28 June 2024
Shard
Facility Update and New Shard Facility
Zanaga Iron Ore Company ("ZIOC" or
the "Company") (AIM:ZIOC) is pleased to provide an update to
shareholders on its existing funding structures in place
with Shard Merchant Capital Ltd ("SMC"),
including both the intention to issue the final share tranche
relating to the Company's existing equity subscription agreement
with SMC ("Existing ESA") as well as the intention to enter into a
new equity subscription agreement ("2024 ESA").
Existing ESA
Further to the announcements dated 3
July 2023 and 14 December 2023 in relation to the Existing ESA,
ZIOC is pleased to report that the second tranche of 12 million
ordinary shares of no par value in the Company ("Ordinary Shares")
issued pursuant to the Existing ESA has successfully been placed by
SMC.
ZIOC received net proceeds of
approximately £890,466 in aggregate in relation to the placing by
SMC of the second tranche of 12 million Ordinary Shares under the
Existing ESA, resulting in total combined proceeds of £1,667,755
from Tranche 1 and Tranche 2.
As provided for in the Existing ESA,
the Company intends to give notice to, and SMC shall then subscribe
for, the third tranche of 12 million Ordinary Shares ("Existing ESA
Tranche 3"), conditional, amongst other things on admission of
those shares to trading on AIM.
New ESA
In order to provide the Company with
increased ability to raise additional working capital the Company
and SMC intend to enter into the 2024 ESA.
This follows the successful implementation of equity subscription
agreements on similar terms in 2020 and 2023.
Under the 2024 ESA the Company would
issue, and SMC would subscribe for, up to 36 million ordinary
shares of no par value in the Company ("Subscription Shares") in up
to three tranches of up to 12 million shares each (as described
below).
In the event the maximum number of
Subscription Shares are issued by ZIOC and subscribed for by SMC,
including the issuance of the Existing ESA Tranche 3 mentioned
above, the share capital of ZIOC would be increased by c.7.4% on a
fully diluted basis, based on the 644,644,989,909 ordinary shares in the
Company in issue as at today's date.
Pursuant to the 2024 ESA, SMC would
undertake to use its reasonable endeavours to place the relevant
Subscription Shares that it has subscribed for and to pay to ZIOC
95% of the gross proceeds of any such sales.
The ESA continues to provide a
number of attractive advantages to ZIOC, which are highlighted
below:
·
Relatively low level of dilution to ZIOC
shareholders
·
ZIOC has the ability to repurchase any unsold
Subscription Shares from SMC, subject to legal requirements - an
important element of flexibility for ZIOC. Any Subscription Shares
re-purchased will be cancelled, limiting dilution
further
·
Low cost of capital - SMC will retain only 5% of
the gross proceeds of any sale of Subscription Shares
Structure Overview:
Issues of Tranches of Subscription Shares
Under the 2024 ESA, Subscription
Shares would be issued, and SMC would subscribe for, the
Subscription Shares in tranches of up to 12 million shares. The
first tranche of 12 million Subscription Shares (the "2024 First
Tranche") would be subscribed for by SMC within three trading days
of the date of the 2024 ESA.
A second Tranche of 12 million
Subscription Shares (the "2024 Third Tranche") would be subscribed
for by SMC 10 trading days following the earlier of: (a) the date
on which SMC has sold all the Subscription Shares subscribed for in
the First Tranche; and (b) such other date as SMC and the Company
agree.
Solely at the discretion of the
Company, a third tranche of up to 12 million Subscription Shares
would be subscribed for by SMC (the "2024 Third Tranche" and
together with the 2024 First Tranche and the 2024 Third Tranche,
each a "Tranche"). Any such subscription would take place within 14
trading days of the earlier of: (a) the date on which SMC has sold
all the Subscription Shares subscribed for in the 2024 Third
Tranche; or (b) such other date as SMC and the Company
agree.
Sales of Subscription Shares
As regards each Tranche, SMC would
agree to use its reasonable endeavours to place all the
Subscription Shares comprised in that Tranche within a three month
period from the date of issue of the relevant Subscription Shares
to it (the "Relevant Three Month Period"). Such period could be
extended prior to the end of the Relevant Three Month Period by
either the Company or ZIOC giving notice to the other. Any such
extension would be for a three month period from the giving of the
extension notice. All such sales would be subject to trading
restrictions, as mentioned below.
Payment of proceeds of Subscription Shares
In respect of each Tranche, the
amount which SMC would undertake to pay for the Subscription Shares
issued to it in that Tranche would be 95% of the gross proceeds of
sale received by SMC from all sales of the relevant Subscription
Shares made by it during the Relevant Three Month Period (as
extended, if that occurs).
The 2024 ESA would provide for
regular payments to be made by SMC to ZIOC following any sales of
Subscription Shares.
·
Payments under the 2024 First Tranche would be
made weekly and then fortnightly.
·
Payments under the 2024 Third Tranche and any 2024
Third Tranche payments would be made every two weeks (unless an
alternative time for payment is agreed between the
parties).
Custodian
The 2024 ESA would provide that the
Subscription Shares be held by a custodian authorized by the
Financial Conduct Authority (FCA). Proceeds of any sale of
Subscription Shares by SMC would be held by the Custodian until
remitted by the Custodian to SMC and SMC would pay to ZIOC 95% of
the gross proceeds of any such sales. To secure SMC's payment
obligations, any proceeds of sale, as well as SMC's beneficial
interest in the Subscription Shares, would be held by SMC on trust
for the benefit of the Company.
Termination and Unsold Shares
The 2024 ESA could be terminated by
the Company at any time and by SMC on the occurrence of certain
specified events.
If on termination of the 2024 ESA,
any Subscription Shares subscribed for by SMC have not been sold by
it (the "Unsold Shares"), the 2024 ESA would provide that such
Unsold Shares shall be bought back by the Company from SMC at the
same price that SMC had subscribed for such Unsold Shares (the
"Buy-Back"). Completion of the Buy-Back
might be deferred if at the relevant time the Company is precluded
from completing the buy-back arrangement under any applicable
legislation.
Suspension of sales of Subscription Shares:
The Company would have the right to
require that SMC cease to make (or procuring) sales of Subscription
Shares under any Tranche for such time as the Company determines
("Suspension Period"). In such event, the relevant Three Month
Period would be extended for the same amount of time as the
Suspension Period.
Trading restrictions:
In order to preserve an orderly
market in the Company's shares, SMC would agree to effect any sales
of Subscription Shares made by it in accordance with customary
orderly market provisions.
Future updates:
The Company will make appropriate
further announcements in due course.
The Company's cash balance at 27
June 2024 was US100k, with US$740k of drawn debt and accrued
interest under the Glencore Facility and the Company continues with
its prudent cash management. The proceeds received by the Company
from SMC pursuant to the 2024 ESA if and when entered into, are
intended to be applied to general working capital, including the
provision of further contributions to the Zanaga Iron Ore Project's
operations.
Glencore loan facility:
The Company is also in discussions
with Glencore regarding the Glencore Facility which falls due for
repayment on 31 July 2024 (the "Due Date"). Such discussions are
ongoing but could include the extension of the current facility or
a subscription by Glencore to part settle the Glencore Facility
prior to the Due Date. At this point there is no certainty as to
whether the Glencore Facility will be extended or partially settled
in shares and a further announcement will be made in due
course.
Change of name of Nominated Adviser and Joint
Broker
Following the completion of their
corporate merger the Company's Nominated Adviser has changed its
name to Panmure Liberum Capital Limited.
The Zanaga Iron Ore Company Limited
LEI number is 21380085XNXEX6NL6L23.
For further information, please
contact:
Zanaga Iron Ore
Corporate Development
and
Andrew Trahar
Investor Relations
Manager
+44 20 7399 1105
Panmure Liberum Capital
Limited
Nominated Adviser,
Financial
Scott Mathieson, John More
Adviser and Corporate Broker
+44
20 3100 2000
Shard Capital Partners LLP
Corporate
Broker
Damon Heath
+44 207 186 9952
______________________________________________
THIS ANNOUNCEMENT CONTAINS INSIDE
INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE
REGULATION (EU) 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW BY
VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR"), AND IS
DISCLOSED IN ACCORDANCE WITH THE COMPANY'S OBLIGATIONS UNDER
ARTICLE 17 OF MAR