(Alliance News) - Erris Resources PLC on Thursday said it has agreed a deal with Bacanora Lithium PLC to buy its 50% stake in Deutsche Lithium GmbH, whose principal asset is the Zinnwald lithium project in Germany.
Erris also announced plans for a name change, a placing and the sale of its Loch Tay gold project.
Its shares were restored to trading on Thursday, closing 63% higher at 10.00 pence each in London. Bacanora shed 18% to 31.50p.
Bacanora will sell its 50% Deutsche Lithium stake and will also part with EUR1.4 million in cash in exchange for 90.6 million Erris shares and a 2% net profit royalty. Bacanora will own a 44% stake in Erris.
"The proposed transaction is therefore also subject to Erris shareholders approving the waiver of the UK Panel on Takeovers and Mergers of any obligation by Bacanora or its concert parties to make a general offer under Rule 9 of the City Code on Takeovers and Mergers," Bacanora added.
The Zinnwald project, which has a mining licence to the end of 2047, hosts a belt "mined historically for tin, tungsten, and lithium at different times over the past 300 years".
"The strategy of Erris has been the identification and acquisition of attractive mining development projects in low risk, preferably European, jurisdictions. The directors of Erris are of the opinion that the Zinnwald Lithium Project represents an appropriate acquisition target that will provide the company with a core asset with several compelling attribute," Erris said.
Upon completion of the transaction, Erris will change its name to Zinnwald Lithium PLC.
The company will also shift its Loch Tay gold project.
"The Erris board believes that the Zinnwald Lithium Project should be the principal focus of Erris going forward. However, it considers that what it sees as the significant potential of the Loch Tay gold project should accrue to the existing shareholders of the company," Erris explained.
"The Loch Tay gold project is owned by Erris's subsidiary company, Erris Gold Resources. Following completion of the proposals and the passing of the resolutions, all existing shareholders in Erris will receive shares in Erris Gold Resources, pro rata on a one-for-one basis to their shareholding of existing ordinary shares."
The company has also conditionally raised GBP3.8 million in a placing of 75.0 million shares at 5p each.
"The net proceeds from the placing of approximately GBP3.0 million will be applied to the professional fees incurred in relation to the transaction and for general working capital purposes," Erris added.
By Eric Cunha; ericcunha@alliancenews.com
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