Aim-listed Power Metal Resources has entered into a legally binding subscription agreement with ACAM for the latter to invest £2-million in Power Metal by way of a loan note with attaching warrants.
It has also entered into an eight-week exclusivity period and a nonbinding term sheet with ACAM with the intention of forming a uranium-focused joint venture (JV) involving Power Metal’s entire portfolio of uranium licences.
ACAM is a natural resource focused limited partnership advised by S and F Investment Advisors.
Pursuant to the proposed JV, 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 (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 JV 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, the company avers.
ACAM and its affiliates have investments in mining and exploration projects globally, it points out.
Assuming the successful completion of the JV, which cannot be guaranteed, the initial public offering of Uranium Energy Exploration is to be aborted with the costs incurred, about £500 000, 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 previously, will occur.
The balance of the proceeds of the notes is to be used for general corporate purposes.
“We announced on March 25 that we were looking at various options to maximise value from our uranium portfolio and, while 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,” says Power Metal CEO Sean Wade.
“While there can be no guarantee that the JV will complete, we are confident that we will achieve a successful outcome and will update shareholders once the legally binding documentation is finalised.
“ACAM has 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,” he adds.