Proposed Capital Raising and Notice of GM

RNS Number : 7290U

Chaarat Gold Holdings Ltd

01 April 2019

 

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

1 April 2019

Chaarat Gold Holdings Limited

("Chaarat" or the "Company")

Proposed Capital Raising of up to USD 11 million

and

Notice of General Meeting

Proposed capital raising

·      The Company proposes to raise gross proceeds of up to USD 11 million, through a Convertible Bond issue of USD 10 million and a Placing of ordinary shares of USD 1 million

·      Secured commitment for a USD 10 million subscription for Convertible Bonds by a new investor

·   Firm indications of interest from Board and senior management in participating in the Placing for approximately USD 1 million and strong interest from an institutional growth capital investor

·      The Issue Price of 30p for the Placing represents a premium of approximately 4% to the closing price of 28.80p per Ordinary Share on 29 March 2019

·     This USD 11 million raising completes Chaarat's near-term funding plans; however, in order to facilitate the introduction of longer-term investing partners, the Board will consider additional subscriptions totaling up to USD 5 million from current shareholders and new investors

Strategic benefits

·     A significant milestone for the funding of Tulkubash and a vote of investor confidence in Chaarat's wider growth strategy, giving access to crucial growth capital

·    This Capital Raising, combined with the recent announced capital participation from partner Çiftay, will provide Chaarat with growth capital of approximately USD 41 million over time at a significant premium to the market

·      An important step in widening Chaarat's shareholder base, reflecting elevated market interest in Chaarat following the acquisition of the Kapan mine in Armenia, which transformed the Company from developer to producer

·    Demonstrates management's ongoing commitment to Chaarat and keeps management's interests in line with those of all investors

·      Structured to minimise dilution to shareholders, a key strategic objective

General Meeting

·      General Meeting for necessary shareholder resolutions to be held on or about 26 April 2019

Artem Volynets, Chief Executive Officer of Chaarat, said: "This new fundraise represents a clear expression of confidence in Chaarat's growth trajectory from both internal and external investors. I am delighted that investors recognise the fundamental value of Chaarat, subscribing for equity and bonds at respective premiums to the last share price."

Introduction

Chaarat (AIM: CGH), the Aim-quoted gold mining company with assets in the Kyrgyz Republic and Armenia, today announces that it proposes to raise gross proceeds of up to USD 1 million through the issue of up to 2,553,333 new ordinary shares of USD 0.01 each ("Ordinary Shares") at 30 pence per Ordinary Share (the "Issue Price") (the "Placing Shares" and the "Placing") as well as a further USD 10 million through a Convertible Bond issue (together with the Placing, the "Capital Raising").

Placing

Certain directors, managers and investors in the Company have given strong indications of interest in subscribing for approximately USD 1 million of Placing Shares at the Issue Price in the Placing. These indications reflect management's ongoing commitment to Chaarat and the conviction of the Company's leadership to keep management's interests in line with those of all investors. An institutional growth capital investor has also expressed strong interest in the Placing.

Convertible Bond Issue

The Company is pleased to announce that it has entered into an agreement with a new investor for the subscription and issue of secured convertible notes 2021 ("Convertible Bonds") for USD 10 million. The agreement is conditional upon the passing of certain resolutions at the general meeting of the Company to be held on or around 26 April 2019 (or any adjournment thereof) (the "General Meeting") as shall be necessary to authorise (either generally or specifically) the allotment and issue of a sufficient number of Ordinary Shares to allow for conversion of the Convertible Bonds in full and disapply pre-emption rights. The Convertible Bonds are expected to be issued shortly after the General Meeting and receipt of payment on the same terms as the Convertible Bonds issued on 15 January 2019. The issue of USD 10 million of additional Convertible Bonds will bring the total number of Convertible Bonds in issue to USD 39,180,000.  The Convertible Bonds have a tenor of 31 October 2021, a conversion price of GBP 0.37 per Ordinary Share and an interest rate of 10 per cent. per year (increasing to 12 per cent. per year from 1 May 2020).

Additional subscriptions and other matters

If the Company has demand from investors which exceeds USD 11 million, the Company may consider increasing the size of the Capital Raising by up to USD 5 million. Any decision to upsize would only be made after careful consideration of the prevailing market conditions, the Company's overall financial position, diversity of investors and growth capital opportunities.  Any such upsized Capital Raising would be through the Share Placing and/or a further Convertible Bond issue and within the time period of the Placing.

Use of proceeds and strategic benefits

The net proceeds of the Capital Raising will be used by Chaarat for its general corporate purposes, principally for the funding of exploration work at Tulkubash and also to contribute to the capital spend for the construction of Tulkubash, following the Company's construction and mining agreement with Çiftay, the Turkish mining and mine construction contractor. Chaarat continues to advance detailed engineering and has finalised several project components for immediate construction readiness at Tulkubash. The first gold production remains on schedule for 2021.

The Capital Raising, alongside the construction and mining agreement with Çiftay, is a significant milestone for the funding of Tulkubash and a vote of investor confidence in Chaarat's wider growth strategy. It gives the Company access to crucial growth capital and has been structured to minimise dilution to shareholders, a key strategic objective for the Company.

Details of the Placing

The Placing is expected to comprise a placing with institutional and certain other investors, in each case at the Issue Price.

The Company will solicit placees to subscribe for Placing Shares at the Issue Price up to USD 1 million.  The Board intends to make an application or applications for the Placing Shares to be admitted to trading on the AIM market of London Stock Exchange plc ("AIM") ("Admission"), with the expectation that Admission will become effective on or prior to 2 May 2019.

The Placing is conditional upon firm commitments being received and legally binding agreements being entered into in respect of the Placing, the resolutions necessary to authorise (either generally or specifically) the allotment and issue of the Placing Shares and disapply pre-emption rights (the "Resolutions") being duly passed at the General Meeting and Admission becoming effective.

The Placing Shares, when issued, will be fully paid and will rank pari passu in all respects with the existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of issue.

Participation in the Placing will be for invited subscribers only and members of the public are not eligible to take part in the Placing. The details of the Placing in this announcement are for information purposes only and do not constitute an offer to sell or issue, or the solicitation of an offer to buy or subscribe for Placing Shares. No public offer of securities of the Company is being made in the United Kingdom, the United States or elsewhere.

A circular containing, amongst other things, the notice convening the General Meeting (the "Circular") is expected to be published by the Company shortly and will be available on the Company's website https://www.chaarat.com/our-news/.

The Company will hold the General Meeting on or around 26 April 2019. 

Expected timetable

The expected timetable for the Capital Raising is as follows:

On or around 2 April 2019	Circular dispatched to shareholders
26 April 2019	Placing closes, placees informed of their allocation and confirmation forms returned by placees.
26 April 2019	Convertible Bond issue closes
On or around 26 April 2019	General Meeting held
2 May 2019	Settlement and admission to trading on AIM of the Placing Shares
Within 14 days of admission of the Placing Shares	Despatch of definitive share certificates for Placing Shares (where applicable)

All times and dates in this announcement may be subject to change at the sole discretion of the Company and the Company will announce any such changes as soon as practicable.

Recommendation and importance of the vote

The Directors consider the Capital Raising to be in the best interests of the Company and shareholders as a whole. Accordingly, the Directors unanimously intend to recommend shareholders to vote in favour of the Resolutions to be proposed at the General Meeting as they intend to do so in respect of their (and their connected persons') beneficial holdings amounting, in aggregate, to not less that 134,818,925 Ordinary Shares, representing approximately 34.12 per cent. of the existing issued ordinary share capital of the Company.

Whilst the Directors believe that alternative sources of funding are available to the Company, they are of the view that the terms associated with such funding would be significantly more onerous than those of the Capital Raising. It is therefore important that shareholders vote in favour of the Resolutions.

Enquiries

Chaarat Gold Holdings Limited Martin Andersson (Executive Chairman) Artem Volynets (CEO)	[phone] [e-mail]
Numis Securities Limited John Prior, Paul Gillam (NOMAD) James Black (Corporate Broking)	[phone]
BMO Capital Markets Limited (Corporate Broker)	[phone]
SP Angel Corporate Finance LLP Ewan Leggat (Joint Broker)	[phone] www.spangel.co.uk
Powerscourt Conal Walsh Isabelle Saber Sam Austrums	[phone] [e-mail]

About Chaarat Gold

Chaarat Gold is a gold mining company which owns the Kapan operating mine in Armenia as well as Tulkubash and Kyzyltash Gold Projects in the Kyrgyz Republic. The Company has a clear strategy to build a leading emerging markets gold company with an initial focus on Central Asia and the FSU through organic growth and selective M&A.

Chaarat is engaged in active community engagement programmes 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 by building relationships based on trust and operating to the best environmental, social and employment standards. Further information is available at www.chaarat.com

Important Notice

The distribution of this announcement and any other documentation associated with the Capital Raising into jurisdictions other than the United Kingdom and the European Union may be restricted by law. Persons into whose possession these documents come should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws or regulations of any such jurisdiction. In particular, such documents should not be distributed, forwarded to or transmitted, directly or indirectly, in whole or in part, in, into or from the United States, Australia, Canada, Japan or the Republic of South Africa or any other jurisdiction where to do so may constitute a violation of the securities laws or regulations of any such jurisdiction (each a 'Restricted Jurisdiction').

The Placing Shares have not been and will not be registered under the US Securities Act 1933 (as amended) (the 'US Securities Act') or with any securities regulatory authority of any state or other jurisdiction of the United States and, accordingly, may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within the United States except in reliance on an exemption from the registration requirements of the US Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States.

There will be no public offer of the Placing Shares in the United States. The Placing Shares are being offered and sold outside the US in reliance on Regulation S under the US Securities Act. The Placing Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the US or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the offering of the Placing Shares or the accuracy or adequacy of this announcement. Any representation to the contrary is a criminal offence in the US.

The Placing Shares have not been and will not be registered under the relevant laws of any state, province or territory of any Restricted Jurisdiction and may not be offered, sold, resold, taken up, transferred, delivered or distributed, directly or indirectly, within any Restricted Jurisdiction except pursuant to an applicable exemption from registration requirements. There will be no public offer of Placing Shares in Australia, Canada, Japan or the Republic of South Africa.

This announcement is for information purposes only and does not constitute or form part of any offer to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in any jurisdiction and should not be relied upon in connection with any decision to subscribe for or acquire any of the Placing Shares.

This announcement has been issued by, and is the sole responsibility of, the Company. No person has been authorised to give any information or to make any representations other than those contained in this announcement and, if given or made, such information or representations must not be relied on as having been authorised by the Company. Subject to the AIM Rules for Companies, the issue of this announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this announcement or that the information contained in it is correct at any subsequent date.

Participation in the Capital Raising will be for invited subscribers only and members of the public are not eligible to take part in the Capital Raising. The details of the Capital Raising contained in this document are for information purposes only and do not constitute an offer to sell or issue, or the solicitation of an offer to buy or subscribe for Placing Shares. No public offer of securities of the Company is being made in the United Kingdom, the United States or elsewhere.

THE CAPITAL RAISING IS ONLY DIRECTED AT (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA WHO ARE QUALIFIED INVESTORS AS DEFINED IN SECTION 86(7) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000, AS AMENDED ("QUALIFIED INVESTORS"), BEING PERSONS FALLING WITHIN THE MEANING OF ARTICLE 2(1)(E) OF DIRECTIVE 2003/71/EC AS AMENDED (INCLUDING ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE) (THE "PROSPECTUS DIRECTIVE"); AND (B) IN THE UNITED KINGDOM, QUALIFIED INVESTORS WHO ARE PERSONS WHO (I) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(5) ('INVESTMENT PROFESSIONALS') OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER"); (II) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) ('HIGH NET WORTH COMPANIES, UNINCORPORATED ASSOCIATIONS, ETC') OF THE ORDER; OR (III) ARE PERSONS TO WHOM IT MAY OTHERWISE BE LAWFULLY COMMUNICATED (ALL SUCH PERSONS IN (A) AND (B) TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").

THE INFORMATION ON THE CAPITAL RAISING MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THE CAPITAL RAISING RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THE CAPITAL RAISING DOES NOT ITSELF CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY.

THE CAPITAL RAISING WILL BE FOR INVITED RELEVANT PERSONS ONLY WHO WILL BE INVITED TO, AND WHO CHOOSE TO, PARTICIPATE IN THE CAPITAL RAISING AND BY WHOM OR ON WHOSE BEHALF A COMMITMENT TO SUBSCRIBE FOR PLACING SHARES IS GIVEN.

Numis Securities Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, acts as Nominated Adviser and Corporate Broker to  the Company on an ongoing basis and is not acting for or advising any other person, or treating any other person as its client, in connection to the matters described in this announcement and will not be responsible for providing the protections afforded to clients of Numis Securities Limited or advice to any other person in relation to the matters contained herein.

No statement in this announcement is intended to be a profit forecast or estimate and no statement in this announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the Directors' current intentions, beliefs or expectations concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies and the Company's markets. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual results and developments could differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements in this announcement are based on certain factors and assumptions, including the Directors' current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's operations, results of operations, growth strategy and liquidity. Whilst the Directors consider these assumptions to be reasonable based upon information currently available, they may prove to be incorrect. Save as required by law or by the AIM Rules for Companies, the Company undertakes no obligation to release publicly the results of any revisions to any forward-looking statements in this announcement that may occur due to any change in the Directors' expectations or to reflect events or circumstances after the date of this announcement.

This announcement should not be considered a recommendation by the Company or any of their respective directors, officers, employees, advisers or any of their respective affiliates, parent undertakings, subsidiary undertakings or subsidiaries of their parent undertakings in relation to any purchase of or subscription for the Placing Shares. Price and volumes of, and income from, securities may go down as well as up and an investor may not get back the amount invested. It should be noted that past performance is no guide to future performance. Persons needing advice should consult an independent financial adviser.

Neither the content of the Company's website nor any website accessible by hyperlinks to the Company's website is incorporated in, or forms part of, this announcement.

 

END

 

 

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