Xtract Resources plc Corporate Update (2265N)
October 24 2016 - 1:01AM
UK Regulatory
TIDMXTR
RNS Number : 2265N
Xtract Resources plc
24 October 2016
For immediate release
24 October 2016
Xtract Resources Plc
Company Update
The Board of Xtract Resources Plc ("Xtract" or the "Company")
announces that, further to the notification by the Company on 30
September 2016, the Company provides a further update on its Manica
Gold Project and an update on its current financing
arrangements.
Highlights
-- Minxcon (Pty) Ltd has been appointed to complete open pit optimisation modelling
-- Social element of the Environmental Impact Study commenced
-- Manica Alluvial negotiations advancing
-- Reduction of corporate overhead to GBP0.65 million from
GBP1.61 million per annum with further reductions being considered
and where appropriate will be implemented
-- All aspects of the Company's financial and technical control
being reviewed and changes made where appropriate
Colin Bird, Executive Chairman, said: "Our decision to cease
funding Minera Polar Limitada against its unsatisfactory operating
results for the previous year, together with an unfavorable future
prognosis, has stopped serious cash deficit funding requirements.
Our focus now is on the Manica mine to determine the capital
expenditure required against the optimum technical plan and
therefore restore certainty to the Company. Concurrent with the
above, we have reduced our operating expenses and overheads to be
consistent with a junior resources publicly listed company. During
the above work programme we will continue to consider all options
with a view to restore shareholder value and the most appropriate
way forward.
Financing Arrangements
The operations of the Group are currently financed through a
combination of funds, which the Company has raised from
shareholders as well as the following financing arrangements in
place, which include a Standby Equity Distribution Agreement
("SEDA") and a Loan Note Facility, as amended ("Loan Note"). Both
of these arrangements were entered into with YA Global Master SPV
LTD ("YAGM" or "Investor").
The SEDA was entered into with the Company and YAGM on the 26
August 2011, and approved by the Company's shareholders on 12
September 2011, in order to provide funding of up to GBP12.5
million in the form of an Equity Line Facility. Any fund drawdowns
by the Company under the SEDA facility are in exchange for the
issue to YAGM by the Company of new ordinary shares in the capital
of the Company ("Shares") at an issue price that is dependent on
the share price and the volume of Xtract shares traded in any given
period as set out further below. In addition, each advance cannot
exceed the greater of GBP2 million, an amount that would result in
YAGM holding more than 2.99% of the entire issued share ordinary
capital of Xtract or an amount equal to 300% of the average daily
traded value for each of the 10 trading days prior to the Company
submitting the notice for an advance. To date the Company has drawn
down a total of GBP2.49 million. The SEDA expires on 30 November
2017.
On 12 December 2013, the Company entered into the Loan Note
agreement pursuant to which YAGM agreed to lend up to US$5 million
to the Company. The Loan Note carries an interest of 12% per annum
along with a drawdown fee of 8% and each tranche is repayable over
a 12-month period. To date a total of US$3.15 million has been
drawdown with a total of US$1.85 million of the facility undrawn
and available, subject to the prior agreement of YAGM.
During May 2016, the Company drew down a total of US$1.65
million under the Loan Note agreement with the repayment period
scheduled to commence in July 2016. The Company drew down a further
US$0.45 million under the Loan Note agreement in July 2016. On 6
October 2016 the Company made a payment of US$0.26 million against
the outstanding balance, which currently amounts to US$1.9 million
(before interest). The Company and YAGM have agreed to schedule the
outstanding payments (before interest) at the rate of US$0.1
million per month in 2016 and US$0.21 million per month in 2017,
with the final repayment by the Company due on 1 August 2017. The
next payment to YAGM is due on or before 1st November 2016. The
Company also agreed under the Loan Note to provide security to YAGM
over the Manica asset, which is subject to the approval of
Mozambican Ministry of Mineral Resources and Energy. The pledge
over the Manica license will be released on the date on which the
amount owed to YAGM is reduced to below US$0.9 million.
As previously announced Auroch Minerals NL ("Auroch") and the
Company are in discussions with regards to the final settlement of
US$1.65 million owed by the Company to Auroch pursuant to the
Company's acquisition of Manica in June 2015.
Outlook
During September 2016 the Company announced it would no longer
continue to provide finance for Minera Polar Limitada, the owner of
the Chepica mine and the Directors, in taking this decision have
now stopped the severe financial haemorrhaging suffered over the
last year. As is common with early producing companies, the Company
raises finance for its activities in discrete tranches to finance
its activities for limited periods only and further funding will be
required from time to time to finance those activities. The
Directors would then expect for the funds to be raised through
project finance funding, the current SEDA, Loan Note and further
equity fund raising or a combination thereof.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
Enquiries:
Xtract Resources Colin Bird, Executive +44 (0)20 3416
Plc Chairman 6471
Michael Cornish +44 (0)207628
Beaumont Cornish Felicity Geidt 3369
Email: corpfin@b-cornish.co.uk
+44 (0)207 382
Beaufort Securities Jon Belliss 8300
SEDA Equity Line
Facility
As previously announced in August 2011, the principle terms of
the SEDA are as follows. The number and timing of advances to be
made pursuant to the SEDA shall be at the discretion of the Company
but the Company cannot make more than one advance every ten trading
days without prior agreement with the Investor, and advances made
must not exceed the advance amounts, as defined in the SEDA.
Advances are subject to the satisfaction of certain conditions
precedent including there being no breach of warranties, no
material adverse change in respect of the Company and no material
breach by the Company of the covenants and obligations of the SEDA.
The Shares will be issued pursuant to the SEDA at a price equal to
95 per cent. of the lowest daily VWAP of the Ordinary Shares for
the 10-trading day period following an advance notice ("Pricing
Period") that is greater or equal to the minimum acceptable price
set by the Company. The minimum acceptable price may not be more
than 95 per cent of the VWAP of the Ordinary Shares on the date
immediately prior to the advance notice. The advance amount will
automatically be reduced by up to 10 per cent. for each trading day
during the Pricing Period that the VWAP is below the minimum
acceptable price.
Loan Note
As previously announced in December 2013, the principle terms of
the Loan Note are as follows. Under the Loan Note, the Company and
YAGM may mutually agree to draw down additional tranches. The Loan
Note requires that, in relation to each tranche borrowed by the
Company pursuant to the Loan Note, the Company will issue YAGM with
new warrants to subscribe (at an exercise price equal to 200 per
cent. of the 5 day volume weighted average price of Shares ("VWAP")
following the advance of that tranche to the Company) for such
number of Shares as would result in the aggregate exercise price on
the full exercise of those warrants being 20 per cent. of the
amount advanced in the relevant tranche. Each such warrant shall be
exercisable for a period of with 3 years from the date of issue of
the warrant.
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
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