TIDMEUZ
RNS Number : 3304H
Europa Metals Ltd
23 November 2022
23 November 2022
Europa Metals Ltd
("Europa Metals", the "Company" or the "Group") (AIM, AltX:
EUZ)
Definitive Agreement signed with Denarius Metals Corp . in
respect of US$6m Farm-in Arrangement for Toral and Equity
Fundraising of GBP580,000 at 4.5p
Europa Metals, the European focused lead, zinc and silver
developer, is pleased to announce that, further to its announcement
of 5 October 2022, it has entered into a definitive option
agreement (the "Option Agreement") with Denarius Metals Corp.
(TSXV: DSLV; OTCQB: DNRSF) ("Denarius").
Pursuant to the Option Agreement, conditional on, inter alia,
the approval of Europa Metals' shareholders, Denarius will have the
right to acquire in two stages up to an 80 per cent. ownership
interest in the Company's wholly owned Spanish subsidiary, Europa
Metals Iberia S.L. ("EMI"), which holds the Toral Pb, Zn & Ag
project ("Toral" or the "Toral Project"), located in the Province
of Castilla y León, north-west Spain.
In addition, the Company announces that it has conditionally
raised GBP580,000 via a subscription for 12,888,888 new ordinary
shares in the capital of the Company ("Ordinary Shares") (the
"Subscription Shares") at an issue price of 4.5 pence (ZAR0.922)
per share (the " Issue Price ") to an existing supportive
institutional shareholder and certain new investors (the
"Subscription").
The Issue Price represents a premium of approximately 60.7 per
cent. to the closing mid-market price of an Ordinary Share on AIM
of 2.8 pence on 22 November 2022, being the last business day prior
to the date of this announcement.
Highlights :
Option Agreement executed
-- Option Agreement entered into with Denarius pursuant to which
it has been granted an initial option (the "First Option") to
subscribe for 51 per cent. of the share capital of EMI, the 100 per
cent. owned Spanish subsidiary of Europa Metals which holds the
Toral Project, and a further option (the "Second Option") to
potentially acquire an additional 29 per cent. of EMI's share
capital from Europa Metals.
-- The First Option is for an initial exercise period of three
years from the date of the Option Agreement (extendable by 90 days
in certain circumstances) and may be exercised by Denarius
conditional upon, inter alia:
o it assuming operatorship and making expenditures on the Toral
Project of US$4,000,000; and
o completion of a preliminary economic assessment ("43-101 PEA")
compliant with National Instrument 43-101 - Standards of Disclosure
for Mineral Projects ("NI 43-101") on the Toral Project.
o Expenditures to include the completion and submission of a
mining licence application in respect of Toral to the local Junta
by 31 July 2023.
-- The proposed transaction is conditional, inter alia, on the
approval of Europa Metals' shareholders and once obtained an
initial US$100,000 advance will flow to EMI on the business day
following such approval followed by a second aggregate sum of
US$550,000 made in periodic payments at the discretion of
Denarius.
-- The Second Option may be exercised by Denarius within a
period of one year from the date of closing of the First Option
conditional upon:
o exercise of the First Option;
o completion of a NI 43-101 compliant pre-feasibility study (the
"PFS") on the Toral Project at its own cost; and
o payment of US$2,000,000 cash to Europa Metals.
Fundraising at 4.5p
-- Subscription to raise GBP580,000 (before expenses) via the
issue of, in aggregate, 12,888,888 new Ordinary Shares to an
existing supportive institutional shareholder and certain new
investors at 4.5p representing a substantial premium to the
Company's prevailing market share price.
-- The Subscription Shares will represent approximately 13.87
per cent. of the enlarged share capital and the proceeds will,
inter alia, facilitate pursuit of the Company's growth strategy and
augment its working capital.
Commenting today, Myles Campion, Executive Chairman and acting
CEO of Europa Metals said :
"I am delighted to have agreed definitive documentation with our
incoming joint venture partner, Denarius, which, subject to the
approval of Europa Metals' shareholders, secures an initial
US$4,000,000 investment into the Toral Project and a potential
future US$2,000,000 cash payment to the Company. The first year
will see an application being made for a mining licence at Toral,
thereby moving the project along the path towards potential future
development. In subsequent years we will seek to expand the current
footprint of the project to encompass the nearby historic
third-party Antonina mine and delineate further high grade mineral
resources, following the recent success of drillholes TOD-041 and
TOD-042, at Toral.
"I am also pleased to have completed a capital raising of
GBP580,000 at a substantial premium to the prevailing market share
price, which augments our working capital position and clearly
demonstrates confidence in the Toral project and our strategic
direction in the current uncertain market conditions."
Key Terms of the Definitive Agreements
The proposed transaction involves the formation of a joint
venture via EMI between Denarius and Europa Metals for the
development of Toral, which covers both the project's existing and
any expanded investigation permit area and potentially the adjacent
historic Antonina Mine area, the former licence for which is
currently terminated by the Junta de Castilla y León (the "Junta").
In return for funding certain expenditure on the project and
consideration of up to, in aggregate, US$6,000,000, Denarius will
be afforded the exclusive right to acquire up to an 80 per cent.
interest in the Toral Project by way of a two-stage option
arrangement.
Option Agreement
Pursuant to the Option Agreement, Denarius has accordingly been
granted an initial option for a period of three years from the date
of the Option Agreement (the "First Option Period") to subscribe
for 51 per cent. of EMI's share capital and a second option for a
period of one year from the closing of the First Option (the
"Second Option Period") to potentially acquire an additional 29 per
cent. of EMI's share capital (the "Second Option") from Europa
Metals.
First Option
The First Option may be exercised by Denarius conditional on,
inter alia:
-- it assuming operatorship and making expenditures on the Toral Project of US$4,000,000; and
-- the completion of the 43-101 PEA.
In each case, prior to the expiry of the First Option Period,
failing which the First Option will lapse.
Denarius will advance the US$4,000,000 by way of a loan (the
"Loan") to EMI (the "First Option Expenditure") and on satisfaction
of all of the conditions of the First Option, Denarius shall be
entitled to capitalise the Loan up to the amount of the First
Option Expenditure for the issue to it of 51 per cent. of the
shares in EMI. In the event that the First Option is not exercised,
Denarius shall be required to assign the loan to Europa Metals for
US$1.
Denarius will have the ability to extend the term of the First
Option Period for a further 90 days if the 43-101 PEA is
significantly advanced and Denarius continues to make commercially
reasonable efforts to meet the conditions to exercise the First
Option.
The First Option Expenditure shall be made in accordance with
the agreed high level budget for the Toral Project which requires:
(i) a minimum of US$1,000,000 of the total of the First Option
Expenditure to be spent prior to the first anniversary of the date
of the Option Agreement, including in respect of a mining licence
application in respect of the Toral Project to be submitted to the
Junta by 31 July 2023; (ii) a minimum of US$2,000,000 of the total
of the First Option Expenditure to be spent prior to the second
anniversary of the date of the Option Agreement; and (iii) the full
amount of the First Option Expenditure to be spent prior to the
third anniversary of the date of the Option Agreement (extendable
by 90 days in certain circumstances).
Denarius shall advance US$100,000 on the business day following
the required shareholder approval being obtained and a further sum
of US$550,000 in periodic payments at the discretion of
Denarius.
Accordingly, the consideration received by the Company in
respect of the First Option will all be utilised on expenditure to
advance the Toral Project.
Second Option
The Second Option may be exercised by Denarius conditional
on:
-- the exercise of the First Option;
-- completion of the PFS at the cost of Denarius; and
-- payment of US$2,000,000 to Europa Metals in satisfaction of
the exercise price for the Second Option (the "Second Option
Exercise Price").
In each case prior to the expiry of the Second Option Period.
The US$2,000,000 consideration receivable in respect of the Second
Option, will be utilised to pursue the Company's stated growth
strategy and provide additional working capital for the group.
In the event that only the First Option is exercised by
Denarius, Denarius has undertaken to transfer to Europa Metals,
upon request by Europa Metals, such number of shares in EMI
representing two per cent. of the issued share capital such that
the Company would own 51 per cent. of the issued share capital of
EMI thereafter.
The proposed transaction (save for the Subscription), which is
unanimously recommended by Europa Metals' board, is subject, inter
alia, to the approval of the Company's shareholders pursuant to the
requirements of Rule 15 of the AIM Rules for Companies (the "AIM
Rules"). Accordingly, the Company will shortly make a further
announcement with respect to the publication of a circular
incorporating a formal notice of a general meeting with regards to
seeking such shareholder approval which, once posted to
shareholders, will also be made available on the Company's website
at: www.europametals.com .
The Option Agreement contains representations, warranties and
indemnities given by the Company and EMI to Denarius, in relation
to title and capacity to the shares in EMI, legal title to the
Toral Project and environmental, of the type commonly found in such
agreements. Such representations, warranties and indemnities are
repeated on exercise of the First Option and the Second Option. The
Company's maximum aggregate liability under such warranties and
indemnities is limited to an amount equal to the aggregate of the
First Option Expenditure and the Second Option Exercise Price (to
the extent such amounts are expended).
In addition, the Option Agreement can be terminated by a party
if the other party is in material breach of the terms of the Option
Agreement. Denarius may terminate the Option Agreement at any time
by providing the Company and EMI with at least sixty days' prior
notice in writing.
The Option Agreement is governed by the laws of the Province of
Ontario and the federal Laws of Canada.
Joint Venture Agreement and Shareholders' Agreement
On exercise of the First Option, the parties shall also enter
into a joint venture agreement (the "JV Agreement") and a
shareholders' agreement (the "Shareholders' Agreement"). The JV
Agreement sets out the terms of the appointment of the management
committee to be established (the "Management Committee") to
determine the overall policies, objectives, procedures and actions
in respect of the joint venture as regards its business including
the Toral Project (the "Joint Venture"). The Management Committee
shall initially consist of three representatives appointed by
Denarius and one representative appointed by the Company. The board
of directors of EMI shall reflect the decisions of the Management
Committee in all respects.
A shareholder holding less than 50 per cent. of the issued share
capital of EMI (a "Minority Shareholder") shall have the right to
appoint a representative to the Management Committee for such time
as its shareholding in EMI does not fall below 10 per cent. Any
shareholder holding more than 50 per cent. of the issued share
capital of EMI (a "Majority Shareholder") shall be entitled to
appoint three representatives to the Management Committee and shall
have the right to be appointed as operator.
The quorum for any meeting of the Management Committee shall
consist of at least three representatives, one of whom must be a
representative appointed by the Company (subject to it holding at
least 10 per cent. of the issued share capital in EMI). Certain
decisions of the Management Committee require the prior written
consent of the Company and Denarius including, but not limited
to:
(a) creating, or permitting, any encumbrances over any assets comprising the Toral Project;
(b) abandoning, selling or otherwise disposing of substantially
all of the assets comprising the Toral Project or any material
portion of it; or
(c) relinquishing or altering the terms of the Toral permit(s)
(other than in connection with a renewal of the Toral
permit(s)).
The JV Agreement is governed by the laws of the Province of
Ontario and the federal Laws of Canada.
The Shareholders' Agreement to be entered into between the
Company, EMI and Denarius sets out certain obligations and
requirements as to the management of EMI. The board of directors of
EMI (the "EMI Board") shall consist of four directors. A Majority
Shareholder shall have the right to appoint three directors and a
Minority Shareholder shall have the right to appoint one director.
The quorum for meetings of the EMI Board must include one director
appointed by the Minority Shareholder. EMI shall not issue any
shares without the prior written consent of the Company and
Denarius.
The Shareholders' Agreement is governed by Spanish law.
For its financial year ended 30 June 2022, EMI reported an
unaudited profit before tax of approximately EUR100,000.
Details of the Subscription and Related Party Transaction
The Company has raised GBP580,000 (before expenses) via a
subscription for, in aggregate, 12,888,888 new Ordinary Shares at
an Issue Price of 4.5 pence per share to an existing supportive
institutional shareholder and certain new investors. The
Subscription is conditional on admission of the Subscription Shares
to trading on AIM and, following admission, the Subscription Shares
will represent, in aggregate, approximately 13.87 per cent. of the
Company's enlarged issued share capital.
The Subscription Shares will be issued under the Company's
pre-existing share capital authorities, will be issued fully paid
and will rank pari passu in all respects with the Company's
existing Ordinary Shares. The Issue Price represents a premium of
approximately 60.7 per cent. to the closing mid-market price of an
Ordinary Share on AIM of 2.8 pence on 22 November 2022, being the
last business day prior to the date of this announcement.
The net proceeds from the Subscription will be utilised towards
progressing he Company's existing strategy to further de-risk and
progress the project, the continued identification and evaluation
of additional projects and potential transaction opportunities to
potentially expand the Company's portfolio and for the Company's
general working capital requirements.
Deutsche Balaton Aktiengesellschaft ("DBA") is investing
GBP330,000, via the Subscription, for 7,333,333 new Ordinary Shares
and, as an existing substantial shareholder in the Company, is
considered to be a related party under the AIM Rules. The
participation of DBA in the Subscription is therefore deemed to
constitute a related party transaction pursuant to Rule 13 of the
AIM Rules. Accordingly, the independent directors of Europa Metals,
being Myles Campion, Evan Kirby and Daniel Smith consider, having
consulted with Strand Hanson Limited, the Company's Nominated
Adviser, that the terms of DBA's participation in the Subscription
are fair and reasonable insofar as the Company's shareholders are
concerned.
Admission to trading
Application will be made to the London Stock Exchange for
admission of the 12,888,888 Subscription Shares to trading on AIM
("Admission") and to the Johannesburg Stock Exchange for quotation
on AltX. It is expected that Admission will become effective and
dealings in the Subscription Shares will commence at 8.00 a.m. on
or around 28 November 2022.
Following Admission, the Company's total issued ordinary share
capital will comprise 92,925,802 Ordinary Shares with voting
rights. This figure may be used by shareholders in the Company as
the denominator for the calculations by which they will determine
if they are required to notify their interest in, or a change to
their interest in, the Company's share capital pursuant to the
Company's constitution.
For further information on the Company, please visit
www.europametals.com or contact:
Europa Metals Ltd
Dan Smith, Non-Executive Director and Company Secretary
(Australia)
T: +61 417 978 955
Myles Campion, Executive Chairman and acting CEO (UK)
T: +44 (0)20 3289 9923
Strand Hanson Limited (Nominated Adviser)
Rory Murphy/Matthew Chandler
T: +44 (0)20 7409 3494
WH Ireland Limited (Broker)
Harry Ansell/Dan Bristowe/Katy Mitchell/Sarah Mather
T: +44 (0)20 7220 1666
Questco Corporate Advisory Proprietary Limited (JSE Sponsor)
Sharon Owens
T: +27 (11) 011 9212
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018, as amended.
Notes to Editors :
Denarius is a Canadian junior company engaged in the
acquisition, exploration, development and eventual operation of
mining projects in high-grade districts, with its principal focus
on the Lomero-Poyatos Project in Spain. The Company also owns the
Zancudo and Guia Antigua Projects in Colombia. Additional
information on Denarius can be found on its website at
www.denariusmetals.com and by reviewing its profile on SEDAR at
www.sedar.com.
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END
DRLBJBFTMTJTMAT
(END) Dow Jones Newswires
November 23, 2022 02:00 ET (07:00 GMT)
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