Tiger Resources Limited Acquisition of Remaining 40% in Kipoi Copper Project
28.08.2014 | ABN Newswire
Perth, Australia (ABN Newswire) - Tiger Resources Ltd. (ASX:TGS) ("Tiger") is pleased to announce that it has entered into an agreement to acquire the remaining 40% shareholding in Société d'Exploitation de Kipoi SA. SEK is the owner of the Kipoi Copper Project in the Democratic Republic of Congo.The Tiger Group currently holds 60% of the shares in SEK. Upon completion of the agreement, which remains subject to the satisfaction of certain conditions precedent, Tiger will acquire the remaining 40% interest, resulting in SEK becoming a wholly-owned subsidiary of Tiger.
The 40% interest will be acquired together with all associated shareholder and contractual rights, other than a 2.5% gross turnover royalty payable by SEK, which will be retained by the vendor.
The agreed purchase price is US$111 million, of which a deposit of US$6.5 million has been paid and a completion payment of US$104.5 million is due by 10 November 2014.
Post completion of the transaction Tiger intends to cede a 5% interest in SEK to the DRC Government to bring the mining title into alignment with the current mining law and regulations in the DRC.
Tiger manages operations on behalf of SEK at Kipoi where the recently completed 25,000 tonne per annum solvent extraction electro-winning plant ("SXEW") has been constructed and successfully commissioned.
Tiger's Managing Director Brad Marwood commented:
"Kipoi has been the cornerstone of our business over the past seven years and together with our DRC business partner we are proud of our achievements. We see the potential to grow our business by focusing on near-mine exploration and sourcing plant feed from elsewhere in the Kipoi region, thus ensuring the mine should operate well into the next decade.
"We believe the acquisition of the additional 40% interest in SEK to be earnings-accretive and offers the opportunity to grow our business and cement our future in the DRC as a 50,000t per year copper cathode producer once the proposed expansion of the SXEW facility has been completed.
"The purchase price is considered a good outcome for all parties having regard to the current 25,000tpa copper cathode production and the fact that the HMS operations are nearing the end of their life."
As a result of the proposed loan facilities, the Board is reviewing the optimal SXEW expansion timetable.
The transaction is subject to Tiger obtaining sufficient financing on commercially acceptable terms; no material adverse changes occurring; no breach of vendor's warranties or pre-completion obligations; and confirmation from the DRC Minister of Portfolio that there are no objections to the transaction.
ACQUISITION FUNDING
The acquisition will be funded by a combination of equity and a finance facility.
The equity component totalling $73.4 million will be funded via a:
1. placement of 65 million fully paid ordinary shares ("New Shares") at $0.30 per share to raise $19.5 million ("Placement"); and
2. fully underwritten pro rata accelerated non-renounceable entitlement offer to raise $53.9 million ("Entitlement Offer"). Key terms of the entitlement offer include:
- Ratio: eligible shareholders will be invited to subscribe for 1 New Share for every 5 existing Tiger shares ("Entitlement") held at the Record Date
- Record Date: 7pm (Sydney time) on 2 September 2014
- Amount: $53.9 million
The offer price per share of $0.30 is equal to the closing price of Tiger shares on 22 August 2014 (the last trading day before the announcement of the Entitlement Offer) and, therefore, the theoretical ex rights price ("TERP") will remain the same. The Offer Price represents a discount of approximately 2.9% to the 30 day volume weighted average price on ASX.
The Entitlement Offer will be fully underwritten, and the Placement managed, by Canaccord Genuity (Australia) Limited. As the Entitlements Offer will be non-renounceable, Entitlements will not be tradeable.
Tiger has executed a finance facility with Taurus Mining Finance Fund ("Taurus"), which will be partially used to fund the acquisition. Key terms include:
- Facility amount: up to US$100 million
- Term: 6 months with options to extend on a monthly basis for up to a further 6 months
- Interest rate: 11% per annum
- Extension fee: if the term extends beyond 6 months, a monthly extension fee of 0.5% of the facility amount is applicable
- Warrants: 20 million warrants with a four-year term exercisable at A$0.40
ENTITLEMENT OFFER
Accelerated Institutional Entitlement Offer
Eligible institutional shareholders will be invited to participate in the institutional entitlement offer, which will take place from 28 August to 29 August 2014 (Institutional Entitlement Offer). Eligible institutional shareholders can choose to take up all, part or none of their Entitlements. Institutional Entitlements cannot be traded on market.
Institutional Entitlements not taken up by the close of the Institutional Entitlement Offer, and Entitlements that would otherwise have been offered to ineligible institutional shareholders, will be sold through an institutional shortfall bookbuild on 29 August 2014.
Retail Entitlement Offer
Eligible retail shareholders will be invited to participate in the retail entitlement offer (Retail Entitlement Offer) at the same Offer Price and offer ratio as the Institutional Entitlement Offer. The Retail Entitlement Offer will open on 5 September 2014 and close at 5pm (Sydney time) on 19 September 2014, unless extended.
The Retail Entitlement Offer is non-renounceable and therefore shareholders cannot trade their Entitlements on market.
ENTITLEMENT OFFER AND PLACEMENT TIMETABLE
The timetable below is indicative only and may be subject to change. Tiger reserves the right to amend any or all of these dates and times without notice subject to the Corporations Act 2001 (Cth), the ASX Listing Rules and other applicable laws. In particular, Tiger reserves the right to extend the closing date of the Retail Entitlement Offer and to accept late applications under the Retail Entitlement Offer (either generally or in particular cases). Any extension of the closing date will have a consequential effect on the issue date of New Shares.
Timetable
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Event Date
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Institutional Entitlement Offer and Placement opens 28 August 2014
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Institutional Entitlement Offer and Placement closes 29 August 2014
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Institutional shortfall bookbuild 29 August 2014
Announce results of Institutional Entitlement Offer
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and Placement, existing shares recommence trading 1 September 2014
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Record Date for Entitlement Offer (AESTD) 7.00pm 2 September 2014
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Retail Entitlement Offer booklet despatched 5 September 2014
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Retail Entitlement Offer opens 5 September 2014
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Settlement of Institutional Entitlement Offer
and Placement 8 September 2014
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Allotment of New Shares issued under the
Institutional Entitlement Offer and Placement 8 September 2014
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Quotation of New Shares under Institutional
Entitlement Offer and Placement 9 September 2014
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Retail Entitlement Offer closes,
unless extended 5.00pm, 19 September 2014
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Allotment of New Shares issued under the
Retail Entitlement Offer 26 September 2014
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New Shares under Retail Entitlement Offer
commence trading 29 September 2014
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Despatch of holding statements 30 September 2014
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BACKGROUND
The Kipoi Copper Project is located approximately 75km NNW of Lubumbashi in the Katanga Province of the DRC. Tiger has a 60% interest in La Société d'Exploitation de Kipoi SA ("SEK"), a DRC-registered company which holds the project assets and is the operator at Kipoi.
Tiger undertook a phased development at Kipoi. Its Stage 2 solvent extraction electro-winning ("SXEW") plant commenced production of copper cathode in May 2014. This first phase of the SXEW plant is expected to produce copper cathode at the nameplate level of 25,000 tonnes per annum. The Stage 1 heavy media separation ("HMS") plant has been in production at Kipoi since 2011.
Stage 1 HMS operations have produced stockpiles with 159,600 tonnes of contained copper as at 30 June 2014 (Reference - June 2014 Quarterly Activities Report). These stockpiles are providing feed for the SXEW plant for the first three years of its operation.
The forecasted SXEW life of mine ("LOM") site cash operating cost is US$1.04/lb, and forecast LOM C3 cost (all-in cost, including capital expenditure) is US$1.75/lb.
It is envisaged that ore from Judeira and other deposits within the Kipoi Project area, and within the nearby 100%-owned Lupoto Project, will also be processed during the SXEW operations, providing additional returns and increasing the ore reserves available as feedstock to the SXEW plant.
Increased resources from these deposits will potentially increase the mine life and/or the annual plant throughput. Further exploration, evaluation and other testing will be required to determine the proportion, if any, of ore from these deposits that may ultimately be available as feed for the SXEW plant.
About Tiger Resources Limited:
Tiger Resources Ltd. (ASX:TGS) has established itself as a producing copper/cobalt company with excellent growth potential after making the transition from an explorer. We have a highly-rated portfolio of properties, all strategically located on the world renowned Katanga Copperbelt in the Democratic Republic of the Congo (DRC), central Africa.
Contact:
Tiger Resources Ltd.
T: +61-8-6188-2000
F: +61-8-6188-2099
www.tigerez.com