Mkango Resources Ltd. (AIM:MKA) (TSX-V:MKA) (the
"
Company" or "
Mkango") is pleased
to announce that the TSX Venture Exchange (“TSXV”) has
conditionally accepted the transaction (“Transaction”)
announced on 16 November 2017 with Talaxis Limited (“Talaxis”), a
wholly owned subsidiary of Noble Group Limited, subject to
shareholder approval, such vote to exclude the shares in Mkango
held by Talaxis (“Minority Approval”).
Pursuant to the agreement in respect of the
Transaction (the “Agreement”):
- Talaxis will invest £12 million (C$20.7 million) in three
tranches to fully fund a feasibility study for (“Songwe” or the
“Project”) in return for a 49% interest in the Project, in addition
to £2 million (C$3.4 million) in two tranches in return for a 49%
interest in a new venture (“Newco”) to be established by Mkango
focused on neodymium alloy powders, magnet and other
technologies.
- The first and second tranches, totaling £5 million (C$8.6
million), of the investment into the Project will be invested
following receipt of Minority Approval, to be sought at a meeting
(“Meeting”) scheduled for January 18, 2018. The first tranche of £2
million (C$3.4 million) is being placed into escrow by Talaxis
pending the Meeting.
- The first tranche of the investment into Newco, totalling £1
million (C$1.7 million), will also be invested on receipt of
Minority Approval.
- Therefore a total of £6 million (C$10.3 million) will be
invested by Talaxis on Minority Approval and a further £8 million
(C$13.8 million) will be invested on completion of the definitive
documentation and according to the milestones in the Agreement,
following which Talaxis will hold a 49% interest in each of the
Project and Newco.
- Talaxis will also have the option (“Option”) to acquire a
further 26% interest in the Project by arranging funding for
Project development, following which Mkango would hold a 25%
interest in the Project, free carried until commencement of
production.
- Talaxis and Mkango have agreed to cooperate as preferred
partners on rare earths projects worldwide and on other projects in
Malawi.
Mkango will be releasing further information in
relation to the Meeting in due course.
William Dawes, Chief Executive Officer
of Mkango, said: "We are very pleased to announce
conditional acceptance by the TSX Venture Exchange, following which
we have a definitive timetable for the transaction. On shareholder
approval and receipt of £6 million investment by Talaxis, the
Company will commence the initial phase of the feasibility study,
including mobilization for an extensive infill, geotechnical and
exploration drilling programme starting in the second quarter of
2018, in parallel with ongoing processing flow sheet optimisation
and work in relation to the Environmental, Social and Health Impact
Assessment. We look forward to updating the market in relation to
the transaction and Mkango’s other projects in Malawi, the Thambani
uranium-tantalum-niobium project and Chimimbi Hill nickel-cobalt
project.”
Transaction Summary
In relation to the Songwe Hill Rare Earths Project, the
Transaction is summarised as follows:
- £2,000,000 Phase 1 investment commitment for the Project will
be released from escrow and invested in Mkango’s subsidiary,
Lancaster Exploration Limited (“Lancaster”), the licence holder for
the Project, on Mkango obtaining acceptance from the TSXV for the
Agreement following receipt of Minority Approval (“TSXV
Acceptance”), upon which Talaxis will receive an 8% interest in
Lancaster.
- £3,000,000 Phase 2 investment commitment for the Project will
be invested on Mkango obtaining TSXV Acceptance, upon which Talaxis
will receive an additional 12% interest in Lancaster.
- £7,000,000 Phase 3 investment commitment for the Project to be
invested subject to completion of the definitive documentation for
the transaction and on Mkango publishing an updated 43-101
resource, upon which Talaxis will receive a further 29% interest in
the Project.
- Upon completion of the feasibility study, and subject to
completion of the definitive documentation for the transaction,
Talaxis will have the Option to acquire a further 26% interest in
the Project and offtake rights for 100% of production from the
Project (subject to Newco (see below) having the option to retain
such amount of offtake as required for Newco’s downstream
manufacturing activities) in consideration of Talaxis arranging
funding for 100% of remaining project development costs, including
funding the equity component thereof.
In relation to Newco, the Transaction is summarised as
follows:
- £1,000,000 Phase 1 investment commitment for Newco to be
invested on Mkango obtaining TSXV Acceptance following receipt of
minority approval, upon which Talaxis will receive a 24.5% interest
in Newco.
- £1,000,000 Phase 2 investment commitment for Newco to be
invested subject to completion of the definitive documentation for
the transaction and, on successful completion of the Phase II
R&D programme with Metalysis, upon which Talaxis will receive a
further 24.5% interest in Newco.
Under the terms of the Agreement, Talaxis will
be Mkango’s preferred partner for all rare earths’ projects
worldwide and for all activities of any sort in Malawi.
Talaxis will be granted a right of first offer to finance any such
activities of Mkango (including in respect of any of the current
assets of Lancaster other than Songwe). Mkango will be Talaxis’
preferred partner for all rare earths’ projects worldwide.
All such opportunities will be offered to Mkango on a 50/50 shared
economics basis, with Mkango being entitled to participate to any
level that it chooses.
Related Party Transaction and
Multilateral Instrument 61-101 (“MI 61-101”)
Talaxis is the holder of 13.9% of the issued and
outstanding shares of Mkango. As such, Talaxis is a Non Arm’s
Length Party pursuant to applicable rules of the TSXV, as well as a
“related party” pursuant to Multilateral Instrument 61-101 -
Protection of Minority Security Holders in Special Transactions
(“MI 61-101”). In addition, Talaxis holds 12
million warrants of Mkango, which, upon exercise, could result in
Talaxis holding 22.9% of the then-issued and outstanding shares of
Mkango. Talaxis has agreed with Mkango that it will not exercise
any warrants which would increase the holding of Talaxis in Mkango
to 20% or more.
Pursuant to MI 61-101, the Transaction is
subject to disinterested shareholder approval (i.e., approval by a
majority of the votes cast at the Meeting, excluding any shares
held by Talaxis, its affiliates and joint actors).
Talaxis is also considered to be a “related
party” as defined under the AIM Rules and accordingly, Talaxis’
investments in both Lancaster and Newco constitute a related party
transaction for the purposes of Rule 13 of the AIM Rules.
The Directors independent of the Transaction,
being the Board as a whole, consider, having consulted with SP
Angel Corporate Finance LLP, the Company’s nominated adviser, that
the terms of the Agreement are fair and reasonable insofar as the
Company’s shareholders are concerned.
About Talaxis
Talaxis Limited is a company, wholly owned by
Noble Group, involved in the investment and development of
resources which are critical to green technology supply chains,
including cobalt, lithium, and rare earths. Talaxis is also
involved in the research and development of industrial applications
related to energy solutions providers and permanent magnets
consumers. Noble Group (SGX:CGP) manages a portfolio of global
supply chains covering a range of industrial and energy products.
Noble facilitates the marketing, processing, financing and
transportation of essential raw materials. For more information
please visit www.thisisnoble.com.About Mkango Resources
Limited
Mkango's primary business is the exploration for
rare earth elements and associated minerals in the Republic of
Malawi, a country whose hospitable people have earned it a
reputation as “the warm heart of Africa”. The Company holds three
exclusive prospecting licenses in Malawi, the Phalombe licence, the
Thambani licence and the Chimimbe Hill licence.
The main exploration target in the Phalombe
licence is the Songwe Hill rare earths’ deposit, which features
carbonatite hosted rare earth mineralisation and was subject to
previous exploration in the late 1980s. Mkango completed an updated
Pre-feasibility Study for the project in November 2015.
In November 2017, Mkango entered into an
agreement with Talaxis, a wholly owned subsidiary of Noble Group
Limited, whereby, subject to regulatory approval, Talaxis will
fully fund a feasibility study for Songwe by investing £12 million
(C$20 million) for a 49% interest in the project. Talaxis will also
have the option to acquire a further 26% interest in the project by
arranging funding for project development.
In addition, by investing a further £2 million
(C$3.3 million), Talaxis may acquire a 49% interest in a new
venture to be established by Mkango focused on neodymium alloy
powders, magnet and other technologies. This includes the
collaboration with Metalysis Ltd announced in September 2017, which
is focused on advanced alloys using neodymium or praseodymium with
other elements for permanent magnet manufacturing.
Permanent magnets are critical materials for
most electric vehicles, direct drive wind turbines and many other
high growth applications. Neodymium is a key rare earth component
at Songwe.
Talaxis and Mkango have also agreed to cooperate
as preferred partners on rare earths projects worldwide and on
other projects in Malawi.
The main exploration targets of Mkango’s
remaining two licences are, in the Thambani licence, uranium,
niobium, tantalum and zircon and, in the Chimimbe Hill licence,
nickel and cobalt.
For more information, please visit
www.mkango.ca.
Cautionary Note Regarding
Forward-Looking Statements
This news release contains forward-looking
statements (within the meaning of that term under applicable
securities laws) with respect to Mkango, its business and the
Project. Generally, forward looking statements can be identified by
the use of words such as “plans”, “expects” or “is expected”,
“scheduled”, “estimates” “intends”, “anticipates”, “believes”, or
variations of such words and phrases, or statements that certain
actions, events or results “can”, “may”, “could”, “would”,
“should”, “might” or “will”, occur or be achieved, or the negative
connotations thereof. Forward looking statements in this news
release include statements with respect to the global market for
products using the rare earth metals the Company is exploring for,
completion of the feasibility study and of the transactions
contemplated in the Agreement, as well as the use of proceeds from
the investments into the Company by Talaxis and the timing of such
expenditures. Readers are cautioned not to place undue reliance on
forward-looking statements, as there can be no assurance that the
plans, intentions or expectations upon which they are based will
occur. By their nature, forward-looking statements involve numerous
assumptions, known and unknown risks and uncertainties, both
general and specific, that contribute to the possibility that the
predictions, forecasts, projections and other forward-looking
statements will not occur, which may cause actual performance and
results in future periods to differ materially from any estimates
or projections of future performance or results expressed or
implied by such forward-looking statements. Such factors and risks
include, without limiting the foregoing, market demand for the
metals and associated downstream products for which Mkango is
exploring, researching and developing, the positive results of a
feasibility study on the Project, delays in obtaining financing or
governmental or stock exchange approvals. The forward-looking
statements contained in this news release are made as of the date
of this news release. Except as required by law, the Company
disclaims any intention and assumes no obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
applicable law. Additionally, the Company undertakes no obligation
to comment on the expectations of, or statements made by, third
parties in respect of the matters discussed above.
For further information on Mkango,
please contact:Mkango Resources
LimitedWilliam DawesChief Executive
Officerwill@mkango.ca
Alexander LemonPresidentalex@mkango.ca
UK: +44 207 3722 744Canada: +1 403 444
5979www.mkango.ca@MkangoResources
BlytheweighFinancial Public
RelationsTim Blythe, Camilla Horsfall, Nick ElwesUK: +44 207 138
3204 SP Angel Corporate Finance LLPNominated
Adviser and BrokerJeff Keating , Caroline RoweUK: +44 20 3470
0470
The TSX Venture Exchange has neither
approved nor disapproved the contents of this press release.
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
This press release does not constitute an offer
to sell or a solicitation of an offer to buy any equity or other
securities of the Company in the United States. The securities of
the Company will not be registered under the United States
Securities Act of 1933, as amended (the “U.S. Securities Act”) and
may not be offered or sold within the United States to, or for the
account or benefit of, U.S. persons except in certain transactions
exempt from the registration requirements of the U.S. Securities
Act.
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