Last checked at 9 Aug 2010 07:00
MedaVinci Plc
("MedaVinci" or the "Company")
Proposed Placing and Investment into Orogen Gold Limited
MedaVinci Plc today announces it has entered into an investment agreement to acquire 49 per cent. of the issued share capital of Orogen Gold Limited for a total consideration of £370,000, with an option to acquire the remaining 51 per cent. over the next 12 months and a placing to raise approximately £842,000, before expenses, by means of the issue of 421,021,000 new Ordinary Shares at 0.2 pence per share.
Highlights:
·; Orogen Gold is an Irish company incorporated, in April 2010, for the purpose of holding investments in companies involved in mineral exploration and related activities and is seeking to explore, appraise and develop one or more gold deposits in Europe. Its initial focus will be on the Deli Jovan Gold Project, a 69 sq km permit area in eastern Serbia covering two shallow underground gold mines that were last in production pre World War II, where Orogen Gold has an Earn-in Agreement with Reservoir Capital Corporation.
·; Under the Earn-in Agreement, Orogen Gold has the right to an initial interest of 55 per cent. in the Deli Jovan Gold Project if it spends a minimum of C$1.5 million on exploration by 20 June 2012 and a further interest of 20 per cent. will be obtained upon an additional spend of C$2.0 million by 20 December 2013, giving Orogen Gold an aggregate interest in 75 per cent. of the Deli Jovan Gold Project
·; The directors and founders of Orogen Gold, John Barry, Edward Slowey, Alan Mooney and Michael Nolan, all have considerable geological and corporate expertise gained by working on mineral exploration and production projects worldwide and are connected to an international network of senior advisors in exploration, mining, commercial operations and financing.
·; The Company, conditional, inter alia, upon Admission, will acquire 49 per cent. of the issued share capital of Orogen Gold. The total consideration of £370,000 is to be satisfied by the issue of 62,500,000 new Ordinary Shares at the Placing Price and as to £245,000 through the cash subscription for 12 million ordinary shares of €0.001 each in the capital of Orogen Gold.
·; The Company has an option to acquire the remaining 51 per cent. of the issued share capital of Orogen Gold within 12 months. If the Company were to exercise the option then it would be required to allot further new Ordinary Shares so as to give the Vendors, in aggregate, a total shareholding of 29.2 per cent. of the issued share capital of the Company.
·; The Placing will raise approximately £842,000, before expenses, by means of the issue of 421,021,000 new Ordinary Shares at 0.2 pence per share to fund the cash consideration under the Investment Agreement and further investment in Orogen Gold.
·; Upon Admission, Michael Nolan, a director of Orogen Gold, will join the Board as a non-executive Director and Adam Reynolds will join the Board of Orogen Gold.
In order to complete the investment into Orogen Gold the Company is required to amend the scope of its investing strategy to include investment in companies involved in mineral exploration and production and, under the AIM Rules, it is a requirement that the change in investing strategy must be approved by Shareholders voting (whether in person or by proxy) at a general meeting.
Therefore a Circular will be sent to Shareholders later today and a General Meeting of the Company has been convened for 10.00 a.m. on 1 September 2010 at 4 Park Place, London SW1A 1LP at which the Resolutions will be proposed.
Over the past 12 months the Board has looked at a number of investment opportunities and believes that the investment in Orogen Gold represents an opportunity for the Company with the potential to enhance shareholder value.
The Board and the Proposed Director will seek to minimise the risks associated with investment in a mineral exploration company however investors and shareholders should be aware in particular of the potential risk factors associated with an investment in a mineral exploration and production company. Further details of the risk factors are included in Part II of the Circular.
An extract from the Circular is set out below.
A copy of this announcement and the Circular, later today, will be available for download on the Company's website at http://www.Medavinciplc.com
Adam Reynolds, Chairman of MedaVinci plc, commented: "This is a significant step forward for MedaVinci and we have made substantial progress since we re-financed the business, changed the Board and the business model last year. Subject to certain targets being achieved we look forward to acquiring the balance of Orogen Gold."
Contact Details:
MedaVinci
Adam Reynolds Tel: +44 (0) 207 245 1100
Zeus Capital Limited Tel +44 (0)161 831 1512
Ross Andrews
Tom Rowley
1. Rationale for the Investment in Orogen Gold
In July 2009, the Company announced a placing, changes to the Board and a review of the business. It was also announced that the Board's initial view was that the Company's investment portfolio was of negligible value. The Company subsequently announced that it had had to recognise a full impairment provision and write off its investments in Demecal Europe BV and ErgoDynamics Participants BV in the financial year ended 31 March 2009. As reported in December 2009, up to £513,000 of funds had not been accounted for and despite the Board's attempts, through legal means, to recover some of these funds no amounts have been recouped to date. The Company's remaining investment, Emotion Fitness Mag Kft ("Emotion Fitness"), a gymnasium business in Hungary, continues to trade in line with management expectations and is generating a small profit on a monthly basis.
The Board has continued to seek other investment opportunities and believes that the investment in Orogen Gold represents an exciting opportunity for the Company with the potential to significantly enhance shareholder value.
2. Background on Orogen Gold
Orogen Gold is an Irish company incorporated, in April 2010, for the purpose of holding investments in companies involved in mineral exploration and related activities and is seeking to explore, appraise and develop one or more gold deposits in Europe. Its initial focus will be on the Deli Jovan Gold Project, a 69 sq km permit area in eastern Serbia covering two shallow underground gold mines that were last in production pre World War II, where Orogen Gold has an Earn-in Agreement with TSX listed Reservoir.
The directors and founders of Orogen Gold, John Barry, Edward Slowey, Alan Mooney and Michael Nolan, all have considerable geological and corporate expertise gained by working on mineral exploration and production projects worldwide and are connected to an international network of senior advisors in exploration, mining, commercial operations and financing. Through these contacts, the Board believes that Orogen will have access to a pipe-line of gold project exploration and development opportunities in Europe. Upon Admission, Michael Nolan will join the Board of MedaVinci and further details of his experience are contained in paragraph 9 below.
3. The Deli Jovan Gold Project
The Deli Jovan Gold Project comprises a permit area of 69 sq km in eastern Serbia covering two shallow underground gold mines that were last in production pre World War II. Serbia is a European Union applicant and foreign investors may acquire concession rights on natural resources under Serbian law. A number of international exploration companies are currently active in Serbia including Rio Tinto and Reservoir Capital Corporation, a TSX listed company.
Under the Earn-in Agreement Orogen Gold has the right to an initial interest of 55 per cent. in the Deli Jovan Gold Project if it spends a minimum of C$1.5 million on exploration by 20 June 2012 and a further interest of 20 per cent. will be obtained upon an additional spend of C$2.0 million by 20 December 2013, giving Orogen Gold an aggregate interest in 75 per cent. of the Deli Jovan Gold Project.
The Earn-in Agreement provides for the Exploration Licence, currently held by Reservoir, to be held, by a wholly owned subsidiary of Reservoir, on behalf of Orogen Gold and Reservoir under the terms of a joint venture agreement. Under Serbian law, the Exploration Licence cannot be transferred and therefore Reservoir has agreed to relinquish the Exploration Licence back to the Ministry of Mining and Energy and simultaneously application will be made to the Ministry of Mining and Energy for a new exploration licence to be re-issued. There is a risk that this new exploration licence will not be granted but the Directors, after consideration, believe that such risk is minimal.
Once the Exploration Licence has been re-issued, and upon satisfaction of the minimum spend commitments under the Earn-in Agreement, as set out above, Orogen will obtain a 55 per cent interest and then a 75 per cent interest in the Deli Jovan Gold Project.
Following the Investment Agreement becoming unconditional, a detailed exploration programme will be undertaken to determine whether there are gold reserves of not less than 100,000 troy ounces. Work will initially consist of accessing and dewatering the old gold mines and sampling of the underground galleries to understand the detailed geometry. Drilling will be designed to build confidence in the geological-structural model for the deposit.
Subsequently, and outside the immediate areas of the old mines, drill targets will be identified with the aim of making new discoveries within the area covered by the Exploration Licence.
The Board and the Proposed Director, after consultation with the Orogen Gold management team, estimate that the initial stage Phase I Exploration Programme will cost approximately US$850,000 and is expected to take 12 months. The second stage Phase I Exploration Programme will cost approximately US$1.65 million and is expected to take a further 9 months.
Subject to satisfactory completion of both stages of this Phase I Exploration Programme, a further Phase II Exploration Programme is proposed comprising diamond drilling and new underground development and sampling to determine whether, based on a preliminary economic assessment, there are sufficient gold reserves to support two or three years of production. It is estimated by the Directors and the Proposed Director, after consultation with the Orogen Gold management team, that this Phase II Exploration Programme will cost approximately US$1.9 million.
The total estimated costs of both Phase I and Phase II of the Exploration Programme are estimated at US$4.4 million and will require a further round of fund raising by the Company.
4. Principal Terms of the Investment Agreement
Under the Investment Agreement, the Company has, conditional, inter alia, upon Admission, agreed to acquire 49 per cent. of the issued share capital of Orogen Gold for a total consideration of £370,000.
The Company will subscribe £245,000 for new ordinary shares in Orogen Gold and will acquire further ordinary shares in Orogen Gold from the Vendors to be satisfied by the allotment of the Consideration Shares to the Vendors, giving the Company an aggregate shareholding of 49 per cent. of the issued share capital of Orogen Gold.
The Company has agreed to provide to Orogen Gold further amounts of up to £500,000, in aggregate over the next 12 months, for working capital to fund the initial stage of the Phase I Exploration Programme which will be provided by the subscription of deferred shares in Orogen Gold. The deferred shares will not be admitted to trading on a recognised stock exchange and will have no monetary value.
Under the Investment Agreement, the Company has an option to acquire the remaining 51 per cent. of the issued share capital of Orogen Gold it will not own at Completion. If the Company were to exercise the option then it would be required to allot further new Ordinary Shares so as to give the Vendors, in aggregate, a total shareholding of 29.2 per cent. of the issued share capital of the Company. This option will lapse if not exercised within 12 months of the date of the Investment Agreement.
Under the terms of the Investment Agreement, the Vendors have entered into orderly marketing arrangements, in respect of any new Ordinary Shares issued under the terms of the Investment Agreement, for a period of two years.
5. The Exploration Licence
Reservoir, through a wholly owned subsidiary registered in Serbia (SEE.d.o.o.), was granted a licence for geological exploration of gold mineralisation and associated polymetallic mineralisation within the Deli Jovan Gold Project, exploration area No. 1677, by the Serbian Ministry of Mining and Energy Resolution No. 310-02-029/2006-06 on 12 May 2006.
Serbia issues Exploration Licences annually. Under the terms of the Exploration Licence, exploration work must commence within 30 days of the date upon which it is granted. The results of the exploration activities must be reported to the Ministry of Mining and Energy within 60 days of the end of the Licence year. There is no minimum expenditure requirement however, the licence holder must complete an approved work programme. Exploration licences have been renewed annually in respect of the Deli Jovan Gold Project since 2006; the last renewal is valid until 30 May 2011.
The Earn-in Agreement provides for the Exploration Licence, currently held by Reservoir, to be held, by a wholly owned subsidiary of Reservoir, on behalf of Orogen Gold and Reservoir under the terms of a joint venture agreement. Under Serbian law, the Exploration Licence cannot be transferred and therefore Reservoir has undertaken, upon signing the joint venture agreement to relinquish the Exploration Licence back to the Ministry of Mining and Energy and simultaneously application will be made to the Ministry of Mining and Energy for a new exploration licence to be re-issued. There is a risk that this new exploration licence will not be granted but the Directors, after consideration, believe that such risk is minimal.
Upon satisfaction of the minimum spend under the Earn-in Agreement as set out in paragraph 3 above, Orogen will obtain a 55 per cent interest and then a 75 per cent interest in the Deli Jovan Gold Project.
6. Amendment to Investing Strategy
The Company's current investment strategy is to invest in businesses in the UK and Europe which operate in support services, retail, media and healthcare and which demonstrate the following criteria:
·; strong growth prospects, operating in sectors where demand exceeds supply, where pricing and margin power can be established;
·; established management team with a proven track record; and
·; capacity to benefit from being admitted to AIM
Resolution 1 to be proposed at the General Meeting is to amend the investing strategy of the Company to include investing in companies involved in mineral exploration and production within Europe.
7. Future Strategy
Following the investment in Orogen Gold it is the Board's intention to seek a purchaser for its investment in Emotion Fitness. The disposal of Emotion Fitness would represent a fundamental change of business for the Company and, under the AIM Rules, would be subject to the prior approval of Shareholders.
The directors of Orogen Gold all have considerable geological and corporate expertise gained by working on mineral exploration and production projects worldwide and are connected to an international network of senior advisors in exploration, mining, commercial operations and financing. Through these contacts, the Board believes that Orogen Gold will have access to a pipe-line of gold project exploration and development opportunities in Europe.
If the Board exercises its Option, Orogen Gold would become its main trading subsidiary. Such an event will be subject to the prior approval of shareholders and publication of an Admission Document under the AIM Rules. In addition, at such time it would be the intention to seek Shareholder approval to change the name of the Company to one that more appropriately reflects the activities of the Company and to undertake a share consolidation.
8. Placing and use of the Placing proceeds
The Company is raising approximately £842,000, before expenses, through the placing of 421,021,000 new Ordinary Shares at the Placing Price. The Placing Shares will, upon allotment, rank pari passu in all respects with the Existing Issued Ordinary Shares. The Placing Price of 0.2 pence per Placing Share represents a discount of approximately 55.55 per cent. to the middle market price of 0.45p per Ordinary Share at the close of business on 6 August 2010, being the latest practicable date prior to the publication of this document.
The Placing is conditional on, inter alia, Admission of the Placing Shares to trading on AIM.
The net proceeds of the Placing will be used to fund the cash consideration element (of £245,000) in respect of the acquisition of the 49 per cent. interest in Orogen Gold and the initial stage of the Phase I Exploration Programme.
The Directors are participating in the Placing as follows:
Adam Reynolds and Paul Foulger are each interested in 50 per cent. of the issued share capital of Wilton International Marketing Limited ("Wilton"). Wilton is subscribing for 37,500,000 Placing Shares at the Placing Price. After the Placing, Wilton will be interested in 86,000,000 Ordinary Shares, representing approximately 8.79 per cent. of the Enlarged Issued Share Capital.
Glyn Hirsch is subscribing for 30,000,000 Placing Shares at the Placing Price. After the Placing, Mr Hirsch will be interested in 82,500,000 Ordinary Shares, representing approximately 8.43 per cent. of the Enlarged Issued Share Capital.
Michael Hough is subscribing for 30,000,000 Placing Shares at the Placing Price. After the Placing, Mr Hough will be interested in 82,000,000 Ordinary Shares, representing approximately 8.38 per cent. of the Enlarged Issued Share Capital.
The Directors' participation in the Placing is a related party transaction under the AIM Rules. Since there are no Directors who are independent of the transaction, Zeus Capital, the Company's nominated adviser, has advised the Company that it considers that the terms of the transaction are fair and reasonable insofar as the Company's Shareholders are concerned.
9. Board Changes
Upon Completion, Michael Nolan will join the Board of MedaVinci plc as a non-executive director. Michael is a Chartered Accountant and has worked in the resources industry for 16 years. He is currently chairman of Vancouver-based Rathdowney Resources Limited, a private natural resources company operating in Ireland and Poland, Finance Director of AIM-traded Cove Energy plc and a Director of AIM-traded Tiger Resource Finance plc. He acted as chief executive officer of AIM-listed mining company Minmet Plc from 1999 to August 2007. He also serves on the board of several resources exploration and investment companies. Further details in relation to Mr Nolan, as required by the AIM Rules, are set out below:
Michael Henry Nolan, aged 48, has held the following directorships within the last five years:
| Current |
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| Mayfly Resources Limited | Lapp Plats AB |
| Connary Minerals plc | Svenska Skifferolje AB |
| BalVairde Capital Limited | Cove Energy East Africa Limited |
| J S Consult Limited | Cove Energy Tanzania Mnazi Bay Limited |
| Adelaide Capital Corp Limited | Cove Energy Rovuma Offshore Limited |
| Beechwood Football Club Limited | Cove Energy Rovuma Onshore Limited |
| Exploration and Discovery Limited | Cove Energy Tanzania Mnazi Bay Limited |
| Terra Energy Limited | Cove Moçambique Energia Limitada |
| Orogen Gold Limited | Cove Moçambique Terra Limitada |
| Tiger Resource Finance plc | Rathdowney Resources Limited |
| Cove Energy plc | Steffilux Investments S.à r.l. |
| Global Hydrocarbons Limited | Rathdowney Polska Sp. Z o.o. |
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| Former |
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| Minmet plc | Bjorkdalsgruvan AB |
| GoldQuest Mining Corp | Partamento Guld AB |
| Minmet (Isle of Man) Limited | Barsele Gold AB |
| Dormant Minerals AB |
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Hall of Names Limited (England & Wales registered company) was placed in Creditors Voluntary Liquidation in 1993. Mr. Nolan was a director at the time of its formal liquidation. The liquidators' report makes no adverse comment with regard to Mr. Nolan's directorship and there were no public criticisms by statutory or regulatory authorities.
Euroglen Limited (England & Wales registered company) was placed in Creditors Voluntary Liquidation in 1995. Mr. Nolan was a director at the time of its formal liquidation. The liquidators' report makes no adverse comment with regard to Mr. Nolan's directorship and there were no public criticisms by statutory or regulatory authorities.
There are no further disclosures to be made in accordance with schedule 2 (g) of the AIM Rules.
10. Shareholder Approvals
Under the AIM Rules, it is a requirement that the change in investing strategy must be approved by Shareholders voting (whether in person or by proxy) at a general meeting.
The provisions of the Articles dealing with the convening of general meetings and the length of notice required to convene general meetings should be amended to conform to the new provisions in the Act. In particular, the Act no longer provides for extraordinary general meetings but now refers to general meetings. In addition, a general meeting to consider a special resolution or to appoint a director can be convened on 14 days' notice whereas previously (and under the Articles) 21 days' notice was required.
The Articles also refer to the authorised share capital of the Company. Under the Act a company is no longer required to have an authorised share capital (which effectively limits the number of shares a company can issue) and it is proposed that this limit be removed. The Directors will continue to be limited as to the number of Ordinary Shares they can allot because allotment authority continues to be required.
Resolutions will be proposed at the General Meeting in order to seek Shareholder approval for the amendment to the Company's investing strategy and the amendment to the Articles.
11. Risk factors
The Board and the Proposed Director will seek to minimise the risks associated with investment in a mineral exploration company however investors and shareholders should be aware in particular of the potential risk factors associated with an investment in a mineral exploration and production company. Further details of the risk factors are included in Part II of the Circular.
DEFINITIONS
| The following definitions apply throughout this announcement unless the context requires otherwise.
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| "Act"
"Admission" | the Companies Act 2006
the admission of the Placing Shares and Consideration Shares to trading on AIM becoming effective in accordance with the AIM Rules |
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| "AIM" | a market operated by London Stock Exchange plc |
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| "AIM Rules" | the AIM Rules for Companies published by London Stock Exchange plc from time to time (including, without limitation, any guidance notes or statements of practice) which govern the rules and responsibilities of companies whose shares are admitted to trading on AIM |
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| "Articles" | the Articles of Association of the Company |
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| "Board" or "Directors"
"BCOMP 400 Limited" | the board of directors of the Company
a company incorporated and registered in England and Wales with company number 07256538 being a wholly owned subsidiary of MedaVinci |
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| "Company" or "MedaVinci" | MedaVinci plc |
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| "Completion" | completion of the acquisition of 49 per cent. of the issued share capital of Orogen Gold in accordance with the terms of the Investment Agreement |
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| "Consideration Shares" | 62,500,000 new Ordinary Shares to be issued pursuant to the Investment Agreement |
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| "Deli Jovan Gold Project" | a 69 sq km permit area in eastern Serbia covering two shallow underground gold mines the subject of a licence for exploration from the Serbian Ministry of Mining and Energy dated 12 May 2006 |
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| "Earn-in Agreement" | an agreement dated 22 March 2010, between Orogen Gold and Reservoir Capital Corporation, a company listed on the TSX |
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| "Enlarged Issued Share Capital" | the entire issued Ordinary Share capital of the Company as enlarged by the issue of the Placing Shares and the Consideration Shares
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| "Existing Issued Ordinary Shares" | the 495,139,817 Ordinary Shares in issue at the date of this announcement |
| " Exploration Licence"
"General Meeting" | the exploration licence in respect of the Deli Jovan Gold Project
the general meeting of the Company, convened for 10.00 a.m. on 1 September 2010, and any adjournment thereof, which will consider the Resolutions |
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| "FSA"
| the Financial Services Authority
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| "Group" | MedaVinci and its subsidiaries |
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| "Investment Agreement" | the investment agreement dated 9 August 2010 between (1) the Company, (2) BCOMP 400 Limited (3) the Vendors, (4) Orogen Gold and (5) Orogen Gold (Serbia) Limited under which the Company has conditionally agreed to acquire 49 per cent. of the issued share capital of Orogen Gold, |
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| "London Stock Exchange" | London Stock Exchange plc |
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| "Ordinary Shares" | ordinary shares of 0.1p each in the capital of the Company |
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| "Orogen Gold"
"Orogen Gold (Serbia) Limited
| Orogen Gold Limited, a company incorporated and registered in Ireland with company number 482834
a company incorporated and registered in Ireland with company number 486997 being a wholly owned subsidiary of Orogen Gold |
| "Placing"
| the conditional placing of the Placing Shares by the Company |
| "Placing Price" | 0.2 pence per Placing Share |
| "Placing Shares" | 421,021,000 new Ordinary Shares to be issued pursuant to the Placing |
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| "Proposed Director" | Michael Henry Nolan |
| "Reservoir" | Reservoir Capital Corporation, a TSX listed company |
| "Resolutions" | the resolutions to be proposed at the General Meeting as set out in the notice convening the General Meeting |
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| "Vendors" | the shareholders of Orogen Gold being Edward Slowey, Michael Nolan and Alan Mooney (all directors of Orogen Gold) and Irina Barry, the spouse of John Barry, chairman of Orogen Gold |
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| "Shareholders | the holder of Ordinary Shares and "Shareholder" means any one of them |
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| "Zeus Capital" | Zeus Capital Limited, a company registered in England and Wales with company number 4417845
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KEY STATISTICS
Existing Issued Share Capital
Current number of Ordinary Shares in issue 495,139,817
Current number of deferred shares of 0.9p each in issue 73,599,817
Placing
Number of Placing Shares 421,021,000
Gross proceeds of the Placing £842,042
Investment in Orogen Gold
Number of Consideration Shares to be issued 62,500,000
Enlarged Issued Share Capital
Number of Ordinary Shares in issue immediately following Admission
of the Placing Shares and the Consideration Shares 978,660,817
Market capitalisation of the Group at the Placing Price immediately
following Admission £1,957,322
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2010
Dispatch of Circular to Shareholders 9 August
Latest date and time for receipt of Forms of Proxy 10.00 a.m. on 30 August
General Meeting 10.00 a.m. on 1 September
Admission of the Placing Shares and Consideration Shares 8.00 a.m. on 3 September
Notes:
1. References to time in this document are to London time.
2. lf any of the above times or dates should change, the revised times and/or dates will be notified to Shareholders by an announcement on a Registered Information Service.
3. All events in the above timetable following the General Meeting are conditional upon approval by Shareholders of the Resolutions to be proposed at the General Meeting.