New Energy Minerals Limited (ASX:NXE) (FRA:GGY) has returned to trading on the Australian Securities Exchange after recruiting a strategic investor and agreeing to $5 million of investment deals.
The company, which was to settle a $1.1 million first tranche under the deal yesterday, was returned to the market by ASX Ltd (ASX:ASX) this morning after first halting on Tuesday last week.
READ: New Energy Minerals' scoping study reveals exceptional economics for Caula Vanadium Graphite Project
New Energy Minerals, which traded as Mustang Resources Ltd (ASX:MUS) until September, has entered into a binding agreement with Hong Kong-based UBezTT International Investment Holdings (BVI) Ltd.
UBezTT’s largest shareholder is the strategic investor and Hong Kong-listed PT International Development Corporation Ltd’s (HK:00372) chairman and managing director Louis Ching.
Ching has experience in commodity trading and business development in China, Asia and Africa.
PT is a holding company that trades copper cathodes and nickel briquettes, has stakes in high-growth investment projects, and investments in a registered Hong Kong-regulated asset manager, and Chinese oil port and storage facilities.
Ching is also a director and deputy president of South Korea-listed STX Corporation (KS:011810) which trades in non-ferrous metals such as zinc, nickel and stainless steel, and provides shipping and logistics services across the world.
Caula project in Mozambique
New Energy’s flagship project is the 80%-owned Caula Vanadium-Graphite Project in Mozambique, which the company has previously shared that it hopes to produce first cash flows from in the December 2019 half-year as it embarks on trial mining operations.
Late last month, New Energy released a scoping study demonstrating the viability of an open pit vanadium and graphite mining operation.
The results indicate substantial financial returns could be generated through a two-phase development schedule with life-of-mine based on the large JORC-measured resource and a strip ratio of 1:1.
The company aims to implement phase I production in the second half of next year as well as the concurrent completion of definitive feasibility studies and development activities for phase II.
Caula project's mineral resource in July
Today, the company described its relationship with UBezTT as a “strategic equity placement and asset level investment and incorporated joint venture in respect of the Caula Vanadium-Graphite Project.”
New Energy managing director Dr Bernard Olivier reported: “This agreement is an important step forward for NXE in fast-tracking the world-class Caula Vanadium-Graphite Project towards development.”
Southern Africa-based Olivier highlighted Ching’s access to Asian debt and equity capital, and commodities trading experience, predicting the investor would “significantly assist in financing the Caula project, but also in securing offtake agreements in the short term once the project is in production.
“The company welcomes Mr Ching as a strategic investor in New Energy Minerals and looks forward to working with him to move the Caula project into early cashflow.”
BIG PICTURE: New Energy Minerals eyes first cash flow from world-class vanadium-graphite project in 2019
New Energy's comparison of its graphite gradings, back when it was known as Mustang
UBezTT director and controlling shareholder Ching said: “We are very excited to make this strategic investment in New Energy Minerals and the Caula Vanadium-Graphite Project.
“We were attracted to this investment by what we believe is a unique opportunity to achieve near-term production of vanadium and graphite, as well as by the quality and experience of the NXE board and management team.
“We look forward to working closely with the board to bring our extensive commodity trading experience and networks in Asia to this project.”
New Energy’s new investor UBezTT is buying into the company in two different ways.
The first is through a $1.5 million share placement priced at 6.5 cents a share, a 15% discount to the three-day volume-weighted average price before the agreement.
UBezTT’s placement will give it 15.4% of the company and has been split into two tranches, with the $1.1 million, 17.6 million-share first tranche due yesterday.
The first tranche investment entitles UBezTT to appoint at least two directors to the New Energy board as long as its total membership is a maximum of seven people.
UBezTT’s second tranche of 5.67 million shares, for about $400,000 is to be approved by shareholders at an extraordinary general meeting likely to be called for mid-December.
Each share under the placement has a 14-cent free-attaching option to be paid to UBezTTor a nominee which expires 36 months from date of issue, if shareholders agree at the upcoming meeting.
UBezTT will also make a $3.5 million project-level investment in New Energy’s wholly-owned asset-holding subsidiary Balama Resources Pty Ltd which has 80% of Caula project.
New investor UBezTT will take a 50% stake in the subsidiary the parties have dubbed Asset Holdco, subject to a due diligence process, with New Energy to hold the remaining 50% stake.
If not taken up by December 15, UBezTT’s option over the subsidiary and project will lapse.
If UBezTT buys into Asset Holdco it can appoint at least two directors to the subsidiary’s board, if it has no more than four directors.
New Energy's project flowsheet
Convertible note matters
Late yesterday New Energy advised it was seeking legal advice after Arena Structured Private Investments (Cayman), LLC, a subsidiary of Arena Investors L.P, issued it with a $5.1 million debtor’s notice.
The company said the notice appeared to include a $2.5 million termination fee claim which it reported on August 15, 2018, that Arena had waived in a convertible note deed that was announced on January 8, 2018.
Arena holds notes with a $2.5 million face value, excluding interest of about $104,000.
New Energy said yesterday evening: “A termination payment is not payable to Arena.
“The company intends to vigorously defend this position.
“It is the company’s intention to repay in cash the amounts it considers to be owing to Arena (including all interest) as soon as possible and the company is actively engaging with potential investors regarding a refinancing and repayment of the Arena loan.”