3 Aug 2010 16:24
3 August 2010
Canisp plc
("Canisp" or the "Company")
Proposed Acquisition of Tri-Star*
Proposed Adoption of New Articles of Association
Proposed Reorganisation of Share Capital
Proposed Approval of a Waiver of the Obligations under Rule 9 of the Takeover Code
Subscription for 3,100,000,000 Ordinary Shares of 0.005p each at 0.005p per share
Change of Name to Tri-Star Resources plc
Notice of Annual General Meeting and Application for Admission to trading on AIM
The directors of Canisp (the "Directors") are pleased to announce that, further to the announcement on 23 July 2010, the Company will today post a circular to Shareholders seeking approval for, inter alia, the acquisition of 99 per cent. of the issued ordinary share capital of Tri-Star, which holds a mining licence and permits to explore for and produce antimony ore in the Gediz district of Turkey, for a maximum consideration of £300,000 (the "Proposed Acquisition"). If Shareholder approval for the Proposed Acquisition is not obtained, the Company's Ordinary Shares will be cancelled from trading on AIM. Further, if the Proposed Acquisition does not proceed, the Directors will consider winding up the Company, in which case, given the Company's cash position, it is unlikely there will be any available funds for distribution to Shareholders. Earlier today, the Company released its annual report and accounts for the year ended 31 March 2010, a copy of which will be made available on the Company's website, www.canispplc.com.
Certain definitions and terms apply throughout this announcement and carry the same meaning as those defined in the AIM admission document of the Company which will shortly be issued in connection with the Proposed Acquisition and will also available on the Company's website, later today.
Highlights:
·; Tri-Star is incorporated in Turkey and holds a licence and permits to explore for and produce antimony ore at the Goynuk antimony mine (the "Goynuk Mine"), in the Gediz district of Turkey. The licence grants the Company the right to exploit antimony.
·; The strategy of Tri-Star is to evaluate the antimony mineral resource of the Goynuk Mine through initial drilling and advanced geophysical techniques, to provide evidence to the Board of its viability.
·; If the antimony occurrence at the Goynuk Mine is proved to be of economic significance, the Directors believe that having a deposit which constitutes an alternative source to the material supplied by the main exporter, China, and which is in closer proximity to key European customers will be of significant strategic importance in the context of the wider European antimony market.
·; The consideration is to be satisfied as to £150,000 payable in cash on completion of the Proposed Acquisition, with a further £150,000 payable in cash subject to certain milestones being achieved (the "Deferred Consideration").
·; The Deferred Consideration will be payable by the Company following: (i) the provision of sufficient evidence relating to the commercial viability of the Goynuk Mine; and (ii) the raising of funding sufficient to enable continued development of the Goynuk Mine and to cover contractual obligations which would arise from making that decision.
·; In view of the nature of the Proposed Acquisition, it constitutes a reverse takeover of the Company under the AIM Rules for Companies and therefore requires the prior approval of Shareholders at the Annual General Meeting, further details of which are set out below.
·; The Company has entered into a facility agreement with EMMEF Investments Limited ("EMMEF"), pursuant to which EMMEF will make available to the Company a facility of £750,000 until 30 June 2011 and which falls due for payment by 30 June 2012, for the purpose of undertaking exploration of the Goynuk Mine, if required.
·; The Company has entered into a Subscription Agreement pursuant to which it will raise £155,000 before expenses by the issue of Ordinary Shares at par.
·; Subject to Completion, Canisp also announces proposals to change the Company's name to Tri-Star Resources plc and effect a number of Board changes. Mehmet Vehbi Eyi and Brian Spratley will join the Board as executive Directors and Adrian Collins, Jos Trusted and Jonathan Quirk will join the Board as non-executive Directors. On Completion, Joanna Unden will resign as a Director and Michael Hirschfield will cease executive responsibilities and become a non-executive Director.
·; Strand Hanson is acting as financial and nominated adviser and KBR is acting as broker in connection with the Proposed Acquisition.
Michael Hirschfield, Chairman of Canisp, today commented:
"I am delighted to supply Shareholders with notice of the Annual General Meeting at which approval will be sought for the acquisition of Tri-Star and other matters, and at the same time to issue the AIM admission document in connection with the Proposed Acquisition and the Company's re-admission to AIM. The Board believes that the acquisition of Tri-Star will give the Company the opportunity to create significant future value for Shareholders. We believe that rare minerals will be an increasingly important sector and are pleased that the Proposed Acquisition, should it be approved by Shareholders, will give the Company significant exposure to that sector."
The Company's AIM admission document containing a notice convening the Annual General Meeting to be held at the offices of Fladgate LLP, 16 Great Queen Street, London, WC2B 5DG at 11.00 a.m. on 26 August 2010 is being sent to Shareholders today.
www.canispplc.com
\* The full name of Tri-Star is Üç Yildiz Antimon Madencilik İthalat Ve İhracat Sanayi ve Ticaret Anonim Şirketi.
Enquiries:
| Strand Hanson Limited (Nomad) James Harris / Paul Cocker / Liam Buswell | Tel: +44 (0)20 7409 3494
|
|
Keith, Bayley, Rogers & Co Limited (Broker) Simon Frost / Brinsley Holman |
Tel: +44 (0)20 3100 8300 |
|
Hansard Communications Justine James /John Bick |
Tel: +44 (0)20 7245 1100
|
The summary above should be read in conjunction with the full text of this announcement set out below.
Strand Hanson and KBR, which are both authorised and regulated in the United Kingdom by the Financial Services Authority, are acting as financial and nominated adviser and broker to the Company respectively in connection with the Proposed Acquisition and the proposed Admission of the Enlarged Share Capital to trading on AIM. Their responsibilities as the Company's nominated adviser and broker under the AIM Rules for Companies and the AIM Rules for Nominated Advisers are owed solely to the London Stock Exchange and are not owed to the Company or to any Director or to any other person in respect of their decision to acquire shares in the Company in reliance on any part of this announcement. Strand Hanson and KBR are acting exclusively for Canisp and for no one else and will not be responsible to anyone other than the Company for providing the protections afforded to their clients or for providing advice in relation to the contents of this announcement or the Proposed Acquisition or the proposed Admission of the Enlarged Share Capital to trading on AIM. No representation or warranty, express or implied, is made by either Strand Hanson or KBR as to the contents of this announcement, without limiting the statutory rights of any person to whom this announcement is issued. The information contained in this announcement is not intended to inform or be relied upon by any subsequent purchasers of Ordinary Shares (whether on or off exchange) and accordingly no duty of care is accepted in relation to them.
The Directors accept responsibility, individually and collectively, for the information contained in this announcement and for compliance with the AIM Rules for Companies. To the best of the knowledge and belief of the Directors, who have taken all reasonable care to ensure that such is the case, the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information.
This announcement does not constitute, or form part of, an offer or an invitation to purchase any securities.
Not for release, publication or distribution in whole or in part in or into the United States, Canada, Australia, the Republic of South Africa or Japan or any other jurisdiction where it is unlawful to do so.
3 August 2010
Proposed Acquisition of Tri-Star
Proposed Adoption of New Articles of Association
Proposed Reorganisation of Share Capital
Proposed Approval of a Waiver of the Obligations under Rule 9 of the Takeover Code
Subscription for 3,100,000,000 Ordinary Shares of 0.005p each at 0.005p per share
Change of Name to Tri-Star Resources plc
Notice of Annual General Meeting and Application for Admission to trading on AIM
1. Introduction
On 23 July 2010, the Company announced that it had conditionally agreed to acquire 99 per cent. of the issued share capital of Tri-Star for a maximum consideration of £300,000, of which £150,000 is payable in cash on completion of the Acquisition and a further £150,000 is payable in cash if and when Tri-Star's exploration activities establish that the Goynuk mine is commercially viable and the Company raises an amount of funding sufficient to facilitate continued development of the mine and to cover current contractual obligations which would arise from making that decision.
The principal activity of Tri-Star is the holding of licences and permits in respect of the mining and exploitation of mineral rights, for antimony, at Goynuk, located in the Gediz district of Turkey. For the reasons set out in the section "Background to and reasons for the Acquisition" below, Tri-Star's business provides a suitable investment opportunity for the Company, as the Company can play an active role in providing both commercial experience and access to capital markets in order to meet future funding requirements, enabling Tri-Star to successfully exploit the permits and licences it holds in respect of the Goynuk antimony mine.
In order to provide funding for the acquisition of Tri-Star, the Company proposes to immediately raise £155,000 before expenses through the subscription for 3,100,000,000 New Ordinary Shares from the Subscribers at the Subscription Price. On Completion, the Subscribers, who include Mr Mehmet Vehbi Eyi, one of the Sellers, will own, in aggregate, 77.62 per cent. of the Enlarged Share Capital. Subsequently, the Company intends to raise up to £750,000 by way of the Proposed Placing or if this does not proceed, by using the EMMEF Facility, further details of which are set out below.
Under the EMMEF Facility, the Company has a borrowing facility of up to £750,000 available until 30 June 2011 for the purpose of undertaking exploration of the Goynuk resource. Interest is payable quarterly at the rate of LIBOR plus five per cent. The EMMEF Facility will be secured by a charge over the issued shares of Tri-Star held by the Company. The loan is repayable on 30 June 2012.
In view of the size and nature of the Acquisition, which constitutes a reverse takeover of the Company under the AIM Rules for Companies, completion of the Acquisition is conditional, inter alia, on receiving the approval of Shareholders, such approval to be sought at the AGM. In addition, as a consequence of the Concert Party acquiring the Subscription Shares, Shareholders are being asked to waive the obligations of the Concert Party under Rule 9, at the AGM.
The purpose of this announcement is to provide summary information on the Proposals and to explain why the Directors consider the Proposals to be in the best interests of the Company and Shareholders as a whole and recommend that Shareholders vote in favour of the Resolutions to be proposed at the AGM.
If the Resolutions are duly passed at the AGM, the Company's existing trading facility on AIM will be cancelled and the Company will apply for the Enlarged Share Capital to be admitted to trading on AIM. If the Resolutions are not passed at the AGM, the Existing Ordinary Shares will be cancelled from trading on AIM pursuant to Rule 41 of the AIM Rules for Companies.
Irrevocable undertakings to vote in favour of the Resolutions have been received from certain of the Directors and Shareholders in respect of 320,687,914 Existing Ordinary Shares, representing approximately 37.44 per cent. of the Company's existing issued share capital.
Shareholders should note that the Proposals are inter-conditional. It is expected that Admission will take place and that dealings in the New Ordinary Shares will commence on 27 August 2010.
2. The Company and its Investing Policy
Since 31 March 2009, the Company has had no substantive trading business, following the disposal of the business and assets of its subsidiary, The Airtime Group Limited. Since that date, the Company has been classified as an investing company under the AIM Rules for Companies. The Company's Investing Policy since its general meeting on 30 March 2009 has been to invest in technology companies, with initial consideration of such companies in the UK and Europe, although investments in other sectors were also considered. No viable opportunities have arisen and therefore, when the opportunity arose to acquire Tri-Star, the Directors considered it represented a suitable investment opportunity albeit outside its stated Investing Policy. Following the Acquisition, the Company will no longer be an investing company. If the Acquisition does not proceed, the Directors will consider winding up the Company, in which case, given the Company's cash position, it is unlikely there will be any available funds for distribution to Shareholders.
3. Background to and reasons for the Acquisition
As set out above, the Company's primary objective is to act as an investing company. Given the Company's limited financial resources, the Directors believe that the Acquisition represents a suitable investment opportunity and one where the Company can play an active role, in terms of providing both commercial experience and access to capital markets, to potentially provide future resources to support Tri-Star in its objective to exploit the permits and licences it holds in respect of the Goynuk antimony mine. The first stage in this process is to raise sufficient funds to carry out a detailed geological review of the mine area, with a view to assessing the potential viability of mineral deposits. If this process, as is expected, provides positive evidence regarding the viability of the mine, the Company will seek further funding to enable the Company to develop the resource. In the event that the geological review does not provide such positive evidence, the Directors will consider winding up the Company, in which case, given the Company's cash position, it is unlikely there will be any available funds for distribution to Shareholders.
4. Information on Tri-Star
Principal activity
The principal activity of Tri-Star is the holding of licences and permits in respect of the mining and exploitation of mineral rights at Goynuk, located in the Gediz district of Turkey.
History and background of Tri-Star
Tri-Star was incorporated on 7 August 2008. Tri-Star is 90 per cent. owned by Mr. Vehbi Eyi, with a 10 per cent. interest held by Mr. Nizamettin Coban who had been connected with the previous owner of the mining licence. Three further shareholders hold nominal numbers of shares, in order to comply with the Turkish legal requirement for a joint stock company to have five shareholders. The licences held by Tri-Star are valid until 10 June 2015. The 2005 operation permit was for 46.68 hectares, but was reduced to 24.62 hectares in late 2008 for antimony. The Company may explore for other base and precious metals such as copper, lead, zinc, arsenic, gold and silver but would need additional licence rights to exploit any such minerals.
Business model and strategy of Tri-Star
The strategy of Tri-Star is to evaluate the antimony (Sb) mineral resource and, through drilling and advanced geophysical techniques, to provide evidence to the Board of its viability. The next objective will be the preparation of a detailed engineering feasibility study with a view to developing the resource.
On the basis that the geological assessment of the site is successful, and subject to raising additional funding, the products that Tri-Star intends to produce are antimony metal ingots and bars, antimony trioxide powder and antimony concentrates and ores.
Tri-Star initially intends to market these products to regional consumers such as automotive battery manufacturers (antimony metal) and to glass and tile manufacturers (trioxide products). It is Tri-Star's strategy to produce a consistent quality product that can then be exported to large European and Gulf State markets for use by chemical and flame retardant product manufacturers.
Goynuk antimony mine
The Goynuk antimony mine is located in forested and ruggedly mountainous terrain in western Turkey, approximately 30 kilometres east of the city of Gediz district in Kutahya province.
The Goynuk Mine is a low temperature, low sulphidation and epithermal deposit, rich in antimony and arsenic, along with traces of gold. The deposit is exposed in an erosional window beneath an overthrust conglomerate unit. The deposit has not been traced out laterally or to depth by drilling, and the overall shape and size are undetermined. The deposit is comprised of brecciated and strongly silicified limestone, and felsic igneous rocks of unknown origin (either an intrusive plug or an ash flow tuff). The protoliths are impregnated by powdery sulphides, principally pyrite. Stibnite is the only mineral of current economic interest, and occurs as chutes, pockets and veinlets occupying open spaced fractures and carbonate dissolution (hydrothermal karst) features. Past production focused on the richer stibnite pockets and chimneys. Sampling of outcrops, drifts and wastepiles suggests that the remaining host rocks contain, in places, more than 0.5 per cent. (11 pounds per tonne) antimony and that if higher grade pockets, balls and chutes comparable to past production exist in unexplored portions of the deposit, overall grades may average greater than one per cent. antimony.
A recent induced polarisation geophysical survey has indicated a roughly tabular drill target within 100 metres of the surface. Each side of the tablet is approximately 200 metres long, with an average thickness of 50 metres. Other unexposed targets with similar geophysical characteristics occur elsewhere on the property and should also be explored by drilling.
Despite a history of more than a hundred years of intermittent artisanal production, the Goynuk deposit is poorly explored and has possibilities as an economically viable open pit antimony deposit. Theoretical considerations suggest that there may be some potential for gold mineralisation peripherally, or at depth.
Antimony
Antimony is an important mineral for the global economy but it is also relatively rare. In a recent EU report on critical raw materials, antimony is considered to be of high relative economic importance and high relative supply risk. The supply risk is mainly due to the fact that the bulk of the world's known reserves are located in China. China has stopped accepting applications for new mines to produce antimony until June 2011 in order to conserve resources. It is of high economic importance due to the lack of substitutes and low recycling rates. MetalFirst Antimony Metal News reported in April 2010 that antimony prices had soared by as much as US$700 per tonne and some EU member states have indicated their support for a suspension of import duties payable on antimony. The US Geological Survey ("USGS") estimates that global reserves of antimony are 2.1 million tonnes and that annual mine production in 2009 was estimated to be 187,000 tonnes, of which over 90 per cent. was produced in China. This suggests a reserve life ratio of approximately nine years. The reserves in China itself are estimated by the USGS to be 790,000 tonnes, or the equivalent of under five years of reserve life ratio. Furthermore, there are more resources in China and globally that can be brought into production given time and favourable metal pricing economics. However, the overall reserve life of an important metal of approximately 11 years is very low (copper is estimated to be around 34 years for example). The consumption of antimony, predominantly in the form of its trioxide salts as a flame retardant, is a structurally expanding market, driven mostly by safety and regulatory concerns. Volume demand for the metal and its compounds have risen steadily over the past decade, on average by 5-7 per cent. per annum.
After several years of steady global growth, both production and average US prices peaked in 2008, at 197,000 tonnes and US$2.80 per pound (US$6.17 per kilogram) respectively, prior to global commodities collapsing later in the year. Preliminary data (Carlin, 2010) indicates that global production in 2009 declined to 187,000 tonnes, with an average price of US$2.30 per pound (US$5.07 per kilogram). Prices have risen steadily since then, from a low of US$1.93 per pound (US$4.26 per kilogram) in January 2009, to approximately US$4.20 per pound (US$9.25 per kilogram) as at 16 July 2010.
In 2008, the last year for which complete international production figures are available, China dominated global production with a 91 per cent. share, followed by Bolivia and Russia with two per cent. each. Turkey, with less than 0.5 per cent. of global production, is in seventh place. Primary antimony production comes from nine countries, as shown below (2008 data, in metric tonnes):
| China | 180,000 |
| Bolivia | 3,500 |
| Russia | 3,500 |
| South Africa | 2,800 |
| Tajikistan | 2,000 |
| Australia | 1,500 |
| Turkey | 1,300 |
| Guatemala | 1,000 |
| Peru | 810 |
| Others | 107 |
The principal antimony ore mineral is stibnite, a compound of antimony and sulphur (Sb2S3). After either smelting or roasting, the stibnite is converted and sold into international markets respectively as antimony metal or as antimony trioxide. Metallic antimony is principally employed in lead-antimony alloys used in ammunition, printing presses, anti-friction bearings, automotive batteries, cable sheaths, corrosion resistant pumps and pipes, roof sheet solder and tank linings. Lead-acid batteries were once the major antimony use, but the advent of maintenance-free batteries has resulted in a drastic decrease in demand from this application. This is counterbalanced by the fact that since lead batteries are universally recycled, there is little recycled antimony entering the market. Antimony trioxide is used to enhance the flame-retarding properties of rubber, textiles, plastics and other combustibles. Antimony is also used as a decolorising and refining agent in the manufacturing of some forms of glass, especially optical quality glass. The current applications of antimony (USA data), in order of importance, are as flame retardants (40 per cent.), transportation, including batteries (22 per cent.), chemicals (14 per cent.), ceramics and glass (11 per cent.), with the remaining applications accounting for 13 per cent.
If the antimony occurrence at Goynuk is proved to be of economic significance, having a deposit which is an alternative to the material supplied by China and in closer proximity to key European customers could be of significant strategic importance in the context of the European antimony market. The substitution of antimony compounds in certain uses and markets is technically feasible. However, alternative compounds such as tin oxides, known to be useful in certain aspects of flame retardants, trade at metal prices nearer US$18,000 per tonne, compared with antimony at US$8,300 per tonne. This provides further evidence as to the commercial application of antimony.
Turkey and its mining industry
Turkey has a modern mining law that encourages responsible mining. All subsurface mineral rights belong to the nation. The mineral rights may be leased as exploration or exploitation concessions for 10 years and are renewable for 10 year periods. Periodic progress reports must be filed with the Turkish government and there is a requirement to pay annual licence fees.
Turkey views mining as an "engine of national growth" and this encourages mining that is carried out in a responsible manner. Mining activities in Turkey are required to adhere to both European and international standards. Permits are needed to explore and/or mine in national forests and good husbandry of the land is expected, with the requirement for adequate compensation for any surficial damages to either public or private lands. Environmental impact statements are required for all scales of mining operations, although regulations applicable to "small mine operations" such as currently exists at Goynuk, under 50,000 tonnes of production per year, have special exemptions.
5. Directors, Proposed Directors, senior management and employees
The current composition of the Board is as follows:
Michael Hirschfield BSc (Econ), FCA, Chairman, aged 46, qualified as a Chartered Accountant with Peat Marwick in 1988. He has held senior management positions with a number of companies including group finance director of Utilitec plc and group finance executive of Lupus Capital plc. He is currently a director of Sirius Petroleum plc, a company whose shares are traded on AIM as well as of a number of private companies including Kitwell Consultants Limited, which acts as company secretary to several listed companies including the Company. Mr Hirschfield was appointed director on 18 December 2003 and on Completion, Mr Hirschfield will become a non-executive director.
Joanna Unden, Non Executive Director, aged 43, has 26 years experience in the finance industry, both in the money markets and metal exchanges. Prior to 2008, Mrs Unden worked for 15 years in the offshore financial services industry, specialising in the establishment and running of trust and fiduciary structures. This role involved acting on behalf of high net worth clients in both equity and structured finance investments. Mrs Unden was appointed a director on 21 September 2009 and will resign as a Director of the Company on Completion.
Proposed Directors
On Completion, it is intended that Adrian Collins, Jos Trusted and Jonathan Quirk will be appointed to the Board as Non Executive Directors, Mehmet Vehbi Eyi (the founder of Tri-Star) will be appointed to the Board as an Executive Director and Brian Spratley will be appointed to the Board as an Executive Director and Chief Executive.
Adrian Collins, proposed Non Executive Chairman, aged 56, was previously a director of Strand Hanson Limited (previously Strand Partners Limited), a leading London-based corporate finance advisory firm and has worked in the fund management sector for over 30 years, a large part of which was spent at Gartmore Investment Management, where latterly he was a Managing Director. Adrian was one of the founders of Trustnet.com, a leading provider of Fund performance information on the Internet. He is currently on the board of a number of public and private companies in the United Kingdom and overseas. He is chairman of Lion Trust Asset Management plc as well as a non-executive director of Hiscox Investment Management Limited and City Natural Resources High Yield Trust plc.
Jos Trusted, proposed Non Executive Director, aged 39, has spent 15 years in investment banking. Jos began his career as a solicitor with K&L Gates, before moving to the investment banking team at Dresdner Kleinwort Benson. Jos spent the majority of his career at UBS, where he was a director, before moving to Kaupthing Bank in 2006 to assist in the establishment of the UK equities division. Jos has advised a number of FTSE clients including Next, Kingfisher, Carnival and Centrica, but has latterly spent more time focusing on smaller businesses, including a number of mining companies including Marcona Mining, Peru. Jos is currently working in investment management.
Jonathan Quirk, proposed Non-Executive Finance Director, aged 58, is a Chartered Accountant. He has worked in the financial services sector since 1974 for, among others, Morgan Grenfell and Deutsche Bank in their capital markets divisions. Since 1997 he has been a founding director of Cairnsea Investments Ltd, an FSA regulated investment manager specialising in quoted and unquoted smaller companies particularly in the financial services sector.
Mehmet Vehbi Eyi, proposed Executive Director, aged 68, graduated from the Academy of Commerce and Science in Ankara, Turkey. He moved to the UK in 1968 and started his career working for a metal trading company where he specialised in minor metals. Mr Eyi worked for an associate member of the LME. In 1993, he established Vemetalco Limited to conduct proprietary trading in minor and speciality metals, specialising in antimony and its co-products. In 2006 Vemetalco Limited was dissolved after trading assets had been distributed to Mr Eyi as its proprietor. Mr Eyi continued as an active investor and trader in metals and, in 2008, he established a controlling interest in Tri-Star.
Brian Spratley, proposed Executive Director and Chief Executive, aged 60 is a mining engineer with over 38 years experience in the mining industry and is currently (and until the end of August 2010) the Chief Operating Officer of PT Artha Nusantara Mining in Indonesia. He has held various positions within international mining groups, including Lundin Group (1995-2003), Crew Gold Corporation (2003-2008) and Grängesberg Iron Ore plc (2008). He has worked in many commodities globally, primarily in a project development role, from exploration and studies through to engineering, construction and operations. His background in the corporate development of junior and mid-tier mining companies is a natural fit for the Company.
Senior management
Other than the Directors and Proposed Directors, there are no key senior management personnel within the Enlarged Group.
Employees
The existing employment rights, including pension rights, of all the management and employees of Tri-Star will remain unchanged and will be fully safeguarded following Completion.
6. Principal terms of the Acquisition
Pursuant to the Acquisition Agreement, the Company has agreed conditionally to purchase 99 per cent. of the issued share capital of Tri-Star from the Sellers. The purchase price is payable as to £150,000 in cash on completion of the Acquisition and a further £150,000 in cash if and when Tri-Star's exploration activities provide sufficient evidence for the Board to consider that the Goynuk mine is commercially viable and the Company raises an amount of funding sufficient to facilitate continued development of the mine and cover current contractual obligations which would arise from making that decision.
The Sellers and the other shareholders of Tri-Star, their current holdings in Tri-Star and the aggregate amount of cash consideration to be paid to them, assuming the deferred consideration is paid, are as follows:
|
|
|
|
| Deferred |
|
| Shares in Tri-Star | Shares in Tri-Star being sold |
Initial consideration (£) | Conditional Consideration (£) |
| Mehmet Vehbi Eyi | 447 | 446 | 135,150 | 135,150 |
| Nizamettin Coban | 50 | 49 | 14,850 | 14,850 |
| Ahmet Kinay | 1 | Nil | Nil | Nil |
| Necla Kinay | 1 | Nil | Nil | Nil |
| Hamit Yapindi | 1
| Nil
| Nil
| Nil
|
| Total | 500
| 495
| 150,000
| 150,000
|
Under the Acquisition Agreement, the shareholders of Tri-Star have given title warranties to the Company in respect of their shares in Tri-Star. In addition, Mr Eyi has given commercial warranties and indemnities (subject to certain limitations) appropriate to a transaction of the size and nature of the Acquisition, relating to the business and assets of Tri-Star.
Mr Eyi has given non-compete and non-solicitation undertakings in respect of the activities currently carried on by Tri-Star for a period of two years from Completion.
The Acquisition Agreement is conditional on, inter alia, the following:
1. the passing of those of the Resolutions at the AGM necessary to approve the purchase of the shares in Tri-Star and to authorise the Company to issue the Subscription Shares;
2. the Introduction Agreement becoming unconditional except for any conditions relating to the completion of the Acquisition Agreement and Admission;
3. confirmation in a form reasonably acceptable to the Company that:
3.1 all the share capital of Tri-Star is fully paid;
3.2 all applicable stamp duty in respect of assignment of the debt owed by Tri-Star to Windmark Trading Limited to Mr Vehbi Eyi has been paid to the relevant Turkish authority;
3.3 the benefit of the debt owed by Tri-Star to Windmark Trading Limited has been assigned to Mr Vehbi Eyi;
3.4 on or immediately following Completion the Company will be debt free (except as owed to Mr Vehbi Eyi); and
4. immediately prior to Completion a search being carried out at the Mining Registry of Turkey in respect of the licences held by Tri-Star, the results of which are reasonably satisfactory to the Company.
7. Details of the Subscription, Proposed Placing, EMMEF Facility and use of proceeds
The Company is proposing to issue 3,100,000,000 Subscription Shares pursuant to the Subscription at the Subscription Price to raise £155,000 before expenses. The Company subsequently intends to carry out the Proposed Placing or draw down under the EMMEF Facility. This would give gross proceeds of £905,000 (£632,000 net of expenses).
The Subscription Price has been established in recognition of the Company's net liability position and in light of its cash and financial obligations. The Directors do not believe that the share price of the Existing Ordinary Shares reflects the current value of the Company and on a winding up, in the absence of the completion of the Proposals, given the Company's cash position, it is unlikely there will be any funds available for distribution to the Shareholders.
The net proceeds of the Subscription and the Proposed Placing, together with existing cash resources, will be used for general working capital purposes and to carry out exploration work.
Only Ordinary Shares that have been unconditionally allotted can be admitted as AIM securities.
The Subscribers include Mr Vehbi Eyi, one of the Sellers, and members of his family who are to subscribe for New Ordinary Shares under the Subscription. Following the Subscription, Mr Emin Eyi, his mother Cemile Eyi and his father Mr Vehbi Eyi will hold 2,860,000,000 New Ordinary Shares, representing 71.61 per cent. of the Enlarged Share Capital. Vehbi Eyi, Cemile Eyi and Emin Eyi are treated as acting in concert for the purpose of the Takeover Code.
The Relationship Agreement regulates the relationship between the Eyi family, their associates and the Enlarged Group on an arm's length and normal commercial basis.
Emin Eyi is a member of SPACF, a limited liability partnership that provides corporate finance advice. SPACF is an appointed representative of Helvetia Asset Management Limited and is regulated by the FSA. SPACF is not engaged to act as an adviser to the Company, the Subscribers or the Sellers in relation to the Proposals.
Certain of the Subscribers are either fellow members of SPACF with Emin Eyi, or employees or otherwise connected with SPACF, and hence also have a relationship with Emin Eyi as a member of SPACF. On completion of the Subscription, they will together hold 160,000,000 New Ordinary Shares, which when added to the holdings of the Eyi Family Members, will total 3,020,000,000 New Ordinary Shares, representing 75.61 per cent. of the Enlarged Share Capital.
The other Subscribers have indirect connections with SPACF and Emin Eyi, and their participation in the Subscription is intended as recognition of their ability to lend assistance in the development of the Enlarged Group. There are no agreements or arrangements between the members of the Concert Party and these other Subscribers that would cause them to be included within the Concert Party. Together, the ten other Subscribers will subscribe for an aggregate of 20,000,000 New Ordinary Shares, which represents 0.50 per cent. of the Enlarged Share Capital.
Brian Spratley, one of the Subscribers, is to become an executive director of the Company. His invitation to participate as a Subscriber is in recognition of his contribution to the future development of the Company. He is not a member of the Concert Party.
After the Subscription, the Subscribers will hold the following number of New Ordinary Shares:
|
| No. of Subscription | Percentage of Enlarged |
| Name of Holder | Shares | Share Capital |
| Emin Eyi | 1,560,000,000 | 39.06 |
| Cemile Eyi | 800,000,000 | 20.03 |
| Mehmet Vehbi Eyi | 500,000,000 | 12.52 |
| Brian Spratley | 60,000,000 | 1.50 |
| PMA Nominees Limited1 | 10,000,000 | 0.25 |
| John Mackay | 69,100,000 | 1.73 |
| Robert Wooldridge | 69,100,000 | 1.73 |
| Bruce Fraser | 2,000,000 | 0.05 |
| Simon Bishop | 2,000,000 | 0.05 |
| Tercel Moore | 2,000,000 | 0.05 |
| Christopher Couldrey | 2,000,000 | 0.05 |
| Terry Gracey | 1,000,000 | 0.03 |
| Alexandra MacKinnon | 1,000,000 | 0.03 |
| David Facey | 900,000 | 0.02 |
| John Sleeman | 900,000
| 0.02 |
| Other investors | 20,000,000
| 0.50
|
| Total | 3,100,000,000
| 77.62
|
¹ PMA Nominees Limited is to hold Ordinary Shares as nominee for the partners of Pritchard Englefield, Solicitors.
The Subscribers have undertaken not to dispose of their Subscription Shares for the period of one year from the date of Completion, except in limited circumstances, including, but not limited to, the receipt of a general offer for the entire issued share capital of the Company, death or an intervening court order. On the expiry of this initial lock-in period, the Subscribers have undertaken only to dispose of their Subscription Shares through the Company's broker, with its consent and that of the Company's nominated adviser for a further 12 month period.
The Subscription Shares will represent approximately 77.62 per cent. of the Enlarged Share Capital of the Company following Admission, be fully paid and rank pari passu with the New Ordinary Shares in issue at Completion.
On Completion, the Directors and Proposed Directors will hold, in aggregate, 14.65 per cent. of the Enlarged Share Capital.
Current trading and prospects
The Company will undertake a fundraising to finance, together with existing cash resources, a detailed survey exercise and test drilling program to establish the extent and quality of the antimony resource and to identify any other mineral resources present at the mine site. This will enable the Company to establish an estimated in the ground value of the mineral resources available at the mine.
Historic financial information
Audited financial information of the Company for the three years to 31 March 2010 is available from the Company's website at www.canispplc.com.
Capital Reorganisation
The Company is proposing to subdivide each Existing Ordinary Share into one New Ordinary Share and one New Deferred Share. The Capital Reorganisation is required to ensure that the value of the Subscription Shares accurately reflects the value of the assets of Tri-Star being purchased under the Acquisition subject to the resolutions being passed. The Articles will be amended to reflect the New Deferred Shares, which will have the same rights as the existing Deferred Shares. The Deferred Shares do not carry the right for the holder to receive notice of, or attend meetings of the Company, the holder will have no right to receive dividends; the Deferred Shares are not redeemable; and the Directors are authorised to transfer all the Deferred Shares to any person they may determine for a total price of one penny.
8. Dividend Policy
The Ordinary Shares rank equally for all dividends and other distributions declared, paid or made in respect of the Ordinary Share capital of the Company. The Company has not paid any dividends since incorporation.
It is the current intention of the Directors and Proposed Directors to retain any earnings arising from the Group's activities to fund further investments by the Enlarged Group and achieve capital growth. Accordingly, they do not intend to pay dividends in the immediate future. The declaration and payment by the Company of any future dividends and their amount will depend upon the Company's financial condition, future prospects, profits legally available for distribution and other factors deemed by the Board to be relevant at that time.
9. Lock-in and orderly market arrangements
On Completion, the Subscribers will be interested in approximately 77.62 per cent. of the Enlarged Share Capital. Each of the Subscribers, Directors and Proposed Directors have undertaken to the Company, Strand Hanson and KBR that, except in certain limited circumstances, they will not dispose of any interest in the Ordinary Shares held by them for a period of 12 months from the date of Admission and, for the 12 months following that period, that they will only dispose of their holdings with the consent of the Company's broker and nominated adviser from time to time.
10. Share Option Plan
The Board believe that it is important that Directors, employees of, and consultants to the Company are appropriately and properly motivated and rewarded. Accordingly, the Board intends to introduce a share option plan which will initially be used to grant options to Michael Hirschfield following Admission. It is expected that the number of Ordinary Shares under option will not exceed ten per cent. of the Company's issued capital from time to time.
11. The Takeover Code
The issue of the Subscription Shares to the Concert Party gives rise to certain considerations under the Takeover Code. Brief details of the Takeover Panel, the Takeover Code and the protections they afford to Shareholders are described below.
The Takeover Code is issued and administered by the Takeover Panel. The Company is a company to which the Takeover Code applies and its shareholders are entitled to the protection afforded by the Takeover Code.
Under Rule 9 of the Takeover Code, any person who acquires an interest (as defined in the Takeover Code) in shares which, taken together with shares in which he is already interested and in which persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, is normally required to make a general offer to all the remaining shareholders to acquire their shares.
An offer under Rule 9 must be made in cash and at the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares of the Company during the 12 months prior to the announcement of the offer.
The members of the Concert Party are deemed to be acting in concert for the purpose of the Takeover Code. On completion of the Subscription the members of the Concert Party will between them be interested in 3,020,000,000 Ordinary Shares, representing approximately 75.61 per cent. of the Company's enlarged issued voting share capital.
The Panel has agreed, however, to waive the obligation to make a general offer that would otherwise arise as a result of the Subscription, subject to the approval of independent shareholders. Accordingly, Resolution 5 is being proposed at the Annual General Meeting, and will be taken on a poll. Those persons disenfranchised from voting will not be entitled to vote on Resolution 5.
Following completion of the Subscription, the members of the Concert Party will between them hold more than 50 per cent. of the Company's voting share capital and (for so long as they continue to be treated as acting in concert) may accordingly increase their aggregate interests in shares without incurring any further obligation under Rule 9 to make a general offer, although individual members of the Concert Party will not be able to increase their percentage interests in shares through or between a Rule 9 threshold without Panel consent.
No member of the Concert Party currently holds Ordinary Shares.
A table showing the interests in New Ordinary Shares of the members of the Concert Party on Admission, subject to passing of the Resolutions, is as set out below:
|
| No. of Subscription | Percentage of Enlarged |
| Name of Holder | Shares | Share Capital |
| Emin Eyi | 1,560,000,000 | 39.06 |
| Cemile Eyi | 800,000,000 | 20.03 |
| Mehmet Vehbi Eyi | 500,000,000 | 12.52 |
| PMA Nominees Limited¹ | 10,000,000 | 0.25 |
| John Mackay | 69,100,000 | 1.73 |
| Robert Wooldridge | 69,100,000 | 1.73 |
| Bruce Fraser | 2,000,000 | 0.05 |
| Simon Bishop | 2,000,000 | 0.05 |
| Tercel Moore | 2,000,000 | 0.05 |
| Christopher Couldrey | 2,000,000 | 0.05 |
| Terry Gracey | 1,000,000 | 0.03 |
| Alexandra MacKinnon | 1,000,000 | 0.03 |
| David Facey | 900,000 | 0.02 |
| John Sleeman | 900,000
| 0.02
|
| Total | 3,020,000,000
| 75.61
|
¹ PMA Nominees Limited is to hold shares as nominee for the partners of Pritchard Englefield, Solicitors
The Takeover Panel has agreed however, subject to Resolution 5 being passed (on a poll) by the Shareholders at the Annual General Meeting, to waive the obligations on the Concert Party under Rule 9 of the Takeover Code to make a general offer for the entire issued share capital of the Company which would otherwise arise as a result of the Proposals. Accordingly, approval of the Shareholders (on a poll) to the Waiver is sought in Resolution 5.
Shareholders should note that, if Resolution 5 is passed, the Concert Party would between them be interested in New Ordinary Shares carrying more than 50 per cent. of the voting rights of the Company and, for as long as they continue to be treated as acting in concert, would be able to acquire further New Ordinary Shares, without incurring an obligation to make an offer to shareholders of the Company under Rule 9 of the Takeover Code, although individual members of the Concert Party will not be able to increase their percentage interests in shares through 30 per cent. or between 30 and 50 per cent. of the voting rights of the Company without Takeover Panel consent.
12. Irrevocable Undertakings
The Company has received irrevocable undertakings from the Directors and certain significant Shareholders to vote in favour of the Acquisition and the other Resolutions in respect of, in aggregate, 320,687,914 Existing Ordinary Shares, representing approximately 37.44 per cent. of the Company's existing issued Ordinary Share capital.
13. Admission Document
The Company's AIM admission document setting out full details of the Proposals and including a notice of the Annual General Meeting, accompanied by the Form of Proxy, will be posted to Shareholders today. Copies of the Company's AIM admission document will also be available to the public free of charge from today at the offices of Fladgate LLP, 25 North Row, London W1K 6DJ (until 6 August 2010 and thereafter at 16 Great Queen Street, London, WC2B 5DG), during normal business hours on any weekday (other than Saturdays, Sundays and public holidays), for a period of at least one month following the date of Admission. The document will also be made available to download from the Company's website at www.canispplc.com.
Expected Timetable of Principal Events
| Publication of this document | 3 August 2010 |
|
Payment to be received from the Subscribers (other than through CREST) pursuant to the Subscription (in cleared funds) |
11.00 a.m. GMT on 26 August 2010 |
|
Latest time and date for receipt of forms of proxy | 11.00 a.m. GMT on 24 August 2010 |
|
Annual General Meeting | 11.00 a.m. GMT on 26 August 2010 |
|
Completion of the Proposed Acquisition, Admission effective and dealings expected to commence in the Enlarged Share Capital on AIM | 27 August 2010 |
|
CREST accounts expected to be credited in respect of Subscription Shares | 27 August 2010 |
|
Definitive share certificates for the Subscription Shares expected to be despatched (where applicable) by | 10 September 2010 |
Enquiries:
| Strand Hanson Limited (Nomad) James Harris / Paul Cocker / Liam Buswell | Tel: +44 (0)20 7409 3494
|
|
Keith, Bayley, Rogers & Co Limited (Broker) Simon Frost / Brinsley Holman |
Tel: +44 (0)20 3100 8300 |
|
Hansard Communications Justine James /John Bick |
Tel: +44 (0)20 7245 1100
|