RNS Number:8014K
Moto Goldmines Limited
31 December 2007
NEWS RELEASE
FOR IMMEDIATE RELEASE TSX Code - MGL
December 31, 2007 AIM Code - MOE
MOTO GOLDMINES AGREES TO INCREASE INTEREST IN THE MOTO GOLD PROJECT AND TO
PLACEMENT TO SAM JONAH
PERTH, WESTERN AUSTRALIA - Moto Goldmines Limited ("Moto" or the "Company") is
pleased to announce that it has entered into agreements with its joint venture
partner, Societe d'Organisation, de Participation et de Management ("Orgaman")
in relation to the Moto Gold Project and with Sam Jonah, KBE, Chairman of the
Company, to the following effect:
• Moto will simplify its joint venture arrangements and increase its interest
in the Moto Gold Project to 70% by acquiring Orgaman's 10% interest for
aggregate consideration of approximately US$34.6 million, comprising 9,319,211
common shares in Moto (to be issued at C$2.93 per share) and a cash payment of
approximately US$7.5 million to repay shareholder loans made by Orgaman to
Borgakim Mining sprl ("Borgakim") and the other subsidiary companies through
which the Moto Gold Project is held, plus interest on the cash element from
signing to completion; and
• In conjunction with this acquisition, Mr Jonah has agreed to subscribe for
2,717,874 common shares in Moto at a price of C$2.78 per share to raise proceeds
of approximately C$7.6 million to demonstrate his ongoing support for the
Company and the Moto Gold Project.
Following the completion of these transactions, Moto will hold a 70% interest in
the Moto Gold Project. The remaining 30% is a non dilutive interest held by
L'Office des Mines d'Or de Kilo-Moto ("OKIMO"), a Congolese state-owned company.
Completion is expected to occur on or about 30 January 2008 and is subject to
receipt of required listing and regulatory approvals from the Toronto Stock
Exchange (the "TSX") and that successful application is made for the admission
of the new shares to the AIM Market of the London Stock Exchange ("AIM").
The Board believes that, by increasing its percentage holding in the Moto Gold
Project and reducing the number of parties to the joint venture arrangements, it
will be able to more rapidly progress the contractual arrangements required to
enable the development and financing of the Moto Gold Project.
Sam Jonah, Chairman of the Company, commented "I have confidence in the Moto
Gold Project and I am pleased to have the opportunity to show this by
subscribing for further shares to assist Moto in increasing its percentage
ownership of the Project. Having completed the feasibility study and increased
our interest in the Project we will be focussing on finalising the joint venture
arrangements with OKIMO so as to enable us to progress and develop the Project
in the interests of all stakeholders"
Acquisition of joint venture partner's interest in the Moto Gold Project
Moto and Orgaman currently hold their 70% interest in the Moto Gold Project
through their ownership of a number of Moto subsidiaries that are incorporated
in the Democratic Republic of Congo ("DRC"). Orgaman has agreed to transfer its
interests in those subsidiaries (comprising shares and shareholder loans) to
Moto for an aggregate consideration of approximately US$34.6 million comprising
9,319,211 common shares in Moto (to be issued at C$2.93 per share) and a cash
payment of approximately US$7.5 million to repay shareholder loans made by
Orgaman to Borgakim and to the other subsidiaries concerned. The cash portion
will bear interest at 8% per annum from signing to completion. The issuance of
the Moto common shares is conditional upon receipt of listing and regulatory
approvals from the TSX and that successful application for the admission of the
new shares is made to AIM.
William Damseaux and Jean-Claude Damseaux are the controlling shareholders of
Orgaman. As at today's date, they hold directly 570,290 Moto common shares and
Orgaman holds 1,166,000 Moto common shares for a total shareholding of 1,736,290
shares. Following completion of this transaction and the issuance of Moto common
shares to Mr Jonah described below, Orgaman, William Damseaux and Jean-Claude
Damseaux as a group will hold approximately 14.75% of Moto's then issued share
capital.
In assessing this acquisition, the Directors (other than Mr Jonah, who has not
taken part in the assessment) have valued the assets being acquired at
approximately US$34.6 million.
Pursuant to the November 2006 Protocol between Moto and OKIMO (announced by the
Company on November 8, 2006) Moto is to acquire certain debts owed by OKIMO to
Orgaman (the "OKIMO Loan") and the contractual arrangements between Moto and
OKIMO are to be further simplified into one agreement regarding the Moto Gold
Project (the "Consolidated Lease Agreement").
As part of the agreements announced today, Moto has formalised the documentation
to reflect its agreement with Orgaman to acquire the OKIMO Loan for a purchase
price equal to its face amount and accrued interest to date, of approximately
US$31.1 million (the "Assignment"). The purchase price will bear interest at 8%
per annum and will be paid to Orgaman as to US$10 million within seven business
days of the effective date of the Assignment, US$10 million on the first
anniversary of the effective date and the balance of approximately US$11.1
million and accrued interest on the second anniversary of the effective date.
Moto has also agreed to certain other protections for Orgaman if it abandons the
Moto Gold Project prior to payment in full to Orgaman.
The Assignment is conditional on the Consolidated Lease Agreement and the
Tripartite Agreement, referred to below, being entered into. As part of the
November 2006 Protocol, it was agreed that the OKIMO Loan would only be removed
from the books of OKIMO once an agreement (the "Tripartite Agreement") is
entered into among OKIMO, Moto/Borgakim and Orgaman confirming completion of the
assignment of the OKIMO Loan. Moto and Orgaman have agreed in the negotiation
of the Tripartite Agreement to seek the insertion of a clause that the OKIMO
Loan, less interest accrued during the force majeure period, being an amount of
approximately US$23 million as at today's date, is assumed by Borgakim.
Pending the Tripartite Agreement being entered into, Moto has agreed that
Orgaman will be granted a charge over an effective 10% interest in Borgakim or
the Moto DRC subsidiary that will hold the Consolidated Lease Agreement. If the
Tripartite Agreement is not entered into within 18 months, Orgaman will be
entitled to exercise the charge and become again involved in the management of
the Moto Gold Project, unless Moto pays the outstanding amount due to Orgaman
under the Assignment.
Moto has the option to pay up to 50% of any instalment of the purchase price for
the OKIMO Loan by the issuance to Orgaman of Moto common shares, subject to
receipt of regulatory approvals. The number of Moto common shares to be issued
will be determined by reference to the volume weighted average price of Moto
common shares on the TSX for the five trading days immediately prior to the
payment date converted to US dollars at the noon rate of exchange published by
the Bank of Canada on the last day of the five-day period.
If there is a change of control of Moto, all unpaid amounts due by Moto in
respect of the purchase price (together with accrued interest) will become
payable within seven days. If a change of control occurs before the
Consolidated Lease Agreement and the Tripartite Agreement become unconditional,
then Orgaman can require payment only upon the Assignment of the Okimo Loan
becoming effective.
Orgaman has agreed that for twelve months it will not dispose of the Moto common
shares issued to it pursuant to the above transactions without first offering
such shares to Mr Jonah and to Moto. Pursuant to applicable Canadian securities
laws, Orgaman will be restricted from selling any common shares issued in
connection with these transactions in Canada for four months, absent an
exemption from registration and prospectus requirements.
The Directors (other than Mr Jonah), having consulted with RFC Corporate Finance
Ltd, the Company's nominated adviser, consider that the terms of the
transactions with Orgaman are fair and reasonable in so far as its shareholders
are concerned.
Sam Jonah, KBE to increase his holding in Moto as a sign of ongoing support
Sam Jonah, KBE, Chairman and a Director of Moto, has agreed to subscribe for
2,717,874 Moto common shares at a subscription price of C$2.78 per share for
aggregate gross proceeds of approximately C$7.6 million (approximately US$7.5
million). The Company will use the subscription proceeds to make the cash
payments to Orgaman, as described above. The subscription is subject to all
regulatory approvals being obtained and to completion of the acquisition from
Orgaman of its interest in the Moto Gold Project, described above.
Mr Jonah has agreed that for twelve months he will not dispose of the Moto
common shares issued pursuant to this subscription, except pursuant to a
recommended takeover offer or plan of arrangement or a transfer approved by the
board of directors of Moto (such approval not to be unreasonably withheld).
Under his existing arrangements with Moto, Mr Jonah is entitled to be issued
options equal to 5% of any material share issuances by the Company. Mr Jonah has
waived his entitlement to be issued options in respect of his subscription for
shares but will be issued options to acquire 465,961 Moto common shares on
completion of the transaction with Orgaman, in accordance with Moto's stock
option plan. Following the issue of these options, Mr Jonah will hold an
aggregate of 3,559,600 options to subscribe for Moto common shares.
Immediately after the issuance of the common shares to Orgaman and Mr Jonah, Mr
Jonah will hold an aggregate of 2,717,874 Moto common shares representing
approximately 3.63% of the then outstanding Moto common shares. If Mr Jonah were
then to exercise all options currently held by him (including the options
referred to above), Mr Jonah would hold an aggregate of 6,277,474 Moto common
shares representing approximately 7.73% of what would then be the issued common
shares of Moto (without giving effect to the issuance of any other shares of
Moto pursuant to any other issued options).
The placement to Mr Jonah is conditional upon completion of the acquisition of
Orgaman's interest in the Moto Gold Project described above.
The Directors (other than Mr Jonah) consider, having consulted with RFC
Corporate Finance Ltd, the Company's nominated adviser, that the terms of the
subscription by Mr Jonah are fair and reasonable in so far as the its
shareholders are concerned.
GICC Consultancy Agreement
In order to expedite the progress of the Moto Gold Project, the Company has
engaged Generale Industrielle et Commerciale au Congo ("GICC"), a DRC-based
consultancy group, to assist Moto in obtaining the Consolidated Lease Agreement,
negotiating the documentation relating to the Moto Gold Project and obtaining of
all relevant government approvals and consents to enable the development of the
Moto Gold Project.
If such agreements and approvals are obtained within 11 months of engaging GICC,
Moto will pay GICC US$2 million and issue GICC 1,886,948 Moto common shares less
such number of common shares as have a value at that time equal to US$2 million,
based on the volume weighted average price of Moto common shares on the TSX for
the previous five trading days converted to US dollars at the noon rate of
exchange published by the Bank of Canada on the last day of the five-day period.
If, during the 12 months following completion of the services, the price of
Moto common shares on the TSX exceeds C$11.92 or C$15.90, a further 628,982
common shares will be issued to GICC on each such share price level being
exceeded as deferred compensation. If there is a change of control of Moto,
certain of the shares will be required to be issued even if the conditions and
thresholds have not been met, but the obligation to issue further shares shall
lapse.
For further information in respect of the Company's activities, please contact:
Mark Arnesen Andrew Dinning
Financial Director and Chief Financial Officer President and Chief Operating Officer
Tel: (61 8) 9240 1377 Tel: (61 8) 9240 1377
Email: marnesen@motogoldmines.com Email: adinning@motogoldmines.com
Nominated adviser for the purposes of AIM: RFC Corporate Finance Ltd Contact:
Jamie Wright
Company website: www.motogoldmines.com
Additional Notes:
Share Capital: Following the issuance of common shares to Orgaman in connection
with the acquisition of Orgaman's interest in the Moto Gold Project and the
share subscription by Mr Jonah, the issued share capital of the Company will
increase from 62,898,270 to 74,935,355 common shares with the following changes
in significant shareholdings and directors' interests, assuming no other share
issuances take place prior to completion:
Current Interest following Interest following
interest Current completion of transactions completion of
(Shares) interest (%) (Shares) transactions (%)
Shareholder
Orgaman/Messrs.. 1,736,290 2.76% 11,055,501 14. 75%
Jean-Claude and William
Damseaux *
Mr Jonah * * Nil Nil 2,717,874 3.63%
Mackenzie Financial 8,750,000 13.9% 8,750,000 11.68%
Corporation ***
* Messrs. Jean-Claude Damseaux and William Damseaux hold directly 570,290
shares, the balance in the above table is held by Orgaman. In addition two
senior managers of Orgaman hold shares in Moto. Mr Antoine Lokondo holds
37,550 shares and options to purchase 100,000 shares exercisable at C$7.65 per
share and Mr Augustin Yenga 10,000 shares.
** In addition to the common shares set out in the table above. Sam Jonah also
holds options to purchase 3,093,639 common shares (comprising 1,750,000 options
exercisable at C$2.60, 400,000 options exercisable at C$3.15, 275,000 options
exercisable at C$7.65 and 668,639 options exercisable at C$2.97) and will be
entitled to receive options to purchase an additional 465,691 common shares on
completion of the transactions with Orgaman.
*** Based on the most recent public filing made by Mackenzie Financial
Corporation.
Caution Regarding Forward Looking Statements: Statements regarding Moto's plans
to increase its interest in the Moto Gold Project and advance development of the
Moto Gold Project are forward looking. There can be no assurance (i) regarding
the final nature of the detailed agreements implementing the transactions
described in this news release or that the detailed agreements will be concluded
in a form that is satisfactory to the parties involved; (ii) that regulatory
approvals required in connection with these transactions will be obtained; or
(iii) that the Moto Gold Project will be successfully developed, that any
mineralisation previously disclosed in respect of the Moto Gold Project will be
proven to be economic, that anticipated metallurgical recoveries will be
achieved, that future evaluation work will confirm the viability of deposits
identified with the project or that future required regulatory approvals will be
obtained.
An exchange rate of US$1.00 = C$1.0073 has been used in this announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCZGMFZZMKGNZG
