TIDMMKA
RNS Number : 6510W
Mkango Resources Limited
16 November 2017
MKANGO RESOURCES LTD.
706 27 Avenue NW,
Calgary, Alberta T2M 2J3
MKANGO ENTERS INTO AGREEMENT WITH TALAXIS TO FUND DEVELOPMENT OF
THE SONGWE HILL RARE EARTHS PROJECT IN MALAWI AND COMMERCIALISATION
OF NEW MAGNET TECHNOLOGIES
London / Calgary: November 16, 2017 - Mkango Resources Ltd.
(AIM/TSX-V: MKA) (the "Company" or "Mkango") is pleased to announce
that it has entered into an agreement ("Agreement") with Talaxis
Limited ("Talaxis"), a wholly owned subsidiary of Noble Group
Limited:
-- Talaxis has agreed to fully fund a bankable feasibility study
("BFS") for Mkango's Songwe Hill Rare Earths Project ("Songwe" or
the "Project") in return for a 49% interest in the Project
-- Talaxis will invest GBP12 million (C$20 million) in the
Project for the BFS in three tranches, with the first tranche of
GBP2 million (C$3.3 million) invested on receipt of regulatory
approval
-- Talaxis will also have the option ("Option") to acquire a
further 26% interest in the Project by arranging funding for
Project development
-- Talaxis may also acquire up to a 49% interest in a new
venture to be established by Mkango focused on neodymium alloy
powders, magnet and other technologies, including Mkango's
collaboration with Metalysis, by investing GBP2 million (C$3.3
million) in two tranches
-- Upon completion of the above investments, Mkango will retain
a 25% interest in Songwe, free carried to production, and a 51% in
interest in the new venture
-- Talaxis and Mkango have agreed to cooperate as preferred
partners on rare earths projects worldwide and on other projects in
Malawi
William Dawes, Chief Executive Officer of Mkango, said: "This
transaction is transformational for Mkango and for Malawi, and is a
further endorsement of the Company's strategy and potential. This
Agreement significantly strengthens our balance sheet whilst
ensuring that the Company is fully funded to progress Songwe and
our collaboration with Metalysis. It also comes at a pivotal time
in the rare earth market with a very strong demand outlook for rare
earths such as neodymium and praseodymium used in permanent magnets
for electric vehicles, wind turbines and other clean technology
applications. We are very excited to be working with Talaxis, and
moving forward with the bankable feasibility study for Songwe and
Phase II of the research and development programme with
Metalysis."
Daniel Mamadou, Executive Director of Talaxis said: "The global
push to decarbonize the economy is creating pressure on the supply
of critical elements to the green tech sector. Environmental
regulation and the policy changes are driving the price of
technology metals. Supported by our access to global logistics
capabilities, an extensive marketing network and a team of
experienced professionals, Talaxis is pleased to enter into this
agreement, which further strengthens our supply chain specialized
in tech metal products."
The Agreement is summarised below:
Songwe Hill Rare Earths Project
Under the Agreement, Talaxis is entitled to receive a 49%
interest in Mkango's subsidiary, Lancaster Exploration Limited
("Lancaster"), the licence holder for the Project, by investing an
aggregate of GBP12 million (C$20 million) in Lancaster in three
tranches to complete the BFS, with the final tranche of GBP7
million being subject to the completion of a definitive Joint
Venture Agreement. Subject to completion of the definitive Joint
Venture Agreement, Talaxis will be granted the Option to acquire a
further 26% interest in Lancaster by arranging funding for Project
development, which, based on the pre-feasibility study prepared by
the MSA Group (Pty) Ltd dated 1 December 2015, would total US$216
million. If the Option is exercised, Mkango will hold a 25%
interest in Lancaster, free carried until the Project commences
production. The Agreement provides that the first tranche of the
investment by Talaxis will be paid upon receipt of TSX Venture
Exchange ("TSXV") approval for the transaction. Payment of the
second tranche will be 45 days after such approval, and the payment
of the third tranche is conditional on completion of the definitive
Joint Venture Agreement in respect of Songwe and on Mkango
publishing an updated 43-101 resource referred to below.
- GBP2,000,000 Phase 1 investment commitment for the Project to
be invested on Mkango obtaining approval from the TSX Venture
Exchange ("TSXV") for the Agreement, upon which Talaxis will
receive a 8% interest in Lancaster.
- GBP3,000,000 Phase 2 investment commitment for the Project to
be invested 45 days after Mkango obtains TSXV approval, upon which
Talaxis will receive an additional 12% interest in Lancaster.
- The use of proceeds will fund the first phase of the BFS
including infill, geotechnical and exploration drilling, bulk
sampling, processing flow sheet optimisation, work in relation to
the Environmental, Social and Health Impact Assessment ("ESHIA")
and other expenditures.
- GBP7,000,000 Phase 3 investment commitment for the Project to
be invested, subject to Talaxis and Mkango completing the
definitive Joint Venture Agreement, on Mkango publishing an updated
43-101 resource, upon which Talaxis will receive a further 29%
interest in the Project. The use of proceeds will be to fund
completion of the BFS.
- Upon completion of the BFS, and subject to Talaxis and Mkango
completing the definitive Joint Venture Agreement, Talaxis will
have the Option to acquire a further 26% interest in the Project
and offtake rights for 100% of production from the Project (subject
to Newco (see below) having the option to retain such amount of
offtake as required for Newco's downstream manufacturing
activities) in consideration of Talaxis arranging funding for 100%
of remaining project development costs, including funding the
equity component thereof.
New Venture ("Newco")
In addition, by investing a further GBP2 million (C$3.3 million)
in two tranches, Talaxis will receive a 49% interest in Newco to be
established by Mkango to further develop, commercialise and market
production in relation to new rare earth alloy powder, magnet and
other technologies geared to accelerating growth in the electric
vehicle market. The use of proceeds includes expenditure under the
previously announced agreement with Metalysis focused on advanced
alloys using neodymium or praseodymium with other elements for
magnet development and potential 3D printing applications. Upon
completion of the investments, Mkango will hold a 51% interest in
Newco. The Agreement provides that the first tranche of the
investment by Talaxis will be paid within 45 days of receipt of
TSXV approval for the transaction. Payment of the second tranche is
conditional on completion of a definitive Investment Agreement in
respect of Newco and successful completion of the Phase II R&D
programme referred to below.
- GBP1,000,000 Phase 1 investment commitment for Newco to be
invested 45 days after Mkango obtains TSXV approval for the
Agreement, upon which Talaxis will receive a 24.5% interest in
Newco. The use of proceeds will be to fund the Phase II research
and development ("R&D") programme with Metalysis and other
expenditures.
- GBP1,000,000 Phase 2 investment commitment for Newco to be
invested, subject to Talaxis and Mkango completing the definitive
Investment Agreement, on successful completion of the Phase II
R&D programme with Metalysis, upon which Talaxis will receive a
24.5% interest in Newco. The use of proceeds will be to fund the
R&D programme with Metalysis and other expenditures.
Under the terms of the Agreement, Talaxis will be Mkango's
preferred partner for all rare earths' projects worldwide and for
all activities of any sort in Malawi. Talaxis will be granted a
right of first offer to finance any such activities of Mkango
(including in respect of any of the current assets of Lancaster
other than Songwe). Mkango will be Talaxis' preferred partner for
all rare earths' projects worldwide. All such opportunities will be
offered to Mkango on a 50/50 shared economics basis, with Mkango
being entitled to participate to any level that it chooses.
The definitive agreements are expected to be completed by
January 31, 2017. The transaction is subject to the receipt of all
necessary regulatory approvals including the approval of the TSXV
and satisfaction of any conditions which it may impose.
Related Party Transaction
Talaxis is the holder of 14.4% of the issued and outstanding
shares of Mkango. As such, Talaxis is a Non Arm's Length Party
pursuant to applicable rules of the TSXV. In addition, Talaxis
holds 12 million warrants of Mkango, which, upon exercise, could
result in Talaxis holding 23.7% of the then-issued and outstanding
shares of Mkango.Talaxis has agreed with Mkango that it will not
exercise any warrants which would increase the holding of Talaxis
in Mkango to 20% or more.
Talaxis is also considered to be a "related party" as defined
under the AIM Rules and accordingly, Talaxis' investments in both
Lancaster and Newco constitute a related party transaction for the
purposes of Rule 13 of the AIM Rules.
The Directors independent of the transaction, being the Board as
a whole, consider, having consulted with SP Angel Corporate Finance
LLP, the Company's nominated adviser, that the terms of the
Agreement are fair and reasonable insofar as the Company's
shareholders are concerned.
Finder's Fee
Subject to acceptance by the TSXV, Mkango proposes to pay a cash
finder's fee of 2% of the amount of each investment to Zenith
Advisory Services Pty Ltd. in connection with the transactions
contemplated in the Agreement, payable within an agreed period of
time following the completion of each phase of the investments.
About Talaxis
Talaxis Limited is a company, currently wholly owned by Noble
Group, involved in the investment and development of resources
which are critical to green technology supply chains, including
cobalt, lithium, and rare earths. Talaxis is also involved in the
research and development of industrial applications related to
energy solutions providers and permanent magnets consumers. Noble
Group (SGX: CGP) manages a portfolio of global supply chains
covering a range of industrial and energy products. Noble
facilitates the marketing, processing, financing and transportation
of essential raw materials. For more information please visit
www.thisisnoble.com.
About Mkango Resources Limited
Mkango's primary business is the exploration for rare earth
elements and associated minerals in the Republic of Malawi, a
country whose hospitable people have earned it a reputation as "the
warm heart of Africa." Mkango holds, through its wholly owned
subsidiary Lancaster, a 100% interest in two exclusive prospecting
licenses in southern Malawi, the Phalombe licence and the Thambani
licence.
The main exploration target in the Phalombe licence is the
Songwe Hill rare earths' deposit, which features carbonatite hosted
rare earth mineralisation and was subject to previous exploration
in the late 1980s. Mkango completed an updated Pre-feasibility
Study for the project in November 2015.
In September 2017, Mkango signed a binding joint venture
principles and exclusivity agreement with Metalysis for advanced
alloys using neodymium or praseodymium with other elements for
magnet manufacturing. Following successful Phase I production of a
neodymium-iron-boron ("NdFeB") alloy powder using Metalysis'
solid-state technology, the Phase II R&D programme has
commenced. NdFeB alloys are used to make permanent magnets,
critical components of most electric vehicles, direct drive wind
turbines and many other high growth applications. Neodymium is a
key rare earth component at Songwe.
The main exploration targets in the Thambani licence are
uranium, niobium, tantalum and zircon.
For more information, please visit www.mkango.ca.
Cautionary Note Regarding Forward-Looking Statements
This news release may contain forward-looking statements.
Readers are cautioned not to place undue reliance on
forward-looking statements, as there can be no assurance that the
plans, intentions or expectations upon which they are based will
occur. By their nature, forward-looking statements involve numerous
assumptions, known and unknown risks and uncertainties, both
general and specific, that contribute to the possibility that the
predictions, forecasts, projections and other forward-looking
statements will not occur, which may cause actual performance and
results in future periods to differ materially from any estimates
or projections of future performance or results expressed or
implied by such forward-looking statements. Such factors and risks
include, without limiting the foregoing, delays in obtaining
financing or governmental or stock exchange approvals. The
forward-looking statements contained in this press release are made
as of the date of this press release. Except as required by law,
the Company disclaims any intention and assumes no obligation to
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by applicable law. Additionally, the Company undertakes no
obligation to comment on the expectations of, or statements made
by, third parties in respect of the matters discussed above.
For further information on Mkango, please contact:
Mkango Resources Limited
William Dawes Alexander Lemon
Chief Executive Officer President
will@mkango.ca alex@mkango.ca
UK: +44 207 3722 744
Canada: +1 403 444 5979
www.mkango.ca
@MkangoResources
Blytheweigh
Financial Public Relations
Tim Blythe, Camilla Horsfall, Nick
Elwes
UK: +44 207 138 3204
SP Angel Corporate Finance LLP
Nominated Adviser and Broker
Jeff Keating , Caroline Rowe
UK: +44 20 3470 0470
The TSX Venture Exchange has neither approved nor disapproved
the contents of this press release. Neither the TSX Venture
Exchange nor its Regulation Services Provider (as that term is
defined in the policies of the TSX Venture Exchange) accepts
responsibility for the adequacy or accuracy of this release.
This press release does not constitute an offer to sell or a
solicitation of an offer to buy any equity or other securities of
the Company in the United States. The securities of the Company
will not be registered under the United States Securities Act of
1933, as amended (the "U.S. Securities Act") and may not be offered
or sold within the United States to, or for the account or benefit
of, U.S. persons except in certain transactions exempt from the
registration requirements of the U.S. Securities Act.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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