Vatukoula Gold Mines PLC Update on US$40 million Investment Agreement (9224Q)

TIDMVGM

RNS Number : 9224Q

Vatukoula Gold Mines PLC

21 October 2013

21 October 2013

Vatukoula Gold Mines plc

("Vatukoula" or "the Company")

Update on US$40 million Investment Agreement

Vatukoula Gold Mines plc, the AIM listed gold producer focused on Fiji, is pleased to announce the completion of the first tranche of the equity funding under the US$ 40 million investment agreement with Zhongrun International Mining Co. Ltd ("Zhongrun") ("Investment Agreement"). This initial investment of $10 million will allow the Company to focus efforts on optimising the operations and increasing production in the medium term. The investment by Zhongrun is part of a long term strategy to reposition the Company and assist the mine in achieving its long term production targets of in excess of 100,000 ounces per annum. Management expect to be at pro rata production rate of 100,000 ounces per annum in approximately 18 months from completion of the US$ 40 million funding.

Under the US$ 40 million Investment Agreement US$10 million of equity was completed today with the next US$10 million of equity anticipated to be completed at the end of October and the US$ 20 million of secured loan notes to be completed by the end of January 2014.

David Paxton, CEO of Vatukoula Gold Mines, commented:

"The Completion of the first tranche of US$40 million Investment Agreement is a significant milestone in the development of the Vatukoula Gold Mine. With these funds and the remaining US$30 million due in the coming months the mine can embark on its capital expansion plans to both increase the grade and tonnage from underground mining operations. Based on current mine plans and costs, I believe, that we will be able to achieve our long term production targets at a cost of below US$900 per ounce"

Under the Investment Agreement the funding was to be provided in two tranches of approximately US$ 20 million each. Subsequent to this the Company has agreed with Zhongrun to complete the first tranche via the issue of two tranches of equity instead of one as originally contemplated. The first of which completed today has been be provided by the issue by the Company of 90,000,000 new ordinary shares at a subscription price of 6.89 pence per share ("First Tranche of Equity Funding"), which has raised gross proceeds of approximately GBP6.2 million (US$ 10 million). The second tranche of the equity funding is to be to be provided by the issue by the Company of 98,897,000 new ordinary shares at a subscription price of 6.89 pence per share ("Second Tranche of Equity Funding"). This will raise gross proceeds of approximately GBP6.8 million which is expected to complete at the end of October. The remaining US$ 20 million will be provided by Zhongrun subscribing for US$ 20 million of secured loan notes ("Loan Notes") which is expected to complete by the end of January 2014.

Application will be made to AIM for the admission of 90,000,000 new ordinary shares of 5p each. The new ordinary shares rank pari passu with the Company's existing issued ordinary shares, and dealings are expected to commence on or around 25 October 2013.

Following admission of the 90,000,000 new ordinary shares, the Company's enlarged issued share capital will comprise 246,358,339 ordinary shares. The Company hold no shares in treasury. Therefore the total number of ordinary shares with voting rights is 246,358,339, which figure may be used by shareholders in the Company as the denominator for 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 and Transparency Rules.

Zhongrun currently holds 37,800,000 ordinary shares in the Company and following the completion of the First Tranche of Equity Funding will hold 127,800,000 ordinary shares, representing approximately 52% of the enlarged share capital of the Company. On completion of the Second Tranche of Equity Funding Zhongrun will hold 226,697,000 ordinary shares, representing approximately 66% of the enlarged share capital of the Company.

As previously announced as of 30 September 2013, as a consequence of changes to the City Code on Takeovers and Mergers (the "Code"), the Company is now subject to the Code. The Company was not previously subject to the Code as it had previously been able to rely on an exemption that, as its place of central management and control was outside of the UK, the Code did not apply. However following the amendment to the Code, for a UK incorporated company with its shares admitted to Aim, this exemption no longer applies in regard of central management and control.

Brief details of the Panel, the Code and the protections they afford are described at the end of this announcement.

As on completion Zhongrun will hold approximately 66% of the voting rights of the Company, without a waiver of the obligations under Rule 9 of the Code, Zhongrun would be required to make a Rule 9 Offer to acquire all of the Ordinary Shares not already owned by it. The Panel has approved a waiver of the obligations of Zhongrun to make a Rule 9 Offer without the requirement for the waiver to be approved by independent shareholders at a general meeting following receipt of written confirmations agreeing to such waiver given by the shareholders holding, in aggregate, in excess of 50 per cent of the shares of the Company capable of being voted at a general meeting of independent shareholders.

 
 Enquiries: 
 Vatukoula Gold Mines plc 
 David Paxton            + 44 (0)20 7440 0643 
 Kiran Morzaria 
 W.H. Ireland Limited                           Pelham Bell Pottinger 
 James Joyce                                    Charles Vivian          + 44 (0)20 7861 
  James Bavister         + 44 (0)20 7220 1666    Daniel Thöle       3232 
 
 

The Takeover Code

The Code is issued and administered by the Panel. The Code applies to all takeover and merger transactions, however effected, where the offeree company is, amongst other things, a UK incorporated listed or unlisted public company or a UK incorporated company with its shares quoted on AIM (and to certain categories of private limited companies). The Company is incorporated in the UK and quoted on AIM and its Shareholders are entitled to the protections afforded by the Code.

Under Rule 9 of the Code, where any person acquires, whether by a series of transactions over a period of time or not, an interest in shares which (taken together with shares already held by him and an interest in shares held or acquired by persons acting in concert with him) carry 30 per cent. or more of the voting rights of a company which is subject to the Code, that person is normally required to make a general offer to all the holders of any class of equity share capital or other class of transferable securities carrying voting rights in that company to acquire the balance of their interests in the company.

Rule 9 of the Code also provides that, among other things, where any person who, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent, but not more than 50 per cent. of the voting rights of a company which is subject to the Code, and such person, or any person acting in concert with him, acquires an additional interest in shares which increases the percentage of shares carrying voting rights in which he is interested, then such person is normally required to make a general offer to all the holders of any class of equity share capital or other class of transferable securities carrying voting rights of that company to acquire the balance of their interests in the company.

An offer under Rule 9 of the Code must be in cash (or with a cash alternative) and at the highest price paid within the preceding 12 months for any shares in the company by the person required to make the offer or any person acting in concert with him.

Under the Code, a concert party arises when persons who, pursuant to an agreement or understanding (whether formal or informal), co-operate through the acquisition by any of them of shares in a company in order to obtain or consolidate control of that company. Under the Code, control means an interest or interest in shares carrying in aggregate 30 per cent. or more of the voting rights of a company, irrespective of whether such interest or interests give de facto control.

Rule 9 of the Code further provides, amongst other things, that where any person who, together with persons acting in concert with him holds over 50 per cent. of the voting rights of a company, acquires an interest in shares which carry additional voting rights, then they will not generally be required to make a general offer to the other shareholders to acquire the balance of their shares.

Pursuant to the issue of shares under the Investment Agreement, Zhongrun will hold approximately 66 per cent. of the voting rights of the Company. Without a waiver of the obligations under Rule 9 of the Code, this would oblige Zhongrun to make a general offer to Shareholders under Rule 9 of the Code.

Dispensation from General Offer

Under Note 1 on the Notes on the Dispensations from Rule 9 of the Code, the Panel will normally waive the requirement for a Rule 9 Offer if, amongst other things, the shareholders of a company who are independent of the person who would otherwise be required to make an offer and any person acting in concert with him pass an ordinary resolution on a poll at a general meeting approving such a waiver. The Panel may waive the requirement for a resolution to be considered at a general meeting (and for a circular to be prepared in accordance with Section 4 of Appendix 1 to the Code) if independent shareholders holding more than 50 per cent. of the company's shares capable of being voted on such a resolution confirm in writing that they would vote in favour of the waiver were such a resolution to be put to the shareholders of the company at a general meeting.

The Company has obtained such written confirmation from the Majority Shareholders who are Independent Shareholders and the Panel has accordingly waived the requirement for a resolution to be put to a meeting of Independent Shareholders. Accordingly, the Issue may be effected without the requirement for Zhongrun to make a Rule 9 Offer.

Following completion of the Investment agreement, Zhongrun will be interested in Ordinary Shares carrying more than 50 per cent. of such rights and will be able to further increase its interest in Ordinary Shares without being subject to the provisions of Rule 9 of the Code.

This information is provided by RNS

The company news service from the London Stock Exchange

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