TIDMGCM
RNS Number : 8089W
GCM Resources PLC
22 August 2022
22 August 2022
GCM Resources plc
("GCM" or the "Company")
(AIM:GCM)
Project Update and Extension of Consultancy Agreement
GCM Resources plc, an AIM quoted mining and energy company,
provides a project update and, announces that, further to its
announcement of 4 September 2019, it has agreed a further extension
of the consultancy agreement (the "Consultancy Agreement") with DG
Infratech Pte Ltd, a Bangladeshi controlled company ("DGI" or the
"Consultant") , for an additional two years, on similar terms as
previously announced. Details of the key terms of the extended
Agreement are set out at the conclusion of this announcement.
Principal terms of the Consultancy Agreement:
Under the terms of the Consultancy Agreement, the Consultant
shall continue to provide the Company with advisory, management,
lobbying and consultancy services in relation to the Company's
business, namely to achieve the approval for and development of the
Coal Project and the Power Projects, and in thus doing so to
deliver approvals and the necessary cooperation from all
stakeholders to develop the Coal Project and the Power
Projects.
In return for its services, the Consultant shall receive the
following fees:
- A monthly retainer of GBP15,000 from 1 January 2022, payable
quarterly in arrears by the issuance of 363,636 new ordinary shares
of 1 pence each in the capital of the Company ("New Ordinary
Shares") at 4.125 pence per share, with no other financial payments
nor reimbursement of expenses, unless agreed by the Company in
advance.
- Upon completion of certain key milestones, the Consultant will
receive share-based success fees in lieu of any cash payment. The
milestones and related payments are as follows:
o receipt of the written approval of the Coal Project's Scheme
of Development , for which the Consultant shall receive a success
fee equal to 5% of the issued capital of the Company at the time of
issue;
o receipt of the written approval in respect of each group of
the Power Plants, for which the Consultant shall receive a success
fee equal to 2% of the issued capital of the Company at the time of
issue (i.e., up to 6% in total) ; and
o commencement of development of the Coal Project , for which
the Consultant shall receive a success fee equal to 4% of the
issued capital of the Company at the time of issue.
With the exception of the monthly retainer, the Consultant will
be restricted from disposing of any New Ordinary Shares received
under the consulting agreement for a period of six months from
issue.
Each milestone specified in the Consultancy Agreement represents
a significant step towards developing the proposed multi-billion
dollar Coal Project and Power Project.
The Board is acutely aware of the potential dilution arising
from the Consultancy Agreement. However, in the opinion of the
Company, the value of the services provided by the Consultant is
expected to significantly exceed the fees incurred if successful.
Accordingly, the Board has concluded that entering into the
Consultancy Agreement is beneficial for GCM and in the best
interests of the Company's shareholders as a whole.
Project Update:
Developing countries that are largely dependent on imported
fuels began to experience financial strain brought on by the
vagaries of the international energy market as the industrial world
recovered from the COVID Pandemic. The Ukraine situation has
dramatically escalated energy supply and cost problems and the
situation is likely to remain protracted. GCM's proposed Phulbari
Coal and Power Project would, in the view of the Board, enable the
Government and People of Bangladesh the opportunity to circumvent
some of the impacts of the world energy market turmoil by utilising
its own energy resource in the Phulbari Coal Basin. The annual
savings for Bangladesh in terms of coal price compared to imported
options and Foreign Exchange Reserves would in the view of the
Board be very significant. Additional benefits may include large
scale solar power development in parallel with coal mining and
potentially a reduction in greenhouse gases due to Phulbari coal
being higher energy than imported coal, meaning less coal being
consumed per kilowatt-hour of electrical energy production and the
need to ship coal thousands of kilometres from overseas mines is
avoided . The Bangladesh Government is reporting difficulties,
particularly with cost, in importing coal and gas for power plants.
GCM has opened up discussions with Government representatives to
establish a modality for progressing the Project.
GCM's Chief Executive Officer, Datuk Michael Tang PJN,
stated:
"I am delighted to continue to engage the services of DG
Infratech and look forward to working with them to drive
significant progress in pursuit of our goals."
"Our primary objective remains to deliver an impact project for
the people of Bangladesh, providing low cost and sustainable
electricity in the country. We have explored options with our
international development partners and believe the entire Phulbari
Geologic Basin should be declared an "Energy Park" of national
significance for Bangladesh. It is rich in natural energy resources
and power generating potentials, capable of supporting over 4,500MW
Solar Power and over 6,600MW thermal power, and in parallel
potentially producing significant volumes of valuable industrial
mineral co-products from the overburden material removed to access
the coal."
"The Company's economic interests and DG Infratech's are
aligned: to achieve successful progression of the proposed Phulbari
Coal and Power Project with its enabled Energy Park. I am confident
that the Consultancy Agreement will assist the Company unlock
significant value for our shareholders in time to come."
This announcement contains inside information for the purposes
of Article 7 of the UK version of Regulation (EU) No596/2014 which
is part of UK law by virtue of the European Union (Withdrawal) Act
2018, as amended ("MAR"). Upon the publication of this announcement
via a Regulatory Information Service, this inside information is
now considered to be in the public domain.
For further information:
GCM Resources plc WH Ireland Ltd
Keith Fulton James Joyce
Finance Director Andrew De Andrade
+44 (0) 20 7290 1630 +44 (0) 20 7220 1666
GCM Resources plc
Tel: +44 (0) 20 7290 1630
info@gcmplc.com; www.gcmplc.com
About GCM Resources
GCM Resources plc (LON:GCM), the AIM listed mining and energy
company, has identified a high-quality coal resource of 572 million
tonnes (JORC 2004 compliant) at the Phulbari Coal and Power Project
(the "Project") in north-west Bangladesh.
Utilising the latest highly energy efficient power generating
technology, the Phulbari coal mine is capable of supporting over
6,000MW power generation. GCM is awaiting approval from the
Government of Bangladesh to develop the Project. The Company,
together with credible, internationally recognised strategic
partners, has a strategy of positioning its proposed coal to supply
power plants at the mine-mouth and other coal-fired power projects
in Bangladesh. GCM aims to deliver a practical power solution to
provide the cheapest electricity in the country, in a manner
amenable to the Government of Bangladesh.
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END
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