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12 July
2019
ASX ANNOUNCEMENT
Mission to Acquire 100% of Pilbara Metals Group
Mission NewEnergy Limited (ASX: MBT, OTC: MNELF) (“Mission” or the “Company”) announces
today that it has entered into a Heads of Agreement to acquire
Pilbara Metals Group Pty Ltd (“PMG”), an exciting Western Australian business
in the EV battery chemical market.
Highlights
●
Acquisition of 100%
of PMG by issuance of 99.0m fully paid ordinary shares in
Mission;
●
PMG aims to be the
first producer of high purity manganese sulphate (HP MnSO4) in
Australia using a novel production process1;
●
HP MnSO4 has
emerged as a critical EV battery material;
●
Novel, low cost
production process utilising low to medium grade manganese ore that
is readily available;
●
HP MnSO4 is driven
by the need to reduce the $/kwh of a high performance EV
battery;
●
Mission will raise
up to $6 million through the issue of new shares, anticipated to be
at $0.035c per share2 to complete its Front End Engineering
Design (FEED) Study along
with its Bankable Feasibility Study (BFS);
●
Transaction subject
to conditions precedent by both MBT and PMG; and
●
MBT Board and
management shall materially change at the conclusion of the
transaction.
About PMG
●
PMG is an
innovative and exciting Perth based company that has, over the past
18 months, designed a metallurgical and engineering process to
convert abundant sources of low cost, low-medium grade &
uneconomical manganese ore to produce High Purity Manganese
Sulphate for the ever growing Electric Vehicle (EV) Battery Supply Chain, as well as for
agricultural purposes;
●
A provisional
process patent has been lodged;
●
Is now seeking
funds to complete the FEED and BFS;
●
Upon completion of
FEED and BFS confirming the viability of the project, PMG plans to
enter into a construction phase and build a Manganese Sulphate
Processing Plant (Plant) on the Kwinana Industrial Strip, located
approximately 45km south of Perth, subject to confirmation of the
feasibility of the Plant following Front End Engineering Design
(FEED) and a Bankable Feasibility Study (BFS);
●
Further funding
will be required for the construction phase and at this stage is
anticipated to be debt based funding, but may require the Company
to raise further equity funding via capital markets;
●
PMG aims to have a
production capacity of at least 40,000 tonnes per annum of high
purity manganese sulphate (HP MnSO4) for the lithium-ion battery
industry3;
●
Successfully
completed initial test-work carried out by CSIRO to produce HP
MnSO4;
●
NPV enhanced by
significant by-product credits;
●
PMG will utilise
low to medium grade feedstock, abundant in Western
Australia;
●
HP MnSO4 is
required if Western Australia is to become a producer of precursors
or cathode material; and
●
Offshore expansion
opportunities through licensing of the technology.
Nickel-Manganese-Cobalt or NMC has become one of the most popular
cathode chemistries.
The Pilbara Metals Business
Manganese
ore is one of the world’s most readily available resources
and Australia has an abundant supply of both high grade, and lower
to medium grade ore. Manganese ore is a commodity that is traded in
the open market, with multiple existing producers within Australia
and the Asian Region.
PMG,
through its innovative and novel process, has focussed its
activities on unlocking the valuable potential of the Australian
and Asian Regions' low-medium grade, which is often overlooked by
most metal market buyers.
This
process has been designed to use Manganese Ore, regardless of
impurities or size (whether it be lump, chips or fines), which is
mostly found as waste material from manganese mining operations
(both current and past).
PMG is
aiming to be the world's lowest cost producer of High Purity
Manganese Sulphate, and Australia’s first.
PMG
aims to be a supplier to essential local and global markets,
including but not limited to:
●
Battery &
Electronic Component Manufacturers;
●
Fertilizer &
Agriculture Industry; and
●
Chemical &
Medical Industry.
PMG
will complement the already growing Lithium, Cobalt & Nickle
industry within Western Australia, and aim to fill the void, by
being the first to market with its Manganese Sulphate
Technology.
PMG's
eventual mission is to build and commission a Manganese Sulphate
processing plant capable of producing a total output of at least
40,000 tonnes of High Purity Manganese Sulphate for use in battery
cathodes. These cathodes are currently used in many types of
batteries such as the NMC-811 (Nickle Cobalt Manganese), and LMO
(Lithium Manganese Oxide). The processing plant would also be
capable of producing Manganese Sulphate to satisfy the agricultural
and fertiliser market, as well as Manganese Oxide.
PMG
intends to build its High Purity Manganese Sulphate Monohydrate
(HPMSM or MnSO4)
Processing Plant on the Kwinana Industrial Strip, within the
strategic Rockingham Industrial Zone (RIZ).
In
order to achieve this, PMG will need to complete its Front End
Engineering Design (FEED)
Study along with its Bankable Feasibility Study (BFS). Further funding will be required
for the construction phase.
Future Approvals
The
Company will require a number of approvals before the commencement
of any construction, and those approvals will be tied to outcomes
from the FEED Study & BFS.
The
approvals required from both the Local Government Authority
(Rockingham) and the State Government and are fairly consistent
with the size of the Company's proposed plant
facility.
In
broad terms, PMG will be required to obtain the following approvals
to construct and operate the manganese sulphate processing
plant:
●
City of Rockingham
planning approvals;
●
City of Rockingham
building approvals;
●
Landcorp leasing
approvals;
●
JTSI approvals
(Jobs Tourism, Science & Innovation);
●
EPA approvals
(Office of the Environmental Protection Authority WA);
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DWER approvals
(Department of Water & Environmental Regulation);
●
Department of
Transport / Main Roads approval;
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DFES approvals
(Department of Fire & Emergency Services); and
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JDAP approval
(Joint Development Assessment Panel).
The
Company can also confirm that the project does not require any
approvals from the Commonwealth Government.
Risk Factors
Dependence on Key Personnel –
The
Company’s success largely depends on the core competencies of
the Directors and management, as well as the ability of the Company
to retain these key executives. Loss of key personnel may have an
adverse impact on the Company's performance.
Regulatory Approvals Risk –
Compliance
with the regulations surrounding the proposition, planning,
construction & operation of the proposed Manganese Sulphate
Processing Plant are governed by a number of different levels of
government and legislation. The approvals process can be time
consuming and resource intensive. Accordingly, there can be no
assurance that any applications for regulatory approval by the
Company will be successful, financially viable or
timely.
The
Company has, however, taken all steps it believes are necessary in
order to mitigate these risks, and has a very thorough
understanding of what is required to ensure these approvals are
granted, as well as the level of resources required.
Operational Risk –
Any
demonstration plant, laboratory plant, pilot plants and commercial
plant proposed by the Company may be affected by various factors,
including operational and technical difficulties; difficulties in
commissioning and operating plant and equipment; mechanical failure
or plant breakdown; unanticipated reactor issues which may affect
through-put; industrial and environmental accidents; industrial
disputes; and unexpected shortages or increases in the costs of
consumables, spare parts, plant and equipment.
Supply Contracts
In
order to successfully produce High Purity Manganese Sulphate, the
Company will need to secure long and short term agreements for
low/medium grade manganese ore, Sulphuric Acid, Water, Gas and
other reagents & consumables from time to time.
Additional Requirements for Capital –
The
Company’s capital requirements depend on numerous factors.
The funds to be raised under the Public Offer are considered
sufficient to meet the immediate objectives of the Company, however
additional funds will be required post completion of the FEED Study
& BFS in order to assist in the construction, commissioning,
certification and operational phases of the proposed
plant.
Any
additional equity financing will dilute shareholdings, and debt
financing, if available, may involve restrictions on the Company's
ability to obtain further financing, as well as on operating
activities. If the Company is unable to obtain additional financing
as needed, it may be required to reduce the scope of its operations
or scale back its development and research programmes as the case
may be.
Future
sources of funding may include, but are not limited
to:
●
Prepaid offtake
agreements;
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Future equity
issues; and/or
●
Debt
funding.
Pathway to Commercialisation
The key
milestones towards commercialisation are:
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Completion of RTO
to fund the FEED Study & BFS;
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Upon positive
results from the FEED and BFS, further funding will be required to
commence construction;
●
Construction &
Commissioning of the High Purity Manganese Sulphate Processing
Plant;
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Sales of High
Purity Manganese Sulphate and other products into the open
market;
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Securing sales of
High Purity Manganese Sulphate and other products based on
contracts and offtake agreements with end users and major
distributers both in Australia and internationally;
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Securing sales of
waste stream products such as Iron Oxide & Gypsum Products in
to the open market; and
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Commercialise its
process into other jurisdictions by way of licencing arrangements.
This would further strengthen the company’s future revenue
potential.
For
more information on Pilbara Metals Group please visit
www.pilbarametalsgroup.com.
About the Proposed Transaction
Under
the terms of the Heads of Agreement, the transaction will be in the
form of a reverse takeover offer (RTO) in which Mission will seek
to acquire 100% of the issued shares of Pilbara Metals Group from
Pilbara Metals Group's current shareholders, with consideration
comprising the issue of 99.0m fully paid ordinary shares in Mission
(Mission Shares) for all of the issued capital in Pilbara Metals
Group (PMG Share).
The RTO
shall be effected by completion of a funding round and compliance
with relevant ASX listing rules. A shareholder notice of meeting
and prospectus will be issued by Mission in due course, seeking,
amongst other things, approval for:
●
the transaction,
including the issue of Mission Shares to Pilbara Metals Group
Shareholders;
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the Change of
Directors and Executives;
●
a Capital Raising
of between A$4.6m and A$6 million; and
●
the change in
nature and scale of Mission's activities pursuant to listing rule
11.1.2 with re-compliance with Chapters 1 and 2 required by the
application of 11.1.3.
1 Provisional Patent
lodged
2 Subject to the Company obtaining the
appropriate ASX Waiver
3 Minimum proposed plant
capacity is based on market research surrounding the current market
demand, as well as future market growth forecasts from both
publicly available research, information provided by the
International Manganese Institute (IMnI) and internal market
research. This is subject to confirmation through the Feed Study
& BFS.
The
Proposed Transaction is subject to a number of Conditions Precedent
including:
●
Mission entering
into Share Purchase Agreements with shareholders of Pilbara Metals
Group;
●
Various shareholder
approvals from Mission Shareholders;
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Disposal or closure
of Mission's current subsidiaries;
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Completion of the
Capital Raising;
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Completion of
audit, independent accountant's report and other reports as may be
required in relation to a Prospectus to be issued by Mission in
relation to the Capital Raising.
The current Board of Directors of Mission are unanimous in their
support of the revised corporate strategy and the acquisition of
the PMG business operations and each director intends to vote in
favor of the resolutions contemplated in respect to their
shareholding.
Regulatory Note
●
the
transaction requires Mission shareholder approval under the Listing
Rules and therefore may not proceed if that approval is not
forthcoming;
●
MBT
is required to re-comply with ASX’s requirements for
admission and quotation and therefore the transaction may not
proceed if those requirements are not met;
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ASX has an absolute discretion in
deciding whether or not to re-admit
the entity to the official list and to quote its securities
and, therefore,
the transaction may not proceed if ASX
exercises that discretion;
●
the
ASX takes no responsibility for the contents of this
announcement;
●
MBT
is in compliance with its continuous disclosure obligations under
Listing Rule 3.1;
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The
Company’s shares are currently suspended from trading on the
ASX; and
●
Investors
should take account of these uncertainties in deciding whether or
not to buy or sell the entity’s securities.
Indicative Timetable & Re-Compliance with Chapters 1 & 2 of
the Listing Rules
The Company acknowledges that the proposed transaction will require
the Company to re-comply with Chapters 1 & 2 of the ASX Listing
Rules and this process involves the Company preparing a Notice of
Meeting and Prospectus. The Company will be required, pursuant to
Listing Rule 11.1.2, to obtain approval from Mission’s
shareholders, at a General Meeting.
An indicative timetable for the Transaction is set out below. The
Company notes that the timetable may be subject to
change.
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Action
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Date
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Announcement of Acquisition
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12 July 2019
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Dispatch Notice of Meeting
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August 2019
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Lodgement of Prospectus and offer open
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August/September
2019
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Shareholder meeting to approve acquisition
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September 2019
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Prospectus offer close
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September/October 2019
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Re-admission to the Official List of the ASX will occur as soon as
possible following the Shareholder meeting
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October/November
2019
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Please note the above dates are indicative only and are subject to
change.
Management Changes
Upon completion of the transaction, James Garton, Guy Burnett &
Dato Swaminathan Mahalingam will resign and Simon Andrew, Robert Mandanici
& Annette Crabbe will be appointed as directors of the Company.
Guy Burnett will remain in his role as Company Secretary going
forward.
Simon Malcolm Andrew, Non-Executive Chairperson
Mr
Andrew completed his Bachelor of Science (Applied Chemistry) and
honours thesis at Curtin University of Technology. Mr
Andrew’s honours thesis involved the development of an
ion-selective electrode for the analysis iron levels in sea water.
Mr Andrew has 20 years’ experience in financial markets in
Asia and Australia. He has worked in various roles including as an
equity research analyst for several global investment banks
including Deutsche Bank and BoA Merrill Lynch. In addition, he was
a founding director of an ASX listed company Emmerson Resources
Limited (ASX: ERM) with an additional eight years as a
non-executive director.
Mr
Andrew’s previous role was Head of Business Development for
ASX listed Yowie Group (ASX: YOW), a role that required a
significant amount of effort in developing offshore
markets.
Robert Paul Mandanici, Managing Director
Mr
Mandanici has worked in both the Private and Government sector and
has extensive knowledge of corporate governance processes and
procedures. He was previously a non-executive director of Auvex
Resources Limited, a manganese exploration & mining company
with projects across the Pilbara & Murchison. Auvex Resources
was subsequently taken over by Mineral Resources (ASX:
MRL).
More
recently, Rob was a founder shareholder of Lithex Resources Limited
(ASX: LTX). Lithex held a number of lithium, tin & tantalum
exploration projects in the Pilbara & Gascoyne and Rob, as
Managing Director, took the company from privately held to listing
on the Australian Securities Exchange (ASX). Rob also owns a
successful boutique property agency & advisory business based
in Perth.
Annette Spindler Crabbe
Miss
Crabbe has worked exclusively in the private sector predominately
with a family owned Mining Services business. Annette began her
career as a Laboratory Technician, managing and running a lab
facility at Auvex Resources Ant Hill manganese mine. After Auvex
was taken over by Mineral Resources, Annette progressed to work in
the company’s crushing and processing plants initially as an
Operator through to Managing the operations and maintenance of
various sites.
Annette
is currently completing a Bachelor of Commerce majoring in Finance
and Economics at Curtin University and has received a Diploma of
Business Management.
Indicative capital structure at Completion, post consolidation and
assuming $4.6m to $6.0m raise at indicative price of $0.035 per
share.
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Details
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$4.6m raise
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$6.0m raise
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Existing Mission
NewEnergy shares on issue
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40,870,275
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40,870,275
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Consideration
shares issued to PMG
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99,000,000
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99,000,000
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Advisor &
Broker Shares issued to Lead manager upon completion4
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4,600,000
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6,000,000
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Capital raise to
comply with ASX listing rules
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131,428,571
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171,428,571
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PMG Convertible
Note Shares5
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35,714,285
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35,714,285
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Total
Mission NewEnergy shares (undiluted)
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311,613,131
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353,013,131
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Options
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Unlisted Advisor
& Broker Options to be issued to the Lead Manager upon
completion, exercisable at $0.055c, expiring 30 June
2021
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1,000,000
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1,000,000
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Unlisted Advisor
& Broker Options to be issued to the Lead Manager upon
completion, exercisable at $0.088c, expiring 30 June
2021
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1,000,000
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1,000,000
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Unlisted options,
exercisable at $0.06c on or before 30 June 2021
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25,106,622
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25,106,622
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Unlisted Options,
exercisable at $0.096c on or before 30 June 2021
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25,106,622
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25,106,622
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Performance
Rights6
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149,652,000
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149,652,000
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Fully
diluted capital structure
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513,478,375
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554,878,375
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Capital Raising / Indicative Use of Funds
The company proposes to raise funds for expansion, Engineering Feed
Study, Bankable Feasibility Study (BFS), additional Research &
Design, & working capital, via a capital raising of between
$4,600,000 and $6,000,000 (“Capital Raising”), at a
price of $0.035 per share.
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Indicative Use of Funds
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Min Subscription
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Max Subscription
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Engineering FEED
& BFS
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1,600,000
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1,600,000
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R &
D
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345,000
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1,540,000
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Land
Option
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300,000
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300,000
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Working
capital
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1,900,000
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2,021,000
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Listing
Costs
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179,000
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179,000
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Costs of capital
raise
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276,000
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360,000
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Total
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4,600,000
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6,000,000
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The
combined entity will meet its $4.0m minimum NTA
requirement.
Financial information
Financial statements for PMG are currently being independently
audited and historical financial information is to be provided
within the notice of meeting to Shareholders to approve the
Transaction.
Due Diligence
The
Company has taken appropriate enquiries into the assets and
liabilities, financial position and performance, profits and
losses, and prospects of Pilbara Metals Group for the board to be
satisfied that the transaction is in the interest of the Company
and shareholders.
ASX Waivers
The Company will seek waiver of Listing Rule 9.1.3 in order to
obtain “look-through” relief for Pilbara Metals Group
shareholders being issued Shares as part of this Transaction along
with a waiver from Listing Rule 2.1 Condition 2 in order to issue
securities with an issue price/sale price of less than 20 cents per
share.
In addition, as demonstrated in the proposed capital table above, a
number of options will be on issue upon successful relisting of the
Company on ASX. The Company will seek waiver from Listing Rule 1.1
Condition 12 to have options on issue with an exercise price of
less than 20 cents.
De-listing Deadline
The
Company’s Shares have been suspended from trading on the ASX
for 3 years as at 25 November 2019. ASX policy is to delist a
company whose shares have been suspended from trading for more than
3 years. The ASX has granted extensions to this de-listing deadline
of up to 3 months where a company has, before the de-listing
deadline, signed definitive legal documents (including obtaining
any necessary financing), obtained regulatory and shareholder
approval for a transaction that will result in the company’s
shares being re- admitted to trading on the ASX if completed, where
required a prospectus to re-comply with Chapters 1 and 2 of the ASX
Listing Rules has been lodged with ASIC and is not subject to
regulatory constraints and the ASX is otherwise satisfied that the
transaction is reasonably capable of being consummated within the
period of the extension. Any extension is ultimately at the
discretion of the ASX.
Suspension from trading on ASX
In accordance with ASX’s policy for entities undertaking
reverse take-over transactions, the Company’s securities will
remain suspended from trading on ASX until the Company has
recompiled with Chapters 1 & 2 of
the Listing Rules in accordance with listing rule
11.1.3.
The ASX
takes no responsibility for the content of this
announcement.
Announcement Ends
-
Company Contact:
|
Mission
NewEnergy Ltd
Guy
Burnett
Phone:
+61 8 6313 3975
Email:
guy@missionnewenergy.com
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Pilbara Metals Group:
Rob
Mandanici
Phone:
+61 419 015 884
Email:
rob@pilbarametalsgroup.com
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4 Advisor & Broker shares
will be on an incentive basis. They will be issued on the basis of
1 share for every dollar raised.
5 PMG can raise up to $1.0
million in a convertible note which converts to shares in Mission
at a 20% discount to the completion price of $0.035 per
share.
6 Performance rights tied to
certain vesting events & milestones.
