REG - Argos Resources Ltd - Proposed Sale of Licence PL001 Interests to JHI

Argos ResourcesAnnouncement

15/12/2022 07:16

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RNS Number : 7661J  Argos Resources Ltd  15 December 2022

This announcement contains inside information

 

ARGOS RESOURCES LIMITED

("Argos", the "Group" or "the Company")

Proposed Sale of North Falkland Basin Interests to JHI Associates Inc

Argos Resources Limited (AIM: ARG.L), the Falkland Islands based
exploration company focused on the North Falkland Basin, is pleased to
announce that the Company and JHI Associates Inc. ("JHI"), a private company
incorporated in Ontario, Canada, have entered into an agreement pursuant to
which it is proposed that JHI will acquire Argos' PL001 Production Licence
interests in the North Falkland Basin (the "Transaction").

Highlights

·      JHI has agreed to acquire 100 per cent. of the Group's PL001
Production Licence in the North Falkland Basin, immediately to the west of the
giant Sea Lion oil field, subject to certain conditions.

·      As consideration, JHI is proposing to issue Argos with new shares
in JHI (the "Consideration Shares"), plus a cash payment enabling the Company
to settle transaction and corporate expenses.

·      Following completion of the Transaction, which remains subject to
the conditions set out below, the Group would gain exposure to the Canje
block, offshore Guyana, which is directly adjacent to the prolific Stabroek
block where ExxonMobil has discovered more than 10 billion barrels of oil.

·      The Consideration Shares are expected to represent approximately
9.3 per cent. of the enlarged share capital in JHI following completion of the
Transaction.

·      In the event that the Transaction is completed, the financial
strength of JHI is expected to underpin the extension of Licence PL001 by two
years to 31 December 2024, which was announced by the Company earlier today.

·      The Transaction would diversify both companies' assets and pave
the way for further drilling activity in the coming years.

The Transaction remains subject to the satisfactory completion of mutual due
diligence and the parties entering into a binding Sale & Purchase
Agreement ("SPA"). In the event an SPA is agreed, completion of the
Transaction would also be subject to, inter alia, obtaining the necessary
approvals from the Falkland Islands Government and Secretary of State to the
transfer of Licence PL001 to JHI. Accordingly, there is no certainty that the
Transaction will complete on the terms indicated, or at all.

Next Steps & AIM Rule 15

It is anticipated that the proposed Transaction would constitute a fundamental
change of business pursuant to AIM Rule 15, as the effect of the Transaction
would be to divest the Company of its sole asset. The Transaction would
therefore also require the consent of Argos' shareholders being given in
general meeting. Upon signing an SPA, the Company will issue a further
announcement and publish a circular containing details of the disposal, the
proposed change to the business and convene the general meeting.

Next Steps & AIM Rule 41

In the event all conditions associated with the Transaction are satisfied, the
Group's sole asset would be a minority shareholding in JHI. The Company's
Board of Directors have concluded that in this scenario the costs associated
with maintaining an AIM listing would not be justified. Therefore, following
completion of the Transaction the Board intends to seek cancellation of the
Company's securities from admission to trading on AIM ("Cancellation").
Cancellation would be conditional upon the consent of not less than 75 per
cent. of votes cast by the Company's shareholders given in general meeting.
Following Cancellation, it would be the Directors intention to liquidate the
Company and distribute the Consideration Shares proportionately to Argos'
shareholders on the register at the relevant time.

Ian Thomson, Chairman of Argos commented:

"This is an attractive transaction for both companies, and I strongly
recommend that ARL shareholders vote in favour when asked to do so in a
general meeting. JHI has ample cash reserves which are more than sufficient to
cover the investments required to advance the exploration activities on
Licence PL001 and to meet the financial capability criteria to support a
licence extension to 31 December 2024.

In addition to the North Falkland Basin Licence PL001, the transaction gives
ARL shareholders access to potential upside in the Canje licence, offshore
Guyana, in a basin that has been the highlight of the oil industry for several
years, enjoying prolific success from numerous giant oil discoveries."

Information on JHI

JHI is a private company incorporated in Ontario and headquartered in Toronto,
Canada. JHI owns a 17.5 per cent. interest in the Canje block, offshore
Guyana, operated by Esso Exploration & Production Guyana Ltd. (35 per
cent.), a subsidiary of ExxonMobil Corp. The other partners in the block are
TotalEnergies E&P Guyana BV (35 per cent.) and Mid-Atlantic Oil & Gas
Inc. (12.5 per cent.). The Canje block covers approximately 4,800 square
kilometres and is located approximately 180 to 300 kilometres offshore Guyana
in water depths ranging from 1,700 to 3,000 metres.

The Canje block is a large and significant licence adjacent and immediately
east of multiple ExxonMobil discoveries in the Stabroek block. 6,100 square
kilometres of 3D seismic data has been shot over the Canje block, from which
over three dozen prospects have been mapped in four proven plays in the Lower
Tertiary and Upper Cretaceous confined channels, Lower Cretaceous carbonate
structures and, with the recent drilling of Sapote-1 well and Stabroek
discoveries, the block now offers the opportunity of yet deeper prospectivity.

As of 31 December 2021, JHI's audited financial statements indicate total
gross assets of approximately US$30.7 million, of which approximately US$27
million in cash and investments, and total liabilities of approximately
US$500,000.

 

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