LONDON (Alliance News) - Metminco Ltd said Wednesday that it will acquire majority stake in nickel and bauxite projects located on the Solomon Islands.
The company has bought entire share capital of Sunshine Metals Ltd, which owns 80% stake in each Jejevo nickel project and Tausere bauxite prospect. Sunshine also separately owns 20% stake in AIM-listed natural resource investor Gunsynd PLC.
Metminco will give Sunshine AUD1.5 million, about GBP825,165, and another AUD1.5 million in the form of 250.0 million shares at a price of AUD0.006 to cover agreed debts.
The Australian gold producer will issue Sunshine a further 250.0 million shares when its receives a JORC compliant resource estimate for the Jejevo nickel project, of at least 125,000 tonnes of contained nickel metal at a cut-off grade of not less than 0.7% nickel.
Metminco will then issue Sunshine a final 500.0 million shares upon receipt of a mining licence for the Jejevo project.
The deal is conditional on Metminco completing a AUD3.0 million raising.
The company said it has already received firm commitments for placement of 135.0 million shares at a price of AUD0.4 per share, to raise AUD540,000.
The miner will also undertake a pro rate renounceable rights issue to raise up to AUD2.5 million. It is expected to be underwritten by its lead manager Patersons Securities Ltd.
Metminco said it intends to cancel its London listing as only 9% of the trading in it shares took place in London over the past 12 months and currently less than 6% of total issued shares are listed on AIM. It, however, will continue to trade on the Australian Securities Exchange after the acquisition.
Metminco Executive Chairman Kevin Wilson said: "The acquisition of the Jejevo Nickel Project, gives Metminco exposure to nickel at a time when rising battery manufacture is expected to accelerate demand for the metal. We will commence advancing Jejevo as soon as the acquisition completes."
"Together with our Quinchia Gold Project we now have two advanced exploration projects that we believe offer near term development potential."
Gunsynd Executive Chairman Hamish Harris said: "The board is pleased to have, conditional on completion, been able to once again swap its exposure from a private company to that of a listed company whilst at the same time enabling Sunshine to access funding and move the project towards mining.
"The transaction also removes the need for any potential future funding by Gunsynd. The Company, however, maintains its exposure to the upside potential of the project and now has the ability to realise the investment at an appropriate time."
Shares in Gunsynd were up 11% Wednesday at 0.025 pence each. Metminco shares were untraded but last closed at 0.35p each.
