Lotus Resources, A-CAP Energy to merge

Perth-based Lotus Resources and A-CAP Energy have agreed to a merger to combine their assets and be a major uranium player in Africa.

Lotus today announced on the ASX that it has agree to merge with West Perth-based A-Cap under a scheme of arrangement where shareholders would receive one Lotus share for every A-Cap share they own.

The merger transaction implies an offer price of about 5.21 cents per A-Cap share, the ASX announcement said.

The deal would value the acquisition of the more than 1.2 million A-Cap shares at about $64.2 million.

Lotus has been focusing on the uranium sector after acquiring the Kayelekera mine project in Malawi in 2020.

A-Cap Energy is a minerals exploration company that oversees the Wilconi Nickel Cobal project in Western Australia and the Letlhakane Uranium project in Botswana.

Lotus managing director Keith Bowes said combining the uranium assets of both companies would create a dedicated African uranium vehicle to meet the needs of the growing market.

“Lotus’s resource base will increase almost five-fold, from 51.1Mlb to 241.5Mlb [100 per cent basis], while A-Cap shareholders will gain exposure to a production ready asset in Kayelekera,” he said.

“The shareholders of both groups will share in the benefits of a long-term development project complementing Kayelekera’s shorter term uranium production profile.”

Lotus non-executive chairman Michael Bowen said the merger represented an opportunity for both companies and their shareholders.

“The combined assets not only produce a globally significant uranium resource, but de-risk the company going forward with improved access to funding and offtake,” he said.

“Letlhakane, which is located in a world-class mining jurisdiction, will be the basis for the long-term growth of the company and I am excited to see what the uranium expertise of the Lotus’s team can bring to Letlhakane.”

A-Cap Energy chairman Jiandong He said the Letlhakane project had reached a point where it was well set to become a significant global uranium supplier in an improving price market.

“A-Cap shareholders will benefit from the early production at Kayelekera while also drawing greater value from the longer-term development of Letlhakane,” he said.

“I encourage A-Cap shareholders to support the merger and am confident of the success of the merged group.”

A-Cap Energy deputy chairman Paul Ingram said the merger would provide the company’s shareholders immediate value realization at a premium.

“It also provides the opportunity to become a shareholder in Lotus, a larger, more liquid vehicle, while retaining meaningful exposure to Letlhakane and significant leverage to the global uranium thematic,” he said.

“Becoming a part of a larger group significantly reduces development, funding and execution risk.”

Thomson Geer was acting as legal adviser to Lotus for the merger.

Canaccord Genuity (Australia) Limited was acting as financial adviser to A-Cap, with Ashurst acting as legal adviser.