- MetalsTech (MTC) has terminated a facilitation agreement with parties involved in the Sturec Gold Project acquisition
- The company had agreed to issue nine million performance rights and a net smelter royalty on the project to certain entities
- The entities in question were either controlled by or associated with MetalsTech’s Chairman and his wife
- The company has replaced the agreement with a deed of release, under which it will issue six million ordinary shares instead
- MetalsTech is up 3.13 per cent and trading at 16 cents per share
MetalsTech (MTC) has terminated a facilitation agreement with parties involved in the Sturec Gold Project acquisition transaction.
In November 2019, the company announced that it had signed a binding agreement for the acquisition of Ortac Resources UK and its Slovakian subsidiary. The subsidiary owned the Sturec Gold Project in Slovakia, which MetalsTech was eager to acquire.
The acquisition transaction was completed in February 2020, allowing the company to begin work at the Sturec Mine.
As part of the transaction, MetalsTech entered a facilitation agreement with Courchevel 1850 and ATF Courchevel Investment Trust (known collectively as Courchevel) and Natres Services.
However, the Courchevel entities are controlled by Fiona Paterson, the wife of company Chairman Russell Moran, and Natres Services is an entity that is associated with both the Chairman and his wife.
Under the facilitation agreement, MetalsTech agreed to issue Courchevel with nine million performance rights, which would convert into the same number of ordinary shares once the company’s share price exceeded six cents for over 20 trading days.
The company also agreed to assign a two per cent net smelter royalty over the Sturec project to Courchevel.
This was reportedly done to document the remuneration that Courchevel would receive, in return for introducing the Sturec project to MetalsTech in the first place.
However, an independent expert who was engaged by the company concluded that the assignment of the net smelter royalty to Courchevel was neither fair nor reasonable to ordinary holders of securities in MetalsTech.
As a result, the company entered “without prejudice” negotiations with Courchevel, in order to settle potential contractual claims regarding the facilitation shares and net smelter royalty.
After negotiations, MetalsTech has now entered into a deed of settlement, termination, and release with Courchevel and Natres.
Under the deed of release, the company has terminated the facilitation agreement which outlined the performance rights issue and royalty assignment. Instead, MetalsTech will settle all outstanding claims by issuing six million fully paid ordinary shares to Courchevel.
The company believes that these developments are for the best, and will provide greater certainty about the future development of the Sturec Gold Project. That said, a second independent report has concluded that the new arrangement is not fair to shareholders either but is at least reasonable.
MetalsTech is up 3.13 per cent, trading at 16 cents per share at 11:46 am AEDT.