Tuesday 23rd January 2018
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Ironsands miner Trans-Tasman Resources will go public via a backdoor listing on the ASX using Manhattan Corp, a company associated with executive chairman Alan Eggers.
The deal, which needs shareholder approval, will see Manhattan issue approximately 706 million ordinary shares and 706 million performance shares in return for all the issued capital in TTR, implying a transaction value of approximately A$36.4 million at its last trading price of 2.6 Australian cents. Manhattan currently has 140.8 million shares on issue, and since the announcement, the stock has climbed 12 percent, or 0.3 Australian cents, to 2.9 cents.
Shares of both companies are expected to vote on the deal on April 10, and once the transaction is completed, the listed entity will rename itself TTR Corp.
Uranium exploration and resource development company Manhattan has been searching for alternative projects to generate returns for shareholders. According to the company, its flagship Ponton uranium project is unlikely to be developed under the current state government in Western Australia given its stated policy to not allow new uranium mines or mineral exploration in A class reserves.
TTR, meanwhile, has been given consent to mine iron sands from the ocean floor in New Zealand's Exclusive Economic Zone in the South Taranaki Bight. The project aims to extract 50 million tonnes of seabed material a year to export up to 5 million tonnes of iron sand per year and is expected to generate an annual $400 million in export revenue. Different environmental and lobby groups, however, have appealed that decision. TTR also has a prospecting permit for an area off the west coast of the South Island.
The merger "offers Manhattan shareholders and new investors exposure to the potential development of a world-class offshore titanomagnetite and heavy minerals sands mining projects," the Australian company said.
TTR shareholders will receive 3,611 new Manhattan ordinary shares and 3,611 new Manhattan performance shares for each TTR ordinary or preference share held prior to the amalgamation. The performance shares will convert to ordinary shares on a one-for one basis if and when appeals against TTRs project are dismissed and Manhattan is satisfied the project has the necessary consent with no further rights or appeal or a change of control event occurs regarding Manhattan, it said.
If those shares convert, TTR shareholders will end up with about 90 percent of the listed company.
The transaction will be subject to requisite independent reports as well as approval by shareholders in both companies. As it will also change the nature or scale of Manhattan's operations it will require re-compliance with ASX listing rules.
A minimum A$4 million capital raising is also planned to fund future exploration, mine development and working capital requirements. It has not yet determined the size, pricing or structure and whether it will be underwritten. The capital raising is expected to open March 18 and close on April 24.
The Australian company's current assets will increase by A$3.3 million, which includes the net proceeds of the capital raising and TTR's expected cash balance. Its non-current assets will increase by approximately A$50 million, including the fair value of TTR's non-cash assets, primarily drilling technology and capitalised exploration and development expenditure and drilling technology.
Alan Eggers, TTR executive chairman, currently holds 23.66 percent of Manhattan and 41.12 percent of TTR. Once the deal is finalised he will have 41.53 percent of the new company. John Seton currently holds 16.99 percent of Manhattan and 35.05 percent of TTR. He will hold 34.93 percent of the new company.
Manhattan said it intends to retain its current board and it expects the amalgamated New Zealand entity will retain its current executive team.
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