TIDMGRL
RNS Number : 1874G
Goldstone Resources Ltd
16 March 2020
16 March 2020
GOLDSTONE RESOURCES LIMITED
("GoldStone" or the "Company")
Funding of up to US$4.3 million to commence production
GoldStone Resources Limited (AIM: GRL), the West and Central
Africa focused gold exploration and development company quoted on
AIM, is pleased to announce that it has raised, in aggregate, up to
US$4.3 million (c.GBP3.4 million) of funding from certain new and
existing investors (the "Fundraise") to finance the advancement of
its Akrokeri-Homase Gold Project ("AKHM") into production.
Summary
-- Fundraise of up to US$4.3 million
- Issue of twenty six 14% unsecured bond notes of US$50,000 each
to certain existing and new investors, to raise, in aggregate,
US$1.3 million (c.GBP1.0 million) (the "Bonds") before expenses
-- Paracale Gold Limited ("Paracale Gold") and BCM Investments
Limited ("BCM") have each subscribed for Bonds with a value of
US$0.3 million respectively
-- 52 million warrants, exercisable at 3 pence per ordinary
share of 1 penny each in the Company ("Ordinary Share") (the
"Exercise Price"), to be issued to the Bond subscribers
-- Commission of 3% payable to Bond holders
- Subject to formal loan documentation being agreed and security
being granted, issue of 14% secured gold loan of up to 2,000 troy
ounces of gold at a price of US$1,500 per troy ounce, equating to a
value of US$3.0 million (c.GBP2.4 million) before expenses to Asian
Investment Management Services Ltd ("AIMS") (the "Gold Loan")
-- 200 troy ounces (US$300,000) available to be drawn immediately
-- Further 1,800 troy ounces (US$2.7 million) to be made
available, subject to entering into formal loan documentation and
security being granted over the assets of the Company
-- 120 million warrants, exercisable at the Exercise Price to be issued to AIMS
-- The Fundraise will enable the Company to start mining the
Homase South Pit and construct the heap leach plant
- Mining operations will start immediately the environmental
permit is issued using contract mining for the open pit
- Application for the environmental permit has been submitted
and expected to be approved within the next three months
- Low cost cyanide heap leach processing facility to produce, in
the first instance, loaded carbon for onward treatment
- Mining lease for the Homase South Pit and land for the plant
and process operation awarded, as announced on 14 February 2020
("Mining Lease")
-- Agreement reached with Cherry Hill Mining Limited ("Cherry
Hill"), pursuant to which Cherry Hill has relinquished its
remaining 10% interest in the Homase licence in exchange for a 2%
royalty of gold sales generated, less all costs and taxes and
duties in accordance with the joint venture agreement.
Emma Priestley, CEO of GoldStone, commented: "I am very pleased
to announce this US$4.3 million funding package and welcome AIMS as
a co-investor alongside Paracale Gold and BCM, who have continued
to support this project. Supporting the existing shareholders, AIMS
have recognised the growth opportunity that the development of the
AKHM project will bring to the Company and the Board thanks them
for their support. I look forward to updating shareholders in due
course as we progress the development of AKHM and move into
production and achieve cashflows during 2020 ."
Further information
The Fundraise
The net proceeds of the Fundraise will enable GoldStone to now
move forward rapidly with the development of the Homase South Pit
and the construction of a low cost cyanide heap leach facility,
with the aim of achieving production during H2 2020.
Following the granting of the Mining Lease, as set out in
Definitive Economic Plan ("DEP"), announced on 27 June 2019, the
Company will be targeting the shallow, free dig mining of the
oxide/weathered ore zones at the Homase South Pit. The Company will
now begin work on advancing the project, including selecting a
mining contractor and appointing a preferred engineering,
procurement, construction, management ("EPCM") provider so that the
Company is ready to move forward with the construction of the low
cost cyanide heap leach facility following the drawdown of the Gold
Loan in full and grant of the environmental permit.
Initially, the Company will seek to produce loaded carbon, which
the Company may then elect to toll treat at an existing third-party
facility within Ghana. Subject to further funding, the Company may
consider expanding its processing facility to include an elution
plant and gold room, meaning that it would be able to produce gold
dore.
In addition, the Company has now submitted the application for
the requisite environmental permit in respect of AKHM to the
Minerals Commission and Environmental Protection Authority in Ghana
and the board of GoldStone (the "Board") expects that the
environmental permit will be awarded within the next three
months.
The Board believes that the Fundraise is an extremely positive
step for the Company and its shareholders as it enables the Company
to go into production and achieve cashflows during 2020. The Board
also believes that the Fundraise demonstrates the confidence that
both AIMS, as a new investor, and the Company's main shareholders,
Paracale Gold and BCM, have in the Company, the AKHM project and
its development strategy and the Board looks forward to keeping
shareholders updated as the Company moves forward.
The Fundraise comprises the issue of Bonds with a value of, in
aggregate, US$1.3 million before expenses and, subject to, inter
alia, further documentation and the grant of security to AIMS over
the assets of the Company, the issue of the Gold Loan for up to
2,000 troy ounces at a price of US$1,500 per troy ounce, equating
to a value of US$3.0 million before expenses.
The Gold Loan is conditional on, inter alia, agreement of the
terms of a formal loan agreement and the provision of security, in
the form of a first ranking general security deed to be granted by
the Company to AIMS over all of its assets (fixed and floating),
undertakings, and a pledge over the shares in GoldStone Akrokeri
Limited and GoldStone Homase Limited (which hold the Akrokeri and
Homase licences respectively),to be completed by no later than 30
April 2020, or such later date as may be agreed to by AIMS. In
accordance with the terms of the conditional term sheet entered
into between AIMS and the Company (the "Term Sheet"), the Company
will immediately be able to drawdown 200 troy ounces, equating to
US$300,000, of the principal amount of the Gold Loan (the
"Advance"). It is the Company's intention to drawdown the Advance
immediately in full. In the event that the conditions to the Gold
Loan are not satisfied, the Advance will be repayable immediately,
plus any accrued interest.
The Company will grant a total of 172,000,000 warrants pursuant
to the Bond and Gold Loan, all of which will be exercisable at 3
pence per Ordinary Share.
Summary terms of the Bonds
-- The Company has issued 26 Bonds with a value of, in
aggregate, US$1.3 million before expenses to new and existing
investors, with each Bond having a face value of US$50,000.
-- The interest payable on the Bonds is 14% per annum, which is
payable annually in advance in cash.
-- The Company will pay a commission of 3% in cash to each Bond holder.
-- The Company will also grant a total of 52 million warrants to
the Bond holders to subscribe for Ordinary Shares, which will be
exercisable at the Exercise Price and will be valid until 2 June
2022 (the "Bond Warrants"). The Bond Warrants will not be listed or
quoted on AIM.
-- The initial term of the Bonds is 12 months (the "First Period").
-- At the end of the First Period, GoldStone may elect to either
repay the Bonds or extend the Bonds for a further 12 months on the
same interest terms (the "Second Period").
-- If the Company elects to extend all or any of the Bonds into
the Second Period, an additional 1,000,000 warrants per Bond will
be awarded to Bond holders, with such warrants being exercisable at
the Exercise Price and valid until 2 June 2022 (the "Additional
Bond Warrants").
-- The Bond holder may elect to receive repayment of the Bonds
in gold, at a fixed price of US$1,450 per troy ounce, or in cash,
or in Ordinary Shares, with the number of Ordinary Shares to be
issued based on the volume weighted average price of an Ordinary
Share for the 15 business days prior to the end of the applicable
period.
-- Paracale Gold and BCM, who are currently interested in
approximately 28.1% and 20.0% of the Company's issued share capital
respectively, have each subscribed for 6 Bonds with a value of, in
aggregate, US$300,000 respectively and accordingly, Paracale Gold
and BCM will each receive 12 million Bond Warrants. If these Bonds
are extended, they will each receive an additional 6 million
Additional Bond Warrants.
-- The Bonds and the associated warrants are non-transferrable,
without the consent of the Company.
As at the date of the announcement:
-- Paracale Gold is interested in 70,352,377 Ordinary Shares,
representing approximately 28.1% of the Company's issued share
capital, 40,352,377 warrants with an exercise price of 1.2 pence,
which are valid until 2 June 2022, 12 million Bond Warrants, 6
Bonds, which have a value of, in aggregate, US$0.3 million, and a
loan to the Company of US$1.224 million, as announced on 28
December 2018.
-- BCM is interested in 50,000,000 Ordinary Shares, representing
approximately 20.0% of the Company's issued share capital, 12
million Bond Warrants and 6 Bonds, which have a value of, in
aggregate, US$0.3 million.
Summary terms of the Gold Loan
-- The Company and AIMS, a fund management and advisory business
based in Malaysia, have entered into the Term Sheet in respect of
the Gold Loan.
-- The principal amount of the Gold Loan will be 2,000 troy
ounces of gold, which at a fixed price of US$1,500 per troy ounce
equates to US$3.0 million before expenses.
- The principal amount drawn under the Gold Loan will be
repayable in such number of troy ounces as has been drawn under the
Gold Loan or in cash, at the election of AIMS, 15 months from the
date of the first drawdown following execution of the loan
agreement (or earlier in the case of an event of default by the
Company).
-- The Company will immediately be able to drawdown the Advance,
being 200 troy ounces, equating to US$300,000, of the principal
amount of the Gold Loan.
- The Company's intends to immediately drawdown the Advance in full.
- In the event that the conditions to the Gold Loan, as set out
below, are not satisfied, the Advance will be repayable
immediately, plus any accrued interest.
-- Drawdown of the balance of the Gold Loan, being 1,800 troy
ounces (US$2.7million), is conditional on, inter alia, the
finalisation of the loan agreement and the granting of security to
AIMS. All conditions to the Gold Loan are to be satisfied on or
before 30 April 2020, unless extended at the sole discretion of
AIMS.
-- The Gold Loan will accrue interest at 14% per annum, which is
payable quarterly in arrears. Interest on the Gold Loan may be paid
in gold, such amount based on the then current prevailing gold
price, or in cash at the election of AIMS.
-- On entering into the loan agreement, the Company will grant
120 million warrants to AIMS to subscribe for such number of
Ordinary Shares, which will be exercisable at the Exercise Price
and which will be valid until 2 June 2022 (the "Loan Warrants").
The Loan Warrants will not be listed or quoted on AIM and will be
non-transferrable without the consent of the Company.
-- The Gold Loan will be secured over the Company's assets and
undertakings, including a pledge over the Company's equity in
GoldStone Akrokeri Limited and GoldStone Homase Limited, which hold
the Akrokeri and Homase licences respectively.
-- The Gold Loan is non-transferrable, without the consent of the Company.
-- The Company will pay the reasonable costs of AIMS, including
legal costs, incurred in relation to the Gold Loan, including in
respect of the loan agreement and security documentation.
Licence Update
With the award of the Mining Lease, announced on 14 February
2020, GoldStone is now deemed to have advanced from an exploration
to a development company under the terms of the joint venture
agreement with Cherry Hill announced on 4 June 2015 (the "JV
Agreement") in respect of the Homase licence. Cherry Hill is the
current holder of the Homase licence through which GoldStone holds
its 90% economic interest, with Cherry Hill holding the balancing
10% economic interest and being the registered holder of the Homase
licence. In accordance with the terms of the JV Agreement, the
Company is pleased to announce that agreement has now been reached
with Cherry Hill, pursuant to which Cherry Hill has relinquished
its remaining 10% interest in exchange for a 2% royalty of gold
sales generated, less all costs and taxes and duties in respect of
the Homase licence.
As a result, GoldStone now holds a 100% economic interest in
both the Akrokeri and Homase licences, pursuant to which GoldStone
will provide the government of Ghana with a 10% free carried
interest and a 5% gross gold royalty as required by the fiscal
regime in Ghana.
Related Party Transaction
Paracale Gold and BCM, who are currently interested in
approximately 28.1% and 20.0% of the Company's issued share capital
respectively, are each a substantial shareholder of the Company and
are therefore each a related party of the Company as defined in the
AIM Rules for Companies ("AIM Rules").
Accordingly, the issue of the Bonds and the Bond Warrants to
each of Paracale Gold and BCM, as detailed above, is deemed to be a
related party transaction pursuant to Rule 13 of the AIM Rules and
the independent directors, being Emma Priestley, Richard Wilkins
and Orrie Fenn, consider, having consulted with the Company's
nominated adviser, Strand Hanson Limited, that the terms and
conditions of the Bonds and associated warrants are fair and
reasonable insofar as the shareholders of the Company are
concerned.
The Takeover Code
The exercise of the warrants to be issued pursuant to the
Fundraise may give rise to certain considerations under the
Takeover Code ("Code"). Brief details of the Panel on Takeovers and
Mergers (the "Panel"), the Code and the protections they afford are
described below.
The Code is issued and administered by the Panel. The Code
applies to all takeover and merger transactions, however effected,
where the offeree company has its registered office in the United
Kingdom, the Channel Islands or the Isle of Man and, inter alia,
whose securities are admitted to trading on a multilateral trading
facility in the United Kingdom (such as AIM). The Company is
therefore subject to the Code.
Rule 9 of the Code requires that any person who acquires,
whether by a series of transactions over a period of time or not,
an interest (as defined in the Code) in shares which, taken
together with shares in which persons acting in concert with him
are interested, carry 30% or more of the voting rights of a company
which is subject to the Code, will normally be required to make a
general offer to all of the remaining shareholders to acquire their
shares (a "Mandatory Offer").
Similarly, when any person, together with any persons acting in
concert with him, is interested in shares which, in aggregate,
carry not less than 30% of the voting rights of such a company but
not more than 50% of such voting rights, a Mandatory Offer will
normally be required if any further interests in shares are
acquired by any such person, or any person acting in concert with
him. A Mandatory Offer under Rule 9 of the Code must be made in
cash and at the highest price paid by the person required to make
the offer, or any person acting in concert with him, for any
interest in shares in the company during the 12 months prior to the
announcement of the offer.
Rule 9 of the Code further provides, inter alia, that where any
person who, together with persons acting in concert with him, holds
over 50% of the voting rights of a company and acquires an interest
in shares which carry additional voting rights, then they will not
normally be required to make a Mandatory Offer to the other
shareholders to acquire their shares. However, the Panel may deem
an obligation to make an offer to have arisen on the acquisition by
a single member of a concert party of an interest in shares
sufficient to increase his individual interest to 30% or more of a
company's voting rights, or, if he already holds more than 30% but
less than 50%, an acquisition which increases his interest in
shares carrying voting rights in that company.
Under the Code, a concert party arises where persons acting
together pursuant to an agreement or understanding (whether formal
or informal) co-operate to obtain or consolidate control of, or to
frustrate the successful outcome of an offer for a company, subject
to the Code. Control means an interest, or interests, in shares
carrying, in aggregate, 30% or more of the voting rights of a
company, irrespective of whether such interest or interests give de
facto control.
The Company considers that Paracale Gold is in concert with Bill
Trew, as he is Paracale Gold's representative on the GoldStone
Board and is also a director of and a shareholder in Paracale Gold,
as well as being the Company's Non-executive Chairman.
Pursuant to the issue of the Bonds, this potential concert party
(the "PCP") will have the ability to increase its aggregate
interest in the Ordinary Shares to more than 30% of the Company's
enlarged share capital. The PCP currently holds 74,352,377 Ordinary
Shares and 40,352,377 warrants over Ordinary Shares. Pursuant to
the issue of the Bond Warrants and assuming the Bonds are repaid in
cash or gold, the PCP has the potential to increase its aggregate
interest in Ordinary Shares up to a maximum of 126,704,754 Ordinary
Shares, through the exercise of the existing warrants and Bond
Warrants held by the PCP, representing, assuming that no other new
Ordinary Shares have been issued, approximately 41.9% of the voting
rights in the then enlarged issued share capital of the Company
which, without a waiver of the obligations under Rule 9 of the
Code, would oblige the PCP and anyone in concert with it to make a
Mandatory Offer under Rule 9 of the Code in certain circumstances.
If the Additional Bond Warrants are issues to the PCP, it would
have the potential to increase its aggregate interest in Ordinary
Shares up to a maximum of 132,704,754 Ordinary Shares,
representing, assuming that no other new Ordinary Shares have been
issued, approximately 43.0% of the voting rights in the then
enlarged issued share capital of the Company. If the Bond Warrants
and Additional Bond Warrants are issued and the Bond is converted
into Ordinary Shares, the PCP's potential holding would, depend
upon the prevailing share price at the time of conversion, assuming
that no other new Ordinary Shares have been issued, increase yet
further.
Pursuant to the issue of the Bonds, BCM will have the potential
to increase its aggregate interest in the Ordinary Shares to more
than 30% of the Company's share capital. BCM currently holds
50,000,000 Ordinary Shares. Pursuant to the issue of the Bond
Warrants and Additional Bond Warrants and assuming the Bonds are
repaid in cash or gold, BCM has the potential to increase its
aggregate interest in Ordinary Shares up to a maximum of 68,000,000
Ordinary Shares, representing, assuming that no other new Ordinary
Shares have been issued, approximately 25.4% of the voting rights
in the then enlarged issued share capital of the Company. If the
Bond Warrants, Additional Bond Warrants are issued and the Bond is
converted into Ordinary Shares, BCM's potential holding would,
assuming that no other new Ordinary Shares have been issued,
increase yet further and depending on the Prevailing Share Price at
the time of conversion, could exceed 30.0% of the voting rights in
the then enlarged issued share capital of the Company which,
without a waiver of the obligations under Rule 9 of the Code, would
oblige BCM and anyone in concert with it to make a Mandatory Offer
under Rule 9 of the Code in certain circumstances.
In addition, AIMS will, pursuant to the Loan Warrants, have the
potential to increase its aggregate interest in shares carrying
voting rights in the Company up to a maximum of 120,000,000
Ordinary Shares representing, assuming that no other new Ordinary
Shares have been issued, approximately 32.4% of the voting rights
in the then enlarged issued share capital of the Company which,
without a waiver of the obligations under Rule 9, would oblige AIMS
and anyone in concert with it to make a Mandatory Offer under Rule
9 in certain circumstances.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014.
- ENDS-
For further information, please contact:
GoldStone Resources Limited
Emma Priestley Tel: +44 (0)20 7236 1177
Strand Hanson Limited
Richard Tulloch / James Tel: +44 (0)20 7409 3494
Bellman
SI Capital Limited
Nick Emerson Tel: +44 (0)1483 413 500
About GoldStone Resources Limited
GoldStone Resources Limited (AIM: GRL) is an AIM quoted
exploration and development company with projects in Ghana and
Senegal that range from grassroots exploration to development.
The Company is focused on developing the Akrokeri-Homase project
in south-western Ghana, which hosts a JORC Code compliant 602,000
oz gold resource at an average grade of 1.77 g/t. The existing
resource is confined to a 4km zone of the Homase Trend, including
Homase North, Homase Pit and Homase South.
The project hosts two former mines, the Akrokerri Ashanti Mine
Ltd, which produced 75,000 oz gold at 24 g/t recovered grade in the
early 1900s, and the Homase Pit which AngloGold Ashanti developed
in 2002/03 producing 52,000 oz gold at 2.5 g/t recovered. It is the
Company's intention to build a portfolio of high-quality gold
projects in Ghana, with a particular focus on the highly
prospective Ashanti Gold Belt.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCBRGDXSXBDGGU
(END) Dow Jones Newswires
March 16, 2020 03:00 ET (07:00 GMT)
Goldstone Resources (LSE:GRL)
Historical Stock Chart
From Apr 2024 to May 2024
Goldstone Resources (LSE:GRL)
Historical Stock Chart
From May 2023 to May 2024