Ann: MOU for sale of Molo Project 25% interest , page-3

re: Ann: MOU for sale of Molo Project 25% int... …and another view on the transaction:

http://www.miningweekly.com/article/energizer-resources-consolidates-madagascar-project-ownership-2013-10-24

Energizer Resources consolidates Madagascar project ownership
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By: Henry Lazenby
24th October 2013
Updated 3 hours ago
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TORONTO (miningweekly.com) – Madagascar-focused project developer Energizer Resources on Thursday announced that it had consolidated full ownership in its flagship Molo graphite project, after inking a binding memorandum of understanding (MoU) with 25% interest holder Malagasy Minerals.

Energizer said the two partners were expected to execute a formal purchase and sale agreement within 45 days.

The deal would give Energizer full ownership of the project, as well as a 100% interest in all of the industrial mineral rights within the acquired property, which comprises 2 120 claims totalling 94 011 ha. The actual area of the Molo deposit as currently delineated comprises only about 1%, or 62 ha, of the total acquired land package.

Energizer’s total land package in southern Madagascar included about 320 km of continuous graphitic trends, where all graphite mineralisation was immediately at surface. Drilling, trenching and geological mapping had also identified at least six other zones that could be potential stand-alone graphite deposits.

“Acquiring 100% ownership of the Molo graphite deposit mineral rights will be another step forward in Molo’s mine development plan. This is a very significant benefit as we further our discussions with both potential strategic and off-take partners and should also help facilitate project financing for the future Molo mine,” Energizer president and COO Craig Scherba said.

Under terms of the MoU, Energizer would have to pay C$400 000 in cash and issue 2.5-million common shares to Malagasy within five business days after the TSX had approved the deal.

Energizer would also issue 3.5-million purchase warrants valid for five years from the signing date of the agreement, at a price to be determined by taking the volume weighted average closing price of Energizer’s common shares during the five days immediately after executing the agreement.

Energizer would again pay C$700 000 and issue of one-million common shares within five business days after receiving a final completed bankable feasibility study (BFS) for the Molo project, or announcing a formal decision to mine; and pay another C$1-million within 5 business days of starting commercial production at the mine.

Malagasy would retain a 1.5% net smelter return royalty on all output from the property.

In a parallel, but separate transaction, Malagasy acquired a 75% interest through a joint-venture agreement to be drafted for non-industrial minerals on Energizer’s Green Giant property, with Energizer retaining the remaining 25% and Malagasy would have a free carried interest through to the BFS stage.

On Monday, Energizer announced that it had entered into a nonbinding letter of intent with Caterpillar Financial Services’ mining finance division regarding financing arrangements for the Molo project.

Cat Financial had proposed two possible debt finance structures to consider individually or possibly in combination with each other.

The proposals entailed Cat Financial to co-arrange with other financial institutions or banks a project finance loan; and/or arrange equipment loan of up to 70% of the Cat equipment value, to buy Cat equipment for the project.

Cat Financial has also expressed an interest to act as Energizer’s financial adviser and funding partner, through which the two companies would develop an optimal financing structure together, pending further due diligence on the project.

Last week, the company reported that it had commissioned and started a pilot plant at Molo, though which consulting engineering firm SGS Canada would undertake two continuous 80-hour campaigns to optimise metallurgical conditions during the next 30 days.

The pilot plant would produce about 10 t of finished graphite concentrate samples that would be shipped to prospective strategic and off-take partners.

SGS optimisation testing had already confirmed that nearly half (47.4%) of the Molo graphite concentrate was classified as the premium-priced large and jumbo flake size (greater than +80 mesh).

Furter, test results had confirmed that the Molo graphite concentrate could be easily upgraded to the ultrahigh purity of greater than 99.9% carbon, which would position Energizer to eventually sell its finished products to a wide range of end users at premium prices.

Edited by: Creamer Media Reporter