TIDMRLD
RNS Number : 6354R
Richland Resources Ltd
13 December 2016
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR
INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR
JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
BREACH OF THE RELEVANT SECURITIES LAWS OF SUCH JURISDICTION.
This announcement does not constitute a prospectus or offering
memorandum or an offer in respect of any securities and is not
intended to provide the basis for any investment decision in
respect of Richland Resources Ltd or other evaluation of any
securities of Richland Resources Ltd or any other entity and should
not be considered as a recommendation that any investor should
subscribe for or purchase any such securities.
13 December 2016
Richland Resources Ltd
("Richland" or the "Company")
Equity fundraising of GBP1.0 million gross,
Operational Update, Repayment of Unsecured Loan Facility in
Equity
and cancellation of 2009 Restricted Shares by way of
acquisition
by the Company into Treasury
Richland (AIM: RLD), the gemstones producer and developer, is
pleased to announce that it has conditionally raised, in aggregate,
approximately GBP1.0 million (before expenses) through a placing,
via Shore Capital Stockbrokers Limited ("Shore Capital") as agent
of the Company, of 133,333,334 new common shares of US$0.0003 each
in the capital of the Company ("Common Shares") (the "Placing
Shares") (the "Placing") to certain new and existing shareholders
including Nicholas Sibley, a Non-Executive Director of the Company,
at an issue price of 0.75 pence per Placing Share (the "Placing
Price").
In addition, the Company announces:
(i) an unaudited operational update for the two-month period ended 30 November 2016;
(ii) that it has agreed to issue a further 54,933,334 new Common
Shares in respect of the settlement of the unsecured loan facility
of US$500,000, entered into on 27 June 2016, together with a
proportion of the accrued interest thereon as further detailed
below (the "Loan Settlement Shares"); and
(iii) that, further to the Company's announcements of 18 April
2016 and 23 May 2016 and as previously approved by shareholders,
the Company has now acquired and transfered into treasury all of
the 7,275,000 Restricted Shares issued in 2009 (the "Treasury
Shares").
Edward Nealon, Chairman of Richland, today commented:
"The funds raised via this Placing will allow Richland to
achieve its final stage of production ramp-up following a very
successful optimisation and ramp-up programme during the course of
2016, that has seen the Capricorn Sapphire mine not only achieve
all of its production ramp-up targets but also a significant
decrease in its cost per carat.
"The funds will also allow us to implement our long-term sales
model through our own beneficiation channels. The pathway to
achieving operational break-even and the mine becoming cash flow
positive will be underpinned by our recently agreed and announced
beneficiation partnerships. The ability of Richland to leverage
margins through the consistent supply of fully certificated and
beneficiated sapphires to both distributors and retailers is
envisaged to become a core part of the Company's revenue
model."
The Placing
Pursuant to the Placing, certain new and existing shareholders
(including Nicholas Sibley, a Non-Executive Director of Richland,
as detailed in the table below), have agreed to subscribe for, in
aggregate, 133,333,334 new Common Shares at the Placing Price. The
Placing Price represents a discount of approximately 33.33 per
cent. to the Company's closing middle market share price of 1.125
pence on 12 December 2016, being the latest practicable date prior
to the date of this announcement.
The Placing Shares have been issued conditional upon their
admission to trading on AIM, which is expected to take place on or
around 5 January 2017. The Placing Shares represent, in aggregate,
approximately 33 per cent. of the Enlarged Share Capital (as
defined below). The Placing Shares will rank pari passu in all
respects with the Company's existing Common Shares and will be
issued fully paid.
Operational Update
Further to the Company's announcement of 23 November 2016,
during the two-month period ended 30 November 2016 the production
rate for the group's Capricorn Sapphire mine was approximately
270,000 carats of sapphire and corundum per month. In addition,
approximately 17,000 tonnes per month of sapphire-bearing alluvial
gravels were extracted and processed at an average grade of
approximately 14.5 carats per tonne during this period. The mine's
total operational costs, inclusive of heating, cutting and
polishing costs, have fallen from approximately US$2.1 per carat
for Q1 2016 to c.US$0.85 per carat for Q4 2016 to date. Once the
planned final-stage ramp-up of production to 1.2 million carats per
quarter is completed by July 2017 the Board currently anticipates
the mine becoming cash flow positive through a combination of:
(a) monthly revenue of approximately US$250,000 from the current
sales mix with limited beneficiation; and
(b) additional revenue from the further development and roll out
of the Company's beneficiation strategy as detailed in the
announcement of 30 November 2016.
Use of Placing Proceeds
The net proceeds of the Placing will be utilised for funding the
capital costs and additional operational expenditure associated
with the abovementioned final phase of production ramp-up to 1.2
million carats per quarter; the operational cash flow shortfall
whilst the ramp-up phase is completed and beneficiation strategy
progressed; and the group's general working capital
requirements.
Repayment of Loan Facility
The providers of the US$500,000 unsecured one-year 10 per cent.
loan facility entered into on 27 June 2016 (the "Loan Facility"),
have, conditional on completion of the Placing, agreed to settle
the outstanding principal amount of US$500,000 (approximately
GBP400,000), by way of the issue of new Common Shares at the
Placing Price.
Of the US$500,000 Loan Facility, US$300,000 was provided equally
by two Directors, Edward Nealon and Nicholas Sibley, each providing
US$150,000, with the balance of US$200,000 provided by long term
shareholder, Ashwath Mehra. Full details of the Loan Facility were
set out in the Company's announcement of 28 June 2016, including
the condition that if the Loan Facility was repaid early the
minimum total interest due would be 7.5 per cent. (the "Minimum
Notional Interest").
In addition, Messrs Nealon and Sibley have agreed to settle the
unpaid balance of the Minimum Notional Interest due to them on
early repayment of the Loan Facility, being US$7,500 each, by way
of the issue of new Common Shares at the Placing Price. Mr Mehra
has agreed to the early repayment of his proportion of the Loan
Facility on the basis that he will be paid the balance of the
Minimum Notional Interest due to him in cash, being US$10,000, plus
an additional US$5,000 in cash from the net proceeds of the
Placing.
The aggregate principal amount of the Loan Facility plus accrued
Minimum Notional Interest to be converted into new Common Shares is
therefore US$515,000 (approximately GBP412,000), which will be
settled by the issue of, in aggregate, 54,933,334 new Common Shares
at the same time as the issue and admission of the Placing Shares,
which is expected to take place on our around 5 January 2017.
Cancellation of 2009 Restricted Shares
As approved by shareholders at the Company's annual general
meeting held on 20 May 2016 and as announced on 23 May 2016, the
Company has now acquired as treasury shares ("Treasury Shares") the
7,275,000 restricted shares issued to certain Directors and
employees in 2009 (the "2009 Restricted Shares") as repayment of
the 2009 share loans made to the Directors and employees concerned
in 2009 (the "2009 Share Loans"). Bernard Olivier, Chief Executive
Officer of the Company, owned 900,000 of the 2009 Restricted Shares
acquired, and his 2009 Share Loan of GBP10,170, based on the
Company's closing middle market share price on 9 December 2016 of
1.19 pence per share, has been repaid by the cancellation of his
900,000 2009 Restricted Shares.
As announced on 18 April 2016, Treasury Shares are not eligible
to receive dividends or vote, such that following the
abovementioned acquisition and transfer into treasury of the 2009
Restricted Shares and prior to the issue of the Placing Shares and
Loan Settlement Shares, the current total number of Common Shares
in issue outside treasury with voting rights is 215,335,604.
Admission to trading
Application will be made in due course for the Placing Shares
and the Loan Settlement Shares to be admitted to trading on AIM,
which is expected to take place on or around 5 January 2017
("Admission"). Following Admission of the Placing Shares and the
Loan Settlement Shares, the Company's total number of Common Shares
in issue outside treasury with voting rights will be 403,602,272
(the "Enlarged Share Capital").
Directors' Interests
Directors' interests following the issue of the abovementioned
Placing Shares and Loan Settlement Shares will be as set out
below:
Common Shares
---------------------------------------------------- ------------------------------------
Current New % of Enlarged Share
Director/Title holding Placing Shares Loan Settlement Shares holding Capital
------------------------ ----------- --------------- ---------------------- ----------- -----------------------
Edward Nealon
(Non-Executive
Chairman) 12,038,428 - 16,800,000 28,838,428 7.15
Ami Mpungwe
(Non-Executive Deputy
Chairman) 7,811,800 - - 7,811,800 1.94
Nicholas Sibley
(Non-Executive
Director) 15,532,165 16,000,000 16,800,000 48,332,165 11.98
Bernard Olivier
(Chief Executive
Officer) 3,617,751 - - 3,617,751 0.90
Related Party Transactions
The abovementioned participation by Mr Sibley as to a
subscription of GBP120,000 in the Placing is deemed to be a related
party transaction pursuant to Rule 13 of the AIM Rules for
Companies. Accordingly, the independent directors, being Ami
Mpungwe, Edward Nealon and Bernard Olivier, having consulted with
the Company's Nominated Adviser, Strand Hanson Limited, consider
that the terms of Mr Sibley's participation in the Placing are fair
and reasonable insofar as the Company's shareholders are
concerned.
The abovementioned settlement of the Loan Facility's principal
amount and accrued interest thereon by way of the issue of new
Common Shares to two of the Company's directors, being Messrs
Nealon and Sibley, are also deemed to be related party transactions
pursuant to Rule 13 of the AIM Rules for Companies. Accordingly,
the independent directors, being Ami Mpungwe and Bernard Olivier,
having consulted with the Company's Nominated Adviser, Strand
Hanson Limited, consider that the terms of the issue of the Loan
Settlement Shares to such directors are fair and reasonable insofar
as the Company's shareholders are concerned.
The abovementioned acquisition of Dr Olivier's holding of
900,000 2009 Restricted Shares by the Company in order to settle
his 2009 Share Loan of GBP10,170 is deemed to be a related party
transaction pursuant to Rule 13 of the AIM Rules for Companies.
Accordingly, the independent directors, being Ami Mpungwe, Edward
Nealon and Nicholas Sibley, having consulted with the Company's
Nominated Adviser, Strand Hanson Limited, consider that the terms
of the acquisition of Dr Olivier's holding of 2009 Restricted
Shares by the Company in settlement of his 2009 Share Loan are fair
and reasonable insofar as the Company's shareholders are
concerned.
For further information please contact:
Bernard Olivier Edward Nealon Mike Allardice
Chief Executive Officer Chairman Group Company Secretary
+61 4089 48182 +61 409 969 955 +852 91 864 854
Laurence Read Nominated Adviser Broker
Corporate Development Strand Hanson Limited Shore Capital Stockbrokers
and Communications James Harris Limited
Officer Matthew Chandler Jerry Keen (corporate
+44 (0) 20 3289 9923 James Dance broking)
+44 (0) 20 7409 3494 Toby Gibbs / Mark Percy
(corporate finance)
+44 (0) 20 7408 4090
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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