Posting of Circular and Notice of General Meeting

RNS Number : 4842U

Anglo Asian Mining PLC

13 July 2018

 

Anglo Asian Mining plc / Ticker: AAZ / Index: AIM / Sector: Mining

13 July 2018

Anglo Asian Mining PLC

Posting of Circular for Proposed Capital Reduction and Notice of

General Meeting

Anglo Asian Mining PLC ("Anglo Asian" or the "Company"), the AIM listed gold, copper and silver producer, is pleased to announce that following the announcement made on 29 June 2018, the Company has today posted a circular to shareholders setting out full details of the proposed capital reduction and notice of General Meeting (the "Circular"). A form of proxy relating to voting at the General Meeting has also been posted to shareholders.

The General Meeting will be held at 10.30 am on 30 July 2018 at the Company's registered office at Squire Patton Boggs, 7 Devonshire Square, Cutlers Gardens, London, EC2M 4YH, United Kingdom.

A copy of the Circular is available for download on the Company's website at www.angloasianmining.com. Selected information from the Circular is reproduced below.

For further information please visit www.angloasianmining.com or contact:

Reza Vaziri	Anglo Asian Mining plc	Tel: [phone]
Bill Morgan	Anglo Asian Mining plc	Tel: [phone]
Stephen Westhead	Anglo Asian Mining plc	Tel: [phone]
Ewan Leggat	SP Angel Corporate Finance LLP Nominated Adviser and Broker	Tel: [phone]
Soltan Tagiev	SP Angel Corporate Finance LLP	Tel + 44 (0) 20 3470 0470
Susie Geliher	St Brides Partners Ltd	Tel: [phone]
Lottie Wadham	St Brides Partners Ltd	Tel: [phone]

Please note, the information below has been copied from the Circular dated 13 July 2018. Any references to page numbers, Parts or 'this document' refer to the Circular which is available for download from the Company's website.

Expected Timetable of Principal Events

Publication of this document: Friday 13 July 2018

Latest time and date for receipt of Forms of Proxy for the General Meeting: 10:30 a.m. on Thursday 26 July 2018

General Meeting: 10:30 a.m. on Monday 30 July 2018

Expected date of initial directions hearing of the Court: 10:30 a.m. on Thursday 9 August 2018

Expected date of Court Hearing to confirm the Capital Reduction: 10:30 a.m. on Tuesday 28 August 2018

Expected effective date for the Capital Reduction: Tuesday 28 August 2018

Notes

1. The expected dates for the confirmation of the Capital Reduction by the Court and the Capital Reduction becoming effective are based on provisional dates that have been obtained for the required Court hearings of the Company's application. These provisional hearing dates are subject to change and dependent on the Court's timetable. If the expected dates of the Court hearings are changed (and consequently the expected effective date for the Capital Reduction), the Company will give notice of this to the extent practicable by issuing an announcement on the Company's website at www.angloasianmining.com/investors.

2. The timetable assumes that there is no adjournment of the General Meeting. If there is an adjournment, all subsequent dates are likely to be later than those shown.

3. References in this document are to London (BST) unless otherwise stated.

DEFINITIONS

The following definitions apply throughout this document and the accompanying Form of Proxy unless the context otherwise requires:

"Act": Companies Act 2006

"Articles": the articles of association of the Company adopted by special resolution dated 28 June 2010

"Board" or "Directors": the directors of the Company or any duly appointed committee thereof

"Capital Reduction": the proposed cancellation of the Company's Share Premium Account as set out in the Notice of General Meeting

"Company" or "Anglo Asian Mining": Anglo Asian Mining plc, a company incorporated in England and Wales with registered number 05227012 and having its registered office at 7 Devonshire Square, Cutlers Gardens, London, EC2M 4YH, United Kingdom

"Court": the High Court of Justice in England and Wales

"Court Hearing": the hearing by the Court to confirm the Capital Reduction

"Court Order": the order of the Court confirming the Capital Reduction

"CREST": the relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the Operator (as defined in the CREST Regulations)

"CREST Regulations": the Uncertificated Securities Regulations 2001 (as amended)

"Form of Proxy": the form of proxy accompanying this document relating to the General Meeting

"General Meeting": the general meeting of the Company, notice of which is set out at the end of this document and including any adjournment(s) thereof

"Group": the Company and its subsidiaries and subsidiary undertakings (in each case as

defined in the Act)

"Notice of General Meeting": the notice of General Meeting, set out in Part IV of this document

"Ordinary Shares": ordinary shares of £0.01 each in the capital of the Company

"Registrars": Link Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU, United Kingdom

"Resolution": the special resolution to be proposed at the General Meeting which is set out in full in the Notice of General Meeting

"Shareholders": holders of Ordinary Shares

"Share Premium Account": the share premium account of the Company

"$": US dollars

LETTER TO SHAREHOLDERS

PROPOSED CAPITAL REDUCTION

NOTICE TO SHAREHOLDERS OF GENERAL MEETING

1. Introduction

I am writing to provide you with details of a proposal to enhance the Company's ability to pay dividends to Shareholders in the future.

The Company currently has negative distributable reserves and is therefore prohibited under the Act from making distributions, including dividends, to its Shareholders.

Accordingly, your approval is being sought to carry out a reduction of the Company's capital by way of the cancellation of the amount standing to the credit of the Company's Share Premium Account so as to create distributable reserves.

The Capital Reduction is conditional upon, amongst other things, the Company obtaining approval of the Shareholders at the General Meeting. Part IV of this document contains a Notice of General Meeting, convening the General Meeting for 10:30 a.m. on Monday 30 July 2018 at the Company's registered office at Squire Patton Boggs, 7 Devonshire Square, Cutlers Gardens, London, EC2M 4YH, United Kingdom.

The purpose of this document is to provide you with information about the Capital Reduction and to explain why the Board considers the Capital Reduction to be in the best interests of the Company and its Shareholders as a whole and unanimously recommends that you vote in favour of the Resolution to be proposed at the General Meeting. Shareholders should note

that, unless the Resolution is approved at the General Meeting (and the Court subsequently confirms the Capital Reduction), the Capital Reduction will not take place.

Part II of this document contains definitions of words and terms that have been used throughout it. Please refer to Part II as you review this document.

2. Background to, and reasons for, the Capital Reduction

The Group's operational performance has been transformed over the past four years as a result of management initiatives and actions. Such initiatives and actions included optimisation of the Group's original agitation leaching facilities, construction of a flotation processing plant and the commencement of production from the Gadir underground and Ugur open pit mines. The Group has also made major improvements to the infrastructure at Gedabek, which has reduced costs, such as connecting the site to the national power grid and construction of a water treatment plant. In early 2017, the Group carried out a strategic review which included various other production and optimisation initiatives. The Group has also benefitted in the period from steadily increasing metal selling prices.

The improvement in operational performance has resulted in a significant improvement in the Group's financial performance and position. The Group recorded a profit before taxation for the years ended 31 December 2016 and 2017 of $6.8 million and $5.7 million respectively, compared to losses in the previous two years. The Group generated cash from operations for the years ended 31 December 2016 and 2017 of $29.6 million and $29.8 million respectively.  This cash generation enabled the Group to significantly reduce net debt from $52.8 million at 31 December 2014 to $10.4 million at 31 March 2018. The Group's remaining borrowings have also been refinanced at lower cost and without financial covenants.

The Group is forecasting increased production for the year ended 31 December 2018, compared to 2017 and the Directors believe that the Group is well positioned for future sustained growth and development. The Group has embarked on a three-year exploration programme to further explore and develop the potential of Gedabek. The Group has also upgraded its processing facilities by the addition of a second crusher line which will enable its main agitation leaching and flotation plants to operate on a stand-alone basis and which is also expected to improve the flexibility of the Group's processing operations.

In light of the Group's prospects and current strong financial position, the Directors believe it is now desirable to consider the payment of dividends to Shareholders. However, the Company currently has negative distributable reserves and is, therefore, prohibited under the Act from making distributions to its Shareholders, including the payment of dividends.

The Directors, therefore, believe it is an appropriate time to undertake the Capital Reduction and create distributable reserves which would enable the payment of dividends in the future, subject to the continuing satisfactory financial performance of the Group.

3. The Capital Reduction

Proposal

The Company does not have sufficient distributable reserves to enable the Board to recommend the payment of dividends should it be considered desirable to do so in the future. The Board therefore proposes that the Capital Reduction be effected in order to increase the distributable reserves of the Company.

At 31 December 2017, the Company had retained losses of $18,500,000. At the same date, the amount standing to the credit of the Company's Share Premium Account amounted to $32,484,000. As at 31 May 2018, the amount standing to the credit of the Share

Premium Account remained at $32,484,000 and the retained losses of the Company had increased to $19,083,000. The Capital Reduction, if approved and made effective, will be sufficient to eliminate the retained losses and create distributable reserves.

The Capital Reduction is proposed to be effected by cancelling the balance standing to the credit of the Share Premium Account. Cancelling the balance of the Share Premium Account will, subject to the discharge of any undertakings required by the Court as explained below, be sufficient to eliminate the deficit on the retained loss account and create positive distributable reserves. As a result, any positive distributable reserves generated by the Company after the date on which the Capital Reduction takes effect would also be available for the Board to use for the purposes of paying dividends.

It is therefore proposed that the amount standing to the credit of the Company's Share Premium Account (such amount being $32,484,000, as at 31 May 2018,) is cancelled.

Approval and Consent of Shareholders

In order to effect the Capital Reduction the Company requires the approval of its Shareholders in the manner described in this section. The Capital Reduction cannot be effected unless the Company receives the approval by the requisite majority of Shareholders and in the requisite manner as set out in this section of this document.

The Shareholders, being holders of Ordinary Shares, are entitled to receive notice of, attend, speak and vote at the General Meeting. The votes of the Shareholders will be added together at the General Meeting and the Resolution to approve the Capital Reduction, which will be proposed as a special resolution, requires a majority in favour of at least 75% of those Shareholders attending and voting in person or by proxy in order to be passed.

Court Approval

In addition to the approval by the Shareholders of the Resolution, the Capital Reduction requires the approval of the Court. Accordingly, following the General Meeting, an application will be made to the Court in order to confirm and approve the Capital Reduction.

In providing its approval of the Capital Reduction, the Court may require protection for the creditors (including contingent creditors) of the Company whose debts remain outstanding on the relevant date, except in the case of creditors which have consented to the Capital Reduction. Any such creditor protection may include seeking the consent of the Company's creditors to the Capital Reduction or the provision by the Company to the Court of an undertaking to deposit a sum of money into a blocked account created for the purpose of discharging the non-consenting creditors of the Company.

It is anticipated that the initial directions hearing in relation to the Capital Reduction will take place on Thursday 9 August 2018, with the final Court Hearing taking place on Tuesday 28 August 2018 and the Capital Reduction becoming effective on the same day, following the necessary registration of the Court Order at Companies House.

There will be no change in the number of Ordinary Shares in issue (or their nominal value) following the implementation of the Capital Reduction. The Capital Reduction itself will not involve any distribution or repayment of capital or share premium by the Company and will not reduce the underlying net assets of the Company. The distributable reserves arising on the Capital Reduction will, subject to the discharge of any undertakings required by the Court as explained below, support the Company's ability to pay dividends, should circumstances in the future make it desirable to do so.

The Board reserves the right to abandon or to discontinue (in whole or in part) the application to the Court in the event that the Board considers that the terms on which the Capital Reduction would be (or would be likely to be) confirmed by the Court would not be in the best interests of the Company and/or its Shareholders as a whole. The Board has undertaken a thorough and extensive review of the Company's liabilities (including contingent liabilities) and considers that the Company will be able to satisfy the Court that, as at the date (if any) on which the Court Order relating to the Capital Reduction and the statement of capital in respect of the Capital Reduction have both been registered by the Registrar of Companies at Companies House and the Capital Reduction will therefore become effective, the Company's creditors will be sufficiently protected.

4. General Meeting

The Notice of General Meeting is set out in Part IV of this document.

The General Meeting will take place at 10:30 a.m. on Monday 30 July 2018. At the General Meeting, the Resolution set out in Part IV of this document will be proposed to Shareholders.

The Resolution will be passed if 75 per cent. or more of the votes cast (in person or by proxy) at the General Meeting are in favour of it.

5. Action to be taken in respect of the General Meeting

Shareholders will find a Form of Proxy enclosed for use in respect of the General Meeting. To be valid, the Form of Proxy must be completed and returned as soon as possible and so as to be received by the Registrars by not later than 10:30 a.m. on Thursday 26 July 2018. You can return your Form of Proxy by post to Link Asset Services, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU, United Kingdom.

The completion and return of the Form of Proxy will not prevent you from attending and voting at the General Meeting in person.

6. Recommendation

The Directors consider that the Capital Reduction will be beneficial for the Company and its Shareholders as a whole. Accordingly, the Directors unanimously recommend that you vote in favour of the Resolution to be proposed at the General Meeting, as they intend to do in respect of their aggregate shareholdings of 45,653,292 Ordinary Shares, representing approximately 40.0 per cent. of the Ordinary Shares in issue at the date of this document.

Yours faithfully

Khosrow Zamani

Non-Executive Chairman

Notes:

Anglo Asian Mining plc (AIM:AAZ) is a gold, copper and silver producer in Central Asia with a broad portfolio of production and exploration assets in Azerbaijan. The Company has a 1,962 square kilometre portfolio, assembled from analysis of historic Soviet geological data and held under a Production Sharing Agreement modelled on the Azeri oil industry.

The Company's main operating location is the Gedabek contract area ("Gedabek") which is a 300 square kilometer area in the lower Caucasus mountains in western Azerbaijan. The Company developed Azerbaijan's first operating gold/copper/silver mine at Gedabek which commenced gold production in May 2009.  Mining at Gedabek was initially from its main open pit which is an open cast mine with a series of interconnected pits. The Company also operates the high grade Gadir underground mine which is co-located at the Gedabek site, In September 2017, production commenced at the Ugur open pit mine, a recently discovered gold ore deposit at Gedabek. The Company has a second underground mine, Gosha, which is 50 kilometres from Gedabek. Ore mined at Gosha is processed at Anglo Asian's Gedabek plant.

The Company produced 71,461 gold equivalent ounces ('GEOs') for the year ended 31 December 2017.  Gedabek is a polymetallic project which demonstrates a high copper content at the main open pit mine, and an oxide gold-rich zone at Ugur.  The Company therefore employs a series of flexible processing routes through which to optimise recoveries and efficiencies.  The Company produces gold doré through agitation and heap leaching operations, copper concentrate from its Sulphidisation, Acidification, Recycling, and Thickening (SART) plant and also a copper and precious metal concentrate from its flotation plant, which is processing tailings from the agitation leach plant. A second dedicated crusher line is also currently being installed for the flotation plant to enable it to operate independently of the agitation leaching plant.

The Company has forecast production for FY 2018 of between 78,000 to 84,000 GEOs an increase for the mid-point of this guidance of over 13 per cent. compared to FY 2017 production of 71,461 GEOs.

Anglo Asian is also actively seeking to exploit its first mover advantage in Azerbaijan to identify additional projects, as well as looking for other properties in order to fulfil its expansion ambitions and become a mid-tier gold and copper metal production company.

 

END

 

 

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