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DJ Altona Energy Plc Memorandum of Understanding with Vanadium Mining Co

 
TIDMANR 
 
6 June 2019 
 
                               Altona Energy plc 
 
                          ("Altona" or the "Company") 
 
                          Memorandum of Understanding 
                                    with a 
                            Vanadium Mining Company 
 
Altona (NEX: ANR.PL), a mining investment company with significant coal 
resources in Australia, announces that it has entered into a Memorandum of 
Understanding ("MoU") with Shaanxi Qianyan Vanadium and Magnesium Mining 
Industry Ltd Company ("Shaanxi Mining"), the owner of an operational vanadium 
mine in China, with the aim of forming a Joint Venture Company ("JV Company") 
in which it is expected that Altona will eventually become the controlling 
shareholder. 
 
Both the Company and Shaanxi Mining have commenced due diligence to examine the 
feasibility of this partnership. However, until a formal joint venture 
agreement has been signed, the deal is conditional, and not binding on either 
the Company or Shaanxi Mining. 
 
There can be no guarantee that the discussions in respect of the MoU signed 
with Shaanxi Mining will be successful and the terms of any relationship are 
yet to be formulated. However, this is a positive step towards our goal of 
acquiring an investment in a Vanadium mine. 
 
Information on the MoU 
 
The due diligence process is expected to take up to six months to complete and 
is dependent upon a number of factors, including Shaanxi Mining being granted a 
provincial government permit which will allow it to enter into an international 
joint venture agreement with Altona. During this period, Shaanxi Mining will 
commission a mineral resource classification report in accordance with the 
Australian Joint Ore Resources Committee Code ("JORC"). This report is expected 
to take some five months to complete and will form the basis of a valuation for 
any acquisition. 
 
When completed the report will help provide a more accurate valuation of the 
assets of Shaanxi Mining which will determine the quantum of Altona's initial 
interest in the JV Company. The consideration for Altona's acquisition of 
shares into the JV company is expected to be either cash, shares or a 
combination of the two. 
 
The successful pursuance of this potential acquisition, and indeed the ability 
of Altona to pursue all of its strategies, requires the Company to obtain 
further funding. As previously announced the Company is considering a number of 
funding options and this may involve a strategy to re-list its shares on the 
London Stock Exchange, via either AIM or a listing on the Standard Market, 
which will be planned to coincide with the signing of the joint venture 
agreement. The board is of the opinion that the liquidity and access to capital 
provided by either AIM or the Standard Market will be more suited to Altona's 
enlarged status and the owner of a revenue generating vanadium mine. 
 
Information on the Vanadium Mine 
 
The Directors understand that Shaanxi Mining, based in Xi'an City, Shaanxi 
Province, is the majority (80%) shareholder in Shaanxi Shangnan Haodi Youzhi 
Limited Company which in turn owns 99.5% of the Shaanxi Shangnan Haodi Vanadium 
Mining Industry Company Ltd ("Shaanxi Vanadium"), which owns and operates a 
vanadium mine in Shangnan County, Shaanxi Province. 
 
Initial discussions with the owners of Shaanxi Vanadium indicate that it is an 
operational vanadium mine, with an original estimated reserve of 190,000 tonnes 
of vanadium. The level of reserves will be confirmed by the JORC report. It is 
understood that the mine uses open-cut and underground mining techniques and 
its main product is vanadium pentoxide (V2O5). It is currently producing 500 
tonnes of V2O5, per annum which indicates an estimated lifespan for the mine of 
380 years. The current mine owners are in the process of initiating a plan to 
increase production to 1,500 tonnes by the end of 2020. 
 
The Board has been informed that in 2018 Shaanxi Vanadium reported revenues of 
approx. RMB35,000,000 (GBP3.9 million) and a net profit of approx. RMB20,000,000 
(GBP2.3 million). The mine was at full production for approximately half of the 
year, due to the installation of new equipment and processing techniques, in 
order to increase productivity, as mentioned above. 
 
The company sells the vanadium pentoxide via China FerroAlloy Online ( 
www.cnfeol.com), a recognised Chinese commodity market. 
 
All of the above is subject to Altona conducting detailed due diligence and 
verification. 
 
Reasons for the MoU 
 
Should a JV Company be established, Altona, with its access to the UK capital 
markets, will consider seeking new funding in order to help implement the 
mine's current strategy to increase production over the next 18 months, 
although the mine is not dependent upon external funding to implement its 
growth strategy. 
 
Further, the mine being owned by a non-Chinese JV Company could be beneficial 
in opening up new international markets in which to sell the vanadium, which is 
in high demand around the world. 
 
Altona's Executive Director, Qinfu Zhang, together with a consortium of 
investors, is owner of a 43% interest in Shaanxi Mining and also chairman of 
the company. Mr Zhang, who has an interest in Altona of 14.75% (through his 
investment vehicle, Wintask Group Ltd) has recognised the potential synergies 
which this deal will bring to both parties. 
 
Finally, the establishment of a JV Company where Altona is the majority 
shareholder of a profitable mining asset will give it a source of revenue with 
which it can proceed with its exploration project in South Australia; namely, 
its Arckaringa underground coal gasification project. 
 
Qinfu Zhang, Executive Director of Altona, commented, "As I mentioned in the 
Company's AGM Statement in January, we have been investigating the possible 
investment into a vanadium project in China and, following four months of 
discussions, the two companies have now entered into an MoU allowing us to look 
more closely as to how we can make the synergies between the two companies work 
best for our shareholders. We will continue to update the market during the 
process until we are hopefully successful in creating a new joint venture for 
Altona." 
 
The Directors of the Company accept responsibility for the content of this 
announcement. 
 
                                    -ends- 
 
For further information, please visit www.altonaenergy.com or contact: 
 
Altona Energy plc 
Qinfu Zhang, Executive Director                +44 (0) 7795 168 157 
 
Alfred Henry Corporate Finance Ltd 
(NEX Corporate Adviser)                        +44 (0) 20 3772 0021 
Jon Isaacs / Nick Michaels 
 
Leander (Financial PR) 
Christian Taylor- Wilkinson                    +44 (0) 7795 168 157 
 
Company Information 
 
Altona is an exploration company focused on the evaluation and development of 
its significant coal resource exceeding 7 billion tonnes (1.3 billion tonnes 
historic JORC compliant) in the northern portion of the Permian Arckaringa 
Basin in South Australia.  Through its wholly owned Australian subsidiary 
Arckaringa Energy Pty Ltd, Altona holds a 100% interest in three exploration 
licences covering 1,944 sq. kms in the northern portion of the Permian 
Arckaringa Basin in South Australia including three coal deposits - Westfield 
(EL5676), Wintinna (EL5677) and Murloocoppie (EL5678).  All three deposits lie 
close to the Adelaide to Darwin railroad and the Stuart Highway. 
 
The Company was admitted to trading on AIM on 10 March 2005 and was 
subsequently admitted to NEX on 1 February 2019.  A copy of its admission 
documents dated 4 March 2005 can be accessed on its website, 
www.altonaenergy.com.  This website is where items can be inspected under Rule 
75 of the NEX Rules for Issuers, from 1 February 2019. 
 
 
 
END 
 

(END) Dow Jones Newswires

June 06, 2019 02:00 ET (06:00 GMT)