REG - Xtract Resources plc - Half-year Report <Origin Href="QuoteRef">XTR.L</Origin> - Part 2
29/09/2017 10:40
- Part 2: For the preceding part double click ID:nRSc2451Sa
31
December 2017 or, if earlier, a change of control of the Company, sale of the
Manica Gold Project or completion of a joint venture.
In the event of a fundraising by the Company, the Noteholder may require that
15% of the net proceeds of the fundraising may be applied to redeem part of
the Convertible Loan Notes. The Convertible Loan Notes may also become
immediately due for redemption on the occurrence of certain events, including
the suspension of the Company's shares from trading on AIM or the Noteholder
determining, acting reasonably, that the value of the Company's assets is
materially reduced or threatened.
The Noteholder may, at any time, from the date of execution of the Convertible
Loan Note Agreement until 31 December 2017, convert all or any of the
Convertible Loan Notes into new fully paid ordinary shares ("Conversion
Shares") at a conversion price equal to a 15% discount ("Conversion Discount")
to the average volume weighted average price of Xtract ordinary shares
("VWAP") during the 10 business days prior to the conversion date subject to a
floor price of 0.012p per Ordinary Share (now equivalent to 2.4p per Ordinary
Share after adjustment for the subsequent Capital Reorganisation). In the
event of a material breach of the terms of Convertible Loan Note Agreement by
the Company which has not been remedied by the Company to the Noteholder's
satisfaction, acting reasonably, the Conversion Discount will increase to
30%.
On 16 February 2017, the Company issued 1,589,623,629 new ordinary shares to
Auroch at an issue price of 0.013282p (equal to a 15 per cent. discount to the
VWAP during the 10 business days prior to the issue of the Convertible Loan
Notes) following receipt of notice from Auroch to convert US$200K of the
outstanding Convertible Loan Notes, and in settlement of the Convertible Loan
Note arrangement fee due of US$50K and interest payable in advance of US$10K.
On 10 March 2017, the Company received a notice from Auroch to convert a
further US$200K of the outstanding Convertible Loan Notes. The Company issued
796,812,502 new ordinary shares to Auroch at an issue price of 0.020485p
(equal to a 15% discount to the VWAP during the 10 business days prior to the
issue of this Conversion Notice).
On 27 March 2017, the Company received a notice to convert US$30Kof the
outstanding Convertible Loan Notes. The Company issued 134,835,331 new
ordinary shares to Auroch at an issue price of 0.016492p (equal to a 15%
discount to the VWAP during the 10 business days prior to the issue of this
Conversion Notice).
The Company also repaid the outstanding balance of Convertible Loan Notes
amounting to US$300K. Accordingly, following the conversion and above
repayments, there was no further outstanding amount on the Convertible Loan
Notes as at 30 June 2017.
2. Loan Agreement
The Company entered into the unsecured Loan Agreement with Auroch for the
balance of the Manica Debt amounting to US$1 million. Under the terms of the
Loan Agreement, the Company agreed to repay the Loan Agreement together with
interest, which will accrue at a rate of 10% per annum, on or before 31
December 2017. In addition, it was agreed that the Company will endeavour to
obtain relevant shareholder authorities on or before 30 June 2017 to authorise
the Company to replace the Loan Agreement with a convertible loan note on
substantially the same terms as the Convertible Loan Notes. In the event that
the Company does not obtain the necessary approvals by 31 December 2017, an
accelerated interest rate of 30% per annum will accrue going forward on any
outstanding balance of the Loan Agreement. The necessary authorities were
approved by shareholders at the General Meeting of the Company held on 13
March 2017.
3. Royalty Agreement relating to the Manica Gold Project
To provide security to Auroch, the Company further agreed to enter into the
Royalty Agreement over the Manica Gold Project pursuant to which Auroch would
be entitled to receive a royalty equal to 3% of gross revenue from commercial
operations (including any alluvial gold production), payable by the Company to
Auroch. The maximum royalty payment in aggregate was US$1.75 million (the
"Maximum Royalty Payment"), being an amount equal to the Manica Debt. Any
payments made under the Royalty Agreement would reduce the amounts due to
Auroch under the Convertible Loan Note and the Loan Agreement. The Royalty
Agreement will terminate upon full settlement by the Company of the Manica
Debt.
4. SEDA Backed Loan
On 12 December 2013, the Company and YA Global Master SPV Ltd ("YAGM") entered
into a loan note agreement pursuant to which YAGM agreed to issue an unsecured
loan of a principal amount of up to US$5 million to the Company. The note
carries an interest of 12% per annum and each tranche is repayable in 12
monthly instalments. The Company pays 8% of each drawn tranche as an
implementation fee. An initial tranche of US$0.30 million was drawn down by
the Company on 12 December 2013 and further tranches of US$0.25 million and
US$0.50 million on the 18 November 2014 and 21 November 2014 respectively.
On 10 May 2016 and 23 May 2016 respectively, the Company drew further tranches
of US$0.85 million. On 19 July 2016, the Company drew a further tranche of
US$0.4 million and the parties agreed to reschedule the monthly instalments
with the final repayment due on 1 August 2017. As 31 December 2016 a total of
£1,473k (US$1,774k) remained outstanding on the SEDA Backed Loan.
Reorganisation of Loan Agreement
On 4 April 2017, the Company announced that it had entered into an agreement
(the "Supplemental Agreement") with YA II EQ, Ltd (Formerly YAGM). (the
"Investor") which is supplemental to the SEDA-backed loan note agreement dated
12 December 2013 ("Loan Agreement").
The Company and the Investor agreed to modify the Loan Agreement and the
repayment schedules in respect of the amounts outstanding.
Following the execution of the Supplemental Agreement, the Company made a cash
payment to the Investor in the amount of US$0.12 million. The Company was
discharged of its obligation to repay US$0.35 million of the amount
outstanding under the Loan Agreement by the issuance and allotment to the
Investor of 1,513,513,514 new ordinary shares (the "Repayment Shares") as
determined by converting US$0.35 million into GBP at the relevant exchange
rate at a share price of 0.0185p per ordinary share, being the same share
price to the last placing as announced in February 2017.
The outstanding balance owed under the Loan Agreement, after taking the above
repayments into account, amounted to US$1.04 million (the "Balance").
In respect of US$0.52 million of the Balance, the Company agreed to make 9
monthly cash payments of principal and interest in accordance with new
repayment schedule beginning on 1 July 2017 at a rate US$0.06 million per
month for 2017, and on average US$0.06 million per month for 2018, and ending
on 1 March 2018.
In respect of the remaining US$0.52 million of the Balance, the Company agreed
to pay such amount on 1 April 2018, plus any accrued and unpaid interest
thereon, to the extent that any such amount has not been previously discharged
through conversion into new ordinary shares of the Company as described
further below.
The Investor may at any time from the date of execution of the Supplemental
Agreement until 1 April 2018, convert all or any of the amount then
outstanding under the Loan Agreement into new fully paid Xtract ordinary
shares ("Conversion Shares") at a conversion price equal to a 15% discount to
the average volume weighted average price of Xtract ordinary shares ("VWAP")
during the 10 business days prior to the conversion date subject to a floor
price of 0.012p per ordinary share (now equivalent to 2.4p per Ordinary Share
after adjustment for the subsequent Capital Reorganisation).
On 19 June 2017, the Company received a conversion notice from the Investor to
convert U$0.1 million of the Balance, together with interest of US$0.003
million, at a conversion price of 0.0012p (now equivalent to 2.4p per Ordinary
Share after adjustment for the subsequent Capital Reorganisation).
Following the Period end, as set out further in Note 11 below, the balance
outstanding to YA II EQ was repaid in full and the facility was terminated.
8. Share capital
As at30 June 2017Number As at30 June 2016Number As at31 December 2016Number
Issued and fully paid Ordinary shares of 0.01p each at 1 January 19,621,061,879 8,603,503,522 8,603,503,522
Share issued during the period 14,840,181,122 1,137,258,065 11,017,558,357
34,461,243,001 9,740,761,587 19,621,061,879
Share Consolidation* (34,461,243,001) - -
Outstanding as at 30 June - 9,740,761,587 19,621,061,879
Deferred shares of 0.09p each
As at 1 January 1,547,484,439 1,547,484,439 1,547,484,439
Subdivision**
Issued during the period 3,790,736,730 - -
5,338,221,169 1,547,484,439 1,547,484,439
Ordinary shares of 0.02p each
As at 1 January - - -
Share Consolidation* 172,306,215 - -
Issued during the period 3,342,537 - -
Outstanding as at 30 June 175,648,752 - -
The following ordinary shares were issued during the period:
· Issued 6 January 2017 - 335,484,611 ordinary shares at 0.018p per share
· Issued 16 February 2017 - 1,589,623,629 ordinary shares at 0.0132p per
share
· Issued 16 February 2017 - 3,496,940,001 ordinary shares at 0.0185p per
share
· Issued 10 March 2017 - 796,812,502 ordinary shares at 0.0204p per share
· Issued 10 March 2017 - 6,659,458,000 ordinary shares at 0.0185p per
share
· Issued 28 March 2017 - 134,835,331 ordinary shares at 0.0164p per share
· Issued 5 April 2017 - 1,513,513,514 ordinary shares at 0.0185p per
share
· Issued 5 April 2017 - 313,513,514 ordinary shares at 0.0185p per share
· Issued 20 June 2017 - 20 ordinary shares at 0.0185p per share
The following Deferred Shares of 0.09p were created during the period
· Issued 22 June 2017 - 3,790,736,730 deferred shares
The following Ordinary Shares of 0.02p were issued during the period:
· Issued 22 June 2017 - 172,306,215 ordinary shares
· Issued 26 June 2017 - 3,342,537 ordinary shares at 2.4p per share
Consolidation and subdivision of the existing ordinary shares ("Capital
Reorganisation")
At the Annual General Meeting of the Company held on 22 June 2017,
shareholders approved issued ordinary share capital as at 1 January 2017 a
capital reorganisation of the Company's issued share capital which comprised
two elements:
· Every 200 existing Ordinary Shares were consolidated into one ordinary
share of 2 pence (a "Consolidated Share").
· Immediately following the consolidation, each Consolidated Share was then
sub-divided into one New Ordinary Share of 0.02 pence and twenty two New
Deferred Share of 0.09 pence.
The Capital Reorganisation became effective immediately following close of
business on 22 June 2017.
9. Cash flows from operating activities
Six month period ended30 June 2017 £'000 Six month period ended30 June 2016£'000 Year ended 31 December 2016£'000
Profit/(loss) for the period (642) (5,244) (8,939)
Adjustments for:
Continuing Operations
Depreciation of property, plant and equipment - - 101
Amortisation of intangible assets - - 180
Finance costs 130 806 2,349
Impairment of intangible assets - 2,343 3,315
Other (gains) /losses - 18 -
Share-based payments expense - 22 99
Operating cash flows before movements in working capital (512) (1,808) (2,895)
Decrease/(Increase) in inventories - 33 45
(Increase)/decrease in receivables 31 1,245 1,555
(Decrease)/increase in payables (601) 1,433 (493)
Cash used in operations (1,082) 903 (1,788)
Income taxes paid - - -
Foreign currency exchange differences (83) (135) 478
Net cash used in operating activities (1,165) 768 (1,310)
10. Related party transactions
Transactions between Group companies, which are related parties, have been
eliminated on consolidation and are therefore not disclosed. The only other
transactions which fall to be treated as related party transactions are those
relating to the remuneration of key management personnel, which are not
disclosed in the Half Yearly Report, and which will be disclosed in the
Group's next Annual Report.
11. Events after the balance sheet date
Conversion of YA II EQ, Ltd Loan Note
On 11 July 2017, the Company received a conversion notice from YA II EQ, Ltd
to convert U$150,000 of the Balance, together with interest of US$1,085, at a
conversion price of 2.4p (equal to the floor price). The Company issued
4,884,450 New Ordinary Shares of 0.02p to YA II EQ, Ltd at an issue price of
2.4p per Ordinary share.
On 31 July 2017, the Company received a conversion notice from YA II EQ, Ltd
to convert U$168,403 of the Balance, together with interest of US$1,107, at a
conversion price of 2.4p (equal to the floor price). The Company today issued
5,382,666 New Ordinary Shares of 0.02p to YA II EQ, Ltd at an issue price of
2.4p per Ordinary share.
Conversion of Auroch Loan
On 19 September 2017. Auroch converted US$200,000 of the outstanding amount
under the loan agreement. The Company issued 6,219,370 new ordinary shares to
Auroch at an issue price of 2.4p per new ordinary share.
Issue of Equity
On 9 August 2017, the Company announced that it had raised £1,300,000 (before
expenses) following the placement of 76,470,590 new Ordinary Shares of 0.02p
each at 1.7p ("Placing Price") per new Ordinary Share (the "Placing").
The net proceeds from the Placing were utilised by the Company to repay, in
full, the amount outstanding to YA II EQ under the existing Loan Note Facility
(as announced on 5 April 2017) of US$ 583K and accordingly the facility was
terminated. In addition, funds will be utilised for the pre-production costs
for the Manica Alluvial operations and the balance for general working capital
purposes and business development.
Manica Gold Alluvial Mining Contractor Agreements
Omnia Contract Mining Agreement
On 19 June 2017, the Company announced that its wholly-owned Mozambican
subsidiary, Explorator Limitada ("Explorator") had concluded a Mining
Contractor agreement ("Mining Contractor Agreement" or "Agreement") with Omnia
Mining Ltd and Moz Gold Group Limitada ("Contract Miners") for the
exploitation of alluvial gold deposits at its Manica mining concession in
Mozambique.
The Company's wholly-owned Mozambican subsidiary, Explorator, had appointed
the Contract Miners, who will have the exclusive right to mine unconsolidated
alluvial deposits on the Permitted Area of the Mining Concession area. The
Agreement will endure for a period of 10 years or the depletion of alluvials,
with the option to extend for a further period of 5 years, if the alluvials
have not depleted, by the Contract Miners as well as rights of early
termination either by Explorator or the Contract Miners.
The Mining Agreement includes performance targets whereby the Contract Miners
from 1 September 2017 until 31 October 2017 will be required to have in place
a fully operational plant with a mining capacity of 100 tonnes per hour. The
minimum target mining capacity increases from 1 November 2017 to 400 tonnes
per hour subject to obtaining the environmental impact assessment ("EIA"). All
target dates in the Agreement will be advanced by the number of days, if any,
that mining has not been able to take place due to the absence of an EIA.
Explorator may direct the Contract Miners to suspend carrying out of services
for such time as Explorator considers necessary and may terminate the Mining
Agreement, inter alia, if the Contract Miners fails to achieve and maintain
any production target by more than 20 per cent for more than two years in a
row. The Contract Miners may terminate the Mining Agreement in the event that
for a period of three months of continuous work the grade of gold recovered
falls to a level that would make the continuance of the operation
inappropriate.
Explorator will receive a base net price per tonne of ore processed by the
Contract Miners and additional incremental payments based on a proportion of
any increase in the gold price above a reference price of US$1,250 per ounce
and / or any failure by the Mining Contractors to achieve the agreed
production targets. Assuming a base gold price of US$1,250, from November
2017, Explorator would expect to receive monthly revenue of US$165,000. All
costs associated with transport and refining of the gold will be shared
equally between the Mining Contractors and Explorator.
The Contract Miners will be responsible and liable for any rehabilitation of
the mining concession to the extent mined by the Contract Miners as required
under the relevant mining laws.
Sino Contract Mining Agreement
On 11 July 2017, the Company announced its wholly-owned Mozambican subsidiary,
Explorator Limitada ("Explorator") had concluded its second mining contractor
agreement ("Sino Mining Contractor Agreement" or "Sino Agreement") with Sino
Minerals Investment Company Limited ("Sino Contract Miner" or Sino) for the
exploitation of alluvial gold deposits at Manica at its Manica mining
concession in Mozambique.
The Company's wholly-owned Mozambican subsidiary, Explorator, had appointed
the Sino, who will have the exclusive right to mine on the eastern block of
the unconsolidated alluvial deposits on the Permitted Area of the Mining
Concession area. The Sino Agreement will endure for a period of 10 years or
the depletion of alluvials, with the option to extend for a further period of
5 years, if the alluvials have not depleted, by Sino as well as rights of
early termination either by Explorator or Sino.
The Sino Agreement included performance targets whereby Sino from the 15
October 2017 will be required to have a fully operational plant with a mining
capacity of 200 tonnes per hour. The minimum target mining capacity, increase
from 15 January 2018 to 400 tonnes on a consistent 24 hours per day basis.
Explorator will be responsible for recording the gold concentrate produced
from the permitted area on a daily basis. Sino will be responsible for the
smelting of the gold concentrate and delivering of gold dore bars equal to 25%
of the gold concentrate produced.
Explorator will be responsible for all statutory and legal requirements
regarding the license.
The Sino Agreement was subject to the condition precedent that Sino pays an
entry fee of US$400,000 in aggregate by 15 December 2017 ("Entry Fee") to
Nexus. In consideration for the appointment of Sino, Explorator will pay Sino
a net fee of 75% of gold produced by Sino (equivalent to 68.5% after deduction
of the applicable mining production tax). Explorator will therefore initially
retain 25% of the sales value of all gold produced, equivalent to 19% after
deduction of the applicable mining production tax,) (the "Net Sales
Balance").
The Net Sales Balance will then be apportioned between Xtract and Nexus based
on the consideration and payments terms in the Sino Agreement, and the payment
of 60% of gross total monthly gold sales to Nexus pursuant to the
Collaboration Agreement, Explorator's net share of gross total monthly gold
sales from the sale of alluvial gold mined in the Manica Concession by Sino,
will be approximately 40% of the Net Sales Balance.
Sino will be responsible and liable for any rehabilitation of the mining
concession to the extent mined by Sino as required under the relevant mining
laws. The Agreement contains an indemnity from Sino to Explorator and further
customary terms and conditions (including termination).
ENDS
This information is provided by RNS
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