Lotus Resources and A-Cap Energy merge to create African-focused uranium player

Lotus Resources (ASX:LOT) and A-Cap Energy (ASX:ACB) have signed a scheme implementation deed (SID) to merge by way of a court-approved scheme of arrangement.

On implementation of the share scheme, the 2 companies will combine to form a merged group, creating a leading African-focused uranium player with significant scale and Resources.

Lotus Resources reports the merged entity will combine a production-ready asset in the Kayelekera Uranium Project in Malawi with future ‘large-scale’ growth asset in the Letlhakane Uranium Project in Botswana.

Thomson Geer is acting as legal advisor to Lotus in relation to the merger. Canaccord Genuity (Australia) is acting as financial advisor to A-Cap and Ashurst is acting as legal advisor to A-Cap in relation to the deal.

Under the terms of the share scheme, each A-Cap shareholder will receive 1 new Lotus fully paid ordinary share for every 3.54 fully paid ordinary A-Cap shares held on the share scheme record date. This implies about a $0.052 per A-Cap share, which is a 10.4% premium to its 30-day VWAP as of 11 July 2023 and a 20.7% premium to A-Cap’s closing share price on the same day.

If approved and implemented, Lotus shareholders will hold about 79% of the merged group and A-Cap Shareholders will hold the remaining shares.

If approved and implemented, Lotus shareholders will hold about 79% of the merged group and A-Cap Shareholders will hold the remaining shares

The A-Cap board unanimously recommends that A-Cap shareholders vote in favour of the share scheme, in the absence of a superior proposal and subject to the independent expert concluding continuing to conclude that the share scheme is in the best interest of A-Cap shareholders.

A-Cap reports each of its directors intend to vote in favour of the share scheme.

Additionally, A-Cap’s largest shareholder Singapore Shenke International Investment, which has 37.95% of the shares in A-Cap on issue also intends to vote in favour of the deal in the absence of a superior proposal.

A-Cap also notes that shareholders do not need to take any action in relation to the schemes at this stage.

A scheme booklet containing information in relation to the schemes is expected to be circulated in August 2023.

Lotus reports that the deal will provide the merged entity increased resources and scale benefits to drive re-rating potential; potential for future inclusion in relevant ASX and uranium-specific indices; and enhance market positioning and increased trading liquidity, among other aspects.

Lotus notes that its uranium expertise will assist in optimising Letlhakane, one of the world’s largest undeveloped uranium resources.

The company adds key diversification benefits also include being in 2 geographic project locations – “a differentiator to other single asset uranium developers”, and an opportunity to capture regional synergies including shared consumables and potentially export path.

According, to Lotus the deal offers an opportunity to become a shareholder in a larger, more liquid vehicle in which A-Cap shareholders can expect to benefit from increased levels of trading liquidity, broader sell-side research coverage, enhanced market positioning and inclusion in relevant ASX and uranium-specific indices.

Key conditions to the implementation of the share scheme include, amongst others, A-Cap shareholders approving the scheme, regulatory approvals in Australia and Botswana, and court approval of the share scheme.

Write to Adam Orlando at Mining.com.au

Images: Lotus Resources Ltd
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Written By Adam Orlando
Mining.com.au Managing Editor Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Adam has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.