The aspiring seabed phosphate miner Chatham Rock Phosphate Ltd (TSX-V: NZP; NZAX: CRP) has entered a non-binding indicative term sheet with the New Zealand based company, Capital Trust Group Limited (CTG).
CTG is a FinTech company with expertise as a turn-key service provider for initial coin offerings (ICO) and asset digitisation, and is looking to expand these services into the mining and minerals sector.
In particular, CTG wants to identify, finance and develop mining projects using its blockchain based technologies and distribution networks.
Chatham Rock holds the Chatham Rise seabed phosphate nodules project and has extensive knowledge of other international phosphate projects to provide an industry basis for this expansion of CTG’s service offerings.
CRP said the intention of the term sheet is to provide an in-principle agreement as to how CRP and CTG could merge if sufficient investor interest can be generated for a merger.
It is intended that CRP and CTG will meet with investors to apprise them of this opportunity and seek indications of investment support at the end of this month.
If financial support is forthcoming, CRP and CTG will then look to complete due diligence on each other and negotiate binding arrangements. The current term sheet envisages that CRP would acquire CTG for an issue of shares representing 40% of CRP’s common stock.
In addition CTG shareholders would receive a three year earn-out on the basis of net revenues received under specified contracts that it currently has in place.
The transaction would proceed if $US10 million in finance can be secured for the merged entity. If this finance is secured, $US5 M would be dedicated towards advancing the Chatham Rise project towards a new marine consent application.