Exercise of Ferrum Option

RNS Number : 2383T

Emerging Metals Limited

02 December 2011

 



For Immediate Release: 2 December 2011

Emerging Metals Limited

("EML" or the "Company")

Exercise of Ferrum Option

Further to the announcements made on 3 June 2011 and subsequently, the Company is pleased to announce that it has now exercised its option (the "Ferrum Option") to acquire all the issued and to be issued ordinary shares of Ferrum Resources Limited ("Ferrum" and "Ferrum Shares") not already owned by it, representing some 62.77 per cent. of Ferrum's issued ordinary share capital (the "Acquisition").  The Acquisition will in total involve the issue of 316,574,265 new ordinary shares of no par value in EML (the "Consideration Shares") with an aggregate value at the closing price on 1 December 2011 of 1.55 pence per EML share (the "Closing Price") of approximately £4.9 million.  In addition, EML will grant warrants over a further 57,280,000 new EML ordinary shares ("Ordinary Shares"), each for a term of five years and with an exercise price per share of 4.88 pence and options over a further 5,012,000 new Ordinary Shares in respect of Ferrum employee options, exercisable for five years at a *formula price.

The Acquisition will constitute a reverse takeover under the AIM Rules and is therefore conditional, amongst other things, on the approval of EML's shareholders ("Shareholders") as well as on admission of the Consideration Shares to trading on AIM.  A circular including details of a placing and constituting an admission document for the purposes of the AIM Rules will be posted to Shareholders in due course.

The directors believe the Acquisition will provide the Company with the opportunity to build a significant and diversified portfolio of interests in exploration assets that will accelerate the growth of the group and add Shareholder value.

Regent Mercantile Holdings Limited ("Regent Mercantile") is interested in 11,695,811 Ferrum Shares and holds an option to acquire a further 1,500,000 Ferrum Shares at an exercise price of 35 pence per Ferrum Share.  Regent Mercantile is itself owned by a trust under which Stephen Dattels and members of his family may become beneficiaries. In accordance with the terms of the Ferrum Option, subject to completion of the Acquisition ("Completion"), Regent Mercantile will be issued 83,742,006 Consideration Shares (with a value at the Closing Price of approximately £1.3 million) and granted a new EML warrant to subscribe for 10,740,000 new Ordinary Shares at a price of 4.88 pence per EML Share for a period of five years from Admission.

Capital International (Nominees) Ltd ("Capital International") is interested in 3,285,714 Ferrum Shares. Capital International holds these shares for its client Galloway Limited, whose directors include Denham Eke and which is indirectly wholly owned by the trustee of a settlement under which James Mellon has a life interest. In accordance with the terms of the Ferrum Option, subject to Completion, Capital International will be issued 23,525,712 Consideration Shares (with a value at the Closing Price of approximately £365,000).

Since Messrs. Dattels, Mellon and Eke are all directors of the Company, the acquisition of Ferrum Shares from Regent Mercantile and Capital International and the grant of a new EML warrant to Regent Mercantile in exchange for the cancellation of its existing Ferrum options, which are being effected through the exercise of the Ferrum Option, are related party transactions for the purposes of  the AIM Rules.  Patrick Weller, who is for these purposes the Company's only independent director, considers, having consulted with Religare Capital Markets (UK) Limited, the Company's nominated adviser, that the terms of the Ferrum Option are fair and reasonable in so far as Shareholders are concerned.

Information on Ferrum

Ferrum is a private iron ore exploration and mining company incorporated in the British Virgin Islands on 18 January 2010.  Since its incorporation, the company has focused on the acquisition of interests in early stage iron ore exploration projects in Africa.  In the Cameroon, Ferrum holds a 63.53 per cent. equity interest in CMC Guernsey Limited, which through Compagnie Minière du Cameroun SA, a 95 per cent. owned subsidiary of CMC Guernsey Limited, holds six iron ore exploration permits in the Cameroon which cover an aggregate area of approximately 6,000 square kilometres in a region potentially prospective for iron ore.  In Sierra Leone, Ferrum holds a 75 per cent. interest in five exploration licences (EL.05/11, EL.06/11, EL.07/11, EL.08/11 and EL.09/11), some of which are located adjacent to or on strike of known iron ore occurrences.  Through a wholly owned subsidiary, Ferrum has applied for two exploration permits in Guinea although it is uncertain if, and when, these permits may be granted.  From the date of incorporation to 31 March 2011, Ferrum made a loss of £1,205,000.  Net assets as at 31 March 2011 amounted to £370,000.

*    The formula price will  be determined based on a price of US$0.305 per Ferrum Share converted to a price per EML Share at an exchange ratio of 7.16 and using the USD:GBP exchange rate on the date of grant.

For further information:

Emerging Metals Limited	Religare Capital Markets Limited	Evolution Securities          Limited	GTH Communications
Denham Eke	Peter Trevelyan-Clark Emily Staples	Jeremy Ellis Matt Tyler	Toby Hall Suzanne Johnson Walsh
[phone]	[phone]	[phone]	[phone]

 

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