Lindian Resources Ltd (ASX:LIN) has reached an out-of-court settlement over a dispute relating to its proposed acquisition of an up to 75% interest in the Kangankunde Rare Earths Project in Malawi.
Under the terms of settlement, proceedings will discontinue and Lindian will be granted a 60-day exclusivity period to negotiate the terms of a legally binding transaction that will allow the company to acquire a 100% interest in Rift Valley Resource Developments Limited and its Kangankunde Rare Earths Project.
“I am pleased that we have been able to reach agreement to settle these legal proceedings, which were a significant ongoing distraction to the company’s activities,” Lindian’s Chairman Asimwe Kabunga said.
“The terms of settlement provide Lindian with a period of exclusivity within which to seek to agree the terms of a binding transaction in respect to the acquisition of the Kangankunde Rare Earths Project.”
If a transaction were to occur, it would be subject to:
- the parties negotiating and successfully executing a legally binding share purchase agreement, shareholders’ agreement, and escrow arrangements in relation to the proposed transaction; and
- all necessary Malawi and Australian legal and regulatory requirements (including ASX Listing Rule requirements) being satisfied.
There is no guarantee at this stage that the transaction will eventuate – however, to assist with the negotiation of the share purchase agreement between the parties to give effect to any proposed transaction, the terms of settlement reflect a proposed purchase consideration of US$30 million, payable in tranches as set out below:
- US$2.5 million in cash (Tranche 1), payable as a non-refundable deposit upon the parties entering into a legally binding share purchase agreement, shareholders' agreement and escrow deed and all necessary regulatory consents and approvals to the proposed transaction being obtained within the period of exclusivity;
- US$7.5 million in cash (Tranche 2), payable on the date that is six months after the date that the Tranche 1 payment is made, at which time 33% of the shares on issue in Rift Valley would be transferred to Lindian;
- US$10 million in cash (Tranche 3), payable on the date that is 12 months after the date that the Tranche 1 payment is made, at which time a further 33% of the shares on issue in Rift Valley would be transferred to Lindian; and
- US$10 million in cash (Tranche 4), payable on the commencement of commercial production in respect of the Kangankunde Rare Earths Project, or 48 months after the date that the Tranche 1 payment is made, whichever is the earlier, at which time the remaining 34% of the shares on issue in Rift Valley would be transferred to Lindian.
Lindian would also have the option of paying the above tranches sooner than the outlined dates to accelerate the completion of each phase of the proposed transaction.