TIDMPOL
RNS Number : 6533F
Polo Resources Limited
19 May 2017
19 May 2017
Polo Resources Limited
("Polo" or the "Company")
GCM RESOURCES plc - INVESTMENT UPDATE
Polo Resources Limited (AIM: POL), the multi-sector investment
company with interests in oil, gold, coal, copper, phosphate,
lithium, iron and vanadium, notes that its investee company, GCM
Resources plc (LON: GCM) has issued an update stating that it has
entered into a consulting agreement in relation to a proposed
2,000MW coal fired power plant in Bangladesh.
The full unedited text of that announcement is reproduced
below.
For further information, please contact:
Polo Resources Limited
Kudzayi Denenga, Investor
Relations +27 (0) 787 312 919
ZAI Corporate Finance Ltd
(nominated adviser)
Ray Zimmerman, John Treacy +44 (0) 20 7060 2220
Liberum Capital (broker)
Henry Freeman +44 (0) 20 3100 2000
Blytheweigh (public relations)
Tim Blythe, Nick Elwes, Camilla
Horsfall +44 (0) 207 138 3204
About the Company
Polo Resources Limited is a natural resources investment company
focused on investing in undervalued companies and projects with
strong fundamentals and attractive growth prospects. For further
details on Polo, please refer to: www.poloresources.com.
GCM Resources plc
("GCM" or the "Company")
(LON:GCM)
2,000MW Power Plant Consulting Agreement
GCM Resources plc (LON:GCM), a resource exploration and
development company, is pleased to announce that it has entered
into a consulting agreement with Dyani Corporation Limited ( )
("Consultant", "Dyani"), a PRC based infrastructure advisory
company. The consultancy is in relation to the advancement of the
proposed 2,000MW coal fired power plant, which includes the
collaboration with China Gezhouba Group International Engineering
Co. Ltd ("CGGC"), as previously announced on 11 November 2016.
Since May 2016, the Consultant has provided invaluable
introduction, negotiation and advisory services to the Company on a
good-faith basis, while terms of a consulting agreement were being
discussed. The Consultant was instrumental in the introduction of
CGGC, and the subsequent negotiation and finalisation of the
Memorandum of Understanding ("MOU") announced on 11 November 2016.
The Company would not have been able to engage nor successfully
enter into the MOU with CGGC without the assistance of the
Consultant. The Company considers that the relationships, skills,
knowledge and expertise of the Consultant will continue to be of
significant benefit in the negotiations with CGGC and other Chinese
enterprises in: undertaking the necessary feasibility and
evaluation studies in respect to the proposed power plant; a joint
venture investment agreement; and a subsequent Engineering,
Procurement, Construction and Commissioning ("EPCC") agreement.
Principal terms of the consulting agreement
Under the terms of the consulting agreement which expires on 30
June 2018, the Consultant shall provide services to assist the
Company in:
-- Procuring a preliminary feasibility study on the proposed
mine mouth power plant at no external cost to GCM;
-- Negotiating and entering into a joint venture investment
agreement with respect to the proposed mine mouth power plant;
and
-- Negotiating and entering into an EPCC agreement or Framework
EPCC agreement in relation to the proposed mine mouth power
plant.
In return for their services, the Consultant shall receive a fee
as follows:
-- For work performed since May 2016 (evaluating the potential
of a mine mouth power plant, advisory, introduction of CGGC,
assisting in the negotiations and successful conclusion of the MOU)
the Consultant shall receive 3,891,034 new issued shares in the
Company;
-- A monthly retainer of GBP20,000 from 1 July 2016, payable
quarterly in arrears by the issuance of Company shares at 20 pence
per share (43% premium to the Company's closing share price prior
to the MOU being agreed and announced) with no other financial
payments nor reimbursement of expenses unless agreed by the
Company.
-- Upon completion of key milestones, the Consultant will
receive share-based success fees in lieu of any cash payment. The
milestones are as follows:
o A preliminary feasibility study completed by CGGC (or a large
Chinese enterprise acceptable to the Company) on the proposed mine
mouth coal power plant of up to 2,000MW at no external cost to GCM,
for which the Consultant shall receive a success fee equal to 5% of
the issued capital of the Company;
o GCM and CGGC (or a large Chinese enterprise acceptable to the
Company) executing a Framework Agreement in relation to a joint
venture investment or similar cooperation with respect to the
proposed mine mouth coal power plant, for which the Consultant
shall receive a success fee equal to 5% of the issued capital of
the Company;
o GCM and CCGC (or a large Chinese enterprise acceptable to the
Company) executing a final joint venture investment or similar
cooperation with respect to the proposed mine mouth coal power
plant, for which the Consultant shall receive a success fee equal
to 8% of the issued capital of the Company; and
o GCM and CCGC (or a large Chinese enterprise acceptable to the
Company) executing a Framework EPCC Agreement, or definitive
agreement in relation to an EPCC with respect to the proposed mine
mouth coal power plant, for which the Consultant shall receive a
success fee equal to 5% of the issued capital of the Company.
Under the consulting agreement all share issues are conditional
upon the Consultants' interest, together with the interest of its
in-concert parties, remaining below 30% of the Company's issued
capital. With the exception of the monthly retainer, the Consultant
is restricted from disposing of any shares received under the
consulting agreement for a period of six months from issue.
Each milestone specified in the consulting agreement represents
a significant step towards developing the proposed multi-billion
dollar power plant at the mine mouth of the Phulbari Coal and Power
Project.
The Board is acutely aware of the potential dilution arising
from the consulting agreement. As fees for services similar to
those provided by the Consultant are typically based upon a
percentage rate of the value of the underlying contract, and given
that a 2,000MW ultra super critical coal fired plant would cost in
the region of $4 billion, GCM does not have the resources to pay
such fees in cash. The Company is fortunate to have found an
introducer and consultant of their calibre who is agreeable to be
compensated with shares of the Company, recognising a cash payment
would be beyond the Company's current ability to fund.
By paying the fees through the issue of shares, the economic
interests of the Consultant are aligned to those of the Company.
The Company incurs little downside in the event that the milestones
are not met. After the MOU was announced the Company saw its
intra-day share price reach a four year high at 60.83 pence on 14
November 2016. The Company's Board of Directors ("Board") believes
that upon the completion of each milestone, GCM's share price is
expected to benefit from a significant re-rating. Accordingly the
value of the services provided by the Consultant is expected to far
exceed the fee incurred.
The Board has concluded that the consulting agreement is
beneficial for GCM.
The Executive Chairman, Datuk Michael Tang PJN, stated: "I am
delighted to engage the services of Dyani and look forward to
working with them to drive significant progress in pursuit of our
goals.
Our primary objective remains to deliver substantial coal fired
power generation to the people of Bangladesh through the Phulbari
Coal and Power Project and a partnership with China Gezhouba Group
International Engineering Co. Ltd. will facilitate this.
The economic interests of both Dyani and our Company are
aligned: to achieve successful progression of the proposed power
plant. I am confident that the consulting agreement will unlock
significant value for our shareholders in time to come."
Issue of shares
In accordance with the consulting agreement as described above,
the Company has today issued and allotted 900,000 shares to the
Consultant in relation to the retainer for the period to 31 March
2017 and 3,891,034 shares to the Consultant in relation to the fee
for services in respect to the MOU and other work performed
to-date.
Application has been made to The London Stock Exchange for these
shares to be admitted to AIM. It is expected that admission will
become effective on 24 May 2017. Following admission of these
Ordinary Shares, the Company's enlarged issued share capital will
comprise 67,652,065 Ordinary Shares with voting rights in the
Company. As the Company holds no shares in treasury, this is the
total number of the voting rights in the Company which may be used
by shareholders as the denominator for the calculations by which
they will determine if they are required to notify their interest,
or a change in the interest, in the share capital of the Company
under Chapter 5 of the FCA's Disclosure and Transparency Rules as
reflected in the Company's articles of incorporation.
This announcement contains inside information as defined in
Article 7 of the EU Market Abuse Regulation No 596/2014 and has
been announced in accordance with the Company's obligations under
Article 17 of that Regulation.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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May 19, 2017 03:49 ET (07:49 GMT)
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