Reward Minerals Ltd (ASX:RWD) has entered into a binding share sale agreement with the receivers and managers of Kalium Lakes Ltd, which is under administration, to acquire the Beyondie Sulphate of Potash (SOP) Project.
This agreement is the next step in Reward's acquisition process.
Debt and encumbrance-free
The acquisition is agreed upon a debt-free and encumbrance-free basis for a total consideration of $20 million.
This amount includes an exclusivity payment of $250,000, upfront cash of $14.75 million and a deferred cash payment of $5 million due by the end of the current financial year.
This binding agreement follows the company's exclusivity deed with Kalium and the receivers, announced on November 16.
The share sale agreement involves Reward acquiring 100% of the issued share capital of Kalium Lakes Infrastructure Pty Ltd (KLI) and Kalium Lakes Potash Pty Ltd (KLP), the entities directly associated with the Beyondie Project.
KLP is the primary employer for the project, while KLI holds the non-process infrastructure assets.
A key condition for the completion of the agreement is the approval of Deeds of Company Arrangement (DOCAs) for both KLP and KLI, with creditor meetings scheduled for December 6.
The DOCAs propose that all unsecured creditor claims and debts be compromised, establishing separate Creditors Trusts for distributing funds to the creditors of KLP and KLI.
The agreement also outlines that priority employee claims will be paid in full, with a fund of up to $250,000 allocated for unsecured creditor claims.
Additionally, Tyson Resources Pty Ltd, associated with executive director Michael Ruane, has provided a $8.75 million loan to Kalium. This loan, secured over Kalium, KLP and KLI properties, will be repaid upon completion of the share sale agreement.
Rare opportunity at time of SOP demand
The company views this as a rare opportunity to acquire an SOP play at a time when the market outlook is strong, with high prices driven by restricted supply, population growth, demand for low-chloride fertilizer and an increased need for SOP for higher-value crops.
Reward's next steps include creditor approval of each DOCA, shareholder approval in early January 2024, and a capital raising of A$22.785 million before costs.
Upon completion, Reward plans to maintain the Beyondie Project on care and maintenance for 12 months, focusing on assessing and resolving operational shortcomings.
It then aims to integrate the Reward Process into the Beyondie Project's brine supply and plant flow sheet, a low-cost R&D program leveraging existing infrastructure.
This will position Reward to evaluate the revenue-generation viability of the Beyondie Project processing plant and any additional capital expenditure required.
Evaluation on horizon
“Reward is pleased to have progressed the potential acquisition of the Beyondie SOP project on a debt-free basis, free of encumbrances to the execution of the Share Sale Agreement stage,” said executive director Michael Ruane.
“Assuming that the proposed DOCA with creditors, shareholder approval and capital raising are completed, the Reward team are keen to move quickly on evaluation of the plant and flowsheet modifications and costs for potentially recommissioning the Beyondie Project.
“The evaluation will also cover the incorporation of the Reward Process into the existing project layout and also for SOP recovery operations at other SOP resource sites.”