US$5 million convertible loan facility <Origin Href="QuoteRef">SRB.L</Origin>

Serabi GoldAnnouncement

31/12/2015 07:10

For immediate release 
 31 December 2015 
 Serabi Gold Plc 
 ("Serabi" or the "Company") 
 US$5 million convertible loan facility 
 
 Serabi Gold plc (AIM:SRB, TSX:SBI), the Brazilian focused gold mining and
development company, announces that Fratelli Investments Limited (" Fratelli
Investments "), the Company's major shareholder, has agreed to provide an
interim unsecured short term working capital convertible loan facility of US$5
million (equivalent to approximately UK£3.3 million) (the " Loan ") to the
Company to provide additional working capital facilities. 
 
 Mike Hodgson, CEO said: 
 
 "Serabi is a high grade gold producer, targeting to achieve lower than
average All-in Sustaining Costs per ounce, and this is critical, faced as we
are, with the recent weakness in the gold price.  As with all gold producers,
we are facing strong economic headwinds, all at a time whilst the Company has
continuing commitments for increasing throughput through the process plant as
well as development expenditure to bring the Sao Chico Mine into full
production.  This has restricted the Company's ability to build up its cash
reserves.  To ensure we can remain on track with our expansion and
development plans, this convertible loan facility, kindly provided to us by
our major shareholder gives the Company the ability to complete its current
development programmes by the early part of the second quarter of 2016 and
thus achieve optimal gold production rates as quickly as possible.  We do not
anticipate that it will be necessary to draw down the full extent of the
convertible loan facility". 
 
 The Loan is for a period expiring on 31 January 2017 and for a maximum of
US$5 million.  The facility may be drawn-down in up to three separate
instalments of an initial US$2 million and two further installments of US$1.5
million each.  The Loan is available to be used at any time up to 30 June
2016.  Interest is chargeable at the rate of 12% per annum. There is no
prepayment penalty or arrangement fee.  The Loan is unsecured and
subordinated to the Company's existing loan facilities, including the secured
loan facility arrangement provided by the Sprott Resource Lending Partnership
(the outstanding balance of which amounted to US$4 million as at 22 December
2015). 
 
 The first US$2 million of the Loan is convertible at the election of Fratelli
Investments into new Serabi Ordinary Shares at an exercise price of 3.6 pence
per new Serabi Ordinary Share at any time. The remaining amount of the Loan,
if drawdown, may be repaid by the Company at its option at any time on or
before 30 June 2016.  Thereafter, Fratelli Investments will have the right to
convert all or part of the remaining amount of the Loan into new Serabi
Ordinary Shares at an exercise price of 3.6 pence per new Serabi Ordinary
Share at any time.  Based on an exchange rate of £1:US$1.50  up  to
92,592,593 new Serabi Ordinary Shares may be issued on conversion of the Loan
by Fratelli Investments. 
 
 Fratelli Investments is currently interested in 343,613,166 Serabi Ordinary
Shares representing 52.35 per cent. of Serabi's current issued share capital
and accordingly, Fratelli Investments is able to increase its aggregate
shareholding in the Company without incurring any obligation under Rule 9 to
make a general offer to the Company's other Shareholders. 
 
 Related Party Transactions 
 
 AIM 
 
 As Fratelli Investments is interested in more than 10 per cent. of the issued
ordinary share capital of the Company, the Loan is a related party transaction
for the purposes of Rule 13 of the AIM Rules.  As Eduardo Rosselot and
Nicolas Banados, non-executive directors of the Company, are both nominated
Board appointees of Fratelli Investments, they are not independent for the
purposes of the AIM Rules. For the purposes of the AIM Rules, the Independent
Directors, comprising the Board (other than Eduardo Rosselot and Nicolas
Banados) consider, having consulted with the Company's nominated adviser, that
the terms of the Loan are fair and reasonable insofar as Shareholders are
concerned. The Independent Directors have taken into account in particular
that the Loan provides the best short-term funding solution and believe that
currently there are no other comparable or acceptable alternative sources of
short term funding. The Independent Directors believe that there is sufficient
time to refinance the Loan in due course as required. 
 
 Canadian Securities Laws 
 
 As a result of Fratelli Investment's shareholding interest in Serabi, the
Loan is a related party transaction for Serabi under Canadian securities laws
pursuant to Multilateral Instrument 61-101 - Protection of Minority Security
Holders in Special Transactions (" MI 61-101 "). In accordance with MI 61-101,
Serabi is relying on the exemptions from the requirement to obtain a formal
valuation and minority shareholder approval of the Loan on the basis that the
board of directors of the Company had determined that the fair market value of
the transaction is less than 25% of the market capitalization of the
Company.   In particular, with the market capitalization of the Company as
of 29 December 2015 being approximately US$25.85 million, the fair market
value of the Loan represents approximately 19% of the Company's market
capitalization.  
 
 Enquiries: 
 
  Serabi Gold plc                                                                 
  Michael Hodgson                                     Tel: +44 (0)20 7246 6830     
  Chief Executive                                     Mobile: +44 (0)7799 473621   
                                                                                 
  Clive Line                                          Tel: +44 (0)20 7246 6830     
  Finance Director                                    Mobile: +44 (0)7710 151692   
                                                                                 
  Email: contact@serabigold.com                                                   
  Website:  www.serabigold.com                                                   
                                                                                 
  Beaumont Cornish Limited Nominated Adviser                                      
  Roland Cornish                                      Tel: +44 (0)20 7628 3396     
  Michael Cornish                                     Tel: +44 (0)20 7628 3396     
                                                                                 
  Peel Hunt LLP UK Broker                                                         
  Matthew Armitt                                      Tel: +44 (0)20 7418 9000     
  Ross Allister                                       Tel: +44 (0)20 7418 9000     
                                                                                 
  Blythe Weigh Communications Ltd Public Relations                                
  Tim Blythe                                          Tel: +44 (0)20 7138 3204     
  Camilla Horsfall                                    Tel: +44 (0)20 7138 3224     
 Copies of this release are available from the Company's website at
www.serabigold.com . 
 
 Neither the Toronto Stock Exchange, nor any other securities regulatory
authority, has approved or disapproved of the contents of this news release. 
 
 Qualified Persons Statement 
 
 The scientific and technical information contained within this announcement
has been reviewed and approved by Michael Hodgson, CEO of the Company. Mr
Hodgson is an Economic Geologist by training with over 25 years' experience in
the mining industry. He holds a BSc (Hons) Geology, University of London, a
MSc Mining Geology, University of Leicester and is a Fellow of the Institute
of Materials, Minerals and Mining and a Chartered Engineer of the Engineering
Council of UK, recognizing him as both a Qualified Person for the purposes of
Canadian National Instrument 43-101 and by the AIM Guidance Note on Mining and
Oil & Gas Companies dated June 2009. 
 
 Forward Looking Statements 
 
 This press release contains forward-looking statements. All statements, other
than of historical fact, that address activities, events or developments that
the Company believes, expects or anticipates will or may occur in the future
(including, without limitation, statements regarding the estimation of mineral
resources, exploration results, potential mineralization, potential mineral
resources and mineral reserves) are forward-looking statements.
Forward-looking statements are often identifiable by the use of words such as
"anticipate", "believe", "plan", may", "could", "would", "might" or "will",
"estimates", "expect", "intend", "budget", "scheduled", "forecasts" and
similar expressions or variations (including negative variations) of such
words and phrases. Forward-looking statements are subject to a number of risks
and uncertainties, many of differ materially from those discussed in the
forward-looking statements. Factors that could cause actual results or events
to differ materially from current expectations include, among other things,
without limitation, failure to establish estimated mineral resources, the
possibility that future exploration results will not be consistent with the
Company's expectations, the price of gold or copper and other risks identified
in the Company's most recent annual information form filed with the Canadian
securities regulatory authorities on SEDAR.com. Any forward-looking statement
speaks only as of the date on which it is made and, except as may be required
by applicable securities laws, the Company disclaims any intent or obligation
to update any forward-looking statement. 
 
 ENDS 
 

 This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf
of NASDAQ OMX Corporate Solutions clients. 
 The issuer of this announcement warrants that they are solely responsible for
the content, accuracy and originality of the information contained therein. 
 Source: Serabi Gold plc via Globenewswire 
 HUG#1976221