Michael McNeilly, Chief Executive Officer of Metal Tiger, commented: Clearly we are disappointed that we were unable to agree acceptable terms given the amount of work undertaken to demonstrate the investment case. With that said, Metal Tiger must look towards the future and take an optimised and moderated risk approach in the balancing of its allocation of funding.
The Board is excited by the Company’s portfolio of investments and their potential for significant value accretion. Following Sandfire’s takeover of MOD Resources and the execution of the collar facility, Metal Tiger is a very different company than it was when the Agreement was executed, as is the current the macro-economic climate; it is important that the Board’s investment decisions reflect this evolution. The Board believes that this difficult, but arguably positive decision, will simplify the investment case for Metal Tiger and improve its medium to longer-term prospects.
Termination of Acquisition and Joint Venture Agreement, Thailand
Metal Tiger plc (AIM: MTR), the London Stock Exchange AIM listed investor in natural resource opportunities, announces that the Company and its joint venture partner have both mutually agreed to terminate the acquisition and joint venture agreement (the “Agreement”) entered into between Metal Tiger and certain group companies, Kanchanaburi Exploration and Mining Company Limited, Boh Yai Mining Company Limited (“BYMC”) and the majority owner of both companies, Mr. Pornnaret Klipbua. The Agreement was entered into in August 2016.
As noted in the Strategic Report for the year ended 31 December 2018 and subsequently in the interim results for the six months ended 30 June 2019, the Company has been in active discussions with regard to renegotiating the terms of the Agreement, with a view to farming into BYMC in order to facilitate the joint venture to run an exploration drill campaign at Boh Yai lead-zinc-silver mine (“Boh Yai”) . The Company’s understanding from its joint venture partner, was that Mr Klipbua and his team had found a viable option that was compliant with the permitting framework under Thai law, in order to allow for the implementation of exploration/resource drilling at the mine site.
Metal Tiger’s negotiating position was to farm-in for 49% of the project for a commitment to undertake an aggressive 2-year drill campaign without any payments to the joint venture partner. This would have represented a significant capital commitment from Metal Tiger over the next two years, with the potential to increase significantly the viability of Boh Yai. Unfortunately, notwithstanding a significant amount of cost-benefit and sensitivity analysis, economic modelling, downstream processing feasibility work, exploration planning, staffing planning, work undertaken for permitting, and scoping of potential Asian buyers for the project post completion of drilling, the Company was unable to reach terms with Mr Klipbua to accept a deal without an upfront payment. In light of this, as well as the prevailing macro-economic environment, the risk-reward ratio was not acceptable to Metal Tiger given a number of factors, including future allocation of funds to support existing investments, potential future investments and the desire to maintain a strong liquidity profile without the potential need to seek equity financing.
The Board of Metal Tiger (the “Board”) remains convinced of the potential to increase significantly the resource estimates for Boh Yai and all of the work undertaken in this regard remains the intellectual property of Metal Tiger. The Company will be retaining its intellectual property in respect of the project and is open to approaches from, or discussions with, third parties, particularly those that would be willing to explore a joint approach to help capture the project’s potential value. The Board believes the relationship with Mr Klipbua remains a very positive one.
All information is provided on an as-is basis. Where we allow Bloggers to publish articles on our platform please note these are not our opinions or views and we have no affiliation with the companies mentioned