Loan Agreement

 
TIDMHMB 
 
 

Hambledon Mining plc ("Hambledon" or the "Company")

Investment by EBRD and Change of Directorate

22 February 2012

Further to the announcement made on 27 January 2012 and the circular to shareholders dated 1 February 2012, Hambledon is pleased to announce that the European Bank for Reconstruction and Development ("EBRD") and the Company have agreed terms for the provision by EBRD of a secured loan facility of US$15 million (the "Loan Agreement"), a US$3 million equity investment in the Company and the issue to EBRD of warrants over 30 million Shares, in each case for Hambledon to develop the Sekisovskoye, Kazakhstan underground mining operation. This agreement follows the approval by the EBRD board of directors earlier this month.

Loan Agreement

Under the terms of the Loan Agreement entered into on 21 February 2012 between two of the Company's subsidiaries, Altai Ken-Bayitu LLP ("AKB") and Sekisovskoye LLP ("Seki"), and EBRD, EBRD has conditionally agreed to lend US$15 million in two tranches to AKB and Seki, on a joint and several basis, repayable in quarterly instalments between 10 January 2015 and 10 October 2017. Interest on drawn amounts will be charged at a rate of three months LIBOR plus seven per cent. per annum. The loan ceases to be available for draw down on 21 February 2014.

Under the Loan Agreement, AKB and Seki have each given certain representations, warranties and covenants to EBRD and the Loan Agreement contains certain events of default that could enable EBRD to require repayment prior to the stated maturity date.

AKB and Seki will work towards satisfying the conditions precedent to the Loan Agreement and the Company estimates that this will be achieved within approximately four weeks from the date of that agreement, after which the first tranche of funds, being US$10 million, made available under the Loan Agreement may be utilised. The availability of the second tranche is subject to certain production targets being met.

Subscription Agreement

Under the terms of the Subscription Agreement entered into on 21 February 2012 between the Company and EBRD, EBRD has conditionally agreed to subscribe for 58,794,708 Shares at a price 3.25 pence per Share (that price equalling the Placing Price per Share under the Placing announced on 1 February 2012). The aggregate subscription monies to be paid by EBRD for such Shares will be approximately GBP1.91 million (approximately US$3.00 million).

Under the Subscription Agreement, the Company has given certain representations, warranties and covenants to EBRD. The Subscription Agreement gives EBRD the right to nominate a director to the Board for so long as it holds Shares (and, before such time, whilst it has the right to subscribe for Shares or exercise Warrants).

The Company will now work towards satisfying the conditions precedent to the Subscription Agreement and estimates that this will be achieved within approximately 14 days following the date of that agreement, after which it must then give not less than 15 days' notice to the EBRD to make its equity investment.

Warrant Instrument

Pursuant to the Warrant Instrument, EBRD has been issued with non-transferrable warrants over 30 million Shares.

The Warrants are exercisable at any time before the earlier of (i) 21 February 2014 and (ii) if the closing price per Share exceeds 6.5325 pence for a period of 20 consecutive trading days during that two year period, 45 days from the date on which the Company notifies EBRD that this condition has been met. In either case, any Warrants not exercised within the relevant period will lapse. The Warrants are exercisable in whole or in tranches of no less than 5,000,000 Warrants (or, if less, the amount of Warrants unexercised as at the relevant date).

The exercise price of the Warrants is 4.875 pence per Share (representing a 50 per cent. premium to the Placing Price).

If the Warrants are exercised in full approximately GBP1.5 million (approximately US$2.30 million) will be raised by the Company.

Total interests in Shares

On the assumption that (i) only the Shares under the Subscription Agreement are issued to EBRD and (ii) no further Shares are issued before that date, EBRD will hold 58,794,708 Shares representing approximately 6.00 per cent. of the then issued share capital of the Company.

On the assumption that (i) the Shares under the Subscription Agreement are issued to EBRD and continue to be held by EBRD, (ii) the Warrants are exercised in full and (iii) no further Shares are issued before that date, EBRD will hold 88,794,708 Shares representing approximately 8.79 per cent. of the then issued share capital of the Company.

Change of Directorate

In view of the impending appointment to the Board of a director nominated by EBRD, Dr Jeff O'Leary is taking this opportunity to resign his position on the Board of the Company. Tim Daffern, CEO of Hambledon, made the following comment "Jeff has ably assisted the Company since his appointment, especially with its resources and resource statement. The Company is extremely grateful for Jeff's guidance and support and wishes him well in the future."

Enquiries:

Hambledon Mining plc:

Telephone [phone]

Charles Zorab

Fairfax I.S. PLC (Nominated adviser and broker):

Telephone [phone]

Ewan Leggat/Katy Birkin

Tavistock Communications:

Telephone [phone]

Ed Portman/Jos Simson

DEFINITIONS

 
"Directors"or"Board"       the directors of the Company; 
"EBRD"                     European Bank for Reconstruction 
                           and Development; 
"Kazakhstan"               the Republic of Kazakhstan; 
"Placing"                  the placing of 177,507,699 
                           Shares (as summarised 
                           in the circular to  Shareholders 
                           dated 1 February 2012) which completed 
                           on 20 February  2012; 
"Placing Price"            means 3.25 pence per Share 
                           (being the price at 
                           which Shares were  issued 
                           under the Placing); 
"Shareholder"              a person recorded as a holder of Shares 
                           in the Company's register of  members; 
"Shares"                   ordinary shares of 0.1p each in 
                           the capital of the Company; 
"Subscription Agreement"   the agreement entered into 
                           on 21 February 2012 
                           between (i) the  Company and (2) EBRD 
                           under which EBRD conditionally agreed 
                           to  subscribe for 58,794,708 Shares; 
"Warrant Instrument"       the deed poll entered into 
                           by the Company on 21 
                           February 2012  constituting 
                           the Warrants; and 
"Warrants"                 the non-transferrable warrants to subscribe 
                           for up to 30,000,000 new 
                           Shares issued to EBRD under the terms 
                           of the Warrant Instrument. 
 
 

The following exchange rate has been used in this announcement: GBP1:$1.57.