TIDMKRS
RNS Number : 4935J
Keras Resources PLC
12 September 2016
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Keras Resources plc / Index: AIM / Epic: KRS / Sector:
Mining
12 September 2016
Keras Resources plc ('Keras' or 'the Company')
Acquisition of the Klondyke Gold Project and Consolidation of
the Warrawoona Greenstone Belt, Intention to Dual List on the ASX
and Board Re-structure
Keras Resources plc, the Australian gold mining company, is
pleased to provide an update in line with its strategy to become a
significant gold producer in Western Australia ('WA').
Highlights
-- Low cost acquisition of 100% of Klondyke Gold Project
('Klondyke') and right to mine contiguous tenements provides
control over the Warrawoona Greenstone Belt, a prospective gold
region with 7.5km of strike and demonstrated resource
potential:
o Klondyke has a scalable JORC compliant resource of 5.6Mt @
2.08g/t for 374,000 ounces - only covers 2km of the 7.5km strike,
and is also open at depth;
o Reached agreement with Haoma Mining NL ('HML') for a Right to
Mine and Option to Purchase Agreement on tenements contiguous and
near to Klondyke, excellent discovery potential as demonstrated by
high grade drill results summarised later in this document
o Transactions represent the first consolidation of this
Greenstone Belt
-- Low cost, four phase programme to confirm the historic
drilling results and assess the feasibility of a stand-alone
open-pit gold mining operation to commence shortly
-- Existing tribute mining operations at Wycheproof are
continuing ahead of schedule and under budget due to the adoption
of revised mining and grade control protocols
-- Intention to dual list on the Australian Stock Exchange
('ASX') and Board restructuring underway to reflect the increased
focus on Australian gold
-- Bridge Facility of US$2million secured to enable completion of acquisition
Keras Managing Director Dave Reeves said, "The acquisition of
Klondyke and the agreement with HML will elevate Keras to a
stand-alone, owner-operated gold miner in addition to its current
tribute miner model. We are committed to maximising value for
shareholders and since entering the West Australian gold industry
via tribute mining agreements in Q4 last year, we have been
evaluating opportunities which will enable us to diversify our
operational risk and increase the returns from our investment. We
believe today's transactions, which combine the Arcadia and HML
tenements and therefore represent the first consolidation of
Warrawoona Goldfield mark a transformational step in achieving this
goal.
"Based on significant interest we have received from investors
in Australia we are pursuing a dual listing on the ASX.
Importantly, strong investor appetite for Australian gold stocks on
the ASX positively impacts valuations and we believe this will
benefit all shareholders, both in London and Australia, in the
future. This will also provide us with the capital to refinance the
Acquisition Finance Facility with less dilution for existing
shareholders. Our Board supports our Australian gold focus and I
would like to thank its members for also enabling our board
restructure and in particular. Roy Pitchford's contributions since
the formation of the Company, through the Admission process and
beyond are greatly appreciated."
"We are entering a new and exciting phase for Keras and this
strategy will be supported by our tribute operations which have
been scrutinised by the Board to ensure profitability going
forward. I am pleased to say that the changes we have made are
already bearing fruit at Wycheproof. The changes to our corporate
identity and Board reflect our genesis and we look forward to
keeping shareholders abreast with updates in the near term."
The Acquisitions
Since entering the WA gold industry in Q4 2015 by way of
acquiring tribute agreements, the Company has been evaluating
opportunities to acquire projects which will increase its share of
the returns and facilitate its growth to become a substantive
Western Australian gold miner. The Company identified an
opportunity to consolidate the Warrawoona Greenstone Belt in the
Pilbara region of Western Australia, and believes that this
consolidation will unlock the areas potential which has been
stifled to date by multiple ownerships.
Figure 1: Location of the Klondyke Project (See PDF)
With this in mind, Keras is acquiring 100% of Arcadia Minerals
Pty Ltd ('Arcadia'), which is the owner of Klondyke. Klondyke
comprises four tenements covering a total area of 490 hectares with
a 2012 JORC compliant Inferred Resource of 5.6Mt at 2.08g/t for
374,000 oz Au. The total consideration for the acquisition is
A$1.42m (GBP0.8m) in cash and the issue of 100,000,000 Keras
ordinary shares, at the prevailing market price at the time of
issue, which will be subject to standard lockup and orderly trading
terms. In addition, Arcadia will retain a 2.5% royalty of the gross
value of the proceeds on production of gold from the tenements. The
royalty is capped at A$3.5m which will only commence post the
production of 20,000 ounces from the Arcadia properties. Arcadia's
accounts for the year ended 30 June 2016 showed total assets of
A$489,567 including the four tenements and associated exploration
and evaluation costs, which had a carrying value of A$458,598.
The HML Tenements comprise seven tenements covering an area of
650 hectares, which are centred both internally on the Klondyke
deposit and on the historic Fieldings Gully, Coronation and
Copenhagen deposits. The Company will pay on completion A$250,000
(GBP145,000) for the five year right to mine the HML Tenements and
the irrevocable right to acquire within a 5 year period the HML
Tenements for a total consideration of A$1.25m, comprising
A$500,000 in cash and a Convertible Note in the amount of A$750,000
with the right to convert into Keras ordinary shares at the 30 day
VWAP post this announcement. The agreement with HML represents a
first step in a regional consolidation to create the critical mass
required to develop a stand-alone, owner operated open-pit gold
mine in the Pilbara region of Western Australia.
Figure 2: Tenement Layout (See PDF)
Klondyke
Klondyke is located in the prospective Warrawoona Goldfield in
the East Pilbara District of the Pilbara Goldfield of Western
Australia, and comprises four granted mining leases covering a
total area of 490 hectares with a 2012 JORC compliant Inferred
Resource of 5.6Mt at 2.08g/t for 374,000 oz Au. The resource is
currently confined to two separate 1km portions of the total 7.5km
of mineralised strike length highlighting the significant potential
for a large increase in resource along the untested strike length.
Limited infill drilling by Haoma adjacent to the resource area
include:
-- W97-1 14m @ 3.83 g/t from 62m
-- W97-2 19m @ 3.44 g/t from 53m
-- W97-10 4m @ 6.08 g/t from 88m
-- KBP010 6m @ 9.39 g/t from 90m
There are numerous historic gold mines with very high gold
grades that exist on the property. These include the Klondyke Block
and the Kopcke's Reward, with historical mined grades of 574g/t and
90 g/t of gold respectively.
Initial optimisations show robust open pit mining metrics given
the large tonnage, near surface nature of the resource. The project
is located approximately 70km from Bamboo Creek and 90km from
Millennium Minerals where excess processing capacity may be
available if a tolling option is pursued. In addition to the
open-pit resources there is the potential for underground mining on
high grade lodes.
Figure 3: Location of Current Resource (See PDF)
Haoma Tenements
The HML Tenements comprise seven granted mining leases covering
an area of 650 hectares, which are centred on both the main
Klondyke shear and also the historic Fieldings Gully, Coronation
and Copenhagen mines.
The Fieldings Gully mine is located 15 km from the centre of the
Klondyke area and is an old operating mine. Fieldings Gully has a
historic non-compliant resource of 315,000t @ 1.8 g/t for 18,266
ounces at a 0.5g/t cut-off. The resource remains open at depth and
along strike. Significant intersections include:
-- FG97-7 14m @ 3.09g/t from 53m
-- FG97-12 4m @ 5.29 g/t from 12m
-- FG97-12 3m @ 17.58g/t from 20m
Copenhagen is located 10 km from Klondyke and is situated on an
old mine. No resource has been calculated, significant intercepts*
include:
-- CRC97-8 4m @ 59.48 g/t from 64m
-- RC13 10m @ 6.25g/t from 14m
-- RC8 8m @ 9.73 g/t from 16m
-- RC7 6m @ 15.47 g/t from 26m
-- RC4 10m @ 6.82 g/t from 18m
-- CRC9 7m @ 8.51 g/t from 51m
-- RC7 8m @ 6.88 g/t from 12m
-- RC1 11m @ 7.23 g/t from 30m
* A small open pit was developed in the 1980s and some of these
areas may have been mined
Coronation is located 12.5 km from Klondyke and is situated on
an old mine. No resource has been calculated, significant
intercepts include:
-- PCR10 9m @ 5.21 g/t from 9m
-- PCR10 8m @ 7.64 g/t from 64m
-- WCR3 3m @ 16.67 g/t from 16m
-- AT2 12m @ 7.08 g/t from surface
-- AT1 4m @ 5.71 g/t from 12m
-- WCR1 2m @ 31.5 g/t from 30m
Figure 4: Location of Haoma Tenements (See PDF)
Planned Activities
Initial optimisations show potential for large open pit along
the main strike of the Klondyke project. Keras will now undertake a
four phase programme to confirm the historic drilling results and
assess the feasibility of stand-alone open-pit mining operation.
The phases are as follows:-
-- Phase 1 - Initial mapping and then a 12,000m drill programme
to upgrade the current resource in Klondyke pit shell area and to
in-fill drill the adjacent Haoma tenements located along strike of
the resource.
-- Phase 2 - Follow up significant drill intercepts at
Copenhagen and review Fieldings Gully and Coronation data to
ascertain the likelihood of further drilling adding to resources.
Complete further metallurgical testwork.
-- Phase 3 - Further extensional drilling planned to define
westerly strike potential of the main Klondyke shear and completion
of a scoping study.
-- Phase 4 - Pre-feasibility study
Current Operations
As highlighted in the announcement dated 31 August 2016, Keras'
tribute mining operations continue at the Wycheproof deposit and
the Company is pleased to report that these are ahead of schedule
and under budget having implemented all changes detailed in the
quarterly report (as announced on 28 July 2016). The Company
expects the first 10,000t parcel of ore grading 1.6g/t to be
processed in the next 2 weeks and a final 8,000t parcel of ore
grading 1.6g/t to be processed in early October. This will mark the
completion of the Wycheproof pit which is budgeted to produce 900
ozs at a ASIC of A$1400/oz. the current Australian gold price is
A$1,750/oz.
ASX Listing and Board Restructure
With the critical mass of the Company's assets and operations
shifting to Western Australia, Keras plans to faciliate the listing
of either Keras or its Australian gold assets on the ASX at the
beginning of 2017. Management believe the listing will provide
access to additional pools of capital and should provide additional
liquidity for the Company's shares. Analysis by the Company shows
significant premiums on gold resources can be attained on the ASX
compared to AIM which could result in a re-rating of the Company's
share price to the benefit of all shareholders. A General Meeting
will be called shortly seeking to authorise various requirements in
order to facilitate this initiative.
As a result of this initiative, the Company's Board will be
restructured to and become more Australian focussed. As a result,
Mr. Roy Pitchford has resigned with immediate effect, Mr. James
Carter has resigned from the Board but will continue in the role of
CFO of the Company and assuming that the fund raising is by a dual
listing, Mr. Brian Moritz intends to resign from the Board on the
appointment of an Australian based Chairman that will be finalised
closer to the listing date.
Acquisition Funding
In order to fund the above acquisitions the Company has entered
into an Acquisition Finance Facility Agreement ('Finance
Agreement') with a consortium of investors arranged by Riverfort
Global Capital Ltd (the 'Investors'). The Finance Agreement has
been entered into as a bridge funding facility to secure the
acquisition of a significant long-term asset for the Company. The
financing is a debt rather than an equity based structure and is
therefore not dependent on the Company's share price
performance.
The total drawdown available to the Company is US$2m (GBP1.5m)
('Principal Amount') and is repayable six months after the initial
drawdown at an interest rate of 10% per semi-annum, with a
Commitment Fee and an Implementation Fee of 5% each. The Investors
will be granted warrants totalling 25% of the Principal Amount with
a 2 year term and a strike price of 130% of the 5 day value
weighted average price ('VWAP') following the date of financial
closure. Management expect the drawdown to take place before the
end of September 2016.
A presentation detailing this acquisition will be made available
on the Company's website today at www.kerasplc.com.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
**ENDS**
For further information please visit www.kerasplc.com, follow us
on Twitter @kerasplc or contact the following:
Dave Reeves Keras Resources plc dave@kerasplc.com
Nominated Adviser
Gerry Beaney/David Hignell Northland Capital Partners Limited +44 (0) 20 3861 6625
Broker
Elliot Hance/Jonathon Belliss Beaufort Securities Limited +44 (0) 20 7382 8415
Financial PR
Elisabeth Cowell/ Frank Buhagiar St Brides Partners Limited +44 (0) 20 7236 1177
This information is provided by RNS
The company news service from the London Stock Exchange
END
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