TSX-V listed nickel company Asian Mineral Resources has announced its intention to acquire ASX-listed tin junior Kasbah Resources.The two companies have entered into a Scheme Implementation Agreement (SIA) for Asian Mineral Resources (AMR) to acquire all of the ordinary outstanding shares of Kasbah by way of a scheme of arrangement under the Australian Corporations Act.
The board of Kasbah has unanimously recommended that all Kasbah shareholders vote in favour of the transaction in the absence of a superior proposal.
Major shareholders of Kasbah - Lion Selection Group (African Lion Fund), Traxys Projects L.P. and Thailand Smelting and Refining Co. - together holding approximately 26.7% of Kasbah’s issued share capital, have agreed to vote in favour of the transaction based on the disclosed terms of the scheme and in the absence of a superior proposal.
As such, the transaction is expected to close in November 2016.
“We are very pleased to be joining forces with AMR as we move towards the creation of a solid and diversified base metals platform. The transaction provides immediate value creation for the Kasbah shareholders and positions the combined company well in pursuing the imminent project financing and construction of the Achmmach tin project,” says Kasbah’s Chairman, Dr. Rodney Marston
Jim Askew, who is currently Chairman of AMR’s board of directors, will remain as Chairman of the board of directors of the combined company, following the implementation of the transaction. The board will be composed of up to seven directors, two of which will be nominated by Kasbah and two of which will be independent directors.
Pala, currently the largest shareholder of AMR, will remain as a 37.7% shareholder in the combined company following the implementation of the transaction. In addition, Pala will provide Kasbah with a A$1,000,000 loan to cover working capital and transaction costs, which Kasbah can draw in two tranches of A$500,000
Kasbah Resources has recently announced a definitive feasibility study which supports a two stage development plan for its 75% owned Achmmach tin project in Morocco.
AMR brings an experienced management team with a track record of successful underground mine development and operations arising from its operation of the Ban Phuc nickel mine in Vietnam.
Once completed, the transaction will provide a clear path to the commencement of construction at Achmmach, which is subject to the decision of the AMR board on an appropriate project financing package.
However, the transaction provides upside opportunities for AMR and Kasbah shareholders with exposure to upswings in tin and nickel, a diversified asset base and potential for future growth.
Moreover, Marston says that the transaction provides a unique opportunity to leverage off AMR’s skilled operations and management team and their experience in commercializing and operating an underground base metals operation in a challenging jurisdiction.
Adding the Ban Phuc nickel mine to the portfolio mix of the combined company will also allow for geographical and commodity diversification, as there are significant exploration targets in close proximity to Ban Phuc which will, if they prove successful, place the combined company in a strong position to rapidly take advantage of the positive momentum in the nickel price and generate cash flow.
Askew says that AMR has done an excellent job in bringing to production the Ban Phuc nickel mine and operating under a challenging nickel price environment.
“We are very excited about the opportunity to team up with proven explorers and resource developers like Kasbah, as well as strategic players such as Toyota Tsusho Corporation and Nittetsu Mining, and transfer our operating experience and knowhow to the successful development of the Achmmach tin project,” says Askew.
Following completion and the positive results of the DFS, as a matter of first priority the combined company will proceed with considering project financing options for the Achmmach tin project.