REG - Zanaga Iron Ore - Funding update - subscription facility

Zanaga Iron OreAnnouncement

03/07/2023 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230703:nRSC6544Ea&default-theme=true

RNS Number : 6544E  Zanaga Iron Ore Company Ltd  03 July 2023

3 July 2023

Subscription Agreement with Shard Merchant Capital Ltd

Zanaga Iron Ore Company Limited ("ZIOC" or the "Company") (AIM: ZIOC), is
pleased to announce that it has entered into an equity subscription agreement
("ESA") with Shard Merchant Capital Ltd ("SMC"), an institutional investor,
dated 1 July 2023. This follows the successful implementation of an equity
subscription agreement on similar terms in June 2020.

Under the ESA the Company will issue and SMC will subscribe for up to 36
million ordinary shares of no par value in the Company ("Subscription Shares")
in up to three tranches of up to 12 million shares each (as described below).

In the event the maximum number of Subscription Shares are issued by ZIOC and
subscribed for by SMC, the share capital of ZIOC will be increased by c.5.9%
on a fully diluted basis, based on the 593,374,746 ordinary shares in the
Company in issue as at today's date.

Pursuant to the ESA, SMC has undertaken to use its reasonable endeavours to
place the relevant Subscription Shares that it has subscribed for and to pay
to ZIOC 95% of the gross proceeds of any such sales.

The ESA provides a number of attractive advantages to ZIOC, which are
highlighted below:

·    Relatively low level of dilution to ZIOC shareholders

·    ZIOC has the ability to repurchase any unsold Subscription Shares
from SMC, subject to legal requirements - an important element of flexibility
for ZIOC. Any Subscription Shares re-purchased will be cancelled, limiting
dilution further

·    Low cost of capital - SMC will retain only 5% of the gross proceeds
of any sale of Subscription Shares

Structure Overview:

Issues of Tranches of Subscription Shares

Under the ESA, Subscription Shares will be issued and SMC will subscribe for
the Subscription Shares in tranches of up to 12 million shares. The first
tranche of 12 million Subscription Shares (the "First Tranche") will be
subscribed for by SMC within three trading days of the date of the ESA.

A second Tranche of 12 million Subscription Shares (the "Second Tranche") will
be subscribed for by SMC 10 trading days following the earlier of: (a) the
date on which SMC has sold all the Subscription Shares subscribed for in the
First Tranche; and (b) such other date as SMC and the Company agree.

Solely at the discretion of the Company, a third tranche of up to 12 million
Subscription Shares will be subscribed for by SMC (the "Third Tranche" and
together with the First Tranche and the Second Tranche, each a "Tranche"). Any
such subscription will take place within 14 trading days of the earlier of:
(a) the date on which SMC has sold all the Subscription Shares subscribed for
in the Second Tranche; or (b) such other date as SMC and the Company agree.

Sales of Subscription Shares

As regards each Tranche, SMC has agreed to use its reasonable endeavours to
place all the Subscription Shares comprised in that Tranche within a three
month period from the date of issue of the relevant Subscription Shares to it
(the "Relevant Three Month Period"). Such period can be extended prior to the
end of the Relevant Three Month Period by either the Company or ZIOC giving
notice to the other. Any such extension is for a three month period from the
giving of the extension notice. All such sales are subject to trading
restrictions, as mentioned below.

Payment of proceeds of Subscription Shares

In respect of each Tranche, the amount which SMC has undertaken to pay for the
Subscription Shares issued to it in that Tranche is 95% of the gross proceeds
of sale received by SMC from all sales of the relevant Subscription Shares
made by it during the Relevant Three Month Period (as extended, if that
occurs).

The ESA provides for regular payments to be made by SMC to ZIOC following any
sales of Subscription Shares.

·    Payments under the First Tranche are to be made weekly and then
fortnightly.

·    Payments under the Second Tranche and any Third Tranche payments are
to be made every two weeks (unless an alternative time for payment is agreed
between the parties).

Illustrative example

For illustrative purposes only, if the average price at which SMC places the
24 million Subscription Shares comprised in the First Tranche and the Second
Tranche was 13.30 pence (being ZIOC's mid-market closing share price on
Thursday 29 June 2023), the net proceeds received by ZIOC from such sales
would be approximately £3.19m. Further, ZIOC has the discretion to elect to
issue up to a further 12 million shares by way of the Third Tranche.

Custodian

The ESA provides that the Subscription Shares are to be held by a custodian
authorized by the Financial Conduct Authority (FCA). Proceeds of any sale of
Subscription Shares by SMC will be held by the Custodian until remitted by the
Custodian to SMC and SMC shall pay to ZIOC 95% of the gross proceeds of any
such sales. To secure SMC's payment obligations, any proceeds of sale, as well
as SMC's beneficial interest in the Subscription Shares, are to be held by SMC
on trust for the benefit of the Company.

Termination and Unsold Shares

The ESA can be terminated by the Company at any time and by SMC on the
occurrence of certain specified events.

If on termination of the ESA, any Subscription Shares subscribed for by SMC
have not been sold by it (the "Unsold Shares"), the ESA provides that such
Unsold Shares shall be bought back by the Company from SMC at the same price
that SMC has subscribed for such Unsold Shares (the "Buy-Back"). Completion of
the Buy-Back may be deferred if at the relevant time the Company is precluded
from completing the buy-back arrangement under any applicable legislation.

Suspension of sales of Subscription Shares:

The Company has the right to require that SMC cease to make (or procuring)
sales of Subscription Shares under any Tranche for such time as the Company
determines ("Suspension Period"). In such event, the relevant Three Month
Period will be extended for the same amount of time as the Suspension Period.

Trading restrictions:

In order to preserve an orderly market in the Company's shares, SMC has agreed
to effect any sales of Subscription Shares made by it in accordance with
customary orderly market provisions.

Future updates:

The Company will make appropriate further announcements in due course.

The Company's cash balance at 27 June 2023 was US$530,000, with US$1,250,000
of drawn debt and incurred interest under the Glencore Facility and the
Company continues with its prudent cash management. The proceeds received by
the Company from SMC pursuant to the ESA will be applied to general working
capital, including the provision of further contributions to the Zanaga Iron
Ore Project's operations.

An application for the admission of the 12 million Subscription Shares in the
First Tranche will be made shortly and the 12 million Subscription Shares in
the First Tranche are expected to be admitted to trading on AIM on 5 July
2023. The First Tranche of Subscription Shares will rank pari passu with the
Company's existing Ordinary Shares. The Company does not hold any shares in
treasury. Following admission of the First Tranche of Subscription Shares, the
total number of Ordinary Shares and voting rights in the Company will be
605,374,746.

This figure of 605,374,746 Ordinary Shares may be used by shareholders as the
denominator for the calculations by which they will determine if they are
required to notify their interest in, or a change to their interest in, the
Company under the FCA's Disclosure Guidance and Transparency Rules.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
THE MARKET ABUSE REGULATION (EU) 596/2014 AS IT FORMS PART OF UK DOMESTIC LAW
BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR"), AND IS
DISCLOSED IN ACCORDANCE WITH THE COMPANY'S OBLIGATIONS UNDER ARTICLE 17 OF
MAR

Clifford Elphick, Chairman of ZIOC commented:

"Following entry into of the Equity Subscription Agreement, ZIOC is pleased
that a financing structure has been put in place which will give the Company
access to funding through a relatively low cost structure which minimises
dilution to shareholders.

This transaction enables ZIOC to secure capital in the future as the project
progresses and further milestones are achieved."

 

The Zanaga Iron Ore Company Limited LEI number is 21380085XNXEX6NL6L23.

 

For further information, please contact:

Zanaga Iron Ore

Corporate Development and
Andrew Trahar

Investor Relations Manager
+44 20 7399 1105

Liberum Capital Limited

Nominated Adviser
  Scott Mathieson, Kane Collings

and Corporate Broker
                                      +44
20 3100 2000

 

About us:

Zanaga Iron Ore Company Limited (AIM ticker: ZIOC) is the owner of 100% of the
Zanaga Iron Ore Project based in the Republic of Congo (Congo Brazzaville).
The Zanaga Iron Ore Project is one of the largest iron ore deposits in Africa
and has the potential to become a world-class iron ore producer.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCSSMESEEDSEFW