TIDMKAT
RNS Number : 3488Q
Katoro Gold PLC
27 October 2021
Katoro Gold plc (Incorporated in England and Wales )
( Registration Number: 9306219)
Share code on AIM: KAT
ISIN: GB00BSNBL022
("Katoro" or "the Company")
27 October 2021
Katoro Gold plc ('Katoro' or the 'Company')
Katoro to Seek Admission to the Standard List of the London
Stock Exchange for the Blyvoor Joint Venture (the "Project")
Katoro Gold plc (AIM: KAT), the AIM listed gold and nickel
exploration and development company, is pleased to announce that
the Company and Target Mine Consulting (Pty) Ltd ("TMC")
(collectively, the "Blyvoor Joint Venture Parties") have agreed to
seek admission for 100% of the Blyvoor Joint Venture project ("BV")
by vending each of their separate interests into a new company to
be listed on the Standard List of the London Stock Exchange plc
("London Stock Exchange" or "LSE") ('Admission'). Admission will be
accompanied by an IPO which will seek to raise sufficient funds to
complete the equity requirements for financial close of the project
and the cash requirements provided for in the agreement between the
parties.
Highlights
-- Katoro's South African Blyvoor Joint Venture project to be
listed on the Standard List of the London Stock Exchange as a new
company " BV ListCo" incorporating the whole project;
-- Application process for listing on the Standard List of the
London Stock Exchange to commence immediately;
-- The Blyvoor Joint Venture Parties have agreed to vend their
interests in the Blyvoor Joint Venture (see RNS dated 30 January
2020) in exchange for shares and cash in BV ListCo, including TMC's
100% equity interest in the project's corporate entity, Blyvoor
Gold Operations (Proprietary) Limited ("BGO") ;
-- Pre-Admission, and before settlement of any cash obligations
to other parties, Katoro will hold 45% and TMC 55% of BV ListCo
based on the parties' respective project development contributions
to date ;
-- Katoro intends to maintain a strategic interest in BV ListCo
post admission, which it estimates to be approximately 30%, subject
to the IPO raise, with c.40% in public hands, ensuring continued
upside from future developments;
-- Katoro will look to recover its total cash expense to date of
c. GBP 1.5 million in Project development, from the IPO;
-- Admission planned to capitalise and complete financial close
of the project with production commencing within 12 to 18 months
from IPO; and
-- River Group appointed as advisor to manage the Admission and the associated IPO.
Katoro CEO, Louis Coetzee, said, "We are extremely excited about
this dynamic development of Katoro's largest business venture to
date. The Blyvoor project CPR indicates healthy returns and amidst
an indicative cyclical longer-term upswing in the raw commodities
sector we remain very optimistic about this project.
"In light of the foregoing, we believe it is an opportune and
highly strategic time to list the Project as a standalone company
on the LSE. As a separate standalone entity with a clear corporate
strategy, the Project has more readily available access to both
equity and debt funding opportunities.
"Crucially, Katoro will retain a significant strategic interest
in the vehicle to hold this robust project, which we expect would
result in a value uplift for Katoro shareholders once it is listing
and funding is complete."
ADDITIONAL INFORMATION
Admission Overview
The respective participation interests of the Joint Venture
Parties will be restructured as equity interests consolidated in BV
ListCo for listing on the LSE. Based on development contributions
in the Project to date, Katoro will, prior to Admission, hold a 45%
interest in BV ListCo. A capital raising of GBP15,000,000 ("IPO
Placing") would also be conducted as a condition precedent to the
restructure (see further below).
The proposed restructure would complete on the Closing Date,
defined as the third business day after the date on which the last
of the Conditions Precedent (summarised below) are fulfilled or
waived as permissible, and consists of:
-- The vending into BV ListCo of:
o 100% of the equity in BGO and all amounts of any nature
whatsoever owing by BGO to TMC; and
o Katoro's interest in the BV, including all amounts owed to
Katoro through the loan account of c. GBP1.5 million
-- In consideration for the vend, BV ListCo paying, on the Closing Date;
o ZAR140,000,000 to Blyvoor Gold Capital (Proprietary) Limited
("BGC") (a company separate from TMC, and the previous owner of
BGO) in respect of claims of BGC against the TMC (notionally
payable by TMC)
o ZAR283,096,000 to TMC as follows:
-- ZAR 80,000,000 in cash; and
-- ZAR 203,096,000 by means of the allotment and issue of shares
in the capital of BV ListCo at an issue price equal to a 10%
discount to the price of the IPO Placing
o ZAR294,624,000 to Katoro by means of the allotment and issue
of shares in the capital of BV ListCo at an issue price equal to a
10% discount to the price of the IPO Placing.
Following the IPO Placing, Admission, and associated cash
payment offsets, it is intended that Katoro will hold approximately
30 % of BV ListCo, with new shareholders in the IPO Placing holding
approximately 40% in BV ListCo. Katoro has no present intentions to
sell the interest in BV ListCo that it would receive under the
restructure .
As earlier flagged, the restructure is subject to a series of
conditions precedent, as summarised here:
-- by no later than 17h00 on 1 November 2021 , irrevocable
written confirmation from Blyvoor Gold Capital (Proprietary)
Limited (a company separate from TMC, and the previous owner of the
Project) that it accepts the payment of ZAR140,000,000 in full and
final settlement of any and all claims it may have against TMC or
BGO;
-- by no later than 17h00 on 30 November 2021 , completion of
technical due diligence to the satisfaction of, and procurement of
a Competent Person's report acceptable to, Katoro and BV
ListCo;
-- by no later than 17h00 on 30 November 2021 , receipt of
necessary shareholder approvals from TMC;
-- by not later than 17h00 on 30 November 2021 , BV ListCo
entering into an agreement to purchase Katoro's total Participation
Interest (as defined in the Blyvoor Joint Venture) in the BV for an
amount of no more than ZAR294,624,000 (payable by means of the
allotment and issue of shares in the capital of the BV ListCo) at
an issue price equal to a 10% discount to the price to the BV
ListCo IPO capital raising;
-- by not later than 17h00 on 20 January 2022 , the receipt of
irrevocable subscriptions for ordinary shares in the capital of the
BV ListCo for net proceeds of no less than GBP15,000,000; and
-- by not later than 17h00 on 31 January 2022 , the ordinary
shares of BV ListCo shall have successfully been admitted for
trading on AIM or admitted for trading on the Standard List of the
London Stock Exchange; and
-- by not later than 17h00 on 31 January 2022 , all regulatory
and other approvals required to implement the restructure and
complete the listing of the ordinary shares of ListCo as
contemplated above be obtained.
River Group has been appointed as advisor to manage the
Admission and the associated IPO. A prospectus for the Admission
and IPO will be published once it has been approved by the
Financial Conduct Authority (the 'FCA'). An experienced board and
management for BV ListCo, comprising directors from Katoro and new
appointments, will be announced in due course and in conjunction
with publication of the prospectus.
Rationale for Seeking Admission
Based on substantial interest from various funding parties, and
having completed a SAMREC compliant Competent Persons and Valuation
Report (see RNS of 04 May 2021) that was produced from the results
of advanced feasibility work conducted on the Project, and
following Katoro's direct cash contribution of c. GBP1.5 million,
the JV parties came to the conclusion that it would be in the best
interest of the Project, shareholders and prospective investors to
position the Project as a standalone, independently listed company.
The reasons for the conclusion include a very clear preference
expressed by interested debt funders and investors, for a single
standalone listed gold tailings focused entity that involves no
unincorporated joint venture interests.
Upon completion of the restructure , Katoro's interest in the BV
will be indirect through its equity holding in BV ListCo, with the
BV's immediate funding requirements met by the IPO Placing. Katoro
will have no future funding obligations with respect to the BV,
however in its discretion Katoro will remain free to support future
fundraising activities by BV ListCo. There will be no change in its
other project interests such as the Haneti nickel joint venture
(65%) in Tanzania.
About the Project
The Project is a gold tailings project in South Africa with an
NPV of c. GBP96 million (Note: the NPV value at the time of
entering into the BJV in January 2020, was c. USD 40 million) at a
discount rate of 7.9% and an IRR of 33% with a payback period of
two and a half years (see RNS of 04 May 2021).
The completed CPR reports that the Project contains a SAMREC
compliant resource of c.1.4Moz of Au at an average grade of 0.31g/t
Au. (RNS 15 Dec) of which c. 868 000 oz is in the measured and
indicated (M&I) category and 542 000 oz in the inferred
category with an "all-in" production cost of 861 US$/Gold oz.
Additional m etallurgical test work also confirmed historical
results and the recovery utilized in the CPR of 51% over LoM and
53.5% for the reserve (TSF 6 and 7).
The targeted initial production anticipates up to 500,000 tonnes
per month (tpm) of material from the tailings in the first phase
and after a 1-year production, a ramp-up phase with a projected
25-year Life-of-Mine (LoM) for the entire resource.
The Project already has the required permitting in place for the
reprocessing of the measured and indicated tailings resource, and
production could therefore commence immediately upon commissioning
of a processing plant.
As at 31 December 2020, Katoro has advanced funding in the
amount of GBP1,201,767 of which 100% relate to expenditure
allocated to the Joint Venture operations, carried by Katoro.
Furthermore, as disclosed in the 30 June 2021 interim financial
accounts, Katoro continued to advance funding in the amount of
GBP97,207 of which 100% relates to expenditure allocated to the
Joint Venture operations, carried out by Katoro. All amounts
contributed to the joint operation are expensed to exploration and
evaluation expenditure on Katoro's consolidated statement of
financial position until such time that commercial viability is
reached and the recoverability of the receivable is more
certain.
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
Bhavesh Patel +44 20 3440 6800 RFC Ambrian Limited NOMAD on AIM
Andrew Thomson
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
Oonagh Reidy 1177 Ltd Relations Adviser
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END
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