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Power Metal secures £2M and eyes uranium joint venture

3 June 2024 18:01
LON: POW

Power Metal Resources PLC (AIM:POW) has announced a strategic financing deal, with plans for a uranium-focused joint venture.

Key finances

Power Metal has entered into a legally binding subscription agreement with ACAM LP, a natural resource-focused investment partnership.

The deal includes £2 million that ACAM will invest in Power Metal through loan notes, with 13,333,333 warrants exercisable at 15 pence per share for five years.

The Notes will bear interest at 10% per annum, payable either in cash or shares at Power Metal’s discretion. The Notes have a five-year term but could be accelerated to 12 months if the joint venture agreement isn’t finalised within a year.

Proposed uranium-focused joint venture

Power Metal has also signed a non-binding term sheet with ACAM, initiating an eight-week exclusivity period to form a uranium-focused joint venture. ACAM or its affiliate will invest £10 million into Power Metal’s Canadian subsidiary, Power Metal Resources Canada Inc (PMC), for a 70% equity interest.

Power Metal could receive up to an additional £4 million, conditional on a successful sale transaction or other value realisation by ACAM. The investment will fund significant drilling and exploration programs across Power Metal’s uranium licences.

Exposure to affiliate mining and exploration projects

The deal is expected to provide Power Metal shareholders with exposure to at least five significant, high impact drilling programmes, with significant advancement on several more.

ACAM and its affiliates have investments in mining and exploration projects globally including the Gardaq joint venture with TSX and AIM listed Amaroq Minerals in Greenland.

CEO statement

Sean Wade, CEO of Power Metal, expressed confidence in the strategic move, stating, “We announced on 25th March 2024 that we were looking at various options to maximise value from our uranium portfolio and whilst these discussions are still taking place, I am pleased to announce that we are making progress to finalise a transaction that we are confident will crystallise significant value for our shareholders.

“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.”

Next Steps

The focus is on completing the legal documentation for the joint venture within the exclusivity period. If the joint venture is successful, the planned IPO of Uranium Energy Exploration plc (UEE) will be aborted, and costs will be covered by the proceeds from the Notes.

POW’s London Stock Exchange-listed share price has risen 11.8% and is currently trading at 19 pence (6:00pm UTC+ 8 hours).

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