A sale and purchase agreement has now been entered into for the sale of IMX’s graphite assets, including the Chilalo Graphite Project, to Graphex Mining Limited (‘Graphex’), a new wholly owned subsidiary of IMX, pursuant to the asset restructure announced on 21 December 2015 (the ‘Restructure’).

The Restructure will see the Chilalo Graphite Project and IMX’s other graphite assets, transferred to Graphex, which will seek an ASX listing and have a focused strategy to progress the world-class Chilalo Project into production.

Under the terms of the sale agreement, in exchange for the portfolio of graphite assets, IMX will receive a cash payment of $1,000,000 and 16,454,000 Graphex shares (‘Graphex Shares’), representing 82.27% of Graphex’s Shares on issue prior to its initial public offering.

The remaining pre-IPO shares in Graphex will be held by MMG Exploration Holdings Limited, transferring their project-level interest to a corporate-level shareholding. On completion of the Restructure, with Graphex listed on the ASX, MMG’s holding of Graphex Shares will be subject to a 12 month escrow period.

IMX intends to transfer all of its Graphex Shares via an in-specie distribution to IMX shareholders on a pro-rata basis (‘In-specie Distribution’). The Company has applied for a private ruling from the Australian Taxation Office (‘ATO’) to confirm that there will be no adverse tax consequences of the In-specie Distribution.

A shareholders’ meeting to approve the sale of the graphite assets and the In-specie Distribution is expected to be held in April, with a notice of meeting (‘Notice of Meeting’) to be dispatched shortly.

IMX Managing Director Phil Hoskins commented, "This is a transformative transaction for IMX and its shareholders. We are committed to the restructure of our Tanzanian assets to create two distinct companies to simplify the value complexity of IMX, with Graphex, a pure play, graphite-focused entity, and IMX, a dedicated base and precious metals company.

"Having recently secured highly experienced mining professionals Stephen Dennis and Grant Davey to the Graphex board of directors, execution of the sale and purchase agreement and the upcoming shareholders’ meeting are important steps in delivering on that commitment."

Completion of the sale agreement and the In-specie Distribution are conditional on, among other things, the following:

IMX obtaining all necessary regulatory and shareholder approvals, including approval of the In-specie Distribution by IMX shareholders;

The parties obtaining all necessary governmental consents and approvals;

Receipt of a draft class ruling from the ATO confirming the availability of demerger relief;

Graphex completing a capital raising to meet ASX’s listing requirements; and

Graphex obtaining a conditional admission letter from the ASX.
Further information on the sale agreement and In-specie Distribution will be contained in the Notice of Meeting.

Conditional upon successful completion of the spin-out and In-specie Distribution, and in conjunction with its proposed ASX listing, Graphex will seek to raise a minimum of $4.25 million and up to $7.0 million, which is expected to include a priority offer to existing IMX shareholders (‘Graphex IPO’).

Given the proposed priority offering to IMX shareholders, the most effective means by which investors can secure an interest in Graphex, is to first become a shareholder of IMX.

The indicative issued and outstanding Graphex shares expected upon completion of the Restructure is shown in the table below.