Proposed Demerger and Listing of Aclara on TSXSource: RNS
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, JAPAN OR SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD BE IN BREACH OF APPLICABLE LAWS.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF REGULATION 11 OF THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019/310.
For immediate release
19 October 2021
Proposed Demerger and Listing of Aclara Resources Inc. on the TSX
Changes to Hochschild Mining's Board of Directors and Senior Management
Hochschild Mining PLC ("Hochschild" or "the Company") (LSE: HOC) (OTCQX: HCHDF) is pleased to announce its intention to demerge shares representing 80% of the entire issued share capital of Aclara Resources Inc. ("Aclara"), its indirect wholly-owned subsidiary. As well as demerging Aclara from the group (the "Demerger"), Aclara will seek to have listed on the Toronto Stock Exchange ("TSX") its entire issued share capital (the "Aclara Shares"). The Demerger is expected to be completed by year-end.
Aclara is a development-stage rare earth mineral resources company with a strategic land package of mineral concessions in Chile. Aclara is initiating the development of its resources through a project called the Penco Module ("Penco"), formerly known as Biolantanidos, which covers a surface area of approximately 600 hectares and contains ionic clays that are rich in rare earth elements ("REE"). Aclara is currently focused on the development and on the future construction and operation of Penco, which will aim to produce a rare earth concentrate through a processing plant that will be fed by clays from nearby deposits.
Following the Demerger, Hochschild Mining Holdings Limited ("HM Holdings") (a wholly-owned subsidiary of the Company) will retain 20% of the Aclara Shares.
In connection with the Demerger, Aclara intends to conduct a concurrent initial public offering of the Aclara Shares (the "Aclara IPO") to raise additional funds to advance its exploration and development activities and for working capital and general corporate purposes. Aclara has applied to have the Aclara Shares listed on the TSX ("Listing"). Listing is subject to the approval of the TSX in accordance with its original listing requirements. The TSX has not conditionally approved Aclara's listing application and there is no assurance that the TSX will approve the listing application.
The Demerger is conditional on certain requirements being satisfied. Assuming such conditions are satisfied, the Demerger will be effected by the Company distributing Aclara Shares representing 80% of the entire issued share capital of Aclara to shareholders of the Company ("Shareholders") by way of a distribution in specie (the "Demerger Dividend"). Although the process relating to the Aclara IPO and Listing is currently at an early stage, the Company has decided to proceed with obtaining approval from Shareholders for the Demerger Dividend, which will be required in order for the Demerger and the Aclara IPO and Listing to proceed.
Eduardo Hochschild, Chairman said:
"This is the logical next step forward for our rare earth business. It is our belief that, as two standalone businesses, both Hochschild and Aclara will have the greatest potential for delivering long-term value creation. Each will have their own strategic focus on their respective products, their own dedicated management teams, separated access to capital and an independent valuation whilst maintaining a strategic relationship that will allow Aclara to benefit from Hochschild's track record on project execution and ESG. Furthermore, we believe that current and future Hochschild shareholders will also benefit from retaining a meaningful stake in a business that offers an exciting proposition in a high growth market."
The Company expects to post a Circular and Notice of Extraordinary General Meeting to Shareholders later today. Once the Company has posted these documents to Shareholders, the Company will make a further announcement via a Regulatory Information Service. These documents will also be made available on the Company's website at:
A preliminary prospectus related to the Aclara IPO was filed on 18 October 2021 with the securities regulatory authorities in each of the provinces and territories of Canada, other than Quebec. In addition, Aclara intends to file shortly a prospectus in Canada qualifying the distribution of the Aclara Shares issuable pursuant to the Demerger Dividend under applicable Canadian securities laws.
Nature of Aclara's business
Aclara is a development-stage rare earth mineral resources company with 451,585 hectares of mining concessions located in the Maule, Ñuble, Biobío and Araucanía regions of Chile. Aclara is initiating the development of its resources through a project called Penco, which covers a surface area of approximately 600 hectares and which has ionic clays that are rich in REE. Aclara is currently focused on the development and on the future construction and operation of Penco, which will aim to produce a rare earth concentrate through a processing plant that will be fed by clays from nearby deposits. In addition to Penco, Aclara intends to conduct exploration activities in order to determine if there are deposits within its other mining concessions that can be developed economically and with an adequate environmental footprint.
Background to the Demerger
The Group acquired 100% of the Aclara Project in 2019. Aclara is unique within the Group in that it focuses on rare earth mineral resources, whereas the primary focus of the Group's business is the exploration, mining, processing and sale of precious metals and, since its acquisition, Aclara has continued to be run as an independent business unit within the Group. Aclara's primary growth opportunities going forward are expected to be in expanding its rare earth business. The Demerger will result in two separately listed companies, each with its own distinct investment prospects.
The Company believes that the Demerger will provide each of the Company and Aclara with a number of opportunities and benefits, including the following:
§ Strategic focus on precious metals: although the Company has applied its expertise to identifying and developing a rare earth mineral deposit, the Company believes that its strategic focus should remain on precious metals. In contrast, Aclara has a different strategic approach in order to succeed in the specialty rare earth industry and will be required to develop specific commercial capabilities and consider further integration down the permanent magnet value chain. Both are areas of expertise that the Company does not currently possess and, even if it were to develop such expertise, this would not necessarily enhance the Company's precious metals business in the future.
§ Management focus: with the Company's management team focusing the majority of its time on precious metals deposits, an independent Aclara will benefit from a dedicated, standalone management team and board.
§ Access to capital: the Company has a pipeline of precious metals opportunities with which Aclara currently competes for capital. At the same time, Aclara has an ambitious growth plan based on the development of several production modules and may eventually invest in building its own separation capabilities. Given the Company's likely future prioritisation of precious metal projects, a separately-listed Aclara will be in a significantly improved position to raise capital from investors who are keen to support a high-growth rare earth opportunity and may have a different approach than precious metals investors.
§ Independent valuation: separating the Company's precious metals and rare earth portfolio will allow the market to value each business independently, potentially leading to a re-rating of either or both businesses.
After careful consideration by the Company, the TSX was selected as the most appropriate venue for listing Aclara due to the depth of the investor base for a business such as Aclara and the relative Canadian familiarity with assets in the Americas. The Company recognises that the mineral resources industry is a much larger proportion of the overall market in Canada and that Canadian investors have a history of taking a longer-term approach to mineral resources companies in the development phase where an asset may still be a few years from the commencement of production.
As at 30 June 2021, the gross asset value of Aclara was $38.2 million (book value). Aclara is still in a developmental phase and has not generated any revenue to date. Accordingly, Aclara has not contributed any amount towards the Group's profits.
Effects of the Demerger on the Company
The Demerger is expected to have minimal effect on the Company's operations. Aclara focuses on rare earth mineral resources, whereas the primary focus of the Group's business is the exploration, mining, processing and sale of precious metals and, since its acquisition, Aclara has continued to be run as an independent business unit within the Group. The Demerger is also expected to have a minimal impact on the Company's financial position, as Aclara is still in a developmental phase and has not generated any revenue to date.
Board and Senior Management Changes Relating to the Demerger
The Company announces that, conditional upon the Demerger coming into effect, Sanjay Sarma will be stepping down as an independent non-executive director of the Company and will be appointed as an independent non-executive director of Aclara. At this stage, the effective date of Sanjay's resignation is not yet known. Once Sanjay's resignation comes into effect, the Company will make an announcement through a Regulatory Information Service.
Following the above change, the Board of the Company will comprise eight directors, five of whom will be independent non-executive directors. The Company is undertaking a search to appoint one or more additional independent non-executive directors to the Board of the Company.
In addition, and also subject to completion of the Demerger:
§ Ramon Barua will be stepping down as the Chief Financial Officer of the Company to assume the role of Director and the Chief Executive Officer of Aclara;
§ Eduardo Hochschild and Ignacio Bustamante will be appointed to the Board of Aclara as Chairman and Director, respectively; and
§ Eduardo Noriega, currently Head of Group Finance, will succeed Ramon Barua as Hochschild Mining PLC Chief Financial Officer. Eduardo joined the Company in March 2007. As Head of Group Finance, Eduardo was responsible for financial planning and controls, treasury, corporate finance, and tax and accounting. Before joining the Company, Eduardo worked for Dell Inc., Union de Cervecerías Peruana Backus & Johnston and Del Mar Fishing Company, in different finance roles. Eduardo is a graduate in Business Administration from Universidad del Pacifico and holds an MBA from the University of Texas.
The person responsible for making this announcement on behalf of the Company is Raj Bhasin, Company Secretary.
Hochschild Mining PLC
Charles Gordon +44 (0)20 3709 3264
Head of Investor Relations
Charlie Jack +44 (0)207 796 4133
About Hochschild Mining PLC
Hochschild Mining PLC is a leading precious metals company listed on the London Stock Exchange (HOCM.L / HOC LN) and crosstrades on the OTCQX Best Market in the U.S. (HCHDF), with a primary focus on the exploration, mining, processing and sale of silver and gold. Hochschild has over fifty years' experience in the mining of precious metal epithermal vein deposits and currently operates three underground epithermal vein mines, two located in southern Peru and one in southern Argentina. Hochschild also has numerous long-term projects throughout the Americas.
The distribution of this announcement in certain jurisdictions may be restricted by law and, therefore, persons into whose possession this announcement comes should inform themselves and observe any such restrictions in relation to the Company's shares, the Aclara Shares and this announcement, including those in the paragraphs that follow. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. No action has been taken or will be taken in any jurisdiction that would permit possession or distribution of this announcement in any country or jurisdiction where action for that purpose is required. Accordingly, this announcement may not be distributed or published in any jurisdiction where to do so would breach any securities laws or regulations of any such jurisdiction or give rise to an obligation to obtain any consent, approval or permission, or to make any application, filing or registration. Failure to comply with these restrictions may constitute a violation of the securities laws or regulations of such jurisdictions.
This announcement does not constitute an offer to sell, subscribe or purchaser or the solicitation of an offer to sell, subscribe for or purchase any shares of the Company, any Aclara Shares or any other securities in any jurisdiction. The Aclara Shares have not been and will not be registered under the applicable securities law of Japan, Australia or the Republic of South Africa and, subject certain limited exceptions, may not be offered for sale or sold, directly or indirectly, in or into Japan, Australia or the Republic of South Africa. Prior to completion of the Demerger, Aclara intends to file a long form prospectus with the securities regulatory authorities in each of the provinces and territories of Canada (excluding Quebec) in order to qualify the distribution of the Aclara Shares issuable pursuant to the Demerger such that, following completion of the Demerger, all of the Aclara Shares issuable pursuant to the Demerger shall be freely tradeable in Canada and over the facilities of the Toronto Stock Exchange under applicable Canadian securities laws. The Aclara Shares have not been and will not be registered under the US Securities Act of 1933, as amended (the "US Securities Act"), or under the securities laws of any state or other jurisdiction of the United States and may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act. None of the US Securities and Exchange Commission, any other US federal or state securities commission or any US regulatory authority has approved or disapproved of the Aclara Shares nor have such authorities passed upon or endorsed the merits of the Aclara Shares or the accuracy or adequacy of this announcement. Any representation to the contrary is a criminal offence in the United States.
This announcement is not an offer or solicitation to purchase or invest in any securities of the Company or Aclara. It is not a prospectus within the meaning of the Swiss Financial Services Act or within the meaning of any securities laws or regulations of Switzerland. Neither this announcement nor any other offering or marketing material relating to the Company's shares or the Aclara Shares has been or will be filed with or approved by any Swiss regulatory authority.
Certain statements contained in this announcement that are not historical fact are "forward-looking" statements. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company's control and all of which are based on the Company's current beliefs and expectations about future events. Forward-looking statements are typically identified by the use of forward-looking terminology such as "believes", "expects", "may", "will", "could", "should", "intends", "estimates", "plans", "assumes" or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. In addition, from time to time, the Company or its representatives have made or may make forward-looking statements orally or in writing. Furthermore, such forward-looking statements may be included in, but are not limited to, press releases or oral statements made by or with the approval of an authorised executive officer of the Company. These forward-looking statements, and other statements contained in this announcement regarding matters that are not historical facts, involve predictions. No assurance can be given that such future results will be achieved; actual events or results may differ materially as a result of risks and uncertainties facing the Company and its subsidiaries. Such risks and uncertainties could cause actual results to vary materially from the future results indicated, expressed or implied in such forward-looking statements. The forward-looking statements contained in this announcement speak only as of the date of this announcement. The Company does not undertake any obligation publicly to update or revise any forward-looking statement as a result of new information, future events or other information, although such forward-looking statements will be publicly updated if required by law or regulation.
Nothing in this announcement should be construed as a profit forecast.
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (Regulation (EU) No.596/2014), as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.
- ends -