REG - Sunrise Resources - £480,000 Investment, Issue of Equity & TVR

Sunrise ResourcesAnnouncement

30/11/2022 07:00

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RNS Number : 9885H  Sunrise Resources Plc  30 November 2022

30 November 2022

 

SUNRISE RESOURCES PLC

("Sunrise" or the "Company")

 

£480,000 Investment

Issue of Equity & TVR

 

Sunrise Resources plc ("Sunrise" or the "Company"), the AIM-traded company
focusing on the development of its CS Pozzolan-Perlite Project in Nevada, USA,
wishes to announce that it has entered into an investment agreement (the
"Agreement") to secure up to a £480,000 investment from Towards Net Zero, LLC
(the "Investor"), a U.S.-based institutional investor focused on the green
economy.

Key terms of the Agreement

(For the meaning of Capitalised Terms please see the section "Details of the
Agreement" following).

1.   The Investor will invest up to £480,000 in the Company as follows.

Ø Next week, the Investor will invest £200,000 for a two-year zero-coupon
convertible security with a face value of £200,000 (the "First Closing").

Ø The Company will have a five-month option to require the Investor to invest
a further £200,000 for a two-year zero-coupon convertible security, which
will be issued to the Investor no later than six-months after the First
Closing (if the Company exercises this option and subject to the prevailing
share price being greater than the Floor Price after the option is exercised).

Ø At the First Closing, the Investor will also invest £80,000 by way of a
placing (the "Placing") of 80,000,0000 ordinary shares at par (0.1 pence per
ordinary share). The total initial investment by the Investor at the First
Closing will thus be £280,000.

Ø Following the conversion or redemption of all convertible securities, the
Investor will make an additional payment to the Company equal to the
Equalisation Amount if the value of these shares at that time exceeds their
subscription price; alternatively, the Equalisation Amount will be due to the
Investor.

2.   Each convertible security may be converted in full or in part at any
time of the Investor's choosing during the two-year term of the convertible
security, initially at 0.16 pence per share, and after the initial month, at
the greater of the Market Price and the Floor Price (0.1 pence per share).

3.   The outstanding face value of the convertible securities may be
redeemed at the Company's option for cash, with a 10% premium, subject to the
Investor's right to convert the outstanding face value in full at that time or
elect that one-third of the outstanding face value be withheld from the
redemption.

4.   The Company will redeem the convertible securities in quarterly
instalments of one-eighth of their original face value for cash (with no
premium), if the Market Price is less than the Floor Price for a specified
period in any one quarter during the term of the Agreement. In addition, at
maturity, the outstanding face value of each convertible security, if any,
will be redeemed by the Company for cash (also with no premium).

5.   At the Company's option, the Company may partially redeem a convertible
security by way of issuance of Ordinary Shares at the greater of the Market
Price and the Floor Price. If the prevailing Market Price is below the Floor
Price, the redemption consideration will also include cash or, at the
Company's election, additional Ordinary Shares, based on the difference
between the Floor Price and the Market Price.

Commenting today, Executive Chairman Patrick Cheetham said:

"We are pleased to be entering into this flexible funding agreement with
Towards Net Zero LLC, an institutional investor with a focus on ESG
(environmental, social and governance) outcomes.

The Agreement provides funding on day one as well as additional capital
committed by the Investor, while the Company retains the flexibility not to
take up the additional funding committed by the Investor if it is not needed.
Moreover, since the number of shares issuable under the arrangement is based
on our future share price performance, it has the potential to reduce dilution
compared to a discounted placing in today's difficult market. The Board
anticipates a number of value catalysts for the Company's key projects which
have potential to minimise dilution under this funding structure. The
agreement also gives us downside protection on the conversion price and also
allows a repayment option at a time of our choosing.

The investment by Towards Net Zero LLC is a recognition of the part that can
be played by the Company's natural pozzolan projects in Nevada in contributing
to CO(2) Net Zero targets in the US cement and concrete industries."

Use of Proceeds

The funds raised will be applied to the further development and exploration of
the Company's projects and general working capital purposes.

Total Voting Rights

For the purposes of the Disclosure and Transparency Rules of the Financial
Conduct Authority, the Board of Sunrise hereby notifies the market that,
following admission of the Placement Shares (defined below), the Company will
have 3,913,599,087 shares in issue with each share carrying the right to one
vote. There are no shares currently held in treasury. The total number of
voting rights in the Company is therefore 3,913,599,087 and this figure may be
used by shareholders as the denominator for the calculations by which they
determine if they are required to notify their interest in, or a change to
their interest in, the Company under the Financial Conduct Authority's
Disclosure Guidance and Transparency Rules.

Details of the Agreement

The investment will initially raise £280,000 within the next week, by way of
a Placing to the Investor of 80,000,000 ordinary shares of 0.1 pence each
("Ordinary Shares") in the Company ("Placement Shares") at a price of 0.1
pence per Ordinary Share (in consideration of the Investor's payment of
£80,000), and an issue to the Investor of a zero-coupon convertible security
with a face value of £200,000 (in consideration of the Investor's payment of
£200,000). The Company will have an option exercisable within five months to
secure an additional investment of £200,000 from the Investor through an
issuance of a convertible security with a face value £200,000 to the
Investor, within the next six months. The additional investment is subject to
the prevailing share price being greater than the Floor Price after the option
is exercised, and other customary conditions precedent. The Company will make
an announcement following the issue of each convertible security. Each of the
convertible securities will have a term of 24 months.

In addition, following the conversion or redemption of all convertible
securities, the Investor has agreed to make an additional payment (the
"Equalisation Amount") to the Company if the value of the Placement Shares at
that time, based on the prevailing Market Price, exceeds the subscription
price paid by the Investor in the Placing, calculated as follows: (1)
80,000,000 multiplied by 98% of the average of five daily VWAPs (chosen by the
Investor) during a specified period before the additional payment is made,
rounded down to the next one hundredth of a pence less (2) £80,000;
alternatively, the Equalisation Amount will be due to the Investor when the
prevailing Market Price is below the subscription price of the Placement
Shares.

The Company may at any time, on thirty days' notice, redeem the outstanding
face value of each convertible security for cash, with a 10% premium, subject
to the Investor's rights to hold back up to one third of the outstanding face
value from redemption or convert the outstanding convertible security.

 

The convertible securities will (subject to the satisfaction of certain
conditions) be convertible into Ordinary Shares of the Company, in whole or in
part, at the option of Investor. The Company will make an announcement each
time a convertible security is converted and will specify in such announcement
the relevant conversion price (the "Conversion Price"), which will initially
be equal to 0.16 pence per share. After the initial month, the Conversion
Price will reset to be the greater of (1) 98% of the average of five daily
volume-weighted average prices of the shares on AIM during a specified period
preceding the relevant conversion, rounded down to the next one hundredth of a
pence (the "Market Price"), and (2) 0.1 pence per share (the "Floor Price").
The Conversion Price thus provides the Company with an opportunity to
ultimately issue shares at higher prices than the prices at which it may raise
capital today, if the Company's share price appreciates; while putting a floor
under the price at which the Company would issue shares in a conversion if the
Company's share price were to depreciate.

 

The Company will redeem each convertible security in quarterly instalments of
one eighth of the original face value of the convertible security (each, a
"Redemption Amount") for cash (with no premium), if the Market Price is equal
to or less than the Floor Price for an agreed threshold period during any
quarter. The Company will not, however, be required to make a quarterly
redemption if the Market Price recovers above the Floor Price for a specified
period during the quarter, or if the amount of that redemption instalment has
been previously converted into shares.

 

At maturity, the Company may redeem the outstanding face value of the
convertible securities for cash (also with no premium).

 

At the Company's option, the Company may partially redeem a convertible
security by way of issuance of Ordinary Shares at the greater of the Market
Price and the Floor Price. In the circumstances of redemption set out above,
if the prevailing Market Price is below the Floor Price, the redemption
consideration will include cash or, at the Company's election, additional
Ordinary Shares at 0.1 pence per share, where the number of additional shares
issued is equal to the amount to be redeemed, divided by the applicable Market
Price minus that same amount divided by Floor Price. If the Company is in
default of the Agreement at any time then the Investor may convert the
outstanding face value of the convertible securities on the same basis.

 

The Investor has agreed to certain, substantial, limitations on its ability to
dispose of the shares following a conversion of a convertible security. The
Investor is also contractually precluded from shorting the Company's shares.

 

The Company has applied for admission of the Placement Shares which will rank
pari passu with existing Ordinary Shares to trading on AIM, and this is
expected to become effective on or around 6 December 2022.

Application will be made to the London Stock Exchange for any shares issued
and allotted on conversion of the convertible securities to be admitted to
trading on AIM. The convertible securities will only be issued to the extent
that the Company has corporate authority to do so.

 

Further information:

 

 Sunrise Resources plc                  Tel: +44 (0)1625 838 884

 Patrick Cheetham, Executive Chairman
                                        Tel: +44 (0)207 628 3396

 Beaumont Cornish Limited

 Nominated Adviser

 James Biddle/Roland Cornish
                                        Tel: +44 (0)207 469 0930

 Peterhouse Capital Limited

 Broker

 Lucy Williams/Duncan Vasey

Shares in the Company trade on AIM. EPIC: "SRES".

Website: www.sunriseresourcesplc.com

 

 

Market Abuse Regulation (MAR) Disclosure

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 which  forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ('MAR'). Upon the publication of this
announcement via Regulatory Information Service ('RIS'), this inside
information is now considered to be in the public domain.

 

 

 

 

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