TIDMPAL
RNS Number : 6636J
Equatorial Palm Oil plc
23 December 2020
23 December 2020
Equatorial Palm Oil plc
("EPO" or the "Company")
Proposed Acquisition of Capital Metals Limited ("CML") for
GBP15.84 million
Placing and Subscription to raise GBP2.085 million
20:1 Share Consolidation
Publication of Admission Document
Notice of General Meeting
& Change of Name to Capital Metals plc
The Company is pleased to confirm it has conditionally raised
GBP2,000,000 at a post consolidation price of 12p per share (0.6p
pre-consolidation) ("Placing Price") through an oversubscribed
Placing by its broker Brandon Hill Capital Ltd. In addition, a
further GBP85,000 has been raised through a subscription with
existing management at the Placing Price. Further details of the
Placing and Subscription can be found below.
The Placing and the Subscription are intended to support the
proposed acquisition of Capital Metals Limited for GBP15.84
million, which is being funded through the issue of new ordinary
shares at the Placing Price. The Placing and Subscription in
addition to current funds held by the Company provides sufficient
working capital for the Company to significantly advance the
Development Study and Work Programme of the Eastern Minerals
Project in Sri Lanka (the "Project"), the principal asset of CML.
The acquisition of CML is conditional upon approval by shareholders
in a general meeting scheduled for 11 January 2021.
Asset Overview
The Project has an established JORC Resource of 17.2Mt, of which
84% is in the Measured and Indicated categories, with an average
grade of 17.6% Total Heavy Minerals ("THM"), making it one of the
highest grade deposits in the global peer group. Less than 5% of
the Project area has been drilled to date and the JORC Resource is
from surface to a depth of 3m. Exploration work has shown
continuation beyond 3m and also returned grades in excess of 26%
THM. Accordingly, the Company expects to be able to upgrade the
size of the resource in due course. Additional adjoining
exploration licences are also under application.
Given the very high grades and simplicity of processing, no
blasting or chemicals are required, operating costs for development
are expected to be low, whilst existing infrastructure, including a
newly constructed port 32km away, is expected to ensure the CAPEX
for development is low.
The Project has undergone extensive work over the last few years
and permitting is at an advanced stage. The Environmental Impact
Assessment ("EIA") is completed and the Company expects it to be
released for public comment shortly. Based on detailed interaction
with the relevant Sri Lankan authorities, the Company believes the
EIA is likely to be granted in Q1 2021, with an industrial mining
license subsequently issued soon thereafter.
Upon the issuance of an Industrial Mining License ("IML"), the
Company will look to finalise ongoing discussions with potential
offtake partners. The Company envisages a demand for its product,
which will primarily consist of ilmenite, rutile, zircon and
garnet. Any offtake agreements are expected to provide some form of
prepayment or financing initiatives, thereby minimising any amounts
required to be sourced by the Company to bring the Project into
production. Construction is targeted to commence in Q4 2021, with
first production in 2022.
CEO, Michael Frayne, commented:
"I am delighted with the positive reception this investment
proposition received, evidenced by the success of the
oversubscribed Placing. In addition, we have already received
acceptances of the offer from over 98% of existing CML
shareholders, and we have received overwhelming support from EPO
shareholders to date.
Following approval at the upcoming General Meeting, we will look
to move through the final key permitting stages and expect to
provide an update in Q1 2021. The Eastern Minerals Project is one
of the highest grade mineral sands deposits globally and also
benefits from a low CAPEX requirement to production. These
contribute to an attractive, high margin, development. As we
progress in 2021, I look forward to publishing further detail on
the expected economics and profitability of the Project, as well
providing operational updates as we move towards the commencement
of construction in H2 2021 and first production in 2022."
The following contains extracts from the Admission Document
which has been posted to shareholders today; full details are set
out in the Admission Document which is available on EPO's website
www.epoil.co.uk .
"
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Publication of Admission Document 23 December 2020
Latest time and date for receipt of CREST 10.00 a.m. on 7 January
voting intentions 2021
Latest time and date for receipt of Forms 10.00 a.m. on 7 January
of Proxy 2021
Time and date of the General Meeting 10.00 a.m. on 11 January
2021
Record Date for the Share Consolidation 6.00 p.m. on 11 January
2021
Change of Name effective 12 January 2021
Issue of the Placing Shares, Subscription 12 January 2021
Shares and Consideration Shares
Readmission of the Enlarged Issued Ordinary 8.00 a.m. on 13 January
Share Capital to trading on AIM 2021
Completion of Acquisition 8.00 a.m. on 13 January
2021
Expected date for New Ordinary Shares to be 13 January 2021
credited to CREST accounts
Despatch of de nitive certi cates for New by 27 January 2021
Ordinary Shares
All of the above timings refer to London time unless otherwise
stated. All future times and/or dates referred to in this Admission
Document are subject to change at the discretion of the Company and
SPARK. All times are UK times unless otherwise speci ed
The Company's shares will remain suspended until 8.00 a.m on 13
January 2021.
1. INTRODUCTION
As announced by the Company on 21 October 2020, it has reached
conditional agreement with parties holding a majority of the shares
("CML Majority") of Capital Metals Limited ("CML") to acquire their
shares in CML in exchange for shares in the Company. On that date,
the Company also made the same offer to all of the remaining
shareholders in CML ("CML Minority") which, if accepted, will
result in the acquisition of up to 100 per cent. of the entire
issued share capital of CML for an aggregate total consideration of
GBP15.84 million at Admission, to be satis ed by the issue of up to
132,000,000 Consideration Shares at an issue price of 12 pence per
Consideration Share (following a 20:1 share consolidation) to the
CML Shareholders accepting the Offer ("CML Vendors"). As at the
date of this document, CML Vendors (including the CML Majority)
that have accepted the Offer hold in aggregate 98.3 per cent. of
the issued share capital of CML.
The Company's shares have been suspended from trading since that
date, with a closing mid-market price of 0.75 pence per Existing
Ordinary Share.
The Company announces it has conditionally raised approximately
GBP2 million by way of the Placing of the Placing Shares to further
the Work Programme and produce the Development Study as outlined in
paragraph 4 of this Part I. In addition, it has raised GBP85,000
under the Subscriptions.
This Admission Document sets out the details of, and reasons
for, the Proposals.
The Acquisition, if completed, will constitute a reverse
takeover by the Company under the AIM Rules and is, therefore,
subject to the approval of Shareholders at the General Meeting on
11 January 2021, details of which are set out in paragraph 22 of
this Admission Document.
In addition, Michael Frayne, Executive Chairman, is a director
and shareholder of CML. As such, the Acquisition constitutes a
related party transaction under AIM Rule 13. The Independent
Directors of the Company have considered the terms of the
Acquisition and recommend it to Shareholders. Further details are
set out in paragraph 3 further below.
The Directors believe that it is appropriate, should the
Acquisition be completed, having been approved by Shareholders at
the General Meeting, that the name of the Company be changed to
Capital Metals plc.
The purpose of the Admission Document is to provide Shareholders
with further information regarding the matters described above and
to seek Shareholders' approval of the Resolutions at the General
Meeting. The notice of General Meeting is set out at the end of
this Admission Document. The Proposals are conditional on, amongst
other things, the passing of the Resolutions, Admission and
acceptance being received from CML Shareholders holding more than
75 per cent. of the issued CML Shares (unless agreed otherwise by
the Company and CML, with the approval of the Nominated Adviser).
If the Resolutions are approved by Shareholders, it is expected
that Admission will become effective and dealings in the Enlarged
Issued Share Capital will commence on AIM on or around 13 January
2021. The General Meeting at which the Resolutions will be proposed
has been convened for 10.00 a.m. on 11 January 2021 at the of ces
of Hill Dickinson LLP at The Broadgate Tower, 20 Primrose Street,
London EC2A 2EW.
You should read the whole of this Admission Document and not
just rely upon the information contained in this letter. In
particular, you should carefully consider the Risk Factors set out
in Part II of this Admission Document. Your attention is also drawn
to the information set out in Parts III to VIII of this Admission
Document.
2. BACKGROUND TO AND REASONS FOR THE ACQUISITION
As announced on 11 June 2020, the Company completed the
disposal, by its wholly-owned subsidiary, Equatorial Biofuels
(Guernsey) Limited, of the Company's 50 per cent. interest in
Liberian Palm Developments Limited to major shareholder Kuala
Lumpur Kepong Berhad ("KLK"). Consequently, the Company became an
AIM Rule 15 cash shell and as such, is required to make an
acquisition, or acquisitions, which constitutes a reverse takeover
under AIM Rule 14 within six months or otherwise seek to become an
investing company pursuant to AIM Rule 8. As 6 months have lapsed
since the Company became an AIM Rule 15 cash shell, the Company's
suspension of trading shall continue until Admission.
Capital Metals Limited has previously sought a listing on a UK
capital market and most recently in early 2020 was in a process to
seek to join the Standard Segment of the Of cial List. Following
discussions with the Company, once the Company had become a Rule 15
cash shell, it was agreed by the independent directors of the
respective boards that a listing by way of a reverse takeover could
be mutually bene cial for each party, if appropriate terms could be
agreed.
The Independent Directors have reviewed the merits of the
Acquisition and agreed its terms with CML.
3. PRINCIPAL TERMS OF THE ACQUISITION
On 16 October 2020, the Company sent an offer letter to Capital
Metals Limited communicating the offer from the Company to acquire
the entire issued share capital of Capital Metals Limited (the
"Offer"). Upon receipt of the Offer, CML sent offer letters to
certain of its shareholders, comprising the CML Majority
communicating the Offer. The CML Majority hold between them around
51.4 per cent. of the CML Shares. The Offer speci ed the following
terms:
-- In consideration for the acquisition of the CML Shares, the
Company proposed to issue 1.235 Consideration Shares for every 1
CML Share sold.
-- That completion of the Acquisition is conditional, amongst
other things, on the passing of the Resolutions and the Placing and
Admission becoming effective on or before 31 March 2021.
-- Completion of the Offer is also conditional on acceptances
being received from the holders of CML Shares holding more than 75
per cent. of the issued CML Shares (unless otherwise agreed between
CML and the Company, with the approval of the Nominated
Adviser).
-- A CML Shareholder accepting the offer (a "CML Vendor") will
be required to provide usual title and capacity warranties and the
Company will also give title and capacity warranties to them.
-- If a CML Vendor wishes to accept the Offer they should return
a signed acceptance form which is sent to them with the Offer
Letter ("Acceptance Form"). Contained within the Offer Letter is a
power of attorney pursuant to which a CML Shareholder will appoint
Capital Metals Limited as their attorney to take all reasonable and
necessary actions on their behalf in order to give effect to the
Offer and to complete the transaction. This includes authority to
execute a conditional sale and purchase agreement ("Acquisition
Agreement") and all necessary instruments of transfer.
-- Save for the CML Vendors referenced in the bullet point
below, all of the CML Vendors will undertake to the Company that
they will not dispose of any interest they hold in the
Consideration Shares for a period of 3 months following
Admission.
-- CML Shares held by CML Vendors as a result of the conversion
by them of bonds in CML into CML Shares shall not be subject to any
lock-in restrictions (unless required pursuant to the AIM Rules)
and certain other CML Vendors shall be subject to the lock-in
restrictions referenced at paragraph 13 of this Part I as required
by Rule 7 of the AIM Rules.
-- The CML Directors recommended that all CML Shareholders accept the Offer.
As at the date of this document, each of the CML Majority has
accepted the Offer and returned an executed Acceptance Form and CML
has entered into an Acquisition Agreement with the Company on their
behalf pursuant to which their CML Shares shall be acquired by the
Company, subject to satisfaction of the conditions. In addition,
Capital Metals Limited sent Offer Letters to the remaining CML
Shareholders (the "CML Minority"). As at the date of this document,
CML Vendors (including the CML Majority) holding 98.3 per cent. of
the issued share capital of CML have accepted the Offer.
In the event that the Offer is accepted by all CML Shareholders,
the Company will acquire all of the issued CML Shares and will in
turn issue 132,000,000 Consideration Shares to satisfy a total
consideration of GBP15.84 million. In the event that the Offer is
not accepted by all CML Shareholders, the number of Consideration
Shares to be issued shall be reduced accordingly.
On the date falling two Business Days prior to the General
Meeting, the Company and Capital Metals Limited (acting as attorney
for the CML Minority that have accepted the Offer) will execute an
Acquisition Agreement setting out the terms of the Acquisition as
set out in the Offer Letter and Acceptance Forms, in particular
containing the mechanics for completion of the Acquisition. Further
details of the Acquisition Agreements are set out in the Admission
Document.
In connection with the Acquisition, the CML Directors entered
into a warranty deed pursuant to which they provided commercial
warranties to the Company in connection with the assets and
business of Capital Metals Limited (the "CML Warranty Deed").
Further details of the Offer Letters, the Acceptance Forms, the
Acquisition Agreement and the CML Warranty Deed are set out in the
Admission Document.
Acquisition of shares from minority holders
The BVI Business Companies Act 2004 (the BCA) provides a
statutory process whereby the holder(s) of 90% plus of the votes of
the issued shares (the Majority Shareholders) can squeeze out the
holders of 10% or less (the Minority Shareholders). After the
Company has received a direction from the Majority Shareholders to
redeem the Minority Shareholders, the Company is obligated to carry
out that redemption process (which begins with notifying the
Minority Shareholders that they are being squeezed out and the
price and manner of that squeeze out, the Squeeze Out Notice).
Unless the squeeze-out is procedurally invalid, Minority
Shareholders cannot prevent their shares being redeemed. However,
they are entitled to dissent and dispute the price (the Redemption
Price) being paid to them by the Company for their shares as the
BCA does entitle them to receipt of fair value for their shares.
Should the Minority Shareholders dispute the Redemption Price then,
failing agreement between the Minority Shareholder and the company,
a statutory appraisal process must be followed for purposes of the
determination of the fair value of their shares (the Appraisal
Process). During the Appraisal Process, the rights of the Minority
Shareholders are restricted to (a) their right to receive fair
value for the shares redeemed and (b) the right to institute
proceedings to obtain relief on the ground that the squeeze-out is
illegal.
Related Party Transaction
Michael Frayne is a director of CML and, together with his wife,
has a 9.81 per cent. interest in CML Shares. He is also Executive
Chairman of the Company.
Accordingly, the Acquisition constitutes a related party
transaction under Rule 13 of the AIM Rules. Geoffrey Brown and Teh
Kwan Wey, being the Independent Directors for the purposes of AIM
Rule 13, having consulted with SPARK, the Company's Nominated
Adviser, consider that the terms of the Acquisition are fair and
reasonable insofar the Shareholders are concerned. In providing
such advice to the Independent Directors, SPARK has taken into
account the Independent Directors' commercial assessment.
4. INFORMATION ON THE ENLARGED GROUP
Equatorial Palm Oil
Since 11 June 2020 Equatorial Palm Oil has been an AIM Rule 15
cash shell. It has no trading businesses, and as such, is required
to make an acquisition, or acquisitions, which constitute a reverse
takeover under AIM Rule 14 within six months from 11 June 2020. Its
only subsidiary is Equatorial Biofuels (Guernsey) Limited, which
the Company is in the process of liquidating at no loss to
creditors, as it is no longer required.
Capital Metals Limited
History and Background
Capital Metals Limited is a company limited by shares,
incorporated on 18 September 2015 in the British Virgin Islands
under the name Lion Metals Limited. It subsequently changed its
name to Capital Metals Limited on 25 September 2015. The principal
legislation under which CML operates is the BVI Companies Act and
the regulations made thereunder. CML acts as a holding company for
one BVI subsidiary and four Sri Lankan subsidiaries. CML is the
parent holding company which owns, directly or indirectly, 100 per
cent. of its subsidiaries; Brighton Metals Limited (BVI) and
Redgate Lanka Limited (Sri Lanka) which between them owns 100 per
cent. of the Sri Lankan operating companies including Damsila
Exports (Pvt) Limited ("DEL") and Eastern Minerals (Pvt) Limited
("EML") and also a dormant subsidiary named Keynes Investments
(Pvt) Limited (Sri Lanka) (together with CML and its subsidiaries
hereinafter referred to as the "CML Group").
The Eastern Minerals Project
In April 2016 CML (via its subsidiaries) acquired 100 per cent.
of DEL and EML, the entities which have owned the exploration
licenses that comprise the Eastern Minerals Project ("EMP" or
"Project"). The EMP (originally called the Pottuvil or Oluvil
Mineral Sands Project) is located in the Ampara District of the
Eastern Province of Sri Lanka, approximately 220 km east of
Colombo. The EMP comprises the Project Licenses which cover 84 sq.
km. An additional nine applications have also been made in respect
of new exploration licenses covering a further 623 sq. km. The EMP
is divided into two sub-project areas:
-- the northern area (Eastern North), was held by DEL through
exploration license EL168/R/4 which expired on 31 October 2020 (the
"DEL License") and which is now subject to the IML Applications;
and
-- the southern area (Eastern South) was (and, following
renewal, will be) held by EML through exploration license EL199/R/4
(the "EML License").
Outstanding Consideration and CML Obligation to Allot Shares
Under the DEL Share Sale Agreement and the EML Share Sale
Agreement certain deferred payments totalling $1,375,000 remain
outstanding from BML to the DEL Vendors and EML Vendors
respectively as follows:
-- the sum of $312,500 payable in cash is due to the DEL Vendors
on completion of the Feasibility Study (by either DEL or EML);
-- the sum of $375,000 payable in cash is due to the DEL Vendors
once commercial production commences pursuant to any IML granted
over all or part of the DEL License area or the EML License
area;
-- the sum of $312,500 payable in cash is due to the EML Vendors
on completion of the Feasibility Study (by either DEL or EML);
and
-- the sum of $375,000 payable in cash is due to the EML Vendors
once commercial production commences pursuant to any IML granted
over all or part of the EML License area or the DEL License
area.
Further details of the DEL Share Sale Agreement and the EML
Share Sale Agreement are set out in the Admission Document.
In addition, under the DEL Introduction Agreement and the EML
Introduction Agreement, BML is required to pay an aggregate amount
of $2,250,000 to RGD1 (or its nominees). These payments are to be
satis ed by the issue of shares in CML as follows:
-- in respect of the DEL Introduction Agreement:
o the sum of $562,500 to be satis ed by the issue of CML shares
on completion of the Feasibility Study (by either DEL or EML) ;
o the sum of $562,500 to be satis ed by the issue of CML shares
once commercial production commences on any IML granted over all or
part of the DEL License area or the EML License area; and
-- in respect of the EML Introduction Agreement:
o the sum of $562,500 to be satis ed by the issue of CML Shares
on completion of the Feasibility Study (by either DEL or EML);
o the sum of $562,500 to be satis ed by the issue of CML shares
once commercial production commences on any IML granted over all or
part of the EML License area or the DEL License area.
When these shares are issued by CML, the Company's shareholding
in CML will be diluted. The extent of this dilution cannot be
determined at this stage as the issue price of the CML Shares will
be at a price per share (i) at which CML Shares were issued in the
latest private placement or fundraising prior to such payment date;
or (ii) if a third party valuation of CML has been obtained by CML,
the price per share determined by that valuation, whichever is
higher.
Overview on Regulatory Regime in Sri Lanka
Under the Mines and Minerals Act a license is required for any
person to explore for, mine, transport, process, store, trade in or
export any mineral. The GSMB is the body empowered to issue such
licenses.
An exploration license grants to the holder of the license the
exclusive right to explore for all mineral categories authorized by
the license. Each license speci es the limit of the land area and
extent for which the license is granted, the mineral in respect of
which the license is granted, the duration of the license and the
conditions subject to which the license is granted.
An industrial mining license grants to the holder of the license
the entitlement to explore for mine, wash, clean, mechanically
break, sort, store, trade in those authorized minerals mined within
the area speci ed in the license. Each IML/IML Application will be
over land described by reference to a ground survey plan specifying
the boundaries of the area to be covered by the license.
The deposit within the area covered by the Project Licenses
consists of active coastal sand and older sand berms that form a
continuous strip of sand with concentrations of heavy minerals and
has been de ned over a strike length of 49 km by 1,643 shallow
auger drill holes. The total heavy mineral ("THM") component of the
mineral sand deposit consists of Valuable Heavy Minerals ("VHM"):
ilmenite, leucoxene, altered ilmenite, rutile, zircon, garnet and
sillimanite. The sand component is composed predominantly of quartz
with a small percentage of feldspar.
The EML License was (and, when renewed, will be) held through a
wholly-owned Sri Lankan private limited company, EML. In addition,
the DEL License was also held through a wholly-owned Sri Lankan
private limited company, DEL, which is also the applicant pursuant
to the IML Applications.
DEL License
The DEL License was rst issued to DEL on 5 June 2010 and had
previously been renewed on 6 July 2012, 17 September 2014, 1
November 2016 and 31 October 2018. The DEL License expired on 31
October 2020. The forms of application that are included in the
regulations issued under the laws of Sri Lanka have been formulated
to indicate that the fourth renewal of an exploration license is
the nal application that may be made for renewal of an Exploration
License. On 28 April 2014 DEL submitted its rst formal application
for an Industrial Mining License ("IML") over 111.5221 hectares
located within the DEL License area ("First IML Application") and
such application is currently pending. In connection with this
application, an environmental impact assessment ("EIA") report was
submitted to GSMB on 26 September 2019. The EIA review and approval
process was delayed earlier this year due to COVID-19 causing
greatly reduced Government activity. The EIA report was resubmitted
to the CCD in October 2020 and the Directors believe the report
will be made available for its 30 business day consultation
shortly.
In October 2020, DEL made a further 5 applications over land
included in the DEL License area (the "Additional IML
Applications").
The GSMB has represented to DEL that, following the expiry of an
exploration license, the GSMB in practice, allows the former
exploration license holder for a period of two years from the date
of expiry:
-- Exclusive right over the former exploration license area to
submit further IMLs should the former license holder wish to do so
(in this case DEL, in respect of the DEL License area); and
-- Exclusivity over the former exploration license area by
refraining from accepting applications for any new exploration
licenses from third parties.
Such representations have also been made verbally by the
Registrar of the GSMB to the Company's Sri Lankan counsel, however
these practices are not provided for in any published guidelines,
policy documents, regulations or statutes to support such
representation.
Notwithstanding the representations given by the GSMB, upon
expiry of the DEL License, DEL will not hold any exploration rights
in respect of the area covered by the DEL License until such time
as an IML is granted.
EML License
The EML License was rst issued to EML on 18 April 2012 and was
renewed three times on 17 September 2014, 1 November 2016 and 31
October 2018 prior to its expiry on 31 October 2020. The fourth
renewal was applied for in October 2020 and is expected to be
granted soon. As a result of COVID-19, the government in Sri Lanka
has been operating at reduced capacity causing a delay in this
process and EML is working with the GSMB in order to obtain this
renewal as soon as possible. Following expiry of the EML License,
EML will not hold any exploration rights in respect of the area
covered by the EML License until such time as a renewal is granted.
EML has not yet applied for an IML in respect of the EML License,
however the Board intends to make such application in the 24 months
period following the date upon which the EML License is
renewed.
Since September 2016, DEL and EML have made nine additional
exploration license applications, covering an area of 623 sq. km.,
surrounding EL 168 and EL 199 both onshore (over 272km2) and
offshore (over 351km2), to cover interpreted extensions to the
mineral sands' deposits. The Company will consider the appropriate
time to recommence the application process for these ELs.
The total EMP license package, including applications, is
summarised below:
Registered
Tenement number Project holder Interest Area km(2) Status
area
Eastern
EL199/R/3 (or 4) South EML 100% 37 Exploration
========== =============== =============== ============ ================
Eastern
COM/EL/2017/199 North DEL 100% 60 Application
========== =============== =============== ============ ================
Eastern
COM/EL/2018/1101 North DEL 100% 24 Application
========== =============== =============== ============ ================
Eastern
COM/EL/2017/201 North DEL 100% 79 Application
========== =============== =============== ============ ================
Eastern
COM/EL/2017/202 South EML 100% 79 Application
========== =============== =============== ============ ================
Eastern
COM/EL/2017/203 South EML 100% 83 Application
========== =============== =============== ============ ================
Eastern
COM/EL/2017/207 North DEL 100% 50 Application
========== =============== =============== ============ ================
Eastern
COM/EL/2017/209 North DEL 100% 100 Application
========== =============== =============== ============ ================
Eastern
COM/EL/2017/208 North DEL 100% 48 Application
========== =============== =============== ============ ================
Eastern
COM/EL/2017/210 South EML 100% 100 Application
========== =============== =============== ============ ================
Eastern
EL/168/R/4 North DEL 100% 0.134 IML Application
========== =============== =============== ============ ================
Eastern
EL/168/R/4 North DEL 100% 0.052 IML Application
========== =============== =============== ============ ================
Eastern
EL/168/R/4 North DEL 100% 0.127 IML Application
========== =============== =============== ============ ================
Eastern
EL/168/R/4 North DEL 100% 0.048 IML Application
========== =============== =============== ============ ================
Eastern
EL/168/R/4 North DEL 100% 0.172 IML Application
========== =============== =============== ============ ================
Eastern
EL/168/R/4 North DEL 100% 1.115 IML Application
========== =============== =============== ============ ================
History of Exploration and Technical Work
In 2014, DEL and EML (prior to the CML's ownership of these
companies) entered into a memorandum of understanding with
technical consultants RGD1 whereby RGD1 provided technical and
commercial management, including preparation of a preliminary
scoping study (the "Scoping Study"). Technical work undertaken on
the Project from 2014 to April 2016 included various drilling
programmes, Mineral Resource Estimates and the Scoping Study for
the Project, after which Brighton Metals Limited (a CML
wholly-owned company) acquired DEL and EML.
In June 2016, RGD1 (on behalf of DEL and EML) concluded the
Scoping Study, including a Mineral Resource Estimate based on the
drilling and sampling work to date. Preliminary assumptions for
operating costs and recoveries that were assessed during the
Scoping Study were in turn benchmarked against similar mineral
sands projects. The Scoping Study reported above at a 5% total
heavy metal ("THM") cut-off is 17.2 Mt at 17.6% THM with contained
THM of in excess of 3 Mt. CML estimates the components of the THM
assemblage is as follows:
VHM Product VHM % VHM % of Insitu 2020 price % of Value
THM Ore US$/t 2
Ilmenite 1 47.1 8.3 230 51
------ ---------------- ----------- -----------
Zircon 5.0 0.9 1,250 20
------ ---------------- ----------- -----------
Rutile 3.4 0.6 1,100 14
------ ---------------- ----------- -----------
Garnet 22.7 4.0 200 15
------ ---------------- ----------- -----------
[1] The ilmenite 2020 price US$/t is the estimate for ilmenite
only and does not include the price for other Titanium Dioxide. The
% THM of Insitu Orr and % of Value gures for ilmenite all include
other Titanium Dioxide
2 Capital Metals Limited estimate
The EMP deposit has been de ned by 1,643 shallow auger drill
holes totalling 2,621 metres of drilling. The drilling was
completed over a number of programmes between 2012 and 2015, rstly
by GSMB on behalf of DEL and EML, and then by RGD1. Further
drilling conducted by CML in 2018 which con rmed that the resource
extended at depth.
A bulk sampling program was undertaken by CML between December
2016 and July 2017 whereby a total of 42 undisturbed sand samples
were taken from 14 pit locations across the project area. Three
samples were taken from each pit in varying THM grade material
(high, medium, and low grade). CML then commissioned detailed bulk
sample metallurgical work at Mineral Technologies (a Downer Group
company) on the sample areas for the design of process ow sheets
from the results of the metallurgical evaluation. This sampling
programme enabled CML to characterize product types and quality
which have been used in discussions with potential off-takers.
JORC Code Estimate Resources
Optiro Pty Limited ("Optiro"), a mineral resource consulting and
advisory group, has reviewed the documentation provided for the EMP
resource model in June 2016. As part of this review, visual
validation of the block model was carried out by examining
cross-section and plan views of the drill hole data and the
estimated block grades.
In Optiro's opinion, the Mineral Resource models developed for
Eastern North and South provide a realistic estimation and classi
cation of the global Mineral Resources as summarised below:
THM
Classi cation Tonnes grade Contained THM
Deposit (Mt) (%) (kt)
Eastern North Measured 3.16 21.9% 691
===================== ======== ================= =========================
Indicated 3.04 18.3% 555
===================================== ======== ================= =========================
Inferred 0.71 19.9% 141
===================================== ======== ================= =========================
Total 6.91 20.1% 1,388
===================================== ======== ================= =========================
Eastern South Measured 2.66 17.6% 468
===================== ======== ================= =========================
Indicated 5.57 15.8% 877
===================================== ======== ================= =========================
Inferred 2.08 14.6% 304
===================================== ======== ================= =========================
Total 10.30 16.0% 1,649
===================================== ======== ================= =========================
Total Measured 5.82 19.9% 1,159
===================== ======== ================= =========================
Indicated 8.60 16.6% 1,432
===================================== ======== ================= =========================
Inferred 2.79 16.0% 446
===================================== ======== ================= =========================
Total 17.21 17.6% 3,037
===================================== ======== ================= =========================
More detail is set out in the Competent Person's Report within
the Admission Document.
Operations of the Enlarged Group
Summary of Work Programme
CML has prepared a Work Programme for 2021. The principal
purpose of the Placing is to raise funds to undertake a Development
Study and further its work programme (the "Work Programme"). The
principal aims of the Work Programme are to obtain all necessary
permits to allow for conversion of the IML Applications to IMLs and
commence engineering and planning studies to facilitate nancing and
off-take agreements.
The Work Programme can be broken down into four phases as
outlined below (the Placing proceeds are suf cient for completion
of Phases I and II.):
Phase I
The Enlarged Group's priority is to complete the Environmental
Impact Assessment ("EIA") approval process with the Sri Lankan
regulators, along with other technical activities and community
awareness, in order to procure the IML resulting from the First IML
Application. CML commissioned the compilation of the requisite (300
page) EIA report (the "EIA Report"), which was prepared by an
independent and multi-disciplinary team of consultants and the EIA
Report was based on the results of the GSMB submitted Technical
Work Report together with required additional information gathered
during the EIA eld study with assistance from CML, and submitted to
the Coast Conservation and Coastal Resources Department ("CCD") for
initial review. The EIA Report covered coastal geomorphology, water
quality studies, air quality studies, ecological studies,
archaeological studies and land use studies as well as detailed
social and community engagement in the Project area. The Enlarged
Group intends to continue this engagement throughout the Project
and will ensure that there is ongoing consultation and awareness
programmes available for
the community.
The EIA was lodged with the CCD in September 2019. The CCD,
together with all the government agencies that are expected to
directly or indirectly have oversight of the Project, has since
carried out an inspection of the area within the EIA study. The CCD
has compiled feedback from these agencies to be included in the EIA
Report ahead of being submitted for a 30 day public consultation
period and a 30 day technical review period, the purpose of which
is to identify whether there are any further matters for CML to
consider. Once any identi ed matters, if any, are resolved, the CCD
can approve the EIA. An approved EIA is required by the GSMB in
order to approve the First IML Application (for the DEL License)
for the Project, which the Directors expect to receive by the end
of Q1 2021.
Following Admission, the Enlarged Group intends to obtain land
access agreements for the initial mining area at the Project. To
this end, discussions with relevant land owners continue. On top of
this, the Enlarged Group intends to complete an updated scoping and
development study ("Development Study") to enhance their technical
understanding prior to full commercial development of the Project.
The Enlarged Group will appoint an independent consultancy to
prepare the Development Study which will include an economic
analysis of the parameters and returns for the Project. The
Directors estimate that this study will take up to 6 months to
complete.
CML has identi ed potential areas that could be drilled to
increase the total resource.
Following approval of the First IML Application, the Enlarged
Group will seek ancillary permits for construction of mining and
processing facilities for the Project. Such ancillary permits
relate to, but are not limited to, power and water, transport, port
access and usage (including dredging approval), and waste
disposal.
Phase II
Once the initial IML has been granted pursuant to the First IML
Application in respect of part of the DEL License area, the
Enlarged Group will have further discussions to agree off-take
agreements with potential customers such as resource trading
companies as well as end user consumers of mineral sands products
such as pigment and ceramic producers. The Enlarged Group intends
to provide samples to these potential customers to support the
off-take discussions. They will also engage in further studies on
the optimum process owsheet and the nal product quality of the
ilmenite, rutile, zircon and garnet for marketing purposes.
The Company will also commence arrangements to source the
necessary funding requirements (of up to $35 million (GBP26.2
million)) needed to take the Project to production in Phases III
and IV. The Directors expect this will comprise a mixture of debt
nance, equity and advance payments from off- take customer(s). The
Directors believe that once the initial IML pursuant to the First
IML Application is obtained, the Company will be in a stronger
position to negotiate terms for off-take agreements and project
nance. The Directors believe that being admitted to trading on AIM
will provide a broader range of nancing options.
The Enlarged Group will further its discussion with the Sri
Lanka Ports Authority ("SLPA") in order to locate some of the
proposed processing plants (described in Phase III below) and use
the facility as its point of shipping once mining commences. As the
port has been underutilised for some time, it is expected that
discussions with the SLPA will also include the Enlarged Group
assisting with port upkeep.
Phase III
The Enlarged Group will use additional funds raised in Phase II
to provide for the following:
i. Construction of the "wet" plant - this is used to separate
the heavy minerals from the silica sands, to create a Heavy Mineral
Concentrate ("HMC"). It will be located adjacent to the mine;
ii. Construction of the "dry" separation plant - this will be
used to separate out the valuable HMC (comprising rutile, zircon,
garnet, ilmenite) from non-valuable silica sands for restoration.
It is proposed to be located at the local port (Oluvil); and
iii. to settle the rst tranche of deferred consideration,
payable in connection with the acquisition of DEL and EML, which is
triggered by the completion of the Feasibility Study. This amounts
to $625,000 (further details are outlined in the Admission
Document).
In addition, following completion of the Feasibility Study, an
amount of $562,500, payable in shares in Capital Metals Limited, is
due to be paid by CML under the DEL Introduction Agreement, as set
out in paragraphs 13.18 and 13.19 of Part VIII of this document and
an amount of $562,500, payable in shares in Capital Metals Limited,
is due under the EML Introduction Agreement, which is set out in
the Admission Document.
Phase IV
Commercial production will start once the Enlarged Group has
obtained the IML, the ancillary permits and off-take agreements and
the processing plants have been constructed and are operational.
Further details regarding the EMP is set out in the Competent
Person's Report in the Admission Document.
Commencing commercial production in respect of the DEL Licence
area will trigger the second and last deferred payment of $375,000
under the DEL Share Sale Agreement and will trigger the second and
last deferred payment $375,000 under the EML Share Sale
Agreement.
Commencing commercial production will also trigger the second
and last payment tranches of the DEL and EML Introduction
Agreements. These amount in aggregate to US$1,125,000 (further
details are outlined in the Admission Document).
Development Study & Economic Analysis
As mentioned in Phase II above, a Development Study is planned
to be commissioned following Admission, which should take up to 6
months to complete.
Based on all technical work completed to date, the Directors'
current expectations are that capex of approximately US$35m
(GBP26.2 million) will be required to commence mining operations.
This is based on constructing a "wet" plant sited adjacent to the
mine site, and a dry mineral separation plant at the port, to
render the Company capable of processing c1.65Mt per annum.
Based on the Scoping Study, the infrastructure in place, and the
nature of the THM deposits (high resource grade and mineral
assemblage value) within the Project License areas, the Board
expects the Project to be a low capex, high margin operation.
The Enlarged Group's model for the Project yields a targeted IRR
and cash ow margins in excess of 50%. This is a management target
only, and is not intended to be a forecast.
Infrastructure
The Oluvil Port is a commercial and shery harbour located some
32 km from the proposed site of the wet plant for the DEL Licence
area; the port was opened on 1 September 2013 under the Nagenahira
Navodaya (Reawakening of the East) programme.
The Nagenahira Navodaya programme was launched to expedite the
development activities in the region and priority was given for the
Oluvil Port as economic infrastructure and a catalyst for the
growth of the eastern region of Sri Lanka. The commercial (cargo)
section comprises 330 m quay at 8 m depth (design depth of 11
m).
In addition to the commercial harbour the port also has other
key infrastructure including:
-- sealed roads to port from the coastal deposits
-- grid power
-- scheme water
-- of ce, workshop, storage facility and residential quarters
-- perimeter security wall and fencing.
The commercial harbour has yet to be used and currently requires
dredging of sand accumulations resulting from long-shore drift. The
port offers more than adequate land and shipping capacity (8,000 to
10,000 t if harbour dredged to design depth of 11 m) for the
Project's needs.
Mineral Sands' Products
Mineral sands' deposits will typically contain a variety of
valuable heavy minerals. The identi ed valuable heavy minerals in
the EMP are zircon, rutile, ilmenite (including sillimanite and
leucoxene) and garnet.
Zircon
Zircon is a high value product used in the ceramic industry for
glazes and as an opaci er on kitchen and bathroom tiles, dinnerware
and decorative ceramics. Industrial ceramics containing zircon are
used in refractory applications requiring heat and corrosion
resistance. A growing application of zircon is in the zirconium
chemicals industry with a major use in catalytic converters to
control motor vehicle emissions.
Rutile and Ilmenite
The titanium ores of rutile and ilmenite are primarily sold as
feedstocks for down-stream processing sectors including titanium
dioxide ("TIO2") pigment or titanium metal. Rutile has a very high
titanium dioxide content (490% TiO2) whilst in Ilmenite the grade
is lower (40-60% TiO2). Depending on the metallurgical
characteristics of the titanium ore, the downstream process route
used to make pigment or metal may be synthetic rutile, slagging,
sulphate or chloride pigment process.
Titanium dioxide pigment
Titanium dioxide pigment is a white pigment primarily used in
the paint industry as it is non- toxic and has the ability to re
ect and scatter all colours of light while absorbing ultraviolet
light. It has replaced lead-based pigments in paints.
Titanium dioxide pigment is also used in the manufacture of
certain plastics, paper, sunscreens, foodstuffs, cosmetics and
toothpaste.
Titanium metal
Titanium metal is a light, inert and strong metal with a high
melting point, which makes it ideal for use in heart pacemakers,
arti cial limbs/joints, spectacle frames and watches. Titanium
metal is also used in rockets, jet aircraft and sporting equipment
and when formed into an alloy with metals such as iron, manganese
and aluminium, it can be used in power stations, paper mills, oil
re neries and desalination plants.
Garnet
Garnet sand is an excellent abrasive and a common,
cost-effective replacement for silica sand in sand blasting. Mixed
with high pressure water, garnet is used to cut steel and other
materials in water jets. Garnet sand is also used for water
ltration media.
Mineral Sands' Markets
The industry is relatively tight in terms of producers, with the
three main producers (Rio Tinto, Tronox and Iluka Resources)
("Iluka") accounting for approximately two thirds of global
production of zircon and Titanium dioxide ("TIO2") feedstock
(ilmenite and rutile).
The consumption of TiO2 and zircon are closely linked to
industrial and commercial applications with over half of the demand
from the US and China. Therefore, the US and Chinese GDP and
housing markets are key in uences of demand for mineral sands
products. Global demand has been impacted by the slowdown in global
industrial activity. The demand for pigment feedstock has grown,
potentially due to increased DIY and commercial painting during the
COVID-19 period. Demand however has fallen in other industries such
as aircraft manufacturing.
In recent years, Iluka Resources noted that global supply of
rutile and chloride ilmenite was in decline due to a lack of new
projects to ll the supply gap which has been compounded by a
reluctance to invest in new mining projects in recent years.
The zircon market is dominated by three mature Australian and
South African operations representing approximately 63 per cent. of
global output. At the beginning of 2020, zircon supply was also
expected to remain in material de cit as the continuing
industrialisation of China and India puts stress on the existing
market while declining grades and volumes at the main sources of
mined supply continue to fall. Reduced industrial global activity
has eased overall zircon demand.
Pricing
Minerals sands' prices are decided by each buyer and producer
typically through off-take arrangements. The commodities are not
traded on any metals markets, therefore, pricing is more complex
and will be determined by the quality of the material produced and
the speci cation requirements of each buyer.
Zircon
Global demand for zircon is mostly driven by the ceramics
sector, which will underpin growth for the foreseeable future and
result in zircon prices moving broadly in line with global GDP.
After a decline in zircon prices between 2011 and 2016 to
approximately US$810 per tonne, fears of supply bottlenecks led to
a substantial recovery during 2017/18 with prices continuing to
increase to over US$1,500 per tonne in late 2019. The decrease in
global GDP due to COVID-19 has seen the zircon price ease in 2020
with Iluka noting a drop in their average sale price to US$1,354
per tonne. Future pricing will be linked to the global GDP post
COVID-19.
(Source: Iluka Mineral sands industry info toolkit November
2019, and Iluka mid-year 2020 results presentation).
Garnet
References to garnet for the Project are to "industrial" garnet
(as opposed to "hard rock garnet", which is analogous to precious
stones.) Alluvial garnet grains (industrial garnet) (herein
referred to as "garnet") which are rounded are more suitable for
blasting treatments. Mixed with high pressure water, garnet is used
to cut steel and other materials in water jets ("Water Jet
Cutting"). There are various kinds of abrasive garnets which can be
divided based on their origin. The largest current source of
abrasive garnet is garnet-rich beach sand of which the main
producers are Australia and India. The Optiro report states that
the Sri Lankan garnets are considered analogous to the Indian
garnet sands. Garnet sand is also used for water ltration
media.
Globally, the garnet market is mainly driven by growing demand
for Water Jet Cutting, which accounted for nearly 37.86% of total
downstream consumption of garnet in 2018. The worldwide market for
Garnet is expected to grow at a compared annual growth rate of
roughly 5.7% over the next ve years, and will reach US$528.3
million in 2024, from US$400.3 million in 2019.
As there are many different type of speci cations for abrasive
garnet the price can vary between from $130-$560/t.
Titanium Feedstock (ilmenite & rutile)
Despite the global disruption in 2020, titanium feedstock prices
have remained strong, one reason being the sustained demand for
ilmenite by Chinese pigment producers.
Ilmenite prices are typically set on long-term contracts and
vary depending on their usage for either sulphate or chloride
process feedstocks, with sulphate ilmenite being the predominant
product by usage. After a few years of price softness between 2013
and 2014, ilmenite prices have strengthened considerably and
average prices were estimated to be around US$165/t during 2017
and, with markets continuing to be driven by Chinese demand and
increasing to approximately US$220/t in 2020.
Rutile prices have also strengthened during 2020, despite
COVID-19, with Iluka achieving an average weighted price of
US$1,246 per tonne in the rst half of 2020, up 7% from H2,
2019.
Overview of Sri Lanka
Country Overview
Sri Lanka, of cially the Democratic Socialist Republic of Sri
Lanka, is an island country in the northern Indian Ocean off the
southern coast of the Indian subcontinent in South Asia. Sri Lanka
has maritime borders with India to the northwest and the Maldives
to the southwest. The distance between the south-eastern tip of
India and north-western Sri Lanka is only about 40 miles. Sri
Lanka's total land area is approximately 25,330 square miles and it
has a population of a little more than 21 million.
Sri Lanka is a republic and is governed by a semi-presidential
system which is a mixture of a presidential and a parliamentary
system. The nation's political capital is Sri Jayawardenapura Kotte
and is a suburb of Colombo, the largest city and cultural capital
of Sri Lanka.
Sri Lanka is a multi-ethnic and multi-religion island nation in
the Indian Ocean, near the southern coast of India.
The country's largest ethnic group is the Sinhalese, who form
about 74 per cent. of the population. The majority of the Sinhalese
are Buddhists, with a Christian minority. The next largest ethnic
group is composed of the Tamils who form 11 per cent. of the
population, of whom the majority are Hindus. A civil con ict
between the Government and the Tamil community, who sought an
independent homeland for the island's Tamil minority, lasted more
than 25 years and ended in May 2009, when Sinhalese government
forces seized the last area controlled by Tamil Tiger rebels.
Presidential elections were held in Sri Lanka on 16 November
2019. The election was won with a clear majority by Gotabaya
Rajapaksa of the SLPP party, who assumed of ce in January 2020. He
replaced Maithripala Sirisena from the United National Party, who
did not stand for re-election. Since the election, Mr Rajapaksa has
named his brother, Mahinda Rajapaksa (the former President
preceding Mr Sirisena), as the new Prime Minister. Given this
change in Presidency, new parliamentary elections were held on 5
August 2020 and the incumbent SLPP party claimed a landslide
victory, winning 145 seats out of a possible 225 seats.
Sri Lanka is endowed with a variety of mineral resources which
are commercially extracted, including feldspar, clays, dolomite,
graphite, limestone, mica, mineral sands and salt. Sri Lanka is
known for its unique type of graphite, which is called vein
graphite. In 2016 the Mineral Industry of Sri Lanka con rmed that,
the mineral-processing industry produced cement, lead (secondary),
iron and steel and the Company believes that this continues to be
the case.
Regulatory Framework in Sri Lanka
The legal framework of Sri Lanka is based upon a mixture of laws
from Rome, England, Holland, South India and old Ceylon.
The Sri Lankan judicial system has the Supreme Court as the apex
court of the nation followed by the Court of Appeal, High Court,
District Courts, Magistrates' Courts and Primary Courts. The
Constitution of the Democratic Socialist Republic of Sri Lanka
provided for an independent judiciary and guaranteed fundamental
rights that allow for any aggrieved person to invoke the Supreme
Court for any violation of their fundamental rights. The
Constitution also provided for a Parliamentary
Commissioner for Administration (Ombudsman) who can investigate
public grievances against government institutions and state of cers
and give redress. It also introduced referendums on certain bills
and on speci c issues of national importance.
The development of mineral resources is governed by the Mines
& Minerals Act No.33 of 1992, the Mines & Minerals
(Amended) Act No.66 of 2009 and the Mining (Licensing) Regulations
No. 1 of 1993 (Gazette 794/23) and revisions thereafter. Under the
Mines and Minerals Act, the GSMB issues Exploration, Mining,
Trading and Transport Licenses.
An Exploration License grants the license holder the exclusive
right to explore for all mineral categories authorised by the
license. The Mining (License) Regulations (No 1 of 1993) Amendment
dated 10 October 2005 (No. 1418/27) state that the minimum
technical expenditure amount per square kilometre on an Exploration
License is initially LKR 20,000/year increasing through subsequent
years over the license duration.
There are two categories of Mining Licenses, namely artisanal
("AML") and industrial ("IML"). There is a procedural standard in
place for the transition from an Exploration License to a Mining
License should exploration activities be successful.
Applications for Exploration Licenses and Mining Licenses are
processed in accordance with established procedure and practices of
the GSMB. No speci c procedure is prescribed by the Mines and
Minerals Act or any other statue. There is also no stipulated time
frame within which the GSMB is required to make a determination on
an application for a license. The GSMB is required by law to refer
every application for an IML to other government agencies for
clearance by such agencies before issuing an IML. Such government
agencies may include in the clearance letters issued by them
various conditions to be complied with by the applicant prior to
the issue of the IML and / or during the continuation of the
IML.
Some such government agencies to whom the GSMB is required to
refer the applications for clearance could be the CCD, the Urban
Development Authority, the Forest Department, the Department of
Wild Life Conservation, the Department of Archaeology, the area
Local Authority, and any other agencies which the GSMB considers it
appropriate to refer the application to. For instance, if a
facility for processing or any other activity is to be set up and
that facility is to be established on lands falling within the
purview of the Urban Development Authority, then such authority
will stipulate various conditions to be satis ed prior to granting
of the IML. Mineral Sand mining is conducted in the coastal zone as
de ned in the Coast Conservation Act. Therefore the CCD always
stipulates conditions to be satis ed prior to the issuance of an
IML, which is why DEL is presently going through the approval
process with the CCD.
The Mines and Minerals Act also provides that the holder of a
license has the right to enter and possess any area of land speci
ed in the license provided that where the owner or state
organization of any such area of land is in possession of such area
of land the holder of the license shall not exercise such rights
except with the consent of such owner or state organization.
Accordingly, DEL will require permits from certain state
organizations to enter lands owned by them in order to carry on
mining activities. In addition, a Local Trading Permit is required
to be obtained from the Local authority of the area in which the
mining activities are conducted. Such permit is renewable every
year. Certain of the land subject to the IML Applications is
privately held and DEL has entered into exploration agreements with
landowners in order to carry on exploration activities pursuant to
the DEL License. In order to conduct mining activities on those
lands, DEL will need to enter into lease agreements with those
landowners.
An Industrial Mining License grants to the license holder the
entitlement to explore for mine, wash, clean, mechanically break,
sort, store, trade in those authorized minerals mined within the
area speci ed in the license and Industrial Mining License. The
category of IML applied for by DEL would also grant to DEL, with
special authorization of the GSMB, the entitlement to export those
authorized minerals mined within the area speci ed in the license,
subject to the terms and conditions imposed by the GSMB.
The holder of an IML (in the category applied for by DEL) should
within a period of eighteen (18) months of granting of an IML
commence commercial production. Where the holder of the IML is
unable to commence commercial production within the speci ed time
period, an extension to commence such commercial production may be
negotiated with the GSMB. Failure to commence commercial production
within the speci ed time period of 18 months or within such
extended period as may be granted by the GSMB will result in
termination of the IML.
A Trading License grants the non-exclusive right to purchase,
store, process, trade in and with the special authorisation from
the Director of the GSMB to export minerals in respect of which the
license is issued.
All exploration, mining and trading licensees are required to
obtain the special authorisation of the Director of the GSMB to
export minerals in respect of which the license is issued.
A license to transport mineral-bearing substances or minerals is
required for such quantity and period and for such minerals as may
be speci ed in such license. All Exploration, Mining and Trading
Licenses require a Transport License to transport mineral-bearing
substances or minerals.
Transparency and environment
Sri Lanka has a comprehensive environmental legislative
framework that includes a prescribed process and procedure for
mining permitting and associated approvals based on an IEE and an
EIA. CML is issued a Terms of Reference ("TOR") or Table of
Contents for the assessments and all matters referred to in the IEE
and/or EIA TOR must be addressed.
The TOR contains standard EIA Sections and Annexures addressing
a description of the project; the mine and production plan; the
existing environment and anticipated environmental impacts;
monitoring programmes and mitigation plans; and conclusion and
recommendations. The Annexures address any comments during
community consultations and public awareness programmes, and all
maps and plans.
A project EIA will be assessed at central government, provincial
and private level and will need to encompass all aspects of the
project.
Fiscal provisions
Mining royalties are levied by the Sri Lankan government through
the GSMB at the rate of seven per cent. of revenue (for exported
products) and the corporate tax rate is 14 per cent.
The Sri Lanka Export Development Board ("EDB") applies a CESS
Export Levy on all exports on a per tonnage basis including
currently 1,650 LKRs/t on ilmenite, 2,200 LKRs/t on rutile and 550
LKRs/t on zircon. With regard to garnet, CML is currently in
discussion with the EDB and GSMB to seek clarity on what appears to
be an incorrect rate of 24,200 LKRs/t. The EDB have suggested this
may potentially be a typographical error (from LKR2,420) and CML
continues to pursue the matter with these two authorities. At
present, there are no other royalties payable relating to the
Project.
5. DIRECTORS, PROPOSED DIRECTORS AND KEY MANAGEMENT
Brief biographical details of the Existing Directors, Proposed
Directors and senior management are set out below
5.1 Existing Directors
Michael Frayne - Executive Chairman (aged 53)
Michael holds a Bachelor of Commerce Degree majoring in
accounting and nance, a Bachelor of Science Degree majoring in
Geology and a Postgraduate Diploma in Applied Finance and
Investment from the Securities Institute of Australia. He is a
Chartered Accountant and a member of the Australian Institute of
Mining and Metallurgy. Michael previously worked for Ernst &
Young and consulted to a number of resource and commodity
companies. Following this, he worked directly in the resource
industry and spent time at Great Central Mines Ltd (now part of
Newmont Ltd) and in the corporate team at Minara Resources Ltd
(formerly Anaconda Nickel Ltd). Since 2002, Michael has provided
corporate management and advice to resource, commodity and energy
companies some of which are listed on AIM and the Australian Stock
Exchange, with projects in Australia, Africa, Asia, North and South
America. It is proposed that Michael moves to become Chief
Executive following Admission.
Geoffrey Brown - Non-Executive Director (aged 80)
Geoffrey Brown has over 55 years' experience in the plantation
sector. He joined Harrisons & Cros eld plc in Malaysia in 1962
where he was employed on various estates growing oil palm and
rubber. He moved to Indonesia in 1976 and was made responsible for
Harrisons & Cros eld's interests in that country. He was
appointed Executive Chairman of London Sumatra Indonesia in 1982
and remained Managing Director of this large Indonesian plantation
company until 1998. In 1990, he was appointed an Executive Director
of Harrisons & Cros eld Plc, responsible for the plantation
division. Harrisons & Cros eld Plc owned and managed
plantations of rubber, oil palms, cocoa, coffee and tea in
Indonesia, and oil palm and coffee in Papua New Guinea. He remained
an Executive Director of Harrisons & Cros eld Plc until the
company divested itself of its plantation interests in 1994. In
1999 and 2000, he co-ordinated the expansion of oil palm
plantations belonging to the Musim Mas Group in Indonesia and then
became a consultant specialising in plantation management. In 2006
he joined the Equatorial Palm Oil group of companies and was an
Executive Director of the Company from 2008 until 2019 at which
time he became a non-executive director.
Teh Kwan Wey - Non-Executive Director (aged 38)
Mr Teh Kwan Wey was appointed as a Non-Executive Director of the
Company in September 2020. He is General Manager (Corporate) for
KLK in Malaysia where he is responsible for in house corporate
nance advisory and execution including acquisitions, divestments,
fund raising and due diligence. Prior to this Mr Teh spent three
years at Lazard in the London Financial Advisory team where he
worked on a number of equity capital, M&A and LBO transactions
for clients across Europe, North America, the Middle East and Asia.
Mr Teh holds a Master of Engineering degree from Imperial College
London.
5.2 Proposed Directors
On Admission, the following individuals will be appointed to the
Board.
Gregory Martyr, Non-Executive Chairman (aged 56)
Greg is an experienced resource industry banker, advisor and
corporate executive. He has over 30 years' experience in resources
investment banking and corporate nance, as well as the management
of international mining companies. He is also on the board of Euro
Manganese Inc. and Carbon Dynamics Group P/L. From 2011 to 2016,
Greg was a Managing Director with Standard Chartered Bank
ultimately as the Global Head of Advisory, Mining and Metals. From
2005 until its 2011 acquisition by Standard Chartered Bank, he was
a partner with Gryphon Partners, a boutique resource advisory rm
and from 1994 to 2003, he was employed in several executive roles
by Normandy Mining Ltd., including President, Americas. Prior to
that he held positions with Deutsche Bank and Morgan Grenfell. Greg
obtained a Bachelor of Economics and a Bachelor of Laws from the
University of Sydney, Australia.
Anthony Samaha, Finance Director (aged 53)
Anthony Samaha is a Chartered Accountant who has over 25 years'
experience in accounting and corporate nance, including resources
development. Anthony worked for over 10 years with international
accounting rms, including Ernst & Young, principally in
corporate nance, gaining signi cant experience in valuations, IPOs,
independent expert reports, and mergers and acquisitions. He has
over 15 years' experience in the listing and management of AIM
quoted companies, including the accounting and nancial management,
fund raisings, project development and mergers and acquisitions.
Anthony has been involved in acquisitions and resource projects in
various regions of the world, including Australia, West Africa,
North America, Kazakhstan and the People's Republic of China. He
holds Bachelor of Commerce and Bachelor of Economics degrees from
the University of Western Australia and is a Fellow of the
Chartered Accountants Australia and New Zealand and an Associate of
the Financial Services Institute of Australasia. He is currently an
executive director of AIM-quoted Reabold Resources plc.
James Leahy, Non-Executive Director (aged 59)
Beginning his career at the London Metal Exchange ('LME'), Mr
Leahy has spent the subsequent 34 years involved in stockbroking
and commodities in a variety of roles, including research analyst,
equity salesman and specialist corporate broker, which covered
mining nance, origination and distribution. He has worked on a wide
range of projects worldwide, ranging from industrial minerals,
coal, iron ore, precious metals, copper, diamonds, lithium,
uranium, plantations, forestry and palm oil. Lately, he has
employed his corporate governance skills, having gained substantial
experience as an independent director on the boards of several
quoted and unquoted companies. In addition, Mr Leahy has direct
experience in capital markets, having worked at James Capel, Credit
Lyonnais, Nedbank, Canaccord and Mirabaud, where he gained
invaluable experience with international institutional fund
managers, hedge funds, private equity and sector specialist
investors. Additionally, Mr Leahy has been involved in many IPOs,
as well as primary and secondary placings, and the development of
junior mining companies through to production. He is currently a
director of the listed fund Geiger Counter Ltd, AIM-quoted Savannah
Resources Plc and AEG Plc.
5.3 Senior Management
Details of key senior management within the Enlarged Group are
set out below:
Sandy Barblett, General Manager - Commercial (aged 53)
Sandy Barblett has 25 years' experience in senior management
roles with public companies including multi-nationals working in
the UK, Australia, USA and Hong Kong. He has advised a number of
companies in relation to general fund raising, admission onto
public markets, strategy and management selection. He has a
Bachelor of Business from Curtin University of Technology in Perth,
Australia and a Bachelor of Laws from the University of Queensland;
he previously worked for Minter Ellison as a solicitor. He is also
a former director of AIM quoted Two Shields Investments plc (now
called BrandShield Systems plc). Mr Barblett will leave the Company
following Admission.
Iranga Dunuwille, Country Manager (aged 46)
Iranga Dunuwille is a member of the Chartered Institute of
Management Accountants (UK) and holds an MBA from the University of
Greenwich, London. Iranga has a broad range of nance experience
over a twenty year career in Sri Lanka and London. Iranga commenced
his career with Ernst & Young Sri Lanka & moved on to a
large blue-chip conglomerate as an Accountant before then becoming
a head of nance for a large manufacturer and exporter in Sri Lanka.
In 2005 Iranga relocated to the UK and initially worked as a
consultant focusing on regulatory compliance & AML before
becoming a management accountant for a high-end shoe
designer/manufacturer, Charlotte Olympia. Iranga relocated to Sri
Lanka in 2016 and now manages all aspects of nance and
administration functions of the Capital Metals group in Sri Lanka
and is a director for the local subsidiary companies. He also acts
as the Consultant CFO to one of the largest inbound tour operators
in Sri Lanka.
Sam Quinn, Corporate Manager & proposed Company Secretary
(aged 43)
Sam Quinn is a corporate lawyer with over 15 years' experience
in the natural resources sector, in both legal counsel and
executive management positions. Mr Quinn is currently a partner of
Silvertree Partners, a London-based corporate services company
dedicated to the natural resources sector and the Director of
Corporate Finance and Legal Counsel for the Dragon Group, a London-
based natural resources venture capital rm and, and holds various
other positions in both listed and private natural resource
companies. Prior to this, Mr Quinn worked as a corporate lawyer for
Jackson McDonald Barristers & Solicitors in Perth, Western
Australia and for Nabarro LLP in London. Mr Quinn graduated from
the University of Western Australia in 1999 with a Bachelor of Laws
and Bachelor of Arts and is a quali ed lawyer in Western Australia
and in England & Wales. It is proposed that Sam will become the
Company's Company Secretary upon Admission.
The Company has identi ed the need for a technical manager who
will be responsible for all operational (i.e. mining, processing,
environmental) aspects of the Project which includes the
implementation of the Development Study. A suitable individual has
been identi ed whom the Company hopes to appoint following
Admission.
6. CURRENT TRADING AND FUTURE PROSPECTS OF THE ENLARGED GROUP
Equatorial Palm Oil
In May 2020, Equatorial Palm Oil disposed of its 50% interest in
Liberian Palm Developments Limited which constituted a fundamental
change of business of the Company under Rule 15 of the AIM Rules
which was approved by shareholders at a general meeting held on 9
June 2020.
Following the general meeting, Equatorial Palm Oil became an AIM
Rule 15 cash shell. At that time the Company had available cash
resources of approximately GBP800,000. On 8 September 2020,
following Shareholders' approval, the Company announced it had
raised GBP400,000 (before expenses) in order to allow the Board to
seek and identify potential acquisition opportunities. As at 30
September 2020, the Company's most recent year end, the net asset
value of the Company was GBP1.136 million, equating to 0.249 pence
per share.
Capital Metals Limited
Capital Metals Limited's core focus is the development of the
Eastern Minerals Project in an ef cient, sustainable and low-cost
manner, by focusing on the establishment of a mining operation and
associated mineral separation plant to produce mineral sands
products for sale into the international markets. An Environmental
Impact Assessment has been completed and lodged with the Sri Lankan
authorities in September 2020, as outlined in paragraph 4 of this
Part I.
7. FINANCIAL INFORMATION
Historical nancial information on the Company and on Capital
Metals Limited is set out in Parts IV and V of this Admission
Document. An unaudited pro forma net assets statement showing the
hypothetical net assets of the Enlarged Group after the Acquisition
are also set out in the Admission Document.
The accounting reference date for the Enlarged Group will be
March. Therefore, should the Resolutions be passed at the General
Meeting, the Company intends to change its accounting reference
date from 30 September to 31 March following Admission.
In the year ended 31 March 2020 CML made a loss before tax of
US$1.024m on turnover of US$nil. Its net asset value at 31 March
2020 was US$0.85 million.
8. CHANGE OF NAME
Subject to Shareholders' approval of Resolution 8 as a special
resolution, the name of the Company will be changed to Capital
Metals plc, to take effect shortly following Admission. The
Directors believe that the proposed new name better encapsulates
the Enlarged Group's new business activity. It is the Board's
intention that the trading names of the Enlarged Group's
subsidiaries will not change post Admission.
If the special resolution to approve the change of name of the
Company is passed at the General Meeting, the Company's AIM symbol
will be changed to CMET and its website address will be changed to
www.capitalmetals.com following the Change of Name being registered
at Companies House.
9. SHARE CONSOLIDATION
It is proposed that, simultaneously with the other proposed
Resolutions, the Ordinary Shares of
GBP0.0001 will be consolidated into new ordinary shares of
GBP0.002 each on the basis of one New Ordinary Share for every 20
ordinary shares of GBP0.0001 each.
Where the Share Consolidation results in any Shareholder being
entitled to a fraction of a new Ordinary Share, such fraction shall
be aggregated and the Directors intend to sell (or appoint another
person to sell) such aggregated fractions in the market and retain
the net proceeds for the bene t of the Company.
Existing share certi cates (where shares are held in certi cated
form) will cease to be valid following the Share Consolidation. New
share certi cates in respect of the new Ordinary Shares will be
issued on or around 27 January 2021. The new Ordinary Shares will
be freely transferable, and application will be made for the new
Ordinary Shares to be admitted to trading on AIM.
One consequence of the Share Consolidation is that Shareholders
holding fewer than 20 Existing Ordinary Shares will receive no new
Ordinary Shares. This consequence is illustrated in the table
below:
Number of Existing Ordinary Shares Number of New Ordinary
currently held Shares held
----------------------------------- -----------------------
19 -
20 1
200 10
2,000 100
To effect the Share Consolidation, it will be necessary to issue
an additional 18 Existing Ordinary Shares so that the Company's
issued ordinary share capital is exactly divisible by 20. These
additional Ordinary Shares will be issued to the Registrar before
the record date for the Share Consolidation. Since these additional
shares would only represent a fraction of a New Ordinary Share,
this fraction will be sold pursuant to the arrangements for
fractional entitlements contained in the Articles.
10. PLACING AND SUBSCRIPTIONS
Placing
The Company has conditionally raised approximately GBP2 million
(before expenses) by the issue of the Placing Shares at the Placing
Price.
Under the Placing Agreement, Brandon Hill have conditionally
agreed to use reasonable endeavours to procure subscribers for the
Placing Shares. The Placing Shares will rank pari passu with the
Existing Ordinary Shares (following the Share Consolidation) and
the Consideration Shares. The Placing is not underwritten or
guaranteed.
Placees will receive one Placing Warrant for every 2 Placing
Shares subscribed in the Placing. The Placing Warrants have an
exercise price of 15.6 pence per share, being a 30 per cent.
premium to the Placing Price, and an exercise period of 2 years
from the date of Admission.
Following their issue, the Placing Shares will represent
approximately 9.7 per cent. of the Enlarged Issued Share
Capital.
Further details of the Placing Agreement are set out in
paragraph 13.11 of Part VIII of the Admission Document.
The Placing is conditional on, amongst other things: (a) the
Placing Agreement having become unconditional and not having been
terminated in accordance with its terms; (b) the Acquisition
Agreement not having been terminated or amended, and having become
unconditional in all respects; (c) the passing of the Resolutions
and (d) Admission having become effective by no later than 8.00
a.m. on 13 January 2021 or such later time being no later than 6.00
p.m. on 28 February January 2021, as the Company, SPARK and Brandon
Hill may agree.
Subscriptions
The Company proposes to undertake the Subscriptions to raise
approximately GBP85,000 by the issue of the Subscription Shares at
the Placing Price. The terms of the Subscription are identical to
those of the Placing. This includes the Subscribers receiving one
Placing Warrant for every 2 Subscription Shares subscribed in the
Subscription.
The Subscription Shares will rank pari passu with the Existing
Ordinary Shares. Following their issue, the Subscription Shares
will represent approximately 0.4 per cent. of the Enlarged Ordinary
Share Capital.
Further details of the Subscription Agreements are set out in
paragraph 13.16 of Part VIII of this document.
The Subscriptions are conditional on the Resolutions being
passed at the General Meeting and Admission having become effective
by no later than 8.00 a.m. on 13 January 2021.
11. USE OF PROCEEDS
The Enlarged Group intends to use the net proceeds of the
Placing for the following purposes:
-- to complete Phases I and II of the Work Programme, the
principal aims of which are to obtain all necessary permits to
allow for conversion of the DEL License to an IML and the
commencement of engineering and planning studies to facilitate
nancing and product off-take agreements for nal project
construction and development;
-- to increase the number of staff and consultants required to
implement the Work Programme, together with the building out the
marketing and nance operations of the Enlarged Group;
-- to repay CML legacy creditors; and
-- for general working capital purposes.
12. ADMISSION TO TRADING ON AIM AND DEALINGS IN THE ENLARGED ISSUED SHARE CAPITAL
If all of the Resolutions are passed at the General Meeting,
application will be made for the Enlarged Issued Share Capital to
be admitted to trading on AIM. It is expected that Admission will
become effective and dealings in the New Ordinary Shares will
commence on 13 January 2021. De nitive share certi cates in respect
of the New Ordinary Shares will be despatched on or before 27
January 2021.
No application has been or will be made for the Warrants to be
admitted to trading on AIM.
The Ordinary Shares are capable of being settled in CREST. CREST
is a paperless settlement procedure enabling securities to be
evidenced otherwise than by a certi cate and transferred otherwise
than by a written instrument in accordance with the requirements of
CREST. The Articles permit the hold and transfer of Ordinary Shares
to be evidenced in uncerti cated form. Accordingly, settlements of
transactions in Ordinary Shares may take place within the CREST
system if the relevant shareholder so wishes. CREST is a voluntary
system and Shareholders who wish to receive and retain share certi
cated will be able to do so.
The Ordinary Shares currently have the ISIN GB00B2QBNL29. The
Ordinary Shares will not be dealt with on any other recognised
investment exchange and no application has been or is being made
for the Ordinary Shares to be admitted to any other such exchange.
Following the Share Consolidation the Company will have a new ISIN,
which will be GB00BMF75608.
SPARK, has been retained as the Company's nominated adviser and
Mirabaud and Brandon Hill as joint brokers respectively in relation
to Admission. Further details of SPARK's and Brandon Hill's
engagements are set out at paragraphs 13.15 and 13.17 respectively
of Part VIII of this Admission Document.
13. LOCK-IN AND ORDERLY MARKET ARRANGEMENTS
The Locked-in Parties (who will, in aggregate own 69,972,241
Ordinary Shares, being 40.6 per cent. of the Enlarged Issued Share
Capital) have undertaken to the Company, SPARK and Brandon Hill
that they will not dispose of any interest they hold in New
Ordinary Shares for a period of 12 months following Admission and,
for a further period of 12 months thereafter, they will only
dispose of an interest in Ordinary Shares on an orderly market
basis through the Company's then broker. Further details of the
Lock-in Agreements are set out in paragraph 13.13 of Part VIII of
the Admission Document.
In addition, it is a term of the Offer that each of the CML
Vendors (other than the Locked-In Parties) shall be subject to a 3
month lock-in period where they will not dispose of any interest
they hold in New Ordinary Shares for a period of 3 months following
Admission without the Company's written approval. The only
Consideration Shares that will not be subject to any lock-in
provisions shall be those issued to CML Vendors in respect of CML
Shares that were obtained pursuant to the conversion of bonds in
CML prior to the Acquisition.
CML has not been independent and earning revenue for at least 2
years, therefore the Company, following Admission, is subject to
the requirements of Rule 7 of the AIM Rules. All of the Directors
and related parties, including substantial shareholders, have
agreed, subject to the Lock-In agreement (as set out in paragraph
13.13 of Part VIII of the Admission Document) not to dispose of any
interest in Ordinary Shares for a period of one year from
Admission.
Relationship Agreement
The directors of CML, Sandy Barblett (through Stanton
Investments Limited), Anthony Eastman (through Tournesol Consulting
Limited) and Sam Quinn will hold 32,809,854 Ordinary Shares on
Admission, representing approximately 19 per cent. of the Enlarged
Issued Share Capital. These parties have undertaken to the Company,
SPARK and Brandon Hill that, for so long as they are interested in
Ordinary Shares carrying 15 per cent. or more of the Company's
voting share capital, they will not act to unduly in uence the
Company or its Board or otherwise interfere with the day-to- day
management of the Company. Details of the Relationship Agreement
are set out in paragraph 13.12 of Part VIII of the Admission
Document.
14. SHARE OPTIONS AND WARRANTS
The Company does not currently have any share options in issue
at present.
Option Plan
The Company intends to grant options to subscribe for new
Ordinary Shares from time to time to incentivise directors,
employees, and consultants at the discretion of the Directors and
subject to the approval of the Remuneration Committee. Options
granted to subscribe for new Ordinary Shares in this manner will be
over approximately 10 per cent. of the Company's issued share
capital from time to time in line with market standard practices
(the "Option Plan"). The terms of such options shall be determined
at the time of grant including any relevant vesting and performance
conditions.
New Options
The Company intends to grant the following options to current
and proposed Directors and key management of the Company, subject
to Admission (the "New Options"):
Number Expiry of Exercise Price
Name of Option Holder of Options Date of Grant Option (pence)
Period
================================================ ============== =============== ========== ==============
Michael Frayne
................................................ 13 January 13 January
.... 3,000,000 2021 2026 12
Anthony Samaha
................................................ 13 January 13 January
. 1,500,000 2021 2026 12
Gregory Martyr
................................................ 13 January 13 January
.... 1,500,000 2021 2026 12
James Leahy
................................................ 13 January 13 January
....... 1,500,000 2021 2026 12
Teh Kwan
Wey............................................. 13 January 13 January
........ 500,000 2021 2026 12
Geoffrey
Brown........................................... 13January 13 January
......... 500,000 2021 2026 12
Iranga
Dunuwille....................................... 13January 13 January
........... 1,500,000 2021 2026 12
Roshan
Akther.......................................... 13January 13 January
........... 500,000 2021 2026 12
Rashmika Kothalawala 13January 13 January
........................................ 250,000 2021 2026 12
Sam
Quinn........................................... 13January 13 January
................ 1,000,000 2021 2026 12
==============
11,750,000
==============
The New Options will vest in three tranches:
-- Tranche 1 - the rst one-third will vest on Admission
-- Tranche 2 - the second one-third will vest six months after Admission; and
-- Tranche 3 - the third one-third will vest 12 months after Admission.
For Tranche 2 to be exercised, the Enlarged Group's volume
weighted average share price ("VWAP") must have traded at a 50%
premium to the Placing Price for ve consecutive days.
For Tranche 3 to be exercised, the Enlarged Group's VWAP must
have traded at a 100% premium to the Placing Price for ve
consecutive days.
Warrants
At present, there are Broker Warrants outstanding over 5 million
Ordinary Shares (of 0.01 pence) with an exercise price of 0.4 pence
per share. Following the Share Consolidation, this will be 250,000
Broker Warrants each with an exercise price of 8 pence per
share.
In connection with the Acquisition, the Company has agreed,
subject to Admission, to issue the following Bondholder Warrants at
an exercise price of 15.6 pence (a 30% premium to the Issue Price)
to CML Vendors that acquired their CML Shares pursuant to the
conversion of their Bonds:
Number Expiry of
CML Vendor of Warrants Date of Grant Exercise
Period
========================================================= ============== =============== ===================
One Design & Skiff Sails Pty Ltd ATF 666,666 13 January 13 January
I W Brown Superannuation Fund... 2021 2024
Kemosabe Capital Pty 640,523 13 January 13 January
Ltd...................................................... 2021 2024
......................
Magnus (Aust) Pty Ltd ATF 283,332 13 January 13 January
......................................................... 2021 2024
.................
RAMK 208,332 13 January 13 January
Ltd...................................................... 2021 2024
................................................
Robert 208,332 13 January 13 January
Millner.................................................. 2021 2024
..............................................
Bruce Warrington Holman 141,666 13 January 13 January
......................................................... 2021 2024
...................
918 141,666 13 January 13 January
Investments.............................................. 2021 2024
..............................................
Holegata Pty Ltd, Holegata S/F A/C 83,333 13 January 13 January
......................................................... 2021 2024
...
Carpadeum Pty 49,998 13 January 13 January
Ltd...................................................... 2021 2024
.................................
==============
2,423,848
==============
In addition, Adviser Warrants over 833,333 Ordinary Shares will
be issued to Brandon Hill in relation to the Placing, details of
which are set out in paragraph 13.14 of Part VIII of the Admission
Document. With effect from Admission, the following Adviser
Warrants will be outstanding:
Adviser Number of Date of Grant Expiry of Exercise Price
Warrants Warrant Period (pence)
---------- -------------- ---------------- ---------------
13 January 13 January
Brandon Hill 833,333 2021 2024 12
In connection with the September Placing, the September Placees
agreed to commit a further amount of GBP400,000 in the Placing and
a condition of such commitment was that the September Placees
would, at the time of the Placing and conditional on Admission, be
issued Placing Warrants over 5,000,000 Ordinary Shares (after the
Share Consolidation) with an exercise price of 8 pence per Ordinary
Share. The following Placing Warrants will be issued to the
following September Placees with effect from Admission:
September Placee Number of Warrants Date of Grant Expiry of Warrant Exercise Price
Period (pence)
------------------- ------------------- ---------------- ------------------ ---------------
Spreadex Limited 1,875,000 13 January 2021 13 January 2024 8
InterTrader
Limited 2,500,000 13 January 2021 13 January 2024 8
Optiva 625,000 13 January 2021 13 January 2024 8
In aggregate, Placing Warrants over 8,687,499 shares will be
issued to Placees (8,333,333) and Subscribers (354,166). These
Placing Warrants have an exercise price of 15.6 pence per share and
exercise period of 2 years from the date of Admission.
15. DIVID POLICY
The Directors believe that the Enlarged Group should seek
principally to generate capital growth for the shareholders of the
Enlarged Group, but may recommend dividends at some future date,
depending upon the generation of sustainable pro ts, if and when it
becomes commercially prudent to do so, subject to having
distributable reserves available for the purpose. There can be no
assurance that the Enlarged Group will declare and pay, or have the
ability to declare and pay, any dividends in the future.
16. CORPORATE GOVERNANCE AND INTERNAL CONTROLS
The Directors recognise the importance of sound corporate
governance and the Enlarged Group will adopt the QCA Code, as
published by the Quoted Companies Alliance.
The Enlarged Group's purpose, business model and strategy are
set out in paragraph 4 above. Key challenges in the execution of
the business model and strategy are set out in the Risk Factors in
Part II below.
The Board will be responsible for the management of the business
of the Enlarged Group, setting the strategic direction of the
Enlarged Group and establishing the policies of the Enlarged Group.
It will be the Board's responsibility to oversee the nancial
position of the Enlarged Group and monitor the business and affairs
of the Enlarged Group on behalf of the Shareholders, to whom the
Directors are accountable. The primary duty of the Board will be to
act in the best interests of the Enlarged Group at all times. The
Board will also address issues relating to internal control and the
Enlarged Group's approach to risk management.
The Enlarged Group will hold board meetings monthly and whenever
issues arise which require the urgent attention of the Board.
The Board believes that, following Admission, it will have an
appropriate balance of sector, nancial and public markets skills
and experience, an appropriate balance of personal qualities and
capabilities and an appropriate balance between executive and
non-executive directors.
Geoffrey Brown, James Leahy and Teh Kwan Wey are deemed to be
independent non-executive directors. The non-executive directors
will be expected to devote such time as may be necessary to ful l
their roles. Brief biographical details of each of the Existing
Directors and the Proposed Directors are set out in paragraph 5
above.
The Group has established a remuneration committee (the
"Remuneration Committee"), an audit committee (the "Audit
Committee") and a nomination committee (the "Nomination Committee")
with formally delegated duties and responsibilities.
From Admission the Remuneration Committee will comprise James
Leahy as Chairman and Greg Martyr, who will meet not less than
twice each year. The committee is responsible for the review and
recommendation of the scale and structure of remuneration for
senior management, including any bonus arrangements or the award of
share options with due regard to the interests of the Shareholders
and the performance of the Enlarged Group.
From Admission the Audit Committee will comprise Greg Martyr as
Chairman and Teh Kwan Wey, who will meet not less than three times
a year. The committee is responsible for making recommendations to
the Board on the appointment of auditors and the audit fee and for
ensuring that the nancial performance of the Enlarged Group is
properly monitored and reported. In addition, the Audit Committee
will receive and review reports from management and the auditors
relating to the interim report, the annual report and accounts and
the internal control systems of the Enlarged Group.
From Admission the Nomination Committee will comprise Geoffrey
Brown as Chairman and James Leahy, who will meet not less than once
a year. The committee will lead the process for board appointments
and make recommendations to the Board. The Nomination Committee
shall evaluate the balance of skills, experience, independence, and
knowledge on the board and, in the light of this evaluation,
prepare a description of the role and capabilities required for a
particular appointment.
The Enlarged Group will seek to engage with Shareholders to
understand the needs and expectations of all elements of the
company's Shareholder base. Michael Frayne will have speci c
responsibility on the Board for Shareholder liaison.
The Board believes that its stakeholders (other than
Shareholders) are its employees, its customers and the consumers
who are protected from online fraud due to its activities. In order
to understand their needs, interests and expectations the Enlarged
Group will work directly and closely with customers, staff and
other consumer organisations to enhance its products to obtain the
best results to prevent online fraud and security breaches.
The Board regularly reviews the effectiveness of its performance
as a unit, as well as that of its committees and the individual
directors and will monitor and promote a healthy corporate
culture.
17. SHARE DEALING POLICY
The Group has adopted and operates a share dealing code
governing the share dealings of the directors of the Company and
applicable employees with a view to ensuring compliance with the
AIM Rules.
18. BRIBERY ACT 2010
The government of the United Kingdom has issued guidelines
setting out appropriate procedures for companies to follow to
ensure that they are compliant with the UK Bribery Act 2010 which
came into force with effect from 1 July 2011. The Company has
implemented an anti-bribery policy as adopted by the Board and also
implemented appropriate procedures to ensure that the Directors,
employees and consultants comply with the terms of the
legislation.
19. RISK FACTORS
Shareholders and other prospective investors in the Company
should be aware that an investment in the Company involves a high
degree of risk. Your attention is drawn to the risk factors set out
in Part II of the Admission Document.
20. TAXATION
General information relating to United Kingdom taxation is set
out in Part VII of this Admission Document. If you are in any doubt
as to your tax position, you should contact your professional
adviser immediately.
Investors subject to tax in other jurisdictions are strongly
urged to contact their tax advisers about the tax consequences of
holding Ordinary Shares.
21. FURTHER INFORMATION
Shareholders should read the whole of the Admission Document
which provides information on the Company, the Acquisition and the
Placing and not rely on summaries or individual parts only. Your
attention is drawn, in particular, to the Risk Factors set out in
Part II of the Admission Document and the additional information
set out in Part VIII of the Admission Document.
22. GENERAL MEETING
Set out at the end of this Admission Document is a notice
convening the General Meeting to be held on 11 January 2021 at
10.00 a.m. at the of ces of Hill Dickinson at The Broadgate Tower,
20 Primrose Street, London EC2A 2EW, at which the following
Resolutions will be proposed:
Resolution 1: to approve the Acquisition;
Resolution 2: to appoint Gregory Martyr as a Director of the
Company; Resolution 3: to appoint Anthony Samaha as a Director of
the Company; Resolution 4: to appoint James Leahy as a Director of
the Company;
Resolution 5: to authorise the Directors to allot the New
Ordinary Shares and options pursuant to the Share Option Plan;
Resolution 6: to consolidate every 20 Existing Ordinary Shares
into one New Ordinary Share;
Resolution 7: to dis-apply statutory pre-emption provisions to
allow the Directors in certain circumstances to allot New Ordinary
Shares in connection with the Proposals and the Share Option Plan
for cash other than on a pre-emptive basis; and
Resolution 8: to approve the Change of Name.
Resolutions 1 to 6 will be proposed as ordinary resolutions and
Resolutions 7 to 8 will be proposed as special resolutions.
23. ACTION TO BE TAKEN
A Form of Proxy has been sent out to Shareholders in connection
with the General Meeting. Please note that arrangements for this
General Meeting are different from previous general meetings given
that we expect signi cant restrictions on personal movement to
still be in place due to COVID-19. The Board requests that no
Shareholders attend the meeting. Any Shareholders that do attend
will be refused entry. Only those who are required to form the
quorum will attend in person and those Shareholders will constitute
the minimum quorum for the meeting to take place. Shareholders are
asked to complete the Form of Proxy in accordance with the
instructions printed on it so as to be received by the Company's
registrars, Share Registrars Limited, as soon as possible but in
any event not later than 10.00 a.m on 7 January 2021.
24. RECOMMATIONS
Michael Frayne is not regarded as an Independent Director as he
is a Shareholder of Capital Metals Limited. Both the other Existing
Directors are regarded as independent.
In respect of Resolution 1, the Independent Directors, having
consulted with its nominated adviser, SPARK, consider that the
terms of the Acquisition are fair and reasonable insofar as
shareholders are concerned, and accordingly recommend that the
Independent Shareholders vote in favour of the Acquisition. The
Independent Directors intend to vote in favour of this Resolution
in respect of 528,957 Existing Ordinary Shares bene cially owned by
them, in aggregate, representing approximately 0.12 per cent. of
the Existing Ordinary Shares. In providing advice to the Directors,
SPARK has taken into account their commercial assessments.
In addition, the Existing Directors consider that Resolutions 2
to 8 to be proposed at the General Meeting are in the best
interests of the Company and its Shareholders as a whole and
accordingly, the Existing Directors unanimously recommend that each
Shareholder votes in favour of each of the Resolutions. All of the
Existing Directors intend to vote in favour of these Resolutions in
respect of the 2,693,957 Existing Ordinary Shares bene cially owned
by them in aggregate, representing approximately 0.59 per cent. of
the Existing Ordinary Shares.
Details of service contracts of Proposed Directors
Under an executive service agreement dated 23 December 2020
between the Company and Mr Michael Frayne, from and subject to
Admission, Mr Frayne is employed as Chief Executive Officer of the
Company and is paid a salary of GBP150,000 per annum (plus expenses
reasonably incurred by him in the course of his duties). Mr Frayne
is required to devote such time, attention and ability as is needed
to enable him to carry out his duties to the Company as Chief
Executive Officer. His appointment shall (unless terminated earlier
due to poor performance or gross misconduct or other material
breach of duties) continue unless and until terminated by either
party on six (6) months' notice in writing. Mr Frayne's service
agreement contains non-compete, non-solicitation and no-conflict
restrictions on Mr Frayne commensurate with his position as Chief
Executive Officer.
Under an executive service agreement dated 23 December 2020
between the Company and Mr Anthony Samaha, from and subject to
Admission, Mr Samaha will be employed as Finance Director of the
Company and will be paid a salary of GBP50,000 per annum (plus
expenses reasonably incurred by him in the course of his duties).
Mr Samaha is required to devote such time, attention and ability as
is needed to enable him to carry out his duties to the Company as
Finance Director. His appointment shall (unless terminated earlier
due to poor performance or gross misconduct or other material
breach of duties) continue unless and until terminated by either
party on (3) months' notice in writing. Mr Samaha's service
agreement contains non-compete, non-solicitation and no-conflict
restrictions on Mr Samaha commensurate with his position as Finance
Director.
Mr Gregory Martyr entered into a letter of appointment with the
Company on 23 December 2020 to act as a non-executive chairman of
the Company from and subject to Admission. Mr Martyr's appointment
will commence on the Admission Date and is terminable at any time
on three months' written notice on either side. Mr Martyr is
entitled to a fee of GBP38,400 per annum and is required to devote
such of his time, attention and ability to his duties as may be
necessary or desirable for the proper and effective discharge of
all of his functions and responsibilities.
Mr Geoffrey Brown entered into a letter of appointment with the
Company on 23 December 2020 to act as a non-executive director of
the Company from and subject to Admission. Mr Brown was first
appointed as a executive director of the Company on 6 March 2008
and subject to Admission, his appointment shall be terminable at
any time on three months' written notice on either side. Mr Brown
is entitled to a fee of GBP15,000 per annum and is required to
devote such of his time, attention and ability to his duties as may
be necessary or desirable for the proper and effective discharge of
all of his functions and responsibilities.
Mr James Leahy entered into a letter of appointment with the
Company on 23 December 2020 to act as a non-executive director of
the Company from and subject to Admission. Mr Leahy's appointment
will commence on the date of Admission and is terminable at any
time on three months' written notice on either side. Mr Leahy is
entitled to a fee of GBP24,000 per annum and is required to devote
such of his time, attention and ability to his duties as may be
necessary or desirable for the proper and effective discharge of
all of his functions
and responsibilities.
Mr Teh Kwan Wey entered into a letter of appointment with the
Company on 3 September 2020 to act as a non-executive director of
the Company. Mr Teh's appointment commenced on 3 September 2020
and, subject to Admission, is terminable at any time on one months'
written notice on either side. Mr Teh is entitled to a fee of
GBP15,000 per annum and is required to devote such of his time,
attention and ability to his duties as may be necessary or
desirable for the proper and effective discharge of all of his
functions and responsibilities.
De nitions
Except where the context otherwise requires, the following de
nitions shall apply throughout this Admission Document:
1985 Act The UK Companies Act 1985;
Acceptance Form the acceptance form appended to
the Offer Letter pursuant to which
CML Vendors have, and will, agree
to the terms of the Offer and appoint
Capital Metals Limited as their
attorney to do all things reasonably
required to complete the Acquisition;
Act, 2006 Act or the Companies The Companies Act 2006, as amended;
Act
Acquisition the proposed acquisition by the
Company of the entire issued share
capital of Capital Metals Limited,
pursuant to the terms of the Acquisition
Agreement;
Acquisition Agreement(s) the form of conditional share purchase
agreement to be entered into with
the CML Majority and the CML Minority
in relation to the Acquisition;
Additional IML Applications the IML applications submitted
by DEL to the GSMB in October 2020
over land located within the DEL
License area, details of which
are included in paragraph 4 of
Part I of this document;
Admission the admission of the Enlarged Issued
Share Capital to trading on AIM
becoming effective in accordance
with Rule 6 of the AIM Rules;
Admission Document this document;
Adviser Warrants warrants over 833,333 Ordinary
Shares, with an exercise price
of 12 pence per share which have
been issued to Brandon Hill, as
set out in paragraph 13.14 of Part
VIII of this Admission Document;
AIM the market of that name operated
by the London Stock Exchange;
AIM Rules the AIM Rules for Companies published
by the London Stock Exchange, as
amended from time to time;
AIM Rules for Nominated Advisers the AIM Rules for Nominated Advisers
published by the London Stock Exchange,
as amended from time to time;
Articles the articles of association of
the Company as adopted from time
to time;
Authorisations any consent, authorisation, registration,
ling, lodgement, noti cation, agreement,
certi cate, commission, lease,
licence, permit, approval or exemption
from, by or with a Governmental
Agency;
BML Brighton Metals Limited, a wholly-owned
subsidiary of CML;
Board the Directors whose names are set
out on page 8 of this Admission
Document;
Bondholder Warrants warrants to subscribe for Ordinary
Shares issued to certain CML Vendors,
details of which are set out in
paragraphs 12.2 and 13.10 of Part
VIII of this document;
Broker Warrants the existing warrants to subscribe
for 5,000,000 Ordinary Shares (prior
to the Share Consolidation) at
an exercise price of 0.4 pence
(prior to the Share Consolidation)
per share;
BVI Business Companies Act the BVI Business Companies Act
2004 (as amended), being the principal
statute of the British Virgin Islands
(BVI) relating to BVI law;
Business Day a day (other than Saturday, Sunday
or a public holiday), on which
clearing banks in the City of London
are generally open for business;
Capital Meta ls plc Capi tal Metals plc, the En larged
Group ' s propo sed ne w nam e;
Capital Metals Limited or CML Capital Metals Limited, a company
registered in the British Virgin
Islands;
CCD the Coast Conservation and Coastal
Resources Management Department
in Sri Lanka;
certi cated or in certi cated a share or other security not recorded
form on the relevant register of the
relevant company as being in uncerti
cated form in CREST;
Change of Name the proposed change of name of
the Company to Capital Metals plc,
further details of which are set
out in paragraph 8 of Part I of
this Admission Document;
CML Majority Roman Resources Management Pty
Ltd, Michael Frayne, Adelise Services
Limited, Stanton Investments Limited,
Bart Properties Pty Ltd ATF The
Scott Flynn Family Trust, Hogans
Bluff Capital Pty, Anthony Samaha,
Sam Quinn, Tournesol Consulting
and others being CML Shareholders
holding in aggregate 51.4 per cent.
of all CML Shares to which Offer
Letters have been sent and from
whom Acceptance Forms have been
received in relation to the Acquisition;
CML Minority all CML Shareholders other than
the CML Majority;
CML Shareholders the holders of CML Shares;
CML Shares shares of no-par value in Capital
Metals Limited, of which there
are 106,861,663 as at the date
of this Admission Document;
CML Vendors CML Shareholders that have returned,
and which do return, Acceptance
Forms to CML following receipt
of an Offer Letter in relation
to the Acquisition and who have
therefore agreed to sell their
CML Shares to the Company pursuant
to the Acquisition;
Company or Equatorial Palm Oil Equatorial Palm Oil plc, a company
incorporated and registered in
England and Wales, with registered
number 5555087, whose registered
of ce is at 6th Floor, 60 Gracechurch
Street, London;
Consideration Shares up to 132,000,000 Ordinary Shares
to be issued to the Sellers pursuant
to the Acquisition Agreement;
CREST the computerised settlement system
(as de ned in the CREST Regulations)
operated by Euroclear which facilitates
the transfer of title to shares;
CREST Regulations the Uncerti cated Securities Regulations
2001 (SI 2001/3755) as amended
from time to time, and any applicable
rules made under those regulations;
Deferred Shares deferred shares of 0.99 pence each
in the capital of the Company;
DEL Damsila Exports (Private) Limited,
a private company incorporated
in Sri Lanka which is an indirect
wholly-owned subsidiary of CML
which holds the DEL License;
DEL Introduction Agreement the introduction agreement entered
into by BML with RGD1 in relation
to the introduction of the DEL
Vendors to BML, as described in
paragraphs 13.18 and 13.19 of Part
VIII of this document;
DEL License Exploration License with the number
EL/168/R/4;
DEL Share Sale Agreement the share sale agreement pursuant
to which CML acquired its interests
in DEL, a summary of which is included
at paragraphs 13.20 and 13.21 of
Part VIII of this Admission Document;
DEL Vendors Damsila Kumuduni Dalpatadu, Kosmapatabendige
Sarath Palitha Dalpatadu, Kosmapatabendige
Radike Samantha Dalpatadu and Kosmapatabendige
Sandun Lakmika Dalpatadu, the parties
that sold DEL to BML in accordance
with the DEL Share Sale Agreement;
Development Study a report which outlines the strategy
to develop and operate the Eastern
Minerals Project based on all the
technical studies completed to
date and will include an economic
analysis;
Directors the Existing Directors and/or the
Proposed Directors, as the context
requires;
Disclosure Guidance and Transparency the Disclosure Guidance and Transparency
Rules Rules sourcebook made by the FCA
pursuant to Part VI of the Listing
Rules made by the FCA under FSMA;
EBGL Equatorial Biofuels (Guernsey)
Limited;
EEA the European Economic Area;
EIA Environmental Impact Assessment;
EML Eastern Minerals (Private) Limited,
a private company incorporated
in Sri Lanka which is an indirect
wholly-owned subsidiary of CML
which holds the EML License;
EML Introduction Agreement the introduction agreement entered
into by BML with RGD1 in relation
to the introduction of the EML
Vendors to BML, as described in
paragraphs 13.22 and 13.23 of Part
VIII of this Admission Document;
EML License Exploration License with the number
EL/199/R/3 (or 4);
EML Share Sale Agreement the share sale agreement pursuant
to which CML acquired its interests
in EML, a summary of which is included
at paragraphs 13.24 and 13.25 of
Part VIII of this Admission Document;
EML Vendors Damsila Kumuduni Dalpatadu and
Kosmapatabendige Sarath Palitha
Dalpatadu, the parties that sold
EML to BML in accordance with the
EML Share Sale Agreement;
EMP or Project Eastern Minerals Project;
Enlarged Group the Company and its Group as it
will be constituted following completion
of the Acquisition;
Enlarged Issued Ordinary Share the issued ordinary share capital
Capital of the Company upon Admission comprising
the New Ordinary Shares;
EU the European Union;
Euroclear Euroclear UK & Ireland Limited,
the operator of CREST;
Existing Directors the directors listed on page 8
of this Admission Document;
Existing Ordinary Shares the 456,277,502 Ordinary Shares
in issue as at the date of this
Admission Document;
Existing Warrants the Broker Warrants;
Exploration License or EL an Exploration License that grants
the holder thereof the exclusive
right to explore for all mineral
categories authorised by the license
granted;
FCA the Financial Conduct Authority;
Feasibility Study namely all necessary studies undertaken
(including without limitation as
to mine plan, engineering and environmental
matters); all Authorisations required
including government, community
and landowner consents obtained;
and the conversion of all or any
part of the exploration licences
EL/199/ R/3 (or 4) and EL/168/R/4
to Industrial Mining Licences;
First IML Application the rst IML application submitted
by DEL to the GSMB on 28 April
2014, details of which are included
in paragraph 4 of Part I of this
document;
FPO the Financial Services and Markets
Act 2000 (Financial Promotion)
Order 2005, as amended;
FSMA the Financial Services and Markets
Act 2000, as amended, including
any regulations made pursuant there
to;
GBP or GBP or pence or p pounds sterling and pence, the
lawful currency from time to time
of the United Kingdom;
General Meeting the general meeting of the Company
to be held on 11 January 2021 at
which the Resolutions will be proposed;
Group the Company including its subsidiary
undertakings;
GSMB the Geographical Survey and Mines
Bureau of Sri Lanka under the Mines
and Minerals Act of Sri Lanka;
HMRC Her Majesty's Re venue and Customs;
Independent Directors Geoffrey Brown and Teh Kwan Wey;
IFRS international nancial reporting
standards;
Industrial Mining License or a license which grants exclusive
IML right to explore for, mine, process
and trade in all minerals mined
within the area of a speci ed license;
IML Applications the First IML Application and the
Additional IML Applications;
ISIN international security identi cation
number;
KLK Kuala Lumpur Kepong Berhad, currently
a substantial shareholder in the
Company;
LEI code legal entity identi er code;
Lock-in Agreement(s) the lock-in and orderly marketing
agreement(s) dated 23 December
2020 and made between the Company,
and the Locked-in Parties, details
of which are set out in paragraph
13.13 of Part VIII of this Admission
Document;
Locked-in Parties Hogans Bluffs Capital Pty Limited,
Anthony Samaha, Michael Frayne,
Kate Frayne, Chulu Holdings Pty
Ltd ATF The Chulu Trust, Adelise
Services Limited, Stanton Investments
Limited, Brent Holdings Limited
and Roman Resources Management
Pty Limited;
London Stock Exchange London Stock Exchange plc;
Market Abuse Regulation the EU Market Abuse Regulation
(No. 596/2014);
Mines and Minerals Act the Mines & Minerals Act No. 33
of 1992 as amended which is an
Act to provide for the establishment
of the Geological Survey and Mines
Bureau to regulate the exploration
for, mining, transportation, processing,
trading in or export of minerals,
for the transfer to such Bureau
of the functions of the Department
of Geological Survey; for the repeal
of the Salt Ordinance (Chapter
211), the Radio Active Minerals
Act, No. 46 of 1968 and the Mines
and Minerals Law, No. 4 of 1973;
and to provide for matters connected
therewith or incidental thereto;
New Options the new options in respect of Ordinary
Shares to be granted by the Company
with effect from Admission, particulars
of which are set out in paragraph
12.1 of Part VIII of this Admission
Document;
New Ordinary Shares the new Ordinary Shares of 0.20
pence each, comprising the Existing
Ordinary Shares following the Share
Consolidation, the Consideration
Shares, the Subscription Shares
and the Placing Shares;
Nominated Adviser Agreements the agreements dated 26 June 2020
between (1) the Company and (2)
SPARK, further details of which
are set out in paragraph 13.15
of Part VIII of this Admission
Document;
Offer the offer communicated, and to
be communicated, to all holders
of CML Shares to acquire their
interests in CML, in consideration
for which the Consideration Shares
will be issued;
Offer Letter(s) the offer letter(s) sent to CML
Majority, and to be sent to the
CML Minority, communicating the
Offer of the Company to acquire
their CML Shares;
Ordinary Shares ordinary shares of 0.01 pence each
in the capital of the Company,
or, following the Share Consolidation,
ordinary shares of 0.20 pence each
in the capital of the Company;
Placees proposed subscribers for Placing
Shares at the Placing Price in
the Placing;
Placing the proposed conditional placing
of the Placing Shares at the Placing
Price with Placees pursuant to
the Placing Agreement;
Placing Agreement the conditional agreement dated
21 December 2020 between (1) the
Company, (2) SPARK, (3) Brandon
Hill and (4) the Directors relating
to the Placing, further details
of which are set out in paragraph
13.11 of Part VIII of this Admission
Document;
Placing Price or Issue Price 12 pence per Placing Share;
Placing Shares the 16,666,666 New Ordinary Shares
to be issued pursuant to the Placing;
Placing Warrants warrants over (i) 5,000,000 Ordinary
Shares with an exercise price of
8 pence per share issued to the
September Placees, and (ii) 8,687,499
Ordinary Shares with an exercise
price of 15.6 pence per share (being
a 30 per cent. premium to the Placing
Price) to be issued to the Placees
and Subscribers details of which
are set out in paragraph 13.14
of Part VIII of this document;
Project Licenses the DEL License and the EML License;
Proposals the Acquisition, the Change of
Name, the Share Consolidation and
the Placing;
Proposed Directors Mr Gregory Martyr, Mr James Leahy
and Mr Anthony Samaha;
Prospectus Regulation Rules the Prospectus Rules of the FCA
made in accordance with the Prospectus
Regulation;
QCA Code the Corporate Governance Code for
Small and Mid-Size Quoted Companies,
as published by the Quoted Companies
Alliance;
Record Date the record date for the Share Consolidation,
being 6.00 p.m. on 11 January 2021;
Registrar Share Registrars Limited of The
Courtyard, 17 West Street, Surrey
GU9 7DR;
Relationship Agreement the agreement dated 23 December
2020 between (1) the Company, (2)
SPARK and (3) various Shareholders,
(further details of which are set
out in paragraph 13.12 of Part
VIII of this Admission Document);
Resolutions the resolutions proposed at the
General Meeting;
RGD1 RGD1 Resources Limited (a company
incorporated in Hong Kong (CIN
1434714) of 3908 Two Exchange Square,
8 Connaught Place, Central, Hong
Kong SAR China);
SEDOL the Stock Exchange Daily Of cial
List Identi cation Number;
Sellers the selling shareholders of Capital
Metals Limited;
September Placee a placee that subscribed for Ordinary
Shares pursuant to the September
Placing, details of which are set
out in paragraph 12.2 of Part VIII
of this document;
September Placing the placing completed by the Company
in September 2020 to raise a gross
amount of GBP400,000;
Share Consolidation the proposed consolidation of the
Company 's ordinary share capital
pursuant to which each 20 Existing
Ordinary Shares of 0.01 pence are
consolidated into 1 New Ordinary
Share of 0.20 pence each;
Shareholders holders of Ordinary Shares in the
Company from time to time;
Share Option Plan the option plan intended to be
adopted by the Company following
Admission as summarised in paragraph
12.1 of Part VIII of this document;
Subscribers the parties who have con rmed their
agreement to participate in the
Subscription via the Subscription
Agreements;
Subscription Agreements the conditional agreements dated
23 December 2020, details of which
are set out in paragraph 13.16
of Part VIII of this Admission
Document;
Subscription(s) the conditional subscriptions for
the Subscription Shares by the
Subscribers;
Subscription Shares the 708,333 New Ordinary Shares
to be allotted and issued by the
Company to the Subscribers at the
Placing Price pursuant to the Subscription;
UDA Urban Development Authority;
Uncertificated or in uncertificated a share or other security recorded
form on the relevant register of the
relevant company concerned as being
held in uncerti cated form in CREST
and title to which, by virtue of
the CREST Regulations, may be transferred
by means of CREST;
United Kingdom or UK the United Kingdom of Great Britain
and Northern Ireland;
USA or US or Unites States the United States of America, its
territories and possessions, any
state of the United States of America
and the District of Columbia;
VAT value added tax; and
Warrants together the Existing Warrants,
the Bondholder Warrants, the Placing
Warrants and the Adviser Warrants.
ADMISSION AND PLACING STATISTICS
Number of Existing Ordinary
Shares in issue at the date
of this Admission Document 456,277,502
Number of new Ordinary Shares
to issue ahead of the Share
Consolidation 18
Number of New Ordinary Shares
in issue following the Share
Consolidation 22,813,876
Number of Placing Shares to
be issued by the Company 16,666,666
Number of Subscription Shares
to be issued by the Company 708,333
Number of Consideration Shares
to be issued by the Company 132,000,000
Enlarged Issued Share Capital
on Admission 172,188,875
Fully diluted share capital** 201,133,555
Placing Shares, Subscription 86.7 per cent.
Shares and Consideration Shares
as a percentage of the Enlarged
Issued Share Capital
Placing Price per Share 12 pence
Market capitalisation of the GBP20.6 million
Company at the Placing Price
Gross proceeds of the Placing GBP2.085 million
and Subscription
Estimated net proceeds of the GBP1.525 million
Placing and Subscription
AIM symbol* CMET
ISIN GB00BMF75608
SEDOL Code BMF7560
LEI Code 213800RR4MW1ETEMS859
assuming 100 per cent. of CML Shares are acquired in the
Offer
* the new AIM symbol shall become effective only if the
Resolutions are passed at the General Meeting, prior to which it
will remain as PAL
** assuming exercise of all existing options and warrants, and
those proposed to be issued in relation to the Proposals
the new ISIN/SEDOL codes only become effective if the resolution
to approve the Share Consolidation is passed at the General
Meeting, otherwise they will remain as GB00B2QBNL29 / B2QBNL2"
For further information, please visit www.epoil.co.uk or
contact:
Equatorial Palm Oil plc
Michael Frayne (Executive Chairman) + 44 (0) 20 7317 6800
SPARK Advisory Partners (Nominated
Adviser)
Neil Baldwin +44 (0) 20 3368 3554
Brandon Hill Capital Limited
(Broker to the Placing)
Jonathan Evans/Oliver Stansfield +44 (0) 20 3463 5000
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END
MSCGCBDDDDDDGGX
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December 23, 2020 04:30 ET (09:30 GMT)
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