Cauldron’s proposed acquisition of WA Sands Project to proceed with some amendments

Cauldron Energy Ltd’s (ASX:CXU) (OTCMKTS:CAULF) (FRA:UFX) proposed acquisition of the WA Sands Project comprising a number of river sand leases at the mouths of the Carnarvon, Onslow and Derby rivers in WA will proceed, but possibly with some amendments.  Onslow Resources Ltd’s mining lease application 09/150 and Quarry Park Pty Ltd’s mining lease 08/487 are both not material to the overall transaction and Cauldron will proceed with the acquisition of the remaining tenements whether or not each, or both, are ultimately included.  Approvals for acquisition On January 29, 2021, shareholders at Cauldron’s annual general meeting approved the issue of the 4 million initial payment shares, 8 million SPA Tranche 1 Shares and 8 million SPA Tranche 2 Shares to the vendors. On February 1, 2021, Cauldron issued the initial payment shares to the vendors as stipulated under the agreement. However, the SPA Tranche 1 shares and the SPA Tranche 2 shares have not been issued and are subject to the granted tenements and tenement applications respectively being transferred to Cauldron in good standing and free of encumbrance. Possible amendments to acquisition In the event that the two leases are deemed invalid, the parties have agreed that they may consider an adjustment to the initial share consideration to be paid to the vendors by Cauldron under the agreement, or a replacement of the tenement. As part of its due diligence prior to entering into the agreement, it was found that one of the tenements - MLA 09/150 - is listed as ‘dead’ on the register maintained by the Department of Mines, Industry Regulation and Safety of Western Australia. The ‘dead’ recording followed a decision in the Western Australian Supreme Court in the case Onslow Resources Ltd v The Minister for Mines and Petroleum [2020], in which the Justice determined that the application for ML09/150 was invalid. Onslow Resources is appealing this decision. MLA09/150 is not considered material to the overall transaction by Cauldron and the acquisition of the remaining tenements will proceed whether or not Onslow Resources succeeds in its appeal. Mining Lease 08/487 On January 22, 2021, proceedings were commenced against Quarry Park, the Mining Registrar, the WA Minister for Mines and Petroleum and the company, in relation to the validity of ML08/487. Following an interim hearing on January 27, 2021, an interim injunction was issued, which restricts the transfer of the tenement pending a decision on the injunction being handed down. Cauldron expects a decision will be delivered within a fortnight. While the company is confident there will not be any loss of ground, it does not consider ML08/487 to be material to the overall transaction by Cauldron and the acquisition of the remaining tenements will proceed whether or not ML08/487 is declared invalid. Not material to overall transaction Cauldron noted that the recent legal developments pertaining to the tenements were not considered necessary for disclosure under ASX listing 23.1 as they were not material to the overall transaction, and as such was not relevant to the resolutions approved by its shareholders. Further, its shareholders had voted 100% in favour of the WA Sands Project acquisition. The orders relating to the issue of interim injunction restricting transfer of the tenement ML08/487 was handed down post the proxies closing for the AGM, and even were this information released to market in the form of an ASX announcement prior to the AGM, it is the company’s view that the result of the resolutions would be unchanged. In the event there was a significant change to the initial share consideration payable to the vendors, Cauldron may consider whether to re-seek shareholder approval for issue of the SPA Tranche 1 shares and/or SPA Tranche 2 shares.