Subscription and Notice of General Meeting

SUBSCRIPTION AND NOTICE OF GENERAL MEETING

 

Overview

Further to the announcement of 17 October, the board of Tethyan Resources PLC (the “Board”) is pleased to announce that it has, subject to Shareholder approval of updated share issue authorities at a general meeting of the Company (the “GM”) to be held on 12 December 2016, received subscriptions for 39,100,000 new ordinary shares in the Company at a price of 3.6 Canadian cents, raising approximately CAN$1,407,600 (or approximately £852,380) before expenses, for the Company to, inter alia, further advance the Suva Ruda and Gokcanica projects in the Republic of Serbia.

The Subscription

As announced on 21 November 2016, Southern Arc Minerals Inc. (“Southern Arc”), a TSX-Venture Exchange listed company, subscribed for 16,500,000 new Ordinary Shares at a price of CAN$0.036 per new Ordinary Share to raise CAN$594,000 (approximately £353,570) before expenses, for the Company to, inter alia, further advance its Suva Ruda and Gokcanica projects (over which it has an option) in the Republic of Serbia (“Southern Arc Subscription”).

In addition, Southern Arc also purchased 14,653,967 Ordinary Shares from Newmont Ventures Limited (“Newmont Acquisition”) as part of becoming a strategic investor in the Company. Taken together with the 16,500,000 new Ordinary Shares acquired in the Southern Arc Subscription, Southern Arc, following completion of the Newmont Acquisition, owns 31,153,967 Ordinary Shares being 29.15% of the Existing Ordinary Shares. Further details of Southern Arc and the Southern Arc Subscription are set out below.

Subject to Shareholder approval, the Company has secured additional equity financing which it also plans to use to advance its Suva Ruda and Gokcanica projects (over which it holds an option) in the Republic of Serbia, as well as for general corporate purposes. The financing will be carried out by way of the Subscription rather than as a placing.

The Company has received signed Subscription Agreements for a total of 39,100,000 new Ordinary Shares at a Subscription Price of CAN$0.036 (£0.0218), raising gross proceeds (before commission and expenses) of CAN$1,407,600 (£852,380). The Subscription Price represents a discount of approximately 12.5 per cent. to the closing price of 2.5 pence per Ordinary Share on 21 November 2016 (being the last practical date prior to the announcement of the Subscription).

The Subscription is conditional upon Admission and upon the Company obtaining the approval of Shareholders at the General Meeting to grant the Directors authority to allot the Subscription Shares and to dis-apply pre-emption rights which would otherwise apply to the allotment of the Subscription Shares. The Company has received irrevocable undertakings to vote in favour of the Resolutions in respect of approximately 40.8 per cent. of the Existing Ordinary Shares from certain Shareholders, including Southern Arc.

Background to and reasons for the Subscription

Tethyan has recently acquired an option over the “Suva Ruda Project”, which hosts the “Rudnitza Prospect”, a porphyry copper gold system, and signed a joint venture agreement over the “Gokcanica Project”. Both projects are located in the Republic of Serbia.

The Rudnitza Prospect is a porphyry copper gold target situated on the Suva Ruda Project and was previously drilled on a minor scale in 2004 by Phelps Dodge. Drilling intersected highly encouraging results including drill hole PDRC -004 which intersected 144 meters of 0.4 % Cu, 0.4 g/t Au from 100 meters depth and bottomed in mineralisation at 244 meters. The project was never tested at depth below around 300 vertical meters from surface. Despite intersecting very encouraging grades in several drill holes Phelps Dodge exited the project in 2006 due to the perception that it did not meet its corporate size objectives.

Following a review of the project by Tethyan’s geological personnel, they concluded that Rudnitza has the potential to contain a major copper gold porphyry deposit which has the potential to be a flagship project.

As announced on 27th September 2016, as part of the option deal on the Suva Ruda Project, Tethyan is required to complete 2000 meters of drilling by 28th December 2016. Tethyan also announced on 1stNovember 2016 that it had commenced a 2500 meter drill program, further details of which are set out in that announcement. Should this drill program locate good grade mineralisation comparable to the previous drilling at depth, below 200 meters, then the Directors believe that this project has the potential to be a flagship project and be could be rapidly advanced to the development stage of exploration.

The Gokcanica Project, over which Tethyan have signed a joint venture agreement, covers an epithermal district that has seen small scale workings from Roman times through to recent. Tethyan plans to complete early stage geological mapping and sampling work over the Gokcanica Project plus a geophysical survey in early 2017 to identify targets for drilling later in 2017. Gokcanica hosts a large phyllic alteration zone over 7 km by 3 km with abundant small scale epithermal alteration and mineralisation. It is proposed that a buried porphyry copper system might be driving the system and Tethyan plans to drill test for this buried system. In addition, narrow veins with high grade gold up to 11 g/t have been identified on the project area. Follow-up work has commenced on this area to try and define drill targets. Further details are set out in the Company’s announcement of 18th October 2016.

Tethyan plans to use the funds raised by the Subscription for advancing the Suva Ruda and Gokcanica projects and for general corporate purposes.

Further Details of the Subscription

39,100,000 Subscription Shares have been subscribed for by the Subscribers at the Subscription Price to raise gross proceeds of CAN$1,407,600 (£852,380) (before commission and expenses) and net proceeds of CAN$1,323,306 (£801,664).

Southern Arc, as a strategic investor in Tethyan, has subscribed for 12,500,000 Subscription Shares. Following completion of the Subscription, the Southern Arc Subscription and the Newmont Acquisition, Southern Arc will own 43,653,967 Ordinary Shares, being 29.9% of the Enlarged Share Capital.

The Subscription is conditional on Admission and the approval of the Resolutions at the General Meeting, which is to be held at the offices of Gowling WLG (UK) LLP at 4 More London Riverside, London, SE1 2AU, on 12th December 2016 at 10.30 a.m. A circular will today be sent to Shareholders and a copy will be available on the Company’s website at www.tethyan-resources.com.

Application will be made to the London Stock Exchange for the Subscription Shares to be admitted to trading on AIM. Subject to the passing of the Resolutions, it is expected that Admission will become effective and that dealings in the Subscription Shares will commence on 13th December 2016.

The Subscription Shares issued pursuant to the Subscription will, when issued, be credited as fully paid and will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of issued.

Any Subscription Shares issued to Canadian Subscribers will be subject to a four month and one day hold period from Admission during which the Subscriber must not trade the Subscription Shares unless permitted under applicable Canadian securities laws.

The Directors intend to vote in favour of each of the Resolutions in respect of their aggregate beneficial interest in respect of 12,401,142 Ordinary Shares, representing approximately 11.6 per cent. of the Existing Ordinary Shares.

Following completion of the Subscription, the Company expects the following Shareholders to hold notifiable interests in the Company:

Shareholder

Number of Ordinary Shares held following Admission

Shareholding as a percentage of the Enlarged Share Capital

Southern Arc Minerals Inc.

43,653,967

29.9 %

Pat DiCapo

9,000,000

6.2 %

Frank Brewer

8,145,000

5.6%

Peter Mullens (Director)

8,171,975

5.6%

Khuanchai Siphakanlaya

5,000,000

3.4 %

Alan Fairless

5,000,000

3.4 %

The Company has entered into the Subscription Agreements with the Subscribers pursuant to which the Subscribers have agreed to subscribe for the Subscription Shares at the Subscription Price conditional on the passing of the Resolutions and Admission. Each Subscription Agreement contains representations, warranties and covenants in favour of the Company which are customary for a subscription of this nature and each is on the same terms.

Directors’ Participation

Certain of the Directors will be participating in the Subscription (“Directors’ Participation”) as set out below and the Company expects them to hold the following interests in the Company:

Director

Number of Subscription Shares

Number of Ordinary Shares held following Admission

Shareholding as a percentage of the Enlarged Share Capital

Christopher Goss

650,000

793,518

0.55 %

Peter Mullens

650,000

8,171,975

5.6 %

Didier Fohlen

1,000,000

3,891,515

2.7 %

The Directors’ Participation is deemed to be a related party transaction for the purposes of Rule 13 of the AIM Rules. Mr Gokhan Kantarcigil, being the sole independent director of the Company for the purposes of the Directors’ Participation, considers, having consulted with the Company’s Nominated Adviser, that the terms of Directors’ Participation are fair and reasonable in so far as the Shareholders are concerned.

The Company expects that the commission and expenses payable in connection with the Subscription will be approximately CAN$85,000 in cash (representing approximately 7.0 per cent. of the aggregate Subscription proceeds from funders they have introduced). In addition to the commission of CAN$84,294 payable to PowerOne for introducing Subscribers pursuant to the Introduction Agreement, the Company has granted to PowerOne 2,341,500 Broker Warrants to subscribe for Ordinary Shares, exercisable at the Subscription Price over a period of three years from the date of grant (such number being equal to seven per cent. of the total number of Subscription Shares issued to Subscribers introduced by PowerOne, and being equivalent to 1.6  per cent. of the Enlarged Share Capital). The grant of the Broker Warrants is conditional on completion of the Subscription and Admission.

For further information please contact:

Tethyan Resources PLC

+44 1534 881 885

Peter Mullens (CEO)

pjm@tethyan-resources.com

Cairn Financial Advisers LLP

+44 (0) 207 213 0880

James Caithie / Sandy Jamieson

 

DEFINITIONS

The following definitions apply throughout this document, unless the context requires otherwise.

“Act”

the UK Companies Act 2006, as amended

“Admission”

the admission of the Subscription Shares to trading on AIM becoming effective pursuant to rule 6 of the AIM Rules

“AIM”

the market of that name operated by London Stock Exchange plc

“AIM Rules”

the ‘AIM Rules for Companies’ published by the London Stock Exchange governing, amongst other things, the admission to AIM and the continuing obligations of AIM companies

“Broker Warrants”

2,341,500 warrants to be granted to PowerOne conditional on Admission in accordance with the Introduction Agreement exercisable at CAN$0.036 over a period of three years

“certificated” or “in certificated form”

the description of a share or security which is not in uncertificated form (that is, not in CREST)

 

“Company” or “Tethyan”

Tethyan Resources plc, a company incorporated in England and Wales with registered number 03781581

“CREST”

the relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the Operator (as defined in the CREST Regulations) in accordance with which securities may be held and transferred in uncertificated form

“CREST Regulations”

the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755), including any enactment or subordinate legislation which amends or supersedes those regulations and any applicable rules made under those regulations or such enactment or subordinate legislation for the time being in force

“Directors” or “Board”

the directors of the Company

“Enlarged Share Capital”

the issued Ordinary Shares of the Company immediately following Admission

“Euroclear”

Euroclear UK & Ireland Limited, a company incorporated in England and Wales and the operator of CREST

“Existing Ordinary Shares”

the 106,859,829 Ordinary Shares in issue at the date of this document

“FCA”

the Financial Conduct Authority

“FSMA”

the UK Financial Services and Markets Act 2000 (as amended from time to time)

“General Meeting”

the general meeting of the Company convened for 10.30am  on 12th December 2016 (or any adjournment or postponement thereof)

“Introduction Agreement”

the agreement dated 14th October 2016 between PowerOne and the Company pursuant to which PowerOne has agreed to introduce potential Canadian subscribers for up to 30 million Subscription Shares

“London Stock Exchange”

the London Stock Exchange plc

“Notice of General Meeting”

the notice of General Meeting, as sent to Shareholders on 22 November 2016

“Ordinary Shares”

ordinary shares of 0.1 pence each in the capital of the Company

“PowerOne”

PowerOne Capital Markets Limited

“Relevant Securities”

Shares in the Company other than shares allotted pursuant to:

a)         an employee share scheme (as defined by section 1166 of the 2006 Act);

b)         a right to subscribe for shares in the Company where the grant of the right itself constituted a Relevant Security; or

c)         a right to convert securities into shares in the Company where the grant of the right itself constituted a Relevant Security; and

any right to subscribe for or to convert any security into shares in the Company other than rights to subscribe for or convert any security into shares allotted pursuant to an employee share scheme (as defined by section 1166 of the Act).

“Resolutions”

the resolutions set out in the Notice of General Meeting

“Shareholders”

holders of Ordinary Shares from time to time, each individually being a “Shareholder”

“Subscriber”

a subscriber for Subscription Shares at the Subscription Price pursuant to a Subscription Agreement

“Subscription”

the subscription by Subscribers for the Subscription Shares  at the Subscription Price pursuant to the Subscription Agreements, as described in this announcement

“Subscription Agreement”

a conditional agreement dated on or before 21st November 2016 between the Company and a Subscriber relating to the

“Subscription Price”

CAN$0.036 (£0.0218) per Subscription Share

“Subscription Shares”

39,100,000 new Ordinary Shares, representing CAN$ 1,407,600  (£852,380) at the Subscription Price

“UK” or “United Kingdom”

the United Kingdom of Great Britain and Northern Ireland

 

SUBSCRIPTION STATISTICS

Number of Existing Ordinary Shares in issue

106,859,829

Number of Subscription Shares

39,100,000

Subscription Price (per Subscription Share)

 CAN$0.036(£0.0218)

Estimated gross proceeds of the Subscription receivable by the Company

CAN$ 1,407,600 £852,380

Estimated net proceeds of the Subscription receivable by the Company after commissions and expenses

CAN$1,323,306 £801,664

 

Enlarged Share Capital immediately following the Subscription

Existing warrants 3.48 pence

145,959,829

105,560

Number of Broker Warrants

Employee options under the Company’s employee share scheme

Fully diluted share capital basis immediately following the Subscription and issue of the Broker Warrants.       

Percentage of the Enlarged Share Capital represented by the Subscription Shares

2,341,500        

7,600,000

156,051,389

 

26.8%

Percentage of the Enlarged Share Capital held by or on behalf of the Directors on Admission

9.9%

Approximate market capitalisation of the Company at the Subscription Price on Admission

 £3.2 million  CAN$5.25 million

AIM Symbol

TETH

ISIN

GB00BYVFRB16

Note 1: Any CAN$:£ amounts stated in this document are based on a CAN$:£ exchange rate of 1.6507 to £ GBP.

Note 2: Save for the date of publication of this announcement, each of the times and dates above are subject to change. Any change, including any consequential change to the Subscription Statistics above, will be notified to shareholders by an announcement on a Regulatory Information Service. Certain events in the timetable are conditional upon, inter alia, the approval of the Resolutions.

 

 

EXPECTED TIMETABLE OF EVENTS

Publication of the Notice of General Meeting and posting to Shareholders

22nd November  2016

Latest time and date for receipt of Forms of Proxy

10.30 am on 8th December 2016

General Meeting

10.30 am  on 12th December  2016

Admission effective and dealings commence
on AIM in Subscription Shares

8.00 am  on 13th December  2016

CREST accounts of UK Subscribers credited with Subscription Shares

8.00 am on 13th  December 2016

Share certificates in respect of Subscription Shares dispatched

by week commencing 19th December 2016

 

About Tethyan

Tethyan is an AIM quoted junior exploration company exploring for copper and gold within the Tethyan mineral belt.  Tethyan has an experienced Board and technical team.  Currently Tethyan holds several licences in Serbia and is looking for other copper and gold projects in Eastern Europe, specifically Serbia and Bulgaria. Southern Arc (TSXV: SA), a strategic investor in Tethyan, will hold 29.15% of the Company on completion of the Southern Arc Subscription and the Newmont Acquisition. Southern Arc brings considerable corporate and exploration experience to Tethyan.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Tags: