REG - Caracal Gold PLC - Corporate Update, Q3 &Q4 2022 Operations Summary

Caracal GoldAnnouncement

23/01/2023 17:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230123:nRSW5976Na&default-theme=true

RNS Number : 5976N  Caracal Gold PLC  23 January 2023

 
Caracal Gold plc / EPIC: GCAT / Market: Main / Sector: Mining

23 January 2023

 
Caracal Gold plc ('Caracal' or the
'Company')

Corporate Update, Q3 and Q4, 2022 Operations Summary

 

Caracal Gold plc, the East African gold producer with over 1,300,000oz
JORC-compliant gold resources, provides a corporate update and progress report
on its operations and exploration activities for the quarters ended 30
September 2022 ('Q3 2022') and 31 December 2022 ('Q4 2022'); specifically, the
Company's Kilimapesa Gold Mine and Processing Operation in Kenya ('Kilimapesa'
or the 'Project'), and the high grade, shallow gold Nyakafuru Gold Project in
Tanzania.

 

Corporate Update

 

Financing

 

With regards to its financing arrangements, the Company announced on 10
January 2023 that OCIM Metals and Mining SA ('OCIM') would not be proceeding
with its previously announced funding. This was announced immediately upon
written confirmation from OCIM. As a result of this, Philoro Global Trading AG
('Philoro') did not advance the funding by 31 December 2022 as was expected
(see RNS dated 12 December 2022). Philoro requested revised operational and
financial plans which took into consideration this change. This work has been
completed and presented to Philoro. The Company has been informed that Philoro
remains committed to the financing and is working with the Company, existing
shareholders, and other institutions in agreeing a financing package to
replace the previous funding. The various parties involved are making good
progress on securing the required funding and will update the market as soon
as is appropriate.

 

Regulatory Disclosure

 

On 22 June 2022, the Company entered a debt finance arrangement for a total
value of $1,500,000 with Mill End Ltd ("Mill End"), the details of which are
below (the "Mill End Financing").

 

Mill End Financing Key Terms:

 

•             Signature Date: 22 June 2022.

•             Principal Amount: $1,500,000.

•             The total amount payable under the Mill End
Financing was to be dependent on how quickly the Company was able to repay the
Mill End Financing:

o  First repayment milestone: 90 days after Signature Date (20 September
2022), 120% of the Principal Amount ($1,800,000)

o  Second repayment milestone: 91-120 days after Signature Date (between 21
Sept 2022 and 20 October 2022) 126.667% of Principal Amount ($1,900,000)

o  Third repayment milestone 121 to 150 days after Signature Date (between 21
October and 19 November 2022) 133.333% of Principal Amount ($2,000,000)

•             Post the 150 days Mill End has the right to
convert into new ordinary shares at 80% of the VWAP of the Caracal ordinary
shares on the business day prior to the conversion request.

•             Mill End has been granted warrants to subscribe
for ordinary shares, exercisable for three years from the date of signature,
at an exercise price of 0.8 pence. The number of shares will be calculated by
dividing $500,000, converted into pounds sterling at a rate agreed between the
parties or the spot exchange rate, by 0.8 pence.

•             As part of the transaction, Robert McCrae and
Gerard Kisbey Green who are directors of the Company, entered into Director's
undertakings whereby security over 98,500,000 and 55,300,000 ordinary shares
respectively in the Company was granted in favour of Mill End. Robert McCrae
and Gerard Kisbey Green remain the beneficial owners of the shares through
Mansa Capital Ltd and Theseus Enterprises Ltd respectively, and retain full
voting rights.

 

These funds were due to be paid back from the proceeds of the recent
financings. However, with the long delays and subsequent withdrawal of OCIM
from the previously anticipated financing, it has been necessary to
renegotiate the terms of the Mill End Financing. The renegotiated terms of the
Mill End Financing were to contain an equity element in Mill Hill's favour.
However, the Company was unable to issue Mill Hill with shares which would be
admitted to trading due to the limitation placed upon it of issuing 20% of
shares of the same class over a 12-month period without a prospectus, the
Company having already issued or agreed to issue a material number of shares
in the period.

 

Therefore, to allow the renegotiation to proceed, the following has taken
place. Mr Robert McCrae borrowed 17,208,742 shares from a shareholder of the
Company. The borrowed shares were transferred to Mill End. Mr McCrae has
agreed to repay the shareholder 17,208,742 shares plus an extra 1,720,874
shares, being an additional 10% at a future date to be agreed. Therefore, at
the date of this announcement Mr McCrae owns 98,500,000 shares, of which
18,929,616 are to be transferred to the lender at a future mutually agreeable
date.

 

Additionally, it has been requested that Mr McCrae transfer 25,000,000 shares
to Mill End. It is anticipated this transfer will occur shortly and the
Company will repay Mr McCrae for these shares.

 

The Company and Mill End are in the process of discussing an amendment to the
transaction to address all above issues.

 

The Board believe this action was taken in the best interests of the Company
and its shareholders and that the Directors undertakings given by Robbie
McCrae and Gerard Kisbey-Green indicate their confidence in the operations and
the ability to raise the required financing.

 

Board Composition

 

The Company hopes to appoint Mr. Simon Grant Rennick as Executive Chairman,
subject to certain final commercial negotiations and legal formalities.

 

Mr Grant Rennick is a graduate of the Cambourne School of Mines. His expertise
encompasses not only mining and minerals but also metals, agriculture, and
property. He has managed mining companies, both public and private, in Uganda,
Malawi, Kenya, Mexico and Botswana; metal trading businesses in Bermuda and in
the UK; was a co-founder of Industrial Mineral Finance House which provides
consultancy services covering all aspects of the industrial minerals' sector;
and established a property development business (since sold).

 

The Company hopes to announce his formal appointment in due course. In the
meantime, Mr Grant Rennick has agreed attend board meetings and provide other
services to the Company as "Chairman Designate".

 

Corporate Governance

 

Due to identified shortcomings, the Board has asked the Chairman Designate to
initiate a comprehensive review of its corporate governance, regulatory
compliance and communications policies in order to strengthen internal
procedures.  This is expected to be a wide-ranging review and will include a
review of the board structure, including the mix of executives and
non-executives, and any requirements for different skill sets to ensure a
robust and efficacious board structure.  Furthermore, a review of all
corporate governance-related matters, practices and policies and a review of
all board sub-committees, will be conducted.

 

The Board has decided that the Company's financial advisor, VSA, as well as an
independent firm of solicitors, will be consulted to assist the Chairman
Designate in this review and the Board expects all the above to be concluded
as soon as practically possible, but in Q1 2023.

 

Q3 & Q4 2022 OPERATIONS SUMMARY

 

HIGHLIGHTS

·    Ongoing work to build production at flagship Kilimapesa Gold Mine:

o  Continue to optimize mine plan and renewed focus on process efficiencies.

o  Realised a total 806 ounces in gold sales in Q3 and 835 ounces in Q4.

o  Reviewed the exploration programmes to further strengthen the current
Mineral Resource Estimate ('MRE'):

§ To date, 104 RC holes accounting for 10,444m and 21 DD holes accounting for
3,660.m have been drilled at Kilimapesa Hill, Maghor and Vim Rutha.

§ In Q4, seven trenches completed for a meterage total of 420m; five at
Kilimapesa West Hill, two in Vim Rutha.

·    Due to the delay in funding, activities around the expansion and
operations have slowed down pending receipt of funds.

·    Excellent progress at Nyakafuru Gold Project in Tanzania:

o  Completed Phase 1 exploration project on schedule and on time; and

o  Commencing 2nd phase drill programme to validate both historical drill
results and new interpretation and collect metallurgical samples.

 

 

Robbie McCrae, CEO of Caracal, said,

 

"The Company welcomes the appointment of Mr Simon Grant Rennick as Chairman
Designate and looks forward to him taking on the role of Executive Chairman.
Simon's extensive experience in exploration and mining projects in Africa as
well as his experience as Chairman of various listed companies will strengthen
the Board significantly.  Furthermore, I look forward to his leadership in
conducting the various internal reviews in progress.

 

"Q3 and Q4 saw Caracal advance several work programmes at its flagship asset,
the Kilimapesa Gold Mine in Kenya, where we are focused on increasing both
mining and processing capacity to lift production to 24koz Au per annum.
While the delay in funding has slowed activities, in addition to the
development of the mine plan and ongoing work at the new processing plant, we
are also analysing results from regional exploration programmes to grow our
resources and further strengthen the project's economics.

 

"The Nyakafuru Gold Project in Tanzania, which has proven high-grade, shallow
gold resources amenable to conventional open pit with the potential to produce
50,000oz per annum, is equally exciting.  Having completed the acquisition,
we are delighted to be progressing targeted drilling programmes to validate
historic positive drill results and expand the current JORC-Compliant resource
of 658,751oz at 2.08g/t.

 

"Our timing to build production/sales could not be better given the strong
gold price, which market commentators think will continue to gain traction
into 2023; indeed, the Bank of America Securities suggests that gold prices
could top $2,000 oz up from a current eight month high of $1,876 oz.   We
look forward to updating shareholders further on our progress."

 

DETAILS

 

KENYA

Operations

 

                    Q1-22             Q2-22             Q3-22             Q4-22
 Mined tons         44,846            42,233            64,639            35,989
 Treated Tons       54,121            58,722            53,709            19,613
 Smelted ounces Au  1,266             746               806               835
 Stockpile tons     22,744 @ 1,72g/t  22,757 @ 1,68g/t  18,757 @ 1.72g/t  7,715 @ 1.47g/t

 

·    In Q3, the plant processed a total of 23,790t at an average grade of
1.61g/t through the CIL circuit and a further 29,919t at an average grade of
0.99g/t through the heap leach circuit to realise a total of 806 ounces in
gold sales.

·    In Q4, the plant processed a total of 19, 613t at an average grade of
1.80g/t through the CIL circuit and a further 6,859t at an average grade of
0.86g/t through the heap leach circuit to realise a total of 835 ounces in
gold sales.

·    Plant 2 was stopped on 1 August 2022 as the project of washing fines
in the circuit proved to be uneconomic. Major factors were the low tons washed
to the CIL and the insignificant upgrading of the fines.

·    The heap leach pads reach design capacity and therefore Plant 3 was
stopped in December 2022.

·    Gold figures accountability (ratio of sold to produced) increased to
99% in September from an average of 50% for July and August. This was
attributed to the installations of weightometers in the plant and the
flowmeter in the Plant 3 CIS circuit, standardisation of sampling and sample
handling procedures and the increase in Quality Control checks in the new
laboratory. Gold figure accountability has subsequently remained stable at
these rates.

·    Tailings Storage Facility construction and monitoring ongoing and
according to schedule.

 

Exploration

·    Latest results from drilling on Kilimapesa Hill confirmed the lateral
and depth extensions as targeted on Kilimapesa Hill.

·    Completed a total of 10 DD holes and 22 RC holes on Vim Rutha
prospect, which extends more than 4km into the exploration licence and is
located a few hundred metres south of Kilimapesa Hill, for a total
respectively of 1,620.9m and 1,943m.

·    DD drilling confirmed the existence of a mineralised structure over
1.5km parallel to the Kilimapesa Hill deposit while samples from the RC
drilling are currently being analysed.

·    A systematic trenching campaign commenced in Q3 to define the surface
expression of the Vim Rutha mineralisation and samples are being analysed.

·    During Q4, a total of seven trenches were completed for a meterage of
420m. Five trenches at the Kilimapesa West Hill prospect and two in Vim Rutha
prospect. These trenches were positioned to determine both the strike and the
extent of mineralisation on Kilimapesa West Hill and Vim Rutha prospects.

·    Continued underground DD with a total of 33.32m being drilled in two
boreholes in Adit D.

·    To date, 104 RC holes accounting for 10,444m and 21 DD holes
accounting for 3,660.m have been drilled at Kilimapesa Hill, Maghor and Vim
Rutha.

 

Safety, Health, and Environment

·    Continued focus on environmental plans with targets hit, annual audit
conducted, and environmental licence obtained in relation to exploratory
drilling, open-pit mining, and heap leach.

·    Open Pit and Exploration Environmental Impact Assessment submitted to
NEMA in Q4.

·    All statutory audits, including Fire Safety, Occupational Safety and
Health, and Environmental, up to date as of 31 December 2022.

·    Ongoing support of employees with various training programmes
completed and underway.

·    One significant accident in Q3 - the employee received immediate
care, is fully recuperated, and has resumed work.

 

TANZANIA - NYAKAFURU GOLD PROJECT

·    Completed the Phase 1 exploration project on schedule and on time -
the final report including conclusions is being finalised.

·    Completed several fieldwork programmes including structural analysis
of Voyager and Mentelle and planning of location of drill holes for the 2nd
phase drill programme.

·    Completed additional working including the upgrading of the Nyakafuru
camp, reviewing of potential in the licences and extensions and advanced drill
tender process.

 

**ENDS**

 

For further information visit www.caracalgold.com or contact the following:

 

 Caracal Gold plc                                      info@caracalgold.com (mailto:info@caracalgold.com)

 Robbie McCrae
 Clear Capital Markets Ltd                             +44 203 897 0981

 Joint Broker                                          +44 203 869 6086

 Keith Swann / Jonathan Critchley
 VSA Capital Ltd                                       +44 203 005 5000

 Financial Adviser and Joint Broker

 Andrew Raca (Corporate Finance)

 St Brides Partners Ltd                                caracal@stbridespartners.co.uk (mailto:caracal@stbridespartners.co.uk)

 Financial PR

 Charlotte Page / Isabel de Salis / Isabelle Morris
 DGWA, the German Institute for Asset and              info@dgwa.org (mailto:info@dgwa.org)

 Equity Allocation and Valuation

 European Investor and Corporate Relations Advisor

 Katharina Löckinger

 

Notes

Caracal Gold plc is an expanding East African focused gold producer with a
clear path to grow production and resources both organically and through
strategic acquisitions. Its aim is to rapidly increase production to
+50,000ozs p.a. and build a JORC compliant resource base of +3Moz.  The
company is progressing a well-defined mine optimisation strategy at its 100%
owned Kilimapesa Gold Mine in Kenya, where there is significant mid-term
expansion potential and the ability to increase gold production to 24,000oz
p.a. and the resource to +2Moz (current JORC compliant resources of approx.
706,000oz). Alongside this, Caracal is undertaking a targeted exploration
programme at the Nyakafuru Project in Tanzania, which has an established
high-grade shallow gold resource of 658,751oz at 2.08g/t contained within four
deposits over 280 km2 and appears amenable to development as a large scale
conventional open pit operation.

 

Caracal's experienced team has a proven track record in successfully
developing and operating mining projects throughout Africa.  The Company is a
responsible mining and exploration company and supports the positive social
and economic change that it contributes to the communities in the regions that
it operates.  It is a proudly East African-focused company: it buys locally,
employs locally, and protects the environment and its employees and their
families' health, safety, and wellbeing.

 

Caracal's shares are quoted on the Main Market of the London Stock Exchange
(LON: GCAT) and on the Frankfurt Stock Exchange (FSE: 6IK).  The Company is
also in the process of listing on the Nairobi Securities Exchange.

 

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDFLFSRLSIVFIV