LONDON: Power Metal Resources PLC (AIM:POW) has announced a substantial investment agreement with ACAM LP. The deal involves a £2 million investment through a loan note arrangement, accompanied by warrants, marking a strategic step forward for Power Metal’s global uranium ambitions.

The legally binding subscription agreement with ACAM LP includes the issuance of loan notes and warrants, injecting £2 million into Power Metal’s operations. The notes, bearing a 10% annual interest, are set for a five-year term, with the company retaining the option to pay interest in cash or by issuing new ordinary shares. Additionally, 13,333,333 warrants have been granted, exercisable at 15 pence per share over the same period.

ACAM LP, advised by S and F Investment Advisors Limited, is a natural resource-focused limited partnership. The two entities have also signed a non-binding term sheet, initiating an eight-week exclusivity period to explore the formation of a joint venture. This venture aims to leverage Power Metal’s comprehensive portfolio of uranium licenses, potentially transforming the company’s uranium strategy.

Under the proposed joint venture, ACAM or an affiliate is expected to make a £10 million equity investment into Power Metal Resources Canada Inc, the company’s wholly owned Canadian subsidiary, acquiring a 70% majority interest. The deal could also see Power Metal receiving up to an additional £4 million, contingent on the investor’s return on investment from a sale transaction or other value realization events.

The successful establishment of this joint venture could expose Power Metal shareholders to at least five high-impact drilling programs, alongside advancements in several other projects. ACAM’s global investment footprint, including the Gardaq joint venture with Amaroq Minerals in Greenland, underscores the potential for significant shareholder value creation.

Sean Wade, CEO of Power Metal Resources, expressed optimism about the ongoing negotiations to maximize the value of the company’s uranium portfolio. While the completion of the joint venture remains uncertain, Wade is confident in reaching a favorable outcome for shareholders. He also highlighted ACAM’s commitment to the company through the subscription agreement and anticipates a fruitful collaboration to finalize the joint venture.

The announcement follows Power Metal’s strategic review initiated on March 25, 2024, aimed at enhancing shareholder value from its uranium assets. The potential joint venture could lead to the cancellation of the planned IPO of Uranium Energy Exploration plc, with incurred costs of approximately £500k to be covered by the proceeds of the notes.

In conclusion, Power Metal Resources PLC is poised for a transformative phase, with the proposed joint venture offering a promising avenue for growth and shareholder returns in the dynamic uranium market.