Power Metal Resources PLC (AIM:POW, OTCQB:POWMD), a London-listed exploration company, has secured £2 million from the mining investment group ACAM LP - a prelude to a potential deal worth a further £10 million.
This financial backing comes in the form of loan notes with attached warrants.
Power Metal said it has also entered an eight-week exclusivity period with ACAM with the aim of forming a joint venture on uranium involving the former's licence portfolio.
The tabled deal will include an initial equity investment of £10 million by ACAM into Power Metal's Canadian subsidiary.
This will give ACAM a 70% interest in the business. Additionally, Power Metal may receive up to £4 million more, depending on the success of the tie-up.
If the joint venture goes ahead, it will allow Power Metal shareholders to benefit from multiple significant drilling programmes. ACAM, with its global mining and exploration investments, brings considerable experience to the table. One of its notable projects includes a joint venture in Greenland with Amaroq Minerals.
If the transaction goes ahead, Power Metal plans to cancel the initial public offering of Uranium Energy Exploration (UEE). The costs incurred, around £500,000, will be covered by the proceeds from the loan notes. Consequently, the planned sales of the Reitenbach Uranium Property and E-12 Uranium Property are unlikely to proceed.
The remaining funds from the loan notes will be used for general corporate purposes.
Power Metal CEO, Sean Wade, said: "Whilst there can be no guarantee that the joint venture will complete, we are confident that we will achieve a successful outcome and will update shareholders once the legally binding documentation is finalised.
"ACAM has already made a significant commitment to the company pursuant to the subscription and we look forward to working with them to successfully conclude the proposed joint venture."