Power Metal agrees Paterson acquisition

Power Metal Resources plc has agreed to a 75% strategic interest in a UK special acquisition vehicle which will acquire outright copper-gold focused First Development Resources (Pty) Ltd (FDR Australia) in Western Australia.

EXPLORATION VEHICLE

FDR Australia’s interests lie in the Paterson Province in the eastern Pilbara region.

In January 2021, Power Metal secured an exclusive 60-day option which focused on the Wallal and Ripon Hills projects.

Three additional exploration properties then became available for acquisition.

Following due diligence on the bigger exploration package, discussions included joint efforts to create a new copper-gold, London-listed Australian exploration vehicle.

TRANSACTION

Power Metal today said that it had to reconstruct the original transaction to secure the strategic footprint in one move.

Conditions include the transfer of the Ripon Hills project to FDR Australia, which also has to have an exploration licence for Wallal, before the UK junior miner acquires the Australian company.

This will lead to Power Metal acquiring a 75% interest in FDR, which will be held through a 75% interest in a newly created UK private company (FDR UK).

The new company will ultimately hold 100% of the issued share capital of FDR Australia. The remaining 25% of FDR UK will be held by the vendors and associated parties.

FDR Australia’s interests include five exploration projects including one granted exploration licence (Ripon Hills) and four licence applications (the Wallal, Wallal West 1, Wallal West 2 and Braeside West Projects).

TERMS

Power Metal will pay an initial A$50,000 in cash (£27,798) from its existing cash resources.

A further £275,000 is payable through 10 million new Power Metal ordinary shares of 0.1p at an issue price of 2.75 pence per share.

Power Metal will also issue the vendors 10 million warrants with an exercise price of 4.5p per new ordinary share and life to expiry of three years from the date of issue.

HIGH QUALITY

Chief executive Paul Johnson said that the Paterson Province had seen considerable interest following the Havieron discovery by Greatland Gold plc and Winu discovery by Rio Tinto.

“The level of interest in the region has intensified of late and the opportunity to secure a high-quality strategic licence footprint is diminishing.

“We needed to act to secure Power Metal’s seat at the ‘Paterson’ table. We now have a seat at that table, but this is Power Metal and our policy is to carve out innovative pathways for value generation with each new transaction.

“There is a clear opportunity in the Paterson Province, something we intend to pursue with considerable vigour and we are aligning Power Metal with an experienced Australian team to support the business in the run up to the listing of the special acquisition vehicle.”