Fundraising and Proposed Acquisition

RNS Number : 0452T

Eastinco Mining and Exploration PLC

22 November 2021

 

22 November 2021

Eastinco Mining and Exploration plc

("Eastinco" or the "Company")

Eastinco Announces Transformational Transactions,

Proposed Acquisition of Aterian Resources Ltd, and

Proposed Admission to the LSE Standard List

Eastinco Mining & Exploration Plc ("Company" or "Eastinco") (AQSE:EM.P), the African focused strategic metals exploration and mining company currently admitted to trading on the AQSE Growth Market ("AQSE"), announces a series of proposed transactions to transform it into a multi-jurisdiction and multi-commodity, critical metals resource company.

Highlights:

· Proposed acquisition of battery metals focused explorer Aterian Resources Ltd ("Aterian").

o  Aterian owns a portfolio of highly prospective Copper and Silver projects totalling 824 km² in Morocco.

o  AIM & TSX-V listed Altus Strategies Plc to become a significant beneficiary shareholder on completion of the proposed acquisition.

· Proposed admission to LSE Standard List (subject to FCA approval), name change to Aterian Plc and a 10-for-1 share consolidation.

· Fundraise completed raising £950,000 with existing shareholders and new investors.

o  £850,000 in CLNs which convert into ordinary shares in the Company at a price of £0.015 per share.

o  £100,000 through the issuance of 6,666,667 Ordinary Shares via a placing at a price £0.015 per share.

o  Eastinco Chairman participated in Fundraise investing £300,000.

· 20,720,000 Ordinary Shares issued to directors and advisers.

· General Meeting to be convened to approve the proposals.

On 21 November 2021 the Company entered into a sale & purchase agreement ("SPA") with AIM & TSX-V listed Altus Strategies Plc ("Altus") and its wholly owned subsidiary Altus Exploration Management Ltd ("AME") to acquire the entire issued capital of AME's 100% owned subsidiary Aterian, through the issuance of new shares of £0.01 par value ("Ordinary Shares") in the Company, the grant of warrants to purchase new Ordinary Shares and the grant of certain mining royalties (the "Acquisition"). Aterian is advancing a portfolio of 15 primarily copper and silver prospective exploration projects ("Aterian Projects") in the Kingdom of Morocco ("Morocco").

Concurrent with the Acquisition, the Company will apply for admission to the Official List (by way of Standard Listing under Chapter 14 of the Listing Rules) and to trading on the London Stock Exchange's Main Market for listed securities ("Admission") and change its name to Aterian Plc ("Name Change"). The Company also proposes to undertake a share consolidation, effective from Admission, whereby each existing 10 Ordinary Shares will be consolidated into 1 new ordinary share ("Consolidation").

The Acquisition, Admission, the Name Change, and other related matters remain subject to the publication of an FCA approved prospectus and approval by the Company's shareholders at a General Meeting ("GM").

The Company has separately raised a total of £950,000 (before costs) (the "Fundraise"), though the issuance of convertible loan notes ("CLNs") with an aggregate value of £850,000 (further details of which are below), and the issue of 6,666,667 Ordinary Shares with a value of £100,000 (the "Placing").

Charles Bray, Executive Chairman of Eastinco commented:

" I am delighted to report on this proposed acquisition of a significant portfolio of 15 copper, silver and other base metal exploration projects strategically positioned close to existing mining projects in Morocco. Upon completion, Altus will become a strategic shareholder of the Company, demonstrating Altus' confidence in the projects, and providing us with an alignment of interest and the support of a well-respected industry player. Previous exploration undertaken by Altus on the Moroccan assets highlight the strong potential for the discovery of deposits of strategic metals in particular, copper and silver. We believe the market fundamentals for copper are excellent, specifically linked to the anticipated growing demand for renewable energy and the related electrification of transportation globally.

"We consider this to be the optimal time to broaden and strengthen our asset portfolio across Africa, adding to our established tantalum and tin mining and exploration projects in Rwanda. Our working relationship with Altus will also guarantee a smooth transition to ensure exploration continues in Morocco without interruption. The proposed listing on the LSE Standard List will provide us with exposure to a wider investor profile and greater liquidity in our shares and therefore a solid platform from which we can continue to grow. The proposed acquisition and Admission are significant steps towards our goal of building a significant strategic metal exploration and development company.

"We are also pleased to announce the completion of a fundraising, undertaken with both new and existing shareholders raising a total of £950,000, which underscores the strong support of our shareholders in the Company's objective to become a leading player in the strategic metal sector. Our directors, certain employees and advisors have agreed to receive shares and share options in the Company, in partial compensation for their services to date. The alignment of financial interests of our board and management with all shareholders is fundamentally positive.

"I look forward to updating our shareholders on these proposed transactions and the related shareholder meeting in due course."

Steven Poulton, Chief Executive of Altus commented:

"We are pleased to announce that Altus is set to become a strategic shareholder in Eastinco, subject to the vending in of our 100% owned Moroccan focussed exploration subsidiary Aterian. The enlarged entity will have a strong and unique portfolio of battery metal exploration and development projects in Morocco and Rwanda. The proposed vend-in will occur concurrently with Eastinco listing on the LSE Standard List in London and the company changing its name to Aterian Plc. This transaction is firmly in line with our business model of making and monetising discoveries in Africa, in return for equity, cash and the creation of new royalty interests. We look forward to the completion of the acquisition, the successful Admission of Eastinco and to supporting the Eastinco team going forward".

Proposed Acquisition of Aterian

The Company has entered into a conditional SPA with Altus and AME, pursuant to which Altus and AME have agreed (subject to the satisfaction of certain conditions) to the Acquisition. The proposed Acquisition will allow Eastinco to expand its mineral asset exposure to include copper and silver in Morocco, in addition to its existing tantalum-niobium-tin portfolio in Rwanda. This will be in line with the Company's objective of becoming a significant critical metals resource company. The Company considers that critical metals are strategic resources that are essential to the global economy and whose supply has a significant impact on the production of key products, including those linked to renewable energy production, electric vehicle battery and equipment manufacturing and infrastructure. The price of copper has exceeded $10,000 per metric tonne in 2021, surpassing its previous all-time high. The Company considers the price increase to be a function of increasing demand absent any material proportional increase in mine supply.

Consideration payable to AME for the Acquisition of Aterian

The consideration payable by the Company to AME for the Acquisition remains subject, among other matters, to the completion of the relevant documentation and Admission, and is as follows:

Ordinary Shares & Warrants

AME will be issued with the following Ordinary Shares and share purchase warrants:

· the issue of new Ordinary Shares representing 17.5% of the enlarged share capital of the Company on Admission, pursuant to the issue of any Ordinary Shares prior to or in connection with Admission;

· the issue of new Ordinary Shares representing an additional 7.5% of the enlarged share capital of the Company on Admission (for an effective holding of 25% of then enlarged share capital of the Company at Admission), upon the grant to a subsidiary of Aterian of the Agdz mining licence ("Mining Licence"), which is currently under application;

· the payment of up to a maximum of £250,000 in cash to Altus from the Company to reimburse Altus for exploration costs incurred by Aterian since May 2021, which has been expended to advance and maintain the good standing of the Aterian Projects;

· the issue of such number of warrants to AME representing 5% of the enlarged share capital of the Company ("InitialAltusWarrants") on Admission. The Initial Altus Warrants will have a five-year duration with 50% of the Initial Altus Warrants exercisable based upon a weighted average of the Fundraise price and the market price on Admission, and the remaining 50% of the Initial Altus Warrants exercisable at a 100% premium to the price set for the initial 50%;

· The issue of further warrants to AME over an additional 5% of the enlarged share capital of the Company ("Additional AltusWarrants") upon the grant of the Mining Licence, and in the same quantum and on the same pricing as the Initial Altus Warrants.

· The shares and warrants issued to AME will be subject to a customary lock in period of 12-months with a further 12-month orderly market provision period ("Lock In").

· The exercise of the Initial Altus Warrants and the Additional Altus Warrants will be subject to AME owning no more than 29.9% of the enlarged share capital of the Company at any time.

Royalty Agreements

Altus will be granted the following royalty interests:

· The grant of a 2.5% net smelter return ("NSR") royalty over each of the licences held by Aterian (each an "Aterian NSR");

· The grant of a 2.5% NSR royalty on any new licences (each an "Additional 2.5% Aterian NSR") granted to Aterian within 3 months of Completion.

· The Company will retain an option to repurchase up to 1% of each Aterian NSR and each Additional 2.5% Aterian NSR for USD$500,000 per 0.5%, for a total potential repurchase consideration of US$1,000,000 per each Aterian NSR and each Additional Aterian NSR.

· The grant of a right to a 1.5% NSR royalty on any new licences (each an "Additional 1.5% NSR") granted to Aterian within 12 months of Completion. The Company will retain an option to repurchase up to 1% of each Additional 1.5% NSR for US$500,000.

· A 3.0% NSR royalty on any new licences awarded to Eastinco in Rwanda within 24 months of Completion which are procured for Eastinco by Altus (each a "Rwanda NSR"). Eastinco will retain an option to repurchase up to 1% of each Rwanda NSR for US$500,000 per 0.5% for a total potential repurchase consideration of US$1,000,000.

· A 2.0% NSR royalty on Eastinco's 85% ownership of the Musasa tantalum project ("Musasa NSR") located in Rwanda.

· The Rwanda NSR and the Musasa NSR will be automatically reduced to 1.5% and 0.5% respectively, at no cost to Eastinco, if Altus does not participate pro rata to at least 50% of its holding in the equity of Eastinco in placements undertaken by Eastinco in the 18 months following Admission.

· Eastinco will retain the right to repurchase up to 1% of each Rwanda NSR and 1% of the Musasa NSR (subject to the Musasa NSR having a lower limit of 0.5% that cannot be repurchased) for US$500,000 per 0.5% for a total potential repurchase consideration of US$1,000,000 in each case.

· The grant to Altus of a Right of First Refusal ("ROFR") under which the Company will not raise any funds by granting any future royalty rights on any project owned by the Company, without first offering Altus the right to purchase such royalty on matching terms.

Details of the Fundraise

The Company has completed a Fundraise consisting of the issue of CLNs raising £850,000. The proceeds of the Fundraise will be applied towards the costs of Admission, exploration across the Company's enlarged portfolio of projects, to refund Altus for agreed exploration expenditures (to a maximum consideration of £250,000 on Admission) and for general working capital purposes.

Terms of the Placing

The Placing of new Ordinary Shares was undertaken at a price of £0.015 per new Ordinary Share resulting in the issue of 6,666,667 new Ordinary Shares.

Terms of the CLNs

The CLNs carry no interest and will automatically convert to new Ordinary Shares in the Company at a conversion price of £0.015 per share, equating to 56,666,667 new Ordinary Shares ("CLN Shares"). The issuance of the CLN Shares is subject to the directors of the Company being granted the necessary authority by the Company's shareholders to issue all the CLN Shares. Should this authority not be granted by 30 December 2022 then the CLNs will be due for repayment by the Company.

Under the terms of the CLNs, upon conversion of the CLNs, holders of CLNs will receive the CLN Shares and be granted in aggregate 113,333,333 warrants to purchase new Ordinary Shares in the Company ("CLN Warrants"). The CLN Warrants will be exercisable at a price of £0.02 per new Ordinary Share at any time up until 30 December 2024.

Mr Charles Bray, Chairman of Eastinco, has subscribed for £300,000 of the CLNs (of which a £100,000 were subscribed to through Edlin Holdings Ltd (a Bray family, related entity).

Issue of Additional Ordinary Shares

In light of the Company's 2021 cash preservation plan, the Company has issued the following further new Ordinary Shares.

i)  20,000,000 Ordinary Shares to Simon Rollason, CEO of Eastinco; and

ii)  720,000 Ordinary Shares to Novum Securities Limited in lieu of certain fees for acting as the Company's AQSE corporate adviser.

Application will be made for the 27,386,667 new Ordinary Shares to be admitted to trading on AQSE and this is expected to occur on or around 25 November 2021. The new Ordinary Shares will rank pari passu with existing Ordinary Shares of the Company. Following the issue of the 27,386,667 new Ordinary Shares, the Company's enlarged issued share capital will comprise 462,455,430 Ordinary Shares. The above figure of 462,455,430 should be used by shareholders of the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

The Directors of the Company accept responsibility for the announcement.

--ENDS--

For further information please visit www.eastinco.com or contact:

Eastinco Mining and Exploration Plc :

Charles Bray, Executive Chairman -  [e-mail]

Tel: [phone]

AQSE Growth Market Corporate Adviser:

Novum Securities Limited

David Coffman / Lucy Bowden

Tel: [phone]

Notification and public disclosure of transactions by persons discharging managerial responsibilities and persons closely associated with them.

1.	Details of the person discharging managerial responsibilities/person closely associated
a)	Name:	Simon Rollason
2.	Reason for the notification
a)	Position/status:	Chief Executive Officer
b)	Initial notification/Amendment:	Initial notification
3.	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name:	Eastinco Mining and Exploration Plc
b)	LEI:	2138005GAARIE1JMP262
4.	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument: Identification code:	Ordinary Shares par value 0.1p ISIN Code:  GB00BKS7ZV87
b)	Nature of the transaction:	Acquisition of Ordinary Shares
c)	Price(s) and volume(s):	Price(s) nil Volume(s) 20,000,000
d)	Aggregated information: · Aggregated volume: · Price:	N/A
e)	Date of the transaction:	22 November 2021
f)	Place of the transaction:	AQSE Stock Exchange

Notification and public disclosure of transactions by persons discharging managerial

Notification and public disclosure of transactions by persons discharging managerial responsibilities and persons closely associated with them.

1.	Details of the person discharging managerial responsibilities/person closely associated
a)	Name:	Charles Bray
2.	Reason for the notification
a)	Position/status:	Executive Chairman
b)	Initial notification/Amendment:	Initial notification
3.	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name:	Eastinco Mining and Exploration Plc
b)	LEI:	2138005GAARIE1JMP262
4.	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument: Identification code:	Convertible Loan Notes ISIN Code:  GB00BKS7ZV87
b)	Nature of the transaction:	Acquisition of Ordinary Shares
c)	Price(s) and volume(s):	Price(s) £1.00 Volume(s) 300,000
d)	Aggregated information: · Aggregated volume: · Price:	N/A
e)	Date of the transaction:	22 November 2021
f)	Place of the transaction:	N/A

 

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