Lionsgold Regulatory News (LION)

Kolar Gold Limited

("Kolar Gold", "Kolar" or the "Company")

Placing, Board Changes and General Meeting

Kolar Gold Limited (LON: KGLD), the AIM-quoted India gold exploration and mine development company, is pleased to announce a company update and details of a placing, proposed board appointments and an extraordinary general meeting (the "General Meeting").

Highlights:

· Conditional placing of 81,818,182 new ordinary shares in the capital of Kolar at a subscription price of 1.1p per share, raising gross proceeds of £900,000 (the "Placing");

· Issue of 81,818,182 warrants to subscribe for new ordinary shares in Kolar at an exercise price of 2.2p per warrant, within a 30 month exercise period;

· Cornerstone investor, Metal Tiger plc (LON:MTR), has agreed to invest £200,000 in the Placing and acquire 18,181,818 new ordinary shares (equivalent to 9.4% of the enlarged share capital of the Company); 

· Placing will enable Kolar Gold to progress its activities in India, look to develop complementary activities in other jurisdictions and also consider fintech opportunities;

· Cameron Parry and Luke Cairns to be appointed as directors with executive responsibilities; Cameron becoming the new CEO of Kolar. Both appointments are conditional on admission to trading on AIM of the ordinary shares to be issued under the Placing;

· Placing conditional on shareholders' approval at the General Meeting on or around 27 July 2016, further details of which are set out below; and

· A circular in connection with the Placing and a notice of the General Meeting will be sent to shareholders today.

Company Update

On 30 March 2016, the Company announced its interim financial results for the six months ended 31 December 2015 and the completion of a strategic review (the "Interims"). The conclusion of this review was that the Company would continue to develop its existing gold exploration and development interests in India through its investment in Geomysore Services India Pvt Ltd ("GMSI") and its relationship with the mine workers' unions at Bharat Gold Mines Limited ("BGML"). In addition, it would also pursue other opportunities (within India and other jurisdictions) that are allied and complementary, which it can develop in parallel with its gold exploration and development interests, including in the fintech sector, which the Board considers attractive. 

The Interims stated that GMSI was in the process of raising US$2.2 million (the "GMSI Fundraising") for additional drilling and to complete the economic feasibility study (the "EFS") in relation to the East Block open pit mine. At that time, the Company stated that it would not be able to participate in the GMSI Fundraising without raising further funds itself and, in not participating, its interest in GMSI would be diluted proportionately. As announced on 6 July 2016, one of the four major shareholders in GMSI, Thriveni Earth Movers Private Limited ("Thriveni"), a leading Indian mining company and a mining contractor to GMSI, has since agreed with the transaction approved by GMSI shareholders as announced on 7 July 2016 to invest US$2.4 million to enable GMSI to undertake the additional drilling in relation to the East Block open pit mine, complete the EFS and provide sufficient working capital to the end of 2016. Following Thriveni's investment, the Company's interest in GMSI will be diluted from 23.4% to 20.5%. With GMSI funded through to EFS on the East Block open pit mine this will allow the directors to consider applying resources to other opportunities, diversifying the risk profile of the Company.

The Placing will raise £900,000 (before fees and expenses) and these funds together with the Company's existing cash resources of approximately £350,000 will enable Kolar Gold to continue to develop its Indian initiatives and, with GMSI now funded through its next work programme, also consider complementary activities in the fintech sector as well as gold mining opportunities in other jurisdictions.

Placing

Under the Placing (which is conditional upon the passing of the resolutions at the General Meeting), Kolar will raise £900,000 (before fees and expenses) through the issue of 81,818,182 new ordinary shares (the "Placing Shares") at a price per share of 1.1p (the "Placing Price").

For each Placing Share issued, an accompanying warrant (a "Placing Warrant") will be issued by the Company. Each Placing Warrant will allow the holder to subscribe for an additional new ordinary share at an exercise price of 2.2p at any time within 30 months following admission to trading of the Placing Shares on AIM ("Admission"). Therefore, 81,818,182 Placing Warrants will be issued.

The Placing Price represents a discount of 18% to the 30 trading day volume weighted average price to 11 July 2016, the latest practicable date prior to the issue of this announcement.

Application will be made for Admission and, subject to shareholder approval of all resolutions at the General Meeting on or around 27 July 2016, Admission is expected to occur on or around 28 July 2016.

For the purposes of the Financial Conduct Authority's Disclosure and Transparency Rules, following Admission, the total issued ordinary share capital of Kolar will be 193,111,719 ordinary shares (with one vote per share). There are no shares held in treasury. Upon Admission of the Placing Shares, the total figure of 193,111,719 may be used by shareholders as the denominator for the calculation by which they will determine whether they are required to notify their interest, or a change to their interest, in Kolar.

Related Party Transaction

Damille Investments II Limited ("Damille") has conditionally subscribed for 6,818,181 Placing Shares with a total consideration of £75,000 (the "Damille Subscription"). By virtue of Damille being a 'substantial shareholder' as defined in the AIM Rules for Companies (the "AIM Rules"), the Damille Subscription is considered a related party transaction under Rule 13 of the AIM Rules.

The directors consider, having consulted with the Company's Nomad, WH Ireland Limited, that the terms of the Damille Subscription are fair and reasonable insofar as shareholders are concerned.

Damille has given an irrevocable undertaking to the Company that it will not exercise its voting rights to vote against the resolutions at the General Meeting.

Board Changes and arrangements

Subject to the passing of the resolutions at the General Meeting and Admission, Cameron Parry and Luke Cairns will be appointed executive directors of the Company. Further details on Mr. Parry and Mr. Cairns are set out in the Appendix to this announcement.

It is intended that Cameron Parry will be appointed CEO of the Company. Mr. Parry has undertaken to subscribe for 2,000,000 Placing Shares for a total amount of £22,000. In addition and as part of his remuneration package, he will receive 5,000,000 ordinary shares in the Company (the "Remuneration Shares") upon his appointment. Mr. Parry has undertaken not to dispose of the Remuneration Shares for a period of at least 6 months from the date of issue and, in the event that he leaves the Company within 6 months from his appointment, he has undertaken to repay the Company £27,500 in cash equivalent to 50 percent. of the issue value of the Remuneration shares by reference to the Placing Price.

Metal Tiger PLC (LON: MTR), of which Cameron Parry is a Non-Executive Director, has undertaken to subscribe for £200,000 (18,181,818 Placing Shares) in the Placing. Onzima Ventures PLC (LON: ONZ), of which Luke Cairns is a Non-Executive Director, has undertaken to subscribe for £30,000 (2,727,272 Placing Shares) in the Placing.

Under the terms of a shareholders' agreement entered into on 24 February 2011 between the Company and Sun Mining and Exploration Limited ("Sun Mining") (the terms of which can be found in the Company's AIM Admission Document dated 10 June 2011), Sun Mining was granted the right to nominate one person to sit on the board of the Company for as long as Sun Mining held 10% of the total shares in issue. At present, the Sun Mining nominated director is Mr Vaidyanathan Sivakumar. Following the Placing Sun Mining's shareholding in the Company will fall below 10% and as a result, Mr Vaidyanathan Sivakumar will resign from the board of the Company with effect from Admission.

Additionally, following Admission, the Company intends to create a pool of 19,800,000 management options to be used to reward performance of key directors and other personnel. The management options will be priced at 2.2p per share (a premium of 100% to the Placing Price) with a term of 3 years and 5 months, expiring on 31 December 2019. A further announcement shall be made as and when any management options are issued.

Extraordinary General Meeting

The General Meeting will be held on or around 27 July 2016 at the Company's registered office, Ground Floor, Dorey Court, Admiral Park, St Peter Port, Guernsey GY1 2HT.

The notice of the General Meeting will be sent, along with a circular in connection with the Placing, to shareholders today.

At the General Meeting, the Company's shareholders will consider and vote on resolutions to approve the disapplication of pre-emption rights in respect of the Placing Shares, the Placing Warrants, the Remuneration Shares and the ordinary shares to be issued on the exercise of any Placing Warrants (the "Warrant Shares"), authorise the directors to allot and issue the Placing Shares, the Placing Warrants, the Remuneration Shares and the Warrant Shares, approve certain amendments to the Company's articles of incorporation, re-designate each ordinary share in the capital of the Company with a par value of 7 pence to an ordinary share of no par value and approve the conditional appointments of Cameron Parry and Luke Cairns to the Board.

Harvinder Hungin, Chairman of Kolar commented: "We are embarking on the next stage of Kolar Gold's evolution.

"Kolar has been an Indian gold focused exploration and development company since its admission to AIM in June 2011. This activity has been complex and difficult though the view that India remains one of the most prospective gold jurisdictions in the world holds and the Company is well placed to capitalise on this opportunity as it develops. In addition to its activities in India, the Company is now looking at related activities in the fintech sector including in India. With GMSI now funded the Board has also resolved that the Company should consider mining opportunities in other jurisdictions, on an opportunistic basis, to support its development activities."

"As part of this change Cameron Parry and Luke Cairns will be joining the Board in an executive capacity with Cameron as CEO. Cameron has a background in both mining and fintech and with AIM quoted companies, most notably Metal Tiger plc where as CEO he presided over a substantial rise in the value of that mining investment company. Luke has a background in corporate finance and is a former NOMAD and brings much needed executive capacity to the Company."

"Following the dilution of Sun Mining's holding as a result of the Placing Mr Vaidyanathan Sivakumar will be stepping down as a director of the Company and I would like to take this opportunity to thank him for his input and support over the years and wish him well in his future endeavours. As continuing directors, Stephen Oke and I remain focused on seeing Kolar succeed in its endeavours in India and we are excited by the prospect of new opportunities that can complement our longstanding position in that jurisdiction."

For further information, please visit www.kolargold.com.au or contact: 

APPENDIX

The following information is disclosed pursuant to Schedule Two paragraph (g) of the AIM Rules for Companies.

Further information on Cameron Parry

Cameron John Parry, aged 41, is an experienced executive director of quoted public companies in both the mining and fintech sectors. Born in Australia and based in London since 2009, over the past four years he has completed the sale of 51 per cent. of a biopharmaceutical company he founded, to an ASX (Australian Stock Exchange) listed company, created and was the CEO of AIM quoted Metal Tiger PLC (LON:MTR), and as Executive Chairman and co-founder, completed the world's first IPO of a blockchain fintech company, Coinsilium Group Limited (ISDX:COIN).

Cameron Parry is currently, or has been during the previous five years, a director of the following companies:

In December 2006, Cameron Parry became a director of an Australian biotechnology company called Astop Biohealth Limited which was put into administration by the Board in June 2007 and subsequently liquidated in September 2007.

Further information on Luke Cairns

The following information is disclosed pursuant to Schedule Two paragraph (g) of the AIM Rules for Companies.

Luke Sebastian Cairns, aged 38, was the Head of Corporate Finance and Managing Director at Northland Capital Partners. Born in Guernsey and based in London, Luke is a former Qualified Executive for AIM and has advised growth companies across a number of sectors and regions on a wide range of transactions. Luke is currently a Non-Executive Director of AIM-listed Onzima Ventures PLC (LON: ONZ) and he is an Associate of the Chartered Institute of Secretaries.

Luke Cairns is currently, or has been during the previous five years, a director of the following companies: