Kazera Global first invested in African Tantalum (Proprietary) Limited (“Aftan”) in 2014 when a 75% interest was acquired for £0.66 million. The remaining 25% was acquired in 2020 for a further £0.22 million. Aftan initially held a 60% interest in the Tantalite Valley Mine (“TVM”), located in South Eastern Namibia. This was increased to 100% in 2015.

In July 2022, Kazera announced an agreement to secure a non-dilutive US$7.5 million investment in return for a 49% stake in the Company’s marketing, sales, and export subsidiary for all lithium production from the TVM.

Subsequently, in December 2022, this was improved upon when Kazera announced that it had signed a definitive agreement to sell its 100% interest in Aftan to Hebei Xinjian Construction (“Xinjian”) for a cash consideration of US$13 million.

Full operational control passed to Xinjian on the transaction date, meaning Kazera would not have to incur any of the costs related to mining, transport or building a processing plant, however, the Agreement allowed for 100% ownership of the shares to be retained by Kazera, passing to Xinjian only on payment in full.

Whereas payments to date have enabled Kazera to invest in, and advance, its other investment projects without the need of accessing external funding, Xinjian is not in compliance with the sale agreement and also owed accrued interest of approximately US$260k at 30 June 2023.

Kazera has so far decided not to exercise its contractual rights to terminate the contract given that:

• Kazera retains 100% ownership of Aftan as security until all amounts owed by Xinjian have been paid in full;
• All ongoing operational costs in respect of the Aftan business are being borne by Xinjian and have been since the beginning of 2023;
• Communication between Kazera and Xinjian remains positive and constructive, and there is hope that further payments will be forthcoming; and
• Outstanding and overdue balances are accruing interest at a rate of 8% per annum.

In view of Xinjian’s non-compliance, Kazera is actively exploring alternative options for the future of Aftan which include:

• Terminating the contract and resuming full control of Aftan;
• Finding an alternative buyer for the project; or
• Selling Xinjian’s debt to a third party.

Importantly, Kazera still owns the underlying asset and will retain all payments received from Xinjian to date. Kazera also retains the right to receive a debenture payment equivalent to 2.5% of gross sales of produced Lithium & Tantalum for the life of the mine.