REG - Condor Gold PLC - Proposed Open Offer to Raise up to £3.9M

Condor GoldAnnouncement

05/12/2022 07:00

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RNS Number : 5192I  Condor Gold PLC  05 December 2022

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF REGULATION
(EU) 596/2014 AS IT FORMS PART OF DOMESTIC LAW IN THE UNITED KINGDOM BY
VIRTUE OF THE EU (WITHDRAWAL) ACT 2018 ("MAR").

 

   Condor Gold plc

   7/8 Innovation Place

   Douglas Drive

   Godalming

   Surrey

   GU7 1JX

   Tel: +44 (0) 207 493 2784

5 December 2022

 

 

Condor Gold Plc

("Condor" or the "Company")

 

Proposed Open Offer to Raise up to £3.9M

Posting of Shareholder Circular and Notice of EGM

Condor Gold Plc (AIM: CNR; TSX: COG) announces that further to its
announcement of 28 November 2022 the Company is today posting its Open Offer
Circular to Shareholders, including a Notice of EGM (the "Circular") to seek
approval for a Sub-division as further detailed below. The EGM will be held at
7/8 Innovation Place, Douglas Drive, Godalming, Surrey GU7 1JX on 21 December
2022 at 11 a.m. A copy of the Circular is available on the Company's website,
www.condorgold.com (http://www.condorgold.com) and will be available on the
Company's SEDAR profile at www.sedar.com (http://www.sedar.com) .

 

Pursuant to the Open Offer, Qualifying Shareholders will be given the
opportunity to subscribe for:

1    Open Offer Share for every 6 Existing Ordinary Shares

Other than where defined, capitalised terms used in this announcement have the
meanings given to them in the Circular.

 

Extracts of the Circular are set out below.

 

1.   INTRODUCTION

 

The Company is providing all Qualifying Shareholders with the opportunity to
subscribe for an aggregate of up to 26,438,255 Open Offer Shares, to raise up
to approximately £3,965,000 (before expenses), on the basis of one Open Offer
Share for every six Existing Ordinary Shares held on the Open Offer Record
Date, at the Issue Price of £0.15. When aggregated with the £1,000,000
raised by the issue of the Convertible Loan Notes (as announced on 28 November
2022), this would allow the Company to raise up to approximately £4,965,000.
Qualifying Shareholders subscribing for their full entitlement under the Open
Offer may also request additional Open Offer Shares through the Excess
Application Facility.

 

The New Shares will be issued pursuant to existing Shareholder authorities
granted at the general meeting of the Company held in May 2022. Application
will be made for the Open Offer Shares to be admitted to trading on AIM, and
the TSX has granted conditional approval with regard to the listing of the
Open Offer Shares on the TSX.  Admission is expected to occur at 8.00 a.m. on
23 December 2022 or such later time and/or date as the Company may agree.

 

The Open Offer is conditional upon Shareholder approval of the Sub-Division,
which will be sought at the EGM to be held at 11 a.m. on 21 December 2022, a
notice of which is set out at the end of the Circular. Under the Act, a
company is prohibited from issuing new shares at a price less than the nominal
value of its shares.  The Company's Existing Ordinary Shares have a nominal
value of £0.20. The middle market share price of each Existing Ordinary Share
on the date prior to the date of this letter was £0.1925.  In order to
enable the Company to offer New Ordinary Shares at a discount to Qualifying
Shareholders to fund the Company through its sales process, the Company
proposes subdividing each Existing Ordinary Share into one New Ordinary Share
of £0.001 and one Deferred Share of £0.199.  The Company expects that the
Deferred Shares will never have any real value.  The Deferred Shares will
have no rights to vote or to dividends. The rights of the Deferred Shares to
participate on a winding-up of the Company are unlikely to be realised, as
such rights will be subject to the prior payment to the holders of New
Ordinary Shares of the nominal capital paid up or credited as paid up on the
New Ordinary Shares together with the sum of £10,000,000 on each New Ordinary
Share.

 

The Issue Price represents a discount of 22 per cent to the closing price of
the Existing Ordinary Shares on AIM on 2 December 2022.

 

Further details of the Open Offer and the Sub-Division are set out in the
Circular, which you are encouraged to read carefully. No part of the Open
Offer has been underwritten.

 

The purpose of the Circular is to provide you with details of and the
background to and reasons for the Open Offer and the Sub-Division and to
explain why the Directors believe that both the Open Offer and the
Sub-Division are in the best interests of the Company and its Shareholders as
a whole.

 

2.   INFORMATION ON CONDOR GOLD PLC

 

Condor Gold Plc is a UK incorporated gold exploration and development company,
with a focus on Nicaragua.  The Company's shares are admitted to trading on
AIM in London and to listing on the TSX in Toronto.

 

The Company's principal asset is La India Project, Nicaragua, which comprises
of a large, highly prospective land package of 588 sq km comprising of 12
contiguous and adjacent concessions. The Company has filed a feasibility study
technical report dated 25 October 2022 and entitled "Condor Gold Technical
Report on the La India Gold Project, Nicaragua, 2022" (the "2022 FS") which is
available on the Company's SEDAR profile at www.sedar.com
(http://www.sedar.com) and was prepared in accordance with the requirements of
NI 43-101.  The 2022 FS indicated that La India Project hosts a high grade
Mineral Resource Estimate ("MRE") of 9,672 kt at 3.5g/t gold for 1,088,000 oz
gold in the indicated mineral resource category and 8,642 kt at 4.3 g/t gold
for 1,190,000 oz gold in the inferred mineral resource category. The open pit
MRE is 8,693 kt at 3.2 g/t gold for 893,000 oz gold in the indicated mineral
resource category and 3,026 kt at 3.0 g/t gold for 291,000 oz gold in the
inferred mineral resource category. Total underground MRE is 979 kt at 6.2 g/t
gold for 194,000 oz gold in the indicated mineral resource category and 5,615
kt at 5.0 g/t gold for 898,000 oz gold in the inferred mineral resource
category.

 

In August 2018, the Company announced that the Ministry of the Environment in
Nicaragua had granted the Environmental Permit ("EP") for the development,
construction and operation of a processing plant with capacity to process up
to 2,800 tonnes per day at its wholly-owned La India gold Project ("La India
Project"). The EP is considered the master permit for mining operations in
Nicaragua. The Company  has purchased a new semi autogenous Mill ("SAG
Mill"), which has mainly arrived in Nicaragua. Site clearance and preparation
is at an advanced stage.

 

Environmental Permits were granted in April and May 2020 for the Mestiza and
America open pits respectively, both located close to La India. The Mestiza
open pit hosts 92 Kt at a grade of 12.1 g/t gold (36,000 oz contained gold) in
the Indicated Mineral Resource category and 341 Kt at a grade of 7.7 g/t gold
(85,000 oz contained gold) in the Inferred Mineral Resource category. The
America open pit hosts 114 Kt at a grade of 8.1 g/t gold (30,000 oz) in the
Indicated Mineral Resource category and 677 Kt at a grade of 3.1 g/t gold
(67,000 oz) in the Inferred Mineral Resource category.

 

Other assets include approximately 1,000 hectares of land purchased for the
mine site infrastructure for circa US$4,200,000 and a new SAG Mill package
purchased for US$6,500,000.

 

On 25 October 2021 Condor announced the filing of a Preliminary Economic
Assessment Technical Report ("PEA") for its La India Project, Nicaragua on
SEDAR https://www.sedar.com (https://www.sedar.com) . The highlight of the
technical study is a post-tax, post upfront capital expenditure NPV of US$418
million, with an IRR of 54 per cent and 12 month pay-back period, assuming a
US$1,700 per oz gold price, with average annual production of 150,000 oz gold
per annum for the initial nine years of gold production. The open pit mine
schedules have been optimised from designed pits, bringing higher grade gold
forward resulting in average annual production of 157,000 oz gold in the first
two years from open pit material and underground mining funded out of
cashflow.  The Mineral Resource estimate and associated Preliminary Economic
Assessment contained in the PEA are considered a historical estimate within
the meaning of NI 43-101.  A qualified person has not done sufficient work to
classify such historical estimate as current, the Company is not treating the
historical Mineral Resource estimate and associated studies as current, and
the reader is cautioned not to rely upon this data as such.  Mineral
Resources that are not Mineral Reserves do not have demonstrated economic
viability.  The Company believes that the historical Mineral Resource
estimate and PEA are relevant to the continuing development of the La India
Project.

 

The 2022 FS was completed on La India vein set open pit only, which has a MRE
of 8,487 kt at 3.0g/t gold in for 827,000 oz gold in the indicated mineral
resource category and 893 Kt at 2.4 g/t gold for 69,000 oz gold in the
inferred mineral resource category.

 

The Company's strategy has been to develop the fully permitted La India
Project in two stages using the new SAG Mill that has already been purchased.
The delivery of a Feasibility Study on La India open pit with an average of
81,524 oz gold per annum for the initial six years for a relatively low total
upfront capital cost of US$106,000,000 is a landmark and further de-risks the
Project. At US$1,600 oz gold, the La India open pit Mineral Reserve produces
total revenues of US$888,000,000, the total operating costs of mining, process
and G&A are US$480,000,000, leading to an operating profit of
US$408,000,000 or a 46 per cent operating margin. After government and other
royalties, but before sustaining capital, the operating profit is
US$355,000,000, which in Condor's opinion is ample to repay any project debt
on the relatively low upfront capex. At US$2,000 oz gold after paying
royalties, but before sustaining capital the operating profit is
US$563,000,000. In reality, two permitted high grade feeder pits will be added
during the early years of production thus increasing production ounces of
gold. Early production is targeted at 100,000 oz gold p.a..

 

The plan has been to materially expand production with a stage two expansion
by converting existing Mineral Resources into Mineral Reserves and an
associated integrated mine plan. On 25 October 2021, the Company announced the
results of a Preliminary Economic Assessment and filed on SEDAR a technical
report entitled "Condor Gold Technical Report on the La Indian Gold Project,
Nicaragua, 2021" detailing average annual production of 150,000 oz of gold
over the initial 9 years of production from open pit and underground Mineral
Resources and provides an indication of a production target. Outside the main
La India open pit Mineral Reserve, there are additional open pit Mineral
Resources on four deposits (America, Mestiza, Central breccia and Cacao) which
represent an aggregate 206 Kt at 9.9 g/t gold for 66,000 oz in the indicated
Mineral Resource category and 2.1Mt at 3.3 g/t gold for 223,000 oz gold in the
inferred Mineral Resource category.  In addition, there is an aggregate
underground Mineral Resource (La India, America, Mestiza, Central Breccia San
Lucas, Cristalito-Tatescame, and Cacao) of 979Kt a 6.2 g/t for 194,000 oz
gold in the indicated Mineral Resource category and 5.6Mt at 5.0 g/t gold for
898,000 oz gold in the inferred Mineral Resource category.

 

3.   BACKGROUND TO AND REASONS FOR THE OPEN OFFER AND SUB-DIVISION

 

On 22 November 2022, the Company announced that the Board has concluded that
now is the right time to sell the assets of the Company to a gold producer
with mine building expertise, thus ensuring a new mine at La India, a
significant investment in the local area and a regeneration of the local
communities.  The Company has appointed Hannam and Partners to run the sales
process.

 

On 28 November 2022, the Company announced that it had successfully raised
£1,000,000 (before expenses) through an issue of Convertible Loan Notes, with
warrants attached, to Galloway Limited, an 18.7 per cent shareholder, which is
wholly owned by Burnbrae Group Limited which is, in turn, wholly owned by Jim
Mellon, the Company's chairman. The £1,000,000 financing provided the Company
with working capital and enables it to cover its short term funding
requirements.

 

On 28 November 2022 the Company also announced that it intended to launch an
open offer providing pre-emptive rights to Qualifying Shareholders to
subscribe for one New Ordinary Share for every six Existing Ordinary Shares
held at the Open Offer Record Date, subject to shareholder approval of the
Sub-Division.  Galloway Limited will not participate in the Open Offer, but
the Convertible Loan Notes will automatically convert into New Ordinary Shares
at the Issue Price if the Open Offer raises £1,000,000 before expenses for
the Company.

 

The equity markets have been difficult of late and the impact of US sanctions
as announced by the Company on 27 October 2022 delayed a financing by the
Company. The Board concluded that the fairest and best way to finance the
Company's operations is via existing shareholders.  It also considers it
important that Shareholders have an opportunity (where it is practicable for
them to do so) to subscribe for Open Offer Shares on the same terms as
Galloway Limited subscribed for the Convertible Loan Notes, but excluding any
entitlement to warrants. Therefore, the Company is making the Open Offer to
Qualifying Shareholders.

 

The Company expects that the proceeds of the Open Offer will fund the Company
through the sales process announced on 22 November 2022 and enable it to meet
its short term liabilities, which include working capital requirements at the
Company's operations in Nicaragua, and the payment of the balance of
US$300,000 due for the SAG Mill purchased by the Company from First Majestic
Silver in March 2021.

 

4.   USE OF PROCEEDS OF THE OPEN OFFER

 

The net proceeds of the Open Offer will be used to fund the Company through
the sales process announced on 22 November 2022, including to:

·    finance the working capital requirements at the Company's operations
in Nicaragua, including keeping concessions and permits in good standing and
re-registering title to land;

·    pay the balance of US$300,000 for the SAG Mill purchased by the
Company from First Majestic Silver;

·    cover head office expenses; and

·    cover interim expenses linked to the sales process.

 

5.   DETAILS OF THE OPEN OFFER

 

The Company is making an Open Offer pursuant to which it may raise a further
amount of up to approximately £3,965,000 (before expenses). The Issue Price
per Open Offer Share is £0.15, which is the same price as the price at which
the Convertible Loan Notes were issued to Galloway Limited, an 18.7 per cent
shareholder which is wholly owned by Burnbrae Group Limited which is, in turn,
wholly owned by Jim Mellon, Condor's Chairman, on 25 November 2022.

 

Subject to the fulfilment of the conditions set out below and in Part IV of
the Circular, Qualifying Shareholders may subscribe for Open Offer Shares in
proportion to their holding of Existing Ordinary Shares held on the Open Offer
Record Date. Shareholders subscribing for their full entitlement under the
Open Offer may also request additional Open Offer Shares as an Excess
Entitlement, up to the total number of Open Offer Shares available to
Qualifying Shareholders under the Open Offer. The Open Offer is not
underwritten.

 

The Open Offer is conditional on, amongst other things, the following
conditions being satisfied:

·    the approval by shareholders of the Resolution at the EGM; and

·    admission of the Open Offer Shares becoming effective by 8.00 a.m. on
or around 23 December 2022.

 

If these and the other conditions to the Open Offer are not satisfied or
waived (where capable of waiver), the Open Offer will lapse and will not
proceed and any applications made by Qualifying Shareholders will be rejected.
In these circumstances, application monies received by the Receiving Agent in
respect of Open Offer Shares will be returned (at the applicant's sole risk),
without payment of interest, as soon as reasonably practicable thereafter.
Lapsing of the Open Offer cannot occur after dealings in the Open Offer Shares
have begun.

 

The Open Offer Shares to be issued pursuant to the Open Offer will, when
issued, rank pari passu in all respects with the New Ordinary Shares,
including the right to receive dividends and other distributions declared
following Admission.

 

Basic Entitlement

 

On, and subject to the terms and conditions of the Open Offer, the Company
invites Qualifying Shareholders to apply for their Basic Entitlement of Open
Offer Shares at the Issue Price. Each Qualifying Shareholder's Basic
Entitlement has been calculated on the following basis:

 

One Open Offer Share for every six Existing Ordinary Shares held at the Open
Offer Record Date

 

Basic Entitlements will be rounded down to the nearest whole number of
Ordinary Shares.

 

Excess Entitlement

 

Qualifying Shareholders are also invited to apply for additional Open Offer
Shares (up to the total number of Open Offer Shares available to Qualifying
Shareholders under the Open Offer) as an Excess Entitlement. Any Open Offer
Shares not issued to a Qualifying Shareholder pursuant to their Basic
Entitlement will be apportioned between those Qualifying Shareholders who have
applied for an Excess Entitlement at the sole and absolute discretion of the
Board, provided that no Qualifying Shareholder shall be required to subscribe
for more Open Offer Shares than he or she has specified on the Application
Form or through CREST.

 

The Open Offer Shares will, when issued and fully paid, rank pari passu in all
respects with the New Ordinary Shares in issue at that time, including the
right to receive all dividends and other distributions declared, made or paid
after the date of Admission of the Open Offer Shares. The Open Offer is not
underwritten.

 

If and to the extent that the Open Offer is not fully taken up by Qualifying
Shareholders, the Company may place any Open Offer Shares that have not been
subscribed for with non-Qualifying Shareholders or institutional investors at
the Issue Price.

 

Qualifying Shareholders should note that the Open Offer is not a "rights
issue". Invitations to apply under the Open Offer are not transferable unless
to satisfy bona fide market claims. Qualifying non-CREST Shareholders should
be aware that the Application Form is not a negotiable document and cannot be
traded. Qualifying Shareholders should also be aware that in the Open Offer,
unlike in a rights issue, any Open Offer Shares not applied for will not be
sold in the market nor will they be placed for the benefit of Qualifying
Shareholders who do not apply for Open Offer Shares under the Open Offer.

 

Overseas Shareholders

 

The Open Offer Shares have not been and are not intended to be registered or
qualified for sale in any jurisdiction other than the United Kingdom.
Accordingly, unless otherwise determined by the Company and effected by the
Company in a lawful manner, the Application Form will not be sent to
Shareholders with registered addresses in, or who are resident or located in
the United States or any other Restricted Jurisdiction since to do so would
require compliance with the relevant securities laws of that jurisdiction. The
Company reserves the right to treat as invalid any application or purported
application for Open Offer Shares which appears to the Company or its agents
or professional advisers to have been executed, effected or despatched in a
manner which may involve a breach of the laws or regulations of any
jurisdiction or if the Company or its agents or professional advisers believe
that the same may violate applicable legal or regulatory requirements or if it
provides an address for delivery of share certificates or warrant certificates
for Open Offer Shares outside the UK, or in the case of a credit of Open Offer
Shares in CREST, to a CREST member whose registered address would not be in
the UK.

 

Notwithstanding the foregoing and any other provision of the Circular or the
Application Form, the Company reserves the right to permit any Shareholder to
apply for Open Offer Shares if the Company, in its sole and absolute
discretion, is satisfied that the transaction in question is exempt from, or
not subject to, the legislation or regulations giving rise to the restrictions
in question.

 

PART VI of the Circular together with the accompanying Application Form, in
the case of Qualifying non-CREST Shareholders, contains the terms and
conditions of the Open Offer. If a Qualifying Shareholder does not wish to
apply for Open Offer Shares, THEY should not complete or return the
Application Form or send a USE message through CREST.

The Open Offer is not being made in Canada

 

The Open Offer is not being made in Canada or to Canadian Shareholders and is
not available for acceptance by any shareholder in Canada.

 

Qualifying non-CREST Shareholders

 

If you are a Qualifying non-CREST Shareholder you will receive an Application
Form, which accompanies the Circular and which gives details of your Basic
Entitlement (as shown by the number of the Open Offer Shares allocated to
you). If you wish to apply for Open Offer Shares under the Open Offer you
should complete the accompanying Application Form in accordance with the
procedure for application set out in paragraph 4 of Part IV of the Circular
and on the Application Form itself. The completed Application Form,
accompanied by full payment, should be returned by post to Computershare
Investor Services PLC, Corporate Actions Projects, Bristol, BS99 6AH so as to
arrive as soon as possible and in any event no later than 11 a.m. on 20
December 2022.

 

Qualifying CREST Shareholders

 

Application will be made for the Open Offer Entitlements of Qualifying CREST
Shareholders to be credited to stock accounts in CREST. It is expected that
the Open Offer Entitlements will be credited to stock accounts in CREST on 6
December 2022. Applications through the CREST system may only be made by the
Qualifying CREST Shareholder originally entitled or by a person entitled by
virtue of a bona fide market claim. If you are a Qualifying CREST Shareholder,
no Application Form is enclosed but you will receive credits to your
appropriate stock account in CREST in respect of the Basic Entitlements to
which you are entitled. You should refer to the procedure for application set
out in paragraph 4 of Part IV of the Circular. The relevant CREST instruction
must have settled by no later than 11 a.m. on 20 December 2022.

 

6.   RISK FACTORS

 

Potential investors are strongly advised to read Part II of the Circular
detailing the risks associated with an investment in the Company. Set out
below are two risks the Board would draw to any potential investors' attention
in particular:

 

Sales Process

 

Whilst the Company has launched a process to seek buyers for the Company's
assets as announced on 22 November 2022, there can be no guarantee that such
an offer will be forthcoming or that it will be on terms that the Directors
consider acceptable or could recommend to Shareholders. If this process were
to result in no acceptable offers for the Company's assets, this could lead to
the Company having to consider its future strategy and, as such, Shareholders
may see a significant reduction in the value of the Company and their interest
therein.

 

Open Offer not Underwritten

 

There is no guarantee that Open Offer Shares will be taken up by Shareholders
and no part of the Open Offer has been underwritten. As such, should the
Company not raise any additional funds under the Open Offer it expects to have
sufficient cash resources available to it until 31 January 2023; at such time
it would require further funding to meet its ongoing liabilities. Furthermore,
the Convertible Loan Notes issued to Galloway Limited are, unless converted,
due for repayment on 25 November 2023 and therefore the Company would need to
raise additional funding to make the repayment or otherwise be in default of
the terms of the Convertible Loan Notes; such event could see a significant
impact on the value of the Company.

 

7.   DETAILS OF THE SUB-DIVISION

 

The Sub-Division comprises the sub-division of each Existing Ordinary Share
into one New Ordinary Share and one Deferred Share.

 

The rights attaching to the New Ordinary Shares will be identical in all
respects to those of the Existing Ordinary Shares, including voting, dividend,
return of capital and other rights. The Deferred Shares shall have the rights
set out in the Resolution.

 

Application will be made 158,629,530 New Ordinary Shares to be admitted to
trading on AIM in place of the Existing Ordinary Shares with admission
expected to become effective at 8 a.m. on 23 December 2022. Subject to
Shareholder approval of the Resolution, it is expected that the Sub-Division
will become effective on 22 December 2022. No application for Admission or
listing on the TSX will be made in respect of the Deferred Shares. Following
the Sub-Division, the ISIN Code and the SEDOL Code for the New Ordinary Shares
will be the same as for the Existing Ordinary Shares.

 

Existing share certificates will continue to be valid following the
Sub-Division and no new share certificates will be issued in respect of the
New Ordinary Shares. No share certificates will be issued in respect of the
Deferred Shares.

 

Following the Sub-Division, all mandates and other instructions, including
communication preferences given to the Company by Shareholders and in force at
the Sub-Division Record Date shall, unless and until revoked, be deemed to be
valid and effective mandates or instructions in relation to the New Ordinary
Shares.

 

Shareholders will not need to take any action in connection with the
Sub-Division. In Canada, Computershare Investor Services Inc. will deliver the
appropriate number of Deferred Shares to CDS  Clearing and Depository
Services Inc. ("CDS") upon the effectiveness of the Sub-Division for
distribution to beneficial owners whose shares are held through CDS.  Such
beneficial owners who hold their Existing Ordinary Shares in an account with
their investment dealer or another intermediary will have their accounts
automatically updated to reflect the Sub-Division in accordance with the
applicable brokerage account providers' typical procedures. The Deferred
Shares will not be transferrable; as a result, holders of Existing Ordinary
Shares who sell or otherwise transfer their New Ordinary Shares following the
Sub-Division will not be able to sell or otherwise transfer their Deferred
Shares.

 

8.   ADMISSION, SETTLEMENT AND CREST

 

Application will be made to the London Stock Exchange for the Open Offer
Shares to be admitted to trading on AIM and the TSX has conditionally approved
the listing of the Open Offer Shares on the TSX. It is expected that Admission
of the Open Offer Shares will become effective at 8 a.m. on 23 December 2022
and that dealings in the Open Offer Shares will commence at that time.

 

No application for Admission to trading on AIM or for listing on the TSX will
be made in respect of the Deferred Shares arising on the Sub-Division.
Following the Sub-Division, the ISIN Code for the New Ordinary Shares and the
SEDOL Code will remain the same as for the Existing Ordinary Shares.

 

The Articles permit the Company to issue shares in uncertificated form. CREST
is a computerised paperless share transfer and settlement system which allows
shares and other securities to be held in electronic computerised paper form.
The Existing Ordinary Shares are already admitted to CREST and therefore the
Open Offer Shares will also be eligible for settlement in CREST.

 

It is expected that the Open Offer Shares due to uncertificated holders will
be delivered in CREST on 23 December 2022.

 

9.   OVERSEAS SHAREHOLDERS

 

The offer of Open Offer Shares and the distribution of the Circular and the
Application Form to persons who have registered addresses in, or who are
resident or ordinarily resident in, or citizens of, or which are corporations,
partnerships or other entities created or organised under the laws of
countries other than the UK or to persons who are nominees of or custodians,
trustees or guardians for citizens, residents in or nationals of, countries
other than the UK may be affected by the laws or regulatory requirements of
the relevant jurisdictions. The Open Offer is not being made in Canada or to
Canadian shareholders and is not available for acceptance by any shareholder
in Canada.

 

Accordingly, any persons into whose possession the Circular comes should
inform themselves about and observe any applicable restrictions or
requirements. No action has been taken by the Company that would permit
possession or distribution of the Circular in any jurisdiction where action
for that purpose is required. Any failure to comply with such restrictions or
requirements may constitute a violation of the securities laws of any such
jurisdiction.

 

10. ACTION TO BE TAKEN BY SHAREHOLDERS

 

You will find set out at the end of the Circular, a notice convening an
extraordinary general meeting to be held at the Company's registered office
address, 7/8 Innovation Place, Douglas Drive, Godalming, Surrey GU7 1JX on 21
December 2022 at 11 a.m.

 

Shareholders may find enclosed a Form of Proxy for use at the EGM. The Form
of Proxy should be completed and returned in accordance with the instructions
printed on it so as to arrive with the Company Secretary at GBH Law Limited,
7/8 Innovation Place, Douglas Drive, Godalming, Surrey GU7 1JX or by email to
condor2022@condorgold.com, or, for Canadian shareholders, to Computershare
Investor Services Inc., Attention: Proxy Department, 100 University Avenue,
8th Floor, Toronto, Ontario M5J 2Y1 Canada, as soon as possible and in any
event, no later than 11 a.m. on 19 December 2022.

 

In order for the Open Offer to proceed, Shareholders will need to approve the
Resolution.  If the Resolution is not passed, the Open Offer will not proceed
with the result that the anticipated net proceeds of the Open Offer will not
become available to fund the Company through its sales process and the Company
could be materially adversely affected as a result. Accordingly, it is
important that Shareholders vote in favour of the Resolution so the Open Offer
can proceed.

 

Qualifying non-CREST Shareholders wishing to apply for Open Offer Shares or
the Excess Open Offer Shares must complete the enclosed Application Form in
accordance with the instructions set out in paragraph 4 of Part IV of the
Circular and on the accompanying Application Form and return it with the
appropriate payment to Computershare Investor Services PLC, Corporate Actions
Projects, Bristol, BS99 6AH, so as to arrive no later than 11 a.m. on 20
December 2022.

 

If you do not wish to apply for any Open Offer Shares under the Open Offer,
you should not complete or return the Application Form. If you are a
Qualifying CREST Shareholder, no Application Form will be sent to you.
Qualifying CREST Shareholders will have Open Offer Entitlements and Excess
CREST Open Offer Entitlements credited to their stock accounts in CREST. You
should refer to the procedure for application set out in paragraph 4 of
Part IV of the Circular. The relevant CREST instructions must have settled in
accordance with the instructions in paragraph 4 of Part IV of the Circular
by no later than 11 a.m. on 20 December 2022.

 

Qualifying CREST Shareholders who are CREST sponsored members should refer to
their CREST sponsors regarding the action to be taken in connection with the
Circular and the Open Offer.

 

11. RECOMMENDATION

 

The Board considers the Open Offer to be in the best interests of the Company
and its Shareholders as a whole. Accordingly, the Board unanimously recommends
that Shareholders vote in favour of the Resolution at the EGM, as the
Directors intend to do so in respect of their own beneficial holdings of the
Company's Ordinary Shares, representing approximately 21.5 per cent. of the
Company's Existing Ordinary Shares.

 

 

 

- Ends -

 

For further information please visit www.condorgold (http://www.condorgold)
.com or contact:

 Condor Gold plc                        Mark Child, CEO

                                        +44 (0) 20 7493 2784
 Beaumont Cornish Limited                Roland Cornish and James Biddle

                                        +44 (0) 20 7628 3396
 SP Angel Corporate Finance LLP         Ewan Leggat

+44 (0) 20 3470 0470
 H&P Advisory Limited                   Andrew Chubb and Nilesh Patel

                                        +44 207 907 8500
 Adelaide Capital (Investor Relations)  Deborah Honig

                                        +1-647-203-8793

 

APPENDIX - TIMETABLE

 

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

 Record Date and time for entitlements under the Open Offer                      6 p.m. on 1 December 2022
 Canadian Record Date for Extraordinary General Meeting                          6 p.m. on 1 December 2022
 Existing Ordinary Shares marked 'ex' by London Stock Exchange                   8.00 a.m. on 5 December 2022
 Announcement of the Open Offer                                                  7 a.m. on 5 December 2022
 Posting of Circular, Forms of Proxy and Application Forms                       5 December 2022
 Basic Entitlements and Excess Open Offer Entitlements credited to stock         As soon as possible after 8 a.m. on 6 December 2022
 accounts in CREST of Qualifying CREST Shareholders
 Recommended latest time for requesting withdrawal of Basic Entitlements and     4.30 p.m. on 14 December 2022
 Excess Open Offer Entitlements from CREST
 Latest time and date for depositing Open Offer Entitlements and Excess          3p.m. on 15 December 2022
 Entitlements into CREST
 Latest time and date for splitting Application Forms (to satisfy bona fide      3 p.m. on 16 December 2022
 market claims only)
 Latest time and date for receipt of Forms of Proxy                              11 a.m. on 19 December 2022
 Latest time and date for receipt of completed Application Forms and payment in  11a.m. on 20 December 2022
 full under the Open Offer or settlement of relevant CREST instructions (as
 appropriate)
 Extraordinary General Meeting                                                   11 a.m. on 21 December
 Record Date for the Sub-Division                                                6 p.m. on 21 December 2022
 Announcement of result of Open Offer and EGM Voting Results                     21 December 2022
 Effective Date of the Sub-Division                                              22 December 2022
 Admission and commencement of dealings Open Offer Shares on AIM                 8.00 a.m. on 23 December 2022
 CREST accounts expected to be credited for the Open Offer Shares to be held in  23 December 2022
 uncertificated form
 Latest date for posting of share certificates for the Open Offer Shares in      9 January 2022
 certificated form

Notes: Each of the times and dates referred to above and where used elsewhere
in this Announcement refer to GMT (unless otherwise stated) and are subject to
change by the Company, in which case details of the new times and dates will
be notified to the London Stock Exchange and the Company will make an
appropriate announcement through a Regulatory Information Service.

 

 

 

About Condor Gold plc:

Condor Gold plc was admitted to AIM in May 2006 and dual listed on the TSX in
January 2018. The Company is a gold exploration and development company with a
focus on Nicaragua.

 

The Company's principal asset is La India Project, Nicaragua, which comprises
of a large, highly prospective land package of 588 sq km comprising of 12
contiguous and adjacent concessions. The Company has filed a feasibility study
technical report dated 25 October 2022 and entitled "Condor Gold Technical
Report on the La India Gold Project, Nicaragua, 2022" (the "2022 FS") which is
available on the Company's SEDAR profile at www.sedar.com
(http://www.sedar.com) and was prepared in accordance with the requirements of
NI 43-101.  The 2022 FS indicated that La India Project hosts a high grade
Mineral Resource Estimate ("MRE") of 9,672 kt at 3.5g/t gold for 1,088,000 oz
gold in the indicated mineral resource category and 8,642 kt at 4.3 g/t gold
for 1,190,000 oz gold in the inferred mineral resource category. The open pit
MRE is 8,693 kt at 3.2 g/t gold for 893,000 oz gold in the indicated mineral
resource category and 3,026 kt at 3.0 g/t gold for 291,000 oz gold in the
inferred mineral resource category. Total underground MRE is 979 kt at 6.2 g/t
gold for 194,000 oz gold in the indicated mineral resource category and 5,615
kt at 5.0 g/t gold for 898,000 oz gold in the inferred mineral resource
category.

 

 

The 2022 FS replaces the previously reported Preliminary Economic Assessment
("PEA") as presented in the Technical Report filed on SEDAR in October 2021 as
the current technical report for the La India project.

 

The 2021 PEA considered the expanded Project inclusive of the exploitation of
the Mineral Resources associated to the La India, Mestiza, America and Central
Breccia deposits. The strategic study covers two scenarios: Scenario A, in
which the mining is undertaken from four open pits, termed La India, America,
Mestiza and Central Breccia Zone ("CBZ"), which targets a plant feed rate of
1.225 million tonnes per annum ("Mtpa"); and Scenario B, where the mining is
extended to include three underground operations at La India, America and
Mestiza, in which the processing rate is increased to 1.4 Mtpa. The 2021 PEA
Scenario B presented a post-tax, post upfront capital expenditure NPV of
US$418 million, with an IRR of 54% and 12 month pay-back period, assuming a
US$1,700 per oz gold price, with average annual production of 150,000 oz gold
per annum for the initial 9 years of gold production. The open pit mine
schedules were optimised from designed pits, bringing higher grade gold
forward resulting in average annual production of 157,000 oz gold in the first
2 years from open pit material and underground mining funded out of cashflow.
The 2021 PEA Scenario A presented a post-tax, post upfront capital expenditure
NPV of US$302 million, with an IRR of 58% and 12 month pay-back period,
assuming a US$1,700 per oz gold price, with average annual production of
approximately 120,000 oz gold per annum for the initial 6 years of gold
production. The Mineral Resource estimate and associated Preliminary Economic
Assessment contained in the 2021 PEA are considered a historical estimate
within the meaning of NI 43-101, a qualified person has not done sufficient
work to classify such historical estimate as current, and the Company is not
treating the historical Mineral Resource estimate and associated studies as
current, and the reader is cautioned not to rely upon this data as such.
Mineral Resources that are not Mineral Reserves do not have demonstrated
economic viability. The Company believes that the historical Mineral Resource
estimate and Preliminary Economic assessment is relevant to the continuing
development of the La India Project.

 

In August 2018, the Company announced that the Ministry of the Environment in
Nicaragua had granted the Environmental Permit ("EP") for the development,
construction and operation of a processing plant with capacity to process up
to 2,800 tonnes per day at its wholly-owned La India gold Project ("La India
Project"). The EP is considered the master permit for mining operations in
Nicaragua. Condor has purchased a new SAG Mill, which has mainly arrived in
Nicaragua. Site clearance and preparation is at an advanced stage.

 

Environmental Permits were granted in April and May 2020 for the Mestiza and
America open pits respectively, both located close to La India. The Mestiza
open pit hosts 92 Kt at a grade of 12.1 g/t gold (36,000 oz contained gold) in
the Indicated Mineral Resource category and 341 Kt at a grade of 7.7 g/t gold
(85,000 oz contained gold) in the Inferred Mineral Resource category. The
America open pit hosts 114 Kt at a grade of 8.1 g/t gold (30,000 oz) in the
Indicated Mineral Resource category and 677 Kt at a grade of 3.1 g/t gold
(67,000 oz) in the Inferred Mineral Resource category. Following the
permitting of the Mestiza and America open pits, together with the La India
open pit Condor has 1.12 M oz gold open pit Mineral Resources permitted for
extraction.

 

Disclaimer

 

Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) is
incorporated into, or forms part of, this announcement.

 

TSX Matters

 

For the purposes of TSX approvals in connection with the Open Offer, the
Company is relying on the exemption set forth in Section 602.1 of the TSX
Company Manual, which provides that the TSX will not apply its standards to
certain transactions involving "eligible interlisted issuers" such as Condor
whose shares are also listed on a recognized exchange such as AIM.

 

Qualified Persons

 

The technical and scientific information in this press release has been
reviewed, verified and approved by Andrew Cheatle, P.Geo., a director of
Condor Gold plc, and Gerald D. Crawford, P.E., the Chief Technical Officer of
Condor Gold plc, each of whom is a "qualified person" as defined by NI 43-101.

 

 

Important Notice(s)

Forward Looking Statements

 

All statements in this press release, other than statements of historical
fact, are 'forward-looking information' with respect to the Company within the
meaning of applicable securities laws, including statements with respect to
the open offer and the potential conversion of the Convertible Loan Notes; the
subdivision of the Company's existing ordinary shares and the meeting of
shareholders to approve such subdivision; future development and production
plans, projected capital and operating costs, mine life and production rates,
metal or mineral recovery estimates, Mineral Resource, Mineral Reserve
estimates at the La India Project, the potential to convert Mineral Resources
into Mineral Reserves; and the Company's strategic plans and ongoing sales
process. Forward-looking information is often, but not always, identified by
the use of words such as: "seek", "anticipate", "plan", "continue",
"strategies", "estimate", "expect", "project", "predict", "potential",
"targeting", "intends", "believe", "potential", "could", "might", "will" and
similar expressions. Forward-looking information is not a guarantee of future
performance and is based upon a number of estimates and assumptions of
management at the date the statements are made including, among others,
assumptions regarding: future commodity prices and royalty regimes;
availability of skilled labour; timing and amount of capital expenditures;
future currency exchange and interest rates; the impact of increasing
competition; general conditions in economic and financial markets;
availability of drilling and related equipment; effects of regulation by
governmental agencies; the receipt of required permits; royalty rates; future
tax rates; future operating costs; availability of future sources of funding;
ability to obtain financing and assumptions underlying estimates related to
adjusted funds from operations. Many assumptions are based on factors and
events that are not within the control of the Company and there is no
assurance they will prove to be correct.

 

Such forward-looking information involves known and unknown risks, which may
cause the actual results to be materially different from any future results
expressed or implied by such forward-looking information, including, risks
related to: mineral exploration, development and operating risks; estimation
of mineralisation and resources; environmental, health and safety regulations
of the resource industry; competitive conditions; operational risks; liquidity
and financing risks; funding risk; exploration costs; uninsurable risks;
conflicts of interest; risks of operating in Nicaragua; government policy
changes; ownership risks; permitting and licencing risks; artisanal miners and
community relations; difficulty in enforcement of judgments; market
conditions; stress in the global economy; current global financial condition;
exchange rate and currency risks; commodity prices; reliance on key personnel;
dilution risk; payment of dividends; as well as those factors discussed under
the heading "Risk Factors" in the Company's annual information form for the
fiscal year ended December 31, 2021 dated March 29, 2022 and available under
the Company's SEDAR profile at www.sedar.com (http://www.sedar.com) .

 

Although the Company has attempted to identify important factors that could
cause actual actions, events or results to differ materially from those
described in forward-looking information, there may be other factors that
cause actions, events or results not to be as anticipated, estimated or
intended. There can be no assurance that such information will prove to be
accurate as actual results and future events could differ materially from
those anticipated in such statements. The Company disclaims any intention or
obligation to update or revise any forward-looking information, whether as a
result of new information, future events or otherwise unless required by law.

 

Beaumont Cornish Limited, which is authorised and regulated in the United
Kingdom by the FCA, is acting as Nominated Adviser exclusively for the Company
and no one else in connection with the contents of this Announcement and will
not regard any other person (whether or not a recipient of this Announcement)
as its client in relation to the contents of this Announcement nor will it be
responsible to anyone other than the Company for providing the protections
afforded to its clients or for providing advice in relation to the contents of
this Announcement. Apart from the responsibilities and liabilities, if any,
which may be imposed on Beaumont Cornish by the Financial Services and Markets
Act 2000, as amended or the regulatory regime established thereunder, Beaumont
Cornish accepts no responsibility whatsoever, and makes no representation or
warranty, express or implied, as to the contents of this Announcement
including its accuracy, completeness or verification or for any other
statement made or purported to be made by it, or on behalf of it, the Company
or any other person, in connection with the Company and the contents of this
Announcement, whether as to the past or the future. Beaumont Cornish
accordingly disclaims all and any liability whatsoever, whether arising in
tort, contract or otherwise (save as referred to above), which it might
otherwise have in respect of the contents of this Announcement or any such
statement. The responsibilities of Beaumont Cornish as the Company's Nominated
Adviser under the AIM Rules for Companies and the AIM Rules for Nominated
Advisers are owed solely to the London Stock Exchange and are not owed to the
Company or to any director or shareholder of the Company or any other person,
in respect of its decision to acquire shares in the capital of the Company in
reliance on any part of this Announcement, or otherwise.

 

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