LONDON (Alliance News) - StratMin Global Resources PLC Thursday agreed an early settlement over share payments due from Bass Metals Ltd as well as the sale of its shares in Bass, amid concerns over a need to raise capital short term.
StratMin Chief Executive Officer Brett Boynton said in a statement that the company's board is "conscious of the pressure on the StratMin share price and market speculation of a discounted capital raise in the near term".
However, the early settlement with Bass and sale of its shares in Bass removes the need for StratMin to raise short term capital with a weak share price, and gives it a strong platform for negotiating a reverse takeover, Boynton explained.
Shares in StratMin were up 12% at 1.54 pence Thursday, having fallen 47% in 2016 to date.
StratMin became a cash shell under AIM rules after selling its Graphmada subsidiary to Bass in September, with much of the consideration of that sale having been agreed in future payments of equity in Bass.
StratMin was to be issued equity in Bass in two tranches of AUD3 million and AUD5 million, subject to Bass meeting some performance criteria by the end of 2017 and 2018.
However, Bass recently approached StratMin with an offer to settle the payments in cash and facilitate the sale of StratMin's remaining 70 million shares in Bass, StratMin said.
Bass will pay AUD2.6 million in cash in three payments of AUD955,000 on or before Friday, AUD1.2 million on or before March 15 next year, and AUD500,000 on or before the end of September next year.
Additionally, there will be an immediate placement of StratMin's entire remaining 70 million shares in Bass at a minimum price of 1.3 cents per share, providing a further AUD910,000 in cash to StratMin in the next five days.
Finally, there will be an option for Bass to acquire the 2.5% net smelter royalty fee attached to the sale from StratMin for AUD500,000 prior to the end of June 2018.
This will provide StratMin with an immediate AUD1.9 million in cash, equivalent to GBP1.1 million, and a total of AUD3.6 million, or GBP2.1 million in cash with the potential for the further proceeds from the royalty sale.
StratMin added that all warranties provided by StratMin to Bass under the share purchase agreement will be extinguished, removing any potential liability for StratMin from historic operations.
In September, StratMin had agreed a USD1.5 million loan facility to help fund its Vatomaina joint venture in Madagascar, however, it has since decided to undertake a reverse takeover instead.
The loan facility was undrawn but was not terminated as StratMin considered alternatives for participating in the joint venture.
However, with StratMin changing its strategic direction, and the collateral for this loan having been its holding on Bass, this loan facility will now be duly terminated.
"This transaction mitigates completion risk with Bass and provides capital to pursue the company's gold strategy which the board believes will deliver better shareholder returns," Boynton said.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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