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LONDON (Alliance News) - Kodal Minerals PLC on Thursday said it has struck a deal to potentially acquire interests in a string of gold exploration opportunities in Mali and the Ivory Coast from Taruga Gold Ltd, which would lead to its share capital more than tripling.
Kodal said it wants to fully acquire Taruga Gold's subsidiary that holds the gold exploration assets for a consideration of GBP410,000.
However, Kodal is proposing to settle that consideration by issuing 1.02 billion new shares in the company to Taruga. Those shares would be equal to 49.5% of Kodal's enlarged issued share capital, and 98% of its existing share capital.
The company being acquired is not generating any revenue and is loss-making, with the subsidiary to be acquired, International Goldfields (Bermuda) Ltd, producing a AUD54,000, or GBP29,000, loss in the financial year to the end of June 2015 and a AUD60,000, or GBP32,000, loss in the six months to the end of December 2015.
Importantly, Kodal also plans to conduct an additional fundraising to try to raise an additional GBP680,000, which is tied in to the acquisition and set to make Kodal's share capital swell even further.
Kodal shares were trading down 24% to 0.0610 pence per share on Thursday morning, though still considerably higher than the issue price for the Taruga shares and the associated fundraising.
Those funds would be raised by a placing of 762.5 million new shares at a price of 0.04 pence each to raise GBP305,000, whilst a subscription will raise a further GBP375,000 through 937.5 million new shares at the same price. The Taruga consideration shares are being issued at the same price as well.
That means Kodal's current share capital of 1.05 billion shares will rise to around 3.77 billion shares in issue if it issues the shares to Taruga and completes the placing and subscription as described Tuesday - which would mean the share capital would multiply by 3.6.
Importantly, the acquisition is conditional on the placing and subscription being completed, which in turn is reliant on Kodal shareholders approving the proposed fundraising.
The GBP680,000 to be raised from the placing and subscription will be used for a variety of reasons, including working capital to the tune of GBP275,000.
Kodal will spend GBP120,000 on local administrative work in Mali and a further GBP170,000 for exploration drilling in the country. The company will also spend GBP55,000 on exploration work in the Ivory Coast and a further GBP35,000 on acquiring more land in the country. Lastly, GBP10,000 will be spent on advancing its project in Norway and a further GBP15,000 will be spent on revewing its Grimeli project in the country.
Kodal shareholders will vote on the propositions at a general meeting on May 13.
One of the resolutions shareholders will have to vote on is the proposed appointment of Bernard Aylward as Kodal's new chief executive. If the acquisition goes through, Aylward will be appointed to Kodal's board.
Aylward has served as the managing director of Taruga Gold and is also a director of the subsidiary set to be acquired by Kodal.
If he is appointed to the board, Kodal will sign an agreement for a company that is owned by Aylward, Matlock Geological Services Pty Ltd, to provide consulting and other services to Kodal at a rate of USD9,167 per month.
The other two resolutions being put to shareholders comprise a resolution to grant power to Kodal directors to allot and issue shares and another covering pre-emptive rights.
Looking at the acquisition from an operational point of view, Kodal would acquire eight mineral exploration licenses and two mineral licence applications. Six of the licenses are in the Ivory Coast with the remaining two projects lying within Mali.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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