Medcaw
Investments plc (LSE:MCI), an acquisition vehicle, is pleased to
announce that it has entered into a conditional implementation
agreement with Abyssinian Metals Limited ("AML"), a company
incorporated in Australia and
developing the Kenticha lithium project located in Oromia State,
Southern Ethiopia.
Subject to
the Company being satisfied with technical, legal, accounting, tax,
financial, commercial and environmental due diligence on AML the
Company will consider making an offer to acquire up to 100% of the
entire issued share capital of AML ("AML Shares") in consideration
for the issue and allotment of new ordinary shares ("Ordinary
Shares") in the Company to the shareholders of AML ("Proposed
Transaction"). As at the date of this announcement no decision has
made by the Company whether to proceed with an offer for the AML
Shares or otherwise and there is no offer that is capable of being
accepted by the shareholders of AML.
AML is a
clean energy metals company with a focus on the development of the
Kenticha lithium project in which it has a 51% legal and beneficial
interest and manager of the project with the Oromia State holding
49%.
Highlights:
-
The
Company has entered into a conditional
implementation agreement with AML ("AML Agreement") which details,
inter alia, an agreement for the Company to finalise technical,
legal, accounting, tax, financial, commercial and environmental due
diligence on AML with a view of advancing a timetable and
negotiations for a potential offer;
-
Medcaw has
today raised £400,000 at 8p per share ("Placement Shares") through
an equity placement to various high net worth and institutional
investors introduced by GIS Global Investment Strategy ("GIS")
("Placement").
-
Subject to
satisfactory due diligence any formal offer by the Company for the
shares in AML is expected to be conditional on:
- receiving
acceptances under the Offer from shareholders of AML holding at
least 51% of the voting rights of AML;
- if
required, a waiver by the UK Takeover Panel (the "Panel") in
respect of the obligations under Rule 9 of the Takeover Code on the
shareholders of AML to make a mandatory offer for the shares in the
Company having been granted;
- if
required, approval by shareholders of Medcaw Investments of the
waiver granted by the Takeover Panel and as required any other
approvals of the shareholders of the Company having been
granted;
-
there
having been no material adverse change in the business, results of
operations, condition (financial or otherwise) or prospects of AML
or any of its subsidiaries from the date prior to completion of the
Proposed Transaction;
- various
board and shareholder approvals; and
- other
conditions to be confirmed in due course.
-
If
completed, the Proposed Transaction will constitute a reverse
takeover under the Listing Rules. The Company is currently unable
to provide full disclosure under Listing Rule 5.6.15 in relation to AML and it has requested a
suspension of trading in its shares with immediate effect. The
trading of the Company's shares will remain suspended until such
time as a prospectus is published in relation to the Proposed
Transaction or the
Company announces that the discussions have been terminated.
-
Given the
conditionality of the implementation agreement, including a due
diligence condition before an offer is agreed, there can therefore
be no guarantee that the Proposed Transaction will proceed as
envisaged or that it will proceed at all. No offer has been made by
the Company at this stage.
The
Company and AML have engaged professional advisors to finalise due
diligence and, should the due diligence condition be satisfied and
an offer for the AML Shares be confirmed, assist with the
documentation to implement the timetable in the implementation
agreement.
Highlights
of the Kenticha project:
-
The
Kenticha project has JORC, open-pitable, inferred resource of
87.7mt @ 0.78% Li2O
with exploration upside of up to 51mt Li2O.
Assay
re-sampling of historic pulps, which is 60% completed with CSA
Global, expected to increase the Li2O
grade by up to 25%.
-
3 high
grade starter pits identified @ 1% Li2O
cut-off of c. 20mt @ 1.2% Li2O (pre re-assay of pulps - post
expected Li2O
1.5%+)
Near
term production highlights
-
Stage 1
(a) of 80,000 tpa (annualised) of 5.5% spodumene concentrate
(SC5.5) from the first of the Dense Medium Separation ("DMS")
plants at the Kenticha project is due to be commissioned in late
2023.
-
Stage 1
(b) - 240,000 tpa (annualised) SC5.5 from end of 2024 as the second
DMS plant is commissioned.
-
2025
production equates to circa USD720m
annualised revenue assuming USD3,000
per tonne of SC5.5.
Significant
profit margin given forecast of all in sustaining cost of
USD750 per tonne which is estimated
to reduce to USD525 per tonne once
production hits nameplate capacity of Stage 1 (b) DMS.
-
Feasibility
Study underway on Bespoke Model production plant - 5mtpa plant
producing an additional 600,000 tpa SC5.5 with scheduled production
early 2027.
-
840,000
tpa of SC5.5 on commissioning of the Bespoke Model is targeted from
the end of 2027 putting AML in the top quartile of lithium
spodumene concentrate producers globally.
-
AML has
developed strong relationships in Ethiopia including vital support from both the
federal, state and local governments including the local community
in which it operates.
-
AML has
entered into a credit facility with New
York based institutional asset manager which enables AML to
draw down up to USD25m at its
option.
-
AML has
secured additional project funding of USD60m secured over 180 ktpa SC5.5 production for
3 years.
-
AML as
manager of the Kenticha project has 100% of the marketing rights of
the SC5.5 product.
-
AML
directors and management have a wealth of experience in bringing
tier 1 mining assets into production across Africa.
-
World
leading third party consultants engaged for all aspects of the
project are as follows:-
-
Neuplan -
engineers and project managers for Stage 1 (a) and (b) of the DMS
plants
-
CSA Global
- geological modelling and resource reporting
-
Knight
Piesold - geotechnical consultants
-
Min-met
Projects - construction of DMS plants
Kenticha
Lithium Project
Kenticha
is a highly evolved, rare element, Lithium Caesium Tantalum (LCT)
pegmatite project comparable to other major rare-element pegmatites
such as Greenbushes, Tanco, Wodgina, Volta Grande and Altai
No.3.
Kenticha
is a late-stage development asset which AML intends to develop with
the production of spodumene concentrate planned in stages, with
near-term production through a Dense Medium Separation (DMS)
modular plant.
Recent
progress of the Kenticha site includes initial camp construction to
accommodate the operating team and security personnel, provision of
services to the local community, and civil works including roads,
water, and power. There have been discussions and provisional
agreements with port authorities for port access and freight
forwarding arrangements, as well as mobilisation of contractors and
equipment for the start-up of operations including drilling
programmes which recently commenced. The construction and
fabrication of the DMS modular plant for the Stage 1 (a) Near Term
Production has been custom-built in Johannesburg and is in the process of being
packed up and shipped to Ethiopia.
It is anticipated that the Stage 1 (a) DMS will be in-situ at the
Kenticha site in August 2023 and
commissioning will start thereafter with the first SC5.5 being
produced by the end of 2023.
The
Proposed Transaction
Subject
to, and conditional upon, the Company being satisfied with due
diligence on AML, Medcaw Investments and AML have agreed to work
together in order to formalise a potential offer by Medcaw to the
shareholders of AML for up to 100% of
the issued share capital of AML in accordance with the indicative
timetable set out in the AML Agreement.
As at the
date of this announcement no decision has made by the Company
whether to proceed with an offer for the AML Shares or not and, for
the avoidance of doubt, nothing in this Agreement is a statement of
intention by the Company to make a takeover bid for the Offeree
under section 631 of the Corporations
Act 2001 (Cth).
Further, this announcement is not intended to constitute, and does
not constitute, an offer capable of acceptance or to otherwise give
rise to any binding contract or commitment.
There is
no certainty that the further discussions between the Company and
AML will result in any offer being made for the shareholders of AML
to consider. The shareholders of AML do not need to take any action
at this time as no offer has been made.
Should the
Company elect to proceed with a takeover bid it will update the
market at that time.
Any
takeover offer by the Company is likely to be subject to a number
of conditions, some of which are briefly mentioned
above.
Details
of Equity Fundraise
Medcaw has
today raised gross proceeds of £400,000 at 8p per share ("New
Ordinary Shares") through an equity placement to various high net
worth and institutional investors introduced by GIS Global
Investment Strategy ("GIS") ("Placement").
The
Company has therefore allotted and issued a total of 5,000,000 new
Ordinary Shares in the Company.
These
shares rank pari passu with the existing Ordinary Shares in the
Company.
Application
will be made to the Financial Conduct Authority ("FCA") for the New
Ordinary Shares to be admitted to listing on the Official List
(standard listing segment) of the FCA, and to the London Stock
Exchange for the New Ordinary Shares to be admitted to trading on
the London Stock Exchange's main market for listed securities
(together "the New Ordinary Share Admission") in due
course.
Following
the issue of the 5,000,000 New Ordinary Shares the Company's issued
share capital will consist of 22,132,095 Ordinary Shares with
voting rights.
No
Ordinary Shares are held in treasury at the date of this
announcement and therefore following the allotment, the total
number of Ordinary Shares in the Company with voting rights will be
22,132,095.
The above
total voting rights figure may be used by shareholders as the
denominator for the calculation by which they will determine if
they are required to notify their interest in, or a change to their
interest in the Company.
Director
Participation in the Placing
Charlie Wood, a director of the Company has subscribed for a
total of 500,000 New Ordinary shares in aggregate. The beneficial
holdings of the Directors before and after the fundraise are set
out below:-
Warrants
The
broker, GIS will be issued 300,000 broker warrants at the placing
price of 8p per share and 1,600,000 warrants at 4p will be issued
to a third-party consultant for transactional services.
Charlie Wood, Executive Director of Medcaw
Investments:
"The
acquisition of AML will bring a world class mining asset and one of
the largest rich spodumene lithium ore bodies to the market in the
UK.
The
near-term production of spodumene concentrate of up to 240ktpa will
make the combined group a significant global player in the lithium
market and will aim to become one of the first lithium producers on
the London Stock Exchange.
Stephen Miller, Managing Director of Abyssinian Metals
Limited: "The
transaction outlined with Medcaw is a significant milestone within
the AML financing and listing strategy and in addition provides the
enlarged shareholder base with capital appreciation and liquidity
as AML builds out its Kenticha lithium production profile within
the on-going electric vehicle and battery revolution.
"The
combination of a highly experienced mining, finance and technical
team, which have developed multiple projects across Africa, combined with our strong Ethiopian
stakeholders, provides a significant platform to ensure that this
project will reach its near-term production goals."
This
announcement contains inside information for the purposes of
the UK Market
Abuse Regulation and the Directors of the Company accept
responsibility for the contents of this announcement.
ENDS
Abyssinian Metals
Ltd Overview
Abyssinian Metals Ltd (“AML”) is developing the Kenticha lithium
project in Ethiopia together with
its joint venture partner – the Oromia State Government. Kenticha
has a current JORC resource of 87.7 mt @ 0.78% Li20 with an
exploration target of up to 51 mt @ 0.9% Li20 which CSA Global is
currently finalising.
Kenticha is a late-stage development with near term production of
spodumene concentrate (SC5.5%) beginning at the end of 2023 with
the imminent commissioning of the DMS modular plants. AML is
looking to produce 240ktpa of SC5.5% by the end of 2024 (on an
annualized basis) and then build a Bespoke production plant by the
end of 2027 and producing up to 850ktpa SC5.5 in total (on an
annualized basis) and thereby putting AML into the top quartile of
global lithium spodumene producers at that time.
Kenticha is a tier 1 resource which fits well as the industry needs
multi-decade lithium resources to feed the EV revolution. AML is
led by a very strong management team who have a wealth of
experience in bringing tier 1 mining assets into production in
Africa. AML is well supported by
its relationships with the Ethiopia federal, state and local governments
including the local communities in which we operate.
Note:
Certain
statements made in this announcement are forward-looking
statements. These forward-looking statements are not historical
facts but rather are based on the Company's current expectations,
estimates, and projections about its industry; its beliefs; and
assumptions. Words such as 'anticipates,' 'expects,' 'intends,'
'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions
are intended to identify forward-looking statements. These
statements are not a guarantee of future performance and are
subject to known and unknown risks, uncertainties, and other
factors, some of which are beyond the Company's control, are
difficult to predict, and could cause actual results to differ
materially from those expressed or forecasted in the
forward-looking statements. The Company cautions security holders
and prospective security holders not to place undue reliance on
these forward-looking statements, which reflect the view of the
Company only as of the date of this announcement. The
forward-looking statements made in this announcement relate only to
events as of the date on which the statements are made. The Company
will not undertake any obligation to release publicly any revisions
or updates to these forward-looking statements to reflect events,
circumstances, or unanticipated events occurring after the date of
this announcement except as required by law or by any appropriate
regulatory authority.