SINGAPORE: Paladin Energy Limited has entered into an agreement to sell its 85% interest in the Kayelekera Uranium Mine in Malawi to Hylea’s subsidiary, Lotus Resources Pty Ltd. [the_ad id=”31605″]The consideration for the sale of Paladin’s 85 % shareholding in Kayelekera is A$5 million, comprising A$200k cash, A$4.8 million in Hylea shares to be issued to Paladin.
The issue price will be based on the lower of the 30 day VWAP at the time of issue, or the price of a Hylea capital raising in the 90 days preceding. Paladin will receive a 3.5% royalty based on revenues derived from future production at Kayelekera, capped at A$5 million.
Paladin will also be repaid the funds advanced to provide security for the US$10 million environmental performance bond issued to the Government of Malawi for Kayelekera.
The repayments will occur in four tranches: US$4 million on completion, US$1 million on the first anniversary, US$2 million on the second anniversary, and the final US$3 million on the third anniversary.
The transaction is subject to Hylea shareholder approval, Paladin Noteholder consent and customary terms and conditions, including Government of Malawi approvals, as well as containing standard representations and warranties.
Completion is expected to occur in late 2019. Hylea’s associated capital raisings are underwritten for A$8 million.
The sale of the company’s non-core asset to Hylea and the repayment of the environmental performance bond advance will enable Paladin to prioritise its capital and other resources on optimising and restarting its Langer Heinrich Mine (Langer Heinrich) in Namibia and to position Langer Heinrich to be among the first significant global producers to return to production.