Shell company GMA Resources has found a Kazakhstan-focused reverse takeover target and intends to change its name to Kemin Resources.
GMA is acquiring a 90% stake in Joint Venture Kazakh-Russian Mining Company LLP (KRMC) for £40m of 148.3m B shares. KRMC has two subsoil use contracts in respect of molybdenum and tungsten deposits in northern Kazakhstan - the Drozhilovskoye molybdenum-tungsten deposit in the Denisovski rayon of Kostanai oblast and the Smirnovskoe molybdenum-tungsten-copper deposit in the Karabalyksky rayon of the Kostanai oblast. These contracts have been held for eight years.
The Kazakhstan government has to agree to the change of ownership and it has pre-emptive rights to acquire the subsoil rights on equivalent terms to the purchase. The government has tried to terminate the rights to each of the subsoil contracts in the past but they have been successfully contested.
The subsoil use contracts are suspended and the B shares will convert into ordinary shares when they are reinstated. If this does not happen by 31 May the B shares will be converted into deferred shares and GMA will transfer its interest in KMRC back to the seller for £1. Loan stock holders are being asked to agree to convert their loans into ordinary shares when the contracts are reinstated.
Assuming the reinstatement of subsoil rights, GMA will assess the available data and start an exploration programme. This will be followed by a pre-feasibility study and then a bankable feasibility study.
Former Oxus Gold boss William Trew will become non-executive chairman. Sanzhar Assaubayev, who is 26 years old and a former director of KazakhGold, will become chief executive.
Every 500 existing shares will be consolidated into one new share. The existing shares will return from suspension on 5 February. At 0.072p a share, GMA is valued at £450,000 – so existing shareholders will own around 1% of the enlarged share capital. If the contracts are not reinstated by 31 May then the shares will be suspended again on 3 June because GMA will not have implemented its investing policy.
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