Keras Res Regulatory News (KRS)

26 April 2022

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

Placing of £1.2m and Broker Option of £0.75m, Cornerstone Investment in Keras & Management Change

· £1.2m placed with cornerstone investor and Board at a premium to current share price

· Broker Option available to raise a further £0.75m to allow new and existing shareholders to participate

· Graham Stacey appointed as CEO with Russell Lamming moving to Non-Exec Chairman to ensure key management is based in US

· Funds will be utilised to enhance current operations and maximise future potential of the Diamond Creek asset

Keras Resources plc (AIM: KRS) is pleased to announce that, post securing 100% of Falcon Isle Resources LLC and Falcon Isle Holdings LLC (collectively 'Falcon Isle') on 30 March 2022, which owns the high-grade Diamond Creek organic phosphate mine ("Diamond Creek'), the Company intends to raise a total of £1,950,000 (before expenses) (the 'Fund Raising') by the issue of up to 1,625,000,000 new ordinary shares of 0.01p each ('Ordinary Shares') at a price of 0.12p per Ordinary Share ('Placing Price'). 1,000,000,000 new Ordinary Shares have been placed for cash consideration to raise £1,200,000 (the 'Placing Shares') (the 'Placing') and the balance of up to 625,000,000 new Ordinary Shares are intended to be issued through a Broker Option (the 'Broker Option Shares'). The purpose of the Broker Option is to allow existing shareholders and other investors to participate in the Fund Raising.

Each Placing Share and Broker Option Share subscribed will receive a warrant to subscribe for 1 new Ordinary Share at any time up to 31 May 2024, at an exercise price of 0.18p per new Ordinary Share ('Warrants').

Shareholders should note that the placing price of 0.12p per share represents a premium of approx. 7% over the closing price of 0.1125p and 20% over the 5-Day VWAP of 0.1004p on 25 April 2022, the day before the Placing was announced. 

As part of the Placing, the Company has secured a cornerstone investor, with First Uranium Resources (CSE: URNM) (KMMIF:OTC) ('First Uranium') subscribing for 800,000,000 Placing Shares, raising funds of £960,000. First Uranium recently raised C$10m to develop a portfolio of assets in the North American phosphate market as it sees this as a key growth commodity within the resource sector.

In addition, the Keras Board of Directors have again co-invested in the Fund Raising and have subscribed for 200,000,000 Placing Shares in aggregate. Brian Moritz, Russell Lamming and Dave Reeves, have subscribed for 35,000,000 (£42,000), 45,000,000 (£54,000) and 120,000,000 (£144,000) new Ordinary Shares respectively (the 'Director Subscription Shares'), (the 'Director Subscription').

While it remains the intention that payments for the Falcon Isle transaction will be financed primarily from Falcon Isle cashflow, the funds being raised will be used for the First Tranche of US$800,000, the establishment of a N1 43-101 compliant Mineral Resource at Diamond Creek, expansion of the Falcon Isle business into other fields of activity and general working capital.

As Keras now focusses on the North American phosphate market, it intends to locate its key management in that region and reduce the costs outside of the US. As such, from 1 June 2022 Graham Stacey (Chief Operating Officer) will be appointed Chief Executive Officer of the Company and Russell Lamming will become a Non-Executive Director. On 1 September 2022, Russell will assume the role of Non-Executive Chairman. Brian Moritz, current Non-Executive Chairman, will continue his role as Non-Executive Director and Company Secretary post the transition and will continue to provide oversight of the Company's finances.

Russell Lamming, CEO of Keras, commented, "The past few months have been a transformative period for Keras. We recently secured 100% of Falcon Isle - the strategically located, high grade organic phosphate mine - which is now past its capex peak-funding period and poised to start ramping up production into the growing organic agricultural sector underpinned by the macro-economic tailwinds of the global fertiliser markets. We are now delighted to have secured a cornerstone investor with First Uranium at a premium to our current share price, who shares our conviction in the upward trajectory of the phosphate market and the inherent value of the Diamond Creek project within this sector.

We as a Board remain very much aligned with shareholders as we continue to invest in the Company and we welcome the opportunity for other investors to participate alongside us. This placing ensures we have a solid cash position to enhance our current operations and consolidate the long term future of both the project and Company. We are fully focussed on building this platform and driving further shareholder value through maximizing the asset potential, optimizing efficiencies and generating cash flows.

I believe Graham's appointment as CEO is key to the Company's transition to a US focussed business. His role in the development of Diamond Creek has been integral since the initial acquisition in 2020 and the Board will continue to support his efforts as he builds Falcon Isle into the premier organic phosphate producer in the US."

Fee Shares and Fee Warrants

The Company has agreed to issue 12,500,00 new Ordinary Shares to SP Angel at a deemed price of 0.12 pence per share in lieu of fees due to SP Angel and to issue 40,000,000 new Ordinary Shares to Shard Capital at a deemed price of 0.12 pence per share in lieu of fees due to Shard Capital (together "Fee Shares"). Each Fee share will have a warrant attached to subscribe for 1 new Ordinary Share at any time up to 31 May 2024, at an exercise price of 0.18p per new Ordinary Share ("Fee Warrants"). The issue of, in aggregate, 52,500,000 Fee Shares and new Ordinary Shares in respect of any Fee Warrants will be conditional upon shareholders providing new authorities for the Directors to issue such shares.

General Meeting

At the Annual General Meeting held on 30 March 2021 the Directors were authorised to issue 1,000,000,000 new Ordinary Shares for cash consideration. This is insufficient for the purposes of the issue of Fee Shares, Broker Option Shares and new Ordinary Shares in connection with the Fee Warrants. The issue of the Fee Shares, Broker Option Shares and new Ordinary Shares associated with the Warrants and Fee Warrants, are subject to the passing of resolutions at a general meeting to be held by the Company at 10am on 16 May 2022.

Broker Option

Under the Broker Option, up to 625,000,000 Broker Option Shares are intended to be placed at 0.12p per share by the Company's joint brokers, Shard Capital Partners LLP ('Shard') and SP Angel Corporate Finance LLP ('SP Angel'), to raise up to £750,000 (before expenses).

To subscribe under the Broker Option, Shareholders should communicate their interest to the Company, Shard or SP Angel by 5:00 pm on 29 April 2022 via their independent financial adviser, stockbroker or other firm authorised by the Financial Conduct Authority, as Shard cannot take orders from persons that are not its clients and SP Angel cannot take direct orders from individual private investors. 

There is no guarantee that Shard or SP Angel will exercise the Broker Option or that shareholders and investors will be able to acquire any Broker Option Shares.

Application for admission

Application will be made for admission of the 1,000,000,000 Placing Shares to trading on the AIM market of the London Stock Exchange ("AIM") which is expected to occur on or around 4 May 2022. The Placing Shares will rank pari passu with the existing Ordinary Shares, which are currently traded on AIM.

Total voting rights 

Following the admission of the Placing Shares, there will be 7,296,073,068 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 7,296,073,068 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.

Related Party

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

Following these Director Subscription and the admission of the Placing Shares, the beneficial interests of the Directors in the issued Ordinary Shares is as follows:

See the Appendix below for further information on dealings by persons discharging managerial responsibilities.

The information contained within this Announcement is deemed by the Company to constitute inside information as stipulated under Article 7 of the Market Abuse Regulation (EU) No. 596/2014 (as amended) as it forms part of the domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (as amended). Upon the publication of this Announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

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

 Appendix