Wrap Text
Definitive Agreement signed with Denarius Metals Corp
Europa Metals Ltd
(Incorporated and registered in Australia and registered as
an external company in the Republic of South Africa)
(Registration number 4459850)
(External company registration number 2011/116305/10)
Share code on the ASX: EUZ
Share code on AIM: EUZ
Share code on the JSE: EUZ
ISIN: AU0000014342
("Europa Metals" or “the Company”)
Definitive Agreement signed with Denarius Metals Corp. in respect of US$6m Farm-in
Arrangement for Toral and Equity Fundraising of £580,000 at 4.5p
Europa Metals, the European focused lead, zinc and silver developer, is pleased to announce that,
further to its announcement of 5 October 2022, it has entered into a definitive option agreement (the
“Option Agreement”) with Denarius Metals Corp. (TSXV: DSLV; OTCQB: DNRSF) (“Denarius”).
Pursuant to the Option Agreement, conditional on, inter alia, the approval of Europa Metals’
shareholders, Denarius will have the right to acquire in two stages up to an 80 per cent. ownership
interest in the Company’s wholly owned Spanish subsidiary, Europa Metals Iberia S.L. (“EMI”), which
holds the Toral Pb, Zn & Ag project (“Toral” or the “Toral Project”), located in the Province of Castilla
y León, north-west Spain.
In addition, the Company announces that it has conditionally raised £580,000 via a subscription for
12,888,888 new ordinary shares in the capital of the Company (“Ordinary Shares”) (the
“Subscription Shares”) at an issue price of 4.5 pence (ZAR0.922) per share (the “Issue Price”) to
an existing supportive institutional shareholder and certain new investors (the “Subscription”).
The Issue Price represents a premium of approximately 60.7 per cent. to the closing mid-market
price of an Ordinary Share on AIM of 2.8 pence on 22 November 2022, being the last business day
prior to the date of this announcement.
Highlights:
Option Agreement executed
• Option Agreement entered into with Denarius pursuant to which it has been granted an initial
option (the “First Option”) to subscribe for 51 per cent. of the share capital of EMI, the 100
per cent. owned Spanish subsidiary of Europa Metals which holds the Toral Project, and a
further option (the “Second Option”) to potentially acquire an additional 29 per cent. of EMI’s
share capital from Europa Metals.
• The First Option is for an initial exercise period of three years from the date of the Option
Agreement (extendable by 90 days in certain circumstances) and may be exercised by
Denarius conditional upon, inter alia:
• it assuming operatorship and making expenditures on the Toral Project of
US$4,000,000; and
• completion of a preliminary economic assessment (“43-101 PEA”) compliant with
National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-
101”) on the Toral Project.
• Expenditures to include the completion and submission of a mining licence application
in respect of Toral to the local Junta by 31 July 2023.
• The proposed transaction is conditional, inter alia, on the approval of Europa Metals’
shareholders and once obtained an initial US$100,000 advance will flow to EMI on the
business day following such approval followed by a second aggregate sum of US$550,000
made in periodic payments at the discretion of Denarius.
• The Second Option may be exercised by Denarius within a period of one year from the date
of closing of the First Option conditional upon:
• exercise of the First Option;
• completion of a NI 43-101 compliant pre-feasibility study (the “PFS”) on the Toral
Project at its own cost; and
• payment of US$2,000,000 cash to Europa Metals.
Fundraising at 4.5p
• Subscription to raise £580,000 (before expenses) via the issue of, in aggregate, 12,888,888
new Ordinary Shares to an existing supportive institutional shareholder and certain new
investors at 4.5p representing a substantial premium to the Company’s prevailing market
share price.
• The Subscription Shares will represent approximately 13.87 per cent. of the enlarged share
capital and the proceeds will, inter alia, facilitate pursuit of the Company’s growth strategy
and augment its working capital.
Commenting today, Myles Campion, Executive Chairman and acting CEO of Europa Metals
said:
“I am delighted to have agreed definitive documentation with our incoming joint venture partner,
Denarius, which, subject to the approval of Europa Metals’ shareholders, secures an initial
US$4,000,000 investment into the Toral Project and a potential future US$2,000,000 cash payment
to the Company. The first year will see an application being made for a mining licence at Toral,
thereby moving the project along the path towards potential future development. In subsequent years
we will seek to expand the current footprint of the project to encompass the nearby historic third-
party Antonina mine and delineate further high grade mineral resources, following the recent success
of drillholes TOD-041 and TOD-042, at Toral.
“I am also pleased to have completed a capital raising of £580,000 at a substantial premium to the
prevailing market share price, which augments our working capital position and clearly demonstrates
confidence in the Toral project and our strategic direction in the current uncertain market conditions.”
Key Terms of the Definitive Agreements
The proposed transaction involves the formation of a joint venture via EMI between Denarius and
Europa Metals for the development of Toral, which covers both the project’s existing and any
expanded investigation permit area and potentially the adjacent historic Antonina Mine area, the
former licence for which is currently terminated by the Junta de Castilla y León (the “Junta”). In
return for funding certain expenditure on the project and consideration of up to, in aggregate,
US$6,000,000, Denarius will be afforded the exclusive right to acquire up to an 80 per cent. interest
in the Toral Project by way of a two-stage option arrangement.
Option Agreement
Pursuant to the Option Agreement, Denarius has accordingly been granted an initial option for a
period of three years from the date of the Option Agreement (the “First Option Period”) to subscribe
for 51 per cent. of EMI’s share capital and a second option for a period of one year from the closing
of the First Option (the “Second Option Period”) to potentially acquire an additional 29 per cent. of
EMI’s share capital (the “Second Option”) from Europa Metals.
First Option
The First Option may be exercised by Denarius conditional on, inter alia:
• it assuming operatorship and making expenditures on the Toral Project of US$4,000,000;
and
• the completion of the 43-101 PEA.
In each case, prior to the expiry of the First Option Period, failing which the First Option will lapse.
Denarius will advance the US$4,000,000 by way of a loan (the “Loan”) to EMI (the “First Option
Expenditure”) and on satisfaction of all of the conditions of the First Option, Denarius shall be
entitled to capitalise the Loan up to the amount of the First Option Expenditure for the issue to it of
51 per cent. of the shares in EMI. In the event that the First Option is not exercised, Denarius shall
be required to assign the loan to Europa Metals for US$1.
Denarius will have the ability to extend the term of the First Option Period for a further 90 days if the
43-101 PEA is significantly advanced and Denarius continues to make commercially reasonable
efforts to meet the conditions to exercise the First Option.
The First Option Expenditure shall be made in accordance with the agreed high level budget for the
Toral Project which requires: (i) a minimum of US$1,000,000 of the total of the First Option
Expenditure to be spent prior to the first anniversary of the date of the Option Agreement, including
in respect of a mining licence application in respect of the Toral Project to be submitted to the Junta
by 31 July 2023; (ii) a minimum of US$2,000,000 of the total of the First Option Expenditure to be
spent prior to the second anniversary of the date of the Option Agreement; and (iii) the full amount
of the First Option Expenditure to be spent prior to the third anniversary of the date of the Option
Agreement (extendable by 90 days in certain circumstances).
Denarius shall advance US$100,000 on the business day following the required shareholder
approval being obtained and a further sum of US$550,000 in periodic payments at the discretion of
Denarius.
Accordingly, the consideration received by the Company in respect of the First Option will all be
utilised on expenditure to advance the Toral Project.
Second Option
The Second Option may be exercised by Denarius conditional on:
• the exercise of the First Option;
• completion of the PFS at the cost of Denarius; and
• payment of US$2,000,000 to Europa Metals in satisfaction of the exercise price for the
Second Option (the “Second Option Exercise Price”).
In each case prior to the expiry of the Second Option Period. The US$2,000,000 consideration
receivable in respect of the Second Option, will be utilised to pursue the Company’s stated growth
strategy and provide additional working capital for the group.
In the event that only the First Option is exercised by Denarius, Denarius has undertaken to transfer
to Europa Metals, upon request by Europa Metals, such number of shares in EMI representing two
per cent. of the issued share capital such that the Company would own 51 per cent. of the issued
share capital of EMI thereafter.
The proposed transaction (save for the Subscription), which is unanimously recommended by
Europa Metals’ board, is subject, inter alia, to the approval of the Company’s shareholders pursuant
to the requirements of Rule 15 of the AIM Rules for Companies (the “AIM Rules”). Accordingly, the
Company will shortly make a further announcement with respect to the publication of a circular
incorporating a formal notice of a general meeting with regards to seeking such shareholder approval
which, once posted to shareholders, will also be made available on the Company’s website at:
www.europametals.com.
The Option Agreement contains representations, warranties and indemnities given by the Company
and EMI to Denarius, in relation to title and capacity to the shares in EMI, legal title to the Toral
Project and environmental, of the type commonly found in such agreements. Such representations,
warranties and indemnities are repeated on exercise of the First Option and the Second Option. The
Company’s maximum aggregate liability under such warranties and indemnities is limited to an
amount equal to the aggregate of the First Option Expenditure and the Second Option Exercise Price
(to the extent such amounts are expended).
In addition, the Option Agreement can be terminated by a party if the other party is in material breach
of the terms of the Option Agreement. Denarius may terminate the Option Agreement at any time
by providing the Company and EMI with at least sixty days’ prior notice in writing.
The Option Agreement is governed by the laws of the Province of Ontario and the federal Laws of
Canada.
Joint Venture Agreement and Shareholders’ Agreement
On exercise of the First Option, the parties shall also enter into a joint venture agreement (the “JV
Agreement”) and a shareholders’ agreement (the “Shareholders’ Agreement”). The JV
Agreement sets out the terms of the appointment of the management committee to be established
(the “Management Committee”) to determine the overall policies, objectives, procedures and
actions in respect of the joint venture as regards its business including the Toral Project (the “Joint
Venture”). The Management Committee shall initially consist of three representatives appointed by
Denarius and one representative appointed by the Company. The board of directors of EMI shall
reflect the decisions of the Management Committee in all respects.
A shareholder holding less than 50 per cent. of the issued share capital of EMI (a “Minority
Shareholder”) shall have the right to appoint a representative to the Management Committee for
such time as its shareholding in EMI does not fall below 10 per cent. Any shareholder holding more
than 50 per cent. of the issued share capital of EMI (a “Majority Shareholder”) shall be entitled to
appoint three representatives to the Management Committee and shall have the right to be appointed
as operator.
The quorum for any meeting of the Management Committee shall consist of at least three
representatives, one of whom must be a representative appointed by the Company (subject to it
holding at least 10 per cent. of the issued share capital in EMI). Certain decisions of the Management
Committee require the prior written consent of the Company and Denarius including, but not limited
to:
(a) creating, or permitting, any encumbrances over any assets comprising the Toral Project;
(b) abandoning, selling or otherwise disposing of substantially all of the assets comprising the
Toral Project or any material portion of it; or
(c) relinquishing or altering the terms of the Toral permit(s) (other than in connection with a
renewal of the Toral permit(s)).
The JV Agreement is governed by the laws of the Province of Ontario and the federal Laws of
Canada.
The Shareholders’ Agreement to be entered into between the Company, EMI and Denarius sets out
certain obligations and requirements as to the management of EMI. The board of directors of EMI
(the “EMI Board”) shall consist of four directors. A Majority Shareholder shall have the right to
appoint three directors and a Minority Shareholder shall have the right to appoint one director. The
quorum for meetings of the EMI Board must include one director appointed by the Minority
Shareholder. EMI shall not issue any shares without the prior written consent of the Company and
Denarius.
The Shareholders’ Agreement is governed by Spanish law.
For its financial year ended 30 June 2022, EMI reported an unaudited profit before tax of
approximately €100,000.
Details of the Subscription and Related Party Transaction
The Company has raised £580,000 (before expenses) via a subscription for, in aggregate,
12,888,888 new Ordinary Shares at an Issue Price of 4.5 pence per share to an existing supportive
institutional shareholder and certain new investors. The Subscription is conditional on admission of
the Subscription Shares to trading on AIM and, following admission, the Subscription Shares will
represent, in aggregate, approximately 13.87 per cent. of the Company’s enlarged issued share
capital.
The Subscription Shares will be issued under the Company’s pre-existing share capital authorities,
will be issued fully paid and will rank pari passu in all respects with the Company’s existing Ordinary
Shares. The Issue Price represents a premium of approximately 60.7 per cent. to the closing mid-
market price of an Ordinary Share on AIM of 2.8 pence on 22 November 2022, being the last
business day prior to the date of this announcement.
The net proceeds from the Subscription will be utilised towards progressing he Company’s existing
strategy to further de-risk and progress the project, the continued identification and evaluation of
additional projects and potential transaction opportunities to potentially expand the Company’s
portfolio and for the Company’s general working capital requirements.
Deutsche Balaton Aktiengesellschaft (“DBA”) is investing £330,000, via the Subscription, for
7,333,333 new Ordinary Shares and, as an existing substantial shareholder in the Company, is
considered to be a related party under the AIM Rules. The participation of DBA in the Subscription
is therefore deemed to constitute a related party transaction pursuant to Rule 13 of the AIM Rules.
Accordingly, the independent directors of Europa Metals, being Myles Campion, Evan Kirby and
Daniel Smith consider, having consulted with Strand Hanson Limited, the Company’s Nominated
Adviser, that the terms of DBA’s participation in the Subscription are fair and reasonable insofar as
the Company’s shareholders are concerned.
Admission to trading
Application will be made to the London Stock Exchange for admission of the 12,888,888 Subscription
Shares to trading on AIM (“Admission”) and to the Johannesburg Stock Exchange for quotation on
AltX. It is expected that Admission will become effective and dealings in the Subscription Shares
will commence at 8.00 a.m. on or around 28 November 2022.
Following Admission, the Company’s total issued ordinary share capital will comprise 92,925,802
Ordinary Shares with voting rights. This figure may be used by shareholders in 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 Company’s share capital pursuant to the Company’s
constitution.
For further information on the Company, please visit www.europametals.com or contact:
Europa Metals Ltd
Dan Smith, Non-Executive Director and Company Secretary (Australia)
T: +61 417 978 955
Myles Campion, Executive Chairman and acting CEO (UK)
T: +44 (0)20 3289 9923
Strand Hanson Limited (Nominated Adviser)
Rory Murphy/Matthew Chandler
T: +44 (0)20 7409 3494
WH Ireland Limited (Broker)
Harry Ansell/Dan Bristowe/Katy Mitchell/Sarah Mather
T: +44 (0)20 7220 1666
JSE Sponsor to Europa Metals
Questco Corporate Advisory Proprietary Limited
Sharon Owens
T: +27 (11) 011 9212
United Kingdom
23 November 2022
The information contained within this announcement is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of United
Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended.
Denarius is a Canadian junior company engaged in the acquisition, exploration, development and
eventual operation of mining projects in high-grade districts, with its principal focus on the Lomero-
Poyatos Project in Spain. The Company also owns the Zancudo and Guia Antigua Projects in
Colombia. Additional information on Denarius can be found on its website at
www.denariusmetals.com and by reviewing its profile on SEDAR at www.sedar.com.
Date: 23-11-2022 09:00:00
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