Keras Res Regulatory News (KRS)

Keras Resources plc / Index: AIM / Epic: KRS / Sector: Mining

18 December 2020

Keras Resources plc ('Keras' or the 'Company')

Diamond Creek Phosphate Mine Update & Placing and Subscription to Raise £550,000

Keras Resources plc, the AIM listed mineral resource company, is pleased to announce an update on progress at the Diamond Creek high-grade direct shipping ore ('DSO'), organic phosphate mine in Utah, USA ('Diamond Creek'). The Company is also pleased to report it has raised £440,000 (before expenses) through the placing of 400,000,000 new ordinary shares of 0.1p each ('Ordinary Shares') at a price of 0.11p per Ordinary Share (the 'Placing Shares') (the 'Placing').

In addition, Brian Moritz and Dave Reeves, directors of the Company, have conditionally agreed to subscribe for 36,363,636 (£40,000) and 63,636,364 (£70,000) new Ordinary Shares respectively (the 'Director Subscription Shares'), (the 'Director Subscription') on the same terms subject to the passing of resolutions at a general meeting to be held by the Company.

Every 2 Placing Shares and Director Subscription Shares subscribed will receive a warrant to subscribe for 1 new Ordinary Share with an exercise price of 0.22p per new Ordinary Share and an expiry date of 31 December 2021 ('Warrant').

The funds being raised will be used to advance approximately US$300,000 to Falcon Isle, as described below, generally to support the Company's growth strategy in Utah and Togo, and for general working capital purposes.

While the Placing Shares are being issued under the Company's existing share authorities, the Warrants and the proposed Director Subscription of further 100,000,000 new Ordinary Shares require additional shareholder authorities, and the necessary authorities will be proposed at a General meeting intended to be held on or about 18 January 2021.

OVERVIEW

· Diamond Creek processing plant fabrication completed and shipping in progress

· Processing plant has been expanded to include a granulation, drying and bagging plant increasing total plant capital expenditure by US$225,000

· Plant commissioning still on schedule to complete in Q1 2021

· Organic phosphate product range will now include 50lb bags of both fine and granulated product in addition to the current offering of one-ton bulk bags

· Higher margin granulated 50lb bagged product will initially be produced by a third-party with sales expected to commence in January 2021

· Marketing programme has been very well received with significant interest for our superior high grade organic phosphate in the new year

Keras Resources CEO, Russell Lamming said: "The Diamond Creek mine has progressed significantly since closing the transaction in July. The demand for our product has been very encouraging to date and underpins the planned increase of our Utah processing facility and expanding our product range to include a 50lb bagged offering of both fine and granulated product in addition to the one-ton bulk bags we have been selling to date. The commissioning of the plant, still expected to be completed in Q1 2021, will increase our flexibility to produce different products and provide the production team with the flexibility to match the marketing team's sales forecasts.

"With regards to the Nayéga Manganese Mine in Togo, I have just returned from Lomé for my last trip of 2020. I remain positive about the award of the exploitation permit and believe that significant progress towards a permit has been made, specifically over the last three months.

"Finally, I would like to thank our shareholders, both those new to our register following today's placing and our long-standing supporters, plus colleagues and other stakeholders, and wish a happy and safe break over the festive season and look forward to providing an update on both Diamond Creek and Nayéga Manganese in due course."

FURTHER INFORMATION

Diamond Creek Phosphate Project

As announced on 30 July 2020 that Keras Resources PLC ('Keras' or the 'Company') entered into an agreement to acquire a 51% interest in Falcon Isle Holdings LLC ('Falcon Isle') for nominal consideration, on the basis that Keras provided a US$2.5m loan facility to Falcon Isle, payable in tranches ('the Acquisition'). Diamond Creek is owned by Falcon Isle. Approximately $2.2m has already been advanced to Falcon Isle and the Directors now intend use funds from the Placing to advance the final part, approximately US$300,000, so increasing the Company's interest in Falcon Isle to 51% before the end of December.

Diamond Creek is a fully permitted, high grade DSO, low capex organic phosphate mine. The mine achieved first commercial production in late July 2020 and the first beneficiated -10 mesh organic product, part of a 770-ton order, was dispatched in early September.

The 2020 mining campaign has now been completed with a total of 7,620 run-of-mine tons extracted from the Diamond Creek mine. As previously reported, the Company decided to increase Year 1 of the phased ROM production by 50% from 5,000 tons to 7,500 tons to ensure sufficient material over the winter while maintaining the Year 5 target of 48,000 tons of commercial production. The increase in planned production does not change the terms of the agreement announced on 30 July 2020.

Current beneficiation is being undertaken through a toll-treating agreement at a plant located in Fillmore, Utah approximately 150km south west of Spanish Fork. A new plant, to be owned and operated by Falcon Isle, which has the capacity to process the 5-year 48,000-ton production target, is now being shipped from Shanghai and is expected to be commissioned in Q1 2021. Once commissioned, the plant will increase both the available capacity and flexibility to produce different sized beneficiated material.

Details of the Placing

Application will be made for admission of the 400,000,000 Placing Shares to trading on the AIM Market of the London Stock Exchange ('Admission'). It is anticipated that Admission of the Placing Shares will take place on or around 24 December 2020. The Placing Shares will rank pari passu with the existing Ordinary Shares, which are currently traded on AIM.

Following Admission of the Placing Shares, there will be 5,266,007,851 Ordinary Shares in issue with each share carrying the right to one vote. There are no shares currently held in treasury. The total number of voting rights in the Company will therefore be 5,266,007,851 and this figure may be used by shareholders as the denominator for the calculations by which they determine if they are required to notify their interest in, or a change to their interest in, the Company under the Financial Conduct Authority's Disclosure Rules and Transparency Rules.

The Director Subscription and grant of Warrants is conditional on the passing of resolutions increasing headroom to be proposed at the General Meeting and cannot be completed until after that meeting.

Application for the 100,000,000 Director Subscription Shares to trading on the AIM Market of the London Stock Exchange will be subject to the passing of resolutions at the general meeting to be held by Company.

Related Party

The Director Subscription and grant of Warrants to Brian Moritz and Dave Reeves constitutes related party transactions pursuant to AIM Rule 13 of the AIM Rules for Companies. Russell Lamming, being the director independent of the Director Subscription and grant of Warrants considers, having consulted with the Company's Nominated Adviser, that the Director Subscription and grant of Warrants to Brian Moritz and Dave Reeves is fair and reasonable insofar as the shareholders of the Company are concerned. 

Director Shareholdings

Subject to the passing of resolutions at a general meeting to be held by the Company and the admission to trading of the Director Subscription Shares, the beneficial interests Directors in the enlarged issued share capital will be as follows:

General Meeting

As a result of the Placing the Company is no longer authorised to issue the total number of shares able to be subscribed under the Warrants to be issued pursuant to the Placing and the 984,357,334 warrants already in issue, or to issue the Director Subscription Shares. To create sufficient headroom for the Placing to go ahead, Russell Lamming and Dave Reeves have undertaken not to exercise the subscription rights of the existing warrants owned by them until there is sufficient authority to issue Ordinary Shares in satisfaction of the rights of the holders of all outstanding Warrants, provided the Company immediately seeks to increase the authority.

For these reasons, the Directors are therefore convening a General Meeting intended to be held on 18 January 2021 to renew their authority to issue Ordinary Shares in full satisfaction of the matters referred to above, details of which will be shortly posted to shareholders.

**ENDS**

For further information please visit www.kerasplc.com, follow us on Twitter @kerasplc or contact the following:

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