MOU signed with Trafigura Pte Ltd
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED TO CONSTITUTE INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
3 February 2020
ADM Energy plc
("ADM" or the "Company")
MOU signed to create a proposed strategic alliance with Trafigura
that enables the development and financing of energy projects in Africa
ADM Energy PLC (AIM:ADME), an oil and gas investing company quoted on AIM, has entered into a non-binding memorandum of understanding ("MOU") with Trafigura Pte Ltd ("Trafigura"), a market leader in the global commodities industry whose core business is the physical trading of oil and petroleum products and metals and minerals, to develop investment opportunities in the African energy sector.
Under the terms of the MOU, it is the intention of ADM and Trafigura (together, the "Parties") to create a strategic alliance where ADM will act as the sponsor for investment opportunities in the African energy sector ("Projects") which will be presented to Trafigura for consideration as a trading counterparty, or financing provider.
ADM, as principal, will be responsible for originating, analysing, developing, structuring and negotiating the Projects with counterparties and presenting the Projects to Trafigura for further evaluation. Subject to a Project being approved by Trafigura ("Approved Project"), the Parties will negotiate a definitive agreement for each Approved Project.
Trafigura will be entitled to provide ADM with conditional pre-financing of up to US$100 million for the acquisition or development of Approved Projects. It is anticipated that Trafigura may subscribe for up to US$20 million in convertible loan notes in ADM as definitive agreements and project funding for Approved Projects are agreed.
Subject to any financing provided, Trafigura will have the exclusive rights to market the crude oil produced by the Approved Project on market terms and for an agreed period. In addition, ADM and Trafigura will cooperate to structure and arrange complementary debt and equity funding for approved projects as may be required to supplement any financial support provided by Trafigura.
The MOU, which has a term of 12 months unless terminated earlier by mutual agreement, constitutes a statement of current intentions and is not legally binding on ADM or Trafigura. There is no certainty that projects originated by ADM will be approved by Trafigura for financing and, as ADM is currently an Investing Company pursuant to the AIM Rules, the obligations it may be required to perform under any eventual agreement, if entered into, may trigger a reverse takeover pursuant to Rule 14 of the AIM Rules.
Osamede Okhomina, CEO of ADM, said: "I have enjoyed a long relationship with Trafigura and this Memorandum of Understanding is an endorsement of the Company's strategy, signalling a new stage of development for ADM. We have identified a number of excellent investment opportunities in Nigeria and West Africa. With our extensive network, and the potential access to capital this MOU gives to ADM, we believe the Company is well positioned to capture future opportunities."
James Josling, Head of Africa Energy Trading for Trafigura, said: "Trafigura has been active in Africa for more than 20 years, helping African producers and refiners of oil, metals and minerals finance their operations, manage their exports and ultimately connect with their end customers around the world. Today's signing shows our intention to work with an upstream investing company that has strong roots in Nigeria and West Africa, and is well placed to develop its potential while being committed to practicing good corporate governance as evidenced by ADM's London quotation."
For further information please contact:
ADM Energy plc
+44 20 7786 3555
Osamede Okhomina, CEO
Cairn Financial Advisers LLP
+44 20 7213 0880
Jo Turner, James Caithie
Fox-Davies Capital Ltd
+44 20 3884 8450
Daniel Fox-Davies, Lionel Therond
Pello Capital Limited
+44 20 3700 2500
+44 20 7618 9100
Harry Chathli, Alexis Gore, Joe Quinlan
About ADM Energy plc
ADM (AIM:ADME) is a natural resources investing company with an existing asset base in Nigeria. ADM holds a 5% equity investment in the Aje Field, part of OML 113, which covers an area of 835 sq km offshore Nigeria. Aje has multiple oil, gas and gas condensate reservoirs in the Turonian, Cenomanian and Albian sandstones with five wells drilled to date.
ADM is seeking to build on its existing asset base in Nigeria and target other investment opportunities across the West African region in the oil and gas sector with attractive risk reward profiles such as proven nature of reserves, level of historic investment, established infrastructure, route to early cash flow and exploration upside. www.admenergyplc.com
About Trafigura Pte Ltd.
Founded in 1993, Trafigura is one of the largest physical commodities trading groups in the world. Trafigura sources, stores, transports and delivers a range of raw materials (including oil and refined products and metals and minerals) to clients around the world. The trading business is supported by industrial and financial assets, including 49.3 percent owned global oil products storage and distribution company Puma Energy; global terminals, warehousing and logistics operator Impala Terminals; Trafigura's Mining Group; and Galena Asset Management. The Company is owned by over 700 of its 8,000 employees who work in 80 offices in 41 countries around the world. Trafigura has achieved substantial growth over recent years, growing revenue from USD12 billion in 2003 to USD 171.5 billion in 2019. The Group has been connecting its customers to the global economy for more than two decades, growing prosperity by advancing trade. www.trafigura.com
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