TSTR.L Regulatory News (TSTR)

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No. 596/2014 until the release of this announcement

1 June 2017

Tri-Star Resources plc

("Tri-Star" or the "Company")

Variation and Conversion of Loan Notes, Placing, Redemption of Loan Notes

and Notice of General Meeting

Tri-Star announces that it has reached agreement with the holders of its convertible loan notes ("Loan Notes") to restructure the Company's balance sheet and raise additional working capital (the "Proposals"). The Proposals are conditional on, inter alia, shareholder approval of the Takeover Panel's waiver of the Odey Entities' (as defined below) obligation to make an offer under Rule 9 of the Takeover Code ("Whitewash Resolution"). The Proposals entail all of the outstanding Loan Notes, amounting to approximately £12.185 million, being converted or redeemed. The Company will also raise £1.3 million, before expenses, for general working capital purposes. Full details of the Proposals are set out below.

Following completion of the Proposals, funds under the discretionary management of Odey Asset Management (the "Odey Entities") will become the holder of 54.27% of the Company's enlarged outstanding share capital, including the OAM Fee shares (as defined below).

The Company will be posting to shareholders a circular shortly setting out further details of the Proposals and giving notice of a general meeting of shareholders to be held on 20 June 2017 to consider resolutions to allow the Proposals to proceed, including the Whitewash Resolution.

Highlights:

· Reduction in the conversion price of the Loan Notes from 0.20 pence to 0.121855 pence per ordinary share ("Issue Price"), unconditional and effective 1 June 2017;

· Subject to, inter alia, approval by shareholders at the General Meeting:

o Odey Entities to convert approximately £4.4 million of Loan Notes into approximately 3,614 million new ordinary shares of the Company ("Shares") (the "Conversion");

o Placing by the Company of approximately 7,453 million new Shares at the Issue Price to raise a total of approximately £9.1 million before expenses (the "Placing"), of which approximately 6,964 million Shares (£8.5 million) will be subscribed by the Odey Entities and approximately 489 million Shares (£0.6 million) have been placed by SP Angel Corporate Finance LLP with existing and new shareholders of the Company;

o Approximately £7.8 million of the Placing proceeds will be applied to redeem the balance of the Loan Notes and the remaining £1.3 million will be used to meet expenses of the transaction and for general working capital purposes;

· Following the Conversion and the Placing and the award of Shares as part payment of fees payable to Odey Asset Management LLP (the "OAM Fees"), the Odey Entities will hold approximately 10,660 million Shares representing 54.27% of the enlarged share capital of the Company.

Update on the Oman Antimony Roaster project ("OAR")

The Company has a 40 per cent. interest in Strategic & Precious Metals Processing LLC ("SPMP"), a joint venture company which is constructing an antimony roasting facility in Oman. The Company reports:

· Test-work has been completed for process issues and Initial independent test reports have confirmed good recoveries of antimony and gold from the test process;

· Final plant design changes and revised operational readiness considerations are forecast to move commissioning of the OAR facility into Q1 2018, with first antimony metal due in March 2018;

· SPMP is expecting to conclude negotiations to address its feedstock requirements for 2018 in the coming months.

The Proposals will also result in the restructuring and strengthening of the Company's balance sheet which the Directors believe will enhance the Company's ability to raise additional capital in the short term to satisfy expected significant additional funding requests from SPMP in respect of completing the development of the OAR during the remainder of 2017.

Mark Wellesley-Wood, Chairman of Tri-Star Resources said:

"This proposed restructuring represents a landmark moment in Tri-Star's history. The proposals being put to shareholders will, if approved, see the Company eliminate its debt, strengthen its balance sheet and bolster its working capital reserves. We welcome the commitment shown by the Odey Entities in taking a significant equity stake in our business and look forward to working closely with them as we enter this next exciting phase of Tri-Star's development."

Enquiries:

Tri-Star Resources plc Tel: +44 (0) 20 3470 0470

Guy Eastaugh, Chief Executive Officer

SP Angel Corporate Finance (Nomad and Broker) Tel: +44 (0) 20 3470 0470

Robert Wooldridge / Jeff Keating

Strand Hanson (Independent Financial Adviser to Tri-Star) Tel: +44 (0) 20 7409 3494

Simon Raggett / Matthew Chandler / Ritchie Balmer

Yellow Jersey PR Limited (Media Relations) Tel: +44 (0) 7825 916 715

Felicity Winkles/ Alistair de Kare-Silver

Variation and Proposed Part Conversion of Loan Notes

Proposed Placing of 7,452,901,067 new Ordinary Shares at 0.121855 pence per share

Proposed Redemption of Loan Notes

Proposed Approval of a Waiver of the Obligations under Rule 9 of the Takeover Code

and

Notice of General Meeting

Note: Capitalised terms used in this announcement are as defined in the "Definitions" section at the end of the announcement, unless the context requires otherwise

1. Introduction

The board of directors of Tri-Star (the "Board") today announce a number of important and necessary developments to restructure the Company's balance sheet and raise additional working capital, further to discussions with the holders of the outstanding Loan Notes. All of the outstanding Loan Notes are currently held by two funds, Odey European Inc. and OEI MAC Inc. (the "Odey Funds") under the discretionary management of Odey Asset Management LLP ("OAM") (together with Odey Swan Fund, the "Odey Entities"), which have provided considerable debt funding and support to the Company over the course of the last four years. In summary, the Company has:

· varied the terms of all of the outstanding Loan Notes so as to reduce the conversion price from 0.20 pence to 0.121855 pence per share and to permit conditional exercise of conversion rights, such unconditional Variation being a pre-requisite to the Odey Funds consenting to the Proposals;

· received notice from the Odey Funds of the conditional exercise, at the varied conversion price, of their conversion rights over such amount of their holding of Loan Notes that would result in the Odey Funds being issued, in aggregate, with 3,613,884,866 new Ordinary Shares, representing approximately 29.9 per cent. of the Company's issued share capital as enlarged by the issue of such Conversion Shares; and

· conditionally, raised approximately £9.1 million (gross) by way of a placing of 7,452,901,067 new Ordinary Shares. The net proceeds of the Placing of approximately £8.8 million to be applied as follows:

§ approximately £7.8 million to redeem the balance of the Loan Notes remaining following the above mentioned Conversion; and

§ the balance of approximately £1.0 million for the Group's general working capital purposes.

The Company also announces that the Odey Funds and Swan have subscribed for, in aggregate, approximately £8.5 million worth of Ordinary Shares of the £9.1 million (gross) raised pursuant to the Placing.

The Conversion is conditional upon, inter alia, the passing of the Resolutions at the General Meeting. Upon completion of the Conversion and the Placing, the Odey Entities will hold, in aggregate, 10,659,531,331 new Ordinary Shares representing approximately 54.27 per cent. of the Enlarged Share Capital (including the OAM Fee Shares), being an amount that, in the absence of a waiver of the obligations under Rule 9 of the Takeover Code, would require the Odey Entities to make a general offer to Shareholders. As is customary, the Panel has agreed to grant a waiver of such obligation provided the Whitewash Resolution (Resolution 1) is approved at the General Meeting on a poll by Shareholders holding more than 50 per cent. of the Existing Ordinary Shares.

In addition, OAM, on behalf of the Odey Funds, has, on the condition that the Resolutions are passed and the Proposals are completed, agreed to waive interest due on the Loan Notes for the period from 1 April 2017 up to and including the date of the General Meeting in order to facilitate negotiation, documentation and implementation of the Variation and the Proposals. However, should the Resolutions not be passed by Shareholders at the General Meeting and the Proposals not be implemented, OAM (on behalf of the Odey Funds) reserves the right to add back all the accrued outstanding interest on the Loan Notes.

A circular is today being posted to Shareholders (the "Circular") which sets out the details of, and reasons for, the Variation and the Proposals; to explain why the Directors believe that they are in the best interests of the Company and its Shareholders as a whole; to provide further detail in relation to the Whitewash Resolution and the implications for Shareholders of the obligations under Rule 9 of the Takeover Code being waived; and to unanimously recommend that Shareholders vote in favour of all of the Resolutions to be proposed at the forthcoming General Meeting. An extract of the majority of Part 1 of the Circular is set out below.

Without such a restructuring, the Board believes that there is a material risk that the Company would fail to retain the support of the Odey Entities and also fail to attract the further capital that will be needed to meet the Company's share of joint venture company SPMP's future additional funding requirements. Tri-Star has a 40 per cent. equity interest in SPMP which is the Company's principal asset. 

Furthermore, the Odey Funds are entitled to call for redemption of such proportion of the Loan Notes that remain outstanding following a conversion which results in the Odey Funds holding 29.9 per cent. of the then enlarged share capital of the Company. The Company currently has insufficient cash reserves to fund any such redemption request.

2. Variation and Proposed Part Conversion of the Loan Notes

In June and September 2013, the Company issued, in aggregate, £4.0 million principal amount of Loan Notes to OEI and further tranches of Loan Notes were issued in August 2014 (£2.0 million) and August 2015 (£2.0 million) with the terms of such Loan Notes being amended in September 2015. All of the Loan Notes are currently held by the Odey Funds which are under the discretionary management of OAM. The proceeds from the issue of the Loan Notes were utilised to satisfy part of the Company's share of the funding obligations in respect of the development of the OAR held by SPMP as well as for other general corporate purposes.

The rate of interest accruing on the Loan Notes is a non-cash coupon of 15 per cent. per annum, calculated on a daily basis, and compounding half yearly. As referred to above, OAM, on behalf of the Odey Funds, has, on the condition that the Resolutions are passed and the Proposals are completed, agreed to waive interest due on the Loan Notes for the period from 1 April 2017 up to and including the date of the General Meeting in order to facilitate negotiation, documentation and implementation of the Variation and the Proposals. However, should the Resolutions not be passed by Shareholders at the General Meeting and the Proposals not be implemented, OAM (on behalf of the Odey Funds) reserves the right to add back all the accrued outstanding interest on the Loan Notes. The approximate aggregate amount currently outstanding under the Loan Notes including accrued interest up to and including 31 March 2017 is £12.185 million. The Odey Funds have the right to serve a conversion notice at any time prior to the scheduled maturity of the Loan Notes on 19 June 2018.

Under the terms of the Loan Notes, the Odey Funds currently have the right to convert all or part of their holding into Ordinary Shares. If the Odey Funds issue a conversion notice and the full conversion of the notes under such notice would result in the Odey Funds holding more than 29.9 per cent. of the Company's then enlarged voting share capital, the Company may allot and issue such shares to the extent the holding of the Odey Funds does not exceed 29.9 per cent. of the then enlarged share capital of the Company. In respect of the portion of the Loan Notes which are the subject of a conversion notice, but are not converted, the Odey Funds have the option of either continuing to hold those notes or, at the Odey Funds' election, to have those notes redeemed for cash by the Company. The Company currently has insufficient cash reserves to fund any such redemption request.

In order to ensure the continuing support of the Odey Entities, the Company agreed with the Odey Funds to amend the existing terms of the Loan Notes to:

· vary the conversion price downwards from 0.20p per share to 0.121855p per Ordinary Share (which is equal to the Issue Price), representing a discount of approximately 24 per cent. to the Company's closing mid-market share price of 0.16p on 31 May 2017 being the last Business Day immediately prior to the announcement of the Proposals; and

· to allow for the exercise of conversion rights to be conditional.

This unconditional Variation was a pre-requisite to the Odey Funds consenting to the Proposals, including the injection of additional capital into the Company pursuant to the Placing. Conditional upon the conditions to the Placing (save for the condition relating to Admission) being satisfied or waived, the Odey Funds have given notice to the Company that they wish to convert £4,403,699.40 of the Loan Notes at the Issue Price into the Conversion Shares.

3. Details of the Placing

SP Angel, as placing agent for the Company, has conditionally placed the Placing Shares at the Issue Price with the Odey Funds, Swan (a fund under the discretionary management control of OAM) and certain other investors to raise approximately £9.1 million before expenses. The Odey Funds and Swan have agreed to subscribe for, in aggregate, 6,963,581,716 of the Placing Shares at the Issue Price raising approximately £8.5 million whilst certain other investors have agreed to subscribe for, in aggregate, the remaining 489,319,351 Placing Shares at the Issue Price raising approximately £0.6 million. The Placing Shares will represent approximately 37.9 per cent. of the Enlarged Share Capital.

The net proceeds of the Placing are to be applied to redeem the balance of the Loan Notes outstanding following the Conversion in order to strengthen the Company's balance sheet with the remainder to be utilised for the Company's general working capital purposes.

Accordingly, on completion of the Proposals, the Odey Entities will, in aggregate, hold approximately 54.27 per cent. of the Enlarged Share Capital (including the OAM Fee Shares).

4. Principal terms of the Placing, issue of the Fee Shares and Admission

The Placing is conditional, among other things, upon:

· the Panel's waiver of the Odey Entities' obligation to make an offer under Rule 9 of the Takeover Code on allotment and issue to them of the Placing Shares and the OAM Fee Shares;

· the passing of the Resolutions;

· the Placing Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms; and

· Admission of the Placing Shares and Conversion Shares to trading on AIM becoming effective by not later than 8.00 a.m. on 21 June 2017 (or such later time and/or date (not being later than 31 July 2017) as SP Angel and the Company may agree).

Accordingly, if such conditions are not satisfied, or, as applicable, waived, the Placing and Conversion will not proceed.

In addition, as part of its engagement terms with the Company, Strand Hanson will be issued 20,516,187 Ordinary Shares on completion in lieu of part of its fee for advising the Company in connection with the Proposals. The Company has also agreed that OAM will be separately issued 82,064,749 Ordinary Shares on completion as part settlement of an arrangement fee in recognition of the professional advisory costs that OAM has incurred in connection with the renegotiation and restructuring of the Loan Notes.

Furthermore, as part of its engagement terms with the Company, on Admission SP Angel will be issued warrants to subscribe for 24,465,968 Ordinary Shares in lieu of part of its fee for advising the Company in connection with the Placing. The warrants will be exercisable at the Issue Price per new Ordinary Share for a period of four years from the date of grant and ending on the fourth anniversary of grant.

The New Ordinary Shares, when issued fully paid, will rank equally in all respects with the Existing Ordinary Shares including the right to receive any dividends or other distributions declared, made or paid after the date of issue of the New Ordinary Shares.

Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM and such admission is expected to become effective on 21 June 2017. It is expected that CREST accounts will be credited on the day of Admission as regards the Placing Shares in uncertificated form and that certificates for Placing Shares to be issued in certificated form will be dispatched by first class post the week commencing 26 June 2017.

The Placing Agreement contains certain warranties and indemnities given by the Company in favour of SP Angel as to certain matters relating to the Company and its business. The obligations of SP Angel under the Placing Agreement may be terminated in certain circumstances if there occurs either a material breach of any of the warranties or if a materially adverse event occurs at any time prior to Admission. Such rights exist in the event that such circumstances arise prior to Admission. If the conditions in the Placing Agreement are not fulfilled on or before the relevant date in the Placing Agreement then the subscription monies will be returned to Placees without interest.

The Placing Agreement also provides for the Company to pay SP Angel a corporate finance fee, commissions and certain other costs and expenses incidental to the Placing and Admission.

5. Current activities, trading and prospects

The Company's most recent financial results for the year ended 31 December 2016 were announced on 10 March 2017 and the Company's Annual Report and Financial Statements were posted to shareholders on 15 March 2017.

Since the start of 2017, the antimony market has risen significantly, driven by concerns over the availability of antimony from China, the world's largest producer. Such concerns were recently heightened following environmental inspections on numerous antimony blast furnace facilities in a twelve-month inspection programme that commenced in April 2017, which has already resulted in approximately 50 per cent. of certain plant capacity in China being shut or suspended for non-compliance.

Tri-Star's principal asset and focus of activities is its 40 per cent. interest in SPMP. SPMP is an Omani company developing the OAR. Construction of the OAR has commenced on site and the first items of major equipment will start to arrive during June 2017. Photographs showing the project's progress have recently been uploaded to the Company's website and are available to view at www.tri-starresources.com.

As reported in the Company's 2016 results announcement on 10 March 2017, test-work has been continuing and this has been completed for process issues. Initial independent test reports have confirmed good recoveries of antimony and gold from the test process and good quality of end product. Testing has also been extended to prepare for operational readiness. As a result of these tests, it has been necessary to change some casting equipment specifications and the lining of the casting kettles has had to be modified in the interests of preserving the product quality of the finished antimony ingot.

These final plant design changes and revised operational readiness considerations are expected to move commissioning and first antimony metal into Q1 2018. Meanwhile, SPMP's discussions with end customers and contracting for feedstock supply are well advanced and SPMP is expecting to conclude negotiations to address its feedstock requirements for 2018 in the coming months.

As at 31 May 2017, being the latest practicable date prior to publication of this announcement, the Company held cash balances of approximately £192,000. Accordingly, if the Proposals are not approved by Shareholders, or for whatever reason are not implemented, the Company will need to secure additional working capital within two months.

The Directors understand that the issue of the New Ordinary Shares arising on completion of the Conversion and Placing will have a substantial dilutive effect on the holdings of Shareholders. The Directors, however, consider the Proposals to be in the best interests of the Company and its Shareholders as a whole since the Proposals remove the risk of the Odey Funds exerting their right to require the redemption, in cash, of the balance of the Loan Notes remaining after the Conversion. The Proposals will also result in the restructuring and strengthening of the Company's balance sheet which the Directors believe will enhance the Company's ability to raise additional capital in the short term to satisfy expected significant additional funding requests from SPMP in respect of completing the development of the OAR during the remainder of 2017.

The Directors consider that the possibility of the Company being able to raise approximately £7.8 million to redeem the balance of the Loan Notes remaining post Conversion at short notice would be extremely challenging and that the best outcome for the Company and its Shareholders in such circumstances will be achieved by the completion of the Proposals.

Assuming completion of the Proposals, the Directors believe that the Company's prospects will be enhanced as the Proposals so enacted will, inter alia, result in the orderly elimination of the Company's existing indebtedness, the removal of the current uncertainty with respect to the timing and consequences of the Loan Notes' conversion and redemption, provide the requisite additional working capital and secure the introduction of the Odey Funds as majority shareholders in the business.

If the Proposals are not approved by Shareholders at the General Meeting and are not implemented, the Directors would immediately have to seek alternative sources of potential funding which may or may not be obtainable on similar commercial terms or secured on a timely basis, or at all. If such alternative sources of potential funding are not found to be available, the Directors believe it is highly likely that the Company would be forced into administration.

6. Relationship Agreement

The Company, SP Angel, the Odey Funds and Swan have entered into a Relationship Agreement, which is conditional upon completion of the Proposals, pursuant to which the Odey Funds and Swan, in their capacities as substantial shareholders, have given various undertakings to the Company and SP Angel regarding the relationship between the Odey Funds, Swan, their associates and the Company.

In particular, the Odey Funds and Swan have agreed:

· not to take any action that would result in the Company not being capable at any time of carrying on its business independently of the Odey Funds, Swan and their associates; and

· not to exercise their voting rights to prevent there being not less than two independent directors of the Company from time to time who have not been nominated by the Odey Funds, Swan and/or their associates.

The agreement will terminate if the Odey Funds, Swan and their associates cease to be interested in more than 29.9 per cent. of the Company's voting share capital from time to time. Some provisions of the Relationship Agreement survive termination and these include the right of the Odey Funds and Swan together to appoint non-executive directors to the Board based on their interest in the Ordinary Shares of the Company as described below.

In view of the substantial shareholdings of the Odey Funds and Swan, the Company has agreed in the Relationship Agreement that for so long as the Odey Funds and Swan are together interested in at least 10 per cent. of the Ordinary Shares, they may appoint one non-executive director to the Board and that for so long as the Odey Funds and Swan are together interested in at least 30 per cent. of the Ordinary Shares, they may appoint two non-executive directors. No such nominated director will be appointed or continue in office if the Company (acting reasonably) determines that such appointment or continuation in office would have a material adverse effect on the ongoing appropriateness of the Company for admission to trading on AIM, such approval not be unreasonably withheld.

The Odey Funds and Swan also separately confirm that they have every intention to act in the best interests of the Company and in turn, to seek to improve the valuation of the Company for all Shareholders.

7. Proposed Board appointments

Pursuant to the provisions of the Relationship Agreement, on completion of the Proposals the following persons will join the Board as non-executive directors at the request of the Odey Funds and Swan:

David Fletcher

David is a Partner and Non-Executive Chairman of OAM. He has been part of the OAM management team for over 20 years since joining as Chief Executive in 1995. David is also a Senior Adviser at Social Finance, a not for profit social sector innovator. Prior to OAM, David was CEO at Leopold Joseph, the quoted UK merchant bank, where he had worked since graduating from New College, Oxford, in 1980.

Karen O'Mahony

Karen is currently Managing Director of PE Advisors Ltd ("PEAL"). Prior to the establishment of PEAL in 2014, Karen spent 10 years at Misland Capital Ltd where she was Deputy Chief Investment Officer. From 2002 to 2004, she was a Director at Davy Stockbrokers Ltd in Dublin and prior to that, she worked as an Associate at Goldman Sachs covering Pan European Equity Research. She holds a master's degree in Quantitative Finance from University College Dublin and an undergraduate degree in Finance from Trinity College Dublin.

8. The Takeover Code

The Placing gives rise to certain considerations under the Takeover Code. Brief details of the Panel, the Takeover Code and the protections they afford are set out below.

The Takeover Code is issued and administered by the Panel. The Takeover Code applies to all takeover and merger transactions, however effected, where the offeree company is, among other things, a listed or unlisted public company resident in the United Kingdom, the Channel Islands or the Isle of Man (and to certain categories of private limited companies). The Company is a public company whose Ordinary Shares are admitted to trading on AIM, and its Shareholders are therefore entitled to the protections afforded by the Takeover Code.

Under Rule 9 of the Takeover Code, where any person acquires, whether by a series of transactions over a period of time or not, an interest in shares which (taken together with shares already held by that person and any interest in shares held or acquired by persons acting in concert with him) carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, that person is normally required by the Panel to make a general offer to all the holders of any class of equity share capital or other class of transferable securities carrying voting rights in that company to acquire the balance of their interests in the company.

Similarly, Rule 9 of the Takeover Code also provides, among other things, that where any person who, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent. but not more than 50 per cent. of the voting rights of a company which is subject to the Takeover Code, and such person, or any person acting in concert with him, acquires an additional interest in shares which increases the percentage of shares carrying voting rights in which he is interested, then such person is normally required by the Panel to make a general offer to all the holders of any class of equity share capital or other class of transferable securities carrying voting rights of that company to acquire the balance of their interests in the company.

An offer under Rule 9 of the Takeover Code must be in cash (or with a cash alternative) and at the highest price paid within the preceding 12 months for any interest in shares in the company by the person required to make the offer or any person acting in concert with him.

Shareholders should be aware that Rule 9 of the Takeover Code further provides, inter alia, that where any person who, together with persons acting in concert with him, holds interests in shares carrying more than 50 per cent. of the voting rights of a company, acquires an interest in shares which carry additional voting rights, then they will not normally be required to make a general offer to the other shareholders to acquire their shares.

Under the Takeover Code, a concert party arises where persons acting together pursuant to an agreement or understanding (whether formal or informal) co-operate to obtain or consolidate control of, or frustrate the successful outcome of an offer for, a company subject to the Takeover Code. Control means an interest or interests in shares carrying, in aggregate, 30 per cent. or more of the voting rights of the company, irrespective of whether the holding or holdings give de facto control. OAM and the relevant funds over which it has control of all voting and investment decisions, being OEI, OMI and Swan (i.e. the Odey Entities), (the "Concert Party") are considered to be acting in concert for the purposes of the Takeover Code (as such term is defined in the Takeover Code). However, for the purposes of Rule 9, the Takeover Panel considers the Concert Party to be a single entity. Given that on completion of the Proposals the Concert Party will hold over 50% of the voting rights of the Company, any transfer of shares in the Company between entities within the Concert Party and any further acquisitions of the Company's shares by any member of the Concert Party, whether individually or collectively, will not be subject to the restrictions of Rule 9 of the Takeover Code.

9. Dispensation from the requirement to make a general offer under the Takeover Code

Immediately following completion of the Proposals and the issue of the Conversion Shares, Placing Shares and OAM Fee Shares, the Odey Entities will have acquired interests in the Ordinary Shares carrying, in aggregate, 54.27 per cent. of the then enlarged voting rights of the Company which, without a waiver of the obligations under Rule 9 of the Takeover Code, would oblige the Odey Entities (and any party deemed to be acting in concert with the Odey Entities) to make a general offer to Shareholders under Rule 9 of the Takeover Code. Each of the Odey Entities' existing and resultant interests will comprise:

The Company has applied to the Panel for a waiver of the obligations under Rule 9 of the Takeover Code in order to permit the Placing to proceed without triggering an obligation on the part of the Odey Entities to make a general offer to Shareholders. Under Note 1 of the Notes on the Dispensations from Rule 9 of the Takeover Code, the Panel will normally waive the requirement for a general offer to be made in accordance with Rule 9 of the Takeover Code (a "Rule 9 Offer") if, among other things, the shareholders of the company who are independent of the person who would otherwise be required to make an offer, and any person acting in concert with him, pass an ordinary resolution approving such a waiver on a poll at a general meeting.

Accordingly, the Panel has agreed to grant a waiver of the obligation of the Odey Entities to make a general offer under Rule 9 of the Takeover Code that would otherwise arise as a result of the issue of the Placing Shares and OAM Fee Shares to the Odey Entities pursuant to the Proposals, subject to Shareholders approving the Whitewash Resolution (Resolution 1) on a poll at the General Meeting. To be passed, the Whitewash Resolution will require a simple majority of the votes cast on a poll by the Shareholders entitled to vote. Shareholders should note that if the Whitewash Resolution is passed by Shareholders at the General Meeting and the Proposals completed, the Odey Entities, or any individual entity thereof, will not be restricted from making an offer for the Company.

Shareholders should further note that, following completion of the Proposals and issue of the Conversion Shares, Placing Shares and OAM Fee Shares, the Odey Entities will between them be interested in approximately 54.27 per cent. of the then enlarged voting rights of the Company and that:

· by virtue of holding more than 50 per cent. of the Company's voting rights, the Odey Entities will be entitled to increase their holdings or aggregate interest in the voting rights of the Company without incurring any obligation under Rule 9 of the Takeover Code to make a general offer to all Shareholders to acquire their Ordinary Shares; and

· this will increase the percentage of the Ordinary Shares that are not in public hands. This may in turn have the effect of reducing the liquidity of trading in the Ordinary Shares on AIM. The Odey Entities' stake in the voting rights of the Company will also mean that the Odey Entities will be able, if they so wish, to exert significant influence over resolutions proposed at future general meetings of the Company.

The attention of Shareholders is drawn to the information on the Odey Entities set out in Part 2 of the Circular and the additional information required by the Takeover Code set out in Part 3 of the Circular.

10. Independent advice provided to the Board

The Takeover Code requires the Board to obtain competent independent advice regarding the merits of the transaction which is the subject of the Whitewash Resolution, the controlling position which it will create, and the effect which it will have on Shareholders generally. Accordingly, Strand Hanson, as the Company's independent financial adviser, has provided formal advice to the Board regarding the Proposals. Strand Hanson confirms that it, and any person who is or is presumed to be acting in concert with it, is independent of the Odey Entities and has no personal, financial or commercial relationship or arrangements or understandings with the Odey Entities.

11. General Meeting

The Directors do not currently have authority to allot all of the New Ordinary Shares and, accordingly, the Board is seeking the approval of Shareholders to allot the Placing Shares at the General Meeting. In addition, the Panel's waiver of the obligations under Rule 9 of the Takeover Code has been granted subject to Shareholders entitled to vote approving the Whitewash Resolution on a poll at the General Meeting.

The formal Notice of General Meeting is set out at the end of the Circular convening the meeting to be held at the offices of Fladgate LLP at 16 Great Queen Street, London WC2B 5DG at 10.00 a.m. on 20 June 2017. At the General Meeting the following Resolutions will be proposed:

· Resolution 1 is an ordinary resolution to approve the waiver of the obligations under Rule 9 of the Takeover Code, conditional on approval of the Panel. This resolution will be taken on a poll, and must be approved by Shareholders entitled to vote who together represent a simple majority of the issued Ordinary Shares held by such Shareholders being voted (whether in person or by proxy) at the General Meeting;

· Resolution 2, which is conditional on the passing of Resolution 1 and is an ordinary resolution, to authorise the Directors to allot relevant securities up to an aggregate nominal amount of £372,645.05335, being equal to 7,452,901,067 Ordinary Shares (i.e. the maximum number of Ordinary Shares available under the Placing); and

· Resolution 3, which is conditional on the passing of Resolutions 1 and 2 and is a special resolution to authorise the Directors to issue and allot up to 7,452,901,067 Ordinary Shares pursuant to the Placing on a non-pre-emptive basis.

Completion of the Conversion and Placing is conditional upon the passing of the Resolutions. If any of the Resolutions are not passed then the Conversion and Placing will not complete and the Company will need to raise additional working capital in the short term. 

If the Proposals are not approved by Shareholders and are not implemented and the Odey Funds were to exert their right to serve a conversion notice at any time prior to the scheduled maturity of the Loan Notes on 19 June 2018 and elect to have the unconverted balance of their Loan Notes redeemed for cash at that time or otherwise hold all or a portion of their Loan Notes until maturity, the Company would be forced to seek alternative sources of potential funding which may or may not be obtainable on similar commercial terms or of a sufficient quantum and may or may not be secured on a timely basis or at all. If any such alternative sources of potential funding are not available when required, the Directors believe it is highly likely that the Company would be unable to satisfy either redemption of the unconverted Loan Notes or its further funding obligations in respect of the OAR, leading to dilution of its existing ownership interest in SPMP and/or potentially being forced into administration.

The Strand Hanson Fee Shares are to be allotted and issued to Strand Hanson in lieu of part of its fee for advising the Company in connection with the Proposals. The SP Angel Warrants are to be granted in lieu of part of its fee for advising the Company in connection with the Placing. The Company has also agreed to pay OAM £175,000 (plus VAT in respect of the cash portion of this payment) in recognition of the professional advisory costs that OAM has incurred in connection with the renegotiation and restructuring of the Loan Notes, such fee to be satisfied by the payment of £75,000 plus VAT in the sum of £15,000 in respect of the professional advisory costs in cash and the allotment and issue of the OAM Fee Shares to OAM (or to any person or entity as it directs). The Fee Shares and the SP Angel Warrants will be allotted and issued pursuant to the general authorities to be granted to the Directors at the Company's forthcoming Annual General Meeting.

12. Irrevocable undertakings

The Company has received irrevocable undertakings to vote in favour of all the Resolutions, including the Whitewash Resolution (Resolution 1), from all of the Directors who hold Existing Ordinary Shares, in respect of, in aggregate, 1,663,745,800 Existing Ordinary Shares representing approximately 19.64 per cent. of the Existing Ordinary Shares. Further details of the irrevocable undertakings are set out in paragraph 4.5 of Part 3 of the Circular.

13. Intentions of the Odey Entities following implementation of the Proposals

Following completion of the Proposals, OAM intends to work alongside the Board to carry out a review of the business structure and operations of the Company, including its investment in SPMP with a view to optimising the ongoing cost base and administration of the Company and increasing the Company's revenue and improving its performance. Some operational and administrative restructuring may be required but OAM has not made any decisions about how any such restructuring should be carried out. When carrying out the review and any restructuring OAM has every intention to act in the best interests of the Company and in turn, to seek to improve the valuation of the Company for all shareholders.

14. Recommendation

The Directors, having been so advised by Strand Hanson, consider the Proposals and the passing of the Resolutions, including the Whitewash Resolution, to be fair and reasonable and in the best interests of the Shareholders and the Company as a whole.  In providing its advice to the Directors, Strand Hanson has taken into account the Directors' commercial assessments.

Accordingly, the Directors unanimously recommend that Shareholders vote in favour of all of the Resolutions, as they have irrevocably undertaken so to do in respect of their own beneficial shareholdings of, in aggregate, 1,663,745,800 Existing Ordinary Shares, representing approximately 19.64 per cent. of the existing issued share capital of the Company.

The Conversion and the Placing are conditional, among other things, upon the passing of the Resolutions at the General Meeting.  Shareholders should be aware that if the Resolutions are not approved at the General Meeting by Shareholders, the Conversion and the Placing will not proceed.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Notes:

If any of the details contained in the timetable above should change, the revised times and/or dates will be notified by means of an announcement through a Regulatory Information Service.

Certain of the events in the above timetable are conditional upon, amongst other things, the approval

of the Resolutions to be proposed at the General Meeting.

All references are to London time unless stated otherwise.

KEY STATISTICS

DEFINITIONS

The following definitions apply throughout this announcement and in the Circular and accompanying Notice of General Meeting and Form of Proxy, unless the context requires otherwise: