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African Mining and Exploration (AME) has signed a conditional agreement with AIM listed Alecto Minerals to sell its subsidiary AME West Africa.

 AME West Africa holds six exploration permits in Mali.

The consideration payable to AME for AME West Africa will be 108,695,652 Alecto shares priced at 1.15p, having an aggregate value of £1.25m.

AME will also retain an existing net smelter royalty of one per cent on the first 300 000 ounces gold produced from the AME West Africa permits.  Alecto will also assume the contingent obligations to make deferred consideration payments to Electrum Ltd, the previous owners of the AME West Africa projects.

Under the terms of the agreement AME is able to retain exposure to the prospectivity of the licence areas held by AME West Africa, including the Kossanto Gold Project, which currently has a JORC Inferred Resource of 2.35 million tonnes @1.42 g/t for 107,000 ounces at a cut off grade of 0.5 g/t Au, whilst avoiding costly expenditure costs to further develop the projects.

In addition, AME has agreed to make a £500 000 strategic cash investment in Alecto through a £250 000 placing of new shares at a price of 1.15p  and a £250,000 placing of 12 month Alecto convertible loan notes. The Loan Notes are convertible at either party’s option at a price of 1.15p per share and will bear interest of seven  per cent payable at expiry or conversion.  The Loan Notes may not be converted into shares if such conversion would lead to AME holding more than 29.9% of Alecto.  This investment will further ensure AME retains an indirect strategic interest in AME West Africa’s licence areas.

Alecto (AIM: ALO) is an African focused, AIM listed resource exploration and development company with a portfolio of highly prospective gold and base metal assets in Mauritania and Ethiopia.

The company has also announced that David Archer, currently a non-executive director, will be appointed CEO of AME with immediate effect, replacing Mark Jones who will step down from the board of AME to join the board of Alecto as CEO.

David has held executive and non-executive roles in a number of listed companies and has been actively involved in the international resources industry for over 30 years.

Archer said, “Having recently delineated a maiden JORC compliant resource at the Kossanto Gold Project, the Board felt it strategically practical and financially beneficial to divest a number of its Malian assets.  The transaction allows AME to retain exposure to the AME West Africa’s Malian gold projects, eliminates the associated funding requirements and contingent obligations to Electrum and provides AME with exposure to Alecto’s exciting Ethiopian and Mauritanian projects.  Having a solid cornerstone investor in Fahad Al-Tamimi, Alecto is also in a strong position to be able to further develop the Malian gold projects, enabling AME to focus on expanding its resources portfolio with new investment opportunities.

“’With an experienced Board and management team, I am confident that we are well placed to further expand our portfolio of resources projects at what is a very opportune time in the commodities’ cycle’.

“Finally, I would like to take this opportunity to thank Mark Jones and our AME West Africa team for all their hard work and dedication to the company, which has resulted in a very active year for AME.  I wish them well for the future and look forward to updating shareholders in due course on our future developments as we continue to establish ourselves as a multi-commodity exploration and development company.”

Highlights

  • Strategic deal with Alecto to sell subsidiary AME West Africa for 108,695,652 new shares in Alecto, priced at 1.15p, with an aggregate value of £1.25 million
  • AME will also make a further £500,000 cash investment in Alecto:
  • £250,000 through subscribing for 21,739,130 new Alecto shares at 1.15p per share; and
  • £250,000 through subscribing for 12 month Alecto convertible loan notes.
  • Following completion of the transaction, AME will hold in aggregate 130,434,783 Alecto shares, representing 26.7% of Alecto’s issued share capital
  • Transaction enables AME to maintain significant exposure to these highly prospective gold licences whilst eliminating funding requirements
  • AME to retain an existing net smelter royalty of 1% on the first 300,000 ounces gold produced from AME West Africa’s licence areas payable in cash
  • Alecto has an extensive portfolio of gold exploration projects in Ethiopia and an Iron-Oxide-Copper-Gold (‘IOCG’) exploration project in Mauritania, as well as a number of strategic alliances
  • AME retains a portfolio of wholly-owned prospective assets, including the 250 sq km Karan Gold Project in southern Mali
  • Active investment strategy in place to further develop the business and build shareholder value through strategic acquisitions
  • Strong Board and management team with proven experience in developing resource assets globally
  • Mark Jones will step down as CEO, effective immediately; it is intended that he will join the board of Alecto as CEO in order to continue the development of the Kossanto Gold Project
  • In line with strategic development, David Archer, current non-executive director, is appointed CEO of AME with immediate effect

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