Proposed Equity Capital Raise and Funding Update

RNS Number : 6997J

Chaarat Gold Holdings Ltd

15 April 2020

 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").

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 absent registration except in transactions exempt from, or not subject to, registration under the US Securities Act and applicable US state securities laws. There is no public offering of the securities in the United States expected.

15 April 2020

Chaarat Gold Holdings Limited

("Chaarat" or the "Company")

Proposed Equity Capital Raise and Funding Update

Chaarat (AIM:CGH), the AIM-quoted gold mining company with assets in the Kyrgyz Republic and Armenia is pleased to announce that it is launching a placing (the "Placing") to raise at least US$12 million via the issue of new ordinary shares in the Company (the "New Ordinary Shares") at 26 pence per New Ordinary Share (the "Placing Price"). The Company already has commitments from its major shareholders, all board members and senior management to invest in excess of US$12 million by way of fresh investment or conversion of existing debt in the Placing and is open to receiving additional offers on the same terms as above.

In addition, further to the announcement made on 9 April 2020 (RNS 4146J), the Company has finalized all terms relating to the extension of its US$17 million loan plus US$2.4 million of accrued interest to a maturity date of 31 December 2020 (the "Loan Extension"). In particular, the Company has also finalised the compensation structure with Labro Investments Limited ("Labro") in respect of the guarantee provided to secure the Loan Extension. The working capital facility provided by Labro (the "Labro Facility") has also been extended to 31 December 2020.

The Placing will enable the Company to opportunistically strengthen its balance sheet at an important stage of the Company's development against a backdrop of macro-economic uncertainty. The proceeds of the Placing alongside the Loan Extension will enable Company to progress its construction schedule and drilling program at Tulkubash during the summer season. Moreover, the funds will also be used to further advance the high-grade Kyzyltash project as well as accelerate selected M&A opportunities and importantly reduce overall Company indebtedness.

Highlights of the proposed Placing

-  The Company has received a commitment of US$10 million from Labro, the Company's largest shareholder with approximately 35.15% equity ownership of which US$5 million is a cash commitment and US$5 million represents a debt conversion reducing the outstanding drawdown of the Labro Facility.

-  All board members, senior management, the Company's largest institutional shareholder and other existing investors have agreed to subscribe for at least US$2 million in the Placing.

-  The Company is open to receiving additional commitments in the Placing with any further funds being allocated to increase the Company's liquidity buffer and advance its strategic projects within this year.

-  The financing announced today allows Chaarat to strengthen its balance sheet, confirming its ability to refinance and optimise its capital structure even in these challenging market conditions.

Placing

Chaarat is pleased to announce an equity capital raise of a minimum of US$12 million, including commitments from its major shareholder and other existing shareholders, all board members and senior management through direct cash subscription as well as through the offset of accrued or future fees and salaries over the next two quarters . The Company is open to receiving additional commitments in the Placing from existing shareholders and other institutional investors at the Placing Price by 24 April 2020.

Labro has placed a firm order of US$10 million in the Placing. This commitment consists of a cash component of US$5 million and the conversion of US$5 million of the outstanding liabilities under the Labro Facility which will be reduced to approximately US$1 million as a result. Pursuant to the conversion, the Company will offset Labro's firm order to subscribe for 30,457,692 New Ordinary Shares at the Placing Price (the "Labro Placing Shares")¹ under the Placing against US$5 million of the Company's current indebtedness under the Labro Facility.

The Company still has the ability to draw up to a further US$7 million under the Labro Facility on or before 31 December 2020, an extension of in excess of five months.

All funds raised will be used to enhance the Company's liquidity buffer and further progress one or more of our strategic targets, namely:

-  fund ongoing work at our Tulkubash project to enhance development within this construction season 

-  further define identified target areas in the 2019 drilling programme at Tulkubash to grow the resource and update the mine life accordingly

-  engage on technical work to advance the Kyzyltash project further in accordance with international best practice standards

-  accelerate the Company's efforts to proceed with selected M&A transactions and where possible seek the opportunities in the current environment for attractive growth projects

-  reduce the Company's existing indebtedness in order to strengthen the balance sheet and reduce interest expense

The Placing is an essential step to deliver on the financial targets previously set out by Chaarat and to optimise the financial capital structure at this given time. It further supports the Company in the next months with the uncertainty of the COVID-19 situation affecting the global economy with the benefit of increased liquidity and reduced interest demands. In the meantime, the Company emphasizes that its operations continue set out in its announcements of 27 March 2020 and 9 April 2020 with precautionary measures in place.

Extension of the Loan and agreements with Labro

Furthermore, as also announced on 9 April 2020 (RNS 4146J), the existing US$17 million investor loan and US$ 2.4 million in accrued interest (the "Loan") has been extended to 31 December 2020. Chaarat has the option to prepay all or part of the Loan without penalty at any time and further secured an option that if Chaarat repays US$5 million before 30 May 2020 then the maturity of the remaining US$12 million of the Loan will automatically extend to 31 March 2021.

Labro has provided a guarantee and security package to the lender for the full amount of the Loan.  In addition, under the Company's current indebtedness, Labro has previously provided a committed working capital facility announced by the Company on 14 December 2018. As part of this current refinancing activity, the Labro Facility has been extended to 31 December 2020.

As payment for the above, Chaarat will compensate Labro via the issue of 12,000,000 new ordinary shares of US$ 0.01 each in the Company (the "Labro Security Fee Shares")². Another 8,000,000 new ordinary shares will be issued to Labro on 31 October 2020 if the Loan has not been repaid in its entirety by Chaarat by that date.

Related Party Transactions

The arrangements with Labro and Martin Andersson to i) guarantee the Loan, ii) extend the maturity of the Labro Facility, iii) subscribe in the Placing, and iv) convert US$5m of outstanding debt (under the Labro Facility) into equity, constitute related party transactions under AIM Rule 13 of the AIM Rules for Companies (the "AIM Rules") as Labro is a substantial shareholder of the Company and Martin Andersson (the executive chairman of Chaarat) is indirectly beneficially interested in the majority of the shares in Labro. The independent directors of the Company (all of the Company's Directors save Martin Andersson) consider, having consulted with the Company's nominated adviser and senior management, that the terms of the transactions are fair and reasonable insofar as the Company's shareholders are concerned.

On 14 April 2020 the Board (excluding Martin Andersson) exercised its discretion to waive the requirement for a mandatory offer under Regulation 19 of the Company's articles of association in respect of the matters disclosed in this announcement ².

The Company will host an investor and analyst webcast on 16 April 2020 at 10 am BST to provide an update on current operational and financial   developments and set out the terms of the proposed Placing. Details for the webcast will be provided shortly.

Artem Volynets, Chief Executive Officer of Chaarat, said:

"We are pleased to announce a comprehensive set of measures to strengthen Chaarat's balance sheet and we are delighted to see such strong support from our equity and debt investors in the current challenging market environment.

We are also proud to report full alignment of interests between the Company's management and its key stakeholders with all board members and top management investing in the Placing.  We all believe that strengthening of our balance sheet and the stability of our operations give us the ability to continue executing on our growth strategy and take advantage of opportunities presented."

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014

¹ 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.

^{1, 2} Regulation 19 Waiver

There is a provision in the Company's articles of association (Regulation 19) which states that the Board has the right to require any holder of more than 20% of ordinary shares in the capital of the Company (the "Ordinary Shares") to make a mandatory offer to all the Company's shareholders to acquire their Ordinary Shares if they acquire an additional interest in any Ordinary Shares.

The Labro Security Fee Shares, Labro Placing Shares issued and to be issued to Labro do not fall under the waiver for market share purchases of up to three million Ordinary Shares announced by the Company on 24 February 2020 (RNS number 8217D).  On 14 April 2020 the Board (excluding Martin Andersson) exercised its discretion to waive the requirement for a mandatory offer for the Company by Labro, to allow Labro to receive the Labro Placing Shares and the Labro Security Fee Shares and to allow Mr Andersson to subscribe in the Placing.

² An application is being made to the London Stock Exchange for the Labro Security Fee Shares to be admitted to trading on AIM, and it is expected that admission will become effective and trading of the New Ordinary Shares will commence on or around 8:00am (London time) on 21 April 2020.

Following the admission of the Labro Security Fee Shares, the Company's enlarged issued share capital will comprise 482,152,855 ordinary shares of US$0.01 each. This figure may be used by shareholders of the Company as the denominator for the calculations by which they will determine whether they are required to notify their interests in, or a change to their interest in, the Company under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules Sourcebook.

Enquiries

Chaarat Gold Holdings Limited	[phone]
Artem Volynets (CEO)	[e-mail]
Numis Securities Limited	[phone]
John Prior, Paul Gillam (NOMAD)
James Black (Corporate Broking)
SP Angel Corporate Finance LLP	[phone]
Ewan Leggat (Joint Broker)
finnCap Limited	[phone]
Scott Mathieson (Joint Broker)
Camille Gochez (Joint Broker)

About Chaarat

Chaarat 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

Appendix 1 - PDMR forms

1	Details of the person discharging managerial responsibilities / person closely associated
a)	Name	Labro Investments Limited
2	Reason for the notification
a)	Position / status	Person/Entity closely associated with the Chairman
b)	Initial notification / amendment	Initial notification
3	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name	Chaarat Gold Holdings Limited
b)	Legal entity identifier	213800T2A5CV84VTFJ70
4	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument	Ordinary shares of US$0.01 each
	Identification code	VGG203461055
b)	Nature of the transaction	Remuneration in shares under a security fee agreement
c)	Currency	GBP
d)	Price(s) and volume(s)		Price(s)	Volume(s)
			26p	12,000,000
e)	Aggregated information · Aggregated volume · Aggregated price · Aggregated total	12,000,000 26 pence £3,120,000
f)	Date of the transaction	14 April 2020
g)	Place of the transaction	XLON

1	Details of the person discharging managerial responsibilities / person closely associated
a)	Name	Labro Investments Limited
2	Reason for the notification
a)	Position / status	Person/Entity closely associated with the Chairman
b)	Initial notification / amendment	Initial notification
3	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name	Chaarat Gold Holdings Limited
b)	Legal entity identifier	213800T2A5CV84VTFJ70
4	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument	Ordinary shares of US$0.01 each
	Identification code	VGG203461055
b)	Nature of the transaction	Acquisition by way of a placing
c)	Currency	GBP
d)	Price(s) and volume(s)		Price(s)	Volume(s)
			26p	30,457,692
e)	Aggregated information · Aggregated volume · Aggregated price · Aggregated total	30,457,692 26 pence £7,918,999.92
f)	Date of the transaction	15 April 2020
g)	Place of the transaction	XLON

1	Details of the person discharging managerial responsibilities / person closely associated
a)	Name	Martin Andersson
2	Reason for the notification
a)	Position / status	Chairman
b)	Initial notification / amendment	Initial notification
3	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name	Chaarat Gold Holdings Limited
b)	Legal entity identifier	213800T2A5CV84VTFJ70
4	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument	Ordinary shares of US$0.01 each
	Identification code	VGG203461055
b)	Nature of the transaction	Acquisition by way of a placing
c)	Currency	GBP
d)	Price(s) and volume(s)		Price(s)	Volume(s)
			26p	2,284,327
e)	Aggregated information · Aggregated volume · Aggregated price · Aggregated total	2,284,327 26 pence £593,925.01
f)	Date of the transaction	15 April 2020
g)	Place of the transaction	XLON

1	Details of the person discharging managerial responsibilities / person closely associated
a)	Name	Hussein Barma
2	Reason for the notification
a)	Position / status	Non-Executive Director
b)	Initial notification / amendment	Initial notification
3	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name	Chaarat Gold Holdings Limited
b)	Legal entity identifier	213800T2A5CV84VTFJ70
4	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument	Ordinary shares of US$0.01 each
	Identification code	VGG203461055
b)	Nature of the transaction	Acquisition by way of a placing
c)	Currency	GBP
d)	Price(s) and volume(s)		Price(s)	Volume(s)
			26p	44,164
e)	Aggregated information · Aggregated volume · Aggregated price · Aggregated total	44,164 26 pence £11,482.55
f)	Date of the transaction	15 April 2020
g)	Place of the transaction	XLON

1	Details of the person discharging managerial responsibilities / person closely associated
a)	Name	Robert Benbow
2	Reason for the notification
a)	Position / status	Non-Executive Director
b)	Initial notification / amendment	Initial notification
3	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name	Chaarat Gold Holdings Limited
b)	Legal entity identifier	213800T2A5CV84VTFJ70
4	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument	Ordinary shares of US$0.01 each
	Identification code	VGG203461055
b)	Nature of the transaction	Acquisition by way of a placing
c)	Currency	GBP
d)	Price(s) and volume(s)		Price(s)	Volume(s)
			26p	44,164
e)	Aggregated information · Aggregated volume · Aggregated price · Aggregated total	44,164 26 pence £11,482.55
f)	Date of the transaction	15 April 2020
g)	Place of the transaction	XLON

1	Details of the person discharging managerial responsibilities / person closely associated
a)	Name	Robert Edwards
2	Reason for the notification
a)	Position / status	Non-Executive Director
b)	Initial notification / amendment	Initial notification
3	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name	Chaarat Gold Holdings Limited
b)	Legal entity identifier	213800T2A5CV84VTFJ70
4	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument	Ordinary shares of US$0.01 each
	Identification code	VGG203461055
b)	Nature of the transaction	Acquisition by way of a placing
c)	Currency	GBP
d)	Price(s) and volume(s)		Price(s)	Volume(s)
			26p	34,265
e)	Aggregated information · Aggregated volume · Aggregated price · Aggregated total	34,265 26 pence £8,908.88
f)	Date of the transaction	15 April 2020
g)	Place of the transaction	XLON

1	Details of the person discharging managerial responsibilities / person closely associated
a)	Name	Warren Gilman
2	Reason for the notification
a)	Position / status	Non-Executive Director
b)	Initial notification / amendment	Initial notification
3	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name	Chaarat Gold Holdings Limited
b)	Legal entity identifier	213800T2A5CV84VTFJ70
4	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument	Ordinary shares of US$0.01 each
	Identification code	VGG203461055
b)	Nature of the transaction	Acquisition by way of a placing
c)	Currency	GBP
d)	Price(s) and volume(s)		Price(s)	Volume(s)
			26p	34,265
e)	Aggregated information · Aggregated volume · Aggregated price · Aggregated total	34,265 26 pence £8,908.88
f)	Date of the transaction	15 April 2020
g)	Place of the transaction	XLON

1	Details of the person discharging managerial responsibilities / person closely associated
a)	Name	Artem Volynets
2	Reason for the notification
a)	Position / status	Chief Executive Officer
b)	Initial notification / amendment	Initial notification
3	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name	Chaarat Gold Holdings Limited
b)	Legal entity identifier	213800T2A5CV84VTFJ70
4	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument	Ordinary shares of US$0.01 each
	Identification code	VGG203461055
b)	Nature of the transaction	Acquisition by way of a placing
c)	Currency	GBP
d)	Price(s) and volume(s)		Price(s)	Volume(s)
			26p	228,433
e)	Aggregated information · Aggregated volume · Aggregated price · Aggregated total	228,433 26 pence £59,392.50
f)	Date of the transaction	15 April 2020
g)	Place of the transaction	XLON

1	Details of the person discharging managerial responsibilities / person closely associated
a)	Name	Gordon Wylie
2	Reason for the notification
a)	Position / status	Senior Independent Non-Executive Director
b)	Initial notification / amendment	Initial notification
3	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name	Chaarat Gold Holdings Limited
b)	Legal entity identifier	213800T2A5CV84VTFJ70
4	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument	Ordinary shares of US$0.01 each
	Identification code	VGG203461055
b)	Nature of the transaction	Acquisition by way of a placing
c)	Currency	GBP
d)	Price(s) and volume(s)		Price(s)	Volume(s)
			26p	117,262
e)	Aggregated information · Aggregated volume · Aggregated price · Aggregated total	117,262 26 pence £30,488.15
f)	Date of the transaction	15 April 2020
g)	Place of the transaction	XLON

1	Details of the person discharging managerial responsibilities / person closely associated
a)	Name	Christopher Eger
2	Reason for the notification
a)	Position / status	Chief Financial Officer
b)	Initial notification / amendment	Initial notification
3	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name	Chaarat Gold Holdings Limited
b)	Legal entity identifier	213800T2A5CV84VTFJ70
4	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument	Ordinary shares of US$0.01 each
	Identification code	VGG203461055
b)	Nature of the transaction	Acquisition by way of a placing
c)	Currency	GBP
d)	Price(s) and volume(s)		Price(s)	Volume(s)
			26p	106,602
e)	Aggregated information · Aggregated volume · Aggregated price · Aggregated total	106,602 26 pence £27,716.50
f)	Date of the transaction	15 April 2020
g)	Place of the transaction	XLON

1	Details of the person discharging managerial responsibilities / person closely associated
a)	Name	Darin Cooper
2	Reason for the notification
a)	Position / status	Chief Operating Officer
b)	Initial notification / amendment	Initial notification
3	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name	Chaarat Gold Holdings Limited
b)	Legal entity identifier	213800T2A5CV84VTFJ70
4	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument, type of instrument	Ordinary shares of US$0.01 each
	Identification code	VGG203461055
b)	Nature of the transaction	Acquisition by way of a placing
c)	Currency	GBP
d)	Price(s) and volume(s)		Price(s)	Volume(s)
			26p	106,602
e)	Aggregated information · Aggregated volume · Aggregated price · Aggregated total	106,602 26 pence £27,716.50
f)	Date of the transaction	15 April 2020
g)	Place of the transaction	XLON

 

END

 

 

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