Appia Signs Letter Agreement to Acquire up to a 70% Interest in a Prospective Brazilian Rare Earths Ionic Clay Project
Appia Signs Letter Agreement to Acquire up to
a 70% Interest in a Prospective Brazilian Rare
Earths Ionic Clay Project
Toronto, Ontario--(Newsfile Corp. - March 7, 2023) -
Appia Rare Earths & Uranium Corp.
(CSE: API)
(OTCQX: APAAF) (FSE: A0I0) (FSE: A0I0.F) (FSE: A0I0.MU) (FSE: A0I0.BE)
(the "Company" or
"Appia")
is pleased to announce that the Company has signed a Letter Agreement (the "
Letter
Agreement
") with 3S LTDA ("
3S
") and Beko Invest Ltd. ("
Beko
") to acquire up to a 70% interest in the
PCH Project (the "
Transaction
") located in the Tocantins Structural Province of the Brasília Fold Belt,
Goiás State, Brazil (the "
Target Property
").
The Cachoeirinha Project (PCH Project) is located within the Tocantins Structural Province in the
Brasília Fold Belt, more specifically, the Arenópolis Magmatic Arc. The PCH Project is 17,551.07 ha. in
size and located within the Goiás State of Brazil. It is classified as an alkaline intrusive rock occurrence
with highly anomalous REE and niobium mineralization. This mineralization is related to alkaline
lithologies of the Fazenda Buriti Plutonic Complex and the hydrothermal and surface alteration products
of this complex by supergene enrichment in a tropical climate. The positive results of the recent
geochemical exploration work carried out to date indicates the potential for REE and Niobium within
lateritic ionic adsorption clays.
Highlights:
Appia is very excited to have entered into the Letter Agreement to secure this high potential
property in Brazil. Our target is Heavy REEs in ionic clays and if Appia is successful in identifying
such a target, it would make Appia one of the few known critical REE companies in the world to
have both light and heavy REE assets.
A number of professional consultants with direct ionic clay expertise have been contacted to bring
together a project team suited for this specialized project.
Appia will take the next 90 days to complete its due diligence on the properties prior to finalizing
this option agreement.
"Ionic adsorption clays are the main source of the critical rare earth permanent magnet metals,
dysprosium and terbium," stated Stephen Burega, President of Appia. "Today China controls essentially
all of the production of these metals, originally due to the exploitation of its own domestic extensive fields
of ionic adsorption clays and now through the control of the same types of formations in Myanmar. The
production and use of dysprosium and terbium to modify rare earth permanent magnets so that they can
withstand extreme temperature cycling without significant loss of magnetic strength is thus under
Chinese control."
He continued, "The best hope for non-Chinese manufacturers of rare earth permanent magnets for
military and civilian use in high temperature (cycling) environments is the discovery and exploitation of
ionic adsorption clays not under Chinese control. This has already occurred in Brazil, where an American
owned private company is bringing an ionic clay deposit into production. Its plan is to produce some
2000 tpa of the core magnet metals, neodymium and praseodymium, and 200 tpa of dysprosium by the
end of 2026."
"The non-Chinese global OEM manufacturing industry is in great need of non-Chinese controlled
sources of rare earth magnetic materials," stated Tom Drivas, CEO and Director of Appia.
"The most
pressing need is for dysprosium and terbium. A new discovery of an ionic clay deposit in Brazil would be
one of the most important events in non-Chinese rare earth sourcing in the last several years."
Ionic clays produce the some of the cleanest heavy and light critical rare earths in the market,
representing simple metallurgy, low or no radioactive exposure, and no crushing, milling, or tailings damn
required for extraction.
Letter Agreement Terms and Conditions
Appia has the option to earn a 60% interest in the Target Property by issuing an aggregate of 2.5 million
common shares of Appia to Beko and spending US$10 million on the Target Property over a period of
five (5) years. If Appia earns its 60% interest, it will then be obligated, within 90 days of earning its 60%
interest, to issue a further US$1,250,000 of common shares of Appia to Beko to earn a further 10%
interest. Upon earning a 70% interest, Appia will grant to Beko a 1% net smelter returns royalty (the "
1%
NSR
") in the Target Property. Appia will have a right of first refusal to acquire the 1% NSR. Thereafter,
Appia and Beko will enter into a joint venture with respect to the further exploration and development of
the Target Property (the "
Joint Venture
") with Appia holding a 70% interest and Beko holding a 30%
interest in the Joint Venture. Upon the formation of the Joint Venture, Beko will have 90 days within which
to elect to either (a) participate in the Joint Venture and contribute its pro rata share of expenditures or
be diluted; (b) sell all of its 30% interest in the Joint Venture, subject to a right of first refusal in favour of
Appia; or (c) elect to have Appia fund its pro rata share of expenditures pursuant to the Joint Venture
subject to the right of Appia to be reimbursed for 150% of the expenditures made by Appia on behalf of
Beko.
The Transaction is subject to satisfactory completion of a due diligence review of 3S, Beko and the
Target Property by Appia. Appia will have 90 days to complete its due diligence review. The execution of
the Letter Agreement will be followed by the good faith negotiation of formal documentation, including a
definitive agreement (the
"Definitive Agreement"
) between the parties, setting forth the detailed terms
of the Transaction, including the terms set out in the Letter Agreement and such other terms and
conditions as are customary for transactions of the nature and magnitude contemplated herein. All
documentation shall be in form and content satisfactory to each party and their respective counsel. The
final structure of the Transaction will be determined after each of Appia and 3S / Beko have had the
opportunity to consider all legal, tax and securities elements of the Transaction in order to ensure the
most efficient structure for each of the parties and their respective security holders. It is anticipated that
on the closing of the Transaction, to occur on or before June 9, 2023 (the "
Closing
"), the Target
Property will be transferred by 3S to and held by a newly incorporated Brazilian company ("
NewCo
")
with Appia holding a 70% interest in NewCo and Beko holding a 30% interest in NewCo subject to
Appia earning its 70% interest as provided herein. The Joint Venture will be governed by the terms of a
unanimous shareholders agreement between Appia and Beko which will govern the relationship of the
parties to the Joint Venture.
Appia will acquire incremental vested interests in the Target Property upon completion of specific
expenditure requirements pursuant to the terms of the Letter Agreement.. Provided Appia issues at least
1 million common shares to Beko and spends at least US$1 million on the Target Property (at which
time it will have earned a 10% legal and beneficial ownership interest in the Target Property), Appia can
elect to cease funding the PCH Project and will have earned an interest in NewCo based upon the
expenditures made to the date of the election (the "
Earned Interest
") and the interest of Beko in NewCo
will be adjusted to 100% minus the Earned Interest. The parties will then determine how they wish to
proceed with their respective interests in NewCo.
The Transaction is subject to the fulfillment of certain conditions precedent as are customary for
transactions of this nature including compliance with the rules of the Canadian Securities Exchange. If
the Definitive Agreement has not been executed by the Closing Date, the terms of the Letter Agreement
shall govern the rights of the parties.
The technical content in this news release was reviewed and approved by Dr. Irvine R. Annesley, P.Geo,
Vice President of Exploration, and a Qualified Person as defined by National Instrument 43-101.
About Appia Rare Earths & Uranium Corp. (Appia)
Appia is a publicly traded Canadian company in the rare earth element and uranium sectors. The
Company is currently focusing on delineating high-grade critical rare earth elements and gallium on the
Alces Lake property, as well as exploring for high-grade uranium in the prolific Athabasca Basin on its
Loranger, North Wollaston,Eastside and Otherside properties. The Company holds the surface rights to
exploration for 113,837.15 hectares (281,297.72 acres) in Saskatchewan. The Company also has a
100% interest in approximately 12,545 hectares (31,000 acres), with rare earth element and uranium
deposits over five mineralized zones in the Elliot Lake Camp, Ontario.
Appia has 130.5 million common shares outstanding, 153.8 million shares fully diluted.
Cautionary Note Regarding Forward-Looking Statements: This News Release contains forward-
looking statements which are typically preceded by, followed by or including the words "believes",
"expects", "anticipates", "estimates", "intends", "plans" or similar expressions. Forward-looking
statements are not a guarantee of future performance as they involve risks, uncertainties and
assumptions. We do not intend and do not assume any obligation to update these forward- looking
statements and shareholders are cautioned not to put undue reliance on such statements.
Neither the Canadian Securities Exchange nor its Market Regulator (as that term is defined in the
policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.
For further information, please contact:
Tom Drivas, CEO and Director: (cell) 416-876-3957, (fax) 416-218-9772 or (email)
Stephen Burega, President: (cellular) 647-515-3734 or (email)
Irvine R. Annesley, Ph.D., P.Geo., Vice-President, Exploration: (tel.) (416) 546-2707 or (email)
To view the source version of this press release, please visit
https://www.newsfilecorp.com/release/157516