Trek Metals to Divest Hendeka Manganese Project to Advanced Energy Fuels
TREK METALS LIMITED (TKM) Share Update September 2024 Monday 9th
Trek Metals Signs Agreement to Divest Hendeka Manganese Project
Trek Metals Limited (ASX: TKM) has announced a significant move to divest its non-core Hendeka Manganese Project in the Pilbara region of Western Australia. The company has entered into a Binding Option and Acquisition Agreement with Advanced Energy Fuels, Inc. (AEFI), a US-based company focused on clean energy and critical minerals.
Instant Summary:
- Trek Metals signs Binding Option and Acquisition Agreement with Advanced Energy Fuels, Inc.
- AEFI to pay A$450,000 in cash and issue 8,000,000 shares to Trek upon exercising the option.
- AEFI commits to spending A$2 million on advancing the Hendeka Project.
- Trek retains a 20% shareholding in AEFI, providing exposure to future upside.
- Focus shifts to Trek's high-priority Christmas Creek Gold Project and McEwen Hills Niobium Project.
Agreement Details
Trek Metals Limited (ASX: TKM) has entered into an option and acquisition agreement with Advanced Energy Fuels, Inc. (AEFI) over its non-core Hendeka Manganese Project in the Pilbara region of Western Australia. This agreement allows AEFI to acquire the Hendeka Project by paying A$450,000 in cash and issuing 8,000,000 shares to Trek, or shares representing at least 20% of AEFI's total issued capital upon its listing.
AEFI is required to spend A$2 million on advancing the Hendeka Project, with the option to exercise the agreement by 30 September 2027. This deal aligns with Trek's strategic focus on its high-priority projects, including the Christmas Creek Gold Project and the McEwen Hills Niobium Project.
Strategic Focus
Trek's CEO, Derek Marshall, emphasized that the Hendeka Project, while promising, is not a core focus for the company. 'The Hendeka Project offers significant optionality on the resurgence of the manganese sector following recent global supply issues,' Marshall said. 'However, our strategic focus remains on the Christmas Creek Project and the McEwen Hills Niobium Project.'
The Christmas Creek Project is currently undergoing a major gold drilling program, with potential extensions of the prolific Granites-Tanami Orogen. The McEwen Hills Niobium Project is located along strike from WA1's world-class Luni discovery, further highlighting Trek's commitment to high-value projects.
Material Terms
The agreement includes several key terms:
- AEFI to pay an option fee of A$50,000 for an exclusive option to acquire the Hendeka Project.
- If AEFI exercises the option, it will acquire Trek subsidiaries Edge Minerals Pty Ltd and Bellpiper Pty Ltd, which hold the Hendeka Project tenements.
- AEFI can exercise the option anytime up until 30 September 2027, subject to meeting the payments and exploration expenditure requirements.
- AEFI to pay A$450,000 upon its proposed listing on or before 30 September 2025.
- Upon listing, AEFI to issue 8,000,000 shares or shares representing at least 20% of its total issued capital, up to a maximum value of A$4,000,000.
- AEFI to spend at least A$2,000,000 on the Hendeka Project during the option period.
- Trek retains the right to appoint one Director to AEFI and has customary participation and information rights.
This agreement allows Trek Metals to focus on its core projects while retaining a stake in the potential future success of the Hendeka Project. The cash and share payments from AEFI provide immediate financial benefits and long-term exposure to the project's upside. This strategic move could positively impact Trek's stock as it demonstrates a clear focus on high-priority projects and prudent management of non-core assets.
Investor Reaction:
Analysts are likely to view this agreement favorably, as it aligns with Trek's strategic focus and provides financial benefits without diverting resources from its core projects. The retention of a 20% shareholding in AEFI offers potential future gains, which could be attractive to investors.
Conclusion:
Investors should keep an eye on Trek Metals' progress with its Christmas Creek Gold Project and McEwen Hills Niobium Project, as these are the company's primary focus areas. The agreement with AEFI is a strategic move that allows Trek to benefit from the Hendeka Project's potential without significant resource allocation. This could be a positive development for Trek's stock and overall market position.