21st Dec 2009 08:06
Central African Gold Plc / Ticker: CAN / Market: AIM / Sub-sector: Gold Mining
21 December 2009
Central African Gold Plc ('CAG' or 'the Company')
Corporate Update
The Board of directors of Central African Gold Plc, the AIM quoted gold mining and exploration company, ('the Board') is pleased to provide a corporate update on recent developments including, inter alia, the disposal of its Malian assets, an extension to its existing convertible loan notes and the issue of new convertible loan notes and the expected release of its financial results.
Highlights
Agreement to dispose of CAG's Malian assets to Colonial Resources Limited ('Colonial Resources') for a total consideration of up to US$5.0m
Extension of the repayment deadline applicable to the Convertible Loan Agreements (as defined in the circular to shareholders dated 27 March 2009) to 29 April 2011
New convertible loan notes issued, raising US$1.25 million (approximately £774,469)
Financial results to be published on or before 25 December 2009
General Meeting and Annual General Meeting ('AGM') to be convened shortly
CAG's acting Chairman and CEO Roy Pitchford said, "As all shareholders will be aware, 2009 has been particularly challenging for the Company. The Board has worked hard to ensure that the business has adequate funding in order to continue to operate its Zimbabwean gold mining operations and the Board believes that today's news represents a significant step forward in securing this objective.
"The funds raised by the sale of CAG's Malian assets, together with the new funds injected into the business by Investec Asset Management, Emerging Capital Partners and HBD Zim Investments, and the deferral of our obligations under the existing convertible loan agreements gives the Company the opportunity to develop its remaining assets and generate shareholder value.
"The Board would also like to take this opportunity to reiterate its contrition to all of the Company's stakeholders following the accounting difficulties that have so significantly delayed the release of the 2008 annual results and the 2009 interim results (together 'the Financial Reports') and undertakes to do all in its power to prevent such a situation occurring again. Nevertheless, whilst it remains the Board's belief that both sets of results will be announced shortly, the Board notes that should the Company not publish its Financial Reports by 25 December 2009, it may be mandatorily delisted pursuant to Rule 41 of the AIM Rules."
Malian Assets Disposal
The Company has today entered into a binding agreement to dispose of (i) its 80 per cent. equity interest in Mali Goldfields SARL, together with all net claims on loan account of the Company or any of its subsidiaries against Mali Goldfields SARL and (ii) its 80 per cent equity interest in Songhoï Resources SARL together with all net claims on loan account of the Company or any of its subsidiaries against Songhoï Resources SARL (together 'the Malian Assets') ('the Disposal') to Colonial Resources ('the Agreement') for a total consideration of up to US$5.0 million ('the Consideration'). As at 31 December 2008, the Malian Assets, which are early stage gold exploration assets, consisting, at 30 November 2009, of 18 prospective permits spanning circa 1,883km² located within the Kedougou-Kenieba window, a major Lower Proterozoic Birimian outlier on the north east margin of the West African Shield, were recorded as having a book value of £4.4 million, as at the year ended 31 December 2008, and profits of £749,000, for the year ended 31 December 2008 (of which most is attributable to gains on foreign exchange transactions).
The Consideration is made up of an initial non-refundable payment of US$0.6 million in cash, which is to be paid within 2 business days of the signing of the Agreement; a further US$3.4 million payable in cash to the Company on completion of the Disposal ('Completion') ('the Completion Payment'); and a further US$1.0 million contingent payment, which will only be payable to the Company in cash upon the achievement of a JORC compliant Indicated or Measured Resource of collectively at least 500,000 ounces gold in respect of the areas covered by the licences granted to each of Songhoï Resources SARL and Mali Goldfields SARL ('the JORC Payment').
Completion must occur on or before 3 March 2010 and is subject to, inter alia, CAG and Colonial Resources shareholder approval, and the completion of a capital raising by Colonial Resources to raise sufficient funds to satisfy the Completion Payment and the JORC Payment (if payable) and to seek shareholder approval for the necessary issue of equity. A Circular containing notice of the General Meeting to approve, inter alia the Disposal and associated matters, will be sent to CAG shareholders shortly.
CAG will use the Consideration, as it is received, to satisfy its general working capital requirements, to meet certain creditor balances that will fall due on Completion and to develop its Zimbabwean gold assets.
Convertible Loan Agreements
Investec Asset Management (Pty) Limited ('IAM') and ECP have agreed to extend the terms of the loans made available to the Company, as described in the circular sent to shareholders on 27 March 2009, amounting to US$2.2 million and US$1.8 million respectively. These loans now have a new maturity date of 29 April 2011 (extended from the earlier date of 14 April 2010 or within five days of the receipt of funds by the Company from the sale of its entire shareholding in Mali Goldfields SARL and Songhoï Resources SARL).
Additionally, CAG has entered into new Convertible Loan Agreements ('the New ECP and IAM Convertible Loan Agreements') with ECP and IAM, (together, 'the Lenders') and a new Convertible Loan Agreement (the 'New HBD Loan Agreement') with HBD Zim Investments Limited ('HBD'). The New ECP and IAM Convertible Loan Agreements and the New HBD Loan Agreement together total circa US$1.25 million (approximately £774,469) and amount to US$397,267 from HBD (approximately £246,168), US$705,070 from ECP (approximately £436,900) and US$147,662 from IAM (approximately £91,499). All loan amounts used the rate of exchange prevailing on the date of the New ECP and IAM Convertible Loan Agreement or the New HBD Loan Agreement, as relevant. The funds received by the Company under the New ECP and IAM Convertible Loan Agreements and the New HBD Loan Agreement incur interest at 10 per cent. per annum, compounded monthly in arrears with the full amount payable on the maturity date, 29 April 2011. There is no penalty for early repayment of the New ECP and IAM Convertible Loan Agreement or the New HBD Loan Agreement.
The terms of the New ECP and IAM Convertible Loan Agreements provide that the Lenders have the right to convert all or part only, of the loans at the conversion price of the lesser of 0.9 pence per ordinary share and ten per cent. below the USD equivalent of any price at which the Company issues shares while monies are still payable to the relevant Lender under the terms of the New Convertible Loan Agreement. Under the terms of the New ECP and IAM Convertible Loan Agreements each of the Lenders acknowledge that the Company currently does not have the capacity to issue the full number of shares issuable should they wish to convert the loans and that, should the Company not receive the required shareholders approval needed to create and issue all of the shares issuable on conversion, the Lenders shall only be able to exercise their conversion rights to the extent that the Company has the relevant authorities to issue and allot such shares at that time.
The terms of the New HBD Loan Agreement provide that HBD has the right to convert all, and not part only, of the loans at the conversion price of 0.9 pence per ordinary share. Under the terms of the New HBD Loan Agreement, HBD acknowledges that the Company currently does not have the capacity to issue the full number of shares issuable should HBD wish to convert the loans and that, should the Company not receive the required shareholders approval needed to create and issue all of the shares issuable on conversion, HBD shall only be able to exercise its conversion rights to the extent that the Company has the relevant authorities to issue and allot such shares at that time.
As IAM, ECP and HBD are substantial shareholders in the Company, the New ECP and IAM Convertible Loan Agreements and the New HBD Loan Agreement are classified as related party transactions in accordance with the AIM Rules. Accordingly, the independent directors, being Roy Pitchford and Craig Campbell, having consulted with Strand Hanson Limited, the Company's nominated adviser, consider the terms of the New ECP and IAM Convertible Loan Agreements and the New HBD Loan Agreement to be fair and reasonable insofar as the Company's Shareholders are concerned. In providing its advice, Strand Hanson Limited has taken into account the independent directors' commercial assessments.
Financial Reports and AGM
The Company is continuing to work with its auditor, KPMG Audit Plc, to finalise the Company's annual report and accounts for the year ended 31 December 2008 and the Interim Results for the six months ended 30 June 2009 and expect these will be published before 25 December 2009, the deadline set by AIM Rule 19. The Board notes that should the Company not publish its Financial Reports by 25 December 2009, it may be mandatorily delisted pursuant to Rule 41 of the AIM Rules.
Once the Financial Reports are published, the Board anticipates that trading in the Company's shares on the AIM market of the London Stock Exchange will recommence.
Accordingly, a date for the AGM will be set once the Financial Reports are finalised by the Company and its auditors.
* * ENDS * *
For further information please visit www.centralafricangold.com or contact:
|
Roy Pitchford / Craig Campbell |
Central African Gold Plc |
Tel: +44(0)77 9390 9985 Tel: +27(0)11 317 3654 |
|
Stuart Faulkner/ James Spinney |
Strand Partners Limited |
Tel: +44(0)20 7409 3494 |
|
Hugo de Salis / Felicity Edwards |
St Brides Media and Finance Ltd |
Tel: +44(0)20 7236 1177 |
|
Panico Theocharides / Sarah Williams |
Capital Hill Corporate Finance (Pty) Ltd |
Tel: +27(0)11 282 2360 |
|
Alan Campbell Alec Pismiris |
Colonial Resources Limited |
Tel: +61 406 244 687 Tel: +61 8 9481 8760 |
Notes to Editors
Central African Gold Plc is an established gold mining company with a portfolio of production and exploration assets in Africa. The Company has two subsidiaries in Zimbabwe: Falcon Gold Zimbabwe Limited (84.7 per cent. owned) and Olympus Gold Mines Limited (100 per cent. owned); and a subsidiary in southern Botswana with a licence covering 436km² of the extension of the Kraaipan greenstone belt from South Africa.
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