TIDMARG
RNS Number : 5573U
Argos Resources Ltd
07 April 2021
This announcement contains inside information
Argos Resources Limited
("Argos" or "the Company")
Subscription to Raise US$550,000
Argos is pleased to announce it has conditionally raised gross
proceeds of US$550,000 (approximately GBP400,000) through the issue
of 14,428,001 Subscription Shares at a price equivalent to 2.75
pence each (the "Subscription Price") by certain new shareholders
and Ian Thomson, Executive Chairman of the Company (the
"Fundraise").
Further to Argos' announcement on 18 September 2020, the Company
remains engaged in discussions with counterparties who have
expressed an interest in participating in drilling on Licence
PL001, a production licence covering an area of approximately 1,126
square kilometres in the North Falkland Basin. In order to enable
the Company to progress these discussions with potential farm-in
partners, on 10 February 2021 the Board requested that the
Falklands Islands Government grant a 12 month extension to the
second term of Licence PL001, which is currently due to expire on 1
May 2021. The Falkland Islands Government has said that as part of
its consideration of this request, the Company must demonstrate
that it has, or will secure, sufficient funds to meet its working
capital requirements until at least the period of the extension
requested.
The net proceeds of the Fundraise, along with the Company's
existing cash of GBP235,000 at 25 March 2021, will provide working
capital for the Group until at least 1 May 2022, being the
requested extension date of Licence PL001.
The Fundraise is conditional, among other matters, on the
passing of the Resolutions by Shareholders at a General Meeting. A
notice convening the General Meeting for 5.00 p.m. (FKST) on 30
April 2021 at Falkland Islands Chamber of Commerce, Stanley,
Falkland Islands to consider the Resolutions is expected to be
posted on 7 April 2021.
Further details on the Background to and Reasons for the
Fundraise are set out below in the Letter from the Executive
Chairman.
For further information:
Argos Resources Limited (+500 22685)
www.argosresources.com
Ian Thomson, Chairman
John Hogan, Managing Director
Cenkos Securities PLC
Neil McDonald (+44 131 220 6939)
Derrick Lee (+44 131 220 9100)
Letter from the Executive Chairman
On 7 April 2021, the Company announced that it had conditionally
raised gross proceeds of US$550,000 (being the US$ equivalent of
approximately GBP400,000) through the issue of 14,428,001
Subscription Shares at a price of 2.75 pence each (the Issue
Price).
The Fundraise comprises a subscription by certain new
shareholders and Ian Thomson, Executive Chairman of the Company, to
raise US$550,000 (being the US$ equivalent of approximately
GBP400,000 (before expenses)).
Following their issue, the Subscription Shares will represent
approximately 6.14% per cent. of the Enlarged Share Capital.
The Fundraise is conditional, among other matters, on the
passing of the Resolutions by Shareholders at a General
Meeting.
The purpose of the Circular is to provide information about the
background to and the reasons for the Fundraise and to explain why
the Board considers it to be in the best interests of the Company
and its Shareholders as a whole and, further, why the Directors
recommend that Shareholders vote in favour of the Resolutions to be
proposed at the General Meeting.
Further background information is set out below under the
heading "Background to and Reasons for the Fundraise".
Background to and Reasons for the Fundraise
The Company's principal asset is a 100 per cent. interest in
Licence PL001, a production licence covering an area of
approximately 1,126 square kilometres in the North Falkland Basin.
Licence PL001 is adjacent and to the west of the large Sea Lion oil
discovery which is reported to contain some 530 million barrels of
recoverable oil. A 3D seismic survey was acquired by the Company in
early 2011 covering the entire Licence Area. The high quality of
the seismic data acquired enabled the Company to identify 52
prospects and 40 leads within the Licence. The Company's Competent
Person's Report ("CPR") issued in July 2013 described 52 prospects
with a total unrisked potential of 3.1 billion barrels of
prospective recoverable resource in the most likely case, and up to
10.4 billion barrels in the upside case.
Following the withdrawal of Noble Energy Falklands Limited and
Edison International S.p.A. from Licence PL001 and the subsequent
reassignment of Licence PL001 to the Company in February 2019, the
Company has continued to seek financially and operationally strong
farm-in partners to participate in the development of PL001 and
help fund the costs of certain drilling commitments during the
second term of Licence PL001.
On 31 October 2019, Argos announced that the Falkland Islands
Government had agreed to extend the second term of Licence PL001 by
a period of 18 months, to 1 May 2021, with no additional work
requirements being required beyond the requirement to drill one
exploration well within the Licence Area by the end of the second
term of Licence PL001. Fulfilling this work obligation would allow
a continuation of Licence PL001 into the Third Exploration Term for
up to a further 10 years from May 2021 in accordance with its terms
and applicable law.
On 18 September 2020, the Company announced that it was engaged
with counterparties who had expressed an interest in participating
in drilling on Licence PL001. However, the Company noted that the
oil & gas industry had experienced a sharp drop in crude oil
prices as a result of increased competition from OPEC for market
share, which was exacerbated by the significant drop in global
energy demand as a result of the Covid-19 pandemic and the
industry's response to the challenging market conditions was
focused on reducing costs, cutting capital expenditure and delaying
projects. Against this backdrop, whilst the Company's discussions
with potential farm-in partners remain on-going, the Board believes
it may be some time before any farm-in partner's expression of
interest is translated into commitments.
In order to enable the Company to progress its discussions with
potential farm-in partners, on 10 February 2021 the Board requested
that the Falklands Islands Government grant a 12 month extension to
the second term of Licence PL001, which is currently due to expire
on 1 May 2021. The Falkland Islands Government has said that as
part of its consideration of this request, the Company must
demonstrate that it has, or will secure, sufficient funds to meet
its working capital requirements until at least the period of the
extension requested.
The net proceeds of the Fundraise, along with the Company's
existing cash of GBP235,000 at 25 March 2021, will provide working
capital for the Group until at least 1 May 2022, being the
requested extension date of Licence PL001. Part of the working
capital raised will be retained in US$ to meet the Company's
anticipated US$ expenditures and part will be converted to GBP
after the conditions set out in the next paragraph are
satisfied.
Completion of the Fundraise is conditional on: (i) the passing
of Resolutions; (ii) the Falkland Islands Government consenting to
the extension of PL001 for a further period to expire not earlier
than 30 April 2022; and (iii) admission of the Subscription Shares
to trading on AIM becoming effective on or before 31 May 2021. In
the event that the Subscription does not become unconditional on or
before 31 May 2021, the Fundraising will not proceed.
In the event that the Company is unable to complete the
Fundraise or an alternative means by which to raise capital, find a
farm-in partner, or negotiate an extension to PL001, the Company
may be unable to realise its assets and discharge its liabilities
in the normal course of business and in these circumstances there
would be a significant material uncertainty over the Group's and
Company's ability to continue as a going concern.
Ongoing activities and strategy
The Company has a strong and experienced management team with
extensive experience in both the oil and gas industry and the
Falkland Islands.
Argos is focused on the North Falkland Basin, specifically
Licence PL001, which is a production licence covering an area of
approximately 1,126 square kilometres in the North Falkland Basin.
Licence PL001 is adjacent and to the west of the large Sea Lion oil
discovery which is reported to contain some 530 million barrels of
recoverable oil. The Company is currently seeking partners to
participate in drilling on Licence PL001 to unlock the value of
what the Directors consider to be a significant and exciting
opportunity.
Details of the General Meeting
As described above, the Fundraise is conditional on the passing
of the Resolutions at a General Meeting. The Resolutions will grant
authority to the Directors to issue and allot the Subscription
Shares as if the statutory pre-emption restrictions under the
Companies Acts did not apply to such issue and allotment.
A notice convening the General Meeting is available on the
Company's website www.argosresources.com . The General Meeting is
to be held at 5.00 p.m. (FKST) on 30 April 2021 at Falkland Islands
Chamber of Commerce, Stanley, Falkland Islands and Shareholders
will be asked to consider and, if thought fit, approve the
Resolutions set out in full in the Notice of General Meeting, as
summarised below:
-- Resolution 1 is an ordinary resolution to grant the Directors
authority to allot the Subscription Shares for the purposes of the
Fundraise.
-- Resolution 2 is conditional on the passing of Resolution 1.
Resolution 2 is a special resolution which disapplies the statutory
pre-emption rights in respect of the allotment of the Subscription
Shares to be allotted pursuant to Resolution 1.
Recommendation
The Board considers the Transaction and passing of the
Resolutions to be in the best interests of the Company and
Shareholders as a whole.
Note: Capitalised terms in this announcement are as defined in
the circular dated 7 April 2021, which is available on the
Company's website at www.argosresources.com
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