Azumah Strikes A$17M Earn-In Deal

Azumah Strikes A$17M Earn-In Deal

• Investment group Ibaera Capital to earn up to 47.5% for US$13.5M spend(~A$17M) at Wa Gold Project, Ghana (over two years)

• Represents material revaluation of Project and Azumah

• Objective is to boost resources and reserves and deliver a fundable development project

• Ibaera has option to invest up to A$2M in new Azumah ordinary shares at a premium of 10% above 10-day VWAP by 31 August 2017

• Execution of full Earn-In, Investment and Joint Venture Agreement (EIJVA) expected by 31 August 2017

• Acceleration of news flow and investment catalysts to result

Azumah Resources Limited has advised it has entered into a binding Term Sheet enabling Perth managed private equity group, Ibaera Capital GP Limited (Ibaera), to earn in two stages up to a 47.5% interest for an expenditure of US$13.5 million ~(A$17M) in the Company’s Wa Gold Project in Ghana, West Africa (Project).

The objective of the deal is to boost gold resources and reserves above the present 2.1 million ounces and 624,000 ounces respectively and deliver within a two-year time frame, or less, a revised Feasibility Study to support the funding and development of the presently proposed 90,000 ounce per year gold operation.

Ibaera, through its new closed-end private equity fund Ibaera Capital Fund LP, is mandated to invest in and develop international gold and base metals projects alongside their Australian corporate owners. It’s proposed investment in Azumah’s Project is to be funded by US natural resources focused institutional investors with more than US$1 billion of funds under management.

Azumah Managing Director, Mr Stephen Stone, said “This transaction represents a game changer for the Company and another important step in unlocking fundamental value and achieving a market rerating.”

“It’s been a tough environment in which to build new projects and having carefully considered several options, we are very pleased to be partnering with Ibaera,“said Mr Stone. “We are looking forward to working with its team of focused and highly regarded mining industry professionals who have a proven capability in discovery and for driving major projects to production whilst employed at WorleyParsons Ltd, Fortescue Metals Group Ltd and BHP Billiton Limited.”

“Shareholders can expect an increased news flow reflecting a range of value adding investment catalysts as the Ibaera funding injection drives an acceleration of activities,” he said.

Azumah recently reported an exploration targeting review by CSA Global that highlights the opportunity to achieve Azumah’s expectations of a lift in resources and reserves.  The study identified over 140 target areas of which 18 were designated very high priority (refer ASX released 24 July 2017).

Transaction Details:

Ibaera and Azumah will now encapsulate the terms of the binding Term Sheet into an Earn-In, Investment and Joint Venture Agreement (EIJVA) to be executed on or before 31 August 2017.  Its key provisions will be;

• Ibaera through its Cayman Island registered, Ibaera Capital Fund LP, may earn an interest in the Project, including the Company’s Ghana exploration and mining licences, through the provision of funds to Azumah’s wholly owned Ghana registered subsidiary, Azumah Resources Ghana Limited (AZG).
• The AZG Board will be reconfigured from the existing two directors to four with Azumah, whilst maintaining a majority equity interest, appointing the Chairman who shall also have a casting vote, except for those decisions requiring unanimous approvals (programmes and budgets, additional unbudgeted expenditures, divestments, investments and funding).
• Ibaera may nominate a suitably qualified and experienced Project Manager who will submit annual work programmes and budgets to the AZG board for its unanimous approval.
• Ibaera may spend an initial US$11.25 million (~A$14.3M) within two years, in accordance with quarterly cash calls, to earn an initial 42.5% interest.
• If additional funds are required to achieve the key objectives of the JV, and Azumah elects not to pro-rata co-fund, Ibaera may sole fund the next US$2.25M (~A$2.8M) and earn an additional 5% interest – total of US$13.50M (~A$17M) and 47.5%.
• If Ibaera does not fulfil its initial funding obligations of US$11.25M, subject to provisions to rectify this, it will withdraw from and not hold any equity in AZG.
• The parties will then work together to co-fund all future expenditures and/or secure project development funding with each party having the right to match third party funding terms.
• Exit, ‘tag-along, drag-along’ and ‘no block’ provisions will enable parties to exit the joint venture or to accommodate third party participation at the Project or corporate level.
• The conditions precedent to completion of the EIJVA comprise: documentation (for the benefit of both parties), satisfactory security provisions being in place over shares in AZG to be acquired by Ibaera, due diligence (technical, legal, licencing, environmental and social) and Ibaera internal approvals.
• Ibaera will have the right, but not the obligation, to subscribe prior to31 August 2017 (or the date of execution of the EIJVA if earlier) for A$2 million and an absolute maximum of 65 million new ordinary shares in Azumah at a 10% premium to the 10-day VWAP on the date it subscribes for the shares.
• The Project licences include the Julie West licence once it has been fully transferred to Azumah by Castle Minerals Limited (ASX:CDT).
• Additional terms as standard in such transactions.