Medcaw Investments Plc Potential acquisition of near-term Lithium production asset

 
TIDMMCI 
 
7 July 2023 
 
 
 
Potential acquisition of near-term Lithium production asset 
 
 
 
  · Signing of conditional implementation agreement with Abyssinian Metals 
Limited 
  · Equity Fundraise & Suspension of Trading 
 
Medcaw Investments plc (LSE:MCI), an acquisition vehicle, is pleased to announce 
that it has entered into a conditional implementation agreement with Abyssinian 
Metals Limited ("AML"), a company incorporated in Australia and developing the 
Kenticha lithium project located in Oromia State, Southern Ethiopia. 
 
Subject to the Company being satisfied with technical, legal, accounting, tax, 
financial, commercial and environmental due diligence on AML the Company will 
consider making an offer to acquire up to 100% of the entire issued share 
capital of AML ("AML Shares") in consideration for the issue and allotment of 
new ordinary shares ("Ordinary Shares") in the Company to the shareholders of 
AML ("Proposed Transaction"). As at the date of this announcement no decision 
has made by the Company whether to proceed with an offer for the AML Shares or 
otherwise and there is no offer that is capable of being accepted by the 
shareholders of AML. 
 
AML is a clean energy metals company with a focus on the development of the 
Kenticha lithium project in which it has a 51% legal and beneficial interest and 
manager of the project with the Oromia State holding 49%. 
 
Highlights: 
 
  · The Company has entered into a conditional implementation agreement with AML 
("AML Agreement") which details, inter alia, an agreement for the Company to 
finalise technical, legal, accounting, tax, financial, commercial and 
environmental due diligence on AML with a view of advancing a timetable and 
negotiations for a potential offer; 
  · Medcaw has today raised £400,000 at 8p per share ("Placement Shares") 
through an equity placement to various high net worth and institutional 
investors introduced by GIS Global Investment Strategy ("GIS") ("Placement"). 
  · Subject to satisfactory due diligence any formal offer by the Company for 
the shares in AML is expected to be conditional on: 
    · receiving acceptances under the Offer from shareholders of AML holding at 
least 51% of the voting rights of AML; 
    · if required, a waiver by the UK Takeover Panel (the "Panel") in respect of 
the obligations under Rule 9 of the Takeover Code on the shareholders of AML to 
make a mandatory offer for the shares in the Company having been granted; 
    · if required, approval by shareholders of Medcaw Investments of the waiver 
granted by the Takeover Panel and as required any other approvals of the 
shareholders of the Company having been granted; 
    · there having been no material adverse change in the business, results of 
operations, condition (financial or otherwise) or prospects of AML or any of its 
subsidiaries from the date prior to completion of the Proposed Transaction; 
    · various board and shareholder approvals; and 
    · other conditions to be confirmed in due course. 
 
  · If completed, the Proposed Transaction will constitute a reverse takeover 
under the Listing Rules. The Company is currently unable to provide full 
disclosure under Listing Rule 5.6.15 in relation to AML and it has requested a 
suspension of trading in its shares with immediate effect. The trading of the 
Company's shares will remain suspended until such time as a prospectus is 
published in relation to the Proposed Transaction or the Company announces that 
the discussions have been terminated. 
  · Given the conditionality of the implementation agreement, including a due 
diligence condition before an offer is agreed, there can therefore be no 
guarantee that the Proposed Transaction will proceed as envisaged or that it 
will proceed at all. No offer has been made by the Company at this stage. 
 
The Company and AML have engaged professional advisors to finalise due diligence 
and, should the due diligence condition be satisfied and an offer for the AML 
Shares be confirmed, assist with the documentation to implement the timetable in 
the implementation agreement. 
 
Highlights of the Kenticha project: 
 
  · The Kenticha project has JORC, open-pitable, inferred resource of 87.7mt @ 
0.78% Li2O with exploration upside of up to 51mt Li2O.  Assay re-sampling of 
historic pulps, which is 60% completed with CSA Global, expected to increase the 
Li2O grade by up to 25%. 
  · 3 high grade starter pits identified @ 1% Li2O cut-off of c. 20mt @ 1.2% 
Li2O (pre re-assay of pulps - post expected Li2O 1.5%+) 
 
Near term production highlights 
 
  · Stage 1 (a) of 80,000 tpa (annualised) of 5.5% spodumene concentrate (SC5.5) 
from the first of the Dense Medium Separation ("DMS") plants at the Kenticha 
project is due to be commissioned in late 2023. 
  · Stage 1 (b) - 240,000 tpa (annualised) SC5.5 from end of 2024 as the second 
DMS plant is commissioned. 
  · 2025 production equates to circa USD720m annualised revenue assuming 
USD3,000 per tonne of SC5.5.  Significant profit margin given forecast of all in 
sustaining cost of USD750 per tonne which is estimated to reduce to USD525 per 
tonne once production hits nameplate capacity of Stage 1 (b) DMS. 
  · Feasibility Study underway on Bespoke Model production plant - 5mtpa plant 
producing an additional 600,000 tpa SC5.5 with scheduled production early 2027. 
 
  · 840,000 tpa of SC5.5 on commissioning of the Bespoke Model is targeted from 
the end of 2027 putting AML in the top quartile of lithium spodumene concentrate 
producers globally. 
  · AML has developed strong relationships in Ethiopia including vital support 
from both the federal, state and local governments including the local community 
in which it operates. 
 
  · AML has entered into a credit facility with New York based institutional 
asset manager which enables AML to draw down up to USD25m at its option. 
  · AML has secured additional project funding of USD60m secured over 180 ktpa 
SC5.5 production for 3 years. 
  · AML as manager of the Kenticha project has 100% of the marketing rights of 
the SC5.5 product. 
  · AML directors and management have a wealth of experience in bringing tier 1 
mining assets into production across Africa. 
  · World leading third party consultants engaged for all aspects of the project 
are as follows:- 
    · Neuplan - engineers and project managers for Stage 1 (a) and (b) of the 
DMS plants 
    · CSA Global - geological modelling and resource reporting 
    · Knight Piesold - geotechnical consultants 
    · Min-met Projects - construction of DMS plants 
 
Kenticha Lithium Project 
 
Kenticha is a highly evolved, rare element, Lithium Caesium Tantalum (LCT) 
pegmatite project comparable to other major rare-element pegmatites such as 
Greenbushes, Tanco, Wodgina, Volta Grande and Altai No.3.   Kenticha is a late 
-stage development asset which AML intends to develop with the production of 
spodumene concentrate planned in stages, with near-term production through a 
Dense Medium Separation (DMS) modular plant. 
 
Recent progress of the Kenticha site includes initial camp construction to 
accommodate the operating team and security personnel, provision of services to 
the local community, and civil works including roads, water, and power. There 
have been discussions and provisional agreements with port authorities for port 
access and freight forwarding arrangements, as well as mobilisation of 
contractors and equipment for the start-up of operations including drilling 
programmes which recently commenced. The construction and fabrication of the DMS 
modular plant for the Stage 1 (a) Near Term Production has been custom-built in 
Johannesburg and is in the process of being packed up and shipped to Ethiopia. 
It is anticipated that the Stage 1 (a) DMS will be in-situ at the Kenticha site 
in August 2023 and commissioning will start thereafter with the first SC5.5 
being produced by the end of 2023. 
 
The Proposed Transaction 
 
Subject to, and conditional upon, the Company being satisfied with due diligence 
on AML, Medcaw Investments and AML have agreed to work together in order to 
formalise a potential offer by Medcaw to the shareholders of AML for up to 100% 
of the issued share capital of AML in accordance with the indicative timetable 
set out in the AML Agreement. 
 
As at the date of this announcement no decision has made by the Company whether 
to proceed with an offer for the AML Shares or not and, for the avoidance of 
doubt, nothing in this Agreement is a statement of intention by the Company to 
make a takeover bid for the Offeree under section 631 of the Corporations Act 
2001 (Cth). Further, this announcement is not intended to constitute, and does 
not constitute, an offer capable of acceptance or to otherwise give rise to any 
binding contract or commitment. 
 
There is no certainty that the further discussions between the Company and AML 
will result in any offer being made for the shareholders of AML to consider. The 
shareholders of AML do not need to take any action at this time as no offer has 
been made. 
 
Should the Company elect to proceed with a takeover bid it will update the 
market at that time. 
 
Any takeover offer by the Company is likely to be subject to a number of 
conditions, some of which are briefly mentioned above. 
 
Details of Equity Fundraise 
 
Medcaw has today raised gross proceeds of £400,000 at 8p per share ("New 
Ordinary Shares") through an equity placement to various high net worth and 
institutional investors introduced by GIS Global Investment Strategy ("GIS") 
("Placement").  The Company has therefore allotted and issued a total of 
5,000,000 new Ordinary Shares in the Company.  These shares rank pari passu with 
the existing Ordinary Shares in the Company.  Application will be made to the 
Financial Conduct Authority ("FCA") for the New Ordinary Shares to be admitted 
to listing on the Official List (standard listing segment) of the FCA, and to 

the London Stock Exchange for the New Ordinary Shares to be admitted to trading 
on the London Stock Exchange's main market for listed securities (together "the 
New Ordinary Share Admission") in due course. 
 
Following the issue of the 5,000,000 New Ordinary Shares the Company's issued 
share capital will consist of 22,132,095 Ordinary Shares with voting rights.  No 
Ordinary Shares are held in treasury at the date of this announcement and 
therefore following the allotment, the total number of Ordinary Shares in the 
Company with voting rights will be 22,132,095. 
 
The above total voting rights figure may be used by shareholders as the 
denominator for the calculation by which they will determine if they are 
required to notify their interest in, or a change to their interest in the 
Company. 
 
Director Participation in the Placing 
 
Charlie Wood, a director of the Company has subscribed for a total of 500,000 
New Ordinary shares in aggregate. The beneficial holdings of the Directors 
before and after the fundraise are set out below:- 
 
[image] 
 
Warrants 
 
The broker, GIS will be issued 300,000 broker warrants at the placing price of 
8p per share and 1,600,000 warrants at 4p will be issued to a third-party 
consultant for transactional services. 
 
Charlie Wood, Executive Director of Medcaw Investments: 
 
"The acquisition of AML will bring a world class mining asset and one of the 
largest rich spodumene lithium ore bodies to the market in the UK.  The near 
-term production of spodumene concentrate of up to 240ktpa will make the 
combined group a significant global player in the lithium market and will aim to 
become one of the first lithium producers on the London Stock Exchange. 
 
Stephen Miller, Managing Director of Abyssinian Metals Limited: "The transaction 
outlined with Medcaw is a significant milestone within the AML financing and 
listing strategy and in addition provides the enlarged shareholder base with 
capital appreciation and liquidity as AML builds out its Kenticha lithium 
production profile within the on-going electric vehicle and battery revolution. 
 
"The combination of a highly experienced mining, finance and technical team, 
which have developed multiple projects across Africa, combined with our strong 
Ethiopian stakeholders, provides a significant platform to ensure that this 
project will reach its near-term production goals." 
 
This announcement contains inside information for the purposes of theUKMarket 
Abuse Regulation and the Directors of the Company accept responsibility for the 
contents of this announcement. 
 
ENDS 
 
Enquiries: 
 
Medcaw Investments Plc 
 
Charlie Wood                      [phone] 
 
 
 
Abyssinian Metals Limited 
 
Via Tavistock Communications [phone] 
 
Abyssinian Metals Ltd Overview 
 
Abyssinian Metals Ltd ("AML") is developing the Kenticha lithium project in 
Ethiopia together with its joint venture partner - the Oromia State Government. 
Kenticha has a current JORC resource of 87.7 mt @ 0.78% Li20 with an exploration 
target of up to 51 mt @ 0.9% Li20 which CSA Global is currently finalising. 
 
 
 
Kenticha is a late-stage development with near term production of spodumene 
concentrate (SC5.5%) beginning at the end of 2023 with the imminent 
commissioning of the DMS modular plants. AML is looking to produce 240ktpa of 
SC5.5% by the end of 2024 (on an annualized basis) and then build a Bespoke 
production plant by the end of 2027 and producing up to 850ktpa SC5.5 in total 
(on an annualized basis) and thereby putting AML into the top quartile of global 
lithium spodumene producers at that time. 
 
 
 
Kenticha is a tier 1 resource which fits well as the industry needs multi-decade 
lithium resources to feed the EV revolution. AML is led by a very strong 
management team who have a wealth of experience in bringing tier 1 mining assets 
into production in Africa. AML is well supported by its relationships with the 
Ethiopia federal, state and local governments including the local communities in 
which we operate. 
 
Note: 
 
Certain statements made in this announcement are forward-looking statements. 
These forward-looking statements are not historical facts but rather are based 
on the Company's current expectations, estimates, and projections about its 
industry; its beliefs; and assumptions. Words such as 'anticipates,' 'expects,' 
'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions 
are intended to identify forward-looking statements. These statements are not a 
guarantee of future performance and are subject to known and unknown risks, 
uncertainties, and other factors, some of which are beyond the Company's 
control, are difficult to predict, and could cause actual results to differ 
materially from those expressed or forecasted in the forward-looking statements. 
The Company cautions security holders and prospective security holders not to 
place undue reliance on these forward-looking statements, which reflect the view 
of the Company only as of the date of this announcement. The forward-looking 
statements made in this announcement relate only to events as of the date on 
which the statements are made. The Company will not undertake any obligation to 
release publicly any revisions or updates to these forward-looking statements to 
reflect events, circumstances, or unanticipated events occurring after the date 
of this announcement except as required by law or by any appropriate regulatory 
authority. 
 
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July 07, 2023 11:13 ET (15:13 GMT)