Issue of US$15m short term senior secured CLNs

RNS Number : 2873C

Chaarat Gold Holdings Ltd

12 April 2017

 

Not for release, publication or distribution to United States newswire services or for release, publication or dissemination in the United States AND DOES NOT CONSTITUTE AN OFFER OF THE SECURITIES HEREIN.

This press release does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or any other jurisdiction.  Any securities described in this press release have not been, and will not be, registered under the US Securities Act of 1933, as amended, and may not be offered or sold in the United States or to a U.S. person (as defined in Regulation S under the US Securities Act) except in transactions exempt from, or not subject to, registration under the US Securities Act and applicable US state securities laws.  There will be no public offering of the securities in the United States.

Chaarat Gold Holdings Limited

("Chaarat", "Chaarat Gold" or "the Company")

Issue of US$15 million short term senior secured convertible loan notes

Road Town, Tortola, British Virgin Islands (12 April 2017).

Chaarat (AIM:CGH), the AIM quoted exploration and development company with assets in the Kyrgyz Republic, is pleased to announce an accelerated and successful close of its US$ 15 million issue of short term senior secured convertible loan notes (the "Notes") (the "Issue").

Highlights

·     Issue of Notes raising US$ 15 million, settlement no later than 28 April 2017

·     Notes are convertible at a price of 30p per ordinary share in the Company ("Ordinary Share")

Issue of Notes

The Company is pleased to confirm that it has received firm commitments for the Issue of Notes to raise US$ 15 million.  As previously announced, the principal terms of the Notes are:

1. Senior Secured Convertible Loan Note

2. Short term - 18 months maximum; Notes mature on 30 September 2018

3. High yield - a minimum of 10%, US$ denominated

4. Conversion price of 30p, being 675,833 shares for every $250,000 of Notes (and pro rata for part thereof) using a fixed exchange rate of US$1/£0.811

5. Settlement no later than 28 April 2017

6. Minimum investment size US$ 250,000

First stage financing plans and use of proceeds

The Company's announcement on 3 April 2017 set out its plans for the first stage financing of the Tulkubash Heap Leach Project (the "Tulkubash Project"), including the following:

·     Intensive drilling program to be implemented to increase the heap leachable reserve base and extend life of mine

·     On completion of drilling program, potential for reduction of pre-stripping, and therefore capital expenditure, by re-design of pit and mine area

·     Access road building works to commence

·     Engineering of the completed sections of the Bankable Feasibility Study to be concluded in parallel with local permitting progress

·     Recruitment of construction and operational team to continue

·     Bankable Feasibility Study and construction finance package for enlarged project planned to be available by end of Q1 2018

Discussions are ongoing with certain international finance institutions to finance some aspects of the Project such as the road, the power-generating unit and possibly the transport equipment, which constitutes the majority of the mine fleet  

The proceeds of the Issue should therefore enable the Company to undertake the following activities:

• A drill program of approximately 12,000 metres aimed at increasing the reserve base of the Tulkubash Heap Leach Project

• Construction of a new section of the access road which will considerably improve the access to site

• Commencement of the basic and detailed engineering design of the project

• Continued recruitment of the construction and operating teams

Subscription for Notes by Labro and a Director and concert party arrangements

Chaarat received expressions of interest from directors to participate to a significant extent in the Issue of the Notes. However, the board of directors ("Board") and its advisors believe that limiting the amount of Notes available to the directors to no more than 5% of the issue will help to ensure the interests of all shareholders are aligned.   Consequently, Labro Investments Limited ("Labro") has confirmed it will subscribe, contingent on issue of this announcement, for up to US$ 375,000 of Notes.  As announced previously, Martin Andersson is indirectly beneficially interested in the majority of the shares in Labro. Following the subscription, Labro will continue to hold 120,058,517 Ordinary Shares representing 34.1% of the Company's share capital and 21,367,521 warrants to subscribe for Ordinary Shares and, in addition, US$ 375,000 of Notes (which are convertible into 1,013,750 Ordinary Shares in respect of principal on the Notes and up to around 143,615  Ordinary Shares in respect of interest on the Notes assuming interest is converted into Ordinary Shares and that the Notes are converted at the final maturity date of 30 September 2018). 

Martin Wiwen-Nilsson has confirmed he will  subscribe, contingent on issue of this announcement, for up to US$ 375,000 of Notes, following which he will hold 8,722,023 Ordinary Shares representing 2.5% of the Company's share capital and US$ 375,000 Notes (convertible into 1,013,750 Ordinary Shares in respect of principal on the Notes and up to around 143,615 Ordinary Shares in respect of interest on the Notes assuming interest is converted into Ordinary Shares and that the Notes are converted at the final maturity date of 30 September 2018).

The subscriptions of Labro and Martin Wiwen-Nilsson may be scaled back further prior to settlement of the Issue

In addition, as the subscriptions by Labro and Martin Wiwen-Nilsson were scaled back, the Board (excluding Martin Andersson and Martin Wiwen-Nilsson) has agreed as part of the Issue that members of the Concert Party (as referred to and defined in the Company's announcement on 27 September 2016) (the "Concert Party") may acquire up to a further 3,527,976 Ordinary Shares (excluding Ordinary Shares issued on exercise of Labro Warrants or conversion of Notes) (being such remaining number of shares as the Concert Party did not purchase under the waiver originally granted on 1 October 2016) within a period of three months following the date of this announcement (the "Permitted Purchases") without triggering a requirement to make a mandatory offer under the Articles (see "Further information relating to the Issue" below).  If all such Ordinary Shares were acquired within such period by way of the acquisition of existing Ordinary Shares, the Concert Party would hold 158,469,748 Ordinary Shares representing 45.0% of the  share capital and, if all Labro Warrants were exercised and all Notes issued to Labro and Martin Wiwen-Nilsson were converted (but no other warrants or options to subscribe for Ordinary Shares were exercised, no other Notes were converted and no other Ordinary Shares were issued),  the Concert Party would hold 182,151,999 Ordinary Shares representing 48.5% of the resulting enlarged share capital (these numbers and percentages would reduce if the subscriptions by Labro and Martin Wiwen-Nilsson are scaled back prior to settlement). 

The information contained within this announcement is deemed to constitute inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.  It is expected that a further announcement will follow shortly confirming the final subscriptions of Labro and Martin Wiwen-Nilsson

Martin Andersson, Chairman of Chaarat, comments:  "We are pleased with the interest in this Convertible Loan Note issue and are delighted to welcome a new group of high quality investors to Chaarat. We are looking forward to moving the project forward to production in Q1 2019."

Enquiries:  

Chaarat Gold Holdings Limited	+ 44 23 800 11747
c/o Central Asia Services Limited	[e-mail]
Dekel Golan   CEO
Linda Naylor  FD
Numis Securities Limited	[phone]
John Prior, Paul Gillam (NOMAD)
James Black (Broker)

Further information relating to the Issue

Following the Issue, the Company's existing issued share capital will remain at 351,775,832 Ordinary Shares and the total number of voting rights, on the basis of one vote per Ordinary Share, will continue to be 351,775,832 (the "Total Voting Rights").  The Total Voting Rights figure may be used by shareholders as the denominator for any calculation by which they will determine whether or not they are required to notify their interests in, or a change to their interest in, the issued share capital of the Company.

Chaarat is a company incorporated in the British Virgin Islands and is therefore not subject to the UK City Code on Takeovers and Mergers. The Articles contain a regulation which provides that where any person (i) acquires interests in shares which (taken together with interests in shares held or acquired by persons acting in concert with him) carry 20% or more of the voting rights of the Company; or (ii) holds (together with persons acting in concert with him) interests in shares representing not less than 20% but not more than 50% of the voting rights and such person (or any person acting in concert with him) acquires an interest in additional shares which increases his percentage of voting rights, the Board shall be entitled, but not obliged, to require that person to extend a mandatory offer to all of the Company's shareholders to acquire their Ordinary Shares. 

The Board has exercised its discretion under the Articles so as not to require a mandatory offer to be made in connection with the Issue by Labro, Martin Andersson, Martin Wiwen-Nilsson or any other member of the Concert Party  in respect of either the issue of the Notes or the conversion thereof, or as a result of any Permitted Purchases, or as a result of any redemption or purchase by the Company of its own voting shares at any time in the future, but not in respect of any other purchase of Ordinary Shares or any interest therein by any member of the Concert Party or any other person acting in concert with them.

China Nonferrous Metals International Mining Co Ltd ("CNMIM")

Chaarat is required to give notice to CNMIM if it intends to issue any Ordinary Shares for cash or non- cash consideration. CNMIM may, within 15 business days of receipt of such notice being issued in connection with any conversion of Notes into Ordinary Shares, give written notice to require Chaarat to issue such number of Ordinary Shares to CNMIM, on the same terms as the issue of such Ordinary Shares, as is necessary to maintain the percentage shareholding of CNMIM in the Company prior to conversion. If and when any Notes are converted, the required notice in respect of the issue of Ordinary Shares on conversion will be sent to CNMIM and a further announcement made, if appropriate.  CNMIM currently holds 22,469,289 Ordinary Shares representing 6.39% of the issued share capital of Chaarat.

NOTES TO EDITORS:

About Chaarat

Chaarat Gold is an exploration and development company operating in the Kyrgyz Republic with a large, high grade resource - the Chaarat Gold Project. The Company's key objective is to become a low cost gold producer generating significant production from the development of the Chaarat Gold Project. Chaarat is engaged in an active community engagement programme to optimise the value of the Chaarat investment proposition. 

Chaarat aims to create value for its shareholders, employees and communities from its high quality gold and mineral deposits in the Kyrgyz Republic by building relationships based on trust and operating to the best environmental, social and employment standards.

Further information is available at www.chaarat.com

 

END

 

 

IODGUGDSGBBBGRD