SolGold PLC Update to Superior Investment Proposal (8025K)

TIDMSOLG

RNS Number : 8025K

SolGold PLC

26 September 2016

26 September 2016

SolGold plc

("SolGold" or the "Company")

SolGold, Newcrest and Maxit Agree to USD33m Equity Raising in SolGold

Highlights:

Ø SolGold to raise a total of USD33m at US16 cents (12p).

Ø SolGold Board unanimously recommends shareholder approvals for the resolutions (as amended) to be put to the SolGold General Meeting to be held on 13 October 2016.

Ø DGR Global to approve the share issues to Newcrest subject to no superior proposals being received by SolGold.

Ø Maxit to approve the share issues to Newcrest subject to no superior proposals being received by SolGold.

Ø Unconditional approval by private interests of CEO Nicholas Mather.

Ø Newcrest to invest USD22.863m for 10% of SolGold.

Ø Maxit and its clients to invest USD10.137m for 4.43% of SolGold.

Ø Newcrest to have anti-dilution and top up right to 10% maximum of issued share capital of SolGold.

Ø Newcrest to support Board on any independently recommended future Change of Control transactions.

Ø Cascabel funding for up to 7 ongoing drill rigs assured.

Previous Proposal Superseded and Exceeded

Further to the market release made on 22 September 2016, the Board of SolGold (AIM: SOLG) wishes to provide the market with an update which supersedes and exceeds in value the previously proposed subscription by Newcrest International (Newcrest) to ordinary shares of 1p each of SolGold ("Shares") equal to 10% of the issued share capital of SolGold at a price of US8 cents per share by Newcrest, under a share subscription agreement (Agreement) as announced in full detail on 30 August 2016 (Previous Newcrest Subscription Proposal).

Superior Proposal

Following receipt of a superior proposal from Maxit Capital LP (Maxit) offering to arrange a cash investment into SolGold at a price of US16 cents per new Share, representing a 100% premium to the last capital raising (Competing Proposal) the Board of SolGold is pleased to advise that agreement has now been reached with:

-- Maxit and its clients to subscribe for up to 63,353,338 new Shares at US16 cents per share for up to USD10.137m (Maxit Placement Shares) representing up to 4.43% of the issued share capital of SolGold (as enlarged by the proposed issue of new Shares to Maxit and Newcrest and which may, at Maxit's election, include their fee); and

-- Newcrest to subscribe to 142,896,661 new Shares also at US16 cents for USD22.863m (Newcrest Placement Shares) equal to 10% of the issued share capital of SolGold (as enlarged by the proposed issue of the Newcrest Placement Shares and the Maxit Placement Shares), replacing the Previous Newcrest Subscription Proposal at US8 cents per share.

The combined share issues will raise a total of USD33m for SolGold resulting in a cash balance of USD48m being available to the Company, more than sufficient than required for the next year of exploration and drilling activity at Cascabel, SolGold's 85% owned Tier 1 copper gold porphyry discovery in Northern Ecuador.

Funds raised will be used principally to advance the Cascabel Project and cover administrative and general expenses of SolGold.

Under the terms of SolGold's subscription agreement with Maxit, Maxit shall be entitled on closing of the capital raising, to receive a success fee of 6% of the cash proceeds that it contributes, and 6% of any amount raised from other subscribers (including Newcrest) above USD10,856,640. The cash fee may, at the election of Maxit, be settled by the allotment and issue to Maxit of an equivalent number of Shares at the subscription price (to be included in the Maxit Placement Shares noted above). In addition, Maxit will be entitled to options over new Shares as are equal to 6% of the number of new Shares issued under this raising for cash to Maxit, and to 6% of the number of new Shares issued to subscribers (including Newcrest) above 67,854,000 new Shares. Half of the options will be exercisable at 14p and half exercisable at 28p. The share options will have a 24 month exercise period.

Shareholder Approvals

Issue of the Maxit Placement Shares is subject to shareholders passing Resolutions 1 and 3 at the forthcoming shareholders meeting on 13 October 2016.

Issue of the Newcrest Placement Shares is subject to shareholders passing all of the Resolutions at the forthcoming shareholders meeting on 13 October 2016, including approval to issue the Newcrest Placement Shares to Newcrest at the amended price of US16 cents rather than the original US8 cents.

The subscription by Newcrest will be equal to 10% of the issued share capital of SolGold, as enlarged by the issue of the Maxit Placement Shares and the Newcrest Placement Shares.

Newcrest have agreed to vary the Agreement to give effect to the increased price and size of the investment by Newcrest.

The SolGold Board of Directors has unanimously approved the proposed transaction, and substantial shareholders Maxit and DGR Global have also provided in-principle approval for the proposed transaction, subject to there being no superior proposal being made to SolGold by an independent bona fide third party for in excess of 5% of the share capital of SolGold prior to SolGold shareholder approval being obtained on 13 October 2016.

Other shareholders representing the private interests of CEO and Managing Director Mr Nicholas Mather have approved the transaction unconditionally.

Newcrest Anti-dilution and Top up Right

Under the Agreement, as varied, Newcrest will have, once unconditional, subject to holding more than 10% of the share capital of SolGold, a right (but not an obligation) to appoint a Director to the Board of SolGold, anti-dilution rights to maintain the position prior to any capital issues to a maximum of 10% of the undiluted share capital of SolGold, and provided Newcrest's holding does not drop below 5%, a top up right to that level (max 10%), to be available for exercise every 6 months in the event that option exercises or any converted debt notes result in the issue of further shares or if there are issues of equity securities under employee or officer share or option schemes.

Newcrest to Support Certain of the Board Recommendations

Newcrest has agreed, for a three year period, to follow the recommendations of any Independent Expert appointed by the SolGold Board to opine in respect of any proposed change of control transactions in respect of the SolGold share capital or its assets, in circumstances where it is demonstrable that holders of 60% of SolGold shares voting at a meeting or lodging acceptances are supportive of the particular formal proposal. Newcrest has also agreed to support the Board of SolGold on resolutions on:

(i) Board composition; and

(ii) capital change resolutions put to SolGold shareholders affecting authorised capital limits and pre-emption waivers under the LSE AIM rules, in the event that 60% of the votes cast at a meeting of SolGold shareholders approve the same.

Newcrest will provide technical support and advice to SolGold at SolGold's request and at market rates.

Commenting on the transactions with Maxit and Newcrest, CEO Nick Mather said:

"With what investors introduced by Maxit have subscribed a month ago, these raisings lift the SolGold bank to some USD48m providing more than enough to cover well over a year of drilling and other exploration and appraisal work at Cascabel. We expect to add considerable value through this work and I can't see the need for any further capital raisings for a long time.

Intense interest in the Cascabel Project and SolGold itself from North American investors and major mining companies drive our interest in the Toronto Stock Exchange (TSX) as an additional stock exchange listing for SolGold and we will be pursuing that in the near future.

We are pleased by the Newcrest decision to proceed with the investment into 10% of SolGold and willingness to be guided by other shareholders in change of control transactions the company may be faced with for the next three years as we grow this project.

Newcrest's interest in SolGold and Cascabel is a strong endorsement of Ecuador as an exploration and development destination and the outlook for Alpala and the fourteen additional targets at Cascabel. We believe it is a Tier 1 discovery. Only the fifth in the World in the last ten years.

In Maxit, SolGold has the mining sector's leading M&A expert which has added value to all our shareholders and will stand us in good stead in the future."

About Newcrest

Newcrest Mining Limited (ASX: NCM) is the largest dedicated gold producer listed on the Australian Stock Exchange with a market capitalisation of A$17 billion at the date of this announcement. Newcrest has an outstanding record in exploration and in developing high tonnage open cut and underground block cave mines and smaller high grade operations. Newcrest has a world class portfolio of operating gold and copper-gold mines, including Cadia Valley and Telfer in Australia and Lihir in Papua New Guinea. It also has a 50% interest in the Golpu porphyry development project in Papua New Guinea.

For the 2016 financial year Newcrest reported a statutory profit of US$332m from the production of 2.439 million ounces of gold and 83kt of copper at an All In Sustaining Cost of $762 per ounce of gold. Newcrest's Annual Resources and Ore Reserves Statement as at 31/12/15 announced on 15 February 2016 reported: "Group Ore Reserves are estimated to contain 69 million ounces of gold, 11 million tonnes of copper and 46 million ounces of silver", and "Group Mineral Resources are estimated to contain 140 million ounces of gold, 20 million tonnes of copper and 120 million ounces of silver."

Readers are advised to read the entire statement.

Additional information in the Newcrest Annual Report for the financial year 2015/2016, financial results for the full year to 30 June 2016 announced on 15 August 2016 and recent presentations can be found at www.newcrest.com.au

By order of the Board

Karl Schlobohm

Company Secretary

Contacts:

Mr Nicholas Mather Tel: [phone]

SolGold Plc (Executive Director) [phone]

[e-mail]

Mr Karl Schlobohm Tel: [phone]

SolGold Plc (Company Secretary)

[e-mail]

Mr Ewan Leggat / Richard Morrison Tel: [phone]

SP Angel Corporate Finance LLP (NOMAD and Broker)

[e-mail] / [e-mail]

NOTES TO EDITORS

SolGold is a Brisbane, Australia based, AIM--listed (SOLG) copper gold exploration and development company with assets in Ecuador, the Solomon Islands and Australia. The Company's primary objective is to discover and define world--class copper--gold deposits. SolGold's Board and Management Team have substantial vested interests in the success of Company, as well as strong track records in the areas of exploration, mine development, investment, finance and law. SolGold's experience is augmented by state of the art geophysical and modelling techniques and the guidance of Newmont trained porphyry expert Dr Steve Garwin.

From a corporate perspective, SolGold has recently announced capital raisings involving Maxit Capital LP and Newcrest International Ltd, both undertaken at substantial premiums to previous raisings. Once completed, SolGold will have raised USD48 million in funding to continue the exploration and development of its flagship Cascabel Project. Also as a result of these raisings, Mr Scott Caldwell (CEO of TSX-listed Guyana Goldfields Inc) joined the SolGold Board on 9 September 2016. Mr Caldwell is a mining engineer with over 30 years of experience building and operating gold and base metal mines worldwide, including USA, Canada, Russia, Zimbabwe, Chile and Indonesia.

Cascabel, the Company's world class flagship copper--gold porphyry project, is located in North West Ecuador on the under--explored northern section of the richly endowed Andean Copper Belt. SolGold owns 85% of Exploraciones Novomining S.A. ("ENSA") and approximately 11% of TSX--V--listed Cornerstone Capital Resources, which holds the remaining 15% of ENSA, the Ecuadorian registered company which holds 100% of the Cascabel concession.

To date SolGold has completed geological mapping, 25km(2) of soil sampling, 14km(2) and an additional 9km(2) Induced Polarisation and Magnetotelluric "Orion" surveys over the Alpala cluster and Aguinaga targets respectively. By June 2016, the Company had also completed approximately 23,700m of drilling and expended a total of approximately USD33m on the program, corporate costs and investments into Cornerstone. Intense diamond drilling is planned for the next 12 months with multiple drill rigs.

Cascabel is characterised by fourteen (14) identified targets, world class drilling intersections over 1km in length, and high copper and gold grades, as well as logistic advantages in location, elevation, water supply, proximity to roads, port and power services and a progressive legislative approach to resource development in Ecuador. To date, SolGold has drill tested only one of the 14 targets, being Alpala.

SolGold is planning a resource statement at Alpala (the most advanced target at Cascabel) during 2016. This has been delayed by the discovery of high-grade mineralisation in Hole 17 at Alpala, extending the immediate resource potential. Alpala is open at depth in the upper extensions, and to the north, north-east, south-west and south-east. The mineralised zone at Alpala and Moran is closely modelled by magnetic signatures and currently encompasses over 10Bt of magnetic rocks expected to be mineralised with copper and gold.

SolGold will drill test other key targets within the Cascabel concession at Aguinaga, Trivinio, Moran, Alpala Northwest, Hematite Hill, Alpala Southeast, Cristal, Parambas, Carmen Tandayama-America and Chinambicito. The Company is planning further metallurgical testing by the end of 2016, and completion of a conceptual early stage mine and plant design and a scoping study for an economic development at Cascabel. SolGold is investigating both high tonnage / low-medium grade open cut and underground block caving operations, and a high grade / low tonnage underground development.

Drill hole intercepts are calculated using a data aggregation method, defined by copper equivalent cut-off grades and reported with up to 10m internal dilution, excluding bridging to a single sample. Copper equivalent grades are calculated using a gold conversion factor of 0.89, determined using copper price of USD2.20/pound and gold price of USD1350/ounce.

Following a comprehensive review of the geology and prospectivity of Ecuador, SolGold and its subsidiaries have also applied for additional exploration licences in Ecuador over a number of additional promising porphyry copper gold targets elsewhere in the Country.

In Queensland, Australia the Company is evaluating the future exploration plans for the Mt Perry, Rannes and Normanby projects. Joint venture agreements are being investigated for a joint venture partner to commit funds and carry out exploration to earn an interest in the tenements.

SolGold retains interests in its original theatre of operations, the Solomon Islands in the South West Pacific, where the 100% owned, as yet undrilled, Kuma prospect exhibits surface geological characteristics which are traditionally indicative of a large metal rich copper gold intrusive porphyry system. SolGold intends in the future to apply intellectual property and experience developed in Ecuador to target additional world class copper gold porphyries at Kuma and other targets in Ecuador and Argentina.

SolGold is based in Brisbane, Queensland, Australia. The Company listed on London's AIM Market in 2006, under the AIM code 'SOLG' and currently has a total of 1,222,716,605 ordinary shares issued, together with 2,180,000 options exercisable at 28p and 5,180,000 options exercisable at 14p.

CAUTIONARY NOTICE

The news release may contain certain statements and expressions of belief, expectation or opinion which are forward looking statements, and which relate, inter alia, to the Company's proposed strategy, plans and objectives or to the expectations or intentions of the Company's directors. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the control of the Company that could cause the actual performance or achievements of the Company to be materially different from such forward-looking statements. Accordingly, you should not rely on any forward-looking statements and save as required by the AIM Rules for Companies or by law, the Company does not accept any obligation to disseminate any updates or revisions to such forward-looking statements.

This information is provided by RNS

The company news service from the London Stock Exchange

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September 26, 2016 05:05 ET (09:05 GMT)