27 July 2015
Closing of BFS Financing with Appian and IFC
Peak Resources Limited ("Peak" or "the "Company"; ASX Code: PEK) is pleased to announce the Closing of Stage 1 of its financing transaction, the details of which are outlined in the previous ASX Announcement titled BFS Funding of ~ A$29.5 million finalised as Formal Agreements with Appian and IFC are executed" dated 3 February 2015.
Closing of Stage 1 of this transaction leaves the Company debt-free and well-financed to advance the Bankable Feasibility Study ("BFS") for the Ngualla Rare Earth Project.
HIGHLIGHTS
Stage 1 total of ~A$20 million (before costs) received from Jersey-based Appian
Natural Resources Fund ("Appian") and International Finance Corporation ("IFC") on a
80:20 pro rata split
Interim loan funding facilities provided by Appian of US$3 million and A$5 million plus applicable interest fully repaid leaves the Company debt free
Appian becomes Peak's largest shareholder, holding a 10% interest
IFC becomes a 3% shareholder in Peak
Stage 1 subscription provides Appian and IFC with a 12.5% interest in Peak subsidiary
Peak African Minerals ("PAM")
BFS formally commenced and progressing
Darren Townsend, Peak's Managing Director said: "We are excited by the potential to advance the development of Ngualla now that we have closed this transformational transaction. We formally welcome Appian and IFC as significant shareholders and partners in the development of the Ngualla Project. We see the support of Appian and IFC, two sophisticated investors in the sector, as a considerable vote of confidence in Ngualla's potential as a magnet metal project and I wish to thank the Peak, Appian and IFC teams and their respective advisors for all the hard work that has gone into this transaction."
Michael W. Scherb, Appian's founder said: "Appian is delighted to be a long-term collaborative partner as Peak advances development of the Ngualla Project. Ngualla's strong alignment with the rapidly growing and high value magnet metal market, underpins our belief that it will emerge as one of the most competitive rare earth projects globally."
About Peak
Peak is an ASX-listed Company developing the Ngualla Rare Earth Project in Tanzania in conjunction with its partners Appian and IFC. Ngualla is a large high grade rare earth deposit, particularly rich in the high growth magnet metals neodymium and praseodymium. Peak has commenced the BFS for the Ngualla Project and has appointed AMEC Foster Wheeler as the lead engineer for the study.
Peak Resources Limited Ground Floor, 5 Ord Street, West Perth, Western Australia 6005. PO Box 603, West Perth 6872. ASX: PEK ACN 112 546 700
Telephone: +61 8 9200 5360 info@peakresources.com.au www.peakresources.com.au Company Secretary: Graeme Scott
Non-executive Chairman: Jonathan Murray Managing Director: Darren Townsend Technical Director: Dave Hammond Non-Executive
Director: John Jetter Non-Executive Director: Robin Mills
About Appian
Appian Natural Resources Fund is a private equity fund which has been established to invest specifically in the metals and mining sector. Appian has a uniquely collaborative investment approach that seeks to partner with local owners, managers and investors to leverage its world-class operational and corporate finance expertise.
With this value-add approach and long-term investment horizon, it aims to generate significant value for the investors and other stakeholders of both the Company and Appian.
For more information, visit www.appiancapitaladvisory.com
About IFC
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. Working with private enterprises in about 100 countries, IFC use their capital, expertise and influence to help eliminate extreme poverty and boost shared prosperity. In FY14, IFC provided more than US$22 billion in financing to improve lives in developing countries and tackle the most urgent challenges of development.
For more information, visit www.ifc.org
Closing Comments
The Company is currently working with its lead engineer, AMEC Foster Wheeler, to advance the BFS with current work programs focused on additional drilling to provide engineering information. In parallel, extensive metallurgical testwork is being completed and it is expected that pilot plant work on the beneficiation part of the process flow sheet will commence this quarter.
Darren Townsend
Managing Director
Appendix - Key Terms
Stage 1 (Closed)
Peak Placement
Appian and IFC (80:20 split) have been issued a total of approximately 50.1 million Peak shares at a price of A$0.09 (raising approximately A$4.5 million). Appian have already nominated two Directors to the Peak board and the IFC are expected to nominate one Director in the near future.
PAM Placement
Appian and IFC have invested approximately US$4.4 million (A$5.9 million at an exchange rate of A$1 = US$0.74) (80:20 split) for a combined 12.5% interest in PAM. Peak holds the remaining 87.5% interest in PAM.
PAM is a Mauritian company that currently owns 100% of the shares in PR NG Minerals Limited
("PRNG"), the 100% owner of the Ngualla Project.
Appian have been granted additional rights for an equal number of Directors as Peak for the board of PAM, including the right to nominate the Chairman with a casting vote. This right is subject to Appian's holding, or having the right to hold, directly or indirectly, 20% of the issued share capital in PAM.
Convertible Note
Appian and the IFC (80:20 pro rata split) have been granted a Convertible Note ("CN") by PAM and Peak for payment of approximately A$2.6 million and redeemable at a conversion price of A$0.103 cents per Peak share with a term of two years. Subject to the receipt of any regulatory approvals that may be required, Appian and IFC may convert the CN which would result in Appian and IFC (80:20 pro rata) being issued with a total of approximately
33.4 million additional ordinary shares in Peak, increasing Appian's interest in Peak to
approximately 15.99% and IFC's interest to 4%.
If the CN is not converted into Peak shares it will be settled by the issue of shares in PAM. This would provide Appian and IFC with an additional 4.99% (80:20) interest in PAM.
Royalty
Appian and IFC (80:20 pro rata split) have made a payment of up to approximately US$5.2 million (A$7 million at an exchange rate of A$1 = US$0.74) to PRNG to purchase a 2% Gross Sales Royalty.
With the above funding all principal repayment and interest obligations under the previously announced bridge loan facilities with Appian have been made and the facilities closed out.
Stage 2 (Not yet complete)
By 31 December 2015 if Appian and IFC deem a high-grade mineral concentrate can be produced from a steady state pilot plant which is of sufficient scale to support scalability to a production sized plant, Appian and IFC would invest a further ~US$4.4 million (80:20) (A$5.9 million) to purchase a further 12.5% interest in PAM to take their combined interest to 25% of PAM (80:20).
Stage 3 (Not yet complete)
On or before 31 July 2016 if Appian and IFC deem production of fully separated rare earths of saleable quality is economically viable, Appian and IFC would invest a further ~US$4.4 million (80:20) (A$5.9 million) to purchase a further 12.5%
62.5%
15.99%
4%
30.0%
7.5%
interest in PAM to take their total combined interest to 37.5% of PAM
(80:20).
Subject to closing and meeting all milestones, Appian's and IFC's overall investment will total approximately ~A$31.8* million and will result in an ownership structure as outlined in Figure 1.
Peak African
Minerals
100%
PR NG Minerals
Limited
100%
Ngualla Rare Earth
Project
Security
Figure 1: Investment structure post-completion of the full
3 stage investment
Forms of security customary for a transaction of this type have been agreed and have been or are to be registered including share pledges over the shares in PAM, PRNG and asset level security given by PRNG.
* An exchange rate of A$1 = US$0.74 has been used for the foreign currency conversion in this announcement. The comparative conversion rate used in the Company's 3 February
2015 announcement referred to above was A$1 = US$0.80.