Almonty -- summary under Continuances/Migrations

Overview

Almonty Industries is proposing to use the CBCA continuation procedures and the domestication procedures under the Delaware General Corporation Law Inc. (the “DGCL”) so as to become governed by the DGCL. This domestication transaction is not anticipated to result in material exit taxes under s. 128.1(4)(b) or 219.1.

Continuation

It is proposed that the Company be continued pursuant to a CBCA Plan of Arrangement from the CBCA pursuant to s. 192 thereof to the State of Delaware so as to be governed by the Delaware General Corporation Law (the “DGCL”) (such change of jurisdiction, the “Domestication”). The Domestication will not interrupt the Company’s corporate existence or its outstanding agreements or obligations.

Company’s shares

Upon the Domestication being effective, shareholders will continue to hold common shares of the Company and the Company’s shares will continue to be listed on the TSX and (in the form of CHESS Depositary Interests) on the ASX,

Canadian income tax consequences

S. 128.1(4)(b)

Upon the Domestication, the Company will cease to be Canadian-resident corporation and its taxation year will be deemed to end immediately before that time. In addition, each property owned by the Company immediately before the deemed year end will be deemed to have been disposed of under s. 128.1(4)(b) for proceeds of disposition equal to its fair market value.

S. 219.1

The Company will also be subject to an additional tax under Part XIV on the amount by which the fair market value, immediately before its deemed year end resulting from the Domestication, of all of the property owned by the Company exceeds the total of its liabilities and the paid-up capital of all the issued and outstanding shares of the Company immediately before the deemed year end.

Likely no exit tax

While the Company believes that the quantum of any taxes payable will not be material based on its current estimates of fair market value, it is possible that CRA may disagree.

U.S. tax consequences

F reorg or taxable

The Domestication will constitute a reorganization under s. 368(a)(1)(F), and generally will not represent a taxable transaction to the Company for U.S. federal income tax purposes, provided that holders of not more than 1% of the Company’s common shares entitled to vote on the transaction elect to exercise their dissenters’ rights. If the continuation does not qualify as an F reorganization, a US holder (subject to the PFIC rules) generally would recognize gain or loss based on the difference between the FMV of the new Almonty shares received and the holder’s adjusted cost basis of its common shares deemed to be surrendered in the Domestication.