Sovereign Metals Limited (ASX:SVM; AIM:SVML) (the Company or Sovereign) is pleased to announce that it intends to undertake a demerger (Demerger) whereby Sovereign’s Malawian graphite projects being the Nanzeka Project, Malingunde Project, Duwi Project and Mabuwa Project (Graphite Projects).
- Sovereign to demerge standalone Graphite Projects (being the Nanzeka, Malingunde, Duwi and Mabuwa Projects) into a wholly owned subsidiary, NGX Limited
- The Demerger seeks to unlock the value of the Graphite Projects for Sovereign shareholders and separate its Kasiya Rutile Project and its standalone Graphite Projects into two distinct companies
- The demerger of the Graphite Projects will be subject to shareholder approval and will involve an in-specie distribution to Sovereign shareholders on the basis of one (1) NGX Share for every eleven (11) Sovereign Shares
- NGX is proposing to pursue an ASX listing through an initial public offering of NGX Shares (IPO) pursuant to a prospectus following the completion of the Demerger
- Sovereign shareholders to retain further exposure to the value and upside of the Graphite Projects as the NGX IPO is expected to comprise a priority offer to existing shareholders on the basis of one (1) new NGX Share for every one (1) NGX Share received pursuant to the Demerger to raise approximately $8,600,000 and a general offer of $1,000,000 to assist with satisfying ASX spread requirements. This will ensure there is no cash outflow from Sovereign to NGX as part of the Demerger, other than applicable Sovereign expenses to affect the Demerger. However, terms of the NGX IPO are yet to be finalised
- A Notice of Meeting for the Demerger and Distribution will be sent to shareholders with the meeting planned to take place early in 2023
- The Demerger allows Sovereign and the existing management team to focus on its flagship Kasiya Rutile Project, the largest natural rutile deposit in the world
- Sovereign will retain all graphite co-product from the Kasiya Rutile Project
- Kasiya Pre-Feasibility Study currently advancing and on track for completion in H1 2023
Are to be demerged through NGX Limited (NGX), a wholly owned subsidiary of the Company, allowing Sovereign to focus on the development of the Kasiya Rutile Project (Kasiya) while unlocking value in its Graphite Projects for shareholders.
Sovereign proposes, subject to shareholder approval, to demerge the Graphite Projects via a spin-out of NGX and in-specie distribution of NGX fully paid ordinary shares (NGX Shares) to Sovereign shareholders by issuing one (1) NGX Share for every eleven (11) Sovereign shares (SVM Shares) held (Distribution), allowing Sovereign shareholders to retain exposure to the value and upside of the Graphite Projects.
Upon completion of the Demerger, NGX intends to seek admission to the official list of the ASX. NGX will undertake a capital raising to satisfy the ASX admission requirements.
NGX will be the offeror of the NGX Shares under the IPO. A prospectus will be issued by NGX for the IPO capital raising which will be made available when the NGX Shares are offered. Anyone wishing to acquire NGX Shares as part of the IPO offer will need to complete the application form that will accompany the prospectus.
Dr Julian Stephens (Perth)
+61(8) 9322 6322
Sam Cordin (Perth)
+61(8) 9322 6322
Sapan Ghai (London)
+44 207 478 3900
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