Fluormin PLC Loan Agreement & Potential Offer By Vanoil Energy (1818A)

TIDMFLOR

RNS Number : 1818A

Fluormin PLC

15 March 2013

FLUORMIN plc

("FLUORMIN" or the "Company")

Loan Agreement and potential offer by Vanoil Energy ltd

LONDON, UK -- (Marketwire - 15 March 2013)

Introduction

Fluormin announces that it has received an intention to make an offer today for the entire issued share capital of Fluormin (the "Potential Offer") on terms set out in an announcement made by Vanoil Energy Ltd ("Vanoil") on 15 March 2013 (the "Vanoil Announcement"). In addition, Fluormin has entered into a fixed term Facility Agreement, pursuant to which Fluormin has provided Vanoil with a fixed loan facility of US$5 million ("Facility Agreement").

Offer for the Company by Vanoil

The Company has been in negotiations with Vanoil as to the terms of an offer for the Company by Vanoil. The proposed terms and further information are contained in the Vanoil Announcement, which can be viewed at www.vanoil.ca.

The Board believes the current and anticipated oil and gas exploration portfolio of Vanoil to be commercially attractive and expects to be in a position to make a formal response to the Offer in the near future following the completion of due diligence. Full details of the terms of the Offer are set out in the Vanoil Announcement which is available on the Company's website.

Facility Agreement

Under the terms of the Facility Agreement, Kenya Fluorspar (BVI) Holdings Limited, a wholly owned subsidiary of Fluormin, has advanced USD$5m in cash to Vanoil. The loan will yield a coupon of 8 per cent. per annum. The loan is repayable on 13 March 2014. In the event that the potential offer by Vanoil for the Company does not complete, the coupon on the loan will increase to 12% and the principal shall be repayable as to USD$2.5m by 12 September 2013, with the balance due by 13 March 2014. Also in the event that the Potential Offer does not complete, or if there is a change of control of Vanoil, the Company may convert up to the full amount of the loan into Vanoil units at US$0.75 per unit, each unit comprising a common share in Vanoil and 0.2375 of a warrant entitling Fluormin to acquire a further common share in Vanoil at CAD$0.75.

The Facility Agreement provides that the purpose of the loan is to provide finance for Vanoil's general corporate purposes and matters connected with Vanoil's acquisition of Avana Petroleum Limited ("Avana"), announced on 26 November 2012, including the business operations of Avana and its subsidiaries.

Background to the Facility Agreement

As previously announced and following difficult fluorspar market conditions as well as operating challenges at the Witkop mine in South Africa, in August 2012, the Company appointed financial advisers to assess options for the mine. On 12 October 2012 the Company announced that despite an improvement in the Company's operational performance and significant cost reductions, the prevailing price for acid grade fluorspar had fallen below operating costs. Having met with trade union representatives in South Africa it was concluded to place the mine on care and maintenance.

Following this the Company has been considering various alternatives on how to best capitalise on this strong cash position to maximise value for shareholders. In this context the Board has been reviewing various acquisition and merger opportunities in the natural resources sector. Of the opportunities reviewed by the Board, the Board believes the Vanoil Offer to be the most attractive and accordingly has entered into the Facility Agreement in order to secure the opportunity to complete a transaction with Vanoil.

Related Party Transaction

Mr James Passin is non-executive Chairman of both the Company and Vanoil. He is also a director of Firebird Management LLC, which through its funds Firebird Global Master Fund Ltd and Firebird Global Master Fund II Ltd is a substantial shareholder of both the Company and Vanoil. Entering into the Facility Agreement with Vanoil (the "Transaction") is therefore classified as a related party transaction, as defined under the AIM Rules for Companies. The independent directors, being Mark Bolton, Albert C Gourley, Jeffrey Kofsky, Sean Murray, Muriel Dube and Brian Kiernan, consider, having consulted the Company's nominated adviser, Westhouse Securities Limited, that the terms of the Transaction are fair and reasonable insofar as its shareholders are concerned.

City Code on Takeovers and Mergers (the "City Code")

The Company is not currently subject to the City Code that is administered by the Panel on Takeovers and Mergers (the "Takeover Panel") as its shares are not traded on a Regulated Market (as defined in the City Code) and its place of central management and control is outside the United Kingdom, Channel Islands or Isle of Man. The Takeover Panel is currently considering whether to extend its remit to all companies incorporated in the United Kingdom, Channel Islands or Isle of Man and whose shares are quoted on the AIM Market, irrespective of where their place of central management and control may be.

The Company may therefore become subject to the City Code in the future. Information regarding the Takeover Panel and a copy of the City Code can be found at http://www.thetakeoverpanel.org.uk/.

IMPORTANT NOTICE

Westhouse Securities Limited, which is authorised and regulated in the UK by the Financial Services Authority, is acting for Fluormin and no-one else and will not regard any other person as a client in relation to matters referred to in this announcement and will not be responsible to anyone other than Fluormin for providing the protections afforded to its clients or for providing advice in relation to any matters referred to in this announcement.

Contact Information

 
Fluormin plc                           +44 (0) 20 7034 7150, 
Mark Bolton, Chief Executive Officer 
Westhouse Securities                   +44 (0) 20 7601 6100, 
Martin Davison 
 Paul Gillam 
 Jonathan Haines

About Vanoil

Vanoil is a company incorporated pursuant to the laws of British Columbia, Canada, listed on the TSXV in Canada, with a focus on oil and gas exploration in East Africa. Vanoil has assets in Kenya and an exclusive right to negotiate a production sharing agreement with respect to an oil & gas concession in Rwanda. In addition, as announced on 26 November 2012, Vanoil is in the process of acquiring a 100 per cent. interest in Avana Petroleum Limited, a company which owns a 25 per cent. participating interest in oil and gas exploration Areas A and B, as awarded by the Government of the Seychelles and is in advanced stages of negotiations to acquire a 10 per cent. interest in Kenyan Block L9. Vanoil's Kenyan oil and gas assets consist of Blocks 3A and 3B in Eastern Kenya, secured by a production sharing contracts signed in October 2007. Blocks 3A and 3B total 24,912 square kilometres and are located at a confluence of three sedimentary basins (Anza, Mochesa and Lamu) within Kenya, with one basin the Anza having some evidence of a working Cretaceous petroleum zone. Vanoil's blocks are located adjacent to Block 9 and Block 10a, the technically advanced concession held and operated by Tullow Oil plc and Africa Oil Corp.

Further details regarding Vanoil can be found on Vanoil's website: www.vanoil.ca

This information is provided by RNS

The company news service from the London Stock Exchange

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