Update on strategy for African Pioneer and its proposed Standard Listing
and
US$500,000 investment in African Pioneer by Sandfire Resources Limited, Related Party Transaction, Issue of Equity and TVR
Update on Strategy for African Pioneer
Tiger is pleased to provide the following update on its 50.75% owned subsidiary, African Pioneer Plc (“African Pioneer” or “APP”), which having identified suitable exploration assets in the mining sector based in Zambia, Namibia and Botswana, is now looking to take advantage of healthier resource markets to acquire these assets and list African Pioneer on the Official List (by way of Standard Listing under Chapter 14 of the Listing Rules) and on the London Stock Exchange’s Main Market for listed securities (the “Standard Listing”) in conjunction with a placing to raise approx. £1.75m.
African Pioneer has been a subsidiary of Tiger since 22 August 2012 and Mr Colin Bird, Tiger’s Chairman, as well as Mr Raju Samtani, Tiger’s Finance Director, are both directors of APP. African Pioneer and its advisors are working on the proposed Standard Listing and a further announcement regarding this will be made in due course.
Exploration Assets being acquired by African Pioneer: The directors of APP have now identified suitable exploration assets in the mining sector based in Zambia, Namibia and Botswana and APP has entered into share purchase agreements to acquire the following three companies and their projects (the “Acquisitions”):
1. 100 per cent. of Zamcu Exploration Pty Ltd (“Zamcu”), which via its subsidiaries Manmar Investments One Hundred & Twenty Nine (Pty) Limited (“Manmar 129”) and Manmar Investments One Three Six (Pty) Limited (“Manmar 136”) holds 70 per cent. interest in the two Namibia Exclusive Prospecting Licenses (“EPLs”) located within the Matchless amphibolite Belt of central Namibia for a consideration of £798,981 to be satisfied by the issue on Standard Listing of; (i) 10,000,000 APP Shares to Zamcu shareholders, (ii) a total of approximately 4,742,857 APP Shares to Manmar 129 and Manmar 136 shareholders and (iii) approximately 4,900,000 APP Shares to Avanti Resources Pty Ltd as trustee for the Marlow Family Fund pursuant to an introduction mandate agreement. In addition, AUS$200,000 (£112,981) has already been paid to Manmar 129 and Manmar 136 shareholders in cash;
2. 80 per cent. of African Pioneer Zambia Limited (“APZ”), which holds 100 per cent. interest in the Zambian Prospecting Licenses (“Zambian PLs”) located in two areas namely the Central Africa Copperbelt (Copperbelt), which comprises four Zambian PLs and the Zambezi area which comprises one Zambian PL for a consideration of £1,925,000 to be satisfied by the issue on Standard Listing of 55,000,000 APP Shares; and
3. 100 per cent. of Resource Capital Partners Pty Ltd (“RCP”), which holds 100 per cent. interest in the Botswana Prospecting Licenses (“Botswana PLs”) located in two areas namely (1) the Kalahari Copperbelt (KC), which comprises six Botswana PLs and (2) the Limpopo Mobile Belt (Limpopo), which comprises two Botswana PLs (“Botswanan Projects”) for a total consideration of £350,000 to be satisfied by the issue on Standard Listing of 10,000,000 APP Shares to RCP shareholders. The Botswanan Projects are subject to the Conditional Botswana Licence Sale Agreement, further details of which are set out below.
The Acquisitions are conditional inter alia on Standard Listing. In conjunction with the proposed Standard Listing African Pioneer will be conducting a placing to raise approx. £1.75m (the “Placing”). Additionally, £100,000 of Tiger’s current outstanding loan to African Pioneer will be converted into APP’s Ordinary Shares on Standard Listing (together the “Transaction”). As a result of the Transaction, Tiger’s interest in APP will be diluted from 50.75% to 4.65% on Standard Listing.
Further details of Acquisitions; Further details of the Acquisitions set out in the Appendix to this announcement.
Conditional sale of Botswana Projects by African Pioneer: on 12 March 2021 African Pioneer have entered into a conditional licence sale agreement with ASX listed Sandfire Resources Limited ( ASX:SFR) (“Sandfire”) (the “Conditional Botswana Licence Sale Agreement”) which provides for;
a) The Sale of licences: the sale to Sandfire of the 8 Botswana licences (the “Licences”) being acquired at Standard Listing by the acquisition of Resources Capital Partners (Pty) Limited for an aggregate consideration of US$1M (being a Guarantee Fee of US$250,00 and a Licence Purchase Price of US$750,000) of which US$0.5M will be paid in cash (the “Cash Consideration”) and US$0.5M by the issue by Sandfire of its ordinary shares to African Pioneer (the “Consideration Shares”) at an issue price per share based on the 10 day VWAP of the Sandfire share price as at the date before the signing of the Sandfire Conditional Botswana Licence Sale Agreement;
b) An Exploration Commitment: Sandfire to spend US$1M on the Licences (the “Exploration Commitment”) within two years of settlement (the “Exploration Period”) and if the US$1M is not spent any shortfall will be paid to African Pioneer;
c) A Success Payment: a success payment to be paid to African Pioneer for the first ore reserve reported under JORC Code 2012 edition on the Licences which exceeds 200,000 tonnes of contained copper (the “First Ore Reserve”) in the range of US$10M to US$80M depending on the copper ore in the First Ore Reserve (the “Success Payment”). Sandfire have the option to elect to settle the Success Payment , if due, by the issue of Sandfire shares based on the 10 day VWAP of Sandfire shares at the time of announcing an Ore Reserve that triggers the Success Payment;
Given the limited exploration conducted on the Botswanan Licences to date and the many years that it could take to establish an Ore Reserve, there can be no guarantee that any such Success Payment will be forthcoming.
d) Conditions Precedents: The conditions precedent to be completed (unless indicated otherwise) by the long stop date of 31 July 2021 are;
a. The parties having executed the Convertible Loan Note Share Subscription Agreement;
b. African Pioneer providing, at least 5 Business Days prior to the Settlement Date:
i. ministerial consent for the transfer of the Licences;
ii. all ASX and LSE regulatory approvals;
iii. bank details for the payment of the Licence Purchase Price and the Guarantee Fee;
iv. approval of the acquisition of the Licences by the Competition Authority of Botswana (or confirmation from such authority or from either party’s Botswana legal counsel that such approval is not required); and
v. duly executed transfer applications for the Licences in the form required by the Mining Act or the Department under which a 100% interest in the Licences may be transferred to the Purchaser.
c. the Standard Listing having occurred by 30 June 2021. If Standard Listing has not occurred by 30 June 2021 then the initial long stop date of 31 July 2021 shall automatically be extended to 31 December 2021 (the “Long Stop Date”) and the Cash Consideration shall not be payable.
e) Completion and Standard Listing not occurring by Long Stop Date. If both i) completion of the Conditional Botswana Licence Sale Agreement and ii) Standard Listing have not occurred, by the Long Stop Date then African Pioneer will be due to pay Sandfire US$500,000 by way of a cancellation fee.
Rationale for Conditional Botswana Licence Sale Agreement: African Pioneer has seen this as an opportunity for Sandfire to take over ownership and responsibility for the exploration stage of the Botswanan Projects whilst allowing African Pioneer to share in the potential upside should the exploration ultimately be successful in establishing a mineable reserve. Sandfire has the in-country infrastructure and technical expertise and financial resources to accelerate the rate of expenditure on the Botswanan Projects by agreeing to fund a minimum of US$1 million of expenditure (compared to the APP’s 18 month budget of $176,000) and the proceeds from the sale to Sandfire will allow African Pioneer to concentrate its increased financial resources and its management capabilities on its remaining two projects in Namibia and Zambia. In addition, as part of the relationship with Sandfire, they have agreed to make a US$500,000 cornerstone investment in African Pioneer (further details of which are set out below).
Sandfire’s US$500,000 Investment into African Pioneer: In connection with its intended Standard Listing, on 1 1 March 2021 African Pioneer entered into a US$500,000 Convertible Loan Note Share Subscription Agreement (the “Sandfire Investment Agreement”) with Sandfire which provides for Sandfire to subscribe for US$500,000 of interest free unsecured loan notes (“Sandfire Investment Notes”) automatically convertible upon Standard Listing into APP Shares constituting 15% of the African Pioneer’s enlarged share capital on Standard Listing. Pursuant to the Sandfire Investment Agreement, upon conversion, Sandfire has the right to nominate a director to the Board of African Pioneer whilst their shareholding remains at or above 15% of the issued share capital of African Pioneer; the appointment will be subject to customary due diligence, although Sandfire has not indicated that they will take up this right and has not identified a candidate to date; additionally, Sandfire will have the right to participate in all future share offerings by African Pioneer as subscribers so as to maintain its African Pioneer shareholding at 15%, irrespective of any disapplication or non-application of pre-emption rights. The APP Shares issued to Sandfire at Standard Listing will be subject to a 12 month lock-in during which the APP Shares are not permitted to be sold, followed by a 12 month orderly markets period during which Sandfire are required to work with the APP’s broker for 10 days prior to making any sale.
Consequence of Standard Listing not occurring by 30 June 2021. If African Pioneer has not listed by 30 June 2021, then the Sandfire Investment Notes shall be automatically and immediately cancelled and the US$500,000 invested by Sandfire will not be repayable by African Pioneer.
Proposed Placing by African Pioneer : It is intended that African Pioneer will undertake a placing in conjunction with its Standard Listing, Novum Securities Ltd the Company’s existing Broker, will act as broker to African Pioneer in connection with the proposed placing details of which will be announced in due course.
Related Party Transaction in relation to Tiger : Mr Colin Bird and Mr Raju Samtani, both Directors of Tiger and African Pioneer, are also co-vendors of APZ and as a result each of Mr Colin Bird and Mr Raju Samtani will receive 15,000,000 APP Shares on Standard Listing and Campden Park Trading, a company owned and controlled by Mr Colin Bird, will receive 5,000,000 of APP Shares on Standard Listing carrying a value of £1,225,000 upon Standard Listing.
Accordingly, taking into account the fact that African Pioneer is currently a 50.75% subsidiary of Tiger, this is considered to be a related party transaction by Tiger pursuant to Rule 13 of the AIM Rules for Companies. The independent directors of the Company, Mr Alex Borrelli and Mr Michael Nolan consider, having consulted with the Company’s Nominated Adviser, Beaumont Cornish Limited, that the terms of the proposed transaction between African Pioneer and aforementioned co-vendors of APZ are fair and reasonable in so far as the Company’s shareholders are concerned.
In forming this view, the Independent Directors have considered the assessment of the Company’s geologists of the APZ assets, the overall effect of the proposed African Pioneer Transaction and the positive effect which it would have on the value of Tiger’s holding in African Pioneer and the validation of the involvement of Sandfire as regards both the investment in and arrangements over certain assets of African Pioneer. The current valuation of Tiger’s interest in African Pioneer is close to £Nil given African Pioneer’s negative net worth at 31 December 2020. In addition, as at the date of this announcement the Company is owed £231,112 by African Pioneer, £100,000 of which will be converted into APP Shares upon African Pioneer’s Standard Listing whilst £131,112 will be repaid in cash when African Pioneer has the available funds to settle this outstanding amount.
Issue of Equity by Tiger : The Company also announces that it has separately agreed to settle a corporate creditor through the issuance 8,500,000 new ordinary shares of 0.1p each at an issue price of 0.53p per ordinary share (“Settlement Shares”). The Settlement Shares will rank pari passu with the existing Ordinary Shares and application is being made for the 8,500,000 Settlement Shares to be admitted to trading on AIM (“Admission”). It is expected that Admission will become effective and dealings in the Settlement Shares will commence at 8.00 a.m. on or around 18 March 2021.
Total Voting Rights of Tiger: Following the issue of the Settlement Shares, the Company’s total issued share capital will consist of 447,942,308 Ordinary Shares with voting rights. The Company also holds 4,500,000 Ordinary Shares in treasury but there are no voting rights in respect of these treasury Shares. On Admission, the abovementioned figure of 439,942,308 Ordinary Shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in Tiger under the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules.
