BMR Group PLC Joint Venture Agreement (4793P)
01 September 2017 - 12:30AM
UK Regulatory
TIDMBMR
RNS Number : 4793P
BMR Group PLC
31 August 2017
BMR Group PLC
("BMR", the "Group" or the "Company")
Agreement of Term Sheet to enter in to a Joint Venture agreement
with Galileo Resources PLC
This announcement contains inside information for the purposes
of Article 7 of Regulation 596/2014.
On 16 August 2016, the Board first announced that the Company
had entered into an option agreement ("Option") with Bushbuck
Resources Limited of Zambia ("Bushbuck") to acquire its Large Scale
Prospecting Licence 19653 - HQ - LPL ("Star Zinc") for a cash
consideration of US$1,000,000, together with VAT and Property
Transfer Tax amounting, in aggregate, to $260,000. The Option
expired on 11 November 2016 in accordance with its terms.
Since expiry of the Option the Company has been reviewing
funding options to enable it to complete the acquisition of Star
Zinc from Bushbuck. The Board is delighted to announce that on 31
August 2017 the Company entered into a binding term sheet ("Term
Sheet") with Galileo Resources PLC ("Galileo"), a UK focused
resource company quoted on AIM whereby Galileo has agreed to
conditionally advance to the Company $591,600 (at an interest rate
of 12% per annum) which is intended to be used for the purpose of
completing the acquisition of Star Zinc ("Acquisition"), through a
joint venture (the "Joint Venture") to be established with Galileo.
The Term Sheet stipulates that Galileo will subscribe for a 51%
equity stake in the Joint Venture through a newly created special
purpose vehicle, to be named Enviro Zambia Limited, which will be
financed by the cancellation of the aforementioned $591,600
loan.
Although the Option has expired, having secured required
funding, the Company expects to conclude negotiations with Bushbuck
in the near future to complete the Acquisition on broadly similar
terms, and will update the market upon completion. The funding into
the Joint Venture is conditional upon completion of the
Acquisition. There can be no guarantee that final agreement with
Bushbuck will be reached, and that the Joint Venture funding will
accordingly be released.
The Term Sheet with Galileo also provides that:
-- within 60 days of completion of the Acquisition, BMR and
Galileo will enter into a formal Joint Venture agreement in respect
of Star Zinc;
-- upon the completion of the Joint Venture agreement, Galileo
will place $100,000 in escrow. Galileo will then undertake an 18
month work programme at a cost of $250,000, using reasonable
endeavours to complete a preliminary economic assessment of Star
Zinc ("PEA"), following which further new shares in Enviro Zambia
will be issued to Galileo to increase its aggregate equity interest
therein to 85%;
-- BMR shall have the right to reduce the interest of Galileo
from 85% to 75% on payment of $150,000 to Galileo, being the
repayment of $100,000 held in escrow plus a $50,000 arrangement fee
within 90 days of the date of completion of the Joint Venture
agreement (failing which the US$100,000 is released to the
Company);
-- from completion of the 18 month work programme until
completion of a feasibility study, the interest of BMR in Enviro
Zambia shall be free carried;
-- thereafter, any net costs will be borne by the joint venture
parties relative to their shareholdings in Enviro Zambia; and
-- concurrent with execution of the joint venture agreement, BMR
and Enviro Zambia shall enter into an off take agreement for
processing of ore from Star Zinc at Kabwe, such terms to be
determined as soon as reasonably practicable following completion
of the PEA to reflect capacity production of Zinc from Star Zinc,
and relevant grade and resource life of the project set out in PEA,
which BMR intends to process in conjunction with its Leach Plant
Residues.
Alex Borrelli, Chairman of BMR, commented: "We are delighted to
have agreed upon a Term Sheet with Galileo that should allow us to
complete the acquisition of Star Zinc which will provide access to
Star Zinc's high grade resources which have the potential to
enhance the grade of the Zinc products from our Kabwe processing
plant.
"As I have stated previously, this should enable BMR to extend
the operating life of the plant as further ore resource can be
processed at Kabwe combined with the Leach Plant Residues, and
therefore represents a significant step for the Group.
"Most importantly, through the completion of the Joint Venture
agreement with Galileo, BMR will secure a strong partner for mining
the resource at Star Zinc, which BMR had to secure in any event,
and has also established the grounds for an off take agreement for
BMR to process the resource from Star Zinc at its Kabwe processing
plant."
For further information:
BMR Group PLC 020 7734 7282
Alex Borrelli, CEO and Chairman
WH Ireland Limited 020 7220 1666
NOMAD and Joint Broker
Chris Fielding/ Alex Bond
Peterhouse Corporate Finance 020 7469 0930
Joint Broker
Lucy Williams/ Duncan Vasey/ Heena Karani
This information is provided by RNS
The company news service from the London Stock Exchange
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