Keras Resources PLC Diamond Creek Update (5399R)
November 05 2021 - 9:44AM
UK Regulatory
TIDMKRS
RNS Number : 5399R
Keras Resources PLC
05 November 2021
5(th) November 2021
Keras Resources plc ('Keras' or the 'Company')
Diamond Creek Update
Keras Resources plc (AIM: KRS) announces an update at the
high-grade Diamond Creek organic phosphate mine, (Diamond Creek) in
Utah, USA, owned by the Company's 51% subsidiary, Falcon Isle
Holdings LLC ('Falcon Isle').
From an operational perspective, the 2021 mining campaign has
now been completed with 8,520 tons mined and delivered to the
laydown area at Diamond Creek. This total was under the previously
announced forecast annual tonnage of 10,000 tons, as there was
previous inventory available from the 2020 marketing campaign,
which preserved both cash flow and storage requirements. Sales
since commencement of the project in June 2020 total 3,061
tons.
From a financial perspective, the delay in commissioning the
Spanish Fork plant and the increased costs associated with those
delays, combined with a lack of additional sales to cover those
costs and the need to complete the 2021 mining campaign before the
winter, has resulted in a need for additional capital to fund
Falcon Isle's operations.
Since investing in Falcon Isle in July 2020, Keras has complied
with all its obligations, as per the transaction announced on 30
July 2020 (the "Transaction"). To date Keras has provided
approximately US$625,000 in additional working capital to Falcon
Isle, which has been funded from Keras's cash reserves. For the
past 9 months, Keras has been in discussions with our partner about
the capital shortfall, has offered non-dilutionary funding
solutions and Keras has offered to acquire additional equity in
Falcon Isle. To date we have not found a resolution and this is
having a negative impact on the business itself and on Falcon
Isle's relationships with key contractors.
Under the circumstances, operations at the Spanish Fork
processing plant have been temporarily halted until this funding
issue is resolved. Having exhausted all efforts to negotiate an
amicable solution, Keras has now engaged local US legal
representatives to enforce its rights under the terms of the
Transaction.
To date, the marketing of Falcon Isle's phosphate has fallen
short of agreed budgets. Keras is now looking to remedy this
underperforming part of the business, which could involve an
outsourced marketing solution. We expect to have this marketing
solution in place prior to commencing next year's sales season in
the first quarter of 2022, however, the inventory in warehouse will
be continued to be marketed.
Russell Lamming, CEO of Keras Resources, commented, "We continue
to believe that the Diamond Creek project is uniquely placed to tap
into the growing organic and carbon conscious world in which we
live. With our milling plant now installed, c.8,500t of ore in the
laydown area and COVID restrictions lessening, we still see
significant value for Keras within this business and are committed
to its future.
"It is unfortunate that, despite our best efforts, we have been
unable to amicably resolve the funding shortfall and now seek to
enforce our rights under the terms of the Transaction. It is also
disappointing that this has resulted in operations being
temporarily halted. As a part of this process, we are also looking
at possible restructuring options as the major creditor to Falcon
Isle. This will enable us to steer Falcon Isle in a direction we
believe will increase sales and associated revenues. We will keep
shareholders updated on our progress in resolving this issue and
look forward to reporting positive progress in the near
future."
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ('MAR') which has
been incorporated into UK law by the European Union (Withdrawal)
Act 2018.
For further information please visit www.kerasplc.com , follow
us on Twitter @kerasplc or contact the following:
Russell Lamming Keras Resources plc annabel@kerasplc.com
Annabel Redford
Nominated Adviser & Joint
Broker
Ewan Leggat / Charlie SP Angel Corporate Finance +44 (0) 20 3470
Bouverat LLP 0470
Joint Broker Shard Capital Partners +44 (0) 207 186
Damon Heath / Erik Woolgar LLP 9900
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