Conditional Agreement for $15m Loan Note

RNS Number : 6010G

Rare Earth Minerals PLC

09 August 2016

 

Rare Earth Minerals Plc

("Rare Earth Minerals", "REM" or "the Company")

Conditional Agreement for US$ 15 million Loan Note from Strategic Mexican Investment Fund.

Rare Earth Minerals Plc (AIM: REM; OTC: REMMY)) is pleased to announce that it has conditionally raised US$15 million with the issue of new loan notes which are convertible into ordinary shares in the Company ("Convertible Loan"). The Convertible Loan is being issued to the Iskandar Mineral Asset Fund ("Iskandar"), a family office fund and a strategic Mexican resources specialist investor based in Mexico.

About the Iskandar Mineral Asset Fund

Iskandar is focused on investing in publicly listed mining companies and private Mexican companies. Iskandar seeks to make strategic acquisitions in companies that manage mining projects during a time of historically low market valuations and at the start of their development potential.

Iskandar's knowledge, permanent presence and experience in Mexico, in addition to its access to capital, will be a great asset to REM as the Sonora Lithium Project move towards commercialisation.  The Iskandar team has a good history of successful investments in Mexico and is well known in the Mexican mining industry and the mining services community generally.

REM will be using the proceeds from the Convertible Loan to fund its joint venture stake and direct equity stake in the Sonora Lithium Project (the "Project") as well as potentially acquiring further interests in this exciting lithium project.

The Convertible Loan is secured by a pledge over the assets of the Company, and has an interest rate of 5%. The principle is convertible at 0.65 pence which represents a premium of 5 % over the closing price on 8 August 2016. The noteholders shall have the right to convert the Convertible Loan into shares of REM on the earlier of: (i) the 12 month anniversary of the date the Convertible Note is issued to the noteholders; and (ii) the achievement by REM of certain performance measures, including the volume weighted average price of REM shares being above the 0.65 pence for 90 consecutive days or relating to potential future investments. In addition, each US$1 of the Convertible Loan has forty warrants attached with the right to subscribe to forty new ordinary shares at a price of 0.8 pence per share for a period of 2 years. The warrant exercise price is a 23% premium to the closing price on the 8 August 2016. The Loan Note is redeemable at the Company's option prior to conversion. The Convertible Loan is conditional on the final approval by the trustees of Iskandar, which is expected to occur prior to the end of August.

Andrew Suckling, The Non-Executive Chairman of Rare Earth Mineral's, commented:

 "It is an important priority for REM to attract a wider range of institutional and high net worth investors to the Company's share register, and we are delighted that Iskandar, whom has extensive local and political knowledge in the Sonora province, and has shown such high degree of confidence in REM's Lithium investment strategy and the Sonora Lithium Project itself."

Gustavo Mazon, Co-Founder & Director of Iskandar Mineral Asset Fund, commented:

"It is of great importance and a privilege for Iskandar to be able to work with REM and participate in the Sonora Lithium Project. At the same time, we believe that this project has the potential to greatly impact local communities and create a platform for further foreign investment along with strong local and national stakeholders. Iskandar, looks forward to working alongside REM in any capacity necessary for the achievement and further advancement of the Sonora Lithium Project and ultimately the accomplishment of commercial production."

The Sonora Lithium Project and Details of REM's ownership:

REM owns a direct interest of 15.5% of Bacanora. The Sonora Lithium Project is comprised of the following lithium properties:

- La Ventana, La Ventana 1, and Megalit concessions, which are 100 percent owned by Minera Sonora Borax S.A. de C.V.("MSB"), a wholly-owned subsidiary of Bacanora; REM, through its direct interest of 15.5% of Bacanora, has an indirect interest in these concessions of 15.5%.

- El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1 concessions, which are held by Mexilit S.A. de C.V. ("Mexilit"). REM has a 30% direct interest in Mexalit through its Joint Venture with Bacanora, and when combined with REM's direct interest of 15.5% in Bacanora, has a total economic interest in Mexalit of 40.8%.

- The Buenavista, and San Gabriel concessions, which are held by Megalit S.A de C.V ("Megalit"). REM has a 30% direct interest in Megalit through its Joint Venture with Bacanora, and when combined with REM's direct interest of 15.5% in Bacanora, has a total economic interest in Megalit of 40.8%.

For further information, please contact:

Rare Earth Minerals plc                                                                      [phone]

Andrew Suckling                                                                                   [phone]

WH Ireland Limited (Nomad & Broker)                                          [phone]

James Joyce

James Bavister

Square1 Consulting                                                                             [phone]

David Bick

Brian Alexander

 

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