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Mineral Hill buying into CPS Energy Resources

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Mineral Hill buying into CPS Energy Resources

Mineral HillIndustries Ltd. reached an agreement with certain shareholders ofCPS Energy Resources Plc to acquire their interest representing 45% of CPSEnergy.

CPS Energy, an energy resource company with its registeredoffice in London, entered into an option agreement with a local operator tojointly develop the contract area covered by project OPL 236, whereby CPSEnergy will acquire an 80.75% participating interest in the production sharingcontract for OPL 236 with the operator, subject to receipt of corporate andregulatory approvals, including ministerial consent after which full assettransfer shall take place.

An independent report completed by LR Senergy Ltd. inJanuary 2015 indicates a potential value in the order of $120 million to $240million.

Mineral Hill, an exploration and development company basedin Canada, has executed a share purchase agreement with 12 independentshareholders, representing 45% of the outstanding shares of CPS Energy. Uponregulatory approval, the shareholders will initiate and complete a privateplacement and raise between $500,000 and $2 million via private placement unitsat an anticipated price of 13 cents per unit, each unit comprising 1 commonshare plus a three-year warrant at 20 cents, 30 cents and 40 cents,respectively, on an annual basis over a three-year exercise period.

The final share price will be determined by the closingprice of the shares on the day the shares resume trading less 5%. The proceedswill be used for general operating expenses and to further the Mineral Hill'sinterest in the OPL 236 project.

Mineral Hill will have to pay a finder's fee. If theshareholders fail to complete the private placement, the transaction will notproceed. And the share purchase agreement will be canceled if not mutuallyamended.

Also upon regulatory approval of the acquisition, MineralHill will issue 2.25 million convertible preferred shares to the shareholders,in proportion to their respective shares of CPS Energy, at a par value ofC$1.00 per preferred share, based on an initial deemed value $5.0 million forthe entire OPL 236 project. The preferred shares will have no voting rights andwill be convertible into Mineral Hill's common shares on a one-for-one basis atany time subsequent to their issuance.

After regulatory approval of the share purchase agreement,Mineral Hill will change its name to MHI Mass-Energy Ltd. The shareholders partof the agreement will nominate one-sixth of MHI's board members and will obtaina full NI 51-101 report as an update of the previous report by LR Senergy, or aperson or firm acceptable to the regulatory authorities and will at the sametime complete an assignment agreement with the operator.

Mineral Hill is in discussion with the remainingshareholders of CPS Energy to conclude a joint venture agreement with respectto the OPL 236 project on a 45%/55% basis with CPS Energy or extend an offer toacquire the balance of 55% to the remaining shareholders of CPS Energy underconditions similar to the share purchase agreement.

The new report will reflect current economic conditions ofOPL 236 and if it confirms the minimum value of the field of the previousreport to be $120 million, and Mineral Hill concurs with the new report, itwill issue a further number of nonvoting, convertible preferred shares at a parvalue of C$1.05 per share to the shareholders in proportion to their CPS Energyshareholdings in order to complete the acquisition. The number of shares to beissued will be based on a 33% discount of the value contemplated in theprevious report.

The preferred shares will be nonvoting and will only beconvertible into common shares of Mineral Hill on a one-for-one if theshareholders' collective conversion of the preferred shares does not trigger areverse take-over under the rules of the TSX Venture Exchange and upon priorapproval of the exchange. After the issuance of the shares and the jointventure with CPS Energy is executed, the shareholders will have the right tonominate two members to Mineral Hill's board.

In case the shareholders fail to secure the minimum fundingor the assignment agreement with the operator is not entered into within twomonths of the approval of the share purchase agreement, Mineral Hill will havethe right to cancel all arrangements with the shareholders and request thereturn of all shares and the resignation of the board members nominated by them.

Mineral Hill also disclosed that it acquired Global EnvironomicSystems Corp. from an affiliated company that had changed its businessdirection. Global Environomic is incorporated under the laws of BritishColumbia, Canada, and has certain rights to a patented waste-to-energyconversion technology.  

Global Environomic will have new board members and MineralHill expects that Global Environomic will be able to secure senior financingfor it its first Enviro-X plant in September 2016, in order to start productionin the first half of 2017.