TIDMMTR
RNS Number : 3090D
Metal Tiger PLC
25 June 2019
25 June 2019
Metal Tiger plc
("Metal Tiger" or the "Company")
MOD Resources - Offer from Sandfire Resources
Metal Tiger plc (AIM:MTR), the London Stock Exchange AIM listed
investor in strategic natural resource opportunities, is pleased to
note the announcement made by MOD Resources Ltd ("MOD") (ASX/LSE:
MOD) today (the "MOD Announcement"), which sets out the terms of a
conditional recommended offer from Sandfire Resources NL
("Sandfire") (ASX: SFR) for the outstanding shares of MOD (the
"Offer"). The Offer will be made on a share-for-share (scrip) basis
(with a mix and match facility to elect for up to 25% cash) with an
exchange ratio of 0.0664 new Sandfire ordinary shares ("Sandfire
Shares") for every MOD ordinary share ("MOD Shares") held at the
record time, representing an effective offer price of A$0.45 per
share based on the five day VWAP of Sandfire Shares (the "Offer
Price").
Highlights:
-- MOD and Sandfire have executed a binding Scheme
Implementation Deed in relation to a conditional recommended
share-for-share Offer for MOD from ASX listed Sandfire, at the
Offer Price of A$0.45 per share, to be affected by way of a scheme
of arrangement in Australia;
-- 0.0664 Sandfire Shares will be offered in exchange for every
MOD Share held, with MOD shareholders also being offered up to 25%
of the consideration in cash, as part of a mix and match
facility;
-- Offer Price represents a premium of approximately 45% to the
closing price per MOD Share on 24 June 2019 (being the last
practicable business day prior to this announcement) and values
MOD's current issued share capital at A$137m (approximately
GBP74m);
-- Pursuant to the Offer, MOD will exercise its option over
Metal Tiger's 30% interest in Tshukudu Exploration, with an
exercise price of A$10.045m (approximately GBP5.45m) due to Metal
Tiger, to be settled in MOD Shares at the Offer Price, which,
subject to MOD shareholder approval, will be issued prior to the
Scheme becoming effective and acquired by Sandfire pursuant to the
Offer (if not approved by MOD shareholders, the amount due will be
paid in cash);
-- Metal Tiger will retain its right to a 2% net smelter royalty
over the Tshukudu exploration properties (which cover approximately
8,000km(2) of prospective land in the Kalahari Copper Belt) and
which will come into effect following MOD exercising its Tshukudu
Option;
-- Metal Tiger's aggregate interest in MOD (including the
consideration for its 30% interest in Tshukudu, its MOD Shares and
its MOD Options) is valued at A$42.7m (approximately GBP23.2m) at
the Offer Price, compared to an aggregate investment of GBP7.7m in
MOD (including JV expenses and net MOD share purchases since
inception);
-- Subject to there being no superior proposal, Metal Tiger has
committed to vote in favour of the Offer and to elect to receive
all Sandfire Shares as consideration for its interests in MOD,
which, should the Offer complete, is expected to result in Metal
Tiger owning approximately 3.5% of Sandfire's then enlarged share
capital; and
-- Subject to the Offer completing before 15 November 2019,
Sandfire has agreed to use reasonable endeavours to set a record
date for the payment of its full year dividend following completion
of the Offer, thereby allowing MOD shareholders to benefit from
such a dividend.
The full announcement made by MOD today (with the Scheme
Implementation Deed appended in full) can be seen using the
following link:
https://www.modresources.com.au/sites/default/files/asx-announcements/6934645.pdf
Michael McNeilly, Chief Executive Officer of Metal Tiger,
commented:
"We are delighted by today's news which could be
transformational for the Kalahari Copper Belt as well as MTR. MTR
has invested a total of approximately GBP7.7m which means that,
should the Offer complete, MTR will have generated a total return
on investment cost of 3.0x. This is of course excluding the value
of our capped US$2m net smelter royalty over T3, as well as the 2%
uncapped net smelter royalty over the Tshukudu Exploration
properties. We believe that Sandfire has the market position and
means to progress T3 and its surrounding targets, thereby enabling
the release of long-term value in these projects.
"Metal Tiger has long believed that the Kalahari Copper Belt has
the potential to deliver substantial returns on investment and see
significant long-term potential for copper production in the area.
Furthermore, we are delighted to continue to deliver on our
strategy of investing in early stage assets and realising value
from our investments.
"Along with our other investments in the area, we look forward
to becoming a shareholder in Sandfire, where we see significant
potential for value accretion in the Sandfire Share price, and to
potentially receiving meaningful future cash flows from our royalty
interest over the Tshukudu exploration properties."
The Offer will be made by way of a scheme of arrangement under
s411 of the Australian Corporations Act 2001 (Cth) (the "Scheme"),
which is expected to be held in October 2019. The directors of MOD
have unanimously recommended that MOD shareholders vote in favour
of the Scheme (and they have confirmed their present intention to
vote in favour of the Scheme in respect of the approximate 7.02% of
MOD Shares owned by them) in the absence of a superior proposal (as
is defined in the Scheme Implementation Deed) and subject to an
Independent Expert concluding (and continuing to conclude) that the
Scheme is in the best interests of MOD shareholders.
The Offer will be also conditional on, inter alia, MOD
shareholders voting on the terms of the Offer at a court meeting
and general meeting (both to be convened when the Scheme Document
is released, which is expected to be by the end of August 2019),
the resolutions being passed at a MOD Extraordinary General Meeting
(the "MOD EGM"), to be convened in due course, in order to allow
new MOD Shares to be issued to satisfy the exercise of the Tshukudu
Option (including a resolution to allow Metal Tiger to increase its
shareholding in MOD to above the 20% limit for listed companies in
Australia) and receipt of the necessary change of control and
regulatory approvals from the Botswanan Government.
The Scheme Implementation Deed contains standard Australian
provisions, such as "no shop", "no talk", "notification" and
"matching rights" provisions, with a break fee being payable in
certain circumstances. MOD has agreed it will not solicit any
competing proposal or participate in any discussions or
negotiations in relation to any competing proposal (unless failure
to do so would involve a breach of the fiduciary duties of its
Directors).
Metal Tiger currently holds 31,838,393 MOD Shares, representing
approximately 10.48% of MOD's issued share capital and 40,673,566
unquoted options with a nil exercise price (the "MOD Options"). Any
unexercised MOD Options will, as part of the Scheme, be exercised
in full and acquired by Sandfire at the Offer Price pursuant to the
terms of the Scheme.
As announced on 18 July 2018, Metal Tiger entered into an
agreement with MOD to sell its 30% interest in the T3 Project (the
"T3 Sale Agreement") along with a side agreement with MOD in
respect of the new MOD shares issued as consideration (the "Share
and Voting Deed"), pursuant to which Metal Tiger committed, inter
alia, to support MOD board recommendations, including a MOD board
endorsed change of control.
Metal Tiger has entered into an amendment to the Share and
Voting Deed (the "Share and Voting Deed Amendment"), whereby this
commitment has been removed and Metal Tiger is able to vote its MOD
Shares as the Board of Metal Tiger wishes. The Share and Voting
Deed Amendment also removes all other restrictions in terms of
Metal Tiger's holding in MOD that were originally in the deed, save
for, if the Offer is terminated, Metal Tiger is released from its
voting obligations with Sandfire or the exclusivity period in the
Scheme Implementation Deed expires, then for a period of 12 months
Metal Tiger will be subject to an amended version of the clause
relating to disposal of its MOD Shares, whereby Metal Tiger would
be prevented from selling its holding to certain restricted
investors, including private equity and competitors to MOD.
The Board of Metal Tiger is in favour of the Offer and sees
significant value in Sandfire Shares at the exchange ratio being
offered, therefore it has entered into a support agreement with
Sandfire in relation to the Offer (the "Support Agreement"),
whereby it has committed to vote in favour of the Offer in respect
of its entire beneficial holding of MOD Shares and committed to
elect to receive Sandfire Shares (i.e. not elect to receive cash
pursuant to the mix and match facility). In addition, pursuant to
the Support Agreement, Metal Tiger has committed to exercise
sufficient MOD Options such that its shareholding in MOD for the
purposes of voting on the Scheme is 19.9% at the record date.
MOD to exercise its option over Metal Tiger's 30% interest in
the Tshukudu JV
Metal Tiger and MOD have entered into an amendment to the T3
Sale Agreement (the "T3 Sale Agreement Amendment"), which amends
certain terms of the agreement and pursuant to which MOD has
committed to exercise its option over Metal Tiger's 30% interest in
Metal Capital Exploration Limited ("Metal Capital") (the "Tshukudu
Option"), which wholly owns Tshukudu Exploration (Pty) Ltd
("Tshukudu Exploration") in Botswana, with a calculated value of
A$10.045m (approximately GBP5.45m) (the "Tshukudu
Consideration").
Pursuant to the Scheme Implementation Deed, MOD has committed to
exercise the Tshukudu Option prior to the record date for the
Scheme. Pursuant to the terms of the T3 Sale Agreement Amendment,
Metal Tiger's 12.5% maximum shareholding restriction has been
removed and MOD and Metal Tiger have agreed that Metal Tiger will
be issued 22,322,222 MOD Shares (the "Tshukudu Consideration
Shares"), in full settlement of the amount due from MOD to acquire
its 30% interest in Tshukudu Exploration. The ability for MOD to
pay Metal Tiger by way of the Tshukudu Consideration Shares will
fall away if the Scheme is not implemented within six months.
The issue of the Tshukudu Consideration Shares will be subject
to a separate vote of MOD shareholders at the MOD EGM, which MOD
has committed to convene in due course. The resolutions to be voted
on by MOD shareholders at the MOD EGM will include a vote on
whether Metal Tiger's shareholding in MOD can increase to over the
20% prescribed shareholding limit for listed companies in
Australia. Should the resolutions at the MOD EGM not be passed, the
Tshukudu Consideration would be settled in cash, which is in-line
with the original agreement. Subject to obtaining MOD shareholder
approval for them to be issued, the Tshukudu Consideration Shares
would be acquired by Sandfire at the Offer Price pursuant to the
terms of the Scheme.
MOD and Metal Tiger have also entered into an addendum to the JV
Agreement in respect of Tshukudu, whereby MOD has agreed to fund
Tshukudu through to completion of the Offer. However, should the
Offer not complete, Metal Tiger will be required to contribute its
pro rata share of costs between now and the date that the Scheme
Implementation Deed is terminated, in order to avoid any dilution
to Metal Tiger's interest in Metal Capital. In addition, if the
Tshukudu Option is exercised and the Offer does not complete for
any reason, the T3 Sale Agreement Amendment contains provisions
whereby the exercise would be unwound and each party would revert
to its current state with respect to the Tshukudu JV.
The terms of the T3 Sale Agreement remain unchanged in respect
of Metal Tiger's 2% net smelter royalty over the Tshukudu
exploration properties, which will come into effect on exercise of
the Tshukudu Option.
Metal Tiger's election to receive all Sandfire Shares
Metal Tiger has committed to elect to receive Sandfire Shares
(and not to elect to receive cash pursuant to the mix and match
facility) in respect of its holding of MOD Shares at the record
time for the Scheme, the balance of the MOD Options held and the
Tshukudu Consideration (subject to the relevant resolutions being
passed at the MOD EGM). Accordingly, should the Offer be successful
and the resolutions are passed at the MOD EGM, Metal Tiger is
expected to receive Sandfire Shares with an aggregate value of
A$42.7m (approximately GBP23.2m) at the Offer Price, which would
represent approximately 3.5% of Sandfire's then enlarged share
capital.
Sandfire is a Tier 1, high-grade, Australian copper miner, with
a market capitalisation of approximately A$1.1bn as at 24 June 2019
(further information on Sandfire is set out below). Should the
Offer be successful, the Board of Metal Tiger believes that its
resultant shareholding in Sandfire's enlarged share capital will
bring the following benefits:
-- the enlarged Sandfire Group will have a stronger financial
position and the merger is expected to facilitate the accelerated
development of the T3 Project and the exploration potential of
MOD's extensive land interests, where Metal Tiger will retain a 2%
net smelter royalty over any future production from the Tshukudu
exploration projects;
-- Metal Tiger would maintain exposure to the value created to
date in the development of the T3 Project towards commercial
production. It is expected that the enlarged Sandfire Group would
be in a better position to raise the requisite funding to finalise
the development of the T3 Project, thereby reducing the financing
risk associated with the project;
-- The enlarged Sandfire Group will have a more diverse asset
base than MOD and Metal Tiger will gain exposure to the potential
for substantial value creation from Sandfire's high grade copper
development and exploration projects, both in Australia and
overseas;
-- Sandfire has historically paid dividends to its shareholders
and, whilst there can be no guarantee this will continue in the
future, should the Offer be successful, this is expected to
represent a new source of income for Metal Tiger. In addition,
provided the Offer completes before 15 November 2019, Sandfire has
agreed to use reasonable endeavours to set a record date for the
payment of its full year dividend following completion of the
Offer, thereby allowing MOD shareholders to benefit from this
dividend; and
-- Sandfire Shares are more liquid than MOD Shares (the average
daily value traded over the last 90 days was A$5.4m for Sandfire
and A$0.2m for MOD) and the combined group is expected to have
increased media and broking coverage.
About Sandfire
Sandfire Resources NL (ASX: SFR) is a leading Australian copper
producer which operates the high-grade DeGrussa Copper-Gold Mine,
900km north of Perth in Western Australia. Sandfire is focused on
discovering, developing and operating high quality resource assets
capable of delivering substantial returns for shareholders.
Sandfire intends to build on the strong cash flows being generated
at DeGrussa to create the foundations for a diversified Australian
mining company with a sustainable growth plan. Sandfire has a
growing portfolio of exploration interests and joint ventures in
highly prospective mineral provinces around Australia and overseas.
For the year ended 30 June 2018, Sandfire reported revenue of
A$596.2m and net profit of A$120.8m. As at 31 December 2018,
Sandfire reported net assets of A$556.0m.
Further information on Sandfire can be found on its website
(http://www.sandfire.com.au/).
About Tshuduku Exploration
As part of the sale of the T3 Project announced on 18 July 2018,
under the terms of T3 Sale Agreement, the remaining 18 exploration
licences, covering approximately 8,000km(2) of prospective land in
the Kalahari Copper Belt, held by the then existing joint venture
arrangement between the parties, where transferred to Tshukudu
Exploration. The licences transferred to Tshukudu Exploration
comprised all of the exploration interests previously part of the
joint venture between Metal Tiger and MOD, excluding the T3
Project, in order to continue the exploration programme in
Botswana. Following completion of the Offer, Metal Tiger would
retain its right to a 2% net smelter royalty over the Tshukudu
exploration properties, which will become due on exercise of the
Tshukudu Option.
Tshukudu Exploration is wholly owned by Metal Capital, which was
a newly incorporated joint venture company and is currently held by
MOD (70%) and Metal Tiger (30%). As at 31 December 2018, the book
value of Metal Tiger's investment in Metal Exploration was GBP1.7m
and Metal Capital registered no revenue and a loss before tax of
approximately GBP5,000 for the year ended 31 December 2018.
About MOD
MOD Resources is a dual listed (ASX/LSE: MOD) copper exploration
and development company with a dominant land position within the
Kalahari Copper Belt in Botswana. The company is focussed on the
100% MOD owned T3 Copper Project, which is expected to be a
high-margin, low-cost copper mine. In parallel with the development
of the T3 Copper Project, MOD continues its exploration program
across several priority drill targets and within untested areas of
interesting and potentially significant Cu-Zn soil anomalies.
For the year ended 31 December 2018, MOD reported a net loss of
A$9.4m. As at 31 December 2018, MOD reported net assets of
GBP46.7m.
The A$/GBP exchange rate used in this announcement is 0.543
A$/GBP.
For further information on the Company, visit:
www.metaltigerplc.com:
Enquiries:
Tel: +44 (0)20 7099
Michael McNeilly (Chief Executive Officer) 0738
Mark Potter (Chief Investment Officer)
Tel: +44 (0)20 7409
Richard Tulloch Strand Hanson Limited 3494
James Dance (Nominated Adviser)
Jack Botros
Tel: +44 (0)1483
Nick Emerson SI Capital Limited 413 500
(Joint Broker)
Tel: +44 (0)20 7614
Paul Shackleton Arden Partners plc 5900
Steve Douglas (Joint Broker)
Tel: +44 (0)20 3757
Gordon Poole Camarco 4980
James Crothers (Financial PR)
Monique Perks
Notes to Editors:
Metal Tiger plc is listed on the London Stock Exchange AIM
Market ("AIM") with the trading code MTR and invests in high
potential mineral projects with a base, precious and strategic
metals focus.
The Company's target is to deliver a high return for
shareholders by investing in significantly undervalued and/or high
potential opportunities in the mineral exploration and development
sector. The Company's key strategic objective is to ensure the
distribution to shareholders of major returns achieved from
disposals. Metal Tiger has two investment divisions: Direct
Equities and Direct Projects.
The Direct Equities division invests in undervalued natural
resource companies listed on AIM, the ASX and the TSX, which
includes its 10.48% interest in MOD Resources Limited ("MOD").
Through the trading of equities and warrants, Metal Tiger seeks to
generate cash for investment in the Direct Projects division.
Metal Tiger's Direct Projects division is focused on the
development of its key project interests in Botswana, Spain and
Thailand. In Botswana, Metal Tiger, through its JV with MOD and its
interest in Kalahari Metals Limited, has a growing interest in the
large and highly prospective Kalahari copper/silver belt. In Spain,
the Company has tungsten and gold interests in the highly
mineralised Extremadura region. In Thailand, Metal Tiger has
interests in two potentially near-production stage lead/zinc/silver
mines as well as licences, applications and critical historical
data covering antimony, copper, gold, lead, zinc and silver
opportunities.
The Company actively assesses new investment opportunities on an
on-going basis and has access to a diverse pipeline of new
opportunities in the natural resources and mining sectors. For
pipeline opportunities deemed sufficiently attractive, Metal Tiger
may invest in the project or entity by buying publicly listed
shares, by financing privately and/or by entering into a joint
venture.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCFAMATMBATMTL
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June 25, 2019 02:01 ET (06:01 GMT)
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