Cadence Minerals (KDNC) – European Metals (AIM: EMH) – Proposed subscription by CEZ for a 51% interest in Geomet s.r.o.

Cadence Minerals (AIM/NEX: KDNC; OTC: KDNCY) is pleased to note the update today from European Metals Holdings Limited (“European Metals” “EMH”) that it has today posted a circular to shareholders (the “Circular”) containing the details of the proposed subscription (the “Proposed Subscription”) of €34,061,265 by CEZ a.s. (“CEZ”) through its wholly-owned subsidiary SDAS, for 51% of Geomet s.r.o. the Company’s wholly owned Czech subsidiary and the holder of the Cinovec licences.

Cadence Minerals Holding in EMH

Cadence holds approximately 19.1 percent of the equity in European Metals, which, through its wholly owned Subsidiary, Geomet s.r.o. (“Geomet”), controls the mineral exploration licenses awarded by the Czech State over Cinovec.

Summary of the Agreement Terms

• Pursuant to the Exclusivity and Framework Agreement, CEZ has the option, but not the obligation, to subscribe through SDAS for such number of Geomet Shares as will result in SDAS holding Geomet Shares comprising fifty-one per cent. (51%) of the ownership interests and voting rights in Geomet, attached with the right to receive fifty-one per cent. (51%) of dividends, liquidation balance and other proceeds payable by Geomet to Geomet Shareholders following completion of the subscription.
• The amount to be paid by CEZ to Geomet under the option is in total approximately €34.06m, equivalent to approximately £29.15m and AUD55.25m. This compares to EMH’s market valuation of approximately £32.88m (€38.42m; AUD62.32m) based on the closing price of an EMH share in London of 21.8 pence on 19 November 2019, the day immediately before announcement by EMH of the Proposed Subscription. The amounts in GBP and AUD included above have been calculated using an average exchange rate for EUR/GBP and EUR/AUD respectively as at 18 November 2019.
• Completion of the Proposed Subscription is conditional, inter alia, on the satisfaction of the following conditions:
  • completion of due diligence in respect of EMH and the Cinovec Project to the satisfaction of CEZ at its sole discretion;
  • the passing of the Ordinary Resolution at the EMH Annual General Meeting, and delivery of a certified copy of the Ordinary Resolution to CEZ;
  • agreement of the initial work programme and budget for Geomet; and
  • CEZ and EMH agreeing the identity of the Chief Executive Officer, the Chief Operating Officer and  the statutory auditor of Geomet to be appointed with effect from completion.
• EMH has agreed to provide CEZ with a period of exclusivity under the Exclusivity and Framework Agreement, with certain break fees payable by EMH if it does not proceed with the Proposed Subscription. In particular, EMH and Geomet have undertaken until 31 March 2020 not to conduct discussions or negotiations or enter into any agreement or arrangement with any person or entity other than CEZ or SDAS in respect of an acquisition of an interest over or in, and/or establishment of a joint venture, partnership or other cooperation in connection with, the Cinovec Project and/or Geomet, by any means.
• EMH and CEZ have also agreed the form of Geomet Shareholders’ Agreement which sets out their rights and obligations as shareholders in Geomet should CEZ exercise the option. The Geomet Shareholders’ Agreement includes certain minority shareholder protections with a number of reserved matters which require the approval of both CEZ and EMH, together with deadlock provisions in the event that on completion of the proposed work programme, the parties disagree on a construction decision.

Accordingly, shareholder approval to the Proposed Subscription is being sought at a General Meeting held by EMH at the office of White & Case LLP, 5 Old Broad Street, London EC2N 1DW at 11.00am GMT on 20 December 2019. 

AIM Rule 15

The proposed subscription by SDAS would constitute a fundamental change of business of EMH under Rule 15 of the AIM Rules and is therefore conditional on, inter alia, the passing of the Ordinary Resolution at the Annual General Meeting. EMH will, however, remain an operating minerals company under the AIM Rules given its remaining material minerals interest and ongoing involvement in the Cinovec Project after the Proposed Subscription has completed.

The full release, including the expected timetable of events and Chairman’s Letter can be found at: https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/EMH/14335909.html

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For further information:

Qualified Person

Kiran Morzaria B.Eng. (ACSM), MBA, has reviewed and approved the information contained in this announcement. Kiran holds a Bachelor of Engineering (Industrial Geology) from the Camborne School of Mines and an MBA (Finance) from CASS Business School.

Forward-Looking Statements:

Certain statements in this announcement are or may be deemed to be forward-looking statements. Forward-looking statements are identified by their use of terms and phrases such as ‘‘believe’’ ‘‘could’’ “should” ‘‘envisage’’ ‘‘estimate’’ ‘‘intend’’ ‘‘may’’ ‘‘plan’’ ‘‘will’’ or the negative of those variations or comparable expressions including references to assumptions. These forward-looking statements are not based on historical facts but rather on the Directors’ current expectations and assumptions regarding the Company’s future growth results of operations performance future capital and other expenditures (including the amount. nature and sources of funding thereof) competitive advantages business prospects and opportunities. Such forward-looking statements reflect the Directors’ current beliefs and assumptions and are based on information currently available to the Directors.  Many factors could cause actual results to differ materially from the results discussed in the forward-looking statements including risks associated with vulnerability to general economic and business conditions competition environmental and other regulatory changes actions by governmental authorities the availability of capital markets reliance on key personnel uninsured and underinsured losses and other factors many of which are beyond the control of the Company. Although any forward-looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions. The Company cannot assure investors that actual results will be consistent with such forward-looking statements.