TIDMANR
RNS Number : 6294E
Altona Energy PLC
05 November 2015
5 November 2015
Altona Energy plc
("Altona" or "the Company")
Arckaringa Joint Venture
Altona (AIM: ANR) is pleased to announce that Altona, Sino-Aus
Energy Group Limited ("Sino-Aus") and Wintask Group Limited
("Wintask") (together the "JV Partners") have signed an agreement
(the "Deed of Variation") modifying the terms of the Arckaringa
project joint venture ("Joint Venture Agreement" or "the JV")
announced on 14 November 2014.
Highlights
-- Investment into the Arckaringa project by Wintask and
Sino-Aus of a maximum of AUD$33 million in four contribution
stages
-- An initial drilling programme will be planned as a part of a
Bankable Feasibility Study ("BFS") which is targeted to be
completed within three years of the Effective Date
-- Sino-Aus will provide Altona with working capital of up to
GBP1.25 million in two tranches, subject to certain conditions
Qinfu Zhang, Altona Energy's Executive Chairman, commented:
"Despite wider market turmoil since the signing of the original
agreement, Altona and Wintask have continued negotiations with
Sino-Aus and we are delighted to have signed this Deed of Variation
to our original agreement with Sino-Aus and Wintask. We look
forward to the future funding dates whereafter we can commence the
Arckaringa project in earnest.
"The Deed of Variation to the agreement creates a more flexible
agreement, which is in the interest of all parties as we
collectively pursue the successful development of the Arckaringa
licences."
For further information, please visit www.altonaenergy.com or
contact:
Altona Energy plc
Qinfu Zhang, Executive Chairman +44 (0)7555 679 245
Leander (Financial PR)
Christian Taylor- Wilkinson +44 (0)7795 168 157
Northland Capital Partners Ltd (Nomad and
Broker)
Matthew Johnson / Gerry Beaney (Corporate
Finance)
John Howes / Mark Treharne (Corporate Broking) +44 (0)20 738 1100
Overview
The joint venture partners have agreed to modify the definition
of the Arckaringa Project to mean the completion of a BFS for an
underground coal gasification ("UCG") project and or one or more
synthetic gas projects and or any other mining project within the
Arckaringa Licence area as agreed by the board of the JV.
The conditions precedent to the Joint Venture Agreement, as
amended by the Deed of Variation, are now as follows:
1) Written consent from the South Australian Government Minister for Mineral Resources and Energy
2) All consents and approvals required under the AIM rules
3) The JV company obtaining all necessary Governmental approvals
for the Arckaringa Project when its scope has been determined by
the Board of the JV Company
4) Altona seeking and gaining approval at a General Meeting to
issue 200 million new shares to Sino-Aus
The date that the aforementioned conditions are met is termed
the Effective Date. As at the date of this announcement, Altona can
confirm that it has received consents for items 1 and 2. The
Company will advise shareholders in due course once the third and
fourth conditions have been met.
If the conditions precedent have not been satisfied by 30 June
2016, a party not in default may terminate the JV Agreement.
Operational ownership of the project will be shared among the JV
Partners, with the first step of the BFS being to plan a drilling
programme; the results of which will inform the JV Partners of the
scope of work needed to complete the BFS. The JV Partners have
agreed to endeavour to complete the BFS within three years of the
Effective Date.
If the cost of the BFS exceeds the total of the Sino-Aus
Contribution and the Wintask Contribution, being a maximum of
AUD$33 million, then each of the three JV Partners will be obliged
to contribute to the overrun amount in accordance with its
shareholding interests.
Arckaringa Coal Chemical Joint Venture Co Pty Ltd will have a
board of directors consisting of two voting members from Altona,
two voting members from Sino-Aus and one voting member from
Wintask.
Joint Venture Financial Contribution
The financial contribution from the Sino-Aus and Wintask is as
follows:
All AUD$ Sino-Aus Wintask Total
---------------------- -------------- ------------- ------------
1st Contribution* $5.4 million $0.6 million $6 million
---------------------- -------------- ------------- ------------
2nd Contribution** $5.4 million $0.6 million $6 million
---------------------- -------------- ------------- ------------
3rd Contribution*** $10.8 million $1.2 million $12 million
---------------------- -------------- ------------- ------------
4th Contribution**** $8.1 million $0.9 million $9 million
---------------------- -------------- ------------- ------------
Total Contribution $29.7 million $3.3 million $33 million
---------------------- -------------- ------------- ------------
It has been agreed that Sino-Aus can reduce its second and third
stage contributions to 90% of the amount set out above provided
that the final total Sino-Aus contribution still meets the total
contribution amount.
Unless otherwise varied by agreement between the joint venture
partners the contribution dates are as follows:
* First Contribution Date means the later of 30 days from the
signing of the Deed of Variation or 5 days following the Company
receiving all necessary AIM and shareholder approvals.
**Second Contribution Date will occur 180 days from the
Effective Date.
***Third Contribution Date will occur one calendar year from the
second contribution date.
****Fourth Contribution Date will occur one calendar year from
the third contribution date.
Once the investors have made their total contributions to the
joint venture, the ownership of the JV will be split as follows:
Altona 45%, Sino-Aus 45%, Wintask 10%. Initially Arckaringa Energy
Pty Ltd ("Arckaringa Energy" being the Company's wholly owned
subsidiary) will hold 100% of the shares in the JV and will issue
shares to Wintask and Sino-Aus as they make their
contributions.
The shares in the JV will be issued to Sino-Aus and Wintask upon
each company making its contribution to the JV. As an example, the
first contribution from Sino-Aus of $5.4million represents 18.18%
of its anticipated total contribution entitling Sino-Aus to be
issued with 8.18% of the shares in the JV, being 18.18% of its
total potential interest of 45%.
In the event that the delay is in respect of the third or fourth
contribution payments, then where the delay is more than 30 days
Arckaringa Energy has the right to buy back the interest from the
defaulting party at the market price. If Arckaringa Energy does not
take up this right then the defaulting partner has the right to
assign all or part of its interests, earned or to be earned, to a
third party who will take on future performance obligations.
Share Placing
Sino-Aus will provide working capital directly to Altona,
amounting to a total of GBP1.25 million, in two tranches. The
funding will be split as follows: subject to certain conditions,
Sino-Aus will subscribe in two equal tranches of 100,000,000 shares
each ("Placing Shares"), the first being priced at 0.5 pence
raising a total of GBP500,000 with the second being priced at 0.75
pence raising a total of GBP750,000. Altona will therefore seek
shareholder approval at the forthcoming General Meeting for the
issue of 200,000,000 Placing Shares.
No later than 5 days from shareholder approval, Sino-Aus is to
subscribe for the first tranche of 100,000,000 Placing Shares. Its
holding following the first tranche placing is shown below:
Shareholder Previous holding Placing Shares Total Shares Percentage
of Company's
enlarged Issued
Share capital
------------- ------------------ --------------- ------------- -----------------
Sino-Aus - 100,000,000 100,000,000 12.11%
------------- ------------------ --------------- ------------- -----------------
Upon completion of the subscription by Sino-Aus of the first 100
million Placing Shares in Altona, Sino-Aus will have the right to
appoint a director to the board of Altona.
The second tranche placing is due 180 days following the date
for the payment of the first tranche of the placing,, Sino-Aus'
interest in Altona following the second tranche placing is shown
below:
Shareholder Previous holding Placing Shares Total Shares Percentage
of Company's
enlarged Issued
Share capital
------------- ----------------- --------------- ------------- -----------------
Sino-Aus 100,000,000 100,000,000 200,000,000 20.2%
------------- ----------------- --------------- ------------- -----------------
The first and second tranche placings are conditional inter alia
on admission of the Placing Shares to trading on AIM. The Placing
Shares, when issued, will rank pari passu in all respects with the
Company's existing ordinary shares.
Assuming no other shares are issued by the Company, following
completion of the first tranche placing, there will be 891,956,853
shares in issue and following the completion of the second tranche
placing, there will be 991,956,853 shares in issue.
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