REG - Tertiary Minerals - Agreement with Mwashia Resources

Tertiary MineralsAnnouncement

26/02/2024 07:00

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RNS Number : 3331E  Tertiary Minerals PLC  26 February 2024

26 February 2024

 

Tertiary Minerals plc ("Tertiary" or the "Company")

 

Agreement with Mwashia Resources

 

The Company is pleased to advise that a new joint venture agreement (the
"JVA") has been signed with local partner Mwashia Resources Ltd ("Mwashia")
that will consolidate ownership of the Jacks, Mukai and Mushima North
exploration licences (the "Licences") into a new Zambian company ("Newco") to
be 90% owned by Tertiary's 96% owned subsidiary, Tertiary Minerals (Zambia)
Limited ("TMZ") and 10% by Mwashia.

Currently all of the Licences are held by Mwashia. Tertiary holds the right to
a 90% joint venture interest in the Jacks licence and options to earn a 90%
joint venture interest in each of the Mukai and Mushima North licences by
meeting certain expenditures and making payments totalling US$60,000 to
Mwashia, details of which were given in the Company's news releases dated 18
November 2021 and 4 November 2022.

The JVA effectively relieves Tertiary of the expenditure obligations due under
its option agreements on the Mukai and Mushima North licences, brings forward
the above payment to Mwashia and puts ownership of the Licences under a common
entity controlled by TMZ. Mwashia's 10% interest will be carried by TMZ with
carried costs being recovered as a priority from future profits.

Commenting today executive Chairman, Patrick Cheetham said:

"This joint venture agreement is a win-win for Tertiary and Mwashia and a
further example of the excellent working relationship we have developed with
our local partner which enabled the recent agreement with KoBold Metals on the
exciting Konkola West Project. This new agreement simplifies our corporate
structure in Zambia, brings forward our 90% ownership holding in all three of
the Licences and creates a vehicle by which the partners can better consider
joint venture approaches from third parties on the Licences."

 

Further information

 Tertiary Minerals plc:
 Patrick Cheetham, Executive Chairman  +44 (0) 1625 838 679
 SP Angel Corporate Finance LLP

 Nominated Adviser and Broker
 Richard Morrison                      +44 (0) 203 470 0470
 Caroline Rowe/Harry Davies-Ball
 Peterhouse Capital Limited

 Joint Broker
 Lucy Williams                         + 44 (0) 207 469 0930
 Duncan Vasey

 

Market Abuse Regulation

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ('MAR'). Upon the publication of this
announcement via Regulatory Information Service ('RIS'), this inside
information is now considered to be in the public domain.

 

Detailed Information

Background

The Licences that are the subject of the JVA are:

·    Exploration Licence 27069-HQ-LEL ("Jacks Licence")

·    Exploration Licence 27066-HQ-LEL "(Mukai Licence")

·    Exploration Licence 27068-HQ-LEL ("Mushima North Licence")

Currently the Licences are held in the name of Mwashia. The Jacks Licence is
subject to a conditional joint venture agreement whereby TMZ is entitled to a
90% interest and where Mwashia holds a 10% carried interest. In the cases of
the Mukai and the Mushima North Licences, TMZ holds an option to earn an
initial 50% and the right to move to 90% ownership by meeting certain
expenditure obligations and making certain payments to Mwashia.

Further details of these arrangements can be found in the Company's news
releases dated 18 November 2021 and 4 November 2022.

Key Terms of the new JVA

The JVA between TMZ and Mwashia was executed on 23 February 2024 and
establishes a joint venture between TMZ and Mwashia in respect of the Licences
with the following key terms:

1)   A Zambian company, "Newco", will be established with a share capital of
ZMW15,000 to be owned 90% by TMZ and 10% by Mwashia.

 

2)   In consideration of the issue of its 10% equity interest in Newco,
Mwashia will transfer all three of the Licences into Newco.

 

3)   TMZ will fund or arrange funding for 100% of all of the costs of the
Joint Venture and Newco with those costs attributable to Mwashia's 10% equity
interest being recovered from 80% of future cash flows.

 

4)   On completion of the transfer of the Licences to Newco, TMZ will enter
into a shareholder's agreement (the "Shareholders' Agreement") in the form set
out in the JVA.

 

5)   Tertiary will be the manager of the joint venture until such time as
the Shareholders' Agreement is signed, after which time TMZ will be entitled
to identify and appoint the Chief Executive of Newco.

 

6)   The Board of Newco will comprise three directors, two appointed by TMZ
and one appointed by Mwashia.

 

7)   Any future dealing on the Licences with a third party will require a
majority vote for shareholders, with one vote per share.

 

8)   The JVA is subject to the following conditions precedent:

a)   the incorporation of Newco;

b)   approval of the terms and conditions of the JVA and all ancillary
documents thereto by any relevant government authority, including but not
limited to any approval required under the Mining Act for the transfer of the
Licences;

c)   Mwashia having obtained the requisite tax clearance certificates from
the Zambian Revenue Authority for the payment of property transfer tax on the
transfer of the Licences to Newco or an exemption from the payment of property
transfer tax in the event that the Zambian Revenue Authority considers the
transfer of the Licences to be Mwashia's consideration for its equity in Newco
(as is anticipated); and

d)   approval of the terms of the JVA by the boards of TMZ and Mwashia.

9)   On satisfaction of the conditions precedent, TMZ will make a payment to
Mwashia of US$60,000, a payment otherwise becoming due under the existing
options agreements with Mwashia.

 

10) TMZ is to hold a first right of refusal over Mwashia's interest in Newco.
Should Mwashia wish to sell its interest in Newco to a third party then TMZ
has the right to match any offer that is made to Mwashia.

 

11) TMZ is to hold drag-along rights over Mwashia's interest in Newco.
 Should TMZ wish to sell its interest in Newco to a third party it can compel
Mwashia to sell its 10% equity interest on the same terms pro-rata to the
interests being sold.

 

 

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