Eclipse Metals Ltd (ASX:EPM) has revised its terms with Oz Yellow Uranium Limited for the divestment of the non-core Ngalia Basin and Liverpool uranium projects in the Northern Territory.
As a result of the company’s discussions with Oz Yellow, the parties have agreed to extend the date to June 30, 2022, on which Oz Yellow may undertake an IPO and seek a listing onto the official list of the ASX, both of which form conditions precedent to the proposed transaction.
Looking ahead, the proposed transaction will create a newly listed company, assisted by a dedicated board and management team, with its sole focus being on the exploration and development of the NT projects.
“New pure-play company”
Eclipse Metals’ executive chairman Carl Popal said, “The revised divestment terms of Eclipse’s non-core uranium assets are more pragmatic in delivering a simplified and balanced approach to progress evaluation of the uranium portfolio.
“Oz Yellow Uranium will be a new pure-play company focused on the Northern Territory uranium tenements.
“Eclipse’s recently announced high-grade quartz, REE and rare/critical metals results have boosted our confidence to strategically move forward in developing the company’s polymetallic Ivittuut project in Greenland.”
Proposed transaction
The proposed transaction contemplates Oz Yellow undertaking an IPO and seeking a listing onto the official list of the ASX.
In February, Eclipse was notified by Petra Capital Pty that it was purporting to terminate its mandate with Oz Yellow to act as sole lead manager, sole underwriter and sole book-runner to its IPO.
Following this notification, the company and Oz Yellow have been in discussions in relation to its impact on the proposed transaction.
Revised transaction
Under the revised proposed transaction structure, Oz Yellow will seek to raise between $6 million and $10 million before costs via its IPO.
In addition, the consideration payable to Eclipse will comprise:
- Fully paid ordinary shares in Oz Yellow which will equate to between 42% and 49% of Oz Yellow upon its listing on the ASX (depending on the amount raised under the IPO), of which a portion will be distributed in specie to Eclipse shareholders on a pro-rata basis;
- Unlisted options in Oz Yellow which will equate to between 28% and 32% of Oz Yellow (on a fully diluted basis) upon its listing on the ASX (depending on the amount raised under the IPO);
- $255,000 in cash plus a further cash payment of an amount equal to all expenditure costs to be incurred by Eclipse on the NT projects until completion of the proposed transaction up to a maximum amount of $250,000; and
- a 2% NSR royalty
“Extraordinary opportunity”
Eclipse continues to believe that the divestment of the NT projects to be an extraordinary opportunity to maximise shareholder value in this longheld asset, whilst allowing the company to focus its efforts on advancing its other projects, including its flagship Ivittuut Project in Greenland.
Popal adds: “Coinciding with the growing global demand for REE, unique minerals and metals delineated and also the quantifiable mass of low impurity, high silica quartz with up to 99.6% SiO2 in a target of 5.8 million tonnes, puts Eclipse in the perfect position to focus more on definition and production of high silica grade quartz in the near future.
“This is highly sought-after industrial mineral, also essential in high-tech semiconductors.
“The divestment of our uranium assets will position Eclipse with clear targets to concentrate as an REE and rare/critical metals explorer and the developer of high silica grade quartz mine.
“The divestment will deliver to Eclipse a significant shareholding and board representation in a cashed-up entity that has the sole focus of exploring and developing uranium exploration ground in the Northern Territory.
“We believe that this to be an extraordinary opportunity to maximise shareholder value in this longheld asset.”