Archer Materials Ltd (ASX:AXE) (OTCMKTS:ARRXF) (FRA:38A) has signed a legally binding share sale agreement with private company iTech Minerals Pty Ltd for the sale of all of the subsidiary companies that hold Archer's mineral tenements.
The sale of the tenements will see Archer simplify its business model and turn into a pure-play deep technology company, focusing on its advanced materials business.
It is consistent with Archer's strategy of monetising its non-core mineral exploration assets to fund and grow its Advanced Materials business, in particular the development of its 12CQ room-temperature quantum computing chip and the A1 Biochip.
The tenement sale and purchase agreement is subject to certain conditions precedent, including the buyer listing on the ASX.
Fully focused on Advanced Materials
Archer executive chairman Greg English said: "For the past year, we have been regularly informing shareholders and investors of our desire to sell our mineral tenements and simplify our business model.
“The sale of our remaining tenements to iTech is the last step in this process, and we are now fully focussed on the growth of our Advanced Materials business.
"The simplification of our business model and the sharpening of our focus on our Advanced Materials business should help the company to attract interest from technology-focused investors and businesses."
Shares have been as much as 4% higher today to A$0.925 and the company's market cap is approximately A$201.2 million.
Terms of the deal
The tenements are held by Archer’s wholly-owned subsidiaries - SA Exploration Pty Ltd, Archer Pastoral Company Pty Ltd and Pirie Resources Pty Ltd - and Archer has agreed to sell all of the subsidiaries shares to iTech.
Completion of the sale and purchase of the subsidiaries is subject to the satisfaction or waiver of certain conditions precedent, including:
- NSW Government approval to the change in control of SA Exploration;
- iTech raising at least $5 million and listing on ASX;
- Archer receiving ATO Demerger relief; and
- Archer receiving shareholders’ approval.
At completion, Archer will receive 50 million consideration shares, which the board plans to distribute to Archer shareholders by way of a pro-rata in-specie distribution, subject to the receipt of favourable tax advice and regulatory and Archer shareholder approvals.
Archer will hold an extraordinary general meeting to seek shareholder approval of the sale of the subsidiaries and the in-specie distribution of the consideration shares.
Further details on the deal
Further information about the transaction, iTech, and the in-specie distribution of the consideration shares, including the record date for eligible Archer shareholders to receive their consideration shares, will be included in the notice of meeting to be distributed to Archer shareholders in June/July 2021.
Detailed information on iTech, the offer of securities under the proposed initial public offering, ASX listing and an indicative timetable will be included in a prospectus to be prepared by the iTech.
iTech has informed Archer that it expects to lodge the prospectus by the end of July 2021.
Mining activities
On completion of the sale of its three wholly-owned subsidiary companies, Archer will no longer hold any mineral exploration licences, mining leases or any other type of mineral tenement.
Archer will, however, keep the 2.0% net smelter return (NSR) royalty granted on the sale of the Eyre Peninsula tenements to Baudin Minerals Pty Ltd.
It also plans to execute an agreement with the buyer for the future purchase of graphene from the Campoona graphite operations.