TIDMNRRP
RNS Number : 3676X
North River Resources Plc
21 February 2017
North River Resources plc / Ticker: NRRP / Index: AIM / Sector:
Mining
21 February 2017
North River Resources plc
("North River" or the "Company")
Cancellation from trading on AIM and Notice of GM
North River Resources plc today announces a proposal to cancel
the admission of the Company's ordinary shares to trading on AIM in
accordance with Rule 41 of the AIM Rules for Companies
("Cancellation").
A circular including a Notice of General Meeting will today be
posted to Shareholders (the "Circular") to convene the necessary
general meeting of the Company (the "General Meeting") to approve
the Cancellation. The General Meeting is to be held at the offices
of Shakespeare Martineau LLP, 6th Floor, Allianz House, 60
Gracechurch Street, London, EC3V 0HR on 17 March 2017 at 10.30 a.m.
(London time). A copy of the Circular and Notice of General Meeting
will also be available to view shortly on the Company's website
www.northriverresources.com.
The Company has received irrevocable undertakings to vote in
favour of the Cancellation resolution representing 77.09% of the
votes entitled to vote at the General Meeting. Accordingly, it is
anticipated that the Cancellation will be approved at the General
Meeting.
An extract of selected parts of the Circular is copied out below
along with an indicative timetable of principal events related to
the Cancellation process. The definitions that apply throughout
this announcement can be found at the end of this announcement.
For further information please visit www.northriverresources.com
or contact:
James Beams North River Resources Tel: +44 (0)
Plc 20 7025 7047
Andrew Emmott / Ritchie Strand Hanson Tel: +44 (0)
Balmer Limited (Nominated 20 7409 3494
Adviser)
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
Introduction
The Board announces that it is seeking Shareholder approval for
the cancellation of admission of its Ordinary Shares to trading on
AIM. Implementation of the Cancellation is conditional on the
Resolution being passed at a General Meeting to be held on 17 March
2017 at 10.30 a.m. A circular including a Notice of General Meeting
containing the full text of the Resolution will today be posted to
Shareholders. Subject to the Resolution being passed at the General
Meeting, it is anticipated that the Cancellation will become
effective at 7.00 a.m. on 27 March 2017.
The purpose of this announcement is to provide Shareholders with
details of the Board's proposal and to advise Shareholders of a
General Meeting at which the Resolution to approve the cancellation
of the Company's Ordinary Shares from trading on AIM will be
considered. This letter sets out the reasons why I and the rest of
the Board, including the Independent Directors, consider the
Cancellation to be in the best interests of the Company and its
Shareholders as a whole and why the Independent Directors are
therefore unanimously recommending that you vote in favour of the
Resolution.
1. Background to, and reasons for, the Cancellation
1.1 Principal Reasons for the Cancellation
The Company is continuing to focus on advancing the Namib
zinc-lead mining project in Namibia ("Namib Project" or "Project").
The successful development of the Project will depend on the grant
of a mining licence, on terms which are economically viable and
secure, favourable economics of the Project, and the availability
of finance for the up-front capital required for construction.
Over the past year, in the announcement of the final results for
the year ended 31 December 2015, in the funding Circular of 28 June
2016, and most recently again in the announcement of drilling
programme results on 12 December 2016, the Company has drawn
Shareholders' attention to the efforts of the Company to identify
cost saving opportunities. It has become increasingly critical that
the Company preserves its option to develop the Namib Project for
as long as possible with existing cash resources.
In line with this need, non-executive director fees have been
suspended, the London corporate office has been closed and all
other corporate costs reduced or eliminated. In Namibia, following
completion of the drilling programme in late 2016, activity on the
Project and at site has been cut right back, pending clarity on the
development timeline for the Project.
In the context of the above, the Independent Directors (being
all of the Directors other than Greenstone's representative, Mark
Sawyer) have conducted a review of the benefits and challenges of
maintaining the Company's quotation on AIM. After careful
consideration, the Independent Directors have concluded that it is
no longer in the interests of the Company to continue to have its
Ordinary Shares admitted to trading on AIM and, accordingly, that
Cancellation is in the best interests of the Company and its
Shareholders as a whole.
In reaching this conclusion, the Board has focused on the
following key factors:
-- Cash preservation:
- The need to preserve cash by cutting costs to a minimum until
the Company has clarity on the timeline for developing a licensed
and financeable project, should it prove economical to develop the
Namib Project. Regarding the outstanding mining licence, the
Company received a Notice of Preparedness to Grant the Mining
Licence from the Ministry of Mines and Energy on 28 January 2016.
This was announced to shareholders on 1 February 2016. The Company
submitted a proposal on meeting the terms and conditions for the
grant of the licence, on 26 April 2016. The Ministry indicated
again in late 2016 that it intends to issue the mining licence,
subject to a further condition that the full terms and conditions
of such licence are met within 6 months following grant of the
licence. The Company has not yet agreed the detailed terms and
conditions to be attached to the grant of the licence and, as such,
uncertainty remains around the details of the licence conditions
and the timing of its grant.
- Mining licence aside, in light of the limited trading in the
Ordinary Shares, the tangible costs associated with maintaining the
AIM quotation (such as legal, accounting, broking, London Stock
Exchange and Nominated Adviser costs) are disproportionately high
when compared with the benefits, and the Directors consider that
these funds could be better utilised in extending the window of
time for the Company to license and optimise a project for
development.
- The management time and legal and regulatory burden associated
with maintaining the Company's admission to trading on AIM, and
complying with the AIM Rules and related regulatory requirements
(including reporting, disclosure and corporate governance
requirements) is disproportionate to the benefits to the Company,
in light of the continuing uncertainty regarding the Namib Project,
and Cancellation would allow the Company to substantially eliminate
the UK corporate level of executive management and overhead and
streamline management of the Project in-country in Namibia.
-- Depressed share price and restricted share liquidity:
- There has been very limited advantage to the Company having
its shares admitted to trading on AIM for capital raising purposes
in recent years, evidenced by the very limited funding raised from
the existing shareholder base, excluding Greenstone, or new
investors.
- The extended period since announcement of the Definitive
Feasibility Study in November 2014, without being able to define a
timeframe and pathway to developing the Project, has contributed to
the depressed share price and consequently reduced benefits to the
Company and its shareholders of an AIM quotation.
- The Company, like a number of other AIM quoted companies of
its size, has a tightly held register of Shareholders and suffers
from a lack of liquidity for its Ordinary Shares. Greenstone now
holds 75.69 per cent. of the existing Ordinary Shares following its
support of the two fundraisings undertaken by the Company in 2015
and 2016 and in the absence of significant investment by other
shareholders or new investors. In practical terms, this has
resulted in a small free float and very low trading volumes, which
the Board believes further reduces the demand for the Ordinary
Shares.
-- Project profile:
- The results of the recent drilling campaign have highlighted
the challenges associated with growing the Namib mineral resource
before getting into and developing the underground mine during
construction and thereafter when in operation. Debt and equity
financing will therefore need to be raised for an initial project
that is supported by the current JORC-defined resources. The Board
is reviewing the appropriate project profile and related funding
strategy with this in mind.
-- Financing:
- The Company will need additional financing if the mining
licence is received and a decision to build the mine is taken. The
Company may also need additional financing for working capital
purposes if the award of the mining licence is delayed further.
- The Board, having considered in detail a broad range of
options, believes the likelihood of raising further funds, on
acceptable terms, whilst remaining on AIM, to be very low. However,
as a private company, the Board believes its options would be much
wider and not constricted by reference to the Company's low and
illiquid share price.
- It is the Board's belief that it is unlikely that the Company
will be able to raise significant funding through a new share issue
to Shareholders other than Greenstone (where there is no guarantee
either of support) and therefore the lack of Ordinary Shares in
public hands and low volumes can be expected to continue.
- The depressed share price is also not a positive platform from
which to explore corporate opportunities to unlock value for
shareholders or grow the Company.
The Board believes that strategic investor appetite in the Namib
Project in the current economic environment will not be undermined
by a cancellation of admission of the Company's Ordinary Shares to
trading on AIM.
Finally, the Board believes that both the Shareholders and the
Namibian government wish to see the Project succeed. It is in both
parties' interests to avoid unnecessary costs in order to optimise
use of existing cash resources in seeking to define a licenced and
economically attractive Project. The Cancellation is believed to be
in all parties' interests in maximising the likelihood of
successfully achieving this aim.
Accordingly, the Independent Directors strongly believe that it
is no longer in the best interests of the Company or its
Shareholders as a whole for the Company to retain its AIM
admission.
1.2 Effect of Cancellation
The principal effects of Cancellation will be:
-- Once the Cancellation has taken place, there will no longer
be a formal market mechanism for Shareholders to trade in the
Ordinary Shares and no price will be publicly quoted for the
Ordinary Shares. The Company is however proposing to set up a
facility to provide Shareholders with a platform to buy and sell
their Ordinary Shares 'off market' although this will be more
difficult than trading 'on market'. The only other opportunity for
Shareholders to sell their Ordinary Shares would arise upon a sale
of all of the issued share capital of the Company to a third party.
It may therefore be more difficult for Shareholders to realise
value from their Ordinary Shares than when the Company had its
Ordinary Shares admitted to trading on AIM admission and, where a
buyer is identified, it will be difficult to place a fair value on
any such sale.
-- It is possible that, following publication of this
announcement, the liquidity and marketability of the Ordinary
Shares may be significantly reduced and the value of such shares
may be consequently adversely affected.
-- Following Cancellation, the AIM Rules will no longer apply to
the Company and levels of corporate governance and transparency
will no longer be dictated by those rules. However, the Company
intends to continue to have a majority of independent directors on
the Board, including an independent Chairman.
-- Shareholders will no longer be afforded the protections given
by the AIM Rules, such as the requirement to be notified of certain
events, including substantial transactions, financing transactions,
related party transactions and fundamental changes in the Company's
business, including certain acquisitions and disposals.
-- The Company will cease to have an independent financial and nominated adviser, and broker.
-- As an unlisted company, the Company will be subject to less stringent accounting disclosure requirements.
The Company will:
-- Remain a public company and subject to the City Code, and
Shareholders will benefit from those provisions including in the
case of an offer for all of the shares of the Company whereby all
shareholders will need to be treated equally. Shareholders will
also continue to benefit from the relevant provisions of the
Act.
-- Continue to provide operational updates when the Company deems it to be appropriate.
-- Continue to publish its annual results.
1.3 Cancellation Process
Rule 41 of the AIM Rules requires an AIM company that wishes to
cancel admission of its securities to trading on AIM to notify such
intended cancellation to Shareholders and separately to inform the
London Stock Exchange of its preferred cancellation date. Rule 41
also requires that, unless the London Stock Exchange otherwise
agrees, the Cancellation must be conditional upon the consent of
not less than 75 per cent. of votes cast by the Shareholders, given
in a general meeting.
Subject to the Resolution approving the Cancellation being
passed by the requisite majority at the General Meeting, it is
anticipated that trading in the Ordinary Shares on AIM will cease
at close of business on 24 March 2017, with Cancellation taking
effect at 7.00 a.m. on 27 March 2017.
Upon the Cancellation becoming effective Strand Hanson will
resign as nominated adviser to the Company and the Company will no
longer be required to comply with the AIM Rules.
1.4 Ordinary Share dealing following Cancellation
Following Cancellation, the Company intends to appoint Asset
Match to facilitate trading in the Ordinary Shares of the Company.
Asset Match, a firm authorised and regulated by the Financial
Conduct Authority, will operate an electronic off-market dealing
facility for the Ordinary Shares. This facility will allow
Shareholders to trade their Ordinary Shares on a matched bargain
and arm's length basis via periodic auctions. Shareholders will
continue to be able to hold their shares in uncertificated form
(i.e. in CREST) and should check with their existing stockbroker
that they are able trade in unquoted shares.
The matched bargain trading facility operates under its own code
of practice which governs the behaviour of participants and the
running of the actions. Further information can be found at
www.assetmatch.com.
2. Greenstone Resources LP
Greenstone (which holds beneficially approximately 75.69 per
cent of the current Ordinary Shares in issue) has indicated that it
is supportive of the Cancellation. The Relationship Agreement
provides that Greenstone may not use its voting rights to vote on a
resolution to cancel trading without the approval of a majority of
independent directors, save where it has made a general offer to
all the other Shareholders under the City Code. All Independent
Directors are supportive of the proposed Cancellation
Greenstone has indicated that it has no current intention of
making an offer to acquire the remainder of the Ordinary Shares
held by the other Shareholders.
Greenstone has provided the Company with an irrevocable
undertaking to vote in favour of the Resolution to be proposed at
the General Meeting in respect of the beneficial holdings totalling
19,975,501 Ordinary Shares, representing approximately 75.69 per
cent. of the Ordinary Shares in issue conditional on the continued
recommendation of the Independent Directors.
3. Strategy following the Cancellation
Following completion of the Cancellation, the Board intends to
take the following next steps to reduce Company's running
costs:
-- Restructure the Board and bringing in technical support as required on a consultancy basis.
-- Move the role of chief executive officer to a Namibia-based
role to directly oversee the Project and manage all key stakeholder
relations in Namibia.
-- With no operating office in the United Kingdom, further
reduce the Company's remaining corporate overheads.
The UK registered company address will remain unchanged, and the
Company website will be maintained as a means of keeping
Shareholders informed of progress.
4. Recommendation
The Independent Directors consider that Cancellation and
approval of the Resolution is in the best interests of the Company
and its members as a whole. The Independent Directors therefore
unanimously recommend that you vote in favour of the Resolution as,
where relevant, they intend to do in respect of their own
beneficial shareholdings of 368,585 Ordinary Shares in aggregate
(representing approximately 1.4 per cent. of the Ordinary Shares in
issue).
The Company has received irrevocable undertakings to vote in
favour of the Resolution representing 77.09% of the votes entitled
to vote at the General Meeting. Accordingly, it is anticipated that
the Resolution will be approved at the General Meeting.
Both Greenstone, beneficially holding 75.69 per cent. of the
Ordinary Shares in issue, and the Independent Directors holding
approximately 1.40 per cent. of the shares in the Company, have
irrevocably undertaken to vote or procure the voting in favour of
the Resolution.
DEFINITIONS
The following definitions apply throughout this announcement and
the Form of Proxy that accompanies the Circular unless the context
requires otherwise:
Act the Companies Act 2006
AIM the AIM Market operated by
the London Stock Exchange
plc
AIM Rules the AIM Rules for Companies
published by the London Stock
Exchange as amended from time
to time
Board or Directors the directors of the Company
Cancellation the proposed cancellation
of admission of the Ordinary
Shares to trading on AIM
Circular the circular to Shareholders
to be posted along with the
Notice of General Meeting
City Code the City Code on Takeovers
and Mergers
Company North River Resources plc
CREST the relevant system (as defined
in the CREST Regulations)
for paperless settlement of
share transfers and the holding
of shares in uncertificated
form in respect of which Euroclear
Ireland is the operator (as
defined in the CREST Regulations)
CREST Manual the rules governing the operation
of CREST consisting of the
CREST Reference Manual, the
CREST International Manual,
the CREST Central Counterpart
Service Manual, the CREST
Rules, the CREST Operations
Manual and the CREST Glossary
of Terms, each as amended
from time to time
CREST Regulations the Uncertificated Securities
Regulations 2001 (SI 2001
No. 3755), as amended from
time to time
Euroclear Euroclear UK & Ireland Limited,
the operator of CREST
Form of Proxy the form of proxy for use
by Shareholders at the General
Meeting which accompanies
the Circular
General Meeting or the General Meeting of the
GM Company convened for 10.30
a.m. on 17 March 2017, pursuant
to the Notice of General Meeting
Greenstone Greenstone Resources LP (No.
1911) a limited partnership
registered in Guernsey and
whose registered office is
at 1(st) Floor, Royal Chambers,
St Julian's Avenue, St Peter
Port, Guernsey, G71 3JX, Channel
Islands
Group the Company and its subsidiaries
and subsidiary undertakings
from time to time
Independent Directors the Directors other than Mark
Sawyer
London Stock Exchange the London Stock Exchange
plc
Nominated Adviser Strand Hanson Limited
Notice or Notice Notice of the General Meeting
of GM or Notice of set out at the end of the
General Meeting Circular
Ordinary Shares ordinary shares of 0.2p each
in the capital of the Company
Registrar Capita Asset Services
Regulatory Information a primary information provider
Service service approved by the Financial
Conduct Authority to disseminate
regulated information to the
market
Relationship Agreement the relationship agreement
entered into between the Company
and Greenstone on 28 June
2016
Resolution the resolution to be proposed
at the General Meeting as
set out in the Notice of General
Meeting
Shareholders holders of Ordinary Shares
Uncertificated or recorded on a register of
in uncertificated securities maintained by Euroclear
form in accordance with the CREST
Regulations as being in uncertificated
form in CREST and title to
which, by virtue of the CREST
Regulations, may be transferred
by means of CREST
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Notice provided to the London 21 February 2017
Stock Exchange to notify it
of the proposed Cancellation
Circular and Form of Proxy 21 February 2017
posted to Shareholders
Latest time and date for receipt 10.30 a.m. on 15
of completed Forms of Proxy March 2017
to be valid for the General
Meeting of the Company
Date and time of the General 10.30 a.m. on 17
Meeting March 2017
Expected last day for dealings 24 March 2017
in the Ordinary Shares on AIM*
Cancellation of admission of 7.00 a.m. on 27
the Ordinary Shares to trading March 2017
on AIM*
Notes:
*Assumes that the Resolution to approve the Cancellation is
passed by the appropriate majority at the General Meeting.
Dates set out against events that are expected to occur after
the date of the General Meeting assume that the General Meeting is
not adjourned and that the Resolution is passed at the General
Meeting.
Each of the times and dates above is subject to change. If any
of the above times and/or dates change, the revised times and/or
dates will be notified to Shareholders by announcement on a
Regulatory Information Service.
References to time in this announcement relate to London time
unless otherwise stated.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCEAXAEAELXEFF
(END) Dow Jones Newswires
February 21, 2017 02:00 ET (07:00 GMT)
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