The SensOre Ltd board has resolved to strategically split its exploration and technology assets, putting the company on the cusp of a significant transformation. This pivotal move involves the privatisation of its technology assets.
Through this transformation, SensOre is set to be renamed – subject to shareholder approval – Premier1 Lithium Ltd, underscoring the company's sharpened focus on lithium and critical minerals exploration and aligning with growing global demand.
The company will work closely with strategic partner Deutsche Rohstoff AG, with which it has agreed to acquire a 70% stake in lithium assets, previously not owned by SensOre, through a scrip deal.
SensOre will hand over 34.3 million shares to Deutsche Rohstoff AG for the 70% interest in Exploration Ventures AI Pty Ltd (EVAI) it previously did not own, giving it 100% ownership of the asset.
The acquisition includes the highly prospective Abbotts North Lithium Project and marks a significant consolidation of SensOre's holdings in the lithium sector.
Coinciding with this agreement, SensOre has secured a well-supported $3 million placement from sophisticated and institutional investors.
The capital raised is earmarked to support the newly formed Premier1 Lithium, focusing on the drilling activities at the Abbotts North project and its portfolio of assets including Montague, Yalgoo and Gecko North.
Abbotts North has returned encouraging assays, with lithium oxide (Li2O) concentrations reaching 1.25%.
Should the placement be approved by shareholders, new shareholders will own 34%.
The technology division of SensOre, meanwhile, is set to emerge as an independent, unlisted entity. It is currently engaging in talks for new venture capital with several interested parties.
This separation is expected to receive regulatory and shareholder approvals, followed by an in-specie distribution of shares in the technology company to current shareholders, alongside share issues to Deutsche Rohstoff AG and placement investors.
For existing shareholders, this restructuring brings a dual advantage. They will not only retain their stakes in the newly named Premier1 Lithium but also gain shares in the independent technology entity.
Furthermore, Premier1 Lithium will maintain certain usage rights to the technology that has been instrumental in identifying and advancing their current projects.
This strategic division marks a new era for SensOre, pivoting towards a more focused exploration strategy while leveraging technological innovation for growth.
SensOre together with Deutsche Rohstoff AG founded EVAI as a 70/30 joint venture with the purpose of applying SensOre’s data cube and machine learning technology to the exploration of lithium pegmatite deposits in Western Australia.
Several pegmatite dykes have been discovered at Abbotts North, following the application of SensOre’s proprietary AI/ML approach and initial confirmation mapping and sampling.
The pegmatite dykes have potassium/rubidium ratios of less than 10 indicating a highly fractionated, fertile field.
Outcropping pegmatites in the vicinity of the anomalous area are on average 2-3 metres wide, up to 350 metres long and returned up to 1.25% Li2O in surface rock chip samples.
The pegmatites can be traced undercover to the east over an area of 1.5 kilometres within the main Buttamiah Prospect.
Previously announced rock chip assays include:
- 23ANR008 - 1.25% Li2O or 5,800ppm Li, 397ppm Cs, 138ppm Ta2O5;
- 23ANR013 - 0.88% Li2O or 4,070ppm Li, 224ppm Cs, 107ppm Ta2O5; and
- 23ANR015 - 0.87% Li2O or 4,050ppm Li, 512ppm Cs, 390ppm Ta2O5
A maiden drill program is planned for the new year to test the main pegmatite dykes.
Acquisition of Abbots North
The acquisition of the 70% interest in EVAI from its joint venture partner Deutsche Rohstoff AG, will give SensOre 100% ownership of the Abbots North lithium asset.
Following the acquisition and capital raise, Deutsche Rohstoff will hold 19.9% of SensOre.
The acquisition includes three tranches of options. Series 1 consists of 6 million options exercisable at $0.075; series 2 consists of 8 million options exercisable at $0.088; and Series 3 consists of 12 million options exercisable at $0.100.
All tranches have an expiry of three years from the grant date.
Deutsche Rohstoff AG’s VP Geology Anja Ehser will join the board as a non-executive director subject to shareholder approval.
Enter Lithium1
SensOre is poised to undergo a significant structural change by separating its technology assets. This demerger is a pivotal condition for the acquisition of EVAI and the previously mentioned placement.
SensOre, pending approval from its shareholders, has committed to executing this demerger by January 31. This move has already garnered considerable interest from various strategic investors in the technology sector.
In line with these changes, SensOre plans to adopt a new identity as Premier1 Lithium, reflecting its revised strategic focus.
Additionally, the company's board has decided to streamline its leadership structure, reducing the number of directors to three. This decision aligns with the company's new strategic direction. Consequently, Robert Peck AM, Adrian Manger, Anthony O’Sullivan and Robert Rowe have expressed their intention to resign from their positions.
Data as a service
Historically, minerals technology has been dominated by unlisted companies, often buoyed by venture capital investments. SensOre, however, has faced challenges in attracting the same level of interest and financial backing from institutional and retail investors on the ASX, particularly when compared to the deeper pockets and enthusiasm of the predominantly US-based technology market.
The proposed demerger is seen as a strategic move to address this disparity and to enhance shareholder value. Detailed information about this demerger will be provided to shareholders in the upcoming Notice of Meeting.
SensOre is reorienting its business model towards becoming a 'data as a service' company, leveraging artificial intelligence/machine learning (AI/ML) and geoscientific software tools. The company is confident in the global appeal of this business model.
Post-demerger, the focus will be on securing venture funding to expand its data services and reach on a global scale. The revenue from existing operations, supplemented by additional venture capital, is expected to significantly contribute to the development of the technology business in the forthcoming years.
The technology division will continue to operate under the SensOre brand name, which has gained recognition in the industry.
This division comprises two main branches: Intrepid, specialising in geophysical solutions and software development, offering both software and data processing, modelling and target selection services (details at Intrepid Geophysics); and the SensOre arm, known for developing extensive hypercubes of Australian geoscience data accessible via the company’s cloud platform.
This segment is continually enhancing its offerings by acquiring and integrating more geoscience data from Australia and worldwide into its expanding data hypercubes. It also develops a range of AI/ML tools applicable to geoscience data (more information at SensOre Technology).
SensOre also offers various consulting services related to data, prospect generation and targeting to a diverse client base. The company plans to maintain these services. The technology division, on a pro-forma basis, is generating positive cash flow, as indicated in the June quarterly report.
In the technology sector, multiples typically are around five times the revenue and have historically been even higher.
Shareholders can expect SensOre to call a notice of meeting to procure shareholder approval around January 17, 2024.