FUNDING & SCHEME UPDATE
ASX Announcement 9 December 2019
Nzuri Copper Limited (Nzuri or the Company) (ASX: NZC) provides the following update on its proposed scheme of arrangement (Scheme) pursuant to which all of the issued capital in Nzuri is proposed to be acquired by Xuchen International Limited (Xuchen), a subsidiary of Chengtun Mining Co., Ltd.
As previously advised to shareholders, the Scheme remains subject to regulatory approval (from the State Administration of Foreign Exchange of China, or 'SAFE') being received in the People's Republic of China.
Nzuri also previously informed shareholders (see ASX announcement on 26 November 2019) that it had been advised by Xuchen that for commercial reasons, its preference is to fund the Scheme consideration by way of a third-party loan, which remains subject to the receipt of certain Chinese provincial government approvals. The receipt of these Chinese provincial government approvals is not a condition precedent to the Scheme. Xuchen informed Nzuri that it expects these approvals to take between one to two months to be received. Xuchen therefore requested for the 'end date' for the Scheme to be delayed from 26 November 2019 to 31 March 2020, with the court hearing for the approval of the Scheme to be on or about 3 February 2020, and implementation of the Scheme to occur on or about 14 February 2020.
Nzuri is pleased to advise that it has agreed to extend the 'end date' for the Scheme as requested by Xuchen, to 31 March 2020. A key reason for Nzuri agreeing to this extension was Xuchen's agreement to amend its existing secured loan facility agreement with Nzuri as described below.
Amendments to secured loan facility agreement
- Additional funding: Xuchen has agreed to advance additional loan funding to Nzuri of up to $3.5 million, in the following tranches:
- $800,000 on or before 13 December 2019;
- $675,000 on or before 31 December 2019;
- $675,000 on or before 7 February 2020;
- $675,000 on or before 28 February 2020; and
- $675,000 on or before 27 March 2020.
The final tranche of $675,000 to be advanced on or before 27 March 2020 is only payable in the event that the Scheme is not implemented on or before 14 February 2020.
A total of $7 million has already been advanced by Xuchen to Nzuri under the existing secured loan facility agreement.
- Interest rate: The interest rate applicable to the additional loan funding amounts will be 8% per annum. A 10% interest rate per annum applies to the $7 million of loan funding previously advanced.
- Maturity date: The maturity date of the $10.5 million total loan has been extended from 26 February 2020 to 26 February 2021.
Court Hearing
The next Court hearing for this matter is listed for 10.30am (AWST) on 13 December 2019 at the Supreme Court of Western Australia. Further details regarding the hearing are included in the Appendix to this announcement.
At this hearing, Nzuri intends to seek an adjournment until on or about 3 February 2020, as outlined above.
An announcement including an updated timetable for the Scheme will be released following the hearing on 13 December 2019.
Financial certainty
In light of the delay to the timetable, Nzuri requested additional information be provided by Xuchen to provide Nzuri with comfort that Xuchen will be in a position to complete the Scheme in accordance with the revised timetable.
Nzuri has received a copy of a stamped letter from Chengtun Mining Group Co., Ltd irrevocably undertaking to Xuchen that, subject to each of the following conditions being satisfied:
- satisfaction or waiver of each of the conditions under the terms of the Scheme Implementation Deed;
- the Court date for approval of the Scheme being no earlier than 3 February 2020;
- the implementation of the Scheme occurring no earlier than 14 February 2020; and
- the Scheme becoming effective,
then to the extent Xuchen does not have the financial capacity to satisfy the obligations to pay the Scheme consideration and consideration payable to holders of Nzuri options, Chengtun will provide (or procure the provision) to Xuchen of such financial support as is required to enable Xuchen to satisfy these payment obligations, up to the maximum of A$110,732,125.04 (being the total Scheme consideration and consideration payable to holders of Nzuri options).
Chengtun has confirmed to Xuchen in the letter it has the financial ability to make the above undertakings.
JUNE 2019 QUARTERLY ACTIVITY REPORT
Highlights
Corporate
- Democratic Republic of Congo ministerial approval received for Chengtun transaction
- Scheme meeting of Nzuri shareholders adjourned to Monday, 19 August 2019 at 3pm (WST)
- Amended funding arrangements entered into with Chengtun for additional loan funding to Nzuri of up to A$2M
Kalongwe Copper-Cobalt Project, DRC
- Earthworks contractor mobilised and construction of the 28km Kalongwe allweather site access road significantly advanced
- Compiled and submitted the Cahier de Charge (detailed project social commitments) for approval as required by the new DRC Mining Code
- 5-yearly update completed for the Project’s Environmental and Social Impact Studies and Environmental and Social Management Plans in line with Mining code requirements
- Regional immunisation program of eight nearby villages facilitated by Nzuri, with some 324 children vaccinated
Exploration – Kalongwe and Fold & Thrust Belt JV
- 2019 exploration programme initiated following planning and prioritisation of targets in the March quarter of 2019
- Design of the Monwezi 2 drill plan completed
- Early stage exploration works commenced, including mapping, pitting and trenching at seven targets
- 323 samples from Monwezi 7 and Mamba submitted for laboratory geochemical assay with results expected in the September quarter of 2019
Kalongwe Project Development Update
Overview
The Kalongwe Copper-Cobalt Project (“Kalongwe”, the “Project”) is the Company’s flagship asset, a significant high-grade oxide near-surface copper-cobalt resource offering a low-CAPEX pathway to near-term production and cash-flow.
Kalongwe is located in the Lualaba Province of the DRC and is situated towards the western end of the world-class Central African Copperbelt, less than 15km from where Ivanhoe Mines Ltd (TSX: IVN, “Ivanhoe”) has announced a second world-class copper discovery at Kakula.
The Kalongwe Project hosts a near-surface JORC resource of 302,000t of contained copper (2.7% Cu grade) and 42,700t of contained cobalt (0.62% Co grade) as predominantly oxide ore (see ASX announcement of 5 February 2015 for further details).
Construction of Site Access Road
A local earthworks contractor was appointed to construct the 28km long Kalongwe site access road, with works commencing on May the 10th and significantly advanced by June quarter end, with some 24km of the road now largely completed including the installation of more than15 culverts.
The new road from the Kamoa site will provide all-weather access to Kalongwe significantly improving site access for all current and future activities
NZURI RECEIVES CASH ACQUISITION PROPOSAL FROM CHENGTUN MINING GROUP WITH ATTRACTIVE PREMIUM
ASX Announcement 27 February 2019
Directors recommend proposed transaction with all-cash consideration of $0.37 cash per share, providing an opportunity for shareholders to crystallise a certain cash outcome for their shares at an attractive premium
Highlights
- Nzuri has entered into a Scheme Implementation Deed with Xuchen International Limited (“Chengtun Bidder”), a subsidiary of leading Chinese metals mining, trading and industrial group Chengtun Mining Group Co., Ltd (“Chengtun Mining”) (together, “Chengtun”), under which it is proposed that Chengtun Bidder will acquire 100% of the share capital of Nzuri by way of a Scheme of Arrangement.
- Nzuri received the current acquisition proposal from Chengtun Bidder while advancing discussions to fund the construction of the Kalongwe Project. These included extensive discussions with Chengtun dating back to 2017 regarding potential off-take, funding and other opportunities for strategic cooperation.
- If the Scheme is implemented, Nzuri shareholders will be entitled to $0.37 cash per share, which represents an attractive premium, including:
- A 42% premium to the closing price of Nzuri shares on the ASX on 26 February 2019;
- A 93% premium to the 30-day VWAP of Nzuri shares on the ASX; and
- A 64% premium to the 3-month VWAP of Nzuri shares on the ASX.
- Chengtun is a major player in the Kolwezi region of the DRC, having recently completed a major new US$150 million SX-EW processing facility with a cobalt hydroxide circuit, which will have many synergies with Nzuri’s flagship Kalongwe Copper-Cobalt Project.
- Chengtun Bidder has also agreed to provide Nzuri with interim funding by way of a secured loan, in the amount of up to A$5M, to support ongoing pre-development activities at the Kalongwe Copper-Cobalt Project.
- The Directors of Nzuri unanimously recommend that Nzuri shareholders vote in favour of the Scheme, subject to the Independent Expert determining that the Scheme is in the best interests of Nzuri shareholders and no superior proposal emerging.
- The Scheme meeting for shareholders is proposed to be held in July 2019, with Scheme implementation proposed to occur in July, subject to the satisfaction of all conditions.
- Binding agreement also entered into with Tembo Capital for the provision of a A$3M loan facility, which is now unlikely to be drawn given the Chengtun Bidder proposal.
Commenting on the proposed transaction, Nzuri Managing Director, Mr Mark Arnesen, said: “After many months of negotiations and discussions, we are pleased to have arrived at a point where we can put this cash acquisition Proposal from Chengtun Bidder in front of our shareholders. The Directors have carefully considered the benefits and disadvantages of the Scheme proposal by the Chengtun and concluded that the cash consideration proposed would provide a certain cash outcome for shareholders for their shares at a substantial premium to the historical trading price of Nzuri shares.
“We have come to know the Chengtun team well over the past 12 months. They have a strong operational presence in the DRC and have recently invested in a new SX-EW processing facility which represents an excellent strategic fit with the Kalongwe Project. They are also clearly on an expansion pathway in the district, having recently transacted on a similar-sized oxide copper-cobalt deposit.
“While we have made great recent progress towards unlocking a suitable financing solution for Kalongwe – combined with extensive pre-development activities including an extensive front-end engineering and design and hydro-metallurgical testwork program – the Board believes that this transaction provides shareholders with the opportunity to crystallise certain value for their investment at a time when new development projects in the resource sector face considerable funding hurdles and a range of market related and strategic risks.
“Given the all-cash nature of the consideration and the significant premium to the recent trading price of Nzuri shares, Directors have recommended that shareholders vote in favour of the Proposal in the absence of a superior proposal emerging and subject to the Independent Expert concluding the offer is in the best interests of shareholders.”
Nzuri Copper Limited (ASX: NZC) (Nzuri or the Company) is pleased to announce that it has entered into a binding Scheme Implementation Deed (SID) with Xuchen International Limited (Chengtun Bidder), a subsidiary of Chengtun Mining Group Co., Ltd. (Chengtun Mining), a diversified Shanghai Stock Exchange-listed metal mining, trading and industrial group, under which it is proposed that Chengtun Bidder will acquire all of the issued shares in Nzuri by way of an Australian Court-approved Scheme of Arrangement, for an offer consideration of $0.37 per share in cash (Proposal).
The Company’s management team has been in discussions with a number of parties on the optimum funding structure for development of its flagship Kalongwe Copper-Cobalt Project in the DRC. The acquisition proposal from Chengtun Bidder follows extensive discussions between the parties dating back to 2017 regarding the potential for off-take, project funding and other forms of strategic cooperation and investment
Chengtun is an existing major player in the Kolwezi region of the DRC, having recently completed a US$150 million SX-EW processing plant with a cobalt hydroxide circuit, which is scalable and has been designed to double in capacity.
The Kalongwe deposit offers significant strategic and technical synergies with Chengtun’s existing operations and processing infrastructure in the region. A recent transaction with Jinchuan Group International Resources Co. Ltd. saw Chengtun further expand its footprint in the district with a strategic transaction on another oxide coppercobalt deposit of similar scale to the Kalongwe deposit.
KASANGASI FOOTPRINT EXTENDED TO 1.2KM AND NEAR-MINE DRILLING DELIVERS MORE HIGH-GRADE COBALT AT MONWEZI 7
ASX Announcement 21 January 2019
Plus, pre-development activities gathering momentum at Kalongwe with design of key site infrastructure items completed and metallurgical testwork program nearing completion.
Highlights
- Final results received from the 2018 exploration field season across the Fold & Thrust Belt JV (FTBJV) licences surrounding Nzuri’s flagship Kalongwe Copper-Cobalt Project.
- Mineralisation trend at the Kasangasi Prospect significantly extended from 400m to 1,200m, demonstrating the potential of this large-scale target. New results from widely spaced reconnaissance drilling include:
- ➢ 7.4m @ 0.83% Cu and 15m @ 1.07% Cu (DKAS_DD016);
- ➢ 8.1m @ 0.79% Cu (DKAS_DD016_2); and
- ➢ 5.8m @ 0.7% Cu (DKAS_DD019)
- Significant additional zones of cobalt mineralisation intersected at the Monwezi 7 Prospect, some 6km south-west of Kalongwe. The new results include:
- ➢ 10.8m @ 0.18% Co (DMON7_DD003)
- ➢ 30.4m @ 0.22% Co including high-grade zone of 1.2m @ 1.1% Co (DMON7_DD003)
- Data review, interpretation and planning underway for the 2019 exploration field season.
- ~50km of road refurbishment and access completed, facilitating access to key regional exploration targets including Kambundji.
- Significant recent progress with pre-development activities at Kalongwe include completion of detailed design of the tail’s storage facility and river diversion channel by Knight Piesold, as well as substantial completion of the extensive metallurgical testwork program at CORE in Brisbane.
- Engineering and Procurement (“EP”) fixed-price offer currently under review in parallel with ongoing funding discussions with lenders and multiple potential off-takers.
- Formal application was made to the DRC government for duty exoneration associated with all project items required to be imported into the DRC for the initial construction and operation of the project.
Nzuri CEO Mark Arnesen said the 2018 program had delivered encouraging results from across the FTBJV licence areas, providing the Company with a series of exploration and growth opportunities to be pursued further in 2019, in parallel with its core focus on advancing the Kalongwe Project towards development.
“The key highlights of the past 12 months have included a significant expansion of the mineralised footprint at Kasangasi – where recent wide-spaced reconnaissance drilling has demonstrated the potential for a standalone deposit – and the successful delineation of three key near-mine prospects, all located within a 1-6km radius of Kalongwe and all of which have the potential to contribute additional ore feed to the Kalongwe plant.
Our development team has also been busy, with several work streams advancing in parallel to ensure that Kalongwe is ready to move swiftly into construction as soon as we make a final investment decision and secure project funding. Following completion of the Front-End Engineering Design program last quarter, we have completed detailed design of key items of site infrastructure, almost finalised the metallurgical testwork program and are negotiating a fixed-price Engineering & Procurement offer in parallel with ongoing funding discussions.”
Nzuri Copper Limited (ASX: NZC) (Nzuri or the Company) is pleased to announce results from its 2018 exploration field season across the Fold & Thrust Belt Joint Venture (FTBJV) licences, located in the Western Katangan Copperbelt in the Democratic Republic of Congo (DRC), and provide an update on pre-development activities at its flagship Kalongwe Copper-Cobalt Project.
The 2018 exploration program across the FTBJV successfully achieved several key objectives, including:
- Significantly extending the mineralisation at the Kasangasi Prospect in recent wide-spaced drilling, confirming the Company’s conceptual exploration model for a Kamoa-type discovery and expanding the known strike length of the target from 400m to 1.2km;
- Delivering further strong cobalt results from the Monwezi 7 prospect, located 6km along strike from Kalongwe, confirming the potential for this key near-mine prospect to provide an additional source of high-grade cobalt feed;
- The successful delineation of a shallow zone of oxide copper mineralisation at the Monwezi 2 prospect, located 3.5km along strike from Kalongwe, resulting in the definition of an Exploration Target of 1-2.5Mt grading between 0.8% Cu and 1.5% Cu (see ASX release, 3 October 2018 – FTBJV Exploration Update). The Company cautions that this potential quantity and grade is conceptual in nature. There has been insufficient exploration to generate a Mineral Resource estimate for the Monwezi 2 prospect and it is uncertain if further exploration will result in the estimation of a Mineral Resource; and
- Definition of the Kalongwe SW satellite prospect, located immediately adjacent to the Kalongwe Mine, advancing this prospect to resource definition stage. Kalongwe SW is expected to provide a cobalt-rich feed to the Kalongwe plant (see ASX Release, 20 June 2018 – FTBJV Exploration Update).
The Company is currently undertaking data interpretation and planning for the 2019 field season, based on a review of results and priorities from its exploration activities over the past 12 months.
