Placing and Convertible Note


 

TIDMZRL 
 
RNS Number : 3665M 
Zambezi Resources Ltd 
28 January 2009 
 

28 January 2009 
Zambezi Resources Limited 
 
 
Placing and Convertible Note 
 
 
Zambezi Resources Limited ("Zambezi" or the "Company") (AIM:ZRL; ASX:ZRL) today 
announces that it has received an application from Astron Limited ("Astron") for 
a share placement of 29 million shares, at a price of A$0.02 per share to raise 
A$580,000 ("Tranche 1"). The Zambezi Board has approved the issue and allotment 
of the Tranche 1 shares to Astron under the 15% capacity available for the issue 
of securities of ASX Listing Rule 7.1. 
 
 
Further to the issue of these shares, application will be made to the London 
Stock Exchange for these new Ordinary Shares to be admitted to trading on AIM 
("Admission"). It is expected that Admission will become effective on 4 February 
2009. The new ordinary shares will rank pari passu with the existing ordinary 
shares of the Company. Following the issue of these shares the Company will 
have 226,876,174 fully paid ordinary shares in issue and Astron Limited will 
have a relevant interest in 29,000,000 Ordinary Shares in the Company, 
representing 12.78% of the Company's total voting rights. 
 
 
Tranche 1 is the first part of a proposed three stage transaction (the 
"Transaction") to raise approximately AUD$13m, subject to various conditions 
including shareholder approval. 
 
 
Zambezi has today entered into a Share Subscription Agreement and a Convertible 
Note Agreement with Astron. 
 
 
Under the terms of the Share Subscription Agreement, Astron has agreed to 
subscribe for a further 171 million shares at a price of A$0.02 per share to 
raise a further A$3.42m ("Tranche 2"). Tranche 2 is conditional upon Zambezi 
shareholder approval, requisite regulatory approvals in Zambia, the execution of 
a voluntary escrow agreement and the execution of the Convertible Note agreement 
(below). Completion of Tranche 2 is scheduled for early March 2009. 
 
 
Under the terms of the Convertible Note Agreement (Tranche 3), Zambezi has 
agreed to issue an unsecured convertible note in the Company to Astron at a Face 
Value of US$6,000,000 (the "Note"). The Note does not carry an interest charge 
and has a maturity date of 31 December 2010 ("Maturity Date"). The Note is 
convertible, at the option of Astron, to shares in the Company up to the 
Maturity Date at a conversion price of the lower of A$0.02 per share or a 20% 
discount to the volume weighted average price of the Company's shares on the ASX 
in the 30 trading days immediately prior to the conversion of the Note. The 
issue of the Note is conditional upon Zambezi shareholder approval and 
completion of the Tranche 2 share placement. Astron has an absolute discretion 
to elect to subscribe for the Note, to be exercised within three months after 
Zambezi shareholder approval 
 
 
A notice of meeting for a shareholder meeting to consider the ratification of 
Tranche 1 and approval for Tranche 2 and the Note will be published in due 
course. 
 
 
The board of Zambezi believes that the Transaction will secure necessary funding 
for the foreseeable future and at the same time provides the Company with a 
strategic investor. The Transaction will allow the Company to continue work on 
the exploration portfolio in Zambia. 
 
 
Astron is listed on the ASX and located in Sydney, Australia, but also has a 
strong presence in China with an office in Shenyang. Astron's interest in 
Zambezi is principally as a strategic opportunity to ultimately supply copper 
from Zambia into China leveraging off Zambezi's copper/gold projects and 
facilitating Zambezi's entry into Chinese markets. The transaction will ensure 
the survival of the Company and add longevity to its existing projects. 
 
 
The Company's shares were suspended from trading on ASX on 31 October 2008 and 
AIM on 3 November 2008 pending clarification of the Company's financial 
position. The Company's shares will only be restored to trading following this 
clarification and a further announcement on this will be made following the 
general meeting to be held as detailed above. 
 
 
 
 
 
 
For more information contact: 
 
 
+----------------------------+ 
| Julian Ford, Managing      | 
| Director                   | 
| Zambezi Resources          | 
| (Australia)                | 
| +61 (08) 9216 9000         | 
| +61 (0) 418 949 580        | 
|                            | 
+----------------------------+ 
| Fiona Owen                 | 
| Grant Thornton UK LLP      | 
| +44 20 7383 5100           | 
|                            | 
+----------------------------+ 
| Simon Edwards / Adam Lloyd | 
| Evolution Securities Ltd   | 
| + 44 20 7071 4300          | 
|                            | 
+----------------------------+ 
 
 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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