TIDMKZG
RNS Number : 8991O
Kazera Global PLC
04 June 2020
04 June 2020
Kazera Global plc
Acquisition of interest in Diamond Mine and Heavy Mineral Sand
Opportunity
Kazera Global plc ("Kazera Global", "Kazera" or "the Company"),
the AIM quoted investment company, is pleased to announce the
conditional acquisition of a controlling interest in a near-term
producing diamond mine and in a heavy mineral sands (HMS)
opportunity in South Africa.
Furthermore, the Company is pleased to update investors on
ongoing drilling activity at TVM.
Highlights :
Acquisition of stake in DBM
-- Kazera to acquire a 90% stake in Deep Blue Minerals (Pty)
Limited ("DBM") and a stake in Whale Head Minerals (Pty) Limited
("WHM") (the "Acquisitions")
-- Acquisition cost of the stake in DBM is GBP600,000 funded via
the issuance to Richard Jennings of 120,000,000 ordinary shares in
the capital of Kazera ("Ordinary Shares" and these Ordinary Shares
being the "Consideration Shares") at a price of 0.5p per
Consideration Share (the "Issue Price")
-- Near-term Diamond production via DBM:
o Historical production grades of 10ct/ht, producing over 10
million carats of gem grade diamonds since production began in
1928
o Timeline of 12 months to restarting production and revenue
generation following completion of acquisition
o Inferred Mineral Resources of 208,000 carats at a grade of
6.0ct/100 m(2)
Potential acquisition of stake in WHM
-- Kazera to acquire a stake in WHM representing 90% of its
current issued share capital or such percentage as is available
once all necessary arrangements with Black Economic Empowerment
partners under South African law are in place
-- Kazera to assume $500,000 of liabilities from the vendor of
the shares in WHM, subject to completion of certain milestones, to
be satisfied through the issue of Ordinary Shares at the volume
weighted average price of the Ordinary Shares at the time the
milestones are met
-- Completion of the Acquisition in the case of WHM is, inter
alia, subject to receipt of a Competent Persons' Report in terms
satisfactory to the Company and receipt of a Mining Permit in
respect of heavy mineral sand deposits over the area known as
Walviskop
-- Heavy Mineral Sands ("HMS") potential:
o Work programme to be funded by diamond production revenue and
will aim to produce over 6,000tpm, achieving an estimated gross
revenue of US$600,000/month
o Possible partner identified to build a Processing Plant on
site at their own cost and to greatly improve HMS's profit
targets
Rationale for the Acquisitions
-- Simple work programme required to start diamond production
-- Staff and extremely experienced management team already in
place to deliver growth at the field
-- Both projects located on the border between South Africa and
Namibia, within 450 kilometres of the TVM Mine
-- Aligned with Kazera's investing policy of investing in
high-impact commodities in the African mining sector at the bottom
of their cycle
Equity Issuances
-- The Company has also moved to strengthen its balance sheet
and allow it to exploit the above opportunities by:
o Raising GBP750,000 through the issuance of 150,000,000
Ordinary Shares (the "Placing Shares") at the Issue Price (the
"Placing")
o Issuing of warrants over 75,000,000 Ordinary Shares
exercisable at 1p per Ordinary share within two years
o Issuing 49,199,999 Ordinary Shares (the "Fee Shares") to
directors and contractors of the Company in lieu of fees and
salaries accrued to 31 May 2020 amounting in aggregate to
GBP156,000, with 19,199,999 of the Fee Shares being issued at the
Issue Price and 30,000,000 of the Fee Shares being issued at a
price of GBP0.002 (0.2p)
Appointment of Director
-- Appointment of new Executive Director - Dennis Edmonds to
take responsibility for the Diamond and HMS projects.
Larry Johnson, Chief Executive Officer of Kazera Global
commented:
"We are very pleased to announce this transaction. With high
growth potential and near-term revenue opportunities, leveraging on
our Board expertise and flexibility, this investment is typical of
the value we seek to create at Kazera. We are investing in a ready
built team with bespoke experience for the geology on the licence.
Kazera will be taking a majority interest in the JV and expects to
enjoy near term revenue generation which will be a significant
boost to our Company and will facilitate not just growth at our
South African diamond and HMS fields but also at TVM, where we
continue to unearth value.
"This is a highly exciting development for the Company, and I
look forward to closing the acquisition and to updating
shareholders on further developments in the near future."
Rationale and Background to the Acquisition
The Acquisitions represent an opportune time in the diamond
pricing cycle with the bonus of a low cost, high grade HMS
opportunity. The current owner, Tectonic Gold plc ("Tectonic" or
"Tectonic Gold"), has spent 18 months on the ground, built a local
team, tested the area extensively and is the first company to
target securing a coincident HMS mining permit and diamond mining
contract.
Kazera will upon Admission acquire a 90% stake in DBM (it should
be noted that a further 26% of DBM may be acquired for value by
Black Economic Empowerment partners as required by South African
law) and, subject to certain milestones to be satisfied at a later
date, a 64% stake in WHM (assuming 26% of WHM has been acquired for
value by Black Economic Empowerment partners as required by South
African law before completion of the purchase of the shares in
WHM).
In the view of Kazera's board, this represents a low risk
investment into a well understood resource and mining operation
that is fully permitted to restart production within 12 months.
Cash flows from diamond production are expected within 12 months
of completion of the Acquisition of the interest in DBM and are
expected to deliver 300-500ct/month. At an average sales price of
US$350/ct, DBM expects to achieve revenues of US$84,000 -
US$140,000/month. Cash flow from this operation will, once the
acquisition of the stake in WHM completes, then be used to
facilitate production from the Heavy Mineral Sands opportunity and
further develop Kazera's investment in its Namibian Tantalite
mine.
The process will be simple on beach multi mesh separation before
diamond gravels are directed to the Alexkor recovery plant. The
cost of re-starting production is expected to be covered by the
proceeds of the Placing and will be utilising the same technology
as the Tormin field which is 200km south of the Deep Blue area of
operations.
The workforce of Tectonic will remain in-situ at the mine to
oversee restarting of and continuation of production, having worked
for the last 18 months testing the area extensively.
Terms of the Acquisitions
DBM
Kazera has agreed to acquire shares in DBM representing 90% of
its current issued share capital from Richard Jennings for
GBP600,000 which will be satisfied by the Company issuing the
Consideration Shares at the Issue Price. The balance of the shares
in DBM will continue to be held by Tectonic and if shares in DBM
need to be held by Black Economic Empowerment partners under South
African law, Tectonic's interest in DBM will not be diluted.
WHM
Kazera has also agreed to acquire from Tectonic shares in WHM
representing 90% of its current issued share capital or such
percentage as is available once all necessary arrangements with
Black Economic Empowerment partners under South African law are in
place, provided that Tectonic remains holding 10% of WHM's issued
share capital subsequent to any such arrangements, with such
arrangements to be in place before completion of the acquisition by
Kazera of the shares in WHM.
The consideration for the purchase of the shares in WHM from
Tectonic is to be satisfied by Kazera assuming the liability of US$
500,000 owed by Tectonic to Consolidated Minerals Pte Ltd ("CM") in
respect of services rendered in relation to the heavy mineral sands
project. Kazera has agreed with CM to satisfy such liability
through the issue of Ordinary Shares worth $250,000 on completion
of the purchase and through the issue of Ordinary Shares worth a
further $250,000 on the construction and commissioning of a plant
to process a minimum of 20,000 tpm of HMS in or near Port
Nolloth.
In each case the value of such Ordinary Shares issued to CM will
be determined by the 30 day volume weighted average price of the
Company's Ordinary Shares as at close of the Business Day Prior to
the date of the commissioning of the Processing Plant. The Company
has also agreed to pay CM a 2.5% royalty on the gross receipts of
WHM from the processing plant, assuming terms are agreed for this
to be built and it is so built and commissioned on or before 31
October 2023.
The purchase of the shares in WHM is conditional on, inter alia,
a competent person's report on WHM being received by the Company, a
mining permit in respect of heavy mineral sand deposits at
Walviskop being received by WHM, completion of due diligence and
all necessary arrangements with a Black Economic Empowerment
Partner being in place, in each case to the Company's satisfaction
(acting reasonably) with such conditions to be satisfied on or
before 31 December 2020 or such later date as is agreed by the
Company with Tectonic.
Placing and Fee Shares
In order to provide the working capital necessary to bring the
diamond project outlined above into production, the Company has
raised GBP750,000 by the issue of the Placing Shares at the Issue
Price. Pello Capital acted as placing agent in respect of the
Placing.
Investors in the Placing will receive a warrant (the "Warrants")
to subscribe for one further Ordinary Share for each two Placing
Shares for which they subscribe. Each Warrant is exercisable at a
price of 1p per Ordinary Share and must be exercised within two
years of Admission. The Company has also granted 1,550,000 Warrants
to certain brokers who facilitated the Placing.
The Company has also agreed to satisfy GBP190,000 of creditors
through the issue of an aggregate of 55,999,998 ordinary shares in
the capital of the Company, of which the Fee Shares will be issued
and allotted on Admission with 19,199,998 Fee Shares being issued
at the Issue Price and 30,000,000 of the Fee Shares being issued at
a price of GBP0.002 (0.2p) to Align Research Limited, a company of
which Richard Jennings is a director and shareholder and to whom
the Consideration Shares are being issued. Subsequently, 800,000
ordinary shares will be issued on 1 July 2020 and 5,999,999
ordinary shares on 1 October 2020, all at the Issue Price, in
satisfaction of the balance of amounts which will then be owed to
creditors.
Furthermore, the Company has elected to cancel the Loan
Facilities Agreements ("the Loans") as announced on 23 March 2020,
with the lenders of the Loans electing to replace their commitments
to provide the Loans into subscriptions in the Placing. For
clarity, no tranches of the loan were drawn upon by the Company.
The lenders of the Loans (being Giles Clarke and Nick Harrison,
directors of the Company, and Align Research Limited) will retain
their warrants over Ordinary Shares exercisable at GBP0.003 (0.3p)
per Ordinary Share which were issued pursuant to the terms of the
Loans.
Drilling Update
Following the highly encouraging results of the first phase of
Kazera's planned drilling programme at TVM, and the recent success
of the Company's contractors, Adamas Drilling, in operating the
man-carry rig on the steep terrain, Kazera continues to embark upon
the second exploration drill phase to further delineate the extent
of Resources in the license in which phase the Company expects to
identify further Mineral Resources.
So far, the Company has completed drilling at Homestead, Purple
Haze and Snake and has now moved into position at Signaalberg,
drilling the last hole, then moving to the final White City site.
Initial results are positive and the Company anticipates completing
the core drilling by the end of H1 2020.
So far the COVID-19 pandemic has had minimal impact on the
Company's capability to operate at the Mine but has, however,
impeded sending recovered cores to ALS for assaying. It is
anticipated that this issue will be resolved shortly once the
government re-open borders.
Admission
The issuance of the Consideration Shares, Placing Shares and Fee
Shares (together the "New Ordinary Shares") is being made out of
the authorities granted to the directors of the Company at the last
Annual General Meeting.
Application has been made to the London Stock Exchange to admit
the New Ordinary Shares to trading on AIM. Admission of the New
Ordinary Shares is expected to occur on 17 June 2020 ("Admission").
The New Ordinary Shares will rank pari passu with the existing
Ordinary Shares.
Following Admission, the issued share capital of the Company
will be 675,427,873 Ordinary Shares and this figure may be used by
shareholders as a denominator for the calculations by which they
will determine if they are required to notify their interest in, or
change to their interest in the Company under the Disclosure
Guidance and Transparency Rules published by the UK Financial
Conduct Authority. There are no Ordinary Shares held in treasury
and each Ordinary Share entitles the holder to a single vote at
general meetings of the Company. Therefore, the total number of
voting rights in the Company will be 675,427,873.
180,000,000 New Ordinary Shares (consisting of 30,000,000
Placing Shares simultaneous with which Align Research Limited's
obligation to advance sums pursuant to the Loans has been
cancelled, 120,000,000 Consideration Shares and 30,000,000 Fee
Shares) are to be issued to Richard Jennings and Align Research
Limited which will equate to 26.38% of the Company entire issued
share capital following Admission,
Related Party Transactions
Pursuant to the above arrangements, Giles Clarke and Nick
Harrison, Chairman and Non-Executive Director of the Company and
Westleigh Investments Holdings Ltd ("WIHL"), a company of which
they are both directors and shareholders are to be issued New
Ordinary Shares at the Issue Price as follows:
Director Current Placing Fee Shares Resultant % of Enlarged
number of Shares to to be issued** number of Issued Share
Ordinary be issued* Ordinary Capital
Shares held Shares held held
Giles Clarke 10,499,410 6,000,000 3,333,333 19,822,743 2.94
------------- ------------ ---------------- ------------- --------------
Nick Harrison 8,832,743 9,000.000 2,666,666 20,499,409 3.04
------------- ------------ ---------------- ------------- --------------
WIHL 10,338,095 - 3,200,000 13,538,095 2.00
------------- ------------ ---------------- ------------- --------------
* The Placing Shares to be issued to Giles Clarke and Nick
Harrison are pursuant to their subscriptions for GBP30,000 and
GBP45,000 respectively in the Placing and simultaneously their
respective commitments to advance GBP25,000 each pursuant to the
Loans have been cancelled. Giles Clarke and Nick Harrison will
receive 3,000,000 and 4,500,000 Warrants pursuant to the Placing
and will retain the 8,333,333 warrants over Ordinary Shares
exercisable at 0.3p per Ordinary Share granted pursuant to the
entry into the Loans.
** The Fee Shares to be issued to Giles Clarke, Nick Harrison
and WIHL relate to salary / fees accrued but not taken since for
period from 1 February 2020 to 31 May 2020. Each of Giles Clarke
and Nick Harrison have also agreed to accept Ordinary Shares in
lieu of salary in respect of the period from 1 June 2020 to 30
September 2020 and WIHL has agreed to accept Ordinary Shares in
lieu of fees in respect of the period from 1 June 2020 to 30 June
2020 amounting to 3,333,333, 2,666,666 and 800,000 Ordinary Shares
respectively. These further Ordinary Shares will be issued in due
course.
The issuance of these Ordinary Shares and Warrants to Giles
Clarke, Nick Harrison and WIHL constitute related party
transactions pursuant to Rule 13 of the AIM Rules for Companies.
Larry Johnson, an independent director for these purposes,
considers, having consulted with the Company's nominated adviser,
that the issuance of these New Ordinary Shares is fair and
reasonable insofar as the Company's shareholders are concerned.
Appointment of Director
The Board have also elected to appoint Mr Dennis Edmonds to the
Board of Kazera Global as Non-Executive Director. Mr Edmonds will
be the Director in charge of the newly acquired project having a
wealth of commercial and corporate experience in southern Africa,
having practiced as a corporate solicitor in South Africa - and
subsequently in the United Kingdom, specialising in structuring and
executing corporate transactions. He has also been employed at
board level in the investment banking and venture capital
industries. Over the past 15 years Mr Edmonds has been a director
of public and private companies, including those operating within
the mineral resources sectors in emerging markets. Most recently,
Mr Edmonds was executive chairman of AIM-quoted Alien Metals
Limited, a company with a portfolio of mineral assets in South
America and is currently CEO of Pathfinder Minerals PLC which has
an interest in a HMS deposit in Mozambique.
Grant of options
The Company has also granted options over 26,500,000 Ordinary
Shares with an exercise price of GBP0.01 (1p) per Ordinary Share as
follows:
Giles Clarke 5,000,000
Larry Johnson 5,000,000
Dennis Edmonds 10,000,000
Nick Harrison 5,000,000
Non-Director 1,500,000
The options are exercisable within five years of the date of
grant and have no further conditions attached..
Disclosures under Schedule 2(g) of the AIM Rules for
Companies
The information detailed below is disclosed in accordance with
Rule 17 and paragraph (g) of Schedule Two of the AIM Rules for
Companies. Except for the information disclosed below, there is no
other information which is required to be disclosed under these
rules.
Dennis Vernon Edmonds, aged 63, has or has in the last five
years had, the following additional directorships:
Current Directorships Previous Directorships in the
last five years
Draganfly Investments Ltd Alien Exploration Limited
---------------------------------
Pathfinder Minerals plc Alien Metals Limited
---------------------------------
Tectonic Gold plc Alien Minerals Limited
---------------------------------
Vantar Limited Alien Resources Limited
---------------------------------
Arian Silver Corporation (UK)
Limited
---------------------------------
Arian Silver (Holdings) Limited
---------------------------------
Bubblr Holdings Ltd
---------------------------------
Healthcare IT Strategy Solutions
Limited
---------------------------------
Kaizen Advisory Ltd
---------------------------------
Draganfly Investments Limited is an investing vehicle which
failed to find a suitable investment for its criteria and has run
out of capital to finance its ongoing costs. It is in the process
of being placed into voluntary liquidation in Jersey with assets of
approximately GBP80,000 and outstanding liabilities of
approximately GBP260,000.
For further information on the Company, visit: www. kazeraglobal
.com
**ENDS**
Kazera Global plc (c/o Camarco) Tel: +44 (0)203 757 4980
Larry Johnson (CEO)
finnCap (Nominated Adviser and Joint Tel: +44 (0)207 220 0500
Broker)
Christopher Raggett / Anthony Adams
(corporate finance)
Camarco (PR) Tel: +44 (0)20 3781 8331
Gordon Poole / James Crothers / Hugo
Liddy
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
ACQFZGGVMFVGGZZ
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