Glencar Mining plc ("Glencar" or the "Company")
AGM Statement
29 June 2009
At today's Annual General Meeting, Sean Finlay, Chairman, made the
following statement:
"Glencar has a very prospective exploration property at Komana in
Mali, West Africa. Through extensive drilling programmes, we have
established a JORC Compliant resource of 1.25 million ounces of
gold. Substantial additional funding is required to advance the
exploration of this target and ultimately to finance the completion
of a feasibility study. In Autumn 2008, Glencar began a
comprehensive review of the funding options available, involving
discussions with many large institutional shareholders and others
over a period of approximately six months. Glencar received feedback
from certain institutional shareholders, including Macquarie Bank
Limited, Glencar's largest shareholder at the time, that in light of
the then prevailing economic climate, they would either not fund the
Company further or if they did so it would be at a significant
discount to the then share price. The Company's shares were then
trading at between 4p and 4.5p and indications were given that the
issue price would need to be in the 2 p- 2.5 p range for the funding
to be made available. For a relatively modest US$5 million funding,
this would have diluted the existing, non participating shareholder
by approximately 33%. Further essential fundraisings would
obviously dilute the shareholder even further. It must be emphasised
that no firm proposals or commitments were received at that time from
any party in relation to funding.
Glencar then explored other strategic options for the Company with a
wide range of parties including farm-in deals for the Komana project
with several major mining groups and merger proposals with certain
other exploration companies who held similar or complimentary assets.
No proposal was received which incorporated a cash element for the
Glencar shareholder. We also engaged in discussions with Gold Fields
in relation to a joint venture agreement on the Komana Project.
These discussions continued until a letter of intent was completed
and announced on 25 March 2009. The Gold Fields Letter of Intent,
further details of which are in the announcement of 25 March 2009,
involved:
(i) an initial placing of Stg£1.2 million completed
on 7 April 2009 at a price of 4.55p, a premium to the market price at
the time of announcement;
(ii) a second placing of Stg£0.95 million at a price
of 4.55p , conditional on shareholder approval of the dissaplication
of pre-emption rights at a general meeting, scheduled for 29 June
2009;
(iii) negotiation of a Joint Venture agreement in
relation to Glencar's Komana licence involving
exploration/feasibility study expenditures of up to $32 million in
return for an interest of up to 65% in the Komana licence; and
(iv) an annual exploration option fee of $1.25 million
payable to Glencar over four years, totalling US$5 million.
The board of Glencar believes that the proposed Gold Fields deal is a
very attractive one for Glencar shareholders because it eliminates
funding uncertainty for up to US$32 million of financing for Komana
while maintaining a significant minority interest in the Komana
project for Glencar. It also provides US$8 million of exploration
financing to be applied on Glencar's Solona licence and on other
properties currently being negotiated.
In the discussions with Gold Fields on the completion of the joint
venture agreement, the Board recognises that there are certain
aspects of the proposed deal which require careful attention in order
to limit or minimise potentially negative impacts. However, the
Board also believes that the many positive aspects of the proposed
deal argue strongly in its favour. Should the proposed joint venture
agreement negotiations be discontinued by Gold Fields because of the
delays and uncertainty caused by the events surrounding today's AGM,
in the Board's view, it would be a very serious loss to the
shareholders when there is no guarantee of any viable alternative
proposal for funding.
If the negotiations with Gold Fields are concluded satisfactorily a
circular will be issued to shareholders which will seek shareholder
approval of the deal. The circular will contain full details of the
final terms of the joint venture agreement and will also contain the
Board's rationale for entering into this agreement, having considered
all realistic alternatives to fund the Group's development projects.
In the meantime, the Board is prepared to consider all realistic
(i.e. firm in terms of financing) strategic corporate options that
are put forward by bona fide interested parties on a timely basis."
For further information, please contact:
Glencar Mining plc
Hugh McCullough, Managing Director
Tel: +353 1 661 9974
e-mail: info@glencarmining.ie
Davy Corporate Finance
Ivan Murphy, Director
Brian Corr, Associate Director
Tel: +353 1 679 6363
Bishopsgate Communications
Nick Rome/Michael Kinirons
Tel: +44 20 7562 3350
e-mail: nick@bishopsgatecommunications.com
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