Proposed Grant of Conditional Warrants

    RNS Number : 1818C
  Monterrico Metals PLC
  28 August 2008
   

    28 August 2008

    Monterrico Metals plc
    ('Monterrico' or 'the Company')

    Proposed Grant of Conditional Warrants

    Monterrico Metals, the AIM listed Resource Company, is pleased to announce today the proposal of two conditional warrants in respect of
new Ordinary Shares in the Company to be granted by the Company to Agropecuaria Las Huaringas S.A. ('ALH').

    The Warrants are conditional upon, inter alia, the passing of certain resolutions at the Company's General Meeting to give the directors
the authority to grant the Warrants and to disapply the statutory pre-emption rights under the Act in respect of such grant. In addition,
the second Warrant is conditional on the Company's Peruvian subsidiary, Rio Blanco Copper S.A. obtaining approval of the Environmental
Impact and Social Study commissioned by the Group into the Rio Blanco Project ("EIAS") by the Peruvian Ministry of Energy and Mines for the
Rio Blanco Project. The Warrants together grant ALH conditional rights to subscribe for up to 20% of the Company's issued share capital in
issue at the time of the exercise as enlarged by the grant of such Warrants.

    A circular containing a notice of a general meeting of the Company ("General Meeting") will today be sent to shareholders of the Company
outlining the terms of the proposed grant of Warrants and seeking Shareholder approval to, inter alia, the grant of the Warrants to ALH and
to issue further Ordinary Shares or other convertible securities in the future. The General Meeting is to be held at 10.00 am on 22
September 2008 at the offices of the Company at Suite 1608, West Tower Shun Tak Centre, 168 -200 Connaught Road Central, in Sheung Wan, Hong
Kong, the People's Republic of China.

    Background to and reasons for the grant of Warrants

    Given the significant mining resources held by the Group in Peru, the Directors believe that the Group would benefit from securing a
strategic relationship with an experienced local company.  

    ALH is a private company wholly owned by the Romero Group, a large Peruvian private business group, with expertise in port operations
and integrated logistics services, including handling, storage, distribution, trucking and other general cargo business. The Romero Group is
also active in shipping-related services, such as in-bond warehousing, shipping agency and stevedoring services and has interests and
experience in commercial banking, agro-industrial operations and import and export trading in related industries. The Romero Group is
largely family owned and the shareholders of ALH comprise members of the Romero Family. 

    The Board believes that a strategic partnership with ALH would provide significant in-country and industry expertise to the Group in
connection with the production phase of the Rio Blanco Project.  The Board also believes that ALH could provide expertise to the Group in
connection with the areas of port operations and integrated logistics services.  

    The proposed grant of the Warrants is in return for ALH indicating its intention to develop a strategic partnership with the Company, as
further set out in the Warrant Agreement, a summary of which is set out below.

    Funds raised from any exercise of the Warrants will be used to fund the Company's working capital requirements towards development of
the Rio Blanco Project.

    The Warrants

    As stated above, the Company has granted two Warrants to ALH each conditional, inter alia, on Shareholder approval.  

    The first warrant ("Warrant A") is exercisable for the aggregate number of Ordinary Shares equal to 10% of the Company's entire issued
share capital as at the date of the Warrant A Exercise Notice. Warrant A may be exercised by ALH any time following the first anniversary of
the Warrant Agreement but before the third anniversary of the Warrant Agreement ("Warrant A Exercise Period"). The purchase price of the
Warrant Shares to be issued pursuant to Warrant A is 190 pence per share, which represents a premium of 37.7% to the mid-market price as at
22 August 2008. To the extent that ALH does not serve a notice to exercise Warrant A on or before the date that is three years from the date
of the Warrant Agreement, Warrant A shall automatically expire, and all rights and obligations of the parties thereunder shall automatically
terminate, without any further liability with respect thereto.  

    The second warrant ("Warrant B") is exercisable for the aggregate number of Ordinary Shares equal to 10% of the Company's entire issued
share capital as at the date of the Warrant B Exercise Notice. Warrant B may be exercised by ALH any time before the date occurring three
years and thirty days from the date of the Warrant Agreement subject to receipt by the Company's Peruvian subsidiary, Rio Blanco Copper
S.A., of government approval of the EIAS for construction and exploitation of the Rio Blanco Project. The purchase price of the Warrant
Shares to be issued pursuant to Warrant B shall be 190 pence per share, which represents a premium of 33.7% to the mid-market price as at 22
August 2008.  To the extent that ALH does not exercise Warrant B on or before the date that is three years and thirty days from the date of
the Warrant Agreement, Warrant B shall not become exerciseable, and all rights and obligations of the parties thereunder shall automatically
terminate without any further liability with respect thereto.  

    To the extent that the exercise of a Warrant (in the case of the exercise of the first Warrant to be exercised pursuant to the Warrant
Agreement) results in ALH being entitled to subscribe for less than 10% of the entire issued share capital of the Company as enlarged by the
exercise of such warrant, or in the case of the exercise of the second Warrant to be exercised pursuant to the Warrant Agreement, results in
ALH being entitled to subscribe for less than 20% of the entire issued share capital as enlarged by the exercise of such Warrant, the
Company shall procure that additional Warrants be granted to ALH on the same terms as those of the relevant Warrant provided always that the
Company has sufficient shareholder authority to do so. If the Company does not have sufficient existing shareholder authority to grant such
further Warrants, the Company is obliged to seek such shareholder authority as soon as reasonably practicable.

    The Warrant Shares will rank pari passu with the existing Ordinary Shares and upon exercise of the Warrants, application will be made to
London Stock Exchange plc for the Warrant Shares to be admitted to trading on AIM.  

    Resolutions

    The Company currently has insufficient Directors' authorities to allot the Warrant Shares. Accordingly, at the General Meeting ordinary
resolutions will be proposed to grant the Directors authority to allot relevant securities for the purpose of section 80 of the Act up to an
aggregate nominal amount of £830,718 (representing approximately 32% of the current issued share capital). Assuming that all of the Warrants
are exercised, the Directors will have residual authority to allot relevant securities for the purpose of section 80 of the Act up to an
aggregate nominal amount of £138,453 (representing approximately 5% of the enlarged issued share capital). The special resolution to be
proposed at the General Meeting will allow the Directors to disapply statutory pre-emption rights pursuant to section 95 of the Act to allot
equity securities authorised under the general authority up to an aggregate nominal amount of £830,718 (representing approximately 32% of
the current issued share capital). 

    The Resolutions, if passed, will enable the Company to complete the grant of the Warrants and to issue further Ordinary Shares or other
convertible securities in the future.

    The grant of the Warrants is conditional upon, inter alia, the passing of the Resolutions at the General Meeting. If all of the
Resolutions are not passed at the forthcoming General Meeting, the Company will be unable to complete the grant of the Warrants.

    Irrevocable Undertakings

    Irrevocable undertakings to vote in favour of the Resolutions have been given by certain Shareholders amounting to 23,649,509 Ordinary
Shares in aggregate (representing 89.9% of the current issued Ordinary Share capital of the Company).

    Expected timetable

    Latest time and date for receipt of Forms of Proxy:
    10:00 a.m. on 20 September 2008

    Time and date of General Meeting:
    10:00 a.m. on 22 September 2008

    Recommendation

    The Directors consider the Resolutions to be proposed at the General Meeting are in the best interests of the Company and the
Shareholders. Accordingly, the Directors unanimously recommend Shareholders to vote in favour of the Resolutions as set out in the circular
posted to Shareholders today.

    Mr. Xiaodong Huang, the Chief Executive Officer of Monterrio said: "We very much welcome the expression of interest by ALH to become a
strategic partner of Monterrico. We firmly believe in securing a partnership that is fully committed to sustainable development and is
responsible to the local population and all stake holders."

    Definitions

    The definitions in the circular being posted to shareholders and dated 28 August 2008 apply throughout this announcement unless the
context otherwise requires.

    For more information please contact:

    Monterrico Metals plc
    Susan Li, Finance Director                                          [phone]
    Andrew Bristow, Investor Relations Manager        [phone]

    Evolution Securities Limited                                       [phone]
    (Nominated adviser)
    Rob Collins
    Tim Redfern
    Adam James

    Evolution Securities China Limited                          [phone]
    (Financial adviser and broker)
    Nick Martin
    Jerry Zheng

This information is provided by RNS
The company news service from the London Stock Exchange
 
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