TIDMMOD
RNS Number : 6132N
MOD Resources Limited
21 January 2019
21 January 2019
MOD Resources Limited
Successful $15 million Capital Raise and
Response to Media Speculation
Highlights:
-- Successfully raised $10 million through an oversubscribed
institutional Placement at $0.30/sh.
-- $5 million to be raised through a fully underwritten Rights Issue at $0.24/sh.
-- Confirms strong shareholder confidence in the Company and the
quality of the T3 Copper Project
-- Received an unsolicited, non-binding, indicative, conditional
proposal from Sandfire at $0.38/sh.
-- The Board believes this proposal undervalues the Company's assets
-- MOD continues to explore all options including further engagement with Sandfire
MOD Resources Limited ("the Company") (ASX/LSE: MOD) is pleased
to announce that it has received firm commitments to raise $10
million through an institutional share Placement with an additional
$5 million fully underwritten Rights Issue to be offered to
existing shareholders. The majority of funds are intended for
working capital to advance the T3 Copper Project towards production
and defining additional resources within the surrounding T3
Expansion Project area.
Furthermore, following media speculation, the Company announces
receipt of an unsolicited, non-binding, indicative and conditional
proposal by ASX listed Sandfire Resources NL ("Sandfire")
(ASX:SFR). The proposal is to acquire 100% of MOD shares via an all
scrip transaction equivalent to $0.38 per MOD share. The Board
believes this proposal undervalues MOD's unique and extensive
assets.
MOD's T3 Copper Project in Botswana lies within a largely
under-explored, highly prospective region offering a dominant
copper-belt scale opportunity. The T3 Copper Project, discovered in
March 2016, presents the potential for a long-life, high-margin,
open pit copper mine with significant exploration upside. The
Company continues to progress the T3 Feasibility Study to reach a
decision to mine in the first half of 2019. The Company has also
advanced discussions with a number of parties which has provided
the Board with confidence in the availability of a range of funding
options to progress the T3 Copper Project into production.
MOD's Managing Director, Julian Hanna, said "Funding from this
capital raise will enable the Company to progress the T3 Copper
Project towards a development decision and conduct further drilling
for additional resources. The unsolicited, indicative proposal for
100% of the Company received from Sandfire confirms the potential
of the T3 Copper Project, however the Board considers it
significantly undervalues the assets of the Company. With strong
ongoing support of our shareholders through a placement and a fully
underwritten rights issue, we believe that the Company will have
sufficient working capital to achieve our objectives."
Successful placement of $10 million with a $5 million Fully
Underwritten Rights Issue
The Company is pleased to announce that it has received firm
commitments to raise $10 million through the issue of approximately
33.33 million fully paid ordinary shares to institutional and
sophisticated investors ("the Placement"). The Placement will be
conducted using the Company's existing Listing Rule 7.1 placement
capacity.
The issue price for the Placement is $0.30 per share
representing a 36% premium to the Company's last closing share
price on ASX. This indicates strong shareholder confidence in the
Company and the opportunity that T3 Copper Project and the regional
exploration represents to shareholders.
To ensure that all shareholders can participate in the capital
raising, the Placement will be followed by a non-renounceable
rights issue to raise approximately $5 million (approximately 21.7
million shares) from eligible shareholders ("Rights Issue"),
offering 1 new share per 13 shares held. The Rights Issue is fully
underwritten by Ashanti Capital. The Rights Issue will be priced at
$0.24 per share, a price that closely reflects the Company's last
closing share price on ASX. Further details relating to the Rights
Issue timetable will be released to the market shortly.
The funds raised from the Placement and Rights Issue are
intended to be used to complete a 2019 capital works program, which
will include:
-- Progress the T3 Copper Project through Feasibility Study,
mining licence application and early T3 development work to reach a
decision to mine, targeted by the end of the first half of
2019;
-- Completion of purchase of the farm on which T3 Open Pit is
located and construction of initial project related
infrastructure;
-- Infill drilling to upgrade part of the early stages of T3
mine production to a JORC compliant Measured Resource category;
-- Advance conceptual underground mining studies for the T3
Expansion Project and A4 Dome with resource drilling as
appropriate; and
-- Conduct follow-up drilling of initial, shallow copper and
silver intersections at the T4 - T23 Dome.
Funds will also enable the Company to progress negotiations with
a number of parties in respect of funding the development of the T3
Copper Project.
The Company's Board of Directors ("the Board") and Metal Tiger
Plc have committed to take up their entitlements in the Rights
Issue.
Ashanti Capital is acting as lead manager and underwriter of the
capital raising. Canaccord is acting as co-manager of the capital
raising. Blue Ocean Equities provides corporate advice to the
Company.
Sandfire Indicative Proposal and Update on Strategic Funding
Process
On 16 January 2019, the Company received an unsolicited,
non-binding, indicative and conditional proposal ("Indicative
Proposal") from Sandfire to acquire 100% of shares in MOD.
The Indicative Proposal was made after a period of technical due
diligence, including access to a data room and a site visit, with
respect to a potential joint venture arrangement, the potential
sale of a partial interest in T3 Copper Project and a potential
market placement to support development of the T3 Copper
Project.
The Indicative Proposal comprises a full scrip consideration
equivalent to $0.38 per MOD share, valuing the Company's equity, on
a fully diluted basis, at $113 million(1) . This is equivalent to
an exchange ratio of 1 Sandfire share for approximately every 17
MOD shares(1) .
The Indicative Proposal is subject to conditions, including:
-- Completion of definitive due diligence to the satisfaction of Sandfire;
-- Execution of a Merger Implementation Agreement;
-- Receipt of a unanimous recommendation from the MOD Board;
-- Binding commitments or statements of intent by MOD
shareholders holding 19.9% or more, in support of the transaction;
and
-- Sandfire Board approval.
The Board believes that the Indicative Proposal undervalues the
assets of MOD:
-- MOD holds a dominant position (11,700km(2) in granted
licences) in one of the last under-explored sediment hosted copper
belts in the world, within a safe jurisdiction(2) ;
-- MOD owns 100% of the T3 Copper Project, a high-quality copper development asset;
-- Strong exploration results indicate the potential for additional economically viable copper mineralization within several priority targets within MOD's landholding;
-- MOD expects the T3 Copper Project will produce a high-grade,
high-quality concentrate, attracting strong interest from metal
traders and smelters;
-- MOD is on track to release the T3 Copper Project Feasibility
Study by end of the first quarter of 2019;
-- MOD's share price and the MOD / SFR exchange ratio are at a 2.5-year low(3) ;
-- The last placement price was $0.47 per share(4) ;
-- NPV (pre-tax) for the T3 Copper Project based on the PFS is
$370m under the Base Case and $529m under the Expansion Case(5) ;
and
-- The acquisition would be highly accretive to Sandfire in
terms of resource, reserve, extended mine-life and NPV per share(6)
.
(1) As at close of market on 15 January 2019.
(2) Refer to Sprott Capital Partners research report dated 15
January 2019, available at
www.modresources.com.au/research_reports
(3) Based on closing prices
(4) MOD's $18m placement and rights issue announced on 6 March
2018.
(5) Refer to ASX announcement "T3 Pre-Feasibility Study Confirms
Robust, Long Life Copper Mine" released on 31 January 2018.
(6) Based on average broker NPV.
The Board remains fully committed to act in the best interests
of, and to maximise value for MOD shareholders. The Company is
willing to engage with Sandfire and grant confirmatory due
diligence if a compelling price is presented and capable of being
supported by the Board and MOD shareholders.
MOD has not received any offer capable of acceptance by the
Company's shareholders and no certainty that the Indicative
Proposal will result in a transaction. The Company will continue to
update the market with any material developments in relation to the
Indicative Proposal.
The Company has appointed Sternship Advisers as financial
advisor and DLA Piper as legal advisor with respect to Sandfire's
Indicative Proposal.
-S-
For and on behalf of the Board.
Julian Hanna Mark Clements
Managing Director Executive Chairman and Company
Secretary
Jeff Sansom Jos Simson / Emily Fenton (UK
Investor Relations PR & IR)
+61 9322 8233 Tavistock
IR@modresources.com.au +44 207 920 3150
MOD@tavistock.co.uk
Subscribe at: www.modresources.com.au
About MOD Resources
MOD Resources Ltd (ASX/LSE: MOD) is a dual listed Australian
copper company with a goal of becoming a substantial copper
producer. After discovering copper in the first drill hole in March
2016, MOD is now under three months away from completion of a
Feasibility Study for its 100% owned 60Mt T3 Copper Project in the
central Kalahari Copper Belt, Botswana. The in-country operating
company for the T3 Copper Project is Tshukudu Metals Botswana (Pty)
Ltd (MOD 100%).
Total cost of discovery of T3 and delineation of the maiden
resource was an exceptionally low US$1.7 million, equivalent to
only US$0.22 cents/lb copper contained within the resource. As
announced 16(th) July, 2018, the total resource now comprises of an
Indicated Resource of 36.6Mt @ 1.14% Cu and 16 g/t Ag containing
417 Kt copper and 18.6 Moz silver and an Inferred Resource of
23.5Mt @ 0.74% Cu and 11 g/t Ag containing 173.3 Kt copper and 8.3
Moz silver (Table 1). Results of the Pre-feasibility Study,
announced on 31 January 2018 suggest a robust, long life, open pit
mining and processing operation at T3 with 9-year Base Case for
2.5Mtpa production, pre-tax NPV A$370m, IRR of 39% and payback
within 2.7 years. Since the announcement of the PFS, there has been
a 20% increase to the Base Case process plant throughput to 3Mtpa,
with allowance for staged future expansion.
Table 1: T3 Revised Mineral Resources (16 July 2018)
JORC Category Cut-off Tonnes Grade Grade Contained Contained
Cu% Cu% Ag g/t Cu (Kt) Ag (Moz)
Indicated 0.25 50,040,000 0.92 13 461.3 20.95
-------- ----------- ------ -------- ---------- ----------
0.4 36,631,000 1.14 16 417.0 18.60
-------- ----------- ------ -------- ---------- ----------
0.5 27,139,000 1.38 19 374.5 16.82
-------- ----------- ------ -------- ---------- ----------
1 14,154,000 2.06 31 291.9 14.30
-------- ----------- ------ -------- ---------- ----------
1.5 10,962,000 2.29 36 250.7 12.61
-------- ----------- ------ -------- ---------- ----------
Inferred 0.25 27,667,000 0.68 10 187.3 9.18
-------- ----------- ------ -------- ---------- ----------
0.4 23,524,000 0.74 11 173.3 8.30
-------- ----------- ------ -------- ---------- ----------
0.5 19,884,000 0.79 11 156.9 7.35
-------- ----------- ------ -------- ---------- ----------
1 3,511,000 1.58 22 55.6 2.46
-------- ----------- ------ -------- ---------- ----------
1.5 1,640,000 2.04 29 33.5 1.55
-------- ----------- ------ -------- ---------- ----------
TOTAL 0.25 77,706,000 0.83 12 648.6 30.14
-------- ----------- ------ -------- ---------- ----------
0.4 60,155,000 0.98 14 590.4 26.90
-------- ----------- ------ -------- ---------- ----------
0.5 47,023,000 1.13 16 531.5 24.17
-------- ----------- ------ -------- ---------- ----------
1 17,665,000 1.97 30 347.6 16.77
-------- ----------- ------ -------- ---------- ----------
1.5 12,602,000 2.25 35 284.2 14.16
-------- ----------- ------ -------- ---------- ----------
In parallel with the development of the T3 Copper Project, a
major exploration program is underway across a combination of 100%
owned and JV licenses covering approximately 11,700km(2) in this
under-explored region, to explore for additional resources that
could be processed through the planned T3 process plant and
potentially add significant value to the expanded project. JV
Exploration Assets are operated by Tshukudu Exploration (Pty) Ltd,
which is a wholly owned subsidiary of UK incorporated joint venture
company, Metal Capital Exploration Limited, owned 70% by MOD and
30% by AIM-listed Metal Tiger Plc (AIM: MTR).
MOD's state of the art exploration techniques have developed the
Company's understanding of the unique 'dome' style geology in the
region. Drilling at multiple high priority exploration targets,
supported by airborne electromagnetics has already proved
successful in discovering encouraging copper mineralisation within
the 5km long A4 Dome and the 12km long A1 Dome which lie only 8kms
and 20kms from the T3 Copper Project respectively.
There are two styles of mineralisation being tested by drilling
in the domes around the T3 Copper Project; shallower high-grade
vein hosted mineralisation and deeper sediment contact hosted
mineralisation known as the NPF contact. NPF contact mineralisation
is an important target as this contact hosts most of the
substantial copper deposits located east of MOD's licences,
including the 100Mt @ 2% Cu 'Zone 5' resource planned to be mined
underground by Cupric Canyon Capital.
MOD has an option to acquire MTR's interests in any new JV
resource which progresses to a scoping study within three years
from 15 November 2018, as well as an option to acquire all the
remaining JV assets at the end of the three-year period.
Forward Looking Statements and Disclaimers
This announcement includes forward-looking statements that are
only predictions and are subject to risks, uncertainties and
assumptions, which are outside the control of MOD Resources
Limited.
Actual values, results, interpretations or events may be
materially different to those expressed or implied in this
announcement. Given these uncertainties, recipients are cautioned
not to place reliance on forward-looking statements in the
announcement as they speak only at the date of issue of this
announcement. Subject to any continuing obligations under
applicable law and ASX Listing Rules, MOD Resources Limited does
not undertake any obligation to update or revise any information or
any of the forward-looking statements in this announcement or any
changes in events, conditions or circumstances on which any such
forward-looking statement is based.
This announcement has been prepared by MOD Resources Limited.
The document contains background information about MOD Resources
Limited current at the date of this announcement. The announcement
is in summary form and does not purport to be all-inclusive or
complete. Recipients should conduct their own investigations and
perform their own analysis in order to satisfy themselves as to the
accuracy and completeness of the information, statements and
opinions contained in this announcement.
The announcement is for information purposes only. Neither this
announcement nor information contained in it constitutes an offer,
invitation, solicitation or recommendation in relation to the
purchase or sale of shares in any jurisdiction.
The announcement may not be distributed in any jurisdiction
except in accordance with legal requirements applicable in such
jurisdiction. Recipients should inform themselves of the
restrictions that apply to their own jurisdiction as a failure to
do so may result in a violation of securities laws in such
jurisdiction.
This announcement does not constitute investment advice and has
been prepared without taking into account the recipient's
investment objectives, financial circumstances or particular needs
and the opinions and recommendations in this announcement are not
intended to represent recommendations of particular investments to
particular persons.
Recipients should seek professional advice when deciding if an
investment is appropriate. All securities transactions involve
risks, which include (among others) the risk of adverse or
unanticipated market, financial or political developments.
To the fullest extent of the law, MOD Resources Limited, its
officers, employees, agents and advisers do not make any
representation or warranty, express or implied, as to the currency,
accuracy, reliability or completeness of any information,
statements, opinion, estimates, forecasts or other representations
contained in this announcement. No responsibility for any errors or
omissions from the announcement arising out of negligence or
otherwise is accepted.
No New Information
To the extent that this announcement contains references to
prior exploration results and Mineral Resource estimates, which
have been cross referenced to previous market announcements made by
the Company, unless explicitly stated, no new information is
contained. The Company confirms that it is not aware of any new
information or data that materially affects the information
included in the relevant market announcements and, in the case of
estimates of Mineral Resources that all material assumptions and
technical parameters underpinning the estimates in the relevant
market announcement continue to apply and have not materially
changed.
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
MSCGMGZMRMGGLZG
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