BMR Group updated the market on the acquisition of Star Zinc on Tuesday, following its previous announcement on 31 August regarding the signing of a term sheet to enter into a joint venture agreement with Galileo Resources.
The AIM-traded company confirmed that on Monday it had - on behalf of its newly-incorporated wholly-owned subsidiary Enviro Zambia - entered into an agreement with Bushbuck Resources to complete the acquisition of Star Zinc for a cash consideration of $1m, of which a $0.13m payment had already been paid, resulting in a remaining consideration of $0.87m.
It said the first tranche of the remaining consideration of $0.4m, together with VAT of $0.16m, was paid on 4 September, with the balance to be satisfied in $0.3m cash no later than 28 November and $0.17m cash by 28 February.
BMR said it already paid the property transfer tax amounting to 10% of the aggregate consideration.
As security for the payment of the whole of the remaining consideration, Bushbuck had been granted a charge over the removable assets of BMR's wholly-owned subsidiary, Enviro Processing, which owns all of the assets at Kabwe, and $0.57m of new ordinary shares
of BMR at a discount of 25% to the prevailing market price.
On 31 August the company also entered into a binding term sheet concerning a joint venture with Galileo, a UK-focused resource company quoted on AIM, whereby Galileo advanced $0.59m, primarily to enable the group to finance the initial consideration payable to Bushbuck.
Upon completion of the acquisition of Star Zinc, Galileo subscribed for a 51% equity stake in Enviro Zambia which was satisfied by the cancellation of the loan of $0.59m.
BMR said Galileo would undertake an 18-month work programme at a cost of $0.25m, using reasonable endeavours to complete a preliminary economic assessment of Star Zinc, following which further new shares in Enviro Zambia would be issued to Galileo to increase its aggregate equity interest therein to 85%.
The board said BMR would have the right to reduce the interest of Galileo from 85% to 75% on payment of $0.15m to Galileo, through the repayment of the $0.1m held in escrow plus a $50k arrangement fee within 90 days of the date of completion of the joint venture agreement.
"We are delighted to have affected the acquisition of Star Zinc which is expected to secure access for us to Star Zinc's high grade resources which have the potential to enhance the grade of the zinc products from our Kabwe processing plant," said BMR chairman Alex Borrelli.
"It has taken a long time to reach this point, and we thank Bushbuck for their patience while funding for the project was secured.
"Galileo is a strong partner for mining the resource at Star Zinc and with them we look forward to taking the project forward and updating the Market on our work in due course."