Sales of Lithium Assets; Binding Heads-Replacement

29 August 2019

Two Shields Investments plc

("TSI", or the "Company")

Sales of Lithium Assets

Binding Heads of Agreement

The issuer advises that the following replaces the "Sales of Lithium Assets; Binding Heads of Agreement" announcement 2497K which was released at 09:33 am on 27 August 2019.

The content has been updated due to an incorrect figure attributed to the carrying value (per the 2018 Accounts) for the Mali based lithium assets. The correct figure is £1,512,000, as opposed to the £1,650,000 previously indicated.  All other details remain unchanged.

The full corrected version is shown below.   

Two Shields Investments plc, the AIM quoted investment company with a strategy to build a high quality portfolio of investments in fast growing and scalable digital and technology enabled businesses, is pleased to announce that binding heads of agreement ("Heads of Agreement") have been signed with Leopard Lithium Pty Ltd ("Leopard Lithium"), an Australia registered private company, to sell TSI's interests in Nashwan Holdings Ltd ("Nashwan") and Mansa Lithium Inc ("Mansa"). The two binding Heads of Agreement set out the terms upon which Leopard Lithium agrees to acquire 100% of the issued shares in both Nashwan and Mansa (the "Transactions"). 

TSI currently directly holds 30% of the issued share capital of Nashwan, and indirectly holds 40% of the issued share capital of Mansa through its 40% holding of Xantus Inc ("Xantus"), the parent company of Mansa.  Effectively, the Transactions result in all of the Mali based Lithium permits and licences that Nashwan and Xantus (through its 100% subsidiary Mansa) hold being transferred to Leopard Lithium.

In year ended 31 March 2018, Nashwan posted a loss of US$10,668 on turnover of US$0, and had net liabilities of US$10,568.

In year ended 31 March 2018, Xantus posted a loss of US$15,000 on turnover of $0 and had net assets of $US864,000 

Under the Heads of Agreement, TSI will receive consideration of 531 shares in Leopard Lithium - which represents a shareholding of approximately 26.5% of the shares in issue.  Following completion of the Transactions, Leopard Lithium will own 100% of the issued share capital of both Nashwan and Mansa and will be run by an experienced team committed to take the projects forward.  Additionally, the Company understands it intends to raise funding, most likely via an IPO on to the Australian Securities Exchange ("ASX") in due course.

TSI will retain its 40% holding in Xantus which owns four Lithium exploration permits in Niger.  However, TSI has no intention to provide further funding to exploration activities in Niger at this stage and is seeking partners to sell or farm out these assets. 

The vendors of Nashwan and Mansa (Xantus and TSI) will receive in aggregate 1,475 shares in Leopard Lithium as consideration for the Transactions, which represents 73.75% of the issued share capital of Leopard Lithium as at the date of the Heads of Agreement.  As a result, upon completion of the sale of Nashwan and Mansa, TSI will hold a total of 531 shares in Leopard Lithium, which represents approximately 26.5% of Leopard Lithium's share capital as at the date of the Heads of Agreement. The Company intends to retain these shares. A summary of the Transactions is set out in the Appendix.

Leopard Lithium has confirmed to the Board that it intends to further develop the lithium licences and in the coming months will trial some cutting-edge exploration techniques developed in Australia for finding and defining sub cropping ore bodies. Ironside Capital Pty Ltd ("Ironside Capital") has been appointed as Corporate Advisor to Leopard Lithium. Ironside Capital has previously been Corporate Advisor to Mali based lithium developer Mali Lithium Limited (https://malilithium.com/) and has acted as lead manager in raising over AUD$25m for exploration and development funding.

Ben Phillips is a director of Leopard Lithium and a corporate executive at Ironside Capital and has over 15 years' experience providing consultation for a broad spectrum of industries including Oil and Gas, Resources, MedTech and Defence. Mr. Phillips advises departments ranging from R&D and exploration through to production, commercialisation and sales. Mr. Phillips role at Ironside Capital is focused on the structure of funding and new management for small-cap companies both private and public. Mr. Phillips has worked for Ironside Capital since the company's incorporation in 2014, having previously held a position at Merchant Corporate Finance.

TSI will have no ongoing working capital commitments to these projects.  Furthermore, Leopard Lithium is intent on identifying further battery metals and gold projects that could be acquired either pre or post an IPO transaction. 

The sale will complete following the signing of definitive sale and purchase agreements, which are expected to take place in the coming days, and fulfilment of various conditions (as set out in the Appendix below) within 6 months of signing of the Heads of Agreement.

As the transaction has been undertaken on a share for share basis no consideration value has been explicitly set out in the Heads of Agreement.

TSI's 40% stake in Mansa Lithium was acquired in July 2017 (as set out in the 3 July 2017 and 26 July 2017 RNS announcements) by the issue of 100,000,000 ordinary shares in the Company ("Ordinary Shares"), and was shown at a value of £560,000 in the Company's most recent audited accounts for the year ended 31 March 2018 ("2018 Accounts").

TSI's 40% stake in Xantus was acquired in November 2017 (as set out in the 30 November 2017 RNS announcement) by the issue of 125,000,000 Ordinary Shares, and was shown at a value of £537,500 in the 2018 Accounts.

TSI's 30% stake in Nashwan was acquired in January 2018 (as set out in the 30 March 2017 and 3 January 2018 RNS announcements) for consideration of £352,500 by the issue of 75,000,000 Ordinary Shares in the Company and payment of £200,000, and was shown at a value of £352,500 in the Company's audited accounts for the year ended 31 March 2018.

Accordingly, the carrying value (per the 2018 Accounts) for the Mali based lithium assets totals £1,512,000.  While the Directors believe that long term this transaction offers shareholders an enhanced upside they have prudently decided to revise the carried value of the assets proportionately downward to reflect the effective dilution to Leopard Lithium and therefore have reduced the carrying value of the Mali based lithium assets to £1,140,000 in total. The Directors have no intention for TSI to fund these legacy mining assets in the Company and believe that the deal with Leopard Lithium represents the best opportunity to maximise the Mali lithium assets for the benefit of all shareholders.  TSI looks forward to informing the market on the final completion of the Transactions in the near future.

Chairman of TSI, Andrew Lawley, said:

"The signing of these binding Heads of Agreement represents further progress from the TSI Board in delivering on its stated strategy of divesting its legacy commodity-based assets.  This will further enable the Board to concentrate its efforts and cash resources on creating value from our portfolio of high growth, disruptive, technology based investments that form the core of strategic focus moving forward.  We are pleased that Leopard Lithium has committed to further develop the prospective lithium licences.  Ben Phillips and the team at Ironside Capital are well placed to exploit the licence opportunities to their fullest extent and we look forward to further news of their progress in these endeavours.  We firmly believe that this course of action will ensure the best possible outcome for TSI shareholders in relation to its current holdings in Nashwan and Mansa licence opportunities."

This announcement contains inside information for the purposes of article 7 of the Market Abuse Regulation (eu) 596/2014.

-Ends-

For further information please visit https://twoshields.co.uk/ or contact:

Notes to Editors:

Two Shields Investments plc, the AIM quoted investment company with a strategy to build a portfolio of high-quality investments in fast growing, scalable digital and technology enabled businesses, including those in the cyber security, e-commerce services and consumer sectors.  The Company has appointed an experienced Board of Directors with a proven pedigree in the origination, acquisition, development & sale of projects and creating value for shareholders.  The investment mandate covers unquoted and quoted businesses, as well as direct project investment. Where appropriate the Board will apply its extensive combined experience to directly support investee businesses achieve their growth potential.

Appendix

Mansa Lithium Inc Transaction

Following the investment announced by the Company on 26 July 2017 (https://polaris.brighterir.com/public/blenheim_natural_resources/news/rns/story/rdvg58r) Xantus Inc (a company registered in the BVI which the Company holds 40% of the issued share capital) ("Xantus") entered into binding heads of agreement (the "Mansa Agreement") between (1) Xantus, (2) Leopard Lithium Pty Ltd (ACN: 154 897 239) (the "Buyer") and (3) Future Fuels Holdings Inc (CRN: 1945170) ("FFH") on 26 August 2019 (the "Signing Date"). The parties may, but are not bound to, replace the Mansa Agreement with a replacement share sale agreement which will replace and supersede the Mansa Agreement.

The Mansa Agreement relates to Mansa Lithium Inc., a company incorporated in the British Virgin Islands, ("Mansa") which is a 100% owned subsidiary of Xantus. Mansa, through Xantus Mali SARL (a company incorporated in Mali) ("Xantus Mali") (the entire issued share capital of which is to be transferred from Xantus to Mansa) and Mansa Exploration SARL (a company incorporated in Mali) ("Mansa Mali") (which is a 100% owned subsidiary of Mansa), is or will immediately prior to Completion be the beneficial owner of the Soumaya Exploration Permit, Dieba North Exploration Licence and Dieba Exploration Permit (together, the "Mansa Projects").

Pursuant to the terms of the Mansa Agreement, Xantus is to sell the entire issued share capital of Mansa to the Buyer (the "Mansa Transaction") in consideration of being issued 885 ordinary shares in the share capital of the Buyer (the "Mansa Consideration Shares"). The Mansa Consideration Shares as at the Signing Date would represent 44.25% of the share capital of the Buyer (calculated on a fully diluted basis). The Company is to receive 354 of the Mansa Consideration Shares at completion of the transaction ("Closing").

The Mansa Agreement provides for split exchange and completion, with Closing conditional upon (the "Conditions"), inter alia:

·    Legal and financial due diligence of Xantus, Mansa, Xantus Mali, Mansa Mali and the Mansa Projects (together the "Mansa Targets");

·    Xantus obtaining any necessary regulatory approvals with respect to the Mansa Targets arising from the change of control as a result of the Closing of the Mansa Transaction;

·    There being no material adverse change in Xantus and the Mansa Targets;

·    There being no breach of warranties by Xantus.

The Conditions must be satisfied or waived by the Buyer by the long-stop date falling 6 months from the date of the Mansa Agreement.

Xantus provides various customary warranties and representations in relation to the Mansa Targets and Xantus. In return, the Buyer provides various representations and warranties in relation to the Buyer relating to, inter alia, the nature of the Consideration Shares and the capacity of the Buyer. Each of Xantus' and the Buyer's warranties and representations are on an indemnity basis.

The liability of the parties arising from the Mansa Agreement is limited to AUS $885,000 and any warranty claims are subject to a time limit of 18 months from Closing.

During the interim period until Closing, Xantus provides customary undertakings not to, and to procure the Mansa Targets will not, inter alia, declare any distributions, amend the capital structure of any of the companies or fail to meet any on-going obligations with respect to the Mansa Projects.

FFH is the guarantor of the obligations of Xantus arising from the Mansa Agreement.

The Mansa Agreement is governed by the laws of Western Australia.

Nashwan Holdings Ltd Transaction

Following the investment announced by the Company on 30 March 2017 (https://polaris.brighterir.com/public/blenheim_natural_resources/news/rns/story/w074qzx)  the Company entered into binding heads of agreement (the "Nashwan Agreement") between (1) the Company, (2) Leopard Lithium Pty Ltd (ACN: 154 897 239) (the "Buyer") and (3) Future Fuels Holdings Inc (CRN: 1945170) ("FFH") on 2       6 August 2019 (the "Signing Date") . The parties may, but are not bound to, replace the Nashwan Agreement with a replacement share sale agreement which will replace and supersede the Nashwan Agreement.

The Nashwan Agreement relates to Nashwan Holdings Ltd, a company incorporated in the Seychelles, ("Nashwan"), through its 100% owned subsidiary, Nashwan Mali SARL (a company incorporated in Mali) ("Nashwan Mali"), which is the beneficial owner of the Meniambala Exploration Permit and Djidje Exploration Permit (together, the "Nashwan Projects") located in Mali. The Company holds 30% of the issued share capital of Nashwan with the balance of 70% being held by FFH.

Pursuant to the terms of the Nashwan Agreement, the Company and FFH (the "Sellers") are to sell the entire issued share capital of Nashwan to the Buyer (the "Nashwan Transaction") in consideration of being issued 590 ordinary shares in the share capital of the Buyer (the "Nashwan Consideration Shares"). The Nashwan Consideration Shares as at the Signing Date would represent 29.5% of the share capital of the Buyer (calculated on a fully diluted basis). The Company is to receive 177  of the Nashwan Consideration Shares at completion of the transaction ("Closing").

The Nashwan Agreement provides for split exchange and completion, with Closing conditional upon (the "Conditions"), inter alia:

·    Legal and financial due diligence of the Sellers, Nashwan, Nashwan Mali and the Nashwan Projects (together the "Nashwan Targets");

·    The Sellers obtaining any necessary regulatory approvals with respect to Nashwan Targets arising from the change of control as a result of the Closing of the Nashwan Transaction;

·    There being no material adverse change in the Sellers and the Nashwan Targets;

·    There being no breach of warranties by the Sellers.

The Conditions must be satisfied or waived by the Buyer by the long-stop date falling 6 months from the date of the Nashwan Agreement.

The Sellers provide various customary warranties and representations in relation to the Nashwan Targets and the Sellers. In return, the Buyer provides various representations and warranties in relation to the Buyer relating to, inter alia, the nature of the Consideration Shares and the capacity of the Buyer. Each of the Sellers' and the Buyer's warranties and representations are on an indemnity basis.

The liability of the parties arising from the Nashwan Agreement is limited AUS $590,000 and any warranty claims are subject to a time limit of 18 months from Closing.

During the interim period until Closing, the Sellers provide customary undertakings not to, and to procure the Nashwan Targets will not, inter alia, declare any distributions, amend the capital structure of any of the companies or fail to meet any on-going obligations with respect to the Nashwan Projects.

The Nashwan Agreement is governed by the laws of Western Australia.