MOD Resources Ltd said its directors are putting final touches on a proposed deal to acquire a number of prospecting licences in the immediate area of its 100% owned Mahumo high grade copper/silver project in the Kalahari Copper Belt of Botswana.
Perth-based exploration-company stated that the acquisition is considered an important part of future growth plans for the Mahumo area and covers any possible extensions to the deposit. It added that the terms of its offer for the licences have been accepted in principle and the proposed transaction remains subject to finalisation of legal documentation and satisfaction of certain conditions precedent which are normal for a transaction of this nature.
“The terms of the proposed acquisition remain confidential until the sale agreement and associated documents have been executed. Although there is some risk the conditions precedent may not be met, the selling parties have confirmed they are committed to concluding the transaction within a reasonable time frame,” said the company.
MOD’s offer includes a commitment to support initiatives of the Botswana Government including training and local employment in the Ghanzi region in the event a mine is established at Mahumo.
The consideration for the acquisition includes an upfront cash payment with the majority of the consideration on a deferred basis once certain targets are met. As part of the transaction, MOD has entered into an agreement with a London Stock Exchange AIM-listed investment company to fund the initial upfront payment for the Acquisition in return for a 30% interest in the prospecting licences to be acquired.
“This does not apply to MOD’s other substantial holdings in the Kalahari Copper Belt which include the current Mahumo high grade resource (announced 25 March 2015),” MOD said.
The Investment Company is primarily focused on undervalued natural resource investment opportunities in which it can provide financial and business support to companies to maximize the value of their interests. The business fit between the Investment Company and MOD is strong and the Board looks forward to working with them to pursue future funding activities out of the London market to enhance the value of these licences.
Meanwhile, the company directors have announced an opportunity for MOD shareholders to participate in a non-renounceable pro-rata rights issue to raise up to $1.2 million (before costs) to progress with the proposed development pathway at the Mahumo Copper/Silver Project and explore MOD’s significant interests in the wider Botswana Kalahari Copper Belt.
The company said the Rights Issue will enable MOD shareholders to subscribe for one new fully paid MOD share for every five shares held at an issue price of $0.006 per share, together with a free attaching unlisted $0.01 option expiring 21 May 2018 for every two new shares subscribed.
“The majority of funds raised through the Rights Issue is intended to be applied to commence the resource extension drilling program at Mahumo and progress towards the proposed pre-feasibility studies. On completion of the above Acquisition, MOD and the Investment Company also plan to undertake an exploration programme directed toward priority targets on the newly acquired licences.”
The Rights Issue will be lead-managed by Patersons Securities Limited. Details of the Rights Issue including indicative timetable will be provided to shareholders shortly.