African Metals Corporation : African Metals provides update on binding framework agreement with XinXing Development Group Co. Ltd.
African Metals provides update on binding framework agreement with XinXing Development Group Co. Ltd.
03/08/2013| 08:07am US/Eastern
Vancouver, British Columbia, Canada. African Metals Corp. has provided an update on the binding framework agreement entered into with XinXing Development Group Co. Ltd. to develop the the Luisha South copper and cobalt project located in the Katanga province of the Democratic Republic of the Congo.
As a term of the agreement, XXD is to conduct a two-phase due diligence review of the company to determine the suitability of the transaction. Currently, African Metals and XXD are finalizing phase 1 of the due diligence process and are preparing to commence phase 2 of the due diligence process.
Terms of the agreement
African Metals also wishes to provide an update on the terms of the agreement. Under the terms of the agreement, XXD has the right to subscribe for 19.9 per cent of African Metals' issued and outstanding capital through a private placement of up to $1.8-million, at a price of 5.3 cents per share, subject to regulatory approval. Funds received will be utilized for the development of the Luisha South project and for general corporate use.
Upon completing the transaction, XXD will have the rights: (a) to nominate one board member to the board of African Metals, provided its holding does not fall below 15 per cent, and (b) to maintain its holding level through additional purchase of shares of African Metals, should African Metals complete any further financing, for a period of two years from the subscription date.
African Metals wishes to note that the transaction is subject to a number of conditions precedent, including:
The completion of the aforementioned due diligence, which includes review of all corporate details, including licences and corporate filings, for which XXD has an exclusive 90-day period to complete;
The entering into of definitive agreements to replace the current agreement;
The approval of the TSX Venture Exchange and other authorities.
The agreement provides that XXD will be required to pay African Metals $100,000 in the event XXD does not elect to initiate negotiations of the definitive agreements upon completing its due diligence review for reasons other than those attributable to third parties or identification of material issues during the due diligence process. African Metals will be required to pay XXD $100,000 in the event of African Metals' breach of the exclusivity provisions.
The agreement and transaction are subject to the approval of the exchange and other authorities. In connection with the investment, a finder's fee may be paid in accordance with applicable laws and the policies of the exchange.
About XinXing Development Group
XinXing Development Group was established in 2007. It is a large state-owned company headquartered in Beijing that is engaged in asset management, capital operation and production businesses. It manages over 10 subsidiaries in 10 provinces in China. These subsidiaries operate property management, non-ferrous metal, and trade and logistics businesses throughout China, as well as in the United States, the European Union and Africa. It also has established mining bases in Zambia.
The Luisha South project
The Luisha South project contains greater than 160,000 tonnes of copper metal and 44,000 tonnes of cobalt metal. In mid-2012, African Metals secured and precommissioned a DMS and spiral plant to produce a copper and cobalt concentrate. Precommissioning returned encouraging results for the copper concentrate from the DMS. Spiral concentrate levels were lower than expected, but remedial works are expected to increase the grade significantly. A review of the plant by a consultant process engineer has shown areas of the plant and equipment that need to be optimized to ensure good-quality concentrate is available for sale.
Once the investment from XXD has been secured, African Metals will move to review in detail the necessary changes to the plant and equipment to ensure efficient production of copper concentrate for sale.
For further information please contact:
African Metals Corporation
Nigel Ferguson, President & CEO
Suite 205 - 16055 Fraser Highway
Surrey, British Columbia, Canada V4N 0G2
Tel: +1 (604) 507 2181
Fax: +1 (604) 507 2187
investor & media relations
70173 Stuttgart, Germany
Tel. +49 (711) 253592 30
Fax +49 (711) 253592 33
Dislaimer: This document may contain forward-looking information based on management's expectations, estimates and projections. These statements are not a guarantee of future performance and involve a number of risks, uncertainties and assumptions.
The Canadian Stock Exchange has neither approved the information contained herein nor accepts responsibility for the adequacy or accuracy of this release.