18:00 Mon 07 Oct 2019
Bezant Resources PLC - Proposed Disposal of 80% of Mankayan project
("Bezant" or the "Company")
Proposed Disposal of 80% of the Company's interest in
the Mankayan Copper-Gold project,
Bezant (AIM: BZT), the copper-gold exploration and development company, is pleased to announce that on
Pursuant to the terms of the Transaction Agreement,
Asean Copper holds a 40 per cent. shareholding in
The project's MPSA was originally issued for a standard 25 year period, which expires on
The consideration payable by MMIH comprises:
i) a funding commitment of up to
ii) subject to the MPSA being renewed following completion of the Exploration Period Requirements to the satisfaction of the relevant Philippine authorities, a further funding commitment of up to
iii) the issue of
The funding commitments in i) and ii) collectively are the "Total Funding Commitment". Further information on the Proposed Transaction is set out below.
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For further information, please contact:
Chief Executive Officer
Executive Chairman
Strand
or visit http://www.bezantresources.com |
Tel: +44 (0)20 3289 9923
Tel: +44 (0)20 7409 3494
Tel: +44 (0)20 7399 9400 |
Background to and rationale for the Proposed Transaction
As announced previously, the Company has for some time been seeking a strategic/funding partner to progress its Mankayan Project, a major copper-gold porphyry deposit located on the
The Board believes that the Proposed Transaction with MMIH, a company which has assembled a portfolio of mining projects within
Further Information on the Proposed Transaction
AIM Rule 15 and General Meeting: In accordance with AIM Rule 15, the Proposed Transaction will constitute a fundamental change of business for the Company and will therefore require the approval of shareholders at a duly convened general meeting. Accordingly, the Company will shortly be publishing a circular, incorporating a notice of general meeting, which will include customary salient information in relation to the Proposed Transaction (the "GM Notice").
Conditions Precedent to the Proposed Transaction: Completion of the Proposed Transaction ("Completion") is conditional upon, inter alia, the following conditions precedent (the "Conditions Precedent"):
(i) the approval of the Company's shareholders at a duly convened general meeting (the "Bezant
(ii) MMIH, within 5 business days of Bezant meeting all regulatory requirements for the Proposed Transaction, amending its existing RTO Transaction agreements with CHX to include the Acquisition and specifically to include the completion of the Acquisition as a condition precedent to the completion of the RTO Transaction's sale and purchase agreement;
(iii) MMIH not having given notice two business days before the date of the Bezant GM that its due diligence has not satisfied itself as to the validity of the ownership by CMDC of the MPSA and the Asean Copper Ownership Structure; and
(iv) other customary closing conditions for a transaction of this nature.
The Conditions Precedent are required to be satisfied or waived by the longstop date, being 40 days from the Transaction Date or such later date as agreed between the parties (the "Longstop Date").
Future management of Asean Copper and ListCo: Upon Completion, MMIH will be responsible for the day to day management and control of Asean Copper and the
Background on MMIH and MMJV: MMIH and MMJV are private companies incorporated in
(a) an early stage gold mine project comprising 3,619.10 hectares located in the towns of Cordon and Diadi in the provinces of Isabela and Nueva Vizcaya,
(b) a brownfield gold mine project comprising 761.4009 hectares located in the province of Misamis Oriental,
Upon completion of the RTO Transaction, MMJV will own and control a majority stake in each of the
Background on China Hongxing Sports Limited: CHX, incorporated in
Financial information relating to Asean Copper: Table One below shows the consolidated assets and liabilities of Asean Copper,
Table One: Financial Information
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Asean Copper Group |
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Bezant Group |
|
£000s |
|
£000s |
Total Assets as at 30 June 2019 |
369 |
|
5,262 |
Total Liabilities as at 30 June 2019 |
- |
|
(92) |
Net Assets as at 30 June 2019 |
369 |
|
5,170 |
|
|
|
|
Loss for the year ended 31 December 2018 |
(206) |
|
(1,187) |
Financial information relating to MMJV: MMJV is a special purpose vehicle incorporated in
Financial information relating to CHX: CHX has reported to the
Consideration Shares: Bezant will only receive the Consideration Shares if the RTO Transaction is successfully completed. Pursuant to the terms of the RTO Transaction announced on
The Consideration Shares will be subject to a lock-in or trading restriction for the shorter of (i) six months from the date of the Proposed Listing (as defined below) and (ii) the trading restriction period of the MMIH shareholders receiving ListCo shares (the "Moratorium Period"). Subject to the terms of the trading restriction, the Company will hold the Consideration Shares as investments held for resale with the net proceeds of future sales expected to provide additional working capital for the group.
Event of non-renewal of the MPSA: The MPSA is currently scheduled to expire on
Joint Venture Agreement: At Completion, MMIH and Bezant will enter into a joint venture agreement to govern their relationship as joint venture partners including in relation to pre-emption rights, dilution, divestment plans, and standard mining industry clauses relevant to joint venture arrangements similar to the nature of the Proposed Transaction. The parties have agreed to use their best endeavours to agree on the final form of the joint venture agreement prior to the Long-Stop Date.
Bezant's Future Plans: Following successful completion of the Proposed Transaction, Bezant will continue to operate as a copper-gold exploration and development company with an attractive portfolio of assets comprising its retained interest in the
Key Terms of the Transaction Agreement
1. Consideration |
In consideration of the Acquisition, MMIH shall provide the following:
a. funding of up to US$2.25m for the required program for the MPSA Renewal and the associated corporate costs of the Project Holding Companies (the "Required Program"). MMIH will ensure that funds are provided and made available for all necessary activities under the Required Program, to be completed in accordance with the relevant timelines of the Required Program and expensed so as to be qualifying expenditure under the Required Program (the "Initial Funding Commitment");
b. funding of a definitive feasibility study up to S$5.5m (approximately £3.23m) (the "DFS Funding Commitment"); and
c. conditional upon and as soon as reasonably practicable after the completion of the RTO Transaction or similar initial public offering of MMJV on the Singapore Stock Exchange (the "Proposed Listing"), Bezant shall be issued the equivalent of S$10m in listed shares of CHX (or such entity holding MMJV for the Proposed Listing) ("ListCo"), with such number of shares to be calculated in accordance with the ListCo listing share price at the date of the Proposed Listing (the "Bezant Listco Shares"). The Bezant Listco Shares shall be subject to a trading restriction for the shorter of (i) six months from the date of the Proposed Listing and (ii) the trading restriction period of the MMIH shareholders receiving ListCo shares (the "Moratorium Period").
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2. Bezant's Commitments |
a. Bezant shall, within 3 days of fulfilment of the Conditions Precedent, procure the issue to MMJV of shares representing 80 per cent. of the issued share capital of Asean Copper as enlarged by the issue of Asean Copper shares to MMJV (the "MMJV Shares") and assign such documents and rights to MMIH as may be reasonably determined by MMJV to enable MMJV to effectively own the MMJV Shares and the related interest in the Mankayan Project (the "Acquisition");b. Bezant agrees that MMIH shall not be responsible for any liabilities accrued by the Project Holding Companies prior to the date of the Acquisition that are not included in the project budget attached to the Transaction Agreement, and undertakes to indemnify and hold harmless MMIH for all costs, damages, expenses and losses incurred by MMIH in relation to any claims for such liabilities;
c. As at 30 June 2019, the CMDC accounts reflect an amount of
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3. Conditions Precedent: |
Completion of the Proposed Transaction is conditional upon:i. Bezant obtaining the approval and ratification of the Transaction Agreement by Bezant's shareholders at a general meeting to be called and held within 26 days of the date of the Transaction Agreement;ii. Bezant obtaining all applicable regulatory approvals for the Transaction;iii. MMIH within 5 business days of Bezant obtaining the approvals listed in ii) above entering into an amendment or supplemental agreement or an amendment and restatement agreement (or such other form as may be effective) to amend the Sale and Purchase Agreement entered into between CHX, MMIH and MMJV on 25 March 2019 for the purposes of including the Acquisition and the terms of the Transaction Agreement including but not limited to MMIH's Commitments as part of the Proposed Listing (the "RTO SPA"), and to include the completion of the Acquisition as a condition precedent to the completion of the RTO SPA;iv. MMIH not having given notice two business days before the date of the Bezant GM that its due diligence has not satisfied itself as to the validity of the:a. ownership by CMDC of the MPSA; andb. the Asean Copper Ownership Structure; andv. Bezant providing MMIH with a certificate of incumbency reflecting the latest shareholding details of Asean Copper to be dated no less than two business days from the date of the Transaction Agreement.In the event that all of the Conditions Precedent are not fulfilled within 40 days of the date of the Transaction Agreement or such later date agreed by the parties (the "Long-Stop Date"), the Transaction Agreement shall forthwith terminate, and neither party shall have any claim against the other party whatsoever.
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4. Funding of DFS |
As part of the Proposed Transaction and conditional upon the MPSA Renewal, MMIH will complete a definitive feasibility study ("DFS") on the Mankayan Project. Should the DFS expenditure exceed the S$5.5m (approximately £3.23m) to be provided by MMIH as part of its Total Funding Commitment, both Bezant and MMIH will be required to fund the excess in accordance with their respective shareholdings in Asean Copper. Should Bezant not fund its portion of the required DFS expenditure, Bezant's interest in Asean Copper shall be diluted in accordance with industry standard dilution terms to be agreed between the parties in good faith. |
5. Representations and warranties |
Bezant represents and warrants to MMIH that it is the sole legal and beneficial owner of 100% of the issued shares of Asean Copper and that it will at Completion be able to arrange and procure, the issue of the MMJV Shares to MMIH on the terms of the Transaction Agreement.MMIH represents and warrants to Bezant that it will at the relevant time have sufficient available funds to meet the Total Funding Commitment in accordance with the Required Program and the Total Funding Commitment.
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6. CMDC Option exercise or assignment |
If for any reason Asean Copper's option to acquire Bezant Holding Inc's shares in CMDC (the "CMDC Option") is exercised or assigned in accordance with its terms to suitably qualified bona fide purchasers (the "CMDC Option Exercise"), then all costs and expenditure to exercise the CMDC Option including the exercise price of
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7. Undertakings in the event of non-renewal of the MPSA |
Should the MPSA (i) not be renewed by the relevant authorities in the Philippines for any reasons outside the control of MMIH or Bezant (which would not include a failure by MMIH to pay the Initial Funding Commitment or the DFS Funding Commitment); or (ii) be returned without consideration to the Philippines government or transferred by the Philippines government to a third party not related to the parties (an "Inadvertent Non-Renewal"), then MMIH will:i) if confirmation of the Inadvertent Non-Renewal is within the Moratorium Period concerning the Bezant Listco Shares, have the right to clawback all of the Bezant Listco Shares save if the Inadvertent Non-Renewal is under appeal (an "Appeal Process") in which case the Moratorium Period will be extended pending the result of the Appeal Process; orii) if confirmation of the Inadvertent Non-Renewal is after the Moratorium Period, have the right to clawback such Bezant Listco Shares that Bezant then owns ("Bezant's Remaining ListCo Shares") save that if there is an Appeal Process Bezant's Remaining ListCo Shares should be held in escrow (in such form and arrangement as may be reasonably satisfactory to MMIH) pending the outcome of the Appeal Process,in both cases without any compensation or the minimum nominal consideration permitted under applicable law, whether by way of a share buy-back or otherwise as permitted under applicable laws and regulations.In the event of an Inadvertent Non-Renewal, MMIH and Bezant mutually confirm that neither entity, nor its directors, management team, or affiliates, or any future partners, will acquire the project and/or property for a period of five years after such notification.The Inadvertent Non-Renewal provisions shall not apply if the MPSA is converted into or replaced by either i) a Financial and Technical Assistance Agreement or ii) any other agreement which under Philippine law allows the Mankayan Project to be developed into a mine.
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8. Termination: |
a) The Transaction Agreement may be terminated by the written consent of the Parties (an "Agreed Termination") in which event the Agreed Termination shall be on the basis agreed by the parties.
b) If the Proposed Listing has not occurred by 31 December 2020 (or such later date as the parties may agree) (the "IPO Date") but MMIH is meeting the Initial Funding Commitment and, once applicable, the DFS Funding Commitment then Bezant does not have the right to terminate the Transaction Agreement.
c) Either Party (the "Initiating Party") may terminate the Transaction Agreement at any time by notice in writing if:i) the other Party (the "Breaching Party") is in breach of any of its obligations under the Transaction Agreement and (if the breach is capable of remedy) fails to remedy the breach within 30 days after receipt of notice in writing from the
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Joint Venture Agreement ("JVA") provisions |
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A. Board of Directors |
Bezant and MMJV shall be entitled to appoint a director according to their respective shareholding proportions, provided that Bezant shall at all times be entitled to appoint at least one director. The management of Asean Copper shall be vested in the board of directors of Asean Copper. |
B. Financing Obligations |
To the extent that Asean Copper is unable, having used reasonable endeavours, to meet the financing needs required to carry out any projects, following the initial obligations of MMIH to fund the project prior to and post the renewal of the MPSA, under the annual business plan approved by the board of directors, each party shall be required to provide funding by way of shareholder loans to Asean Copper in accordance with their respective shareholding proportions or be diluted in accordance with industry standard dilution terms to be set out in the JVA. |
C. Information Rights |
Bezant shall be entitled to receive information to comply with its ongoing AIM disclosure obligations including but not limited to;a. quarterly management accounts within 14 days of the end of each calendar quarter and annual accounts within 3 months of each calendar year end;b. Copies of all
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D. Pre-emption rights |
No transfers of shares in Asean Copper are permitted except to i) permitted transferees; ii) third party sales made after the Proposed Listing in accordance with a right of first refusal and if the right of first refusal is not taken up Bezant shall have tag along rights and MMIH (or ListCo) shall have drag along rights; iii) ListCo by MMIH prior to the IPO Date in which case Bezant will waive its pre-emption rights provided that the sale or transfer by MMIH is consistent with the Transaction Agreement. |
E. Allocation of sale proceeds |
If shares in Asean Copper are sold to a third party then Bezant shall be entitled to receive X where:Y= Bezant's then shareholding in Asean CopperZ= The total proceeds payable to i) the non-Bezant shareholders of Asean Copper plus ii) any CMDC Shareholders other than Asean CopperX = Y * Z
It is agreed that for the purpose of this paragraph a sale by ListCo to MMIH prior to the IPO Date shall not be considered a thirty party sale provided that the sale or transfer by MMIH is consistent with the Transaction Agreement. |
F. Reserved Matters |
Asean Copper shall not carry out the following actions without the approval of Bezant:(i) acquisition of new projects or disposal of existing projects including shareholdings in CMDC and
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G. Protection of Investment |
The parties agree to work together in good faith to protect the interests of Asean Copper in the
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A further announcement(s) will be made, as appropriate, in due course.
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014.
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