13 March 2024
Power Metal Resources
PLC
("Power Metal" or the
"Company")
Disposal of Victoria Goldfields Joint
Venture Interest
Heads of Agreement Signed for Disposal
of Interest to JV Partner
Power Metal Resources PLC
(AIM:POW), the London listed
exploration company with a global project portfolio,
announces the signing of a Heads of Terms Agreement ("HoT" or the
"Agreement") to conditionally dispose of the Company's entire 49.9%
interest in New Ballarat Gold Corporation plc ("NBGC") (the
"Transaction") which wholly owns Red Rock Australasia Pty Limited
("RRAL"), the local operating company holding exploration interests
in the Victoria Goldfields, Australia and in South
Australia.
Sean Wade, Chief Executive Officer of
Power Metal Resources plc, commented:
"Power Metal
has now agreed to dispose of its interest in NBGC to joint venture
partner Red Rock Resources plc.
"The
Transaction enables the ownership of NBGC to be focused in one
entity which is the optimal holding structure for its continuing
development. It is also part of a streamlining process of the
Power Metal portfolio converting the NBGC interest into a balance
sheet investment holding and additional incoming
cash.
"The
Transaction is the fourth undertaken by Power Metal in various
structures over the last two years and which have together
significantly built the underlying working capital of the Company
and its overall balance sheet strength.
"This
disposal will further enable Power Metal to concentrate its
managerial, operational and financial resources on retained high
value business interests and new opportunities."
HoT
HIGHLIGHTS
The
Transaction
Power Metal to conditionally
dispose of its 49.9% interest in NBGC and, POW's interest in loans
to NBGC and RRAL (together the "Interests"), to joint venture
("JV") partner Red Rock Resources plc ("RRR") for consideration up
to £1,500,000 potentially payable in cash, RRR ordinary shares and
RRR warrants, and other items of contingent consideration (the
"Consideration").
The Transaction is conditional upon the
completion of due diligence by RRR (to be completed by 19 April
2024), funding, the approval of RRR shareholders at any General
Meeting called to approve the issue of the initial RRR share and
warrant consideration, relevant board and regulatory approvals, and
completion of final documentation (the "Conditions
Precedent").
Subject to the Conditions Precedent being
satisfied, the transaction will complete ("Completion"). Completion
must occur within 13 weeks of 8 March 2024, being the date of the
HoT, or the Agreement will be terminated (the "Long Stop
Date").
The
Consideration
The Consideration of up to £1,500,000 is
payable as follows:
- Upon
Completion, £250,000 in
convertible loan notes ("CLNs") with a conversion price equal to
the price of any placement of new ordinary shares of RRR raising
proceeds of over £200,000. Should conversion not be
undertaken within 6 months of the HoT date, the CLNs of £250,000
are repayable immediately as cash.
- Upon RRR
shareholder approval for this item within the Consideration,
£250,000 payable through
the issue of 166,666,667 RRR new ordinary shares ("RRR Shares") at
a price of 0.15 pence per Share (or by cash at RRR's election) and
166,666,667 warrants to subscribe for RRR Shares each exercisable
into one new RRR Share at a price of 0.25p and exercisable during a
period expiring 3 years after the date of their
issue.
- £250,000 payable in cash two months
after Completion.
- £250,000 payable in cash nine months
after Completion or, at RRR's election, through the issue of RRR
Shares equal to the value of £250,000, the price of which to be
calculated by reference to the last 10 trading days'
volume-weighted average price ("VWAP") immediately prior to the
date nine months after Completion, provided that if RRR Shares are
issued then accompanying warrants with a three year life to expiry
and each converting into one RRR Share at a 50% premium to the
price of issue of the RRR Shares will also be issued on the basis
of one warrant for every two RRR Shares issued.
- £250,000 payable on an announcement by
RRR via a regulatory news service, or a declaration by a Qualified
or Competent person (as those terms are defined in the AIM Note for
Mining Companies), of a 20,000 oz gold or gold equivalent JORC
Resource according to the JORC 2012 Code (or any applicable similar
standard or replacement JORC standard) from within the boundaries
of the current licence area. The £250,000 is payable in cash
or at RRR's election, through the issue of RRR shares to the value
of £250,000, calculated by reference to the last 10 trading days'
VWAP immediately prior to the trigger for this payment, provided
that if RRR Shares are issued then accompanying warrants with a
three year life to expiry and each converting into one RRR Share at
a 50% premium to the price of issue of the RRR Shares will also be
issued on the basis of one warrant for every two RRR Shares
issued.
-
£250,000
payable on an announcement by RRR via a regulatory news
service, or a declaration by a Qualified or Competent person (as
those terms are defined in the AIM Note for Mining Companies), of a
200,000 oz gold or gold equivalent JORC Resource according to the
JORC 2012 Code (or any applicable similar standard or replacement
JORC standard) from within the boundaries of the current licence
area. The £250,000 is payable in cash or at RRR's election,
through the issue of RRR shares to the value of £250,000,
calculated by reference to the last 10 trading days' VWAP
immediately prior to the trigger for this payment, provided that if
RRR Shares are issued then accompanying warrants with a three year
life to expiry and each converting into one RRR Share at a 50%
premium to the price of issue of the RRR Shares will also be issued
on the basis of one warrant for every two RRR Shares
issued.
Additional HoT terms
The HoT contains additional terms including,
inter alia:
-
POW will retain its existing
Gross Production Royalty ("GPR") of 0.75% over
the footprint covered by RRAL exploration interests.
-
RRR will ensure key licence retention
and specifically those licences containing the Ajax and Berringa
mines.
-
POW will retain the right to purchase any
individual exploration licences that are to be surrendered by RRAL
or where expenditure commitments will not be satisfied and a
reduced expenditure has not been agreed, for consideration of A$1
per licence.
-
From the date of the Agreement until Completion or
the Long Stop Date, whichever shall be sooner, POW and RRR commit
to contribute A$20,000 per month towards the costs of RRAL, with
any further costs to that date being met by RRR.
-
RRR has committed that no significant exploration interests
of, or controlling interest in, NBGC/RRAL may be transferred out,
or disposed of, or agreed to be so transferred or disposed by
NBGC/RRAL, to another party without an opportunity being given to
POW to match the terms offered by such other party; and
- Should RRR
dispose in whole or part of any of the Interests within 12 months
of the HoT, 15% of disposal proceeds after agreed costs will be
payable to POW, or 5% in months 13-24 (the "Disposal Premium").
(Note: any amount payable under the Disposal Premium is
capped such that the total aggregate Consideration for the
Transaction shall not exceed 74.9% of Power Metal's market
capitalisation as at the date of the Agreement, using the
mid-market closing price of Power Metal ordinary shares on the
trading day immediately prior to the date of the HoT).
-
POW retains certain buyback rights in respect of its 49.9%
holding in the event of a payment default by RRR exceeding 60 days
from due date, save as caused by force majeure.
-
POW holds a separate convertible loan note which together
with interest and charges amounts to £94,400 of which £50,000 is
payable in cash upon Completion and the remaining £44,400 is
payable in cash two months after Completion, as part of the
HoT.
The
Interests
The Power Metal book value of
NBGC/RRAL Interests at the current date is £870,784.
The Interests include the following
licenses (granted and in application) held by RRAL:
License
Number
|
Project
Name
|
Area
(km2)
|
EL007271
|
Buninyong
|
133
|
EL007281
|
Blue
Chip
|
74
|
EL007282
|
Blue
Sky
|
489
|
EL007285
|
Blue
Ribbon
|
8
|
EL007327
|
Dereel
|
60
|
EL007385
|
Sardinia
|
4
|
EL007329
|
Kilmore
|
484
|
EL007301
|
Pitfield/Mt. Bute
|
85
|
EL007328
|
Blue
Yonder
|
164
|
State
land within EL007271
EL007505
EL007506
EL007507
|
-
|
9
9
8
|
EL007460
|
Kilmore
West
|
325
|
EL007330
|
Daylesford
|
202
|
EL007294
|
Talbot
|
129
|
EL005535
|
Berringa
|
9 (228
net ha)
|
EL007756
|
Monmouth
|
22
|
State
land within EL007327
EL007799
|
Dereel
(2)
|
3
|
EL007826
|
Ballarat
East
|
4
|
EL007460
|
Kilmore
West
|
325
|
ELA2023/00017 (SA)
|
Upalinna
|
560
|
EL007540
(3
competing applications)
|
Outer
Ballarat
|
142
|
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of
MAR.
For
further information please visit https://www.powermetalresources.com/
or
contact:
Power Metal Resources plc
|
|
Sean Wade (Chief Executive
Officer)
|
|
|
|
SP Angel Corporate Finance (Nomad
and Joint Broker)
|
|
Ewan Leggat/Caroline Rowe/Harry
Davies-Ball
|
+44 (0) 20 3470 0470
|
|
|
SI Capital Limited (Joint
Broker)
|
|
Nick Emerson
|
+44 (0) 1483 413 500
|
|
|
First Equity Limited (Joint
Broker)
|
|
David Cockbill/Jason
Robertson
|
+44 (0) 20 7330 1883
|
BlytheRay (PR Advisors)
|
+44 (0) 20 7138 3204
|
Tim Blythe
|
|
Megan Ray
|
|
NOTES TO EDITORS
Power Metal Resources plc - Background
Power Metal Resources plc (LON:POW)
is an AIM listed metals exploration company which finances and
manages global resource projects.
The Company has a principal focus on
opportunities offering district scale potential across a global
portfolio including precious, base and strategic metal exploration
in North America, Africa and Australia.
Project interests range from
early-stage greenfield exploration to later-stage prospects
currently subject to drill programmes.
Power Metal will develop projects
internally or through strategic joint ventures until a project
becomes ready for disposal through outright sale or separate
listing on a recognised stock exchange, thereby crystallising the
value generated from our internal exploration and development
work.
Value generated through disposals
will be deployed internally to grow the Company, or may be returned
to shareholders through share buy backs, dividends or in-specie
distributions of assets.