CNG.L Regulatory News (CNG)

16 Feb 2009 07:00

16 February 2009 Kryso Resources plc ('Kryso' or 'the Company') AIM: KYS Proposed Financing

- Conditional placing of new ordinary shares to raise approximately £2.56 million before expenses

- Mandatorily convertible loan of £500,000 to provide funding in the period to completion of the placing

- Issue of warrants conditional on the placing

- Proceeds to be deployed to complete the bankable feasibility study for the Pakrut gold project, to expand the Pakrut project resource and reserve base and to continue exploration at the Hukas nickel-copper project

Kryso Resources plc, the mineral exploration and development company with gold and nickel-copper projects in Tajikistan, is pleased to announce that on 13 February 2009 it entered into a conditional subscription agreement (the 'Subscription Agreement') with Naveen Holdings Limited ('Naveen Holdings'), a company beneficially wholly owned by Stanislav V. Kotov. Further information on Naveen Holdings is set out in the paragraph headed 'Background Information on Naveen Holdings and Vertex Mining' and further information on Mr. Kotov is set out at the end of this announcement,

Pursuant to the Subscription Agreement, Naveen Holdings will subscribe for 29,157,925 new ordinary shares at 8.78 pence per share to raise approximately £ 2.56 million before expenses (the 'Placing').

On 13 February 2009, the Company also entered into a mandatorily convertible loan agreement (the 'Convertible Loan Agreement'), pursuant to which Naveen Holdings has advanced £500,000 to the Company (the 'Convertible Loan'). The Convertible Loan will automatically convert into 9,090,909 new ordinary shares of the Company.

Upon completion of the Placing and conversion of the Convertible Loan, Naveen Holdings will own 38,248,834 ordinary shares (29.99% of the enlarged issued share capital of the Company).

At completion of the Placing, Naveen Holdings will also be issued with warrants (the 'Warrants') to subscribe for such number of new ordinary shares in the capital of the Company which, following exercise of the Warrants, will result in Naveen Holdings owning up 51 per cent. of the enlarged issued share capital of the Company. Further information on the terms of the Warrants is set out in the paragraph below headed 'Warrants' and a summary of the implications under the City Code on Takeovers and Mergers (the 'City Code') of any exercise of the Warrants is set out in the paragraph below headed 'Rule 9 Whitewash'.

Vassilios Carellas, Managing Director of Kryso Resources, comments:

"Kryso is pleased to have entered into a relationship with a team with a strong track record for the successful exploration and development of natural resources projects. Our new partners are supportive of Kryso's aim to take the Pakrut field to commercial production at the earliest opportunity."

Background on Naveen Holdings and Vertex Mining

Mr Kotov is the sole beneficial shareholder of Naveen Holdings, a company registered in Cyprus. Naveen Holdings was incorporated in October 2008 and has never traded. It is expected that Naveen Holdings will change its name to Vertex Mining International (Cyprus) Limited prior to completion of the Placing.

Mr Kotov is also a director and shareholder of Vertex Mining Company CJSC ('Vertex Mining'), a private company registered in the Russian Federation. Vertex Mining was incorporated in 2005 and its principal business is geological exploration and the mining of solid minerals. Vertex Mining currently has exploration or mining operations in several locations throughout the Russian Federation. Further information on Vertex Mining will be included in a circular to shareholders, which is expected to be issued by the Company in April 2009.

Whilst no agreement has been reached between Vertex Mining and Naveen Holdings, it is currently anticipated that Naveen Holdings, or the Placing Shares and the Warrants, will be transferred to the ownership of Vertex Mining following the completion of the Placing.

Use of Proceeds

Kryso intends to utilise the net funds raised by way of the Placing and the Convertible Loan to complete the bankable feasibility study for the Pakrut gold project, define additional resources and reserves at Pakrut and to continue exploration at the Hukas nickel-copper project. The proceeds will also be used to repay the outstanding convertible loan from Great Basin Gold.

Warrants

On completion of the Placing, Naveen Holdings will be granted Warrants to subscribe for such number of new ordinary shares in the capital of the Company which, following exercise of the Warrants, will result in Naveen Holdings owning up 51 per cent. of the enlarged issued share capital of the Company. The Warrants will be exercisable at a price of 8 pence per new ordinary share. A summary of the implications under the City Code of any exercise of the Warrants is set out in the paragraph below headed 'Rule 9 Whitewash'.

The Warrants may be exercised in whole or in part from the date falling six calendar months after the date on which they are granted until the fifth anniversary of that date.

Convertible Loan Agreement

Pursuant the Convertible Loan Agreement, Naveen Holdings has advanced to the Company a zero coupon madatorily Convertible Loan of £500,000. The Convertible Loan is unsecured and will automatically convert into 9,090,909 ordinary shares upon completion of the Placing or the Subscription Agreement being terminated.

New Directors

Under the Agreement, Naveen Holdings will have the right, subject to completion of the Placing, to appoint three directors (the 'New Directors') to the board of Kryso. At the same time, three existing directors of Kryso will retire. The identity of the retiring directors is not yet known. The appointment of the New Directors will be proposed to shareholders at a general meeting (the 'General Meeting') to be held shortly before the completion of the Placing. The New Directors will, if appointed, be subject to retirement in the normal way under the Company's articles of association.

Further information on the New Directors is available at the end of this announcement.

Conditions

The Placing is subject to a number of conditions, including:

- Shareholders passing resolutions approving: the waiver of Rule 9 of the City Code on Takeovers and Mergers (see the paragraph below headed 'Rule 9 Whitewash'); an increase in the Company's authorised share capital; the appointment of the New Directors; the proposed allotment of shares; the waiver of statutory pre-emption rights; and certain amendments to the Company's articles of association.

- Admission ('Admission') to trading on AIM of the shares issued to Naveen Holdings under the Placing.

- No material adverse effect or material breach of warranty having occurred prior to 9 March 2009.

- No insolvency event, revocation of any existing exploration licence or unlifted suspension of the Company's shares from trading having occurred prior to Admission.

The Agreement contains warranties given by the Company to Naveen Holdings as to, inter alia, the organisation, good standing, mineral rights, assets and other matters relating to the Company and its business.

Rule 9 Whitewash

If (as a result of the exercise of any Warrants or the acquisition of ordinary shares in the Company) Naveen Holdings and/or Vertex Mining (if the shares of Naveen Holdings or the Placing Shares and Warrants are transferred to Vertex Mining) become interested in 30 per cent. or more of the voting rights of the Company then, absent a waiver being approved by the independent shareholders of the Company, under Rule 9 of the City Code either or both of them will be required to make a mandatory offer for the entire share capital of Kryso. Accordingly, the Company has agreed to use all reasonable endeavours to obtain agreement from the UK Panel on Takeovers and Mergers (the 'Panel') to allow a waiver of the application of Rule 9 in respect of the exercise of the Warrants, subject to the approval by the independent shareholders at the General Meeting.

If the Panel agrees to the waiver, the notice of the General Meeting will seek a resolution of the members of the Company that the provisions of Rule 9 of the City Code will not apply to any exercise of the Warrants by Naveen Holdings or Vertex Mining. If the Panel does not agree to the waiver being put to shareholders, the notice of the General Meeting will not include a resolution relating to the Rule 9 waiver.

It is currently anticipated that a circular to shareholders containing further information about the proposed transaction and containing a notice convening the General Meeting will be despatched to shareholders during April 2009.

For further information, please contact:

Vassilios Carellas/Craig Brown, Kryso Resources plc

Tel: 020 7371 0600

Brett Miller/Roxane Marffy, Ruegg & Co Ltd.

Tel: 020 7584 3663

Jason Bahnsen, Fox-Davies Capital Ltd.

Tel: 020 7936 5200

Christian Dennis, Orbis Equity Partners Ltd.

Tel: 020 3178 3977

Biographies of the New Directors

Mark A. Gyetvay - Proposed Non-Executive Chairman

Mark Gyetvay studied at Arizona State University (Bachelor of Science, Accounting, 1981) and later at Pace University, New York (Graduate Studies in Strategic Management, 1995). He moved to Moscow in 1995 in order to lead the Coopers & Lybrand oil and gas practice and was admitted as a partner in July 1996. After the merger and foundation of PricewaterhouseCoopers in 1998, he assumed the role as a client service engagement partner in PwC's Global Energy, Utilities and Mining practice based in Moscow.

As a Certified Public Accountant, a member of American Institute of CPA, an associate member of the Society of Petroleum Engineers, and a former member of PwC's Petroleum Thought Leadership Council, Mr. Gyetvay is a recognized expert in the oil and gas industry and a frequent speaker at industry conferences. He has published numerous articles on various oil and gas industry topics, including articles in leading international industry magazine Oil and Gas Journal. Mr. Gyetvay joined NOVATEK in June 2003 as Chief Financial Officer and Deputy Chairman of the Board.

Gennadiy F Tolmachev - Proposed Managing Director

Gennadiy Tolmachev graduated in 1973 from Irkutsk Polytechnic University as a Mining Engineer. He began his career as a drilling foreman and progressed to become the Head of Production and Engineering in the SevVostGeology State Company. From 1992, Mr. Tolmachev served as CEO of Geozoloto Closed JSC and as CEO of Omsukchansk Mining Company JSC (a joint venture with Bema Gold Corporation).

In November 1998, Mr. Tolmachev was appointed as a Deputy Governor of Russia's Magadan Region and served as Head of the Regional Department of Industry. In November 1999, Mr. Tolmachev accepted the position of CEO of Yamal Mining Company and moved to the Yamalo-Nenets Region, Western Siberia. He combined this role with positions as CEO of YamalZoloto JSC and SeverChrom LLC, subsidiaries of Yamal Mining Company, was elected as Chairman of KongorChrom LLC and served as the Head of Regional Mining and Exploration Projects for Peter Hambro Mining JSC in the North Ural and Yamal Region. In November 2006, Mr. Tolmachev became Head Engineer of Vertex Mining and was elected as the Chairman of Hoozhir Enterprise LLC, Vertex Mining's subsidiary in Eastern Siberia.

Mr. Tolmachev played an active role in the discovery and evaluation of the Nyavlenginskoe, Lunnoe, Arylakhskoe, Julietta, Novogodnee-Monto gold deposits and the Zentralnoe and Zapadnoe chrome deposits. He has been involved in the development and mining of the Oirinskoe gold field (Kubaka), the Julietta gold field, the Zentralnoe chrome deposits and a number of alluvial gold deposits.

Stanislav V. Kotov - Proposed Non-Executive Director

Stanislav V. Kotov attained a Qualified Expert Certificate from the Russian Federal Commission on Securities and Capital Markets in 1998, and was awarded an MSc in Physics from Voronezh State University in 1994.

Mr Kotov is the sole beneficial owner of Naveen Holdings.

He is currently a shareholder and Non-Executive Director of Vertex Mining, was formerly Director of Investor Relations, Corporate Finance and International Projects at the London representative office of NOVATEK and prior to that served as Advisor to the Chairman of the Executive Board and Corporate Secretary to the Board of Directors for NOVATEK in Moscow.