TIDMCNR
RNS Number : 6980H
Condor Gold PLC
28 November 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF REGULATION (EU) 596/2014 AS IT FORMS PART OF DOMESTIC LAW IN THE
UNITED KINGDOM BY VIRTUE OF THE EU (WITHDRAWAL) ACT 2018
("MAR").
Condor Gold plc
7/8 Innovation Place
Douglas Drive
Godalming
Surrey
GU7 1JX
Tel: +44 (0) 207 493 2784
28 November 2022
Condor Gold Plc
("Condor" or the "Company")
Fundraise via a Convertible Loan Note and Proposed Open Offer to
Raise up to GBP4.2M
Condor Gold Plc (AIM: CNR; TSX: COG) announces it has raised
GBP1 million through the issue of unsecured convertible loan notes
(the "Loan Notes") with warrants attached to Galloway Limited
("Galloway"), an 18.7% shareholder, which is wholly owned by
Burnbrae Group Limited which is, in turn, wholly owned by Jim
Mellon, Condor's Chairman.
Furthermore, Condor intends to launch an open offer providing
pre-emptive rights to Qualifying Shareholders to subscribe for 1
new ordinary share of GBP0.001 each ("New Ordinary Shares") for
every 6 ordinary shares held at the record date ("Existing Ordinary
Shares") at a subscription price of GBP0.15 per New Ordinary Share
(the "Open Offer"). Closing of the Open Offer is subject to
shareholder approval of a sub-division of the Company's ordinary
shares and the approval of the Toronto Stock Exchange. The record
date for the Open Offer is 1 December 2022. The full timetable will
be announced separately in due course. The issue of the Loan Notes
and Open Offer, together (the "Fundraise"), will raise up to GBP4.2
million.
Highlights of the Loan Notes
-- GBP1 million has been received by the Company in cleared
funds from Galloway, an 18.7% shareholder, which is wholly owned by
Burnbrae Group Limited which is, in turn, wholly owned by Jim
Mellon, Condor's Chairman, pursuant to the issue by the Company of
the Loan Notes
-- The Loan Notes will automatically convert into New Ordinary
Shares at GBP0.15 per New Ordinary Share if at least GBP1 million
is raised under the Open Offer from shareholders other than
Galloway
-- The Loan Notes have a 17% annual coupon attached, payable in
cash or by the issue of further loan notes at Galloway's option
-- The Loan Notes are repayable by the Company 12 months after
the date of issue assuming they are not converted earlier
-- The Loan Notes have a 2.5 for 1 warrant attached e.g. 2.5
warrants will be issued for each share that the principal amount of
the Loan Notes may be converted into, resulting in the issue of
warrants over 16,666,666 New Ordinary Shares and upon full exercise
of the warrants a subscription of GBP2.5 million
-- The warrants have an exercise price of GBP0.15 and an 18 month term
-- The Loan Notes are unsecured
-- As a condition of the subscription for Loan Notes, Denham
Eke, will be appointed (subject to normal regulatory approvals) to
the Condor board as a non-executive director
Highlights of the Open Offer
-- Gross proceeds of up to GBP3.2 million
-- 1 New Ordinary Share to be offered to all Qualifying
Shareholders on a pre-emptive basis for each 6 Ordinary Shares
held
-- Open Offer price of GBP0.15 per New Ordinary Share
-- Qualifying shareholders who subscribe for their full
entitlements in the Open Offer may also request additional Open
Offer shares
-- Any basic entitlements in the Open Offer not taken up by
Qualifying Shareholders may be placed by the Company at its sole
discretion
-- A circular containing full details of the terms and
conditions of the Open Offer and timetable expected to be published
the week commencing 5 December 2022
-- Conditional on Shareholder approval of a sub-division of each
of the Company's Existing Ordinary Shares of GBP0.20 into one
ordinary share of GBP0.001 and one deferred share of GBP0.199.
Jim Mellon, Chairman of Condor Gold commented:
"I am pleased to support the Fundraise with a commitment of GBP1
million, which the Company has already received. I encourage
existing shareholders to take up their pre-emptive rights under the
open offer of 1 new share for every 6 shares held. The Company's La
India Project is almost construction ready, with the key permits to
construct and operate a mine, a bankable feasibility study
completed, a SAG Mill and surface rights purchased. Initial
production is targeted at 100,000 oz gold p.a. with an expansion to
150,000 oz gold p.a. The strategy recently announced is for the
Company to sell the assets. The fundraise allows the Company to
enter a sale phase sufficiently funded".
Background to the Fundraise
The Company has successfully secured financing of GBP1 million
to provide working capital and cover short term overheads. It is
providing pre-emptive rights to all Qualifying Shareholders via an
open offer of 1 new share for every 6 shares held, subject to
shareholder approval of a subdivision of the Company's current
shares, allowing shareholders to participate in the financing of
the Company to raise an up to an additional GBP3.2 million. The
equity markets have been difficult of late and the impact of US
Sanctions as notified on 27 October 2022 has delayed financing. A
prior offer of equity financing was subsequently withdrawn whilst
the Company rejected a secured debt facility. The Company has
spoken with its Broker for several weeks and concluded that the
fairest and best way to finance the Company's operations is via
existing shareholders. The Company's short term funding requirement
is circa GBP500k to GBP700k over the next two months which is met
by the issue of the Loan Notes. The Company expects the Fundraise,
assuming at least GBP1 million is raised through the Open Offer, to
fund the Company through the sales process as announced on 22
November 2022.
Use of Proceeds
The net proceeds of the Fundraise after expenses will
principally be used by the Company to finance working capital
requirements at the operations in Nicaragua, including keeping the
concessions and permits in good standing, to pay the balance of
US$300k for the SAG Mill, to re-register land title and for head
office expenses.
The Loan Notes
The key terms of the Loan Notes are as follows:
-- GBP1 million has been received by the Company in cleared
funds from Galloway, an 18.7% shareholder which is wholly owned by
Burnbrae Group Limited which is, in turn, wholly owned by Jim
Mellon, Condor's Chairman, by way of subscription for the Loan
Notes.
-- The Loan Notes may be converted into Ordinary Shares at any
time at the option of the Noteholder
-- The Loan Notes will automatically convert into New Ordinary
Shares at GBP0.15 per New Ordinary Share if at least GBP1 million
is raised under the Open Offer from shareholders other than
Galloway
-- The Loan Notes have a 17% annual coupon, which is payable in
cash or by the issue of additional loan notes, at the option of the
loan note holder
-- The Loan Notes are repayable by the Company 12 months after
the date of issue (assuming they are not converted) and become
immediately repayable if the Sub-Division does not complete by 31
January 2023
-- The Loan Notes have a 2.5 for 1 warrant attached e.g. 2.5
warrants will be issued for each share that the principal amount of
the Loan Notes may be converted into, resulting in the issue of a
warrant over 16,666,666 New Ordinary Shares and, upon exercise,
raising GBP2.5 million
-- The warrants have an exercise price of GBP0.15 and an 18 month term
-- The Loan Notes are unsecured
-- The warrants cannot be exercised so as to result in Galloway
and Jim Mellon's interest in the Company exceeding 29.9%
The issue of the Loan Notes is a related party transaction under
the AIM Rules given Galloway currently holds 18.7% of the Company
issued ordinary shares and is wholly owned by Burnbrae Group
Limited which is, in turn, wholly owned by Jim Mellon, Condor's
Chairman. Accordingly, the independent directors, being the Board
excluding Jim Mellon, having consulted with the Company's Nominated
Adviser, consider the terms of the Loan Notes fair and reasonable
insofar as shareholders are concerned. In forming this view the
independent directors have noted the following:
- the financial position of the Company as noted above. The
Company has short term funding needs amounting to GBP500k to
GBP700k over the next 2 months which the Loan Notes will meet;
- the unsecured nature of the Loan Notes; and
- the Open Offer which will allow Qualifying Shareholders to
subscribe on a pre-emptive basis for New Ordinary Shares at the
same fixed price as the Loan Notes convert and at which the
warrants are exercisable.
Open Offer
The Company considers it important that Shareholders have an
opportunity (where it is practicable for them to do so) to
subscribe for New Ordinary Shares on the same terms as Galloway has
subscribed for the Loan Notes but excluding any entitlement to
warrants and accordingly the Company is making the Open Offer to
Qualifying Shareholders, noting that some overseas shareholders may
not be able to participate in the open offer for regulatory
reasons. Galloway has also indicated that it does not intend to
subscribe for its entitlement under the Open Offer.
The Company will undertake an Open Offer to allow shareholders
to subscribe for New Ordinary Shares up to an aggregate of GBP3.2
million at GBP0.15 per share and will issue a circular (the
"Circular") containing further details and the terms and conditions
of the Open Offer.
The key terms of the Open Offer are:
-- Gross proceeds of up to GBP3.2 million
-- 1 New Ordinary Share offered to all existing shareholders
(other than some overseas shareholders) on a pre-emptive basis for
each 6 Ordinary Shares held
-- Open Offer price of GBP0.15 per New Ordinary Share
-- Qualifying shareholders who subscribe for their full
entitlements in the Open Offer may also request additional Open
Offer shares
-- Any basic entitlements in the Open Offer not taken up by
Qualifying Shareholders may be placed by the Company at its sole
discretion
-- Circular and timetable expected to be published the week commencing 5 December 2022
-- Conditional on Shareholder approval of a sub-division of each
of the Company's Existing Ordinary Shares of GBP0.20 each into one
ordinary share of GBP0.001 and one deferred share of GBP0.199
The Circular will also include a notice of an extraordinary
general meeting (the "EGM") that will set out a resolution seeking
Shareholder approval for a sub-division of each Existing Ordinary
Share into one New Ordinary Share of GBP0.001 and one deferred
share of GBP0.199. The Deferred Shares shall have no rights to vote
or participate in distributions or on a winding up of the
Company.
Appointment of Denham Eke as Non Executive Director
As a condition of the subscription by Galloway for the Loan
Notes, Denham Eke, the sole director of Galloway, is to be
appointed to the Company's Board as a Non Executive Director
following the completion of normal regulatory checks and filings.
Denham Eke began his career in stockbroking before moving into
corporate planning for a major UK insurance broker. He is a
director of many years' standing of both public and private
companies involved in the mining, leisure, manufacturing and
financial services sectors. Denham is the Managing Director of
Burnbrae Group Limited, Galloway Limited and also Executive Vice
Chairman of AIM traded Manx Financial Group Plc, Finance Director
of Agronomics Limited (AIM: ANIC) and Bradda Head Lithium Ltd and
Chairman of Webis Holdings Plc (AIM: WEB).
The Company's Principal Assets
The Company's principal asset is La India Project, Nicaragua,
which comprises of a large, highly prospective land package of 588
sq km comprising of 12 contiguous and adjacent concessions. La
India Project hosts a high grade Mineral Resource Estimate of 9,672
kt at 3.5g/t gold for 1,088,000 oz gold in the indicated mineral
resource category and 8,642 kt at 4.3 g/t gold for 1,190,000 oz
gold in the inferred mineral resource category. The open pit
Mineral Resource Estimate is 8,693 kt at 3.2 g/t gold for 893,000
oz gold in the indicated mineral resource category and 3,026 kt at
3.0 g/t gold for 291,000 oz gold in the inferred mineral resource
category. Total underground Mineral Resource Estimate is 979 kt at
6.2 g/t gold for 194,000 oz gold in the indicated mineral resource
category and 5,615 kt at 5.0 g/t gold for 898,000 oz gold in the
inferred mineral resource category.
Other assets include approximately 1,000 hectares of land
purchased for the mine site infrastructure for circa US$4.2 million
and a new SAG Mill package purchased for US$6.5 million.
Condor has filed a feasibility Study (the "2022 FS") titled
"Condor Gold Technical Report on the La India Gold Project,
Nicaragua, 2022" and dated October 25, 2022, which was completed on
La India vein set open pit only, which has a Mineral Resource
Estimate of 8,487 kt at 3.0g/t gold in for 827,000 oz gold in the
indicated mineral resource category and 893 Kt at 2.4 g/t gold for
69,000 oz gold in the inferred mineral resource category.
The 2022 FS produced a Probable Mineral Reserve of 7.3Mt at
2.56g/t gold for 602,000 oz gold. Production averages 81,545 oz
gold per annum for the first 6 years of an 8.4 year mine life. Low
initial capital requirement of US$105.5 million (including
contingency and EPCM contract) and low average Life of Mine All-in
Sustaining Cash costs (AISC) at US$1,039 per oz gold.
- Ends -
For further information please visit www.condorgold .com or
contact:
Condor Gold plc Mark Child, CEO
+44 (0) 20 7493 2784
Beaumont Cornish Limited Roland Cornish and James Biddle
+44 (0) 20 7628 3396
SP Angel Corporate Finance Ewan Leggat
LLP +44 (0) 20 3470 0470
H&P Advisory Limited Andrew Chubb and Nilesh Patel
+44 207 907 8500
Adelaide Capital (Investor Deborah Honig
Relations) +1-647-203-8793
About Condor Gold plc:
Condor Gold plc was admitted to AIM in May 2006 and dual listed
on the TSX in January 2018. The Company is a gold exploration and
development company with a focus on Nicaragua.
The 2021 PEA considered the expanded Project inclusive of the
exploitation of the Mineral Resources associated to the La India,
Mestiza, America and Central Breccia deposits. The strategic study
covers two scenarios: Scenario A, in which the mining is undertaken
from four open pits, termed La India, America, Mestiza and Central
Breccia Zone ("CBZ"), which targets a plant feed rate of 1.225
million tonnes per annum ("Mtpa"); and Scenario B, where the mining
is extended to include three underground operations at La India,
America and Mestiza, in which the processing rate is increased to
1.4 Mtpa. The 2021 PEA Scenario B presented a post-tax, post
upfront capital expenditure NPV of US$418 million, with an IRR of
54% and 12 month pay-back period, assuming a US$1,700 Per oz gold
price, with average annual production of 150,000 oz gold per annum
for the initial 9 years of gold production. The open pit mine
schedules were optimised from designed pits, bringing higher grade
gold forward resulting in average annual production of 157,000 oz
gold in the first 2 years from open pit material and underground
mining funded out of cashflow. The 2021 PEA Scenario A presented a
post-tax, post upfront capital expenditure NPV of US$302 million,
with an IRR of 58% and 12 month pay-back period, assuming a
US$1,700 per oz gold price, with average annual production of
approximately 120,000 oz gold per annum for the initial 6 years of
gold production. The Mineral Resource estimate and associated
Preliminary Economic Assessment contained in the 2021 PEA are
considered a historical estimate within the meaning of NI 43-101, a
qualified person has not done sufficient work to classify such
historical estimate as current, and the Company is not treating the
historical Mineral Resource estimate and associated studies as
current, and the reader is cautioned not to rely upon this data as
such. Mineral Resources that are not Mineral Reserves do not have
demonstrated economic viability. The Company believes that the
historical Mineral Resource estimate and Preliminary Economic
assessment is relevant to the continuing development of the La
India Project.
In August 2018, the Company announced that the Ministry of the
Environment in Nicaragua had granted the Environmental Permit
("EP") for the development, construction and operation of a
processing plant with capacity to process up to 2,800 tonnes per
day at its wholly-owned La India gold Project ("La India Project").
The EP is considered the master permit for mining operations in
Nicaragua. Condor has purchased a new SAG Mill, which has mainly
arrived in Nicaragua. Site clearance and preparation is at an
advanced stage.
Environmental Permits were granted in April and May 2020 for the
Mestiza and America open pits respectively, both located close to
La India. The Mestiza open pit hosts 92 Kt at a grade of 12.1 g/t
gold (36,000 oz contained gold) in the Indicated Mineral Resource
category and 341 Kt at a grade of 7.7 g/t gold (85,000 oz contained
gold) in the Inferred Mineral Resource category. The America open
pit hosts 114 Kt at a grade of 8.1 g/t gold (30,000 oz) in the
Indicated Mineral Resource category and 677 Kt at a grade of 3.1
g/t gold (67,000 oz) in the Inferred Mineral Resource category.
Following the permitting of the Mestiza and America open pits,
together with the La India open pit Condor has 1.12 M oz gold open
pit Mineral Resources permitted for extraction.
Disclaimer
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on the Company's website
(or any other website) is incorporated into, or forms part of, this
announcement.
TSX Matters
For the purposes of TSX approvals in connection with the
issuance of the Loan Notes and the warrants, the Company is relying
on the exemption set forth in Section 602.1 of the TSX Company
Manual, which provides that the TSX will not apply its standards to
certain transactions involving "eligible interlisted issuers" such
as Condor whose shares are also listed on a recognized exchange
such as AIM.
Qualified Persons
The technical and scientific information in this press release
has been reviewed, verified and approved by Andrew Cheatle, P.Geo.,
a director of Condor Gold plc, and Gerald D. Crawford, P.E., the
Chief Technical Officer of Condor Gold plc, each of whom is a
"qualified person" as defined by NI 43-101.
Technical Information
Certain disclosure contained in this news release of a
scientific or technical nature has been reviewed by t he Qualified
Persons responsible for their respective components of the 2022 FS
as defined below:
-- On behalf of SRK: Dr Tim Lucks of SRK Consulting (UK)
Limited, Mr Fernando Rodrigues and Mr Ben Parsons of SRK Consulting
(U.S.) Inc., Mr Parsons assumes responsibility for the Mineral
Resource Estimate, Mr Fernando Rodrigues for the Mineral Reserve
estimate and the open pit mining study and production schedule, and
Dr Lucks for the oversight of the remaining SRK technical
disciplines.
-- On behalf of Hanlon: Mike Rockandel for the Process design
and Project Infrastructure and corresponding operating and capital
costs.
-- On Behalf of Tierra Group: Justin Knudsen P.E. for the
tailings waste management and La Simona water attenuation structure
design.
Important Notice(s)
Forward Looking Statements
All statements in this press release, other than statements of
historical fact, are 'forward-looking information' with respect to
the Company within the meaning of applicable securities laws,
including statements with respect to: the Fundraising, including
the open offer and the potential conversion of the Loan Notes; the
timing of the subdivision of the Company's existing ordinary shares
and the meeting of shareholders to approve such subdivision; future
development and production plans, projected capital and operating
costs, mine life and production rates, metal or mineral recovery
estimates, Mineral Resource, Mineral Reserve estimates at the La
India Project, the potential to convert Mineral Resources into
Mineral Reserves; and the Company's strategic plans and ongoing
sales process. Forward-looking information is often, but not
always, identified by the use of words such as: "seek",
"anticipate", "plan", "continue", "strategies", "estimate",
"expect", "project", "predict", "potential", "targeting",
"intends", "believe", "potential", "could", "might", "will" and
similar expressions. Forward-looking information is not a guarantee
of future performance and is based upon a number of estimates and
assumptions of management at the date the statements are made
including, among others, assumptions regarding: future commodity
prices and royalty regimes; availability of skilled labour; timing
and amount of capital expenditures; future currency exchange and
interest rates; the impact of increasing competition; general
conditions in economic and financial markets; availability of
drilling and related equipment; effects of regulation by
governmental agencies; the receipt of required permits; royalty
rates; future tax rates; future operating costs; availability of
future sources of funding; ability to obtain financing and
assumptions underlying estimates related to adjusted funds from
operations. Many assumptions are based on factors and events that
are not within the control of the Company and there is no assurance
they will prove to be correct.
Such forward-looking information involves known and unknown
risks, which may cause the actual results to be materially
different from any future results expressed or implied by such
forward-looking information, including, risks related to: mineral
exploration, development and operating risks; estimation of
mineralisation and resources; environmental, health and safety
regulations of the resource industry; competitive conditions;
operational risks; liquidity and financing risks; funding risk;
exploration costs; uninsurable risks; conflicts of interest; risks
of operating in Nicaragua; government policy changes; ownership
risks; permitting and licencing risks; artisanal miners and
community relations; difficulty in enforcement of judgments; market
conditions; stress in the global economy; current global financial
condition; exchange rate and currency risks; commodity prices;
reliance on key personnel; dilution risk; payment of dividends; as
well as those factors discussed under the heading "Risk Factors" in
the Company's annual information form for the fiscal year ended
December 31, 2021 dated March 29, 2022 and available under the
Company's SEDAR profile at www.sedar.com .
Although the Company has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking information,
there may be other factors that cause actions, events or results
not to be as anticipated, estimated or intended. There can be no
assurance that such information will prove to be accurate as actual
results and future events could differ materially from those
anticipated in such statements. The Company disclaims any intention
or obligation to update or revise any forward-looking information,
whether as a result of new information, future events or otherwise
unless required by law.
Beaumont Cornish Limited, which is authorised and regulated in
the United Kingdom by the FCA, is acting as Nominated Adviser
exclusively for the Company and no one else in connection with the
contents of this Announcement and will not regard any other person
(whether or not a recipient of this Announcement) as its client in
relation to the contents of this Announcement nor will it be
responsible to anyone other than the Company for providing the
protections afforded to its clients or for providing advice in
relation to the contents of this Announcement. Apart from the
responsibilities and liabilities, if any, which may be imposed on
Beaumont Cornish by the Financial Services and Markets Act 2000, as
amended (" FSMA ") or the regulatory regime established thereunder,
Beaumont Cornish accepts no responsibility whatsoever, and makes no
representation or warranty, express or implied, as to the contents
of this Announcement including its accuracy, completeness or
verification or for any other statement made or purported to be
made by it, or on behalf of it, the Company or any other person, in
connection with the Company and the contents of this Announcement,
whether as to the past or the future. Beaumont Cornish accordingly
disclaims all and any liability whatsoever, whether arising in
tort, contract or otherwise (save as referred to above), which it
might otherwise have in respect of the contents of this
Announcement or any such statement. The responsibilities of
Beaumont Cornish as the Company's Nominated Adviser under the AIM
Rules for Companies and the AIM Rules for Nominated Advisers are
owed solely to the London Stock Exchange and are not owed to the
Company or to any director or shareholder of the Company or any
other person, in respect of its decision to acquire shares in the
capital of the Company in reliance on any part of this
Announcement, or otherwise.
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END
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