HGM to acquire Jade Gas, holding entity of Mongolian coal seam gas projects

PERTH: High Grade Metals Ltd (HGM) announced it has signed a binding term  sheet to acquire  100%  of  the  issued  capital  of  Jade  Gas  Pty  Ltd.

Subject to the satisfaction of the relevant conditions, and on the assumption that High Grade Metals Ltd (HGM) conducts and completes a consolidation on 5:1 basis (i.e. that every five  existing  shares  are  consolidated  to  one  share),  HGM  intends  to acquire 100%  of  the  issued capital  in Jade  in consideration  of  the  issue  of  the following to the shareholders of Jade: 826.166 million fully paid Ordinary Shares at Completion; and 68 million Options with a term of four years from 30 June 2019 and a strike price of 4.5c.

The key  asset of  Jade  is  a 60%  interest  in  a  joint venture  with  the  Mongolian State-owned enterprise, Erdenes Methane LLC (EM), a subsidiary of Erdenes Mongol LLC, which holds a Production Sharing  Agreement  with  the  Mineral  Resources And Petroleum  Authority  of  Mongolia  (MRPAM)  to explore and exploit coal seam gas over the major coal field known as Tavan Tolgoi.

Jade is an Australian company which has been established as the holding entity for various current and proposed coal seam gas projects in Mongolia.

A joint venture company, Methane Gas Resource LLC (MGR), has been established to undertake the work in Mongolia. MGR is owned60%by a 100% owned Jade subsidiary (Jade Methane LLC) and 40% by Erdenes Methane LLC, a 100% owned subsidiary of Erdenes Mongol LLC.

The Production  Sharing Agreement (PSA) with  the  Mineral  Resources and Petroleum  Authority  of Mongolia (MRPAM) provides the right to explore and exploit CSG over the area of the Tavan Tolgoi coal  field covered  by seven mining  licenses covering a total of 665 km.

The PSA has been awarded to Erdenes Methane LLC.  Under the joint venture agreement between Jade Methane LLC and Erdenes Methane LLC the PSA must be transferred to MGR.  This process is in train and is subject to Government approval.

The Company understands that Jade is pursuing additional corporate development opportunities which may  take  the  form  of  additional  joint  ventures  or applications  for  additional  exploration  licences  in Mongolia. The  status  and  details  of  the  proposed  corporate  development  opportunities  will  form  part  of  the Company’s due diligence investigations and further details and updates will be provided in due course.

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