TIDMMKA
RNS Number : 8732Y
Mkango Resources Limited
11 December 2017
MKANGO RESOURCES LTD.
706 27 Avenue NW,
Calgary, Alberta T2M 2J3
MKANGO ANNOUNCES CONDITIONAL ACCEPTANCE OF TALAXIS TRANSACTION
BY TSX VENTURE EXCHANGE SUBJECT ONLY TO SHAREHOLDER APPROVAL
London / Calgary: December 11, 2017 - Mkango Resources Ltd.
(AIM/TSX-V: MKA) (the "Company" or "Mkango") is pleased to announce
that the TSX Venture Exchange ("TSXV") has conditionally accepted
the transaction ("Transaction") announced on 16 November 2017 with
Talaxis Limited ("Talaxis"), a wholly owned subsidiary of Noble
Group Limited, subject to shareholder approval, such vote to
exclude the shares in Mkango held by Talaxis ("Minority
Approval").
Pursuant to the agreement in respect of the Transaction (the
"Agreement"):
-- Talaxis will invest GBP12 million (C$20.7 million) in three
tranches to fully fund a feasibility study for ("Songwe" or the
"Project") in return for a 49% interest in the Project, in addition
to GBP2 million (C$3.4 million) in two tranches in return for a 49%
interest in a new venture ("Newco") to be established by Mkango
focused on neodymium alloy powders, magnet and other
technologies.
-- The first and second tranches, totaling GBP5 million (C$8.6
million), of the investment into the Project will be invested
following receipt of Minority Approval, to be sought at a meeting
("Meeting") scheduled for January 18, 2018. The first tranche of
GBP2 million (C$3.4 million) is being placed into escrow by Talaxis
pending the Meeting.
-- The first tranche of the investment into Newco, totalling
GBP1 million (C$1.7 million), will also be invested on receipt of
Minority Approval.
-- Therefore a total of GBP6 million (C$10.3 million) will be
invested by Talaxis on Minority Approval and a further GBP8 million
(C$13.8 million) will be invested on completion of the definitive
documentation and according to the milestones in the Agreement,
following which Talaxis will hold a 49% interest in each of the
Project and Newco.
-- Talaxis will also have the option ("Option") to acquire a
further 26% interest in the Project by arranging funding for
Project development, following which Mkango would hold a 25%
interest in the Project, free carried until commencement of
production.
-- Talaxis and Mkango have agreed to cooperate as preferred
partners on rare earths projects worldwide and on other projects in
Malawi.
Mkango will be releasing further information in relation to the
Meeting in due course.
William Dawes, Chief Executive Officer of Mkango, said: "We are
very pleased to announce conditional acceptance by the TSX Venture
Exchange, following which we have a definitive timetable for the
transaction. On shareholder approval and receipt of GBP6 million
investment by Talaxis, the Company will commence the initial phase
of the feasibility study, including mobilization for an extensive
infill, geotechnical and exploration drilling programme starting in
the second quarter of 2018, in parallel with ongoing processing
flow sheet optimisation and work in relation to the Environmental,
Social and Health Impact Assessment. We look forward to updating
the market in relation to the transaction and Mkango's other
projects in Malawi, the Thambani uranium-tantalum-niobium project
and Chimimbi Hill nickel-cobalt project."
Transaction Summary
In relation to the Songwe Hill Rare Earths Project, the
Transaction is summarised as follows:
- GBP2,000,000 Phase 1 investment commitment for the Project
will be released from escrow and invested in Mkango's subsidiary,
Lancaster Exploration Limited ("Lancaster"), the licence holder for
the Project, on Mkango obtaining acceptance from the TSXV for the
Agreement following receipt of Minority Approval ("TSXV
Acceptance"), upon which Talaxis will receive an 8% interest in
Lancaster.
- GBP3,000,000 Phase 2 investment commitment for the Project
will be invested on Mkango obtaining TSXV Acceptance, upon which
Talaxis will receive an additional 12% interest in Lancaster.
- GBP7,000,000 Phase 3 investment commitment for the Project to
be invested subject to completion of the definitive documentation
for the transaction and on Mkango publishing an updated 43-101
resource, upon which Talaxis will receive a further 29% interest in
the Project.
- Upon completion of the feasibility study, and subject to
completion of the definitive documentation for the transaction,
Talaxis will have the Option to acquire a further 26% interest in
the Project and offtake rights for 100% of production from the
Project (subject to Newco (see below) having the option to retain
such amount of offtake as required for Newco's downstream
manufacturing activities) in consideration of Talaxis arranging
funding for 100% of remaining project development costs, including
funding the equity component thereof.
In relation to Newco, the Transaction is summarised as
follows:
- GBP1,000,000 Phase 1 investment commitment for Newco to be
invested on Mkango obtaining TSXV Acceptance following receipt of
minority approval, upon which Talaxis will receive a 24.5% interest
in Newco.
- GBP1,000,000 Phase 2 investment commitment for Newco to be
invested subject to completion of the definitive documentation for
the transaction and, on successful completion of the Phase II
R&D programme with Metalysis, upon which Talaxis will receive a
further 24.5% interest in Newco.
Under the terms of the Agreement, Talaxis will be Mkango's
preferred partner for all rare earths' projects worldwide and for
all activities of any sort in Malawi. Talaxis will be granted a
right of first offer to finance any such activities of Mkango
(including in respect of any of the current assets of Lancaster
other than Songwe). Mkango will be Talaxis' preferred partner for
all rare earths' projects worldwide. All such opportunities will be
offered to Mkango on a 50/50 shared economics basis, with Mkango
being entitled to participate to any level that it chooses.
Related Party Transaction and Multilateral Instrument 61-101
("MI 61-101")
Talaxis is the holder of 13.9% of the issued and outstanding
shares of Mkango. As such, Talaxis is a Non Arm's Length Party
pursuant to applicable rules of the TSXV, as well as a "related
party" pursuant to Multilateral Instrument 61-101 - Protection of
Minority Security Holders in Special Transactions ("MI 61-101"). In
addition, Talaxis holds 12 million warrants of Mkango, which, upon
exercise, could result in Talaxis holding 22.9% of the then-issued
and outstanding shares of Mkango. Talaxis has agreed with Mkango
that it will not exercise any warrants which would increase the
holding of Talaxis in Mkango to 20% or more.
Pursuant to MI 61-101, the Transaction is subject to
disinterested shareholder approval (i.e., approval by a majority of
the votes cast at the Meeting, excluding any shares held by
Talaxis, its affiliates and joint actors).
Talaxis is also considered to be a "related party" as defined
under the AIM Rules and accordingly, Talaxis' investments in both
Lancaster and Newco constitute a related party transaction for the
purposes of Rule 13 of the AIM Rules.
The Directors independent of the Transaction, being the Board as
a whole, consider, having consulted with SP Angel Corporate Finance
LLP, the Company's nominated adviser, that the terms of the
Agreement are fair and reasonable insofar as the Company's
shareholders are concerned.
About Talaxis
Talaxis Limited is a company, wholly owned by Noble Group,
involved in the investment and development of resources which are
critical to green technology supply chains, including cobalt,
lithium, and rare earths. Talaxis is also involved in the research
and development of industrial applications related to energy
solutions providers and permanent magnets consumers. Noble Group
(SGX: CGP) manages a portfolio of global supply chains covering a
range of industrial and energy products. Noble facilitates the
marketing, processing, financing and transportation of essential
raw materials. For more information please visit
www.thisisnoble.com.
.
About Mkango Resources Limited
Mkango's primary business is the exploration for rare earth
elements and associated minerals in the Republic of Malawi, a
country whose hospitable people have earned it a reputation as "the
warm heart of Africa". The Company holds three exclusive
prospecting licenses in Malawi, the Phalombe licence, the Thambani
licence and the Chimimbe Hill licence.
The main exploration target in the Phalombe licence is the
Songwe Hill rare earths' deposit, which features carbonatite hosted
rare earth mineralisation and was subject to previous exploration
in the late 1980s. Mkango completed an updated Pre-feasibility
Study for the project in November 2015.
In November 2017, Mkango entered into an agreement with Talaxis,
a wholly owned subsidiary of Noble Group Limited, whereby, subject
to regulatory approval, Talaxis will fully fund a feasibility study
for Songwe by investing GBP12 million (C$20 million) for a 49%
interest in the project. Talaxis will also have the option to
acquire a further 26% interest in the project by arranging funding
for project development.
In addition, by investing a further GBP2 million (C$3.3
million), Talaxis may acquire a 49% interest in a new venture to be
established by Mkango focused on neodymium alloy powders, magnet
and other technologies. This includes the collaboration with
Metalysis Ltd announced in September 2017, which is focused on
advanced alloys using neodymium or praseodymium with other elements
for permanent magnet manufacturing.
Permanent magnets are critical materials for most electric
vehicles, direct drive wind turbines and many other high growth
applications. Neodymium is a key rare earth component at
Songwe.
Talaxis and Mkango have also agreed to cooperate as preferred
partners on rare earths projects worldwide and on other projects in
Malawi.
The main exploration targets of Mkango's remaining two licences
are, in the Thambani licence, uranium, niobium, tantalum and zircon
and, in the Chimimbe Hill licence, nickel and cobalt.
For more information, please visit www.mkango.ca.
Cautionary Note Regarding Forward-Looking Statements
This news release contains forward-looking statements (within
the meaning of that term under applicable securities laws) with
respect to Mkango, its business and the Project. Generally, forward
looking statements can be identified by the use of words such as
"plans", "expects" or "is expected", "scheduled", "estimates"
"intends", "anticipates", "believes", or variations of such words
and phrases, or statements that certain actions, events or results
"can", "may", "could", "would", "should", "might" or "will", occur
or be achieved, or the negative connotations thereof. Forward
looking statements in this news release include statements with
respect to the global market for products using the rare earth
metals the Company is exploring for, completion of the feasibility
study and of the transactions contemplated in the Agreement, as
well as the use of proceeds from the investments into the Company
by Talaxis and the timing of such expenditures. Readers are
cautioned not to place undue reliance on forward-looking
statements, as there can be no assurance that the plans, intentions
or expectations upon which they are based will occur. By their
nature, forward-looking statements involve numerous assumptions,
known and unknown risks and uncertainties, both general and
specific, that contribute to the possibility that the predictions,
forecasts, projections and other forward-looking statements will
not occur, which may cause actual performance and results in future
periods to differ materially from any estimates or projections of
future performance or results expressed or implied by such
forward-looking statements. Such factors and risks include, without
limiting the foregoing, market demand for the metals and associated
downstream products for which Mkango is exploring, researching and
developing, the positive results of a feasibility study on the
Project, delays in obtaining financing or governmental or stock
exchange approvals. The forward-looking statements contained in
this news release are made as of the date of this news release.
Except as required by law, the Company disclaims any intention and
assumes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by applicable law. Additionally,
the Company undertakes no obligation to comment on the expectations
of, or statements made by, third parties in respect of the matters
discussed above.
For further information on Mkango, please contact:
Mkango Resources Limited
William Dawes Alexander Lemon
Chief Executive Officer President
will@mkango.ca alex@mkango.ca
UK: +44 207 3722 744
Canada: +1 403 444 5979
www.mkango.ca
@MkangoResources
Blytheweigh
Financial Public Relations
Tim Blythe, Camilla Horsfall, Nick
Elwes
UK: +44 207 138 3204
SP Angel Corporate Finance LLP
Nominated Adviser and Broker
Jeff Keating , Caroline Rowe
UK: +44 20 3470 0470
The TSX Venture Exchange has neither approved nor disapproved
the contents of this press release. Neither the TSX Venture
Exchange nor its Regulation Services Provider (as that term is
defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy any equity or other securities of
the Company in the United States. The securities of the Company
will not be registered under the United States Securities Act of
1933, as amended (the "U.S. Securities Act") and may not be offered
or sold within the United States to, or for the account or benefit
of, U.S. persons except in certain transactions exempt from the
registration requirements of the U.S. Securities Act.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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