investors who can then deduct these costs against their income. Gross proceeds from FT Unit sales will be exclusively used for qualifying exploration expenditures.

Flow-through financing is a vital capital-raising method for junior Canadian exploration companies, especially in the critical minerals sector. It offers investors tax incentives alongside equity participation, often enabling issuers to raise capital at a premium over market prices. The $0.45 FT Unit price premium compared to the $0.33 non-flow-through Unit price exemplifies this. Investor valuation of this premium depends on their individual tax situations and investment strategies.

Accelerated Warrant Expiry Clause and Implications for Investors

Both Unit and FT Unit warrants feature an acceleration clause permitting Automata Rare Earth to shorten the 24-month exercise period. If the company’s shares trade above $0.55 on the CSE for ten consecutive trading days after the statutory hold period of four months and one day, the company may call the warrants early per the terms.

This clause encourages warrant holders to exercise promptly when the share price surpasses the trigger, providing the company with additional capital at $0.475 per share. For investors, this introduces timing risk distinct from typical warrant agreements, requiring close monitoring of trading activity. The announcement did not specify the notice period warrant holders would receive before early expiry enforcement.

Allocation of Proceeds: Oculus REE and Burnt Pond VMS Projects

Funds raised will advance exploration and development of Automata’s Canadian critical minerals portfolio, focusing on its flagship projects. The Oculus Rare Earth Element (REE) Project in Labrador is situated in a region gaining prominence for rare earth exploration due to its favorable geology. The Burnt Pond VMS (volcanogenic massive sulphide) Project in Newfoundland offers exposure to base and precious metal mineralization typical of VMS deposits.

Proceeds from non-flow-through Units will also support evaluating strategic opportunities and general corporate purposes. Automata holds option agreements to acquire up to 100% interest in both projects. The announcement did not disclose specific exploration budgets, drilling targets, or a breakdown of funds between the two projects.

Research Capital Corporation Engaged as Exclusive Finder

Automata Rare Earth has contracted Research Capital Corporation as the exclusive finder for this offering. Per the agreement and subject to securities laws and CSE policies, Research Capital will earn a cash commission of 8.0% of gross proceeds raised from subscribers it introduces.

Additionally, Research Capital will receive non-transferable finder's warrants equal to 8.0% of the total Units and FT Units sold to its introduced subscribers. Each finder's warrant permits purchase of one common share at the applicable unit price ($0.33 for Units or $0.45 for FT Units) for 24 months from closing. Engaging a recognized Canadian capital markets firm may help broaden investor reach, though no specific investor targets or subscription timelines were disclosed.

Closing Process, Hold Period, and Regulatory Approval

The offering will close in one or more tranches, a common approach for junior exploration firms to maintain flexibility as investor interest develops. Closing is conditional on customary requirements, including approval from the Canadian Securities Exchange. No target closing dates were provided.

All securities issued—including common shares, flow-through shares, warrants, and finder's warrants—will be subject to a statutory hold period of four months and one day from issuance under Canadian securities laws. This restricts resale during that time, standard for private placements in Canada. Investors should consider this illiquidity when evaluating the opportunity.

CEO Statement on Critical Mineral Demand and Company Outlook

Christopher Huggins, CEO of Automata Rare Earth Corp., stated: "This financing provides the Company with the capital necessary to continue advancing our Canadian critical mineral projects at a time when demand for secure domestic supplies of rare earth elements and strategic metals continues to accelerate. We appreciate the support from both existing and new shareholders and look forward to executing on our exploration objectives."

His remarks underscore the strategic environment in which Automata operates. Global demand for rare earth elements is rising due to their critical role in defense, autonomous systems, AI infrastructure, and next-generation robotics — sectors highlighted by the company. The emphasis on secure domestic supply aligns with ongoing geopolitical efforts in Canada, the U.S., and allied nations to diversify rare earth supply chains away from dominant global producers.

Overview of Automata Rare Earth’s Canadian Critical Minerals Assets

Automata Rare Earth positions itself as a Canadian critical minerals exploration company targeting rising demand for rare earth elements in advanced technologies. Its current assets, Oculus in Labrador and Burnt Pond in Newfoundland, are described as strategically located within prospective mineral districts. However, this announcement did not include resource estimates or historical results.

The company is listed on the Canadian Securities Exchange (CSE: AREE), OTCQB in the U.S. (OTCQB: CMTNF), and Frankfurt Stock Exchange (FSE: 7K0), reflecting efforts to access both domestic and international investor markets. Automata holds option agreements—not outright ownership—on both projects, requiring fulfillment of conditions or expenditures to earn interests. Specific option terms were not disclosed.

Investor Insights on This Non-Brokered Private Placement

Non-brokered private placements are common for junior exploration companies on the CSE. Aside from the finder's role of Research Capital, this offering relies on direct investor engagement rather than a fully underwritten syndicate, potentially resulting in a more concentrated shareholder base among new subscribers.

Investors will likely watch the final raise relative to the $2.5 million maximum, noting the flow-through portion’s minimum $1.0 million threshold. Potential dilution from share issuances and warrants—including finder's warrants—depends on subscription levels and warrant exercises. Immediate share price impact was not available at announcement. As with all junior explorers, operational results are subject to exploration risk, commodity price fluctuations, regulatory approvals, and market conditions.