Sipa Resources Ltd (ASX:SRI) will increase focus on its extensive Western Australian portfolio of gold and base metal projects after arranging the sale of Akelikongo Nickel-Copper Project in Uganda to London Stock Exchange listed Blencowe Resources PLC (LSE:BRES).
The terms of the staged option agreement will see Sipa receive US$1.5 million in Blencowe shares staged over four separate milestones, assuming successful advancement through all four stages.
It allows for Blencowe to acquire progressive ownership of the project over four stages with a total minimum spend by Blencowe of US$2.75 million (A$3.87 million) while Sipa will maintain interest in project upside via ownership of BRES stock.
“Important result for Sipa”
Managing director Pip Darvall said, “The sale of our Ugandan asset to Blencowe is an important result for Sipa and its shareholders as we can now focus our attention and funds on our highly prospective portfolio of Western Australian assets, with multiple exploration and drill programs planned for 2022.
“We wish Blencowe every success in their efforts to become a battery metals producer and believe that Akelikongo is a complementary asset to assist them in achieving this.
“Sipa will retain an interest in the project through its holding in Blencowe and our shareholders will benefit if further success in Uganda is achieved.”
The acquisition is structured as a series of options, with Blencowe progressively taking control of Sipa’s Ugandan subsidiary.
This transaction supports Blencowe’s efforts to become a leading supplier of battery minerals and complements its existing Orom-Cross Graphite Project in northern Uganda.
Terms of the deal are:
- Stage 1 – Blencowe to spend US$250,000 over the first six months to earn 20%. If Blencowe elects to move to Stage 2 then US$350,000 of BRES stock is issued to Sipa;
- Stage 2 – A further US$500,000 spent by Blencowe over next six months to earn 30% (cumulative 50%). If Blencowe elects to move to Stage 3 then an additional US$500,000 of BRES stock will be issued to Sipa;
- Stage 3 – A further US$1 million spent by Blencowe over the next 12 months to earn 30% (cumulative 80%). If Blencowe elects to move to Stage 4 then an additional US$650,000 of BRES stock will be issued to Sipa;
- Stage 4 – A further US$1 million spent by Blencowe over the next 12 months to earn 20% (cumulative 100%) at which point Blencowe will grant a Net Smelter Royalty of 1.5% to Sipa; and
- Escrow – each tranche of Blencowe shares will be subject to six-month escrow.
A total of US$1.5 million (approximately A$2.1 million) will be paid for 100% of the Akelikongo project, all in BRES shares, assuming successful advancement through all four stages.