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(AIM:LMY)    

Lithic Metals and Energy Limited ("Lithic Metals" or "the Company")

Proposed Acquisition, Suspension of Trading, Change of Name

Further to the announcement on 4 September that, as part of its continuing strategic review, the Company was actively negotiating a potential merger with a larger company, the Board is pleased to announce its intention to acquire all of the issued shares of Amber Petroleum Ltd., a private company incorporated in the BVI. The Acquisition will constitute a reverse takeover pursuant to the AIM Rules. The Board is also pleased to announce that it has completed its strategic review. 

Accordingly, the Company intends as soon as possible to publish an admission document in accordance with the AIM Rules which will, inter alia, set out further details of the terms of the Acquisition and of the Company's New Business Strategy, and also seek approval by the Shareholders of the Acquisition and of the New Business Strategy at the SGM. 

Shareholder approval of the Acquisition is required pursuant to AIM Rule 14 and, although the New Business Strategy does not require shareholder approval, the Board believes that, because it would be an expansion of the Company's existing strategy, seeking shareholder approval is appropriate. At the SGM, approval to (i) convert all existing unissued preferred shares into ordinary shares; (ii) increase the Company's authorised share capital from £3,020,000 to £30,000,000 by the creation of an additional 2,698,000,000 ordinary shares of £0.01 par value each; and (iii) change the Company's name to AfNat Resources Limited will also be sought. 

Pending publication of the admission document in accordance with the AIM Rules, trading in the Company's shares has been suspended with effect from 7am on 29 October 2009. 

Based on current advice, the Board believes that the Acquisition will be completed, with the Enlarged Share Capital admitted to AIM before 31 December 2009.

Capitalised terms used throughout this announcement are defined at the end of the announcement. 

Further details of the proposed New Business Strategy

The Board is committed to creating an international mining and exploration group focused on investing in and acquiring and developing resource projects, including in particular uranium and nickel assets.  The proposed New Business Strategy reflects this commitment and would give the Directors greater flexibility to utilise the Company's cash reserves (and any cash reserves that come under the Directors' control if the Acquisition is completed) in what remain challenging market conditions.  

The New Business Strategy would, if approved, permit the Directors to continue to review and consider potential investments in nickel projects (the strategy outlined in the IPO Admission Document), but also permit different types of investment in projects and companies focussed on other types of natural resources, including in particular uranium, to which the Company has increased its exposure since the IPO Admission. The New Business Strategy would also give the Company the capacity to acquire strategic stakes in private or publicly traded companies with a focus on all types of natural resources as part of the Company's ordinary course of business.  Further details of the proposed New Business Strategy will be set out in the admission document to be published in due course. 

Further details on Amber

Amber is focused on investing in junior uranium mining and exploration companies, particularly those with direct or indirect interests in Namibia and, since the adoption of this strategy in May 2009, it has acquired minority interests in three companies: Bannerman Resources Limited, Niger Uranium Limited and West Australian Metals Ltd.  It also currently has cash balances totaling approximately US$2.55 million.  

Further details on the Acquisition

The Company has reached an agreement with the directors of Amber whereby, subject to the satisfaction of a number of conditions, the Company will acquire all of the issued shares of Amber. Pursuant to the terms of the Acquisition, Amber Shareholders will receive Consideration Shares with an implied aggregate value of approximately £9.48 million. The Consideration Shares will represent approximately 69.3 per cent. of the Enlarged Share Capital.

The Acquisition is to be implemented by means of a scheme of arrangement under section 179A of the BVI Business Companies Act.  Documentation has been filed at the Court that should, in due course, enable the implementation of the scheme of arrangement.

The Acquisition will constitute a reverse takeover under the AIM Rules and is therefore conditional (inter alia) upon the approval of Shareholders at a special general meeting. A reverse takeover also involves the cancellation of the Ordinary Shares from trading on AIM and a new application for the Enlarged Share Capital to be admitted to trading on AIM.

The Board believes the Acquisition will provide the Company with the opportunity to build a significant and diversified portfolio of interests in exploration and advanced stage assets that will add value for Shareholders in accordance with the proposed New Business Strategy. The Directors also believe that Amber's current equity investments will provide opportunities for a positive return as it is the Directors' belief that world demand for uranium, and consequently its price, will increase as a result of the projected growth in nuclear power generating capacity. The Acquisition will also increase existing cash resources, which will allow the Company to pursue additional investment opportunities in line with the New Business Strategy.

Change of Company Name

At the SGM, approval to change the Company's name to AfNat Resources Limited will also be sought. 

Suspension and cancellation 

As stated above, the Company intends to publish an admission document and, pending its publication in accordance with the AIM Rules, trading in the Company's shares has been suspended with effect from 7am on 29 October 2009. 

Following satisfaction of the final condition of the Acquisition (that is, the Court Order being filed with the BVI Registrar), in accordance with the AIM Rules trading on AIM of the Company's shares would be cancelled and it is intended that an application will be made which would enable the immediate re-admission to trading on AIM of the Enlarged Share Capital. 

Key Statistics

Key statistics on Admission are expected to be as follows:

Number of Ordinary Shares in issue prior to the Acquisition	126,297,197
Number of Consideration Shares to be issued and allotted pursuant to the Acquisition	285,426,846
Number of Ordinary Shares in issue immediately following completion of the Acquisition and Admission	411,724,043
Consideration Shares as a percentage of the Enlarged Share Capital	69.3 per cent.

City Code on Takeovers and Mergers

For the avoidance of doubt, the Company is not subject to the City Code and accordingly investors should be aware that they are not afforded the protections of the City Code.

Definitions used in this announcement

"Acquisition"	the proposed acquisition by the Company of the issued shares of Amber pursuant to the Scheme
"Admission"	the admission of the Ordinary Shares to trading on AIM becoming effective in accordance with the AIM Rules on implementation of the Scheme in accordance with its terms
"AIM"	the AIM market operated by London Stock Exchange plc
"AIM Rules"	the rules and guidance notes for companies with a class of securities admitted to AIM issued by the London Stock Exchange plc as in force at the date of this announcement
"Amber"	Amber Petroleum Ltd., a company registered and incorporated in the BVI with company number 1017685
"Amber Shareholders"	the holders of Amber Shares
"Amber Shares"	the issued shares of no par value of Amber
"Board" or "Directors"	the board of directors of the Company
"BVI"	the British Virgin Islands
"BVI Business Companies Act"	the BVI Business Companies Act 2004, as amended from time to time
"BVI Registrar"	the Registrar of Corporate Affairs in the BVI
"City Code"	the City Code on Takeovers and Mergers
"Consideration Shares"	285,426,846 Ordinary Shares to be issued fully paid to the Scheme Shareholders pursuant to the Scheme
"Court"	High Court of Justice of the Eastern Caribbean Supreme Court of the Virgin Islands
"Court Meeting"	the meeting of the Scheme Shareholders convened by order of the Court pursuant to section 179A of the BVI Business Companies Act to consider and, if thought fit, approve the Scheme, including any adjournment thereof
"Court Order"	the order of the Court sanctioning the Scheme under section 179A of the BVI Business Companies Act
"Enlarged Share Capital"	the Ordinary Shares in issue immediately following Admission
"IPO Admission"	the initial admission of Ordinary Shares to trading on AIM on 31 October 2005
"IPO Admission Document"	the admission document of the Company dated 28 September 2005 in relation to the IPO Admission (available on the Company website at www.lithicme.com)
"New Business Strategy"	means the proposed new business strategy of the Company, recommended by the Directors to the Shareholders for their approval at the SGM and more particularly set out in the admission document to be published in due course
"Ordinary Shares"	ordinary shares of £0.01 (one pence) each in the capital of the Company
"Scheme"	the scheme of arrangement for the implementation of the Acquisition under section 179A of the BVI Business Companies Act between Amber and the Scheme Shareholders, with or subject to any modification or addition thereto or condition approved or imposed by the Court and agreed by the Company and Amber
"Scheme Record Time"	6:00 pm on the Business Day immediately preceding the date of the hearing of the Court at which the Court Order is given
"Scheme Shareholder"	a person who appears as a holder of Scheme Shares in the register of members of Amber at Scheme Record Time
"Scheme Shares"	means the Amber Shares which will be purchased by the Company upon the Scheme becoming effective
"Seymour Pierce"	Seymour Pierce Limited, the Company's nominated adviser and broker, who is authorised and regulated in the United Kingdom by the Financial Services Authority
"Shareholder"	a holder of Ordinary Shares
"Special General Meeting" or "SGM"	the special general meeting of the Shareholders to be called to approve, inter alia, the Acquisition and the New Business Strategy

Enquiries:

Lithic Metals and Energy Limited	David de Jongh Weill, Chairman	T: +44 20 7881 0180
Seymour Pierce	Nicola Marrin Catherine Leftley	T: +44 20 7107 8000

 

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