TIDMSTGR
RNS Number : 7640T
Stratmin Global Resources PLC
01 April 2016
1 April 2016
StratMin Global Resources Plc
("StratMin" or the "Company")
Proposed disposal of principal operating subsidiary
StratMin Global Resources Plc (AIM: STGR) announces that it has
entered into heads of terms with Bass Metals Ltd (ASX:BSM) ("Bass")
according to which Bass would acquire the outstanding 93.75per
cent. of Graphmada Mauritius ("Graphmada"), which it does not
already own, for a staged cash, equity and royalty consideration of
up to A$15.25 million subject, inter alia, to regulatory and
shareholder approvals, as announced by Bass earlier today (the
"Proposed Disposal"). This term sheet replaces that signed on 2
September 2015 which envisaged an investment by Bass into Graphmada
of a sum totalling up to GBP2.0 million to take a 25per cent.
investment in Graphmada. Bass has already made payments totalling
GBP500,000 and acquired 6.25per cent. of Graphmada under that
agreement.
Since 2 September 2015, StratMin has received interest from a
number of parties regarding investment into, or an acquisition of,
the Company's graphite operations. In discussions with Bass, as the
joint venture partner in these operations, Bass expressed a
preference for acquiring 100 per cent. of Graphmada itself, in
order to independently fund its development and expansion.
In order to provide StratMin shareholders with ongoing
investment exposure to the graphite assets and take advantage of
valuations being given to graphite projects in the Australian
market, StratMin has negotiated the Proposed Disposal so that the
proposed consideration includes a significant proportion of
equity-based consideration, comprising Bass equity with a cash and
royalty component to optimise the economics of the transaction.
This enables StratMin to pursue other corporate opportunities
whilst retaining an interest in the funded expansion of Graphmada's
graphite operations.
The proposed consideration of up to A$15.25 million for the
remaining 93.75per cent. of Graphmada values the business at
A$16.267 million or approximately GBP8.6 million. This is, in the
Board's opinion, a reasonable control premium to the original
GBP8.0 million implied valuation under the 2 September 2015 term
sheet and a compelling valuation in comparison with the current
market capitalisation of StratMin.
The consideration for the remaining 93.75per cent. of issued
shares in Graphmada will be settled as follows, subject to the
satisfaction of a number of conditions precedent including, inter
alia, shareholder approvals and regulatory approvals for both
StratMin and Bass:
1. A cash payment of A$1,500,000 (approximately GBP795,000) in cash,
2. An equity payment of A$8,750,000 in shares in the following 3 tranches
a. A$750,000 worth of Bass shares at a price of A$0.01 per share upon execution; and
b. A$3,000,000 worth of Bass shares upon achieving production
output of 1,250t of graphite concentrate over three consecutive
months ("tranche 2"); and
c. A$5,000,000 worth of Bass shares upon achieving production
output of 2,500t of graphite concentrate over three consecutive
months ("tranche 3")
3. A net smelter royalty of 2.5% capped at A$5,000,000 beginning
six months after execution of the transaction.
At the close of trading on the ASX on 30 March 2016, Bass'
mid-market share price was A$0.009
The shares issued under tranches 2 and 3 will be valued on Bass'
volume weighted average share price over the 20 trading days
immediately prior to the achievement of the production
milestones.
The Board has considered the Proposed Disposal and the
alternatives for funding the development of operations and believes
that placing funding control under Bass, with operational support
from StratMin and Tirupati, gives StratMin shareholders the best
available development proposition.
The structure of the Proposed Disposal is designed to
accommodate the regulatory requirements of both the Australian and
London markets. As it involves disposal of StratMin's only
significant asset, it is subject to shareholder and regulatory
approval and will be classified as a fundamental change of business
for StratMin as defined in the AIM Rules for Companies. Following
the completion of the Proposed Disposal, StratMin will have six
months to secure another asset or business, failing which it may be
required to apply for readmission to AIM as an Investing Company.
Following the completion of Bass' due diligence and receipt of a
formal offer for Graphmada from Bass, Stratmin will send a circular
to shareholders detailing the proposed transaction and seeking the
required shareholder approvals, in accordance with the AIM Rules
for Companies.
The Board has been pursuing a number of corporate opportunities
and is confident that it will be able to complete a transaction
within the six months following completion of the Proposal Disposal
and maintain the admission of its ordinary shares to trading on the
AIM Market.
Brett Boynton, CEO, commented:
"The Proposed Disposal gives the Company a full funding solution
for the Madagascan operations and a platform to convert other
opportunities we have been actively pursuing.
"We are very encouraged with the appetite from Bass and the
Australian market for increased investment in Graphmada. The Board
sees this as an excellent opportunity to crystallise value for
StratMin shareholders, secure funding from a more active graphite
market and maintain an investment exposure to the assets.
"The transaction has had to take into account the needs of two
different regulatory environments so has some forced delays, but
both the Stramin and Bass teams are very keen to get this completed
so we can move forward with a clear growth strategy."
For further information please visit www.StratMinglobal.com or
contact:
StratMin Global Resources Plc +44 (0) 20 3691
Brett Boynton, CEO 6160
Strand Hanson (Nominated & Financial Adviser) +44 (0) 20 7409
Rory Murphy / Ritchie Balmer 3494
Beaufort Securities (Broker) +44 (0) 20 7382
Jon Bellis 8300
Optiva Securities (Broker) +44(0) 20 3137
Christian Dennis 1903
This information is provided by RNS
The company news service from the London Stock Exchange
END
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