1 Apr 2010 07:00
7.00 a.m. 1 April2010
NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE INOR INTO THE UNITED STATES, THE
REPUBLIC OF IRELAND, THE REPUBLIC OF SOUTH AFRICA,CANADA, JAPAN OR AUSTRALIA,
OR THEIR RESPECTIVE TERRITORIESOR POSSESSIONS
Bellzone Mining plc
("Bellzone" or the "Company")
Admission to trading on AIM and £33.6 (ca. US$50)million fundraising
Highlights
· Admission to AIM
· Placing of 96,000,000 new Ordinary Shares at 35peach to raise £33.6m (ca. US$50m)
· Proceeds to beused to further develop its assets estimated at more than 13 billion tonnes of magnetiteand 2.9 billion tonnes of oxide ore as well as complete long lead items of the bankablefeasibility study ("BFS") at Bellzone's 100% owned Kalia iron project in Guinea
· Two staged productionplanned with initial ramp up to 20 million tonnes per annum ("mtpa") in Q1 2014,increasing to 50mtpa in 2018
Bellzone Mining plc (AIM:BZM), an iron ore explorationand development company, with 100% owned assets in Guinea, West Africa, announcesthe commencement of trading on AIM ("Admission") at 8.00 a.m. today after a placing(the "Placing") raised gross proceeds of £33.6 million (approximately US$50 million). Pursuant to the Placing, the Company has issued 96,000,000 new ordinary shares ofno par value ("Ordinary Shares") at 35p each (the "Placing Price") to a broadbase of institutional and other investors following a roadshow across the UnitedKingdom, the United States and Canada. Based on the Placing Price, the market capitalisationof Bellzone immediately following completion of the Placing and Admission will beapproximately £184.5 million. Canaccord Adams Limited acted as Bellzone's NominatedAdviser, joint broker and joint bookrunner and Renaissance Capital Limited actedas joint broker and joint bookrunner.
Bellzone aims to become asignificant iron ore producer and intends to develop a 50 mtpa iron ore operationat its 100% owned Kalia project. The Company has, to date, developed and defineda maiden inferred magnetite JORC resource of 2.4 billion tonnes along a 4.3 km sectionof the 19 km long magnetite strike mapped at Kalia I. The Company estimates, subjectto the results of further drilling, that the 19 km long Kalia I together with the20 km long magnetite strike known as Kalia II, have the potential to host more than13 billion tonnes of magnetite ore. In addition, Bellzone estimates that there is2.9 billion tonnes of oxide ore at surface over Kalia, which can be used to generateearly cash flow in 2014.
In parallel with the exploration programme, BellzoneInfrastructure Limited ("Bellzone Infrastructure"), currently a wholly owned subsidiaryof the Company, has been set up to facilitate the development, funding and operationof the rail, port and power infrastructure for the Kalia Iron Project. A non-bindingmemorandum of understanding has been reached with a Chinese enterprise for the preparationof a BFS on the infrastructure, including a 286 km railway line and port. Due toits locality to bauxite, and other iron ore deposits in southern and central Guinea,the Company believes that as well as servicing the Kalia Iron Project, the infrastructurehas multi-user potential and expects Bellzone Infrastructure to become a commerciallyviable standalone entity.
The Company intends to utilise the proceeds ofthe Placing to: further develop its current internal estimates of the potential ofits principal assets of more than 13 billion tonnes of magnetite and 2.9 billiontonnes of oxide ore at surface; conduct the long-lead stages of the BFS of the KaliaIron Project as well as environment and socioeconomic studies and bulk test work;and satisfy general working capital requirements.
Commenting today, Nik Zuks, Managing Directorof Bellzone Mining plc, said:
"The KaliaIron Project presents an exciting opportunity to develop a 50mtpa mining operationin one of the world's largest underdeveloped iron and bauxite provinces. To supportthis, through Bellzone Infrastructure, we also plan to develop 286km of railway,a port facility and power infrastructure, which we expect will not only service themine but also have a multi-user potential.
We are pleasedwith the continued support of the Guinean Government as well as that shown from ournew institutional investors. Following today's successful listing and admissionto AIM, our main objective is to carry out the long-lead items of the BFS, whichwe expect will cut the timetable from 12 to 8 months at Kalia and continue the resourceextension. We believe Kalia has the potentialto host more than 13 billion tonnes of magnetite and the funding will also enable us to upgrade and extend the existing JORC resource as well delineate and classify oursignificant oxide potential of 2.9 billion tonnes."
Enquiries:
| Bellzone Nikolajs Zuks |
+61 439 420 893 |
|
Canaccord Adams Limited Nominated Adviser and Joint Broker to Bellzone Andrew Chubb/Tarica Mpinga |
+44 (0)20 7050 6500 |
|
Renaissance Capital Limited Joint Broker to Bellzone Simon Matthews/Thomas Beattie |
+44 (0)20 7367 7777 |
|
Conduit PR Jos Simson/Charlie Geller |
+44 (0)20 7429 6666 / +44 (0) 7899 870 450 |
Further information
Placing Statistics
Placing Price per Placing Share 35 pence
Number of Ordinary Sharesin issue prior to the Placing 431,124,485
Number of Placing Shares to be issued pursuantto the Placing 96,000,000
Number of Ordinary Shares in issue immediatelyfollowing Admission 527,124,485
Number of Options in issue prior to the Placing1 9,250,000
Number of Options and Warrants over Ordinary Sharesin issue immediately 14,050,000
following Admission
Number of fully diluted Ordinary Shares in issueimmediately following Admission2 541,174,485
Market capitalisation, upon Admission, at thePlacing Price £184.5 million
Gross proceeds of the Placing £33.6 million
Net proceeds of the Placing receivable by theCompany £30.6 million
Percentage of the Enlarged Ordinary Share Capitalsubject to the Placing 18.2 per cent.
Percentage of fully diluted Enlarged OrdinaryShare Capital subject to the Placing 17.7 per cent.
ISIN JE00B3N0SJ29
AIM symbol BZM
1 The Options over 9,250,000 Ordinary Shares areconditional on Admission.
2 Assuming exercise of all outstanding Optionsand Warrants further details of which are set out in paragraph 12 of Part VIII ofthe admission document.
Definitions and Forward Looking Statements
All defined terms in this announcement shall,unless the context otherwise requires, have the same meaning as in Bellzone's admissiondocument dated 31 March 2010 (the 'Admission Document'). Copies of the AdmissionDocument will be available to the public free of charge from the registered officeof the Company at Channel House, Green Street, St. Helier, Jersey, JE2 4UH and fromthe offices of Canaccord at 7th Floor, Cardinal Place, 80 Victoria Street, LondonSW1E 5JL, during normal office hours, Saturdays and Sundays excepted, from the dateof the Admission Document until the date which is one
month following Admission.
Canaccord, which is regulated in the United Kingdomby the FSA and which is a member of the London Stock Exchange, is acting as nominatedadviser, joint bookrunner and joint broker for the Company and for no one else inconnection with the matters described herein and will not be responsible to anyoneother than the Company for providing the protections afforded to customers of Canaccord,or for advising them on the contents of this announcement or any matter referredto herein. Its responsibilities as the Company's nominated adviser under the AIMRules are owed solely to the London Stock Exchange and are not owed to the Companyor to any Director or to any other person in respect of his decision to acquire sharesin the Company in reliance on any part of this document.
Renaissance Capital, which is regulated in theUnited Kingdom by the FSA and which is a member of the London Stock Exchange, isacting as joint bookrunner joint broker for the Company and for no one else in connectionwith the matters described herein and will not be responsible to anyone other thanthe Company for providing the protections afforded to customers of Renaissance Capital,or for advising them on the contents of this announcement or any matter referredto herein.
This announcement and the Admission Document containforward-looking statements which reflect the current view of the Company or, as appropriate,of the Directors with respect to financial performance, business strategy, plansand objectives of management for future operations (including development plans relatingto the Group's products and services).
These forward-looking statements relate to theGroup and the sectors and industries in which the Group
operates. Statements which include the words "expects","intends", "plans", "believes", "projects", "anticipates", "will", "targets","aims", "may", "would", "could", "continue", the negative of these words,or similar statements of a future or forward looking nature identify forward-lookingstatements.
All forward-looking statements included in thisannouncement and the Admission Document address matters that involve known and unknownrisks and uncertainties. Accordingly, there are or will be important factors thatcould cause the Group's actual results of operations, performance, achievementsor financial condition to differ materially from those indicated in these statements.These factors include but are not limited to those described in Part IV of the AdmissionDocument on Risk Factors, which should be read in conjunction with the other cautionarystatements that are included in the Admission Document.
Although the Company and the Directors have attemptedto identify all factors that may influence the accuracy of any forward-looking statementthere remain factors which are impossible to foresee and which may cause resultsor events to differ materially from those predicted. Any forward-looking statementsin this announcement and the admission document reflect the Company's and Directors'current views with respect to future events and are subject to these and other risks,uncertainties and assumptions relating to the Group's operations, results of operations,growth strategy and liquidity.
Any forward-looking statements speak only as ofthe date of this announcement and the Admission Document. Subject to any obligationsunder the AIM Rules for Companies, the Company undertakes no obligation to updatepublicly or review any forward-looking statement, whether as a result of new information,future developments or otherwise. All subsequent written or oral forward-lookingstatements attributable to the Company, the Directors, or any member of the Groupor individuals acting on behalf of the Group are expressly qualified in their entiretyby this paragraph. Prospective investors should specifically consider the factorsidentified in this announcement and the Admission Document which could cause actualresults to differ before making an investment.
Overview of the Company
Bellzone is a Jersey registered holding companyfor a group of companies with large scale iron ore deposits and exploration assetsin Guinea. The Company, which was founded in November 2007, aims to become a significantiron ore producer in Western Africa.
The Company intends to develop a 50 mtpa ironore production and export business in Guinea, West Africa. The Company has adopteda two staged approach to production, which is predicted to result in an initial rampup to 20mtpa in 2014, increasing to 50mtpa in 2018. This approach is based upon stagedincreases in DSO and concentrate production.
Since November 2007, the Company, through itsGuinean subsidiary, Bellzone Guinea, has been developing and defining the resourcepotential of its Kalia prospect. In July 2009, Bellzone achieved a maiden inferredmagnetite JORC resource of 2.4 billion tonnes along a 4.3 km section of a 19 km longmagnetite strike known as the Kalia I Deposit.
The Company intends to utilise the proceeds ofthe Placing to further develop its current internal estimates of the potential ofits principal assets of more than 13 billion tonnes of magnetite and 2.9 billiontonnes of oxide ore at surface as well as to conduct the long-lead stages of a BFSof the Kalia Iron Project as well as environment and socioeconomic studies and bulktest work.
Preliminary indications are that there will beapproximate overall capital requirements of US$1.4 billion
for the mine and US$3 billion for the infrastructure.
The Group's principal assets are:
· 100% Kalia IronProject
- Located in South Central Guinea, and coversan area of 59 km2. Kalia has been mapped in two distinct zones over a39 km magnetite strike
- Host to an inferred magnetite JORC resourceof 2.4 billion tonnes along a 4.3 km section of a 19 km long magnetite strike
- The Company believes Kalia has the potentialto host more than 13 billion tonnes of magnetite ore. In addition, Bellzone alsoestimates that there is a 2.9 billion tonne direct shipping ore cap at Kalia, whichcan be used to generate early cash flow
- Proceeds will be used to accelerate thedrilling programme, achieve additional JORC resource classification and completethe long-lead stages of a BFS.
-
· 100% Faranah ProspectingPermits
- Located directly to the east of the Kalialicence and covers an area of 808 km2
- Geological mapping and geophysics haveidentified three prospective areas of mineralisation with a combined strike lengthof 8 km - 9 km of greenstone belt hosting magnetite bearing rocks.
· 100% AlbadariaProspecting Permits
- Located 150 km southeast of the villageof Kalia and covers an area of 4,383 km2
- Permit grants permission to explore fornickel, cobalt, copper, manganese and platinum
- The 2008/2009 exploration season fieldwork established that mineralised zones (Ni-Cu sulfides) are spatially associatedwith a zone of peridotite, pyroxenite and gabbronorite bodies hosted in basementgranites that extends in a northwest / southeast direction across the lease. Thiszone is estimated at more than 40 km long, with a width varying between 10-12 km.
Infrastructure
Bellzone Infrastructure, currently a wholly ownedsubsidiary of the Company, has been set up to facilitate the funding and operationof the infrastructure for the Kalia Iron Project, which will need to include rail,port and power facilities which the Company estimates at a cost of approximatelyUS$3bn. A non-binding memorandum of understanding has been reached with a Chineseenterprise for the preparation of a bankable feasibility study on the infrastructure.Thereafter, subject to execution of a legally binding agreement, it is currentlyenvisaged that Chinese enterprises will participate in the financing of the infrastructuredevelopment, including the 286km railway line and port, in return for an equity holdingin Bellzone Infrastructure which may be significant. Due to locality to bauxite,gold and other iron ore deposits in Guinea, the Company believes that the infrastructureproject has multi-user potential and the Company expects Bellzone Infrastructureto become a viable stand alone commercial entity.
A transport contract has been agreed between theCompany and Bellzone Infrastructure which commits to transporting the Group's productat arm's length rates benchmarked to international comparators.
The developed infrastructure solution has beenbased on a number of third party infrastructure studies
which have been undertaken in Guinea from 1976to 2006.
Due to locality to bauxite, gold and other ironore deposits in Guinea the infrastructure project should have multi-user potential,which should provide additional potential revenue streams for Bellzone Infrastructure.
Key Strengths
The Directors believe that the key strengths ofthe Group's business are:
Magnetite resource with large upside potential
CSA Global (UK) Ltd has indicated, based on lateraland depth extensions across the 39 km magnetite strike and current geological understandingthat a three to four fold increase in total mineralisation tonnage could be possibleif the information gathered from further drilling does not significantly change themineralisation geometry and characteristics. Subject to the results of further drilling,the Company itself estimates, that the Kalia prospect could contain in excess of13 bt of magnetite ore. A JORC inferred resource of 2.4 billion tonnes, with over2 billion tonnes of primary magnetite with an additional 0.9 billion tonnes of depthextension defined as Exploration Potential has been calculated on only 4.3 km ofa known 39 km strike length of magnetite mineralisation. It is estimated that theJORC resource will support projected production for more than 30 years.
Oxide at surface potential - Low extraction costand early cash flow
The Group has mapped 59 km2 of surfacemineralisation over the Kalia prospect. From this the Company has estimated thatthere is potentially up to 2.9 billion tonnes of oxide at surface which containssufficient DSO material to support the forecast production plans. The staged approachto production ramp up should allow the Group to benefit from the early cashflow thatwould be generated from the low cost DSO operation, which is planned for start upin 2014. In addition the early mining and sale of the DSO material effectively pre-stripsthe material above the Banded Iron Formation ("BIF") ore zones, resulting in acheaper start up operating cost regime for the concentrator due to come into productionin 2015.
Support of Government
The Guinean Government is encouraging the developmentof iron ore projects to diversify from the country's traditional bauxite mining.In addition, the Government view the Kalia Iron Project, and in particular the associatedinfrastructure, as a key regional economic growth driver in South Central Guinea,a region that has not yet benefited from the extractive industry relative to thebauxite and gold regions located in the northwest and the east of the country, respectively.The local and central government have expressed their satisfaction with the progressof the project and are giving their full support for the next phases.
Infrastructure funding
Bellzone Infrastructure, currently a wholly ownedsubsidiary of the Company, has been set up to facilitate funding and operations ofthe infrastructure for the Kalia Iron Project, which includes rail, port and powerfacilities. A non-binding memorandum of understanding has been reached with a Chineseenterprise for the preparation of a definitive feasibility study on the infrastructure.
Thereafter, subject to the execution of a legallybinding agreement, it is currently envisaged that Chinese enterprises will participatein the financing of the infrastructure development, including the railway line andport in return for an equity holding in Bellzone Infrastructure which may be significant.Due to locality to bauxite, gold and other iron ore deposits in Guinea, the Companybelieves that the infrastructure project has multi-user potential and the Companyexpects Bellzone Infrastructure to become a viable stand alone commercial entity.
Relatively low cost
The mining costs of the Kalia prospect are expectedto be relatively low due to the surface oxidised DSO material and the topographyof the ore body which will facilitate low strip ratio open pit mining when extractingthe deeper magnetite ore. The simple DSO processing operation and the high grademagnetite concentrate that is expected to be produced at a relatively coarse grindsize will reduce the overall power requirements of the treatment plant resultingin reduced processing costs. The combination of relatively lower costs for both themining and processing operations is expected to benefit the Company's operationalcashflow. In addition, shipping from West Africa to China is comparable in distanceand voyage time from Brazil to China. On current spot freight rates, the cost fromWest Africa would be US$2 per tonne cheaper at US$18.40 per tonne compared to US$20.50per tonne from Brazil. Supply of iron units from the west coast of Africa to Europeor EurAsia for example would be far cheaper than if sourced from India, South Africaor Australia.
Strong Management
The Board and management have significant longterm experience in relevant industries, having managed and operated development stageand production stage mining operations, with in-depth knowledge of Guinea and theiron ore market.
Directors
Michael Farrow (aged 55) - Non Executive Chairman
Michael is a principal and director of ConsortiaPartnership Limited, a Jersey licensed trust company. He currently sits on the boardof a number of UK listed companies. He has also been group company secretary of CaterAllen Jersey, a banking, trustee and investment management group. Michael was formerlya regular Army officer and holds an MSc in Corporate Governance and is a Fellow ofthe Chartered Institute of Secretaries & Administrators.
Nik Zuks (aged 57) - Managing Director
Nik is the founder of the Company and has in excessof 25 years experience in mineral exploration and development in Australia, Africa,Malaysia and Indonesia. He was responsible for the development of the Mid West Ironand Steel Project in Western Australia, an integrated mining and processing project.
He previously established Linia Prava CentralAsia, which was acquired by ASX listed Nimrodel Resources Limited (ASX: NMR). Nikwas founder of Murchison Metals Limited, Indo Mines Ltd and Simba Mines Inc. andwas also instrumental in the development of the Mambramo forestry project in IrianJaya, Indonesia.
Terry Larkan (aged 48) - Finance Director
Terry has more than 25 years experience workingin Africa, Australasia as well as North and South America, either employed by orconsulting to organisations in the mining industry. Terry's expertise lies in theareas of finance, accounting and other supporting business areas such as IT and supplychain management and is augmented with extensive experience in the areas of corporateand project governance. Terry's recent career has included roles as financial controllerwith a multi site mining company, Partner in Ernst & Young and his last positionwas as Vice President - Risk and Assurance with Barrick Gold Corporation based inToronto. Terry holds a Bachelor of Accounting Science, an MBA, is a Certified InternalAuditor as well as being a Member of the Chartered Institute of Secretaries & Administrators.
Tony Gardner-Hillman (aged 53) - Non ExecutiveDirector
Tony is an independent non-executive directorwith a varied portfolio of appointments. He has extensive experience of the legaland financial market places gained through his former career in the law and in trustcompany business. He was a partner at Crills, Jersey for over 16 years, where heheaded the Financial Services Business and Regulation team. In 1987 he co-foundedJersey Trust Company where he remained a director until disposing of his shareholdingand resigning as non-executive group chairman in 2008. He is a solicitor of the SeniorCourts of England & Wales and holds a first class honours degree in Jurisprudencefrom Oxford University.
Simon Farrell (aged 59) - Non Executive Director
Simon has a Bachelor of Commerce from the Universityof Western Australia and an MBA from the Wharton School of the University of Pennsylvania.He has held a number of senior management and Board positions, principally in theresources sector over the last 20 years. Simon has over 25 years' in the resourcessector with Bougainville Copper, Kalgoorlie Super Pit, Hamersley Iron and WoodieWoodie Manganese. He is currently a non-executive director of Kenmare Resources plc,listed on the Main Market of the LSE. He is also currently Chief Executive Officerof Coal of Africa Ltd, and since he assumed that role, the company's market capitalisationhas grown from less than $A5 million to approximately $A1.5 billion.
Senior Management
Graham Fyfe (aged 43) - Chief Operating Officer
Graham was promoted to COO in June 2009, havingbeen the General Manager at Bellzone since February 2008. He is a qualified ChemicalEngineer and has 20 years experience as a mining professional having been a projectmanager at Rio Tinto and Fluor Australia with many projects valued in excess of US$250million. He has both a South African and Australian professional background and dualnationality.
Frederic Materne (aged 58) - Project Manager
Frederic has over 35 years' management experiencein turnkey projects in heavy industry, including mine developments above and underground,process plants and associated infrastructure development
including rail, roads and ports. From 2004 to2009, he was a construction manager on the upgrades of the West Angelas and Marandooiron ore mines for Rio Tinto and after the successful completion of these projectstransferred in 2006 to the Rio Tinto Simandou project in Guinea.
Ray Hull (aged 40) - HSE Manager
Ray has over 12 years' HSE set-up, co-ordinationand management experience in turnkey projects in heavy industry, above ground minedevelopments, mobile maintenance plants and infrastructure, including port, railand road development. From 2007 to 2009 Ray held senior positions with Australianbased mining contract companies including HWE Mining and Doorn-Djil Yoordaning Miningand Construction Pty Ltd (a division of the McMahon Group of Companies).
Ray Basten (aged 42) - Logistics Manager
Ray has over 22 years experience in the miningand oil & gas industry, with 18 of those years specifically involved in Supply andLogistics management. From 1998 he has been involved in a range of mining projectsthroughout Africa including in the countries of Tanzania, Ghana, Burkina Faso, Maliand Guinea. From 2006 to 2008 he was Supply Manager for an earthmoving contractoroperating the LEFA gold mine at Lero, Guinea.
Senior Consultant
Bernard Neehoff (aged 47) - Exploration Manager
Bernard has over 25 years' experience in variousgeological environments in the fields of mining and exploration since graduatingwith a postgraduate Diploma of Science (Geology) in 1984. Eighteen of the years havebeen spent in a senior company role or as a consultant. Work has principally occurredwithin Australia, Myanmar (Burma), Indonesia, USA, China, Angola, Namibia and Guinea.
Details of the Placing
The Company has placed 96,000,000new Ordinary Shares pursuant to the Placingat 35p per share to raise £33.6 million(before fees and expenses). The new Ordinary Shares which will represent approximately18.2 per cent. of the enlargedordinary share capital immediately following Admission, will be fully paid upon issueand will rank pari passuin all respects with the existing Ordinary Shares.
The Admission, Placing, Use of Proceeds and FutureFunding Requirements
The reason for Admission is to enable the Companyto access institutional capital to broaden its investor
base and provide it with the capital, to advancethe Kalia Iron Project.
The gross proceeds raised by the Company pursuantto the Placing are expected to be US$50 million.The Company intends to use the net proceeds of the Placing, of approximately US$45.5million (after deducting fees and expenses) to:
• Fundthe completion of the long lead stages of the BFS at anestimated cost of US$19 million, which includes consultant costs, technical surveys,rail alignment optimisation, process flowsheet and mass balance development, plantand port layouts, hydro-power scoping studies and site infrastructure development;
• Fundthe DSO JORC resource definition at a cost of US$7 million;
· Fund thedefinition and extension of a measured JORC magnetite resource for US$12 million;
• Fundenvironment studies, socio-economic work and bulk test work at an estimated costof
US$4.5 million;
• Providegeneral working capital.