INTEX: Successful Private Placement - Changes to the Ambershaw Deal
OSLO, NORWAY, February 28, 2017 (Newswire.com) - Intex Resources ASA (ITX:OSL) has secured NOK 11.25 million in a private placement. The company increases its investment in Ambershaw Metallics Inc and has renegotiated favourable conditions for a long-term investment in the Canadian mining company.
Intex Resources ASA ('Intex') has raised NOK 11.25 million at NOK 1.85 per share. Intex has also renegotiated the agreement with Ambershaw Metallics Inc. (AMI) and Legacy Hill Resources (LHR), which was announced on 22 November 2016. The renegotiation comes with favourable terms for Intex. The capital raise will partly be used to expand the convertible loan to AMI by USD 600.000, which will make AMI able to produce pellet samples to selected steel mills in North America in the second half of 2017.
In addition to expanding the convertible loan, the company has secured a five percent interest in AMI through purchase of AMI shares from Legacy Hill Resources with a settlement in Intex shares. The company buys 1 million Ambershaw shares valued at USD 439,000, settled in Intex shares valued at 60 days VWAP after disclosure of the transaction.
Intex’s option to purchase up to 51 percent of the Canadian pellet producer through an equity transaction of USD 7 million has been extended from March 2017 to February 2018. The option is conditional of the financing. Completion of the equity transaction is conditional on a shareholders agreement with Legacy Hill and a management agreement between Legacy Hill and Ambershaw, on standard market conditions.
"We said last fall that we would diversify Intex. The Ambershaw deal is doing exactly that, ensuring Intex a real chance of getting earnings for the first time in the company’s history, with multiples that in our view are very attractive. This is the start of "new" Intex", said Chairman Lars Christian Beitnes at Intex Resources.
Ambershaw produces "Super Premium Pellets" for the North American market. Traditional production is very expensive, and thus there is very little new production entering the market, which in turn provides stable prices. Ambershaw has secured the rights to a completely different, but proven production method, that can provide 90 percent lower CAPEX and 70 to 80 percent lower OPEX.
"When AMI is in full production, the EBITDA is expected at USD 68 million in 2021, which should give an IRR of 63 percent and a potential NPV of USD 213 million on a 100 percent basis. These figures are based on pellet prices of USD 95/dmt, which is significantly below the current market price that are in excess of USD 130/dmt", said Beitnes.
Global commodity prices have been struggling for several years, but recently there have been clear signs that prices are ticking up again. Following years of underinvestment there are few quality projects available, including iron ore prices that has doubled over the last six months. The investment in Ambershaw Metallics ensures that Intex will be able to take part in this upturn.
Ambershaw does not only secure Intex potential revenue for the first time, but it also reduces risk factors significantly.
"The agreement secures Intex an option in a unique opportunity with minimal political, geological and market risks, with estimated revenue occuring in 12 to 18 months", said CEO Cecilie Grue in Intex Resources.
Initially Intex buys five percent of the shares of AMI for USD 439,000 from LHR. LHR receives shares in Intex as settlement for the transfer, and the number of shares to be issued will be calculated based on the volume weighted average in the first 60 days after the announcement of the transaction. Additionally Intex expands the convertible loan of USD 200,000 announced in November 2016 by USD 600,000. The company's option to buy up to 51 percent for an additional USD 7 million in an equity transaction in AMI has been extended for 11 months from March 2017 to February 2018.
"The multiples are very attractive, and with a potential EBITDA of USD 8 million in 12-18 months and USD 68 million in 2021, the future is looking really bright", said Grue.
It's London based Legacy Hill Resources, comprising a leading mining team, which accounts for the operation of Ambershaw. Legacy Hill was founded and is managed by D Saradhi Rajan, formerly a Senior Vice President at Vedanta Resources and a former Principal of a hedge fund with USD 1.6 billion under management focused on natural resources. He was also a Managing Director at Bank of America Merrill Lynch.
"We are very pleased with the cooperation with Intex on Ambershaw. We have worked for more than two years with the takeover of the asset, which got into major problems in connection with the latest commodity crisis. This agreement with Intex is the last part of the puzzle to fall into place. The deal gives us access to a well-developed stock market", said Saradhi Rajan Managing Director Legacy Hill Resources.
A combination of old and new investors participated in the private placement. The investment bank Carnegie is assisting with the settlement and will also be a financial advisor for Intex going forward.
Oslo, 28th of February 2017
For further information, please contact:
Cecilie Grue, mobile: +47 991 62 486, e-mail: firstname.lastname@example.org.
Acting Chief Executive Officer
Lars Beitnes, mobile: +356 7996 1497, e-mail: email@example.com.
Chairman of the Board of Directors
Source: Intex Resources ASA