2nd Jun 2014 14:18
LONDON (Alliance News) - Anglo Pacific Group PLC Monday raised GBP10 million to help pay for a deal to buy Cancap Investments Ltd's 2% net smelter return royalty interest in the Maracás vanadium project in Brazil for up to USD25 million in cash plus warrants.
Anglo Pacific placed 5.5 million new shares, equivalent to about 5% of its existing share issue, with new and existing investors to help pay for the deal.
Barclays Bank and BMO Capital Markets were joint bookrunners for the placing.
In a separate statement, Anglo Pacific said it will pay USD22 million in cash on completion of the acquisition, a further USD1.5 million in cash when the Maracás project reaches sales of an annualised production rate of 9,500 tonnes V2O5 equivalent over a calendar quarter, and a final USD1.5 million when the project reaches an annualised production rate of 12,000 tonnes V2O5 equivalent over a calendar quarter.
It will also issue Cancap with 500,000 warrants when the deal is completed. Each warrant is for one share at a strike price of GBP2.50 a share and will be exercisable for five years.
The Maracás vanadium project is operated by Largo Resources Ltd and is due to start production in the near term. It is forecast to produce an average annual production of approximately 11,400 tonnes V2O5 equivalent over a 29 year mine life. Largo has an off-take agreement with Glencore International AG for all vanadium products produced at the project for the first six years of commercial production.
Anglo Pacific's new 2% net smelter return royalty interest is on all mineral products sold from the area of the Maracás project covered by the royalty interest.
"The Maracás royalty provides additional commodity diversification to the Anglo Pacific royalty portfolio through exposure to vanadium, a commodity which we believe has strong underlying fundamentals driven by China's and other developing economies' increasing demand for high quality alloyed steel," Chief Executive Julian Treger said in a statement.
Anglo Pacific invests in royalties in the natural resources sector. Its current portfolio includes royalties on producing assets in Brazil, Australia and Spain, as well as development assets across the world and pre-development assets in Canada and Australia.
Anglo Pacific shares were trading up 1.9% at 184.69 pence Monday afternoon.
By Steve McGrath; [email protected]; @SteveMcGrath1
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