BHR.L Regulatory News (BHR)

1 Feb 2008 11:42

Carnegie Minerals plc01 February 2008 CARNEGIE MINERALS PLC ("Carnegie" or the "Company") Issue of Equity and Notice of Extraordinary General Meeting The Board of Carnegie Minerals Plc (AIM - CME), the mineral sands resourcecompany with production interests in The Gambia and advanced exploration inadjoining Senegal, is pleased to announce that it has raised £1,130,000 (beforeexpenses) through a placing to institutional and other investors at 4p a share. A Circular has been sent to Shareholders to convene an Extraordinary GeneralMeeting for the purposes of passing resolutions to enable the proposed CapitalRaising to be effected. Background to and reasons for the Capital Raising Since Carnegie's admission to AIM in August 2006, Carnegie's mineral sandsbusiness has continued to grow in West Africa. At the same time, the Companyhas progressed new synergistic opportunities that we believe hold greatpotential for the Company going forward. In Senegal, Carnegie's exploration identified a high grade ore reserve at theNiafarang deposit. The Company therefore plans to develop Niafarang, which is50% funded by our joint venture partner Astron Ltd ("Astron") and 50% funded bythe Company, with the aim of bringing the project into production in early 2009.The Company also recently undertook a significant exploration drillingprogramme in the northern and southern parts of the licence area. Based on theassay results available to date, which highlighted mineralisation intersectionsin these previously untested areas, the Company plans to follow-up explorationas well as drill testing in the eastern part of the licence area whereidentified geophysical targets were not drilled during this programme due to theonset of the rainy season. With the positive exploration results received so far, the Company has also beeninvestigating further mineral sands potential in the region. Additionally, theCompany has been actively assessing a number of opportunities in othergeographical regions; both in industrial minerals and other commodities that itbelieves will complement the existing projects and contribute to the futuresuccess of the Company. With the positive exploration results in Senegal, the Company wishes to raisefurther funds to enable the Company to maintain its contributing interest inthat country and to follow up the other high potential initiatives. Additionally, to allow the Company to issue Ordinary Shares in consideration forexisting warrants and options and to provide the Board with flexibility forfurther fundraisings in the future, authority is being sought at the EGM toissue a number of Ordinary Shares other than on a pre-emptive basis. By passingthe resolution to provide the Board with such authority, the Company will beable to rapidly exploit investment and financing opportunities that presentthemselves to the Company, in a cost-effective manner. Gambia update In The Gambia, all development and operating expenditure is funded by theCompany's 50% joint venture partner, Astron. Four production units have beencommissioned and an official mine site opening held in July 2007. Productionrates were increasing in line with expectations and a second stage concentratorwas scheduled to be commissioned this year with a resulting increase in revenuesexpected. On 16 January 2008, the joint venture company received an instruction from theGovernment of The Gambia directing it to cease all operations and to providecertain information in relation to production, grades and prices. An additionalletter with a request of further information was received by the company on 18January 2008. Both letters received from The Gambian Government required theinformation requested to be supplied within 24 business hours in default ofwhich there would be a risk of the cancellation of the Gambian joint venturecompany's licence and other potential action. The Company responded to each ofthe letters within the prescribed time limits. The Company has not received anynotice from The Gambian Government that the licence has been cancelled. TheCompany believes it has supplied all the required information includingindependent SGS laboratory assays and offered to fund an independent industryexpert to assist them in interpreting these results. As at the date of thiscircular, we await the Gambian Government's response. Given the uncertainty overthe Gambian licence that this action has produced, the Board has decided to takethe most prudent approach available to it and provide fully against the carryingvalue of the Gambian assets on its balance sheet. Given this new development in The Gambia's risk profile, a full provisionagainst the Company's Gambian assets will remain, even in the event theGovernment of The Gambia allows the joint venture company to fully resume itsoperations. Following the supply of the necessary information to the Gambian Government, theCompany awaits a response. Whilst the Company is making arrangements to meetwith the Gambian Government in order to resolve any concerns, the Boardcurrently has no indication or visibility on the timing of the response from theGambian Government on this issue. The Company will make further announcements asappropriate when responses from the Gambian Government are received. Details of the proposed Capital Raising Blue Oar has, on behalf of the Company, conditionally placed a total of28,250,000 Placing Shares at the Placing Price, to an existing substantialshareholder, RAB, and additional institutional and other investors, to raise£1,130,000. In addition, 28,250,000 New Warrants will be issued to Placees on the basis ofone New Warrant for every Placing Share subscribed. The Capital Raising is conditional, inter alia, upon: • the passing of the Resolutions at the EGM; • the Placing Agreement becoming unconditional; and • Admission having become effective on or before 26 February 2008 (or suchlater date as Blue Oar and the Company may agree, not being later than 29February 2008). The Placing is not being underwritten, in whole or in part, by Blue Oar or anyother party. The Placing Shares The Placing Shares will, when issued, rank equally in all respects with theother Ordinary Shares then in issue, including all rights to all dividends andother distributions declared, made or paid following Admission. Application will be made for the Placing Shares to be admitted to trading onAIM. It is expected that trading in the Placing Shares will commence on 26February 2008. The New Warrants The Company has created 28,250,000 New Warrants on the terms of the New WarrantInstrument, which will be issued to Placees on Admission on the basis of one NewWarrant for every Placing Share subscribed for. Each New Warrant entitles theholder to subscribe for one Ordinary Share. Subject to their terms, the NewWarrants are exercisable at any time prior to the fifth anniversary of the dateof Admission at a price of 6p per Ordinary Share. The New Warrants will not beadmitted to trading on AIM but are freely transferable. Use of Proceeds Proceeds from the proposed Capital Raising are planned to be used to fund: • Carnegie's 50% share of an environmental impact study at the Niafarang deposit in Senegal and other statutory procedures to convert the deposit area into a mining title; • Carnegie's 50% share of further exploration including drilling in Southern Senegal; • Continued regional investigations; and • Investigation of new projects in other geographical regions identified as highly prospective with low sovereign risk. In the event that the joint venture company is able to convert the Niafarangportion of the title in Senegal to a mining title in a timely manner, thenadditional funding would be sought to facilitate the development of this depositat that time. Extraordinary General Meeting The EGM will be held at 10.00 a.m. on 25 February 2008 at the offices of MemeryCrystal LLP, 44 Southampton Buildings, London SC2A 1AP. Recommendation RAB is a substantial shareholder (as defined) under the AIM Rules. The Placingtherefore constitutes a related party transaction for the purposes of the AIMRules. The Directors, having been so advised by Blue Oar, the Company'snominated adviser, consider that the terms of the Placing are fair andreasonable insofar as the Shareholders are concerned. In providing advice to theBoard, Blue Oar has taken into account the Directors' commercial assessments. The Directors consider that the Capital Raising is in the best interests of theCompany and its Shareholders as a whole and accordingly recommend thatShareholders vote in favour of the Resolutions, as they intend to do in respectof their own shareholdings, amounting in aggregate to 250,000 Ordinary Shares(representing approximately 0.45 per cent. of the current issued share capitalof the Company). For further information please contact: Alan G. Hopkins (Carnegie Minerals Managing Director)enquiries@carnegiemins.com Romil Patel / Jerry Keen (Blue Oar Securities Plc): T: +44 (0) 20 7448 4400 Billy Clegg / Edward Westropp (Financial Dynamics): T: +44 (0) 20 7831 3113 The Carnegie Minerals Website is www.carnegiemins.com Definitions "Admission" admission of the Placing Shares to trading on AIM "AIM" the AIM market operated by the London Stock Exchange "Blue Oar" Blue Oar Securities Plc, Nominated Adviser and Broker to the Company "Board" or "Directors" the directors of the Company "Capital Raising" the issue of the Placing Shares and the New Warrants to institutional and other investors "Company" or "Carnegie" Carnegie Minerals Plc "Extraordinary General Meeting" the extraordinary general meeting of the or "EGM" Company convened for 25 February 2008 "London Stock Exchange" London Stock Exchange plc "New Warrants" the 28,250,000 warrants to subscribe for Ordinary Shares "Options" the existing options to subscribe for Ordinary Shares granted by the Company "Ordinary Shares" ordinary shares of 1p each in the capital of the Company "Placing" the placing of the Placing Shares "Placing Agreement" the conditional agreement relating to the Capital Raising, between the Company and Blue Oar "Placing Price" 4p per Placing Share "Placing Shares" the 28,250,000 new Ordinary Shares to be issued pursuant to the Placing "RAB" RAB Special Situations (Master) Fund Limited "Resolutions" the resolutions to be proposed at the Extraordinary General Meeting "Shareholders" the holders of Ordinary Shares "Warrants" the existing warrants to subscribe for Ordinary Shares granted by the Company on its original admission to AIM This information is provided by RNS The company news service from the London Stock Exchange