TIDMGLR
RNS Number : 8320M
Galileo Resources PLC
26 January 2021
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 C ompany's obligations under Article 17 of MAR.
For immediate release
26 January 2021
Galileo Resources Plc
("Galileo" or "the Company")
Sale of 9 Kalahari Copper Belt Licences for US$3 million
to Sandfire Resources Ltd ("Sandfire") and
US$1.5 million subscription into Galileo by Sandfire
Galileo Resources plc ("Galileo" or the "Company") is pleased to
announce that on 25 January 2021 it entered into two legally
binding agreements with ASX listed Sandfire Resources Limited (
ASX:SFR) ("Sandfire").
The first agreement is a conditional licence sale agreement (the
"Licence Sale Agreement") which provides for;
i) The Sale of licences and right of first refusal: the sale to
Sandfire of 9 of the Company's Kalahari Copper Belt Licences (the
"Included Licences") which the Company acquired in May and October
2020. Sandfire to have a first right of refusal in relation to the
acquisition of the 15 Kalahari Copper Belt Licences being retained
by the Company (the "Excluded Licences") ("ROFR: Excluded
Licences") for an aggregate consideration of US$3 million payable
on the Settlement Date of which US$1.5 million will be paid in cash
and US$1.5 million by the issue of 370,477 Sandfire ordinary shares
to the Company (the "Consideration Shares") at an issue price of
A$5.227 per share, being the VWAP of the Sandfire share price for
the 10 trading days prior to the date of signing the Licence Sale
Agreement;
ii) An Exploration Commitment: Sandfire to spend US$4 million on
the Included Licences (the "Exploration Commitment") within two
years of settlement (the "Exploration Period") and if the US$4
million is not spent, any shortfall will be paid to the Company;
and
iii) A Success Payment: a one-off success payment to be paid to
the Company for the first ore reserve reported under JORC Code 2012
edition on the Included Licences which exceeds 200,000 tonnes of
contained copper (the "First Ore Reserve") in the range of US$10
million to US$80 million depending on the amount of contained
copper in the First Ore Reserve (the "Success Payment"). US$2
million of the Success Payment will be held in escrow for up to
three years pending any claim by Sandfire under the Licence Sale
Agreement. Note: given the limited exploration conducted on the
Included Licences to date and the many years that it could take to
establish an Ore Reserve, there can be no guarantee that any such
Success Payment will be forthcoming.
The second agreement is a share subscription agreement (the
"Share Subscription Agreement") which provides for;
i) Sandfire's Share Subscription: Sandfire to acquire US$1.5
million 41,100,124 ordinary shares of 0.1 p in the Company
("Galileo Shares") ("Sandfire's Shares") at a subscription price of
2.68 pence per Galileo Share, being a 25% premium to the 10 day
VWAP of the Company's share price as at 22 January 2021, being the
day before the signing of the Share Subscription Agreement.
Sandfire's Shares will be issued at a premium of 17 % to the
closing mid-price of the Galileo Shares on 25 January 2021, being
the last practical date before the issue of this announcement. This
will represent a 4.62% interest in Galileo.
ii) Sandfire to have participation rights: Sandfire's Shares
will represent 4.62% of the Company's issued shares as enlarged by
the issue of Sandfire's Shares ("Initial Voting Power"). Whilst
Sandfire's shareholding percentage is equal to or greater than the
Initial Voting Power, Sandfire will have participation rights (the
"Participation Rights") to participate in new Galileo share issues
/ issues of rights to acquire Galileo shares by the Company on the
same terms as other participants in a new Galileo share issue /
issues of rights to acquire Galileo shares to at least maintain
Sandfire's shareholding save that the Participation Rights cannot
increase Sandfire's shareholding over 20%; and
iii) Sandfire to have a right to nominate a director: If
Sandfire's percentage Galileo shareholding increases to 15% then it
will have the right to nominate a director to the Board of Galileo,
whose appointment would be subject to customary due diligence on
them prior to their appointment.
Colin Bird Chairman & CEO said:
"This transaction with Sandfire represents a major step forward
for Galileo in its Kalahari Copper Belt endeavours.
We are pleased to be working with Sandfire Resources, who are an
Australian listed company and have an enviable track record of
copper/gold discovery, development execution and operation. They
have a commanding position in the Kalahari Copper Belt and hence we
feel that this arrangement will benefit both parties to further
enhance their positions. The transaction allows Sandfire to explore
the Included Licences, which are in close proximity to their major
mine build, and also allows Galileo to carry out exploration on the
Excluded Licences.
We look forward to implementing the transaction and working
alongside Sandfire in a region, where in my opinion, discovery and
mine build has only just started."
Overview of transactions with Sandfire
Upon completion of the Licence Sale Agreement the Company will
have in aggregate an additional US$3.0 million cash (including the
Sandfire Share Subscription) to invest in the Excluded Licences
which include the highly prospective PL 039/2018 and PL 040/2018,
the Company's other projects and other opportunities plus will have
secured a US$4 million investment by Sandfire in the Included
Licences with the prospect of a very significant Success Payment if
the First Ore Reserve is greater than 200,000 tonnes of contained
copper. US$2 million of the Success Payment will be held in escrow
for up to three years pending any claim by Sandfire under the
Licence Sale Agreement. Note: given the limited exploration
conducted on the Included Licences to date and the many years that
it could take to establish an Ore Reserve, there can be no
guarantee that any such Success Payment will be forthcoming or if
it is the amount .
Under the Share Subscription Agreement, Sandfire will make a
US$1.5 million strategic equity investment at a 25% premium with
participation rights to retain their shareholding but not to
increase it beyond 20%, and the right to nominate a director to the
Galileo Board were they to increase their shareholding to 15% whose
appointment would be subject to customary due diligence on them
prior to their appointment.
Application to trading on AIM : Application will be made to the
London Stock Exchange for a total of 41,100,124 new Galileo Shares
to be admitted to trading on AIM, being Sandfire's Shares
("Admission") which will rank pari passu to the existing ordinary
shares in the Company . It is expected that Admission will become
effective and that dealings in the new Galileo Shares will commence
at 8.00 a.m. on Tuesday 9 February 2021. The issue of the shares
will be made under the Company's existing share authorities.
Total Voting Rights after Share Issue : Following the issue of
Sandfire's Shares, the Company's total issued share capital will
consist of 889,801,317 Galileo Shares with voting rights. The
Company does not hold any Ordinary Shares in treasury and
accordingly there are no voting rights in respect of any treasury
shares.
On Admission, the abovementioned figure of 889,801,317 Galileo
Shares (the "Enlarged Share Capital") may be used by shareholders
in the Company as the denominator for the calculations by which
they will determine if they are required to notify their interest
in, or a change to their interest in, Galileo under the Financial
Conduct Authority's Disclosure Guidance and Transparency Rules.
Significant Shareholder Notification: Sandfire will on Admission
own 41,100,124 Galileo Shares representing 4.62% of the Enlarged
Share Capital.
Further Information on Assets being sold and purchaser
The Company acquired all its Kalahari Copper Belt Licences which
includes the Included Licences and Excluded Licences (as shown in
the tables below) on 21 May 2020 by acquiring Crocus-Serv Resources
Pty Ltd and Virgo Business Solutions Pty Ltd for GBP173,848 and on
16 October 2020 by acquiring Africibum Co. Pty Ltd ("Africibum")
for GBP290,220, the issue of 10,000,000 2 year warrants with an
exercise price of 2 pence and the granting of a 1.5% Net Smelter
Royalty (NSR) to the sellers of Africibum to the Company ( the
"Sellers") which the Company has the right to acquire from the
Sellers at any time for total consideration of GBP1.5 million,
which can be payable in Galileo Shares or cash at the absolute
election of the Company. The Company will remain liable to pay the
NSR. In the event that the Company chooses to buy back the NSR by
the issue of Galileo Shares, it shall do so by issuing Galileo
Shares calculated at a price per share equal to the volume weighted
average price of Galileo Shares during the period of 30 days prior
to the date upon which the Galileo Shares are to be issued.
Included Licences Title Holder
PL 044/2018 Virgo Business Solutions Pty Ltd
---------------------------------
PL 045/2018 Virgo Business Solutions Pty Ltd
---------------------------------
PL 122/2020 Africibum Co Pty Ltd
---------------------------------
PL 154/2020 Africibum Co Pty Ltd
---------------------------------
PL 250/2018 Crocus-Serv Resources Pty Ltd
---------------------------------
PL 251/2018 Crocus-Serv Resources Pty Ltd
---------------------------------
PL 366/2018 Africibum Co Pty Ltd
---------------------------------
PL 367/2018 Africibum Co Pty Ltd
---------------------------------
PL 368/2018 Africibum Co Pty Ltd
---------------------------------
Excluded Licence Title Holder
PL 039/2018 Virgo Business Solutions Pty Ltd
---------------------------------
PL 040/2018 Virgo Business Solutions Pty Ltd
---------------------------------
PL 001/2018 Crocus-Serv Resources Pty Ltd
---------------------------------
PL 002/2018 Crocus-Serv Resources Pty Ltd
---------------------------------
PL 003/2018 Crocus-Serv Resources Pty Ltd
---------------------------------
PL 004/2018 Crocus-Serv Resources Pty Ltd
---------------------------------
PL 005/2018 Crocus-Serv Resources Pty Ltd
---------------------------------
PL 041/2018 Virgo Business Solutions Pty Ltd
---------------------------------
PL 042/2018 Virgo Business Solutions Pty Ltd
---------------------------------
PL 046/2018 Virgo Business Solutions Pty Ltd
---------------------------------
PL 047/2018 Virgo Business Solutions Pty Ltd
---------------------------------
PL 123/2020 Africibum Co Pty Ltd
---------------------------------
PL 252/2018 Crocus-Serv Resources Pty Ltd
---------------------------------
PL 253/2018 Crocus-Serv Resources Pty Ltd
---------------------------------
PL 254/2018 Crocus-Serv Resources Pty Ltd
---------------------------------
Approximately GBP10,000 was spent on the Included Licences in
the six months to 30 September 2020 and no income has been
generated from the Included Licences. The Company will record a
profit on disposal of the Included Licences and this will be
reported in the audited accounts for the year ended 31 March
2021.
Sandfire Resources Ltd is an ASX-listed company which, as at 30
June 2020, had net assets of A$750.2 million, declared a final 30
June 2020 dividend of A$14 cents per share, and as at 25 January
2021 had a market capitalisation of approximately A$900
million.
Summary of Licence Sale Agreement:
Parties On the one part the Company and its three wholly
owned subsidiaries Virgo Business Solutions Pty
Ltd, Africibum Co Pty Ltd, Crocus-Serv Resources
Pty Ltd and on the other part Sandfire Resources
Ltd and its wholly owned subsidiary Tshukudu Metals
Botswana (Pty) Ltd.
------------------ -----------------------------------------------------------------------
Consideration US$1.5M for the sale of the Included Licences payable
in cash (the "Licence Purchase Price") and US$1.5M
for the right of first refusal granted to Sandfire
in relation to the Excluded Licences (the "Right
of First Refusal Fee") payable by the issue of
the Consideration Shares to the Company, both amounts
are payable on the Settlement Date as defined below.
------------------ -----------------------------------------------------------------------
Settlement The latter of:
Date 1. 30 Business Days after execution of the Licence
Sale Agreement; or 2. 5 Business Days after the
Condition Precedents are met,
or such later date as is agreed between the Parties.
------------------ -----------------------------------------------------------------------
Consideration The issue by Sandfire of 370,477 of its ordinary
Shares shares to the Company as settlement of the Right
of First Refusal Fee at an issue price of A$5.227
per share, being the 10 day VWAP of the Sandfire
share price as at the date before the signing of
the Licence Sale Agreement. The Consideration Shares
are not subject to any sale restrictions.
------------------ -----------------------------------------------------------------------
Exploration Sandfire, through its 100% owned Botswana subsidiary
Commitment Tshukudu Metals Botswana (Pty) Ltd, to spend US$4
million on exploration activities within the Exploration
Period, with a minimum of 60% on drilling and assay
costs on the Included Licences (the "Qualifying
Exploration Expenditure") of which a minimum if
US$1 million, of the Exploration Commitment is
to be spent on PL 250/2018 and PL 251/2018 ("Agreed
Licence Expenditure").
If Sandfire fails to meet the Exploration Commitment
within the Exploration Period, it will pay any
remaining shortfall amount of the Exploration Commitment
to the Company, in Immediately Available Funds,
at the expiry of the Exploration Period.
------------------ -----------------------------------------------------------------------
Technical During the Exploration Period there will be a technical
Committee committee chaired by Sandfire with two representatives
from Sandfire and two from the Company to provide
advice on the exploration of the Included Licences
and collaboratively review technical data at quarterly
technical meetings, or more frequently as decided
by the technical committee. This will provide the
Company with an active participation in the exploration
strategy for the Included Licences, working closely
with Sandfire who are experienced in the Kalahari
Copper Belt where they have two projects: i) the
T3 (Motheo) Copper-Silver Project, which announced
a Definitive Feasibility Study (DFS) in December
2020 on an initial Base Case 3.2Mtpa processing
capacity and open pit development of the T3 Deposit;
and ii) the A4 discovery, for which Sandfire have
announced a maiden Inferred Mineral Resource containing
100,000 tonnes of copper at an average grade of
1.5% Cu.
------------------ -----------------------------------------------------------------------
Success Payment The Success Payment is only triggered if the First
Ore Reserve is > 200,000 tonnes of contained copper.
Given the Included Licences have had limited exploration
to date, if an Ore Reserve is determined this may
take several years and there is no certainty that
an Ore Reserve would be established or that any
such reserve would exceed 200,000 tonnes of contained
copper. The one-off Success Payment will be calculated
in accordance with the table below and US$2 million
of the Success Payment will be held in escrow for
up to three years pending any claim by Sandfire
under the Licence Sale Agreement.
Contained copper (Cu) in Success Payment
first Ore Reserve (USD)
Between the following: payable
>200Kt Cu and <400Kt Cu $10,000,000
----------------
>400Kt Cu and <600Kt Cu $20,000,000
----------------
>600Kt Cu and <750Kt Cu $40,000,000
----------------
>750Kt Cu $80,000,000
----------------
The Success Payment is due to be paid in cash within
30 days from the date Sandfire announces an Ore
Reserve which triggers the payment of the Success
Payment (the "Success Payment Completion Date").
Sandfire have the option to elect to settle the
Success Payment by the issue by Sandfire of its
ordinary shares to the Company based on the 10
day VWAP for Sandfire shares prior to, but excluding
the Success Payment Completion Date.
------------------ -----------------------------------------------------------------------
First Ore Means the first ore reserve defined on the Licences,
Reserve which is compliant with the Australasian Code for
Reporting of Ore Reserves (JORC Code, 2012 edition)
and results in a declared ore reserve for a single
Deposit containing at least 200,000 tonnes of contained
copper.
------------------ -----------------------------------------------------------------------
Conditions Settlement is conditional upon: 1. The parties
Precedent having executed the Share Subscription Agreement
(which has been done); 2. ministerial consent for
the transfer of the Included Licences by the Botswana
Minister of the Ministry of Minerals, Energy and
Water Resources ("Ministerial Consent") ; 3. all
ASX and AIM regulatory approvals; 4. approval of
the acquisition of the Included Licences by the
Competition Authority of Botswana (or confirmation
from such authority or from either party's Botswana
legal counsel that such approval is not required)
("Competition Approval") ; and 5. duly executed
transfers of the Included Licences in the form
required by the Mining Act under which a 100% interest
in the Included Licences may be transferred.
If the Ministerial Consent and / or the Competition
Approval is not granted by the Long Stop Date the
agreement shall automatically terminate and cease
to have effect and no Party shall have any obligation
or liability to any other Party.
------------------ -----------------------------------------------------------------------
Long Stop 31 July 2021 or such later date is agreed to be
Date the parties to the Licence Sale Agreement.
------------------ -----------------------------------------------------------------------
Included Licences PL 044/2018 PL 154/2020 PL 366/2018
to be sold PL 045/2018 PL 250/2018 PL 367/2018
PL 122/2020 PL 251/2018 PL 368/2018
------------------ ----------------------- ---------------------- ----------------------
Excluded Licences PL 039/2018 PL 004/2018 PL 047/2018
not to be PL 040/2018 PL 005/2018 PL 123/2020
sold PL 001/2018 PL 041/2018 PL 252/2018
PL 002/2018 PL 042/2018 PL 253/2018
PL 003/2018 PL 046/2018 PL 254/2018
------------------ ----------------------- ---------------------- ----------------------
Included Licences If Sandfire wishes to transfer or sell part of
Right of First or one or more of the Included Licences then the
refusal Company has a right of first refusal to buy the
Included Licence (s) on the term of the Included
Licence Right of First Refusal which has to be
exercised by the Company within 30 days.
------------------ -----------------------------------------------------------------------
ROFR: Excluded If the Company wishes to transfer or sell part
Licences of or one or more of the Excluded Licences then
Sandfire has a right of first refusal to buy the
Excluded Licence (s) on the term of the Excluded
Licence Right of First Refusal which has to be
exercised by Sandfire within 30 days.
------------------ -----------------------------------------------------------------------
Governing The agreement is governed by and construed under
Law the law in the State of Western Australia.
------------------ -----------------------------------------------------------------------
Disputes Where a dispute occurs in relation to the First
Ore Reserve or any other matter the Company and
Sandfire shall within 21 days each nominate one
person (a "Nominated Representative") to represent
them to resolve the dispute and the Nominated Representative
shall be empowered by their own Board to negotiate
terms of a settlement of the dispute which shall
be binding on all the parties. If after 30 days
of their appointment the Nominated Representatives
have been unable to reach an agreement then in
relation to a dispute in respect of the First Ore
Reserve it shall be referred to an expert and a
dispute if respect of any matter other than the
First Ore Reserve the parties are free to direct
it to an expert or take legal or any other action
to resolve the matter.
------------------ -----------------------------------------------------------------------
Representations The parties have given customary representations
& Warranties and warranties for an agreement of this nature.
------------------ -----------------------------------------------------------------------
Further information in relation to the Share Subscription
Agreement
Parties The Company and Sandfire Resources Limited
------------------- ------------------------------------------------------------
Share Subscription Sandfire will acquire US$1.5 million 41,100,124
ordinary shares of 0.1 p in the Company ("Galileo
Shares") ("Sandfire's Shares") at a subscription
price of 2.68 pence per Galileo Share, being a
25% premium to the 10 day VWAP of the Company's
share price as at 22 January 2021 being the day
before the signing of the Share Subscription Agreement.
Sandfire's Shares will be issued at a premium of
17 % to the closing mid-price of the Galileo Shares
on 25 January 2021, being the last practical date
before the issue of this announcement. Sandfire's
Shares are not subject to any sale restrictions.
------------------- ------------------------------------------------------------
Participation Sandfire's Shares will represent 4.62% of the Company's
Rights issued shares as enlarged by the issue of Sandfire's
Shares ("Sandfire's Initial Voting Power"). Whilst
Sandfire's shareholding percentage is equal to
or greater than the Initial Voting Power Sandfire
will have participation rights (the "Participation
Rights") to participate in new Share issues/ issues
of rights to acquire Galileo Shares by the Company
on the same terms as other participants in a new
Galileo share issue / issues of rights to acquire
Galileo shares to at least maintain its shareholding
save that the Participation Rights cannot increase
its shareholding over 20%.
------------------- ------------------------------------------------------------
Right to Nominate If Sandfire's percentage shareholding increases
a director to 15% then it will have the right to nominate
a director to the Board of Galileo whilst its shareholding
equals or exceeds 15% whose appointment would be
subject to customary due diligence on them prior
to their appointment.
------------------- ------------------------------------------------------------
Conditions The only condition precedent to the Share Subscription
Precedent Agreement is that the parties enter into the Licence
Sale Agreement and this condition has been met.
------------------- ------------------------------------------------------------
Governing The agreement is governed by and construed under
Law the law in the State of Western Australia.
------------------- ------------------------------------------------------------
Representations The parties have given customary representations
& Warranties and warranties for an agreement of this nature.
------------------- ------------------------------------------------------------
The information on Sandfire referred to in this announcement t
was sources from its public announcements and website at
https://www.sandfire.com.au/site/content/
You can also follow Galileo on Twitter: @GalileoResource
For further information, please contact: Galileo Resources
PLC
Colin Bird, Chairman Tel +44 (0) 20 7581
4477
---------------------------------- ----------------------
Beaumont Cornish Limited - Nomad Tel +44 (0) 20 7628
Roland Cornish/James Biddle 3396
---------------------------------- ----------------------
Novum Securities Limited - Joint
Broker
Colin Rowbury /Jon Belliss +44 (0) 20 7399 9400
---------------------------------- ----------------------
Shard Capital Partners LLP - Tel +44 (0) 20 7186
J oint Broker 9952
Damon Heath
---------------------------------- ----------------------
Technical Glossary:
An 'Ore Reserve' is the economically mineable part of a Measured
and/or Indicated Mineral Resource. It includes diluting materials
and allowances for losses, which may occur when the material is
mined or extracted and is defined by studies at Pre-Feasibility or
Feasibility level as appropriate that include application of
Modifying Factors. Such studies demonstrate that, at the time of
reporting, extraction could reasonably be justified.
A 'Mineral Resource' is a concentration or occurrence of solid
material of economic interest in or on the Earth's crust in such
form, grade (or quality), and quantity that there are reasonable
prospects for eventual economic extraction. The location, quantity,
grade (or quality), continuity and other geological characteristics
of a Mineral Resource are known, estimated or interpreted from
specific geological evidence and knowledge, including sampling.
Mineral Resources are sub-divided, in order of increasing
geological confidence, into Inferred, Indicated and Measured
categories.
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