Altona Energy PLC Joint Venture Agreement (0309X)

TIDMANR

RNS Number : 0309X

Altona Energy PLC

14 November 2014

Embargoed until 7.00am 14 November 2014

Altona Energy Plc

("Altona" or "the Company")

Arckaringa Joint Venture

Altona (AIM: ANR) is today pleased to announce that Altona, Sino-Aus Energy Group Limited ("Sino-Aus") and Wintask Group Limited ("Wintask") (together the "JV Partners") have signed an agreement in respect of the terms of the Arckaringa project joint venture ("Joint Venture Agreement" or "the JV") on 13 November, 2014, and have incorporatedan Australian joint venture entity, Arckaringa Coal Chemical Joint Venture Co Pty Ltd, with the quantum of the contributions to be made in stage payments by Wintask and Sino-Aus totalling AUD$33 million. The Company will post its final results for the year ended 30 June 2014 at 7.01am today.

Highlights

   --     Investment into the Arckaringa project by Wintask and Sino-Aus of AUD$33 million 

-- Initial drilling programme and Bankable Feasibility Study ("BFS") targeted to be completed within two years

-- Wintask and Sino-Aus will provide Altona with working capital of GBP2 million, subject to certain conditions, through a subscription of Altona ordinary shares of 0.1p each ("Shares")

-- The product focus of the Arckaringa project will be Coal-to-Methanol, coal chemical and synthetic gas production due to market demand and reliance of proven technology

Michael Zheng, Altona Energy's Executive Chairman, commented:

"We are delighted to have reached this milestone agreement with Sino-Aus and Wintask, which are both fully committed to the project. The new JV entity has been created to complete the BFS at Arckaringa, and ultimately to bring this world-class project to fruition. I would like to thank our shareholders for their patience and loyalty and we offer our promise that our entire focus will be on driving forward the drilling programme and BFS and further development of Arckaringa project, which will lay a solid foundation for future production."

For further information, please visit www.altonaenergy.com or contact:

 
Altona Energy Plc 
 Michael Zheng, Executive Chairman           [phone] 
Leander (Financial PR) 
 Christian Taylor- Wilkinson              [phone] 
WH Ireland Ltd (Nomad) 
 Adrian Hadden 
 James Bavister                          [phone] 
Old Park Lane Capital Plc (Broker) 
 Michael Parnes                          [phone] 
 
 

Overview

The ownership of the JV will be split accordingly: Altona 45%, Sino-Aus 45%, Wintask 10%. The transfer of Exploration Licences 4511, 4512, 4513 ("Arckaringa Licences") to the JV will occur when all conditions precedent have been met (the "Effective Date").

The conditions precedent to the Joint Venture Agreement are as follows:

   --     the approval of the joint venture by Australia's Foreign Investment Review Board (FIRB); 

-- ministerial consent pursuant to the Mining Act for the transfer of the Arckaringa Licences to the joint venture company; and

-- the approval by shareholders for the issue of the new Shares at a price of 1p each ("Placing Shares") at a specially convened General Meeting immediately following the AGM.

Operational ownership of the project will be shared among the JV Partners, with the first step of the BFS being the planned drilling programme; the results of which will inform the JV Partners of the scope of work needed to complete the BFS. The JV Partners have agreed to endeavour to complete the BFS within two years of the Effective Date.

If the cost of the BFS exceeds the total of the Sino-Aus Contribution and the Wintask Contribution, then each of the three JV Partners will be obliged to contribute to the overrun amount in accordance with its shareholding interests.

Arckaringa Coal Chemical Joint Venture Co Pty Ltd will have a board consisting of two voting members from Altona, two voting members from Sino-Aus and one voting member from Wintask. Sino-Aus has the right to appoint the chairman of the board. For the avoidance of doubt, Qinfu Zhang, being both a Director of Altona and a representative of Wintask, will not be eligible to be appointed to the JV board as one of the two representatives of Altona.

Financial Contribution

The financial contribution from the Sino-Aus and Wintask is as follows:

 
 All A$                Sino-Aus        Wintask       Total 
--------------------  --------------  ------------  ----------- 
 1st Contribution*     $5.4 million    $0.6million   $6million 
--------------------  --------------  ------------  ----------- 
 2nd Contribution**    $5.4 million    $0.6million   $6million 
--------------------  --------------  ------------  ----------- 
 3rd Contribution 
  ***                  $10.8 million   $1.2million   $12million 
--------------------  --------------  ------------  ----------- 
 4th Contribution 
  ****                 $8.1 million    $0.9million   $9million 
--------------------  --------------  ------------  ----------- 
 Total Contribution    $29.7million    $3.3million   $33million 
--------------------  --------------  ------------  ----------- 
 

* First Contribution Date means the date being 30 days from the date effective date.

**Second Contribution Date will occur 30 days from the commencement of the First Stage Task (ie, drilling programme) to be approved by the Board of the JV.

***Third Contribution Date will occur 30 days from the completion of the First Stage Task.

****Fourth Contribution date will occur after the completion of the Second Stage Tasks, which are to be determined by majority vote following the completion of the first stage tasks. The completion of a task is agreed by majority vote.

Further, Sino-Aus and Wintask will provide working capital directly to Altona, amounting to GBP2 million, in two tranches, which the Company regards as a strong sign of confidence from its partners.

The funding will be split as follows: subject to certain conditions Wintask will subscribe for 20,000,000 Placing Shares in two equal tranches and Sino-Aus will subscribe for 180,000,000 Placing Shares in two equal tranches. Altona will therefore seek shareholder approval at the forthcoming General Meeting, immediate following the AGM, for the issue of up to 200,000,000 Placing Shares.

Subject to shareholder approval and once the first contribution funds are received, Wintask and Sino-Aus will subscribe for 100,000,000 Placing Shares in the Company at the placing price of 1 pence per share to raise gross proceeds of GBP1 million. Their holdings following the first tranche placing are below:

 
 Shareholder    Previous holding   Placing Shares   Total Shares   Percentage 
                                                                    of Company's 
                                                                    enlarged Issued 
                                                                    Share capital 
-------------  -----------------  ---------------  -------------  ----------------- 
 Wintask (1)    230,000,000        10,000,000       240,000,000    26.9% 
-------------  -----------------  ---------------  -------------  ----------------- 
 Sino-Aus       -                  90,000,000       90,000,000     10.9% 
-------------  -----------------  ---------------  -------------  ----------------- 
 

(1) Mr Zhang Qinfu, executive director of the Company, is a director of Wintask and was nominated as a director of the Company by Wintask

Subject to the tranche one placing conditions and once the receipt of the second contribution funds have been received, Wintask and Sino-Aus will subscribe for 100,000,000 Placing Shares in the Company, again raising GBP1 million gross proceeds for the Company. Their holdings following the second tranche placing are below:

 
 Shareholder    Previous holding   Placing Shares   Total Shares   Percentage 
                                                                    of Company's 
                                                                    enlarged Issued 
                                                                    Share capital 
-------------  -----------------  ---------------  -------------  ----------------- 
 Wintask (1)    240,000,000        10,000,000       250,000,000    25.2% 
-------------  -----------------  ---------------  -------------  ----------------- 
 Sino-Aus       90,000,000          90,000,000      180,000,000    18.1% 
-------------  -----------------  ---------------  -------------  ----------------- 
 

(1) Mr Zhang Qinfu, executive director of the Company, is a director of Wintask and was nominated as a director of the Company by Wintask

The first and second tranche placings are conditional inter alia on admission of the Placing Shares to trading on AIM. The Placing Shares, when issued, will rank pari passu in all respects with the Company's existing issued Shares.

Upon completion of the subscription by Sino-Aus of 180 million Placing Shares in Altona, Sino-Aus will have the right to appoint a director to the board of Altona.

Following completion of the first tranche placing, there will be 891,956,853 Shares in issue and following the completion of the second tranche placing, there will be 991,956,853 Shares in issue.

Other Information

The board believes that the South Australia government is currently highly committed to resources projects in their region, and hasbeen a long-time supporterof the Arckaringa project, especially following the return of the Exploration Licences back to Altona on 18 March 2014.