3 June 2024
Power Metal Resources
PLC
("Power Metal" or the
"Company")
Strategic Financing and Proposed
Formation of Uranium-Focused Joint Venture
Power Metal Resources PLC
(AIM:POW, OTCQB:POWMF),
the London-listed exploration company with a global project
portfolio, is pleased to announce
that it has entered into a legally binding subscription agreement
(the "Subscription") with ACAM LP ("ACAM" or the "Investor")
pursuant to which it will invest £2 million in Power Metal by way
of a loan note (the "Notes"), with attaching warrants (the
"Warrants").
Furthermore, the Company has entered
into an eight-week exclusivity period and a non-binding term sheet
with ACAM with the intention of forming a uranium-focused joint
venture involving Power Metal's entire portfolio of uranium
licences (the "Joint Venture").
Highlights:
·
ACAM has entered
into a legally binding Subscription agreement to purchase Notes
with attaching Warrants for £2 million. The Notes have a term of
five years, bearing interest at 10% per annum, payable at the
option of the Company in cash or through the issuance of new
ordinary shares in the Company ("Shares"). The 13,333,333 Warrants
are exercisable for five years at a price of 15 pence per
Share.
·
ACAM is a natural
resource focused Limited Partnership advised by S and F
Investment Advisors Limited ("S&F").
·
Non-Binding term
sheet signed with ACAM, pursuant to which the parties intend to
enter into a Uranium-focused joint venture involving Power Metal's
entire portfolio of uranium licences.
·
Pursuant to the
proposed Joint Venture, it is currently intended that ACAM, or an
affiliate, will make an initial equity investment of £10 million
into the Company's wholly owned Canadian subsidiary company, Power
Metal Resources Canada Inc ("PMC"), for a majority interest in PMC
of 70%. The Company will potentially receive an additional cash
payment of up to £4 million, conditional upon a sale transaction
completing or other value realisation by the Investor, subject to
the Investor achieving a minimum return threshold on its
investment.
·
If completed, the
proposed Joint Venture is expected to provide Power Metal
shareholders with exposure to at least five significant, high
impact drilling programmes with an experienced financial partner,
with significant advancement on several more. ACAM and its
affiliates have investments in mining and exploration projects
globally including the Gardaq joint venture with TSX and AIM listed
Amaroq Minerals in Greenland.
·
Assuming the
successful completion of the Joint Venture, which cannot be
guaranteed, the IPO of Uranium Energy Exploration plc ("UEE") is to
be aborted with the costs incurred, approximately £500k, to be met
through the proceeds of the Notes. Accordingly, at this stage, it
is unlikely that the disposals of the Company's wholly owned
Reitenbach Uranium Property, and E-12 Uranium Property,
as announced on 8 August 2022 and 4 November 2022 respectively,
will occur.
·
The balance of
the proceeds of the Notes is to be used for general corporate
purposes.
Sean Wade, Chief Executive Officer of
Power Metal Resources, commented:
"We announced on 25th March 2024 that we were
looking at various options to maximise value from our uranium
portfolio and whilst these discussions are still taking place, I am
pleased to announce that we are making progress to finalise a
transaction that we are confident will crystallise significant
value for our shareholders.
Whilst there can be no guarantee that the Joint Venture will
complete, we are confident that we will achieve a successful
outcome and will update shareholders once the legally binding
documentation is finalised.
ACAM have already made a significant commitment to the Company
pursuant to the Subscription and we look forward to working with
them to successfully conclude the proposed Joint
Venture."
Details of the Subscription for Notes and
Warrants
The Company and ACAM have entered
into a legally binding subscription agreement, pursuant to which
ACAM will subscribe for 2,000,000 Notes with 13,333,333 attaching
Warrants, for proceeds of £2 million, before expenses.
The Notes, which are unsecured, will
rank as the senior indebtedness of the Company, have a term of five
years from issuance (the "Repayment Date") and bear interest at 10%
per annum, payable semi-annually. If the Company and ACAM fail to
enter into definitive legal documentation in relation to the Joint
Venture on the basis set out in the Term Sheet (as defined below)
within 12 months, both parties acting reasonably, the Repayment
Date will be accelerated to 12 months from the issuance of the
Notes.
At the election of the Company
interest payments can be paid in cash or in Shares. Where the
Company elects to settle interest in Shares, such Shares will be
issued at the 10-day VWAP of the Company's Shares on the AIM Market
of the London Stock Exchange to the date preceding the relevant
payment date.
While the Notes remain outstanding,
the Company will use 20% of the proceeds of any future equity
financing to redeem Notes for cash. The Company is also required to
utilise a portion of any cash proceeds realised from the sale of
assets in excess of £300,000 to redeem Notes for cash,
with such proportion being 50% if the 10-day VWAP is in
excess of the exercise price of the Warrants at the time, or 100%
if the VWAP is equal to or below the exercise price of the
Warrants. The Notes can otherwise be
redeemed at any time by the Company without fee or
penalty.
The Warrants have a term of five
years and are exercisable at a price of 15 pence per Share, subject
to standard adjustment provisions, including for bonus issues and
stock splits. The quantum of Warrants will be re-set in proportion
to an increase in the Company's fully diluted share capital as a
result of any future equity fundraising.
Proposed Joint Venture
The Company has entered into an
eight-week exclusivity period and a non-binding term sheet (the
"Term Sheet") with ACAM, pursuant to which the parties intend to
form the uranium focused Joint Venture.
Pursuant to the Term Sheet, it is
intended that ACAM, or an affiliate with substantially the same
beneficial owners, will invest an initial £10 million into PMC for
an equity interest of 70% with the proceeds used to fund
exploration programmes across the portfolio of uranium licences,
including drilling. The Company will
potentially receive an additional cash payment of up to £4 million,
conditional upon a sale transaction completing or other value
realisation by the Investor, subject to the Investor achieving a
minimum return threshold on its investment.
At this stage, there is no binding
obligation or commitment on the part of any party with respect to
the Joint Venture which is subject to the execution of various
definitive legal documentation. Accordingly, there is no certainty
that this Joint Venture will proceed, or if it does, that it will
proceed on the terms outlined here.
If the Joint Venture is successfully
completed, the IPO of UEE is to be aborted with the costs incurred
to be met through the proceeds of the Notes. Accordingly, at this
stage, it is unlikely that the disposals of the Company's wholly
owned Reitenbach Uranium Property, and E-12 Uranium Property, as
announced on 8 August 2022 and 4 November 2022 respectively, will
occur.
Shareholders should note
that Sean Wade is a director of both Power Metal
and UEE.
Advisers
Tamesis Partners LLP ("Tamesis") is
acting as financial adviser to the Company in relation to the
Subscription and the proposed Joint Venture.
This announcement contains inside
information for the purposes of Article 7 of the Market Abuse
Regulation (EU) 596/2014 as it forms
part of UK domestic law by virtue of
the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under
Article 17 of MAR.
For further information please
visit https://www.powermetalresources.com/ or
contact:
Power Metal Resources plc
|
|
Sean Wade (Chief Executive
Officer)
|
+44 (0) 20 3778 1396
|
|
|
SP Angel Corporate Finance (Nomad
and Joint Broker)
|
|
Ewan Leggat/Caroline Rowe
|
+44 (0) 20 3470 0470
|
|
|
SI Capital Limited (Joint
Broker)
|
|
Nick Emerson
|
+44 (0) 1483 413 500
|
|
|
First Equity Limited (Joint
Broker)
|
|
David Cockbill/Jason
Robertson
BlytheRay (PR Advisors)
Tim Blythe/Megan Ray
|
+44 (0) 20 7330 1883
+44 (0) 20 7138 3204
|
NOTES TO EDITORS
Power Metal Resources plc -
Background
Power Metal Resources
plc (LON:POW) is an AIM listed metals exploration company
which finances and manages global resource projects and is seeking
large scale metal discoveries.
The Company has a principal focus on
opportunities offering district scale potential across a global
portfolio including precious, base and strategic metal exploration
in North America, Africa and Australia.
Project interests range from
early-stage greenfield exploration to later-stage prospects
currently subject to drill programmes.
Power Metal will develop projects
internally or through strategic joint ventures until a project
becomes ready for disposal through outright sale or separate
listing on a recognised stock exchange thereby crystallising the
value generated from our internal exploration and development
work.
Value generated through disposals
will be deployed internally to drive the Company's growth or may be
returned to shareholders through share buy backs, dividends or
in-specie distributions of assets.