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Ivrea Project: Second Exploration Permit Issued
Nyota Minerals Limited (LSE:NYO) has announced that a second exploration permit at the Ivrea Project in the Piemonte Region of Italy has been issued to KEC Exploration Pty.
Nyota announced on 10 February 2015 that it had entered into a binding agreement for the acquisition of 70% of KEC. The receipt of the second permit triggers the payment of the balance of the acquisition consideration as described below.
The Acquisition
Nyota entered in to a binding agreement in February 2015 to pay a consideration of 75 million new ordinary shares in Nyota and cash of A$100,000 to acquire 70% of the issued share capital of KEC . The A$100,000 comprised a fee of A$25,000 and A$75,000 of licence-related costs.
37.5 million Ordinary Shares and A$37,500 of the licence-related costs (i.e. half of the Consideration, excluding the fee) was paid immediately and the other half is now payable as a result of the issue of the Galerno permit to KEC.
There is no further consideration payable if and when further licences that have been applied for by KEC are issued.
Nyota agreed to fund 100% of KEC’s expenses and until such time as either it decides not to continue with the Ivrea Project, or a JORC-Compliant Mineral Resource of 50,000 tonnes of contained nickel at an average grade of not less than 0.75% (or a metal equivalent) is defined anywhere within the Ivrea Project area). Nyota and KEC therefore agreed an initial and non-binding exploration work programme and budget for the next 12 months with a target spend of at least A$150,000; further details of which are given below. Should Nyota decide to spend less than this amount the vendors would be entitled to a payment of A$50,000 (equivalent to approximately £26,000), payable in cash or new Ordinary Shares at Nyota’s discretion.
Following satisfaction of the Consideration, the Vendors will own in aggregate 7.8% of the enlarged share capital of the Company. The new Ordinary Shares to be issued to the Vendors will rank pari passu with the existing Ordinary Shares.
For the second tranche of 37.5m new Ordinary Shares the Appendix 3B notification for the purposes of the ASX Listing Rules is appended hereto and an application will be made for those shares to be admitted to trading on AIM, which is expected to occur on or around 28 April 2015.
In the event that the Project Hurdle Rate is met (and Nyota has not withdrawn from the Ivrea Project) a deferred consideration will become payable to the vendors comprising a further cash payment of A$250,000 and 150 million new Ordinary Shares (subject to shareholder approval at the time of issuance); in aggregate amounting to approximately A$367,000 (equivalent to approximately £188,000) based on the Closing Price. Following payment of the deferred consideration KEC’s shareholders will be required to contribute to KEC’s funding pro-rata their respective shareholding.
Each of Nyota and the vendors has a pre-emptive first right to acquire the other party’s interest in KEC, including by matching any third party offer for the other’s equity interest. In addition, an area of exclusivity has been agreed that prevents both parties from carrying on any exploration, consultancy or advisory work in competition with KEC.
Exploration and Initial Work Programme
KEC has applied for four exploration permits. The Bec and the Galerno permits have been issued and a further 2 licence applications (Gula and Fei) have been submitted. Nyota has no reason to believe that these applications will not be approved.
The licence applications cover a total of 117 km2 at the northern end of the Ivrea Gabbroic Complex that is the host to known nickel mineralisation. Exploration licences in Italy have an initial two year term and are renewable at least twice for a further two years each time subject to work requirements and developments.
The existing licence and the adjacent application areas include at least nine historic nickel mines and exploratory workings that have been inspected by Nyota prior to the acquisition.
