Kazera Global has revealed that the Chinese company Hebei Xinjian Construction (Xinjian), with which it entered into a December agreement to sell its 100% interest in the Tantalite Valley Mine in Namibia, has failed to comply with the conditions of the sale agreement and is currently in payment arrears of N$30.3 million (US$1.6 million).
According to the AIM-listed company, the outstanding balance is accruing interest at a rate of 8% per annum.
Under the terms of the sale agreement announced on December 20, 2022, Xinjian was due to have paid N$57 million (US$3 million) no later than January 31, 2023, and a further N$58.8 million (US$3.1 million) (excluding interest) by the end of June 2023, making a total of N$115.5 million (US$6.1 million).
To date, Kazera has only received N$79.5 million (US$4.2 million) in proceeds, including N$11.4 million (US$0.6 million) deemed to have been paid in respect of a Contribution and Exclusive Marketing and Sales Agency Agreement.
“Xinjian is currently not in compliance with the agreement, with payment arrears of US$1.9 million (excluding interest). Nonetheless, at this time the Company has elected not to exercise its contractual rights to terminate the contract given that, under the terms of the sale agreement with Xinjian, Kazera retains ownership of 100% of the shares in African Tantalum (Aftan) as security until all amounts owed by Xinjian have been paid in full,” said as part of its latest trading update.
“Communication between Kazera and Xinjian remains positive and constructive, with the Company believing that outstanding balances will be forthcoming.”
According to Kazera, Xinjian has been funding operational costs of the Namibia mine since the beginning of the year.
“All ongoing operating costs in respect of the Aftan business have been borne by Xinjian since the beginning of 2023.”
Kazera says it has started seeking an alternative buyer for the Namibian mine should Xinjian fail to complete the purchase agreement.
“The Company is also exploring alternative avenues for the future of Aftan should Xinjian not be able to fulfill its contractual obligations, including seeking an alternative buyer,” the company said.
The mine sale conditions comprise a purchase consideration of N$68.9 million (US$3.64 million) and the repayment of an intercompany loan to Kazera of N$177.2 million (US$9.36 million).
Aftan is the holding company for Kazera’s interest in the Tantalum Valley mine.
Kazera Global is a commodity-diverse mining investment company listed on AIM, focused principally, but not exclusively, in the resources and energy sectors.
