12/09/2016 - 13:59

Potash West to acquire stake in Davenport

12/09/2016 - 13:59

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Davenport Resources has launched a $5 million capital raising to support its plans to acquire a potash project majority owned by West Perth-based Potash West and list on the ASX.

Potash West to acquire stake in Davenport
Potash West explores for potash in Western Australia.

Davenport Resources has launched a $5 million capital raising to support its plans to acquire a potash project majority owned by West Perth-based Potash West and list on the ASX.

Potash West will end up with a substantial shareholding in Melbourne-based Davenport, which was formed earlier this year as a spin-out from Arunta Resources.

It will acquire the shareholding when Davenport buys East Exploration; a potash explorer focused in Germany which is majority owned by Potash West.

Davenport is also planning to list on the ASX and hopes to raise up to $6 million in an initial public offering.

As part of the EE acquisition, Potash has committed to subscribe for $1 million worth of shares in Davenport’s IPO, which would give it a 25 per cent stake in company.

“Under the transaction terms, Potash West shareholders are now assured of a direct and priority investment in Davenport through subscribing for shares in the IPO, to a value of $1 million,” Potash managing director Patrick McManus said.

“The asset sale and resultant priority entitlement and new ASX listing process is an exciting milestone for Potash West shareholders.

“The anticipated fundraising will provide the financing to complete drilling programs that should lead to the delineation of a maiden JORC complaint potash resource on Kuellstedt.

“Post the capital raising Potash West will own 19.2 million Davenport shares, about 25 per cent of the company.”

Mr McManus will be non-executive chairman of Davenport, while Christopher Bain (an existing non-executive director of Davenport) will become managing director.

Davenport was previously a wholly-owned subsidiary of Arunta Resources but was demerged in February and took with it all of Arunta’s minerals exploration tenement interests.

Arunta was subsequently acquired by telecommunications company Spirit Telecom, and re-listed via the backdoor.

Davenport shareholders will meet at the end of the month to vote on the IPO, ASX listing and acquisition of EE.

Potash shares were unchanged at 2.8 cents each at the close.

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