REG - Power Metal Res. - Financing and Proposed Formation of Uranium JV

Power Metal ResourcesAnnouncement

03/06/2024 07:00

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RNS Number : 7458Q  Power Metal Resources PLC  03 June 2024

3 June 2024

 

Power Metal Resources PLC

("Power Metal" or the "Company")

Strategic Financing and Proposed Formation of Uranium-Focused Joint Venture

Power Metal Resources PLC (AIM:POW, OTCQB:POWMF), the London-listed
exploration company with a global project portfolio, is pleased to announce
that it has entered into a legally binding subscription agreement (the
"Subscription") with  ACAM LP ("ACAM" or the "Investor") pursuant to which it
will invest £2 million in Power Metal by way of a loan note (the "Notes"),
with attaching warrants (the "Warrants").

Furthermore, the Company has entered into an eight-week exclusivity period and
a non-binding term sheet with ACAM with the intention of forming a
uranium-focused joint venture involving Power Metal's entire portfolio of
uranium licences (the "Joint Venture").

Highlights:

·    ACAM has entered into a legally binding Subscription agreement to
purchase Notes with attaching Warrants for £2 million. The Notes have a term
of five years, bearing interest at 10% per annum, payable at the option of the
Company in cash or through the issuance of new ordinary shares in the Company
("Shares"). The 13,333,333 Warrants are exercisable for five years at a price
of 15 pence per Share.

·    ACAM is a natural resource focused Limited Partnership advised by S
and F Investment Advisors Limited ("S&F").

·    Non-Binding term sheet signed with ACAM, pursuant to which the
parties intend to enter into a Uranium-focused joint venture involving Power
Metal's entire portfolio of uranium licences.

·    Pursuant to the proposed Joint Venture, it is currently intended that
ACAM, or an affiliate, will make an initial equity investment of £10 million
into the Company's wholly owned Canadian subsidiary company, Power Metal
Resources Canada Inc ("PMC"), for a majority interest in PMC of 70%. The
Company will potentially receive an additional cash payment of up to £4
million, conditional upon a sale transaction completing or other value
realisation by the Investor, subject to the Investor achieving a minimum
return threshold on its investment.

·    If completed, the proposed Joint Venture is expected to provide Power
Metal shareholders with exposure to at least five significant, high impact
drilling programmes with an experienced financial partner, with significant
advancement on several more. ACAM and its affiliates have investments in
mining and exploration projects globally including the Gardaq joint venture
with TSX and AIM listed Amaroq Minerals in Greenland.

·    Assuming the successful completion of the Joint Venture, which cannot
be guaranteed, the IPO of Uranium Energy Exploration plc ("UEE") is to be
aborted with the costs incurred, approximately £500k, to be met through the
proceeds of the Notes. Accordingly, at this stage, it is unlikely that the
disposals of the Company's wholly owned Reitenbach Uranium Property, and
E-12 Uranium Property, as announced on 8 August 2022 and 4 November 2022
respectively, will occur.

·    The balance of the proceeds of the Notes is to be used for general
corporate purposes.

 

 

Sean Wade, Chief Executive Officer of Power Metal Resources, commented:

 

"We announced on 25(th) March 2024 that we were looking at various options to
maximise value from our uranium portfolio and whilst these discussions are
still taking place, I am pleased to announce that we are making progress to
finalise a transaction that we are confident will crystallise significant
value for our shareholders.

 

Whilst there can be no guarantee that the Joint Venture will complete, we are
confident that we will achieve a successful outcome and will update
shareholders once the legally binding documentation is finalised.

 

ACAM have already made a significant commitment to the Company pursuant to the
Subscription and we look forward to working with them to successfully conclude
the proposed Joint Venture."

 

Details of the Subscription for Notes and Warrants

 

The Company and ACAM have entered into a legally binding subscription
agreement, pursuant to which ACAM will subscribe for 2,000,000 Notes with
13,333,333 attaching Warrants, for proceeds of £2 million, before expenses.
 

 

The Notes, which are unsecured, will rank as the senior indebtedness of the
Company, have a term of five years from issuance (the "Repayment Date") and
bear interest at 10% per annum, payable semi-annually. If the Company and ACAM
fail to enter into definitive legal documentation in relation to the Joint
Venture on the basis set out in the Term Sheet (as defined below) within 12
months, both parties acting reasonably, the Repayment Date will be accelerated
to 12 months from the issuance of the Notes.

 

At the election of the Company interest payments can be paid in cash or in
Shares. Where the Company elects to settle interest in Shares, such Shares
will be issued at the 10-day VWAP of the Company's Shares on the AIM Market of
the London Stock Exchange to the date preceding the relevant payment date.

 

While the Notes remain outstanding, the Company will use 20% of the proceeds
of any future equity financing to redeem Notes for cash. The Company is also
required to utilise a portion of any cash proceeds realised from the sale of
assets in excess of £300,000 to redeem Notes for cash, with such proportion
being 50% if the 10-day VWAP is in excess of the exercise price of the
Warrants at the time, or 100% if the VWAP is equal to or below the exercise
price of the Warrants. The Notes can otherwise be redeemed at any time by the
Company without fee or penalty.

 

The Warrants have a term of five years and are exercisable at a price of 15
pence per Share, subject to standard adjustment provisions, including for
bonus issues and stock splits. The quantum of Warrants will be re-set in
proportion to an increase in the Company's fully diluted share capital as a
result of any future equity fundraising.

 

Proposed Joint Venture

 

The Company has entered into an eight-week exclusivity period and a
non-binding term sheet (the "Term Sheet") with ACAM, pursuant to which the
parties intend to form the uranium focused Joint Venture.

 

Pursuant to the Term Sheet, it is intended that ACAM, or an affiliate with
substantially the same beneficial owners, will invest an initial £10 million
into PMC for an equity interest of 70% with the proceeds used to fund
exploration programmes across the portfolio of uranium licences, including
drilling. The Company will potentially receive an additional cash payment of
up to £4 million, conditional upon a sale transaction completing or other
value realisation by the Investor, subject to the Investor achieving a minimum
return threshold on its investment.

 

At this stage, there is no binding obligation or commitment on the part of any
party with respect to the Joint Venture which is subject to the execution of
various definitive legal documentation. Accordingly, there is no certainty
that this Joint Venture will proceed, or if it does, that it will proceed on
the terms outlined here.

 

If the Joint Venture is successfully completed, the IPO of UEE is to be
aborted with the costs incurred to be met through the proceeds of the Notes.
Accordingly, at this stage, it is unlikely that the disposals of the Company's
wholly owned Reitenbach Uranium Property, and E-12 Uranium Property, as
announced on 8 August 2022 and 4 November 2022 respectively, will occur.

 

Shareholders should note that Sean Wade is a director of both Power Metal and
UEE.

 

Advisers

 

Tamesis Partners LLP ("Tamesis") is acting as financial adviser to the Company
in relation to the Subscription and the proposed Joint Venture.

 

 

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.

For further information please visit https://www.powermetalresources.com/
(https://www.powermetalresources.com/)  or contact:

 Power Metal Resources plc
 Sean Wade (Chief Executive Officer)                                             +44 (0) 20 3778 1396

 SP Angel Corporate Finance (Nomad and Joint Broker)
 Ewan Leggat/Caroline Rowe                                                       +44 (0) 20 3470 0470

 SI Capital Limited (Joint Broker)
 Nick Emerson                                                                    +44 (0) 1483 413 500

 First Equity Limited (Joint Broker)
 David Cockbill/Jason Robertson                                                  +44 (0) 20 7330 1883

 BlytheRay (PR Advisors)

 Tim Blythe/Megan Ray                                                            +44 (0) 20 7138 3204

 

NOTES TO EDITORS

Power Metal Resources plc - Background

Power Metal Resources plc (LON:POW) is an AIM listed metals exploration
company which finances and manages global resource projects and is seeking
large scale metal discoveries.

 

The Company has a principal focus on opportunities offering district scale
potential across a global portfolio including precious, base and strategic
metal exploration in North America, Africa and Australia.

 

Project interests range from early-stage greenfield exploration to later-stage
prospects currently subject to drill programmes.

 

Power Metal will develop projects internally or through strategic joint
ventures until a project becomes ready for disposal through outright sale or
separate listing on a recognised stock exchange thereby crystallising the
value generated from our internal exploration and development work.

 

Value generated through disposals will be deployed internally to drive the
Company's growth or may be returned to shareholders through share buy backs,
dividends or in-specie distributions of assets.

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