Elemental Minerals receives Listing Rule waivers

PERTH, Australia, Dec. 23, 2013 /CNW/ - Elemental Minerals Ltd (ASX, TSX: ELM) ("Elemental" or the "Company") refers to its announcement earlier today in relation to the off-market takeover offer being made by Dingyi Group Investment Limited ("Dingyi") for all of the fully-paid ordinary shares of Elemental ("Dingyi Offer") including the references to the previously announced secured convertible note financing facility being provided by Dingyi (the "Convertible Note Facility").

As announced today, the parties have agreed to proceed with the Convertible Note Facility to enable, subject to satisfaction of certain outstanding conditions precedent (including registration of security), the drawdown of up to $10 million. The parties have commenced the process of execution and registration of documentation necessary to establish security for the Convertible Note Facility over the Company's shareholding in Sintoukola Potash P.A. ("Sintoukola") and receivables owed by Sintoukola to the Company (the "Securities"). Further details of the proposed drawdown of funds and the key terms of the Convertible Note Facility are set out in today's announcement and in the Company's original transaction announcement of 1 July 2013.

The Company has received waivers of ASX Listing Rules 7.3.2 and 10.1 from ASX in connection with the Convertible Note Facility and the Securities.  The terms of the ASX waivers are set out below.

As mentioned in today's announcement, Elemental will utilise a portion of its existing ASX Listing Rule 7.1 capacity to issue loan notes in connection with the proposed drawdown of up to $10 million and accordingly the issue of loan notes will not require shareholder approval and the waiver of ASX Listing Rule 7.3.2 is no longer required.

Terms of ASX waivers

1. Based solely on the information provided, ASX Limited ("ASX") does the following in relation to the Company:
  1.1. Grants the Company a waiver from listing rule 7.3.2 to permit the notice of meeting (the "Notice") seeking shareholder approval to allow the Company to issue two tranches of loan notes to raise up to $5,000,000 (the "Notes"), as part of a $15,000,000 convertible note facility, to Dingyi Group Investment Limited ("Dingyi") to state that the Notes will be issued more than 3 months after the date of the shareholders' meeting, on the following conditions:
    1.1.1. The Notes are issued no later than 15 January 2014 in the case of the first tranche, and no later than 14 April 2014 in the case of the second tranche.
    1.1.2. The Notice sets out in detail the terms of the Notes and the conditions precedent which must be satisfied prior to their issue.
    1.1.3. Any annual report released during a period in which the Notes are issued or remain to be issued, the annual report discloses details of the Notes that have been issued (and the number that may still be issued), including the conditions precedent that were satisfied prior to their issue.
    1.1.4. The Company releases the terms of this waiver to the market at the earlier of the Notice being despatched and the execution by the Company, Dingyi and Sintoukola of the documents necessary to establish the security arrangements for the Notes:
  1.2. Grants the Company a waiver from listing rule 10.1 to permit it to grant security over the Company's  shareholding in Sintoukola Potash S.A. ("Sintoukola") and the receivables owing to the Company from Sintoukola ("Potash Assets") (together, the "Security") in favour of Dingyi, pursuant to the terms of the Facility, without shareholder approval, on the following conditions.
    1.2.1. The security arrangement includes a term that if an event of default occurs and Dingyi exercises its rights under the Security, neither Dingyi nor any of its associates can acquire any legal or beneficial interest in an asset of the Company in full or part satisfaction of the Company's obligations under the terms of the arrangement, or otherwise deal with the assets of the Company, without the Company first having complied with any applicable listing rules, including listing rule 10.1, other than as required by law or through a receiver or receiver and manager appointed by Dingyi, or an officer of a Court empowered by the laws of the Republic of Congo to exercise powers under the Uniform Act Relating to Security Interests (I'Acte Uniforme OHADA Portant Organisation des Sûretés) (or analogous person appointed by Dingyi) exercising its power of sale under the Security and selling the assets to an unrelated third party on arm's length commercial terms and/or collecting receivables the subject of the Security and distributing the cash proceeds to Dingyi in accordance with its legal entitlements.
    1.2.2. A summary of the material terms of the Security is made in each annual report of the Company during the term of the security arrangement.
    1.2.3. Any variation terms of the security arrangement or Security which is:
      1.2.3.1. not a minor change; or
      1.2.3.2. inconsistent with the terms of this waiver,
      must be subject to shareholder approval.
    1.2.4. The Company must seek to discharge the Security when all Notes are repaid, converted or redeemed, up to an interest amount of $2,500,000. If it is not discharged, the Company must seek shareholder approval for the continuation of the Security for any further loan facility amount.
    1.2.5. The Company releases the terms of this waiver to the market, and the Company's plans with respect to the repayment of funds advanced under the terms of the security arrangement and the discharge of the Security, including the timeframe within which it expects the repayment and discharge to occur at the later of the Company, Dingyi and Sintoukola completing the execution of the documents necessary to establish the security arrangements for the Notes, or the granting of the waiver from listing rule 10.1.
2. ASX has considered listing rules 7.3.2 and 10.1 only and makes no statement as to the Company's compliance with other listing rules.

Repayment of Convertible Note Facility

The Company intends to repay or refinance the loan notes issued under the Convertible Note Facility on or before the maturity date (if those loan notes are not converted beforehand) and the Securities be discharged upon that repayment or refinance occurring. The source of the funding required to repay or refinance the loan notes will be determined by the Elemental Board at an appropriate time during the term of the loan notes and following consideration of the circumstances existing at the time, particularly the status of the Dingyi Offer.

The maturity date of the loan notes is the date six months after the close of the Dingyi Offer, although Dingyi has the ability to unilaterally extend the maturity date for additional periods of not more than six months in limited circumstances.  The Dingyi Offer is currently scheduled to close on 31 January 2014 (unless extended).

Elemental may repay loan notes without penalty at any time after the date that is 90 days after the first tranche of loan notes is issued. Dingyi may also require loan notes to be repaid earlier than their maturity date where an event of default occurs or in the majority of circumstances where a break fee is required to be paid by Elemental under the bid implementation agreement between Elemental and Dingyi.

About Elemental Minerals

Elemental Minerals Limited is an advanced mining exploration and development company that aims to grow shareholder value through its 93%-owned Sintoukola Potash Project on the Republic of Congo coastline. Elemental Minerals is dual listed on the Australian Stock Exchange and the Toronto Stock Exchange under the symbol ELM. For more information, visit www.elementalminerals.com

About Dingyi Group Investment

Dingyi Group Investment Limited is a company incorporated in Bermuda and listed on the Hong Kong Stock Exchange. Dingyi is an investment company with interests based primarily in Hong Kong and Mainland China. Dingyi is a company controlled by Mr. Li Kwong Yuk, a Chinese entrepreneur.  Mr. Li also controls a number of other substantial Mainland Chinese and international business interests in sectors including infrastructure, real estate, financial institutions and natural resource, among others.

SOURCE Elemental Minerals Limited

For further information:

Mr Sam Middlemas
Non-Executive Chairman
Tel: +61 (419) 936 040
sam.middlemas@elementalmineralsltd.com

Mr Glenn Gatcliffe
Managing Director - BMO Capital Markets
Tel: +1 (416) 359 7048
glenn.gatcliffe@bmo.com