Proposed merger of A-Cap and Lotus announced

Friday, 14 July 2023

The two Perth-based companies have signed a Scheme Implementation Deed, under which they propose to merge by way of a court-approved scheme of arrangement between A-Cap and its shareholders. Under the Share Scheme, Lotus will acquire 100% of the A-Cap shares. Each A-Cap shareholder will receive 1 new Lotus fully paid ordinary share for every 3.54 fully paid ordinary A-Cap shares held on the Share Scheme record date. If the Share Scheme is approved and implemented, Lotus shareholders will hold about 79% of the merged group with A-Cap shareholders holding 21.0%.

The merger will combine Lotus's production-ready Kayelekera uranium project in Malawi with A-Cap's future large-scale growth asset, the Letlhakane uranium project in Botswana.

"Combining the uranium assets of Lotus and A-Cap creates a dedicated African uranium vehicle that meets the needs of the growing uranium market," said Lotus Managing Director Keith Bowes. "Lotus's resource base will increase almost five-fold, from 51.1 million pounds to 241.5 million pounds (100% basis), while A-Cap 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".

A-Cap Energy Chairman Jiandong He added: "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."

The merger is conditional, among other things, on A-Cap shareholders approving the Share Scheme and the Option Scheme by the requisite majorities; regulatory approvals in Australia and Botswana; and court approval of the Share Scheme. If all conditions are met, the transaction is expected to be implemented in October this year.

Lotus bought the Kayelekera mine from Paladin Energy in March 2020. Paladin permitted, constructed, commissioned and operated the open pit mine at Kayelekera between 2009 and 2014, when it was placed on care and maintenance due to consistently low uranium spot prices. The mine produced 10.9 million pounds of uranium (4193 tU) from 2009 to 2014. It has 31 million pounds U3O8 of remaining resources. Lotus is currently considering restarting the mine.

According to A-Cap, the Letlhakane project is "one of the world's largest undeveloped uranium deposits". A mining licence was granted in September 2016 and is valid for 22 years. Botswana's Department of Environmental Affairs formally approved the project's Environmental Impact Statement in May 2016. Provisional surface rights were granted in June 2016.