On 7 May 2012 the Board of Firestone Energy Limited (ASX/JSE: FSE) (the “Company” or “Firestone”) announced that it had entered into a conditional termsheet for the provision of A$30.7million of funding by Ariona Company SA (Ariona). Firestone is now pleased to announce that the Company has executed an Investment Agreement with Ariona to provide funding to the Company for the increased amount of A$40.7million.
Ariona is a special purpose vehicle representing a consortium of international institutional and private investors focusing on global resource opportunities.
Through the execution of this agreement, Ariona will provide A$40.7million to the Company under a secured convertible note facility replacing the current convertible notes. As previously announced on 7 May 2012, Ariona will provide this funding to Firestone with an initial A$30.7million by way of a replacement of the current convertible note facility. An additional $10million convertible note facility will also be made available to the Company on the same terms as the initial facility.
With this increased facility, and based on current Budgeted expenditure, Firestone is fully funded up to and including the completion of the Bankable Feasibility Study (BFS). Post the finalisation of the BFS, project funding will be required to undertake development and operation of the Waterberg Coal Project and Ariona have undertaken to procure funding of up to US$400m for this purpose.
It is confirmed that the terms of the convertible notes will be:
|Interest Payments||Payable half yearly. For the first 24 months interest is to be paid in cash or capitalised at the election of FSE and after the first 24 months interest to be paid in cash or capitalised as agreed by the Company and Ariona.|
|Conversion Price||A$0.025 per share|
|Conversion Terms||Convert into ordinary shares at the election of the noteholder.|
The Funds raised will be applied in approximately the manner set out below.
|Redeem existing convertible notes (ECNs) at face value||21.30m|
|Pay outstanding interest on the ECNs||0.85m|
|Expenses of the transaction (estimate)||1.90m|
The new convertible note facility is subject to certain conditions precedent, the most significant of which are:
Other significant terms are:
As a result of this transaction and a separate transaction between Ariona and Sekoko Resources Pty Ltd (as announced to the market on 29 June 2012), Ariona will become Firestone’s largest shareholder initially holding 25.69% in Firestone Shares (and up to approximately 50.00% on a fully diluted basis) and Sekoko Resources will now maintain an interest of 8.1% in the Company. The ownership of the Waterberg Joint Ventures will be:
*Includes an indirect 10% interest in the Joint venture for Ariona
There are several aspects of the transactions which will require shareholder approval including, Ariona acquiring more than 20% of Firestone, as an exception to Ariona making a formal takeover offer for Firestone. As advised the Company will convene a general meeting of shareholders in Q3 to approve the transactions. The Company will commission a report from an independent expert to assess whether the transactions are fair and reasonable for those shareholders of the Company not participating in the transactions. The independent experts report will accompany the notice of meeting and information memorandum to be sent to shareholders.
David Knox, the CEO of Firestone commented that “This transaction marks a significant event in the development of both the Company and the Waterberg Project.”
Firestone’s corporate finance adviser is BBY Limited and Kelly & Co are its corporate lawyers.
Chief Executive Officer
Tel: Australia (+61 08 9287 4600)
South Africa (+27 11 706 3548)
Firestone Energy Limited is an independent, Australian exploration and development company listed on the Australian Stock Exchange Ltd (ASX) and the Johannesburg Stock Exchange (JSE).
Firestone Energy has entered into a Joint Venture with Sekoko Resources (Pty) Ltd through which Firestone Energy has acquired the right to 60% participation interests in the Waterberg Coal Project located in Lephalale area, Limpopo Province, South Africa.
The first stage of the project is to develop the Smitspan mine which has a substantial measured thermal coal resource and to develop the Vetleegte mine which is a substantial metallurgical coal deposit.
Firestone Energy is committed to becoming a profitable independent coal and energy producer at its projects in South Africa, thereby making a substantial contribution to the social and economic development of the Lephalale area and South Africa.
3,114 million ordinary shares
Sekoko Resources (Pty) Ltd
Linc Energy Ltd
BBY Nominees Pty Ltd
Bell Potter Nominees Ltd
Directors and Officers
Non Executive Directors:
Mr Tim Tebeila (Chairman)
David Perkins (Deputy Chairman)
Dr Pius Kasolo
Mr David Knox CEO
Mr Jerry Monzu Company Secretary
Suite B9, 431 Roberts Road
Subiaco, Western Australia 6008
Tel: +61 (08) 9287 4600
Sekoko Resources (Pty) Ltd is a South African-based black-owned energy and minerals company developing the coal, magnetite iron ore and PGMs Projects in the Limpopo Province of South Africa. This includes a significant exploration program and development of the Waterberg Coal Joint Venture Project based on significant Coal Zone Resources.
25 July 2012
+27 11 706 3542