Dual-listed Andrada Mining has executed a legally binding agreement to restructure Uis Tin Mining Company (UTMC), the operational Namibian entity that holds the ML133, ML134 and ML129 mining licences in Namibia, to ensure a more efficient corporate structure going forward.

The company is seeking to increase its ownership interest in UTMC, from 85% to 100%, through the acquisition of the 15% interest currently held by the Small Miners of Uis (SMU).

The SMU is a nonprofit organisation established by the Minister of Mines and Energy of Namibia to support the economic development of Namibians in historical mining areas.

UTMC is a joint venture between SMU and Andrada’s wholly owned subsidiary Andrada Mining Namibia to ensure the economic development of the licences.

To date, the collaboration has been considered very successful in implementing its mandated responsibility to operate the Uis mine and to develop all the licences. SMU has a 15% interest in UTMC and under the proposed transaction this interest is being ultimately sold to Andrada Namibia.

The SMU has approved, as part of the transaction, the transfer of a 5% ownership interest in UTMC, from its original 15% ownership interest in UTMC, to Sinco Investments Five, to fulfil its mandate to further empower Namibians and enable access to the mining industry.

Andrada Namibia will then acquire this 5% interest in UTMC from Sinco, as Sinco has expressed a preference to hold listed Andrada shares.

Sinco is a locally owned and managed investment company focussed on developing mining and construction projects within Namibia. It works with partners across the mining value chain to advance the interests of Namibians.

This transaction is a continuation of Andrada’s strategic positioning to benefit Namibia through collaboration with SMU to unlock multiple critical minerals, while empowering local Namibians, Andrada said.

The directors say this transaction will simplify Andrada's ownership structure in the Uis and Lithium Ridge licences, while still giving the SMU and Sinco economic exposure to the development of the company’s assets through a shareholding in Andrada itself.

The directors add that the new structure will allow for the streamlining of operations for value creation and will create the opportunity for more rapid development of the assets through the introduction of project-specific financing partner solutions.

“We believe this transaction reflects the strong and collaborative relationship Andrada has built with the SMU over the years. It signifies our mutual growth and development as partners, and the progression of SMU as an organisation.

“Furthermore, it marks a significant step forward, with the aim to leverage our combined strengths to advance the economic revival of historical mining areas and upliftment of local communities,” Andrada CEO Anthony Viljoen said on June 27.

“Building on this momentum, we have reached a mutually beneficial share swap agreement that upholds our commitment to empower local Namibians. The net effect of this restructure should be value-accretive for all Andrada shareholders and facilitates Andrada’s long-term strategy.

Andrada’s full ownership of the Uis and Lithium Ridge licences will provide strategic optionality to enhance the value proposition of our portfolio, and on completion we will be well-positioned to unlock the full potential of both assets through the various ongoing strategic discussions that the company is currently undertaking,” he added.

The restructuring is intended to consolidate the ownership of Uis and Lithium Ridge licences to provide Andrada with the ability to target and expedite the development of these individual mining licences through full operational and strategic control.

As part of the transaction, Andrada Namibia will also dispose of its 85% interest in licence ML129 to SMU. While licence ML129, known as Spodumene Hill, no longer aligns with Andrada's current plans, it presents a valuable opportunity for the SMU to drive immediate development and economic growth in the Erongo region.

The restructure of ML134 at Uis and ML133 at Lithium Ridge should augment Andrada’s strategic dialogue with potential funding partners and culminate in a series of value-accretive transactions aimed at realising the full potential of the company’s lithium resource and asset portfolio, Andrada said.

At the same time, this transaction will allow Andrada to retain its empowerment credentials in line with its commitment to uplifting economic empowerment in Namibia, while the SMU will realise near-term value and remain well-positioned to continue to benefit from Andrada’s future growth.

The two remaining licences will strategically position the company to develop its lithium strategy and to attract partners with expertise in processing lithium for both the technical and chemical industries through the production of petalite and spodumene concentrates respectively.

While the transaction is subject to certain consents and approvals, the directors have said that they are confident that these will be obtained.

Under the conditional share purchase agreement (SPA), Andrada Namibia will acquire 15 ordinary shares of N$1 each in the capital of UTMC currently held by SMU and will immediately transfer five of those shares to Sinco.

This would result in Andrada Namibia holding, in aggregate, 95 ordinary shares of N$1 each in UTCM, representing a 95% interest in UTMC, and therefore in the licences held by UTMC, other than ML129, which is to be transferred to SMU as part of the consideration under the SPA.

In addition, as part of the acquisition arrangements, Andrada Namibia would be granted an option to acquire the remaining 5% of UTMC transferred to Sinco.

Once exercised, Andrada Namibia and its parent company Andrada will then hold a 100% interest in UTMC and a 100% interest in all of its licences, with the exception of ML129 which will be disposed of as part of the acquisition. As part of the consideration for the conditional acquisition, the SMU will be issued with ordinary shares in Andrada.

SMU will be paid a cash payment and will take control of licence ML129, currently held by UTMC. In addition, once the acquisition has completed, the option can be exercised and Sinco will be issued with ordinary shares in Andrada.

The acquisition, including the transfer of ML129, and the option are conditional upon Ministerial consent and consents from Orion, Standard Bank and the Development Bank of Namibia.

The consideration for the acquisition will include the issue by Andrada of ordinary shares to the SMU for N$12-million. A total cash payment of N$18-million will be paid by Andrada Namibia to SMU by way of 240 monthly payments of N$75 000 each.

Also, there will be a transfer of Andrada Namibia’s 85% interest in ML129 to the SMU, along with the transfer of 5% of the shares in UTMC to Sinco.

Following completion of the acquisition documentation, the intention is that Andrada will exercise its option to acquire the remaining 5% of UTMC held by Sinco. The consideration for which is the issue by Andrada of ordinary shares in the company at a total value of N$24-million.