(“BWA” or the “Company”)
Proposed £4.66 million Acquisition of Kings of the
Further to the Company’s announcements of
An extract from the Circular is set out below. A copy of the full text of the Circular will be available at www.bwagroupplc.com.
The Directors of BWA are responsible for the contents of this announcement.
For further information please contact:
07836 238 172
020 7469 0930
The Directors of BWA have for a number of years been seeking a suitable acquisition or major investment for the Company with a view to achieving an enhancement of Shareholder value. They believe that the transaction described in this Circular is capable of meeting that objective.
The purpose of this Circular is to outline the background to, and reasons for, the Acquisition and explain why the Board consider the Acquisition to be in the best interests of the Company and its Shareholders as a whole, and why the Directors recommend that you vote in favour of all the Resolutions, as they intend to do themselves in respect of the Ordinary Shares beneficially held by them.
2. Background to and Reasons for the Acquisition
Since the formation of the Company, the Directors have sought a suitable investment or investments which will be value enhancing for Shareholders and, over the years, have made a number of small investments, including in a potential mining opportunity in
The Directors believe that the KOTN licences represent the material investment that they have been looking for and that the Acquisition meets the objectives of the Company’s investment strategy, being a sizeable investment in the minerals sector, to build upon the existing investment in BWA Cameroon, which they believe also has the prospect of enhancing Shareholder value.
The Directors have determined that it would be appropriate for an independent valuation report to be prepared based on available data in order for them to have the necessary comfort for the consideration to be paid for KOTN. The Valuation Report is summarised in section 3 below, which includes references to “NI 43-101” reports, the purpose of which is to provide a summary of material scientific and technical information concerning mineral exploration, development, and production activities on a mineral property.
3. Description of the KOTN mineral licences being acquired
BWA commissioned an independent report by
A summary of the five mineral Licences groups is set out in Table 1 below:-
Table 1 Kings of the North Concessions and Exploration Stage
Name Province Commodity Existing NI43-101 Report Hemlo North Limb Ontario Gold Yes (dated 7 Dec. 2016) Isoukustouc Quebec Nickel-Copper-Cobalt Yes (dated 10 Dec. 2009) Villebon Quebec Gold -Nickel-Copper-PGE Yes (dated 10 Dec. 2009) Nova Gold Quebec Gold No Winterhouse Quebec Gold No (Maison D’hiver)
SRK have valued each project separately using a combination of the market, cost and geoscience appraisal methodologies. From the valuation estimates using each approach, SRK has developed a final preferred valuation along with what SRK consider to be appropriate ranges for each project (see Table 2), as is defined within the VALMIN code (
Table 2 SRK Preferred Valuation for the Kings of the North Projects
Preferred Value Hemlo Isoukustouc Villebon Nova Winterhouse Kings of the North Range (CAN$M) North Gold Portfolio Max 2.1 2.4 3.0 0.7 0.29 8.5 SRK Preferred 1.5 2.2 2.7 0.5 0.26 7.2 Min 1.2 2.1 2.5 0.4 0.25 6.4
Notes: All values are in Canadian Dollars. A degree of rounding has been conducted throughout the valuation process. SRK consider any differences this may cause to the final valuation figures to be negligible.
From this Table 2, it can be seen that the SRK’s Preferred Valuation for the five licence area groups is
Table 3 Comparison of Exploration Valuation Methodology Ranges
SRK Hemlo North Isoukustouc Villebon Nova Gold Winterhouse Kings of the Valuation North (CAN$M) Portfolio PEM
$1.2 $1.7 $3.5 $0.5 $0.05 $7.0Valuation Min $1.7 $2.9 $2.3 $0.4 $0.3 $7.6Valuation NPV Max $26 $38 $53 $16 $5 $138Valuation Technical $1.5 $2.4 $3.0 $0.5 $0.3 $7.7Valuation
Notes: All values are in Canadian Dollars. A degree of rounding has been conducted throughout the valuation process. SRK consider any differences this may cause to the final valuation figures to be negligible.
Whilst the SRK preferred valuation at
Below is a summary of the five licence area groups. References to ‘Prospectively’ are summarised in the Table below.
Hemlo North property is located in the
The Isoukustouc project is located within the
The Villebon project is located near the south-eastern margin of the Abitibi Greenstone Belt, in the Vald'Or region of
The project area was subject to drilling in 2010/2011.
The Nova Gold project is located in the
The project area is split into four blocks of claims. The eastern most two contiguous blocks of claims are prospective for banded iron formation ("BIF") related gold mineralisation in metamorphosed sedimentary units located at the border of Labrador Trough, a younger tectonic belt. Goldcorp's Elenore mine is reported to be in a similar metamorphic sedimentary/ mobile belt geological setting (
Winterhouse (Maison D’Hiver),
Winterhouse property is located in the
The project area is prospective for Archean greenstone hosted gold and base metals with a number of high grade occurrences and high grade historical drill intersections (at Courcy-2) located approximately 5 km to the west of the property (on
The Directors consider, that in the light of the SRK report and technical valuation, the acquisition of these five mining licence areas in
Table Summary of Kings of the North Projects
Hemlo North Isoukustouc Villebon Nova Gold Winterhouse KOTN Exploration Early Early Target Early Early Stage Definition Prospectivity Strong, on the Good Good Good Good northernmost extent of the Heron Bay?Hemlo greenstone belt. Identified Yes Yes Yes Yes Yes Prospects Geophysics Airborne VTEM Yes Yes Yes Yes Survey Drilling Historic Scout Limited Limited No No Drilling Historic No No Yes, No No Mineral Non-Compliant Resource or Mineral Reserve Estimates Historic of No No No No No Current Production Primary Hemlo-Type Intrusive Intrusive BIF / BIF Exploration Gold Deposits related magmatic Metamorphic associated Model Ni-Cu-Co related Gold metamorphic mineralisation Ni-Cu-Co gold mineralisation Type of VMS, BIF, Qtz a Neighbouring mineral Gold quartz drilled occurrence in vein hosted, intersections vicinity mafic intrusives Cu-Ni, Ag & minor PGM. Adjacent Yes Yes Yes Yes Yes Properties Range of Historic B-40: 3.84% Non-compliant Channel: Au grab sample grades intersections: Ni, 17% Cu and resource: 5.81g/t Au samples: on property 2.5 m @ 8.2 0.2% Co. 421,840 t @ over 3m, 0.45g/t, g/t Au, 3.10m Mathilda: 0.52% Cu, 0.72 4.42g/t Au 0.34g/t, @ 3.9 g/t Au. 0.35% Cu, % Ni & 1.08 over 0.35m, 0.2g/t 0.5g/t Recent samples 0.34% Ni & g/t combined 4.83g/t Au 1.7g/t, mostly low 0.1% Co, Pt-Pd (1987) over 0.9m. 0.83g/t, grade. Manic-3 (Lac Grab: 1.03g/t, Louis): up to 28.66g/t 0.12g/t 0.84% Ni, 2% Au, 40g/t Cu, 0.11% Co Au, 16.37g/t Au, 6.9g/t Au, 2.29g/t Au, 3.05g/t Au Number of 420 30 32 99 63 Claims* Earliest & 05/05/2019 16/01/2021 05/10/2019 01/01/2020 24/01/2019 Latest Claim Expiry Date Earliest & 04/04/2020 25/05/2021 16/02/2022 23/09/2020 26/10/2019 Latest Claim Expiry Date Area under 7,342 1,663 1,393 4,865 3,290 Claim (Ha) Required Work
$ 133,400 $ 56,100 $ 71,600 $ 13,365 $ 8,505Spend for Next Renewal Available $ 148,031 $ 622,922 $ 493,931$ - $ - Exploration Reserve Renewal Fees $ 1,958 $ 2,024 $ 13,365 $ 14,345Net Credit $14,631 $564,865 $420,307- $26,730- $22,850 $950,223GESTIM - $ 1,100,000 $ 685,551$ - $ - Accepted Incurred Expenditure Anticipated $ 2.00 $ 1.00 $ 1.20 $ 0.60 $ 0.30 $5.10Future Spend (SRK ES) $M Impairment 1.00 Valuation $ Royalty ? 3% NSR on ? ? ? property. 1.5% can be bought back for $3MGESTIM First Affected by: Affected by : Nation Nittassin de ÉPOG Restriction Betsiamites agreement Note agreement Transaction $2Mfor 50%, Committed $4Mfor 75% Spend Buy Back Yes 25% for Option $1M+ 3x Exploration Spend
The information set out above in this section 3 has been extracted without material adjustment from the Valuation Report. The Valuation Report is available for inspection on BWA’s website at www.bwagroupplc.com. SRK have given and have not withdrawn their written consent to the inclusion in this Circular of the information extracted from the Valuation Report and to the references thereto and to their name in the form and context in which they appear.
4. Consideration for the Acquisition
The contract for the Acquisition (the SPA) sets out the terms of the Acquisition, subject to Canadian law. Under the terms of the SPA, BWA will acquire the entire issued share capital in KOTN (a corporation existing under the laws of
The principal terms of the Convertible Loan Notes are as follows:
a. convertible into Ordinary Shares up until the third anniversary of Completion, at a price equal to the 5 days Volume Weighted Average Price per Ordinary Share prior to the date of conversion and subject to a minimum conversion price of £0.005 per Ordinary Share;
b. following the third anniversary of Completion, any outstanding Convertible Loan Notes will be rolled over for a subsequent 12 months on the same terms;
c. Convertible Loan Notes which have not been converted by the expiry of the further 12 month period shall automatically convert to a new class of share in the Company, being Deferred Non-Voting Shares, convertible on the same terms as the Loan Note Instrument, save they carry no right to capital on winding up;
d. the Convertible Loan Notes provide that, at all times no person shall be able to exercise their right to convert any Convertible Loan Notes or Deferred Non-Voting Shares if to do so would cause that person (or any person acting in concert with that person, as defined in the Takeover Code) to exceed a 29% interest in the voting rights of BWA; and
e. the Convertible Loan Notes are interest free.
The £100,000 of Convertible Loan Notes to be issued pursuant to the Subscription will have the same rights as the Convertible Loan Notes to be issued as consideration for the Acquisition.
Shareholders’ approval is required to authorise the creation of a new class of Deferred Non-Voting Share which will be issued in accordance with the Loan Note Instrument in the event that any Convertible Loan Notes are not converted during the available conversion timeframe as set out above. The Deferred Non-Voting Shares shall be issued in accordance with the terms of the Loan Note Instrument, save that on any return of assets on liquidation, the Deferred Non-Voting Shares shall not confer on the holders thereof any entitlement to receive out of the assets of the Company available for distribution amongst the members (subject to the rights of any new class of shares with preferred rights) the amounts paid up or credited as paid up on the Deferred Non-Voting Shares held by them respectively after (but only after) payment shall have been made to the holders of the Ordinary Shares of the amounts paid up or credited as paid up on such shares and the sum of £10,000,000 in respect of each Ordinary Share held by them respectively. The holders of the Deferred Non-Voting Shares shall have no further right to participate in the assets of the Company.
5. Future Strategy
The Directors intend that work will be undertaken on all the KOTN mineral licence groups over the next 12 to 18 months, in line with the licence agreements and with a view to obtaining up to date NI 43-101 reports and also a resource on one or two of the targeted sites. The anticipated work programs on Hemlo North, Villebon and Isoukustouc are set out in the full Valuation Report, which is available as set out above. Of the other two sites, the work programme for Maison D’Hiver (Winterhouse) which is noted in the Valuation Report is covered in a presentation prepared by independent geological consultant
The Directors expect that the funding of the exploration work in
The Company’s existing subsidiary, BWA Cameroon, has for some time, been actively seeking licences for the development of rutile sands projects in Cameroon. The gaining of such licences is proving very time consuming, but the process is now at a stage where no further money needs to be spent before the licences are granted. Recently, BWA Cameroon received
The Company’s other major investment,
6. Working Capital
The Directors are of the opinion, having made due and careful enquiry, that, taking into account the proceeds of the Subscription, the working capital available to the Company on Completion will be sufficient for the present requirements of the Company, that is, for the period of twelve months following Completion.
On completion of the Acquisition,
Save as set out below, there is no further information regarding
Vilhjalmur Thor VilhjalmssonCurrent Directorships 1. North Atlantic Mining Associates Ltd2. JV Capital Ltd3. Melville Bay Ltd4. Iceland Resources ehf 5. JV Capitalehf 6. Eldgjá ehf 7. African Minerals Ventures Ltd8. St Georges eco mining Ltd 9. JV Verktakar ehf 10. Moberg Capital Ltd11. Borealis Commodities Exchange ehf Historic Directorships 1. North Atlantic Mining Associatesehf 2. Birta Ltd3. NAMA Resources plc4. NAMA Coal Ltd5. NAMA East Asia Ltd6. NAMA Gold Ltd North Atlantic Mining Associatesehf went into administration in Icelandon 13 February 2014and was liquidated on 8 December 2015with a deficit of less than £500,000.
8. Corporate Governance
In accordance with NEX revised governance requirements the Company has formed an Audit committee, of which
9. Issue of Shares to Directors
On the flotation of the Company in
4.1 The following definitions shall apply to clause 4.2:
(a) Current Price means:
4.1.1 if new money is being raised at the time of the Company’s investment into another business, the issue price of such shares; or
4.1.2 if no new money is being raised at the time of the Company’s investment into another business, the average mid-market closing price of an ordinary share in the capital of the Company over the 10 Dealing Days after the completion of the Company’s investment;
(b) Dealing Days means a day on which trading occurs on PLUS or any other market on which the shares of the Company are traded at the relevant time.
4.2 You shall be entitled to a fee of £10,000 per annum (Fee). The Fee shall accrue each year but shall not be payable until the Company makes an investment in the securities of another business (whether publicly traded or not) at which point the Fee shall be payable in ordinary shares in the capital of the Company. The number of ordinary shares you are entitled to receive shall be calculated by reference to the Current Price.
The Acquisition meets the terms of the Directors’ agreements and so, in order to settle total outstanding remuneration of £298,193 due to the Directors and to repay the Director loans totalling £62,261.19, the Company is proposing to issue a total of 72,090,838 Ordinary Shares at £0.005 per share. Of these Ordinary Shares, 59,638,600 Ordinary Shares are proposed to be issued in satisfying the Directors’ outstanding remuneration and 12,452,238 Ordinary Shares in respect of Directors’ loans Shareholder approval is required to authorise the allotment of Ordinary Shares for this purpose.
In issuing 72,090,838 Ordinary Shares pursuant to Resolution 4, the Company is capitalizing the sum of £360,454.19. The following table sets out the Ordinary Shares to be issued to each Director:
Director Director Loan Total issue Total % of enlarged Remuneration shareholding issued share post-issue capital Richard Cash : Cash : Cash : 43,118,982 22.39% Battersby £100,833 £30,957.80 £131,790.80 Ordinary Ordinary Shares : Shares : Ordinary 20,166,600 6,191,560 Shares : 26,358,160 Alex Borrelli Cash : Cash : Cash : 25,202,618 13.08% £98,611 £15,507.24 £114,118.24 Ordinary Ordinary Shares : Shares : Ordinary 19,722,200 3,101,448 Shares : 22,823,648 James Cash : Cash : Cash : 42,575,301 22.10% Butterfield £98,749 £15,796.15 Ordinary Ordinary £114,545.15 Shares : Shares : 19,749,800 3,159,230 Ordinary Shares : 22,909,030 Total Cash : Cash : Cash : 110,896,901 57.05% £298,193 £62,261.19 £360,454.19 Ordinary Ordinary Ordinary Shares : Shares : Shares : 72,090,838 59,638,600 12,452,238
10. General Meeting
A notice convening the General Meeting, which is to be held at
· Resolution 1, which is an ordinary resolution, to authorise the Directors to complete the Acquisition;
· Resolution 2, which is a special resolution, to amend the articles of association, as set out in the Notice of the General Meeting, such that the Company’s articles of association includes rights for the Deferred Non-Voting Shares as referred to in the Loan Note Instrument;
· Resolution 3, which is an ordinary resolution, to authorise the Directors to allot relevant securities, namely the Convertible Loan Notes, which contain a right to be converted from debt to equity in the form of Ordinary Shares and Deferred Non-Voting Shares, up to an aggregate nominal amount of £10,000,000, being equal to Convertible Loan Notes (i.e. the number of Convertible Loan Notes to be issued); and
· Resolution 4, which is an ordinary resolution, to authorise the Directors to allot Ordinary Shares to the Directors, in respect of their outstanding director remuneration and to satisfy the director loans, in the amount of 72,090,838 Ordinary Shares at £0.005.
11. Actions to be taken
In respect of the General Meeting
Please check that you have received the following with this Circular a Form of Proxy for use in respect of the General Meeting.
Whether or not you propose to attend the General Meeting in person, you are strongly encouraged to complete, sign and return your Form of Proxy in accordance with the instructions printed thereon as soon as possible, but in any event so as to be received, by post or, during normal business hours only, by hand, at the Company’s registered office, by no later than
If you hold your shares in the Company in uncertificated form (that is, in CREST) you may vote using the CREST Proxy Voting service in accordance with the procedures set out in the CREST Manual (please also refer to the accompanying notes to the Notice of the General Meeting set out at the end of this Circular). Proxies submitted via CREST must be received by the Company’s agent (CREST ID 7RA36) by no later than
Appointing a proxy in accordance with the instructions set out above will enable your vote to be counted at the General Meeting in the event of your absence. The completion and return of the Form of Proxy or the use of the CREST Proxy Voting service will not prevent you from attending and voting at the General Meeting, or any adjournment thereof, in person should you wish to do so.
Shareholders should be aware that if any of the Resolutions are not passed, the Acquisition will not proceed.
The Directors believe that the Resolutions to be proposed at the General Meeting are in the best interests of the Company and Shareholders as a whole and unanimously recommend that Shareholders vote in favour of the Resolutions.
The Directors have irrevocably undertaken to vote in favour of the Resolutions in respect of, in aggregate, 38,806,063 Ordinary Shares, representing approximately 32.2 per cent of the Ordinary Shares in issue at the date of this Circular.
The following definitions apply throughout this document (including the Notice of General Meeting) and the Form of Proxy unless the context requires otherwise:
“Acquisition” the Company’s proposed acquisition of the entire issued share capital of KOTN "Board" or "Directors" the directors of the Company whose names are set out on page 4 of this Circular "Business Day" any day on which banks are usually open in
Englandand Walesfor the transaction of sterling business, other than a Saturday, Sunday or public holiday "certificated" or "in certificated a share or other security not held in form" uncertificated form (that is, not in CREST) “Circular” this document including the Notice of General Meeting “Company” or “BWA” BWA Group PLC, a company incorporated in Englandand Waleswith registered number 00255647 “Completion” completion of the Acquisition “Convertible Loan Notes” the unsecured convertible loan notes to be issued in accordance with the Loan Note Instrument agreed as part of the Acquisition "CREST" a relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the Operator (as defined in the CREST Regulations) "CREST Regulations" the Uncertificated SecuritiesRegulations 2001 (SI 2001/3755) as amended from time to time “Deferred Non-Voting Share” means a deferred non-voting share in the capital of BWA on the same terms as the Loan Note Instrument save that it shall have no right to capital on winding-up, to be issued in accordance with the Loan Note Instrument in the event that such Convertible Loan Notes are not converted “Existing Ordinary Shares” the issued share capital of the Company as at the date of this Circular, being 120,531,833 Ordinary Shares " Financial Conduct Authority" or "FCA" the Financial Conduct Authority(and its predecessor, the Financial Services Authority) in its capacity as the competent authority for the purposes of Part VI of FSMA "Form of Proxy" the enclosed form of proxy for use by Shareholders in connection with the General Meeting "FSMA" the Financial Services and Markets Act 2000 (as amended) "General Meeting" the general meeting of the Company to be held at 11 a.m.on 30 September 2019(or any reconvened meeting following any adjournment of the general meeting) at BDB Pitmans LLP, 50 Broadway, London, SW1H 0BL, notice of which is set out at the end of this document “Group” the Company and its subsidiaries from time to time “KOTN” Kings of the North Corp.(incorporated in Quebec) 230 Notre Dame Street West, Montreal, Quebec, H2Y 1T3 “Loan Note Instrument” the draft convertible loan note instrument prepared prior to exchange of contracts on 29 May 2019relating to the Acquisition “ ” plc“NEX Exchange” NEX Exchange Limited, a Recognised Investment Exchange under section 290 of FSMA “NEX Exchange Growth Market” or “NEX” the primary market segment operated by NEX Exchange for dealings in unlisted securities “NEX Exchange Rules” the NEX Exchange Growth Market – Rules for Issuers, which set out the admission requirements and continuing obligations of companies seeking admission to and whose shares are admitted to trading on the NEX Exchange Growth Market “Notice” or “Notice of General Meeting” the notice of the General Meeting set out at the end of this document “Ordinary Shares” ordinary shares in the capital of the Company. “Proposals” the Resolutions set out in the Notice of General Meeting “Proposed Director” Vilhjalmur Thor Vilhjalmsson“Recognised Investment Exchange” has the meaning given in the NEX Exchange Rules "Registrar" Share Registrars Limited, registrars to the Company "Resolutions" the resolutions to be proposed at the General Meeting, as set out in the Notice of General Meeting "Shareholders" holders of Ordinary Shares “SPA” or “Share Purchase Agreement” the share purchase agreement relating to the purchase of KOTN dated 29 May 2019between BWA, SX and various minority shareholders of SX “Subscription” the proposed subscription of £100,000 nominal of Convertible Loan Notes “SX” means St-Georges Eco-Mining Corp. a corporation existing under the laws of Canadaand having an address at 230 Notre-Dame Street West, Montreal, Quebec, H2Y 1T3 “Takeover Code” the City Code on Takeovers and Mergers "uncertificated" or "in uncertificated recorded on the register of members of form" the Company as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST "United Kingdom" or "UK" the United Kingdomof Great Britainand Northern Ireland"United States" or "US" the United States of America“Valuation Report” the valuation report of the assets to be acquired pursuant to the Acquisition prepared by SRK Exploration Services Limited dated 29 March 2019“Volume Weighted Average Price” the volume weighted average price of the Ordinary Shares, calculated by dividing the total value by the total volume of Ordinary Shares traded for the relevant period, if no trade has occurred on certain day it is assumed to be 1 share traded at the last traded price "£", "pence", "penny", "pounds UKpounds sterling, the lawful currency sterling", or sterling” of the United Kingdom“C$” Canadian dollars, the lawful currency of Canada”
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via a