GCM Resources Regulatory News (GCM)

4 September 2019

GCM Resources plc

("GCM" or the "Company")

(AIM:GCM) 

Consultancy Agreement

GCM Resources plc ("GCM" or the "Company"), an AIM quoted mining and energy company, is pleased to announce that it has entered into a consultancy agreement (the "Consultancy Agreement") with DG Infratech Pte Ltd, a Bangladeshi controlled company ("DGI" or the "Consultant"). The Consultancy Agreement is in relation to the advancement of the Company's proposed world class high grade coal resource of 572 million tonnes (JORC 2004 compliant) at the Phulbari Coal and Power Project in North-West Bangladesh (the "Coal Project") as well as the Company's proposed 3 x 2,000MW coal fired mine mouth power plants (the "Power Projects"). 

Principal terms of the Consultancy Agreement

Under the terms of the Consultancy Agreement, the Consultant shall provide the Company with advisory, management, lobbying and consultancy services in relation to the Company's business, namely to achieve the approval for and development of the Coal Project and the Power Projects, and in thus doing so to deliver approvals and the necessary cooperation from all stakeholders to develop the Coal Project and the Power Projects.

In return for its services, the Consultant shall receive the following fees:

- A monthly retainer of £12,000 from 1 September 2019, payable quarterly in arrears by the issuance of 66,666 new ordinary shares of 10 pence each in the capital of the Company ("New Ordinary Shares") at 18 pence per share, with no other financial payments nor reimbursement of expenses, unless agreed by the Company in advance.

- Upon completion of certain key milestones, the Consultant will receive share-based success fees in lieu of any cash payment. The milestones and related payments are as follows:

o receipt of the written approval of the Coal Project's Scheme of Development, for which the Consultant shall receive a success fee equal to 5% of the issued capital of the Company at the time of issue;

o receipt of the written approval in respect of each group of the Power Plants, for which the Consultant shall receive a success fee equal to 2% of the issued capital of the Company at the time of issue (i.e. up to 6% in total); and

o commencement of development of the Coal Project, for which the Consultant shall receive a success fee equal to 4% of the issued capital of the Company at the time of issue.

With the exception of the monthly retainer, the Consultant will be restricted from disposing of any New Ordinary Shares received under the consulting agreement for a period of six months from issue.

Each milestone specified in the Consultancy Agreement represents a significant step towards developing the proposed multi-billion dollar Coal Project and Power Projects.

The Board is acutely aware of the potential dilution arising from the Consultancy Agreement. The Company is fortunate to have found a consultant of DGI's calibre which is prepared to be compensated with New Ordinary Shares, recognising a cash payment would be beyond the Company's current ability to fund.

By paying the fees through the issue of New Ordinary Shares, the economic interests of the Consultant are aligned to those of the Company. The Company incurs little downside in the event that the milestones are not met and, if the milestones are reached, the value of the services provided by the Consultant is expected to far exceed the fees incurred. Accordingly, the Board has concluded that entering into the Consultancy Agreement is beneficial for GCM and in the best interests of the Company's shareholders as a whole.

GCM's Executive Chairman, Datuk Michael Tang PJN, stated: 

"I am delighted to engage the services of DG Infratech and look forward to working with them to drive significant progress in pursuit of our goals.

"Our primary objective remains to deliver an impact project for the people of Bangladesh, providing low cost and sustainable electricity in the country, by combining the Company's coal mine proposal, with mine mouth power plants generating 6,000MW.

"The economic interests of both DG Infratech and our Company are aligned: to achieve successful progression of the proposed Coal Project and Power Plant Projects. I am confident that the Consultancy Agreement will unlock significant value for our shareholders in time to come."

About GCM Resources

GCM Resources plc (LON:GCM), the AIM listed mining and energy company, has identified a high quality coal resource of 572 million tonnes (JORC 2004 compliant) at the Phulbari Coal and Power Project (the Project) in north-west Bangladesh.

Utilising the latest highly energy efficient power generating technology the Phulbari coal mine is capable of supporting power plants of up to 6,000MW. GCM is awaiting approval from the Government of Bangladesh to develop the Project. The Company has a strategy of combining the Company's mine proposal with up to 6,000MW of power generation, together with credible, internationally recognised strategic partners. GCM aims to deliver a practical power solution to provide low cost electricity in the country, in a manner amenable to the Government of Bangladesh.