TIDMPATH
RNS Number : 4105J
Path Investments plc
19 August 2019
Path Investments plc
("Path" or the "Company")
Proposed Acquisition of FineGems Extraction Corporation
("FGE")
Path Investments plc (TIDM: PATH), is pleased to announce that
it has today signed a binding Share Purchase Agreement ("SPA") to
acquire the entire issued share capital of FGE, a company
incorporated in the British Virgin Islands, which, in turn, owns
75% of Jagoda Tourmaline Extraction Limited ("JTE"), a company
incorporated in Zambia, which owns 100% of the Jagoda Licence,
located in Central Zambia, situated at a distance of c. 300
kilometres from Lusaka (the "Proposed Transaction").
Reasons for the Acquisition
Since the Company's IPO in March 2017 the directors of Path have
sought opportunities in line with the stated strategy to rapidly
deploy capital directly in near-production assets with low
execution risk. Businesses with strong cash flow characteristics
have been targeted, which in turn lend themselves to regular cash
distributions to shareholders.
The acquisition of FGE by Path delivers on that strategy,
broadened to include the resources sector in June 2019, which now
brings opportunities in the new energy sector to the company.
-- The transaction gives Path control of the assets in Zambia, a
country where over 80% of exports are resource -based, chiefly
copper, and 1% of total exports are gemstones.
-- Two long-life assets (both manganese ore and tourmaline),
with rapid and simple project execution and manageable scale.
-- Production from both assets occurs within months, from rapid deployment of capital
-- Low risk, with a proven reserve.
-- Multiple upsides, including adjacent license acquisition.
-- Compelling strategic rationale and competitive advantage.
The Manganese Ore Deposit
Trench/rock chip sampling on the Jagoda Licence has identified a
manganese ore deposit with a very high degree of purity, at an
average of 52%. Manganese ("Mn") is on the US Government list of
critical minerals, which identifies the median grade of global ore
deposits of Mn as 31% and the grade of the richest 10% of ore
deposits as greater than 49% Mn. Deposits of this purity have
applications in the battery storage and electric vehicle ("EV")
battery sectors, as well as the ferroalloy, electronics and
chemical sectors. The EV battery sector is forecast to grow at a
compound rate of 8.81% per annum to 2023 (Source: MRFR Forecast
2023), whilst the battery storage sector is expected to grow
thirteenfold to 2024 (Source: Wood Mackenzie Power & Renewables
Global Energy Storage Outlook to 2024).
A Competent Person's Report ("CPR") of the manganese resource
situated on the Jagoda Licence area will be completed, following on
from a recent geological report, which indicated material reserves.
A marketing and sales agreement is being negotiated with an
established metals trading firm, that will enable the Company to
monetise the manganese ore at market prices less transport, storage
costs and marketing commission. Market prices for high purity Mn
ore shipments typically trade at a premium to median grade
shipments.
The Tourmaline Deposits
Tourmaline is a gemstone, naturally occurring in more hues,
shades and nuances than any other gem. Despite its highly
fragmented value chain, the gem is mined chiefly in Brazil and
Africa. Buyers of all the different grades of tourmaline are mainly
from China, India and Singapore, with pink gemstones, in-situ at
Jagoda, being particularly prized. Therefore, demand for the gems
is likely to increase in line with the growth of the emerging
middle classes of China, India and the rest of Asia.
The Gemological Institute of America's coloured gemstone courses
describe the Jagoda mine on the Jagoda License as one of the top
three tourmaline deposits in the world. The mine was historically
mined between 1995 to 2004 to a depth of about 15 metres,
generating sales of 214 million carats of tourmaline. Historical
sales records show that 3% of the resource is high quality, premium
grade tourmalines, including red rubellites, that command a premium
price, in line with emeralds. Jagoda will supply and market over 30
million carats per annum into a global market estimated at 300
million carats per annum, immediately making Jagoda a significant
global player, if not the largest player, in the tourmaline
market.
The tourmaline portion of the Jagoda Redevelopment Project will
extend the existing pit to a depth of 35 metres, to access 425
million carats of measured and indicated tourmaline gemstone
resources, with an additional 195 million carats of inferred
resources, according to a full CPR held for the tourmaline
resource.
Two other tourmaline deposits have been identified on the Jagoda
Licence, with an additional 1.2 billion carats of Tourmaline
gemstone inferred resources. Sales will be conducted through
established coloured gemstone auction processes, with annual sales
expected to progressively reach 35 million carats.
Jagoda License Redevelopment Strategy
The Manganese Deposit can be developed more quickly and with a
lower capital investment than for the Tourmaline Deposits, so the
Jagoda Redevelopment Project has been split into two phases:
-- Phase 1 - manganese ore production to commence within 4
months post completion of the SPA ("Completion"), with first sales
revenue expected by month 6; and
-- Phase 2 - tourmaline production targeted to commence within 8
months post Completion, and first sales expected by month 17.
This step-wise investment approach reduces risk and time to
first dividend in this high value, high margin, low capital
expenditure business. The two mining activities will be physically
separate, but can share certain facilities, infrastructure,
equipment, staff and management as well as corporate overhead.
Details of the Proposed Transaction
The SPA contains a number of conditions to be satisfied prior to
Completion, including a fundraising to finance both phases of the
Jagoda Redevelopment Project. As a final budget and work programme
for the Jagoda Redevelopment Project has not yet been agreed, the
quantum of any such fundraise is, at the date of this announcement,
undetermined.
The Proposed Transaction contemplates the allotment and issue of
shares in Path to the vendors of FGE providing them with a 50%
shareholding in Path (on a fully diluted basis) at Completion in
consideration for the sale of 100% of FGE to Path. No cash payment
will be made by Path to the shareholders of FGE as part of the
consideration for the Proposed Transaction. Completion will be
subject to the issue of a prospectus amongst other things.
Whilst the principal terms of the Proposed Transaction have been
agreed, the acquisition remains subject to due diligence,
completion of the acquisition documentation, completion of the
fundraising and re-listing of the enlarged group on the London
Stock Exchange. The parties intend to proceed as quickly as
possible with the Proposed Transaction. However, there can be no
certainty that it will be completed.
If the Proposed Transaction is completed, it will constitute a
reverse takeover under the Listing Rules. As the Company is unable
to provide full disclosure under Rule 5.6.15 of the Listing Rules,
the Company will continue the suspension of the listing of its
ordinary shares on the Standard Segment of the Official List, and
as traded on the Main Market of London Stock Exchange, pending
publication of a prospectus, setting out details of the Proposed
Transaction and the fundraising.
Further announcements will be made, as appropriate, in due
course.
This announcement contains inside information for the purposes
of Article 7 of Regulation 596/2014.
For further information please contact:
Path Investments plc
Christopher Theis 020 3934 6630
Shard Capital (Broker and Financial Adviser)
Simon Leathers 020 7186 9900
IFC Advisory (Financial PR & IR)
Tim Metcalfe
Heather Armstrong 020 3934 6630
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
ACQSFFFUAFUSESA
(END) Dow Jones Newswires
August 19, 2019 02:00 ET (06:00 GMT)
Path Investments (LSE:PATH)
Gráfica de Acción Histórica
De Mar 2024 a Abr 2024
Path Investments (LSE:PATH)
Gráfica de Acción Histórica
De Abr 2023 a Abr 2024
