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Altus Strategies Plc / Index (EPIC): AIM (ALS) TSX-V (ALTS) OTCQX (ALTUF) / Sector: Mining


Altus Strategies Plc
(“Altus” or the “Company”) 
 

Altus Strategies Plc (AIM: ALS, TSX-V: ALTS, OTCQX: ALTUF) announces that on 21 November 2021 the Company entered into a sale and purchase agreement and other agreements with London AQSE Growth Market listed Eastinco Mining and Exploration plc (“Eastinco”) to sell the Company’s 100% owned subsidiary Aterian Resources Ltd (“Aterian”) to Eastinco (the “Transaction”). Aterian is advancing a portfolio of 15 primarily copper and silver exploration projects (“Aterian Projects”) in the Kingdom of Morocco. Eastinco is currently advancing a portfolio of tantalum exploration and development projects in the Republic of Rwanda. The Transaction remains subject to certain conditions precedent, including the admission to trading of Eastinco’s entire issued share capital to the Official List of the FCA (Standard Segment) (“Admission”) and to trading on the London Stock Exchange’s Main Market for listed securities (“LSE Standard Listing”).

Highlights:

  • Altus to vend its 100% owned Morocco focused subsidiary Aterian into Eastinco
  • Altus to own up to 25% of Eastinco and an Altus appointee will join Eastinco’s board
  • Altus to receive warrants for up to an additional 10% of Eastinco
  • Altus to own 15 new royalties, including a royalty on the Musasa tantalum mine in Rwanda
  • Eastinco to transform into a pan-African strategic metals development company
  • Eastinco currently owns tantalum exploration and development projects in Rwanda
  • The Transaction remains subject to Eastinco’s Admission and LSE Standard Listing
  • Eastinco proposes to change its name to Aterian Plc on completion of the Transaction

Steven Poulton, Chief Executive of Altus, commented:
“We are delighted to announce the proposed divestment to Eastinco of our 100% owned Moroccan focused exploration subsidiary, Aterian, as part of Eastinco’s proposed LSE Standard Listing and subsequent name change to Aterian Plc. The enlarged entity will have a strong and unique portfolio of strategic metal exploration and development projects in Morocco and Rwanda.

“The Transaction will result in Altus generating a portfolio of 15 new royalties on the Aterian portfolio, of primarily copper and silver projects, as well as a royalty on the Musasa tantalum mine in Rwanda. Altus will become a material shareholder of Eastinco with up to 25% of the issued capital at Admission. Altus will also hold share purchase warrants for up to an additional 10% of Eastinco, subject to certain restrictions, retaining a significant stake in the enlarged Aterian portfolio. Altus will also receive a reimbursement of up to £250,000 in respect of certain exploration expenditures incurred by Aterian in 2021.

“The Transaction with Eastinco reflects our confidence in the Aterian Projects and is in line with our business model of making and monetising exploration discoveries in return for equity, cash and the creation of new royalty interests. We look forward to the completion of the Transaction, the successful Admission of Eastinco and to supporting the Eastinco team going forward”.


Charles Bray, Executive Chairman of Eastinco commented:
I am delighted to report on our proposed acquisition of Aterian for its significant portfolio of 15 copper, silver and base metal exploration projects strategically positioned close to existing mining projects in Morocco. Upon completion, Altus will become a strategic shareholder of Eastinco, demonstrating Altus’ confidence in the projects and providing us with an alignment of interest and the support of a well-respected industry player. Previous exploration undertaken by Altus on the Moroccan assets has highlighted the strong potential for the discovery of deposits of strategic metals, in particular, copper and silver. We believe the market fundamentals for copper are excellent, specifically linked to the anticipated growth in demand for renewable energy and the related electrification of transportation globally.

“We consider this to be the optimal time to broaden and strengthen our asset portfolio across Africa, adding to our established tantalum mining and exploration projects in Rwanda. Our working relationship with Altus will also guarantee a smooth transition to ensure exploration continues in Morocco without interruption. Our proposed LSE Standard Listing will provide us with exposure to a wider investor profile and greater liquidity in our shares and, therefore, a solid platform from which we can continue to grow. This is a key step to becoming a leading strategic metal exploration and development company in Africa.”


Conditions Precedent
Eastinco is currently listed on the AQSE Growth Market. Concurrent with the Transaction, Eastinco will apply for the admission to trading of Eastinco’s entire issued share capital to the Official List of the FCA (Standard Segment) and to trading on the London Stock Exchange’s Main Market for listed securities. Eastinco has recently completed a pre-IPO financing, raising £950,000 (before costs) via the placement of Eastinco ordinary shares (“Eastinco Shares”) and the issue of interest free Convertible Loan Notes (“CLNs") to current and new investors. The Eastinco Shares were issued at a price of 1.5 pence each and the CLN’s will automatically convert on Admission into Eastinco Shares using a conversion price of 1.5 pence each (“Pre-IPO Price”). Eastinco. Upon completion of the Transaction, Eastinco intends to change its name to Aterian Plc (“Name Change”). Eastinco also proposes to undertake a share consolidation, effective from Admission, whereby each existing 10 Eastinco Shares will be consolidated into 1 new Eastinco Share (“Consolidation”). The Transaction, Admission, Name Change, Consolidation and other related matters remain subject to the publication of an FCA approved prospectus and the approval of the Transaction, Consolidation and other matters by Eastinco shareholders at a General Meeting which Eastinco plans to convene. The Transaction remains subject, among other matters, to the completion of the relevant documentation and Admission. Shareholders should note that there is no guarantee that the conditions will be satisfied or that the Transaction will be completed.

Consideration Payable to Altus for the Sale of Aterian
The consideration payable by Eastinco to Altus for the acquisition of the entire issued share capital of Aterian, is described below:

Eastinco Shares, Eastinco Warrants & Reimbursement
At completion of the Transaction (“Completion”), Altus will be issued new Eastinco Shares and share purchase warrants (“Eastinco Warrants”) to purchase Eastinco Shares and receive cash consideration as follows:

  • Eastinco Shares representing 5% of the then enlarged share capital of Eastinco following the issue of Eastinco Shares pursuant to the issue of any other Eastinco Shares prior to or on Admission;
  • The Issue to Altus of such number of Eastinco Warrants to purchase such number of Eastinco Shares as will represent 5% of the enlarged share capital of Eastinco at Admission (“Initial Altus Warrants”). The Initial Altus Warrants will have a five-year term. The exercise price of 50% of the Initial Altus Warrants will be based upon a weighted average of the Pre-IPO price and the market price on Admission (“First Price"), and the remaining 50% of the Initial Altus Warrants will have an exercise price which is a 100% premium to the First Price (“Second Price"); and
  • The payment by Eastinco of up to £250,000 to reimburse Altus for exploration costs incurred by Aterian since May 2021, which have been incurred to advance and to maintain the good standing of the Aterian Projects.

In addition, upon the grant of the Agdz mining licence (“Agdz Mining Licence") to a subsidiary of Aterian (currently under application), Eastinco will issue to Altus:

  • Additional Eastinco Shares representing 7.5% of the enlarged share capital of Eastinco on Admission (for an effective holding of 25% of Eastinco’s entire issued share capital); and
  • Further Eastinco Warrants to purchase such number of Eastinco Shares representing an additional 5% of the enlarged share capital of Eastinco (“Additional Altus Warrants”) on Completion. The exercise price of 50% of the Additional Altus Warrants will be the same as the First Price, and the remaining 50% of the Additional Altus Warrants will be the Second Price.

Royalty Agreements
Altus will also be granted the following royalty interests at Completion:

  • A 2.5% net smelter return (“NSR”) royalty over each of the licences currently held by Aterian (each an “Aterian NSR”). Eastinco will retain an option to repurchase up to 1% of each Aterian NSR for US$500,000 per 0.5%, for a total potential repurchase consideration of US$1,000,000 per each Aterian NSR;
  • A 2.5% NSR royalty on any new licences (each an “Additional 2.5% NSR”) granted to Aterian within three months of Completion. Eastinco will retain an option to repurchase up to 1% of each Additional 2.5% NSR for US$500,000 per 0.5%, for a total potential repurchase consideration of US$1,000,000 per each Additional 2.5% NSR;
  • A 1.5% NSR royalty on any new licences (each an “Additional 1.5% NSR”) granted to Aterian within twelve months of Completion. Eastinco will retain an option to repurchase up to 1% of each Additional 1.5% NSR for US$500,000;
  • A 3.0% NSR royalty on any new licences awarded to Eastinco in Rwanda within 24 months of Completion which are procured for Eastinco by Altus (each a “Rwanda NSR”). Eastinco will retain an option to repurchase up to 1% of each Rwanda NSR for US$500,000 per 0.5% for a total potential repurchase consideration of US$1,000,000;
  • A 2.0% NSR royalty on Eastinco’s 85% ownership of the Musasa tantalum project (“Musasa NSR”) located in Rwanda;
  • The Rwanda NSR and the Musasa NSR will be automatically reduced to 1.5% and 0.5% respectively, at no cost to Eastinco, if Altus does not participate pro rata to at least 50% of its holding in the equity of Eastinco in placements undertaken by Eastinco in the 18 months following Admission; and
  • Eastinco will retain the right to repurchase up to 1% of each Rwanda NSR and 1% of the Musasa NSR (subject to the Musasa NSR having a lower limit of 0.5% that cannot be repurchased) for US$500,000 per 0.5% for a total potential repurchase consideration of US$1,000,000 in each case.

Royalty Right of First Refusal
In addition, Altus will be granted a Right of First Refusal (“ROFR”) over any future royalty rights on any project owned by Eastinco, providing Altus with the right to purchase any such royalty on matching terms.

Other
The Eastinco Shares issued to Altus on Completion and upon the grant of the Agdz Mining Licence will be subject to a customary lock in period of 12-months with a further 12-month orderly market provision. Any exercise of the Eastinco Warrants will be subject to Altus owning no more than 29.9% of the enlarged ordinary share capital of Eastinco at the time of exercise. Altus will be entitled to a designated seat on the Board of Eastinco, so long as Altus owns 10% or more of the issued share capital of Eastinco.

Aterian made a loss of £10,028 in the year ended 31 December 2020 and had net liabilities of £45,365 as at 31 December 2020.

Qualified Person
The technical disclosure in this regulatory announcement has been approved by Steven Poulton, Chief Executive of Altus. A graduate of the University of Southampton in Geology (Hons), he also holds a Master's degree from the Camborne School of Mines (Exeter University) in Mining Geology. He is a Fellow of the Institute of Materials, Minerals and Mining and has over 20 years of experience in mineral exploration and is a Qualified Person under the AIM rules and NI 43-101.

For further information you are invited to visit the Company’s website www.altus-strategies.com or contact:

Altus Strategies Plc

Steven Poulton, Chief Executive

Tel: +44 (0) 1235 511 767

E-mail: info@altus-strategies.com

SP Angel Corporate Finance LLP (Nominated Adviser)

Richard Morrison / Adam Cowl

 

Tel: +44 (0) 20 3470 0470

SP Angel Corporate Finance LLP (Broker)

Grant Barker / Richard Parlons

 

Tel: +44 (0) 20 3470 0471

Shard Capital (Broker)

Isabella Pierre / Damon Heath

 

Tel: +44 (0) 20 7186 9927

Yellow Jersey PR (Financial PR & IR)

Charles Goodwin / Henry Wilkinson

Tel: +44 (0) 20 3004 9512

E-mail: altus@yellowjerseypr.com

About Altus Strategies Plc
Altus Strategies (AIM: ALS, TSX-V: ALTS & OTCQX: ALTUF) is a mining royalty company generating a diversified and precious metal focused portfolio of assets. The Company’s differentiated approach of generating royalties on its own discoveries in Africa and acquiring royalties globally through financings and acquisitions with third parties, has attracted key institutional investor backing. The Company engages constructively with all stakeholders, working diligently to minimise its environmental impact and to promote positive economic and social outcomes in the communities where it operates. For further information, please visit www.altus-strategies.com.

Cautionary Note Regarding Forward-Looking Statements
Certain information included in this announcement, including information relating to future financial or operating performance and other statements that express the expectations of the Directors or estimates of future performance constitute "forward-looking statements". These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements. Such factors include, without limitation, the completion of planned expenditures, the ability to complete exploration programmes on schedule and the success of exploration programmes. Readers are cautioned not to place undue reliance on the forward-looking information, which speak only as of the date of this announcement and the forward-looking statements contained in this announcement are expressly qualified in their entirety by this cautionary statement. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is based on assumptions made in good faith and believed to have a reasonable basis. The forward-looking statements contained in this announcement are made as at the date hereof and the Company assumes no obligation to publicly update or revise any forward-looking information or any forward-looking statements contained in any other announcements whether as a result of new information, future events or otherwise, except as required under applicable law and regulations.

TSX Venture Exchange Disclaimer
Neither the TSX Venture Exchange nor the Investment Industry Regulatory Organisation of Canada accepts responsibility for the adequacy or accuracy of this release.

Market Abuse Regulation Disclosure
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.


© 2021 Altus Strategies Plc.
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