MTR Metal Tiger Plc

 
TIDMMTR 
 
 

18 July 2018

Metal Tiger plc

("Metal Tiger" or the "Company")

Sale of T3 Project and creation of New Exploration Joint Venture with MOD Resources

Metal Tiger is pleased to announce that it has signed a binding agreement (the "Agreement") with its joint venture partner MOD Resources Limited ("MOD") to sell its 30% interest in the T3 Project in consideration for 17,200,000 MOD shares and 40,563,566 options to receive a further 40,563,566 MOD shares for nil consideration ("Options"), exercisable under certain conditions, for a total value equivalent to A$27.7 million based on the last traded price of MOD shares on the ASX as at 17 July 2018 of A$0.48 per share.

Under the Agreement, Metal Tiger and MOD will also transfer control of all remaining exploration licenses held under the existing joint venture arrangement (i.e. excluding the T3 Project) to a new exploration joint venture company to be owned 70% by MOD and 30% by Metal Tiger ("New JV"). The New JV will continue the ongoing exploration programme over the 18 exploration licences covering 7,978 km2 of prospective land in the Kalahari Copper Belt.

Highlights:

 
 
    -- Metal Tiger to sell its 30% interest in the T3 Project (circa 24km2 

within prospecting licence PL190) for MOD shares and Options ("Consideration

Securities") in MOD for a total value equivalent to A$27.7 million

based on the closing price of MOD shares on the ASX on 17 July 2018 of

A$0.48. Consideration value based on MOD's 20 day VWAP of A$0.461 as

at 17 July 2018 of circa A$26.6 million.

 
    -- Metal Tiger has invested circa GBP3.8m to date in the MOD/Metal Tiger 

joint venture, and this milestone deal has so far provided Metal Tiger

shareholders with a circa 4.5x return over direct investment cost,

excluding any investment in the listed shares of MOD. The total

investment in the joint venture comprises contributions made to both

T3 and other exploration licenses and the return calculation takes no

account of the unrealised value of Metal Tiger's 30% stake in the New

JV.

 
    -- The consideration for the sale of T3 comprises a combination of MOD 

shares and Options, providing Metal Tiger shareholders with exposure

to the development of the T3 Project, without a requirement to

contribute to mine construction costs, and provides increased exposure

to MOD's successful ongoing exploration programme.

 
    -- Consolidation of the T3 Project to 100% MOD direct ownership is 

expected to make the asset more attractive with regard to development

financing options; Metal Tiger will benefit from this through its

substantial Consideration Securities and current equity position in

MOD.

 
    -- In the event of a successful takeover offer for MOD any remaining 

Metal Tiger Options will be automatically converted to MOD shares.

 
    -- Metal Tiger and MOD will enter into a New JV comprising all of the 

joint venture exploration licenses (excluding the T3 Project) covering

circa 7,978 Km2 of prospective land in the Kalahari Copper

Belt providing Metal Tiger shareholders with a 30% interest in any

future discoveries on these areas.

 
    -- Metal Tiger will also have a significantly increased exposure to the 

MOD licenses outside of the New JV via its Consideration Securities

and current equity position in the company.

Metal Tiger will grant MOD contractual rights (the "Rights") in the New JV, exercisable under specific circumstances at MOD's discretion, to purchase the remaining joint venture exploration assets ("Exploration Assets") held in the New JV, within the 3-year period following completion of the Transaction. This provides Metal Tiger with pre-defined exits, improving the ability to realise value for shareholders.

 
 
    -- Metal Tiger will retain a 2% net smelter royalty over the T3 Project 

capped at US$2 million. In addition, Metal Tiger may also receive a 2%

net smelter royalty over all Exploration Assets under specific

scenarios.

 
    -- Metal Tiger will have a right to nominate a board representative to 

MOD provided Metal Tiger owns at least a 10% interest in MOD

(including shares and Options).

 
    -- Metal Tiger has entered into a Share and Voting Deed with MOD, in 

which Metal Tiger has committed to support MOD board recommendations,

with restrictions also having been placed on Metal Tiger's ability to

sell MOD shares.

 
    -- Metal Tiger will no longer be required to make further capital 

contributions to the T3 Project from the date of this Agreement,

facilitating improved liquidity to finance further exploration in the

New JV and releasing capital for new investments.

Metal Tiger currently holds 13,880,042 shares of MOD representing 6.0% of MOD's current issued share capital.

Michael McNeilly, Chief Executive Officer of Metal Tiger plc, commented:

"We are delighted to sign this deal with our long-standing partner MOD, which is the culmination of five months of hard work on both sides.We believe this deal represents an exceptional outcome for both Metal Tiger and MOD shareholders and the optimal path forward for the advancement of the T3 Project.The creation of the new exploration JV preserves and formalises Metal Tiger and MOD's highly successful exploration partnership in the Kalahari Copper Belt where we continue to see scope for substantial value creation in the short term and will continue to draw upon the joint financing capabilities of both the London and Australian markets.

Through the transaction Metal Tiger will become the largest shareholder in MOD and is pleased to give its full support to the MOD Board to continue their excellent work in the management of exploration activities and the expeditious development of T3.We have full confidence that Metal Tiger's investment in MOD will deliver exceptional returns for Metal Tiger shareholders."

Agreement Structure and Commercial Terms

 
 
    -- Under the terms, Metal Tiger will sell its 30% stake in Metal Capital 

Limited for a total consideration of 17,200,000 MOD shares and

40,563,566 Options.

 
    -- The Options to be issued to Metal Tiger will not have voting or 

dividend rights and are exercisable at nil consideration within 3

years. Metal Tiger may exercise the Options by converting them into

one MOD share each, provided Metal Tiger owns equal or less than 12.5%

of MOD after completing the conversion. The Options reduce the impact

of any dilution of Metal Tiger's shareholding from any future MOD

equity issuance.

 
    -- The New JV will be created by a transfer of 17 of the 18 exploration 

licenses within the current joint venture which will be subsequently

transferred from Tshukudu Metals Botswana ("TMB") to a newly

incorporated joint venture vehicle, Tshukudu Exploration (Proprietary)

Limited ("TEP"). TEP will be 100% owned by the New JV, a new UK

incorporated company, Metal Capital Exploration Limited, to be owned

70% by MOD and 30% by Metal Tiger. The remaining licence, PL190/2008,

which includes the T3 Project, will be held on trust by TMB for TEP,

and all areas excluding the T3 Project will form part of the New JV.

 
    -- The T3 Project comprises the draft planned mine and plant layout as 

per the January 2018 T3 Pre-Feasibility Study and covers a total area

of 24.34 km2.

Metal Tiger's funding commitment of the T3 Project has ceased following signing of this Agreement.

 
 
    -- Metal Tiger will grant MOD a series of Rights in the New JV, 

exercisable at MOD's election, to purchase the remaining New JV

exploration assets currently held by MOD and Metal Tiger. These Rights

will be exercisable at a pre-determined valuation methodology based on

the relative proportion of MOD's enterprise value attributed to the

exploration value of the relevant asset at the time of exercise. Under

the Rights:

1. MOD has the option to acquire a 100% interest in any New JV Exploration Asset on completion of an announced scoping study within the 3-year period from completion of the Transaction (the "Mineral Resource Option");

2. MOD has the option to acquire a 100% interest in all the New JV Exploration Assets at the end of the 3-year period following completion of the Transaction (the "JV Roll-Up Option"); and

3. MOD has the option to acquire 100% in all the New JV Exploration Assets following a change of control recommended by the MOD Board (the "JV Consolidation Option").

 
 
    -- Upon exercise of the JV Roll-Up Option or JV Consolidation Option, 

Metal Tiger will receive a 2% net smelter royalty over the properties

the subject of the options. For the avoidance of doubt this will not

include a royalty over any New JV Exploration Assets acquired by MOD

under the Mineral Resource Option.

 
    -- Metal Tiger will enter into a Share and Voting Deed with respect to 

the Consideration Securities. MTR has committed to support MOD board

recommendations, including a board endorsed change of control.

Restrictions have been placed on Metal Tiger's ability to sell MOD

shares, including agreeing not to dispose of any of the Consideration

Securities within the 12 months from completion of the Transaction.

 
    -- Upon completion, Metal Tiger will have the right to nominate one 

director to the board of MOD at any time in which it holds more than

10% of the issued share capital in MOD (including shares and Options).

 
    -- The parties will enter into a Management Agreement to govern the New 

JV upon completion. The New JV will be managed by MOD and each party

must fund ongoing exploration pro-rata to their retained interests.

 
    -- The Transaction is conditional upon the certain conditions precedent, 

including but not limited to:

MOD receiving all necessary shareholder and ASX approvals;

Completion of the transfer of licenses to the New JV and renewal

of PL 190 (includes T3 project) for a further 2 years; and

Regulatory approvals in Botswana.

 
    -- In the UK, HMRC has confirmed in a non-statutory pre-clearance that 

Substantial Shareholder Exemption should be available to MTR and

therefore, no corporation tax should be payable in respect of the

disposal of MTR's 30% shareholding in Metal Capital Limited.

 
    -- Completion will occur 5 business days after the satisfaction of all 

conditions precedent and is expected to occur by the end of October

2018.

 
    -- Should completion not have occurred by 5.00pm (WST) on 31 December 

2018, or such other date as MOD or Metal Tiger may agree in writing,

either MOD or Metal Tiger may terminate the Agreement.

The latest audited accounts filed for Tshukudu Metals Botswana (Pty) Limited for the year to 31 December 2017 showed a loss for the year of Pula 959,177 (USD 93,310) and net assets of Pula 82,918,625 (USD 8,552,191).

NRG Capital Partners is acting as sole Financial Adviser to Metal Tiger in relation to the Transaction.

For further information on the Company, visit: www.metaltigerplc.com:

 
Michael McNeilly                Chief Executive Officer                 Tel: +44 (0)20 7099 0738 
                                (Metal Tiger plc) 
Mark Potter                     Chief Investment Officer                Tel: +44 (0)20 7099 0738 
                                (Metal Tiger plc) 
Julian Vickers                  NRG Capital Partners                    Tel: +44 (0)20 3709 4500 
                                (Financial Adviser) 
Stephen AllenBhavesh Patel      RFC Ambrian Ltd(Nominated Adviser)      Tel: +44 (0)20 3440 6800 
Charlie Cryer                   RFC Ambrian Ltd(Joint Broker)           Tel: +44 (0)20 3440 6800 
Nick Emerson                    SI Capital(Joint Broker)                Tel: +44 (0)1483 413 500 
Gordon Poole                    Camarco(Financial PR)                   Tel: +44 (0)20 3757 4980 
James Crothers 
 
 

Notes to Editors:

Metal Tiger plc is listed on the London Stock Exchange AIM Market ("AIM") with the trading code MTR and invests in high potential mineral projects with a precious and strategic metals focus.

The Company's target is to deliver a very high return for shareholders by investing in significantly undervalued and/or high potential opportunities in the mineral exploration and development sector timed to coincide, where possible, with a cyclical recovery in the exploration and mining markets. The Company's key strategic objective is to ensure the distribution to shareholders of major returns achieved from disposals.

Metal Tiger's Metal Projects Division is focused on the development of its key project interests in Botswana, Spain and Thailand. In Botswana, Metal Tiger has a growing interest in the large and highly prospective Kalahari copper/silver belt. In Spain, the Company has tungsten and gold interests in the highly-mineralised Extremadura region. In Thailand, Metal Tiger has interests in two potentially near-production stage silver/lead/zinc mines as well as licences, applications and critical historical data covering antimony, copper, gold, silver, lead and zinc opportunities.

The Company has access to a diverse pipeline of new opportunities focused on the natural resource sector including physical resource projects, new natural resource centred technologies and resource sector related fintech opportunities. Pipeline projects deemed commercially viable may be undertaken by Metal Tiger or by an AIM or NEX Exchange (formerly ISDX) partner with whom the Company is engaged.

View source version on businesswire.com: https://www.businesswire.com/news/home/20180717006087/en/

 
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(END) Dow Jones Newswires

July 18, 2018 02:00 ET (06:00 GMT)