10th Jun 2008 07:00
Tuesday, 10 June 2008
Peter Hambro Mining Plc announces strategic investment in Rusoro Mining Ltd through a secured exchangeable loan
US$80 million strategic investment in Rusoro by PHM-led syndicate (PHM, BlackRock, GLG, Lansdowne, Endeavour)
2 year senior secured exchangeable loan with a 10 per cent coupon, exchangeable into Rusoro shares at C$1.25, secured on Rusoro's principal subsidiaries
PHM has a call option on the shares underlying the other syndicate members' portion of the loan at C$2.20
Syndicate members have the right to participate pro rata in any future equity or equity linked capital raising
Rusoro, a TSX Venture Exchange listed gold producer with 12.8 million ounces of gold resources, is led by a majority Russian management team including Andre Agapov as CEO, and was formed by the Agapov family
Gold Fields of South Africa is the largest shareholder in Rusoro
Peter Hambro Mining Plc ("PHM"), the second largest Russian gold mining company, announces a strategic investment in Rusoro Mining Ltd ("Rusoro"), a TSX Venture Exchange listed gold producer and exploration company in Venezuela, and its affiliates (collectively the "Rusoro Group").
PHM has created a syndicate, comprising funds which are investment managed by BlackRock Investment Management International Limited ("BlackRock"), GLG Partners LP ("GLG") and Lansdowne Partners Limited ("Lansdowne"), which are existing investors in both PHM and Rusoro, and Endeavour Mining Capital Corp. ("Endeavour"), to participate in a US$80 million senior secured exchangeable loan ("Loan") to Venezuela Holdings (BVI) Ltd. ("BVI"), a wholly owned subsidiary of Rusoro. The Loan is exchangeable into shares of Rusoro at C$1.25 and Rusoro will also act as a guarantor of the Loan. PHM, GLG and Lansdowne will each take up US$20 million and BlackRock and Endeavour will each take up US$10 million (collectively PHM, BlackRock, GLG, Lansdowne and Endeavour are referred to as the "Lenders").
The Loan will be drawn down today and be made available in two tranches. US$28 million will be available immediately for general corporate purposes, with the remaining US$52 million made available once pre-agreed strategic milestones are met.
PHM has also entered into an option agreement with the other Lenders which gives PHM the right to acquire from them, at a price of C$2.20 per share, the number of shares which such other Lenders may receive upon exchange of their Loan (the "Option Agreement"). PHM is able to exercise its option in full or in part under the Option Agreement at any time from signing until (a) if the relevant Loan has been exchanged, the later of (i) 6 months after signing and (ii) 6 days after such exercise or (b) if the relevant Loan has not been exchanged, the earlier of (i) 6 days before expiry of the exchange right on the final repayment date and (ii) 6 days before the date on which prepayment or repayment, as applicable, is due to take place through prepayment by the Borrower or following a change of control.
Exchange of PHM's US$20 million loan into shares would give PHM an interest of approximately 4.0 per cent of the partially diluted shares in Rusoro, being the aggregate of the common shares currently in issue plus the shares to be issued on exercise of the exchange right by PHM in respect of its loan participation, but excluding any shares that PHM could receive pursuant to the Option Agreement. Full exercise of the Option Agreement would give PHM an interest of approximately 14.2 per cent of the partially diluted shares in Rusoro (being calculated on the same basis as above, but allowing for full exercise of the Option Agreement and full exchange of the Loan).
The Rusoro Group will use the proceeds of the Loan for general corporate purposes including strategic acquisition opportunities. For more detailed information, please see the press release issued by Rusoro today (and for which PHM accepts no responsibility), which is attached and can be found on their website (www.rusoro.com).
To view the Press Release referred to in the paragraph above, please follow the link below;
http://www.rns-pdf.londonstockexchange.com/rns/3409W_-2008-6-10.pdf
About Rusoro
Rusoro is an advanced junior gold producer with 12.8 million ounces of gold resources classified under NI 43-101 mineral resource classification, and a large land position in the Bolivar State region of Venezuela. Rusoro was created by Russian nationals Mr. Andre Agapov and his family and acquired the Choco 10 mine from Gold Fields Ltd. ("Gold Fields"), now a 36 per cent shareholder in Rusoro. Rusoro has a significant reserve and resource base and is expected to achieve an annualised production rate of 120,000 ounces per year by the end of 2008. In December 2007, Choco 10 produced 9,671 ounces of gold. Rusoro has an on-going aggressive drilling campaign for 2008 designed to increase and upgrade its gold ounces for projected production expansion at the Choco 10 Mine in El Callao.
Strategic rationale
The Board of PHM believes that its participation in the Loan offers PHM an attractive investment in its own right, and exciting strategic opportunities going forward. PHM may, depending on market and other circumstances, increase or decrease its interest in Rusoro in the future.
Commenting on the transaction, Peter Hambro, Executive Chairman of PHM, said:
"We have always said that any investment outside Russia would need to have a Russo-centric rationale and the Rusoro investment is just such an opportunity. With it we have a strategic investment in a growing gold producer which is backed by proven reserves and resources and has a successful management team. The transaction also provides an opportunity to develop a closer relationship with Gold Fields, as the largest shareholder in Rusoro. Entry into our first overseas investment is in a secured loan with exchange rights into Rusoro shares at an attractive price of C$1.25."
Commenting on the transaction, Andre Agapov, CEO of Rusoro, said:
"We are delighted to begin a relationship with PHM, given their success in finding and developing mines in Russia, and we welcome them as strategic investors in our company. We believe our similar backgrounds and understanding of our respective local markets offers a good framework for closer cooperation".
The Loan
The Loan will carry an annual coupon of 10 per cent, payable semi-annually and an exchange price of C$1.25 representing a 25 per cent premium to the closing price of Rusoro shares on 9 June 2008. The total shares underlying the Loan will represent 14.2 per cent of the partially diluted share capital of Rusoro. The Lenders will have the right to exchange their Loan participation into common shares at any time from 10 July 2008 to 4 June 2010, providing the Loan remains outstanding. The Loan will carry a final maturity of 2 years and BVI will have the right to prepay the Loan at any time on giving 30 days notice and the Lenders will have the right to exchange the Loan at any time until prepayment is made. PHM, BlackRock, GLG, Lansdowne and Endeavour will have the right to participate pro rata in any future equity or equity linked capital raising whilst any part of the holder's Loan remains outstanding, for a proportion of any issues of shares, whether for cash or non-cash consideration. The Loan is to be secured on a number of assets of the Rusoro Group including, among other things, shares in the principal operating subsidiaries of the Rusoro Group. Funding is expected to occur today.
JPMorgan Cazenove Limited acted as financial adviser to PHM and Endeavour Financial International Corporation acted as financial adviser to Rusoro.
Notes to Editors
1. Mr. Andre Agapov, founder and currently CEO of Rusoro, has been involved with Rusoro since 2002, and together with Mr. Vladimir Agapov is a 16 per cent shareholder. Before founding Rusoro, Mr. Andre Agapov held a number of positions in the corporate finance and securities industry. He began his financial career as a broker at Business Management International, a Moscow based raw materials and commodities trading firm. Between 1993 and 1995, he was General Manager of Olbi International, which at the time was the largest Russian trading house/financial institution based in New York. Subsequently, from 1996 to 2002, Mr. Andre Agapov was a Partner at MFC Securities, a financial services company based in London, England. He obtained a degree in Aeronautical Engineering and Economics from the Aviation Institute, Moscow in 1990. Mr. Andre Agapov has significant business relationships in Russia.
2. Gold Fields are currently 36 per cent shareholders of Rusoro following the sale to Rusoro of the Venezuelan assets and liabilities formerly owned by Gold Fields Netherlands Services BV, a wholly owned subsidiary of Gold Fields, including the producing Choco 10 mine on 30 November 2007. Consideration for the assets was in the form of 140 million new shares and US$180 million.
3. With respect to participation by BlackRock, the Loan will be held by the following fund, which is investment managed by BlackRock:
- BlackRock Natural Resources Hedge Fund Limited
With respect to participation by GLG, the Loan will be held by the following funds, which are investment managed by GLG:
- GLG Global Mining Fund
- GLG European Long-Short Fund
- GLG Emerging Markets Special Situations Fund
With respect to participation by Lansdowne, the Loan will be held by the following funds, which are investment managed by Lansdowne:
- Lansdowne UK Equity Fund Limited
- Lansdowne UK Equity Fund Limited Partnership
- Lansdowne UK Strategic Investment Master Fund Limited
- END -
For further information:
|
Alya Samokhvalova |
Peter Hambro Mining Plc |
T: +44 207 201 8900 |
|
Tom Randell |
Merlin Financial |
T: +44 207 653 6620 |
|
Ian Hannam |
JPMorgan Cazenove |
T: +44 207 588 2828 |
|
Patrick Magee |
JPMorgan Cazenove |
|
|
Joe Seifert |
JPMorgan Cazenove |
Forward-looking statements: This document contains statements about expected or anticipated future events and financial results that are forward-looking in nature and as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, the regulatory process and actions, technical issues, new legislation, competitive and general economic factors and conditions, the uncertainties resulting from potential delays or changes in plans, the occurrence of unexpected events, and the Company's capability to execute and implement its future plans. Actual results may differ materially from those projected by management.
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