TIDMCAF
RNS Number : 2789W
China Africa Resources PLC
08 February 2017
China Africa Resources PLC
8 February 2017
China Africa Resources plc
("China Africa" or "the Company" or "CAF")
Investment Agreement - USA Lithium
China Africa Resources plc (LON:CAF) the London Stock Exchange
AIM listed natural resource exploration and development company is
pleased to announce it has signed an Investment Agreement with US
Lithium (Pty) Ltd ("USL"), a private Australian company, to acquire
up to a 47.5% shareholding in USL.
USL has interests in lithium exploration licences in Arizona and
New Mexico held through a 100% owned subsidiary company registered
in the United States of America ("USA"). Further details in respect
of USL and specifically its USA lithium interests are provided
below.
Shareholders should note that this transaction does not
constitute a reverse takeover under the AIM Rules and consequently
China Africa must continue to seek to complete a reverse takeover
or face suspension from trading on AIM.
Paul Johnson, Chief Executive Officer of China Africa Resources
plc commented "I am pleased to announce this second investment
which continues to build the China Africa business model, this time
with the addition of lithium exploration and development interests
in the secure operating environment of the United States.
I would encourage readers to review the project information
provided below in respect of both Arizona and New Mexico lithium
projects.
The funds from the initial investment by CAF will be used
directly to fund a follow-up exploration programme which the US
Lithium team are currently finalising. This planned work will
generate systematic exploration data to further the knowledge of
the four projects and will seek to qualify the exploration targets
in advance of any future drilling programme.
The historic exploration data from all four projects is
encouraging and the presence of the historical lithium and tantalum
workings in the New Mexico Project are particularly interesting. We
look forward to relaying the findings from the US Lithium programme
and related material developments as they occur.
China Africa will continue to investigate further opportunities
and has a number under advanced review. There of course can be no
certainty that any commercial transactions will be undertaken until
crystallised and published via regulatory announcement."
Investment Agreement - Key Financial Terms
Initial 25%:
CAF to is to acquire a 25% holding in USL with consideration to
comprise cash and CAF equity as follows:
USD$100,000 payable in cash (GBP79,707) to USL to be applied to
cover the costs of USL's next stage exploration work programme,
commencing shortly.
AUD$150,000 payable in new ordinary shares of 1p each in the
Company ("Ordinary Shares") at 3p per share being the mid-market
price of CAF stock on the date that the Investment Agreement was
prepared. The sterling equivalent at the date of agreement is
GBP90,220 equating to 3,007,333 CAF shares or 3.7% of CAF issued
share capital post transaction.
FURTHER 22.5%:
At the discretion of CAF and dependent on the results achieved
during the aforementioned CAF funded exploration work programme,
CAF has the right to acquire an additional 22.5% of USL again with
consideration to comprise cash and CAF equity as follows:
AUD$150,000 payable in cash (GBP90,220) to USL to be applied to
cover the auditable historic costs incurred to date.
AUD$225,000 payable in new ordinary shares of 1p each in the
Company ("Ordinary Shares") at 3.25p per share. The sterling
equivalent at the date of agreement is GBP135,330 equating to
4,164,000 CAF shares.
Upon acquisition of the 47.5% total holding the Investment
Agreement provides for certain amendments to the Articles of
Association of USL to ensure CAF's proportionate holding in USL is
protected, notably the application of 75% shareholder approval for
any issue of new equity or alteration to the capital structure of
USL.
Further Summary Information
US Lithium Pty Limited ("USL")
USL is an Australian private limited company which has a 100%
owned subsidiary company, registered in the United States of
America ("USA"), that holds 100% of four exploration properties;
three in the State of Arizona and one in the State of New
Mexico.
Lithium Interests of USL
The current US Lithium exploration portfolio consists of four
distinct projects; two focussed on lithium bearing pegmatites; and
two predominantly focussed on lithium bearing volcanogenic altered
hectorite clays. Hectorite is a lithium and magnesium containing
bentonite (smectite) clay.
The New Mexico Pegmatite Project, is centred on a cluster of
subparallel lithium bearing pegmatite dikes. The amphibole-schist
hosted dikes are steeply dipping and individually range up to 7m
wide at outcrop. The main lithium mineral present is lepidolite
with subordinate microlite providing tantalum and columbite
providing niobium. Historically parts of the project area have been
worked on a small-scale, for both lithium and tantalum. Recent
limited surficial sampling in the project area has yielded grades
of up to 1.2% Li (or 6.39% Lithium Carbonate Equivalent LCE).
The Arizona Pegmatite Project is centred on the southern end of
the Arizona Pegmatite belt and a historical pegmatite mining area.
The pegmatite hosted lithium occurs as spodumene, amblygonite and
lepidolite. Recent grab sampling in the project area has yielded
results up to 1.97% Li, supporting further systematic exploration
work.
The style of lithium pegmatite mineralisation being sought by
USL is typified by that being mined at Talison Lithium's
Greenbushes Mine in W. Australia (Mineral Resource 2012 Measured
& Indicated 118.5Mt @ 2.4% Li) and ASX listed Birimian Ltd's
Bougouni Lithium Project, in Mali, where a maiden Mineral Resource
(15.5Mt @ 1.48% Li2O) for the Goulamina Deposit was recently
announced.
The two Arizona Clay projects are focused on lithium bearing
clay deposits. Both are early stage exploration projects targeting
low grade, bulk tonnage, lithium clay deposits typified by the
Sonora Deposit, Mexico and the Lithium Nevada Project (previously
King Valley Project), in Nevada, USA. The Pre-Feasibility Study
stage Sonora Project (Mineral Resource Indicated 259Mt @3,200ppm Li
& Inferred 160Mt @ 3,200ppm Li) is held by AIM listed Bacanora
Minerals whilst the Lithium Nevada Project (Mineral Resource,
Measured 50.7Mt @ 0.312% Li & Indicated 164.0Mt @ 0.285% Li) is
held by TSX listed Lithium Americas Corp.
USL's work programme at its Arizona clay projects is focused on
the evaluation of lithium bearing clays derived from interbedded
volcanogenic lacustrine sediments in structurally defined
intermountain basins. These clays are currently thought to be
derived from the alteration of silicic vitric tuffs. Values from
recent sampling range from 211ppm Li to 1,220ppm Li with analysis
for Rare Earth Element (REE) content, including Yttrium, ranging
195 to 440 ppm REE and averaging 14% as heavy REEs.
One of the deposits is also known to be uranium bearing,
drilling in the late 1970's reportedly noted several uranium
occurrences, though these were not fully investigated and represent
as yet untested uranium potential.
The second of the clay projects is targeting volcanogenic
derived lacustrine clays, with historically reported interbedded
thicknesses of over 20m and reported grades between 0.4% and 1.0%
Lithium Oxide (Li(2) O) over a thickness of 12m. Whilst this
project is still at an early exploration stage, a small number of
surface samples taken from this project have yielded upto 920ppm
Li.
Based on a suggested economic cut-off grade of 1,000 ppm Li
(5,320ppm LCE) (from the Mineral Resource of Bancanora Mineral's
Sonora hectorite deposit) both of the Arizona clay projects are
considered by USL to warrant systematic exploration to identify,
map and laterally delineate the stratigraphic horizons with
elevated lithium.
Total Voting Rights
As a result of this investment, 3,007,333 new Ordinary Shares
are expected to be admitted to trading on or around 15 February
2017 ("Admission"). Following Admission the total issued share
capital of the Company will consist of 81,843,195 Ordinary Shares.
As such the total number of voting rights in the Company will be
81,843,195 Ordinary Shares. This number may be used by shareholders
as the denominator for the calculations by which they will
determine if they are required to notify their interest in, or a
change to their interest in, the Company under the FCA's Disclosure
and Transparency Rules.
AIM Rule 15 Cash Shell Status
On 14(th) December shareholders in CAF approved at General
Meeting the distribution of shares in the Company's 100% owned
China Africa Namibia Pty Limited to then shareholders. This
distribution was completed as announced to market on 11 January
2017. As a result of the distribution China Africa Resources became
a Rule 15 Cash Shell with six months to complete a reverse takeover
or face suspension from trading on AIM.
Shareholders should note that this transaction, being an
investment to secure up to 47.5% holding in USL, does not represent
a reverse takeover under the AIM rules. Consequently, China Africa
continues to be required to complete a reverse takeover within six
months of 11 January 2017 or face suspension from trading on
AIM.
Competent Person
The technical information contained in this disclosure has been
read and approved by Mr Nick O'Reilly (MSc, DIC, MAusIMM, FGS), a
Director of China Africa, who is a qualified geologist who meets
the criteria of a qualified person under the AIM Rules - Note for
Mining and Oil & Gas Companies.
For further information on the Company, visit:
http://www.chinaafricares.com/.
China Africa Resources PLC T: +44 (0) 7766 465617
Paul Johnson, Chief Executive
Officer
SPARK Advisory Partners - T: +44 (0) 2033 683
Nominated Adviser 555
Sean Wyndham-Quin
Neil Baldwin www.sparkadvisorypartners.com
SI Capital Limited - Joint T: +44 (0) 1483 413
Broker 500
Nick Emerson
Andy Thacker
Beaufort Securities Limited T: +44 (0) 207 382
- Joint Broker 8300
Elliot Hance
China Africa Resources Investing Policy:
Under the AIM Rules for Companies, CAF is required to complete
an acquisition or acquisitions that constitutes a reverse takeover
within six months of becoming an AIM Rule 15 Cash Shell or it will
face suspension from trading on AIM. The Directors intend to apply
the investing policy set out below in seeking an acquisition or
acquisitions that will constitute a reverse takeover but there can
be no certainty that they will be able to do this in the specified
time frame.
The Board proposes to invest in and/or acquire companies and/or
projects within the natural resource sector but with a particular
interest in opportunities in the energy metal and minerals sector
and with a key focus on opportunities in respect of uranium,
lithium, cobalt, copper and coal. Each commodity has a specific
relevance to the Energy space in terms of power generation, storage
and distribution.
The Board considers that, as evidenced by the financial support
provided by the new investors for the proposals outlined, there is
a strong demand for energy metal and mineral opportunities on
London's AIM.
The Board will not be limited to a specific geographic focus. In
selecting investment opportunities, the Board will focus on
businesses, assets and/or projects that are available at attractive
valuations and hold opportunities to unlock embedded value or
where, through efficient and focused work, there is the prospect of
adding considerable value to each project, for the benefit of
shareholders.
Where appropriate, the Board may seek to invest in businesses
where it may influence the business at a board level, add their
expertise to the management of the business, and utilise their
industry relationships and access to finance.
The Company's interests in a proposed investment and/or
acquisition may range from a minority position to full ownership
and may comprise one investment or multiple investments. The
proposed investments may be in quoted or unquoted companies; be
made by direct acquisitions or farm-ins; and may be in companies,
partnerships, earn-in joint ventures, debt or other loan
structures, joint ventures or direct or indirect interests in
assets or projects. The new Board may focus on investments where
intrinsic value can be achieved from the restructuring of
investments or merger of complementary businesses.
The Board expects that investments will typically be held for
the medium to long term, although short term disposal of assets
cannot be ruled out if there is an opportunity to generate an
attractive return for Shareholders. The Board will place no minimum
or maximum limit on the length of time that any investment may be
held.
The Board will conduct initial due diligence appraisals of
potential businesses or projects and, where they believe further
investigation is warranted, intend to appoint appropriately
qualified persons to assist.
The Board believes it has a broad range of contacts through
which it is likely to identify various opportunities which may
prove suitable. The Board believes its expertise will enable it to
determine quickly which opportunities could be viable and so
progress quickly to formal due diligence.
The Company will not have a separate investment manager. The
Board proposes to carry out a comprehensive and thorough project
review process in which all material aspects of a potential project
or business will be subject to rigorous due diligence, as
appropriate. Due to the nature of the sector in which the Company
is focused the Company expects a focus on capital returns over the
medium to long term. Should opportunities arise for an early cash
return to investors, this will be considered by the Board.
It is emphasised that there is no certainty that the Company
will be able to secure an acquisition or Reverse Takeover as set
out above.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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