AusAmerican to buy Congo copper miner

On Friday Sept. 5, copper and gold focused resource company AusAmerican Mining Limited (ASX:AIW(“AusAmerican” or “the company”) reported that it has entered into a binding term sheet for an exclusive option to acquire a 77.58% interest in Shenglong International Investment Limited (“Shenglong”), a BVI (British Virgin Islands) company that is engaged in exploration and production of copper, lead and zinc in the Republic of Congo (“ROC”).

Shenglong owns 100% of a Congolese company called Societe Lulu De Mine which holds 90% of two Polymetalic exploitation permits titled M’Passa-Moubiri and Mindouli under which rights are granted over a total of 372km2. The exploitation permits are valid until 2036. The other 10% of the projects are owned by the Congolese Government (refer to the ASX announcement of 5th September 2014).

In addition to the information detailed in this announcement under the heading “”Details of the Transaction” the company wishes to disclose the following:

There is a clause in the binding term sheet that addresses the situation in which AIW is required by a potential financier to provide 100% of Shenglong’s interest in the project (90%, since the Congolese Government have the additional 10%) as security to the lender (AIW will have 77.58% of Shenglong, the vendor will retain 22.42%). In return for the vendor agreeing to provide his 22.42% interest in Shenglong as security for AIW’s loan, AusAmerican agrees to issue the vendor with the following;

1. 50,000,000 ordinary shares in AIW ; and

2. A convertible facility valued at US$24.89 million which will be deemed as fully paid up by the vendor. This facility will be interest free and will not be convertible for two (2) years from the date of issue. As the company distributes income from the project to the vendor (the company will have rights over 70% of the revenues from the project from the payment of the initial payment of the US$49 million; the vendor will have 20% of the revenue of the project and the Congolese government 10% of revenue) these funds will reduce the US$24.89 million outstanding under the convertible facility until this amount equals zero or the two year period is completed at which stage the vendor can convert the remaining dollar value of the facility into ordinary ASX shares at a conversion of the average previous three month VWAP of the shares in AIW.

Please note the issue of the shares and the convertible facility will only occur if the company is required to pledge 100% of Shenglong’s interest in the project as security and will only be converted if after two years the vendors share of income from the Moubiri project is less than US$24.98 million.