ISR waives sale condition for mining asset purchase to go through

Singapore

ISR Capital's long-drawn S$3 million acquisition of a rare-earth mining asset in Madagascar will finally come to fruition as it has waived a sale condition so the deal can be completed, the investment company announced on Monday.

Completion of the deal was now scheduled to take place on Monday.

ISR has faced numerous queries by the Singapore Exchange over its purchase of the 60 per cent stake in Tantalum Holding (Mauritius) (THM), which fully owns Tantalum Rare Earth Malagasy SARLU (TREM). The latter holds an exploration licence for a rare-earth mining concession in Madagascar. The market regulator's queries have, among other issues, cast a spotlight on the valuation of the acquisition target.

The purchase has been in the works since June 2016.

The waived condition relates to ISR and the seller REO Magnetic agreeing on the project's cash flow budget and liquidity plan.

"As further studies will be conducted on the project after the completion, including but not limited to environmental impact assessment and feasibility study, the board is of the view that the cash flow budget and liquidity plan will be more reliable if these are prepared concurrently" with and using the results of those studies after the completion of the acquisition, the company said in its filing with the exchange.

ISR will allot and issue 747 million new shares at 0.4 Singapore cent apiece for the purchase around Jan 2, bringing the total number of issued and paid up shares in the company to nearly 3.91 billion.

To facilitate the deal's completion, the parties have further agreed to extend the long-stop date to Jan 3, 2019.

At an extraordinary general meeting (EGM) in October where shareholder approval was achieved, executive chairman Chen Tong said it was not confirmed as to whether the full mining licence would ultimately be granted to them.

The exploration licence was renewed starting from November 2018 for three years (see amendment note).

ISR closed at 0.4 Singapore cent, up 0.1 Singapore cent or 33.3 per cent.

Amendment note: An earlier version of this article incorrectly stated that the exploration license had not been renewed. The article above has been revised to reflect this.