Materials sector company, Parkway Minerals NL (ASX: PWN) recently inked an agreement to acquire Consolidated Potash Corporation Ltd (CPC) to extend its project and technology portfolio.
Parkway currently owns two fertilizer feedstock projects, comprising of Lake Seabrook Potash Project (LSPP) and Dandaragan Trough Project (DTP). The company also owns 31% stakes in Davenport Resources (ASX: DAV), providing the company with the opportunity of developing and delivering high-grade potash products in the European market. Besides, the company has strategic investment in Lithium Australia Limited (ASX: LIT), focussed on the lithium value chain from mineral resources.
Consolidated Potash Corporation Ltd (CPC) is an unlisted Australian public company that holds interest in two brine projects - Karinga Lakes Potash Project in Northern Territory, Australia and New Mexico Lithium Potash Project in the United States. The majority interest (~86%) of Consolidated Potash Corporation Ltd is owned by two shareholders with the following stakes-
- 23% by Lions Bay Capital (TSX-V: LBI), a Toronto Stock Exchange listed investment company. On completion of the acquisition transaction, Lions Bay Capital will reportedly own 10 million shares in Davenport Resources.
- 52% - Activated Logic Pty Limited, an entity under the control of Mr. Bahay Ozcakmak, the founder of Activated Water Technologies (AWT), now a wholly-owned subsidiary of CPC.
(Source: Parkway Acquisition Presentation)
Key ownerships of Consolidated Potash Corporation Ltd (CPC) include:
Karinga Lakes Potash Project (KLPP)- CPC has acquired 15% interest in the joint venture and also executed a technology licensing agreement, with an option to acquire up to 40% interest in the KLPP by investing up to $3 million. The KLPP consists of a chain of salt lakes representing part of the Central Australian groundwater discharge zone in the Northern Territory, Australia.
Parkwayâs Managing Director, Mr. Patrick McManus, stated âBy earning a 15% interest in the Karinga Lakes Potash Project (KLPP), CPC has demonstrated the value of CPCâs technology and capability in relation to potash and other brine projects.â
New Mexico Lithium Project (NMLP)- CPC has acquired an initial 50% interest in the NMLP by entering into a Joint Project Appraisal and Development Agreement (JPADA) with an unrelated US-based vendor. The NMLP covers the central zone (501 BLM - Bureau of Land Management claims, ~40km2) of a large playa lake system, the Lordsburg Playa, in the Animas Valley in the southwest corner of the state of New Mexico, US.
Activated Water Technologies (AWT)- Activated Water Technologies is a wholly-owned subsidiary of CPC that operates as a technology division of CPC. It is focused on the development and commercialisation of the brine processing technology-aMESâ¢-by performing cutting-edge R&D, collaborating with strategic partners as well as performing a range of pre-commercial investigations, including process piloting studies to demonstrate the potential of the technology.
Mr. Patrick McManus said: âParkway has followed the progress of CPC over the last 2 years with interest and in particular have been most impressed with the successful aMESâ¢ test-work performed by CPCâs AWT subsidiary.â
(Source: Parkway Acquisition Presentation)
AWT and Victoria University are strategic partners and have been awarded several grants by the Australian Research Council (ARC). They are members of the prestigious ARC Energy Efficient Separation Hub.
Consideration for the acquisition of CPC includes:
ASX-listed Fertiliser Feedstock Explorer, Parkway has agreed to acquire 97.79% of CPC by issuing the acquisition consideration as follows:
- Parkway issuing ~479.6 million ordinary shares (PWN) to CPC shareholders, equivalent to 42.4% of the expanded capital of Parkway, prior to any capital raising.
- Parkway issuing ~123.3 million partly paid shares (PWNCA) to CPC shareholders.
- Parkway transferring 10 million Davenport Resources Limited (ASX: DAV) shares and issuing ~10.97 million PWN shares to TSX-V listed Lions Bay Capital Inc. (majority vendor of CPC) in consideration for the extinguishment of a loan to CPC.
In addition, Parkway will issue to Victoria University, with whom CPC wholly owned subsidiary AWT is party to a strategic collaboration and technology licence agreement, 6 million PWN shares in lieu of Victoria University exercising rights to acquire a minority interest in AWT.
Parkway has also agreed to loan CPC up to $130,000 in working capital to primarily maintain CPCâs New Mexico potash-lithium project (NMLP) in good standing and perform preliminary permitting related activities.
Post-completion of the acquisition transaction, Parkway will reportedly move to compulsorily acquire the remaining 2.21% of CPC. In order to support the acquisition, Parkway intends to complete a capital raising of $450,000 via a placement of 90,000,000 shares in Parkway at a minimum placement price of $0.005.
Rationale of Acquisition Transaction:
Parkwayâs strategic acquisition of Consolidated Potash Corporation provides it with an expanded platform of attractive growth opportunities, most immediately through the Karinga Lakes Potash Project (KLPP) as well as an exciting lithium potash project in New Mexico. In addition to these two brine projects, the acquisition of CPC also provides Parkway with direct ownership of the aMESâ¢ technology, suitable for brine processing and the production of potash and lithium, complementary to Parkwayâs existing K-MaxÂ® technology.
Parkwayâs Project and Technology Portfolio post-acquisition (Source: Parkway Acquisition Presentation)
This represents a strong strategic fit with Parkwayâs portfolio providing immediate synergies and growth opportunities, including:
- Potential to add value to Davenport project portfolio
- aMESâ¢ technology to be tested for potential at Lake Seabrook
- Potential to leverage its ownership of the aMESâ¢ technology, in order to participate in other attractive brine projects.
In a nutshell, the acquisition of these complementary projects and technology portfolio is projected to be value-accretive that has the potential to provide logical & immediate path to the market, positioning Parkway strongly for near-term growth.
Mr. Patrick said, âParkway believes CPCâs technology has the potential to materially improve product recovery and project economics for brine hosted resource projects, globally, and look forward to progressing the KLPP and the New Mexico Lithium Project with the companyâs new project partners.â
Further, as a part of Parkwayâs acquisition of CPC, the Parkway board is expected to be strengthened through the appointment of Mr. Bahay Ozcakmak, the managing director of CPC, and Mr. Patrick Power, the founder of Western Potash (TSX-V: WRX).
Parkway anticipates the key milestones relating to the completion of the transaction as follows:
- Notice of Meeting sent to Shareholders - Friday 9 August 2019
- EGM of Parkway Shareholders to vote on the transaction- Tuesday 10 September 2019
- Consideration Shares issued/transferred to CPC vendors- Friday 13 September 2019
PWNâs stock price last traded at $0.005 on 12 August 2019.
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