Bass acquires 100% of StratMin’s Graphmada

JOHANNESBURG (miningweekly.com) – ASX-listed Bass Metals will acquire the remaining 93.75% it does not already own in Aim-listed StratMin Global Resources’ graphite operations Graphmada Mauritius for A$15.25-million in staged cash, equity and royalty considerations.

The agreed term sheet allowed StratMin to pursue other corporate opportunities while retaining exposure to the operations through a significant proportion of equity-based consideration.

“This term sheet replaces that signed on September 2, 2015, which envisaged an investment by Bass into Graphmada of a sum totalling up to £2-million to take a 25% investment in Graphmada,” StratMin CEO Brett Boynton said in an update to shareholders on Friday.

As a joint venture partner, Bass, which had, to date, paid some £500 000 for 6.25% of the operations under the prior agreement, preferred to acquire the entire shareholding to independently fund the development and expansion of Graphmada itself.

“The board sees this as an excellent opportunity to crystallise value for StratMin shareholders, secure funding from a more active graphite market and maintain an investment exposure to the assets,” Boynton said.

The transaction, subject to a number of conditions precedent including regulatory and shareholder approvals, would see Bass pay out A$1.5-million in cash, as well as a three-tranche equity payment totalling A$8.75-million in shares and a net smelter royalty of 2.5% capped at A$5-million beginning six months after execution of the transaction.

The first tranche would comprise A$750 000 worth of Bass shares at a price of A$0.01 apiece upon execution.

This would be followed by a second tranche of A$3-million worth of Bass shares after three months’ consecutive production of 1 250 t of graphite concentrate and a final tranche of A$5-million would be paid out upon achieving production output of 2 500 t of graphite concentrate over three consecutive months, the value of which would be based on Bass's volume-weighted average share price over the 20 trading days immediately prior to the milestones.

“The board has considered the proposed disposal and the alternatives for funding the development of operations and believes that placing funding control under Bass, with operational support from StratMin and Tirupati, gives StratMin shareholders the best available development proposition,” StratMin explained.

With StratMin disposing of its only significant asset, the company was now required to acquire another asset or relist on the exchange as an investing company.

“The board has been pursuing a number of corporate opportunities and is confident that it will be able to complete a transaction within the six months following completion of the proposed disposal and maintain the admission of its ordinary shares to trading on the Aim market,” said Boynton.

"The proposed disposal gives the company a full funding solution for the Madagascan operations and a platform to convert other opportunities we have been actively pursuing.”