caravel signs non-binding letter of intent wit

COULD BE THE SIGN OF GOOD THINGS TO COME

The LOI contemplates a wider strategic alliance with a leading global miner and reflects the significant potential of the Calingiri Project in WA
? First Quantum, one of the world’s leading copper producers, to inject $1.25m into Caravel to acquire a cornerstone 12.9% stake
? First Quantum to enter into a Technical Cooperation Agreement to provide assistance, technical resources and personnel for the Calingiri Copper-Molybdenum Project in WA
? Caravel has agreed to provide First Quantum with a Right of First Refusal Agreement on the Calingiri Project
Caravel Minerals Limited (“Caravel” or the “Company”) (ASX: CVV) is pleased to announce that it has entered into a non-binding letter of intent (“LOI”) with First Quantum Minerals Ltd (“First Quantum”) (TSX:FM). The transaction proposed under the LOI will secure the support of First Quantum to accelerate the exploration and development of the Company’s flagship Calingiri Copper-Molybdenum Project in WA. First Quantum will be issued with shares in Caravel in return for a $1.25m investment in the Company, acquiring a cornerstone 12.9% stake.
In addition, the two companies will enter into a Technical Cooperation Agreement which will enable Caravel to access First Quantum’s considerable geological, operational and technical expertise and accelerate the exploration and evaluation of the Calingiri Project, located 120km north-east of Perth.
First Quantum is an established and well-regarded mining and metals company operating seven mines and developing five projects worldwide. First Quantum currently produces copper, nickel, gold, zinc and platinum group metals across Australia, Africa and Europe. In addition, the company is developing new projects in Zambia, Peru and Panama that, when complete, will increase its annual copper production capacity to more than 1.3 million tonnes per annum. First Quantum’s market capitalisation is in excess of A$10 billion.
Caravel’s Chief Executive Officer, Marcel Hilmer said:
“The agreement with First Quantum represents a major milestone for the Company and we greatly appreciate the significant financial and technical commitment. It is clearly evident that First Quantum have formed the view that Calingiri has the potential to emerge as a major new copper mining district right on the doorstep of Perth.”
“The cash proceeds from the issue of shares to First Quantum will support our current and upcoming exploration programs at Calingiri while the Technical Cooperation Agreement will enable us to access one of the best technical and geological teams in the world to help us evaluate the potential of a large-scale, large-tonnage copper-molybdenum project. We are looking forward to a long and successful relationship with First Quantum as we work together to unlock the potential of the Calingiri Project.”
Caravel has recently announced a new drilling program at Calingiri to test its potential to host multiple centres of bulk tonnage copper-molybdenum mineralisation. Extensive exploration work completed
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earlier this year, including initial drilling, has confirmed the potential for Calingiri to emerge as a
significant new base metal mining district in WA.
The principal commercial terms of the transaction outlined in the LOI are as follows:
? First Quantum will subscribe for 83,333,333 fully paid ordinary shares in the issued capital of
Caravel at a price of $0.015 per ordinary share;
? Caravel will issue 83,333,333 unlisted options to acquire Caravel shares exercisable at $0.035
per option on or before 3 years from the date of issue and otherwise on the terms and
conditions to be agreed;
? First Quantum and Caravel will finalise and complete the steps required to execute a Technical
Cooperation Agreement. There is an understanding that First Quantum will provide assistance,
technical support and personnel in relation to the advancement and interpretation of the
Calingiri Project for no less than 18 months. Caravel will commit to a minimum 75% of the
proceeds from the issue of the shares to be expended on the Calingiri Project; and
? First Quantum and Caravel will finalise and complete the steps required to execute a Right of
First Refusal Agreement. Caravel will agree for a period of no less than 18 months, that if it
receives an acceptable bona fide written offer from any third party to purchase or JV any of the
Calingiri Project it will allow First Quantum to acquire at the same price and upon the same
terms and conditions as are outlined in the third party offer.
Completion of the transaction is conditional upon the satisfaction of a number of conditions precedent,
including (but not limited to) completing technical and legal due diligence, agreement and execution of
the Technical Cooperation Agreement and the Right of First Refusal Agreement and obtaining all
necessary Caravel shareholder approvals (including under section 611 of the Corporations Act, if
required).
The proceeds of the issue of shares will be paid in full on the date of issue of the shares.