Search Minerals Inc. Settles $404K Debt Through Shares-for-Debt Transaction to Strengthen Financial Position

Search Minerals Inc. (TSX.V: SMY) (OTC: SHCMF) has entered into a shares-for-debt transaction with LeadFX Inc. to settle outstanding debt totaling $404,053.73. The company issued 808,107 common shares at a deemed price of $0.50 per share to complete the transaction, which replaces a previously planned unsecured convertible loan arrangement.

The strategic decision to pursue this shares-for-debt approach serves to preserve cash resources and strengthen the company's balance sheet. According to the company's announcement, this financial maneuver allows Search Minerals to maintain liquidity while addressing its debt obligations. The shares issued in this transaction will carry a four-month-and-one-day statutory hold period, which is standard for such arrangements in the Canadian market.

Since LeadFX qualifies as a related party, the transaction falls under Multilateral Instrument 61-101 protection of minority security holders in special transactions. However, Search Minerals indicated that the transaction qualifies for exemptions from formal valuation and minority approval requirements. This exemption applies because the fair market value of the shares issued does not exceed 25% of the company's market capitalization. The company also confirmed that no new control person will be created through this transaction.

This financial restructuring occurs as Search Minerals continues to advance its exploration and development projects focused on Critical Rare Earth Elements (CREE) and transition metals including Zirconium and Hafnium. The company's primary operations are concentrated in the emerging Port Hope Simpson – St. Lewis CREE District of South-East Labrador, where it controls two deposits (Foxtrot and Deep Fox), two drill-ready prospects (Fox Meadow and Silver Fox), and numerous other CREE prospects along a 64-kilometer belt. Additional information about the company's projects can be found at https://ibn.fm/S3raI.

The company also maintains assets in the Red Wine CREE District of central Labrador, including the drill-ready Two Tom Lake CREE-Be-Nb deposit, the Mann #1 CREE-Nb-Be prospect, and Merlot CREE Prospect. These projects position Search Minerals within the growing critical minerals sector, which has gained strategic importance globally due to supply chain concerns and increasing demand for rare earth elements used in various technologies including electric vehicles, renewable energy systems, and defense applications.

The debt settlement transaction represents a significant financial management decision for Search Minerals as it navigates the capital-intensive mining exploration sector. By converting debt to equity, the company reduces its immediate financial obligations while potentially aligning LeadFX's interests with those of other shareholders. This approach may provide the company with greater financial flexibility to advance its exploration programs and development timelines in Labrador's emerging rare earth districts.

For investors and stakeholders following developments in the critical minerals sector, this transaction demonstrates how junior mining companies are managing financial challenges while positioning themselves for long-term project development. The preservation of cash through such arrangements can be particularly important for exploration-stage companies that require sustained investment in drilling, sampling, and feasibility studies before reaching production stages. Additional company updates are available at https://ibn.fm/SHCMF.