TIDMIRON
RNS Number : 5935P
Ironveld PLC
11 June 2020
Ironveld Plc
("Ironveld" or the "Company")
Bridge Loan Facility and Extension of IIG Option Agreement
Ironveld is pleased to announce that, along with its prospective
strategic partner, Inclusive Investment Group Proprietary Limited
("IIG"), it has made an application to a major South African
funding institution for project development funding which, if
successful, would provide Ironveld with sufficient funds to start
mining and production at the Company's magnetite project in South
Africa.
On 30 March 2020, the Company announced that it had entered into
arrangements with IIG to raise potential gross proceeds of
approximately US$3.2 million. In particular, the Company and IIG
entered into an Option Agreement pursuant to which on the grant of
the Option (which is conditional) IIG can subscribe for 440,176,070
new ordinary shares in the capital of the Company at a price of
0.42 pence per share. The option was to expire on 17 June 2020.
In order to bring the timetable for the potential Option
exercise in line with the proposed project financing the Company
has agreed to an extension to the exercise period of the Option to
30 September 2020.
In consideration, IIG has agreed to provide the Company with a
bridge funding facility of up to ZAR3.70 million (approximately
US$200,000) ("Bridge Loan Facility") which is intended to provide
the Company with the requisite funds to continue its operations
until such time as the funding application is reviewed.
Highlights
-- IIG is leading an application for up to ZAR240 million
(approximately US$14.4 million) project development funding which,
if successful, would provide Ironveld with sufficient funds to
begin mining and production from its magnetite project in South
Africa;
-- IIG and Ironveld agreed that it would be beneficial to align
the potential Option exercise with the raising of project financing
and accordingly have agreed to extend the final Option exercise
date in terms of the Option Agreement between IIG and Ironveld,
from 17 June 2020 to 30 September 2020;
-- On grant of the Option (which is conditional), IIG can
subscribe for 440,176,070 new ordinary shares in the capital of the
Company at a price of 0.42 pence per Subscription Share;
-- IIG also agreed to extend a loan of US$1,000,000
(approximately GBP780,000) to Ironveld on completion of the
Subscription. Should IIG choose to convert the loan and all accrued
interest at the end of the loan term (and also assuming no further
shares are issued by the Company other than those included in this
announcement and constant exchange rates), it will be issued with a
further 233,373,349 shares, taking its holding to 46.8 per cent. of
the Company's issued share capital;
-- IIG has agreed to extend a Bridge Loan Facility of up to
ZAR3.70 million (approximately US$200,000), unconditionally, in
order to fund Ironveld through to the anticipated project financing
and exercise of the Option;
-- Ironveld has agreed, conditional on shareholder approval,
that any Bridge Loan funds drawndown plus accrued interest,
together with IIG's initial US$250,000 Option Fee, will convert
into Ironveld shares at the Subscription Price of 0.42 pence should
the Option expire; and
-- All other aspects of the Fundraising, comprising potential
gross proceeds of US$3.2 million, remain unchanged.
The grant of the Option and the Fundraising in general are
wholly conditional on shareholder approval being granted at a
general meeting of the Company (the "General Meeting") and to the
Takeover Panel granting a Rule 9 Waiver*. The Company will publish
a circular together with a notice to convene the General Meeting in
due course. Should these conditions not be met, then the
Fundraising (comprising the Subscription and Loan Facility) will
not proceed, and the option fee of US$250,000 (approximately GBP
210,000) paid by IIG to the Company will be repayable in full .
Under the terms of the revised Option Agreement, exercise of the
Option must occur prior to 30 September 2020.
Capitalised terms in this announcement shall have the same
meaning as in the Company's announcement of 30 March 2020 unless
the context requires otherwise.
Martin Eales, Chief Executive Officer of Ironveld, said:
"In recent weeks we have been working very productively with IIG
and the potential for a larger project financing for Ironveld is
becoming much more realistic. If successful, the financing will
allow the Company to progress various workstreams and transition to
mining and production at our magnetite project, marking a
transformative milestone for Ironveld.
"Due to the timescale of this financing and the impact of
COVID-19 restrictions we have agreed to IIG's request to extend the
period for exercising the Option to 30 September 2020. We are
pleased that IIG has demonstrated its continued commitment to the
transaction by agreeing to the Bridge Loan Facility announced
today."
Background
Ironveld and IIG have been working closely together in recent
weeks in order to secure project development funding, which would
facilitate the start of mining and production for Ironveld's
magnetite project in South Africa. A funding application for up to
ZAR240 million (approximately US$14.4 million) is currently
underway with a major South African financing institution. Whilst
the outcome of this current application is not yet certain, based
on the merits of the application the parties are optimistic as to
the chances of a successful conclusion and have therefore agreed to
extend IIG's Option timetable such that it is more in line with the
larger fundraising process.
The transaction and larger project financing application have
also been impacted by the effect of lockdown restrictions in South
Africa due to COVID-19, which has caused interruption at all levels
of commerce.
Due to both of these factors, Ironveld has agreed to IIG's
request to extend the period during which the Option can be
exercised from prior to 17 June 2020 to prior to 30 September 2020.
In exchange, IIG has agreed to provide bridge funding to Ironveld
so that it is capable of meeting its obligations prior to the
anticipated exercise of the Option.
Bridge Loan Facility
IIG has agreed to advance to Ironveld two tranches of ZAR1.85
million (approximately US$100,000 each) in July 2020 and August
2020 on an unconditional and unsecured basis. The loan amounts will
bear interest of 10 per cent. per annum (in line with the cost of
borrowing in South Africa). Any loan amounts plus interest will be
convertible into New Ordinary Shares in Ironveld at a price of 0.42
pence per New Ordinary Share on completion of the exercise of the
Option or failing such exercise, on the date being 5 Business Days
after 30 September 2020 or such later date as agreed between the
parties. If the Resolutions are not passed on or before 30
September 2020, any loan amounts plus interest will instead be
convertible into Existing Ordinary Shares in Ironveld at a price of
1 pence per Existing Ordinary Share. If the Bridge Loan Facility is
converted into New Ordinary Shares , the amount of the Option and
therefore the number of Subscription Shares to be issued pursuant
to its exercise will be reduced commensurate with the amount of the
Bridge Loan Facility that is converted. The Company will give
standard representations and warranties to IIG pursuant to the
Bridging Loan Facility.
The parties have further agreed, subject to shareholder
approval, that if IIG's Option expires on 30 September 2020 then
any loan amounts plus interest plus IIG's original US$250,000
Option Fee will be converted into new Ironveld Shares at the
Subscription Price of 0.42 pence.
General Meeting and Shareholder Approval
As announced on 30 March 2020, Shareholder approval will be
required for the Option to come into effect and to allow any New
Ordinary Shares to be issued pursuant to the Fundraising. Ironveld
expects to publish the Circular required for the General Meeting in
June or July 2020.
Resolutions required at the General Meeting will include:
a) a Rule 9 Waiver Resolution, in accordance with the provisions of the Takeover Code;
b) by way of ordinary resolution to give the Directors authority
to subdivide each existing ordinary share of 1 pence each into one
ordinary share of 0.1 pence each and nine deferred shares of 0.1
pence each, with the deferred shares having the same rights and
restrictions as the Company's existing deferred shares of 1 pence
each;
c) by way of ordinary resolution to give the Directors authority
to allot the New Ordinary Shares;
d) by way of special resolution to dis-apply statutory pre-emption rights in respect thereof; and
e) by way of special resolution to amend Ironveld's current
articles of association to include reference to the New Ordinary
Shares, in particular detailing the rights attaching to the New
Ordinary Shares.
The Directors (representing 4.41 per cent. of the issued
ordinary share capital) and Tracarta Limited (representing 12.27
per cent. of the issued share capital) have all indicated that they
will support the resolutions to be put forward at the General
Meeting.
For further information, please contact:
Ironveld plc c/o Blytheweigh
Giles Clarke, Chairman +44 20 7138 3204
Martin Eales, Chief Executive Officer
finnCap (Nomad and Broker)
Christopher Raggett / Hannah Boros +44 20 7220 0500
Blytheweigh
Tim Blythe / Megan Ray +44 20 7138 3204
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
*Rule 9 Waiver means the waiver, conditional on its approval by
the Independent Shareholders** taken by a poll, by the Takeover
Panel Executive (the "Panel") of the obligation that, following the
issue of the shares pursuant to the exercise of the Option
Agreement, would otherwise arise on IIG to make a general offer to
all shareholders of the Company pursuant to Rule 9 of the Takeover
Code as a result of the allotment and issue of shares pursuant to
exercise of the Option Agreement by IIG.
**Independent Shareholders means the shareholders of the
Company, excluding (i) IIG and any person acting in concert with
them who holds Ordinary Shares and (ii) the directors of the
Company, with the exception of the Independent Director.
NOTES TO EDITORS
Ironveld (IRON.LN) is the owner of Mining Rights over
approximately 28 kilometres of outcropping Bushveld magnetite with
a SAMREC compliant ore resource of some 56 million tons of ore
grading 1,12% V2O5, 68,6% Fe2O3 and 14,7% TiO2.
The Definitive Feasibility Study published in April 2014
confirms the project's viability to deliver a Vanadium slag product
for which the company has an offtake agreement as well a High
Purity Iron product which commands a premium in the market place
and Titanium slag containing commercial grades of titanium.
Ironveld is an AIM traded company. For further information on
Ironveld please refer to www.ironveld.com.
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END
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