HomeEast AfricaBass Metals sharply reduces payment for Graphmada mine

Bass Metals sharply reduces payment for Graphmada mine

The agreement involves a material reduction of the ASX-listed company’s future obligations to Stratmin – reducing it from up to A$13 million to a maximum of A$3.14 million – and introduces a revised, accelerated payment timeframe.

As a result, the overall final price that Bass will pay for the operating Graphmada graphite mine is A$5.39 million instead of A$15.25 million.

Meanwhile, Stratmin’s remaining shareholding of 70 million shares in Bass will be issued to a number of existing Bass shareholders, including directors and key management. Bass will undertake a capital raising of up to A$2,000,000 to facilitate this transaction and to carry on with its production optimisation plans at Graphmada.

Under the company’s original share purchase agreement with Stratmin, Bass would pay A$1,500,000 in cash and issue 75,000,000 shares to Stratmin. These obligations were met and concluded in early September 2016.

The agreement also provided that Bass make further future payments to Stratmin, as part of the acquisition: a total of A$8,000,000 worth of Bass shares would be issued to Stratmin and the company was obliged to pay Stratmin a 2.5% production royalty of up to A$5,000,000 in cash over the next 5 years.

However, Bass and Stratmin have now agreed that Bass’ obligation to issue $8,000,000 worth of shares will be waived upon the payment of A$2,640,000 to Stratmin over the following timeframe: A$955,000 on or before 19 December 2016 and A$1,185,000 on or before 15 March 2017.

Bass has also secured an option to buy back its up to A$5,000,000 royalty obligation for the sum of A$500,000 with the option to be exercised by 31 December 2017, with no royalty payments to be made before this date.

Rick Anthon, Bass Metals Chairman, commented: “We are delighted with the terms of this revised agreement, which allows us to remove up to A$13,000,000 worth of future potential liabilities for A$3,140,000.

“This transaction provides great certainty to Bass and allows us to move forward confidently with our on-going optimisation and expansion plans”.