Australian Mines Limited has been in talks among investors and media organization as the company has yet not met the financing condition for Sconi Project deal.
As per the March 2018 announcement, Australian Mines was supposed to secure the financing package for the development and construction of Sconi project by the end of 2018. It outlines the lock-in condition to the binding term sheet agreement with SK innovation for the sale of 100% of the cobalt sulphate and nickel sulphate produced from Australian Mines’ Sconi Cobalt-Nickel-Scandium Project.
But does that mean the deal is called off now?
On Thursday, Australian Mines Limited (ASX: AUZ) cleared all the flux among investors and told that both SK Innovation and Australian Mines remain fully committed to the binding off-take agreement for the Sconi Project announced on 6 March 2018.
The company further unleashed the extension of financing package timing to 19 September 2019. In today’s market release, Australian Mines stated that the company and SK Innovation have mutually agreed to extend the period for the finalization of financing package to get sufficient time for discussions with the group of Tier 1 lenders.
Australian Mines Managing Director, Benjamin Bell stated that the company expects the entire project funding package to be in place by the second quarter of 2019. He added that SK International’s approval to the extension of financing package timeline demonstrates the Australian Mines long-build relationship with Korean electric vehicle battery manufacturer and their support to the future development of Sconi.
Moreover, it has been confirmed that the extension for fulfilling financing condition would not cast any adverse impact on the Australian Mines’ potential to satisfy the production and product delivery conditions mentioned in the binding off-take agreement.
Under the terms of an agreement, SK Innovation can earn a modest discount on the base price of commodities if it acquires 669 million shares of Australian Mines at a price of $0.12 per share. But the timeline to subscribe for these shares was fixed to three months from the completion of Bankable Feasibility Study, i.e., 20 November 2018. That means if SK International does not elect to acquire the Placement Shares by 20 February 2019 it will lose all the rights to obtain a discount on the base price.
“SK Innovation’s ability to acquire an equity stake in Australian Mines remains very much alive and will remain so until at least 20 February 2019,” Mr. Bell added.
However, Australian Mines’ shareholders voted for this placement to go through the issuance of options, but those options and the shareholders’ approval expired on 31 December 2018.
In the concluding statement, Mr. Bell confirmed the combined efforts of both the companies to finalize and execute the long form off-take agreement in the current quarter, i.e., Q1 2019.
AUZ last traded at $0.038. Although there has been no daily price movement 3 January 2019, 12,802,280 shares changed hands on ASX today.
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