TIDMGCAT
RNS Number : 5976N
Caracal Gold PLC
23 January 2023
Caracal Gold plc / EPIC: GCAT / Market: Main / Sector:
Mining
23 January 2023
Caracal Gold plc ('Caracal' or the 'Company')
Corporate Update, Q3 and Q4, 2022 Operations Summary
Caracal Gold plc, the East African gold producer with over
1,300,000oz JORC-compliant gold resources, provides a corporate
update and progress report on its operations and exploration
activities for the quarters ended 30 September 2022 ('Q3 2022') and
31 December 2022 ('Q4 2022'); specifically, the Company's
Kilimapesa Gold Mine and Processing Operation in Kenya
('Kilimapesa' or the 'Project'), and the high grade, shallow gold
Nyakafuru Gold Project in Tanzania.
Corporate Update
Financing
With regards to its financing arrangements, the Company
announced on 10 January 2023 that OCIM Metals and Mining SA
('OCIM') would not be proceeding with its previously announced
funding. This was announced immediately upon written confirmation
from OCIM. As a result of this, Philoro Global Trading AG
('Philoro') did not advance the funding by 31 December 2022 as was
expected (see RNS dated 12 December 2022). Philoro requested
revised operational and financial plans which took into
consideration this change. This work has been completed and
presented to Philoro. The Company has been informed that Philoro
remains committed to the financing and is working with the Company,
existing shareholders, and other institutions in agreeing a
financing package to replace the previous funding. The various
parties involved are making good progress on securing the required
funding and will update the market as soon as is appropriate.
Regulatory Disclosure
On 22 June 2022, the Company entered a debt finance arrangement
for a total value of $1,500,000 with Mill End Ltd ("Mill End"), the
details of which are below (the "Mill End Financing").
Mill End Financing Key Terms:
-- Signature Date: 22 June 2022.
-- Principal Amount: $1,500,000.
-- The total amount payable under the Mill End Financing was to
be dependent on how quickly the Company was able to repay the Mill
End Financing:
o First repayment milestone: 90 days after Signature Date (20
September 2022), 120% of the Principal Amount ($1,800,000)
o Second repayment milestone: 91-120 days after Signature Date
(between 21 Sept 2022 and 20 October 2022) 126.667% of Principal
Amount ($1,900,000)
o Third repayment milestone 121 to 150 days after Signature Date
(between 21 October and 19 November 2022) 133.333% of Principal
Amount ($2,000,000)
-- Post the 150 days Mill End has the right to convert into new
ordinary shares at 80% of the VWAP of the Caracal ordinary shares
on the business day prior to the conversion request.
-- Mill End has been granted warrants to subscribe for ordinary
shares, exercisable for three years from the date of signature, at
an exercise price of 0.8 pence. The number of shares will be
calculated by dividing $500,000, converted into pounds sterling at
a rate agreed between the parties or the spot exchange rate, by 0.8
pence.
-- As part of the transaction, Robert McCrae and Gerard Kisbey
Green who are directors of the Company, entered into Director's
undertakings whereby security over 98,500,000 and 55,300,000
ordinary shares respectively in the Company was granted in favour
of Mill End. Robert McCrae and Gerard Kisbey Green remain the
beneficial owners of the shares through Mansa Capital Ltd and
Theseus Enterprises Ltd respectively, and retain full voting
rights.
These funds were due to be paid back from the proceeds of the
recent financings. However, with the long delays and subsequent
withdrawal of OCIM from the previously anticipated financing, it
has been necessary to renegotiate the terms of the Mill End
Financing. The renegotiated terms of the Mill End Financing were to
contain an equity element in Mill Hill's favour. However, the
Company was unable to issue Mill Hill with shares which would be
admitted to trading due to the limitation placed upon it of issuing
20% of shares of the same class over a 12-month period without a
prospectus, the Company having already issued or agreed to issue a
material number of shares in the period.
Therefore, to allow the renegotiation to proceed, the following
has taken place. Mr Robert McCrae borrowed 17,208,742 shares from a
shareholder of the Company. The borrowed shares were transferred to
Mill End. Mr McCrae has agreed to repay the shareholder 17,208,742
shares plus an extra 1,720,874 shares, being an additional 10% at a
future date to be agreed. Therefore, at the date of this
announcement Mr McCrae owns 98,500,000 shares, of which 18,929,616
are to be transferred to the lender at a future mutually agreeable
date.
Additionally, it has been requested that Mr McCrae transfer
25,000,000 shares to Mill End. It is anticipated this transfer will
occur shortly and the Company will repay Mr McCrae for these
shares.
The Company and Mill End are in the process of discussing an
amendment to the transaction to address all above issues.
The Board believe this action was taken in the best interests of
the Company and its shareholders and that the Directors
undertakings given by Robbie McCrae and Gerard Kisbey-Green
indicate their confidence in the operations and the ability to
raise the required financing.
Board Composition
The Company hopes to appoint Mr. Simon Grant Rennick as
Executive Chairman, subject to certain final commercial
negotiations and legal formalities.
Mr Grant Rennick is a graduate of the Cambourne School of Mines.
His expertise encompasses not only mining and minerals but also
metals, agriculture, and property. He has managed mining companies,
both public and private, in Uganda, Malawi, Kenya, Mexico and
Botswana; metal trading businesses in Bermuda and in the UK; was a
co-founder of Industrial Mineral Finance House which provides
consultancy services covering all aspects of the industrial
minerals' sector; and established a property development business
(since sold).
The Company hopes to announce his formal appointment in due
course. In the meantime, Mr Grant Rennick has agreed attend board
meetings and provide other services to the Company as "Chairman
Designate".
Corporate Governance
Due to identified shortcomings, the Board has asked the Chairman
Designate to initiate a comprehensive review of its corporate
governance, regulatory compliance and communications policies in
order to strengthen internal procedures. This is expected to be a
wide-ranging review and will include a review of the board
structure, including the mix of executives and non-executives, and
any requirements for different skill sets to ensure a robust and
efficacious board structure. Furthermore, a review of all corporate
governance-related matters, practices and policies and a review of
all board sub-committees, will be conducted.
The Board has decided that the Company's financial advisor, VSA,
as well as an independent firm of solicitors, will be consulted to
assist the Chairman Designate in this review and the Board expects
all the above to be concluded as soon as practically possible, but
in Q1 2023.
Q3 & Q4 2022 OPERATIONS SUMMARY
HIGHLIGHTS
-- Ongoing work to build production at flagship Kilimapesa Gold Mine:
o Continue to optimize mine plan and renewed focus on process
efficiencies.
o Realised a total 806 ounces in gold sales in Q3 and 835 ounces
in Q4.
o Reviewed the exploration programmes to further strengthen the
current Mineral Resource Estimate ('MRE'):
-- To date, 104 RC holes accounting for 10,444m and 21 DD holes
accounting for 3,660.m have been drilled at Kilimapesa Hill, Maghor
and Vim Rutha.
-- In Q4, seven trenches completed for a meterage total of 420m;
five at Kilimapesa West Hill, two in Vim Rutha.
-- Due to the delay in funding, activities around the expansion
and operations have slowed down pending receipt of funds.
-- Excellent progress at Nyakafuru Gold Project in Tanzania:
o Completed Phase 1 exploration project on schedule and on time;
and
o Commencing 2nd phase drill programme to validate both
historical drill results and new interpretation and collect
metallurgical samples.
Robbie McCrae, CEO of Caracal, said,
"The Company welcomes the appointment of Mr Simon Grant Rennick
as Chairman Designate and looks forward to him taking on the role
of Executive Chairman. Simon's extensive experience in exploration
and mining projects in Africa as well as his experience as Chairman
of various listed companies will strengthen the Board
significantly. Furthermore, I look forward to his leadership in
conducting the various internal reviews in progress.
"Q3 and Q4 saw Caracal advance several work programmes at its
flagship asset, the Kilimapesa Gold Mine in Kenya, where we are
focused on increasing both mining and processing capacity to lift
production to 24koz Au per annum. While the delay in funding has
slowed activities, in addition to the development of the mine plan
and ongoing work at the new processing plant, we are also analysing
results from regional exploration programmes to grow our resources
and further strengthen the project's economics.
"The Nyakafuru Gold Project in Tanzania, which has proven
high-grade, shallow gold resources amenable to conventional open
pit with the potential to produce 50,000oz per annum, is equally
exciting. Having completed the acquisition, we are delighted to be
progressing targeted drilling programmes to validate historic
positive drill results and expand the current JORC-Compliant
resource of 658,751oz at 2.08g/t.
"Our timing to build production/sales could not be better given
the strong gold price, which market commentators think will
continue to gain traction into 2023; indeed, the Bank of America
Securities suggests that gold prices could top $2,000 oz up from a
current eight month high of $1,876 oz. We look forward to updating
shareholders further on our progress."
DETAILS
KENYA
Operations
Q1-22 Q2-22 Q3-22 Q4-22
Mined tons 44,846 42,233 64,639 35,989
----------------- ----------------- ----------------- ----------------
Treated Tons 54,121 58,722 53,709 19,613
----------------- ----------------- ----------------- ----------------
Smelted ounces
Au 1,266 746 806 835
----------------- ----------------- ----------------- ----------------
Stockpile 22,744 @ 1,72g/t 22,757 @ 1,68g/t 18,757 @ 1.72g/t 7,715 @ 1.47g/t
tons
----------------- ----------------- ----------------- ----------------
-- In Q3, the plant processed a total of 23,790t at an average
grade of 1.61g/t through the CIL circuit and a further 29,919t at
an average grade of 0.99g/t through the heap leach circuit to
realise a total of 806 ounces in gold sales.
-- In Q4, the plant processed a total of 19, 613t at an average
grade of 1.80g/t through the CIL circuit and a further 6,859t at an
average grade of 0.86g/t through the heap leach circuit to realise
a total of 835 ounces in gold sales.
-- Plant 2 was stopped on 1 August 2022 as the project of
washing fines in the circuit proved to be uneconomic. Major factors
were the low tons washed to the CIL and the insignificant upgrading
of the fines.
-- The heap leach pads reach design capacity and therefore Plant 3 was stopped in December 2022.
-- Gold figures accountability (ratio of sold to produced)
increased to 99% in September from an average of 50% for July and
August. This was attributed to the installations of weightometers
in the plant and the flowmeter in the Plant 3 CIS circuit,
standardisation of sampling and sample handling procedures and the
increase in Quality Control checks in the new laboratory. Gold
figure accountability has subsequently remained stable at these
rates.
-- Tailings Storage Facility construction and monitoring ongoing and according to schedule.
Exploration
-- Latest results from drilling on Kilimapesa Hill confirmed the
lateral and depth extensions as targeted on Kilimapesa Hill.
-- Completed a total of 10 DD holes and 22 RC holes on Vim Rutha
prospect, which extends more than 4km into the exploration licence
and is located a few hundred metres south of Kilimapesa Hill, for a
total respectively of 1,620.9m and 1,943m.
-- DD drilling confirmed the existence of a mineralised
structure over 1.5km parallel to the Kilimapesa Hill deposit while
samples from the RC drilling are currently being analysed.
-- A systematic trenching campaign commenced in Q3 to define the
surface expression of the Vim Rutha mineralisation and samples are
being analysed.
-- During Q4, a total of seven trenches were completed for a
meterage of 420m. Five trenches at the Kilimapesa West Hill
prospect and two in Vim Rutha prospect. These trenches were
positioned to determine both the strike and the extent of
mineralisation on Kilimapesa West Hill and Vim Rutha prospects.
-- Continued underground DD with a total of 33.32m being drilled in two boreholes in Adit D.
-- To date, 104 RC holes accounting for 10,444m and 21 DD holes
accounting for 3,660.m have been drilled at Kilimapesa Hill, Maghor
and Vim Rutha.
Safety, Health, and Environment
-- Continued focus on environmental plans with targets hit,
annual audit conducted, and environmental licence obtained in
relation to exploratory drilling, open-pit mining, and heap
leach.
-- Open Pit and Exploration Environmental Impact Assessment submitted to NEMA in Q4.
-- All statutory audits, including Fire Safety, Occupational
Safety and Health, and Environmental, up to date as of 31 December
2022.
-- Ongoing support of employees with various training programmes completed and underway.
-- One significant accident in Q3 - the employee received
immediate care, is fully recuperated, and has resumed work.
TANZANIA - NYAKAFURU GOLD PROJECT
-- Completed the Phase 1 exploration project on schedule and on
time - the final report including conclusions is being
finalised.
-- Completed several fieldwork programmes including structural
analysis of Voyager and Mentelle and planning of location of drill
holes for the 2nd phase drill programme.
-- Completed additional working including the upgrading of the
Nyakafuru camp, reviewing of potential in the licences and
extensions and advanced drill tender process.
**ENDS**
For further information visit www.caracalgold.com or contact the
following:
Caracal Gold plc info@caracalgold.com
Robbie McCrae
Clear Capital Markets Ltd
Joint Broker +44 203 897 0981
Keith Swann / Jonathan Critchley +44 203 869 6086
-------------------------------
VSA Capital Ltd
Financial Adviser and Joint
Broker
Andrew Raca (Corporate Finance) +44 203 005 5000
-------------------------------
St Brides Partners Ltd caracal@stbridespartners.co.uk
Financial PR
Charlotte Page / Isabel de Salis
/ Isabelle Morris
-------------------------------
DGWA, the German Institute info@dgwa.org
for Asset and
Equity Allocation and Valuation
European Investor and Corporate
Relations Advisor
Katharina Löckinger
-------------------------------
Notes
Caracal Gold plc is an expanding East African focused gold
producer with a clear path to grow production and resources both
organically and through strategic acquisitions. Its aim is to
rapidly increase production to +50,000ozs p.a. and build a JORC
compliant resource base of +3Moz. The company is progressing a
well-defined mine optimisation strategy at its 100% owned
Kilimapesa Gold Mine in Kenya, where there is significant mid-term
expansion potential and the ability to increase gold production to
24,000oz p.a. and the resource to +2Moz (current JORC compliant
resources of approx. 706,000oz). Alongside this, Caracal is
undertaking a targeted exploration programme at the Nyakafuru
Project in Tanzania, which has an established high-grade shallow
gold resource of 658,751oz at 2.08g/t contained within four
deposits over 280 km2 and appears amenable to development as a
large scale conventional open pit operation.
Caracal's experienced team has a proven track record in
successfully developing and operating mining projects throughout
Africa. The Company is a responsible mining and exploration company
and supports the positive social and economic change that it
contributes to the communities in the regions that it operates. It
is a proudly East African-focused company: it buys locally, employs
locally, and protects the environment and its employees and their
families' health, safety, and wellbeing.
Caracal's shares are quoted on the Main Market of the London
Stock Exchange (LON: GCAT) and on the Frankfurt Stock Exchange
(FSE: 6IK). The Company is also in the process of listing on the
Nairobi Securities Exchange.
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