REG - Cadence Minerals PLC - Conditional Sale Agreement of its Stake in LT & LS

Cadence MineralsAnnouncement

30/03/2022 07:00

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RNS Number : 5570G  Cadence Minerals PLC  30 March 2022

Cadence Minerals Plc

 

("Cadence Minerals", "Cadence" or "the Company")

 

Cadence enters into a Conditional Sale Agreement of its 31.5% Equity Stake in
Lithium Technologies and Lithium Supplies

 

Cadence is pleased to announce that along with all the Lithium Technologies
and Lithium Supplies ("LT and LS") shareholders; we have reached an agreement
to sell 100% of the equity of LT and LS.

 

Highlights:

•             Cadence and all LT and LS shareholders have
entered into a conditional agreement to sell 100% of LT and LS for up to
A$21.05 million (£11.82 million)

•             Cadence owns 31.5% of LT and LS and would receive
up to A$6.63 million (£3.72 million)

•             The consideration payable to LT and LS
shareholders will be via a mixture of cash and shares

•             The Buyer will spend a minimum of A$4 million over
three years from the completion of the sale on the exploration of the
Litchfield lithium prospect ("Litchfield") in Northern Australia.

 

Cadence CEO Kiran Morzaria commented: "On behalf of the Cadence board and the
other LT and LS shareholders, we are pleased to report that we have reached a
conditional agreement with a public, unlisted Australian company to sell LT
and LS."

 

"Recent exploration and sampling work at the Litchfield project and the
project's proximity to Core Lithium's assets have led us to believe that
Litchfield has considerable potential to host lithium mineralisation. In
addtion to this the other lithium assets held by LT and LS provides the Buyer
with several attractive targets to explore and develop."

 

"For Cadence, this transaction is, we believe, an excellent balance of risk
and reward. Firstly it provides an initial consideration that more than covers
our book investment. Secondly, by partly paying the consideration in shares in
the buyer and cash payment on milestones we are exposed the the exploration
upside. Lastly, given the commitment of at least A$ 4 million to explore the
primary assets, this mitigates dilution to Cadence shareholders."

 

"Moreover, this transaction will also allow our management team to focus on
delivering additional value through our ongoing involvement in developing our
flagship Amapa Iron Ore project."

 

The consideration for LT and LS is up to A$ 21.05 million (£11.82 million).
Cadence has 31.5% of LT and LS and would receive up to A$ 6.63 (£3.72
million). The Buyer is a public, unlisted company in Australia ("Buyer").

 

LT and LS, through their subsidiaries, are the holders of two prospective
exploration licenses and one exploration application in Australia and a
further seven exploration license applications in Argentina.

 

All of the licenses and applications target prospective hard rock lithium
deposits. The most significant of these is the Litchfield lithium prospect,
which is contiguous to Core Lithium's (ASX: CXO) strategic Finniss Lithium
Project (JORC compliant ore reserves: 7.4Mt @ 1.3% Li2O)2.

 

The acquisition of LT and LS has several conditions precedent, including the
completion of due diligence and the relevant regulatory approval. Assuming
this is successful, the Buyer will acquire 100% of LT and LS through a mixture
of cash and shares partially paid on completion of the sale of LT and LS and
the remainder paid on the achievement of key performance milestones.

 

The net loss of LT and LS were A$1,560 and A$1,306, respectively, for the year
ended 30 June 2021. As such, the net loss attributable to the Company (being
31.5% of LT and LS) was A$903 (£516). As of 31 December 2020, the carrying
values of LT and LS in the Company's balance sheet was approximately £337,000
and £237,000, respectively.

 

 Timing                   Cash / Shares  Shares      Share Price (A$)  Value (A$)  Approximate value to KDNC (A$)
 Completion of Sale       Cash           N/A         N/A               1,050,000   330,750
 Completion of Sale       Shares         45,000,000  0.20              9,000,000   2,835,000
 Milestone One Payment    Cash           N/A         N/A               2,500,000   787,500
 Milestone Two Payment    Cash           N/A         N/A               2,500,000   787,500
 Milestone Three Payment  Cash           N/A         N/A               3,000,000   945,000
 Milestone Four Payment   Cash           N/A         N/A               3,000,000   945,000
 Total                                                                 21,050,000  6,630,750

 

The first three milestone payments are payable once a JORC resource is of not
less than 12 million tonnes of lithium oxide is proved at Litchfield. The
fourth milestone payment is payable on completing a definitive feasibility
study on Litchfield. The Buyer can also pay the milestones payments in equity,
using a defined pricing mechanism.

 

The Buyer has committed to spending at least A$4 million on the exploration of
Litchfield during the three years post the completion of the sale. Should the
milestones not be achieved during this period, the respective consideration
will not be payable.

 

The proceeds received by the Company will be used for reinvestment as per our
investment strategy, which is available here
(https://www.cadenceminerals.com/about/strategy/) . In relation to the shares
received as part of the consideration, the Company will be bound by an escrow
agreement with the Buyer as per the regulatory authorities in Australia and
will be in the form and substance consistent with the ASX Listing Rules. After
the lapse of the escrow arrangement, Cadence will retain or dispose of these
shares as per our investment strategy, which is available here
(https://www.cadenceminerals.com/about/strategy/) .

 

- Ends -

 

 For further information:

Cadence Minerals plc
                      +44 (0) 7879 584153
 Andrew Suckling
 Kiran Morzaria

 WH Ireland Limited (NOMAD & Broker)        +44 (0) 207 220 1666
 James Joyce
 Darshan Patel

 Novum Securities Limited (Joint Broker)    +44 (0) 207 399 9400
 Jon Belliss

 

 

 

Qualified Person

Kiran Morzaria B.Eng. (ACSM), MBA, has reviewed and approved the information
contained in this announcement. Kiran holds a Bachelor of Engineering
(Industrial Geology) from the Camborne School of Mines and an MBA (Finance)
from CASS Business School.

Forward-Looking Statements:

Certain statements in this announcement are or may be deemed to be
forward-looking statements. Forward-looking statements are identified by
their use of terms and phrases such as ''believe'' ''could'' "should"
''envisage'' ''estimate'' ''intend'' ''may'' ''plan'' ''will'' or the negative
of those variations or comparable expressions including references to
assumptions. These forward-looking statements are not based on historical
facts but rather on the Directors' current expectations and assumptions
regarding Cadence Minerals Plc's future growth results of operations
performance, future capital and other expenditures (including the amount.
nature and sources of funding thereof), competitive advantages business
prospects and opportunities. Such forward-looking statements reflect the
Directors' current beliefs and assumptions and are based on information
currently available to the Directors.  Many factors could cause actual
results to differ materially from the results discussed in the forward-looking
statements, including risks associated with vulnerability to general economic
and business conditions, competition environmental and other regulatory
changes actions by governmental authorities, the availability of capital
markets, reliance on key personnel uninsured and underinsured losses and other
factors many of which are beyond the control of Cadence Minerals Plc. Although
any forward-looking statements contained in this announcement are based upon
what the Directors believe to be reasonable assumptions. Cadence Minerals Plc
cannot assure investors that actual results will be consistent with such
forward-looking statements.

 

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