Kennedy Ventures PLC Placing to raise £2.0 million (6641E)

TIDMKENV

RNS Number : 6641E

Kennedy Ventures PLC

20 July 2016

20 July 2016

Kennedy Ventures plc

("Kennedy Ventures" or "the Company")

Placing to raise GBP2.0 million

HIGHLIGHTS

-- Conditional placing to raise GBP2.0 million before expenses (the "Placing") through the issue of 66,666,665 new ordinary shares of 1p each ("Ordinary Shares") at a price of 3p per share (the "Issue Price")

-- Net proceeds of the Placing will be used by African Tantalum (Pty) Limited ("Aftan"), Kennedy Ventures' investee company, to upgrade and expand Aftan's current plant at Tantalite Valley Mine ("TVM") and open up the Lepidolite orebody where, due to the association of lepidolite (lithium-rich mica) with the tantalite, lithium potential exists ("the Programme"). The Programme is designed to:

o Improve overall tantalite recovery rates through the installation of a new fines recovery plant

o Increase targeted throughput to 15,000 tonnes per month and increase production to 15 tonnes of tantalite concentrate per month with improved ore sourcing and grades

-- The Board believes the raise will see TVM to a position of positive operational cash flows within the first quarter after commissioning. Completion of the Programme and full production is anticipated in Q2 2017 at which time Aftan will also be in a strong position to enter the lithium market.

-- Giles Clarke and Nick Harrison to participate in the Placing to acquire an additional 1,666,667 Ordinary Shares and 833,333 Ordinary Shares respectively

Peter Hibberd, CEO of Kennedy Ventures commented: "TVM represents an exciting project for a multitude of reasons and the Programme is necessary in order to extract the inherent and significant value from the Homestead Mine and surrounding ore bodies. We are therefore pleased to announce this raise as it is envisaged that it will enable Aftan to deliver improved recoveries, increased production capacity and provide for its near term entrance to the attractive lithium market, by way of further exploration and subsequent commencement of lithium concentrate production which Aftan later anticipates upgrading to lithium carbonate. On the current time frame Kennedy Ventures, through our stake in Aftan, will be the first and only company with lithium producing investments that is quoted in London. We look forward to updating shareholders as we carry out this accretive programme."

Giles Clarke, Chairman of Kennedy Ventures commented: "The TVM project represents a rare and exciting combination of lithium and tantalite in a country that has enjoyed one of the longest stretches of political stability and peace in Africa. We are pleased to continue to receive institutional and retail support and are now well positioned to progress operations towards lithium and tantalite delivery into two demand-led markets."

Background, strategy and use of proceeds

The Company's operational cashflow has been constrained since Aftan reopened the TVM and recommissioned the existing processing plant at the end of 2015. This is due to irregular mine grades and an unexpectedly high proportion of fine tantalite as mining moved through the orebody. Additionally, TVM has encountered significant amounts of lithium bearing ores that the existing plant is not currently configured to recover. The Programme is designed to address these issues as well as significantly enhance the productivity of TVM.

The net proceeds of the Placing will be used to enable Aftan, by way of a shareholder loan from the Company, to upgrade and expand the existing TVM plant as well as for general working capital for both the Company and Aftan. In addition, funds will be applied to open up the nearby Lepidolite ore body which will enable increased throughput to a targeted 15,000 tonnes per month (previous target was 10,500 tonnes) and output to a targeted 15 tonnes of tantalite concentrate. It is anticipated that all the increased product volume will be supplied to Aftan's offtake partner under the existing agreement. It is hoped that the upgraded recovery plant will significantly improve overall recoveries by allowing the re-processing of all tailings and the ability to process micaceous ores from Homestead Mine (not previously possible) and surrounding ore bodies including Lepidolite. The Lepidolite ore body holds higher grades of 730ppm Ta205 (Homestead resource from an earlier independent study of 430ppm Ta205) that will drive improved production levels.

Aftan has also identified significant lithium potential from the TVM and anticipates producing lithium concentrate after completion of the Programme, which will enable its entrance into the lithium market. The Lepidolite ore body has resource potential along strike and down dip, studies are ongoing to understand the best way to exploit the Lithium potential. The near term objective will be to produce lithium concentrate followed by lithium carbonate through the upgrade of the concentrate on site.

The lithium market has seen enormous recent demand largely driven by its use in portable energy storage batteries in electric vehicles. Further growth is anticipated in this market, where there exists strong long term fundamentals, with many major car manufacturers declaring major positions in the "green" transport, electric vehicle market. The Board believes the Placing will see Aftan become operationally cash flow positive, and generate stronger margins and with the potential to become a lithium producer.

Placing and subscription summary

The Placing will raise, in aggregate, GBP2.0 million (before expenses, which are estimated to total approximately GBP200,000) through a conditional placing of, in aggregate, 66,666,665 new Ordinary Shares (the "Placing Shares") at a price of 3p per share (the "Placing"). The Placing will comprise of a placing of 12,000,000 Placing Shares and 5,833,333 Placing Shares (the "First Firm Placing Shares" and "Second Firm Placing Shares" respectively) issued pursuant to the existing share authorities as approved at the Company's 2015 Annual General Meeting (the "Firm Placing") and a conditional placing of 48,833,332 Placing Shares ("Conditional Placing Shares") which is conditional upon, inter alia, shareholder approval ("Conditional Placing") at a general meeting of the Company to be convened for 11am on 4 August 2016 (the "General Meeting").

As part of the Placing, the Company intends to allot and issue 2,983,723 Placing Shares to Shore Capital Stockbrokers Limited in lieu of fees. The Placing Shares to be issued to Shore Capital Stockbrokers Limited are included within the total Conditional Placing Shares, the issue and allotment of which are subject to shareholder approval at the General Meeting.

The Placing Shares to be issued will rank pari passu in all respects with the Company's existing Ordinary Shares and, subject to shareholder approval, will represent approximately 38.1% of the Company's enlarged issued share capital, following admission of the Firm Placing Shares and Conditional Placing Shares.

Application has been made for the 12,000,000 First Firm Placing Shares, pursuant to the Firm Placing, to be admitted to trading on the AIM Market of the London Stock Exchange ("AIM") and it is expected that admission will take place and trading in the First Firm Placing Shares will commence from 8:00am on 25 July 2016 ("First Admission"). Application has also been made for the 5,833,333 Second Firm Placing Shares, pursuant to the Firm Placing, to be admitted to trading on the AIM and it is expected that admission will take place and trading in the Second Firm Placing Shares will commence from 8:00am on 29 July 2016 ("Second Admission"). Application will be made for the Conditional Placing Shares, pursuant to the Conditional Placing, to be admitted to trading on AIM and it is expected that admission will take place and trading in the Conditional Placing Shares will commence from 8:00am on 5 August 2016 ("Final Admission"), subject to shareholder approval at the General Meeting.

Total voting rights

Following the First Admission but before the Second Admission, the Company's issued share capital will consist of 120,461,539 Ordinary Shares, with each Ordinary Share carrying the right to one vote. The Company does not hold any Ordinary Shares in treasury. This figure of 120,461,539 Ordinary Shares may therefore be used by shareholders in the Company, between the dates of First Admission and Second Admission, as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules ("DTRs").

Following the Second Admission, the Company's issued share capital will consist of 126,294,872 Ordinary Shares, with each Ordinary Share carrying the right to one vote. The Company does not hold any Ordinary Shares in treasury. This figure of 126,294,872 Ordinary Shares may therefore be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the DTRs.

Following the Final Admission, and subject to shareholder approval, the Company's issued share capital will consist of 175,128,204 Ordinary Shares, with each Ordinary Share carrying the right to one vote.

Director Participation and Related Party Transaction

Giles Clarke and Nick Harrison, both directors of the Company, are to participate in the Conditional Placing, subscribing for 1,666,667 Ordinary Shares and 833,333 Ordinary Shares respectively. In addition, Westleigh Investments Holdings Limited ("WIHL"), a company wholly owned and controlled by Giles Clarke and Nick Harrison is to participate in the Conditional Placing, subscribing for 833,333 Ordinary Shares. Following the completion of the Placing and Final Admission, and subject to shareholder approval, Giles Clarke will hold an interest in 8,066,372 Ordinary Shares (representing 4.6% of the enlarged issued share capital), Nick Harrison will hold an interest in 7,233,038 Ordinary Shares (representing 4.1% of the enlarged issued share capital) and WIHL will hold an interest in 10,338,095 Ordinary Shares (representing 5.9% of the enlarged issued share capital).

The participation by Giles Clarke, Nick Harrison and WIHL in the Conditional Placing constitutes a related party transaction for the purposes of AIM Rule 13. The Directors (with the exception of the Directors involved in the transaction as a related parties), having consulted with the Company's nominated adviser, Grant Thornton UK LLP, consider that the terms of the related party transaction are fair and reasonable in so far as shareholders are concerned.

Notice of General Meeting

A General Meeting of the Company will be held at 11:00am on 4 August 2016 at Lakeside, Fountain Lane, St Mellons, Cardiff, CF3 0FB. A notice of the General Meeting has been posted to shareholders and will shortly be available on the Company's website at www.kvplc.com.

The business of the General Meeting is to seek the approval of shareholders to increase the directors' authorities to issue shares on a non-pre-emptive basis. In the first instance, this authority will be used to allot and issue the Conditional Placing Shares, which includes the Ordinary Shares in satisfaction of certain fees outstanding to Shore Capital Stockbrokers Limited

The Directors recommend that all shareholders vote in favour of the resolutions. The Company has received irrevocable undertakings to vote in favour of the resolutions from Directors who hold, or are interested in, an aggregate of 22,304,172 Ordinary Shares, representing 20.56 per cent. of the Company's current issued share capital.

For further information on the Company, visit: www.kvplc.com, or contact:

 
 Kennedy Ventures plc 
 Peter Hibberd (CEO), c/o Gordon       Tel: [phone] 
  Poole                                 4997 
 Grant Thornton UK LLP (Nominated      Tel: [phone] 
  Adviser)                              5100 
  Colin Aaronson / Richard Tonthat 
  / Daniel Bush 
 Shore Capital (Broker)                Tel: [phone] 
  Mark Percy / Toby Gibbs (corporate    4090 
  finance) 
  Jerry Keen (corporate broking) 
 Camarco (PR)                          Tel: [phone] 
  Gordon Poole / Billy Clegg / Sean     4980 
  Blundell 
 

The Market Abuse Regulation (MAR) became effective from 3 July 2016. Market soundings, as defined in MAR, were taken in respect of the Placing with the result that certain persons became aware of inside information, as permitted by MAR. That inside information is set out in this announcement and in the circular to shareholders convening the General Meeting, and has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to the Company and its securities.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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July 20, 2016 02:00 ET (06:00 GMT)