Metal Tiger plc (LON:MTR), the London Stock Exchange AIM listed investor in natural resource opportunities, has today announced that, following several months of due diligence and negotiations, it has signed a binding subscription agreement to invest A$3.33 million (c.£.1.7 million) into Australian-based and South Korean-focused gold explorer, Southern Gold Limited at A$0.14 per share as part of SAU’s A$10 million (c.£.5.2 million) fundraise, which is subject to SAU shareholder approval. Assuming Southern Gold shareholders approve the Placement, Metal Tiger will be interested in circa 14.90% of the company.
Highlights of Southern Gold investment:
- Cornerstone investment by Metal Tiger for approximately 33% of the institutional fundraise to support a lift in Southern Gold’s gold exploration efforts in South Korea to a more significant level, including a doubling of field teams and diamond drilling rate.
- Metal Tiger has obtained the right to nominate one director to the Board of Southern Gold for so long as it holds an interest in the SAU of at least 10%. Terry Grammer is expected to join as Metal Tiger’s nominee following SAU shareholder approval of the Placement.
- Metal Tiger has negotiated as a condition precedent of its investment the appointment of prominent geologist Douglas Kirwin to the Board. Doug is expected to join upon announcement of the Placement by Southern Gold.
- The Board of SAU has committed to hold within 3 months of completion of the Placement a strategic review session (the “SAU Review”) which will be attended by members of the Board (including Terry Grammer and Douglas Kirwin) as well as senior management.
The key goals of the SAU Review include, but are not limited to, SAU using reasonable endeavours to:
a) establish a detailed and optimised strategy to ensure the Company has 70% of its annual expenditure on exploration in the 2020/2021 financial year, of which 40% of total annual expenditure is to be expended on drilling;
b) establish 3-4 project generation teams, of which a minimum of 2 project generation teams will undertake the task of generating targets for licence applications for a minimum of six months;
c) outline and prepare a revised marketing strategy, which shall include an in-depth analysis of epithermal deposits with the purpose of providing education to the market of the potential value of epithermal deposits; and
d) establish three site visits per year with key specific targeted individuals (for example, analysts, news writers, corporate/strategic advisers etc.) invited to attend each of the site visits.
In addition to Metal Tiger, the Placement has been supported by SAU’s four largest shareholder, and several of its directors as well as attracting institutional support in Australia. The new share issuance will be subject to shareholder approval at a general meeting of SAU shareholders, expected to be held in early to mid-March, with a Notice of Meeting expected to be sent to SAU shareholders imminently.
The Company will provide a link to Southern Gold’s announcement relating to the Placement in a separate RNS, which is expected to be tomorrow.
Further information on Southern Gold
Southern Gold is listed on the ASX under symbol SAU. Southern Gold owns 100% of a portfolio of high-grade gold projects in South Korea that are largely greenfield epithermal gold-silver targets in the south-west of the country.
For the year ended 30 June 2019, SAU reported a loss before tax of A$10.1 million. As at 30 June 2019, SAU reported net assets of A$7.6 million.
Spain Write Off
The Board reviews its existing investment on an ongoing basis and, following its latest review, has decided to write off its Spanish assets, being its Logrosan joint venture.
Michael McNeilly, Chief Executive Officer of Metal Tiger, commented: “Southern Gold was first identified as a possible investment opportunity for Metal Tiger in July 2019 through an encounter with Douglas Kirwin. Recognising Doug’s technical talent, experience and success, we immediately started to undertake a significant amount of corporate and technical due diligence on SAU. Following a site visit by Terry Grammer and I in November 2019, the true scale of the exploration opportunity presented itself. The realisation that the company had successfully built a team that could operate in-country gave us the comfort to put a deal to the Board of SAU. In this deal we have obtained commitments that SAU would run a strategic review process to focus on areas where we believed there could be room for improvement. The existing investor support in the Placement gives us added comfort. We believe Southern Gold represents a unique area / country exploration play with significant exploration upside potential.”