REG - Firering Strategic - Option to acquire interest in ex-Glencore Project

Firering Strategic MineralsAnnouncement

17/08/2023 07:00

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RNS Number : 5646J  Firering Strategic Minerals PLC  17 August 2023

 

Firering Strategic Minerals plc / EPIC: FRG / Market: AIM / Sector: Mining

 

17 August 2023

Firering Strategic Minerals Plc

 ("Firering" or the "Company")

Option to acquire an interest in ex-Glencore Limestone Project

Project is commission ready with the potential to be in production within 12
months

 

Firering, an exploration company focusing on critical minerals, is pleased to
announce that it has signed an option deed ("Option Deed") dated 16 August
2023 to acquire up to 28.33% of Limeco Resources Limited ("Limeco"), the owner
of a Limestone project located 22km west of Lusaka in Zambia for an aggregate
of US$5.1 million across two tranches. The project comprises of a limestone
quarry with an estimated non-JORC compliant mineral resource of more than 73
million tonnes (Source: Golder Associates, October 2017) and a quicklime
production facility with the potential to produce between 500 and 600 tonnes
of quicklime per day ("Project").

Highlights

·    The Option Deed entered into by Firering and Clearglass Investments
Limited ("Clearglass") as co-option holders with the current shareholders of
Limeco ("Vendors") for an option over 33.33% of Limeco ("Option") (Firering
28.33%, Clearglass 5.00%)

·    Quicklime has multiple uses and is an essential reagent widely used
during flotation of copper sulphide minerals.

·    Limeco is in the process of commissioning a Lime Plant in Zambia of
which over US$100m has been invested to date.  The Lime Plant is ready for
immediate commission and includes:

o  Existing limestone quarry with an estimated resource* of 73.7Mt @ 95.3%
CaCO(3).

o  Two stage crushing circuit with an installed primary throughput of 500tph
of limestone, and a lime plant comprising of eight kilns for burning crushed
limestone to produce between 500 and 600 tonnes of quicklime per day.

o  A limestone stockpile of 200,000 tonnes to be used for immediate
production.

o  Existing infrastructure of main access roads, power and water.

o  Advanced discussions ongoing for Lime offtake with major copper producers.

·    Firering will have the option to acquire up to 28.33% of Limeco
across two tranches for an aggregate amount of US$5.1 million.

·    Clearglass to pay a non-refundable US$500k fee for the grant of the
Option, in exchange for up to 5% of Limeco upon exercise of the Option by
Firering, such amount to be made available to Limeco as a loan from the
Vendors to bring the project into operation.

·    On completion of the first tranche of the Option, which is
exercisable by Firering at any time over the next 12 months, Firering will pay
US$2.5 million to the Vendors and receive 17.5% of Limeco's shares, with
Clearglass receiving 2.5%.

·    On completion of the second tranche of the Option, which is
exercisable at any time in the 12 months following exercise of the first
tranche of the Option, Firering will pay US$2.6 million and will receive a
further 10.83% of Limeco's shares, with Clearglass receiving a further 2.5%.

·    Limeco is expected to be profitable and delivering cashflow within
12-24 months with the view of paying dividends to shareholders as soon as
possible.

·    Given the expected positive cashflow, Firering will be assessing debt
financing options to acquire its stake in Limeco.

·    Shareholders' Agreement entered into between Firering, Clearglass and
the Vendors with Firering given the right to appoint either the CEO or CFO of
Limeco with effect from the grant of the Option in order for Firering to
oversee and manage the initial commissioning and commencement of production
through the established lime plant at the Project throughout the period of the
Option.

*The non-JORC compliant resource is based on all available drilling data as at
August 2017. The Mineral Resources estimates are at this stage reported as an
in situ Mineral Resources estimate only, as further work is required in order
to be able to report the Mineral Resources estimates in accordance with the
guiding principles and minimum standards set out in the 2012 Edition of the
"Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves" (the JORC Code) and the Company's internal estimates, which are
also not JORC  compliant, are still subject to verification, validation, and
external review; accordingly, such numbers are provided  for guidance only.
There can be no guarantee the final JORC-compliant resource estimate will
reconcile with these early-stage calculations.

 

The Company intends to commission a JORC compliant report when operations have
been fully commissioned.

 

**Source: Data Bridge Market Research

 

Yuval Cohen, Chief Executive Officer of Firering, said:

"Firering has been keen to add a production asset to its portfolio.  We
believe this is a unique opportunity for Firering to diversify its investments
and secure a stake in an advanced project which is commission ready with the
potential to be in production within a year.

"In 2021, Glencore sold its Mopane copper mine in Zambia to ZCCM Investments
Holdings plc for US$1.5billion resulting in Limeco being surplus to its
requirements. Limeco has been at an effective standstill whilst the above sale
of the Mopane copper mine was being negotiated.

"Firering has wasted no time in establishing a technical team responsible for
the refurbishment of the crushing system. Commissioning and modifications to
the plant consisting of eight kilns will gradually be brought online and is
estimated to produce between 500 and 600 tpd of quicklime.  Initial cashflow
is expected within 12-24 months, which will increase after the plant has
reached steady state production. Should both options be exercised, our 28.33%
stake in Limeco is expected to generate cashflow for Firering.

I am looking forward to keeping the market updated with our achievements at
Limeco".

Proposed Transaction

Firering has been granted the Option, together with Clearglass Investments
Limited ("Clearglass") to acquire an interest in Limeco by Kai Group Ltd
("Kai") and Samfuel Ltd ("Samfuel"), the current shareholders in Limeco. The
total Option is over 33.33% of Limeco shares and is exercisable in two
tranches. If the first tranche of the option is exercised, Firering will
acquire 17.5% of the existing issued share capital of Limeco ("Shares")
together with 17.5% (approximately US$18.3 million) of the shareholder debt
("Debt") (which in total amounted to approximately US$104.5 million as at 31
December 2022)) and Clearglass will acquire 2.5% of the Shares together with
2.5% of the Debt, in consideration for which Firering shall pay to the Vendors
US$2.5 million (the "First Option"). If the second tranche of the option is
exercised, Firering will acquire 10.83% of the Shares, together with 10.83%
(cUS$13.1m) of the Debt and Clearglass will acquire 2.5% of the Shares
together with 2.5% of the Debt, in consideration for which Firering shall pay
to the Vendors US$2.6 million (the "Second Option").

Main terms of the Option Deed

The main terms of the Option Deed are:

·    the First Option and Second Option (together "the Options") are
exercisable at Firering's sole discretion;

·    the First Option may be exercised at any time during the period of 12
months from the date of the Option Deed. If the First Option is not exercised
during this time, the First Option and Second Option will both lapse;

·    the Second Option may be exercised at any time during the period of
12 months after the exercise of the First Option;

·    a non-refundable sum of US$500,000 shall be paid by Clearglass to the
Vendors within 10 business days of the signing of the Option Deed, such amount
to be made available by the Vendors to Limeco to fund the initial development
of the Project;

·    the consideration payable for the First Option is US$2,500,000 which
shall be satisfied in cash by Firering to Kai and Samfuel in equal
proportions;

·    the consideration payable for the Second Option is US$2,600,000 which
shall be satisfied in cash by Firering to Kai and Samfuel in equal
proportions; and

·    Kai, Samfuel and Limeco to provide customary warranties and
undertakings to the Company and Clearglass.

Main terms of the shareholders' agreement

In connection with the Option, and given that Firering and Clearglass will
acquire a shareholding in Limeco if the Option is exercised, Kai, Samfuel,
Firering and Clearglass have entered into a shareholders' agreement (the
"Shareholders' Agreement") to regulate the operation of the business and
affairs of the Company and each of the parties' rights in relation to Limeco.
The main terms of the Shareholders' Agreement are:

·    each of Kai, Samfuel and Firering (the "Major Shareholders") are
entitled to appoint one director to the board of directors of Limeco with
effect from the date of the Option;

·    the board of directors of Limeco shall determine the overall
policies, objectives, operations, business and management of Limeco. However,
certain critical business matters require the consent of either (i) whilst the
Option remains to be exercised, all of the Major Shareholders (notwithstanding
that Firering will not yet hold shares in Limeco), or after exercise of the
Option, shareholder approval of shareholders holding at least 70% of Limeco
Shares, or (ii) approval of at least one director appointed by Firering and
one director appointed by either Kai or Samfuel;

·    Firering shall have the right to nominate either the Chief Executive
Officer or Chief Financial Officer to the Limeco board with effect from the
grant of the Option;

·    the Shareholders' Agreement contains other standard provisions such
as pre-emption rights in respect of the issue and transfer of shares, drag
along and tag along rights, and restrictive covenants relating to competing
businesses and solicitation of staff and customers.

Limeco

Limeco was initially established by Glencore plc due to the shortage of
quicklime in Zambia and the need for quicklime at its Mopane operations in
Zambia. In total, over $US100m has been invested in establishing the limestone
quarry and constructing the current lime plant.  The lime plant consists of a
two stage crushing circuit with an installed primary throughput of 500tph of
limestone, and a quicklime production unit comprising eight kilns for burning
crushed limestone to produce between 500 and 600 tonnes of quicklime per day.

In October 2017, Golder Associates visited Limeco and produced an in-situ
mineral resource estimate of 73.7Mt @ 95.3% CaCO(3) (Source: Golder
Associates, report 1776596-002-R-Rev0, 05 October 2017).

 

First geological mapping and diamond drilling were completed in 2012 when 37
drill holes were drilled with an average depth of 66m for a total of 2,517m.
This was followed by the development of a resource model in 2013.  A further
drilling programme (23 drillholes totalling 1,610m) was then completed
southeast of the drilling done in 2012.  This was followed in 2017 with an
infill drilling programme comprising another 65 drillholes totalling 4,022m.

Limestone production from the quarry commenced in March 2016 and ceased in
January 2017.  Crushed limestone (-90mm +60mm) was fed to only two kilns
during that time.  The majority of the blasted limestone was stockpiled
adjacent to the primary crusher and will serve as initial feedstock when the
kilns are being commissioned.  The circa US$100 million investment was made
via a shareholders' loan into Limeco. This loan (see Limeco Financials section
below) remains outstanding to the current Vendors of Limeco, in proportion to
their shareholdings.

 

Pictures of the project from May 2023

Figure 1: View of plant from primary crusher

 

Figure 2: View of kilns

Quicklime Market

Global quicklime
(https://www.databridgemarketresearch.com/reports/global-quicklime-market)
 market is forecast to gain significant growth for the period 2022 to 2029.
According to a report by Data Bridge Market Research, the market would grow at
a CAGR of 4.2% in the forecast period from 2022 to 2029 is and expected to
reach US$9.8 billion by 2029.

Quicklime, or CaO, is a white powder with a high melting point of 2,600
degrees Celsius. It forms slaked lime when it interacts with water. Quicklime
high calcium
(https://www.databridgemarketresearch.com/reports/global-calcium-propionate-market)
 and dolomitic, which are extensively used as a flux in purifying steel. It
provides durable mortar and plaster and soil stabilization. It also improves
water quality, especially for water softening and arsenic removal. Quicklime
can be applied on various applications, such as building and construction
materials, metallurgy, chemicals, mining, paper, and pulp production among
others.

The major drivers contributing to the growth of the quicklime market include
growing usage of precipitated calcium carbonate and high adoption of quicklime
in building & construction industry. The major restraints which may impact
the global quicklime market growth are volatility in the prices of quicklime
raw materials and complicated process for producing quicklime.

Several opportunities associated with the quicklime market include increasing
demand for iron and steel from different industries and rising mining
activities. In order to fulfil the growing demand for quicklime products in
building and construction
(https://www.databridgemarketresearch.com/reports/u-s-joint-reconstruction-market)
 and water treatment industry, some companies are expanding their production
capacities and entering in agreement across different regions. Besides, strict
government regulations for manufacturing and commercializing of quicklime is
challenging the growth of the market.

Limeco Financials

In its most recent published accounts (financial year ended 31 December 2022)
Limeco posted a loss before and after tax of US$828,052 on turnover of US$0.
As at 31 December 2022 Limeco had net liabilities of US$104,535,988.
Liabilities include US$104,509,835 due to shareholders. If Firering exercises
the First Option and Second Option respectively, it will acquire the right to
17.5% (cUS$18.3m) and 10.83% (cUS$11.3m) of this shareholder debt.

Funding of Option exercise

Limeco is expected to be profitable and generating cashflow within 24
months.  Given the expected cashflow and associated flow of dividends FRG
will be assessing debt financing options to acquire its stake in Limeco.

 

Related Party Transaction

Clearglass is a party to the Option Deed and under the terms of the Option
Deed can acquire up to 5% of the Shares and 5% of the Debt. Clearglass is also
party to the Shareholders' Agreement with Firering.

Clearglass is a Cypriot company (Company number HE351995).  Firering's
Chairman and a substantial shareholder, Youval Rasin, is a director and 40%
shareholder in Clearglass.  Clearglass's majority shareholder, Eli Rasin, is
the uncle of Youval Rasin. Eli Rasin is also the legal and beneficial owner of
Rompartner Limited which is a substantial shareholder of the Company as
defined under the AIM Rules for Companies.

Therefore, the proposed transactions - entering into the Option Deed and the
Shareholders' Agreement - constitute related party transactions under the AIM
Rules for Companies. Accordingly, the directors of the Company (other than
Youval Rasin), who are independent for the purposes of the transaction,
consider, having consulted with the Company's nominated adviser, SPARK
Advisory Partners Limited, that the terms of the Option Deed and the
Shareholders' Agreement are fair and reasonable insofar as the Company's
shareholders are concerned.

For the sake of clarity, given his involvement with Clearglass, Youval Rasin
will not participate in the Board decision to exercise the First Option and
Second Option.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK
VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF ENGLISH
LAW BY VIRTUE OF THE EUROPEAN (WITHDRAWAL) ACT 2018, AS AMENDED.  ON
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

 

*** ENDS ***

 

For further information and updates on Firering's exploration programme, visit
www.fireringplc.com or contact the following:

 

 Firering Strategic Minerals                     Tel: +44 20 7236 1177

 Yuval Cohen

 Vassilios Carellas

 SPARK Advisory Partners Limited                 Tel: +44 20 3368 3550

 Nominated Adviser

 Neil Baldwin / James Keeshan / Adam Dawes
 Optiva Securities Limited                       Tel: +44 20 3137 1903

 Broker

 Christian Dennis / Daniel Ingram
 St Brides Partners Limited                      T: +44 20 7236 1177

 Financial PR                                    E: firering (mailto:firering@stbridespartners.co.uk) @stbridespartners.co.uk

                                               (mailto:firering@stbridespartners.co.uk)
 Ana Ribeiro / Susie Geliher / Isabelle Morris

 

Notes to Editors:

 

Firering Strategic Minerals

Firering Strategic Minerals plc is an AIM-quoted mining company focused on
exploring and developing a portfolio of mines producing critical minerals in
the Côte d'Ivoire focused on Lithium and Tantalum to support the global
transition to net zero emissions. It operates the Atex Lithium-Tantalum
Project in northern Côte d'Ivoire, which is prospective for both lithium and
tantalum.  Firering's main focus is working together with Australian
diversified minerals company Ricca Resources to advance development at Atex
with a view to establishing a maiden lithium resource and then progressing a
Lithium project through to DFS.  Firering is also assessing pilot scale
production of ethically sourced tantalum and niobium to generate early
revenues and support further exploration work.  Should pilot production be
successful, a large-scale Tantalum production facility may be developed, which
will be supported by a debt facility of FCFA 5,057,000,000 (approximately
€7,500,000) currently under negotiation to fund the entire scale-up plan to
develop a portfolio of ethically sourced mineral projects in the Côte
d'Ivoire, supplying EV batteries, high tech electronics and other fast-growing
end markets.

 

Forward-Looking Statements

This announcement may contain some references to forecasts, estimates,
assumptions and other forward-looking statements. Although the Company
believes that its expectations, estimates and forecast outcomes are based on
reasonable assumptions, it can give no assurance that they will be achieved.
They may be affected by a variety of variables and changes in underlying
assumptions that are subject to risk factors associated with the nature of the
business, which could cause actual results to differ materially from those
expressed herein.

 

 

 

 

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