JBM - MLI Strategic Alliance

It is a core part of MLI's development strategy to use its considerable discovery expertise and track record for teh fast track establishment of new mining projects.  It is considered that the establishment of strategic alliances and joint ventures with company's with access to high quality projects and financial strength to progress them through teh feasibility and development pathway

This allows MLI to minimise investment risk in early stage assessment, achieve maximum return for its core skills and achieve its stated objective of maintaining strategic equity positions and/or royalty streams in quality mining projects.

MLI has now entered into the following Heads of Agreement with  JB Mining with a view to establishing a strong mining entity through out Africa.  This strategy of de-risking key projects, both financially and technically, will allow teh combined mining entity to move rapidly toward production and profitability. We also believe it represents a significant opportunity for sharing in the considerable upside that both companies offer in the region.

In December 2012 MLI and JBM announced the finalisation of a commitment to enter  into a Heads of Agreement  to fast-track development of the Egeralayta Perlite Project in Djibouti and the commencement of a Pre Feasibility Study of the Hesdaba Gold Project, Djibouti.


Under the terms of the Agreement, 



JBM controls 80% of three exploration permits and one mining license though an exploration concession agreement entered into with the Government of the Republic of Djibouti, the latter retaining a 20% free carry interest in the permits and license (Appendix 1), whereby JBM has the right to carry out exploration and/or mining operations within the boundaries of the granted licence areas:


1. Three exploration permits, each of 100 sq.  km. in area.
              a. Hesdaba Block granted on 20th July 2009 –Tenure 3 years with- 2 renewals of 2 years each.
              b. Asaleyta Block granted on 20th July 2009 –Tenure – 3 years with- 2 renewals of 2 years each.
              c. Garabbayis Block granted on 20th July 2009 –Tenure – 3 years with- 2 renewals of 2 years each


2. One 20 year Mining Exploration Permit for the mining of gold, covering an area of 10km2 in the Hesdeba area in the region of Dikhil, granted on 1 January 2012, mining license number 001/2012.


3. JBM controls 80% of a mining licence concession through an exploration concession agreement entered into with the Government of the Republic of Djibouti, the latter retaining a 20% free carry interest in the license(s), whereby JBM has the right to carry out exploration and/or mining operations within the boundaries of the granted licence area:  One 20 year Mining Licence covering an area of 404.21 hectares in Egeralayta area in the district of Arta, for the mining of perlite, granted on 23 April 2009, mining licence number 001/2009 Egeralayta 5 Km2.

MLI has agreed conduct and complete Preliminary DD within 90 days, and within which time MLI will provide JBM notification in written form of its intentions to move forward or reject the Project in terms of entering into a Definitive Agreement (the “Notification”).


In the event that MLI notifies JBMHL of its intentions to enter into a Definitive Agreement, the Parties agree to use their best efforts to enter into such an agreement within 30 days from the date MLI provides the Notification to JBMHL, said Definitive Agreement to embody the general principles of, among other terms and conditions.


Following completion of the Preliminary DD, and no later than the day before signing the Definitive Agreement, MLI shall prepare and submit to JBMHL (i) a list of those properties of the Assets that would be subject to the initial fundraising and development endeavours (the “Preferred Assets”), (ii) a two-year draft budget for the development of the Preferred Assets, and (iii) a consolidated valuation of the Preferred Assets and any remaining properties of the Assets (the “Remaining Assets”). The Remaining Assets will be subject to development as and when the Parties mutually agree it makes commercial sense to integrate them into the business.

 

The Parties agree to incorporate the following general terms and conditions into the Definitive Agreement in a manner consistent to their mutual understanding as of signing this Agreement. Specifically:
 

MLI, or its appointed subsidiary/affiliate, to be granted in consideration for its efforts and obligations herein described in this clause 3 either (i) a 20% percent equity interest in JBMHL, or (ii), a 20% interest in the following subsidiaries of  JBMHL – JBDML and JBNML, or (iii) a 20% interest in a joint venture vehicle created by the Parties which would wholly own JBDML and JBNML (either of three options referred to as the “SPV”)
 

MLI to have the option to acquire the equivalent of up to 51% of the promoters equity position of the IPO holding company (currently 80%) at the time of an IPO at a 10% discount to the initial offer price.
 

MLI to carry-out a full due diligence (“Full DD”), which shall be a multi-faceted due diligence on the Project, to include a legal, financial, and commercial component, the results of which are to be considered satisfactory in the opinion of MLI.
 

MLI will take on the role of full time project Manager for which MLI will receive a project management fee equivalent to 10% of the gross expenditure on the Project up to a decision to mine, or, at MLI’s sole discretion, free carried equity up to the decision to mine. In the case of the latter, MLI shall inform JBMHL prior to the first round of financing of its desire to exercise the option of free equity. Failing this, the project management fee is to be accrued for payment until such time as the SPV completes its first round of financing for one or more of the licenses of the Project.
 

MLI is to be responsible for all capital raising and IPO activities. MLI commits to use its reasonable efforts to carry-out an IPO for the Preferred Assets within 24 months, market conditions permitting.
 

MLI agrees to maintain the licence in good standing and ensure all commitments are met.
 

MLI agrees to provide an interim SBLC as a commitment to fund the project moving forward upon completion of the successful Full DD.

© MLI Ltd 2012