REG-Medcaw Investments Plc: Potential acquisition of near-term Lithium production asset

Medcaw InvestmentsAnnouncement

07/07/2023 16:15

7 July 2023

 

Potential acquisition of near-term Lithium production asset

 
* Signing of conditional implementation agreement with Abyssinian Metals
Limited
* Equity Fundraise & Suspension of Trading
Medcaw Investments plc (LSE:MCI), an acquisition vehicle, is pleased to
announce that it has entered into a conditional implementation agreement with
Abyssinian Metals Limited ("AML"), a company incorporated in Australia and
developing the Kenticha lithium project located in Oromia State, Southern
Ethiopia.

Subject to the Company being satisfied with technical, legal, accounting, tax,
financial, commercial and environmental due diligence on AML the Company will
consider making an offer to acquire up to 100% of the entire issued share
capital of AML ("AML Shares") in consideration for the issue and allotment of
new ordinary shares ("Ordinary Shares") in the Company to the shareholders of
AML ("Proposed Transaction"). As at the date of this announcement no decision
has made by the Company whether to proceed with an offer for the AML Shares or
otherwise and there is no offer that is capable of being accepted by the
shareholders of AML.

AML is a clean energy metals company with a focus on the development of the
Kenticha lithium project in which it has a 51% legal and beneficial interest
and manager of the project with the Oromia State holding 49%.

Highlights:
* The Company has entered into a conditional implementation agreement with AML
("AML Agreement") which details, inter alia, an agreement for the Company to
finalise technical, legal, accounting, tax, financial, commercial and
environmental due diligence on AML with a view of advancing a timetable and
negotiations for a potential offer;
* Medcaw has today raised £400,000 at 8p per share ("Placement Shares")
through an equity placement to various high net worth and institutional
investors introduced by GIS Global Investment Strategy ("GIS") ("Placement").
* Subject to satisfactory due diligence any formal offer by the Company for
the shares in AML is expected to be conditional on:* receiving acceptances
under the Offer from shareholders of AML holding at least 51% of the voting
rights of AML; 
* if required, a waiver by the UK Takeover Panel (the "Panel") in respect of
the obligations under Rule 9 of the Takeover Code on the shareholders of AML
to make a mandatory offer for the shares in the Company having been granted;
* if required, approval by shareholders of Medcaw Investments of the waiver
granted by the Takeover Panel and as required any other approvals of the
shareholders of the Company having been granted;
* there having been no material adverse change in the business, results of
operations, condition (financial or otherwise) or prospects of AML or any of
its subsidiaries from the date prior to completion of the Proposed
Transaction;
* various board and shareholder approvals; and
* other conditions to be confirmed in due course.

* If completed, the Proposed Transaction will constitute a reverse takeover
under the Listing Rules. The Company is currently unable to provide full
disclosure under Listing Rule 5.6.15 in relation to AML and it has requested a
suspension of trading in its shares with immediate effect. The trading of the
Company's shares will remain suspended until such time as a prospectus is
published in relation to the Proposed Transaction or the Company announces
that the discussions have been terminated.  
* Given the conditionality of the implementation agreement, including a due
diligence condition before an offer is agreed, there can therefore be no
guarantee that the Proposed Transaction will proceed as envisaged or that it
will proceed at all. No offer has been made by the Company at this stage.
The Company and AML have engaged professional advisors to finalise due
diligence and, should the due diligence condition be satisfied and an offer
for the AML Shares be confirmed, assist with the documentation to implement
the timetable in the implementation agreement.

Highlights of the Kenticha project:
* The Kenticha project has JORC, open-pitable, inferred resource of 87.7mt @
0.78% Li2O with exploration upside of up to 51mt Li2O.  Assay re-sampling of
historic pulps, which is 60% completed with CSA Global, expected to increase
the Li2O grade by up to 25%. 
* 3 high grade starter pits identified @ 1% Li2O cut-off of c. 20mt @ 1.2%
Li2O (pre re-assay of pulps - post expected Li2O 1.5%+)
Near term production highlights
* Stage 1 (a) of 80,000 tpa (annualised) of 5.5% spodumene concentrate (SC5.5)
from the first of the Dense Medium Separation ("DMS") plants at the Kenticha
project is due to be commissioned in late 2023.
* Stage 1 (b) - 240,000 tpa (annualised) SC5.5 from end of 2024 as the second
DMS plant is commissioned.  
* 2025 production equates to circa USD720m annualised revenue assuming
USD3,000 per tonne of SC5.5.  Significant profit margin given forecast of all
in sustaining cost of USD750 per tonne which is estimated to reduce to USD525
per tonne once production hits nameplate capacity of Stage 1 (b) DMS.
* Feasibility Study underway on Bespoke Model production plant - 5mtpa plant
producing an additional 600,000 tpa SC5.5 with scheduled production early
2027.
* 840,000 tpa of SC5.5 on commissioning of the Bespoke Model is targeted from
the end of 2027 putting AML in the top quartile of lithium spodumene
concentrate producers globally.
* AML has developed strong relationships in Ethiopia including vital support
from both the federal, state and local governments including the local
community in which it operates.
 
* AML has entered into a credit facility with New York based institutional
asset manager which enables AML to draw down up to USD25m at its option.
* AML has secured additional project funding of USD60m secured over 180 ktpa
SC5.5 production for 3 years.
* AML as manager of the Kenticha project has 100% of the marketing rights of
the SC5.5 product.
* AML directors and management have a wealth of experience in bringing tier 1
mining assets into production across Africa.
* World leading third party consultants engaged for all aspects of the project
are as follows:-* Neuplan - engineers and project managers for Stage 1 (a) and
(b) of the DMS plants
* CSA Global - geological modelling and resource reporting 
* Knight Piesold - geotechnical consultants
* Min-met Projects - construction of DMS plants
Kenticha Lithium Project

Kenticha is a highly evolved, rare element, Lithium Caesium Tantalum (LCT)
pegmatite project comparable to other major rare-element pegmatites such as
Greenbushes, Tanco, Wodgina, Volta Grande and Altai No.3.   Kenticha is a
late-stage development asset which AML intends to develop with the production
of spodumene concentrate planned in stages, with near-term production through
a Dense Medium Separation (DMS) modular plant.

Recent progress of the Kenticha site includes initial camp construction to
accommodate the operating team and security personnel, provision of services
to the local community, and civil works including roads, water, and power.
There have been discussions and provisional agreements with port authorities
for port access and freight forwarding arrangements, as well as mobilisation
of contractors and equipment for the start-up of operations including drilling
programmes which recently commenced. The construction and fabrication of the
DMS modular plant for the Stage 1 (a) Near Term Production has been
custom-built in Johannesburg and is in the process of being packed up and
shipped to Ethiopia. It is anticipated that the Stage 1 (a) DMS will be
in-situ at the Kenticha site in August 2023 and commissioning will start
thereafter with the first SC5.5 being produced by the end of 2023.

The Proposed Transaction

Subject to, and conditional upon, the Company being satisfied with due
diligence on AML, Medcaw Investments and AML have agreed to work together in
order to formalise a potential offer by Medcaw to the shareholders of AML for
up to 100%  of the issued share capital of AML in accordance with the
indicative timetable set out in the AML Agreement.

As at the date of this announcement no decision has made by the Company
whether to proceed with an offer for the AML Shares or not and, for the
avoidance of doubt, nothing in this Agreement is a statement of intention by
the Company to make a takeover bid for the Offeree under section 631 of the
Corporations Act 2001 (Cth). Further, this announcement is not intended to
constitute, and does not constitute, an offer capable of acceptance or to
otherwise give rise to any binding contract or commitment.

There is no certainty that the further discussions between the Company and AML
will result in any offer being made for the shareholders of AML to consider.
The shareholders of AML do not need to take any action at this time as no
offer has been made.

Should the Company elect to proceed with a takeover bid it will update the
market at that time.

Any takeover offer by the Company is likely to be subject to a number of
conditions, some of which are briefly mentioned above.

Details of Equity Fundraise

Medcaw has today raised gross proceeds of £400,000 at 8p per share ("New
Ordinary Shares") through an equity placement to various high net worth and
institutional investors introduced by GIS Global Investment Strategy ("GIS")
("Placement").  The Company has therefore allotted and issued a total of
5,000,000 new Ordinary Shares in the Company.  These shares rank pari passu
with the existing Ordinary Shares in the Company.  Application will be made
to the Financial Conduct Authority ("FCA") for the New Ordinary Shares to be
admitted to listing on the Official List (standard listing segment) of the
FCA, and to the London Stock Exchange for the New Ordinary Shares to be
admitted to trading on the London Stock Exchange's main market for listed
securities (together "the New Ordinary Share Admission") in due course.

Following the issue of the 5,000,000 New Ordinary Shares the Company's issued
share capital will consist of 22,132,095 Ordinary Shares with voting rights. 
No Ordinary Shares are held in treasury at the date of this announcement and
therefore following the allotment, the total number of Ordinary Shares in the
Company with voting rights will be 22,132,095.

The above total voting rights figure may be used by shareholders as the
denominator for the calculation by which they will determine if they are
required to notify their interest in, or a change to their interest in the
Company.

Director Participation in the Placing

Charlie Wood, a director of the Company has subscribed for a total of 500,000
New Ordinary shares in aggregate. The beneficial holdings of the Directors
before and after the fundraise are set out below:-


Warrants

The broker, GIS will be issued 300,000 broker warrants at the placing price of
8p per share and 1,600,000 warrants at 4p will be issued to a third-party
consultant for transactional services.

 

Charlie Wood, Executive Director of Medcaw Investments:

"The acquisition of AML will bring a world class mining asset and one of the
largest rich spodumene lithium ore bodies to the market in the UK.  The
near-term production of spodumene concentrate of up to 240ktpa will make the
combined group a significant global player in the lithium market and will aim
to become one of the first lithium producers on the London Stock Exchange.

 

Stephen Miller, Managing Director of Abyssinian Metals Limited: "The
transaction outlined with Medcaw is a significant milestone within the AML
financing and listing strategy and in addition provides the enlarged
shareholder base with capital appreciation and liquidity as AML builds out its
Kenticha lithium production profile within the on-going electric vehicle and
battery revolution.

"The combination of a highly experienced mining, finance and technical team,
which have developed multiple projects across Africa, combined with our strong
Ethiopian stakeholders, provides a significant platform to ensure that this
project will reach its near-term production goals."

 

This announcement contains inside information for the purposes of
the UK Market Abuse Regulation and the Directors of the Company accept
responsibility for the contents of this announcement.

 

ENDS
CONTACT:
Enquiries:

Medcaw Investments Plc

Charlie Wood                      +44 (0)203 918 8797

 

Abyssinian Metals Limited

Via Tavistock Communications +44 (0) 207 920 3150

Abyssinian Metals Ltd Overview

Abyssinian Metals Ltd (“AML”) is developing the Kenticha lithium project
in Ethiopia together with its joint venture partner – the Oromia State
Government. Kenticha has a current JORC resource of 87.7 mt @ 0.78% Li20 with
an exploration target of up to 51 mt @ 0.9% Li20 which CSA Global is currently
finalising.

 

Kenticha is a late-stage development with near term production of spodumene
concentrate (SC5.5%) beginning at the end of 2023 with the imminent
commissioning of the DMS modular plants. AML is looking to produce 240ktpa of
SC5.5% by the end of 2024 (on an annualized basis) and then build a Bespoke
production plant by the end of 2027 and producing up to 850ktpa SC5.5 in total
(on an annualized basis) and thereby putting AML into the top quartile of
global lithium spodumene producers at that time.

 

Kenticha is a tier 1 resource which fits well as the industry needs
multi-decade lithium resources to feed the EV revolution. AML is led by a very
strong management team who have a wealth of experience in bringing tier 1
mining assets into production in Africa. AML is well supported by its
relationships with the Ethiopia federal, state and local governments including
the local communities in which we operate.

Note:

Certain statements made in this announcement are forward-looking statements.
These forward-looking statements are not historical facts but rather are based
on the Company's current expectations, estimates, and projections about its
industry; its beliefs; and assumptions. Words such as 'anticipates,'
'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar
expressions are intended to identify forward-looking statements. These
statements are not a guarantee of future performance and are subject to known
and unknown risks, uncertainties, and other factors, some of which are beyond
the Company's control, are difficult to predict, and could cause actual
results to differ materially from those expressed or forecasted in the
forward-looking statements. The Company cautions security holders and
prospective security holders not to place undue reliance on these
forward-looking statements, which reflect the view of the Company only as of
the date of this announcement. The forward-looking statements made in this
announcement relate only to events as of the date on which the statements are
made. The Company will not undertake any obligation to release publicly any
revisions or updates to these forward-looking statements to reflect events,
circumstances, or unanticipated events occurring after the date of this
announcement except as required by law or by any appropriate regulatory
authority.

 3802331_0.png (https://news.cision.com/medcaw-investments-plc/i/3802331-0-png,c3198585)  



Copyright (c) 2023 PR Newswire Association,LLC. All Rights Reserved