TIDMZIOC
RNS Number : 6544E
Zanaga Iron Ore Company Ltd
03 July 2023
3 July 2023
Subscription Agreement with Shard Merchant Capital Ltd
Zanaga Iron Ore Company Limited ("ZIOC" or the "Company") (AIM:
ZIOC), is pleased to announce that it has entered into an equity
subscription agreement ("ESA") with Shard Merchant Capital Ltd
("SMC"), an institutional investor, dated 1 July 2023. This follows
the successful implementation of an equity subscription agreement
on similar terms in June 2020.
Under the ESA the Company will issue and SMC will subscribe for
up to 36 million ordinary shares of no par value in the Company
("Subscription Shares") in up to three tranches of up to 12 million
shares each (as described below).
In the event the maximum number of Subscription Shares are
issued by ZIOC and subscribed for by SMC, the share capital of ZIOC
will be increased by c.5.9% on a fully diluted basis, based on the
593,374,746 ordinary shares in the Company in issue as at today's
date.
Pursuant to the ESA, SMC has undertaken to use its reasonable
endeavours to place the relevant Subscription Shares that it has
subscribed for and to pay to ZIOC 95% of the gross proceeds of any
such sales.
The ESA provides a number of attractive advantages to ZIOC,
which are highlighted below:
-- Relatively low level of dilution to ZIOC shareholders
-- ZIOC has the ability to repurchase any unsold Subscription
Shares from SMC, subject to legal requirements - an important
element of flexibility for ZIOC. Any Subscription Shares
re-purchased will be cancelled, limiting dilution further
-- Low cost of capital - SMC will retain only 5% of the gross
proceeds of any sale of Subscription Shares
Structure Overview:
Issues of Tranches of Subscription Shares
Under the ESA, Subscription Shares will be issued and SMC will
subscribe for the Subscription Shares in tranches of up to 12
million shares. The first tranche of 12 million Subscription Shares
(the "First Tranche") will be subscribed for by SMC within three
trading days of the date of the ESA.
A second Tranche of 12 million Subscription Shares (the "Second
Tranche") will be subscribed for by SMC 10 trading days following
the earlier of: (a) the date on which SMC has sold all the
Subscription Shares subscribed for in the First Tranche; and (b)
such other date as SMC and the Company agree.
Solely at the discretion of the Company, a third tranche of up
to 12 million Subscription Shares will be subscribed for by SMC
(the "Third Tranche" and together with the First Tranche and the
Second Tranche, each a "Tranche"). Any such subscription will take
place within 14 trading days of the earlier of: (a) the date on
which SMC has sold all the Subscription Shares subscribed for in
the Second Tranche; or (b) such other date as SMC and the Company
agree.
Sales of Subscription Shares
As regards each Tranche, SMC has agreed to use its reasonable
endeavours to place all the Subscription Shares comprised in that
Tranche within a three month period from the date of issue of the
relevant Subscription Shares to it (the "Relevant Three Month
Period"). Such period can be extended prior to the end of the
Relevant Three Month Period by either the Company or ZIOC giving
notice to the other. Any such extension is for a three month period
from the giving of the extension notice. All such sales are subject
to trading restrictions, as mentioned below.
Payment of proceeds of Subscription Shares
In respect of each Tranche, the amount which SMC has undertaken
to pay for the Subscription Shares issued to it in that Tranche is
95% of the gross proceeds of sale received by SMC from all sales of
the relevant Subscription Shares made by it during the Relevant
Three Month Period (as extended, if that occurs).
The ESA provides for regular payments to be made by SMC to ZIOC
following any sales of Subscription Shares.
-- Payments under the First Tranche are to be made weekly and then fortnightly.
-- Payments under the Second Tranche and any Third Tranche
payments are to be made every two weeks (unless an alternative time
for payment is agreed between the parties).
Illustrative example
For illustrative purposes only, if the average price at which
SMC places the 24 million Subscription Shares comprised in the
First Tranche and the Second Tranche was 13.30 pence (being ZIOC's
mid-market closing share price on Thursday 29 June 2023), the net
proceeds received by ZIOC from such sales would be approximately
GBP3.19m. Further, ZIOC has the discretion to elect to issue up to
a further 12 million shares by way of the Third Tranche.
Custodian
The ESA provides that the Subscription Shares are to be held by
a custodian authorized by the Financial Conduct Authority (FCA).
Proceeds of any sale of Subscription Shares by SMC will be held by
the Custodian until remitted by the Custodian to SMC and SMC shall
pay to ZIOC 95% of the gross proceeds of any such sales. To secure
SMC's payment obligations, any proceeds of sale, as well as SMC's
beneficial interest in the Subscription Shares, are to be held by
SMC on trust for the benefit of the Company.
Termination and Unsold Shares
The ESA can be terminated by the Company at any time and by SMC
on the occurrence of certain specified events.
If on termination of the ESA, any Subscription Shares subscribed
for by SMC have not been sold by it (the "Unsold Shares"), the ESA
provides that such Unsold Shares shall be bought back by the
Company from SMC at the same price that SMC has subscribed for such
Unsold Shares (the "Buy-Back") . Completion of the Buy-Back may be
deferred if at the relevant time the Company is precluded from
completing the buy-back arrangement under any applicable
legislation.
Suspension of sales of Subscription Shares:
The Company has the right to require that SMC cease to make (or
procuring) sales of Subscription Shares under any Tranche for such
time as the Company determines ("Suspension Period"). In such
event, the relevant Three Month Period will be extended for the
same amount of time as the Suspension Period.
Trading restrictions:
In order to preserve an orderly market in the Company's shares,
SMC has agreed to effect any sales of Subscription Shares made by
it in accordance with customary orderly market provisions.
Future updates:
The Company will make appropriate further announcements in due
course.
The Company's cash balance at 27 June 2023 was US$530,000, with
US$1,250,000 of drawn debt and incurred interest under the Glencore
Facility and the Company continues with its prudent cash
management. The proceeds received by the Company from SMC pursuant
to the ESA will be applied to general working capital, including
the provision of further contributions to the Zanaga Iron Ore
Project's operations.
An application for the admission of the 12 million Subscription
Shares in the First Tranche will be made shortly and the 12 million
Subscription Shares in the First Tranche are expected to be
admitted to trading on AIM on 5 July 2023. The First Tranche of
Subscription Shares will rank pari passu with the Company's
existing Ordinary Shares. The Company does not hold any shares in
treasury. Following admission of the First Tranche of Subscription
Shares, the total number of Ordinary Shares and voting rights in
the Company will be 605,374,746.
This figure of 605,374,746 Ordinary Shares may be used by
shareholders as the denominator for the calculations by which they
will determine if they are required to notify their interest in, or
a change to their interest in, the Company under the FCA's
Disclosure Guidance and Transparency Rules.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014 AS IT
FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION
(WITHDRAWAL) ACT 2018 ("MAR"), AND IS DISCLOSED IN ACCORDANCE WITH
THE COMPANY'S OBLIGATIONS UNDER ARTICLE 17 OF MAR
Clifford Elphick, Chairman of ZIOC commented:
"Following entry into of the Equity Subscription Agreement, ZIOC
is pleased that a financing structure has been put in place which
will give the Company access to funding through a relatively low
cost structure which minimises dilution to shareholders.
This transaction enables ZIOC to secure capital in the future as
the project progresses and further milestones are achieved."
The Zanaga Iron Ore Company Limited LEI number is
21380085XNXEX6NL6L23.
For further information, please contact:
Zanaga Iron Ore
Corporate Development and Andrew Trahar
Investor Relations Manager +44 20 7399 1105
Liberum Capital Limited
Nominated Adviser Scott Mathieson, Kane Collings
and Corporate Broker +44 20 3100 2000
About us:
Zanaga Iron Ore Company Limited (AIM ticker: ZIOC) is the owner
of 100% of the Zanaga Iron Ore Project based in the Republic of
Congo (Congo Brazzaville). The Zanaga Iron Ore Project is one of
the largest iron ore deposits in Africa and has the potential to
become a world-class iron ore producer.
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END
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