TIDMASO
RNS Number : 8025K
Avesoro Resources Inc.
02 September 2019
September 2, 2019
Avesoro Resources Inc.
TSX: ASO
AIM: ASO
Loan Agreement and Update on Acquisition Proposal
New Working Capital Facility
Further to the announcement of August 20, 2019, the Company
announces that it has entered into a loan agreement in connection
with an additional working capital facility (the "New Facility") of
up to US$5,000,000 with Avesoro Jersey Limited ("AJL") to assist
with satisfying the Company's near term cashflow needs.
The Company has drawn down the entire amount available under the
New Facility and the funds have been made available for general
working capital purposes. The New Facility is unsecured and ranks
subordinated to the Company's existing facilities. Interest will be
charged on the drawn amount at a fixed rate of 3.0 per cent per
annum. The New Facility is due to be repaid in full no later than
12 months following drawdown and has no early repayment penalty.
Following drawdown of the New Facility, the balance of working
capital loans provided by AJL is US$42,235,025.
The Company has agreed to the following conditions in relation
to the New Facility:
-- the Company will not incur any additional indebtedness or
issue any equity interests in the Company until completion of its
next Annual General Meeting without the unanimous approval of the
Company's board of directors (the "Board");
-- the Company will not file or initiate any insolvency
proceedings until completion of its next Annual General Meeting
without the unanimous approval of the Board;
-- the Company will not terminate the employment or appointment
of its Chief Executive Officer or Chief Financial Officer until
completion of its next Annual General Meeting without the unanimous
approval of the Board;
-- following the formal commencement of the Takeover Bid (as
defined below), upon the earlier of (i) the termination of the
Takeover Bid in accordance with its terms because the minimum
tender condition has not been satisfied or because another
condition has not been satisfied due to a force majeure or other
event which materially and adversely affects the Company, and (ii)
January 1, 2020, AJL will have the right to appoint one additional
director (who need not be independent) to the Board and to appoint
two further independent directors to the Board. Each appointment
will be subject to compliance with applicable laws, the on-boarding
process, and the approval of the Company's nominated adviser.
The effect of the final condition listed above is to amend the
Relationship Agreement between AJL and the Company by potentially
increasing the number of directors appointed to the Board by
AJL.
AJL has reiterated its commitment to continue to support the
financial needs of the Company while the Takeover Bid is ongoing
and will not seek any changes to the Board (save as set out above)
during that time.
The Company also announces that it has received loan deferrals
as follows:
-- US$10 million loan principal and associated interest due to
AJL under an earlier working capital facility from the due date of
March 13, 2020 to October 31, 2020;
-- Deferral of payment obligations under the equipment finance
loans from Mapa Insaat Ve Ticaret AS, a related party, until
October 31, 2020 of which c.US$5.5m and EUR2.5m had been overdue
and a further c.US$5.2m and EUR2.7m would have fallen due for
payment before October 31, 2020.
The Company continues discussions with its senior secured
lenders as announced on August 20, 2019.
Related Party Transaction (AIM Rule 13)
AJL is a substantial shareholder of the Company (72.9% of the
Company's issued and outstanding Common Shares). As a result,
entering into the New Facility and the consequent amendments to the
Relationship Agreement constitute related party transactions under
the AIM Rules for Companies. The independent directors of the
Company, being Mr David Netherway, Mr Jean-Guy Martin and Mr Loudon
Owen consider, having consulted with the Company's nominated
adviser, that the terms of the New Facility and amendments to the
Relationship Agreement are fair and reasonable insofar as the
Company's shareholders are concerned.
The entry into the New Facility is also a related party
transaction for the purposes of Multilateral Instrument 61-101 -
Protection of Minority Shareholders in Special Transactions ("MI
61-101") in Canada. The Company is relying on the exemption
available under section 5.7(f) of MI 61-101 from the minority
shareholder approval requirements. The New Facility is not a type
of related party transaction that is subject to the formal
valuation requirement under MI 61-101.
AJL Takeover Bid
The Company refers to the announcement made by AJL concurrently
with this announcement pursuant to which AJL has announced its
intention to launch a binding takeover bid offer to acquire all of
the issued and outstanding Common Shares that it does not already
own at a price of GBP1 per Common Share (the "Takeover Bid") in
compliance with National Instrument 62-104 - Take-Over Bids and
Issuer Bids ("NI 62-104") and MI 61-101. The Company understands
that the lock up agreements entered into by AJL and holders of
12.9% of the outstanding Common Shares will continue to apply to a
takeover bid transaction structure.
As the Takeover Bid will constitute an "insider bid" within the
meaning of MI 61-101, AJL is required to obtain a formal valuation
within the meaning of MI 61-101. Further, the special committee of
independent directors of the Company (the "Special Committee") is
required to select and engage an independent valuator at AJL's
expense; supervise the preparation of a formal valuation by that
independent valuator; and use its best efforts to ensure that the
formal valuation is completed and provided to AJL in a timely
manner. AJL has agreed that it will use its reasonable endeavours
to commence a formal Take-Over Bid by circular as soon as it has
received the formal valuation and in such time as would allow the
Takeover Bid to complete by January 1, 2020.
In light of the notification from AJL that it intends to
commence the Takeover Bid, the Special Committee has determined it
appropriate to take steps to shorten the deposit period for
acceptance of the bid from 105 days to 35 days from the date of the
bid (including the delivery of a formal valuation) following the
formal commencement of the Takeover Bid. The Special Committee has
notified AJL of its intention to shorten the deposit period to
facilitate the Takeover Bid given the shareholder support for the
Takeover Bid (as evidenced by the lock up agreements announced on
August 20, 2019) and the Company's current financial and operating
status.
Notwithstanding the above, it is important to note that although
AJL has announced its intention to launch a binding Take-Over Bid
it is under no formal legal obligation to do so.
Further announcements by the Company in respect of the Takeover
Bid will be made in due course.
Operational Update and Production Guidance
As announced on August 20, 2019, mining and processing
operations at the Youga Gold Mine have recommenced. Additional
heavy mining equipment ("HME") has begun to arrive on site, with
mining capacity now standing at 80% of the pre-security incident
level. Further HME mobilised by the mining contractor is expected
to arrive at site during September, with operations returning to
full capacity by the end of September.
At the New Liberty Gold Mine, pit dewatering continues to
progress, whilst the HME fleet remains focused on waste stripping.
It is now estimated that ore mining could recommence within the
next ten days with gold processing operations restarting shortly
thereafter.
Contact Information
Avesoro Resources Inc.
Geoff Eyre / Nick Smith
Tel: +44(0) 20 3405 9160
Camarco finnCap
(IR / Financial PR) (Nominated Adviser and Joint Broker)
Gordon Poole / Nick Hennis Christopher Raggett / Scott Mathieson
/ Camille Gochez
Tel: +44(0) 20 3757 4980 Tel: +44(0) 20 7220 0500
Berenberg Hannam & Partners
(Joint Broker) (Joint Broker)
Matthew Armitt / Detlir Elezi Rupert Fane / Andrew Chubb / Ernest
Tel: +44(0) 20 3207 7800 Bell
Tel: +44(0) 20 7907 8500
About Avesoro Resources Inc.
Avesoro Resources is a West Africa focused gold producer and
development company that operates two gold mines across West Africa
and is listed on the Toronto Stock Exchange ("TSX") and the AIM
market operated by the London Stock Exchange ("AIM"). The Company's
assets include the New Liberty Gold Mine in Liberia and the Youga
Gold Mine in Burkina Faso.
For more information, please visit www.avesoro.com
Certain information communicated in this announcement was, prior
to its publication, inside information for the purposes of Article
7 of Regulation 596/2014.
Forward Looking Statements
Certain information contained in this press release constitutes
forward looking information or forward-looking statements within
the meaning of applicable securities laws. This information or
statements may relate to future events, facts, or circumstances or
the Company's future financial or operating performance or other
future events or circumstances. All information other than
historical fact is forward looking information and involves known
and unknown risks, uncertainties and other factors which may cause
the actual results or performance to be materially different from
any future results, performance, events or circumstances expressed
or implied by such forward-looking statements or information. Such
statements can be identified by the use of words such as
"anticipate", "plan", "continue", "estimate", "expect", "may",
"will", "would", "project", "should", "believe", "target",
"predict" and "potential". No assurance can be given that this
information will prove to be correct and such forward looking
information included in this press release should not be unduly
relied upon. Forward looking information and statements speak only
as of the date of this press release.
Forward looking statements or information in this press release
include statements regarding the Takeover Bid and the transactions
contemplated thereby.
In making the forward looking information or statements
contained in this press release, assumptions have been made
regarding, among other things: general business, economic and
mining industry conditions; interest rates and foreign exchange
rates; the continuing accuracy of Mineral Resource and Reserve
estimates; geological and metallurgical conditions (including with
respect to the size, grade and recoverability of Mineral Resources
and Reserves) and cost estimates on which the Mineral Resource and
Reserve estimates are based; the supply and demand for commodities
and precious and base metals and the level and volatility of the
prices of gold; market competition; the ability of the Company to
raise sufficient funds from capital markets and/or debt to meet its
future obligations and planned activities and that unforeseen
events do not impact the ability of the Company to use existing
funds to fund future plans and projects as currently contemplated;
the stability and predictability of the political environments and
legal and regulatory frameworks including with respect to, among
other things, the ability of the Company to obtain, maintain, renew
and/or extend required permits, licences, authorizations and/or
approvals from the appropriate regulatory authorities; that
contractual counterparties perform as agreed; and the ability of
the Company to continue to obtain and retain qualified staff
(including employees and contractors) and equipment in a timely and
cost-efficient manner to meet its demand.
Actual results could differ materially from those anticipated in
the forward-looking information or statements contained in this
press release as a result of risks and uncertainties (both foreseen
and unforeseen) and should not be read as guarantees of future
performance or results and will not necessarily be accurate
indicators of whether or not such results will be achieved. These
risks and uncertainties include customary completion risks for
transactions similar to the Takeover Bid, and it is specifically
noted that AJL has not yet formally commenced the Takeover Bid and
there is no guarantee that AJL will do so, or that if commenced it
will be completed on the terms set out in this press release or at
all. Other risks are those normally incidental to exploration and
development of mineral projects and the conduct of mining
operations (including exploration failure, cost overruns or
increases, and operational difficulties resulting from plant or
equipment failure, among others); the inability of the Company to
obtain required financing when needed and/or on acceptable terms or
at all; risks related to operating in West Africa, including
potentially more limited infrastructure and/or less developed legal
and regulatory regimes; health risks associated with the mining
workforce in West Africa; risks related to the Company's title to
its mineral properties; the risk of adverse changes in commodity
prices; the risk that the Company's exploration for and development
of mineral deposits may not be successful; the inability of the
Company to obtain, maintain, renew and/or extend required licences,
permits, authorizations and/or approvals from the appropriate
regulatory authorities and other risks relating to the legal and
regulatory frameworks in jurisdictions where the Company operates,
including adverse or arbitrary changes in applicable laws or
regulations or in their enforcement; competitive conditions in the
mineral exploration and mining industry; risks related to obtaining
insurance or adequate levels of insurance for the Company's
operations; that Mineral Resource and Reserve estimates are only
estimates and actual metal produced may be less than estimated in a
Mineral Resource or Reserve estimate; the risk that the Company
will be unable to delineate additional Mineral Resources; risks
related to environmental regulations and cost of compliance, as
well as costs associated with possible breaches of such
regulations; uncertainties in the interpretation of results from
drilling; risks related to the tax residency of the Company; the
possibility that future exploration, development or mining results
will not be consistent with expectations; the risk of delays in
construction resulting from, among others, the failure to obtain
materials in a timely manner or on a delayed schedule; inflation
pressures which may increase the cost of production or of
consumables beyond what is estimated in studies and forecasts;
changes in exchange and interest rates; risks related to the
activities of artisanal miners, whose activities could delay or
hinder exploration or mining operations; the risk that third
parties to contracts may not perform as contracted or may breach
their agreements; the risk that plant, equipment or labour may not
be available at a reasonable cost or at all, or cease to be
available or resign, or in the case of labour, may undertake strike
or other labour actions; the inability to attract and retain key
management and personnel; and the risk of political uncertainty,
terrorism, civil strife, or war in the jurisdictions in which the
Company operates, or in neighbouring jurisdictions which could
impact on the Company's exploration, development and operating
activities.
Although the forward-looking statements contained in this press
release are based upon what management believes are reasonable
assumptions, the Company cannot provide assurance that actual
results or performance will be consistent with these
forward-looking statements. The forward looking information and
statements included in this press release are expressly qualified
by this cautionary statement and are made only as of the date of
this press release. The Company does not undertake any obligation
to publicly update or revise any forward looking information except
as required by applicable securities laws.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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