Strategic Minerals has entered into arrangements with New Age Exploration to acquire its entire 50% shareholding in Cornwall Resources – the joint venture vehicle developing the Redmoor tin and tungsten project in Cornwall, it announced on Monday.
The AIM-traded firm said the total capped purchase price was £2.66m, with the acquisition subject to approval by NAE shareholders at a general meeting.
Upon completion of the acquisition, Cornwall Resources will be 100% owned by Strategic.
The purchase price had been structured to reflect expected future Strategic Minerals cash flows, with a significant component of the purchase price set to be determined by future production revenues.
Strategic Minerals said the purchase price would be payable in three stages, with the first being £1.06m in cash within 30 days of approval by NAE shareholders.
The second stage would consist of a £0.54m Strategic Minerals promissory note, payable 180 days after settlement, with the third stage consisting of a royalty stream of 1.5% of net smelter revenue from Redmoor production, capped at £1.06m.
“The recent resource upgrade has highlighted the potential world class nature of the Redmoor tin and tungsten project, and has given the board confidence to consolidate control,” said Strategic Minerals managing director John Peters.
“To date, Strategic Minerals has progressed Redmoor in conjunction with its joint venture partner, NAE, and is delighted that this opportunity has arisen to acquire total control of the project.
“Whilst the acquisition is subject to approval by NAE shareholders at a general meeting, we consider this will be forthcoming within around a month, and Strategic Minerals will then have a further 30 days to settle the acquisition.”
Peters said Strategic has valued working with NAE in developing Redmoor, with the board “pleased” to have agreed a fair and mutually beneficial transaction.
“As a UK listed company with full ownership of a flagship UK based project, Strategic Minerals is proud to play a significant role in the renaissance of the Cornish mining industry.
“Whilst the company has sufficient cash resources to fund the acquisition of NAE's interest in Redmoor, it is exploring non-dilutive funding alternatives with a select group of potential investors, at both a holding company and project level.
“Taking full control of Redmoor provides a significant benefit to the Company as it allows it to, solely, set the timing of project developments and, hence, the potential need for cash flow.”
The board considered the acquisition to be an “exciting opportunity”, Peters said, and in conjunction with its team and local stakeholders, it looked forward to the next phase of development for Cornwall Resources.
“Strategic Minerals believes such development will further demonstrate the potential size and scope of the project and its position in a global context.”
The company's board confirmed that the Strategic Minerals chairman, Alan Broome, was also the chairman of NAE and that, after making the rest of the board aware of the Redmoor opportunity, recused himself from any further dealings with the acquisition including any voting at board level in both the company and NAE.