TIDMPREM
RNS Number : 2219R
Premier African Minerals Limited
20 September 2017
For immediate release
20 September 2017
Premier African Minerals Limited
("Premier" or the "Company")
Disposal of Premier's 52% Interest in TCT IF
Summary
Premier African Minerals Limited, the AIM-traded,
multi-commodity mining and natural resource development company
focused on Southern and Western Africa, announces that it has today
entered into an agreement with Amire Glory Limited ("Amire Glory"
or the "Buyer") for the sale of Premier's 52% interest in
Mozambique-based TCT Industrias Florestais Limitada ("TCT IF"),
which principally owns a limestone deposit and forestry interests
in Mozambique ("Disposal"). Premier will retain a 50% interest in
the limestone deposit following completion of the Disposal.
Background to the Disposal
The Board announced last month that it was reviewing possible
partnerships and / or a sale of Premier's TCT IF forestry interests
whilst ensuring that Premier maintained an interest in the
limestone deposit. Over the course of this year Premier has become
increasingly focused on the exploration and development of its Zulu
lithium asset and bringing RHA into sustainable ongoing production.
In addition, Premier has increased its strategic interest in Circum
Minerals through a series of share acquisitions.
The limestone asset of TCT IF remains of continuing potential
interest to Premier, but the deposit is still at the very initial
stages of exploration. At the time of initial acquisition there had
been some early test-work on surface material of the limestone,
which indicated that there were potentially acceptable grades of
calcium carbonate (CaCO3) for limestone for use in cement
production, and initial work had suggested that solubility should
be suitable for agrilime and that the material is also expected to
be suitable for aggregate production.
In respect of TCT IF's forestry interests, the Board does not
believe that these are material in the ongoing development and
strategy of the Group. Operating conditions in Mozambique can be
challenging, and in particular the timber industry was affected
earlier this year by a country-wide suspension of timber cutting
and export licences in Mozambique for un-processed timber of over
125 mm in diameter. TCT IF's forestry interests are relatively
small scale and have underperformed against budget in the current
year, and overall are expected only to be break-even for the year
as a whole. The forestry interests will not generate the surplus
cash flow that had been planned on acquisition to support further
exploration activities on the limestone project in the current
year.
When Premier initially completed the acquisition of its interest
in TCT IF in October 2016 ("TCT IF Acquisition Agreement"), the
subsequent payment by Premier of the consideration due to Transport
Commodity Trading Mozambique Limitada ("TCTM") and GAPI Sociedade
de Investimentos S.A. ("GAPI") (together the "TCT Vendors") was
only due following final procedural registration of the assignment
of quotas by the Mozambique authorities and this registration has
remained outstanding and as set out in Premier's 2016 audit report
and accounts, amounted in aggregate to approximately US$2.1 million
as at 30 June 2016, to be settled in either New Premier Ordinary
Shares or cash at the election of the TCT Vendors ("Vendor
Consideration"). Given the elapse of time, the TCT Vendors have
made it increasingly clear to Premier that the outstanding
consideration must be settled as soon as possible, failing which
the TCT IF Acquisition Agreement could lapse.
The Company has therefore secured an agreement to novate its
rights and obligations under the TCT IF Acquisition Agreements,
whilst still retaining a free carried interest in the limestone
deposits to completion of the initial exploration programme and
without cost. Following completion of the Disposal, which is
expected to occur within 60 days, Premier will be relieved of any
obligations in respect of TCT IF and will be able to focus ongoing
management and financial resources to the development of Zulu and
RHA.
Principal terms of the Disposal
Premier has today executed a binding letter of understanding
("LoU") with the Buyer for the sale by Premier of its 52% interest
in TCT IF for a value of US$2.1 million (before settlement of the
Vendor Consideration). The consideration will be satisfied through
the transfer by Premier of all rights and obligations held under
the public deeds for the assignment of quotas to acquire its 52%
interest in TCT IF from the Vendors. The Buyer will therefore
assume Premier's responsibility to settle the Vendor Consideration
of US$2.1 million and on completion of the Disposal, Premier will
have no further liabilities or obligations to the TCT Vendors. Net
of the settlement of the Vendor Consideration the net proceeds
retained by Premier is nil.
The Buyer has further agreed to establish a
Mozambique-registered Company ("NewCo") which will hold its
interest in TCT IF's limestone deposit exploration licence and
Premier will be granted a 50% interest in NewCo. The Buyer will be
responsible for NewCo's initial exploration costs of up to a
maximum of US$200,000 ("Exploration Spend") unless otherwise agreed
in writing with Premier. Following such Exploration Spend, the
shareholders in NewCo will be responsible for any further funding
of NewCo pro rata to their interests in NewCo. Premier will be
appointed the manager of NewCo (and retain oversight therefore of
the exploration and development of limestone project).
The Buyer, as described further below, intends to develop a
portfolio of Mozambican forestry tourism and agricultural interests
and has further granted Premier the right to participate in any
fund raise whether by way of private placement, offer to the public
or offer to shareholders of the Buyer or otherwise to the total
value of 10% of the proposed fund raise (this right will lapse
following the admission of all or any of the shares in the Buyer,
to trading on a market for listed securities operated by a
recognised investment exchange or should Premier fail to
participate in a fund raise).
As soon as reasonably practicable following the signature of the
LoU, Premier and the Buyer will enter into a Deed of Novation,
whereby Premier and the Buyer will release and discharge the other
from all claims and demands under or in connection with the TCT IF
Acquisition Agreement and begin negotiating a definitive joint
venture agreement in respect of the limestone project.
Completion of the Disposal is conditional, inter alia, on the
following matters:
(i) the parties agreeing, signing and exchanging an acquisitions
agreement incorporating all the terms of the LoU within 60 days if
signing of the LoU. Premier will only provide basic warranties
under the Disposal, such as its rights and obligations under TCT
Agreement;
(ii) there being no material adverse change in the business,
operations, assets, position (financial, trading or otherwise),
profits or prospects of TCT IF between the date of the LoU and
closing;
(iii) no government or other person having:
- commenced or threatened to commence any proceedings or
investigation for the purpose of prohibiting or otherwise
challenging or interfering with the Proposed Transaction;
- taken or threatened to take any action as a result or in
anticipation of the Proposed Transaction that would be inconsistent
in any material respect with any of the warranties in the
acquisitions agreement; or
- enacted or proposed any legislation (including any subordinate
legislation) or order or imposed any condition which would
prohibit, materially restrict or materially delay the
implementation of the Disposal;
(iv) the receipt of a Letter of No objection from the Ministry
of Mineral Resources and Energy for the transfer of the Quota,
Mozambique Central Bank prior approval in relation to the
acquisition of the Quota and any other formal approval required by
the Mozambique authorities to have the Proposed Transaction
approved.
Further information on TCT IF
TCT Industrias Florestais Limitada ("TCT IF") is a
Mozambique-based natural resources company, which has an early
stage 27 km(2) limestone exploration license in Mozambique. In
addition, TCT IF has a 24,821 hectare hardwood forestry concession
located in central Mozambique, with allied milling and furniture
manufacture and semi-finished goods export.
TCT IF is the operator of the limestone exploration license and
this is valid for two years from the date of formal grant in
January 2016, and is renewable for another two year period. The
work commitments under the exploration license are set out in an
approved exploration programme that is budgeted at US$200,000.
The Forestry concession is valid for another 10 years subject to
renewal for another 50 year term and is permitted to cut up to
3,000 m(3) per annum, over and above historically cut and dead
timber. The concession is valid until 2065 and includes rights to
harvest up to 3,000 m(3) of logs annually.
In the six months ended 30 June 2017, TCT IF made an unaudited
loss before taxation of US$64,000 (Premier's attributable loss in
respect of its 52% interest amounted to a loss of US$33,000) on
total sales of US$116,000. The carrying value of Premier's 52%
interest in TCT IF as shown in Premier's audited report and
accounts as at 31 December 2016 amounted to US$2.127 million, being
the acquisition cost.
Further information on the Buyer
Amire Glory was established to acquire an initial 60%
controlling interest in the land and commercial assets of Grupo
Madal that includes a 94,000 hectare forest concession, 34,000
hectare in conservation and tourism operations and 31,000 hectare
of prime agricultural land in the Zambezi province of Mozambique. A
combination of commercial farming, hardwood lumber production, port
development and tourism in the Grupo Madal business is expected to
compliment the forestry and lodge business of TCT IF. George Roach
is currently interested in 33% of Amire Glory, which is expected to
reduce shortly to below 10% on completion of the Grupo Madal
transaction. George Roach is also a director of Amire Glory.
Related Party Transaction
As George Roach is currently a director and shareholder of Amire
Glory, the execution of the LoU is a related party transaction
under AIM Rule 13. The independent directors of the Company, Ian
Stalker, Michael Foster and Russel Swarts, being the Directors
other than George Roach (the "Independent Directors"), consider,
having consulted with the Company's Nominated Adviser, that the
terms of the LoU are fair and reasonable insofar as the Company's
shareholders are concerned. In reaching their view the Independent
Directors have conducted their own review of TCT IF and the
proposed Disposal and have taken particular regard that the
proposed sale would enable Premier to exit from its investment in
TCT IF without net cost while retaining a 50% interest in the
limestone project with an overall reduced financial exposure and
further;
(i) Premier had expected that TCT IF's Forestry operations would
contribute to cash flows from an early stage but they have been
lossmaking and no surplus cash flow has been generated within TCT
IF to fund the limestone project's exploration programme;
(ii) TCT IF's outlook for the remainder of the year remains
challenging: The Company's current budget forecasts at best
breakeven for TCT IF for the year as whole;
(iii) The outstanding Vendor Consideration of US$2.1 million for
the acquisition of Premier's acquisition of its 52% in TCT IF is
due and has not yet been settled. The Buyer will assume Premier's
full obligation to settle this outstanding consideration due to the
TCT Vendors and there should therefore be no realised loss against
the current carrying value in Premier's accounts and no net cost to
Premier;
(iv) Premier is providing limited warranties to the Buyer who
has also been prepared to proceed with limited due diligence;
(v) Following the Disposal, the limestone exploration licence
will be transferred to a newco and Premier will be appointed the
Manager and have an ongoing 50% interest. The Buyer is responsible
for the first US$200,000 of exploration expenditure;
(vi) There is a low likelihood that any third party would
currently match the terms and conditions of the Buyer's offer,
particularly given the high implied valuation of the limestone
project given Premier's continuing 50% interest, noting also that
there are no resources or projections for the limestone project nor
any drilling results;
(vii) There have been no other expressions of interest following
the Company's announcement in August 2017 that it was reviewing
possible partnerships and / or a sale of its interest in TCT, while
at the same time there is pressure from the TCT Vendors for
immediate payment;
(viii) There is no realistic prospect of securing a superior
offer to the Buyer's proposal on price and terms in a timeframe
that is likely to be acceptable to the TCT Vendors. The Independent
Directors have been informed that unless the Disposal proceeds,
there is a high likelihood that the TCT Vendors could lapse the TCT
IF Acquisition Agreement; and
(ix) Following the Disposal, and Amire Glory concluding the
purchase of the controlling interest of Grupo Madal assets, George
Roach's shareholding in Amire Glory will amount to less than 10% of
the issued share capital of Amire Glory.
The Disposal is expected to complete within 60 days and a
further announcement will be made in due course.
Forward Looking Statements
Certain statements in this announcement, are, or may be deemed
to be, forward looking statements. Forward looking statements are
identified 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
reflect the Directors' current beliefs and assumptions and are
based on information currently available to the Directors. A number
of 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 announcement contains inside information for the purposes
of Article 7 of Regulation 596/2014.
Enquiries:
Premier African Tel: +44 (0)7734
Fuad Sillem Minerals Limited 922074
------------------------ --------------------------- -----------------
Michael Cornish Beaumont Cornish Tel: +44 (0)
/ Roland Cornish Limited 20 7628 3396
(Nominated Adviser)
------------------------ --------------------------- -----------------
Jerry Keen/Edward Shore Capital Stockbrokers Tel: +44 (0)
Mansfield Limited 20 7408 4090
------------------------ --------------------------- -----------------
Beaufort Securities Tel: +44 (0)
Jon Belliss Limited 20 7382 8300
------------------------ --------------------------- -----------------
Charles Goodwin/Harriet Yellow Jersey PR Tel: +44 (0)
Jackson Limited 07544 275 882
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Notes to Editors:
Premier African Minerals Limited (AIM: PREM) is a
multi-commodity mining and natural resource development company
focused in Southern and Western Africa with production started at
its flagship RHA project in Zimbabwe.
The Company has a diverse portfolio of projects, which include
tungsten, rare earth elements, gold, lithium and tantalum in
Zimbabwe and Benin, encompassing brownfield projects with near-term
production potential to grass-roots exploration. In addition, the
Company holds 5,010,333 million shares in Circum, the owner of the
Danakil Potash Project in Ethiopia, which has the potential to be a
world class asset. At present those shares are valued at US$10.2
million based on the latest price at which Circum has accepted
subscriptions. Premier also has an interest in Casa Mining Limited,
a privately-owned exploration company that has a 71.25 per cent
interest in the 1.5 million ounce inferred resource Akyanga gold
deposit in the DRC.
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
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