TIDMKDNC
RNS Number : 8629H
Cadence Minerals PLC
27 March 2020
Cadence Minerals Plc
("Cadence Minerals" or "Cadence")
European Metals (AIM: EMH) - Final Agreement with CEZ to make
Significant Investment into Cinovec Project.
Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to note
the update today from European Metals Holdings Limited ("European
Metals" "EMH" or "the Company") that it has today reached final
agreement ("Final Agreement") with CEZ Group ("CEZ"), one of
Central and Eastern Europe's largest power utilities, regarding a
strategic partnership and significant investment into the Cinovec
Project ("Cinovec" or "the Project").
The Company announced on 20 November 2019 ("Potential Strategic
Partnership with CEZ and Significant Investment into Cinovec
Project") the terms of a conditional agreement ("Conditional
Agreement") with CEZ under which CEZ had the option to subscribe to
become a 51% shareholder in Geomet s.r.o. ("Geomet"), the Company's
Czech subsidiary and holder of the rights over the Project.
The Final Agreement reached today is now a binding commitment
from CEZ to subscribe to become a 51% shareholder in Geomet, and is
conditional only upon EMH shareholder approval, which will be
sought at an EGM to be held in April 2020.
The amended terms of the Final Agreement (as compared to the
Conditional Agreement) include:
-- in the context of the binding commitment to invest described
above and current market conditions, a reduction of the price
payable by CEZ upon completing of the subscription of Geomet shares
from EUR34,061,265 to EUR29,100,000; and
-- allowing CEZ to elect to withdraw from funding of the Project
at two separate milestones. The first withdrawal milestone is
designed to coincide with completion of the front-end engineering
design program and semi-industrial pilot testing of the lithium
concentrate processing while the second withdrawal milestone is
designed to coincide with completion of the definitive feasibility
study. If CEZ elects to withdraw, Geomet will return to it an
amount equal to its initial investment minus EUR250,000 and all
costs and expenses incurred in relation to the Project up until the
date of notification of the withdrawal. Following a withdrawal, CEZ
will reduce its holding on a pro-rata basis to a minority position
in Geomet.
The directors of EMH believe that the revised terms provide
sufficient funding for the next stage of the development of the
Project, setting it on sound footing to progress into production
thereafter.
Further details of the Final Agreement will be set out in the
supplementary circular to be posted to EMH shareholders
shortly.
Cadence Minerals Holding in EMH
Cadence holds approximately 19.1 percent of the equity in
European Metals, which, through its wholly owned Subsidiary, Geomet
s.r.o. ("Geomet"), controls the mineral exploration licenses
awarded by the Czech State over Cinovec.
Background to the Transaction
In July last year, EMH announced that CEZ was conducting due
diligence on the Company and the Cinovec Project, and that the
successful outcome of the due diligence process could result in CEZ
potentially becoming the Company's largest shareholder and
co-development partner for the Cinovec Project. Since then, EMH and
CEZ have held detailed discussions on the framework for CEZ's
participation in the Cinovec Project and in November 2019 EMH and
CEZ entered into the Conditional Agreement, pursuant to which CEZ
had the option to subscribe become a 51% shareholder in Geomet. The
Conditional Agreement included conditions precedent that have now
all been met.
In light of very significant changes in global markets and the
successful completion of CEZ's due diligence, EMH and CEZ have
replaced the Conditional Agreement with the Final Agreement.
The Company considers that CEZ Group is an ideal strategic and
financial partner for the Cinovec Project. In addition to CEZ's
financial strength, the Board believes that CEZ provides strong
strategic relationships within the Czech Republic, the European
Union and abroad. CEZ is a leader in power generation and
distribution in the region and has plans to become heavily involved
in the development of new energy systems. Through these battery
industry activities, CEZ is expected to assist greatly in the
securing of off take agreements for the Project.
Financial effects of the Transaction
The primary financial objective of the transaction is to secure
the funding for the next stage of the development of the Cinovec
Project and to provide a strong platform for the Cinovec Project to
progress into production. Whilst the Board believes from the
extensive PFS work undertaken to date that Cinovec is a robust
project with strong economics, the funding of large mining and
processing projects requiring significant capital expenditure is
very challenging for smaller mining companies in current economic
and market conditions.
The addition of a partner with the financial strength of CEZ,
and the strong significant business relationships that it brings,
significantly enhances the status of the Cinovec Project at this
important stage of its development.
The subscription proceeds from the Final Agreement will be used
by Geomet to develop the Cinovec Project through completion of the
Definitive Feasibility Study ("DFS"), complete all permitting
processes and advance the Cinovec Project to a construction
decision. The DFS will bring together the detailed operational and
financial implementation plan, including geological, technical,
engineering, metallurgical, environmental and financial technical
expert reports. The Company has prepared the detailed budget and
business plan for the delivery of the DFS, together with the
front-end engineering design programme, which is expected to take
up to 18 months to complete. In order to facilitate the timely
progressing of the DFS, Geomet will enter into a service contract
with one or more third party contractors and, under the Geomet
Shareholders' Agreement (to be entered into at the completion of
CEZ's investment), EMH will be appointed to provide services of
managing the Cinovec Project development.
On completion of CEZ's investment pursuant to the Final
Agreement, EMH's ongoing interest in Geomet will reduce to 49%.
Under the Geomet Shareholders' Agreement (to be entered into at the
completion of CEZ's investment), Geomet will have a board of five
directors. EMH will have the right to nominate two of the five
Geomet directors Further, under the Geomet Shareholders' Agreement,
EMH will be appointed to provide services managing the Cinovec
Project development
Accordingly, on completion of the Final Agreement, EMH will
cease to consolidate Geomet's results within the EMH's consolidated
accounts..
AIM Rule 15
The Final Agreement would constitute a fundamental change of
business of the Company under Rule 15 of the AIM Rules. The Final
Agreement is therefore conditional on, inter alia, Shareholder
approval which will be sought at a General Meeting of the Company
to be convened in due course. The Company will, however, as
previously announced, remain an operating minerals company under
the AIM Rules given its remaining material interest and ongoing
involvement in the Cinovec Project after the Final Agreement has
completed, as described above.
The completion of the Final Agreement will not result in any
changes to the Company's Board or management.
Further information
European Metals expects to publish shortly a supplementary
circular to shareholders setting our further details of the amended
proposed subscription, the proposed amendments to the Exclusivity
and Framework Agreement and Geomet Shareholders' Agreement,
together with notice of the General Meeting. A further announcement
will be made in due course.
The full release can be found at:
https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/EMH/14479989.html
European Metals Managing Director Keith Coughlan said; "We are
very pleased to have concluded this agreement with CEZ which,
subject only to EMH shareholder approval, provides certainty for
the future development of the Cinovec Project. Given the current
uncertain state of global markets, it is particularly affirming for
us to have a partner with the corporate, technical and financial
strength of CEZ investing in the Project."
- Ends -
For further information:
Cadence Minerals plc +44 (0) 207 440 0647
Andrew Suckling
Kiran Morzaria
WH Ireland Limited (NOMAD & Broker) +44 (0) 207 220 1666
James Joyce
James Sinclair-Ford
Novum Securities Limited (Joint
Broker) +44 (0) 207 399 9400
Jon Belliss
Qualified Person
Kiran Morzaria B.Eng. (ACSM), MBA, has reviewed and approved the
information contained in this announcement. Kiran holds a Bachelor
of Engineering (Industrial Geology) from the Camborne School of
Mines and an MBA (Finance) from CASS Business School.
Forward-Looking Statements:
Certain statements in this announcement are or may be deemed to
be forward-looking statements. Forward-looking statements are
identi ed by their use of terms and phrases such as "believe"
"could" "should" "envisage" "estimate" "intend" "may" "plan" "will"
or the negative of those variations or comparable expressions
including references to assumptions. These forward-looking
statements are not based on historical facts but rather on the
Directors' current expectations and assumptions regarding the
Company's future growth results of operations performance future
capital and other expenditures (including the amount. nature and
sources of funding thereof) competitive advantages business
prospects and opportunities. Such forward-looking statements re ect
the Directors' current beliefs and assumptions and are based on
information currently available to the Directors. Many factors
could cause actual results to differ materially from the results
discussed in the forward-looking statements including risks
associated with vulnerability to general economic and business
conditions competition environmental and other regulatory
changes actions by governmental authorities the availability of
capital markets reliance on key personnel uninsured and
underinsured losses and other factors many of which are beyond the
control of the Company. Although any forward-looking statements
contained in this announcement are based upon what the Directors
believe to be reasonable assumptions. The Company cannot assure
investors that actual results will be consistent with such
forward-looking statements.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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