TIDMSOLG
RNS Number : 8025K
SolGold PLC
26 September 2016
26 September 2016
SolGold plc
("SolGold" or the "Company")
SolGold, Newcrest and Maxit Agree to USD33m Equity Raising in
SolGold
Highlights:
Ø SolGold to raise a total of USD33m at US16 cents (12p).
Ø SolGold Board unanimously recommends shareholder approvals for
the resolutions (as amended) to be put to the SolGold General
Meeting to be held on 13 October 2016.
Ø DGR Global to approve the share issues to Newcrest subject to
no superior proposals being received by SolGold.
Ø Maxit to approve the share issues to Newcrest subject to no
superior proposals being received by SolGold.
Ø Unconditional approval by private interests of CEO Nicholas
Mather.
Ø Newcrest to invest USD22.863m for 10% of SolGold.
Ø Maxit and its clients to invest USD10.137m for 4.43% of
SolGold.
Ø Newcrest to have anti-dilution and top up right to 10% maximum
of issued share capital of SolGold.
Ø Newcrest to support Board on any independently recommended
future Change of Control transactions.
Ø Cascabel funding for up to 7 ongoing drill rigs assured.
Previous Proposal Superseded and Exceeded
Further to the market release made on 22 September 2016, the
Board of SolGold (AIM: SOLG) wishes to provide the market with an
update which supersedes and exceeds in value the previously
proposed subscription by Newcrest International (Newcrest) to
ordinary shares of 1p each of SolGold ("Shares") equal to 10% of
the issued share capital of SolGold at a price of US8 cents per
share by Newcrest, under a share subscription agreement (Agreement)
as announced in full detail on 30 August 2016 (Previous Newcrest
Subscription Proposal).
Superior Proposal
Following receipt of a superior proposal from Maxit Capital LP
(Maxit) offering to arrange a cash investment into SolGold at a
price of US16 cents per new Share, representing a 100% premium to
the last capital raising (Competing Proposal) the Board of SolGold
is pleased to advise that agreement has now been reached with:
-- Maxit and its clients to subscribe for up to 63,353,338 new
Shares at US16 cents per share for up to USD10.137m (Maxit
Placement Shares) representing up to 4.43% of the issued share
capital of SolGold (as enlarged by the proposed issue of new Shares
to Maxit and Newcrest and which may, at Maxit's election, include
their fee); and
-- Newcrest to subscribe to 142,896,661 new Shares also at US16
cents for USD22.863m (Newcrest Placement Shares) equal to 10% of
the issued share capital of SolGold (as enlarged by the proposed
issue of the Newcrest Placement Shares and the Maxit Placement
Shares), replacing the Previous Newcrest Subscription Proposal at
US8 cents per share.
The combined share issues will raise a total of USD33m for
SolGold resulting in a cash balance of USD48m being available to
the Company, more than sufficient than required for the next year
of exploration and drilling activity at Cascabel, SolGold's 85%
owned Tier 1 copper gold porphyry discovery in Northern
Ecuador.
Funds raised will be used principally to advance the Cascabel
Project and cover administrative and general expenses of
SolGold.
Under the terms of SolGold's subscription agreement with Maxit,
Maxit shall be entitled on closing of the capital raising, to
receive a success fee of 6% of the cash proceeds that it
contributes, and 6% of any amount raised from other subscribers
(including Newcrest) above USD10,856,640. The cash fee may, at the
election of Maxit, be settled by the allotment and issue to Maxit
of an equivalent number of Shares at the subscription price (to be
included in the Maxit Placement Shares noted above). In addition,
Maxit will be entitled to options over new Shares as are equal to
6% of the number of new Shares issued under this raising for cash
to Maxit, and to 6% of the number of new Shares issued to
subscribers (including Newcrest) above 67,854,000 new Shares. Half
of the options will be exercisable at 14p and half exercisable at
28p. The share options will have a 24 month exercise period.
Shareholder Approvals
Issue of the Maxit Placement Shares is subject to shareholders
passing Resolutions 1 and 3 at the forthcoming shareholders meeting
on 13 October 2016.
Issue of the Newcrest Placement Shares is subject to
shareholders passing all of the Resolutions at the forthcoming
shareholders meeting on 13 October 2016, including approval to
issue the Newcrest Placement Shares to Newcrest at the amended
price of US16 cents rather than the original US8 cents.
The subscription by Newcrest will be equal to 10% of the issued
share capital of SolGold, as enlarged by the issue of the Maxit
Placement Shares and the Newcrest Placement Shares.
Newcrest have agreed to vary the Agreement to give effect to the
increased price and size of the investment by Newcrest.
The SolGold Board of Directors has unanimously approved the
proposed transaction, and substantial shareholders Maxit and DGR
Global have also provided in-principle approval for the proposed
transaction, subject to there being no superior proposal being made
to SolGold by an independent bona fide third party for in excess of
5% of the share capital of SolGold prior to SolGold shareholder
approval being obtained on 13 October 2016.
Other shareholders representing the private interests of CEO and
Managing Director Mr Nicholas Mather have approved the transaction
unconditionally.
Newcrest Anti-dilution and Top up Right
Under the Agreement, as varied, Newcrest will have, once
unconditional, subject to holding more than 10% of the share
capital of SolGold, a right (but not an obligation) to appoint a
Director to the Board of SolGold, anti-dilution rights to maintain
the position prior to any capital issues to a maximum of 10% of the
undiluted share capital of SolGold, and provided Newcrest's holding
does not drop below 5%, a top up right to that level (max 10%), to
be available for exercise every 6 months in the event that option
exercises or any converted debt notes result in the issue of
further shares or if there are issues of equity securities under
employee or officer share or option schemes.
Newcrest to Support Certain of the Board Recommendations
Newcrest has agreed, for a three year period, to follow the
recommendations of any Independent Expert appointed by the SolGold
Board to opine in respect of any proposed change of control
transactions in respect of the SolGold share capital or its assets,
in circumstances where it is demonstrable that holders of 60% of
SolGold shares voting at a meeting or lodging acceptances are
supportive of the particular formal proposal. Newcrest has also
agreed to support the Board of SolGold on resolutions on:
(i) Board composition; and
(ii) capital change resolutions put to SolGold shareholders
affecting authorised capital limits and pre-emption waivers under
the LSE AIM rules, in the event that 60% of the votes cast at a
meeting of SolGold shareholders approve the same.
Newcrest will provide technical support and advice to SolGold at
SolGold's request and at market rates.
Commenting on the transactions with Maxit and Newcrest, CEO Nick
Mather said:
"With what investors introduced by Maxit have subscribed a month
ago, these raisings lift the SolGold bank to some USD48m providing
more than enough to cover well over a year of drilling and other
exploration and appraisal work at Cascabel. We expect to add
considerable value through this work and I can't see the need for
any further capital raisings for a long time.
Intense interest in the Cascabel Project and SolGold itself from
North American investors and major mining companies drive our
interest in the Toronto Stock Exchange (TSX) as an additional stock
exchange listing for SolGold and we will be pursuing that in the
near future.
We are pleased by the Newcrest decision to proceed with the
investment into 10% of SolGold and willingness to be guided by
other shareholders in change of control transactions the company
may be faced with for the next three years as we grow this
project.
Newcrest's interest in SolGold and Cascabel is a strong
endorsement of Ecuador as an exploration and development
destination and the outlook for Alpala and the fourteen additional
targets at Cascabel. We believe it is a Tier 1 discovery. Only the
fifth in the World in the last ten years.
In Maxit, SolGold has the mining sector's leading M&A expert
which has added value to all our shareholders and will stand us in
good stead in the future."
About Newcrest
Newcrest Mining Limited (ASX: NCM) is the largest dedicated gold
producer listed on the Australian Stock Exchange with a market
capitalisation of A$17 billion at the date of this announcement.
Newcrest has an outstanding record in exploration and in developing
high tonnage open cut and underground block cave mines and smaller
high grade operations. Newcrest has a world class portfolio of
operating gold and copper-gold mines, including Cadia Valley and
Telfer in Australia and Lihir in Papua New Guinea. It also has a
50% interest in the Golpu porphyry development project in Papua New
Guinea.
For the 2016 financial year Newcrest reported a statutory profit
of US$332m from the production of 2.439 million ounces of gold and
83kt of copper at an All In Sustaining Cost of $762 per ounce of
gold. Newcrest's Annual Resources and Ore Reserves Statement as at
31/12/15 announced on 15 February 2016 reported: "Group Ore
Reserves are estimated to contain 69 million ounces of gold, 11
million tonnes of copper and 46 million ounces of silver", and
"Group Mineral Resources are estimated to contain 140 million
ounces of gold, 20 million tonnes of copper and 120 million ounces
of silver."
Readers are advised to read the entire statement.
Additional information in the Newcrest Annual Report for the
financial year 2015/2016, financial results for the full year to 30
June 2016 announced on 15 August 2016 and recent presentations can
be found at www.newcrest.com.au
By order of the Board
Karl Schlobohm
Company Secretary
Contacts:
Mr Nicholas Mather Tel: +61 (0) 7 3303 0665
SolGold Plc (Executive Director) +61 (0) 417 880 448
nmather@SolGold.com.au
Mr Karl Schlobohm Tel: +61 (0) 7 3303 0661
SolGold Plc (Company Secretary)
kschlobohm@SolGold.com.au
Mr Ewan Leggat / Richard Morrison Tel: +44 (0) 20 3470 0470
SP Angel Corporate Finance LLP (NOMAD and Broker)
Ewan.leggat@spangel.co.uk / richard.morrison@spangel.co.uk
NOTES TO EDITORS
SolGold is a Brisbane, Australia based, AIM--listed (SOLG)
copper gold exploration and development company with assets in
Ecuador, the Solomon Islands and Australia. The Company's primary
objective is to discover and define world--class copper--gold
deposits. SolGold's Board and Management Team have substantial
vested interests in the success of Company, as well as strong track
records in the areas of exploration, mine development, investment,
finance and law. SolGold's experience is augmented by state of the
art geophysical and modelling techniques and the guidance of
Newmont trained porphyry expert Dr Steve Garwin.
From a corporate perspective, SolGold has recently announced
capital raisings involving Maxit Capital LP and Newcrest
International Ltd, both undertaken at substantial premiums to
previous raisings. Once completed, SolGold will have raised USD48
million in funding to continue the exploration and development of
its flagship Cascabel Project. Also as a result of these raisings,
Mr Scott Caldwell (CEO of TSX-listed Guyana Goldfields Inc) joined
the SolGold Board on 9 September 2016. Mr Caldwell is a mining
engineer with over 30 years of experience building and operating
gold and base metal mines worldwide, including USA, Canada, Russia,
Zimbabwe, Chile and Indonesia.
Cascabel, the Company's world class flagship copper--gold
porphyry project, is located in North West Ecuador on the
under--explored northern section of the richly endowed Andean
Copper Belt. SolGold owns 85% of Exploraciones Novomining S.A.
("ENSA") and approximately 11% of TSX--V--listed Cornerstone
Capital Resources, which holds the remaining 15% of ENSA, the
Ecuadorian registered company which holds 100% of the Cascabel
concession.
To date SolGold has completed geological mapping, 25km(2) of
soil sampling, 14km(2) and an additional 9km(2) Induced
Polarisation and Magnetotelluric "Orion" surveys over the Alpala
cluster and Aguinaga targets respectively. By June 2016, the
Company had also completed approximately 23,700m of drilling and
expended a total of approximately USD33m on the program, corporate
costs and investments into Cornerstone. Intense diamond drilling is
planned for the next 12 months with multiple drill rigs.
Cascabel is characterised by fourteen (14) identified targets,
world class drilling intersections over 1km in length, and high
copper and gold grades, as well as logistic advantages in location,
elevation, water supply, proximity to roads, port and power
services and a progressive legislative approach to resource
development in Ecuador. To date, SolGold has drill tested only one
of the 14 targets, being Alpala.
SolGold is planning a resource statement at Alpala (the most
advanced target at Cascabel) during 2016. This has been delayed by
the discovery of high-grade mineralisation in Hole 17 at Alpala,
extending the immediate resource potential. Alpala is open at depth
in the upper extensions, and to the north, north-east, south-west
and south-east. The mineralised zone at Alpala and Moran is closely
modelled by magnetic signatures and currently encompasses over 10Bt
of magnetic rocks expected to be mineralised with copper and
gold.
SolGold will drill test other key targets within the Cascabel
concession at Aguinaga, Trivinio, Moran, Alpala Northwest, Hematite
Hill, Alpala Southeast, Cristal, Parambas, Carmen Tandayama-America
and Chinambicito. The Company is planning further metallurgical
testing by the end of 2016, and completion of a conceptual early
stage mine and plant design and a scoping study for an economic
development at Cascabel. SolGold is investigating both high tonnage
/ low-medium grade open cut and underground block caving
operations, and a high grade / low tonnage underground
development.
Drill hole intercepts are calculated using a data aggregation
method, defined by copper equivalent cut-off grades and reported
with up to 10m internal dilution, excluding bridging to a single
sample. Copper equivalent grades are calculated using a gold
conversion factor of 0.89, determined using copper price of
USD2.20/pound and gold price of USD1350/ounce.
Following a comprehensive review of the geology and
prospectivity of Ecuador, SolGold and its subsidiaries have also
applied for additional exploration licences in Ecuador over a
number of additional promising porphyry copper gold targets
elsewhere in the Country.
In Queensland, Australia the Company is evaluating the future
exploration plans for the Mt Perry, Rannes and Normanby projects.
Joint venture agreements are being investigated for a joint venture
partner to commit funds and carry out exploration to earn an
interest in the tenements.
SolGold retains interests in its original theatre of operations,
the Solomon Islands in the South West Pacific, where the 100%
owned, as yet undrilled, Kuma prospect exhibits surface geological
characteristics which are traditionally indicative of a large metal
rich copper gold intrusive porphyry system. SolGold intends in the
future to apply intellectual property and experience developed in
Ecuador to target additional world class copper gold porphyries at
Kuma and other targets in Ecuador and Argentina.
SolGold is based in Brisbane, Queensland, Australia. The Company
listed on London's AIM Market in 2006, under the AIM code 'SOLG'
and currently has a total of 1,222,716,605 ordinary shares issued,
together with 2,180,000 options exercisable at 28p and 5,180,000
options exercisable at 14p.
CAUTIONARY NOTICE
The news release may contain certain statements and expressions
of belief, expectation or opinion which are forward looking
statements, and which relate, inter alia, to the Company's proposed
strategy, plans and objectives or to the expectations or intentions
of the Company's directors. Such forward-looking statements involve
known and unknown risks, uncertainties and other important factors
beyond the control of the Company that could cause the actual
performance or achievements of the Company to be materially
different from such forward-looking statements. Accordingly, you
should not rely on any forward-looking statements and save as
required by the AIM Rules for Companies or by law, the Company does
not accept any obligation to disseminate any updates or revisions
to such forward-looking statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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