Subscription to Raise US$400,000 Gross

RNS Number : 4058M

Sula Iron & Gold PLC

13 October 2016

 

 13 October 2016

Sula Iron & Gold plc

("Sula" or the "Company")

Subscription to Raise US$400,000 Gross

Proposed Appointment of new CEO and Non-Executive Director

Proposed Grant of Warrants and Options

Sula Iron & Gold plc, a multi-commodity exploration company focused on Sierra Leone, announces that it has conditionally raised US$400,000 (before expenses) through a subscription for 304,642,410 new ordinary shares of 0.1p each in the Company ("New Ordinary Shares") (the "Subscription Shares") at a price of 0.1p per Subscription Share (the "Subscription Price") (the "Subscription").

The Subscription Shares are being subscribed for by Madini Occidental Ltd ("MO"), a private company incorporated in the Republic of Seychelles, which is currently owned by Madini Minerals ("Madini") and Ian Schofield who are interested in 75.0 per cent. and 25.0 per cent. of its issued share capital respectively.

Madini is a privately owned enterprise, incorporated in Mauritius, formed by mining professionals with a focus on acquiring stakes in, and applying its extensive technical and commercial capabilities to, African based advanced exploration and development-stage projects.

Ian Schofield is a private high-net worth investor with experience in investing in natural resources companies. Ian Schofield is also currently interested in 9.2 per cent. of the issued share capital of Madini.

In lieu of any commission payable in cash in relation to the Subscription, Sula has agreed, subject to receipt of the entire Subscription proceeds, to issue a further 15,232,120 fully paid New Ordinary Shares (the "Commission Shares"), together with the Commission Warrants (as described below) to Madini or its nominated subsidiary.

Subject to admission to trading on AIM, the Subscription Shares and Commission Shares will represent, in aggregate, approximately 26.16 per cent. of the Company's enlarged issued share capital. The Subscription Price equates to the prevailing closing mid-market price of the Company's ordinary shares of 0.1p per ordinary share on 12 October 2016 (being the latest practicable business day prior to the date of this announcement).

The Subscription will be completed in two equal tranches, with the first tranche of US$200,000 having been received by the Company (the "First Tranche Funding") and the second tranche of US$200,000 having been dispatched yesterday and expected to be received by the Company today (the "Second Tranche Funding"). The Subscription Shares will also be issued, subject to admission to trading on AIM ("Admission"), in two tranches, with the first tranche of 152,321,205 Subscription Shares to be issued on 14 October 2016 (the "First Tranche Shares") and the second tranche of 152,321,205 Subscription Shares to be issued following receipt by the Company of the Second Tranche Funding (the "Second Tranche Shares") along with the Commission Shares, the Subscription Warrants and the Commission Warrants (as described below).

Application has been made to the London Stock Exchange for the First Tranche Shares, the Second Tranche Shares and the Commission Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in the First Tranche Shares will commence at 8.00 a.m. on 14 October 2016 and in the Second Tranche Shares and the Commission Shares at 8.00 a.m. on or around 18 October 2016.

Following the issue of the abovementioned First Tranche Shares, the Company's total issued share capital will consist of 1,055,003,129 ordinary shares with voting rights.  The Company does not hold any ordinary shares in treasury and accordingly there are no voting rights in respect of any treasury shares. The First Tranche Shares will be fully paid and will rank pari passu in all respects with the Company's existing ordinary shares.

On Admission of the First Tranche Shares, the above figure of 1,055,003,129 ordinary shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, Sula under the Financial Conduct Authority's Disclosure and Transparency Rules.

Following the issue of the abovementioned Second Tranche Shares and the Commission Shares, the Company's total issued share capital will consist of 1,222,556,454 ordinary shares with voting rights. The Second Tranche Shares and the Commission Shares will be fully paid and will rank pari passu in all respects with the Company's existing ordinary shares.

On Admission of the Second Tranche Shares and the Commission Shares, the above figure of 1,222,556,454 ordinary shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, Sula under the Financial Conduct Authority's Disclosure and Transparency Rules.

The net proceeds of the Subscription will be used by Sula to advance its Ferensola Gold Project in northern Sierra Leone and for general working capital purposes.

Proposed Appointment of Directors

Subject to completion of, inter alia, the requisite regulatory approvals, two representatives of Madini, being Roger Murphy and a further individual to be nominated by Madini in due course, will join the board of Sula as directors (the "Proposed Directors"). Roger Murphy has recently joined and invested in Madini.

It is proposed that Roger Murphy will assume the role of Chief Executive Officer of Sula in place of Sula's Founder, Nick Warrell, who shall assume the position of the Company's Chief Operating Officer, and that the second nominee will join the board of Sula as a Non-Executive Director. A further announcement regarding these proposed Board changes will be made in due course.

Role of the Proposed Directors and Madini

The Proposed Directors, together with Madini, will be responsible, along with the existing directors, for advancing the Company's flagship Ferensola Gold Project through the provision of strategic and operational advice and by securing funding and/or a strategic or joint venture partner.  The Proposed Directors will lead Sula's capital markets and financial communications with the intent of raising Sula's profile amongst investors.

Proposed Grant of Warrants and Options

Subject to receipt of the Second Tranche Funding, Sula will issue 304,642,410 warrants to MO to subscribe for New Ordinary Shares at a price of 0.24p per share, exercisable for a period of five years from the date of grant (the "Subscription Warrants").

In lieu of any commission payable in cash in relation to the Subscription, and in addition to the abovementioned Commission Shares, Sula will also, subject to receipt of the entire Subscription proceeds, issue 15,232,120 warrants to Madini or its nominated subsidiary to subscribe for New Ordinary Shares, exercisable at a price of 0.1p per share for a period of five years from the date of grant (the "Commission Warrants").

Upon completion of the Subscription, the existing directors of Sula (the "Current Directors") will be granted options to subscribe for New Ordinary Shares, as further detailed in the table below (the "New Current Director Options"):

Current Director	Number of existing warrants and/or options held	New options to be granted to the Current Director	Total options and/or warrants held post grant
Nick Warrell	15,000,000	25,000,000	40,000,000
Matt Wood	8,323,691	15,000,000	23,323,691
Howard Baker	17,000,000	15,000,000	32,000,000

The New Current Director Options will be exercisable in three equal tranches, insofar as is possible, at 0.2p, 0.3p and 0.4p per New Ordinary Share for a period of five years from the date of grant.

Upon completion of the Subscription and completion of the appointment of the Proposed Directors, the Proposed Directors will be granted options to subscribe for New Ordinary Shares, as further detailed in the table below (the "Proposed Director Options"):

Proposed Director	Number of existing warrants and/or options held	Options to be granted to the Proposed Director	Total options held post grant
Roger Murphy	-	15,000,000	15,000,000
Second nominee of Madini	-	5,000,000	5,000,000

The Proposed Director Options will be exercisable in three equal tranches, insofar as is possible, at 0.2p, 0.3p and 0.4p per New Ordinary Share for a period of five years from the date of grant. The Proposed Director Options will be issued directly to Madini or its nominated subsidiary.

City Code on Takeovers and Mergers (the "City Code")

Under Rule 9 of the City Code (to which Sula is subject), any person who acquires, whether by a series of transactions over a period of time or not, an interest in shares of a company which (when taken together with shares in which any person(s) acting in concert with him are interested) carry 30 per cent. or more of the voting rights of that company, or any person, together with persons acting in concert with him, who is interested in shares which, in aggregate, carry not less than 30 per cent. of the voting rights of a company but does not hold shares carrying more than 50 per cent. of such voting rights, and such person, or any other person acting in concert with him, acquires an interest in any other shares which increases the percentage of shares carrying voting rights in which he is interested, such person will normally be required to make an offer to the holders of shares in that company to acquire all of the shares in that company not held by him or persons acting in concert with him.  Such an offer would have to be made in cash, or be accompanied by a cash alternative, at not less than the highest price paid for any interest in existing shares by that person or by any person acting in concert with him within the 12 months prior to the announcement of such offer.

Following completion of the Subscription, MO will hold, in aggregate, approximately 26.16 per cent. of the Company's enlarged share capital. The Proposed Directors are presumed to be acting in concert with Madini, MO and Ian Schofield, for the purposes of the City Code (together, the "Concert Party").

Following completion of the Subscription, Madini and Ian Schofield (via MO and Madini) will be interested, in aggregate, in 19.62 per cent. and 8.35 per cent. respectively of the Company's then enlarged issued share capital.

If any of the Subscription Warrants, the Commission Warrants or the Proposed Director Options (together, the "Concert Party Dilutive Securities") are exercised and satisfied through the issue of New Ordinary Shares, it is possible that the resulting issue of New Ordinary Shares would result in the Concert Party's aggregate shareholding (together with shares in which any other person(s) deemed by the Takeover Panel to be acting in concert (as defined in the City Code) with it are interested) being equal to or greater than 30.0 per cent. of the Company's then enlarged issued share capital and, pursuant to Rule 9 of the City Code, the Concert Party would then be obliged to make a mandatory offer in cash (or accompanied by a cash alternative) for the entire issued ordinary share capital not held by it (or any person(s) deemed by the Takeover Panel to be acting in concert with it) at the highest price paid by the Concert Party (or any person(s) deemed by the Takeover Panel to be acting in concert with it) for any interest in ordinary shares acquired in the previous 12 months.

Madini and MO have committed not to exercise their abovementioned proposed warrants to the extent that it would result in the Concert Party's aggregate interest in Sula increasing to 30.0 per cent. or more of Sula's issued ordinary share capital. For illustrative purposes only, if all of the Concert Party Dilutive Securities were to be exercised, Sula would issue the respective members of the Concert Party with, in aggregate, 339,874,530 New Ordinary Shares.  Accordingly, for illustrative purposes only, based on the above, ceteris paribus, the Concert Party would then hold, in aggregate, 659,749,060 ordinary shares, representing approximately 42.23 per cent. of the issued share capital as enlarged by the issue of New Ordinary Shares pursuant to the exercise of the Concert Party Dilutive Securities and the Concert Party would then be obliged to make a mandatory offer in cash as described above.

Update on Joint Venture discussions

In its unaudited consolidated Interim Results for the six months ended 31 March 2016, Sula announced that it was in advanced discussions with respect to securing a potential joint venture partner to assist with the development of its Ferensola Gold Project. As a result of the transaction with MO, these discussions have now been terminated.

Adviser warrants

The Company also announces that the exercise price of a warrant over 3,568,485 shares previously issued to an adviser to the Company has been amended such that it is now exercisable at a price of 0.1p per share.

Nick Warrell, Chief Executive Officer of Sula, commented:

"We are extremely pleased with the continued interest our gold project is generating. We look forward to working with the Proposed Directors and Madini in advancing the Company's Ferensola Gold Project and look forward to updating the market with further news in due course."

Roger Murphy of Madini, commented:

"Madini is delighted to partner with Sula to assist with the development of its very exciting Ferensola Gold Project in Sierra Leone. We believe that with the additional skills that we bring to Sula and our track record of developing African mining projects, Madini will complement the Sula team enabling us to unlock the undoubted value of the Ferensola Gold Project."

**ENDS**

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

For further information please visit www.sulaironandgold.com or contact the following:

Sula Iron & Gold plc Nick Warrell / Matt Wood / Howard Baker [phone] Strand Hanson Limited (Financial and Nominated Adviser) Simon Raggett / James Harris / James Dance [phone] VSA Capital Limited (Broker) Andrew Raca [phone]

For further information on Madini Minerals please visit www.madiniminerals.com.

 

END

 

 

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