Two Shields Investments PLC (LON:TSI), the AIM quoted investment company with a strategy to build a high quality portfolio of investments in fast growing and scalable digital and technology enabled businesses, today announced that binding heads of agreement have been signed with Leopard Lithium Pty Ltd, an Australia registered private company, to sell TSI’s interests in Nashwan Holdings Ltd and Mansa Lithium Inc . The two binding Heads of Agreement set out the terms upon which Leopard Lithium agrees to acquire 100% of the issued shares in both Nashwan and Mansa.
TSI currently directly holds 30% of the issued share capital of Nashwan, and indirectly holds 40% of the issued share capital of Mansa through its 40% holding of Xantus Inc (“Xantus”), the parent company of Mansa. Effectively, the Transactions result in all of the Mali based Lithium permits and licences that Nashwan and Xantus (through its 100% subsidiary Mansa) hold being transferred to Leopard Lithium.
In year ended 31 March 2018, Nashwan posted a loss of US$10,668 on turnover of US$0, and had net liabilities of US$10,568.
In year ended 31 March 2018, Xantus posted a loss of US$15,000 on turnover of $0 and had net assets of $US864,000
Under the Heads of Agreement, TSI will receive consideration of 531 shares in Leopard Lithium – which represents a shareholding of approximately 26.5% of the shares in issue. Following completion of the Transactions, Leopard Lithium will own 100% of the issued share capital of both Nashwan and Mansa and will be run by an experienced team committed to take the projects forward. Additionally, the Company understands it intends to raise funding, most likely via an IPO on to the Australian Securities Exchange (“ASX”) in due course.
TSI will retain its 40% holding in Xantus which owns four Lithium exploration permits in Niger. However, TSI has no intention to provide further funding to exploration activities in Niger at this stage and is seeking partners to sell or farm out these assets.
The vendors of Nashwan and Mansa (Xantus and TSI) will receive in aggregate 1,475 shares in Leopard Lithium as consideration for the Transactions, which represents 73.75% of the issued share capital of Leopard Lithium as at the date of the Heads of Agreement. As a result, upon completion of the sale of Nashwan and Mansa, TSI will hold a total of 531 shares in Leopard Lithium, which represents approximately 26.5% of Leopard Lithium’s share capital as at the date of the Heads of Agreement. The Company intends to retain these shares. A summary of the Transactions is set out in the Appendix.
Leopard Lithium has confirmed to the Board that it intends to further develop the lithium licences and in the coming months will trial some cutting-edge exploration techniques developed in Australia for finding and defining sub cropping ore bodies. Ironside Capital Pty Ltd (“Ironside Capital”) has been appointed as Corporate Advisor to Leopard Lithium. Ironside Capital has previously been Corporate Advisor to Mali based lithium developer Mali Lithium Limited (https://malilithium.com/) and has acted as lead manager in raising over AUD$25m for exploration and development funding.
Ben Phillips is a director of Leopard Lithium and a corporate executive at Ironside Capital and has over 15 years’ experience providing consultation for a broad spectrum of industries including Oil and Gas, Resources, MedTech and Defence. Mr. Phillips advises departments ranging from R&D and exploration through to production, commercialisation and sales. Mr. Phillips role at Ironside Capital is focused on the structure of funding and new management for small-cap companies both private and public. Mr. Phillips has worked for Ironside Capital since the company’s incorporation in 2014, having previously held a position at Merchant Corporate Finance.
TSI will have no ongoing working capital commitments to these projects. Furthermore, Leopard Lithium is intent on identifying further battery metals and gold projects that could be acquired either pre or post an IPO transaction.
The sale will complete following the signing of definitive sale and purchase agreements, which are expected to take place in the coming days, and fulfilment of various conditions (as set out in the Appendix below) within 6 months of signing of the Heads of Agreement.
As the transaction has been undertaken on a share for share basis no consideration value has been explicitly set out in the Heads of Agreement.
TSI’s 40% stake in Mansa Lithium was acquired in July 2017 (as set out in the 3 July 2017 and 26 July 2017 RNS announcements) by the issue of 100,000,000 ordinary shares in the Company (“Ordinary Shares”), and was shown at a value of £560,000 in the Company’s most recent audited accounts for the year ended 31 March 2018 (“2018 Accounts”).
TSI’s 40% stake in Xantus was acquired in November 2017 (as set out in the 30 November 2017 RNS announcement) by the issue of 125,000,000 Ordinary Shares, and was shown at a value of £537,500 in the 2018 Accounts.
TSI’s 30% stake in Nashwan was acquired in January 2018 (as set out in the 30 March 2017 and 3 January 2018 RNS announcements) for consideration of £352,500 by the issue of 75,000,000 Ordinary Shares in the Company and payment of £200,000, and was shown at a value of £352,500 in the Company’s audited accounts for the year ended 31 March 2018.
Accordingly, the carrying value (per the 2018 Accounts) for the Mali based lithium assets totals £1,650,000. While the Directors believe that long term this transaction offers shareholders an enhanced upside they have prudently decided to revise the carried value of the assets proportionately downward to reflect the effective dilution to Leopard Lithium and therefore have reduced the carrying value of the Mali based lithium assets to £1,140,000 in total. The Directors have no intention for TSI to fund these legacy mining assets in the Company and believe that the deal with Leopard Lithium represents the best opportunity to maximise the Mali lithium assets for the benefit of all shareholders. TSI looks forward to informing the market on the final completion of the Transactions in the near future.
Chairman of TSI, Andrew Lawley, said:
“The signing of these binding Heads of Agreement represents further progress from the TSI Board in delivering on its stated strategy of divesting its legacy commodity-based assets. This will further enable the Board to concentrate its efforts and cash resources on creating value from our portfolio of high growth, disruptive, technology based investments that form the core of strategic focus moving forward. We are pleased that Leopard Lithium has committed to further develop the prospective lithium licences. Ben Phillips and the team at Ironside Capital are well placed to exploit the licence opportunities to their fullest extent and we look forward to further news of their progress in these endeavours. We firmly believe that this course of action will ensure the best possible outcome for TSI shareholders in relation to its current holdings in Nashwan and Mansa licence opportunities.”
