REG - GCM Resources PLC - Renewal of Consulting Agreement and Share Issue

GCM ResourcesAnnouncement

08/01/2025 07:00

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RNS Number : 4664S  GCM Resources PLC  08 January 2025

The information contained within this announcement was deemed by the Company
to constitute inside information as stipulated under the UK Market Abuse
Regulation

 

8 January 2025

 

GCM Resources plc

("GCM" or the "Company")

 

Renewal of Consulting Agreement and Share Issue

 

GCM Resources plc (AIM: GCM), the AIM traded mining and energy company,
announces that it has agreed a new consulting agreement with Dyani
Corporation, Ltd. ("Dyani") (the "Dyani Agreement"), to maintain and develop
the Company's relationship with our key partner, Power Construction
Corporation of China, Ltd. ("PowerChina"), on similar terms as previously
announced. The Dyani Agreement was most recently extended on 29 June 2020 and
expired on 30 June 2022. Details of the key terms of the Dyani Agreement are
set out below.

 

Dyani Agreement

 

Dyani has helped the Company to make significant progress in developing our
partnership with PowerChina. The previous agreement with Dyani expired on 30
June 2022 and Dyani has continued to assist GCM. For example, Dyani has played
a key role in the milestone of signing the Phulbari Coal Mining Infrastructure
Construction and Overburden Stripping Contract ("Mine Construction Contract")
which was announced on 11 March 2024 as well as the extension of the
memorandum of understanding ("MoU") announced on 13 December 2024. While the
Company has a strong direct relationship with the Bangladesh office of
PowerChina, Dyani maintains our connections at the Bangladesh office and the
head office level in Beijing. The strength of this bilateral relationship with
PowerChina is crucial for us to maintain our credibility with the Government
of Bangladesh, and as the operator of such a significant asset as the Project.
Consideration under the Dyani Agreement is payable in new ordinary shares of 1
pence each in the share capital of the Company ("Ordinary Shares"), which
aligns Dyani's interests with Shareholders and preserves the Company's cash
position while we work for consent to develop the Project.

 

Key terms of the contract

 

Under the terms of the Dyani Agreement, which will expire on 31 December 2025,
Dyani shall provide services to assist the Company to:

 

·      Promote the Project; grow its relationship with its key
development partner, PowerChina; facilitate PowerChina's assistance in
achieving project approval from the Government of Bangladesh; and securing
finance necessary to take the Project to the stage of coal extraction with
positive cashflow.

 

·      Identify additional project opportunities that represent business
opportunities for GCM that could be developed as adjuncts to the Project.

 

Dyani will receive share-based success fees on achieving milestones as well as
a monthly retainer fee, as follows:

 

·      A retainer fee of £25,000 per month backdated from 1 January
2024, paid quarterly in arrears by the issuance of new Ordinary Shares priced
at the 10 trading days volume weighted average price ("VWAP") immediately
prior to the end of the relevant quarter. Accordingly, the following new
Ordinary Shares will be issued to Dyani in respect of fees due:

 

o  For the quarter ended 31 March 2024 and using the VWAP of 8.63p for the 10
trading days prior thereto, a resultant issue of 869,061 new Ordinary Shares;

o  For the quarter ended 30 June 2024 and using the VWAP of 5.4455p for the
10 trading days prior thereto, a resultant issue of 1,377,284 new Ordinary
Shares;

o  For the quarter ended 30 September 2024 and using the VWAP of 3.0074p for
the 10 trading days prior thereto, a resultant issue of 2,493,849 new Ordinary
Shares; and

o  For the quarter ended 31 December 2024 and using the VWAP of 1.8908p for
the 10 trading days prior thereto, a resultant issue of 3,966,575 new Ordinary
Shares.

 

·      The success fees comprise:

 

o  a one-time fee equal to 2% of Company's issued share capital (the "ISC")
as at 7 January 2025 for facilitating and delivering the Mine Construction
Contract (an initial mine construction EPC Contract with PowerChina), covering
mine infrastructure and initial overburden removal (noting that this is a
sub-set of an all-encompassing Mine Development and Operations Contract). This
was achieved on 9 March 2024 and accordingly Dyani will be issued with
5,527,312 new Ordinary Shares.

 

o  a one-time fee equal to 4% of the ISC at the time of issue for
facilitating and delivering a complete mining contract, covering all mine
development and operational activities necessary to take the operation through
to at least first 8-years of coal production with associated continuous
overburden removal and stockpile management ("Mine Development and Operations
Contract"). A further announcement will made as and when this milestone is
achieved, and the resultant one-time fee becomes payable.

 

·      Dyani will also receive a one-time fee of £85,000 payable by way
of 4,688,620 new Ordinary Shares for services, including furthering the
relationship with PowerChina, in the 18-month period prior to 1 January 2024.
The number of new Ordinary Shares to be issued in this respect have been
calculated using the 10 day VWAP to 26 November 2024.

 

Other principal terms under the Dyani Agreement are as follows:

·      Any new Ordinary Shares issued to Dyani is conditional upon
Dyani's interest, together with the interest of any parties with which it is
acting in concert, remaining below 30% of the Company's ISC.

 

·      In the event that Dyani's interest exceeds 25% of the Company's
ISC, Dyani has agreed to enter into a relationship agreement with the Company.

 

·      With the exception of the monthly retainer, Dyani is restricted
from disposing of any Ordinary Shares received under the Dyani Agreement for a
period of six months from the date of issue.

 

·      Notwithstanding the milestones as set out above, the total shares
issued under the Dyani Agreement as well as the previous agreement
(announcements dated 18 May 2017, 2 July 2018 and 29 June 2020) will be capped
at 45% of the enlarged issued share capital of the Company. In the event that
this occurs, Dyani shall remain obliged to continue the services, even though
no new Ordinary Shares will be issued. The Company is subject to the City Code
on Takeovers and Mergers.

 

·      Dyani is contracted on a non-exclusive basis.

 

·      The entry into any of the agreements with strategic partners is
at the discretion of the Company.

 

Accordingly, the Company will issue, in aggregate, 18,922,701 new Ordinary
Shares to Dyani pursuant to the Dyani Agreement.

 

Changes to significant shareholdings

 

As a result of the issue of the new Ordinary Shares to Dyani, the Company is
aware of the following changes to significant shareholders in the Company on
Admission (as defined below):

 

 Name                     Total Ordinary Shares currently held  Total Ordinary Shares held on Admission                       Percentage of enlarged share capital on Admission
 Dyani Corporation, Ltd.              30,993,839                                      49,916,540                              16.90
 Polo Resources Limited               43,328,003                            43,328,003                                        14.67
 DG Infratech Pte Ltd                 10,327,270                10,327,270                                                    3.50

 

Related Party Transaction

 

Under the AIM Rules for Companies (the "AIM Rules") Dyani is a substantial
shareholder (with a current shareholding in the Company of 10.5%). Entering
into the Dyani Agreement is therefore deemed to be a related party transaction
pursuant to AIM Rule 13 (together the "Transaction"). Accordingly, for the
purpose of AIM Rule 13, the Directors consider, having consulted with the
Company's nominated adviser, Allenby Capital Limited ("Allenby Capital"), that
the terms of the Transaction are fair and reasonable insofar as the Company's
shareholders are concerned.

 

Admission and Disclosure Guidance and Transparency Rules

 

Application has been made to the London Stock Exchange for, in aggregate,
18,922,701 new Ordinary Shares to be admitted to trading on AIM ("Admission").
It is currently anticipated that Admission will become effective and that
dealings in the new Ordinary Shares will commence on AIM at 8.00 a.m. on or
around 14 January 2025.

 

Following Admission, the Company's issued ordinary share capital will comprise
295,288,306 Ordinary Shares with voting right in the Company. As the Company
holds no shares in treasury, with effect from Admission, the above figure may
be used by shareholders as the denominator for the calculations by which they
will determine if they are required to notify their interest, or a change in
the interest, in the share capital of the Company under Chapter 5 of the FCA's
Disclosure Guidance and Transparency Rules as reflected in the Company's
articles of incorporation.

 

 

For further information:

 

 GCM Resources plc                    Tel: +44 (0) 20 7290 1630

 Keith Fulton, Finance Director       info@gcmplc.com

                                      www.gcmplc.com (http://www.gcmplc.com)

 Allenby Capital Limited              Tel: +44 (0)20 3328 5656

 Nominated Adviser and Joint Broker   info@allenbycapital.com (mailto:info@allenbycapital.com)

 John Depasquale / Vivek Bhardwaj

 Axis Capital Markets Limited         Tel: +44 (0) 203 026 0320

 Joint Broker

 Ben Tadd / Lewis Jones

 

 

About GCM Resources plc

 

GCM Resources plc (LON: GCM), the AIM traded mining and energy company, has
identified a high-quality coal resource of 572 million tonnes (JORC 2004
compliant) at the Phulbari Coal and Power Project (the "Project") in
north-west Bangladesh.

 

Utilising the latest highly energy efficient power generating technology the
Phulbari coal mine can support some 6,600MW. GCM requires approval from the
Government of Bangladesh in order to develop the Project. The Company has a
strategy of linking the Company's mine proposal to supplying coal to the
Government of Bangladesh's existing and in the pipeline coal-fired power
plants and / or power plants developed development partners. Together with
credible, internationally recognised strategic development partners, GCM aims
to deliver a practical power solution to provide the cheapest coal-fired
electricity in the country, in a manner amenable to the Government of
Bangladesh.

 

 

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