Alecto will require additional funding in order to proceed with the Proposed Transaction and in order to provide funding to Mowana for the recommencement of production and it is in discussions with potential providers of such working capital financing
Mark Jones, CEO of Alecto Minerals, commented:
"Mowana is a first class copper mining project and I am very excited about the prospect of bringing it into Alecto's portfolio. The proposed acquisition of Mowana will be transformational for Alecto, turning the Group in to a producing miner and materially strengthening its balance sheet.
"I very much look forward to effectively completing our transformation from a greenfield exploration company into a multi-commodity metals producer in Africa in the coming months, and the team has conducted significant work to ensure that this is achievable. Our technical team has worked tirelessly to generate a robust business model that will target early cash flow from both the profitable mining of copper and the management of the operation. Additionally,
our commercial team has secured commitments for funding, so that we can realise the maximum value from copper production and quickly initiate plant improvements at Mowana that are expected to deliver substantial production efficiencies.
"The proposed Mowana acquisition represents an ideal opportunity to achieve a complete transformation of Alecto and we look forward to keeping investors abreast of our progress."
The Proposed Transaction
Alecto has agreed conditionally to acquire 100% of the issued share capital of Cradle for a consideration of £1,000,000 payable in cash (the "Cash Consideration") and the issue of new ordinary shares of 0.01 pence each ("Ordinary Shares") to the Vendor and its Nominees (as defined below) (the "Consideration Shares") that will represent 60% of the issued share capital of Alecto, as enlarged by the Proposed Transaction (including any associated equity fundraising) and any other share issues prior to completion. The final number of Consideration Shares will therefore be determined by, inter alia, the scale of any equity fundraising undertaken by Alecto prior to or in conjunction with the Proposed Transaction. However, as at the date of this announcement, the number of Consideration Shares to be issued is estimated to be 8,793,869,932. Accordingly, at 0.065 pence (being yesterday's closing price per Alecto share), the aggregate consideration to be paid by Alecto is therefore currently estimated to be approximately £6.72m.
The Proposed Transaction would constitute a reverse takeover under the AIM Rules due to its size and nature and will be subject to, inter alia, the publication of an admission document in respect of the enlarged group in accordance with the AIM Rules and shareholder approval.
Furthermore, the AIM Rules require that where a company announces a reverse takeover, trading in its shares on AIM be suspended pending publication of an admission document. Accordingly, trading in Alecto's shares will be suspended from 7.30 a.m. today until an admission document setting out full information on the Proposed Transaction and the enlarged group can be published. It is currently anticipated that an admission document will be published by the end of March 2017.
PenMin and Alecto have conducted considerable technical due diligence over a period of several months, as a result of which the Directors believe that the Proposed Transaction represents an attractive proposition for Alecto and its shareholders. However, the Proposed Transaction remains subject, inter alia, to formal legal, financial and technical due diligence, and to both financing and shareholder and regulatory approval and there can be no certainty as to when and if the Proposed Transaction will complete.
Alecto will require additional funding in order to proceed with the Proposed Transaction and to provide funding to Mowana for the recommencement of production and is in discussions with potential providers of such working capital financing, further details of which are set out below. If such funding cannot be raised, Alecto will not be able to proceed with the Proposed Transaction and will not be able to fund the recommencement of production at Mowana.
Cradle Arc Investments (Pty) Limited
Cradle is a holding company which currently owns 100% of the Mowana copper mine and plant in Botswana through its wholly owned subsidiary, Leboam Holdings (Pty) Limited ("Leboam").
The Mine consists of an open pit operation and a process plant, located within a PaleoProterozoic sedimentary basin of the southern African Shield, in north-east Botswana, that uses standard flotation process technology and has been designed to produce saleable copper concentrates from the treatment of up to 1.2Mtpa of oxide, supergene and sulphide ores. The process plant has two flotation circuits. Minerals are separated first, and tailings from the roughers are sent to an oxide circuit. Most other mineral species are recovered in the oxide flotation process. Concentrates are filtered to recover excess process water. Tailings are dewatered using thickeners and deposited onto a tailings storage facility. Water recovered in the dewatering stages is recycled to the various parts of the plant as appropriate. The plant is in good condition and capable of re-commencing mining using the existing infrastructure.
The plant consists of: