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Marvel Gold lodges Evolution Energy Minerals prospectus and secures major ESG fund as cornerstone investor

Published: 10:43 29 Sep 2021 AEST

Marvel Gold Ltd - Marvel Gold lodges Evolution Energy Minerals prospectus and secures major ESG fund as cornerstone investor

Marvel Gold Ltd (ASX:MVL) has taken another key step in spinning off its Chilalo Graphite Project asset in Tanzania with a prospectus lodged for spin-off vehicle Evolution Energy Minerals Limited.

Providing a launching pad for the A$22 million initial public offer (IPO) at $0.20 cents per share is the participation of prominent investment fund, ARCH Sustainable Resources Fund LP (ARCHSRF), which has a strong environment, social and governance (ESG) focus.

ARCHSRF, which is based in Guernsey, will cornerstone the offer with a subscription for A$8 million.

Financial support

This forms part of an overall potential allocation of up to US$25 million by ARCHSRF for ongoing financial support to Chilalo, with this further support subject to negotiation and the fund’s investment hurdles.

The IPO also includes a priority offer to Marvel shareholders for up to $2 million.

“Meaningful exposure” for Marvel

Marvel managing director Phil Hoskins said: “We are very pleased to be moving ahead with the spin-out of the Chilalo Graphite Project and the IPO of Evolution.

“This is an important transaction that not only delivers non-dilutionary funding to Marvel, but also provides our shareholders with meaningful exposure to the ongoing development of Chilalo.”

Evolution Energy Minerals is a wholly-owned subsidiary of Marvel which, upon completion of the spin-out transaction, will own and operate the Chilalo Graphite Project in Tanzania’s southeast.

Evolution IPO

Under the IPO, Evolution is seeking to issue 110 million new shares at an issue price of $0.20 per share, to raise not less than $22 million, before costs. This comprises:

  1. The offer of 70 million new shares to raise $14 million;
  2. A priority offer of up to approximately 10 million new shares for up to $2 million to eligible Marvel shareholders; and
  3. An offer to ARCHSRF of 40 million new shares to raise $8 million.

Part of the IPO process will see Evolution apply to list on the ASX with the funds raised to progress development of the Chilalo Project.

“Landmark milestone”

Evolution executive chairman Trevor Benson said: “This is a landmark milestone in the development of the Chilalo Project, an advanced graphite asset of the highest quality.

“On completion of the IPO, Evolution will be well funded and with a team that has substantial experience in graphite and project development in Africa, strongly positioned to realise the value of Chilalo.

“We are particularly pleased to welcome ARCHSRF as a cornerstone shareholder, whose financial support and ESG expertise will assist Evolution in its objective of becoming a producer of sustainable graphite products for the global green economy.”

Marvel will hold shares representing about 31% of the new company’s issued shares and will be paid up to $2 million cash as consideration for the sale of Chilalo.

Chieftain Securities Pty Ltd and Ashanti Capital Pty Ltd have been appointed as joint lead managers to the IPO.

ESG commitment

ARCHSRF’s investment not only validates Evolution’s commitment to ESG standards, but also provides Evolution with insight into the expectations of institutional investors with respect to ESG standards.

Together with its prioritisation of ESG performance, this is expected to position Evolution as an investment proposition for a wide range of ESG-focused fund managers.

ARCHSRF is advised by ARCH Emerging Markets Partners Limited, a specialist emerging markets investment advisory firm involving individuals with deep experience in emerging markets, private equity, asset management and legal and governance matters.

Investment agreement

Evolution has entered into an investment deed and a royalty deed with ARCHSRF. As well as the $8 million cornerstone investment, the agreement, which is subject to terms and conditions, will see ARCHSRF:

  • Agree to acquire a 1.7% net sales return royalty on minerals from Chilalo in exchange for $2 million;
  • Indicate its intention to allocate up to US$25 million (inclusive of the $10 million already contractually committed) for ongoing financial support of the Chilalo Project, such further support remaining subject to negotiation and ARCHSRF’s investment hurdles; and
  • Has the right to appoint a nominee to the Evolution board of directors, while it holds not less than 10% voting power in Evolution.

“A world-class asset”

Managing director of the ARCH SRF investment strategy, Amanda van Dyke, said: “We’re incredibly excited to cornerstone the IPO of the Chilalo Graphite Project, a project we’ve been monitoring for over 12 months.

“We view Chilalo as a world-class asset and Evolution has assembled a team with considerable graphite marketing and project delivery experience.

“Our investment follows an extensive due diligence period including an extensive review of the project’s ESG credentials and a site visit in May 2021.

“ARCH SRF was created with a strict ESG focus to work in strategic partnership with companies like Evolution, supporting them financially, technically, on ESG and commercially to create investor value."

“We strongly believe that the supply of sustainable raw materials is the key to our green economic future," she said.

“Our vision is to deploy our significant ESG, project financing and development expertise to ensure Evolution meets the highest standards for sustainable development to become the supplier of choice for high-value graphite and battery materials products.”

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