ECR Minerals Regulatory News (ECR)

28 Dec 2005 10:00

Mercator Gold PLC28 December 2005 FOR IMMEDIATE RELEASE 28 December 2005 MERCATOR GOLD PLC ("MERCATOR" OR "THE COMPANY") RE-ADMISSION OF ORDINARY SHARE TO TRADING ON AIM PROPOSED ACQUISITION OF ASSETS FROM ST. BARBARA MINES LIMITED PROPOSED PLACING OF UP TO 26,400,0000 NEW ORDINARY SHARES AT 50P PER SHARE AFTER 1 FOR 10 SHARE CONSOLIDATION ADMISSION OF THE ENLARGED SHARE CAPITAL TO TRADING ON AIM NOTICE OF EXTRAORDINARY GENERAL MEETING On 3 November 2005, the Company announced, further to the announcement on 28October 2005, the terms of the agreement to acquire St. Barbara's entire goldexploration and mining assets in the prospective Meekatharra Belt of WesternAustralia, subject to Shareholder approval. The total purchase considerationwill comprise of A$18 million (£7.56 million) in cash and New Ordinary Sharesplus the adoption of environmental bonding requirements of A$2.684 million(£1.13 million). Due to the size of the Acquisition in relation to the Group,the transaction is classied as a "Reverse Takeover" under the AIM Rules, andunder the terms of the Sale Agreement, St. Barbara will be receiving NewOrdinary Shares equivalent to between 23.1 per cent. and 28.1 per cent.(depending upon the eventual size of the Placing) of the Enlarged Share Capital.Accordingly trading in the Company's Ordinary Shares was suspended on 28 October2005 pending the publication of an admission document. The Company today announces that an admission document has been posted toShareholders and, in accordance with the AIM Rules, has requested that tradingin the Ordinary Shares recommences today. The Acquisition is subject to theapproval of Shareholders at the Extraordinary General Meeting, details of whichare set out below. Application will be made for the Enlarged Share Capital to beadmitted to trading on AIM, subject to the Resolutions being passed byShareholders at the Extraordinary General Meeting and it is expected thatAdmission will become effective and that trading in the Enlarged Share Capitalon AIM will commence on 20 January 2006. DETAILS OF THE ACQUISITION The Acquisition will comprise the purchase of the following (the "MeekatharraAssets"): • the 55 per cent. interest held by SBM in the Annean Joint Venture; • the 3 million tonne per annum Bluebird (Yaloginda) mill and gold processing facility (the "Bluebird Plant"), together with associated plant, ofces, warehouses, workshop, vehicles, spare parts, consumables, 215-person camp and tailings dams, located 12 km south of the Meekatharra township within the Annean Joint Venture area. The Bluebird Plant is currently on care and maintenance and has an estimated replacement value of A$29.6 million (£12.4 million); • approximately 120 granted exploration tenements and 44 tenement applications in the Meekatharra region, bringing Mercator's total holding to 435 granted and pending tenements totalling 1,932 km2; • the SBM joint venture interest and benets (currently 100 per cent. but reducing to potentially 35 per cent.) in the Pollelle joint venture with Elara Mining Limited (subject to Elara's right rst of refusal) further details of which are set out in paragraph 11.1.10 of Part VII of this document; • land and property assets in and around Meekatharra; • data and intellectual property relating to exploration, mining and ore processing on the Meekatharra Tenements; and • a six month option to purchase the Annean (167,761 ha), Norie (25,784 ha) and Cullculli (57,890 ha) pastoral leases. The consideration for the sale is comprised of approximately A$5 million cash,the equivalent of A$13 million in New Ordinary Shares at 50p per New OrdinaryShare and the assumption by Mercator Australia of the rehabilitation bondsrelating to the Meekatharra Tenements which are A$2.684 million (£1.13 million). REASONS FOR THE ACQUISITION The Acquisition will consolidate and enlarge Mercator's holding over theMeekatharra Belt in the Murchison Gold Province, more than double the Company'sgold resource base and add signicant additional exploration ground to theYaloginda project area. Ownership of the Bluebird Plant along with the enlarged resource base isintegral to giving the Company the capacity to commence gold production during2007 should it reach its resource base criteria. FUND RAISING The Company is proposing to raise between £9 million and £13.2 million in thePlacing, in order to fund the payment of the cash portion of the Acquisition,approximately A$5 million (£2.1 million), to increase exploration activitytargeting additional quality resources, to convert resources into reserves andto provide working capital. Under the Placing the number of New Ordinary Shares to be placed at the price of50p per New Ordinary Share will be between 18 million and 26.4 million,following the Share Consolidation. The Placing is conditional, inter alia, on the passing of the Resolutions at theEGM, Admission becoming effective and the Placing Agreement becomingunconditional in all other respects not later than 8.00 a.m. on 20 January 2006or such later date as the Company, Loeb Aron, Beaumont Cornish and the JointBrokers may agree (being not later than 8.00 a.m. on 28 February 2006). It isexpected that Admission will become effective on 20 January 2006. The Placing Shares to be issued pursuant to the Placing will, followingallotment, rank pari passu in all respects with the New Ordinary Sharesincluding the right to receive all dividends and other distributions declared,made or paid after the date of their issue. The Placing Shares to be issuedpursuant to the Placing will be created in accordance with the Act and will bein registered form. Pursuant to the Convertible Loan Notes Placing, on 14 December 2005, the Companyissued £1,000,000 of Convertible Loan Notes. The Convertible Loan Notes have aterm of two years from the date of issue and have a face value of £5,000 each. EXTRAORDINARY GENERAL MEETING The Extraordinary General Meeting will be held at 11.00 a.m. on 18 January 2006at the registered office of the Company at Peek House, 3rd Floor, 20 Eastcheap,London EC3M 1EB. DETAILS OF THE SHARE CONSOLIDATION At the Extraordinary General Meeting it is intended to propose a resolutionconsolidating the entire issued and the authorised but unissued Ordinary Sharesof 1p each into New Ordinary Shares of 10p each in the capital of the Company onthe basis of every 10 Ordinary Shares being consolidated into one New OrdinaryShare. Full details of this resolution are set out in the notice ofExtraordinary General Meeting. FURTHER INFORMATION Copies of the admission document are available from the offices of BeaumontCornish Limited, Fifth Floor, 10-12 Copthall Avenue, London EC2R 7DE and theoffices of the Company at Peek House, 3rd Floor, 20 Eastcheap, London EC3M 1EBand can be viewed on the Company's website: www.mercatorgold.com Enquiries: Mercator Gold plc Patrick Harford, Managing Director +44 (0) 7786 486645 Michael de Villiers, Finance Director +44 (0) 207 929 1010 Beaumont Cornish Limited Roland Cornish +44 (0) 207 628 3396 King & Shaxson Capital Ltd Nick Bealer +44 (0) 207 426 5986 Ocean Equities Ltd Will Slack +44 (0) 207 786 4375 Parkgreen Communications Justine Howarth/Ana Ribeiro +44 (0) 207 493 3713 This information is provided by RNS The company news service from the London Stock Exchange