REG - Alien Metals Limited - Funding Facility, Board Appointment & Update

Alien MetalsAnnouncement

15/03/2024 07:15

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RNS Number : 0193H  Alien Metals Limited  15 March 2024

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (596/2014/EU) AS THE SAME HAS BEEN RETAINED IN UK LAW AS AMENDED BY THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS (SI 2019/310). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
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Trading Symbols

AIM: UFO

FWB: I3A1

15 March 2024

Alien Metals Ltd

("Alien Metals" or "the Company")

 

Funding Facility of up to A$2 million

 Board Appointment and Project Update

 

Alien Metals (AIM: UFO), a company focused on the exploration and development
of the Hancock iron ore Project ("Hancock Project") and the Pinderi Hills
project in Western Australia, advises that it has entered a short-term funding
facility on terms outlined below and continues to progress project development
across its diversified resource portfolio.

 

Overview

•    A funding package of up to A$2m has been made available through a
convertible loan note (the "Facility" or the "Note") as detailed below.

 

•    The Facility will meet short-term capital requirements and contribute
towards exploration and the ongoing review of strategic funding options to
maximise value for the Company's shareholders and stakeholders, including:

o  Considering various longer-term financing options, including continued
discussions with strategic partners regarding offtake funding, debt, and
equity project funding in connection with the Hancock Project and the Pinderi
Hills PGM, silver and base metals project; and

o  Actively exploring the potential for the sale or joint venture of non-core
assets providing further funding for the Company.

 

•   Appointment of Technical Director, Mr. Rob Mosig, to the Board as a
Non-Executive Director, who brings significant expertise in exploration,
development, and strategic partnering, whilst having direct experience on the
Company's PGM and base metals project in the West Pilbara. Following Rob's
appointment, Mr. Alwyn Vorster has stepped down from the Board to focus on his
other directorships and business commitments. Alwyn will continue to assist
Alien Metals as an advisor to the Board on the Hancock Project development.

•     The Company has further strengthened its iron ore team with the
appointment of an iron ore expert from global mining consulting firm CSA
Global (now ERM). CSA Global has extensive iron ore exploration and
development expertise, including significant roles with Fenix Resources Ltd
(ASX: FEX), which transformed from an iron ore explorer to a producer within
18 months.

 

•     An Advisory Board is to be established, consisting of technical
and mining industry experts to guide the Company on the various strategic
options currently available to Alien Metals for the financing and/or
development of its key assets.

 

•   The project and technical team will continue to focus on the Hancock
Project, progressing exploration to increase the resources and reserves as set
out in the Development Study on (AIM: 8 February 2024)
(https://www.londonstockexchange.com/news-article/UFO/iron-ore-development-study-for-hancock-project/16323155)
.
(https://www.londonstockexchange.com/news-article/UFO/iron-ore-development-study-for-hancock-project/16323155)
The study demonstrated strong economic returns from the Hancock Project, as
outlined below.

Guy Robertson, Executive Director, commented:

"It is our objective to unlock the value of the Hancock iron ore project,
where we have recently received positive interest from potential joint venture
partners following the results of the Development Study.

"The funding announced today will provide additional capital to the Company to
continue the exploration of our projects, while we explore and progress
negotiations with various potential funding partners for the Hancock Project.

"We are delighted to welcome Rob Mosig to the Board who has over 40 years of
experience in mineral exploration projects, including direct experience with
Alien's Pilbara PGM and battery metals projects. The board thanks Alwyn
Vorster for his contribution and ongoing support as a senior adviser,
assisting the Company's strategic options in the iron ore portfolio."

Funding details

The Company is considering various proposals to progress the development of
the Hancock Project, including funding through joint ventures, project
financiers such as offtake funding, debt, and equity funding from strategic
investors and the sale of non-core assets.

As work progresses on the various mining approvals and exploration development
work at the Hancock Project, the Company has finalised the Facility of up to
A$2m with a long-term major shareholder.

The Board is grateful for the support of all its shareholders and believes
there is a significant opportunity to unlock the value of the Company's assets
in the near term.

Information on the Facility

•     Lender: Bennelong Resource Capital Pty Limited, a shareholder in
the Company, with a current holding of 7.2%.

•   Convertible Securities: Convertible securities of up to A$2,000,000
(Convertible Securities), to be drawn in three tranches: Tranche 1:
A$1,000,000, Tranche 2: A$500,000, and Tranche 3: A$500,000.

•     Face Value and Purchase Price: A$1 per Convertible Security.

•     Availability Period for drawdown: 12 months.

•   Commitment Fee and Establishment Fee: 3% of the maximum amount of the
Facility, being A$60,000, and A$10,000 respectively, each to be deducted from
Tranche 1.

•     Commitment Warrants: 25,000,000 warrants to subscribe for one
ordinary share in the capital of the Company ("Ordinary Share"), each with a
strike price of a 25% premium to the 10-day VWAP prior to the date of the
deed, being 0.18p, and an expiry date 36 months after the date of issue. These
Commitment Warrants must be issued to the Lender within three Business Days
after the condition to drawdown of the Facility has been satisfied.

•  Interest: SOFR (Secured Overnight Financing Rate) (being circa 5.3% as
at the date of this announcement) plus 10% per annum, to be paid at the end of
each fiscal quarter.

•     Repayment Date: 12 months or a later date as agreed between the
Company and the Noteholder, unless (i) a party other than the noteholder
acquires 50% or more of the Company's shares or (ii) an event of default
occurs, in which case the notes shall be repayable on the relevant event
occurrence.

•    Conversion Price: the balance due under the Facility (including
accrued interest at the end of each fiscal quarter) can be converted into
Ordinary Shares at the option of the Lender at the lower of:

(a) 85% of the VWAP over the ten trading days prior to the date of the
Facility, converted into $A at the average of the daily £/A$ exchange rate
published by the Reserve Bank of Australia over that period; or

(b) the price per Ordinary Share offered by the Company in any equity capital
raising offered between the date of the deed and the Repayment Date, converted
into A$ at the average of the £/A$ exchange rate published by the Reserve
Bank of Australia over the five business days before settlement of that
raising.

For each Ordinary Share issued to the Lender pursuant to this conversion
right, the Lender will at the same time also be issued one Conversion Warrant
(see below for the terms applicable to each Conversion Warrant).

•     Conversion Warrants: means a warrant to subscribe for one Ordinary
Share expiring 36 months from the date of issue, each of which will have a
strike price equal to the lower of 125% of the VWAP over the then 10 trading
days prior to:

(a)  the date of the deed, being 0.18p; and

(b)  the date on which the respective conversion notice is given to the
Company,

The warrants are transferrable.

•     Repurchase Premium: means an amount equal to:

(a)  the principal sum outstanding paid by the Company to redeem the Notes
(or any number of them); plus

(b)  the percentage that is the same percentage by which the amount of the
VWAP (over the 10 trading days prior to the date of this deed) exceeds the
issue price of Ordinary Shares under the first equity raising of Ordinary
Shares that occurs after the date of the deed (if any) over the ten trading
days prior to the announcement of the capital raising, but not greater than
20%, and in any event (including regardless of whether an equity raising has
occurred) not less than 10%, on the principal sum outstanding.

·    Withdrawal fee: 2% of the facility limit in the event of withdrawal
i.e. where the Company advises the noteholder it does not wish to avail itself
of Tranche 1 and Tranche 2 of the facility, then 2% of Tranche 1 and 2, but
not Tranche 3, unless by agreement.

·   Drawdown structure: Tranche 1 within five days of notice. Tranche 2
subject to the Company announcing its Annual Report for the year ended 31
December 2023 and Tranche 3 is conditional upon agreement between Company and
the Lender of (i) the Company's budget for the financial year ended 31
December 2024 and (ii) a form of security to be granted over the assets of the
Company (or members of its group).

·     Transferability: the notes are freely transferrable.

·     Undertakings of the Company: the Company has given a number of
customary undertakings to the Lender in relation to the operation of its
business, and the provision of financial and management information regularly.
In particular, key decisions will require the approval of the Lender.

It is agreed that the Lender will not convert any amounts outstanding under
the Facility or exercise any Conversion Warrants such the conversion or
exercise, respectively, would result in the Lender together with anyone in
concert with it holding more than 29.9% of the then enlarged share capital of
the Company.

If the Lender's shareholding exceeds 20% of the Company's share capital as a
result of conversion of any amount outstanding under the Facility or following
an exercise of Conversion Warrants, it will negotiate in good faith entering
into a relationship agreement with the Company and the Nominated Adviser from
time to time containing customary provisions and protections as is usual for
an AIM company.

The funds raised under the Facility will be used for general short-term
working capital needs and further progressing towards the grant of a mining
lease in respect of the Hancock Project and further exploration targets
recently identified as set out in the Company's Development Study on (AIM: 8
February 2024)
(https://www.londonstockexchange.com/news-article/UFO/iron-ore-development-study-for-hancock-project/16323155)
.
(https://www.londonstockexchange.com/news-article/UFO/iron-ore-development-study-for-hancock-project/16323155)

 

Company Update and Project Outlook

 

New Board Appointment

The appointment of Technical Director, Rob Mosig, to the board will add
significant exploration, development, and strategic partnering expertise. Rob
will be assisting the Company's management team in prioritising key
exploration and development activities across the Company's portfolio.

Rob was the founding Managing Director of Helix Resources Limited from 1986 to
2006 and the Managing Director of Platina Resources Limited from 2006 to 2018.
Rob was instrumental in introducing Lonmin plc, a major platinum and palladium
producer as a joint venture partner in the Munni Munni project in the late
1990's.

Rob's in-depth knowledge of Western Australia, and in particular the Munni
Munni platinum group metals and Elizabeth Hills Silver projects will be
invaluable as the Company examines options to unlock the value of the
projects.

Rob has over 40 years of experience in the mining and exploration industry
after receiving a Master of Science from Monash University and is a Fellow of
AusIMM.

As a result of the Board changes, Guy Robertson will resume his position as
Executive Chairman on an interim basis, assisting the Company with funding and
financing options, along with the recruitment of additional key management
personnel to progress the Company's projects. At the same time, Elizabeth
Henson, Non-Executive Director, will assume the role of Senior independent
Non-Executive Director.

AIM Rules for Companies: Schedule Two Paragraph (g) Disclosures

As required pursuant to Rule 17 and Schedule Two paragraph (g) of the AIM
Rules for Companies, the Company confirms that Rob Mosig, aged 73, is, save
for Alien Metals, currently a director/partner, or has been a director/partner
in the past five years, of the following companies/partnerships:

 Current Directorships/Partnerships  Past Directorships/Partnerships (held in last five years)
 Javelin Minerals Limited            Future Metals NL
 Mantle Minerals Limited             Rodinia Resources Pty Ltd
 Colter Investment Holdings Pty Ltd  Volcanic Metals Ltd

 

There is no further information to be disclosed pursuant to Rule 17 and
Schedule Two Paragraph (g) of the AIM Rules for Companies.

Project and Permitting Update

The Board believes that the Company's recent Development Study demonstrates
that the Hancock Project has the potential to become an iron ore mine in
Western Australia. The key highlights and developments of the Project, as
more fully described in the Company's announcement on (AIM: 8 February 2024)
include:

·  Execution of the Mining Agreement with the Traditional Owners, Karlka
Nyiyaparli Aboriginal Corporation, paving the way for mining approvals.

·      A significant high-grade (60%+ Fe) resource with the potential to
significantly increase the resource and reserves:

o  MRE of 8.4Mt@ 60% Fe JORC Mineral Resource, including an upgraded
Indicated Resource of 4.5Mt@ 60.2% Fe.

·      Low cost, dig, truck and ship (no beneficiation or processing
required other than crushing)

·      Based on 8Mt of the Mineral Resource being converted to mining
inventory, robust project financials of the base case produced the following:

o  An average annualised EBITDA of A$39m

o  A pre-tax NPV(10) of A$146m and a pre-tax IRR of 133%

o  Production rate of 1.25mtpa

o  Initial development Capital Cost of A$28m

·    Ore processing will utilise a plant capable of producing 1.25Mt to
1.5Mt of 100% fines product per annum on a single shift basis. Sprint capacity
of the plant working on a double shift basis is up to 3.0Mt per annum.

·    Reduction in costs will be achieved through the proximity to the
mining town of Newman. The close vicinity allows the Company to avoid
extensive construction capital costs associated with airstrip, mining camp and
associated services.

·    Provisional export capacity through the Port of Port Hedland has
been secured (MoU executed) and remains on track for final approvals during
the first half of 2024.

The Company has made significant progress on the Hancock Project and is
currently in discussion with various parties regarding the required
development funding. In the interim, the technical team will focus on
securing all relevant approvals required for mining at the same time assessing
strategies with the Company's technical experts to increase the existing
resources and reserves which is expected to significantly increase the value
of the project.

For further information please visit the Company's website
at www.alienmetals.uk (https://www.alienmetals.uk/) or contact:

 

Strand Hanson (Financial and Nominated Adviser)

James Harris / James Dance / Robert Collins   Tel: +44 (0) 207409 3494

 

WH Ireland Ltd (Broker)

Harry Ansell / Katy Mitchell   Tel: +44 (0) 207 220 1666

 

Yellow Jersey (Financial PR)

Charles Goodwin / Shivantha Thambirajah / Soraya Jackson   Tel: +44 (0) 20
3004 9512

 

Notes to Editors

Alien Metals Ltd is a mining exploration and development company listed on the
AIM market of the London Stock Exchange (AIM: UFO). The Company's focus is on
delivering a profitable direct shipping iron ore operation from it 90% Hancock
iron ore project in the central Pilbara region of Western Australia. The
Hancock tenements currently contain a JORC-compliant resource of 8.4Mt iron
ore @ 60% Fe and offers significant exploration upside which is targeted to
deliver a mining operation of 2Mtpa for 10 years.

 

These tenements have direct access to the Great Northern Highway, which
provides an essential export route to export facilities at Port Hedland, from
where more than 500Mt of iron ore is exported annually (30% of global
production). The Company also has an interest in two iron ore exploration
projects Brockman and Vivash, located in the West Pilbara.

 

The Company owns the Elizabeth Hill Silver Project, located near Karratha in
the Pilbara, which consists of the Elizabeth Hill Mining Lease and exploration
tenements surrounding the historical silver mine which has produced some of
Australia's highest-grade silver ore during the late 1990's.  The Company
also owns one of Australia's largest PGM deposits, Munni Munni which hosts a
deposit containing a historic resource of 2.2Moz PGM (Palladium, Platinum,
Gold, and Rhodium).

 

 

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