Kimberley Metals to develop lead-silver-zinc project with Henan Yuguang Lead & Gold
Sydney-based Kimberley Metals (ASX:KBL) has entered into an agreement with China's largest lead producer, Henan Yuguang Lead & Gold Co., Ltd.
Yuguang will take take a 15% placement in KBL and Yuguang will take a 25% direct interest in a Joint Venture to develop the Sorby Hills Lead-Silver-Zinc project in Western Australia.
A memorandum of cooperation has been signed between the companies. This MOC is subject to China and Australian regulatory approvals, KBL shareholders' approval and Yuguang Board of Director's approval. The final agreement that provides all terms and conditions to the contemplated transaction will be executed in the coming days.
Under the MOC Yuguang or a related entity will take a placement of KBL shares representing 15% of KBL's expanded share capital at the time of issue. The pricing of the placement is $0.25 per share, a premium of 25% to the Initial Public Offering in January 2010, and 37.9% to Volume Weighted Average Price since listing on February 25th 2010.
The number of shares to be issued is approximately 20,800,000.
A notice of meeting to KBL shareholders, at which approval will be sought for the proposed share
placement to Yuguang.
Under the MOC, KBL and Yuguang will create a Joint-Venture to develop the Sorby Hills Lead-Silver-Zinc project located near Kununurra in Western Australia.
Yuguang will earn an interest of 25% in the Joint-Venture by contributing $5 million to bring the feasibility studies to completion.
Yuguang will be entitled to a percentage of all minerals products produced by the Project at market terms. This percentage shall be equivalent to the sum of the direct interest in the Project and the proportional interest through the equity in KBL.
Yuguang will have the right to earn entitlement to a higher portion of the mineral produced on the condition of providing assistance satisfactory to KBL in raising funds to bring the project into production.
