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Secured Notes Provide $1.32M Cash to Fund Operations
- $1.32 million cash investment after expenses received via secured notes issued to CPS Capital Group Pty Ltd (Note Holder);
- The notes are expected to be non-dilutive for Cyclone shareholders as they leverage securities held by Cyclone in European Lithium Limited (ASX:EUR)
- 1.34 million secured notes issued with a face value of $1.25, repayable in EUR shares at a 5% discount to the EUR VWAP share price1.
- Cyclone owns 62.8m EUR shares valued at $4.96 million as of 13/11/23. 55m EUR shares will be used as security.
- The timing of the note repayment is at the discretion of the Note Holder after a non- repayment period of 90 days, with a maturity of 12 months.
The notes carry a face value of $1.25 and are repayable in EUR securities at the discretion of the Note Holder after a 90 days standstill period. With the exception of the options, the notes should be non- dilutive to Cyclone Shareholders2.
Cyclone Executive Director and CEO, Paul Berend, said: “These notes provide us the oxygen to hit some major operational targets for project Block 103; whilst not diluting our Cyclone shareholders. They are a smart way to leverage our EUR shares; assuming that the merger between EUR and Sizzle Acquisition Corp and the subsequent NASDAQ listing is completed during the 3-month standstill period. If this happens, and if the future EUR share price reflects the current NASDAQ valuation, our Cyclone shareholders would benefit from a higher share price of EUR shares. This is a nice potential upside which explains the structure of the notes but is speculative. The most important takeaway is that we have secured the funding to achieve key operational milestones for Block 103, which could drive substantial value uplift for our shareholders.”
This article includes content from Cyclone Metals Ltd., licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
Cyclone Metals (ASX:CLE) is a listed exploration and development mining company focused on developing a world class iron ore project in Canada referred to as ‘Block 103.’ The company’s acquisition of Block 103 will soon be finalized, which will trigger an active development phase to unlock the full value embedded in this exciting mineral asset.
Block 103 is located in the Labrador Trough in Canada 30 kilometers from the town of Schefferville, and is within 20 kilometers of an open-access heavy haul railway directly connected to the Sept Isles iron ore export port. The Labrador Trough is a well-established and stable iron ore exporting district which harbors numerous iron producers including IOC (Rio Tinto), Champion Iron and Tata Steel all of which benefit from the same rail and port infrastructure.
Block 103 is a well-advanced project with over US$35 million of expenditures to date, including mineral resource drilling, metallurgical test work, geological modelling, engineering studies and risk assessments.
A maiden NI 43-101 mineral resource was defined by Watts, Griffis and McOuat in 2013 and then preliminary economic assessment (PEA) study was completed by BBA Inc. These independent studies highlight the exciting value embedded in Block 103, and the potential to produce large volumes of direct reduction pellets for a low cash cost, leveraging the low stripping ratio (0.4:1), and the access to competitive hydro-power.
- Block 103 has a mineral resource 7.2 billion tonnes @ 29.2 percent iron - inferred NI 43-101 compliant.
- Block 103 is located in the Labrador Trough, a well-established and stable iron ore exporting district
- Block 103 mineral resource can support large-scale production of DRI quality pellets or concentrates; from 20 mta to 100 Mta, critical for steel mills looking to reduce their carbon footprint
- Historical exploration of the project includes 115 drill holes totaling 28,021 meters.
- Iron ore is essential for the steel industry, creating persistent demand for the project's future product.
- An experienced management team leads the company toward creating shareholder value by developing its promising project.
Project Block 103
Project Block 103 Highlights:
- Reported mineral resource 7.2 billion tonnes @ 29.2 percent iron - inferred NI 43-101 compliant. This maiden mineral resource is based on less than 25 percent of the strike area
- Mining friendly jurisdiction, less than 20 kilometers from an open-access heavy haul railway directly connected to the Sept Isles iron ore export port.
- Metallurgical test work shows a very high-quality iron ore concentrate can be easily achieved, suitable for processing into direct reduction iron (DRI) quality pellets
- A preliminary economic assessment (completed in 2013 by Watts, Griffis and McOuat and BBA) highlights attractive financials: NPV = C$7.4 billion @ 8 percent WACC for 16,6 Mta production of acid pellets
- Low pellet cash costs US$46.5 /t FOB Sept Isles due to favourable ore properties and access to hydropower.
- Block 103 mineral resource can support large-scale production of DRI quality pellets or concentrates; from 20 mta to 100 Mta.
- DRI pellets are critical for steel mills looking to reduce their carbon footprint, are in very short supply and carry large premiums over acid pellets
Tony Sage, executive chairman, stated, “Block 103 is an exceptional project and takes us back to our iron ore roots. We look forward to unlocking the full value of the Block 103 asset for our shareholders, whilst developing the project responsibly in a manner which maximizes the benefits for the local stakeholders.”
Cyclone Metals is underpinned by a highly credentialed management team with a successful track record in creating value for shareholders by developing similar iron ore ventures. The team’s expertise includes geology, mining, metallurgy, environmental management, capital deployment, project management, finance, corporate governance and administration.
Antony (Tony) Sage - Executive Chairman
Tony Sage has more than 35 years’ experience in corporate advisory services, funds management and capital raising predominantly within the resource sector. Sage is based in Western Australia and has been involved in the management and financing of listed mining and exploration companies for the last 22 years. Sage has operated in Argentina, Brazil, Peru, Romania, Russia, Sierra Leone, Guinea, Côte d’Ivoire, Congo, South Africa, Indonesia, China and Australia. Sage is currently the executive chairman of ASX-listed CuFe Ltd (ASX:CUF) and European Lithium Limited (ASX: EUR). Sage is also the sole owner of A League football club Perth Glory that plays in the National competition in Australia.
Paul Berend – CEO and Executive Director
Paul brings over 20 years of experience in the iron ore and steel industry acquired in blue chip as well as junior mining companies worldwide. His previous corporate roles include GM Business Development for Rio Tinto Iron Ore and GM Corporate Strategy for ArcelorMittal, the world’s largest steel producer. He has also worked for Hatch (director advisory services for Australasia), McKinsey & Company and Partners In Performance. Paul has a successful track record in identifying and developing early-stage mining projects and is the founder and historic CEO of Trans-Tasman Resources Ltd (a titano-magnetite project in New Zealand ASX: MKR). He has worked extensively with private equity and specialised funds to identify and develop early-stage mining projects and turn around undervalued producing mineral assets. Paul has an MBA from HEC (Paris, France), an MSc and DEA (~PhD) in chemical process design and chemistry from ENSIC (Nancy, France), a bachelor’s in applied mathematics and algebra from Harvard University and is a Graduate of the Australian Institute of Company Directors.
Timothy Paul Turner - Non-executive Director
Timothy Turner is the senior partner of accounting and advisory Firm, HTG Partners. Turner heads the audit and assurance division and is responsible for the issue of audit opinions for self-managed superannuation funds through to full reporting entities. He also has in excess of 30 years’ experience in business development, structuring and general business consultancy. Timothy has a Bachelor of Business (Accounting), is a registered company, SMSF and organization auditor, is a fellow of CPA Australia and a fellow of the Tax Institute of Australia. With over 15 years’ experience on listed company boards and 30 years’ experience in the Australian accounting, taxation and business fields, Turner brings a wealth of experience and knowledge in corporate compliance, governance and maneuvering.
Will Scott - Non-executive Director
Will Scott spent 39 years as the owner/manager of pastoral properties in the Murchison Region of Western Australia where he successfully integrated prospecting and earth moving into his business model, as the owner and executive director of Wyn Contracting Pty Ltd. In 2012 Scott relocated and integrated the earth moving component of his business to Karratha assuming the role of operations manager at Nickol River Fill Pty Ltd, establishing a successful sand and rock quarry. In 2016, Scott focused his attention to small-scale mining and prospecting, with joint venture partnerships in the Karratha area of the West Pilbara. He has successfully explored and identified primary resource ore bodies as well as recovering substantial quantities of gold in alluvial/eluvial style, in both gold nugget and gold specimen form.
Scott has undertaken extensive mapping of gold discovery locations, with the use of technologies such as sub audio magnetics (SAM), which has identified primary gold ore bodies in the West Pilbara.
Melissa Chapman - Chief Financial Officer and Joint Company Secretary
Melissa Chapman is the co-founder and executive director of Bellatrix Corporate Pty Ltd with over 20 years’ experience in the accounting and company secretarial professions. She has significant experience including in Perth and London serving ASX/LSE listed and private companies.
Catherine Grant-Edwards - Joint Company Secretary
Catherine Grant-Edwards has over 20 years’ experience in the accounting and company secretarial professions with ASX/LSE-listed and private companies. She has practiced at Ernst & Young and is a co-founder and executive director of Bellatrix Corporate Pty Ltd.