TIDMKRS
RNS Number : 1708A
Keras Resources PLC
17 January 2020
Keras Resources plc / Index: AIM / Epic: KRS / Sector:
Mining
17 January 2020
Keras Resources plc ('Keras' or the 'Company')
Togo Update, Corporate Restructuring,
Issue of New Shares and Options to Management
Keras Resources plc, the AIM listed mineral resource company is
pleased to provide an update on activities in Togo and the
restructuring of its 85% interest in Société Générale de Mines SARL
('SGM') required to comply with the permitting process at the
Nayega Manganese ('Mn') Project ('Nayega', or the 'Project') and in
the drive to streamline the Keras corporate structure. In addition,
the Company has updated its management incentive scheme.
Highlights
-- CEO Russell Lamming is currently in Togo meeting with
government officials, interested and affected parties and the SGM
management team to close the permitting process at Nayega and
ensure that production commences in the first quarter of 2020 as
previously announced;
o Corporate restructuring of SGM, which is a requirement of the
draft Mining Convention agreed between SGM and the Republic of Togo
('RoT') and part of the documentation required in the permitting
process
o Finalising contracts with third party service providers and
securing key management in Togo - post the ramp-up phase a 100%
Togolese workforce is planned
o As part of the drive to streamline the corporate structure and
reduce overhead costs, Keras's interest in SGM to be directly held
by Keras
o Relinquishing rights to the Kamina Cobalt & Nickel Project
and wind down subsidiary, Kamnico SARL
-- Proposed 1 for 10 share consolidation of Keras to reduce the
number of shares in issue and to attract institutional investors
looking at cashflow positive mining companies
-- Cancellation of Share Appreciation Rights ('SAR') Scheme, the
Introduction of an Enterprise Management Incentive ('EMI') option
scheme and the issue of an additional 90,000,000 EMI share options
to executive management
Russell Lamming, CEO of Keras Resources, commented, "The past
six months have been transformational for Keras. With the
notification in October 2019 of a decree authorised by the Togo
Council of Ministers permitting SGM to undertake large scale mining
at the Nayega, the successful demerger of the Company's interest in
Calidus in November 2019 and the completion of the restructuring
process, we are now positioned to transition into a manganese
producer.
"We remain on track to commence commercial production in the
first quarter of 2020. The underlying fundamentals of the business
remain strong as we have an excellent standalone asset, which has
installed capacity to produce 6,500 tonnes per month without any
further capital. Furthermore, the Project has the unusual status of
already being proved up through what was essentially a trial
mining, processing and logistics exercise in the first half of
2019.
"I look forward to providing shareholders a steady stream of
news flow on key contracts and activities on the ground as we move
towards commercial production later this quarter."
Togo Update
To finalise the documentation associated with the award of the
Exploitation Permit at Nayega, SGM needs to be converted from a
Private Limited company ('Société à responsabilité limitée',
'SARL') to a Public Limited company ('Société Anonyme', 'S.A'). A
SA company has a higher degree of corporate governance and is a
requirement of the draft Mining Convention agreed between SGM and
the RoT last year that needs to be implemented before mining can
commence. The conversion has involved detailed legal, accounting
and auditor input to meet all regulatory requirements. Following
the issue of the mining permit, the Republic of Togo will be
entitled to a 10% carried interest in SGM. As a result, the
Company's interest in SGM will be reduced to 76.5% on issue of the
mining permit.
In addition to the ongoing interaction with the Togolese
authorities, management is currently finalising contracts with
third party service providers and securing key management in Togo
as it transitions to a mining operation. The employment plan for
Nayega includes, post the ramp-up phase, a 100% Togolese
workforce.
Corporate Restructuring
In line with the restructuring process, which started with the
demerger of the Company's interest in Calidus Resources Limited
('Calidus') ('the Demerger'), the following changes are being made
to further streamline the corporate structure and reduce
unnecessary overhead costs.
-- The Company's interest in SGM is being transferred from its
100% owned Guernsey incorporated subsidiary, Southern Iron Limited
('SIL') directly into Keras.
-- SGM is being converted from a Private Limited Company
('Société à responsabilité limitée', 'SARL') to a Public Limited
Company ('Société Anonyme', 'S.A.').
-- In line with the strategic move to a focused cash flow
generative company, the Keras is relinquishing its rights to the
Kamina Cobalt & Nickel Project and winding down its 100% owned
subsidiary, Kamnico SARL.
On the conclusion of the restructuring, Keras will have a direct
interest in SGM with a balance sheet suited for a cashflow
generative mining company.
Share Consolidation
As Keras transitions from developer to producer, the Company
will, at the upcoming Annual General Meeting ('AGM') propose a 1
for 10 share consolidation to reduce the number of shares in issue
and to attract institutional investors looking at cashflow positive
mining companies. The AGM is expected to be held on the 19th March
2020 at the offices of Memery Crystal LLP, 165 Fleet Street, London
EC4A 2DY. Notice of AGM is expected to be sent to shareholders on
25 February 2020, with the Annual Report for the year ended 30
September 2019.
SAR Scheme Cancellation, Adoption & Award of EMI Scheme
The Demerger resulted in a fundamental change to the business
and its underlying value, which rendered awards under the Company's
existing share appreciation scheme ("SAR Scheme") inappropriate.
The Company will be cancelling the SAR Scheme and replacing it with
an EMI option scheme, which has a more favourable tax treatment.
The 30,000,000 unvested SAR's will be cancelled and reissued under
the EMI option scheme, with the exercise price of such EMI options
being reduced to a level that appropriately reflects the effect of
the Demerger on the underlying value of the Company. Please see
below for details of the basis used for calculating the option
pricing applied to those EMI options that replace awards under the
SAR Scheme.
EMI options over 90,000,000 new ordinary shares of the Company
("New Ordinary Shares") have been granted to executive management,
in addition to the EMI options over 30,000,000 New Ordinary Shares
(together the "EMI Options"), as follows:-
Vesting Dates
Exercise
Name Price * 17/01/20 09/03/2020** 17/01/2021 17/01/2022 17/01/2023
------------- ----------- ------------- ----------- ----------- -----------
R J Lamming
(CEO) GBP0.001639 30,000,000 20,000,000 20,000,000 20,000,000
------------- ----------- ------------- ----------- ----------- -----------
G D Stacey
(COO) GBP0.001639 10,000,000 10,000,000 10,000,000
------------- ----------- ------------- ----------- ----------- -----------
* 30-day volume weighted average price ('VWAP') close of business on 16 January 2020
** SARS converted to EMI Options
Prior to the Demerger, CEO Russell Lamming held 90,000,000 SAR's
at an exercise price 0.36p of which 60,000,000 had vested. At the
request of the Board, Mr Lamming did not exercise those SARs that
had vested prior to the High Court hearings for the Demerger, as
the exercise of these SARs would have significantly increased the
number of ordinary shares of Keras that were in issue, which would
in turn have significantly affected the ratio to be used for
calculating the number of ordinary shares of Calidus to be issued
to each shareholder of the Company pursuant to the Demerger
process. The Company was advised that a significant change to the
aforementioned ratio could have put Court approval of the Demerger
at risk and could also potentially cause confusion. It was agreed
in principle that Mr Lamming would be compensated in cash for
agreeing not to exercise his SARs, as he suffered a loss of value
as a consequence, further details of which are set out below:
-- The value of the 60,000,000 SARs that had vested at the close
of trading on 19 November 2019, being the day prior to the Demerger
becoming effective, was GBP69,000, after taking into account the
strike price of the SARs. Had the SARs been exercised, Mr Lamming
would have been issued with 14,526,316 New Ordinary Shares. Using
the increased conversion ratio for the Demerger that would have
resulted from the issue of 14,526,316 New Ordinary Shares (being:
3.472034 versus the actual conversion ratio: 3.451963), Mr Lamming
would have been entitled to 4,183,805 ordinary shares of Calidus
with a value of GBP50,828 (the Calidus share price was A$0.023 at
the close of business on 19 November 2019 and the exchange rate was
A$:GBP 1.8932). Mr Lamming's total loss from not exercising his
SARs is therefore calculated to be GBP119,828, of which Keras
shareholders benefitted directly by the transfer to them of the
4,181,064 Calidus shares which would otherwise have been received
by Mr Lamming.
-- Mr Lamming has elected not to receive cash, but to convert
the total compensation for his loss of GBP119,828 into 73,110,423
New Ordinary Shares at the 30-day value VWAP at the close of
business on 16 January 2020.
-- The outstanding, unvested 30,000,000 SAR's will be converted
to EMI Options, with the same vesting date (09/03/20) at an
exercise price of GBP0.001639, the 30-day volume weighted average
price ('VWAP') close of business on 16 January 2020.
The grant of EMI Options and the issue of 73,110,423 New
Ordinary Shares to Russell Lamming are deemed to constitute related
party transactions as defined by AIM Rule 13 of the AIM Rules for
Companies. The directors of the Company, with the exception of
Russell Lamming, consider, having consulted with the Company's
Nominated Adviser, that the grant of the EMI Options and the issue
of 73,110,423 New Ordinary Shares to Russell Lamming is fair and
reasonable insofar as the shareholders of the Company are
concerned.
Admission and Total Voting Rights
Application will be made for the of 73,110,423 New Ordinary
Shares to be admitted to trading on the AIM market of the London
Stock Exchange ('Admission'). Admission is expected to occur on or
around 23 January 2020.
Following the Admission, the total issued share capital of the
Company will consist of 2,571,468,862 ordinary shares of 0.01 pence
each carrying the right to one vote. There are no shares currently
held in treasury. The total number of voting rights in the Company
will therefore be 2,571,468,862 ordinary shares of 0.01 pence each
and this figure may be used by shareholders as the denominator for
the calculations by which they determine if they are required to
notify their interest in, or a change to their interest in, the
Company under the Financial Conduct Authority's Disclosure Rules
and Transparency Rules.
Director shareholding
Following Admission of the 73,110,423 New Ordinary Shares, the
beneficial shareholding of Mr Lamming will be 142,267,884 ordinary
shares of the Company representing 5.53% of the total issued share
capital of the Company.
Background
Keras is focused on advancing its Nayega Manganese Project in
Togo, West Africa, to commercial production. The Project hosts a
current JORC Compliant Mineral Resource of 13.5Mt @ 11.1% Mn and an
Ore Reserve of 8.48Mt @ 14.0% Mn with additional upside identified
through exploration work. The known deposit at Nayega covers 2.2km
by 500m and averages 3.3 metres in thickness. An internal
Definitive Feasibility Study demonstrated the current life of mine
('LoM') of 15 years, however, with ongoing exploration on the Ogaro
anomaly, located approximately 5.5km east of the Nayega Resource,
the Company is confident that there is the potential for the life
of mine to increase.
On 18 October 2019, the Council of Ministers of the Republic of
Togo adopted a decree to grant a license for large-scale
exploitation of the manganese deposit at Nayega to SGM. The Company
expects to commence commercial production at Nayega in Q1 2020.
For the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055, this announcement is being made on
behalf of Russell Lamming, Chief Executive Officer. This
announcement contains inside information for the purposes of
Article 7 of Regulation (EU) 596/2014.
The information set out below is provided in accordance with the
requirements of Article 19(3) of the EU Market Abuse Regulation No
596/2014.
1. Details of the person discharging managerial responsibilities/person
closely associated
a) Name: Russell Lamming
------------------------------------ ---------------------------------
2. Reason for the notification
-----------------------------------------------------------------------
a) Position/status: Chief Executive Officer
------------------------------------ ---------------------------------
b) Initial notification/Amendment: Initial notification
------------------------------------ ---------------------------------
3. Details of the issuer, emission allowance market participant,
auction platform, auctioneer or auction monitor
-----------------------------------------------------------------------
a) Name: Keras Resources Plc
------------------------------------ ---------------------------------
b) LEI: 213800OZFKFM2N4R4F47
------------------------------------ ---------------------------------
4. Details of the transaction(s): section to be repeated
for (i) each type of instrument; (ii) each type of transaction;
(iii) each date; and (iv) each place where transactions
have been conducted.
-----------------------------------------------------------------------
a) Description of the financial Ordinary shares of
instrument, type of instrument: 0.1p each
Identification code:
ISIN: GB00B649J414
------------------------------------ ---------------------------------
b) Nature of the transaction: 1. Issue of shares
in lieu of payment
2. Grant of options
------------------------------------ ---------------------------------
c) Price(s) and volume(s): Price(s) Volume(s)
1. 0. 1639
p 1. 73,110,423
2. 0. 1639
p 2. 90,000,000
--------------
------------------------------------ ---------------------------------
d) Aggregated information: Price(s) Volume(s)
Aggregated volume: 1. 0. 1639
Price: p 1. 73,110,423
2. 0. 1639
p 2. 90,000,000
--------------
------------------------------------ ---------------------------------
e) Date of the transaction: 17 January 2020
------------------------------------ ---------------------------------
f) Place of the transaction: London
------------------------------------ ---------------------------------
1. Details of the person discharging managerial responsibilities/person
closely associated
a) Name: Graham Stacey
------------------------------------ ---------------------------------
2. Reason for the notification
-----------------------------------------------------------------------
a) Position/status: Chief Operating Officer
(Non-Board)
------------------------------------ ---------------------------------
b) Initial notification/Amendment: Initial notification
------------------------------------ ---------------------------------
3. Details of the issuer, emission allowance market participant,
auction platform, auctioneer or auction monitor
-----------------------------------------------------------------------
a) Name: Keras Resources Plc
------------------------------------ ---------------------------------
b) LEI: 213800OZFKFM2N4R4F47
------------------------------------ ---------------------------------
4. Details of the transaction(s): section to be repeated
for (i) each type of instrument; (ii) each type of transaction;
(iii) each date; and (iv) each place where transactions
have been conducted.
-----------------------------------------------------------------------
a) Description of the financial Ordinary shares of
instrument, type of instrument: 0.1p each
Identification code:
ISIN: GB00B649J414
------------------------------------ ---------------------------------
b) Nature of the transaction: 1. Grant of options
------------------------------------ ---------------------------------
c) Price(s) and volume(s): Price(s) Volume(s)
1. 0. 1639
p 2. 30,000,000
--------------
------------------------------------ ---------------------------------
d) Aggregated information: Price(s) Volume(s)
Aggregated volume: 1. 0. 1639
Price: p 2. 30,000,000
--------------
------------------------------------ ---------------------------------
e) Date of the transaction: 17 January 2020
------------------------------------ ---------------------------------
f) Place of the transaction: London
------------------------------------ ---------------------------------
**S**
For further information please visit www.kerasplc.com, follow us
on Twitter @kerasplc or contact the following:
Russell Lamming Keras Resources plc info@kerasplc.com
Nominated Adviser & Broker
Ewan Leggat / Charlie SP Angel Corporate Finance +44 (0) 20 3470
Bouverat LLP 0470
Financial PR
Isabel de Salis / Cosima +44 (0) 20 7236
Akerman St Brides Partners Ltd 1177
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END
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