North Perth-based metals explorer Aura Energy Ltd has entered into a deal, potentially valued at $460 million, with Chinese company Sino King Investment Ltd.
North Perth-based metals explorer Aura Energy Ltd has entered into a deal, potentially valued at $460 million, with Chinese company Sino King Investment Ltd.
Both companies have signed a heads of agreement to develop Aura's Storsjon uranium project in central Sweden, whereby Sino has the right to acquire an 80 per cent interest.
Under the deal, Sino has agreed to pay a $1 million deposit and sole fund exploration work to a total of $15 million within 30 months, at which time it would have earned a 20 per cent interest.
In addition, Sino will have the right to acquire a further 60 per cent in the project for a cash payment of $460 million.
Meanwhile Sino will have the option of taking a 15 per cent stake in Aura at 23 cents per share, only after Sino has spent $4 million in exploration.
Sino can also subscribe for a further 15 per cent stake in Aura, only after Sino has acquired a 20 per cent interest in the project.
The agreement is subject to due diligence, anticipated to take around one month.
Below is the announcement:
Aura Energy (ASX: AEE, "Aura", "the Company") is pleased to announce it has entered into a Heads of Agreement ("Agreement") with Sino King Enterprise Investment Limited ("Sino King") potentially worth A$460 million to develop the Company's Storsjön Project ("Project") in central Sweden.
Under the Agreement, Sino King has the right to acquire up to 80% of the Project, which comprises seven granted exploration licences and one application covering 106km2 in the proven Alum Shale uranium district.
Terms of the Agreement:
- Sino King has agreed to pay a A$1 million non-refundable deposit within 10 days of completing final due diligence.
- Sino King must solely fund exploration on the Project to a total of A$15 million (including the previous payment of A$1 million) to be spent within 30 months and may not withdraw from the agreement prior to spending A$4 million within 12 months of the agreement.
- The objective of the exploration programme is to define an inferred resource, compliant with the JORC code, of one billion tonnes of Alum Shale with a minimum average grade of 160ppm U3O8.
- The exploration program is to be managed by Aura.
- Upon completion of the sole funding period, Sino King will have earned a 20% interest in the subsidiary holding the Project.
- In addition, at that time, Sino King will have the right to acquire an additional 60% interest in the Project for a cash payment of A$460 million.
- Aura will grant Sino King an option to take a 15% placement in the Company at $0.23 per share. This option is exercisable only during the period of 90 days after Sino King has sole funded A$4 million of expenditure on the Project.
- Aura will grant Sino King a further option to take an additional 15% placement in the Company at $0.38 per share subject to the requirements of the Corporations Act.This option is exercisable only during the period of 90 days after Sino King has acquired a 20% interest in the subsidiary which holds the Project.
- The granting of the second tranche of options is conditional upon all necessary ASX regulatory compliance and shareholder approvals.
- The Agreement is subject to final due diligence, which is anticipated to be completed within one month.
Aura Energy's Managing Director, Dr Bob Beeson, said the Agreement is a tremendous vote of confidence in the Company's exploration team and their ability to identify and advance a major project.
"We've always been confident in the potential for a very large scale, near-surface uraniummolybdenum- vanadium deposit in the Alum Shale area and this Agreement with Sino King justifies that confidence," said Dr Beeson.
"The Project has moved from discovery hole to gaining the attention of major uranium players within six months," he said.
"This Agreement will assist the fast-tracking of exploration to prove up a resource at Storsjön over the coming months."
"Storsjön is only one of several substantial projects that Aura has acquired over the past two years that we will continue to develop and add value for our shareholders."
Aura has recently announced a succession of very positive drilling results that have attracted the attention of potential investors. Seventeen drill holes in the Häggån licence have an average intersection of 116 metres of mineralised shale, with the thickest intersection being 204 metres.
The potential of the district is indicated by the presence of a major uranium-vanadiummolybdenum resource in adjacent tenements in Jämtland. Continental Precious Metals (TSX: CZQ) have announced an inferred resource of 437 million pounds of U3O8, 900 million pounds of MoO3 and 7.14 billion pounds of V2O5.
The province is considered to contain Europe's largest resources of uranium.
