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(Sharecast News) - Aura Energy announced on Friday that it has agreed a transaction that establishes a CAD 50m (26.82m) valuation for its polymetallic Hggn project in Sweden, after securing a CAD 10m strategic investment that would see the asset housed in a newly structured Canadian vehicle ahead of a proposed stock market listing.
Under a binding agreement, Aura would transfer 100% of the Hggn project into SIU Metals, an unlisted Canadian public company, in exchange for shares, resulting in SIU Metals becoming the sole owner of the project.
Following completion, Aura would retain a 78.7% stake in SIU Metals on an undiluted basis, while MMCAP International SPC and other strategic investors would hold 19.7% after subscribing CAD 10m through a private placement, implying a project valuation of CAD 50m.
SIU Metals intended to seek a listing on the TSX Venture Exchange in connection with the transaction, which was being structured as a reverse takeover and was expected to complete in June.
The AIM-traded firm said the associated financing, which was scheduled to close in February, was designed to fund permitting, continued exploration and resource expansion at Hggn, as well as working capital and corporate costs.
"We are delighted to welcome investors of the calibre of MMCAP, Aura's largest shareholder, and other high-quality investors into this new vehicle for Aura's Hggn project, and the future support they can bring," said Phil Mitchell, executive chairman of Aura Energy.
"We believe their investment is a demonstration of the quality and potential of the project, and its exciting future as, following legislation changes brought into effect on 1 January, mining of uranium is now allowed again in Sweden.
"This transaction shines a spotlight on the under-recognized value of Hggn within Aura Energy, and creates an independent and dedicated pathway for funding, growth and management of the project.
"Upon successful completion of the transaction, Aura's existing shareholders will continue to benefit from Hggn's upside potential, and by way of a direct comparison with the valuation of other companies with similar deposits in the region."
As part of the deal, Aura said it would transfer its Swedish subsidiary Vanadis Battery Metals into SIU Metals, with the resulting Canadian entity becoming the reporting issuer and owner of the Hggn project.
SIU Metals would consolidate its shares, change its name and align its financial year-end to June, while Aura would nominate a new board and management team with public company and mining experience, including independent directors.
The financing would take the form of a CAD 10.35m subscription receipt issue at CAD 1.00 per receipt, with each receipt converting into one common share and half a warrant on completion of the transaction.
Aura said the warrants would be exercisable at CAD 1.50 for two years.
The placing was being led by MDCP Securities, which would receive a 5% cash fee and broker warrants.
Aura said the transaction followed a change in Swedish legislation on 1 January allowing the exploration for and extraction of uranium, a development it believed materially enhanced the value of Hggn.
MMCAP's participation in the financing constituted a related party transaction under the AIM rules, with Aura's independent directors concluding the terms are fair and reasonable for shareholders.
At 1108 GMT, shares in Aura Energy were up 17.75% at 11.33p.
Reporting by Josh White for Sharecast.com.