MTR.L Regulatory News (MTR)

24 Aug 2020 07:20

 

24 August 2020

Metal Tiger plc

(“Metal Tiger” or the “Company”)

Heads of Agreement Executed

Metal Tiger plc (AIM:MTR), the London Stock Exchange AIM listed investor in natural resource opportunities, is pleased to announce that the shareholders of Kalahari Metals Limited (“Kalahari Metals” or “KML”), in which Metal Tiger has a 62.17% interest, have entered into a binding heads of agreement (“HoA”) with Cobre Limited (“Cobre”), in which Metal Tiger has a 18.79% interest, pursuant to which Cobre will acquire up to 51% of Kalahari Metals (the “Proposed Transaction”).

In consideration for the Proposed Transaction, Cobre will issue, in aggregate, 21,423,169 new ordinary shares in the capital of Cobre (“Cobre Shares”, each a “Cobre Share”) (the “Consideration Shares”), which, based on the closing price of a Cobre Share of A$0.19 as at the close of business on 20 August 2020 (the “Cobre Closing Price”), would value the 51% interest in KML at approximately A$4.1m (approximately £2.2m).

Pursuant to the HoA, it is proposed that Cobre will acquire the entire interests of the minority shareholders of KML (the “Minority Vendors”), who, in aggregate, hold 37.83% of KML, for, in aggregate, 15,892,251 Consideration Shares and up to 13.17% of KML from Metal Tiger, resulting in Cobre owning 51% of KML, with the remaining 49% being held by Metal Tiger. Under the terms of the HoA, Metal Tiger will initially sell 12.16% of its interest in KML to Cobre for 5,106,963 Consideration Shares and will grant an option to Cobre to acquire an additional 1.01% of KML for an additional 423,955 Consideration Shares (the “Cobre Option”).

Subject to Cobre receiving the necessary change of control approvals in Botswana to acquire more than 50% of KML (the “COC Consent”), Cobre will then be able to exercise the Cobre Option to increase its total holding to 51%. In the event the COC Consent is not received, Cobre will not be able to exercise the Cobre Option and will be interested in 49.99% of KML, with Metal Tiger being interested in 50.01%, though, in any event, Cobre will assume operatorship of KML.

Assuming completion of the Proposed Transaction and exercise of the Cobre Option, and that Cobre shareholder approval is received for Metal Tiger’s additional investment of A$310,000 into Cobre at A$0.20 (announced on 28 April 2020) and that there are no further changes to the issued share capital of Cobre, then Metal Tiger will be interested in approximately 20.72% of the issued share capital of Cobre and would have an economic interest in Kalahari Metals of approximately 59.57% (being a direct interest of 49.0% and an indirect interest of 10.57% as a result of the Company’s direct interest in Cobre).

As set out below, the Proposed Transaction is subject to, inter alia, the completion of due diligence by Cobre on KML, the parties entering into formally binding agreements and Cobre shareholder approval. Pursuant to the HoA, Cobre has been granted a 60-day period of exclusivity to complete its due diligence and to enter into the formal agreements.

The Board of Metal Tiger (the “Board”) believes that the transaction will be beneficial for KML as it introduces an additional listed and well-funded partner in Cobre, provides a partial liquidity event for Metal Tiger’s investment, whilst allowing Metal Tiger to maintain a significant effective interest in KML going forward. Furthermore, subject to KML being successfully advanced, the Board believes that it may potentially provide a future exit opportunity for Metal Tiger. In addition, the Board believes that by bringing in an additional funding partner, there is the potential for economies of scale operationally that could see operational costs in country reduced as a result of increased funding.

Michael McNeilly, Metal Tiger’s CEO, is a non-executive director of both KML and Cobre. Mr McNeilly recused himself from all Cobre board-related matters in respect of the Proposed Transaction and any KML related matters insofar as they pertained to the Minority Vendors in respect of the Proposed Transaction.

Summary of the Proposed Transaction and other key terms

The other key terms of the HoA are set out below and the final terms will be subject to, inter alia, the parties entering into formal documentation and the conditions precedent set out below:

Cobre to acquire up to 51% of KML for the issue of up to 21,423,169 Consideration Shares, which, based on the Cobre Closing Price, have a value of approximately A$4.1m;The Consideration Share will be subject to a lock up from the date of issue until the later of 31 January 2022 or such later date as may be required by the ASX.The Proposed Transaction is subject to, inter alia, a number of conditions precedent, including:The completion of due diligence on KML by Cobre;The parties agreeing and entering into a formal sale agreement;Cobre and MTR negotiating and executing a shareholders’ agreement in relation to the management of KML (the “Shareholders’ Agreement”);Cobre obtaining all regulatory and ASX listing approvals necessary to complete the Proposed Transaction, including:approval from Cobre shareholders to the issue of the Consideration Shares;approval from Cobre shareholders to acquire the interest in KML from MTR (to the extent necessary);any other approvals or satisfying any conditions that Cobre, the Australian Securities & Investments Commission or ASX deems necessary in order to ensure compliance with ASX listing rules of the Corporation Act 2001 (Cth); andMetal Tiger obtaining Australian Foreign Investment Review Board (“FIRB”) approval in respect of the Proposed Transaction (to the extent required).

Following completion of the Proposed Transaction, it is proposed that:

Kalahari Metals will use all of its available cash (currently estimated to be approximately US$600k at completion based on current KML budget) to fund further exploration work, prior to either Metal Tiger or Cobre providing any additional funding to KML. MTR and Cobre will then each provide additional funding of A$1.25m over the first 12 months post completion and an additional A$0.5m each in the second 12-month period post completion.Metal Tiger and Cobre will each be entitled to appoint two nominee directors to the board of KML. One of Cobre’s nominees will act as Chairman and will have a casting vote in the event of a deadlock.Cobre, KML and Adam Wooldridge (current executive director of Kalahari Metals providing operational oversight in country) agree to use all reasonable endeavours to negotiate a consultancy agreement, or such similar agreement that is on satisfactory terms to all parties under which Mr Wooldridge will be engaged by KML to provide consultancy services in relation to KML’s exploration activities.

A copy of Cobre’s press release can be found at:

https://www.asx.com.au/asxpdf/20200824/pdf/44ltblw7zp5711.pdf

Further announcements will be made as appropriate.

Mr Michael McNeilly, Chief Executive Officer of Metal Tiger, said:

“Should the Proposed Transaction complete, we believe it will be a very positive transaction, as Metal Tiger’s effective interest in KML’s projects will be minimally reduced and the transaction would provide an additional funding partner in Cobre. We believe this will allow KML to undertake a more aggressive exploration programme and will allow for economies of scale at the project level. Assuming exploration success it may also provide a potential future liquidity avenue for Metal Tiger’s interest. We look forward to working with the team at Cobre to bring this transaction to fruition and ultimately to hopefully making a discovery in the Kalahari Copperbelt.”

This announcement contains inside information for the purposes of the market abuse regulation (EU No. 596/2014).

For further information on the Company, visit www.metaltigerplc.com:

Michael McNeilly	(Chief Executive Officer)	Tel: +44 (0)20 7099 0738
Mark Potter	(Chief Investment Officer)
Richard Tulloch James Dance Jack Botros	Strand Hanson Limited (Nominated Adviser)	Tel +44 (0)20 7409 3494
Paul Shackleton Steve Douglas	Arden Partners plc (Broker)	Tel: +44 (0)20 7614 5900
Gordon Poole James Crothers Hugo Liddy	Camarco (Financial PR)	Tel: +44 (0)20 3757 4980

Background information on KML:

Kalahari Metals Limited, which was incorporated in England & Wales on 3 May 2017, holds interests in 12 highly prospective exploration licences covering a total area of 8,595km2 in the Kalahari Copper Belt of Botswana, comprising two 100% owned exploration licences, five exploration licences subject to a binding earn-in agreement with Triprop Holdings (Pty) Limited (includes the Ngami Copper Project), and five exploration licences held by 100% owned subsidiary, Kitlanya Limited.

As announced on 14 February 2020, Metal Tiger currently holds approximately 62.2% of KML together with a conditional 2% net smelter royalty over all KML’s wholly owned licences, being seven licences covering, in aggregate, 6,650km2 (together, the “Royalties”). The five exploration licences owned by Triprop Holdings (Pty) Limited (in which KML has a 51% interest) do not form part of the Royalties.

Further details are available under the Project Investments section of the Company’s website at: www.metaltigerplc.com/portfolio/project-investments/kalahari-metals.

The net assets and net loss of KML incorporated into the Group’s results for the year ended 31 December 2018 were £796,000 and £73,000 respectively.

Background information on Cobre:

Cobre, an Australian public company that was incorporated on 18 May 2018, is seeking to create shareholder value through the successful exploration of base metal projects. Cobre’s subsidiary, Toucan Gold Pty Ltd, holds a group of tenements collectively referred to as the Perrinvale Project in central Western Australia.

As at 31 December 2019, Cobre reported net assets of A$1.1m. For the period ended 31 December 2019, Cobre reported a loss after tax of A$1.2m.

Further details are available at Cobre’s website at: www.cobre.com.au.

Notes to Editors:

Metal Tiger plc is admitted to the AIM market of the London Stock Exchange AIM Market ("AIM") with the trading code MTR and invests in high potential mineral projects with a base, precious and strategic metals focus.

The Company's target is to deliver a high return for shareholders by investing in significantly undervalued and/or high potential opportunities in the mineral exploration and development sector. Metal Tiger has two investment divisions: Equity Investments and Project Investments.

Equity Investments invests in undervalued natural resource companies. The majority of its investments are listed on AIM, the TSX and the ASX, which includes its interest in Sandfire Resources Limited (ASX: SFR). The Company also considers selective opportunities to invest in private natural resource companies, typically where there is an identifiable path to IPO. Through the trading of equities and warrants, Metal Tiger seeks to generate cash for investment for the Project Investments division.

Project Investments is focused on the development of its key project interests in Botswana, where Metal Tiger has a growing interest in the large and highly prospective Kalahari copper/silver belt through its interest in Kalahari Metals Limited.

The Company actively assesses new investment opportunities on an on-going basis and has access to a diverse pipeline of new opportunities in the natural resources and mining sectors. For pipeline opportunities deemed sufficiently attractive, Metal Tiger may invest in the project or entity by buying publicly listed shares, by financing privately and/or by entering into a joint venture.

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