Steven Poulton, Chief Executive of Altus, commented:
“We are delighted to reach this deal with Canyon which is designed to monetise our bauxite projects in Cameroon. The deal will generate a significant additional shareholding for the Company in ASX listed Canyon which, if fully consummated, is valued at approximately £3.4 million / C$5.8 million based on the current price of Canyon’s shares on the ASX. Critically, we have also secured a US$1.50 / tonne ‘life of mine’ royalty on bauxite ore mined and sold from the Project. Altus strategically acquired a stake in the Project in 2010 and entered a JV with Canyon in December 2013. Our total expenditure generating the project prior to the JV was less than US$125,000 and this amount was repaid in cash by Canyon. We also received an initial 8 million Canyon shares which are not subject to escrow, with a current value to Altus of approximately £0.8 million / C$1.5 million. This series of transactions showcases the strategic value of our Africa focused and counter-cyclical project generator business model.”
Altus Strategies Plc (LON: ALS & TSX-V: ALTS), the Africa focused exploration project generator, announced that it has signed a Joint Venture Termination agreement and a Sale & Purchase agreement with ASX listed Canyon Resources Ltd (“Canyon”). The Termination Agreement terminates the existing Joint Venture Agreement dated 23 December 2013 (“JVA”) that the Company has with Canyon. The SPA transfers a 100% interest in the share capital (“Aucam Shares”) of the Company’s subsidiary Aucam Resources Ltd (“Aucam”), which is incorporated in the Republic of the Seychelles, to Canyon. Aucam is the 100% owner of Aucam SA, the holder of the Company’s Birsok and Mandoum licences (the “Project”) in Cameroon. The Project is located in central Cameroon and is contiguous with exploration licences owned by Canyon, covering the potentially substantial Minim Martap bauxite deposit (the “Minim Martap Project”).
· Altus to receive up to 30 million Canyon shares with a current value of C$5.8 million / £3.4 million as follows:
o 25 million shares for the termination of the JVA (which are in addition to 8 million shares already received under the JVA)
o 5 million shares for transferring the Project and upon the receipt of a mining convention at the Minim Martap Project
· Altus to receive a US$1.50 / tonne royalty on bauxite ore mined and sold from the Project
· Altus expended less than US$125,000 on generating the Project prior to the JVA
· Canyon has announced a JORC (2012) compliant resource at the Minim Martap Project of 550 million tonnes at an average grade of 45.5% total Al2O3 and total 2.06% SiO2, comprising:
o Indicated 88 million tonnes averaging 41.8% Al2O3 and 1.3% SiO2
o Inferred 466 million tonnes averaging 46.2% Al2O3 and 2.2% SiO2
· The Project occupies parts of the same bauxite plateaux as the Minim Martap Project
· The Project is located less than 10km from a rail line which runs to the port
Key Commercial Terms of the Agreements
Termination Agreement: In consideration of the termination of the JVA, Canyon will issue to Altus:
- 15 million ordinary free trading Canyon shares (the “First Shares”)
- 10 million ordinary Canyon shares, to be issued 12 months following the issue of the First Shares and subject to a 12 month voluntary escrow
SPA: In respect of the sale of the shares in Aucam, Canyon will issue and pay to Altus:
- 5 million ordinary Canyon shares, to be issued upon the execution of a mining convention on the Minim Martap Project and subject to a 12 month voluntary escrow
- a payment of a US$1.50 per tonne ‘life of mine’ royalty on sales of ore mined from the Project to be governed by a separate royalty deed (“Royalty Deed”)
The Agreements are subject to certain conditions precedent, including the transfer of the Aucam Shares, the execution of the Royalty Deed, the re-organisation of Aucam as well as obtaining any regulatory or other approvals as may be required. The Agreements contain standard representations and warranties by both Altus and Canyon. The signing of the Agreements follows the Letter of Intent entered into between Altus and Canyon announced by Altus on 11 October 2018.
Following the transaction and on the basis that all 30 million Canyon shares are issued to Altus, Altus will hold an approximate 8.7% interest in Canyon on a partially diluted basis.
While Canyon is not a related party to Altus, the Chairman of the Company is also the Chairman of Canyon and as such he recused himself from the decision making process in respect of the signing of the Agreements.