Power Metal Resources PLC (LON:POW) the AIM listed metals exploration and development company is pleased to announce an agreement has been reached for the acquisition of a 75% strategic interest in a UK special acquisition vehicle which is to acquire outright First Development Resources (Pty) Limited (“FDR Australia”), an Australian private company.
FDR Australia holds a portfolio of copper-gold focused exploration interests in the Paterson Province in the eastern Pilbara Region of Western Australia. The acquisition of FDR Australia will not be undertaken until the Ripon Hills Project has been successfully transferred into FDR Australia and a granted exploration licence has been received by FDR Australia in respect of the Wallal Project. Further announcements will be made by the Company as appropriate.
CHIEF EXECUTIVE OFFICER STATEMENT
Paul Johnson Chief Executive Officer of Power Metal Resources plc commented:
“The acquisition announced today provides Power Metal with a strategic interest in exploration properties in the Paterson Province, Western Australia. This region has seen considerable interest in recent years following the Havieron discovery by Greatland Gold plc and Winu discovery by Rio Tinto.
The level of interest in the region has intensified of late and the opportunity to secure a high-quality strategic licence footprint is diminishing. We needed to act to secure Power Metal’s seat at the “Paterson” table.
We now have a seat at that table, but this is Power Metal and our policy is to carve out innovative pathways for value generation with each new transaction.
Through this acquisition we are creating a new strategic Australian copper-gold exploration vehicle with a view to listing this special acquisition vehicle on the London capital markets at the earliest opportunity.
There is a clear opportunity in the Paterson Province, something we intend to pursue with considerable vigour and as you will see below, we are aligning Power Metal with an experienced Australian team to support the business in the run up to the listing of the special acquisition vehicle.
For myself, and Andrew Bell Chairman of Power Metal, this transaction is reminiscent of the financing and restructuring of Greatland Gold we coordinated in April 2016, which rejuvenated that vehicle and provided the backdrop to the dramatic delivery for shareholders we saw there. It does Power Metal no harm if we aspire to achieve another positive outcome with this new opportunity.”
This acquisition agreement (the “Agreement”) underlying this transaction was finalised on 27 April 2021 and was based in part on an option agreement (the “Option”) announced by the Company on 19 January 2021 and which may be viewed through the following link:
After signing of the original option agreement which focused on two exploration projects being the Wallal Project and the Ripon Hills Project, three additional exploration properties became available for acquisition which would significantly enhance the overall exploration licence footprint.
Discussions with FDR Australia and associated project vendors ensued and due diligence work was undertaken on the wider exploration package. The discussions were extended to the consider the strategic opportunity to work together and potentially create a new London listed Australian exploration vehicle, focused on the Paterson Province, in Western Australia.
To secure the strategic footprint in one move it was necessary to pick apart the original option agreement and reconstruct the transaction.
The outcome of this is that Power Metal Resources will acquire an effective 75% interest in FDR Australia. This interest will be held through a 75% interest in a newly created UK private company, (“FDR UK”), which will ultimately hold 100% of the issued share capital of FDR Australia. The remainder 25% of FDR UK will be held by the vendors and associated parties, as outlined below.
FDR Australia’s business interests are outlined below and include five exploration projects including one granted exploration licence (the Ripon Hills Project) and four licence applications (the Wallal, Wallal West 1, Wallal West 2 and Braeside West Projects) .
The intention is to list FDR UK on the UK capital markets, on the most expedited pathway possible.
THE PATERSON PROVINCE
The Paterson Province is considered highly prospective for gold-copper and base metal mineral systems and is currently of particular focus for resource companies with a significant level of exploration activity underway across the region.
This level of interest follows recent high-profile copper and gold discoveries by Rio Tinto at their Winu property1 and by Greatland Gold plc (LON:GGP) with the Havieron discovery2. Notably, several major groups in search of Tier 1 deposits have entered into joint-venture / farm-in agreements with junior explorers to expedite exploratory work.
The area also has developed mine and processing infrastructure due to the presence of established mining operations, including Newcrest Mining’s Telfer Mine3 and the X-Metals Nifty Copper Operation4 (planned as a mine restart).
FDR AUSTRALIA AND ITS BUSINESS INTERESTS
FDR Australia currently holds five project interests (the “FDR Australia Interests”) as follows:
The Wallal Project - E45/5816 – Licence Application
E45/5816, the Wallal Project is an exploration licence application held outright by FDR Australia and covering 390km2 in the western quadrant of the Paterson Province with a favourable lithospheric setting for substantial base metal deposits consistent with Rio Tinto’s (ASX: RIO) Winu discovery – predominantly copper-gold-silver with a JORC compliant Inferred Resource of 503Mt @ 0.45% Cu equivalent.
Ripon Hills Project - E45/5088 – Granted Exploration Licence
E45/5088, the Ripon Hills Project is a granted exploration licence covering 42km²prospective for base metal-gold mineralisation and is proximal to Rumble Resources’ (ASX: RTR) Braeside Project where significant new base metal discoveries have been made5.
The Ripon Hills Project will be transferred at nil cost to FDR from current owner Great Sandy Pty Ltd (“Great Sandy”) a private Australian Company (the consideration for the transfer will be satisfied by Great Sandy nominees receiving a proportion of consideration outlined below.) (Note: The mineral rights for manganese and iron are excluded for the Ripon Hills Project.)
Wallal West 1 Project - E45/5853 – Licence Application
E45/5853, the Wallal West 1 Project, is an exploration licence application covering 96km² prospective for base metals and gold.
The ownership rights to the Wallal West 1 Project will be transferred at nil cost to FDR Australia from current owner Pardoo Resources Pty Ltd (“Pardoo”) a private Australian Company (the consideration for the transfer will be satisfied by Pardoo nominees receiving a proportion of consideration outlined below”.)
Wallal West 2 Project - E45/5880 – Licence Application
E45/5880 the Wallal West 2 Project, is an exploration licence application covering 86km² prospective for base metals and gold.
The ownership rights to the Wallal West 2 Project will be transferred at nil cost to FDR Australia from current owner Pardoo (the consideration for the transfer will be satisfied by Pardoo nominees receiving a proportion of consideration outlined below”.)
Braeside West Project - E45/5854 – Licence Application
E45/5854 the Braeside West Project, is an exploration licence application covering 137km² prospective for copper-lead-zinc and manganese mineralisation.
The ownership rights to the Braemore West Project will be transferred at nil cost to FDR Australia from current owner Pardoo (the consideration for the transfer will be satisfied by Pardoo nominees receiving a proportion of consideration outlined below”.) (Note: The mineral rights for manganese and iron are excluded for the Braeside West Project.)
FDR Australia Additional Disclosure
In the 6 months ended 31 December 2020 FDR Australia made an operating loss of A$18,914 (circa £10,707) and as at 31 December 2020 FDR had net liabilities of A$19,939 (circa £11,287).
The Company believe that securing a footprint in the prospective Paterson Province in Western Australia has the potential to deliver significant value for shareholders.
While the area has excellent mining infrastructure, there are many parts of the region – highly prospective for copper-gold mineralisation – which are under-explored. In turn, this significantly enhances the upside potential as much of the area is masked by surficial cover.
Using an array of modern exploration techniques, comprising reconciling geophysics and geochemical surveys, the exploration would seek to efficiently and cost effectively identify priority test-drill targets.
TRANSACTION TERMS – ACQUISITION OF FDR AUSTRALIA
Power Metal will, subject to local regulatory approvals and through a new special acquisition vehicle acquire an effective 75% interest in FDR Australia, an Australian private company holding five exploration projects.
The 75% interest will be held through a special acquisition vehicle, namely a new UK private company (FDR UK) which will acquire a 100% interest in FDR Australia and in which Power Metal will hold a 75% interest.
The intention is to list FDR UK on a recognised stock exchange in the London capital markets at the earliest opportunity.
The vendors of the FDR Australia interests include the shareholders of FDR Australia and various third parties with interests in the exploration properties included in this announcement (the “Vendors”). The Vendors will hold the remaining 25% interest in FDR UK.
In addition to the 25% holding in FDR UK the consideration payable to the Vendors and related transaction terms are as follows:
In addition, subject to the acquisition of FDR Australia by FDR UK:
COMPETENT PERSON STATEMENT
The technical information contained in this disclosure has been read and approved by Mr Nick O'Reilly (MSc, DIC, MIMMM, MAusIMM, FGS), who is a qualified geologist and acts as the Competent Person under the AIM Rules - Note for Mining and Oil & Gas Companies. Mr O'Reilly is a Principal consultant working for Mining Analyst Consulting Ltd which has been retained by Power Metal Resources PLC to provide technical support.
Source 1: Rio Tinto PLC announcement https://www.riotinto.com/en/news/releases/2020/Rio-Tinto-reveals-maiden-Resource-at-Winu-and-new-discovery
Source 2: Greatland Gold PLC announcement https://polaris.brighterir.com/public/greatland_gold/news/rns/story/wkqm9ow
Source 3: Newcrest Mining Ltd : https://www.newcrest.com/our-assets/telfer
Source 4: Metals X Ltd: https://www.metalsx.com.au/copper/
Source 5 : Rumble Resources Ltd: http://rumbleresources.com.au/braeside_project.php
28 April 2021