TIDMPOW
RNS Number : 8767W
Power Metal Resources PLC
28 April 2021
28 April 2021
Power Metal Resources plc
("Power Metal" or the "Company")
Conditional Australia Copper-Gold Acquisition
Power Metal Resources PLC (LON:POW) the AIM listed metals
exploration and development company is pleased to announce an
agreement has been reached for the acquisition of a 75% strategic
interest in a UK special acquisition vehicle which is to acquire
outright First Development Resources (Pty) Limited ("FDR
Australia"), an Australian private company.
FDR Australia holds a portfolio of copper-gold focused
exploration interests in the Paterson Province in the eastern
Pilbara Region of Western Australia. The acquisition of FDR
Australia will not be undertaken until the Ripon Hills Project has
been successfully transferred into FDR Australia and a granted
exploration licence has been received by FDR Australia in respect
of the Wallal Project. Further announcements will be made by the
Company as appropriate.
CHIEF EXECUTIVE OFFICER STATEMENT
Paul Johnson Chief Executive Officer of Power Metal Resources
plc commented:
"The acquisition announced today provides Power Metal with a
strategic interest in exploration properties in the Paterson
Province, Western Australia. This region has seen considerable
interest in recent years following the Havieron discovery by
Greatland Gold plc and Winu discovery by Rio Tinto.
The level of interest in the region has intensified of late and
the opportunity to secure a high-quality strategic licence
footprint is diminishing. We needed to act to secure Power Metal's
seat at the "Paterson" table.
We now have a seat at that table, but this is Power Metal and
our policy is to carve out innovative pathways for value generation
with each new transaction.
Through this acquisition we are creating a new strategic
Australian copper-gold exploration vehicle with a view to listing
this special acquisition vehicle on the London capital markets at
the earliest opportunity.
There is a clear opportunity in the Paterson Province, something
we intend to pursue with considerable vigour and as you will see
below, we are aligning Power Metal with an experienced Australian
team to support the business in the run up to the listing of the
special acquisition vehicle.
For myself, and Andrew Bell Chairman of Power Metal, this
transaction is reminiscent of the financing and restructuring of
Greatland Gold we coordinated in April 2016, which rejuvenated that
vehicle and provided the backdrop to the dramatic delivery for
shareholders we saw there. It does Power Metal no harm if we aspire
to achieve another positive outcome with this new opportunity."
BACKGROUND
This acquisition agreement (the "Agreement") underlying this
transaction was finalised on 27 April 2021 and was based in part on
an option agreement (the "Option") announced by the Company on 19
January 2021 and which may be viewed through the following
link:
https://www.powermetalresources.com/n/n340/option-signed-australia-copper-gold-acquisition
After signing of the original option agreement which focused on
two exploration projects being the Wallal Project and the Ripon
Hills Project, three additional exploration properties became
available for acquisition which would significantly enhance the
overall exploration licence footprint.
Discussions with FDR Australia and associated project vendors
ensued and due diligence work was undertaken on the wider
exploration package. The discussions were extended to the consider
the strategic opportunity to work together and potentially create a
new London listed Australian exploration vehicle, focused on the
Paterson Province, in Western Australia.
To secure the strategic footprint in one move it was necessary
to pick apart the original option agreement and reconstruct the
transaction.
The outcome of this is that Power Metal Resources will acquire
an effective 75% interest in FDR Australia. This interest will be
held through a 75% interest in a newly created UK private company,
("FDR UK"), which will ultimately hold 100% of the issued share
capital of FDR Australia. The remainder 25% of FDR UK will be held
by the vendors and associated parties, as outlined below.
FDR Australia's business interests are outlined below and
include five exploration projects including one granted exploration
licence (the Ripon Hills Project) and four licence applications
(the Wallal, Wallal West 1, Wallal West 2 and Braeside West
Projects).
The intention is to list FDR UK on the UK capital markets, on
the most expedited pathway possible.
THE PATERSON PROVINCE
The Paterson Province is considered highly prospective for
gold-copper and base metal mineral systems and is currently of
particular focus for resource companies with a significant level of
exploration activity underway across the region.
This level of interest follows recent high-profile copper and
gold discoveries by Rio Tinto at their Winu property(1) and by
Greatland Gold plc (LON:GGP) with the Havieron discovery(2) .
Notably, several major groups in search of Tier 1 deposits have
entered into joint-venture / farm-in agreements with junior
explorers to expedite exploratory work.
The area also has developed mine and processing infrastructure
due to the presence of established mining operations, including
Newcrest Mining's Telfer Mine(3) and the X-Metals Nifty Copper
Operation(4) (planned as a mine restart).
FDR AUSTRALIA AND ITS BUSINESS INTERESTS
FDR Australia currently holds five project interests (the "FDR
Australia Interests") as follows:
The Wallal Project - E45/5816 - Licence Application
E45/5816, the Wallal Project is an exploration licence
application held outright by FDR Australia and covering 390km(2) in
the western quadrant of the Paterson Province with a favourable
lithospheric setting for substantial base metal deposits consistent
with Rio Tinto's (ASX: RIO) Winu discovery - predominantly
copper-gold-silver with a JORC compliant Inferred Resource of 503Mt
@ 0.45% Cu equivalent.
Ripon Hills Project - E45/5088 - Granted Exploration Licence
E45/5088, the Ripon Hills Project is a granted exploration
licence covering 4 2km(2) prospective for base metal-gold
mineralisation and is proximal to Rumble Resources' (ASX: RTR)
Braeside Project where significant new base metal discoveries have
been made (5) .
The Ripon Hills Project will be transferred at nil cost to FDR
from current owner Great Sandy Pty Ltd ("Great Sandy") a private
Australian Company (the consideration for the transfer will be
satisfied by Great Sandy nominees receiving a proportion of
consideration outlined below.) (Note: The mineral rights for
manganese and iron are excluded for the Ripon Hills Project.)
Wallal West 1 Project - E45/5853 - Licence Application
E45/5853, the Wallal West 1 Project, is an exploration licence
application covering 96km(2) prospective for base metals and
gold.
The ownership rights to the Wallal West 1 Project will be
transferred at nil cost to FDR Australia from current owner Pardoo
Resources Pty Ltd ("Pardoo") a private Australian Company (the
consideration for the transfer will be satisfied by Pardoo nominees
receiving a proportion of consideration outlined below".)
Wallal West 2 Project - E45/5880 - Licence Application
E45/5880 the Wallal West 2 Project, is an exploration licence
application covering 86km(2) prospective for base metals and
gold.
The ownership rights to the Wallal West 2 Project will be
transferred at nil cost to FDR Australia from current owner Pardoo
(the consideration for the transfer will be satisfied by Pardoo
nominees receiving a proportion of consideration outlined
below".)
Braeside West Project - E45/5854 - Licence Application
E45/5854 the Braeside West Project, is an exploration licence
application covering 137km(2) prospective for copper-lead-zinc and
manganese mineralisation.
The ownership rights to the Braemore West Project will be
transferred at nil cost to FDR Australia from current owner Pardoo
(the consideration for the transfer will be satisfied by Pardoo
nominees receiving a proportion of consideration outlined below".)
(Note: The mineral rights for manganese and iron are excluded for
the Braeside West Project.)
FDR Australia Additional Disclosure
In the 6 months ended 31 December 2020 FDR Australia made an
operating loss of A$18,914 (circa GBP10,707) and as at 31 December
2020 FDR had net liabilities of A$19,939 (circa GBP11,287).
EXPLORATION RATIONALE
The Company believe that securing a footprint in the prospective
Paterson Province in Western Australia has the potential to deliver
significant value for shareholders.
While the area has excellent mining infrastructure, there are
many parts of the region - highly prospective for copper-gold
mineralisation - which are under-explored. In turn, this
significantly enhances the upside potential as much of the area is
masked by surficial cover.
Using an array of modern exploration techniques, comprising
reconciling geophysics and geochemical surveys, the exploration
would seek to efficiently and cost effectively identify priority
test-drill targets.
TRANSACTION TERMS - ACQUISITION OF FDR AUSTRALIA
Power Metal will, subject to local regulatory approvals and
through a new special acquisition vehicle acquire an effective 75%
interest in FDR Australia, an Australian private company holding
five exploration projects.
The 75% interest will be held through a special acquisition
vehicle, namely a new UK private company (FDR UK) which will
acquire a 100% interest in FDR Australia and in which Power Metal
will hold a 75% interest.
The intention is to list FDR UK on a recognised stock exchange
in the London capital markets at the earliest opportunity.
The vendors of the FDR Australia interests include the
shareholders of FDR Australia and various third parties with
interests in the exploration properties included in this
announcement (the "Vendors"). The Vendors will hold the remaining
25% interest in FDR UK.
In addition to the 25% holding in FDR UK the consideration
payable to the Vendors and related transaction terms are as
follows:
- Power Metal will pay initial consideration of A$50,000 in cash
(circa GBP27,798) and GBP275,000 payable through issue to the
Vendors of 10 million new Power Metal Ordinary Shares of 0.1p
("Ordinary Shares) at an issue price of 2.75 pence per share
("Initial Consideration Shares") (note: A$20,000 (circa GBP11,322)
will be used to eliminate shareholder loans in the accounts of FDR
Australia and therefore on its acquisition by FDR UK, FDR Australia
will carry no liabilities). The cash component of the consideration
above will be funded from Power Metal existing cash resources.
- In addition, Power Metal will issue the Vendors 10 million
warrants with an exercise price of 4.5p per new Ordinary Share and
life to expiry of 3 years from the date of issue ("Initial
Consideration Warrants"). Should the volume weighted average price
("VWAP") of Power Metal shares meet or exceed 7.0 (seven) pence for
a 5 consecutive trading days Power Metal may serve notice on the
Vendors providing 10 trading days to exercise and pay for the
Initial Consideration Warrants or the Initial Consideration
Warrants will be cancelled.
- The acquisition of FDR Australia by FDR UK will not be
undertaken until the Ripon Hills Project has been successfully
transferred into FDR Australia and a granted licence has been
received by FDR Australia in respect of the Wallal Project.
- The initial consideration items outlined above (cash, Initial
Consideration Shares and Initial Consideration Warrants) will not
be paid until FDR UK acquires 100% of FDR Australia and until the
regulatory approvals have been received including any such approval
required from the Foreign Investment Review Board ("FIRB"),
Australia enabling that acquisition to proceed.
In addition, subject to the acquisition of FDR Australia by FDR
UK:
- Excluding the Wallal Project, upon grant of each of the three
additional exploration licence applications (Wallal West 1 & 2
and Braeside West) and ownership transfer to FDR Australia a
further GBP80,000 consideration is payable through the issue of
2,500,000 new Ordinary Shares at an issue price of 3.2p each
("Grant Shares"). Should all three licence applications be granted
the total consideration payable is GBP240,000 (being GBP80,000 per
granted exploration licence application) through the issue of
7,500,000 new Ordinary Shares at an issue price of 3.2p each.
- Excluding the Wallal Project, upon grant of the each of the
three additional exploration licence applications (Wallal West 1
& 2 and Braeside West) and ownership transfer to FDR Australia
Power Metal will issue the Vendors 2,500,000 warrants with an
exercise price of 5p per new Ordinary Share and life to expiry of 3
years from the date of issue ("Grant Warrants") for each
exploration licence application granted. Should the VWAP of Power
Metal shares meet or exceed 10.0 (ten) pence for a 5 consecutive
trading days Power Metal may serve notice on the Vendors providing
10 trading days to exercise and pay for the Grant Warrants or the
Grant Warrants will be cancelled. Should all three licence
applications be granted a total of 7,500,000 Grant Warrants will be
issued.
- The Vendors will retain a 2% net smelter royalty ("NSR") over
all licences included in this transaction and FDR UK will have the
right to purchase 1% of this NSR for A$1,000,000
- The Vendors and their professional licensing and geological
teams will continue to work with Power Metal to manage local
corporate operations, undertake initial ground exploration and
potentially to further build the licence footprint in the Paterson
Province.
- A suitable advisory team will be promptly established to
manage the corporate activities required to seek a potential
listing of FDR UK on the UK capital markets.
COMPETENT PERSON STATEMENT
The technical information contained in this disclosure has been
read and approved by Mr Nick O'Reilly (MSc, DIC, MIMMM, MAusIMM,
FGS), who is a qualified geologist and acts as the Competent Person
under the AIM Rules - Note for Mining and Oil & Gas Companies.
Mr O'Reilly is a Principal consultant working for Mining Analyst
Consulting Ltd which has been retained by Power Metal Resources PLC
to provide technical support.
References:
Source 1: Rio Tinto PLC announcement
https://www.riotinto.com/en/news/releases/2020/Rio-Tinto-reveals-maiden-Resource-at-Winu-and-new-discovery
Source 2: Greatland Gold PLC announcement
https://polaris.brighterir.com/public/greatland_gold/news/rns/story/wkqm9ow
Source 3: Newcrest Mining Ltd :
https://www.newcrest.com/our-assets/telfer
Source 4: Metals X Ltd: https://www.metalsx.com.au/copper/
Source 5 : Rumble Resources Ltd:
http://rumbleresources.com.au/braeside_project.php
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
For further information please visit
https://www.powermetalresources.com/ or contact:
Power Metal Resources plc
Paul Johnson (Chief Executive Officer) +44 (0) 7766 465 617
SP Angel Corporate Finance (Nomad and Joint Broker)
Ewan Leggat/Charlie Bouverat +44 (0) 20 3470 0470
SI Capital Limited (Joint Broker)
Nick Emerson +44 (0) 1483 413 500
First Equity Limited (Joint Broker)
David Cockbill/Jason Robertson +44 (0) 20 7330 1883
Notes to Editors:
P ower Metal Resources plc (LON:POW) is an AIM listed metals
exploration and development company seeking a large scale metal
discovery.
The Company has a global portfolio of project interests
including precious metals exploration in North America and
Australia together with base and strategic metal exploration in
Africa. Project interests range from early stage greenfield
exploration to later stage prospects currently subject to drill
programmes.
The Board and its team of advisors have expertise in project
generation, exploration and development and have identified an
opportunity to utilise the Company's position to become a leader in
the London market for investors wishing to gain exposure to
proactive global metals exploration.
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