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Volt Resources (ASX:VRC) to acquire controlling interest in ZG Group

Summary

  • Volt Resources Limited (ASX:VRC) has entered into term sheets for the proposed acquisition of a 70% interest in the Zavalievsky group of companies (ZG Group) for an aggregate purchase price of USD 7.5 million.
  • The acquisition may make Volt a key participant in graphite supply into the growing European market with excellent access to other markets in the USA and the Middle East.
  • The acquisition would immediately transform Volt into one of the few ASX-listed graphite producers.

Volt Resources Limited (ASX:VRC) is transitioning from a graphite explorer and developer into a graphite producer. Taking a logical and value accretive step towards this transition, the Company on 10 February 2021, announced that it had entered into term sheets for the proposed acquisition of a 70% interest in the ZG Group, Ukraine.

The acquisition bodes well for Volt, as it would immediately transform the company into one of the few ASX-listed graphite producers.

“This is a rare opportunity to acquire an existing graphite business located in Europe at a fraction of the development cost of a new project”, says Chairman Asimwe Kabunga.

Advantages of the proposed acquisition

The company’s chairman, Mr Kabunga believes that there are several potential benefits in acquiring a controlling interest in the ZG Group on Volt’s graphite strategy.

Copyright © 2021 Kalkine Media Pty Ltd, Source: VRC’s ASX Report, 5 Feb 2021

Additionally, there is an upside around Volt’s wholly owned Bunyu Graphite Project in Tanzania. Volt’s ability to complete funding for Bunyu Project will be enhanced by this potential acquisition, to accelerate the transition to a graphite producer with a customer base, sales revenue, and cash flow generation along with in-house operating and technical expertise to de-risk the Bunyu development.

Besides, an experienced workforce can assist with training, commissioning, and ramp-up for the Bunyu development.

The Zavalievsky mine has significant granite and garnet mineralisation. It currently produces ~ 250k tpa of crushed granite (blue metal) for road construction, and concrete manufacturing for domestic markets. Volt believes that there is a potential to considerably increase the annual production of crushed granite via the expansion of crushing and screening equipment.

Zavalievsky Graphite crushing circuit, Source: VRC’s ASX Report, 5 Feb 2021

Overview of the proposed acquisition & transaction

The graphite mine and processing facilities are adjacent to Zavallya, around 280 kms south of the Ukraine capital Kyiv, and 230 kms north of Odessa’s main port.

Volt has entered into term sheets with three companies comprising the ZG Group - Zavalievsky Graphite LLC, Stone Found LLC, and Graphite Invest LLC.

  • The term sheets have been entered with four existing shareholders (vendors) of each of the three companies- Olezhe Heeson, Volodomyr and Tetyana Kolesnychenko, and Vitalii Liaschenko.
  • The Vendors have agreed to sell 70% of the total issued equity in each ZG Group company for an aggregate purchase price of USD 7.5 million, payable in two instalments of USD 3.75 million.
  • The Vendors have granted Volt exclusivity until 23 April 2021 (or later date as the parties may agree) to complete its due diligence enquiries and finalise the Definitive Agreements terms.

The proposed transaction remains conditional upon legal, financial, tax, technical, and operational due diligence. Governmental, regulatory, and necessary third-party consents and approvals, need to be obtained.

Meanwhile, Volt aims to progress the exploration and development of Bunyu Graphite Project and Guinea Gold Project in Guinea.

On 10 February 2021, Volt Resources shares were riding high at $ 0.022, up 15.78 %.


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