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Amaroq Minerals Ltd
Symbol AMRQ
Shares Issued 177,358,737
Close 2022-10-19 C$ 0.56
Market Cap C$ 99,320,893
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Amaroq arranges financing for 30 million British pounds

2022-10-19 13:39 ET - News Release

Mr. Eldur Olafsson reports

AMAROP MINERALS PROPOSED FUNDRAISING

Amaroq Minerals Ltd. intends to conduct a placing and subscription of new common shares to raise proceeds of approximately 30 million British pounds (equivalent to $46.4-million or 4.9 billion Icelandic kronur), in addition to the 18 million British pounds (equivalent to $27.9-million or 2.9 billion Icelandic kronur) in relation to the Acam LP joint investment. The books are covered on the fundraising at a price of 35 pence (54 cents, or approximately 57 Icelandic kronur at the closing exchange rate on Oct. 18, 2022) per new common share, with the proceeds being used to expand the company's resource base and accelerate exploration activities.

Highlights:

  • The approximately 30-million-British-pound fundraising will consist of:
    • A proposed placing of new common shares (the United Kingdom placing shares) with new and existing institutional investors (the U.K. placing), at the placing price, including a five-million-British-pound commitment from an existing family office shareholder;
    • An oversubscribed 2.4-billion-Icelandic-krona (equivalent to 15 million British pounds, or $23.2-million) underwritten proposed placing of new depositary receipts representing new common shares (the Icelandic placing shares) with new and existing institutional investors (the Icelandic placing), at the placing price;
    • A proposed private placement of new common shares (the Canadian subscription shares) by certain new and existing institutional investors, directors and senior management of the company at the placing price (the Canadian subscription); directors and senior management have committed to subscribe for 1.75 million British pounds (equivalent to $2.71-million, or 285 million Icelandic kronur) in the fundraising.
  • The fundraising complements the joint venture between the company and Acam, announced on June 10, 2022. In addition to the fundraising, the company has now executed final documentation in relation to the Acam joint venture, with closing and receipt of the initial 18-million-British-pound financing now only subject to certain regulatory conditions precedent.
  • Net proceeds from the fundraising will be used to expand and delineate the resource base at the company's cornerstone Nalunaq gold project in south Greenland and progress the asset toward mine construction as well as provide financing to accelerate exploration across the company's significant portfolio of gold assets and other corporate purposes and sit alongside Acam's joint venture investment.
  • The company is applying for listing of the Icelandic depository receipts, representing the Icelandic placing shares, on the Nasdaq First North Growth Market in Iceland, a multilateral trading facility, with admission to Icelandic exchange expected to become effective on Nov. 1, 2022, subject to completion of the fundraising and obtaining the necessary approvals from the TSX Venture Exchange.

Details of the fundraising:

  • Stifel Nicolaus Europe Ltd. is acting as sole bookrunner, nominated adviser and broker on the U.K. placing and Panmure Gordon (U.K.) Ltd. is acting as manager and broker in relation to the U.K. placing.
  • Arion banki hf and Landsbankinn hf are acting as joint bookrunners and underwriters on the Icelandic placing.
  • In relation to the U.K. placing:
    • The U.K. placing will be conducted through an accelerated bookbuild process to be conducted by the U.K. banks, which will launch immediately following the release of this announcement and will be made available to eligible institutional investors subject to the terms and conditions set out in an appendix. The bookbuild is expected to close no later than 8 a.m. on Oct. 20, 2022; however, the U.K. banks and the company reserve the right to close the bookbuild earlier or later, without further notice.
    • The U.K. placing is subject to the terms and conditions set out in an appendix to this announcement.
    • The U.K. placing is conditional, amongst other things, upon the Icelandic placing completing and the Icelandic listing. The Icelandic placing is conditional, amongst other things, upon the U.K. placing not having been terminated prior to the subscription for the Icelandic placing shares and the receipt of final approval from the TSX-V for the listing of the fundraising shares, but is not conditional upon the U.K. placing being completed.
  • In relation to the Icelandic placing:
    • Arion Bank has agreed to underwrite the purchase by placees procured by it of such number of Icelandic placing shares that, at the placing price (converted into Icelandic kronur on the day of close of the bookbuild), have an aggregate subscription price of 1,846 million Icelandic kronur (equivalent to 11.3 million British pounds and $17.6-million) pursuant to the terms and conditions agreed between Arion Bank and the company.
    • Landsbankinn has further agreed to underwrite the purchase by placees procured by it such number of Icelandic placing shares that, at the placing price (converted into Icelandic kronur on the day of close of the bookbuild), have an aggregate subscription value of 875 million Icelandic kronur (equivalent to 5.38 million British pounds and $8.32-million) pursuant to the terms and conditions agreed between Landsbankinn and the company.
  • Allocations are at the absolute discretion of Stifel, in consultation with the company and Panmure Gordon. The number of fundraising shares will be determined following completion of the bookbuild by agreement between the company and Stifel. Details of the number of fundraising shares will be announced as soon as practicable after the close of the bookbuild.

Eldur Olafsson, chief executive officer of Amaroq, commented: "This fundraising will be instrumental to driving growth throughout our exciting portfolio in Greenland, where we occupy a leading position in what is one of the last frontiers for Western governments and companies to secure the strategic minerals that will prove vital in the coming decades. On completion of the fundraising, the funds raised will enable us to progress the development of our flagship Nalunaq gold project, one of the highest-grade gold deposits in the world, whilst accelerating exploration of our strategic minerals assets to provide raw materials needed for the energy transition."

Background to and reasons for the fundraising

The company's strategy is to leverage its first-mover advantage in Greenland, underpinned by the previously producing Nalunaq project, to build a full-cycle mining company in Greenland, delivering long-term shareholder value and providing significant upside potential through its land bank of high-impact gold and strategic mineral exploration assets. Amaroq has been listed on the TSX-V since July, 2017, and the AIM (Alternative Investment Market) of the London Stock Exchange PLC since July 31, 2020.

The company acquired the Nalunaq gold project in 2015 and has made significant progress since this time in expanding the extent of the resource base through drilling, incorporating a new geological model (the Dolerite dike model) to better understand the distribution of the high-grade ore, building a new 50-person winterized camp to allow full-year activities, and acquiring and otherwise progressing much of the infrastructure required to bring Nalunaq into production. During this time, Amaroq has also been able to acquire the largest package of mineral rights in southern Greenland, covering 7,866.85 square kilometres, and the third largest in the whole of Greenland, with a number of assets that are highly prospective for gold and strategic minerals. The addition of strategic minerals into the portfolio provides significant growth potential as these metals and minerals, such as copper, nickel, titanium and graphite, are critical for increased electrification as part of the world's decarbonization strategy and as independent supply continues to become an increasing focus for nations globally.

As previously announced, the Nalunaq development was required to be put on temporary hold in February, 2021, due to unforeseen and material cost increases associated with the impacts of COVID-19. As a result, the company redirected its focus, continued to advance and derisk the Nalunaq project ahead of development, and has conducted successful regional exploration across its portfolio targeting gold and strategic minerals and resulting in a material increase in the company's reserve base.

Key developments at Nalunaq since AIM admission in 2020 include:

  • Infrastructure: Since admission, Amaroq has completed a significant proportion of Nalunaq's required infrastructure, with 60 per cent of major processing plant equipment procured, a 50-person all-weather exploration camp constructed and commissioned, critical surface mobile equipment purchased, and supporting infrastructure either purchased or commercially and technically evaluated.
  • Third party engineering study: Halyard Inc. was engaged to complete a third party engineering study on Nalunaq's development costs, including the process plant, mobile equipment, surface infrastructure, permanent camp, and associated logistics and engineering. The study concluded that the advanced engineering of the overall project is now to feasibility study level, based on the Canadian requirements of National Instrument 43-101, Standards of Disclosure for Mineral Project.
  • The Dolerite dike model: Amaroq has worked with SRK Consulting to develop the most robust mineral resource estimation technique for Nalunaq possible. This included the development of the Dolerite dike model to account for the high-grade variability from core sampling (the nugget effect) in order to better reflect the full resource potential at Nalunaq. The model allows the geological results to be incorporated into the Halyard engineering study in order to move the project toward independent technical studies to support further development.
  • Resource growth through drilling: Amaroq has drilled approximately 22,373 metres at Nalunaq since it listed on AIM and, incorporating learnings from the new Dolerite dike model, has identified two new high-grade zones, namely Valley block and Welcome block, taking the total number of identified high-grade zones at the asset to five. The Valley block is now expected to be one of the key targets for initial development. As a result of drilling in the 2020 and 2021 field seasons, Amaroq announced on Sept. 6, 2022, that it had increased its total inferred mineral resource by 30 per cent contained gold, with a 50-per-cent increase in average grade, since the previous estimate reported in 2020. The resource now sits at 355,000 tonnes at 28.0 grams per tonne gold for 320,000 ounces gold, putting the project in the top 2 per cent of projects globally in terms of reported gold resource grade.
  • Delivering on its ESG (environmental, social and governance) mandate: The company has worked hard over the period to update its environmental impact assessment (EIA) and social impact assessment (SIA) and will continue to do so over the coming months in line with the terms of its exploitation licence:
    • It has read and understood this announcement in its entirety (including the appendices) and acknowledges that its participation in the U.K. placing will be governed by, and subject to, the terms and conditions of the U.K. placing as referred to and included in this announcement.

Going forward, the company has laid out a clear plan for bringing Nalunaq back into production, with further drilling planned to expand the resource base and infill drilling to support resource confidence and delineation. The company is currently conducting an option study before moving toward initial development. Material produced from this initial development, which is expected to be in the Valley block, will provide the company the optionality to complete a bulk sample, potentially for toll treatment off site, and is expected to facilitate the recognition of reserves to underpin a prefeasibility study on the asset. A bulk sample and the associated infrastructure would be dual purposed and would also provide the initial construction required to commence redevelopment of Nalunaq. A prefeasibility study would outline the move to full-scale underground construction and mining and demonstrate a significant derisking of the development plan for Nalunaq and be used to support external debt and external investment. Amaroq will look to commence full mine construction and operations following the bulk sample and prefeasibility study, subject to securing appropriate financing.

Acam joint venture

The fundraising complements the joint venture between the company and Acam, announced on June 10, 2022, under which the company will establish a new subsidiary to hold certain licences in which the majority of resource is expected to relate to non-gold products.

Acam, through its affiliate company GCAM LP, will invest an initial amount of 18 million British pounds under a subscription and shareholder agreement in return for shares in the joint venture company representing up to 49 per cent of the joint venture company, to finance work programs on the initial joint venture company licences. The company will invest five million British pounds under the subscription and shareholder agreement, with such amount to be set off against costs incurred by Nalunaq AS as the joint venture company's project manager.

The subscription and shareholder agreement has been signed and placed into escrow and will be released (and will become effective) subject to satisfaction of certain conditions, expected to be satisfied by Q1 2023, including: (a) written approval by the government of Greenland pursuant to Section 88(1) of the Mineral Resources Act of the transfer of the initial joint venture company licences by Nalunaq AS to the joint venture company; (b) written confirmation from the Greenland Tax Agency that the demerger and transfer of the initial joint venture company licences to the joint venture company will be treated as tax neutral and not result in a tax charge; (c) execution of a novation agreement by Nalunaq AS, the company, the joint venture company, Orano Mining and GCAM in relation to the novation of the existing transfer and option agreement between Nalunaq AS and Orano Mining; and (d) receipt of final acceptance from the TSX-V in connection with the transactions outlined in the subscription and shareholder agreement. In the event that a takeover of the company becomes effective before the conditions precedent are satisfied and the bidder notifies the company, the joint venture company or Nalunaq AS that: (a) it does not want to proceed to completion of the subscription and shareholder agreement; or (b) the conditions precedent are not satisfied or waived by March 31, 2023, GCAM will have the right to terminate the escrow and a break fee will be payable by the company to GCAM. The break fee will be calculated based on a daily rate of 4,932 British pounds and the number of days elapsed since Oct. 19, 2022, and is subject to a cap of 941,918 British pounds.

Under the subscription and shareholder agreement, the joint venture company has agreed to grant a right of first refusal to the company in relation to any of the joint venture company's licences in Greenland that it does not wish to progress, wishes to withdraw from or on which material gold assets are discovered, and the company has agreed to grant a right of first refusal to the joint venture company in relation to any of the company's mineral licences that it does not wish to progress, wishes to withdraw from or on which material non-gold assets are discovered.

Sources and uses of proceeds

Existing cash will be used to finance exploration drilling and the joint venture deal means there is no spending requirement on the wider strategic assets in the short term, beyond the five million British pounds under the subscription and shareholder agreement, with such amount to be set off against costs incurred by Nalunaq AS as the joint venture company's project manager.

The use of proceeds of the fundraising includes 14.1 million British pounds to finance initial development at Nalunaq, including underground development costs and bulk sampling. In addition to this, the company plans to spend a further 1.3 million British pounds to conduct a further approximately 3,000 metres of drilling to expand the resource. Coupled together, this fundraising aims to increase both the size and the confidence level of the resource base. The increased confidence is aimed at to facilitating the conversion of mineral resources to mineral reserves and the bulk sample will possibly provide initial cash flows from Nalunaq, which would be used to progress the project through a prefeasibility study as well as completing its EIA and SIA, moving the asset toward full-scale mining.

In the unlikely event that the Icelandic placing completes but the U.K. placing does not, the company would adjust the uses of proceeds to reflect a smaller resource development program as well as making other less material reductions to the wider exploration program.

Bookbuild

Stifel is acting as sole bookrunner, nominated adviser and broker on the U.K. placing and Panmure Gordon is acting as manager and broker on the U.K. placing. Arion Bank and Landsbankinn are acting as joint bookrunners and joint underwriters on the Icelandic placing.

The bookbuild for the U.K. placing will launch immediately following the release of this announcement. The bookbuild is expected to close no later than 8 a.m. on Oct. 20, 2022, but the U.K. banks and the company reserve the right to close the bookbuild earlier or later, without further notice.

The U.K. placing is subject to the terms and conditions set out in an appendix to this announcement.

The number of fundraising shares will be determined following completion of the bookbuild by agreement between the company and Stifel. Allocations are at the absolute discretion of Stifel, in consultation with the company and Panmure Gordon, and will be confirmed orally or by e-mail following the close of the bookbuild. Details of the fundraising shares will be announced as soon as practicable after the close of the bookbuild.

By choosing to participate in the U.K. placing and by making an oral and legally binding offer to acquire U.K. placing shares, investors will be deemed to have read and understood this announcement in its entirety (including the appendices) and to be making such offer on the terms and subject to the conditions of the U.K. placing contained herein and to be providing the representations, warranties and acknowledgments contained in the appendix.

Application will be made to the London Stock Exchange for the Icelandic placing shares to be admitted to trading on AIM. Application will also be made to the TSX-V for admission of the Icelandic placing shares to trading on the TSX-V, with listing subject to the approval of the TSX-V and the company satisfying all of the requirements of the TSX-V and to the Icelandic exchange for the admission of the Icelandic depository receipts. It is currently expected that admission of the Icelandic placing shares to the TSX-V will occur on at 9:30 a.m. ET on Nov. 1, 2022, and admission of the Icelandic placing shares to trading on AIM will occur on at 8 a.m. GMT on Nov. 1, 2022 (or in each case such other date as may be agreed between the company and the U.K. banks). It is expected that the Icelandic listing will become effective and that dealings in the Icelandic depository receipts will commence on the Icelandic exchange at 9:30 a.m. GMT on Nov. 1, 2022 (or such other date as may be agreed between the company and the U.K. banks).

Application will be made to the London Stock Exchange for the U.K. placing shares and the Canadian subscription shares to be admitted to trading on AIM and to the TSX-V for the U.K. placing shares and the Canadian subscription shares to be admitted to trading on the TSX-V, with listing subject to the approval of the TSX-V and the company satisfying all of the requirements of the TSX-V. It is currently expected that admission will become effective and that dealings in the U.K. placing shares and Canadian subscription shares will commence on AIM at 8 a.m. GMT on Nov. 2, 2022, and on the TSX-V at 9:30 a.m. ET on Nov. 2, 2022 (or in each case such other date as may be agreed between the company and the U.K. banks).

Related party transaction

Certain of the directors and members of the company's senior management team have indicated their intention to participate in the Canadian subscription for approximately 1.75 million British pounds (equivalent to 285 million Icelandic kronur, or $2.71-million) in aggregate. As such, the Canadian subscription will constitute a related party transaction within the meaning of Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions, and within the meaning of Policy 5.9 of the TSX-V rules.

Related party transactions require the company to obtain a formal valuation and minority shareholder approval unless exemptions from these requirements are available under applicable Canadian securities laws. With respect to the Canadian subscription, the company is relying on the exemption from the formal valuation requirements in Section 5.5(b) of MI 61-101 (as a result of the common shares being listed on the TSX-V and being admitted for trading on AIM) and is relying on the exemption from minority approval requirements in Section 5.7(1)(a) of MI 61-101 as the fair market value of the securities distributed to, and the consideration received from, interested parties does not exceed 25 per cent of the company's market capitalization. The company did not file a material change report at least 21 days prior to the closing of the Canadian subscription as participation of the insiders had not been confirmed at that time and the company wished to close on an expedited basis for business reasons.

Unless stated otherwise, all amounts are based on an Icelandic-krona-to-British-pound exchange rate of 0.0061 and a Canadian-dollar-to-British-pound exchange rate of 0.6459 as at Oct. 19, 2022.

About Amaroq Minerals Ltd.

Amaroq's principal business objectives are the identification, acquisition, exploration and development of gold properties in Greenland. The company's principal asset is a 100-per-cent interest in the Nalunaq project, an advanced-exploration-stage property with an exploitation licence, including the previously operating Nalunaq gold mine. The company has a portfolio of gold assets covering 7,866.85 square kilometres, the largest portfolio of gold assets in southern Greenland covering the two known gold belts in the region. Amaroq is incorporated under the Canada Business Corporations Act and wholly owns Nalunaq AS, incorporated under the Greenland Public Companies Act.

Qualified person statement

The mineral resource estimate was prepared by Dr. Lucy Roberts, MAusIMM (CP), principal consultant (resource geology), SRK Consulting (U.K.) Ltd., an independent qualified person in accordance with the requirements of National Instrument 43-101. Dr. Roberts has approved the disclosure herein.

The technical information presented in this press release has been approved by James Gilbertson, CGeol, vice-president, exploration, for the company and a chartered geologist with the Geological Society of London, and, as such, is a qualified person as defined by NI 43-101.

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