7th Jul 2016 09:37
LONDON (Alliance News) - StratMin Global Resources PLC Thursday said it has now entered into a conditional sale and purchase agreement with its joint venture partner Bass Metals Ltd, weeks before shareholders vote on the proposed sale of the London-listed company's graphite operations.
StratMin shares were trading up 7.7% to 1.62 pence per share on Thursday.
StratMin holds 93.75% of the subsidiary that holds the graphite assets, Graphmada Mauritius, alongside Australian-listed Bass Metals, its existing partner that holds the other 6.25% of the subsidiary.
The London-listed company agreed to sell its stake to Bass Metals on the first day of April for a total of AUD15.3 million - valuing Graphmada Mauritius at AUD16.3 million, roughly GBP8.6 million. In September, StratMin valued the subsidiary at GBP8.0 million.
StratMin shareholders will vote on the deal on July 29 and the company has now signed a conditional sale and purchase agreement with Bass Metals. Shareholder approval is the only potential barrier to the deal being completed.
Breaking down the consideration, Bass will make a cash payment of AUD1.5 million, roughly GBP795,000. Bass will also make an equity payment of AUD8.8 million in shares, which will be issued over three tranches.
Bass will issues shares to StratMin worth AUD750,000 once the deal has been executed, whilst the remaing shares will only be issued once the graphite operations have hit certain milestones.
Once production has been maintained above 1,250 tonnes of graphite concentrate for three consecutive months, Bass will issue a second tranche of shares to StratMin worth AUD3.0 million, followed by a further tranche of shares worth AUD5.0 million once production has exceeded 2,500 tonnes over three consecutive months.
StratMin said it has purposely negotiated the consideration to be weighted more towards equity than cash to "optimise the economics of the transaction" which will enable the company to pursue other corporate activities whilst retaining an interest in the graphite operations.
Bass will also pay a net smelter royalty fee of 2.5% to StratMin, capped at AUD5.0 million, starting six months after the deal has been executed.
By Joshua Warner; [email protected]; @JoshAlliance
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