TIDMCRA
RNS Number : 9462K
Cradle Arc PLC
16 April 2018
Cradle Arc plc / EPIC: CRA.L / Market: AIM / Sector: Mining
16 April 2018
Cradle Arc plc
("Cradle Arc", the "Company" or, together with its subsidiaries,
the "Group")
Option Agreement for a Joint Venture and/or Sale of Luiri Gold
Mines Limited
Cradle Arc (AIM: CRA), the African focused base and precious
metals exploration and production company, is pleased to announce
that it has today entered into an option agreement (the
"Agreement") pursuant to which it has granted Singa Holdings Zambia
Private Limited ("Singa") an option to establish a joint venture
and/or an option to acquire the entire issued share capital of
Luiri Gold Mines Limited ("Luiri"), the Company's wholly owned
subsidiary, which holds the Matala and Dunrobin gold assets in
Zambia.
Highlights:
-- Cradle Arc has granted Singa an exclusive option to acquire
the entire issued share capital of Luiri for a total cash
consideration of US$2.5 million (the "Share Option"), which expires
on 1 July 2018, unless otherwise extended.
-- In the event the Share Option is exercised and with effect
from completion of the acquisition of Luiri, Cradle Arc will
receive a royalty of 1.5% of gross revenue generated from the
Matala and Dunrobin gold assets, up to a maximum aggregate amount
of the Net Present Value of US$2.5 million discounted at 8%.
-- Cradle Arc has also granted Singa an exclusive option which
expires on 30 June 2018, unless otherwise extended, to form a joint
venture for the operation of the Matala and Dunrobin gold assets
(the "JV Option"). In the event the JV Option is exercised, any
such joint venture terminates upon the commencement of commercial
gold production. In the event that Singa elects to exercise the JV
option, Cradle Arc has the right to require Singa to exercise the
Share Option.
-- An option fee of US$30,000 (the "Option Fee") is payable by
Singa to Cradle Arc in three equal monthly tranches, commencing on
the date of the Agreement.
Kevin van Wouw, CEO of Cradle Arc, said:
"The development of our Zambian gold assets has long been an
important goal for the Company. We are, however, extremely mindful
of the potential dilution that raising equity funds for the
development of Matala could have on existing shareholders at the
Company's current share price, and we therefore consider that this
partnership with Singa represents the best path towards potential
production in the near to mid-term.
"Should the Share Option be exercised, the total amount payable
to Cradle Arc would, in our view, represent fair value given the
project's current stage of development and will support the
Company's future strategy. On exercise of the Share Option, the
Company will receive US$2.5 million, which will contribute towards
the cost of the planned Dense Media Separation (DMS) upgrades at
the Group's Mowana Copper Mine, together with the potential future
royalty stream."
Further Information
Pursuant to the Agreement, the Company has granted Singa an
exclusive option to acquire the entire issued share capital of
Luiri (the "Shares") for a total cash consideration of US$2.5
million. The Share Option expires on 1 July 2018, however, Singa
may extend the Share Option period for up to two months by paying
to the Company US$50,000 for each month that the Option Period is
extended.
Singa will utilise the Share Option period to complete its
formal legal and technical due diligence.
Upon exercise of the Share Option, the cash consideration of
US$2.5 million (the "Cash Consideration") is payable by Singa to
the Company. On receipt of the Cash Consideration, the Company will
transfer to Singa 75% of the Shares, with the remaining 25% of the
Shares being transferred to Singa upon commencement of commercial
production of gold ("Second Completion"), at which point the joint
venture will terminate.
With effect from Second Completion, a royalty of up to a maximum
amount of the Net Present Value of US$2.5 million discounted at 8%
per annum (the "Royalty") is payable by Singa to the Company. The
Royalty shall be calculated as 1.5% of the gross revenue generated
from any mining operations on the HQ-8074-LML mining licence, which
hosts, inter alia, the Matala and Dunrobin gold deposits.
At any time following the first royalty payment (the "Redemption
Date"), Singa has the right to accelerate the payment of the
royalty, by making a one-off payment to the Company. If the
Redemption Date is a date which falls less than 48 months from the
date of Second Completion, an additional discount of US$500,000
will be applied.
Pursuant to the Agreement, the Company has also granted Singa an
exclusive option to form a joint venture for the operation of the
Matala and Dunrobin gold assets. The JV Option expires on 30 June
2018, unless otherwise extended. In the event the Share Option
period is extended, the JV Option period will automatically extend
for an equivalent period of time. The JV Option period may also be
extended by agreement between the parties.
On exercise of the JV Option, Singa will assume full operational
management, control, risk, benefit and funding of the Matala and
Dunrobin gold assets. In the event the JV Option is exercised, the
Company has the right to require Singa to exercise the Share
Option.
Pursuant to the Agreement, the parties have agreed to use
reasonable endeavours to resolve certain issues to the reasonable
satisfaction of Singa including, inter alia, any restrictions and
impediments in respect of the Luiri licence, adherence to the terms
of the Consent Settlement Order in respect of the licence and
Luiri's existing legal matters, further details of which are set
out on pages 46-47 of the Company's AIM admission document dated 18
January 2018.
The Agreement contains customary warranties and
undertakings.
**ENDS**
For further information on the Company, please visit
www.cradlearc.com or contact:
Cradle Arc plc Tel: +44 (0)20 7499 5881
Kevin van Wouw
Mark Jones
Strand Hanson Limited Tel: +44 (0)20 7409 3494
Angela Hallett
Matthew Chandler
James Dance
Tamesis Partners LLP Tel: +44 (0)20 3882 2868
Richard Greenfield
St Brides Partners Limited Tel: +44 (0)20 7236 1177
Charlotte Page
Susie Geliher
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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