TIDMARG
RNS Number : 7661J
Argos Resources Ltd
15 December 2022
This announcement contains inside information
ARGOS RESOURCES LIMITED
("Argos", the "Group" or "the Company")
Proposed Sale of North Falkland Basin Interests to JHI
Associates Inc
Argos Resources Limited (AIM: ARG.L), the Falkland Islands based
exploration company focused on the North Falkland Basin , is
pleased to announce that the Company and JHI Associates Inc.
("JHI"), a private company incorporated in Ontario, Canada, have
entered into an agreement pursuant to which it is proposed that JHI
will acquire Argos' PL001 Production Licence interests in the North
Falkland Basin (the "Transaction").
Highlights
-- JHI has agreed to acquire 100 per cent. of the Group's PL001
Production Licence in the North Falkland Basin, immediately to the
west of the giant Sea Lion oil field, subject to certain
conditions.
-- As consideration, JHI is proposing to issue Argos with new
shares in JHI (the "Consideration Shares"), plus a cash payment
enabling the Company to settle transaction and corporate
expenses.
-- Following completion of the Transaction, which remains
subject to the conditions set out below, the Group would gain
exposure to the Canje block, offshore Guyana, which is directly
adjacent to the prolific Stabroek block where ExxonMobil has
discovered more than 10 billion barrels of oil.
-- The Consideration Shares are expected to represent
approximately 9.3 per cent. of the enlarged share capital in JHI
following completion of the Transaction.
-- In the event that the Transaction is completed, the financial
strength of JHI is expected to underpin the extension of Licence
PL001 by two years to 31 December 2024, which was announced by the
Company earlier today.
-- The Transaction would diversify both companies' assets and
pave the way for further drilling activity in the coming years.
The Transaction remains subject to the satisfactory completion
of mutual due diligence and the parties entering into a binding
Sale & Purchase Agreement ("SPA"). In the event an SPA is
agreed, completion of the Transaction would also be subject to,
inter alia, obtaining the necessary approvals from the Falkland
Islands Government and Secretary of State to the transfer of
Licence PL001 to JHI. Accordingly, there is no certainty that the
Transaction will complete on the terms indicated, or at all.
Next Steps & AIM Rule 15
It is anticipated that the proposed Transaction would constitute
a fundamental change of business pursuant to AIM Rule 15, as the
effect of the Transaction would be to divest the Company of its
sole asset. The Transaction would therefore also require the
consent of Argos' shareholders being given in general meeting. Upon
signing an SPA, the Company will issue a further announcement and
publish a circular containing details of the disposal, the proposed
change to the business and convene the general meeting.
Next Steps & AIM Rule 41
In the event all conditions associated with the Transaction are
satisfied, the Group's sole asset would be a minority shareholding
in JHI. The Company's Board of Directors have concluded that in
this scenario the costs associated with maintaining an AIM listing
would not be justified. Therefore, following completion of the
Transaction the Board intends to seek cancellation of the Company's
securities from admission to trading on AIM ("Cancellation").
Cancellation would be conditional upon the consent of not less than
75 per cent. of votes cast by the Company's shareholders given in
general meeting. Following Cancellation, it would be the Directors
intention to liquidate the Company and distribute the Consideration
Shares proportionately to Argos' shareholders on the register at
the relevant time.
Ian Thomson, Chairman of Argos commented:
"This is an attractive transaction for both companies, and I
strongly recommend that ARL shareholders vote in favour when asked
to do so in a general meeting. JHI has ample cash reserves which
are more than sufficient to cover the investments required to
advance the exploration activities on Licence PL001 and to meet the
financial capability criteria to support a licence extension to 31
December 2024.
In addition to the North Falkland Basin Licence PL001, the
transaction gives ARL shareholders access to potential upside in
the Canje licence, offshore Guyana, in a basin that has been the
highlight of the oil industry for several years, enjoying prolific
success from numerous giant oil discoveries."
Information on JHI
JHI is a private company incorporated in Ontario and
headquartered in Toronto, Canada. JHI owns a 17.5 per cent.
interest in the Canje block, offshore Guyana, operated by Esso
Exploration & Production Guyana Ltd. (35 per cent.), a
subsidiary of ExxonMobil Corp. The other partners in the block are
TotalEnergies E&P Guyana BV (35 per cent.) and Mid-Atlantic Oil
& Gas Inc. (12.5 per cent.). The Canje block covers
approximately 4,800 square kilometres and is located approximately
180 to 300 kilometres offshore Guyana in water depths ranging from
1,700 to 3,000 metres.
The Canje block is a large and significant licence adjacent and
immediately east of multiple ExxonMobil discoveries in the Stabroek
block. 6,100 square kilometres of 3D seismic data has been shot
over the Canje block, from which over three dozen prospects have
been mapped in four proven plays in the Lower Tertiary and Upper
Cretaceous confined channels, Lower Cretaceous carbonate structures
and, with the recent drilling of Sapote-1 well and Stabroek
discoveries, the block now offers the opportunity of yet deeper
prospectivity.
As of 31 December 2021, JHI's audited financial statements
indicate total gross assets of approximately US$30.7 million, of
which approximately US$27 million in cash and investments, and
total liabilities of approximately US$500,000.
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