Speechly Bircham has advised Stratmin Global Resources Plc, the AIM-listed graphite exploration and production company, on its £25.5m acquisition of Graphmada Equity Pte Ltd, a related placing of £1.5m convertible loan notes and readmission to AIM.
Graphmada Equity is a Singaporean company which owns advanced stage graphite mining operations in Madagascar. It has recently completed the construction of a graphite processing plant at its principal Loharano project in eastern Madagascar and is scheduled to ramp up production over the next two quarters.
Demand for natural flake graphite has risen in recent years due to its relative scarcity, unique physical and chemical properties and its increasing importance in high-end technology applications. Indeed, on the day before the transaction completed, the FT ran a major article about graphene, a ground-breaking new material made from graphite.
Stratmin has acquired Graphmada for £25.5m to be satisfied through the issue of new shares in Stratmin.
The transaction was a reverse takeover under the AIM Rules and was subject to shareholder approval. The sellers of Graphmada were required to seek a "whitewash" waiver from the Takeover Panel of their obligation to make a mandatory offer for Stratmin under Rule 9 of the Takeover Code, which was also subject to shareholder approval.
In addition, Stratmin placed convertible loan notes raising £1.5m for working capital purposes and for the operation and further development of its graphite processing facility.
Following shareholder approval of the proposals, the enlarged group was admitted to trading on AIM on 29 January 2013 with a market capitalisation of approximately £30m.
In addition to the corporate work, Speechly Bircham also advised the company on a bespoke operating agreement relating to the mine and processing plant at Loharano, which has been designed to produce up to 12,000 tonnes of processed graphite each year.
Speechly's team was led by corporate partner Chris Putt, assisted by corporate associates Paul Arathoon, Jaspal Sekhon and Amelly Kok.
Commenting on the deal Chris Putt said "We are very pleased to have worked with Stratmin on what was a complex transaction across three jurisdictions. We are delighted that Stratmin has secured financing which will enable it to ramp up graphite production at Loharano over the coming months. Although market conditions remain challenging, this deal highlights that funding is still available for well-run companies with high quality projects. This is a major milestone for the company and we look forward to supporting them going forward."
Gobind Sahney, Executive Chairman of Stratmin, commented "We had been working with Speechlys on general corporate matters prior to our acquisition of Graphmada and found them to be the logical choice in guiding us through this complex process. Their support and guidance in our acquisition of the target and readmission was right on the mark. I look forward to working with Chris and his team as Stratmin grows".
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