Propsed Acquisition and issue of Equity

RNS Number : 1728D

Baker Steel Resources Trust Ltd

27 January 2015

 



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES, AUSTRALIA, CANADA, JAPAN OR THE REPUBLIC OF SOUTH AFRICA.

This announcement is an advertisement and not a prospectus. Investors should not purchase or subscribe for any transferable securities referred to in this announcement except on the basis of information contained in the prospectus published by Baker Steel Resources Trust Limited dated 26 January 2015 (the "Prospectus") in connection with a placing and open offer of new ordinary shares and the admission of such new ordinary shares (the "Ordinary Shares") to the premium segment of the Official List of the Financial Conduct Authority (the "Official List") and to trading on London Stock Exchange plc's main market for listed securities (the "London Stock Exchange"). A copy of the Prospectus will, following publication, be available from the Company's website. This announcement is not an offer to sell, or a solicitation of an offer to acquire, securities in the United States or in any other jurisdiction. Neither this announcement nor any part of it shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.

BAKER STEEL RESOURCES TRUST LIMITED

27 JANUARY 2015

FURTHER RE: PROPOSED ACQUISITIONS AND ISSUE OF EQUITY

SUMMARY OF THE PROPOSALS

Baker Steel Resources Trust Limited announces proposals including the Acquisition of Additional Investments and a fundraising by way of an Initial Placing and Open Offer.

The Company has published a circular convening an extraordinary general meeting of the Shareholders of the Company to be held on 23 February 2015 and a prospectus in connection with the Placing, the Open Offer and the Placing Programme.

Subject to the conditions set out in the Circular, the Company will seek to:

* acquire a portfolio of Additional Investments with a value of £18.60 million (unaudited) as at 31 December 2014, with the potential to acquire Further Additional Investments with a value of up to £60.72 million (unaudited) as at 31 December 2014. A significant proportion of these Additional Investments are already represented in the Company's existing portfolio, and the balance is consistent with the Company's investment policy. The Company will issue New Ordinary Shares as consideration for the Additional Investments and the Further Additional Investments;

* raise up to £100 million pursuant to an Initial Placing and Open Offer;

* to the extent that less than £100 million is raised under the Initial Issue, institute a Placing Programme which would permit it to issue further New Ordinary Shares pursuant to one or more non-pre-emptive Placings over the next 12 months with a view to raising up to £100 million less the amount raised under the Initial Issue;

* following completion of the Proposals, introduce discount management and distribution policies as described below;

* obtain the approval of the Independent Shareholders of a waiver granted by the Takeover Panel under Rule 9; and

* amend the Existing Articles so that the Company will not be required until the Annual General Meeting falling in 2018, to propose a special resolution to the effect that the Company shall be wound up, and, if the Company is not then liquidated or reorganised, at each third Annual General Meeting thereafter.

The New Ordinary Shares will be issued at Net Asset Value in respect of Unlisted Investments acquired and at a 15 per cent. discount to the prevailing Net Asset Value in respect of the acquisition of Listed Investments and cash raised through the Open Offer and Initial Placing.

Shareholders will have the opportunity to subscribe, pro-rata to their existing shareholdings, for all of the Ordinary Shares available under the Initial Issue.

As a result of the Acquisitions, existing Shareholders will suffer dilution of their existing shareholdings which would be mitigated if Shareholders take up their Open Offer Entitlement.

Notwithstanding this dilution, the Directors believe that the Proposals are in the best interests of Shareholders as a whole because they will provide the Company with greater critical mass, providing a stronger investment proposition. In particular:

* the increase in net assets and market capitalisation of the Company is expected to widen the appeal of the Ordinary Shares to potential investors, which inter alia is expected to improve the liquidity of the Ordinary Shares and reduce the discount at which the Ordinary Shares may trade relative to their Net Asset Value in the future. Furthermore, the increase in net assets will facilitate the introduction of discount management and distribution policies;

* the Acquisitions broadly retain the current shape and focus of the Company's portfolio and its inherent upside potential, given the high level of commonality between the Current Investments, the Additional Investments and the Further Additional Investments;

* to the extent that new capital is raised through the Initial Issue and/or the Placing Programme, it is anticipated that deployment of additional funds into selected existing investments can accelerate the process of creating and realising inherent value in these assets as they move up the value curve, as described below;

* the Investment Manager believes that the commodities cycle is close to its trough and that current market conditions therefore represent an attractive time to be investing in mining and resources assets, many of which are priced well below their risk adjusted fair values. Capital markets are generally unreceptive to development companies' need for capital and such companies are currently being particularly undervalued due to perceived financing risk. The Investment Manager believes that it is therefore timely to seek to exploit this opportunity through carefully selected investment with a preference towards companies with late stage development projects requiring the last tranche of capital to reach positive cashflow from operations;

* the increase in scale should provide the Investment Manager with better opportunities to achieve favourable terms for investment by the Company given the stronger negotiating position derived from its ability to invest in larger 'ticket sizes' in investee companies;

* the potential addition of Salamanca as an additional Investment Adviser, should negotiations to acquire certain co-owned assets from Salamanca clients be concluded, will enhance the existing skill set of the Investment Manager and broaden its network for identifying attractive investment opportunities for the Company; and

* the increased size of the Company will reduce the level of its ongoing charges per Ordinary Share.

Enquiries:

Baker Steel Resources Trust Limited

[phone]

Francis Johnstone

Trevor Steel

Buchanan, Financial PR Adviser

[phone]

Bobby Morse / Gordon Poole / Lora Coventry

Numis Securities Limited

[phone]

David Benda / Nathan Brown (corporate)

James Glass (sales)

DETAILS OF THE PROPOSALS

1. Introduction

The Board is pleased to announce that the Company has entered into a number of conditional acquisition agreements to acquire certain additional investments, with an approximate aggregate value, as at 31 December 2014, of £18.60 million (unaudited) in consideration for the issue of fully paid New Ordinary Shares (Acquisition Shares).

The Company is also proposing to raise up to £100 million pursuant to an Initial Placing and Open Offer (together the Initial Issue) of New Ordinary Shares. To the extent that the Company raises less than £100 million pursuant to the Initial Issue, the Company is also proposing a Placing Programme which would permit it to issue further New Ordinary Shares pursuant to one or more non-pre-emptive Placings over the next 12 months with a view to raising up to £100 million less the amount raised under the Initial Issue. The Directors intend to invest the net proceeds of the Initial Issue and any Placings under the Placing Programme in accordance with the Company's investment objective and investment policy.

In the event that Existing Shareholders do not take up any of their entitlements pursuant to the Open Offer and no Initial Issue Shares are issued pursuant to the Initial Issue, and on the basis of (i) the Net Asset Value of the Ordinary Shares and (ii) the value of the Additional Investments, each as at 31 December 2014, 42,772,053 Acquisition Shares would be issued as consideration for the Additional Investments. Accordingly certain Shareholders who are deemed to be acting in concert (pursuant to the Takeover Code) (the Deemed Concert Party) would hold 51,991,984 Ordinary Shares representing 45.53 per cent. of the ordinary share capital.

Furthermore, under the terms of the Acquisition Agreements, as the value of the Additional Investments and the Net Asset Value of the Ordinary Shares is not to be calculated until 18 February 2015, the total amount of Ordinary Shares in which the Deemed Concert Party could be interested could vary such that their aggregate interest may be in excess of or less than 45.53 per cent. of the ordinary share capital. Accordingly, if on such Calculation Date the aggregate holding of Ordinary Shares in which the Deemed Concert Party is interested is in excess of 49.99 per cent. of the ordinary share capital, provisions have been included in the GNRMF Acquisition Agreement and the GDGF Acquisition Agreement such that the investments to be sold to the Company will be scaled back to ensure that the aggregate interests of the Deemed Concert Party cannot exceed 49.99 per cent. of the voting rights of the Company.

As a result of the above, under Rule 9 of the Takeover Code, on completion of the Acquisitions the Deemed Concert Party would normally be obliged to make a mandatory offer to all Shareholders (other than the Deemed Concert Party) to acquire their Ordinary Shares. Following an application to the Takeover Panel, the Takeover Panel has agreed to waive this obligation, subject to the approval of the Independent Shareholders (on a poll) at the Extraordinary General Meeting. Accordingly, the Whitewash Resolution (as defined below) is being proposed at the EGM to approve the waiver granted by the Takeover Panel. The members of the Deemed Concert Party are not considered to be Independent Shareholders and will therefore not be permitted to vote on the Whitewash Resolution. In addition, CF Ruffer Baker Steel Gold Fund is not considered to be an Independent Shareholder and will not be permitted to vote on the Whitewash Resolution. Your attention is drawn to the Takeover Code and the Rule 9 Waiver section contained in the Circular which, together with Part III of the Circular, contains full details of the Deemed Concert Party.

The Company's Existing Articles require that at the Annual General Meeting of the Company falling in 2015 and each third Annual General Meeting thereafter, the Board is required to propose a special resolution to the effect that the Company shall be wound up (a Discontinuation Vote). In view of the Acquisitions and further fundraisings now proposed by the Company, which together are intended to significantly increase the size of the Company and attract new investors, and because the Proposals are subject to the passing of the Resolutions to be proposed at the Extraordinary General Meeting, the Board believes it is appropriate for the Existing Articles to be amended so that the Board will not be required to propose a Discontinuation Vote until the Annual General Meeting of the Company falling in 2018 and, if the Company has not then been liquidated or reorganised, at each third Annual General Meeting thereafter.

The Acquisitions, the Initial Issue and the Placing Programme are conditional, inter alia, upon Shareholders approving the amendments to the Existing Articles as referred to above. It is also proposed that the Company's general authority to issue shares, which is due to expire on 29 March 2015, shall be renewed.

Consequently, an extraordinary general meeting of the Company is being convened at which Shareholders will be asked to consider:

* the disapplication of pre-emption rights in respect of the proposed fundraising by way of the Initial Issue to raise up to £100 million and, as required by the Listing Rules, the issue of New Ordinary Shares for cash pursuant to the Initial Issue at an issue price representing a 15 per cent. discount to the Net Asset Value per Ordinary Share prevailing as at the Calculation Date (the Initial Issue Resolution);

* the disapplication of pre-emption rights in respect of the issue of New Ordinary Shares for cash pursuant to the Placing Programme at an issue price representing a premium to the prevailing Net Asset Value per Ordinary Share (the Placing Programme Resolution);

* the approval of the waiver granted by the Takeover Panel of any requirement under Rule 9 for the Deemed Concert Party to make a general offer to Shareholders as a result of the issue and allotment of the Acquisition Shares (the Whitewash Resolution);

* the renewal of the Company's general authority to issue new Ordinary Shares (the Authority Resolution), which the Directors currently intend to use only in connection with the Proposals; and

* the proposed amendment to the Existing Articles in respect of the Discontinuation Vote provisions and certain other amendments described below under the heading ''Amendment of the Articles'' (the Amendment Resolution).

2. Background to and reasons for the Acquisitions and the Initial Issue

The Company's investment objective is to seek capital growth over the long-term through a focussed, global portfolio consisting principally of the equities, or related instruments, of natural resources companies. The Company invests in unlisted companies (i.e. those companies that have not yet made an initial public offering or IPO), and in listed securities (including special situations opportunities and less liquid securities) with a view to making attractive investment returns through uplift in value resulting from development progression of the investee companies' projects and through exploiting value inherent in market inefficiencies and pricing anomalies.

On its IPO in April 2010, the Company issued approximately 66 million Ordinary Shares, at an issue price of £1 per share (with subscription shares attached on a one for five basis).

Approximately 30.5 million of these Ordinary Shares were issued for cash pursuant to a placing and offer for subscription and 35.5 million Ordinary Shares were issued in consideration for the acquisition of a seed portfolio of assets (the IPO Seed Portfolio) in connection with the scheme of reorganisation of Genus Capital Fund.

Several investments have since been made by the Company in accordance with its investment policy.

The Company's Net Asset Value as at 31 December 2014 was approximately £32.2 million (unaudited) and its investment portfolio comprised 7 Listed Investments (valued at £7.8 million) and 9 Unlisted Investments (valued at £24.5 million). Its cash and accruals totalled approximately £(0.18) million. As at the same date the Net Asset Value per Ordinary Share was 44.9 pence. The 54.1 per cent. fall in the Company's Net Asset Value since its IPO in April 2010 has broadly tracked the downturn in the general market for mining shares with the Euromoney Global Mining 100 Index down 47.5 per cent. in Sterling terms over the same period.

The Board is looking to significantly increase the size of the Company through the Acquisitions and the Initial Issue which it believes will provide the Company with greater critical mass, providing a stronger investment proposition. In particular,

* the increase in net assets and market capitalisation of the Company is expected to widen the appeal of the Ordinary Shares to potential investors which inter alia is expected to improve the liquidity of the Ordinary Shares and reduce the discount at which the Ordinary Shares may trade relative to their Net Asset Value in the future. Furthermore, the increase in net assets will facilitate the introduction of discount management and distribution policies;

* the Acquisitions broadly retain the current shape and focus of the Company's portfolio and its inherent upside potential, given the high level of commonality between the Current Investments, the Additional Investments and the Further Additional Investments;

* to the extent that new capital is raised through the Initial Issue and/or the Placing Programme, it is anticipated that deployment of additional funds into selected existing investments can accelerate the process of creating and realising inherent value in these assets as they move up the value curve, as described below;

* the Investment Manager believes that the commodities cycle is close to its trough and that current market conditions therefore represent an attractive time to be investing in mining and resources assets, many of which are priced well below their risk adjusted fair values. Capital markets are generally unreceptive to development companies' need for capital and such companies are currently being particularly undervalued due to perceived financing risk. The Investment Manager believes that it is therefore timely to seek to exploit this opportunity through carefully selected investment with a preference towards companies with late stage development projects requiring the last tranche of capital to reach positive cashflow from operations;

* the increase in scale should provide the Investment Manager with better opportunities to achieve favourable terms for investment by the Company given the stronger negotiating position derived from its ability to invest in larger 'ticket sizes' in investee companies;

* the potential addition of Salamanca as an additional Investment Adviser, should negotiations to acquire certain co-owned assets from Salamanca clients be concluded, will enhance the existing skill set of the Investment Manager and broaden its network for identifying attractive investment opportunities for the Company; and

* the increased size of the Company will reduce the level of its ongoing charges per Ordinary Share.

3. The Acquisitions and issue of Acquisition Shares

The Company has entered into the Acquisition Agreements, details of which are set out below.

Pursuant to the Acquisition Agreements the Company has agreed to acquire the Additional Investments which, as at 31 December 2014, had an aggregate value of approximately £18.60 million (unaudited).

All of the Additional Investments fall within the Company's investment policy and of the 18 Additional Investments to be acquired pursuant to the Acquisition Agreements, 92.1 per cent. by value of the Additional Investments are in investee companies in which the Company has already made an investment and 7.9 per cent. by value of the Additional Investments are not common to the Company's existing portfolio. The value attributed to the Additional Investments will be determined as at the Calculation Date, in accordance with the Company's usual valuation policies save that the value of the Listed Investments will be their volume weighted average traded price (VWAP) on the principal stock exchange on which they are traded over the 10 dealing days prior to and including the Calculation Date rather than their latest closing price as published by the relevant exchange or clearing house quoted on such exchange. The reason for using the 10 day VWAP is to account for any one day volatility on the relevant stock exchange. Further details of the Additional Investments proposed to be acquired pursuant to the Acquisition Agreements are set out in Part II of the Circular.

The consideration payable under the Acquisition Agreements will be satisfied by the issue of fully paid Acquisition Shares. The issue price and the number of Acquisition Shares to be issued will depend on whether the Additional Investments are Unlisted Investments or Listed Investments:

* in the case of Unlisted Investments, the Acquisition Shares will be issued at an issue price equal to the prevailing Net Asset Value per Ordinary Share as at the Calculation Date and the value of the Unlisted Investments used to calculate the consideration will be their fair value as at 31 December 2014, as determined by the Investment Manager, in consultation with the Directors, in accordance with the Company's usual valuation policies, subject to adjustment if there is a significant change in value between such date and the Calculation Date. The valuation process will be subject to an independent review by Grant Thornton UK LLP; and

* in the case of Listed Investments and any cash attributable to those GNRF Shareholders who elect to roll-over their investment (to the extent it is not distributed to those shareholders), the Acquisition Shares will be issued at an issue price equal to 85 per cent. of the prevailing Net Asset Value per Ordinary Share as at the Calculation Date and the value of the Listed Investments used to calculate the consideration will be their VWAP on the principal stock exchange on which they are traded over the 10 dealing days prior to and including the Calculation Date, as determined by the Administrator. The Board believes it is appropriate to apply a 15 per cent. discount to the Net Asset Value per Ordinary Share in respect of the Listed Investments being acquired so as not to dis-incentivise their prospective vendors, who could otherwise reasonably expect to realise market value for them. Accordingly they have been treated in the same manner as funds proposed to be raised through the Initial Issue.

The valuation process will be subject to an independent review by Grant Thornton UK LLP.

The Acquisition Shares will rank pari passu in all respects with the existing Ordinary Shares, save for any dividends or other distributions declared, made or paid on the Ordinary Shares by reference to a record date prior to the allotment of the Acquisition Shares.

Applications will be made to the FCA for admission of all the Acquisition Shares to the premium segment of the Official List and to the London Stock Exchange for the Acquisition Shares to be admitted to trading on the main market for listed securities of the London Stock Exchange. It is expected that Admission of the Acquisition Shares will become effective and that unconditional dealings in the Acquisition Shares will commence on the main market for listed securities of the London Stock Exchange at 8.00 a.m. on 25 February 2015.

The Acquisition Agreements are conditional on Admission of the relevant Acquisition Shares and on Shareholders approving certain resolutions set out in Part IV of the Circular.

The Company has conditionally entered into the following Acquisition Agreements:

*              GNRMF Acquisition Agreement

Genus Natural Resources Master Fund (GNRMF) is a Cayman Islands exempted company and is managed by Baker Steel Capital Managers (Cayman) Limited, the Company's Manager, which has delegated investment management to Baker Steel Capital Managers LLP, the Company's Investment Manager. GNRMF, together with Genus Natural Resources Fund (GNRF), forms a master/feeder fund structure, whereby all of GNRF's assets (to the extent not retained in cash) are invested in the ordinary shares of GNRMF.

Pursuant to the GNRMF Acquisition Agreement, the Company has agreed to acquire a portfolio of 18 assets from GNRMF in connection with a proposed scheme of reorganisation of GNRMF and GNRF (the Scheme of Reorganisation). Of these Additional Investments, 92 per cent. by value of the Additional Investments are common to the Company's existing portfolio and, as at 31 December 2014, these Additional Investments had an aggregate value of approximately £13.34 million (unaudited).

Pursuant to the Scheme of Reorganisation, GNRF Shareholders will be given the option to roll-over their investment in GNRF into New Ordinary Shares and/or to elect to redeem their GNRF Shares for cash. To the extent that GNRF Shareholders elect to redeem their GNRF Shares, the cash sum payable to them will be funded using GNRF's own cash resources. No cash payable to GNRF Shareholders pursuant to the Scheme of Reorganisation will be funded out of the net proceeds of the Initial Issue.

GNRF Shareholders who do not elect to redeem their GNRF shares for cash will receive fully paid New Ordinary Shares in consideration for the transfer of the relevant proportion of the GNRMF Additional Investments (including any residual cash held by GNRMF, to the extent not distributed to its shareholders) commensurate to their shareholdings in GNRF.

The GNRMF Acquisition Agreement provides that in the event that (i) the Whitewash Resolution is not passed at the Extraordinary General Meeting and (ii) the number of Acquisition Shares to be issued under the GNRMF Acquisition Agreement would, immediately following Admission and after taking into account the Acquisition Shares to be issued under the GDGF Acquisition Agreement and the New Ordinary Shares to be issued under the Initial Issue, result in the Deemed Concert Party being directly or indirectly interested in shares carrying 30 per cent. or more of the voting rights in the Company as at Admission, the Additional Investments to be sold to the Company shall be scaled back in a manner to be agreed between the parties so as to ensure the aggregate shareholding of the Deemed Concert Party is less than 30 per cent. of the voting rights in the Company.

The GNRMF Acquisition Agreement also provides for the scaling back of any of the Additional Investments to be sold to the Company in a manner to be agreed between the parties where necessary in order to avoid the investment restrictions of the Company being breached which would otherwise occur as a result of the acquisition of such Additional Investments.

In addition, as described above and more particularly below, the GNRMF Acquisition Agreement also provides for the scaling back of the Additional Investments to be sold to the Company in a manner to be agreed between the parties to ensure that there are no circumstances, following the Calculation Date, in which the aggregate shareholding of the Deemed Concert Party could exceed 49.99 per cent. of the voting rights in the Company.

Irrevocable undertakings have been given to the Company in respect of approximately 88.3 per cent. of GNRF Shares to roll-over these interests for Acquisition Shares and to vote in favour of the Scheme of Reorganisation. Accordingly, subject to the GNRMF Acquisition Agreement becoming unconditional in accordance with its terms, the Company will acquire assets representing at least approximately 88.3 per cent. of the GNRMF portfolio, subject to scaling back, as referred to above.

Trevor Steel and David Baker, both of whom are principals of the Manager and the Investment Manager, have an interest in over 75 per cent. of GNRF Shares.

The registered holders of the interests of Trevor Steel and David Baker have confirmed to the Company that they do not intend from the period of Admission to 31 December 2016, to dispose of such Acquisition Shares as are issued to them pursuant to the GNRMF Acquisition Agreement (save for the possible transfer of such shares to the Investment Advisers in part consideration for the services provided by them under their investment advisory agreements).

Trevor Steel and David Baker are also indirectly interested in GNRF Shares through their respective interests in BS Cayman which holds 6.9 per cent. of the GNRF Shares. Baker Steel Limited (a subsidiary of BS Cayman) also holds a further 0.5 per cent. of the GNRF Shares. As BS Cayman already holds 504,832 Ordinary Shares (representing 0.7 per cent. of the Company's issued share capital), the boards of directors of BS Cayman and Baker Steel Limited have informed the Directors that BS Cayman and Baker Steel Limited will both elect to redeem all of their GNRF Shares for cash.

As described above, all redemptions of GNRF Shares for cash will be funded from GNRF's existing resources and not out of the proceeds of the proposed Initial Issue.

Christopher Sherwell, a Director of the Company, holds 513 US$ class shares in GNRF (representing 0.24 per cent. of GNRF's net asset value as at 31 December 2014 (unaudited)). Mr Sherwell has informed the Board that he intends to roll-over his interest in GNRF in exchange for Acquisition Shares pursuant to the Scheme of Reorganisation.

In addition to the conditions referred to above, the acquisition of the GNRMF Additional Investments is also conditional on fulfilment of the conditions of the Scheme of Reorganisation (which includes the directors of GNRF and GNRMF agreeing to proceed with the Scheme of Reorganisation).

*              GDGF Acquisition Agreement

Genus Dynamic Gold Fund (GDGF) is a Cayman Islands exempted company and is managed by Baker Steel Capital Managers (Cayman) Limited, the Company's Manager, which has delegated investment management to Baker Steel Capital Managers LLP, the Company's Investment Manager.

Pursuant to the GDGF Acquisition Agreement, the Company has agreed to acquire 3 assets from GDGF. All of these Additional Assets are common to the Company's existing portfolio and, as at 31 December 2014, these Additional Investments had an aggregate value of approximately £5.25 million (unaudited).

The GDGF Acquisition Agreement provides that in the event that (i) the Whitewash Resolution is not passed at the Extraordinary General Meeting and (ii) the number of Acquisition Shares to be issued under the GNRMF Acquisition Agreement would, immediately following Admission and after taking into account the Acquisition Shares to be issued under the GNRMF Acquisition Agreement and the New Ordinary Shares to be issued under the Initial Issue, result in the Deemed Concert Party being directly or indirectly interested in shares carrying 30 per cent. or more of the voting rights in the Company as at Admission, the Additional Investments to be sold to the Company shall be scaled back in a manner to be agreed between the parties so as to ensure the aggregate shareholding of the Deemed Concert Party is less than 30 per cent. of the voting rights in the Company.

The GDGF Acquisition Agreement also provides for the scaling back of the Additional Investments to be sold to the Company in a manner to be agreed between the parties where necessary in order to avoid the investment restrictions of the Company being breached which would otherwise occur as a result of the acquisition of such Additional Investments.

In addition, as described above and more particularly below, the GDGF Acquisition Agreement also provides for the scaling back of the Additional Investments to be sold to the Company in a manner to be agreed between the parties to ensure that there are no circumstances, following the Calculation Date, in which the aggregate shareholding of the Deemed Concert Party would exceed 49.99 per cent. of the voting rights in the Company.

Further Additional Investments

In addition to the Additional Investments which will be acquired under the Acquisition Agreements, the Investment Manager has also identified a number of holdings of common assets which it believes the Company may be able to acquire on the same terms as the Additional Investments. In particular, the Company is in negotiations with Salamanca Group Advisers Limited to acquire certain co-owned assets from Salamanca's clients which, if completed, is expected to result in Salamanca becoming an additional investment adviser. All of the Further Additional Investments fall within the Company's investment policy and all of the 7 Further Additional Investments which might be acquired are in investee companies in which the Company has already made an investment or in which the Company will be interested following completion of the Acquisitions. As at 31 December 2014, the Further Additional Investments had an aggregate value of £60.72 million (unaudited).

The Investment Manager has not yet been able to finalise these further potential acquisitions to the stage that the Company has been able to sign acquisition agreements prior to the publication of the Circular, but expects to do so by 31 July 2015, in which case the consideration payable for such acquisitions will be satisfied by the issue of fully paid Acquisition Shares. However, there can be no assurance that all or any of the Further Additional Investments will be acquired. The Further Additional Investments will be acquired on the same basis as the Additional Investments and the issue price and the number of Acquisition Shares to be issued will depend on whether the Further Additional Investments are Unlisted Investments or Listed Investments as set out above.

4. Takeover Code and Rule 9 Waiver

The Takeover Code applies to the Company and governs, inter alia, transactions which may result in a change of control of the Company. Under Rule 9 of the Takeover Code, any person who acquires, whether by a series of transactions over a period of time or not, an interest (as defined in the Takeover Code) in shares which, taken together with shares in which he is already interested or in which persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, is normally required to make a general offer to all the remaining shareholders to acquire their shares.

Similarly, Rule 9 of the Takeover Code also provides that when any person, together with persons acting in concert with him, is interested in shares which, in aggregate, carry more than 30 per cent. of the voting rights of such company, but does not hold shares carrying 50 per cent. or more of such voting rights, a general offer will normally be required if any further interest in shares is acquired by any such person.

An offer under Rule 9 must be in cash and must be at the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares of the company in question during the 12 months prior to the announcement of the offer.

Persons acting in concert include persons who, pursuant to an agreement or understanding (whether formal or informal) co-operate to obtain or consolidate control of that company.

In the event that Existing Shareholders do not take up any of their entitlement pursuant to the Open Offer and no Initial Issue Shares are issued pursuant to the Initial Issue, and on the basis of (i) the Net Asset Value of the Ordinary Shares and (ii) the value of the Additional Investments, each as at 31 December 2014, 42,772,053 Acquisition Shares would be issued as consideration for the Additional Investments. Accordingly the Deemed Concert Party would hold 51,991,984 Ordinary Shares representing 45.53 per cent. of the ordinary share capital which, without a waiver of the obligations under Rule 9 of the Takeover Code, would oblige the Deemed Concert Party to make a general offer to Shareholders under Rule 9 of the Takeover Code.

Full details of the members of the Deemed Concert Party and a summary of the basis on which the Takeover Panel has determined them to be acting in concert are set out in Part III of the Circular.

If on the Calculation Date the aggregate holding in which the Deemed Concert Party is interested is in excess of 49.99 per cent. of the ordinary share capital, provisions have been included in the GNRMF Acquisition Agreement and the GDGF Acquisition Agreement such that the Additional Investments to be sold to the Company will be scaled back to ensure that the aggregate interests of the Deemed Concert Party cannot exceed 49.99 per cent. of the voting rights of the Company.

In light of the above, the Company has applied to the Takeover Panel for a waiver of Rule 9 of the Takeover Code in order to permit the GNRMF Additional Investments and the GDGF Additional Investments to be acquired by the Company without triggering an obligation on the part of the Deemed Concert Party to make a general offer to Shareholders.

The Takeover Panel has agreed, subject to the Whitewash Resolution being passed on a poll of Independent Shareholders, to waive the requirement which might otherwise arise as a result of the Acquisition Shares to be issued pursuant to the GNRMF Acquisition Agreement and the GDGF Acquisition Agreement (after taking into account the New Ordinary Shares to be issued under the Initial Issue) for the members of the Deemed Concert Party to make a general offer to all Shareholders.

The Deemed Concert Party is not intending to seek any changes to the Board and has confirmed that, following completion of the Proposals, the business of the Company will be continued in substantially the same manner as it is at present.

Additional information required by the Takeover Code in relation to the Rule 9 Waiver is set out in Part III of the Circular.

If the Whitewash Resolution is not passed, the Acquisition Shares to be issued pursuant to the GNRMF Acquisition Agreement and the GDGF Acquisition Agreement will be scaled back under the terms of that agreement (as summarised above) to ensure that the Deemed Concert Party would not be directly or indirectly interested in shares carrying 30 per cent. or more of the voting rights in the Company as at Admission.

5. Initial Placing and Open Offer

Background to and reasons for the Initial Placing and Open Offer

The mining sector is a naturally cyclical one as oversupply leads to a decrease in commodity prices which in turn leads to a closure of mines and a reduction in funding for exploration and development of new mines. Once demand increases sufficiently to exceed supply, such is the long lead time between exploration and actual production, this leads to increased commodity prices and a consequent increase in margins for producers and an increased appetite for funding new projects. The current downturn has been exacerbated by the lack of availability of debt finance since the global financial crisis in 2008.

The market for mining shares has fallen 47.5% since the end of 2010 as measured by the Euromoney Global Mining 100 Index in Sterling terms. This compares to the previous two downturns of 39% (1990-1991) and 58% (1996-1998) respectively. The Company's strategy has focused on generating returns in a neutral commodity environment through investing in high quality mining projects which seek to gain value by moving up or ''riding'' the development curve through to production. The Investment Manager believes that the mining cycle is close to its trough and hence that current market conditions represent an attractive time to be investing in mining assets which are priced well below their risk adjusted fair values and that the value of the development curve is set to rise in the next up-cycle.

The increased size of the Company through both the Acquisitions and the funds to be raised through the Initial Issue will have a two fold benefit. The size of the Company and its individual investments will put it in a stronger negotiating position with respect to terms for new and follow-on investments. In addition, a wider shareholder base and greater market capitalisation should bring it onto the investment horizon of more investors and therefore increase liquidity of the Company's Ordinary Shares leading to a reduction in the discount between its Net Asset Value per Ordinary Share and the share price. Furthermore, the increase in net assets will facilitate the introduction of discount management and distribution policies as described below.

Use of net proceeds of the Initial Issue

The Directors intend to apply the net proceeds of the Initial Issue in making investments in accordance with the Company's investment objective and investment policy.

As a result of the limited availability of capital in the mining and resources sector over the past several years, certain of the Company's assets have not been able to progress their projects as fast as they could have, had finance been available. Part of the Company's investment approach is to hold strategic stakes in investments and be in a position to influence investee company management such that they do not pursue financing strategies which might be unduly dilutive to the Company's interest.

The Investment Manager intends to invest up to £20 million in existing investments of the Company in order to unlock the value inherent in their projects. The Initial Issue will also give the Company the capacity to subscribe for its rights in cases where any of its investee companies considers an otherwise dilutive issue.

The Investment Manager has also identified a pipeline of potential new investments which it has been unable to pursue due to lack of available funds. In view of the high number of projects chasing a limited amount of capital in the sector, the Investment Manager will seek to make new investments through structures which give the Company an element of downside protection whilst still maintaining equity upside, such as investments through convertible debt. Subject to retaining a cash holding of up to 10 per cent. of total assets, the Investment Manager expects the Company to be fully invested within a year of completion of the Proposals.

Structure and pricing of the Initial Placing and Open Offer

Under the Initial Placing and the Open Offer, subject to compliance with the Law and the Articles, the Company is proposing to raise up to £100 million (before expenses). The Open Offer ensures that all of the New Ordinary Shares to be issued under the Initial Issue are reserved in the first instance for Qualifying Shareholders.

Under the Open Offer, Qualifying Shareholders will be entitled to subscribe for the New Ordinary Shares to be issued under the Initial Issue pro rata to their holdings of Ordinary Shares on the Record Date (being 23 January 2015) as follows:

3.65 New Ordinary Shares for every 1 Ordinary Share held at the Record Date based on an indicative issue price of 38.2p per New Ordinary Share (being equal to 85 per cent. of the Net Asset Value of an Ordinary Share as at 31 December 2014)

New Ordinary Shares not taken up by Qualifying Shareholders in accordance with their Open Offer Entitlement will be made available under the Initial Placing and the Excess Application Facility (as described in Part VI of the Prospectus).

The actual issue price of the New Ordinary Shares to be issued under the Initial Placing and the Open Offer (the Initial Issue Shares) will be equal to 85 per cent. of the prevailing Net Asset Value per Ordinary Share as at the Calculation Date (the Initial Issue Price) and accordingly will be the same as the issue price for the Acquisition Shares, as calculated on the Calculation Date, which are to be issued in respect of the Listed Investments (including any residual cash held by GNRMF to the extent not distributed to its shareholders) to be acquired under the Acquisition Agreements (as described above).

If the Net Asset Value per Ordinary Share as at the Calculation Date is less than 44.9p (being the Net Asset Value per Ordinary Share as at 31 December 2014 on which the Open Offer Entitlement to subscribe for the number of New Ordinary Shares set out above has been calculated), every Qualifying Shareholders' Open Offer Entitlement will be adjusted on a pro rata basis to reflect the resulting lower Initial Issue Price and the number of New Ordinary Shares which each Qualifying Shareholder will be entitled to subscribe for on a pre-emptive basis will be increased accordingly. Conversely, if the Net Asset Value per Ordinary Share as at the Calculation Date is more than 44.9p per Ordinary Share, every Qualifying Shareholders' Open Offer Entitlement will be adjusted on a pro rata basis to reflect the resulting higher Initial Issue Price and the number of New Ordinary Shares which each Qualifying Shareholder will be entitled to subscribe for on a preemptive basis will be decreased accordingly.

For illustrative purposes only, the effect of these adjustments on the indicative Initial Issue Price referred to above and the total number of New Ordinary Shares subscribed by a Qualifying Shareholder is shown in the examples below. The following examples are unaudited and are not intended to be a forecast of the Net Asset Value per Ordinary Share as at the Calculation Date nor the actual Initial Issue Price. The actual Initial Issue Price will be calculated as at the Calculation Date by reference to the Net Asset Value per Ordinary Share prevailing as at that date.

The following examples assume that the Qualifying Shareholder referred to in the examples is entitled under his Open Offer Entitlement to subscribe for 1000 New Ordinary Shares under the Open Offer (calculated on the basis of a Net Asset Value per Ordinary Share as at 31 December 2014 of 44.9p) and wishes to take up his Open Offer Entitlement in full:

Example of adjustments if Net Asset Value per Ordinary Share on the Calculation Date falls to 40p

	As at date of the Circular	As at Calculation Date
Net Asset Value per Ordinary Share	44.9p	40p
Initial Issue Price (being a 15% discount to NAV)	38.2p	34.0p
No. of New Ordinary Shares to be subscribed by the Qualifying Shareholder	1,000	1,123
Total amount invested	£382.00	£382.00

Example of adjustments if Net Asset Value per Ordinary Share on the Calculation Date rises to 50p

	As at date of the Circular	As at Calculation Date
Net Asset Value per Ordinary Share	44.9p	50p
Initial Issue Price (being a 15% discount to NAV)	38.2p	42.5p
No. of New Ordinary Shares to be subscribed by the Qualifying Shareholder	1,000	898
Total amount invested	£382.00	£382.00

To the extent that the adjustment would result in the issue of a fraction of a New Ordinary Share to the Qualifying Shareholder, the number of New Ordinary Shares subscribed will be rounded down to the nearest whole number and the balance of the subscription amount which would otherwise have been used to subscribe for such fractional entitlement shall be retained by the Company for its own account and will not be refunded to the Qualifying Shareholder.

As can be seen from the illustrative examples set out above, the adjustments to reflect any decrease or increase in the Net Asset Value per Ordinary Share will only affect the Initial Issue Price and the consequential number of New Ordinary Shares subscribed, but will not alter the total amount invested. Each Qualifying Shareholder will remain entitled to subscribe for his pro rata share of the total number of New Ordinary Shares available for issue under the Initial Issue. In addition Shareholders will be entitled to apply for additional new shares in excess of their entitlement if all Shareholders do not take up their entitlement. Further details of the Excess Application Facility are set out in the Prospectus.

Except as described below, New Ordinary Shares allocated to Placees under the Initial Placing will be subject to clawback to meet valid applications made by Qualifying Shareholders under the Open Offer in respect of their Open Offer Entitlement only.

The Company has received irrevocable undertakings from certain Shareholders not to take up their Open Offer Entitlements representing in aggregate 122,007,363 New Ordinary Shares available for issue, based on the Open Offer Entitlements as at the date of the Circular. The entitlements to New Ordinary Shares to which these undertakings relate will be available to be placed firmly with Placees under the Initial Placing and will not be subject to clawback in respect of valid applications under the Open Offer.

The Initial Issue Shares will rank pari passu in all respects with existing Ordinary Shares, save for any dividends or other distributions declared, made or paid on the Ordinary Shares by reference to a record date prior to the allotment of the Initial Issue Shares.

Based on an indicative Initial Issue Price of 38.2p (being 85 per cent. of the Net Asset Value as at 31 December 2014) and assuming the Initial Issue is fully subscribed, the Initial Issue Shares would represent 365 per cent. of the Company's existing issued share capital as at the date of the Circular.

To the extent that they do not take up their entitlements, Shareholders will suffer dilution of their existing shareholdings as set out below. Notwithstanding this dilution, the Directors believe that the Proposals are in the best interests of Shareholders for the reasons set out above.

In the event that existing Shareholders do not take up any of their entitlements pursuant to the Initial Issue and no Initial Issue Shares are issued pursuant to the Initial Issue and on the basis that 42,772,053 Acquisition Shares are issued as consideration for the Additional Investments (such number of Acquisition Shares being calculated by reference to the value of the Additional Investments as at 31 December 2014 (unaudited) and the Company's Net Asset Value as at 31 December 2014), the number of Ordinary Shares in issue would increase by 59.7 per cent. and the level of dilution to the Net Asset Value per existing Ordinary Share would be approximately 2.0 per cent.

However, in the event that 261,718,782 Initial Issue Shares are issued pursuant to the Initial Issue (being the maximum number of Initial Issue Shares available pursuant to the Initial Issue and such number of Initial Issue Shares being calculated by reference to the Company's Net Asset Value as at 31 December 2014) the number of Ordinary Shares in issue would increase by a further 228.5 per cent. and the additional level of dilution to the Net Asset Value per existing Ordinary Share would be approximately a further 10.5 per cent.

The Initial Issue is conditional, inter alia, on:

(i) each of the Initial Issue Resolution and the Amendment Resolution being passed at the EGM;

(ii) the Whitewash Resolution being passed at the EGM or in the event that the Whitewash Resolution is not passed, the Deemed Concert Party being interested directly or indirectly in shares carrying less than 30 per cent. of the voting rights in the Company;

(iii) the Placing Agreement becoming wholly unconditional (save as to Admission of the Initial Issue Shares) and not having been terminated in accordance with its terms prior to such Admission; and

(iv) Admission of the Initial Issue Shares occurring by 8.00 a.m. on 25 February 2015 (or such later date as the Company, the Investment Manager and Numis may agree in writing, not being later than 8.00 a.m. on 31 March 2015).

The results of the Initial Placing and the Open Offer are expected to be announced at 8.00 a.m. on 23 February 2015.

Applications will be made to the FCA for admission of the Initial Issue Shares to the premium segment of the Official List and to the London Stock Exchange for the Initial Issue Shares to be admitted to trading on the main market for listed securities of the London Stock Exchange. It is expected that Admission of the Initial Issue Shares will become effective and that unconditional dealings in the Initial Issue Shares will commence on the main market for listed securities of the London Stock Exchange at 8.00 a.m. on 25 February 2015.

The Initial Issue Shares will be issued in registered form and may be held in uncertificated form. The Initial Issue Shares will be issued to Placees through the CREST system unless otherwise stated. The Initial Issue Shares will be eligible for settlement through CREST with effect from their Admission.

Further details of the Initial Placing and Open Offer and how Shareholders can apply for New Ordinary Shares are set out in the Prospectus.

6. The Placing Programme

Background to and reasons for the Placing Programme

To the extent that the Company raises less than £100 million under the Initial Issue, it is proposed that the Company should be able to raise the balance (being £100 million less the gross proceeds of the Initial Issue) on a non-pre-emptive basis pursuant to the Placing Programme. Any New Ordinary Shares issued under the Placing Programme will be issued at a premium to the prevailing Net Asset Value at the time of the relevant Placing as described below.

Structure and pricing of the Placing Programme

Conditional on the Placing Programme Resolution being passed at the EGM, the Directors will be authorised to issue further New Ordinary Shares (the Placing Programme Shares) for cash pursuant to the Placing Programme in order to raise up to £100 million (less the amount raised under the Initial Issue), without having to first offer those shares to existing Shareholders. The maximum aggregate amount to be raised under the Initial Issue and the Placing Programme will be capped at £100 million and accordingly if the Initial Issue is fully subscribed, no further Ordinary Shares will be issued under the Placing Programme.

New Ordinary Shares issued pursuant to the Placing Programme will be issued at a premium to the prevailing Net Asset Value per Ordinary Share at least sufficient to cover the costs and expenses of the relevant Placing. The issue price of any Placing Programme Shares will be announced through a Regulatory Information Service as soon as is practicable following the allotment of such Placing Programme Shares.

The Placing Programme Shares will rank pari passu in all respects with the existing Ordinary Shares, save for any dividends or other distributions declared, made or paid on the Ordinary Shares by reference to a record date prior to the allotment of the Placing Programme Shares.

New Ordinary Shares will be available for issue under the Placing Programme from 25 February 2015 until 22 January 2016. The Placing Programme is flexible and may have a number of closing dates in order to provide the Company with the ability to issue New Ordinary Shares over a period of time and the issue of the Placing Programme Shares will be at the discretion of the Directors.

7. Authority to issue Ordinary Shares

Pursuant to an ordinary resolution passed on 29 March 2010, the Directors were generally and unconditionally authorised to exercise all powers of the Company to issue up to a maximum aggregate amount of, inter alia, 1,000,000,000 Ordinary Shares, provided that such authority shall expire on the date which is five years after the date of that resolution.

In connection with the Proposals, the Directors believe it is appropriate to propose the Authority Resolution which seeks authority to issue up to 500 million New Ordinary Shares at the EGM, in substitution for the above existing authority before its expiry next year.

The Board does not have any current intention to issue further Ordinary Shares other than in connection with the Proposals, and any non pre-emptive issues for cash will be subject to the granting of necessary waivers by Shareholders by special resolution.

8. Amendment of the Articles

The Company's Existing Articles require that at the Annual General Meeting of the Company falling in 2015 and each third Annual General Meeting thereafter, the Board is required to propose a special resolution to the effect that the Company shall be wound-up.

In view of the Acquisitions and the proposed Initial Issue and the Placing Programme, which together are intended to significantly increase the size of the Company and attract new investors, and because the Proposals are subject to Shareholder approval at the Extraordinary General Meeting, the Board believes it is appropriate to amend the Existing Articles so that the first Discontinuation Vote will be put to Shareholders at the Company's Annual General Meeting in 2018 and, if the Company is not then liquidated or reorganised, at each third Annual General Meeting thereafter.

In addition to postponing the first Discontinuation Vote until the 2018 Annual General Meeting, the Existing Articles will also be amended so that the special resolution that the Directors are required to put to the relevant Annual General Meeting will provide that, if passed, the Directors will then be required, within 6 months of the passing of the special resolution, to formulate and submit proposals to Shareholders that will provide Shareholders with an opportunity to realise the value of their Ordinary Shares at Net Asset Value per Ordinary Share.

The exact wording of the proposed new provision relating to the requirement to propose a Discontinuation Vote and the form of the special resolution to be put to Shareholders at the relevant Annual General Meeting is set out in Resolution 5 in the notice of the Extraordinary General Meeting in Part IV of this document.

In addition to the amendments described above, the Directors are also proposing the following amendments to the Existing Articles:

* deleting all references in the Existing Articles to the subscription shares as these are no longer in issue; and

* amending Article 5(b) which sets out Shareholders' rights of pre-emption on new issues of the Company's equity securities (or their sale out of treasury) to clarify that such pre-emption rights only apply on new issues or sales out of treasury for cash. This clarification reflects the current requirements of the Listing Rules and is also consistent with the statutory pre-emption rights contained in the UK Companies Act 2006 which apply on new issues and sales out of treasury for cash, but not to issues and sales for non-cash consideration.

A copy of the Existing Articles, as proposed to be amended by the Amendment Resolution is available for inspection (i) from the date of the Circular to the conclusion of the Extraordinary General Meeting, at the registered office of the Company, Arnold House, St. Julian's Avenue, St Peter Port, Guernsey GY1 3NF; and (ii) at the place of the Extraordinary General Meeting for at least 15 minutes before and during the meeting.

If the Amendment Resolution is not passed, none of the Acquisitions, the Initial Issue or the Placing Programme will proceed. In these circumstances the Company will continue in existence in its present form and in accordance with the Existing Articles, Shareholders would retain the opportunity to vote on the continuation of the Company at the Annual General Meeting in 2015.

9. Discount Management Policy and Capital Returns Policy

Discount Management Policy

Subject to the passing of the Initial Issue Resolution and the Amendment Resolution and completion of the Acquisition Agreements and to the Company having the appropriate authorities in place at the relevant time to purchase its own shares, the Company will introduce a discount management mechanism from August 2015. Beginning from the publication of the Company's Net Asset Value as at 31 July 2015, the Company will on a monthly basis, following publication of its monthly Net Asset Value, calculate the aggregate net cash proceeds of realisation over the immediately preceding six month period. If the Ordinary Shares are trading at a discount in excess of 15 per cent. to their Net Asset Value, the Board intends to allocate at least 50 per cent. of such realisation proceeds (less the aggregate value of any Ordinary Shares already bought back during the six month period) to buy back its own Ordinary Shares.

Capital Returns Policy

Subject to the passing of the Initial Issue Resolution and the Amendment Resolution and completion of the Acquisition Agreements, in respect of each financial year of the Company (the Relevant Year) commencing with the year to 31 December 2015, the Board intends to allocate cash for distribution to Shareholders (the Distributable Amount). The Distributable Amount for each Relevant Year will be calculated following the publication of the Company's audited financial statements for the Relevant Year.

Such Distributable Amount shall be no less than 15 per cent. of the aggregate net realised cash gains achieved in the Relevant Year. Such net realised cash gains will be calculated after deducting any losses realised in the Relevant Year.

The Board will retain discretion for determining the most appropriate manner by which to distribute any Distributable Amount, which may include but will not be limited to, share buybacks, tender offers and dividend payments.

General

The operation of the Discount Management Policy and the Capital Returns Policy will be subject to compliance with all necessary regulatory obligations of the Company, including close periods and the Guernsey law solvency test and will also be subject to the Company retaining sufficient cash for its working capital requirements and the protection of Shareholder value in respect of the existing Portfolio.

The Board will retain ultimate discretion for the allocation and distribution under the Discount Management Policy and of any Distributable Amount.

10. Extraordinary General Meeting

The Extraordinary General Meeting has been convened for 9.30 a.m. on 23 February 2015.

The Resolutions that will be put to Shareholders at the Extraordinary General Meeting are:

* the Initial Issue Resolution to approve the disapplication of pre-emption rights in respect of the proposed fundraising by way of the Initial Issue to raise up to £100 million and the issue of New Ordinary Shares for cash pursuant to the Initial Issue at an issue price reflecting a 15 per cent. discount to the Net Asset Value per Ordinary Share prevailing as at the Calculation Date (Resolution 1);

* the Placing Programme Resolution to approve the disapplication of pre-emption rights in respect of the issue of New Ordinary Shares for cash pursuant to the Placing Programme to raise up to £100 million (less the amount raised under the Initial Issue) at an issue price reflecting a premium to the prevailing Net Asset Value per Ordinary Share as at the date of the relevant issue (Resolution 2);

* the Whitewash Resolution to approve the waiver granted by the Takeover Panel of any requirement under Rule 9 for the Deemed Concert Party to make a general offer to Shareholders as a result of the issue and allotment of the Acquisition Shares (Resolution 3);

* the Authority Resolution to authorise the Directors to issue up to a maximum aggregate amount of 500,000,000 Ordinary Shares in substitution for the existing allotment authority, such authority to expire five years from the date of such resolution (Resolution 4); and

* the Amendment Resolution to approve the proposed amendments to the Existing Articles in respect of the Discontinuation Vote provisions and certain other amendments, as described above (Resolution 5).

The Acquisitions and the Initial Issue are conditional upon each of the Initial Issue Resolution and the Amendment Resolution being passed.

The Placing Programme is conditional upon each of the Placing Programme Resolution and the Amendment Resolution being passed.

The changes to the Existing Articles are conditional upon the Initial Issue Resolution and the Amendment Resolution being passed. If the Initial Issue Resolution and the Amendment Resolutionare not passed, the Existing Articles will remain in force and Shareholders will be given the opportunity to vote on the continuation of the Company at the Annual General Meeting in 2015.

All Qualifying Shareholders are entitled to attend, speak and vote at the Extraordinary General Meeting and to appoint a proxy or corporate representative to exercise that right. However, only Independent Shareholders are entitled to vote on the Whitewash Resolution.

11 Irrevocable undertakings

The Board has consulted its 3 largest Shareholders, RIT Capital Partners plc, Overseas Asset Management (Cayman) Limited and CF Ruffer Baker Steel Gold Fund who hold in aggregate 40.0 per cent. of the Company's issued Ordinary Shares. RIT Capital Partners plc and Overseas Asset Management (Cayman) Ltd have signed irrevocable undertakings to vote in favour of all the Resolutions to be proposed at the Extraordinary General Meeting. Shareholders who are not Independent Shareholders will not be permitted to vote on the Whitewash Resolution. Accordingly, Ruffer LLP, on behalf of CF Ruffer Baker Steel Gold Fund, has signed an undertaking to vote in favour of all Resolutions to be proposed at the Extraordinary General Meeting other than the Whitewash Resolution.

In addition, the Investment Manager acts as the discretionary investment manager for a number of investment vehicles which, together hold 9.4 per cent. of the Ordinary Shares. Each of these investment vehicles have authorised the Investment Manager to exercise the votes attaching to these Ordinary Shares at the Extraordinary General Meeting, at the Investment Manager's discretion. The Investment Manager has signed an undertaking to vote in favour of Resolutions 1, 2, 4 and 5. The Investment Manager will not vote these shares in respect of the Whitewash Resolution.

Further details of these irrevocable undertakings are set out in Part III of the Circular.

12. Action to be taken

Shareholders will find enclosed with the Circular a Form of Proxy for use in relation to the Extraordinary General Meeting. Whether or not Shareholders propose to attend the Extraordinary General Meeting in person, they are requested either to complete the Form of Proxy and return it to the Company's UK Transfer Agent, Capita Asset Services at PSX, 34 Beckenham Road, Beckenham, Kent BR3 4ZF in accordance with the instructions printed on it, or, if you hold your Ordinary Shares in CREST, to utilise the CREST electronic proxy appointment service in accordance with the procedures set out on the Form of Proxy. In each case, proxy votes should be returned as soon as possible, but in any event not later than 48 hours before the time appointed for the Extraordinary General Meeting or any adjournment of that meeting.

Completion and return of Forms of Proxy will not prevent you from attending and voting in person at the Extraordinary General Meeting should you wish to do so.

13. Expected timetable

	2015
Record Date for entitlement under the Open Offer	close of business on 23 January
Initial Placing opens	26 January
Ex-entitlement date for the Open Offer	27 January
Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to stock accounts of Qualifying CREST Shareholders in CREST	28 January
Recommended latest time for requesting withdrawal of Open Offer Entitlements and Excess CREST Open Offer Entitlements from CREST	4.30 p.m. on 16 February
Latest time for depositing Open Offer Entitlements and Excess CREST Open Offer Entitlements into CREST	3.00 p.m. on 17 February
Latest time and date for splitting of Open Offer Application Forms (to satisfy bona fide market claims only)	3.00 p.m. on 18 February
Calculation Date	close of business on 18 February
Latest time and date for receipt of completed Open Offer Application Forms and payment in full under the Open Offer or settlement of relevant CREST instruction	11.00 a.m. on 20 February
Latest time and date for receipt of commitments in respect of the Initial Placing	12.00 p.m. on 20 February
Latest time and date for receipt of Forms of Proxy	9.30 a.m. on 21 February
Extraordinary General Meeting	9.30 a.m. on 23 February
Initial Issue Price and results of the EGM and the Proposals announced	by close of business on 23 February
Admission of Acquisition Shares issued in relation to the Acquisitions and commencement of dealings in Acquisition Shares	8.00 a.m. on 25 February
Admission of New Ordinary Shares issued under the Initial Placing and Open Offer and commencement of dealings in New Ordinary Shares	8.00 a.m. on 25 February
CREST members' accounts credited in respect of New Ordinary Shares in uncertificated form	8.00 a.m. on 25 February
Despatch of definitive share certificates for New Ordinary Shares issued under the Initial Placing and the Open Offer in certificated form	week commencing 2 March

Notes: All references to times in this announcement are to London times. The dates and times specified above are subject to change. In particular, the Directors may with the prior approval of Numis Securities Limited bring forward or postpone the closing time and date for the Initial Placing and the Open Offer by up to two weeks. In the event that such date is changed, the Company will notify investors who have applied for New Ordinary Shares of changes to the timetable either by post, by electronic mail or by the publication of a notice through a Regulatory Information Service.

IMPORTANT INFORMATION

This document is not for release, publication or distribution (directly or indirectly) in or into the United States, Canada, Australia, Japan, the Republic of South Africa or to any "US person" as defined in Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act") or into any other jurisdiction where applicable laws prohibit its release, distribution or publication. It does not constitute an offer of securities for sale anywhere in the world, including in or into the United States, Canada, Australia, Japan or the Republic of South Africa. No recipient may distribute, or make available, this document (directly or indirectly) to any other person. Recipients of this document in jurisdictions outside the UK should inform themselves about and observe any applicable legal requirements in their jurisdictions. In particular, the distribution of this document may in certain jurisdictions be restricted by law.

The Ordinary Shares have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and, subject to certain exceptions, may not be offered or sold within the United States or to, or for the account or benefit of, US Persons. The Company will not be registered as an "investment company" under the Investment Company Act of 1940, and investors will not be entitled to the benefits of that Act. In addition, relevant clearances have not been, and will not be, obtained from the securities commission (or equivalent) of any province of Australia, Canada, Japan or the Republic of South Africa and, accordingly, unless an exemption under any relevant legislation or regulations is applicable, none of the Ordinary Shares may be offered, sold, renounced, transferred or delivered, directly or indirectly, in Australia, Canada, Japan or the Republic of South Africa.

The contents of this announcement, which has been prepared by and is the sole responsibility of the Company, have been approved by Baker Steel Capital Managers LLP ("Baker Steel") solely for the purposes of section 21(2)(b) of the Financial Services and Markets Act 2000.

Each of Baker Steel and Numis Securities Limited ("Numis") is authorised and regulated by the UK Financial Conduct Authority. Neither Baker Steel nor Numis is acting as adviser to any recipient of this document or will be responsible to any recipient of the document for providing the protections afforded to clients of either of them or for providing advice in connection with this document or any of the matters referred to herein. Numis has not verified or authorised the contents of, or any part of, this document.

This document is an advertisement and not a prospectus and investors must only subscribe for or purchase the securities referred to in this document on the basis of information contained in the Prospectus and not in reliance on this document. This document does not contain sufficient information to support an investment decision and investors should ensure that they obtain all available relevant information before making any investment. This document does not constitute and may not be construed as an offer to sell, or an invitation to purchase, investments of any description, nor as a recommendation regarding the possible offering or the provision of investment advice by any party. No information in this document should be construed as providing financial, investment or other professional advice and each prospective investor should consult its own legal, business, tax and other advisers in evaluating the investment opportunity. No reliance may be placed for any purposes whatsoever on this document (including, without limitation, any illustrative modelling information contained herein), or its completeness.

None of the Company, Baker Steel or Numis nor any of their respective officers, partners, employees, agents, advisers or affiliates makes any express or implied representation, warranty or undertaking with respect to the information or opinions contained in this document and none of them accept any responsibility or liability (for negligence or otherwise) as to this document's accuracy or completeness or as to the suitability of any particular investment for any particular investor or for any loss howsoever arising, directly or indirectly, from any use of such information or opinions or otherwise arising in connection therewith. In addition, no duty of care or otherwise is owed for any loss, cost or damage suffered or incurred as a result of the reliance on such information or opinions or otherwise arising in connection with this document. In all cases, each recipient should conduct its own investigations and analysis of the Company and Baker Steel and such recipient will be solely responsible for forming its own views as to the potential future performance of the Company.

Certain information contained in this document constitutes "forward-looking statements," which can be identified by the use of terms such as "may", "will", "should", "expect", "anticipate", "project", "estimate", "intend", "continue," "target" or "believe" (or the negatives thereof) or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or actual performance of the Company may differ materially from those reflected or contemplated in such forward-looking statements. As a result, investors should not rely on such forward-looking statements in making their investment decisions. No representation or warranty is made as to the achievement or reasonableness of and no reliance should be placed on such forward-looking statements.

Defined terms used in this announcement shall (unless the context otherwise requires) have the same meanings as are set out in the circular and prospectus published by Baker Steel Resources Trust Limited dated 26 January 2015.

 

END

 

 

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