Admission to AIM
Tuesday 7th August, 2007
Category :
Regulator News Service
Strategic Natural Resources plc (’SNR’), a vehicle established to develop, own and manage natural resource extraction enterprises in southern Africa, is pleased to announce that trading in its shares on AIM commenced today.
As part of the flotation, Hichens Harrison & Co plc placed 10 million ordinary shares at 30p per share raising a total of £3million for the Company. At admission there are 65 million ordinary shares in issue giving a market capitalisation of £19.5 million at the placing price. HB Corporate is Nominated Adviser to the Company
The funds raised during the placing will primarily be used to cover planning and operational costs for the development of the Company’s principal asset, the prospecting right over 9,283 hectares held by its subsidiary, Elitheni Coal (Pty) Ltd, at Indwe, which is located north of East London in the Eastern Cape Province of South Africa, and to meet the cost of additional prospecting for coal in that area.
SNR intends to develop, own and manage a coal mining operation at Indwe, close to areas where energy supplies are falling well below current and projected supply.
SNR’s Chief Executive Jeremy Metcalfe said: “We are confident that our strategic positioning will establish us as a long-term supplier to the energy market in South Africa and subsequently throughout southern Africa. We have already established the initial contacts we believe may lead to long-term customer relationships.“
SNR has entered into a framework agreement with the AIM- and AltX-quoted power generation group, IPSA Group PLC (‘IPSA’), giving IPSA, subject to certain conditions, a right of first refusal to purchase, for IPSA’s planned Indwe Power Plant and the Da Gamma Textile CHP Plant, all of Elitheni’s coal which it plans to sell to the primary energy market. It is anticipated that the majority of the coal extracted will be used in electricity generation and industrial boilers through the use of clean coal combustion technology.
Coal mined at Indwe is also suitable for use in brick making, as a reductant in the metallurgical smelting industry and as a domestic fuel source.
For further information contact:
Jeremy P. Metcalfe
Chief Executive
Strategic Natural Resources plc
Tel: +44 1303 874 798
Allan Piper
First City Financial Public Relations
Tel: +44 20 7242 2666
Rod Venables / Cecil Jordaan
HB Corporate
Tel: +44 20 7510 8600
AIM Admission Details:
AIM symbol: SNRP
Funds raised: £3 million
Placing price: 30p
Number of shares placed: 10 million
Number of shares in issue: 65 million
Percentage of enlarged share capital with placees: 15.4%
Market capitalisation at placing price: £19.5 million
Proportion of issued shares held by management: 45%
Advisers:
Nominated Adviser: HB Corporate
Financial Adviser: Blomfield Street Securities Limited
Broker: Hichens, Harrison & Co. plc
Board of Directors:
Richard Henry Ringrose Latham, Non-Executive Chairman
Richard Latham was appointed Chairman of Northern Petroleum Plc in 1999 and his career has been closely tied to the energy industry. He holds a MBA degree from Cranfield University and has spent most of his working life in the City - initially as an investment manager and for 27 years with companies in the upstream oil and gas industry. He was formerly deputy chairman of Aberdeen Petroleum Plc, chairman and managing director of Claremount Oil and Gas Limited and a non-executive director of Atlantis Resources Limited, a company listed on the London and Toronto stock exchanges.
Jeremy Peter Metcalfe, Chief Executive
Jeremy Metcalfe has a track record as a financier, marketer and promoter. He has hands on experience of the extractive minerals market having managed public companies including the chairmanship of Minmet plc, Connary Minerals plc, Crediton Minerals plc and Tiger Resource Finance plc which were engaged in the exploration and production of gold, base metals and diamonds in Brazil, Portugal, Peru, Dominican Republic, Honduras and the UK. He has arranged the funding, purchase and sale of a number of gold related projects in Europe and West Africa including the early funding of Golden Prospect plc (since renamed Ambrian Capital plc) and of Tiger Resource Finance plc, a successful mining finance house. He has a wide experience of running a number of businesses, latterly in the public sector commencing in 1994.
Barry William Nel, Commercial Director
Barry Nel is the founder of Elitheni and is involved in the South African coal and energy supply sector. He was a founder of Trans Tugela Coal (Pty) Ltd in 1976 which was South Africa’s first independent coal mining operation. The business grew to three medium sized collieries and captured 35 per cent. of the Natal industrial coal market. He formed Coalnet in 1990 to focus on joint ventures with coal users such as the successful joint venture between Coalnet and Vakbel of Turkey, which involved exporting 2.5Mt of South African coal to Turkey. Since 1999, he has committed himself and all his resources to the full time task of establishing Elitheni.
Elizabeth Ruth Shaw, Executive Finance Director
Elizabeth Shaw has been involved in the electricity sector since 1994 when she joined Fieldstone Private Capital Group (UK) Limited. Between 1994 and 2000, as a director of Fieldstone, she advised on a number of mergers, acquisitions and disposals in the electricity industry, both in the UK and in developing markets. Prior to joining Fieldstone, she was involved in the financing of small to medium sized companies in the UK, including raising equity for both listed and unlisted companies. She joined Independent Power Corporation PLC as a director in 2000 where she is responsible for business development and finance. She is also an executive director and founder of Rurelec PLC and of IPSA Group PLC. She is a graduate of Exeter University.
Peter Richard Stephen Earl, Non-Executive Director
Peter Earl began his career at the Boston Consulting Group Inc. advising state-owned companies. He has advised ministries of finance and central banks in Abu Dhabi, Albania, Kuwait and Saudi Arabia. He was previously CEO of Tranwood PLC and The Carter Organisation Inc. in New York. In 1994 he acted on secondment to the World Bank and UNDP in Bolivia. He has advised governments on privatisations in Latin America and Eastern Europe having served as Deputy Chairman for the United Nations Economic Commission for Europe infrastructure finance group. He became a director of Fieldstone Private Capital Group UK Limited in London in 1994, where he advised on cross-border power sector acquisitions and bids totalling approximately US$6 billion, involving 5,000 MW of installed generating capacity. In 1995 he founded Independent Power Corporation PLC, and is also a founder and executive director of Rurelec PLC and of IPSA Group PLC. He is also a non-executive director of Blomfield Street Securities Limited and of Hichens Harrison (South America) Limited, both being subsidiaries of Hichens Harrison. He is the author of a European textbook on cross-border takeovers. He is an Oxford University graduate and was a Kennedy Scholar at Harvard University.
Robert Myles Randal MacDonnell, Non-Executive Director
Randal MacDonnell was a Partner of Laurie Milbank & Co Stockbrokers, stockbroker partnership for 16 years until it was taken over by Chase Manhattan Bank (subsequently JPMorgan Chase & Co.) in 1985. He was head of the institutional equity department raising money for underwritings, placings and rights issues, as well as conducting normal stock exchange business. In 1986 he was appointed a Director of Chase Manhattan Securities Limited where he remained for four years. He subsequently became a director of Credit Lyonnais Securities Limited and in 1994 was appointed a Director of Kleinwort Benson Securities Limited primarily dealing with small companies. Prior to becoming a member of the London Stock Exchange in 1965 he was commissioned in the 9th/12th Royal Lancers. He is currently a non-executive director of PipeHawk plc.
Use of funds:
► To meet the cost of the mining right application for the Elitheni coal mine, located in the Eastern Cape, South Africa;
► To establish an initial mining operation at Indwe;
► To meet the cost of future prospecting for coal in the Indwe area;
► To repay a related party loan of approx. £450,000;
► The costs of admission.
Website:
Background information:
Strategic Natural Resources PLC (the ‘Company’ or ‘SNR’) was established in October 2004 as a vehicle to develop, own and manage natural resource extraction enterprises in southern Africa. Acharnian Mining Ltd (incorporated in the British Virgin Islands), a wholly owned subsidiary of SNR and intermediate holding company, owns 90 per cent. of the share capital of Elitheni Coal (Pty) Ltd (incorporated in South Africa).
The principal asset of Elitheni Coal (Pty) Ltd (‘Elitheni’) is the phase 1 and phase 2 prospecting right, which gives Elitheni the right to prospect for coal over these areas. The phase 1 and phase 2 area covers 9,283.80 ha in the Gubahoek / Macubeni area of the Eastern Cape Province of South Africa and the prospecting right gives the Company the exclusive right to apply for and be granted a mining right for coal over the phase 1 and 2 area. On 6 March 2007, Elitheni submitted an application for a prospecting right on further land in the Gubahoek / Macubeni area, to the extent of 15,922.86 ha (to be the phase 3 area). Subject to the grant and registration of the phase 3 prospecting right, anticipated to be in the final quarter of 2007, Elitheni will have rights to prospect for coal over a total of 25,206.66 ha.
The competent person’s report confirms that the phase 1 area, over which prospecting is complete, has a resource of 15Mt of coal, comprising 6.68Mt of Measured Coal Resources, 2.45Mt of Indicated Coal Resources and 5.92Mt of Inferred Coal Resources.
Elitheni has commenced the work required for the submission of the phase 1 and 2 area mining right application and, subject to increasing and maintaining its Historically Disadvantaged South African (‘HDSA’) shareholder base to the minimum regulatory requirement of 26 per cent., expects to submit the application during the third quarter of 2007. Based on this planned submission date, the granting of the mining right is expected to be in the third quarter of 2008.
Subject to the phase 3 area prospecting activities showing adequate reserves, the Directors plan to submit the mining right application for the phase 3 area before the end of 2008, in order to commence mining in 2009.
It is anticipated there will be strong demand for Elitheni’s coal from several markets, predominantly the Indwe Power Plant and the Da Gama Textile Plant. Both of these projects are planned by IPSA, the independent power generation company quoted on both AIM and Johannesburg’s junior AltX market.
Elitheni’s coal can also be used as a reductant within the metallurgical industry, an additive and primary energy source for the brick-making industry; and fuel for domestic consumption.
Power generation in South Africa is currently dominated by the State-owned electricity generator and supplier, Eskom, which currently generates around 95 per cent. of the country’s installed generating capacity. The South African electricity system is currently suffering from a severe reduction in reserve capacity since electricity consumption has far outstripped anticipated production growth levels and no significant new generation capacity has been added to Eskom’s generation base for a number of years. Areas of the Western Cape have been experiencing blackouts and brownouts over the past two years.
In line with South Africa’s Black Empowerment Act, 26% of Elitheni’s shares must be held by HDSAs in order that the company can be granted and retain a mining right. At present, two investors whom the Directors believe to be HDSAs, hold in aggregate, 10% of Elitheni. The company is in negotiations with HDSAs wishing to acquire additional shares, and The Directors anticipate that after admission to AIM, but prior to an application for the mining right over the Phase 1 and 2 Area, HDSA investors will acquire shares taking the holding to the required 26% level. SNR’s interest in, Elitheni will accordingly decrease to 74%.
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