RE: RNS 13 Jul 2023 07:07
3 July 2023
Subscription Agreement with Shard Merchant Capital Ltd
Zanaga Iron Ore Company Limited ("ZIOC" or the "Company") (AIM: ZIOC), is pleased to announce that it has entered into an equity subscription agreement ("ESA") with Shard Merchant Capital Ltd ("SMC"), an institutional investor, dated 1 July 2023. This follows the successful implementation of an equity subscription agreement on similar terms in June 2020.
Under the ESA the Company will issue and SMC will subscribe for up to 36 million ordinary shares of no par value in the Company ("Subscription Shares") in up to three tranches of up to 12 million shares each (as described below).
In the event the maximum number of Subscription Shares are issued by ZIOC and subscribed for by SMC, the share capital of ZIOC will be increased by c.5.9% on a fully diluted basis, based on the 593,374,746 ordinary shares in the Company in issue as at today's date.
Pursuant to the ESA, SMC has undertaken to use its reasonable endeavours to place the relevant Subscription Shares that it has subscribed for and to pay to ZIOC 95% of the gross proceeds of any such sales.
The ESA provides a number of attractive advantages to ZIOC, which are highlighted below:
· Relatively low level of dilution to ZIOC shareholders
· ZIOC has the ability to repurchase any unsold Subscription Shares from SMC, subject to legal requirements - an important element of flexibility for ZIOC. Any Subscription Shares re-purchased will be cancelled, limiting dilution further
· Low cost of capital - SMC will retain only 5% of the gross proceeds of any sale of Subscription Shares
Structure Overview:
Issues of Tranches of Subscription Shares
Under the ESA, Subscription Shares will be issued and SMC will subscribe for the Subscription Shares in tranches of up to 12 million shares. The first tranche of 12 million Subscription Shares (the "First Tranche") will be subscribed for by SMC within three trading days of the date of the ESA.
A second Tranche of 12 million Subscription Shares (the "Second Tranche") will be subscribed for by SMC 10 trading days following the earlier of: (a) the date on which SMC has sold all the Subscription Shares subscribed for in the First Tranche; and (b) such other date as SMC and the Company agree.
Solely at the discretion of the Company, a third tranche of up to 12 million Subscription Shares will be subscribed for by SMC (the "Third Tranche" and together with the First Tranche and the Second Tranche, each a "Tranche"). Any such subscription will take place within 14 trading days of the earlier of: (a) the date on which SMC has sold all the Subscription Shares subscribed for in the Second Tranche; or (b) such other date as SMC and the Company agree.
Sales of Subscription Shares
As regards each Tranche, SMC has agreed to use its reasonable endeavours to place all the Subscription Shares comprised in that Tranche within a three month period from the date o
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