REG - Europa Metals Ltd - Publication of Supplementary Explanatory Statement

Europa MetalsAnnouncement

21/12/2022 07:00

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RNS Number : 3957K  Europa Metals Ltd  21 December 2022

21 December 2022

Europa Metals Ltd

("Europa Metals", the "Company" or the "Group") (AIM, AltX: EUZ)

Publication of Supplementary Explanatory Statement

Europa Metals, the European focused lead-zinc and silver developer, further to
the Company's announcement of 7 December 2022, wishes to provide additional
information that the directors of the Company consider may be beneficial to
Shareholders in deciding whether to approve the resolution to be proposed at
the general meeting scheduled to be held at 11.00 a.m. (UK time) on Friday, 30
December 2022.

The Supplementary Explanatory Statement is set out in full at the end of this
announcement and should be read by Shareholders in its entirety. In addition,
the Supplementary Explanatory Statement, together with the Explanatory
Statement of 7 December 2022, can be viewed and downloaded from the Company's
website via the following link:
http://www.europametals.com/site/aim-rule-261/shareholder-communication
(http://www.europametals.com/site/aim-rule-261/shareholder-communication)

Defined terms used in this announcement have the same meanings as those
ascribed to them in the Notice, Explanatory Statement and/or Supplementary
Explanatory Statement unless the context requires otherwise.

For further information on the Company, please visit www.europametals.com or
contact:

 

Europa Metals Ltd

Dan Smith, Non-Executive Director and Company Secretary (Australia)

T: +61 417 978 955

Myles Campion, Executive Chairman and acting CEO (UK)

T: +44 (0)20 3289 9923

Strand Hanson Limited (Nominated Adviser)

Rory Murphy/Matthew Chandler

T: +44 (0)20 7409 3494

WH Ireland Limited (Broker)

Harry Ansell/Dan Bristowe/Katy Mitchell/Sarah Mather

T: +44 (0)20 7 220 1666

Questco Corporate Advisory Proprietary Limited (JSE Sponsor)

Sharon Owens

T: +27 (11) 011 9212

 

 

 

EUROPA METALS LTD

ACN 097 532 137

SUPPLEMENTARY EXPLANATORY STATEMENT

TO SHAREHOLDERS

 

INTRODUCTION

This Supplementary Explanatory Statement has been prepared for the information
and assistance of Shareholders in connection with the Resolution to be
considered at the General Meeting of the Company's Shareholders to be held at
11.00 a.m. (UK time) / 7.00 p.m. (AWST) on Friday, 30 December 2022 at the
offices of The Ince Group PLC at Aldgate Tower, 2 Leman Street, London E1 8QN.

This Supplementary Explanatory Statement should be read in conjunction with
the Notice of Meeting and Explanatory Statement announced and sent to
Shareholders on 7 December 2022.

Capitalised terms in this Supplementary Explanatory Statement have the
meanings given in the Notice of General Meeting and Explanatory Statement to
Shareholders unless otherwise stated.

The purpose of this Supplementary Explanatory Statement is to provide certain
additional information that the Directors believe may be beneficial to
Shareholders in deciding whether or not to pass the Resolution set out in the
Notice.

 

1. RESOLUTION 1 -  APPROVAL OF THE PROPOSED TRANSACTION WITH DENARIUS

1.1 Denarius

Denarius is a Canadian junior mining company listed on the TSXV (ticker
symbol: DSLV).  It is engaged in the acquisition, exploration, development
and eventual operation of mining projects in high-grade districts, with its
principal focus being on its Lomero-Poyatos Project (the Lomero Project) in
Spain. Denarius also owns the Zancudo and Guia Antigua Projects in Colombia.

Following appropriate due diligence, the Company is satisfied that Denarius
has a suitably qualified board and management team as well as access to
sufficient funds to be able to, inter alia, properly carry out the planned
twin drill programme and complete a preliminary economic assessment to satisfy
the conditions to be able to exercise the First Option, and thereafter
potentially complete a NI 43-101 compliant pre-feasibility study on the Toral
Project and pay US$2 million cash to the Company to be able to exercise the
Second Option.

1.2 Toral Project

On 30 November 2022, the Company announced an updated mineral resource
estimate for the Toral Project.  The Company confirms that there have not
been any material changes to the information set out in that announcement.
Further information on the Toral Project is set out in the announcement and,
if Shareholders are in any doubt about its contents, they are recommended to
seek independent advice.

In the event that Shareholders do not approve the Resolution or Denarius
withdraws from the Option Agreement without substantially completing the
conditions to the exercise of the First Option or Second Option, the Company
would seek to either identify and secure an alternative partner(s) to fund the
Toral Project or raise sufficient funds to progress the project.  Progressing
the Toral Project will include further exploration work and completion of a
pre-feasibility study.

1.3 Loan

The proposed Loan to the Company's wholly-owned subsidiary EMI will be a
participating, or limited recourse, loan governed under Spanish law, which
converts into equity in EMI upon Denarius exercising the First Option.

If the First Option is not exercised, Denarius will be required to assign the
Loan to Europa Metals in return for the payment by the Company of US$1.

Interest of 5 per cent. will accrue on the Loan if EMI generates a profit of
at least €500,000 prior to it being converted into equity.

1.4 JV Agreement and Shareholders' Agreement

In addition to the terms set out in the Explanatory Statement, the JV
Agreement contains the following terms:

(a)        during the option periods, Denarius will, as operator,
prepare work programmes and budgets for approval by the Management Committee.
Europa Metals will initially have one representative on the Management
Committee. A participant may elect not to participate in the work programme
and budget, in which event their interest in the joint venture would be
diluted in accordance with an agreed formula;

(b)        subject to typical exceptions, in the event that a party
wished to transfer its interest in the JV Agreement, there is a right of first
refusal to the other party; and

(c)        disputes under the JV Agreement are to be resolved by
arbitration.

The JV Agreement and Shareholders' Agreement otherwise contain terms
considered customary for a transaction of this nature.

1.5 Directors' recommendation

In unanimously recommending that Shareholders vote in favour of the
Resolution, the Directors have identified and considered the following
principal advantages:

(a)        prior to entering into the Option Agreement, the Company
undertook a lengthy due diligence and sale/joint venture process, and is
satisfied that as a result of this process the consideration receivable under
the Option Agreement is superior to competing potential proposals received and
is at least equal to the value of the interest in the Toral Project being
disposed;

(b)        the Option Agreement enables the Toral Project to be
advanced by Denarius to a completed pre-feasibility study stage without the
Company having to raise further capital for Toral;

(c)        as a condition to exercising the Second Option, Denarius
must pay the Company US$2 million in cash.  As a result of such potential
future cash payment, the Directors believe that the Company would be in an
optimal position to invest in other resource opportunities/projects;

(d)        Denarius' management team is experienced in operating in
Spain and is currently advancing Denarius' Lomero Project towards an economic
study following completion of its Phase 2 exploration programme; and

(e)        the Company will, in the event that Denarius at any time
elects not to proceed with the Option Agreement, have the benefit of the work
undertaken by Denarius, at no cost to the Company, to that point.

In unanimously recommending that Shareholders vote in favour of the
Resolution, the Directors have also had regard to the following disadvantages:

(a)        the Company will no longer manage the Toral Project and,
following exercise of the First Option and potentially the Second Option, will
be a minority shareholder in EMI; and

(b)        the Company could potentially suffer further dilution should
fundraising activity be required if it cannot meet future cash calls in
respect of the Toral Project.

GLOSSARY IN RESPECT OF THE EXPLANATORY STATEMENT AND SUPPLEMENTARY EXPLANATORY
STATEMENT

 

 A$                           means Australian dollars.
 AIM                          means the market of that name operated by the London Stock Exchange plc.
 AIM Rules for Companies      means the AIM Rules for Companies published by London Stock Exchange plc (as
                              amended from time to time).
 Board                        means the current board of directors of the Company.
 Chairman or Chair            means the person appointed to chair the General Meeting.
 Company or Europa Metals     means Europa Metals Ltd ACN 097 532 137.
 Corporations Act             means the Corporations Act 2001 (Cth).
 Corporations Regulations     means the Corporations Regulations 2001 (Cth).
 DI Holders                   means holders of depositary interests in the Company.
 Directors                    means the directors of the Company, being Myles Campion, Evan Kirby and Daniel
                              Smith.
 Explanatory Statement        means the explanatory statement accompanying the Notice of Meeting.
 Form of Instruction          means, for DI Holders, the form of instruction enclosed with the Notice of
                              Meeting.
 General Meeting or Meeting   means the General Meeting of Shareholders convened by the Notice.
 Group                        means the Company and a related body corporate of the Company as defined in
                              section 50 of the Corporations Act and any company in respect of which the
                              Company has voting power of not less than 20%.
 Notice of Meeting or Notice  means the notice of General Meeting including the Explanatory Statement.
 Ordinary Resolution          means a Resolution to be passed by a simple majority of Shareholders (entitled
                              to vote) that vote on the Resolution (in person, by proxy, by attorney or, in
                              the case of a corporate Shareholder, by a corporate representative).
 Proxy Form                   means, for Shareholders, the proxy form enclosed with the Notice of Meeting.
 Resolution                   means the resolution set out in the Notice of Meeting.
 Share                        means an ordinary share in the Company.
 Shareholder                  means a holder of Shares in the Company.
 US$                          means US dollars.

All references to "£", "pence" or "p" are to the lawful currency of the
United Kingdom.

All references to "A$", "$", "c" or "cents" are to the lawful currency of
Australia.

 

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