In a major financial restructure, Firestone was informed by its major shareholder Sekoko Resources that it had entered into a binding term sheet with Ariona which would enable it to acquire 800 million shares in the company for $A8 million.
Firestone said this represented about 25.7% of the issued capital of the company, effectively reducing Sekoko’s current shareholding in Firestone from 27.4% to 1.7%.
Under the transaction, Ariona will obtain a 10% interest in the Waterberg joint venture project from Sekoko for about $13 million.
Firestone will attain a 60% interest in the Waterberg project, while Sekoko will have a 30% stake and Ariona will obtain a 10% interest.
Under the transaction, Ariona will procure project funding in the sum of about $US400 million for the development of the Waterberg JV project.
Following the acquisitions, Ariona, who represents a consortium of international institutional and private investors focusing on global resource opportunities, will be Firestone’s largest shareholder.
Under a conditional term sheet, Ariona will provide $37 million to Firestone via a secured four year convertible note facility.
The new convertible note facility is subject to certain conditions, including completion of legal and financial due diligence on the existing convertible notes and obtaining necessary shareholder and regulatory approval.
Under the funding facility, Ariona will be able to nominate up to two directors to sit on Firestone’s board.
About $6.65 million of the funds raised will be applied to working capital for Firestone while $1.9 million is expected to cover the expenses of the transaction.
FSE chairman Tim Tebeila said the transaction was a major step towards accelerating the development of Waterberg.
“The financial backing provided by Ariona will allow us to proceed with developing the project to completion,” he said.
“This is an exciting time for the company and we very much welcome Ariona’s involvement in the project and as a substantial shareholder of Firestone Energy.”
The Waterberg project comprises eight farms in South Africa’s Waterberg coalfield totalling some 7979 hectares with a proven JORC resource of 1.8 billion tonnes.
It will kick off production in 2014.
A ramp-up of output over a period of five years will see the mine produce 10 million tonnes per annum.
