TIDMIRON
RNS Number : 0163I
Ironveld PLC
30 March 2020
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN
ARTICLE 7 OF THE MARKET ABUSE REGULATION NO. 596/2014 ("MAR"). UPON
THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS
NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
30 March 2020
Ironveld Plc
("Ironveld" or the "Company")
Strategic Partnership and Conditional Fundraising to raise
US$3.2 million
Ironveld is pleased to announce a new strategic partnership with
Inclusive Investment Group ("IIG") as part of which the Company has
entered into arrangements to raise potential total gross proceeds
of approximately GBP 2.7 million (US$3.2 million) (the
"Fundraising").
The Fundraising comprises:
-- an option agreement between the Company and IIG (the "Option
Agreement") pursuant to which, on grant of the Option (which is
conditional), IIG can subscribe (the "Subscription") for
440,176,070 new ordinary shares in the capital of the Company (the
"Subscription Shares") at a price of 0.42 pence per Subscription
Share (the "Issue Price") (the "Option"); and
-- a term loan from IIG of US$1,000,000 (approximately GBP
840,000 ) (the "Loan Facility") to be entered into on completion of
the Subscription. The Loan Facility will be capable of conversion
at the Issue Price.
The grant of the Option and the Fundraising in general are
wholly conditional on shareholder approval being granted at a
general meeting of the Company (the "General Meeting") and to the
Takeover Panel granting a Rule 9 Waiver*. The Company will publish
a circular together with a notice to convene the General Meeting in
due course. Under the terms of the Option Agreement, exercise of
the Option must occur on or prior to 17 June 2020. Should these
conditions not be met, then the Fundraising will not proceed.
Highlights
-- Total fundraising package agreed of US$3.2 million
(approximately GBP 2.7 million) consisting of US$2.2 million
(approximately GBP 1.85 million) equity and US$1.0 million
(approximately GBP 840,000 ) loan from IIG;
-- IIG is an investment vehicle associated with Mcebisi Jonas
and Monwabisi Twantwa in South Africa and is at the forefront of
securing development for South Africa's coming wave of battery and
strategic metals projects;
-- Following completion of the Subscription and the issue of the
Salary Shares (as detailed below) IIG will own approximately 36.0
per cent. of the Company's issued ordinary share capital to become
Ironveld's largest shareholder and will provide expertise and
utilise its extensive African connections to secure the larger
scale funding required by Ironveld to develop its near term high
purity iron, vanadium and titanium project;
-- IIG has agreed to pay Ironveld an option fee of US$250,000
(approximately GBP 210,000), (payable within 3 days of the date of
the Option Agreement) with such funds to be deductible from the
eventual Subscription proceeds. This fee is non-refundable unless
the Rule 9 Waiver is not granted or the resolutions are not
approved at the General Meeting, in which case the fee would be
repayable in full;
-- The Issue Price of 0.42 pence per new ordinary share of 0.1
pence represents a discount of 17.9 per cent. compared to the 20
day VWAP of 0.5113 pence and a premium of 5.0 per cent. to the mid
market price of 0.40 pence on 27 March 2020, being the last trading
day prior to this announcement;
-- IIG has agreed to extend a loan of US$1,000,000
(approximately GBP840,000) to Ironveld on completion of the
Subscription. The Loan Facility will attract interest at a rate of
8 per cent. per annum, will be repayable 24 months from the date of
drawdown and convertible at the option of IIG at the Issue Price.
Should IIG choose to convert the loan and all accrued interest at
the end of the loan term (and also assuming no further shares are
issued by the Company other than those included in this
announcement and constant exchange rates), they will be issued with
a further 233,373,349 shares, taking its holding to 46.8 per cent.
of the Company's issued share capital;
-- Ironveld and IIG have agreed that IIG will nominate two
non-executive Directors to Ironveld's Board following completion of
the Fundraising. Ironveld and IIG's relationship will be governed
by a relationship agreement between the two on normal commercial
terms limiting the ability of IIG to dictate Ironveld's strategy
and board composition;
-- In addition, certain Ironveld Board Directors have agreed in
principle, conditional on completion of the Fundraising, to
capitalise substantially all of their historic deferred salaries
and fees (totalling approximately GBP543,000) for 129,195,548 new
ordinary shares in the capital of Ironveld (the "Salary Shares") at
the same Issue Price of 0.42 pence;
-- The 440,176,070 Subscription Shares and 129,195,548 Salary
Shares (together "New Ordinary Shares") will represent
approximately 46.6 per cent. of the Company's enlarged issued
ordinary share capital.
Martin Eales, Chief Executive Officer of Ironveld, said:
"This fundraising and strategic partnership mark a significant
milestone for the Company which we believe will allow us to
commence unlocking value from our Project.
"We are delighted to be working alongside IIG as our strategic
partner and have no doubt that together we can capitalise on
Ironveld's huge potential. We look forward to keeping the market
updated on our progress."
Giles Clarke, Chairman of Ironveld, said:
"This agreement is the culmination of a great deal of hard work
by Martin Eales, Peter Cox and the team. I am very grateful to
them.
"We are delighted to welcome IIG as a shareholder and most
importantly Mcebisi Jonas and his colleagues who are immensely well
equipped to transform Ironveld's fortunes and lead the development
of the project."
Reasons for the Fundraising and use of proceeds
The Company has not yet been revenue earning and therefore
requires a certain level of funding to cover essential running
costs and overheads, which the Fundraising proceeds should provide
for until cashflows can be successfully derived from Phase 1 of the
Company's development project. The substantial investment in
Ironveld by IIG represents an exciting opportunity for Ironveld to
bring on board a credible and serious partner to help drive its
strategy, with relationships at the highest levels of South
Africa's funding institutions.
The Company will look to utilise IIG's expertise in order to
secure the broader financing required to bring the Company's
project into development.
Information on IIG
IIG is a South Africa based investment group focussed on Africa.
The group has interests in multiple sectors and has a particular
focus on strategic metals and minerals within the region. The
company has identified Ironveld as a near-production vehicle that
it believes can accelerate into a leading strategic / battery
metals player in the region. IIG was founded by Mcebisi Jonas, the
current Chairperson of multinational mobile telecommunications
group MTN, and Monwabisi Twantwa.
Current trading and Prospects
Ironveld expects to release its interim Financial Statements to
31 December 2019 following this announcement. There was no trading
in the six months to 31 December 2019 and a normal level of
operating overheads was incurred.
Details of the Option Agreement
Ironveld and IIG have entered into the Option Agreement which
has the following key terms:
-- IIG has agreed to pay Ironveld an option fee of US$250,000
(approximately GBP 210,000), (payable within 3 days of the date of
the Option Agreement) with such funds to be deductible from the
eventual Subscription proceeds. This fee is non-refundable unless
the resolutions are not approved at the General Meeting and / or
the Takeover Panel does not grant a Rule 9 Waiver in respect of the
Fundraising, in which case the fee would be repayable in full; IIG
will, subject to the satisfaction of certain conditions, be granted
a call option pursuant to which it can compel the Company to issue
the Subscription Shares. The grant of this option is conditional
upon the passing of the resolutions to be proposed at the General
Meeting and the Takeover Panel granting a Rule 9 Waiver in respect
of the Fundraising. IIG must exercise this option on or prior to 17
June 2020; and
-- The grant of the option to IIG is conditional on the Takeover
Panel granting a Rule 9 Waiver and on resolutions being passed by
the Company's shareholders at the Company's General Meeting
regarding this Rule 9 Waiver and to enable the Subscription Shares
to be issued at the Issue Price, given that this is less than the
nominal value of the Company's existing ordinary shares of 1 pence
each.
Details of the Loan Facility
Ironveld and IIG have the terms of a Loan Facility which is to
be entered into at completion:
-- Unsecured loan of US$1,000,000 (approximately GBP 840,000) to
be made by IIG to Ironveld to be drawn down in one tranche
following completion of the Subscription;
-- The loan amount attracts interest at a rate of 8 per cent per
annum and will be repayable 24 months from drawdown, extendable by
mutual consent;
-- The Company may elect to repay some or all of the Loan early without penalty;
-- The loan amount will be convertible at IIG's option at the
Issue Price of 0.42 pence, should IIG choose to convert the loan
and accrued interest at the end of the term (assuming constant
exchange rates), they would be issued with a total of 233,373,349
new ordinary shares; and
-- The Company will give standard representations and warranties
to IIG pursuant to the Loan Facility.
General Meeting and Shareholder Approval
Shareholder approval will be required for the Option to come
into effect and to allow any New Ordinary Shares to be issued
pursuant to the Fundraising.
Resolutions required at the General Meeting will include:
a) a Rule 9 Waiver Resolution, in accordance with the provisions of the Takeover Code;
b) by way of ordinary resolution to give the Directors authority
to subdivide each existing ordinary share of 1 pence each into one
ordinary share of 0.1 pence each and nine deferred shares of 0.1
pence each, with the deferred shares having the same rights and
restrictions as the Company's existing deferred shares of 1 pence
each;
c) by way of ordinary resolution to give the Directors authority
to allot the New Ordinary Shares;
d) by way of special resolution to dis-apply statutory pre-emption rights in respect thereof; and
e) by way of special resolution to amend Ironveld's current
articles of association to include reference to the new ordinary
shares, in particular detailing the rights attaching to the new
ordinary shares.
The Directors (representing 4.41 per cent. of the issued
ordinary share capital) and Tracarta Limited (representing 12.27
per cent. of the issued share capital) have all indicated that they
will support the resolutions to be put forward at the General
Meeting.
Settlement of Directors' Deferred fees and Salaries
In view of Ironveld's constrained financial position in recent
years various members of the Board have deferred a proportion of
their contractual salaries and fees. In settlement of these
balances certain of the Directors (other than Martin Eales who for
this purpose will assume the role of Independent Director) have
agreed in principle to capitalise substantially all of the
outstanding balances (totalling approximately GBP543,000) for new
ordinary shares of 0.1 pence each in the Company at the Issue Price
of 0.42 pence on completion of the Fundraising. The issue of the
Salary Shares to the Directors will be deemed to be related party
transactions under Rule 13 of the AIM Rules and be approved in due
course in accordance with the AIM Rules upon exercise of the
Option.
The following exchange rates have been assumed throughout this
announcement, as determined by www.bankofengland.co.uk on 25 March
2020:
GBP1.00 : US$1.19
GBP1.00 : ZAR 20.50
US$1.00 : ZAR 17.40
For further information, please contact:
Ironveld plc c/o Blytheweigh
Giles Clarke, Chairman +44 20 7138 3204
Martin Eales, Chief Executive Officer
finnCap (Nomad and Broker)
Christopher Raggett / Hannah Boros +44 20 7220 0500
Blytheweigh
Tim Blythe / Megan Ray +44 20 7138 3204
*Rule 9 Waiver means the waiver, conditional on its approval by
the Independent Shareholders** taken by a poll, by the Takeover
Panel Executive (the "Panel") of the obligation that, following the
issue of the shares pursuant to the exercise of the Option
Agreement, would otherwise arise on IIG to make a general offer to
all shareholders of the Company pursuant to Rule 9 of the Takeover
Code as a result of the allotment and issue of shares pursuant to
exercise of the Option Agreement by IIG.
**Independent Shareholders means the shareholders of the
Company, excluding (i) IIG and any person acting in concert with
them who holds Ordinary Shares and (ii) the directors of the
Company, with the exception of the Independent Director.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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