GoldStone Resources Limited (AIM: GRL), the AIM-quoted company focused on gold exploration in Central and West Africa, has announced that it has entered into a loan agreement with Paracale Gold Limited, pursuant to which Paracale Gold will provide a loan of up to £400,000 which, subject to shareholder approval, will convert into new ordinary shares of 1 penny each in the capital of the Company (“Ordinary Shares”)(“Conversion”).
The directors of the Company (“Directors” or “Board”) are mindful of the need to progress the Company’s Homase-Akrokerri project (the “Project”), which hosts an existing 602,000 oz gold JORC Code compliant resource at an average grade of 1.77g/t, and create shareholder value. Following completion of the placing and subscription in July 2016 and the subsequent work programme, the Company now needs to raise funds in the near term for general working capital purposes.
Summary terms of the Loan
•£400,000 Loan, with £200,000 to be drawn down immediately
•Subject to shareholder approval, a further £200,000 to be drawn down in full within 3 business days of the Company’s 2017 annual general meeting (“AGM”) which is to be held no later than 31 July 2017
•The Loan will be unsecured and will attract interest at a rate of 9.375 per cent per annum, compounded daily until it is repaid or converted
•Subject to shareholder approval at the AGM, the Loan and accrued interest will convert automatically into new Ordinary Shares at a price of 1 penny per share (the “Conversion Shares”)
•Within 5 business days of issue of the Conversion Shares, Paracale Gold shall also receive warrants to subscribe for such number of new Ordinary Shares as equals the number of Conversion Shares issued, exercisable at a price of 2 pence per share at any time during the 2-year period following the grant date (the “Warrants”)
•If shareholders do not approve the Conversion, the Loan, accrued interest and a default fee of 50% of the amount of the Loan then outstanding (including accrued interest) will become payable in full to Paracale Gold within six weeks of the AGM
•If shareholders do not approve the Conversion and the Loan is repaid, Paracale Gold shall receive Warrants to subscribe for 20,000,000 Ordinary Shares (“Repayment Warrants”), to be issued within 5 business days of the AGM. If the Company does not have sufficient authority to issue the Repayment Warrants at that time, it will be unable to issue any further Ordinary Shares (other than as a result of the exercise of any pre-existing subscription right) until such time as the Repayment Warrants have been issued to Paracale Gold
•The Loan will be used for essential corporate purposes, including renewal of licences and areview of existing data for all the projects, with the initial focus on the Homase-Akrokerri Project. Following review, further funding will be required to advance the Company’s projects
•The Loan, together with the Company’s existing cash resources, are expected to provide funds for 6-9 months, depending on the rate of spend
•Prior to Conversion or repayment, the Company will not be able to enter into any material agreement, settle any litigation or take on any additional debt without the prior consent of Paracale Gold
•Paracale Gold has the right to appoint a non-executive director following the initial draw down of £200,000 pursuant to the Loan. Following Conversion, for so long as Paracale Gold controls the exercise of not less than 20% of the voting rights of the Company, it shall be entitled to remove and replace such director, subject to consent of the Company’s nominated adviser
•Paracale Gold has entered into a relationship agreement with the Company and Strand Hanson, the Company’s nominated adviser, which will come into effect following Conversion and remain in effect for so long as Paracale Gold controls the exercise of not less than 20% of the voting rights of the Company.
Assuming the AGM is held on 31 July 2017 (being the latest possible date under the terms of the Loan Agreement), the number of Conversion Shares, and therefore also the number of Warrants, will be 40,620,658.
The Company also announces that Dr Bob Foster has decided to step down from the Board of the Company as a Non-executive Director to focus on other business interests with effect from 4 April 2017.
The Directors continue to monitor and manage the Company’s working capital position very carefully and have, in order to preserve cash and subject to the required authorities being granted by shareholders at the AGM, agreed to convert accrued and future salaries and fees through to the end of September 2017 for all directors (including Paracale Gold’s nominee), into new Ordinary Shares (“Fee Shares”). The number of Fee Shares to be issued shall be calculated by reference to (i) the average closing daily volume weighted average share price for the period of 30 days prior to the AGM in the case of salaries and fees accrued since 1 January 2017 and (ii) the average closing daily volume weighted average share price for the period of 30 days prior to the due date for payment of salaries and fees payable monthly to 30 September 2017, provided that no Ordinary Share shall be issued at a price less than its nominal value of 1 penny.
Neil Gardyne, Chairman of GoldStone, commented: “Paracale Gold shares our vision for the development of the Homase-Akrokerri Project in Ghana. In what remains a challenging market for the natural resource sector, we welcome and value the support and credentials of Paracale Gold, who we believe will be a long-term strategic investor in the Company.”
“On behalf of the Board, we would like to sincerely thank Bob Foster for his time and many contributions to Goldstone. Bob has had a significant impact while at Goldstone, especially in understanding the potential for the Homase and Akrokerri Project in Ghana, and we are sorry to see him go. We wish him the very best in his future endeavours.”
Source: Ghana/Goldoilgas.com
