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$12.0 million project equity agreement with Greenstone Resources
Highlights:
· Binding Investment Agreement signed with Greenstone Resources LP, a long term strategic investor, for $12.0 million of equity funding
· Greenstone has subscribed for an initial tranche of $2,784,680 of ordinary shares of 0.2 pence each in the capital of the Company (“Ordinary Shares”) at 0.6 pence.
· In addition, Greenstone to provide up to $8.875 million of equity in three further tranches at increasing prices to underpin growth in shareholder value:
– $2.875 million at 0.7 pence
– $5.0 million at 0.9 pence
– $1.0 million at 1.0 pence
– Drawdown of these tranches is subject to certain project milestones being achieved (the most salient of which are set out at the end of this announcement)
· The funding package provides the equity capital for North River to re-open the Namib mine. Site preparation and advanced construction planning will begin immediately.
· Strategy to build North River by acquisition during the sector downturn to become a high-growth enterprise.
Martin French, Managing Director commented: “I am extremely pleased to welcome Greenstone as a corner-stone shareholder in North River. This is a major step in the Company’s transition to become a revenue-generating concern.
“Greenstone has conducted extensive due diligence on the Company and specifically the Namib project, so this investment represents a great vote of confidence in the project. It allows us to fast-track the development of the mine and provides a clear pathway to production in 2015.
“North River is an ambitious Company. It is our objective to use the Namib project as a platform to capitalise on numerous other opportunities in Namibia and elsewhere to build a larger business.”
Mark Sawyer, Senior Partner of Greenstone, said “We are delighted to become a major shareholder in North River and look forward to supporting Martin and his team in delivering both the Namib mine restart and the Company’s broader growth strategy.”
Key Transaction Details:
North River today announced the signing of a binding Investment Agreement with Greenstone, whereby Greenstone will invest up to $12.0 million in the Company in a series of tranches by way of equity subscriptions and one or more non-secured, non-redeemable, zero coupon convertible debentures (the “Convertible Debenture”) (the “Transaction”).
The Transaction will provide North River funding to complete the study and approval process for the Company’s Namib Lead and Zinc Project (“Namib”) mine restart, accelerate development through early works and the placing of long-lead item orders, as well as providing construction equity funding.
Greenstone has made an initial investment of $3.125 million being a subscription for 303,921,797 Ordinary Shares at 0.6p per share, of which $340,320 (33,333,333 Ordinary Shares) was raised in the private placement announced on 30 June 2014. The balance ($2,784,680, 270,588,464 Ordinary Shares) is the first tranche under the Investment Agreement (the “Tranche One Shares”). Admission to trading on AIM of the Tranche One Shares is expected to take place on 16 July 2014. The Tranche One Shares will rank pari passu in all respects with the existing issued Ordinary Shares in the Company. Following the allotment of the Tranche One Shares, the total issued share capital of the Company is 1,654,938,661 Ordinary Shares and Greenstone has a relevant interest representing 18.36% of the Company’s total voting rights.
Under the terms of the Investment Agreement, Greenstone will provide a further $8.875 million of funding in three tranches, subject to Greenstone being satisfied that certain milestones relating to the Namib mine restart have been satisfied.
The second tranche under the Investment Agreement is a $2.875 million subscription for Ordinary Shares at a subscription price of 0.7 pence (“Tranche Two”). The third tranche under the Investment Agreement will be $5.0 million of Ordinary Shares at a subscription price of 0.9 pence per share (“Tranche Three”) with the final tranche of under the Investment Agreement being $1.0 million of Ordinary Shares at a subscription price of 1 pence per share (“Tranche Four”). Tranche Three and Tranche Four will be limited so that Greenstone’s maximum holding in the issued share capital of the Company from time to time will not exceed 29.99% (the “Maximum Percentage”). Funding the Maximum Percentage will be by way of one or more Convertible Debenture and the conversion price will be equal to the relevant subscription price for that tranche.
Any Convertible Debenture issued will be convertible into: i) Ordinary Shares up to the Maximum Percentage; and, thereafter ii) shares in a newly incorporated, wholly owned subsidiary of the Company which will hold all of its assets and interests (the “Subsidiary”), such that Greenstone has an economic interest in the Company and its group which is the same as if the investment had been made in the Company only. The Convertible Debenture carries zero interest. The Company can require that any Convertible Debenture, or shares in the Subsidiary, issued to Greenstone are converted into Ordinary Shares up to the Maximum Percentage.
North River and Greenstone have also entered into a Relationship Agreement pursuant to which Greenstone, for such time as it has a Significant Interest (as defined below), shall have the right to: i) nominate one director to board of North River; ii) maintain its percentage shareholding in the Company by participating in future equity issues; and iii) nominate customers for a proportion of the group’s mineral production equal to Greenstone’s interest in the Company’s issued share capital. The Relationship Agreement contains other standard terms, including (but not limited to) orderly market and corporate governance provisions. Greenstone is committed to maintaining the independence of North River and has agreed that at a majority of the board shall comprise independent directors.
