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Great Western Minerals (GWG.V) - acquisition of Less Common Metals Ltd
Comment by Objective Capital , Jun 09, 2008
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Great Western Minerals announced that it has signed a non-binding Letter of Intent to acquire all of the issued and outstanding shares of Less Common Metals Ltd. ("LCM") of Birkenhead, United Kingdom, subject to the required regulatory approvals in the UK and Canada. The purchase price of this acquisition is £4,000,000 or approximately C$7,800,000, with closing anticipated on 18 June 2008.
The purchase price of £4,000,000 will be satisfied as follows: (i) Great Western has obtained a senior debt facility of £2,700,000 secured against the assets of LCM, of which £2,000,000 will be applied to the purchase price, with the balance to be used as working capital for operations; and (ii) the issuance by GWMG of a £2,000,000 convertible debenture to the vendors of the LCM shares. GWMG will also issue 750,000 common share purchase warrants to the vendors.
Founded in 1992, LCM is a profitable, private company with excellent long-term relationships with many blue-chip market-leading customers across a wide range of industries including automotive, aerospace, nuclear and defence. One of LCM's key clients is Aichi Steel Corporation of Japan, one of the Toyota Group Companies. Aichi uses LCM products in high efficiency, low weight, permanent magnet motors for ancillary equipment used in the latest vehicles manufactured by Toyota.
LCM is a leading, global manufacturer and supplier of rare earth based alloys, high purity metals, and ultra-high-purity indium. Other specialty alloys produced at the state-of-the-art plant in Birkenhead include neodymium-iron-boron and samarium cobalt alloys for the permanent magnet industry, magneto-optic and magnetostrictive materials, hydrogen storage systems and master alloys used in the production of other specialty alloys. LCM's production of samarium cobalt accounts for 20% of global demand. Additional information about LCM can be obtained from www.lesscommonmetals.com.
Objective's view:
LCM is a private company and apart from the list of activities it carries out, which are in any case detailed above, not much is known about it, other than it is profitable.
For Great Western Minerals the purchase has logic in that it will provide a manufacturing outlet for its rare earth elements mining business in addition to its existing facility Great Western Technologies Inc. facility in Troy Michigan. LCM brings additional clients, an established business supplying materials to the battery industry all of whom will no doubt welcome an alternative source of supply for strategic materials.
