REG - Amur Minerals Corp - Proposed sale of the Kun-Manie Project

Amur MineralsAnnouncement

09/05/2022 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220509:nRSI6944Ka&default-theme=true

RNS Number : 6944K  Amur Minerals Corporation  09 May 2022

9 May 2022

 

AMUR MINERALS CORPORATION

(AIM: AMC)

 

Proposed sale of the Kun-Manie Project for US$ 105 Million

 

Amur Minerals Corporation ("Amur" or the "Company"), the nickel-copper
sulphide mineral exploration and resource development company focused on the
far east of Russia, announces that it, together with its wholly owned
subsidiary Irosta Trading Limited ("Irosta"), has entered into a Share
Purchase Agreement (the "SPA") for the sale of 100% of its interest in
Irosta's wholly owned subsidiary, AO Kun-Manie ("AO KM" or "Kun-Manie").  For
a total consideration of US$105 million, Stanmix Holding Limited (the "Buyer"
or "Stanmix") will purchase AO KM and the benefit of all amounts owed by AO KM
to Amur under intra-group loans (the "Transaction").  AO KM is an exploration
and mining company which holds the Detailed Exploration and Mine Production
mineral licence for the Kun-Manie nickel-copper sulphide project located in
Amur Oblast of the Russian Federation.

 

Highlights:

 

·   The total consideration for the Transaction is US$105 million to be
completed in a series of payments. The Transaction consideration is payable in
US$.

 

·   The divesture price represents premiums of 220% to the Company's market
capitalisation of 5 May 2022 (£26.2 million) and 330% to the current
Kun-Manie book value of US$24.4 million as at 30 June 2021 in Amur's interim
financials. The closing share price on 5 May 2022 was 1.91 pence per share.

 

·    A Fair Market Value ("FMV") of AO KM was derived by Medea Natural
Resources ("MNR") with a range from US$106 million to US$131 million based on
an assessment of international transactions for similar sized nickel
equivalent projects.  Given current volatile market conditions, and that the
project is located within Russia, the Transaction falls at the lower limit of
the independently derived FMV.

 

·    In addition to shareholder approval of the Transaction at a General
Meeting scheduled for 25 May 2022, completion of the Transaction requires the
approval by a newly created Russian Federation government commission per Order
81 dated 1 March 2022 (which specifically addresses change of control of
western held assets) and the consent of the Federal Antimonopoly Service of
Russia.

 

·    The Company and its financial auditor ("BDO") now consider the
Kun-Manie project to be an asset held for sale from an accounting perspective
until a change of control is completed.

 

Payment Terms

 

The divestiture price of US$105 million will be paid as follows:

 

·    Consideration of US$75 million payable by the Buyer to Amur as
follows:

 

o  US$15 million upon Completion of the Transaction (to occur within 60 days
of signing the SPA);

 

o  US$10 million within 12 months of the date of the SPA; and

 

o  US$50 million within 48 months of the date of the SPA.

 

·    Amur has also agreed to assign to the Buyer the benefit of all loans
owed by Kun-Manie to Amur in consideration for US$30 million, payable in ten
annual installments of US$3 million commencing on the anniversary of the date
of completion in 2027.

 

Following the payment of the initial consideration of US$15 million, all
subsequent payments are supported by a personal guarantee by the controller of
the Buyer. Once Kun-Manie enters production the obligations under this
guarantee in respect of the US$30 million payable in respect of loans may be
assigned to Kun-Manie or any party that at that time holds its mining licence.

 

Use of Proceeds

 

The Company intends to use the proceeds from the payment obtained on
Completion for an acquisition via a reverse takeover within six months of
Completion.  Funds from the Completion payment will be utilised to evaluate
and acquire one or more projects located in mining friendly jurisdictions. It
is anticipated that portions of the second and third payments (totaling US$60
million) will be paid as dividends to the shareholders.

 

 

Robin Young, CEO of Amur, commented:

 

"I am delighted to announce the proposed sale of Kun-Manie to Stanmix Holding
Limited for the total consideration of US$105 million, representing a cash
consideration of US$75 million over four years and a further US$30 million
over 10 years commencing in 2027.  The total consideration represents a 220%
premium to the Company's market capitalisation on 5 May 2022 and a 330%
premium to the Kun-Manie book value. Additionally, Amur recently engaged with
independent advisers with respect to the valuation of Kun-Manie which
indicates that US$105 million is a fair and reasonable price for the project.

 

"Stanmix Holding Limited is a company controlled by Vladislav Sviblov, a
Russian entrepreneur and shareholder in a number of mining and industrial
assets, including Highland Gold, one of the largest gold miners in Russia. He
has also completed a number of major Russian mining M&A transactions and
Stamnix Holding Limited is therefore well positioned to continue the
development of Kun-Manie.

 

"The Board and I recommend that shareholders vote in favour of the sale at the
General Meeting that will be held on 25 May 2022, as the total consideration
represents a significant premium to shareholders compared to the current
market capitalisation of the Company. Additionally, in order to move Kun-Manie
into a development and production phase, significant further investment is
required to be made, including significant expenditure on infrastructure and
access roads and there is no guarantee that Amur will be able to source and
execute financing agreements to meet this required spend given the current
volatile market. This also complicated the execution of this transaction.

 

"Following the sale, the Company will continue to be listed on AIM as a Rule
15 cash shell, providing the Board with the ability to identify future
acquisition opportunities, in mining friendly jurisdictions, that have the
potential to deliver value creation. Additionally, the Board anticipates that
portions of the deferred consideration will be paid to shareholders as a
dividend."

 

 

Order 81 and Company Approvals

 

The Transaction is subject to certain conditions occurring within 60 days of
the signing of the SPA ("Completion") including:

 

 

·    the dispatch of a shareholder circular ("Circular") and approval of a
resolution to complete the Transaction at a general meeting of the Company
("General Meeting") scheduled for 25 May 2022;

 

·    the approval under the commission created with regard to the
Presidential Decree No. 81 dated 1 March 2022 having been granted on the terms
required by applicable law, and not having been subsequently revoked, and such
approval not being conditional upon any further actions or omissions by any
party; and

 

·    the consent of the Federal Antimonopoly Service of Russia or its
relevant territorial department to the Transaction being granted and such
consent not being conditional upon any further actions or omissions by any of
the parties to the SPA.

 

Fair Market Value

 

An independent FMV analysis was compiled by MNR in accordance with the
Canadian Institute of Mining, Metallurgy and Petroleum on the Valuation of
Mineral Properties ("CIMVAL") Code for the Valuation of Mineral Properties.
 The evaluation was completed 4 February 2022).

 

Applying the principles of the CIMVAL Code, MNR has used various valuation
methods to determine the value for the Project. The report looked at
valuations of listed companies including resource multiples and also prices
paid for comparable assets.

 

When assessing listed comparables, MNR examine the value of nickel in
resources vs enterprise value, and also the Enterprise Value ("EV") to Net
Present Value ("NPV") if the company in question had published the results of
a technical study (Preliminary Economic Assessment, Preliminary Feasibility
Study, Feasibility Study) where NPVs had been reported. When looking at
M&A transactions and in order to obtain a reasonable number of comparables
in the data set, it evaluated nickel, copper and zinc acquisitions estimated
on a nickel equivalent basis.  Using long term consensus pricing, assuming
100% relative payabilities, recoveries and JORC resource estimates for the
data set, it defined the FMV based on the JORC Mineral Resource estimates for
Kun-Manie.

 

Based on the 30 June 2021 Kun-Manie JORC resource estimate, MNR's valuation
range for the project is from US$106 million to US$131 million, with a
preferred mid-point valuation of US$118 million. Comparison of the FMV to the
total cash offer consideration of US$105 million, and based on similar
international transactions related to nickel projects of the late exploration
stage, the transaction of US$105 million represents a discount to the midpoint
FMV in the order of 11% and is attributable to the project being located
within Russia.

 

Future Strategy and Special Dividend

 

The Transaction is a fundamental disposal pursuant to Rule 15 of the AIM Rules
for Companies. A Circular containing full details of the Transaction will be
published and notified by RNS and a General Meeting is expected to be held on
25 May 2022.

 

If the sale is approved by shareholders and completes in accordance with its
terms (to occur within 60 days of signing of the SPA), the Company would
become a cash shell in accordance with Rule 15 of the AIM Rules and retain
cash balances of approximately US$20 million after paying certain expenses and
any taxes relating to the Transaction.

Following receipt of the first deferred consideration payment of US$10
million, to be paid within one year of the date of the SPA, the Company
intends to pay a special dividend to shareholders of the Company at that time.
A further special dividend may be paid to shareholders of the Company
following receipt of the second deferred consideration payment of US$50
million, within four years of the date of the SPA. The Directors will
determine the size of the special dividend at the relevant time. The Company
has received tax advice that the Transaction is unlikely to attract capital
gains or withholding tax. The Board proposes that the record date and payment
date for the distribution of profits shall be no later than 90 days following
receipt of each deferred consideration payment.

The Directors intend to seek to acquire another company or business in
exchange for the issue of Ordinary Shares in a single transaction (a "reverse
takeover"), subject to Shareholder approval. In considering the Company's
future strategy, the Board will seek to identify opportunities offering the
potential to deliver value creation and returns to Shareholders over the
medium to long-term in the form of capital and / or dividends.

The Company will be required to make an acquisition or acquisitions which
constitute(s) a reverse takeover under AIM Rule 14 on or before the date
falling six months from the completion of the Transaction, or be re-admitted
to trading on AIM as an investing company under AIM Rule 8. Failing that, the
Company's Ordinary Shares would then be suspended from trading on AIM pursuant
to AIM Rule 40. If the Company's shares remain suspended for six months,
admission of the Company's shares will be cancelled.

As at end of H1 2021, the net asset value of the Company was US$27 million.

 

 

About Stanmix Holding Limited

 

Stanmix Holding Limited is a Cyprus incorporated company controlled by
Vladislav Sviblov. Mr Sviblov is a Russian entrepreneur and shareholder in
some major mining and industrial assets including Highland Gold Mining, one of
the largest gold miners in Russia which Mr Sviblov acquired in 2020.  Mr
Sviblov has previously completed two additional major M&A transactions,
namely the acquisition of Trans-Siberian Gold in Kamchatika, and the assets of
the Zoloto Kamchatki group. In April 2022, Highland Gold Mining entered into a
definitive agreement to acquire the Russian assets of New York Stock
Exchange-listed Kinross Gold Corporation.

 

 

Market Abuse Regulation (MAR) Disclosure)

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.

 

 

 Company               Nomad and Broker                   Public Relations

 Amur Minerals Corp.   S.P. Angel Corporate Finance LLP   BlytheRay
 Robin Young CEO       Richard Morrison                   Megan Ray

                       Adam Cowl                          Tim Blythe
 +44 (0) 7981 126 818  +44 (0) 20 3470 0470               +44 (0) 20 7138 3203

 

For additional information on the Company, visit the Company's website,
www.amurminerals.com (http://www.amurminerals.com) .

 

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 (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  DISKZGGKZRZGZZM