Issue of Equity


 

TIDMTSG 
 
RNS Number : 7742H 
Trans-Siberian Gold PLC 
01 March 2010 
 

 
 
                            Trans-Siberian Gold plc 
 
 
          Proposed equity conversion of US$5.2 million existing debt 
 
                    Proposed placing to raise US$1.7 million 
 
                              Asacha Project update 
 
                                General Meeting 
 
 
LONDON: 1 March 2010 - Trans-Siberian Gold plc ("TSG" or "the Company") (TSG.L) 
is pleased to announce proposals to strengthen its capital base and provide 
additional financial resources by converting US$5,209,133 of existing debt into 
up to 12,345,087 new TSG ordinary shares at 30.8 pence per share (the 
"Conversion") and by raising approximately GBP1.1 million, net of expenses, 
through a placing of 3,533,534 new ordinary shares also at 30.8 pence per share 
(the "Placing"), in each case conditional on the approval of the Company's 
shareholders at a General Meeting of the Company, to be held on 23 March 2010 
(the "GM"). The number of new ordinary shares to be issued pursuant to the 
Conversion will be determined in accordance with the closing US dollar:pound 
sterling exchange rate on 22 March 2010, as more fully set out in a circular 
sent to shareholders on 26 February 2010 (the "Circular") together with the 
notice of the GM. 
 
 
UFG loans 
 
TSG reported on 29 May 2009 that, while negotiations continued with other 
potential sources of finance for the Asacha project, its major shareholder UFG 
Asset Management ("UFG") had agreed to provide the Company with bridging finance 
of up to US$3 million on commercial terms, repayable in two equal tranches, the 
first on the earlier of the first anniversary of the commencement of gold 
production at Asacha and 30 September 2011, and the second on the earlier of the 
second anniversary of first gold production and 30 September 2012. 
 
The Company also reported that UFG had an option, subject to the requisite 
approval of TSG's shareholders, to convert any part of the outstanding loan into 
TSG ordinary shares at a price equivalent to the volume weighted average price 
of the Company's shares for the period of 60 business days prior to notice of 
such conversion. 
 
TSG reported on 19 October 2009 the first drawdown of a three year US$25 million 
loan facility for the Asacha project from a Russian bank (the "Asacha 
Facility"). Negotiations continued during fourth quarter 2009 with a second 
Russian bank, which had indicated more favourable terms over the three year term 
of the facility, with a potential interest saving, net of arranger fees, of 
approximately US$1 million. However, this bank required an interest prepayment 
of approximately US$846,000 during the construction period of the project. 
 
The Company considered that, as the terms offered by the second Russian bank 
were more favourable, it was in the best interests of TSG to refinance the 
initial borrowing. In order to facilitate the refinancing of the Asacha Facility 
and to provide funds for the interest prepayment required by the second bank, on 
2 December 2009 UFG agreed to provide the Company with bridging finance of a 
further US$3.5 million on commercial terms. It was agreed that all or part of 
the loan could be repaid by TSG without penalty at any time before the scheduled 
repayment, which was to be in two equal tranches, on the same dates as the 
earlier UFG loan. It was also agreed that the second UFG loan could be converted 
into TSG shares on the same basis as the first UFG loan as described above. 
 
The Company drew down the US$3.5 million facility from UFG on 8 December 2009 
and, following the completion of the refinancing of the Asacha Facility, repaid 
US$2.5 million to UFG on 30 December 2009. 
 
On 25 February 2010 UFG notified the Company that it wished to exercise the 
conversion option in respect of the outstanding amounts of the two UFG loans. 
 
 
AGA Debt 
 
In connection with the Subscription Agreement between TSG and AngloGold Ashanti 
Limited ("AGA") dated 30 June 2004, AGA agreed to provide specialist technical 
consultancy services to the Company for a three year period on commercial terms. 
The services included staff secondments, as well as provision of mining, 
metallurgical and exploration expertise. TSG and AGA have now agreed the 
outstanding amount due to AGA in respect of the consultancy services at 
US$744,567 and, as part of the settlement, that this amount, less US$32,693 
costs incurred by TSG on behalf of AGA, being US$711,874 net, should bear 
interest on commercial terms with effect from 1 January 2009. 
 
 
AGA Option Exercise and Placing 
 
The Subscription Agreement also included an anti-dilution provision, whereby, on 
each occasion that TSG issues new ordinary shares, AGA has the option to 
maintain its interest in TSG at the same percentage as its shareholding 
immediately prior to such issue. Whenever AGA elects not to exercise this 
option, the maximum interest which it may maintain on any future issue of new 
ordinary shares by the Company is adjusted accordingly. 
 
AGA has notified the Company that, if the proposed conversion of the UFG Loans 
is completed, it wishes to exercise its option to maintain its current 29.74% 
shareholding and is also willing to subscribe for additional new ordinary shares 
so that its total subscription for new ordinary shares shall be on a 
proportionate basis to UFG. The Company and AGA have agreed that this shall be 
achieved in part through the conversion of TSG's indebtedness to AGA, as 
described above, into new ordinary shares, on the same basis as the conversion 
of the UFG loans, with the remaining part by means of a placing of new ordinary 
shares (the latter being the "Placing Shares"). 
 
 
Conversion of the UFG loans and AGA debt 
 
Subject to shareholder approval at the GM, the UFG loans and the AGA 
indebtedness will be converted into new TSG ordinary shares by applying the 
closing US dollar:pound sterling exchange rate on 22 March 2010 and a conversion 
price of 30.8p, based on the volume weighted average closing price of TSG's 
shares for the 60 trading days up to and including 24 February 2010. As 
elaborated in the Circular, the Conversion will result in the issue of up to 
12,345,087 new ordinary shares in the Company (the "Conversion Shares"), of 
which 10,348,803 shares will be issued to UFG and 1,996,284 shares to AGA 
respectively, in consideration of the release of the Company's indebtedness to 
UFG and AGA described above. 
 
The Conversion Shares, when issued, will represent approximately 12.25% of TSG's 
enlarged issued share capital. The Conversion Shares to be issued to AGA are in 
addition to the Placing Shares to be issued to AGA. 
 
 
Proposed Placing 
 
The proposed Placing to raise approximately GBP1.1 million (net of expenses) 
involves a placing, conditional on the approval by TSG's shareholders at the GM, 
by Seymour Pierce Limited of 3,533,534 new ordinary shares with AGA. These funds 
will be utilised for general corporate purposes. 
 
The Placing price of 30.8 pence per share has been calculated on the same basis 
as the conversion price described above. 
 
The Placing Shares, when issued and fully paid, will represent approximately 
3.51% of TSG's enlarged issued share capital. 
 
 
Effect of the Conversion and the Placing 
 
The new ordinary shares to be issued pursuant to the Conversion and the Placing 
will represent up to 15.76% of the Company's enlarged issued share capital. As a 
result of the Conversion and the Placing, UFG's and AGA's respective interests 
will increase to approximately 53.70% and 30.54% of the Company's shares. 
 
As reported on 1 February 2008, the Company is not subject to The City Code on 
Takeovers and Mergers. The Company's principal place of business is not in the 
UK and a majority of its Directors are based outside the UK. Therefore the 
Company continues to be deemed to be outside the jurisdiction of the Code and 
will not be subject to the Code while its management and control remain outside 
the UK. 
 
 
Asacha 
 
Progress has continued at the Asacha Project. During 2009 more than 1,000 metres 
of mine development and preparation works were completed, in total about 2,100 
metres since 2008. 5,445 tonnes of preproduction ore was mined in 2009, with a 
further 2,333 tonnes in January 2010. At the end of that month 41,851 tonnes of 
ore were ready for processing. Underground activities included steel arching, 
electrical works, the installation of pumping equipment and piping to deliver 
compressed air and water. 
 
The concrete foundations for the plant building were finished in October 2009, 
with 31% of the foundations for plant equipment completed by the end of January 
2010. In November 2009, assembly of the metal framework of the plant building 
commenced and lighting of the plant site was arranged with 126 metres of cables 
laid and 20 lamps installed. Work is continuing with two shifts employed. By the 
end of January 2010 44% of the metal parts were ready. 
 
At the tailings storage facility, in spite of severe climatic conditions, site 
soil excavation has continued through the winter, with 23,600 cubic metres 
excavated and transported to the waste heap in January 2010. Work also continues 
on the foundations for the mechanical repair shops and terracing of the fuel 
storage facility. 
 
The total capital cost of the Asacha Project to the start of production is now 
estimated at US$107.4 million, net of US$14.4 million VAT recoveries, compared 
to the September 2009 estimate of US$106.1 million. The total project cost 
includes pre-commissioning mining costs of US$5.1 million, other pre-operating 
expenditure of US$28.8 million, "first fill" equipment spares and consumables of 
US$1.1 million and contingency of US$3.3 million. The revised capital projection 
includes a US$1.5 million increase in the contingency provision and assumes a 
stronger Russian rouble in accordance with official state projections 
(RUR33.9:US$1 instead of RUR35:US$1). 
 
US$86.9 million, net of US$6.2 million VAT recovered, has been spent up to the 
end of December 2009. A further US$20.5 million, net of US$8.2 million 
additional VAT recoveries, is forecast to be spent prior to the start of 
production. 
 
US$17.7 million of capital expenditure, including contingency of US$2.1 million, 
will be incurred after the commencement of production, compared to the September 
2009 estimate of US$7.7 million. The increase in post start up capital 
expenditure includes US$7 million for the completion of the power line in 2011 
and an increase in the contingency provision. 
 
Production of gold is now expected to commence in the first quarter of 2011. 
 
 
Rodnikova 
 
No geologic exploration was undertaken in 2009. The Russian State Commission for 
Reserves's comments and recommendations in respect of the Techno-Economic Study 
of Deposit Development Conditions (a pre-feasibility study) submitted in June 
2009 were received in August 2009. The pre-feasibility study will be revised and 
resubmitted during 2010. The final Report on Reserves is also being developed by 
Zarevo's geologists, with expected submission by September 2010. 
 
 
General Meeting 
 
Shareholders' approval is being sought at the GM for an increase in the 
Directors' authorities to allot shares and to disapply statutory pre-emption 
rights in relation to the Conversion and Placing. Shareholders' approval is also 
being sought for amendments to the rules of the Employee Share Option Scheme 
relating to the commencement of the period within which options may be 
exercised. 
 
 
Related Party Transactions 
 
The Conversion and the Placing, as they relate to UFG and AGA, are defined as 
related party transactions under the AIM Rules. The Directors, other than Messrs 
Fenner and Ryan (who are connected to UFG), having been so advised by Seymour 
Pierce Limited, the Company's nominated adviser, consider the terms of the 
Conversion to be fair and reasonable insofar as the Shareholders are concerned. 
 
The Directors, having been so advised by Seymour Pierce Limited, consider the 
terms of the Placing to be fair and reasonable insofar as the Shareholders are 
concerned. 
 
 
                                      Ends 
Contacts: 
 
Simon Olsen                                                    +44 (0) 1480 
811871 
Seymour Pierce 
Mark Percy                                                      +44 (0) 20 7107 
8000 
 
 
Copies of the Circular are available at the offices of Seymour Pierce Limited 
(20 Old Bailey, London EC4M 7EN) upon request. Copies of the Circular are also 
available from TSG's website in accordance with Rule 26 of the AIM Rules for 
Companies, http:www.trans-siberiangold.com 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 IOELLFSSFTIRFII
Trans-siberian Gold (LSE:TSG)
過去株価チャート
から 9 2024 まで 10 2024