Vatukoula Gold Mines PLC Investment Agreement for US$ 40 million financing (4312L)
August 12 2013 - 2:00AM
UK Regulatory
TIDMVGM
RNS Number : 4312L
Vatukoula Gold Mines PLC
12 August 2013
12 August 2013
Vatukoula Gold Mines plc.
("Vatukoula", "VGM" or "the Company")
Investment Agreement for US$ 40 million financing of the
Vatukoula Gold Mine
Vatukoula Gold Mines plc, the AIM listed gold producer focused
on Fiji, is pleased to announce that the Company has entered into
an investment agreement with Zhongrun International Mining Co. Ltd
("Zhongrun") for Zhongrun to provide US$ 40 million of funding to
implement the production growth strategy and capital investment
plan at the Vatukoula Gold Mine ("Investment Agreement")..
Under the Investment Agreement the funding will be provided in
two tranches of approximately US$ 20 million each. The first
tranche will be provided by the issue by the Company of 188,897,000
new ordinary shares at a subscription price of 6.89 pence per share
("Equity Funding"). This will raise gross proceeds of approximately
GBP13 million. The second tranche will be provided by Zhongrun
subscribing for US$ 20 million of secured loan notes ("Loan
Notes").
The Equity Funding will be subject to shareholder approval at
General Meeting to be convened shortly and to be held in early
September. The Company has obtained irrevocable undertakings from
approximately 51% of its shareholders to vote in favour of the
Equity Funding. Subject to shareholder approval it is expected that
the Equity Funding will be completed by the 10(th) September 2013
when the new ordinary shares will be admitted to AIM. Once these
shares are issued they will represent approximately 55% of the
enlarged share capital of the Company.
Zhongrun currently holds 37,800,000 ordinary shares in the
Company and following the completion of the Equity Funding will
hold 226,697,000 ordinary shares, representing approximately 66% of
the enlarged share capital of the Company.
The Debt Funding is conditional on the completion of the Equity
Funding and the Loan Notes will carry an interest rate of 13% per
annum and be for a term of six years. During the first three years
the Company will not make any payments of interest (which will
continue to accrue) or repayments of the principle. Following the
initial period of the three years the Loan Notes will be repaid
over the remaining term of three years. The Investment Agreement
provides for the subscription for the Loan Notes in early December
2013.
The Investment Agreement is also subject to approval by the
shareholders of Zhongrun's ultimate holding company, Zhongrun
Resources Investment Corp ("ZRIC"). Irrevocable undertakings have
been given by certain of ZRIC's shareholders to vote in favour of
the transaction in respect of a total of approximately 47% of its
share capital. ZRIC require 50% of its shareholders to vote in
favour to approve the transaction.
As a result of the size of Zhongrun's existing shareholding in
the Company, the Investment Agreement constitutes a related party
transaction under the AIM Rules. The Directors of Vatukoula (with
the exception of Yeung Ng, Fengwen Zheng and Ian He who were
nominated for appointment by Zhongrun and accordingly did not
participate in the Board's deliberations)) consider, having
consulted with WH Ireland, the Company's nominated adviser, that
the terms of transaction are fair and reasonable insofar as the
Company's other shareholders are concerned.
David Paxton, CEO of Vatukoula Gold Mines Commented:
"We are delighted to have secured the funding to develop the
Vatukoula Gold Mine to its full potential. The funding has come
from our largest shareholder which demonstrates the continued
confidence they have in the robustness of the Vatukoula Gold Mine.
This agreement provides financing support on competitive terms in
line with recent financings. The US$40 million will provide us with
the balance sheet flexibility to embark on our capital investment
programme early in the coming fiscal year. We look forward to
working with Zhongrun as we deliver our Company strategy to grow
our production to sustainable and profitable level."
-Ends-
Enquiries:
Vatukoula Gold Mines plc Pelham Bell Pottinger
+ 44 (0)20 7440 + 44 (0)20 7861
David Paxton 0643 Charles Vivian 3232
Kiran Morzaria Daniel Thöle
W.H. Ireland Limited Daniel Stewart
+ 44 (0)20 7220 +44 (0)20 7776
James Joyce 1666 Colin Rowbury 6550
James Bavister
This information is provided by RNS
The company news service from the London Stock Exchange
END
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