DMG Blockchain Solutions Inc. announced that it has signed a letter of intent to offer 50 megawatts critical IT load of artificial intelligence data center colocation services to a single tenant at its Christina Lake, British Columbia facility. The Tenant, who is under a non-disclosure agreement at this time, will be providing DMG Blockchain Solutions Inc. with an investment grade backstop to review. The Company and the Tenant are working towards a definitive agreement, but there is no guarantee the parties will reach such agreement.
The initial term of the Definitive Agreement is 12 years with the right to renew it for up to three periods of five years. Pursuant to the letter of intent, the Company will deliver colocation capacity to the Tenant in phases with the goal of delivering the first phase by December 31, 2026. The letter of intent specifies Monthly Recurring Charges and Annual Escalations that reflect current market rates for artificial intelligence colocation.
DMG Blockchain Solutions Inc. will seek to utilize debt as the primary method of financing to meet the needed capital requirements if a Definitive Agreement is concluded. The letter of intent further stipulates that commencing on the date of the letter of intent and for a period of twelve months thereafter the right of first refusal, in the event that the Company intends to accept an offer from a different third party, the Tenant shall have seven business days from the offer notification to exercise the right of first refusal. Outside of the right of first refusal term, non-disclosure agreement and non-circumvent conditions, this letter of intent is non-binding.
The proposed transaction is at arm?s length. During this time period, the Company will continue to operate its Christina Lake facility primarily as a Bitcoin mining operation. If the Definitive Agreement is entered into by the parties, then the Company will transition the facility to an artificial intelligence data center to provide the colocation services to the Tenant.
If and when the Definitive Agreement is executed in connection with the proposed transaction, the Company will issue a more comprehensive news release disclosing further details of the proposed transaction. There is no assurance that the Definitive Agreement will be successfully negotiated or executed by the parties. Completion of the proposed transaction is subject to a number of conditions, including entering into the Definitive Agreement.
