TIDMGUN
RNS Number : 0011X
Gunsynd PLC
24 August 2020
Gunsynd Plc
("Gunsynd" or the "Company")
Quarterly Investor Update
Gunsynd Plc (AIM: GUN, AQSE: GUN) is pleased to announce the
following investor update for the quarter ending 31 July 2020
regarding its current holdings in investee companies and activities
acquired and managed as per its investing policy.
Rincon Resources Pty Ltd
The Company advised in late June 2020 that it had invested
A$250,000 (approximately GBP138,000) in Rincon Resources Pty Ltd
("Rincon"), an Australian gold and base metals exploration company.
At the time the Company investment represented approximately 28% of
Rincon.
Rincon Resources is a Western Australian ("WA") focused gold and
base metals and holds the rights to three highly prospective
projects in WA, with a main focus on the South Telfer Project,
covering 50,000-hectares in the Paterson province. The South Telfer
Project is approximately 12km south of Newcrest Limited's Telfer
mine. Rincon's Laverton and Kiwirrkurra Projects are also highly
prospective gold and base metals projects.
The funds raised by Rincon are being used to progress activities
including acquisition of a valuable historical magnetic database,
commence Heritage clearance activities, and final preparations for
initial drill programs at the South Telfer Project, WA.
Further detailed updates will be provided accordingly as the
Company is advised by the Rincon board and management. We
anticipate exciting progress during the remainder of 2020.
Eagle Mountain Mining Limited
The Company announced on 22 July 2020 that it had invested
A$200,000 (approximately GBP110,000) in Eagle Mountain Mining
Limited ("Eagle Mountain"), an ASX listed copper-gold exploration
and development company (ASX: EM2). This investment provides
Gunsynd with exposure to copper exploration which compliments the
Company's recent investment in gold explorer Rincon Resources.
The Eagle Mountain investment was part of a A$3.0 million
capital raising at A$0.13 supported by institutional investors. The
intended use of funds will include a surface diamond drilling
program of approximately 2,000 metres at the Eagle Mountain's
high-grade Oracle Ridge Copper Mine Project ("Oracle Ridge")
scheduled to commence Q3 2020, for the potential acquisition of
prospective ground in the vicinity and to provide additional
working capital for the company.
The Company further announced on 11 August 2020 an update from
Eagle Mountain regarding the commencement of its maiden drilling
program which marked an exciting milestone for Eagle Mountain since
it finalised the acquisition of the Oracle Ridge Copper project.
Eagle Mountain had appointed Boart Longyear Limited ("Boart
Longyear") to undertake a maiden surface diamond drilling program.
Boart Longyear is a global drilling company which has previously
undertaken exploration programs at Oracle Ridge and was chosen for
its experience onsite and safety management program which includes
stringent procedures for the management of COVID-19, with drilling
equipment and crews planned to be onsite before the end of
August.
The drilling program will target extensions to high-grade
portions of the existing Mineral Resource Estimate ("MRE") in three
priority zones. The zones are supported by a combination of:
-- previous drilling outside the existing MRE which has
intersected mineralisation
-- unconstrained mineral resources; and
-- a magnetic anomaly.
The current share price of Eagle Mountain is approximately
A$0.24 representing an attractive uplift on our investment via the
capital raising.
Human Brands International ("Human Brands") and Rogue Baron
Limited ("Rogue Baron")
The Company announced an update on 2 July 2020 regarding Human
Brands, a US-based premium spirits company in which Gunsynd held a
convertible loan note.
Share exchange agreement
Human Brands had entered into a share exchange agreement with
Rogue Baron to sell the following subsidiaries: Shinju Whiskey LLC;
Shinju Spirits Inc; Mazeray Corporation; STI Signature Spirits
Group LLC and Legacy Retail Group LLC. These subsidiaries hold the
Shinju, Mazeray and Copa Imperial Brands as well as a 52% interest
in Bin 1301 wine bar in Washington DC. The consideration for the
sale was 36,247,500 ordinary shares in Rogue Baron at a price of
7.8 pence per ordinary share.
Deed of Novation
A deed of novation was entered into which transferred Gunsynd's
convertible loan note from Human Brands to Rogue Baron. It will
accrue interest at 12% per annum, be unsecured and repayable on 31
March 2021. Gunsynd increased the Loan Note by a further GBP120,000
and the loan note is currently approximately GBP500,000 and can be
converted at any time at the election of Gunsynd into ordinary
shares of Rogue Baron at a price per share determined by dividing
GBP 1,616,304 (representing the agreed valuation of the ordinary
share capital of Rogue Baron) by the total number of ordinary
shares in Rogue Baron in issue immediately prior to conversion.
Under the novation, various future capital raising fees payable to
Gunsynd have also been transferred to Rogue Baron.
COVID-19 has impacted the US hospitality sector, and closures
have affected bars and restaurants including the bar in Washington
DC which produces the majority of revenue for Legacy Retail Group
LLC (now owned by Rogue Baron). The lockdown has now been partially
lifted but there is still an impact on bars in the city due to
social distancing. However, offsetting this Rogue Baron is now in
negotiations to dramatically reduce the rent on the premises. The
bar has also received a substantial low interest loan from the
government which should place it in a better financial situation
going forward when social distancing measures are relaxed.
Shinju sales, which had been encouraging to the end of February,
were heavily impacted in the next three months due to lockdowns in
key sales states. With lockdowns gradually being removed sales have
started to pick up again. Given the shortage of Japanese whisky
with the discontinuation of many labels such as Hibiki 12, Hibiki
17, Hakushu 12, Nikka 12 and Taketsuru Pure Malt 17, 21 and 25,
Rogue Baron sees an opportunity in this space in the future if the
company can be funded to the extent it can increase not only its
marketing but product offering with the potential addition of other
expressions (i.e. different ages of the same whisky product) from
Japan. The recent sale of Aviation Gin to Diageo for up to USD 610
million once again shows the value spirits brands can achieve in a
short space of time (Ryan Reynolds invested in the brand in
2018).
The IPO process is still ongoing and has been impacted by the
effects of COVID-19 on the business and markets in general. We hope
to provide an update on this shortly.
Sunshine Minerals Limited ("Sunshine")
On 21 August 2020, the Company announced that Malachite
Resources Limited, which is listed on the ASX (ASX: MAR;
"Malachite"), had made an announcement regarding the acquisition of
the 85% of Sunshine Minerals Limited it does not already own
("Sunshine Minerals") (the "Transaction"). Malachite had previously
acquired a 15% shareholding in Sunshine, a private company
incorporated in the Solomon Islands.
Sunshine owns 80% of Sunshine Nickel Limited (SNL) which holds
PL 01/18 located on the south coast of Santa Isabel Island. The
remaining 20% of SNL is owned by local landowners. The Jejevo
Nickel Project is located within the PL 01/18 project area.
The acquisition of 85% of Sunshine Minerals is for an upfront
payment of A$850,000 in shares in Malachite and a further,
deferred, payment of A$1,105,000 in shares in Malachite upon valid
application for a mining lease for PL 01-18. The acquisition is
subject to conditions precedent as set out in the announcement of
21 August 2020.
Gunsynd holds 4,965,850 shares in Sunshine Minerals and will,
subject to completion of the Transaction, receive 1,262,967 Upfront
Consideration Shares and 1,641,856 Deferred Consideration Shares.
Following, and subject to, completion of the Transaction, Gunsynd
will have no direct interest in Sunshine Minerals.
Kolosori Nickel Limited ("Kolosori")
The Company advised in late 2019 it had purchased a 7.67% stake
in Kolosori Nickel (SI) Limited ("Kolosori"), which owns 80% of the
nickel prospecting licence PL05/19 over the Kolosori Prospect in
the Solomon Islands, for consideration of GBP45,000.
Malachite has entered into an MOU with Kolsori. Under the MOU,
Malachite has exclusivity until 30 September 2020 to carry out due
diligence and consider making an offer for Kolosori.
Oyster Oil and Gas Limited ("Oyster")
The Company announced on 29 November 2019 that it had entered
into a binding term sheet with Sajawin Pty Ltd ("Sajawin") to
conditionally sell all of its shares in Oyster for a consideration
of approximately GBP260,000. Sajawin continues to undertake the
necessary work to meet the conditions precedent to conclude this
deal. To date, Gunsynd has received GBP20,000 of the consideration.
The Company further advised in May 2020 it had agreed with Sajawin
to extend the deadline for the unmet Conditions Precedent of the
Term Sheet, through a share purchase variation agreement term sheet
from 30 April 2020 to 30 October 2020. If any of the Conditions
Precedent are not satisfied by 30 October 2020, then either Party
may terminate the Term Sheet at which time the Parties' rights and
obligations under the Term Sheet will immediately cease and Gunsynd
will immediately return the initial payment to Sajawin. The Company
will provide further updates as they arise.
Summary
The Gunsynd board has been able to make progress in a number of
areas, not least its new investments in Rincon and Eagle Mountain
(the latter of which is already well in the money) and the
conditional disposal of its investment in Sunshine Minerals.
Following the fundraisings announced on 11 June, 6 July and 7 July
2020 together totalling GBP1,169,000 before expenses, the Company
is now well funded for the foreseeable future. The current
situation with respect to COVID-19 has seen global governments
smash a walnut with a sledge hammer. The fiscal and monetary
stimulus in response to COVID-19, whilst a burden for decades to
come, is more than likely to provide strong stimulus to the natural
resources sector and in particular gold. The same can be said of
the "climate crisis" which has resulted in a big push to electric
cars which we believe will prove positive for nickel. Similarly, in
addition to the US government loan for its bar in Washington, we
believe Rogue Baron is well positioned for the future as commerce
returns to something like normal and the supply constraints on
Japanese whisky will still remain. Thus, with the possible
exception of Oyster and the oil market, we have confidence in the
future prospects of our portfolio of investments during a time of
extreme economic uncertainty.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
The Directors of Gunsynd accept responsibility for this
announcement.
For further information please contact:
Gunsynd plc
Hamish Harris/Peter Ruse +44 (0) 78 7958 4153
Cairn Financial Advisers LLP
James Caithie / Mark Rodgers / Liam
Murray +44 (0) 20 7213 0880
Peterhouse Capital Limited
Lucy Williams +44 (0) 20 7469 0930
Forward Looking Statements
This announcement contains forward-looking statements relating
to expected or anticipated future events and anticipated results
that are forward-looking in nature and, as a result, are subject to
certain risks and uncertainties, such as general economic, market
and business conditions, competition for qualified staff, the
regulatory process and actions, technical issues, new legislation,
uncertainties resulting from potential delays or changes in plans,
uncertainties resulting from working in a new political
jurisdiction, uncertainties regarding the results of exploration,
uncertainties regarding the timing and granting of prospecting
rights, uncertainties regarding the Company's or any third party's
ability to execute and implement future plans, and the occurrence
of unexpected events. Actual results achieved may vary from the
information provided herein as a result of numerous known and
unknown risks and uncertainties and other factors.
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