TIDMKAT
RNS Number : 2016J
Katoro Gold PLC
08 April 2020
Katoro Gold plc (Incorporated in England and Wales )
( Registration Number: 9306219)
Share code on AIM: KAT
ISIN: GB00BSNBL022
("Katoro" or "the Company")
08 April 2020
Katoro Gold plc ('Katoro' or the 'Company')
Disposal of Imweru Gold Project
Katoro Gold plc (AIM:KAT), the gold and nickel exploration and
development company, is pleased to announce that it has agreed the
disposal of its Imweru gold project ('Imweru' or 'the Project') to
Lake Victoria Gold Limited ('LVG') for a total staged consideration
of US$1.0 million and a 1.5% Net Smelter Royalty ('NSR') on all
future gold production from Imweru ('the Disposal').
Louis Coetzee, Executive Chairman of Katoro Gold, said: "The
Board believes that the Disposal is an important step for the
Company, as it provides greater certainty of the ability for Imweru
to be brought into production. LVG holds the Imwelo gold project,
which is adjacent to Imweru, together with the relevant
environmental approvals and a mining licence for Imwelo and are
thus far more advanced toward gold production than Katoro.
"By combining Imwelo and Imweru, the Board believes that Imweru
has a greater chance of being brought into production, potentially
in the near-term, thereby providing a revenue generative
opportunity for Katoro through the NSR. This will require no
further funding or managerial time requirements on Katoro, which is
important at this stage in our business development.
"Freeing up our financial and managerial resources will allow
the Company to concentrate on the Blyvoor Joint Venture ('JV')
project, which is focused on the reprocessing of an existing c.1.34
million ounces of gold JORC compliant tailings resource , and the
Haneti nickel, platinum-group-elements, gold and lithium project,
which the Board believes has substantial exploration upside
potential.
"The Disposal enables Katoro to elect to receive up to US$1.0
million in cash payments over the next two years against the
achievement of defined milestones, or to receive shares in LVG for
the same value. Access to cash is important, however, the
optionality to receive shares in LVG means we can elect to retain
an equity interest in LVG, which will hold the combined
Imwelo/Imweru project, should we so choose.
"Added to this, the 1.5% NSR could deliver a further cash stream
to Katoro as the project moves into production, over a multi-year
time horizon.
"Looking forward, all our energies will now be focused on the
Blyvoor JV and Haneti projects, and we look forward to keeping
shareholders updated on these projects."
Further information on the Disposal
Katoro has entered into a sale and purchase agreement ('SPA')
with LVG for the disposal of Reef Miners Ltd ('Reef'), Katoro's
wholly owned subsidiary, which holds the Imweru Gold Project in
Tanzania ('Imweru').
LVG is an unlisted public company, incorporated in Australia,
operating multiple exploration licences including its key project,
the Imwelo Gold Project in Tanzania ('Imwelo'), located adjacent to
Imweru and also holds the relevant environmental approvals and
mining licence for Imwelo .
The board of Katoro ('the Board') believes that the Disposal
will enable Imwelo and Imweru to be combined, thereby creating a
project with a larger footprint and in-situ gold resource, enabling
a faster route to gold production for Imweru.
Imweru and Imwelo are located in the Lake Victoria Goldfields
region of northern Tanzania, a proven mineral district that
currently hosts both AngloGold Ashanti's Geita Gold Mine and Acacia
Bulyanhulu Gold Mine.
The current, JORC code compliant, mineral resource for Imweru
and Imwelo consists of 11.6 Mt at a grade of 1.38 g/t for 515,110
oz Au and 4.7 Mt at 1.92 g/t for 291,600 oz Au respectively and
probable reserve for Imwelo consists of 1.4 Mt at 2.2 g/t for
97,394 oz Au.
Under the terms of the SPA, Katoro will, on receiving consent
for the Disposal from the Tanzanian Mining Commission in respect of
section 110 of the Mining Act 2010 ('the Condition Precedent'),
transfer 100% of Reef to LVG in return for a consideration of
US$1.0 million, payable pursuant to a convertible loan note
instrument which provides for the issue of convertible loan notes
by LVG to Katoro ('the Convertible Loan Notes'), which will be due
on the following dates:
-- US$100,000 upon the satisfaction of the Condition Precedent;
-- US$100,000 upon registration of Reef in the name of LVG;
-- US$100,000 four months from the date of the SPA;
-- US$200,000 nine months from the date of the SPA; and
-- US$500,000 upon the earlier of the commissioning of the first
producing mine of LVG in the Tanzania or the date 24 months from
the date of the SPA.
Pursuant to the SPA, in the event LVG fails to make any of the
payments for the first US$500,000 when due, 100% ownership of Reef
will revert to the Company. In the event that LVG fails to make the
final payment of US$500,000 when due, 50% ownership of Reef will
revert to the Company.
The Convertible Loan Notes issued shall, within 30 days of the
respective issue, be repayable in cash or converted into shares in
LVG at a conversion price of A$0.10 per share, at the sole
discretion of Katoro. If the Convertible Loan Note was converted in
full, based on current exchange rates, this would result in the
issue of c.16.2 million shares in LVG, which taken with the 700,000
shares already held by Katoro, would result in Katoro holding
c.16.9 million shares in LVG, representing c.13.4% of LVG's then
issued share capital assuming LVG has not issued any further shares
in the meantime.
The Convertible Loan Notes are subject to standard provisions
relating to a reorganisation of LVG's share capital, ensuring the
value of any shares issued to Katoro on any conversion of the
Convertible Loan Notes is maintained. The Convertible Loan Notes
will be repayable immediately upon any insolvency event of LVG
occurring.
The SPA contains standard warranties by both parties in relation
to capacity and execution of the SPA, in relation to title to the
shares in Reef and Imweru by the Company and in relation to
authority to issue any shares to be issued on conversion of the
Convertible Loan Notes by LVG.
In addition to the Convertible Loan Notes, LVG shall pay Katoro
a net smelter royalty, after taking account of payments due to the
Tanzanian Government in accordance with the applicable mining code,
of 1.5% on all gold produced from Imweru.
As previously announced, the Disposal was originally structured
to include the disposal of both the Imweru and Lubando projects
(which sit within Reef), this will now though only involve the
disposal of the Imweru project, with Lubando now being retained by
the Company. As a result, the Disposal does not fall to be treated
as a fundamental disposal requiring shareholder approval pursuant
to Rule 15 of the AIM Rules for Companies ('AIM Rules') and falls
to be treated as a substantial transaction pursuant to Rule 12 of
the AIM Rules.
As at 31 December 2018, Reef had total assets of US$29,000 and
for the year end ended 31 December 2018, had a loss of
US$106,000.
Following the Disposal, the Company's assets will be its 75%
interest in Haneti, 100% interest in Lubando, and its interest in
the Blyvoor JV.
This announcement contains inside information as stipulated
under the Market Abuse Regulations (EU) no. 596/2014.
**ENDS**
For further information please visit www.katorogold.com or
contact:
Louis Coetzee louisc@katorogold.com Katoro Gold plc Executive Chairman
Richard Tulloch +44 (0) 20 7409 Strand Hanson Limited Nominated Adviser
Ritchie Balmer 3494
Georgia Langoulant
Nick Emmerson +44 (0) 1483 413 SI Capital Ltd Broker
Sam Lomanto 500
Isabel de Salis +44 (0) 20 7236 St Brides Partners Investor and Media
Beth Melluish 1177 Ltd Relations Adviser
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END
DISFZGGDNRZGGZG
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