TIDMKAT
RNS Number : 2169S
Katoro Gold PLC
22 June 2018
Katoro Gold plc (Incorporated in England and Wales)
(Registration Number: 9306219)
Share code on AIM: KAT
ISIN: GB00BSNBL022
("Katoro" or "the Company")
Dated: 22 June 2018
Katoro Gold PLC ('Katoro' or the 'Company')
Conditional Acquisition of High Grade Nickel Sulphide Project
& Placing
Katoro Gold PLC (AIM: KAT), the Tanzanian focused exploration
and development company is pleased to announce that it has entered
into a conditional agreement to acquire Kibo Nickel Limited and its
wholly owned subsidiary, Eagle Exploration Limited (the 'Kibo
Nickel Group'), from the Company's majority shareholder, Kibo
Mining plc ('Kibo') (the 'Acquisition'), which is the 100% owner of
the polymetallic Haneti Nickel Project ('Haneti' or the 'Project')
in Tanzania.
Additionally, the Company announces that it has raised
GBP325,000 via a placing ('the Placing') of 25,000,000 new ordinary
shares of GBP0.01 each in the Company ('Ordinary Shares') (the
'Placing Shares') at a price of 1.30 pence (the 'Placing
Price').
Overview
-- Conditional acquisition of 100% interest in the Kibo Nickel
Group from Kibo Mining (Cyprus) Limited (the 'Seller'), a wholly
owned subsidiary of Kibo, for GBP200,000, payable through the issue
of 15,384,615 new Ordinary Shares to Kibo at the Placing Price,
together with a 2% royalty payable on any sales revenue (less
transportation and refining costs) in respect to nickel or nickel
concentrates
-- Completed a placing to raise GBP325,000 (before expenses)
from new and existing shareholders to further develop the Company's
existing gold projects in Tanzania, develop Haneti and for general
working capital purposes
-- Kibo, the Company's majority shareholder, to invest GBP75,000 in the Placing
-- Following receipt of the net proceeds of the Placing, Katoro
will have cash resources of approximately GBP705,000
-- The Acquisition is part of Katoro's commodity diversification strategy
-- The Kibo Nickel Group controls 100% of Haneti, which covers
an area of approximately 5,000 sq. km and forms a near contiguous
project block, with approximately US$1.5 million spent on
exploration to date by the Seller
-- Previous values, internally estimated by Kibo, include 13.59%
nickel, 0.25% Cobalt, 78 ppb (parts per billion) gold, 413 ppb
platinum, 1930 ppb palladium and 927 ppm (parts per million)
copper, as well interesting Lithium anomalies
-- Independent work, undertaken by Western Geophysics Pty,
underlines potential for substantial nickel sulphide deposit
-- Strong market fundamentals with demand for nickel expected to
grow exponentially, driven by electric vehicle ('EV') sales
-- Haneti to be advanced in tandem with Katoro's Imweru Project,
subject to outcome of ongoing consultation with Tanzanian
Government on the latter, as previously announced
Louis Coetzee, Katoro's Executive Chairman said, "Haneti is a
highly prospective high-grade nickel sulphide asset and is a great
addition to Katoro's portfolio. Historic work has already yielded
exceptional high grades of up to 13.59% nickel as well as
discoveries of gold, cobalt and platinum and some significant
lithium anomalies. With independent work already outlining the
potential for a significant nickel deposit, we are excited about
initiating an exploration and development plan. This in tandem with
the strong market fundamentals for nickel; annual demand from the
EV sector is currently approximately 36,000 tonnes, and forecast to
surge to 350,000-500,000 tonnes by 2025, makes Haneti an exciting
prospect which we hope will add significant value to the
Company.
"Our confidence in Tanzania has been underpinned recently by the
positive messages from the country's new Mining Commission,
indicating that it is open to cooperation in the development of
highly prospective projects. With decades of cumulative experience
in developing projects in Tanzania and experience through the
development of the Imweru and Lubando gold projects in the Lake
Victoria Goldfields region of northern Tanzania, we look forward to
advancing our key projects. I'd like to take this opportunity to
thank shareholders for their support and hope that the portfolio
will deliver shareholder value as we advance them up the
development curve."
Acquisition
Katoro has entered into a conditional acquisition agreement with
Kibo and Kibo Mining (Cyprus) Limited (the 'Seller'), a private
company incorporated in the Republic of Cyprus and a wholly owned
subsidiary of Kibo. Under the terms of the acquisition agreement,
Katoro will satisfy the consideration payable to Kibo of GBP200,000
by way of an issue to Kibo of 15,384,615 new Ordinary Shares at the
Placing Price ('Consideration Shares'). The Consideration Shares
will rank pari passu with the existing Ordinary Shares.
Furthermore, Katoro will pay the Seller a 2% royalty on any sales
revenue (less transportation and refining costs) in respect to
nickel or nickel concentrates.
The Acquisition is conditional, inter alia, on the completion of
due diligence on the Kibo Nickel Group to the satisfaction of Paul
Dudley and Myles Campion, being the independent directors of Katoro
overseeing the Acquisition (the 'Independent Directors'). The
Consideration Shares will only be issued to Kibo once this has been
confirmed and a further announcement will be made on this as and
when appropriate.
The acquisition agreement contains the normal representations
and warranties from the Seller that are expected to be provided in
a transaction of this nature.
For the year ended 31 December 2017, Kibo Nickel Limited ("Kibo
Nickel") reported net liabilities of EUR11,620, nil revenue and a
loss for the year of EUR3,300. For the year ended 31 December 2017,
Eagle Exploration Limited ("Eagle Exploration") reported net
liabilities of US$891,968, nil revenue and a loss for the year of
US$33,989. Kibo Nickel does not consolidate the results of Eagle
Exploration and Eagle Exploration's only liability, is an
inter-company loan of US$957,621 which will be transferred to
Katoro on completion of the Acquisition.
After completion of the Placing, and assuming the Acquisition
completes and the Consideration Shares are issued, Kibo will hold
82,987,179 Ordinary Shares, which would represent 55.53% of the
then enlarged share capital of the Company (assuming no further
Ordinary Shares have been issued in the interim).
The Project is expected to benefit from increased visibility in
Katoro's portfolio, as Kibo repositions itself as a major regional
energy player, changing its focus from exploration and development
activities to developing three power projects in Tanzania, Botswana
and Mozambique.
Katoro will prioritise developing an exploration programme for
Haneti, utilising the decades of experience that it has in
developing projects in Tanzania in the same way as has been used to
develop Katoro's two gold projects in development - Imweru and
Lubando - located in Lake Victoria Goldfields region of northern
Tanzania.
As announced on 24 May 2018, Katoro recently completed its
assessment of the economic feasibility of Imweru and based on the
preliminary pre-feasibility results and the new mining legislation
and regulations in Tanzania, it believes there is good upside
exploration and development potential for the further development
of Imweru. The Company looks forward to continuing its engagement
with the Ministry of Minerals to determine the next steps with
regards to the development of Imweru.
Background on the Haneti Project
Haneti comprises tenements (prospecting licences, offers and
applications) prospective for nickel, platinum-group-elements,
copper, gold and Lithium. Located in the Dodoma region in central
Tanzania, the tenements cover an area of approximately 5,000 sq. km
and form a near contiguous project block. The Project area
straddles the Dodoma, Kondoa and Manyoni districts all within the
Dodoma (Administrative) region. The main prospective belt of rocks
within the Project, the Hanet-Itiso Ultramafic Cemplex ('HIUC'),
sporadically crop out over a strike length of 80 km.
Exploration by Kibo up to the end of 2012 over the HIUC
comprised, rock sampling soil sampling, geological mapping,
trenching, geophysical surveys and petrographic analyses.
Rock samples taken from outcrop, spoil heaps, trenches and pits
produced numerous high nickel values with the highest values seen
in saprolite developed on serpentinite. The best multi-metal rock
sample result came from a magnetite rich rock outcrop in an old
prospecting pit on Mihanza Hill with values of 13.59% nickel, 0.25%
Cobalt, 78 ppb (parts per billion) gold, 413 ppb platinum, 1930 ppb
palladium and 927 ppm (parts per million) copper. The high nickel
associated with platinum, palladium and copper made this a priority
area for follow-up work.
Soil geochemical sampling on 400m X 200m centres covering an
area of 38 sq. km was carried out between 2012-2014 also over an
area broadly coincident with the rock sampling areas. Geochemical
analyses were carried out for a number of metals and results showed
significant nickel enrichment in regolith above serpentinites on
the hilltops. There was good correlation between nickel, cobalt,
copper, gold and arsenic.
The independent geochemical assessment report by Australian
consultants, Western Geophysics Pty, concluded that the Mihanza
Hill soil and rock anomaly shows strong geochemical characteristics
to those that may be expected to overlie a "chondrite" type
Ni-Cu-PGM sulphide target. This result significantly improved the
quality of the target for nickel sulphide mineralisation as well as
validating the prospectivity of the rest of the HIUC for this style
of nickel sulphide mineralisation. The geophysical interpretation
revealed that the target nickel sulphide potential rocks on the
Project were much more extensive than previously thought.
With part of the net proceeds of the Placing, the Company plans
to initiate further field exploration at Haneti, which is
anticipated to include drilling of the highly prospective Mihanza
and the Mwaka Hill targets. A further update regarding the
development plans for Haneti will be announced in due course.
Placing
In addition, the Company is pleased to announce the Placing,
which has raised GBP325,000 (before expenses) by way of the issue
of the Placing Shares at the Placing Price.
Kibo, the Company's majority shareholder, has invested GBP75,000
in the Placing and will be issued 5,769,231 Placing Shares. On
admission of the Placing Shares, Kibo will be interested in
67,602,564 Ordinary Shares, representing 50.43% of the Company's
share capital as enlarged by the Placing, but before the issue of
the Consideration Shares.
Following receipt of the net proceeds of the Placing, Katoro
will have cash resources of approximately GBP705,000. The net
proceeds of the Placing will be used for the development of the
Company's existing gold projects in Tanzania, the development of
Haneti and for general working capital purposes.
Related Party Transactions
Kibo is a substantial shareholder and therefore a related party
of the Company as defined in the AIM Rules for Companies (the 'AIM
Rules'). Accordingly, the Acquisition and Kibo's participation in
the Placing are deemed related party transactions under Rule 13 of
the AIM Rules. The Independent Directors consider, having consulted
with the Company's nominated adviser, Strand Hanson Limited, that
the terms of the Acquisition and the terms of Kibo's participation
in the Placing are fair and reasonable insofar as the Company's
shareholders are concerned.
Total Voting Rights
Application will be made for the Placing Shares to be admitted
to trading on AIM. Trading in the Placing Shares is expected to
commence on AIM on or around 7 July 2018 ('Admission'). Following
Admission, the Company shall have 134,063,210 Ordinary Shares in
issue and this figure may be used by shareholders as the
denominator for the calculations to determine if they are required
to notify their interest in, or a change to their interest in, the
Company under the FCA's Disclosure Guidance and Transparency
Rules.
**ENDS**
This announcement contains inside information as stipulated
under the Market Abuse Regulations (EU) no. 596/2014.
For further information please visit www.katorogold.com or
contact:
Louis Coetzee louisc@katorogold.com Katoro Gold plc Executive Chairman
Richard Tulloch +44 (0) 20 7409 Strand Hanson Nominated Adviser
Ritchie Balmer 3494 Limited
Frederick Twist
Ben Tadd +44 (0) 203 7000 SVS Securities Broker
Tom Curran 093
Isabel de Salis +44 (0) 207 236 St Brides Partners Investor and Media
Priit Piip 1177 Ltd Relations Adviser
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END
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