TIDMEUZ
RNS Number : 8812B
Europa Metals Ltd
05 October 2022
5 October 2022
Europa Metals Ltd
("Europa Metals", the "Company" or the "Group") (AIM, AltX:
EUZ)
Proposed US$6m Farm-In Arrangement with
Denarius Metals Corp. for up to 80% of the Toral Project
Europa Metals, the European focused lead, zinc and silver
developer, is pleased to announce that it has signed a letter of
intent for an option and joint-venture ("JV") arrangement with
Denarius Metals Corp. (TSXV: DSLV; OTCQB: DNRSF) ("Denarius"),
pursuant to which Denarius will have the right to acquire up to an
80% ownership interest in the Company's wholly owned Toral Zn-Pb-Ag
Project (the "Toral Project" or "Toral"), León Province, Northern
Spain in two stages (the "Proposed Transaction").
The Proposed Transaction is subject, inter alia, to confirmatory
due diligence by Denarius, the finalisation and entering into of
definitive documentation (the "Definitive Agreement") and all
requisite shareholder and regulatory approvals as appropriate.
Highlights :
-- Stage 1 Option : Denarius will be afforded the exclusive
right to acquire 51% of the project's intermediate holding company,
Europa Metals Iberia S.L. ("EMI"), or the project's underlying
permit(s), by spending US$4m on the Toral Project over a period of
up to 3 years, comprising:
o US$650,000 in two tranches to be utilised by Europa Metals to
fund completion of a pre-feasibility study and mining licence
application for the Toral Project; and
o A further US$3.35m to be applied towards:
-- approximately 2,000m of confirmatory due dilligence drilling;
and
-- securing and exploring the nearby historic Antonina Zn-Pb
mine area (the "Antonia Mine") and surrounding concessions to form
a proposed expanded JV project.
-- Stage 2 Option : Denarius will be afforded the exclusive
right to acquire an additional 29% interest in EMI, or the
project's underlying permit(s), in return for:
o delivering a further pre-feasibility study demonstrating
positive economic results over the proposed enlarged project,
including the Antonina concessions; and
o making a cash payment of US$2m to Europa Metals, within the
12-month period following exercise of the Stage 1 Option.
Commenting today, Myles Campion, Executive Chairman and acting
CEO of Europa Metals said :
"The Board has for some time been evaluating a range of options
to advance the Toral Project towards development in a manner that
minimises dilution for the Company's shareholders as far as
possible whilst also providing exposure to the significant future
value inherent in the project. It is a credit to our Spanish team
to have progressed and shaped the project to its current stage of
development and we are delighted to be able to seek a definitive
agreement to partner with Denarius and its successful development
team.
"Over the past four years, Europa Metals' team has been working
diligently to progress this high-quality, base metals project in a
world-class mining jurisdiction. This proposed investment by
Denarius is a significant step forward in the advancement of not
only Toral, but also our ambition to secure potential further
concessions in the surrounding region.
"We look forward to welcoming Serafino and the rest of the
Denarius team into the Toral Project and collectively changing the
direction of exploration and mining activity across northern Spain
with the ongoing support of regional governments and
communities."
Serafino Iacono, Executive Chairman and CEO of Denarius,
commented :
"We are extremely pleased to have agreed the commercial
parameters for this proposed farm-in transaction subject, inter
alia, to definitive documentation which will enable Denarius to
lead the development of this high-grade polymetallic project
located in a well-mineralised historic mining area and proactive
jurisdiction that also offers potential further exploration
opportunities. The high-grade concentrates that could be produced
at Toral in the future make this a unique opportunity for Denarius
to seek to develop a high-quality base metal project in the heart
of western Europe.
"Surging demand from industry, combined with increasing
geopolitical risks, have served to increase raw metals prices over
the last year. The production capacity to service the European
automotive and lead-acid battery industry is declining and there is
an urgent need to develop safer and more sustainable alternative
raw material supply systems in the region. The Proposed Transaction
could also provide future strategic synergy with our wholly owned
Lomero-Poyatos polymetallic project in respect of the
commercialisation of concentrates from both potential future
operations."
Details of the Proposed Transaction
The Proposed Transaction involves the formation of an
unincorporated joint-venture between Denarius and Europa Metals for
the development of the Toral Project, which will cover both the
existing investigation permit (the "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"). The Proposed Transaction will involve the grant of a
two-stage option to Denarius by the Company in return for funding
certain planned expenditure and consideration of up to, in
aggregation, US$6m subject to certain conditions precedent, as
described further below.
The first phase of the Proposed Transaction will involve an
option for the acquisition by way of a farm-in by Denarius or its
designee, from EMI, a wholly owned Spanish subsidiary of Europa
Metals, which holds the current Permit in respect of the Toral
Project of a 51% interest in the Toral Project (the "First
Option").
In order to be able to exercise the First Option and acquire a
51% interest in the Toral Project (i) Denarius and Europa Metals
shall agree on a work programme and budget and (ii) Denarius will
thereafter fund a minimum of US$4m of expenditure (including
US$650,000 to be advanced to Europa Metals as to US$100,000 on
signing of the Definitive Agreement and as to US$550,000 on
completion of a potential financing round by Denarius, which is
expected to be concluded by 31 March 2023) towards:
i. a 6-month due diligence twin drilling project of up to 2,000
metres to confirm mineralisation and grades and enable Denarius to
obtain cores from the mineral resource wireframes; and
ii. the completion of a pre-feasibility study for the Toral
Project (including the proposed Antonina Mine concession) to be
presented to the Junta (the "Pre-Feasibility Study").
Notwithstanding the foregoing, Europa Metals and Denarius
understand that a pre-feasibility study on the Toral Project,
acceptable to the Junta must be presented before the end of October
2023 to comply with the obligations under the existing Permit.
The disbursement of the remaining amounts required to exercise
the First Option (a minimum of US$3.35m), will be contingent on the
effective incorporation of the Antonina Mine into the Toral Project
(the "Antonina Condition Precedent"). Denarius will have the right
to terminate the joint-venture in the event that: (i) Denarius
and/or Europa are unable to secure the mineral rights in respect of
the historic Antonina Mine area within the 18-month period
following the date of execution of the Definitive Agreement; or
(ii) if the due diligence twin drilling project finds significant
assay discrepancies with the previously Europa Metals reported
values.
The second phase of the Proposed Transaction will involve an
option to afford Denarius or its designee, the right to acquire an
additional 29% interest in the Toral Project, via EMI, or in the
Permit directly, to take its interest up to 80% in return for: (i)
delivering the Pre-Feasibility Study demonstrating positive
economic results for the proposed enlarged Toral Project and (ii)
making a cash payment of US$2m to Europa Metals, within the
12-month period following the date of exercise of the First Option
(the "Second Option").
The Proposed Transaction is subject, inter alia, to confirmatory
due diligence by Denarius, the finalisation and entering into of a
Definitive Agreement (within the next 60 days unless extended by
the parties) and all requisite shareholder and regulatory
approvals, as appropriate, and there can be no guarantee that the
transaction will be completed.
A further announcement(s) will be made in due course as
appropriate.
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.
About Denarius
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
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