6 June
2019
Altona Energy
plc
("Altona" or the "Company")
Memorandum of
Understanding
with a
Vanadium Mining Company
Altona (NEX: ANR.PL), a mining investment company with
significant coal resources in Australia, announces that it has entered into
a Memorandum of Understanding (“MoU”) with Shaanxi Qianyan Vanadium
and Magnesium Mining Industry Ltd Company (“Shaanxi Mining”), the
owner of an operational vanadium mine in China, with the aim of forming a Joint Venture
Company (“JV Company”) in which it is expected that Altona will
eventually become the controlling shareholder.
Both the Company and Shaanxi Mining have commenced due diligence
to examine the feasibility of this partnership. However, until a
formal joint venture agreement has been signed, the deal is
conditional, and not binding on either the Company or Shaanxi
Mining.
There can be no guarantee that the discussions in respect of the
MoU signed with Shaanxi Mining will be successful and the terms of
any relationship are yet to be formulated. However, this is a
positive step towards our goal of acquiring an investment in a
Vanadium mine.
Information on the MoU
The due diligence process is expected to take up to six months
to complete and is dependent upon a number of factors, including
Shaanxi Mining being granted a provincial government permit which
will allow it to enter into an international joint venture
agreement with Altona. During this period, Shaanxi Mining will
commission a mineral resource classification report in accordance
with the Australian Joint Ore Resources Committee Code (“JORC”).
This report is expected to take some five months to complete and
will form the basis of a valuation for any acquisition.
When completed the report will help provide a more accurate
valuation of the assets of Shaanxi Mining which will determine the
quantum of Altona’s initial interest in the JV Company. The
consideration for Altona’s acquisition of shares into the JV
company is expected to be either cash, shares or a combination of
the two.
The successful pursuance of this potential acquisition, and
indeed the ability of Altona to pursue all of its strategies,
requires the Company to obtain further funding. As previously
announced the Company is considering a number of funding options
and this may involve a strategy to re-list its shares on the London
Stock Exchange, via either AIM or a listing on the Standard Market,
which will be planned to coincide with the signing of the joint
venture agreement. The board is of the opinion that the liquidity
and access to capital provided by either AIM or the Standard Market
will be more suited to Altona’s enlarged status and the owner of a
revenue generating vanadium mine.
Information on the Vanadium Mine
The Directors understand that Shaanxi Mining, based in Xi’an
City, Shaanxi Province, is the
majority (80%) shareholder in Shaanxi Shangnan Haodi Youzhi Limited
Company which in turn owns 99.5% of the Shaanxi Shangnan Haodi
Vanadium Mining Industry Company Ltd (“Shaanxi Vanadium”), which
owns and operates a vanadium mine in Shangnan County, Shaanxi Province.
Initial discussions with the owners of Shaanxi Vanadium indicate
that it is an operational vanadium mine, with an original estimated
reserve of 190,000 tonnes of vanadium. The level of reserves will
be confirmed by the JORC report. It is understood that the mine
uses open-cut and underground mining techniques and its main
product is vanadium pentoxide (V2O5). It is
currently producing 500 tonnes of V2O5, per
annum which indicates an estimated lifespan for the mine of 380
years. The current mine owners are in the process of initiating a
plan to increase production to 1,500 tonnes by the end of 2020.
The Board has been informed that in 2018 Shaanxi Vanadium
reported revenues of approx. RMB35,000,000 (£3.9 million) and a net profit of
approx. RMB20,000,000 (£2.3 million).
The mine was at full production for approximately half of the year,
due to the installation of new equipment and processing techniques,
in order to increase productivity, as mentioned above.
The company sells the vanadium pentoxide via China FerroAlloy
Online (www.cnfeol.com), a recognised Chinese commodity market.
All of the above is subject to Altona conducting detailed due
diligence and verification.
Reasons for the MoU
Should a JV Company be established, Altona, with its access to
the UK capital markets, will consider seeking new funding in order
to help implement the mine’s current strategy to increase
production over the next 18 months, although the mine is not
dependent upon external funding to implement its growth
strategy.
Further, the mine being owned by a non-Chinese JV Company could
be beneficial in opening up new international markets in which to
sell the vanadium, which is in high demand around the world.
Altona’s Executive Director, Qinfu Zhang, together with a
consortium of investors, is owner of a 43% interest in Shaanxi
Mining and also chairman of the company. Mr Zhang, who has an
interest in Altona of 14.75% (through his investment vehicle,
Wintask Group Ltd) has recognised the potential synergies which
this deal will bring to both parties.
Finally, the establishment of a JV Company where Altona is the
majority shareholder of a profitable mining asset will give it a
source of revenue with which it can proceed with its exploration
project in South Australia;
namely, its Arckaringa underground coal gasification project.
Qinfu Zhang, Executive Director of Altona, commented, “As
I mentioned in the Company’s AGM Statement in January, we have been
investigating the possible investment into a vanadium project in
China and, following four months
of discussions, the two companies have now entered into an MoU
allowing us to look more closely as to how we can make the
synergies between the two companies work best for our shareholders.
We will continue to update the market during the process until we
are hopefully successful in creating a new joint venture for
Altona.”
The Directors of the Company accept responsibility for the
content of this announcement.
-ends-
For further information, please visit www.altonaenergy.com or
contact:
Altona Energy
plc
Qinfu Zhang, Executive Director |
+44 (0) 7795 168 157 |
Alfred Henry
Corporate Finance Ltd
(NEX Corporate Adviser)
Jon Isaacs / Nick Michaels |
+44 (0) 20 3772 0021 |
Leander (Financial
PR)
Christian Taylor- Wilkinson |
+44 (0) 7795 168 157 |
Company Information
Altona is an exploration company focused on the evaluation and
development of its significant coal resource exceeding 7 billion
tonnes (1.3 billion tonnes historic JORC compliant) in the northern
portion of the Permian Arckaringa Basin in South Australia. Through its wholly
owned Australian subsidiary Arckaringa Energy Pty Ltd, Altona holds
a 100% interest in three exploration licences covering 1,944 sq.
kms in the northern portion of the Permian Arckaringa Basin in
South Australia including three
coal deposits – Westfield (EL5676), Wintinna (EL5677) and
Murloocoppie (EL5678). All three deposits lie close to the
Adelaide to Darwin railroad and
the Stuart Highway.
The Company was admitted to trading on AIM on 10 March 2005 and was subsequently admitted to
NEX on 1 February 2019. A copy
of its admission documents dated 4 March
2005 can be accessed on its website, www.altonaenergy.com.
This website is where items can be inspected under Rule 75 of
the NEX Rules for Issuers, from 1 February
2019.