PERTH, AUSTRALIA: Kinetiko Energy Limited (ASX: KKO) signed a binding legal agreements for the acquisition of 100% of Afro Energy (Pty) Ltd from Badimo Gas (Pty) Ltd.
Upon completion of the acquisition, Kinetiko Energy will become the sole owner of Afro Energy, which holds 100% interest in the exploration rights and sample gas production permit in South Africa.
KKO will issue approximately 598m shares to Badimo as total consideration for the acquisition. Since the inception of Afro Energy, KKO has been paying the majority of the exploration costs incurred by Afro Energy.
As a result, Kinetiko has loan amounts owing to it which will be satisfied through the reduction of the Consideration Shares being issued. On or before completion of the merger KKO shall facilitate the sale of $6.5m of Consideration Shares to third party investors at a 30-day VWAP discount to the KKO share price.
Upon completion of the Acquisition and subject to the price paid for the Consideration Cash, the beneficial shareholders of Badimo will own approximately 46% of the post -merger issued share capital of KKO. An independent expert will be engaged by KKO to opine as to whether or not the Acquisition is fair and reasonable to KKO shareholders.
KKO Executive Chairman, Adam Sierakowski, said: “This union between the historic joint venture partners represents the achievement of a major milestone for the de-risking of the development of what is potentially the largest on shore gas project in South Africa.
Years of significant cooperation between the Badimo and Kinetiko teams have enabled this acquisition to be realized and will result in delivering substantial shareholder value”.
Badimo Gas Executive Chairman Don Ncube said: “We have worked for over a decade to explore and develop a significant onshore non -fracking gas project in the Mpumalanga, Orange Free State and Kwazulu-Natal regions of South Africa.
The creation of a project which delivers abundant clean energy will greatly assist South Africans whose economy faces an energy crisis. This merged entity will now be able to raise capital for accelerated exploration, production and downstream development in international markets. Such foreign direct investment was previously not available to Badimo and this merger facilitates and reinforces the foreign direct investment initiative of our President.
It will provide new employment opportunities and development of technical skills in the regions where such gas production is established. It will also contribute to the reduction of harmful polluting carbon dioxide emissions.”