TIDMAFP
RNS Number : 9031N
African Pioneer PLC
04 October 2021
4 October 2021
African Pioneer Plc
("African Pioneer" or "the Company")
Revised arrangements for exploration
and potential Sale of Kalahari Copper Belt Licences
African Pioneer plc ("APP" or the "Company") announces that, in
place of the existing arrangements, it has on 2 October 2021
entered into a two year option agreement with ASX listed Sandfire
Resources Limited ( ASX:SFR) ("Sandfire") in relation to 4 of its 8
Botswana prospecting licences for a cash payment of US$500,000 and
the issue of 107,272 Sandfire shares and a 24 months exploration
expenditure commitment of US$1,000,000 (the "Option Agreement").
The Company has entered into the Option Agreement to allow an
acceleration of exploration activities on the 4 Kalahari Copper
Belt prospecting licences the subject of the Option Agreement (the
"Included Licences") funded by Sandfire. Funds received will also
allow the Company to accelerate exploration activities on the
Company's 4 other prospecting licences in Botswana and its projects
in Namibia and Zambia.
Highlights of Option Agreement:
Option Agreement Payments to APP: Sandfire will on 8 October
2021:
1) pay to the Group US$500K in cash in relation to the cash
component of the option fee for the right to acquire the Included
Licences; and
2) issue 107,272 Sandfire ordinary shares ("Sandfire Shares") to
the Company with a current market value A$565K (approx. US$407K)
based on the closing Sandfire share price of A$5.27 per Sandfire
share on 1 October 2021 (being the last trading date before the
date of this announcement) to settle the share component of the
option fee and a guarantee fee due to the Company. The Sandfire
Shares do not have any trading restrictions.
Exercise and Option Period: The option can then be exercised
within 2 years of the Option Agreement (the "Option Period") to
acquire the Included Licences for US$1. Sandfire has the right to
extend the Option Period by 1 year by the payment of a US$500,000
option extension fee.
Exploration Commitment: Sandfire to fund US$1 million of
exploration expenditure by the Company on the Included Licences
(the "Exploration Commitment") within the Option Period and if the
US$1 million is not spent, any shortfall will be paid to African
Pioneer. Sandfire can withdraw from the Option Agreement at any
time after meeting the Exploration Commitment.
A Success Payment: a one-off success payment to be paid to the
Company for the first ore reserve reported under JORC Code 2012
edition on the Included Licences which exceeds 200,000 tonnes of
contained copper (the "First Ore Reserve") in the range of US$10
million to US$80 million depending on the amount of contained
copper in the First Ore Reserve (the "Success Payment").
Termination of Conditional Licence Sale Agreement: As a result
of entering into the Option Agreement the parties have terminated
the Conditional Licence Sale Agreement dated 12 March 2021 under
which Sandfire was due to acquire all 8 of the Company's 8 Botswana
prospecting licences for a cash payment of US$500,000 and the issue
of 107,272 Sandfire shares to the Company (the "Conditional Licence
Sale Agreement").
Colin Bird Chairman & CEO commented:
"This Option Agreement with Sandfire allows an acceleration of
exploration activities on the 4 prospecting licences the subject of
the Option Agreement and provides the Company with US$500,000 to
invest in its remaining 4 prospecting licences in Botswana and its
projects in Namibia and Zambia.
We are pleased to be working with our 15% shareholder Sandfire
Resources, who is a successful Australian copper and gold producing
company with a large copper silver mine development programme in
Botswana where it has recently been awarded a mining licence and
who has recently announced the US$1.8 billion acquisition of the
MATSA copper mine in Spain. The transaction allows Sandfire to fund
the exploration of the Included Licences, which are in close
proximity to their major mine build, and also allows the Company to
carry out exploration on its 4 other Botswana Prospecting
Licences."
Further Information on Assets the subject of the Option
Agreement
The Company acquired its Botswanan Projects comprising 8
prospecting licences for GBP350,000 by aquiring Resources Capital
Partner Pty Ltd on 1 June 2021. Although unexplored, these licences
are located in an highly prospective area for copper projects and
it was the Company's original intention to conduct an initial 18
month exploration work programme to assess the prospectively of the
Botswanan Projects and assess the best way of developing them and
had earmarked US$176,000 in the Group's 18 month budget for this
purpose. The Option Agreement provides for Sandfire to fund
US$1,000,000 of exploration expenditure within 24 months on the
Included Licences which are the subject of the Option Agreement
which will significantly accelerate and increase the exploration
work undertaken on the Botswanan Projects.
Included Licences the subject of the Option Agreement Retained Licences not the subject
of the Option Agreement
------------------------------------------------------ ----------------------------------
PL 100/2020 PL 096/2020
PL 101/2020 PL 097/2020
PL 102/2020 PL 098/2020
PL 103/2020 PL 099/2020
Use of Option Payments: The payments from Sandfire under the
Option Agreement will allow the Group to concentrate its increased
financial resources and its management capabilities on its
remaining two projects in Namibia and Zambia and the 4 Botswana
prospecting licences that are not the subject of the Option
Agreement.
Summary of Option Agreement:
Parties On the one part the Company and its wholly owned
subsidiary Resources Capital Partners (Pty) Ltd
and on the other part Sandfire Resources Ltd and
its wholly owned subsidiary Tshukudu Metals Botswana
(Pty) Ltd.
------------------ -------------------------------------------------------------------------
Option Payments The payments due under the option are i) the fee
for the option over the Included Licences comprising
US$500K payable in cash and the issue of 53,635
Sandfire shares (the " Option Fee ") and ii) the
issue of 53,636 Sandfire Shares as a guarantee fee
to the Company (the " Guarantee Fee ") both to be
settled on 8 October 2021. The Sandfire shares are
not subject to any sale restrictions.
------------------ -------------------------------------------------------------------------
Exploration Sandfire, through its 100% owned Botswana subsidiary
Commitment Tshukudu Metals Botswana (Pty) Ltd, to fund US$1
million on exploration activities to be undertaken
by an independent geological manager on advice from
the technical committee within the Option Period,
with a minimum of 60% on drilling and assay costs
on the Included Licences.
If Sandfire fails to meet the Exploration Commitment
within the Option Period, it will pay any remaining
shortfall amount of the Exploration Commitment to
the Company at the expiry of the Option Period.
------------------ -------------------------------------------------------------------------
Technical During the Option Period there will be a technical
Committee committee with two representatives from Sandfire
and two from the Company to provide advice on the
exploration of the Included Licences and collaboratively
review technical data at quarterly technical meetings,
or more frequently as decided by the technical committee.
This will provide the Company with the benefit of
Sandfire's participation in the exploration strategy
for the Included Licences. Sandfire is very experienced
in the Kalahari Copper Belt where it has two projects:
i) the T3 (Motheo) Copper-Silver Project, which
announced a Definitive Feasibility Study (DFS) in
December 2020 on an initial Base Case 3.2Mtpa processing
capacity and open pit development of the T3 Deposit;
and ii) the A4 discovery, for which Sandfire has
announced a maiden Inferred Mineral Resource containing
100,000 tonnes of copper at an average grade of
1.5% Cu.
------------------ -------------------------------------------------------------------------
Option Period 2 years which Sandfire has the right to extend by
1 year by the payment of a US$500,000 option extension
fee in cash.
------------------ -------------------------------------------------------------------------
Withdrawal Sandfire can withdraw from the Option Agreement
by giving 30 days notice at any time after meeting
the Exploration Commitment.
------------------ -------------------------------------------------------------------------
Purchase Price The purchase price following exercise of the Option
is US$1 with settlement being conditional on the
Conditions Precedent being met by the Condition
Satisfaction Date.
------------------ -------------------------------------------------------------------------
Success Payment The Success Payment is only triggered if the First
Ore Reserve is > 200,000 tonnes of contained copper.
Given the Included Licences have had limited exploration
to date, if an Ore Reserve is determined this may
take several years and there is no certainty that
an Ore Reserve would be established or that any
such reserve would exceed 200,000 tonnes of contained
copper. The one-off Success Payment will be calculated
in accordance with the table below.
Contained copper (Cu) in Success Payment
first Ore Reserve (USD)
Between the following: payable
>200Kt Cu and <400Kt Cu $10,000,000
----------------
>400Kt Cu and <600Kt Cu $20,000,000
----------------
>600Kt Cu and <750Kt Cu $40,000,000
----------------
>750Kt Cu $80,000,000
----------------
The Success Payment is due to be paid in cash within
30 days from the date Sandfire announces an Ore
Reserve which triggers the payment of the Success
Payment (the "Success Payment Completion Date").
------------------ -------------------------------------------------------------------------
First Ore Means the first ore reserve defined on the Licences,
Reserve which is compliant with the Australasian Code for
Reporting of Ore Reserves (JORC Code, 2012 edition)
and results in a declared ore reserve for a single
Deposit containing at least 200,000 tonnes of contained
copper.
------------------ -------------------------------------------------------------------------
Conditions After exercise of the Option, settlement is conditional
Precedent upon: 1. ministerial consent for the transfer of
the Included Licences by the Botswana Minister of
the Ministry of Mineral Resources, Green Technology
and Energy Security ("Ministerial Consent"); 2.
all ASX regulatory approvals; 3. duly executed transfers
of the Included Licences in the form required by
the Mining Act or the Botswana Department of Mines
under which a 100% interest in the Included Licences
may be transferred.
------------------ -------------------------------------------------------------------------
Condition 60 business days after the Option is exercised
Satisfaction
Date
------------------ -------------------------------------------------------------------------
Included Licences PL 100/2020
PL 101/2020
PL 102/2020
PL 103/2020
------------------ ---------------------------------------------------------------------
Included Licences If Sandfire wishes to transfer or sell part of or
Right of First one or more of the Included Licences other than
refusal to a related body corporate then the Company has
a right of first refusal to buy the Included Licence
(s) on the terms set out in the Included Licence
Right of First Refusal offer which has to be exercised
by the Company within 30 days.
------------------ -------------------------------------------------------------------------
Governing The agreement is governed by and construed under
Law the law in the State of Western Australia.
------------------ -------------------------------------------------------------------------
Disputes Where a dispute occurs in relation to the First
Ore Reserve or any other matter the Company and
Sandfire shall within 21 days each nominate one
person (a "Nominated Representative") to represent
them to resolve the dispute and the Nominated Representative
shall be empowered by their own Board to negotiate
terms of a settlement of the dispute which shall
be binding on all the parties. If after 30 days
of their appointment the Nominated Representatives
have been unable to reach an agreement then in relation
to a dispute in respect of the First Ore Reserve
it shall be referred to an expert and a dispute
in respect of any matter other than the First Ore
Reserve the parties are free to direct it to an
expert or take legal or any other action to resolve
the matter.
------------------ -------------------------------------------------------------------------
Representations The parties have given customary representations
& Warranties and warranties for an agreement of this nature.
------------------ -------------------------------------------------------------------------
For further information, please contact:
African Pioneer Plc
Colin Bird
Executive Chairman +44 (0) 20 7581 4477
Beaumont Cornish (Financial Adviser)
Roland Cornish +44 (0) 20 7628 3396
Novum Securities Limited (Broker)
Jon Belliss +44 (0) 20 7399 9400
or visit https://africanpioneerplc.com/
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
UK Domestic Law by virtue of the European Union (Withdrawal) Act
2018 ("UK MAR").
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