Medcaw Investments (LON: MCI) is considering acquiring a company with a lithium project in Southern Ethiopia. This is a change to the original plan for the standard list shell, which was going to acquire a life sciences business.
Abyssinian Metals Ltd (AML) has a 51% stake in the Kenticha lithium caesium tantalum project with the other 49% owned by the Oromia state. The project has a JORC, open-pit, inferred resource of 87.7mt at 0.78% Li2O with upside of up to 51mt. The grade could increase to up to 25%. Three higher grade starter pits have been identified.
Stage one is planned for 80,000tpa of 5.5% spodumene concentrate from a plant due to be commissioned by the end of 2023. A second plant is planned for the end of 2024. By 2025, it is estimated that annualised revenues could be $720m, assuming a sales price of $3,000/t and all in sustaining costs of $750/t.
AML already has a credit facility of $25m. The company has 100% of the marketing rights of production.
Due diligence will commence, and the two companies will work together to agree a potential offer for 100% of AML. The acquisition will be conditional on at least 51% acceptances.
Medcaw Investments raised £400,000 at 8p/share prior to trading in the shares being suspended. There was cash of £644,000 at the end of 2022. More cash will be required to finance the acquisition (although that could be via a share swap) and/or bringing the project into production.
