7th Feb 2007 08:57
GVM Metals Ltd07 February 2007 GVM METAL LIMITED Heads of Agreement reached to acquire Kelso Mining Limited GVM Metals Limited ('GVM' or the 'Company') today announces that it has agreedterms for the acquisition of Kelso Mining Limited ('Kelso') whose principalasset is the right to acquire 70% of the issued share capital of Coal of AfricaLimited ('CoAL'). CoAL is a South African company that owns the Mooiplaats coalproject and surrounding New Order prospecting rights. The properties owned byCoAL are located within 2 kilometres of the Camden Power Station near Ermelo andare beside the main rail line to the Richards Bay export coal terminal. A Competent Persons Report ('CPR') on the CoAL properties is currently beingprepared by SRK Consulting and it is a condition of the Kelso acquisition ofCoAL that the CoAL properties contain a JORC and SAMREC compliant resource inexcess of 450 million tonnes of coal. The CPR is expected to be made availableby April 2007. The terms of the CoAL agreement contain a number of preconditions includingregulatory and Kelso shareholder consent and the completion of due diligencesatisfactory to the Company. As well as the precondition to the JORC and SAMRECstatus of the resources, the transaction is to complete 90 days after SouthAfrican Ministerial consent to the transfer of New Order Mining Title. Kelso also owns the Itawes nickel project located in the northern Mindanaoprovince in the Philippines. Whilst the Mineral Production Sharing Agreement isexpected to be granted by the Department of Environment and Resources shortly,GVM will have the right to sell the Itawes project back to the Itawes vendorsfor a nominal consideration, whilst retaining a minority interest, should theCoAL transaction not close and/or the Mineral Production Sharing Agreement notbe granted. The maximum consideration for the Kelso acquisition is approximately £10million. This consideration is made up as follows: a. An initial consideration of £3.7 million, comprising cash of £2 millionand £1.7 million in new GVM shares to be issued at its mid-market price with butwithin a minimum and maximum price range of 20-30 pence per share; b. Subject to completion of the CoAL acquisition, a deferred consideration£4 million in new GVM shares to be issued at its mid-market price with a minimumand maximum price range of 20-30 pence per share; and c. Subject to completion of both the CoAL acquisition and receipt by the Itawes project of its Mineral Production Sharing Agreement, an additional deferredconsideration of £2.2 million of which £1.5 million is payable in cash andthe balance in new GVM shares to be issued at its mid-market price with aminimum and maximum price range of 20-30 pence per share. The acquisition of Kelso requires the approval of GVM shareholders. Once finalagreements have been executed, a Notice of Meeting will be sent to GVMshareholders providing full details of the acquisition. This is expected by nolater than 31 March 2007. Following completion of the acquisition, should GVM decide to exercise theoption to acquire 70% of CoAL, the consideration will be £30 million of which a£3 million deposit has already been paid by Kelso The balance is payable as to£17 million on completion in cash and the balance in cash 12 months thereafter.The CoAL agreement is not expected to be completed for at least four months toallow time for the completion of the Competent Person's Report and to receiverelevant regulatory consents. The Company will provide further technical details regarding the potentialresources, development, production or other indicative technical data when SRKConsulting report is completed. For more information contact: Simon Farrell, Managing Director GVM +61 417 985 383 or +61 8 9322 6776Leesa Peters / Jos Simson Conduit PR +44(0) 20 7429 6606Olly Cairns / Romil Patel Corporate Synergy Plc +44(0) 20 7448 4400 www.gvm.com.au This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
MCM.L