HGM.L Regulatory News (HGM)

4 Dec 2007 07:02

Highland Gold Mining Limited04 December 2007 HIGHLAND GOLD MINING LIMITED US$400 million equity subscription in Highland Gold by Millhouse LLC Introduction Highland Gold Mining Limited ("Highland Gold") announces that it has todaysigned a subscription agreement with Millhouse LLC whereby Millhouse LLC willsubscribe in cash for 65,050,000 new ordinary shares in Highland Gold at a priceof 151 pence per new ordinary share (the "First Subscription") and a further65,050,000 new ordinary shares at the same price, following the passing of therequisite shareholder resolutions (the "Second Subscription"). The aggregate proceeds of these subscriptions will amount to approximatelyUS$400 million. These proceeds will form an essential component of HighlandGold's funding, allowing it to proceed with its development programme and willreduce the Company's reliance on debt financing. Completion of the First Subscription, which will be made pursuant to existingshareholder authorities, is expected to take place around 11 December 2007. TheSecond Subscription is conditional, inter alia, on the passing of theappropriate shareholder resolutions at an Extraordinary General Meeting ofHighland Gold to be convened as soon as possible and completion of the SecondSubscription is expected to take place shortly thereafter. Following completionof the First Subscription, Millhouse LLC's shareholding will be 25.0% of thethen increased issued share capital and will become 40.0% of the enlarged issuedshare capital following completion of the Second Subscription. Millhouse LLC is a Moscow-based asset management company overseeing investmentsin a variety of industries including mining and metallurgy, real estate,pharmaceuticals, consumer products and media. Assets under management include asignificant stake in steel and mining major Evraz Group and a majority interestin the Dvoinoe gold project. James Cross, Chairman of Highland Gold, said, "This transaction provides us withsignificant funding to enable the progress of our very active developmentprogramme at a number of key sites in our portfolio. Highland Gold now has ashareholder of notable standing in Russia. This supplements our existingrelationship with Barrick and creates a strong platform for exploiting ourattractive asset base." Eugene Shvidler, Chairman of Millhouse LLC, said, "This investment in HighlandGold fits perfectly with our approach of taking strategic stakes in businesseswith strong growth potential. We believe our investment and management inputwill help Highland to obtain maximum returns on a world-class set of assets." Alex Davidson, executive vice president, exploration and corporate developmentfor Barrick, commented, "Barrick welcomes the investment by Millhouse LLC inHighland Gold. This investment greatly strengthens Highland Gold's presence inRussia and positions Highland Gold to move forward with its exciting pipeline ofdevelopment assets for the benefit of all stakeholders." Highland Gold has been advised by JPMorgan Cazenove and Rothschild. JPMorganCazenove acts as the Nominated Adviser for Highland Gold. Terms of the Subscription Agreement and Relationship Agreement Highland Gold has today entered into a Subscription Agreement setting out theterms and conditions of the subscriptions. The new ordinary shares issued underboth subscriptions will be credited as fully paid and will rank pari passu inall respects with the existing shares in issue. Applications will be made to theLondon Stock Exchange for the new shares to be issued under both subscriptionsto be admitted to trading on the AIM market. Admission is expected to beeffective around 11 December 2007 in respect of the First Subscription and inthe first half of January in respect of the Second Subscription. Highland Gold and Millhouse LLC have also entered into a Relationship Agreementwhich ensures that Highland Gold carries on business independently of, and atarm's length to, Millhouse LLC. The existing cooperation agreement betweenHighland Gold and Barrick will remain in effect subject to certain consequentialamendments, including a reduction in the number of directors it has the right toappoint from 3 to 2. Under the Relationship Agreement, Millhouse LLC will have the right to appoint anumber of directors to the Board of Highland Gold depending on the size of itsshareholding. Following completion of the First Subscription, it will beentitled to appoint 3 directors out of 9 and this will remain the case followingcompletion of the Second Subscription. Millhouse LLC will also have the right toappoint a chief executive officer who will not serve on the Board. Furtherdetails of the Relationship Agreement and the composition of the Board will beset out in a circular to shareholders at the time of calling the EGM. JamesCross will remain as Chairman. Takeover Code Although Highland Gold has its registered office in Jersey, the Panel haspreviously confirmed that Highland Gold is not subject to the Takeover Code andshareholders will not be afforded any protections under the Takeover Code. It isnot expected that this position will change as a result of this transaction. As Highland Gold is not currently a company subject to the Takeover Code,investors should be aware that shareholders (including Barrick, and, in duecourse, Millhouse LLC) are able to increase their interests in voting rights inHighland Gold to any level without having to make a mandatory offer under theTakeover Code. Extraordinary General Meeting An Extraordinary General Meeting, at which requisite shareholder resolutionswill be proposed, will be held in the first half of January 2008. Barrick, IvanKoulakov and Millhouse LLC will undertake to vote their respective shareholdingsin favour of these shareholder resolutions. Enquiries: Highland Gold Henry Horne, Managing Director, Moscow - +7 495 777 5529Dmitry Yakushkin, Director of Communications - +7 495 777 3155Duncan Baxter, Executive Director - +44 (0) 1534 814202Dominic Palmer-Tomkinson - +44 207 7239 0140 JPMorgan Cazenove (Nominated Adviser)Michael Wentworth-Stanley, Managing Director - +44 (0) 207 588 2828Sam Critchlow RothschildRoger Ewart Smith, Managing Director - +44 (0) 207 280 5424 Fin Public RelationsAlex Glover - +44 (0) 207 608 2280 Each of JPMorgan Cazenove and Rothschild, which is authorised and regulated inthe United Kingdom by the Financial Services Authority, is acting as financialadviser to Highland Gold and no-one else in connection with the transaction andwill not be responsible to anyone other than Highland Gold for providing theprotections afforded to its clients or for providing advice in relation to thetransaction or in relation to the contents of this announcement, or for anyother transaction, arrangement or matters referred to in this announcement. Highland Gold Mining Limited trades under the ticker, HGM.Lwww.highlandgold.com This information is provided by RNS The company news service from the London Stock Exchange