Aim- and AltX-listed Shuka Minerals has entered into an agreement with its second-largest shareholder Gathoni Muchai Investments (GMI) to increase a loan facility to Shuka by £1.5-million.

Along with a Tranche 1 loan of £500 000 in December, the £1.5-million Tranche 2 of the loan will take the total loan amount extended by GMI to Shuka to £2-million.

Shuka in December entered into a share purchase agreement (SPA) with shareholders of Zambian mining and exploration company Leopard Exploration and Mining (LEM) to acquire the company and its Kabwe zinc mine, in central Zambia.

The bigger loan amount covers the balance of the cash consideration due to the LEM vendors at completion of the acquisition, while also providing funding for initial exploration work at the Kabwe mine and for general working capital requirements.

Since the start of the year, Shuka and its legal and corporate advisers have been working to satisfy the outstanding conditions to complete the Kabwe mine acquisition ahead of the revised June 30 completion date.

Technical site visits have been undertaken in Zambia and meetings in Lusaka and South Africa have also been held with key stakeholders, as well as the company’s existing, and potential future financiers, it adds.

Shuka has, meanwhile, entered into an addendum and variation to the SPA whereby the LEM vendors have agreed that the share consideration for the acquisition, being $3-million, shall be settled on completion through the issue of 28.6-million new ordinary Shuka shares, with no deferred consideration share.

Also, as compensation for the issuance of the consideration shares, with no deferred consideration shares, the company shall, on completion, issue the LEM vendors a further two-million warrants.

All conditions precedent required to complete the acquisition have now been satisfied.

“This is the biggest milestone achieved in my short tenure as CEO and one which the market, shareholders and all stakeholders in Shuka have been waiting for. I must thank the entire team for their diligent efforts in getting us to this point, and the continued support by GMI who have now invested over £1-million in Shuka and are looking to increase this with the extended loan,” CEO Richard Lloyd acclaims.

The increased loan facility and SPA addendum not only open the path to completion of the acquisition but will allow Shuka to enhance its understanding of the full geological potential of Kabwe.

“The company can now accelerate its geological, mining and mineral processing planning for this world famous asset,” he adds.