Norseman Gold Regulatory News (NGL)

26 Feb 2007 07:03

Davos Resources PLC26 February 2007 DAVOS RESOURCES PLC AIM Code: DVRS Update to the acquisition of Central Norseman Gold Corporation Limited and associated fundraising Board changes Appointment of Joint Broker 26 February 2007 Highlights of the Acquisition O Davos is acquiring Australia's longest continually runninggold operation which has produced in excess of 5.5 million ounces of gold since1937 O Production is currently sourced from two underground minesand processed through a CIL processing plant with a capacity of approximately700,000 tonnes per annum O The tenements being acquired cover a total area of 689 km2and are considered to have excellent exploration potential O The total consideration for the acquisition is A$66 millionplus the assumption of bonds and guarantees of approximately A$5 million. A$44million is payable in cash of which A$8 million has already been paid as a nonrefundable deposit. Davos has engaged Ocean Equities Ltd to raise the requisitefunds and provide working capital for the Company Introduction Further to the announcement on 10 January 2007 in relation to the conditionalacquisition of Central Norseman Gold Corporation Limited ("CNGC") from CroesusMining NL ("Croesus") ("the Acquisition"), Davos Resources Plc ("Davos" or "theCompany") through its wholly owned subsidiary, Davos Gold Pty Ltd ("Davos Gold")is pleased to provide further information on the proposed acquisition. Background Information on CNGC CNGC is the owner of the Norseman Gold Mine which is located approximately 725kmeast of Perth, Western Australia, and is midway between Kalgoorlie andEsperance. The Norseman Gold Mine lies at the southern extent of theNorseman-Wiluna Greenstone Belt of the Eastern Goldfields Province of theYilgarn Block. Gold was first found on the Norseman field in 1894 and CNGC was established in1937. It is Australia's longest continuously running gold mining operationhaving produced gold for over 65 years and the Norseman field itself hasproduced over 5.5 million ounces of gold. CNGC was acquired by Croesus in January 2002, following its sale by WesternMining Corporation. It was subsequently placed into administration in June 2006following a period where the operations were generating significant lossesexacerbated by hedge book commitments that CNGC was unable to meet. Miningoperations at the Norseman Gold Mine have continued during the period ofadministration. The Norseman Project is currently producing gold from two high-grade undergroundgold mines and has an excellent portfolio of advanced exploration opportunitiesto support future production. The highly prospective land holding of 689km(2) contains key strategicinfrastructure within the Norseman region including a 700,000 tonnes per annumCIL treatment plant, administration offices, Single Persons' Quarters andhousing within the Norseman townsite. The Norseman Project is well servicedwith power, water and access via the sealed Kalgoorlie-Esperance Highway. Theoperation currently has approximately 200 employees and contractors. Terms of the Acquisiton Davos has agreed to acquire CNGC for a total consideration of A$66 million plusthe assumption of Department of Industry and Resources performance bonds andguarantees totaling approximately A$5 million. The consideration comprises: 1. A deposit of A$8 million, which was paid by Davos to the Administratorsof Croesus on 9 January 2007; 2. An additional cash payment of A$36 million payable in cash on completionof the Acquisition; 3. The issue of new ordinary shares in Davos with a value of A$2million at the price at which the proposed placing referred to below isundertaken, being approximately 8 million ordinary shares at 10p per share; and 4. The issue of 7% convertible loan notes in the principal sum of A$20million which will be repayable in four equal tranches annually from 2008 to2011 or convertible into new ordinary shares in Davos in four equal tranchesannually from 2008 to 2011 at prices of 20p, 25p, 35p and 50p respectively. The deposit that has been paid by Davos is non-refundable, save in the eventthat the creditors of CNGC fail to approve the Acquisition. The creditors'meeting is scheduled for 28th February 2007. The Acquisition is conditional on the approval of Davos shareholders. Under the terms of the Acquisition, Davos is required to pay an additional cashamount of A$36 million and complete the transaction by 31 March 2007. Davosmay, at its election, extend this deadline to 30 April 2007 by making an interimnon-refundable payment of A$5 million (which the Company intends to raisethrough a further placing and/or borrowing) and demonstrating to theAdministrators of Croesus that it has procured irrevocable subscriptionagreements for a minimum of A$31 million and irrevocable proxies in favour ofthe acquisition by Davos shareholders for the shareholders meeting to inter aliaapprove the acquisition. Pursuant to the Acquisition and subject to completion of the Acquisition furtherordinary shares and options will be issued as follows: • 30 million new ordinary shares will be issued to Directors andmanagement • 25 million new ordinary shares will be issued to a consortium ("Consortium") which introduced and assisted the Company with the acquisition • 11 million options will be issued to senior executives including BarryCahill. The options will be exercisable for a period of 3 years at 10p per share • 10 million employee options (currently unallocated) exercisable for aperiod of 3 years at 10p per share Following completion of the Acquisition all the Directors, Management andConsortium will be subject to a 2 year lock-in on their new ordinary shares (inaddition to any applicable AIM rule lock-in requirements). In addition, all theoptions issued to Directors, Management will be subject to a lock-in in year 1and orderly market arrangement in year 2. Financing of the Acquisition In early January 2007, Davos raised a total of £3,072,000 through a privateplacement of 61,440,000 new ordinary shares at a price of 5p per ordinary share. Interests associated with David Steinepreis, Chairman of Davos, subscribedfor, and were issued, 3,000,000 ordinary shares. On 22 February 2007, the Company raised an additional £1,439,000 million throughthe issue of 28,780,000 additional new ordinary shares at a price of 5p perordinary share. Application will be made for these new ordinary shares to be admitted to tradingon AIM. Following these subscriptions, Mr Steinepreis and his associated parties had aninterest of 6,100,000 ordinary shares representing approximately 4.1 per cent.of the Company's issued share capital. The Company has engaged Ocean Equities Limited to raise an additional £24million at 10p per ordinary share for the Acquisition and to provide workingcapital for the Company. Proposed changes to the Board It is proposed that Mr Barry Cahill, current Operations Manager at the NorsemanProject and acting on behalf of the Administrator, and Mr Vince Pendal, willjoin the Board of Davos following the completion of the Acquisition. Barry Cahill - Proposed Chief Executive Officer Barry Cahill is a mining engineer with over 20 years experience in operationalmining and management throughout Australia. He has had extensive experience inthe management of underground and open pit mines as both a mining contractor andan operator, including the Leinster nickel mine and the Broken Hill base metalmine. His area of expertise has an emphasis on the recovery of poorly performingoperations to a profitable standard particularly in narrow vein undergroundmines. Barry Cahill has been an executive director of a number of publiccompanies including managing director of Australian Mines Limited, a companylisted on the ASX. He is a member of the Australasian Institute of Mining &Metallurgy and a member of the Australian Institute of Company Directors. Vince Pendal - Proposed Chairman Vincent Pendal has extensive experience in banking and corporate finance in boththe industrial and mining sectors in Australia. He is currently the chairman ofBrandrill Ltd, a company listed on the ASX, and a director and a majorshareholder of Oakvale Capital Ltd, a company registered in Australia, whichprovides independent advice on financial risk management to a range of leadingcompanies, government authorities and institutions throughout Australia. Duringthe past five years he also served as Chairman of Austral Coal Limited andPerilya Limited, companies listed on the ASX. He is a foundation/life member ofthe Kalgoorlie Mining Hall of Fame. Mr Scott Spencer has resigned as Non-Executive Director with immediate effect. Appointment of Joint Broker Davos is also pleased to announce the appointment of Ocean Equities Limited asJoint Broker to the Company with immediate effect. Change of Name Davos proposes, subject to shareholder approval, to change its name to NorsemanGold Plc. Timetable It is intended that a new admission document, which will contain a CompetentPersons Report by RSG Global on the Norseman Mine and a Notice of ExtraordinaryGeneral Meeting of shareholders, will be sent to the Company's shareholders inApril 2007, setting out details of, and seeking approval for, the Acquisitionthe Proposed Placing and change of name to Norseman Gold Plc. Contacts: David Steinepreis Davos Resources Plc 07913 402727(U.K.) Olly Cairns Corporate Synergy Plc 020 7448 4400 Guy Wilkes Ocean Equities Ltd 020 7786 4370 Notes: The information in this announcement as it relates to geology, geochemistry andgeophysics, has been prepared and reviewed by Barry Cahill who is a CompetentPerson as described in Part two of the AIM Guidance Notes for Mining, Oil andGas Companies. This information is provided by RNS The company news service from the London Stock Exchange