Keegan Resources arranges financing with Highland Park
2012-10-15 06:45 MT - News Release
Mr. Shawn Wallace reports:
KEEGAN WELCOMES HIGHLAND PARK GROUP AS STRATEGIC INVESTOR AND RECRUITS HIGHLY EXPERIENCED MANAGEMENT TEAM FOR DEVELOPMENT OF ESAASE GOLD PROJECT
Keegan Resources Inc. has arranged a private placement with Highland Park SA of Johannesburg, South Africa, and some other investors. Highland Park will become a major strategic investor in the company but is not expected to materially affect control.
The placement will involve an equity issue of a targeted 9,443,500 units at $3.44 per unit, the five-day volume-weighted average market price based on the date of signing of the principle subscription agreement, resulting in a targeted total of $32.5-million raised. The placement will further enhance the company's already strong financial position and will provide access to Highland Park's substantial resource management skills. The funds from the placement will enable Keegan to fast-track the company's flagship Esaase gold project in Ghana and emerge as a significant gold producer.
The key investors in Highland Park include the original founders and former executives of Toronto-based LionOre Mining International Ltd. LionOre was acquired in 2007 for $6.3-billion (U.S.) by Norilsk Nickel. Highland Park was also involved in the development and strategic direction of Mantra Resources into a leading uranium explorer and developer prior to its acquisition by ARMZ Uranium Holding Co. in 2011.
In conjunction with the Highland Park investment, Keegan is pleased to announce the appointments of Peter Breese as president and chief executive officer and Tony Devlin as chief operating officer of the company to occur concurrently with completion of the placement. Mr. Breese will also be appointed as a director of Keegan. Along with Mr. Breese and Mr. Devlin comes a multidisciplinary technical team that has the expertise necessary to execute on all aspects of the project. The board understands that the appointment of a CEO and a COO with strong records of success in project development and operations management, as well as extensive experience in Africa, is an important and timely step for the company as it evolves from an explorer into a significant near-term gold producer. Shawn Wallace, co-founder, chairman and acting CEO, will continue to play a key role with Keegan as chairman of the board and as a director.
The board is very pleased to have Highland Park as a strategic investor and has also invited Colin Steyn, previously CEO of LionOre and currently the chairman of Coalspur Mines, to join the board of Keegan upon completion of the financing. Mr. Steyn was a director of LionOre from 1998 and was appointed president and CEO in 1999. Prior to this, Mr. Steyn was executive director in charge of metallurgical operations in Zimbabwe for Rio Tinto. Mr. Steyn holds an MBA from Cranfield University, United Kingdom, and is currently a director of Mirabela Nickel and the chairman of Coalspur Mines.
Dr. Daniel McCoy will step down from the board on closing to make room for these new appointments. Dr. McCoy has been integral in the discovery and delineation of the Esaase gold project and the company wishes to thank him for his many contributions as a director. Dr. McCoy will continue with Keegan in his present role as chief geologist.
Shawn Wallace, chairman of the board, commented: "We think that the investment in Keegan by Highland Park, a group of very successful and experienced mining executives known for their meticulous approach and extensive due diligence, represents a major endorsement of our project, our new plan and our team. I am delighted to also welcome Peter and Tony to the Keegan team. Their extensive African project development and operational experience will be critical in transforming Keegan into a significant gold producer. The value of putting in place a team that has worked together for many years on several successful projects is invaluable. Execution risk is currently a key issue for investors in the mining industry and we feel that by putting this team in place we have more than addressed this. The timing of these appointments is ideal as we finalize a revised prefeasibility study following our extensive re-examination of the development options for our flagship Esaase gold project.
"I would also on behalf of the entire board like to give a special thank you to Dr. Daniel McCoy. Dan was responsible for assembling and guiding the technical team that discovered and delineated the Esaase gold project and his contribution was critical to our exploration success.
"The funds raised from the placement and any subsequent warrant exercise will add significantly to our already strong financial position, minimizing financing risk, and will now enable us to expedite the development of our key asset in Ghana. I believe Keegan now stands out as one of the few development projects that will be virtually fully financed without committing any debt security over its property or hedging any of its future gold production. The partnership with Highland Park will be accretive to all shareholders. We will also gain from the demonstrated corporate, development and operational skills and expertise of Mr. Colin Steyn and Highland Park as we commence the transition from explorer to significant gold producer."
Colin Steyn, on behalf of Highland Park, commented, "Our investment follows a lengthy and exhaustive due diligence of a number of gold opportunities in Africa by our technical team and our decision to invest in Keegan reflects our confidence in the quality of Keegan's Esaase gold project and its management, and also reflects our confidence in Ghana as an investment destination."
Peter Breese has over 25 years executive, operational and project management experience in the global mining industry in the base and precious metals sectors. Mr. Breese is currently a director of Toronto Stock Exchange-listed Coalspur Mines Ltd. He has held a number of senior executive positions including CEO of Mantra Resources, CEO of Norilsk Nickel International, chief operating officer of LionOre, as well as senior management and board positions with Impala Platinum Holdings (South Africa), Mimosa Mining Company (Zimbabwe), Zimasco (Zimbabwe) and BCL (Botswana).
Tony Devlin has over 30 years of executive, operational and project management experience in Africa. Most recently Mr. Devlin was managing director (MD) of Mantra Tanzania. Prior to that he was MD of Williamson Diamonds in Tanzania and also held a number of executive management positions with Anglo American including CEO of Zimbabwe Alloys (Zimbabwe).
The financing will include the issuance of up to 9,443,500 units at $3.44 per unit, the five-day volume-weighted average market price based on the date of signing of the subscription agreement, resulting in a total of $32.5-million raised. Each unit will consist of one common share of the company as well as one warrant to purchase a common share in the company for a period of two years at a price of $4 per share. Should the company's share price trade at a price of greater than $6 per share for a period of 20 consecutive trading days, the company will have a right to accelerate the exercise period of the warrants to 30 days. Exercise of the warrants would raise an additional $37.8-million. The private placement will result in Highland Park securing an initial 9.6-per-cent ownership of the company with the warrant providing an opportunity to increase their ownership to 17.3 per cent assuming no intervening additional share issuances. Highland Park will become a strategic partner and the single largest shareholder in Keegan. The placement is not expected to materially affect control given the size of the other institutional shareholdings.
There are no fees or broker warrants associated with the financing. The financing is currently subject to TSX acceptance and will rely on an exemption from shareholders approval requirements under New York Stock Exchange (NYSE) MKT rules. Insiders may purchase up to 10 per cent of the financing.
