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4 Jul 2012 15:00
4 July 2012 Sovereign Mines of Africa PLC ("SMA" or "the Company") SMA Share Placing, Share Exchange and Update
Sovereign Mines of Africa Plc, the gold mining exploration company with properties in the Republic of Guinea in West Africa, is pleased to announce that the Company has entered into a Share Exchange Agreement (the "Exchange Agreement") with prospective AIM-quoted Praetorian Resources Limited ("Praetorian") and a subscription agreement with Praetorian for a placing of 10,666,667 new ordinary SMA shares of one pence per share for cash ("Subscription Agreement").
Highlights of Exchange and Subscription Agreements include:
* SMA has agreed to exchange 18,333,333 new ordinary SMA shares of one pence per share ("Ordinary SMA Shares") at a strike price of six pence ("Exchange Shares") for 2,200,000 Praetorian ordinary shares of nil par value which is expected to represent 5.49% of Praetorian's issued share capital on its admission to AIM (falling to 4.72% on admission of a further 6,566,020 Praetorian ordinary shares that are conditional on shareholder consents) (with Subscription Shares of nil par value attached on 1 for 2 basis) at a price GBP0.50 ("Share Exchange"). * Praetorian has agreed to subscribe, for cash, for 10,666,667 million new Ordinary SMA Shares at a strike price of six pence to raise £640,000 (the "Issue").
The issue of SMA Exchange Shares is conditional, inter alia, on the Admission of the entire issued and to be issued share capital of Praetorian to trading on AIM becoming effective in accordance with the AIM rules ("Admission"). The Company expects this to be on or around 9 July 2012.
Admission of the Ordinary SMA Shares is expected to commence on 9 July 2012. On the issue to Praetorian of the aggregate 29,000,000 Ordinary SMA Shares in respect of the above Agreements, the Company's issued share capital will be 194,692,183 and Praetorian's shareholding in the Company will be 14.9%.
Praetorian is a newly formed natural resource focused investment holding company incorporated in Guernsey. Its investing policy is focused on investing in mining and energy stocks with depressed valuations arising, inter alia, during cyclic economic downturns. By arranging share exchanges the intent is to provide its investee companies with an additional means of raising capital in current market conditions. Praetorian is expected, on admission of its shares to AIM, to have GBP5.5 million in cash and to have made investments in resource companies totalling GBP17.3 million.
Praetorian's admission document will be available at www.praetorian.com.
David Pearl, Chairman of SMA, said:
"We are delighted that Sovereign has been selected by Praetorian to be part of its initial portfolio of shares. We believe that the market exposure we will enjoy, at a time when small cap resource stocks are finding it difficult to attract institutional shareholders, will be equally as valuable as the financial benefits of the transaction."
Details of the Subscription Shares include:
The holder of Praetorian Subscription Shares of no par value will have the right, inter alia, to convert into Praetorian ordinary shares of nil par value on the basis of one Praetorian ordinary share for every Subscription Share held, at the price of GBP0.70 per ordinary share, payable in full on subscription.
The expiry date for conversion is the last business day in July 2015.
On Admission, the Subscription Shares will become fully detached from the Ordinary Shares and trade separately on AIM.
The Subscription Shareholder will not be entitled to any right of participation in the profits of Praetorian.
Update on Mandiana Magana phase two drill results
In April this year, the Company completed Phase 2 of our exploration programme - the testing of strike extensions - and this involved 4,590 metres of RC drilling with 228 metres of diamond tails in 3 holes. SMA expected to be able to announce full assay results for this programme in June but due to the political situation in Mali, the results have still not been received from the international laboratory in Bamako. The Company expects to receive these results shortly and will update shareholders when these are received and analysed.
Enquiries:
SOVEREIGN MINES OF AFRICA PLCDavid Pearl, F.C.A. - Chairman +44 20 7586 4145
david.pearl@pearlcp.com
John Barry - Exploration Director +353 8 7669 5608 Nathan Steinberg - Finance Director +44 20 7269 7680
SHORE CAPITAL - NOMINATED ADVISER & BROKERToby Gibbs/Bidhi Bhoma - Corporate FinanceJerry Keen - Corporate Broking +44 20 7408 4090RIVINGTON STREET CORPORATE FINANCE, JOINT BROKERJon Levinson - Corporate Broking +44 20 7562 3357SQUARE1 CONSULTING LIMITEDDavid Bick/Mark Longson +44 20 7929 5599
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