TIDMGRL
RNS Number : 3897B
Goldstone Resources Ltd
03 April 2017
3 April 2017
GOLDSTONE RESOURCES LIMITED
("GoldStone" or the "Company")
GBP400,000 financing
Related Party Transaction
Board changes
GoldStone Resources Limited (AIM: GRL), the AIM quoted company
focused on gold exploration in Central and West Africa, announces
that it has entered into a loan agreement with Paracale Gold
Limited ("Paracale Gold") (the "Loan Agreement"), pursuant to which
Paracale Gold will provide a loan of up to GBP400,000 (the "Loan")
which, subject to shareholder approval, will convert into new
ordinary shares of 1 penny each in the capital of the Company
("Ordinary Shares")("Conversion").
The directors of the Company ("Directors" or "Board") are
mindful of the need to progress the Company's Homase-Akrokerri
project (the "Project"), which hosts an existing 602,000 oz gold
JORC Code compliant resource at an average grade of 1.77g/t, and
create shareholder value. Following completion of the placing and
subscription in July 2016 and the subsequent work programme, the
Company now needs to raise funds in the near term for general
working capital purposes.
Summary terms of the Loan
-- GBP400,000 Loan, with GBP200,000 to be drawn down immediately
-- Subject to shareholder approval, a further GBP200,000 to be
drawn down in full within 3 business days of the Company's 2017
annual general meeting ("AGM") which is to be held no later than 31
July 2017
-- The Loan will be unsecured and will attract interest at a
rate of 9.375 per cent per annum, compounded daily until it is
repaid or converted
-- Subject to shareholder approval at the AGM, the Loan and
accrued interest will convert automatically into new Ordinary
Shares at a price of 1 penny per share (the "Conversion
Shares")
-- Within 5 business days of issue of the Conversion Shares,
Paracale Gold shall also receive warrants to subscribe for such
number of new Ordinary Shares as equals the number of Conversion
Shares issued, exercisable at a price of 2 pence per share at any
time during the 2-year period following the grant date (the
"Warrants")
-- If shareholders do not approve the Conversion, the Loan,
accrued interest and a default fee of 50% of the amount of the Loan
then outstanding (including accrued interest) will become payable
in full to Paracale Gold within six weeks of the AGM
-- If shareholders do not approve the Conversion and the Loan is
repaid, Paracale Gold shall receive Warrants to subscribe for
20,000,000 Ordinary Shares ("Repayment Warrants"), to be issued
within 5 business days of the AGM. If the Company does not have
sufficient authority to issue the Repayment Warrants at that time,
it will be unable to issue any further Ordinary Shares (other than
as a result of the exercise of any pre-existing subscription right)
until such time as the Repayment Warrants have been issued to
Paracale Gold
-- The Loan will be used for essential corporate purposes,
including renewal of licences and a review of existing data for all
the projects, with the initial focus on the Homase-Akrokerri
Project. Following review, further funding will be required to
advance the Company's projects
-- The Loan, together with the Company's existing cash
resources, are expected to provide funds for 6-9 months, depending
on the rate of spend
-- Prior to Conversion or repayment, the Company will not be
able to enter into any material agreement, settle any litigation or
take on any additional debt without the prior consent of Paracale
Gold
-- Paracale Gold has the right to appoint a non-executive
director following the initial draw down of GBP200,000 pursuant to
the Loan. Following Conversion, for so long as Paracale Gold
controls the exercise of not less than 20% of the voting rights of
the Company, it shall be entitled to remove and replace such
director, subject to consent of the Company's nominated adviser
-- Paracale Gold has entered into a relationship agreement with
the Company and Strand Hanson, the Company's nominated adviser,
which will come into effect following Conversion and remain in
effect for so long as Paracale Gold controls the exercise of not
less than 20% of the voting rights of the Company.
Assuming the AGM is held on 31 July 2017 (being the latest
possible date under the terms of the Loan Agreement), the number of
Conversion Shares, and therefore also the number of Warrants, will
be 40,620,658.
The Company also announces that Dr Bob Foster has decided to
step down from the Board of the Company as a Non-executive Director
to focus on other business interests with effect from 4 April
2017.
The Directors continue to monitor and manage the Company's
working capital position very carefully and have, in order to
preserve cash and subject to the required authorities being granted
by shareholders at the AGM, agreed to convert accrued and future
salaries and fees through to the end of September 2017 for all
directors (including Paracale Gold's nominee), into new Ordinary
Shares ("Fee Shares"). The number of Fee Shares to be issued shall
be calculated by reference to (i) the average closing daily volume
weighted average share price for the period of 30 days prior to the
AGM in the case of salaries and fees accrued since 1 January 2017
and (ii) the average closing daily volume weighted average share
price for the period of 30 days prior to the due date for payment
of salaries and fees payable monthly to 30 September 2017, provided
that no Ordinary Share shall be issued at a price less than its
nominal value of 1 penny.
Neil Gardyne, Chairman of GoldStone, commented:
"Paracale Gold shares our vision for the development of the
Homase-Akrokerri Project in Ghana. In what remains a challenging
market for the natural resource sector, we welcome and value the
support and credentials of Paracale Gold, who we believe will be a
long-term strategic investor in the Company.
"On behalf of the Board, we would like to sincerely thank Bob
Foster for his time and many contributions to Goldstone. Bob has
had a significant impact while at Goldstone, especially in
understanding the potential for the Homase and Akrokerri Project in
Ghana, and we are sorry to see him go. We wish him the very best in
his future endeavours."
For further information, please contact:
GoldStone Resources
Limited
Emma Priestley/ Neil Tel: +44 (0)20 7830
Gardyne 9650 /
+27 (0)82 490 4427
Strand Hanson Limited
Richard Tulloch / James Tel: +44 (0)20 7409
Bellman 3494
SI Capital Limited
Nick Emerson / Andy Tel: +44 (0)1483
Thacker 413 500
Further Information
GoldStone's Operations
The Company has made significant progress since completing the
GBP1.0 million placing and subscription in July 2016, having
undertaken and completed a drilling programme consisting of two
auger drilling programmes for over 3,300 metres, some 1,500 metres
of reverse circulation drilling and approximately 800 metres of
diamond drilling on the Company's Homase-Akrokerri Project in
Ghana.
The results of the drilling programmes, which were announced on
11 November 2016, 26 January 2017 and 3 February 2017, produced
encouraging results and culminated in the start of the process for
targeting 'information gaps' within the existing JORC Code
compliant resource for the Homase-Akrokerri Project of 602,000 oz
gold. These results provide important insights into the controls on
the mineralisation as well as confirming the continuity of the
mineralised zone at a depth of 250 metres. Whilst there is little
doubt that the ore within the Homase pit is open at depth, our
focus will be on identifying resources within the Homase pit at
depths that can be exploited in the foreseeable future.
Importantly, the results of the drilling programme have enabled us
to identify the further drilling required to seek to add to, and at
the same time improve confidence levels in the categorisation of,
the existing resource for the Project.
Litigation
As announced on 13 October 2016, there is an outstanding claim
by a former director, which exceeds the Company's current cash
resources. Whilst the Board believes there is no merit in the case,
discussions with the claimant are ongoing in order to resolve the
situation.
Financial Position
It should be noted that currently the Company does not have
sufficient cash resources to support its minimum spend requirements
and general overheads for the next 12 months. The Company only has
sufficient cash resources to meet its requirements to the end of
May 2017, not taking into account the impending claim by the former
director.
The Board has given due consideration to potential funding
options for the Company. In light of the timing implications for
seeking the additional shareholder authorities required to conduct
an equity fund raise, and taking into account the chances of
success of such an equity fund raise, the Directors believe that
the Loan is in the best interests of the Company and shareholders
as a whole.
The terms of the Loan Agreement and the Warrants
Pursuant to the terms of the Loan Agreement, Paracale Gold has
agreed to provide the Company with up to GBP400,000, of which
GBP200,000 will be drawn immediately. Subject to shareholder
approval, the remaining GBP200,000 will be drawn down in full
within 3 business days of the AGM.
The Loan will be used for essential corporate purposes,
including renewal of licences and a review of existing data for all
the projects, with the initial focus on the Homase-Akrokerri
Project.
The Loan will be unsecured and will carry interest at a rate of
9.375 per cent per annum, compounded daily until it is repaid or
converted. Prior to Conversion, the Company will not be able to
enter into any material agreement, settle any litigation or take on
any additional debt, without the prior written consent of Paracale
Gold.
Pursuant to the Loan Agreement, the Loan and accrued interest
will, subject to shareholder approval to increase the Company's
authorised share capital and permit allotment of the Conversion
Shares and Warrants at the Company's 2017 AGM (which must be held
before 31 July 2017), convert automatically into the Conversion
Shares at a price of 1 penny per share. If the necessary
shareholder approvals are not obtained, the Loan, accrued interest
thereon and a default fee, being equal to 50 per cent of the drawn
down amount of the Loan (including accrued interest) (the "Default
Fee"), must be paid in full to Paracale Gold within six weeks of
the AGM.
If the necessary shareholder approvals at the AGM are obtained,
the second tranche of GBP200,000 will be drawn down within 3
business days of the AGM and Conversion will result in the
40,000,000 Conversion Shares being issued to Paracale Gold in
respect of the conversion of the GBP400,000 principal loan amount.
In addition, assuming the AGM is held on 31 July 2017 (being the
latest possible date under the terms of the Loan), the accrued
interest would be GBP6,206.59, which would convert into a further
620,658 Conversion Shares. Accordingly, the maximum number of
Conversion Shares will be 40,620,658.
In addition, subject to the necessary shareholder approvals
being obtained at the AGM, the Company will grant Paracale Gold
Warrants to subscribe for up to 40,620,658 new Ordinary Shares
(being the same number as the number of Conversion Shares) at 2
pence per share within two years from the date of grant. The
Warrants are subject to standard anti-dilution provisions and
protections in the event of capital re-organisations.
If the necessary shareholder approvals are not obtained at the
AGM, and the Loan is repaid rather than converted, Paracale Gold
shall receive Warrants to subscribe for 20,000,000 Ordinary Shares
("Repayment Warrants"), to be issued within 5 business days of the
AGM. If the Company does not have sufficient authority to issue the
Repayment Warrants at that time, it will be unable to issue any
further Ordinary Shares (other than as a result of the exercise of
any pre-existing subscription right, for example under an option or
warrant) until such time as the Repayment Warrants have been issued
to Paracale Gold.
In the event that the AGM is not held before the 31 July 2017
and/or shareholders do not approve the requisite resolutions, then
the full amount drawn down under the Loan and the accrued interest,
together with the Default Fee will become payable in full by no
later than 11 September 2017, being six weeks from 31 July 2017. In
addition, Paracale Gold will receive the Repayment Warrants.
The Takeover Code
The exercise of conversion rights pursuant to the Loan Agreement
may give rise to certain considerations under the Code. Brief
details of the Panel, the Code and the protections they afford are
described below.
The Code is issued and administered by the Panel. The Code
applies to all takeover and merger transactions, however effected,
where the offeree company has its registered office in the United
Kingdom, the Channel Islands or the Isle of Man and, inter alia,
whose securities are admitted to trading on a multilateral trading
facility in the United Kingdom (such as AIM). The Company is
therefore subject to the Code.
Rule 9 of the Code requires that any person who acquires,
whether by a series of transactions over a period of time or not,
an interest (as defined in the Code) in shares which, taken
together with shares in which persons acting in concert with him
are interested, carry 30 per cent. or more of the voting rights of
a company which is subject to the Code, will normally be required
to make a general offer to all of the remaining shareholders to
acquire their shares (a "Mandatory Offer").
Similarly, when any person, together with any persons acting in
concert with him, is interested in shares which, in aggregate,
carry not less than 30 per cent. of the voting rights of such a
company but not more than 50 per cent. of such voting rights, a
Mandatory Offer will normally be required if any further interests
in shares are acquired by any such person, or any person acting in
concert with him. An offer under Rule 9 of the Code must be made in
cash and at the highest price paid by the person required to make
the offer, or any person acting in concert with him, for any
interest in shares in the company during the 12 months prior to the
announcement of the offer.
Rule 9 of the Code further provides, inter alia, that where any
person who, together with persons acting in concert with him, holds
over 50 per cent. of the voting rights of a company and acquires an
interest in shares which carry additional voting rights, then they
will not normally be required to make a Mandatory Offer to the
other shareholders to acquire their shares. However, the Panel may
deem an obligation to make an offer to have arisen on the
acquisition by a single member of a concert party of an interest in
shares sufficient to increase his individual interest to 30 per
cent. or more of a company's voting rights, or, if he already holds
more than 30 per cent. but less than 50 per cent., an acquisition
which increases his interest in shares carrying voting rights in
that company.
Under the Code, a concert party arises where persons acting
together pursuant to an agreement or understanding (whether formal
or informal) co-operate to obtain or consolidate control of, or to
frustrate the successful outcome of an offer for a company, subject
to the Code. Control means an interest, or interests, in shares
carrying, in aggregate, 30 per cent. or more of the voting rights
of a company, irrespective of whether such interest or interests
give de facto control.
In the event that the Resolutions are approved, Paracale Gold
will have the potential to increase its interest in shares carrying
voting rights in the Company up to a maximum of 81,241,316 Ordinary
Shares (comprising 40,620,658 Conversion Shares and 40,620,658 new
Ordinary Shares arising from the exercise of the Warrants)
representing 44.27 per cent of the voting rights in the issued
share capital which, without a waiver of the obligations under Rule
9, would oblige Paracale Gold to make a Mandatory Offer under Rule
9 in certain circumstances.
In the event that the Resolutions are not passed and Paracale
Gold receives only the Default Warrants, it will the potential to
increase its interest in shares carrying voting rights in the
Company up to a maximum of 20,000,000 Ordinary Shares representing
16.36 per cent of the voting rights in the issued share capital
which would not oblige Paracale Gold to make a Mandatory Offer
under Rule 9.
Board representation
The Loan Agreement also provides that Paracale Gold is entitled
to nominate one non-executive director to the Board on draw down of
the initial GBP200,000. Subject to completion of the requisite due
diligence pursuant to the AIM Rules, the Paracale Gold nominee is
expected to be appointed shortly.
Relationship Agreement
The Company, Paracale Gold and Strand Hanson have also entered
into a relationship agreement, to provide certain safeguards to,
inter alia, ensure that for so long as Paracale Gold and its
associates together are entitled to exercise or control the
exercise of 20 per cent. or more of the Company, GoldStone is
capable of carrying on its business independently of Paracale Gold
as a substantial shareholder. In addition, for as long as the
relationship agreement remains in place, Paracale Gold will be able
to nominate one director to the Goldstone Board.
Importance of the shareholder vote
Shareholders should note that should they not approve the
relevant resolutions at the AGM to enable the Conversion of the
Loan, the Company would not have sufficient funds to be able to
repay the amount then due pursuant to the Loan Agreement, including
the Default Fee equal to 50 per cent of the amount drawn (including
accrued interest), which would need to be repaid in full within six
weeks of the AGM. In such circumstances, the Company would need to
immediately consider alternative sources of financing to repay the
Loan and to provide general working capital to the Company and
there can be no certainty that such financing would be available or
that the terms of such financing would be on terms as favourable to
the Company and its shareholders.
The Company currently has minimal available cash resources,
which the Board estimates are sufficient, prior to the claim by a
former director, for the Company's requirements for approximately
two months. Accordingly, if Shareholders do not approve the
resolutions and the Company is unable to secure the necessary
funding in the short term to repay the Loan, it is highly likely
that the Company will not be able to meet its liabilities as they
fall due and may therefore be forced into insolvency proceedings
(be that administration or liquidation) and in such a case it is
highly unlikely that there would be any value attributable to
Shareholders.
Paracale Gold Limited
Paracale Gold Limited is a mining investment company focused on
mineral exploration and mine development opportunities.
It is currently assessing and investing in natural resources
projects where it believes it can add value through supporting
their geological exploration works, production development
opportunities and corporate activities. Paracale aims to assemble a
portfolio of investments, at various stages of the mineral
development cycle through to and including production, by
leveraging its existing resources and background.
Paracale is a privately held company incorporated in the British
Virgin Islands. The directors, William (Bill) Trew and Alasdair
Stuart and its management team have had a long association within
the international project engineering, mine development and mineral
processing sectors.
Board changes
The Company also announces that Dr Bob Foster has decided to
step down from the Board of the Company as a Non-executive Director
to focus on other business interests with effect from 4 April
2017.
As set out above, pursuant to the Loan Agreement, Paracale Gold
is entitled to nominate one non-executive director to the
Board.
Proposed issue of Fee Shares to certain Directors
The Directors continue to monitor and manage the Company's
working capital very carefully. In order to preserve cash, and
subject to the required authorities being granted by shareholders
at the AGM, the Company intends to convert a total of, in
aggregate, GBP36,204 in accrued fees and salaries due to certain
Directors, being Emma Priestley, Neil Gardyne and Richard Lloyd up
to 30 March 2017 into Fee Shares. The number of Fee Shares to be
issued in respect of such fees and salaries shall be calculated by
reference to the average closing daily volume weighted average
price of Ordinary Shares for the period of 30 days prior to the
AGM, provided that no Ordinary Share shall be issued at a price
less than its nominal value of 1 penny.
In addition, subject to the required authorities being granted
by shareholders at the AGM, the Company has agreed to issue Fee
Shares in lieu of fees and salaries due to Directors for each month
through to the end of September 2017, with such number of Fee
Shares to be issued each month to be determined based on the
average closing daily volume weighted average price of Ordinary
Shares for the period of 30 days prior to the monthly due date for
payment of such salaries and fees, provided that no Ordinary Share
shall be issued at a price less than its nominal value.
The issue of the Fee Shares to certain Directors is treated as a
related party transaction under the AIM Rules for Companies. The
independent director (being Bob Foster, as the only director not
receiving Fee Shares), having consulted with the Company's
nominated adviser, Strand Hanson Limited, considers that the terms
of the proposed issue of the Fee Shares are fair and reasonable
insofar as the Company's Shareholders are concerned.
- END -
The information contained within this announcement is deemed by
the Company to constitute inside information under the Market Abuse
Regulations (EU) No. 596/2014.
About GoldStone Resources Limited
GoldStone Resources Limited (AIM: GRL) is an AIM quoted
exploration company with projects in Ghana, Senegal, and Gabon that
range from grassroots to advanced exploration.
The Company is focused on developing the Homase-Akrokerri
project in south-western Ghana, which hosts an existing 602,000 oz
gold JORC Code compliant resource at an average grade of 1.77g/t,
along strike from the Obuasi Gold Mine, one of the World's major
gold mines with a total historical and current resource in excess
of 70 million ounces of gold. It is the Company's intention to
build a portfolio of high-quality gold projects in Ghana, with a
particular focus on the highly prospective Ashanti Gold Belt.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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