Power Metal Resources plc plans to sell 29,758,334 of its shares and warrants over 986,352 ordinary shares of £0.01 each in Guardian Metal Resources plc to its uranium joint venture partner for £9,225,083.91.
INCUBATOR
The agreement is in principle with UCAM Ltd, which needs to complete a fundraise, and subject to administrative processes and a legally binding sale and purchase agreement.
On 9 January Power Metal held 43.2% of voting rights in its spin-out Guardian which is focused on tungsten, lithium, industrial garnet and base and precious metals in Nevada.
The sale of shares will result in Power Metal holding 25,169,772 shares in Guardian, representing approximately 19.2% of its issued share capital.
Power Metal said that the agreement would be entered into within 10 business days but that there was no guarantee of any transaction.
Proceeds will be used to redeem the £2 million loan note issued to ACAM LP on 10 June 2024, plus accrued interest, and for general corporate purposes.
UCAM is a special purpose vehicle, and an affiliate of ACAM LP, formed as the intended investor in the uranium joint venture Fermi Exploration Ltd.
Power Metal chief executive Sean Wade added that the sale of the shares would introduce a “significant strategic investor” to Guardian.
“GMET [Guardian] has been a very successful investment for Power Metal and if the proposed transaction is completed, we will have realised a return on this part of our investment of 966%, or close to 10 times.
“This would represent a strong validation of our incubator model and will hopefully give investors renewed confidence in our ability to generate significant shareholder returns.
“We are committed to our remaining holding in GMET for the foreseeable future and look forward to seeing it continue to grow as part of our portfolio of high-quality assets.”