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- Lindian Resources (LIN) has signed binding agreements to acquire 75 per cent of Sarmin Bauxite and up to a 75 per cent interest in the Woula Bauxite Project
- Sarmin Bauxite is a private company which holds the rights to the Lelouma Bauxite Project in the Republic of Guinea
- Lelouma has an indicated and inferred mineral resource of 847 million tonnes at 45.1 per cent aluminium oxide and 2.1 per cent silicon dioxide
- Through an investment deed, Lindian will acquire 75 per cent of Sarmin’s issued share capital by issuing over 30.6 million fully paid ordinary shares 1.63 cents each to Sarmin’s shareholders
- Additionally, Lindian will need to fund all project expenditure until a definitive feasibility study (DFS) has been completed
- In regards to the Woula Project, Lindian has entered an agreement with Asena Holdings to acquire the rights it has under a binding term sheet with three other parties to acquire a 61 per cent interest in the project
- Lindian can then increase this to 75 per cent if it solely funds a JORC-defined scoping study within 18 months of acquiring the initial 61 per cent interest
- Finally, Lindian Resources has received commitments to raise $1 million through a two tranche placement to funds planned exploration and working capital
- Company shares are up a healthy 22.2 per cent and are trading for 2.2 cents
Lindian Resources (LIN) has signed a binding agreement to acquire a 75 per cent interest in Sarmin Bauxite.
Sarmin is a private company that holds the rights to the Lelouma Bauxite Project which is located in the Republic of Guinea.
Additionally, Lindian will acquire up to a 75 per cent interest of the Woula Bauxite Project after completing due diligence.
Lelouma Bauxite Project
The Lelouma Project has a significant resource base which has been systematically explored by Sarmin and previous owner, Mitsubishi Corporation. Together, these companies have poured US$10 million (roughly A$14 million) into exploration.
Importantly, Lelouma is located only 40 kilometres from Lindian’s Gaoual Bauxite Project. Both projects are within haul distance of existing rail infrastructure which means the company can fast-track development, save on costs and deliver high-grade ore into the global bauxite market.
The Lelouma Project has a JORC-compliant indicated and inferred mineral resource of 847 million tonnes at 45.1 per cent aluminium oxide and 2.1 per cent silicon dioxide.
Drilling has been conducted at the project throughout the year to support an updated mineral resource statement which will include the measured category. The updated mineral resource is aimed to be released before the end of the year
Further, Sarmin has applied to convert the exploration permit for the Lelouma Project into a mining concession which grants the holder the exclusive right to conduct mining operations for 25 years.
“The acquisition of Lelouma provides Lindian with another world-class bauxite asset in the world’s premier bauxite jurisdiction. Securing the Lelouma Project is an important step in the company’s strategy of becoming the world’s leading bauxite developer,” Chairman Asimwe Kabunga said.
Transaction terms
Lindian has entered an investment deed with Sarmin’s controlling shareholder, Sarmin Mining, and other existing shareholders.
Under the investment deed, Lindian will acquire a 75 per cent in Sarmin’s issued share capital by agreeing to issue 30,674,847 fully paid ordinary shares at an implied issue price of 1.63 cents to Sarmin’s shareholders.
Additionally, Lindian will need to fund all expenditure at the project until a definitive feasibility study (DFS) has been completed.
Within 12 months of the DFS being completed, Sarmin’s shareholders can choose to exchange their 25 per cent interest for a one per cent free-on-board (FOB) royalty. This would result in Lindian increasing its ownership in Sarmin to 100 per cent.
Upon completion, Lindian may appoint four members, including a CEO and Chairman, to the Sarmin Board, while existing Sarmin shareholders will be entitled to appoint two people.
However, this transaction is subject to the approval of the Government of Guinea and Lindian’s shareholders. Shareholder approval will be sought at the company’s 2020 annual general meeting.
Woula Bauxite Project
The Woula Bauxite Project is located in northwestern Guinea. While the southern portion of the project has been explored, the eastern, north-south trending limb is relatively under-explored.
The project has an inferred mineral resource of 64 million tonnes at 38.7 per cent aluminium and 3.1 per cent silicon dioxide.
Lindian will acquire up to 75 per cent of the project once it completes due diligence. Once the acquisition is completed, the company plans to explore for high-grade zones which can then be mined.
“The key focus for us now is the development strategy; we believe that staged development of bauxite assets is critical, starting with lower capex assets that are close to the coast or existing infrastructure, such as Woula, and then progressing to larger world-class resources like Lelouma and Gaoual,” CEO Danny Keating said.
Transaction terms
Specifically, Lindian has entered an agreement with Asena Holdings to acquire Asena’s rights under a binding term sheet with Woula Natural Resources SARL, Enterprise Generate D’Entretien and Construction and Lancinet Dabo to acquire up to 61 per cent of Woula, which owns the Woula Bauxite Project.
In return, Lindian will make a series of cash payments to Woula’s shareholders over nine months, totalling US$150,000 (roughly A$210,747).
Lindian can then increase the 61 per cent interest to 75 per cent if it solely funds the completion of a JORC-defined scoping study for the project within 18 months of acquiring the initial 61 per cent interest.
The company will issue 12,269,939 fully paid ordinary shares at 1.63 cents to Asena to acquire its rights. However, the issue of these shares is conditional upon Lindian completing the acquisition of a 61 per cent interest.
Placement
Lindian has received firm commitments from sophisticated investors to raise $1 million through a two-tranche placement. All up, 61,349,694 shares will be issued at an implied issue price of 1.63 cents.
The placement comes with a one-for-two option at an exercise price of 3.2 cents.
While the first tranche of 30,674,847 shares doesn’t require shareholder approval, the second tranche needs to be given the green light.
Lindian will use the funds from the placement for exploration and work activities, including at the Lelouma and Woula projects, and for working capital.
Company shares are up a healthy 22.2 per cent and are trading for 2.2 cents at 1:55 pm AEST.
