TIDMBKY
RNS Number : 2636P
Berkeley Energia Limited
30 August 2017
BERKELEY ENERGIA LIMITED
NEWS RELEASE | 30 August 2017 | AIM/ASX: BKY
Berkeley Energia signs US$120 million sovereign wealth fund
strategic investment to bring Salamanca into production
Berkeley Energia ("Company") is pleased to announce that it has
entered into an investment agreement with the sovereign wealth fund
of the Sultanate of Oman agreeing to invest up to US$120 million to
fully fund the Salamanca mine into production.
The investment will position the fund as a long term strategic
investor in the Company as well as a potential offtake partner, and
is structured as:
-- an interest-free and unsecured convertible loan of US$65
million which can be converted into ordinary shares at 50 pence per
share resulting in the fund owning approximately 28% of the
Company; and,
-- three tranches of options convertible at a weighted average
price of 85 pence per share contributing a further US$55 million
towards the later phases of the Company's development of the
Salamanca mine resulting in the fund holding a further 9% of the
Company.
The investment is binding on the parties and is subject to
approval by the Company's shareholders.
The fund will have the right to appoint a non-executive director
to the Board and has the right to match future uranium off-take
transactions on similar commercial terms subject to certain
limitations on volume. A summary of the key commercial terms of the
investment by the State General Reserve Fund ("SGRF") is included
below.
Managing Director, Paul Atherley, commented:
"We are delighted to welcome Oman's sovereign wealth fund as a
long-term strategic investor in the Company and look forward to
working closely with them to realise the full potential of the
exciting Salamanca project.
The Salamanca mine is one of the only major uranium mines in
development in the world today at a time when spot uranium prices
are at a decade low.
The project benefits from a rare combination of low up front
capital cost and very low operating costs and due in part to its
location in the heart of the European Union we are able to contract
supply at prices well above the current spot price.
The fund's interest in matching our future off-take contracts
will further enhance our revenue stream."
Mr Tim Keating, Private Equity Manager for Mining and Resources,
State General Reserve Fund commented:
"The Salamanca mine matches our investment criteria of being a
long life, low cost mine development opportunity with outstanding
economic fundamentals. We are excited to partner with the Berkeley
Energia team to unlock the full potential of the Salamanca
project."
Canaccord Genuity London acted as corporate finance advisor to
the transaction.
For further information please contact:
Berkeley Energia Limited +44 20 3903 1930
Paul Atherley, Managing info@berkeleyenergia.com
Director
Hugo Schumann, Chief Commercial
Officer
Peel Hunt LLP (Joint Broker) +44 20 7418 8900
Matthew Armitt
Ross Allister
Chris Burrows
WH Ireland Limited (Nominated
Adviser) +44 20 7220 1666
Paul Shackleton
Jessica Cave
Buchanan +44 207 466 5000
Bobby Morse, Senior Partner BKY@buchanan.uk.com
Anna Michniewicz, Account
Director
KEY COMMERCIAL TERMS OF INVESTMENT BY SGRF
Subject to shareholder approval and other conditions precedent,
the Company will place a US$65 million Convertible Loan Note
("Note") to SGRF. The Note is non-interest bearing and is unsecured
and only repayable in an event of breach of the terms of the
investment agreement which includes a breach of a representation or
warranty, a breach of covenants, insolvency or the Company ceasing
to conduct business or ceasing being listed on either AIM, LSE or
ASX. The Note is convertible by SGRF at any time into fully paid
ordinary shares of the Company at an issue price of GBP0.50 per
share being an 11% premium to the 10 day volume weighted average
price of Berkeley's shares on AIM to 29 August 2017. Should the
Company raise further equity prior to conversion of the Note at a
price below GBP0.50 then the conversion price of the Note will be
reset to the issue price of the equity raising, subject to a floor
price of GBP0.27 per share. The Company may convert all or part of
the Note into ordinary shares in the Company any time after
Technical Completion of the centralised processing plant at
Retortillo has occurred. Technical Completion is defined to occur
once key commissioning tests have been successfully completed. If
Technical Completion has not occurred 4 years after the issue of
the Note, then the Note will automatically convert into shares at
the lower of GBP0.50 per share or the last trading price of the
Company's shares on AIM at the relevant time, subject to conversion
at the floor price of GBP0.27 per share. The Note may also be
converted by either SGRF or the Company if a change of control
event occurs in relation to the Company.
Upon receipt of shareholder approval and upon satisfaction of
conditions precedent, the Company will also issue to SGRF a total
of 50,443,124 unlisted options in three tranches for a further
US$55 million once exercised as follows:
-- 10,088,625 options with an exercise price of GBP0.60, vesting
and exercisable on Conversion of the Note and expiring 12 months
from the date of vesting;
-- 15,132,937 options with an exercise price of GBP0.75, vesting
and exercisable on Conversion of the Note and expiring 18 months
from the date of vesting; and
-- 25,221,562 options with an exercise price of GBP1.00, vesting
and exercisable on Conversion of the Note and expiring 24 months
from the date of vesting.
The investment agreement also provides that if SGRF holds a 10%
interest in the Company on an as-converted basis they have the
right to appoint one nominee to the board of the Company and the
right to be provided with certain information from the Company
common for this type of investment.
The Company is also pleased to grant SGRF the right to purchase
uranium from the Company at the same price and up to the same
volume as any bone fide customer of the Company who concludes a
future long-term offtake agreement with Company. The right to match
shall be subject to an annual cap (on a rolling 12 month basis) on
the volume of mined product, which shall not exceed the greater of
1 million pounds of U3O8 concentrate per annum or 20% of annual
production. SGRF has 30 days to match off-take contracts following
receipt of notice from the Company of entering into a new long-term
offtake contract. Existing contracts in place will not be subject
to the right to match provision. The right to match only applies so
long as SGRF holds more than a 10% interest in the Company on an
as-converted basis. If a change of control transaction occurs, the
right to match shall cease to exist. The right to match
transactions is subject to approval from Euratom and compliance
with applicable laws and exchange rules.
The investment agreement with SGRF contains exclusivity
provisions with no shop restriction, no talk restriction (subject
to the Company's directors' fiduciary obligations) and a
notification obligation in respect of potential competing
transactions. The investment agreement also contains the usual
warranties and undertakings considered standard for this type of
investment. Conditions precedent of the transaction include the
following: Berkeley shareholders approving the issue of ordinary
shares and options to SGRF pursuant to the conversion of the Note,
Foreign Investment Review Board's approval for SGRF's investment
and other conditions precedent which are considered standard for an
agreement of this nature including no material adverse change, no
law or litigation prohibiting the transaction, representations and
warranties of the parties being true and correct and the parties
complying in all material respects with their obligations under the
investment agreement. The investment agreement may be terminated if
any conditions precedent are not satisfied or waived by 31 January
2018 and SGRF may terminate if there is a breach of a
representation or warranty or a material adverse change occurs in
respect of the Company. Subject to the opinion of the independent
expert and the Company's directors' fiduciary obligations, each
Board member intends to vote in favour of the transaction in
respect of all ordinary shares they hold or control. Subject to the
same qualification, each director unanimously recommends that
shareholders vote in favour of the transaction at the shareholders
meeting which will take place in due course.
This announcement contains inside information which is disclosed
in accordance with the Market Abuse Regulation which came into
effect on 3 July 2016.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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