MERLIN ACQUISITION

Lucapa has entered into a binding Asset Sale Agreement (“ASA”) for the acquisition of the Merlin Diamond Project, through its wholly owned subsidairy Australian Natural Diamonds Pty Ltd ACN 648 368 334 ("AND").

Under the ASA, Lucapa has agreed, subject to the satisfaction of a number of conditions precedent, to acquire the Merlin Assets from Merlin Operations Pty Ltd ACN 009 171 019, a wholly owned subsidiary of Merlin Diamonds Limited (In Liquidation) ACN 009 153 119. At completion under the ASA, Lucapa is required to pay the purchase price to Merlin Operations in respect of the Merlin Assets of ~A$7.4m in cash and will also replace ~A$1.1m financial security relating to the Merlin Tenements with the Department of Industry, Tourism and Trade in the Northern Territory.

The cash outlay of ~A$8.5 million in aggregate represents an attractive ~A$2/ carat multiple on Merlin Operations’ existing 4.4m carat Resource. The Acquisition is subject to the fulfilment of usual and transaction specific conditions precedent. These conditions precedent need to be either satisfied or waived by the parties prior to the date that is, unless otherwise agreed:

  • three months after the date of the ASA; or
  • 31 December 2021, if before termination, either Lucapa or Merlin Operations extends the deadline. 

The conditions precedent include:

  • Lucapa receiving binding commitments in respect of a portion of the capital raising;
  • The receipt of indicative approval to the transfer of the Merlin Tenements by the Northern Territory Minister for Mining and Industry;
  • Release of various security interests over the Merlin Assets including a mining mortgage over the Mining Lease;
  • Execution of deeds of assumption/ assignment in respect of existing obligations owed by Merlin Operations to third parties in respect of the Merlin Tenements relating to access rights, native title rights, royalties, back-in rights and milestone payments in respect of the Merlin Tenements; and

Other customary closing conditions precedent.