Premier holds 2 million shares in Circum Minerals Ltd, currently valued at circa US 1.4 million. Circum is a private natural resources investment group with a strategic investment in the Danakil Potash Project, Ethipoia.
The Danakil Project encompasses an established large-tonnage, high grade, shallow potash deposit.
On the 13th May, Premier African Minerals received £2.34 Million following the AgriMinco Danakil Option Exercise.
The consideration payable by Premier on completion of the acquisition of Mandalore pursuant to the Option Exercise comprised:
(i) The cancellation of all the common shares of AgriMinco owned by Premier for no consideration. As at the date of this announcement, Premier is interested in 120 million AgriMinco shares representing 42 per cent. of AgriMinco’s issued share capital with a value of approximately CAN$1.8 million based on the last closing price of AgriMinco shares of CAN$0.015 per share on 11 May 2014, the last practicable date prior to the publication of this announcement;
(ii) The settlement of certain secured debt obligations owed by AgriMinco to third parties that will require payment of up to CAN$1.5 million that will be funded from the interest free, term loan of US$2.5 million repayable on 31 December 2014 (“Bridge Loan”) provided by Circum Minerals Limited (“Circum”); and
(iii) The issue to AgriMinco of new Premier Ordinary shares with a value equal to CAN$1 million based on the volume weighted average price per Premier Ordinary Share for the 5 trading days immediately prior to and following the Option Exercise. Based on the closing mid-market price of a Premier Ordinary share of 0.975p on 12 May 2014, the last practicable date prior to the publication of this announcement, this would result in the issue of 55,847,589 new Premier Ordinary Shares (assuming the price of Premier Ordinary Shares and the Sterling-Canadian $ exchange rate remain constant).
In aggregate, the consideration on completion is estimated on present pricing at CAN$4.3 million, equivalent to £2.34 million
The exercise of the option, without the need to access the capital markets in the near term, provided Premier with a significant asset that is intended to be acquired by Circum. As a consequence, Premier African Minerals’ normal operating costs, through the arrangement could be funded into the foreseeable future without the need for further immediate dilution to shareholders. As well as retaining a significant interest in the Danakil Potash Project going forward via our ownership of 2 million shares in Circum, these incoming funds will allow us to progress our flagship RHA Tungsten development in Zimbabwe.