Aim-listed investment company Kazera Global has signed a definitive agreement to sell its 100% interest in African Tantalum (Aftan) to Hebei Xinjian Construction (Xinjian) for $13-million.
The sale of Aftan – which is the holding company for Kazera's interest in the Tantalum Valley mine, in Namibia – comprises a purchase consideration of $3.64-million and the repayment of an intercompany loan to Kazera of $9.36-million.
To date, $642 207 has been paid by Xinjian, while another $500 000 is to be received before the end of December.
A further $2.5-million will be paid by the end of January 2023. The balance of $9.36-million will be payable in equal monthly instalments starting in April 2023 and terminating in December the same year.
Outstanding amounts will attract interest at a rate of 8% a year.
To the year ended June 30, Aftan reported a loss before tax of N$6.96-million.
When approached by Xinjian to consider the outright sale of Aftan in place of a previously announced investment, Kazera’s board carefully considered the merits of an earlier-than-initially-anticipated exit from this investment.
Kazera’s board believe the sale of Aftan offers the company an opportunity to exit an investment for an attractive return, enabling Kazera to invest in its diamond and mineral sands projects – the latter of which offers a significant cash flow profile and now without the need to raise additional capital.
It also positions Kazera to return value to shareholders, and the board is examining options to enable this in the future.
In addition, the sale removes the risks associated with the construction of a new processing plant and recommissioning the mine in the current uncertain market environment.
Kazera CEO Dennis Edmonds says the company has been working with Xinjian under the joint venture since July and is confident in its ability to progress the asset through its next development phase, while Kazera retains exposure to its growing cash flow profile through the debenture stream.
“This represents a real milestone for Kazera as the first realisation of returns from an investment in line with our stated strategy as an investing company of building value in our investments whilst maintaining flexibility for opportunistic exit points.
“This strategic exit will also enable management to focus on our existing projects and further potential investments.
“We see major opportunities in the present environment and look forward to delivering sustainable growth to the benefit of all our stakeholders in the near term,” he says.
Meanwhile, in South Africa, Kazera is on track to exceed its target of producing 1 000 t of bulk heavy mineral sands at the Walviskop mine by the end of this year and has already built up a stockpile of almost 5 000 t.
Offtake discussions are well advanced with three different parties, all of whom Kazera says, have expressed interest in buying the bulk product with a view to entering into a contract in the future to purchase the product in the form of refined minerals, which attract a premium price.