Lotus Resources Ltd (ASX:LOT) and A-Cap Resources Ltd (ASX:ACB) have agreed to merge via a scheme of arrangement, under which Lotus will acquire 100% of the A-Cap shares on issue.
The merger will create a leading African-focused uranium player with significant scale and resources by combining Lotus’s production-ready asset, Kayelekera, with A-Cap’s large-scale growth asset, Letlhakane.
Under the scheme of arrangement (share scheme), A-Cap shareholders will receive 1 new Lotus share for every 3.54 A-Cap shares held on the scheme record date.
The merger transaction implies an offer price of about $0.0521 per A-Cap share, representing a premium of 20.7% to the closing A-Cap share price on 11 July 2023.
A-Cap board to vote in favour
Upon implementation of the share scheme, Lotus shareholders will hold about 79.0% of the merged entity and A-Cap shareholders will hold about 21.0%.
A-Cap’s board has unanimously supported the share scheme, with board members confirming their intention to vote all A-Cap shares in which they have a relevant interest in favour of the share scheme.
A-Cap’s largest shareholder, Singapore Shenke International Investment Pte Ltd, which holds about 37.95% of the ACap shares on issue intends to vote in favour of the share scheme.
“Dedicated African uranium vehicle”
Under the scheme, the board of the merged entity will be the current board of Lotus, led by Lotus’ managing director Keith Bowes and non-executive chairman Michael Bowen.
Bowes said: “Combining the uranium assets of Lotus and ACap creates a dedicated African uranium vehicle that meets the needs of the growing uranium market.
“Lotus’s resource base will increase almost five-fold, from 51.1Mlb (million pounds) to 241.5Mlb (100% basis), while ACap shareholders will gain exposure to a production ready asset in Kayelekera.
“The shareholders of both groups will share in the benefits of a long-term development project complementing Kayelekera’s shorter term uranium production profile.”
Early production at Kayelekera
A-Cap’s in-country exploration, technical and environmental personnel will transition to the combined entity to ensure existing knowledge is maintained.
A-Cap chairman Jiandong He said: “Through the A-Cap team, the Letlhakane Project has reached a point whereby it is well set to become a significant global uranium supplier in an ever-improving price market.
“A-Cap Shareholders will benefit from the early production at Kayelekera while also drawing greater value from the longer term development of Letlhakane.
“I encourage A-Cap shareholders to support the merger and am confident of the success of the merged group.”