TIDMKGLD
RNS Number : 5976I
Kolar Gold Limited
17 June 2011
17 June 2011
Kolar Gold Limited
Admission to trading on AIM and GBP12 million fundraising
Highlights
-- Admission to AIM with a market capitalisation of
approximately GBP40 million.
-- Placing of 30 million new Ordinary Shares at 40p raising
GBP12 million.
-- KG is the first Indian gold explorer and mine developer
admitted to trading in the UK, providing investors access to
opportunities for gold discoveries in the prospective Kolar Gold
Belt in Southern India.
-- Proceeds to be used to exercise options to explore the Kolar
Gold Projects (which cover 568km(2) of the Kolar Gold Belt in
Southern India) and accelerate the ongoing exploration
programme.
-- The Kolar Gold Projects have a defined exploration target of
1 - 10 Moz and current JORC resource estimate of 92,713 oz of gold.
(Mining Associates CPR, December 2010)
-- A drilling programme has commenced. Management exploration
target of 1-2Moz in the medium term.
-- The Company continues to pursue the acquisition of the Kolar
Gold Fields mine with a defined exploration target of 2 - 10Moz
(Mining Associates CPR, December 2010)
Kolar Gold Limited ("KG"or the "Company"), a gold exploration
and development company that has entered into agreements which give
it rights to explore and develop one prospecting licence and 13
further licence applications in the Kolar Gold Belt, Southern India
(the "Kolar Gold Projects"), announces the commencement of trading
on AIM ("Admission") of its shares after a placing (the "Placing")
raised gross proceeds of GBP12 million.
Pursuant to the Placing, the Company has issued 30 million new
ordinary shares at a 40p placing price ("Placing Price") to a broad
base of institutional investors (equivalent to 30 per cent of the
enlarged share capital of the Company). Based on the Placing Price,
the market capitalisation of KG following Admission will be GBP40
million.
Cenkos Securities is KG's Nominated Adviser and joint broker and
Ocean Equities acts as joint broker.
Commenting today, Nick Spencer, Chief Executive Officer of Kolar
Gold Limited, said:
"The Kolar Gold Projects present an exciting opportunity to
explore and develop one of the world's most prospective gold
provinces. We believe that the increased profile and additional
funding AIM admission brings will allow us to develop into a
leading gold exploration and mine development company in India.
Following today's successful Admission our main objective is to
accelerate drilling by deploying two full time rigs at the South
Kolar Prospecting Licence and to continue to assist GMSI in
progressing the outstanding licence applications which will then
allow us to commence drilling in other areas of the Kolar Gold
Projects, on which there has already been years of preliminary
exploration work. We look forward to working closely with our
Indian partner SUN Mining on the granting of these licences and
also in participating in new mining policy legislation. I believe
that their presence in Delhi will be of great benefit to the
Company in executing its plans."
The Kolar Gold Projects
The Group aims to become a leading Indian gold explorer and mine
developer and accordingly has entered into an option agreement and
mine operator agreement with Geomysore Services India Private
Limited ("GMSI"), a Bangalore based exploration group. These GMSI
Agreements give the Company the exclusive right, once the licence
applications have been granted, to explore and develop the Kolar
Gold Projects situated in the Kolar Gold Belt, an 80 kilometre long
Archaean Greenstone Belt in Southern India. The Kolar Gold Projects
presently consist of 1 granted Prospecting Licence, and
applications for 6 further Prospecting Licences, 4 Mining Licences
and 3 Reconnaissance Permits. They include 32 known mineralised
prospects and cover 568 square kilometres in the southern Indian
states of Andra Pradesh, Karnataka and Tamil Nadu. The Company
commenced exploration on the first granted Prospecting Licence in
South Kolar in February 2011.
In addition, the Company will continue to target the potential
acquisition of the historic Kolar Gold Fields mine which produced
25 million ounces of gold at an average grade of 15.9 grams per
tonne over 120 years until closure in 2001.
The Kolar Gold Belt is regarded as one of the most geologically
prospective Archaean Greenstone Belts in the world. It is also
regarded by Mining Associates Pty Limited, the Competent Person
under the AIM Rules, as comparable to the Archaean Greenstone Belts
of South Africa, Canada and Western Australia which have similar
geology, structure and style of mineralisation.
Placing Statistics
Placing Price per share GBP0.4
Number of Existing Ordinary Shares 68,411,736
Number of Placing Shares being issued pursuant
to the Placing 30,000,000
Number of Ordinary Shares in issue at Admission* 100,107,019
Percentage of Enlarged Share Capital represented 30.0 per cent.
by Placing Shares
Gross proceeds of the Placing GBP12.0 million
Estimated net proceeds of the Placing receivable GBP11.3 million
by the Company
Market capitalisation of the Company at the Placing GBP40.0 million
Price at Admission
TIDM Code/AIM Symbol KGLD
ISIN GG00B3M9KL68
* includes 1,695,283 Ordinary Shares to be issued on Admission,
other than in connection with the Placing.
For further information please contact:
Enquiries:
Kolar Gold Limited
Nick Spencer (Chief Executive Officer) +617 3846 0211
Harvinder Hungin (Chairman) +44 7990 516669
Cenkos Securities
Nomad and Joint Broker
Beth McKiernan
Ken Fleming +44 20 7397 8900
Ocean Equities
Joint Broker
Will Slack +44 20 7786 4370
Tavistock Communications
Ed Portman / Paul Youens +44 20 7920 3150
BACKGROUND
Overview of the Group
The Company is a Guernsey registered company with an
internationally experienced board which proposes to raise GBP12.0
million by way of the Placing to fund the exercise of its option
rights to, and exploration plans in, the Kolar Gold Projects which
consist of 1 granted licence and 13 licence applications held/made
by GMSI in Southern India. The Kolar Gold Projects include 32 known
mineralised prospects and cover 568 km(2) of the Kolar Gold Belt, a
geologically prospective Archaean Greenstone Belt which also
includes the adjacent Kolar Gold Fields. The Kolar Gold Fields
produced 25 Moz of gold at an average of 15.9 g/t for over 120
years until closure in 2001. KG has secured its rights over the
Kolar Gold Projects by entering into agreements with GMSI for a
total contingent consideration of GBP6.9 million (GBP2.2 million of
which has already been paid).
Business Strategy
The Group aims to become a leading Indian gold explorer,
developer and operator benefiting both its Shareholders and the
wider community in which it operates. To progress this strategy,
the Group intends to focus on the Kolar Gold Projects and
specifically:
-- to maintain the granted licence and progress the applications
over the remaining Kolar Gold Projects so that, under the GMSI
Agreements, it can exercise its rights to explore and develop the
gold potential of the granted licence areas;
-- concentrate on the Group's key interests in the granted
licence area in South Kolar and more advanced applications held by
GMSI in North Kolar and East Kolar and validate existing data and
to carry out drilling and other exploration to increase the
Inferred and Indicated JORC compliant resource base in areas of
known mineralisation; and
-- to undertake geological exploration, including geophysics,
geochemical sampling, trenching and drilling to identify extensions
of existing deposits and new zones of gold mineralisation within
the Kolar Gold Projects.
Having considered the Competent Person's Report and the
Company's operational experience to date, the Directors believe
that a JORC compliant Inferred and Indicated resource of between 1
and 2 Moz may be delineated in the medium term.
If exploration of the Kolar Gold Projects is successful, the
Company intends to develop, mine and operate the Kolar Gold
Projects by employing modern mining techniques and internationally
recognised standards on health, environment and safety.
In addition, the Board intends to continue to pursue the
potential acquisition of the mining assets in the Kolar Gold Fields
owned by Bharat Gold Mines Ltd ("BGML") with the BGML ex-employee
groups and SUN Mining. The Directors believe that the exploration
and development of the Kolar Gold Projects, which are adjacent to
the Kolar Gold Fields, will demonstrate the Group's commitment to
gold exploration in this region and that this, together with
project feasibility and active development of the area may assist
in their continued pursuit of the BGML Assets.
Finally, in the longer term, the Group intends to actively
pursue further opportunities in gold projects in India which could
potentially add value to the Group.
Key Strengths
The Directors believe the key strengths of the Group's business
are:
-- its internationally experienced board;
-- it is well positioned to explore and develop the Kolar Gold
Projects (with drilling having commenced on the first granted
licence in February 2011) for which the Competent Persons Report
defines an exploration target of 1 to 10 Moz of gold across all
areas, underground and open pit;
-- the systematic exploration and drilling programme with the
objective of resource identification, validation and delineation,
initially in South Kolar and subsequently in North and East Kolar.
Mining Associates, acting as the Competent Person, for the purposes
ofAdmission, states that exploration of the Kolar Gold Projects is
akin to an evaluation of the entire gold fields of Western
Australia prior to the commencement of current activities in the
late 1970s;
-- through its agreements with GMSI over the Kolar Gold
Projects, it has access to one of the most prospective Archaean
Greenstone Belts in the world;
-- the potential acquisition of the BGML assets (for which, the
Competent Person's Report defines an exploration target of 2 to 10
Moz of gold across all areas, underground, open pit and tailings)
by the Company, which the Directors believe may be assisted by the
Group's commitment to the exploration, potential project
feasibility and active development of Kolar Gold Projects;
-- the agreement between the Company and SUN Mining, pursuant to
which SUN Mining will assist KG in its dealings with the Government
of India and local government regarding the Kolar Gold Projects and
the possible acquisition of mining assets from BGML. Through its
agreement with SUN Mining, SUN Mining has become a shareholder in
the Company and may increase its shareholding in return for
assisting the Company with its strategy.
Gold consumption and mining in India
In 2010, total Indian gold demand reached US$38 billion, being
963 tonnes, and accounting for approximately 25 per cent of the
global gold market (source: World Gold Council). This demand has
been increasing at an average of 13 per cent per year for the last
ten years. India, however, currently only produces approximately
0.5 per cent of its annual gold consumption, with the Archaean
Greenstone Belts of the Dharwar Craton (in which the Kolar Gold
Belt is situated), being the main producing areas. Hutti Gold Mines
Company Limited is the only significant primary gold producer, with
an annual output of approximately 95,000 ounces per annum.
Strong Board and Management
Details of the Board, which comprises 6 directors who
collectively have international experience, are set out below:
Harvinder Hungin (aged 50) (Non-Executive Chairman)
Mr. Hungin, was an investment banker from 1984 to 2002, firstly
at Lazard before moving to Hambros in 1991, where he was appointed
a director in 1994. At Hambros, he also oversaw the bank's
activities in
India. In 1998, Societe Generale acquired Hambros. Prior to
leaving the City in 2002 he was a Managing Director of investment
banking and a member of the European M&A Operations
Committee.
In 2004, Mr. Hungin co-led the GBP1.8 billion take-private of
Chelsfield plc, one of the UK's largest property investment and
development companies and as part of this he co-led the formation
of a GBP400m fund to invest in Global Switch, the world's largest
data centre company. Chesfield plc's other key projects included
the development of theWestfield shopping centre in west London and
the obtaining of planning consent at Stratford (site of the 2012
Olympics), the largest consent granted within the M25.
In 2005 Mr. Hungin co-founded Chelsfield Partners LLP, which
invested in assets in the UK and central and western Europe. He
exited from property in May 2007 and has been developing a
portfolio of diversified business interests, including the
formation of an infrastructure development vehicle in India.
Nicholas Spencer (aged 49) (Chief Executive Officer)
Mr. Spencer joined the board of KG plc in 2004 and has
experience in building businesses in mining, logistics, aerospace
and engineering services with multinational companies in Australia,
the UK, Asia and the Middle East. He has 25 years experience in
international business including mine build and revival, open pit
mining, equipment purchase and mine finance. He was responsible for
building a $125 million mine in Egypt and spent more that seven
years with BHP managing operations and business development in
Australia. Mr. Spencer also spent many years in Asia establishing
joint ventures for TNT
Limited. He is an engineer with an MBA from Cranfield UK who has
held senior executive positions with BHP, TNT, Meggitts Aerospace,
Babcock Contractors and co-founded private equity fund manager,
Crescent Capital Partners.
Richard Johnson (aged 60) (Chief Operations Officer)
Mr. Johnson is a qualified mining engineer and a Fellow of
AusIMM. He joined KG plc in a non-executive role in 2001 and was
appointed an executive director in 2010 with the responsibility of
leading the on ground activities of KG and operational aspects of
arrangements with GSMI in India. Following Admission, Mr. Johnson
will be based in India. Mr. Johnson has over 40 years of mining
experience with Australian and international mining companies,
gaining exposure to a number of commodities with particular
emphasis on the gold sector. He held various production management
positions in Johannesburg Consolidated Investment Co Limited
("JCI") at its gold and platinum mines between 1973 and 1979.
Whilst with JCI Mr. Johnson also worked in the group's Finance
Division responsible for the financial modelling and valuation of
new capital projects.
Mr. Johnson has held a number of executive positions in mining
companies including Golden Dumps (Pty) Limited in South Africa; DRD
Gold Limited; Emperor Mines Limited, and Allied Gold. He has a long
association with Australia, Papua New Guinea and South Africa
developing underground and open pit gold mines and tailings
resources and has worked closely with government authorities,
administrative bodies and the financial sector as well as
consultants, contractors and onsite management.
Stephen Coe (aged 45) (Non-Executive Director)
Mr. Coe qualified as a Chartered Accountant with Price
Waterhouse in 1990 and remained in audit practice, specialising in
financial services, until 1997. From 1997 to 2003 he was a director
of the Bachmann Group of fiduciary companies and Managing Director
of Bachmann Fund Administration Limited, a specialist third party
fund administration company. From 2003 to 2006 Stephen was a
director with Investec in Guernsey and Managing Director of
Investec Trust (Guernsey) Limited and Investec Administration
Services Limited. He became self employed in August 2006 providing
services to financial services clients and is a director of a
number of listed and unlisted investment funds and offshore
companies including Raven Russia Limited, Matrix European Real
Estate Investment Trust Limited, ACP Capital Limited and Trinity
Capital PLC (and serves as Chairman of the Audit Committee for
these companies). Mr. Coe has been involved with offshore
investment funds and managers since 1990 with significant exposure
to property, debt, emerging markets and private equity
investments.
Shiv Khemka (aged 48) (Non-Executive Director)
Mr. Khemka is Vice Chairman of SUN Group, a private investment
group active in several transforming
markets around the world, with a particular focus on Russia and
India. The Group is a leading principal and private equity investor
across various industries including Oil and Gas, Mining, Real
Estate, Infrastructure, Technology and Consumer Goods. SUN Group is
a member of the Russian Prime Minister's Foreign Investment
Advisory Council (FIAC). Mr. Khemka is also Chairman of the Board
of SUN Gold which is the Group's holding company for its gold
assets in Russia and Kazakhstan.
Mr. Khemka was elected a 'Global Leader for Tomorrow' (GLT) at
the World Economic Forum in Davos in 1997 and was invited to join
the Forum's 'Foreign Business Leaders Council' for Russia. He
serves on the Board of Overseers of The Wharton School, and on the
Board of Governors of The Lauder Institute, University of
Pennsylvania. Mr. Khemka is also a member of the President's
leadership Council at Brown University; a member of the
International Advisory Board of the Centre for the Advanced Study
of India (CASI) at the University of Pennsylvania and sits on the
Advisory Board of the School of Oriental and African Studies (SOAS)
in London. As one of the founders and partners, Mr. Khemka also
sits on the Council of the Moscow School of Management "Skolkovo"
and an inaugural member of the Advisory Board for the Wharton
Entrepreneurship and Family Business Research Center at CERT for
the Middle East. He is also Chairman of the Aikido Aikikai
Foundation of India.
Mr. Khemka is the Trustee of The Nand & Jeet Khemka
Foundation and the Nabha Foundation as well as the Chairman of The
Global Education and Leadership Foundation.
Mr. Khemka was educated at Eton College, received a B.A. from
Brown University, an M.B.A. with distinction from The Wharton
School and a Master's in International Studies from The Lauder
Institute, University of Pennsylvania.
Stephen Oke (aged 56) (Non-Executive Director)
Mr. Oke holds a BSc Honours degree in Geology from the
University of Southampton and an MBA from the University of the
Witwatersrand Graduate School of Business. He has 35 years'
experience in the mining and metals industry of which some 12 years
were spent in various operational management positions for the
National Coal Board, Anglovaal Ltd, BPCoal and Johannesburg
Consolidated Investment Company Limited. Subsequently, he has held
senior positions in the investment banking industry for Smith New
Court, Merrill Lynch, NM Rothschild and Sons and Standard Bank,
specialising in the metals and mining sector, where he advised on a
number of transactions and equity capital fund raisings worldwide.
He is a non executive director of International Ferro Metals
Limited, African Mining & Exploration plc and Shaft Sinkers
Holdings plc and was previously on the boards of Nikanor plc,
Katanga Mining Limited and Kazakhgold Group Limited.
This summary should be read in conjunction with the full details
set out in the Admission Document.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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