Richland Resources provide proposed reverse takeover update

Strand Hanson Ltd is acting as nominated and financial adviser to the company, and Peterhouse Capital Ltd is acting as broker to the company.

The proposed transaction constitutes a reverse takeover transaction pursuant to Rule 14 of the AIM Rules for Companies (the AIM Rules) and, accordingly, is conditional on, inter alia, the approval of shareholders at an AGM to be held at 10.00 am (Bermuda time) on 23 November 2020 at Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda.

Key Highlights

GAR projects

Proposed acquisition of GAR, which via its wholly owned US subsidiary, holds a 51% interest in four gold exploration projects in North and South Carolina, as follows:

• The Jones-Keystone-Loflin Project.
• The Carolina Belle Project.
• The Jennings-Pioneer Project.
• The Argo Project.

Initial consideration

An aggregate payment on completion of the acquisition (completion) to the sellers and URI of AUS$60 000 (approximately £33 900 or US$43 392) in cash and the issue of 21 367 288 new common shares at 2.75 pence per share being the price of the proposed placing equivalent to approximately AUS$1.04 million (approximately US$752 128; £587 600).

In addition, Richland made two non-refundable cash payments to GAR of US$29 340 on 31 July 2020 and US$22 818 on 30 September 2020, respectively.

Deferred consideration

Potential further future payments to be made to the sellers and URI, in cash or new common shares at Richland's sole discretion, of, in aggregate, AUS$1.5 million (the tranche 1 deferred consideration") and AUS$3 million (the tranche 2 deferred consideration), subject to the achievement of certain material, value-generative performance milestones, or the occurrence of certain vesting events within 5 years of completion. Absent the earlier occurrence of certain Vesting Events, the tranche 1 deferred consideration will fall due upon confirmation of a prescribed minimum estimated level of JORC 2012 compliant resources and the tranche 2 deferred consideration will fall due on completion of a pre-feasibility study confirming a pre-tax NPV of more than US$50 million in respect of any of the GAR projects (with the tranche 1 deferred consideration also falling due upon the achievement of such performance milestone if not previously triggered/paid).

Proposed share capital consolidation

The company is proposing a share capital consolidation at a ratio of 10:1 such that, subject to the passing of the relevant resolutions, dhareholders will be issued one new common share of US$0.003 (a new common share) for every 10 existing common shares of US$0.0003 (the existing common shares) currently held.

Proposed fundraising

The company has conditionally raised, in aggregate, approximately £3.33 million (before expenses) via the proposed issue of i) 84 625 476 new common shares pursuant to the placing (the placing shares) at a price of 2.75 pence per new common share (the placing price) and (ii) 36 363 636 new common shares (the subscription shares) pursuant to the subscription at the placing price (together, the fundraising). The net proceeds of the fundraising will be utilised to fund the initial cash consideration in respect of the acquisition and the enlarged group's planned initial 2 year work programme and requisite working capital requirements.

Proposed board change and other proposed corporate changes

Proposed appointment of Rhoderick Grivas, a current Director and Shareholder of GAR, to the Board as a Non-Executive Director on Admission. Grivas is a professional geologist and has significant operational experience in metals exploration and mining generally, including specific knowledge of the GAR Projects.

Proposed name change to Lexington Gold Ltd to reflect the transformational nature of the proposed transaction (to be effected shortly following admission).

The proposed transaction represents a transformational move for the company away from being an AIM Rule 15 cash shell to becoming an operating company with a clear focus on exploration for gold and other precious metals in North and South Carolina. The acquisition rationale is supported by both the Board's belief in the future potential of GAR's existing project interests and the current strong market environment in relation to gold. Pursuant to AIM Rule 15, the company's common shares will remain suspended from trading on AIM until completion of the proposed transaction.

Edward Nealon, Non-Executive Chairman of Richland, commented: "The proposed rebirth of Richland as Lexington Gold Ltd focused on the USA represents a move into a world famous mineral zone in the North and South Carolinas, where the dominant commodity is gold at a time when gold is performing strongly compared to other commodities. The acquisition of GAR provides us with not one but four projects which are all individually highly prospective, with two of them having walk up drill targets, such that we expect exciting times ahead."

Read the article online at: https://www.globalminingreview.com/finance-business/02112020/richland-resources-provide-proposed-reverse-takeover-update/