Further to its ASX announcement of 5 January 2023, and withdrawal of its prospectus dated 19 October 2022 by way of a second supplementary prospectus (announced on 20 January 2023), Comet Resources Limited (Comet or Company) (ASX: CRL) is pleased to announce that it has executed an amended binding agreement to acquire 100% interest of the Mt Margaret Copper Project and associated regional tenements near Cloncurry, Queensland (Project or Mt Margaret) from Mount Isa Mines Limited, a wholly-owned subsidiary of Glencore Plc (Acquisition).

HIGHLIGHTS:

• Key Transaction points remain unchanged:
  • Comet to acquire 100% of Mt Margaret Copper Project from Glencore
    
  • Company to raise $27m to fund acquisition and initial post-acquisition pre- development activities, with the raise including a $5m priority offer to existing Comet shareholders
  • Glencore to provide 3-year loan of $27m to Comet – substantially reducing up front dilution for Comet shareholders
    
• Further improved transaction terms:
  • 49.975m options previously approved to be issued as part of the transaction will now not be issued
    
  • MMM New Shareholders, who will hold 52.3m shares, to enter into voluntary escrow agreements for 12-months following Comet’s re-listing
• Shaw and Partners and Aitken Mount Capital Partners appointed as each a Joint Lead Manager to the Offer joining Peloton Capital
• The Mt Margaret Copper Project successfully produced from open pit mining from 2012 until 2014, when operations were suspended due to the copper price environment and outlook at that time
• Located only 7km from key processing infrastructure at Ernest Henry, where Mt Margaret ore was previously processed into export quality copper concentrate
• JORC open-pit Resources of 13.0Mt at 0.78% copper and 0.24g/t gold with >95% in the Measured and Indicated categories¹
  
• Near-term production potential – 2 open pits already pre-stripped
• Significant potential for Resource growth through further exploration
• Defined high priority exploration targets – Both extensional and regional

Mt Margaret was a substantial past-producing copper mine that we’re able to acquire due to portfolio rationalisation of a global tier one miner. It contains existing Mineral Resources of 13.0Mt, with over 95% of this resource in the Measured and Indicated categories. Most of Mt Margaret’s Resource sits in two already pre-stripped open pits providing Comet with a reduced capex pathway to production. The new changes to the transaction structure provides further improvements for both existing and incoming shareholders alike and we look forward to closing the deal in Q1 of 2023.”

ACQUISITION OVERVIEW

Comet has entered into an amended and restated share sale agreement (MTM Acquisition Agreement) with Minerals Mining and Metallurgy Limited (ACN 645 972 309) (MMM), Mount Isa Mines Limited (ACN 009 661 447) (MIM) and Mount Margaret Mining Pty Ltd (ACN 150 366 224) (MTM) pursuant to which MIM has agreed to sell, and MMM has agreed to buy, 100% of the issued capital in MTM (MTM Shares). MTM is the owner of the Project. Neither MMM, MIM or MTM are related parties of the Company.

The consideration for the acquisition of the MTM Shares remains unchanged and is as follows:

(i) a non-refundable payment by MMM of $5,000,000 to MIM (paid on 18 February 2022);
(ii) on completion, the issue by Comet (such issue to be procured by MMM) of 25,000,000 fully paid ordinary shares in the capital of Comet (Shares) to MIM (or its nominee) (at an aggregate deemed issue price for those Shares of $0.20 per Share, equal to an amount of $5,000,000;
(iii) on completion, the issue by Comet (such issue to be procured by MMM) of 10,000,000 options exercisable at $0.30 per option on or before the date which is 5 years from issue; and
(iv) a 2% net smelter return royalty from the sale of any copper, gold or silver extracted, produced and sold from the Mount Margaret Project for the life of the mine.

At completion of the Acquisition, MIM has agreed to make a loan available to MMM in the amount of A$27,000,000 (the Loan) for the sole purpose of MMM using these funds to replace the Environmental Bond at completion. The difference between the current Environmental Bond liability of A$32,341,120 and the Loan amount will be funded by Comet from the proceeds of its capital raising. The addition of the Loan improves the transaction structure by reducing the size of the equity raise required to complete the Acquisition, thereby reducing up-front dilution to shareholders, and allows the Company time to advance and de-risk the project before further equity is raised. Options for re-payment of the Loan at maturity include future equity raises, repayment via alternative debt financing or cash flows from operations should the Company return the Project to production, or a combination thereof. A decision will be made on the method of repayment of the Loan in the future.

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