TIDMKEM
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014.Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
Kemin Resources plc
("Kemin" or "the Company")
Company update following resignation of Nominated Adviser
Further to the announcement on 28 September 2018, the Board of
Directors of Kemin Resources Plc (AIM: KEM), a molybdenum and
tungsten exploration and development company with substantial
interests in Kazakhstan, wishes to provide the following statement
by way of an update following the resignation of Strand Hanson
Limited as the Company's nominated adviser ("Nominated Adviser"),
the suspension of trading its shares, and the next steps being
taken by the Board.
Resignation and suspension of trading in the shares:
The Board understands that immediate notice to terminate was
given to the Company by the Nominated Adviser principally on
account of the Company's failure to discuss with it, and further to
announce, a related party transaction, in contravention of AIM Rule
13. Further details are set out below.
In June 2018 Mr A T Bulanbayev, a director of the Joint Venture
Kazakh-Russian Mining Company LLP (KRMC), in which the Company
holds a 90% interest, made an unsecured short term working capital
loan to the Company of approximately GBP26,000 (12m Kazakh Tenge),
repayable on demand (the "Transaction").
The purpose of the Transaction was to fund urgent payments
required to be made in Kazakhstan in order to meet the Group's
obligations under the approved work programmes agreed with the
Ministry of Industry and Development in Kazakhstan, and to meet
other smaller payments in order to progress the Drozhilovskoye
project. In compliance with Kazakh company law, the loan was
provided interest free.
The loan was principally for the following purposes:
-- geological exploration (drilling and extraction of core samples);
-- creation of an electronic database, and analysis and interpretation of
ore bodies;
-- analytical laboratory works on drilled ores; and
-- transportation costs of ore delivery to China for technological
testing (see below).
Payments in relation to the above amounted to 9,789,132 Kazakh
Tenge.
The Company intends to use the remaining funds to pay a company
based in China to undertake an assessment in relation to the
processing technology required to maximise the yields from the
ore.
Full disclosure was made of the Transaction on 28 September 2018
in the interim statement of the Company released on that date, an
extract of which is set out below:
"During the period the Company received financial support from
Amrita (as disclosed in note 1) a Company connected with the major
shareholder and also from a Director of the subsidiary Company as
disclosed in note 7 of the Interim Statements. The loan from the
Director of approximately GBP26,000 under Kazakhstan Company Law is
charged with no interest, the loan was to fund short term working
capital and the Directors are of the opinion the terms of the
transaction are fair and reasonable.....
Note 7 Related Party Transactions
A T Bulanbayev a Director of the subsidiary KRMC made a loan to
the Company of 12m Kazakh Tenge, (GBP26,600), in accordance with
Kazakhstan Company law no interest is charged on this loan
amount."
In accordance with AIM Rule 13, the Transaction constituted a
related party transaction being in excess of the relevant class
test based on 5% of the turnover of the Company, and as such should
have been disclosed to the market at the time it was entered into,
which was in June 2018.
The total of GBP26,000 was advanced by a local director of
Kemin's Kazakh subsidiary company, KRMC, on 30 June 2018 to make
payments for operational purposes. These payments required prompt
settlement in local currency at a time that Kemin did not have
funds available in its local account. Local management agreed the
short term loan on an interest free basis and with no benefit to
the lender. Local management did not immediately report the loan
and the transaction was detected through a routine internal review
prior to the preparation of the interim financial statements. Once
reviewed by the Chief Financial Officer, Chief Executive Officer
and the Nomad it became apparent this was a reportable event.
Owing to the internal administrative error, no disclosure was
made at that time, and the Board omitted to review the Transaction
with its Nominated Adviser to ensure that it was fair and
reasonable, as was required by the rules at the time of the
transaction. The transaction was disclosed in the interims as noted
above and agreed as being fair and reasonable as far as
shareholders are concerned.
Although the Board understands that there had been deficiencies
in their communication with the Nominated Adviser, they were
disappointed by the immediate resignation and regret the
circumstances arising. The Company is putting procedural safeguards
in place to ensure that this will not reoccur. The steps taken will
involve more regular checks and reporting between head office, KMRC
and the Board. The training needs of the employees involved will
also be reviewed and updates given to staff as appropriate.
The Company is not aware of any other matters that are required
to be disclosed to the market.
Next steps
Given the unanticipated resignation and strict timeframe to
appoint a new nominated adviser pursuant to the AIM Rules, the
Company believes that it will not be in a position to formally
appoint a new advisor within the required timeframe. For that
reason, the Board has no option but to prepare for the cancellation
of the Company's shares to trading on AIM.
The Board believes that the cancellation of the Company's shares
from trading on AIM in no way reflects on the future prospects and
viability of the Company.
As detailed in Note 1 to the Interim announcement of 28 November
2018, the Company has a previously approved facility available,
which will enable it to continue to develop and provide the
necessary level of working capital. The facility amounts to
approximately GBP4.4m, available from Amrita Investments
Limited.
The next steps for the Company are outlined below, and the Board
are committed to taking the Company forward for the benefit of all
shareholders.
Despite the cancellation, the Company intends to:
-- provide continued liquidity for shareholders by setting up a matched
bargain facility, further details of which will be announced
shortly;
-- continue with the work programmes for 2018 to 2021, to include :
geological and exploration works;
drilling of 43 boreholes, 6030 running metres;
sampling and analysis; and
technological research.
In accordance with work programme for 2018, the total investment
for the two deposits will be approximately GBP750,000 (352m Kazakh
Tenge).
-- The Board will continue to explore various corporate opportunities as
they arise.
-- Contact will be maintained with shareholders via the Company's website www.keminresourcesplc.com
with updates as appropriate.
In the meantime, the Board confirms that it will continue to
manage the Company according to quoted company principles and in
particular, prior to entry into any significant acquisition, whilst
not required to, the Board will nevertheless seek shareholder
approval for any such transaction. Further, in the event such a
transaction is a related party transaction, the Company will engage
an independent financial adviser to give a fair and reasonable
opinion in the manner required under the AIM Rule 13.
Sanzhar Assaubayev, CEO of Kemin Resources said:
"Given the tight timelines in appointing another Nominated
Adviser, the Company has had to review its options.The Board
believes that the Company has a strong future and will ensure that
the Company continues to develop for the benefit of all
shareholders."
For further information please visit www.keminresources.com or
contact:
Kemin Resources plc:
Rajinder Basra (Chief Financial Officer)
+44 (0) 207 932 2430
Information on the Company
Kemin Resources plc (AIM: KEM) was formed into its present
structure in April 2013 by the reverse take-over of GMA Resources
plc by the 'Joint Venture Kazakh-Russian Mining Company LLP'
(KRMC).
The Company is focused on developing its mineral resources
including molybdenum, tungsten and lithium deposits Drozhilovskoye
and Smirnovskoye. Each of the deposits is assessed to have
significant value.
Kemin's 90% owned Kazakh entity, KRMC, is the developer and
future operator of the two subsoil licences that allow exploration
and mining at each deposit.
Both deposits are located in northern Kazakhstan.
View source version on businesswire.com:
https://www.businesswire.com/news/home/20181019005456/en/
This information is provided by Business Wire
(END) Dow Jones Newswires
October 19, 2018 11:31 ET (15:31 GMT)
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