pgradeTM Commercialisation Update
Deep Yellow testwork program
Marenica completed a testwork program with its proprietary U-pgradeTM process technology on uranium samples from Deep Yellow Limited's (ASX:DYL) Tumas project in Namibia. Tumas is located in the same region of Namibia as the Marenica project and shares many similar metallurgical characteristics.
The testwork program was successful, confirming the amenability of the U-pgradeTM process to the Tumas samples. The parties are in discussions about the next stages of commercialising U-pgradeTM.
Successful completion of the Tumas testwork is expected to build further industry credibility and generate momentum amongst resource owners to utilise this game changing technology.
With all commercialisation discussions, it is Marenica's priority to make the technology available on terms where its shareholders receive a fair share of the benefits derived by resource owners using U-pgradeTM while ensuring that the resource owner enjoys significant benefits from the application of the technology.
Discussions continue with other resource owners to demonstrate the benefits of U-pgradeTM and enter into agreements for future testwork and eventually license and commercialisation agreements.
Corporate Restructuring
During the March quarter Marenica reached agreement with Hanlong Energy Limited on revised terms for the outstanding Convertible Note ("Note").
The changes to the terms of the Note include;
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Extension of term until 14 November, 2018
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Conversion Price for Note reduced to $0.58 per share
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Marenica now has the right to repay debt at maturity in shares issued at $0.58 per share or cash
Although it is anticipated that the Note remains in place for the next 2.5 years, at maturity Marenica will have the option to repay the amount outstanding by issuing about 2.8 million shares to Hanlong or cash.
At the General Meeting conducted 5 April 2016 the restructure of the Note was unanimously approved by shareholders, a strong vote of confidence in the restructure outcome.
The agreement to the fixed terms of conversion removes the uncertainty at maturity and gives Marenica the confidence that the Note can be repaid by issuing a pre-determined number of new Marenica shares. This will provide certainty for present shareholders and new investors seeking to become involved in the development and commercialisation of U-pgradeTM.
Marenica would like to acknowledge the support received from Hanlong, not just with this agreement but throughout its significant involvement with the Company. All parties realised that the Note in its previous form limited the Company accessing capital markets due to the overhang and uncertainty, and that restructuring was necessary to create an investment vehicle attractive to new investors and provide the business with a strong foundation on which to base future capital raisings for the Company to prosper.
Capital Raising
Late in the March quarter Marenica opened a Share Purchase Plan ("SPP") to allow existing eligible Shareholders to subscribe for new fully paid ordinary shares in the Company.
$506,000 was raised from the SPP, easily exceeding the $400,000 underwritten amount and the maximum that could be raised under ASX Listing Rules and Marenica's SPP authority. The SPP was closed on 15 April 2016 as per the schedule.
Reflecting the strong support for Marenica's patented U-pgradeTM technology, offers for additional investments in Marenica were also received from existing and new investors.
As a result, a further $241,008 was raised from share placements at an average subscription price of $0.11 per share ($191,400 at $0.107 and $49,608 at $0.124). The placement was completed under the Company's existing placement capacity.
The placement and the SPP together raised $747,008, well in excess of the target for the capital raising of
$500,000.
The SPP capital raising is intended to fund critical development activities during 2016 including:
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Completing significant bench scale testwork on third party ore;
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Strengthening patent protection of Marenica's core technology (U-pgradeTM);
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Confirming funding for the Pilot Plant;
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Negotiating long term commercialisation agreements with resource owners; and
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Building applications and demand for the U-pgradeTM technology outside of the traditional uranium resource owners.
Marenica expects many of the commercialisation discussions and Pilot Plant plans will reach maturity in 2017.
The strong support for and interest in Marenica is evidence of the difference between the potential value of U-pgradeTM and Marenica's current market capitalisation. It also provides confirmation and significant external confidence that the restructure of the terms of the Note were viewed as a positive development for Marenica.
U-pgradeTM has gained real and tangible momentum with investors and shareholders clearly appreciating the potential value it can offer. The Company has a clear and achievable strategy to participate in the exciting future in store for Uranium producers.
Corporate
On 27 April 2016 the Company issued the following shares:
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A total of 4,728,976 shares at $0.107 each under the SPP.
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A further 1,788,786 shares under the Company's placement capacity at the same price as the SPP.
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1,477,066 shares as approved at the Company's General Meeting of Shareholders held on 5th April 2016. These Shares were issued at various issue prices equal to the monthly volume weighted average share price for Marenica Shares for each relevant month that the payment relates.
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170,349 shares in lieu of fees for consultants out of the Company's placement capacity.
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400,064 shares under the Company's placement capacity at $0.124 per share.
Full details of the purpose of the issues were included in the Appendix 3B lodged on ASX on 27 April 2016. Marenica announced a number of important changes to its Management team during the quarter.
Murray Hill, Chief Executive Officer since May 2012 and the principal architect in the development and
design of the Company's proprietary Uranium concentration process, U-pgradeTM, was appointed to the Board of Marenica as Managing Director. His remuneration remains the same following this appointment to Managing Director.
The Board considered it time to strengthen the financial and commercial management of Marenica in the quest to commercialise U-pgradeTM. To this end two experienced people were appointed to the management team, John Sestan as Chief Commercial Officer, and Riccardo Vittino as Chief Financial Officer. Their roles are part time and tailored to meet the Company's day to day needs while maintaining its low cost and flexible business model. The appointments are timely with increasing interest in U-pgradeTM being evident from resource owners and potential investors.
The Company now has in place the technical and commercial expertise to help realise Marenica's vision to commercialise U-pgradeTM and earn its fair share of the value add that U-pgradeTM can deliver to resource owners.
Tenements
The Group holds the following mineral tenements at the end of the June 2016 quarter.
Namibia - Marenica Minerals (Pty) Ltd (Marenica 75%)
➢ EPL3287
Australia - Marenica Energy Ltd