Challenger to buy gold, copper projects in South America

Challenger to buy gold, copper projects in South America

New life has been breathed into Challenger Energy (ASX: CEL) after the company announced this morning it had entered into an agreement to wholly acquire AEP Corporation, en entity which holds the rights to earn a 75 per cent stake in the Hualilian project in Argentina and wholly buy the El Guayabo project in Ecuador.


HIGHLIGHTS

  • Binding conditional agreement to acquire 75% of the Hualilan Project (Argentina) and 100% of El Guayabo Project (Ecuador) via acquisition of AEP Corporation Pty Ltd (AEP) for consideration comprising 180,000,000# ordinary shares, 78,444,444# options 4 cents expiring 30 June 2022, 60,000,000# Class A Performance Shares and 60,000,000# Class B Performance Shares.

  • AEP can earn 75% of the Hualilan Project in Argentina and 100% of El Guayabo Project in Ecuador via staged farmin agreements.

  • Hualilan Project is a high-grade gold / silver project with extensive historical drilling and a 43-101 compliant foreign resource estimate.

  • El Guayabo is a breccia and porphyry gold / copper project with sufficient historical information to identify multiple targets including;

    • Breccia hosted mineralization - only 2 of 10 breccia bodies systematically drill tested;

    • Extensive late stage vein system - never drill tested; and

    • Underlying porphyry system target - never drill tested.

  • Short term project execution strategy that will see a drilling program at Hualilan designed to establish confidence in the foreign resource estimate and to explore areas along strike and the completion of geophysical survey work on El Guayabo to determine the likely size and depth of the porphyry target.

  • The Company will continue to pursue its application for shale gas exploration rights in South Africa.

  • Proposed capital raising of $5.0m as part of proposed re-compliance with Chapters 1 and 2 of the ASX Listing Rules.

  • The Company will appoint new experienced directors: Kris Knauer as Managing Director, Fletcher Quinn as NonExecutive Chairman and Scott Funston as Finance Director and CFO.

  • AEP has raised $2.25 million and has advanced the Company A$200,000 and agreed to provide up to a further A$300,000 facility to the Company to facilitate re-compliance.

  • The Company will seek to consolidate its shares on a one for five basis as part of re-compliance.

  • The Company will issue a prospectus to raise $5,000,000 at $0.03# per share.

  • The transaction is subject to conditions, including Company shareholder approval, due diligence and the Company’s re-compliance with Chapters 1 and 2 of the ASX Listing Rules.

# - on a post 1 for 5 consolidation basis

OVERVIEW

Challenger Energy Limited (ASX: CEL) (CEL or the Company) is pleased to announce it has signed a binding heads of agreement to acquire 100% of the issued capital in AEP Corporation Pty Ltd (AEP) (the Transaction). AEP owns the rights to earn in to 75% of the Hualilan Project in Argentina and 100% of the El Guayabo Project in Ecuador (collectively referred to as the Projects). In addition to $300,000 founder capital AEP has raised $2.25m in seed capital over the past 6 months. Under the terms of the Transaction, the current shareholders in AEP (Vendors), which includes the seed capital shareholders, will receive 180m# ordinary shares 78.44# million 4 cent options expiring 30 June 2022, and 120m# performance shares in the Company as consideration for the acquisition.

The Transaction is subject to and conditional upon the satisfaction of certain conditions precedent including; the Company obtaining all regulatory and shareholder approvals for the Transaction; completion of due diligence by the Company; execution of definitive legal documentation; and re-compliance with Chapters 1 and 2 of the ASX Listing Rules.


To view the full announcement, please click here.

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