The Marathon project was acquired by Sibanye-Stillwater as part of the Stillwater acquisition in May 2017.
The agreement sees Sibanye-Stillwater receive upfront proceeds in the form of 3.0 million Canadian dollars (CAD$) in cash and 11,053,795 shares @ CAD$0.2714 per share in Gen Mining (an equity interest of 12.9% @ CAD$0.2714 per share) on closing of the agreement. Gen Mining will acquire a 51% interest in the Marathon project and form an unincorporated joint venture with Stillwater Canada Inc.
The agreement will enable Gen Mining, a focused exploration company, to advance the Marathon project and to conclude further economic studies in the development of this asset.
The conclusion of the transaction is subject to customary conditions for a transaction of this nature and is expected to close prior to mid July 2019.
Sibanye-Stillwater CEO, Neal Froneman commented: “We are pleased to enter into this agreement which unlocks immediate value for the Group and ensures appropriate investment and focus on the Marathon project, whilst we maintain our attention on our core US PGM operations. We look forward to working with Gen Mining to realize the potential of the property, increasing the value proposition for all stakeholders.”
Transaction overview
Upon signing a letter of intent Gen Mining paid a deposit of CAD$100,000 to Sibanye-Stillwater.
To acquire the First Interest, Gen Mining must pay an additional CAD$2.9 million in cash and issue 11,053,795 common shares (or 12.9% interest) at a deemed price per common share of CAD$0.2714 to Sibanye-Stillwater. Gen Mining will become the operator of the joint venture and the property (unless its interest in the joint venture reduces to a minority interest) and will assume all liabilities of the Property in such operatorship capacity.
Gen Mining has the right to earn an additional 29-per-cent interest in the Property (the “Second Interest”) within four years of the closing date, by making total cash expenditures on the Property of at least CAD$10 million and delivering a preliminary economic assessment. During this second earn-in period, Gen Mining must make all required expenditures to maintain the property in good standing.
Once Gen Mining has earned the Second Interest, Sibanye-Stillwater shall have the option to fund any future exploration and development costs on a pro rata basis with Gen Mining (80% funded by Gen Mining and 20% funded by Sibanye-Stillwater) in order to maintain its 20% interest in the Property, subject to normal dilution provisions.
If Gen Mining does not earn into the Second Interest, Sibanye-Stillwater shall have a one-time option to re-acquire from Gen Mining an additional 31% participating interest in the joint venture (for a total 80% participating interest) for CDN$1.00 and become operator under the joint venture.
Upon a definitive feasibility study (the “DFS”) being prepared and the management committee of the joint venture making a positive commercial production decision, so long as Sibanye-Stillwater has a minimum 20% interest in the Property, then Sibanye-Stillwater will have 90 days to exercise an option to increase its participating interest in the joint venture from its current percentage up to 51% (the “Percentage Differential”)by agreeing to fund an amount of the total capital costs as estimated in the DFS multiplied by the Percentage Differential, in addition to its pro rata proportion of costs that it would fund at its current participating interest level. Should this option be exercised, Sibanye-Stillwater would also take over operatorship of the project at such time.
Source: Company Press Release
