Tembo Gold Corp. (TSX VENTURE:TEM)(FRANKFURT:T23) ("Tembo" or the "Company") is
pleased to announce a proposed strategic financing for the Company. The Company
proposes to complete a non-brokered private placement (the "Financing")
consisting of up to 13,333,334 units (the "Units") at a price per Unit of C$0.15
and up to 44,380,000 subscription receipts (the "Subscription Receipts") at a
price per Subscription Receipt of C$0.15 for total gross proceeds of up to
C$8.657 million with a minimum financing condition of C$7 million.
Each Unit will consist of one common share (each a "Share") and one common share
purchase warrant of the Company (each a "Warrant"). Each Warrant will be
exercisable to acquire one Share at a price of $0.16 per Share for a period of
three years from the issuance of the Units on the initial closing of the
Financing.
The main investors subscribing for Subscription Receipts under the Financing
will be NAMF II (Mauritius) Limited ("NAMF Mauritius") as to C$1,941,750, NAMF
II South African Partnership ("NAMF South Africa") as to C$558,250, Stratex Gold
A.G. ("Stratex") as for up to C$1,657,000 and Concept Capital Management Limited
("CCM") as for up to C$2,500,000 (collectively, the "Investor Group"). Certain
management members, other insiders, and existing shareholders of the Company
will also participate in the Financing for up to C$2,000,000 of Units. None of
the members of the Investor Group are currently insiders of the Company.
David Scott, President and CEO of Tembo, states, "We are very pleased with the
prospect of having the Investor Group as strategic partners in Tembo. We look
forward to their financial support through their investment, and importantly,
their input into the technical planning and corporate management of the Company.
he synergy of Tembo's goals and that of the Investor Group could point toward a
fruitful and successful future as the prospectivity of the Tembo Project is
further explored."
Commenting on the proposed investment Stratex Chairman Christopher Hall said
"Stratex is very pleased to announce this exciting strategic investment in
conjunction with the New Africa Mining Fund II and Concept Capital Management.
The Tembo property is located in the highly prospective Lake Victoria Gold Belt
of Tanzania to the northwest of, and next to, the Bulyanhulu Mine. Tembo has
built on extensive historic work and artisanal activity with encouraging results
from over 35,000m of drilling on half a dozen targets, however, it has yet to
report a resource. Stratex and its partners believe they can guide, support and
provide the finance for management to focus on priority targets, with infill and
step-out drilling, before moving to resource estimation. In line with our
restated strategy, we see Tembo as a "tipping point" opportunity, where tightly
focussed exploration can accelerate the exploration process. Negotiating and
structuring this transaction has been a protracted process and there are still
some hurdles to be overcome. However, there has been an immense amount of
goodwill on all sides as the financing is clearly in the interests of Tembo and
all its stakeholders."
About New Africa Mining Fund II
The New Africa Mining Fund II ("NAMF") is a junior mining venture capital fund
which provides capital for early to later stage exploration and mining
development projects in all minerals except diamonds and uranium, throughout
Africa. NAMF adheres to the common standards and investment practices which have
been developed and successfully followed by Private Equity investment firms in
other markets. Such practices include due diligence, strict attention to
corporate governance and sustainable development policies and a disciplined
approach to timely investment realization.
About Stratex International Plc. (AIM:STI)
Stratex is an AIM-listed company focused on the exploration and development of
gold and high-value base metals in Turkey, East Africa and West Africa. Listing
in January 2006, the company has been positioned to take advantage of the
current paucity of exploration activities and the resultant projected shortage
in supply of precious and base metals. Since inception Stratex has rapidly
amassed a portfolio of high-potential exploration licences in central and
western Turkey, Ethiopia and Djibouti, and Senegal and Mauritania, as a result
of the company's informed and aggressive approach to terrain analysis and
prospect identification.
About Concept Capital Management
CCM, is a private German based Asset Management Company focused on evaluating
and investing in Canadian resource companies through equity investments,
convertible bonds and gold, silver, and copper off-take agreements.
The strategic intention of the Investor Group is to prioritize continued
advancement of the exploration of the Tembo project with an aim to develop a
significant resource base. The Board of Directors considers that the
introduction of the Investor Group will favorably expand the potential capital
base of the Company going forward. As such the Board of Directors of Tembo
unanimously recommends that Tembo shareholders consent to the change of control
in connection with the Financing. The Investor Group has advised Tembo that it
intends for Tembo to remain a public company after completion of the Financing.
Set out below are some additional key terms of the Financing:
-- The members of Investor Group are making their investment jointly;
-- The investors in the Investor Group will each be granted a right to
maintain their pro rata interest in the Company going forward, subject
to maintaining a minimum 5% equity interest in Tembo;
-- The Investor Group will act jointly and in concert in making its
investment and propose to enter into a private voting arrangement in
connection with their investment. It is anticipated that the voting
arrangement will provide for, among other things, the pooling of the
Shares (assuming conversion of the Subscription Receipts) owned by the
Investor Group, the termination of the pooling arrangement, the exercise
of the collective voting rights, certain restrictions on encumbrances,
the establishment of a pooling agent and certain rights with respect to
the disposition of Shares (assuming conversion of the Subscription
Receipts);
-- The board of directors of Tembo will be reconstituted with a majority of
directors comprised of nominees of the Investor Group. It is proposed
that David Scott, Dave Anthony and John Seaman will resign as needed
from the Tembo board and Neil Gardyne, Bob Foster, Frank Hoegel of NAMF
Mauritius and NAMF South Africa, Stratex and CCM, respectively, will be
appointed to fill such vacancies. Each nominee will be appointed
immediately following the conversion of the Subscription Receipts of the
applicable Investor Group member. The appointment of all the nominees of
the Investor Group will constitute a "Change of Management" under the
rules of the TSXV. The biographies of the proposed directors are as
follows:
Neil Gardyne - Mr. Gardyne is a geologist with over 35 years' experience in
exploration and mining ventures in Southern Africa, and has been involved in
managing Private Equity/ Venture Capital funds focusing on early stage
exploration and mine development in South Africa for the past 12 years. He has a
BSc (Hons) degree in Geology from the University of Kwa-Zulu Natal, and is
currently a Director on the Board of NAMF II (Mauritius) Ltd, Decorum Capital
Partners (Pty) Ltd, and NAMF Corporate Advisory Services (Pty) Ltd.
Bob Foster (BSc, PhD, FIMM, CEng, FGS, CGeol) - Dr. Foster has 39 years of
experience as a professional economic geologist and has particular expertise in
the genesis of and exploration for gold deposits, having worked in Europe,
Central Asia, North and South America, and throughout Africa. Following ten
years in the mining industry in Rhodesia (now Zimbabwe) he joined Southampton
University in 1984 where he subsequently devoted more than 15 years to lecturing
and managing a large applied research group investigating ore-forming processes
and mineral exploration strategies before spending six years with UK-based
Exploration Consultants Ltd as Minerals Manager. He has published numerous
scientific and technical papers and has been an invited keynote speaker at very
many international scientific and technical conferences around the world. He is
Chief Executive of Stratex International Plc, an AIM-quoted company operating in
Turkey and East and West Africa.
Frank Hoegel - Mr. Hoegel currently serves as Chief Executive Officer of Peter
Beck Performance Fonds GbR, and sits on the advisory board of Concept Capital
Management, an Asset Management Company focused on evaluating and investing in
Canadian resource companies through equity investments, convertible bonds and
gold, silver, and copper off-take agreements. Mr. Hoegel completed his degree in
Master of Business Administration (FH) with a focus on Financial Management,
Banking and International Business & Management from the University of
Nurtingen, Germany.
The net proceeds of the Financing will be used by the Company to fund ongoing
exploration costs on its properties in Tanzania and for working capital
purposes. The following table sets forth the capitalization of the Company as at
June 30, 2013, the date of the most recent consolidated financial statements
filed by the Company, before and after giving effect to the maximum Financing.
The table should be read in conjunction with the consolidated financial
statements of the Company, including notes thereto, and the associated
management's discussion and analysis.
----------------------------------------------------------------------------
As at June 30, 2013 after
giving effect to
As at June 30, 2013 Financing(1)
----------------------------------------------------------------------------
Cash and cash equivalents $ 80,494 $ 8,737,494
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Long-term debt $ 0 $ 0
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Common Shares 49,586,213 107,299,546
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Stock options 3,904,000 3,904,000
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Warrants 13,278,181 70,991,515
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Contributed surplus $ 8,874,788 $ 14,530,695
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Deficit $ (30,008,718) $ (30,008,718)
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Shareholders' equity $ 14,358,382 $ 23,015,382
----------------------------------------------------------------------------
Share Capital $ 35,138,792 $ 38,139,885
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Note:
(1) Assumes gross proceeds of the Financing before deducting the
estimated expenses of the Financing and assumes that there is no
exercise of outstanding common share purchase warrants or stock
options of the Company. Includes conversion of the Subscription
Receipts to Units prior to the six months of issuance and no Penalty
Shares. Does not include the Warrant Shares or any Shares issuable
upon exercise of outstanding common share purchase warrants and
stock options of the Company.
If CCM does not subscribe for all its allocated Subscription Receipts each
Investment Group member shall have the right to subscribe for the remaining
Subscription Receipts under CCM's allocation. Each Subscription Receipt will
automatically convert to a Unit upon the clearance (the "TSXV Clearance") by the
TSX Venture Exchange (the "TSXV") of the Personal Information Form(s) and/or
Declaration(s) of the applicable Investor Group member for a period of five
years after the issuance date of the Subscription Receipt (the "Sub Receipt
Term").
Under the terms of the Subscription Receipts, to the extent any Subscription
Receipts remain outstanding after six months from the date of issuance:
a. each Investor Group member whose Subscription Receipts have converted to
Units (the "Converted Members") shall have a call option (the "Call
Option") for a three month period to acquire any Investor Group member's
Subscription Receipts that have not converted to Units (the "Defaulting
Member") at 100% of the original price paid by the Defaulting Member for
the Subscription Receipts; and
b. subject to the Converted Member(s) not exercising the Call Option, all
the Defaulting Member(s) outstanding Subscription Receipts will become
transferable to a third party (the "Transferee"), who must agree to
enter the voting pool arrangement (as described below) with the
Converted Members and an agreement with Tembo Gold that allows the
Transferee to assume the rights and obligations of the Defaulting Party
under the subscription agreement to be entered between the Company and
the Investor Group (however, prior to any transfer being finalized, the
Converted Members shall have a right of first refusal to purchase the
Defaulting Party's Subscription Receipts on the same terms as those
negotiated with the Transferee), and following such transfer, the
Subscription Receipts will automatically convert for the Transferee or
Converted Member, as applicable, to 1.5 Shares and one Warrant (to the
extent the Warrant has not expired) upon the TSXV Clearance within the
Sub Receipt Term; and:
i. if either (A) NAMF and NAMF South Africa; or (B) CCM is the
Defaulting Member (but not all three such parties), the
Converted Members shall be issued 0.11 of a Share for each
Subscription Receipt subscribed for; or
ii. if all of NAMF, NAMF South Africa and CCM are the Defaulting
Members, the Converted Member (Stratex) shall be issued 0.18 of
a Share for each Subscription Receipt subscribed for,
(collectively, the "Penalty Shares"). Tembo Gold shall not be required to
issue fractional Shares and, in any such case, the number of Shares
issuable as Penalty Shares shall be rounded up to the nearest whole
number.
Notwithstanding the foregoing, in the event the Defaulting Member(s) obtains
TSXV Clearance prior to completion of any transfer of Subscription Receipts
under the Call Option or prior to the completion of any other transfer of the
Subscription Receipts within the Sub Receipt Term, such Subscription Receipts
will automatically convert to Units on their original terms (one Share and one
Warrant, to the extent the Warrant has not expired) and no Penalty Shares will
be issuable.
The Company currently has outstanding 49,586,213 Shares on a non-diluted basis,
and 65,047,512 Shares on a fully-diluted basis. The issuance of Units to the
Investor Group upon conversion of the Subscription Receipts within six months of
issuance and assuming completion of the maximum Financing and no Penalty Shares,
including those Shares of the Company currently held by the Investor Group, will
represent up to approximately 44.2% of the issued and outstanding Shares on a
non-diluted basis and up to approximately 60.5% of the issued and outstanding
Shares assuming exercise of the Warrants by the Investor Group. The completion
of the Financing and conversion of the Subscription Receipts will result in a
change of control of Tembo and, accordingly, the Company will seek the written
consent of shareholders holding over 50% of its issued and outstanding Shares in
accordance with the policies of the TSXV. Following the completion of the
Financing and conversion of the Subscription Receipts, assuming the issuance of
the maximum number of Units under the Financing and no Penalty Shares, the
Investor Group members will own:
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Investor Group Member Shares and Warrants Ownership Percentage(1)
----------------------------------------------------------------------------
NAMF II South African 3,721,666 Shares 3.47% Undiluted
Partnership 3,721,666 Warrants 6.70% Partially Diluted
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NAMF II (Mauritius) Limited 12,945,000 Shares 12.06% Undiluted
12,945,000 Warrants 21.53% Partially Diluted
----------------------------------------------------------------------------
Stratex Gold A.G. 11,046,667 Shares 10.30% Undiluted
11,046,667 Warrants 18.67% Partially Diluted
----------------------------------------------------------------------------
Concept Capital Management 19,666,667 Shares 18.33% Undiluted
Limited 16,666,667 Warrants 29.31% Partially Diluted
----------------------------------------------------------------------------
Note:
(1) The partially diluted percentages were calculated assuming the
exercise of each individual Investor Group member's Warrants.
All the securities will be subject to a four month and one day hold period from
the applicable closing date(s) of the Financing. The Company may pay a finder's
fee in connection with the Financing in accordance with the policies of the
TSXV, subject to the approval of the TSXV, which may include up to $50,000 in
cash and up to 3,399,332 in Units in lieu of a cash payment.
The Financing remains subject to a number of conditions precedent, including
without limitation, shareholder consent and acceptance and approval of the
Financing by the TSXV.
The Company also announces that it has cancelled its previously announced
non-brokered private placement of $1,000,000 that was announced on March 14,
2013, due to the market conditions at that time.
About Tembo Gold Corp.
Tembo Gold Corp. (TSX VENTURE:TEM) is a Canadian publicly-listed mineral
exploration company with a 100% interest in the Tembo Gold Project which is
located adjacent to African Barrick's Bulyanhulu Gold Mine in the prolific Lake
Victoria Greenstone belt in Tanzania. Tembo's focus is the discovery and
development of gold projects in Africa. The Company's exploration strategy is to
discover mineral resources as well as continue to look for additional
opportunities that can bring value to the Company and shareholders.
On Behalf of the Board of Directors of Tembo,
David Scott, President & CEO
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT
TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE.
Cautionary Note Regarding Forward-Looking Statements
Certain information set out in this news release constitutes forward-looking
information. Forward looking statements are often, but not always, identified by
the use of words such as "seek", "anticipate; "plan", "continue; "estimate;
"expect", "may, "will", "intend", "could", "might", "should", "believe" and
similar expressions. This news release contains forward-looking statements in
respect of certain anticipated goals and expectations in connection with the
Financing, including, without limitation, the use of the net proceeds from the
Financing, the timing of the conversion of the Subscription Receipts, the
receipt of applicable shareholder approval in connection with the change of
control of the Company, the anticipated voting arrangement to be entered into by
the Investor Group, the anticipated consolidated capitalization of Tembo after
giving effect to Financing, the anticipated reconstitution of the board of
directors of Tembo, the anticipated approval of the TSXV for the Financing and
the expectation that Tembo will remain a public company following the change of
control. Forward-looking statements are based upon the opinions and expectations
of management of the Company as at the effective date of such statements and, in
certain cases, information provided or disseminated by third parties. Although
the Company believes that the expectations reflected in such forward-looking
statements are based upon reasonable assumptions, and that information obtained
from third party sources is reliable, they can give no assurance that those
expectations will prove to have been correct. The forward-looking statements
contained herein after provided for the purpose of providing readers with the
Company's expectations and goals in connection with the Financing, and may not
be suitable for other purposes. Readers are cautioned not to place undue
reliance on forward-looking statements.
FOR FURTHER INFORMATION PLEASE CONTACT:
Tembo Gold Corp.
Marc Cernovitch
Director & VP Business Development
416.619.9010
mcernovitch@tembogold.com
www.tembogold.com
Tembo Gold (TSXV:TEM)
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Tembo Gold (TSXV:TEM)
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