BMR Group PLC Acquisition of Star Zinc (7917P)

TIDMBMR

RNS Number : 7917P

BMR Group PLC

05 September 2017

BMR Group PLC

("BMR", the "Group" or the "Company")

Acquisition of Star Zinc through a Joint Venture Agreement with Galileo Resources PLC

This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.

Pursuant to the previous announcement on 31 August 2017 regarding the signing of a term sheet to enter in to a joint venture agreement with Galileo Resources PLC ("Galileo") concerning Star Zinc, the Board is delighted to announce that on 4 September 2017, BMR, on behalf of its newly incorporated wholly owned subsidiary ("Enviro Zambia"), entered into an agreement with Bushbuck Resources Limited ("Bushbuck") to complete the acquisition of Star Zinc for a cash consideration of $1,000,000, of which a $130,000 payment has already been paid, resulting in a remaining consideration of $870,000.

The first tranche of the remaining consideration of $400,000, together with VAT of $160,000, was paid on 4 September 2017, with the balance, to be satisfied in cash, as to $300,000 by no later than 28 November 2017 and as to $170,000 by 28 February 2018. BMR has also already paid the property transfer tax amounting to 10% of the aggregate consideration.

As security for the payment of the whole of the remaining consideration, Bushbuck has been granted a charge over (i) the removable assets of BMR's wholly-owned subsidiary, Enviro Processing Limited, which owns all of the assets at Kabwe, BMR's principal operations, bar the property, and (ii) $570,000 of new ordinary shares of BMR at a discount of 25% to the prevailing market price.

On 31 August 2017 the Company also entered into a binding term sheet concerning a joint venture, the terms of which were disclosed in the announcement on the same date, with Galileo, a UK focused resource company quoted on AIM, whereby Galileo advanced to the Company $591,600 (at an interest rate of 12% per annum) primarily to enable the Group to finance the initial consideration payable to Bushbuck. Upon completion of the acquisition of Star Zinc, Galileo subscribed for a 51% equity stake in Enviro Zambia which was satisfied by the cancellation of the aforementioned loan of $591,600.

Galileo will undertake an 18 month work programme at a cost of $250,000 (in respect of which it has placed $100,000 in escrow), using reasonable endeavours to complete a preliminary economic assessment of Star Zinc ("PEA"), following which further new shares in Enviro Zambia will be issued to Galileo to increase its aggregate equity interest therein to 85%. BMR shall have the right to reduce the interest of Galileo from 85% to 75% on payment of $150,000 to Galileo, through the repayment of the $100,000 held in escrow plus a $50,000 arrangement fee within 90 days of the date of completion of the joint venture agreement, (failing which the US$100,000 is released to the Company);

Other highlights of the joint venture include:

- from completion of the 18 month work programme until completion of a feasibility study, the interest of BMR in Enviro Zambia shall be free carried; and

- BMR and Enviro Zambia shall enter into an off take agreement for processing of ore from Star Zinc at Kabwe, such terms to be determined as soon as reasonably practicable following completion of the PEA to reflect capacity production of Zinc from Star Zinc, and relevant grade and resource life of the Star Zinc project set out in PEA, which BMR intends to process in conjunction with its Leach Plant Residues;

Alex Borrelli, Chairman of BMR, commented: "We are delighted to have effected the acquisition of Star Zinc which is expected to secure access for us to Star Zinc's high grade resources which have the potential to enhance the grade of the Zinc products from our Kabwe processing plant. It has taken a long time to reach this point, and we thank Bushbuck for their patience while funding for the project was secured. Galileo is a strong partner for mining the resource at Star Zinc and with them we look forward to taking the project forward and updating the Market on our work in due course."

For further information:

BMR Group PLC 020 7734 7282

Alex Borrelli, CEO and Chairman

WH Ireland Limited 020 7220 1666

NOMAD and Joint Broker

Chris Fielding/ Alex Bond

Peterhouse Corporate Finance 020 7469 0930

Joint Broker

Lucy Williams/ Duncan Vasey/ Heena Karani

This information is provided by RNS

The company news service from the London Stock Exchange

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September 05, 2017 02:00 ET (06:00 GMT)