TIDMAMC
RNS Number : 6944K
Amur Minerals Corporation
09 May 2022
9 May 2022
AMUR MINERALS CORPORATION
(AIM: AMC)
Proposed sale of the Kun-Manie Project for US$ 105 Million
Amur Minerals Corporation ("Amur" or the "Company"), the
nickel-copper sulphide mineral exploration and resource development
company focused on the far east of Russia, announces that it,
together with its wholly owned subsidiary Irosta Trading Limited
("Irosta"), has entered into a Share Purchase Agreement (the "SPA")
for the sale of 100% of its interest in Irosta's wholly owned
subsidiary, AO Kun-Manie ("AO KM" or "Kun-Manie"). For a total
consideration of US$105 million, Stanmix Holding Limited (the
"Buyer" or "Stanmix") will purchase AO KM and the benefit of all
amounts owed by AO KM to Amur under intra-group loans (the
"Transaction"). AO KM is an exploration and mining company which
holds the Detailed Exploration and Mine Production mineral licence
for the Kun-Manie nickel-copper sulphide project located in Amur
Oblast of the Russian Federation.
Highlights:
-- The total consideration for the Transaction is US$105 million
to be completed in a series of payments. The Transaction
consideration is payable in US$.
-- The divesture price represents premiums of 220% to the
Company's market capitalisation of 5 May 2022 ( GBP26.2 million)
and 330% to the current Kun-Manie book value of US$24.4 million as
at 30 June 2021 in Amur's interim financials. The closing share
price on 5 May 2022 was 1.91 pence per share.
-- A Fair Market Value ("FMV") of AO KM was derived by Medea
Natural Resources ("MNR") with a range from US$106 million to
US$131 million based on an assessment of international transactions
for similar sized nickel equivalent projects. Given current
volatile market conditions, and that the project is located within
Russia, the Transaction falls at the lower limit of the
independently derived FMV.
-- In addition to shareholder approval of the Transaction at a
General Meeting scheduled for 25 May 2022, completion of the
Transaction requires the approval by a newly created Russian
Federation government commission per Order 81 dated 1 March 2022
(which specifically addresses change of control of western held
assets) and the consent of the Federal Antimonopoly Service of
Russia.
-- The Company and its financial auditor ("BDO") now consider
the Kun-Manie project to be an asset held for sale from an
accounting perspective until a change of control is completed.
Payment Terms
The divestiture price of US$105 million will be paid as
follows:
-- Consideration of US$75 million payable by the Buyer to Amur as follows:
o US$15 million upon Completion of the Transaction (to occur
within 60 days of signing the SPA);
o US$10 million within 12 months of the date of the SPA; and
o US$50 million within 48 months of the date of the SPA.
-- Amur has also agreed to assign to the Buyer the benefit of
all loans owed by Kun-Manie to Amur in consideration for US$30
million, payable in ten annual installments of US$3 million
commencing on the anniversary of the date of completion in
2027.
Following the payment of the initial consideration of US$15
million, all subsequent payments are supported by a personal
guarantee by the controller of the Buyer. Once Kun-Manie enters
production the obligations under this guarantee in respect of the
US$30 million payable in respect of loans may be assigned to
Kun-Manie or any party that at that time holds its mining
licence.
Use of Proceeds
The Company intends to use the proceeds from the payment
obtained on Completion for an acquisition via a reverse takeover
within six months of Completion. Funds from the Completion payment
will be utilised to evaluate and acquire one or more projects
located in mining friendly jurisdictions. It is anticipated that
portions of the second and third payments (totaling US$60 million)
will be paid as dividends to the shareholders.
Robin Young, CEO of Amur, commented:
"I am delighted to announce the proposed sale of Kun-Manie to
Stanmix Holding Limited for the total consideration of US$105
million, representing a cash consideration of US$75 million over
four years and a further US$30 million over 10 years commencing in
2027. The total consideration represents a 220% premium to the
Company's market capitalisation on 5 May 2022 and a 330% premium to
the Kun-Manie book value. Additionally, Amur recently engaged with
independent advisers with respect to the valuation of Kun-Manie
which indicates that US$105 million is a fair and reasonable price
for the project.
"Stanmix Holding Limited is a company controlled by Vladislav
Sviblov, a Russian entrepreneur and shareholder in a number of
mining and industrial assets, including Highland Gold, one of the
largest gold miners in Russia. He has also completed a number of
major Russian mining M&A transactions and Stamnix Holding
Limited is therefore well positioned to continue the development of
Kun-Manie.
"The Board and I recommend that shareholders vote in favour of
the sale at the General Meeting that will be held on 25 May 2022,
as the total consideration represents a significant premium to
shareholders compared to the current market capitalisation of the
Company. Additionally, in order to move Kun-Manie into a
development and production phase, significant further investment is
required to be made, including significant expenditure on
infrastructure and access roads and there is no guarantee that Amur
will be able to source and execute financing agreements to meet
this required spend given the current volatile market. This also
complicated the execution of this transaction.
"Following the sale, the Company will continue to be listed on
AIM as a Rule 15 cash shell, providing the Board with the ability
to identify future acquisition opportunities, in mining friendly
jurisdictions, that have the potential to deliver value creation.
Additionally, the Board anticipates that portions of the deferred
consideration will be paid to shareholders as a dividend."
Order 81 and Company Approvals
The Transaction is subject to certain conditions occurring
within 60 days of the signing of the SPA ("Completion")
including:
-- the dispatch of a shareholder circular ("Circular") and
approval of a resolution to complete the Transaction at a general
meeting of the Company ("General Meeting") scheduled for 25 May
2022;
-- the approval under the commission created with regard to the
Presidential Decree No. 81 dated 1 March 2022 having been granted
on the terms required by applicable law, and not having been
subsequently revoked, and such approval not being conditional upon
any further actions or omissions by any party; and
-- the consent of the Federal Antimonopoly Service of Russia or
its relevant territorial department to the Transaction being
granted and such consent not being conditional upon any further
actions or omissions by any of the parties to the SPA.
Fair Market Value
An independent FMV analysis was compiled by MNR in accordance
with the Canadian Institute of Mining, Metallurgy and Petroleum on
the Valuation of Mineral Properties ("CIMVAL") Code for the
Valuation of Mineral Properties. The evaluation was completed 4
February 2022).
Applying the principles of the CIMVAL Code, MNR has used various
valuation methods to determine the value for the Project. The
report looked at valuations of listed companies including resource
multiples and also prices paid for comparable assets.
When assessing listed comparables, MNR examine the value of
nickel in resources vs enterprise value, and also the Enterprise
Value ("EV") to Net Present Value ("NPV") if the company in
question had published the results of a technical study
(Preliminary Economic Assessment, Preliminary Feasibility Study,
Feasibility Study) where NPVs had been reported. When looking at
M&A transactions and in order to obtain a reasonable number of
comparables in the data set, it evaluated nickel, copper and zinc
acquisitions estimated on a nickel equivalent basis. Using long
term consensus pricing, assuming 100% relative payabilities,
recoveries and JORC resource estimates for the data set, it defined
the FMV based on the JORC Mineral Resource estimates for
Kun-Manie.
Based on the 30 June 2021 Kun-Manie JORC resource estimate,
MNR's valuation range for the project is from US$106 million to
US$131 million, with a preferred mid-point valuation of US$118
million. Comparison of the FMV to the total cash offer
consideration of US$105 million, and based on similar international
transactions related to nickel projects of the late exploration
stage, the transaction of US$105 million represents a discount to
the midpoint FMV in the order of 11% and is attributable to the
project being located within Russia.
Future Strategy and Special Dividend
The Transaction is a fundamental disposal pursuant to Rule 15 of
the AIM Rules for Companies. A Circular containing full details of
the Transaction will be published and notified by RNS and a General
Meeting is expected to be held on 25 May 2022.
If the sale is approved by shareholders and completes in
accordance with its terms (to occur within 60 days of signing of
the SPA), the Company would become a cash shell in accordance with
Rule 15 of the AIM Rules and retain cash balances of approximately
US$20 million after paying certain expenses and any taxes relating
to the Transaction.
Following receipt of the first deferred consideration payment of
US$10 million, to be paid within one year of the date of the SPA,
the Company intends to pay a special dividend to shareholders of
the Company at that time. A further special dividend may be paid to
shareholders of the Company following receipt of the second
deferred consideration payment of US$50 million, within four years
of the date of the SPA. The Directors will determine the size of
the special dividend at the relevant time. The Company has received
tax advice that the Transaction is unlikely to attract capital
gains or withholding tax. The Board proposes that the record date
and payment date for the distribution of profits shall be no later
than 90 days following receipt of each deferred consideration
payment.
The Directors intend to seek to acquire another company or
business in exchange for the issue of Ordinary Shares in a single
transaction (a "reverse takeover"), subject to Shareholder
approval. In considering the Company's future strategy, the Board
will seek to identify opportunities offering the potential to
deliver value creation and returns to Shareholders over the medium
to long-term in the form of capital and / or dividends.
The Company will be required to make an acquisition or
acquisitions which constitute(s) a reverse takeover under AIM Rule
14 on or before the date falling six months from the completion of
the Transaction, or be re-admitted to trading on AIM as an
investing company under AIM Rule 8. Failing that, the Company's
Ordinary Shares would then be suspended from trading on AIM
pursuant to AIM Rule 40. If the Company's shares remain suspended
for six months, admission of the Company's shares will be
cancelled.
As at end of H1 2021, the net asset value of the Company was
US$27 million.
About Stanmix Holding Limited
Stanmix Holding Limited is a Cyprus incorporated company
controlled by Vladislav Sviblov. Mr Sviblov is a Russian
entrepreneur and shareholder in some major mining and industrial
assets including Highland Gold Mining, one of the largest gold
miners in Russia which Mr Sviblov acquired in 2020. Mr Sviblov has
previously completed two additional major M&A transactions,
namely the acquisition of Trans-Siberian Gold in Kamchatika, and
the assets of the Zoloto Kamchatki group. In April 2022, Highland
Gold Mining entered into a definitive agreement to acquire the
Russian assets of New York Stock Exchange-listed Kinross Gold
Corporation.
Market Abuse Regulation (MAR) Disclosure)
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.
Company Nomad and Broker Public Relations
Amur Minerals S.P. Angel Corporate BlytheRay
Corp. Finance LLP
Robin Young CEO Richard Morrison Megan Ray
Adam Cowl Tim Blythe
+44 (0) 7981 126 +44 (0) 20 7138
818 +44 (0) 20 3470 0470 3203
For additional information on the Company, visit the Company's
website, www.amurminerals.com .
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END
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