Denham Capital-backed Tremont Investments Limited has terminated its deal to acquire Cradle Resources, the Australia-listed niobium producer, according to a regulatory filing.
As an investment vehicle focused on Africa, Tremont called off the scheme implementation agreement it reached with Cradle Resources in March this year following some changes in Tanzania law and the imposition of inspection fee on the value of mineral exports by the local government.
“If the proposed changes are passed, amongst other things, the Tanzanian Government will be entitled to not less than a 16 per cent free carried interest in the shares of all mining companies. (…) Although significant uncertainty exists about the proposed changes, if passed without significant amendment they are likely to have an adverse effect on the project,” Cradle Resources explained.
The company added, as a result, it will continue to move forward with its Panda Hill Niobium Project.
Tremont is Cradle Resources’ 50:50 joint venture partner in this project. It had planned to take over the Australian firm for A$55 million (nearly $42 million). The energy investment fund has some 19.6 per cent of Cradle Resources, and the agreement, if implemented, was expected to increase Tremont’s underlying ownership in Panda Hill Niobium from 59.8 per cent to 100 per cent.
“The cash offer enables Cradle shareholders to realise immediate value for their Cradle shares and reflects the size, strategic nature and development potential of the Panda Hill Niobium Project,” the Australia company said in its March announcement, describing it a “compelling proposal”.
The transaction was initially expected to be implemented last month, with Tremont funding the total cash consideration using existing reserves and entitlements pursuant to funding arrangements entered into with its global energy private equity backer Denham Capital.