REG - Keras Resources PLC - Issue of Convertible Loan Notes and Loans

Keras ResourcesAnnouncement

28/05/2024 07:00

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RNS Number : 9597P  Keras Resources PLC  28 May 2024

Keras Resources plc / Index: AIM / Epic: KRS / Sector: Mining

 

28 May 2024

 

Keras Resources plc ('Keras' or the 'Company')

 

Issue of Convertible Loan Notes and Loans

Keras Resources plc (AIM: KRS) is pleased to announce that it has on 24 May
2024 restructured its short term liabilities of US$900,000 incurred in the
2022 acquisition of the outstanding 49% in Falcon Isle Resource Corp and
Falcon Isle Holdings LLC (together "Falcon Isle") into a US$1,525,000
(GBP1,195,610) 4 year loan and convertible loan, comprising US$1,325,000
(GBP1,038,808) in new cash funds and US$200,000 (GBP156,801) in capitalised
Directors outstanding fees.  The additional funds will be used to pay
US$800,000 consideration due to the vendor of Falcon Isle on 1 July 2024,
US$100,000 for a final severance payment to the former CEO of Falcon Isle,
and for growth projects and general working capital.  The restructure ensures
that the Company can meet its current obligations without negatively impacting
the long-term growth profile at the high-grade organic phosphate business in
Utah, USA.

 

The cash funding includes funding from the Diane H. Grosso Credit Shelter
Trust , an associate of 17% shareholder Chris Grosso with Directors Russell
Lamming and Graham Stacey capitalising US$100,000 (GBP78,401) of outstanding
fees each due from the Company (50% in the form of Convertible Loans and 50%
in the form of the Loans).

 

Further details of dealings by Russell Lamming and Graham Stacey are set out
in the Appendix.

 

The funding comprises:-

 

·    4 year convertible loan notes totalling GBP 597,805 (US$762,500), at
a 4% per annum interest rate and conversion price of GBP 0.0275 issued by
Keras ("Convertible Loans").  After 12 months, if the 30 day volume weighted
Keras share price is GBP 0.09 (British pounds sterling) or greater, Keras has
the option to call the conversion of the Convertible Loans. The Convertible
Loans are being made to Keras and may be converted at any time by notice given
by the holders, interest will be compounded annually and included with the
amount being converted, or paid at the end of the 4 year loan period if not
converted; and

 

·    4 year Promissory Notes totalling US$762,500 (GBP597,805) at an 8%
per annum interest rate repayable after 4 years. The Promissory Notes are
being made to Falcon Isle Resource Corp which has the right to repay the
loans, without penalty, after 2 years (the "Loans"). Interest on the loans is
payable annually on the anniversary of the notes.

 

The Directors of the Company have the authority to issue shares for cash up to
a maximum nominal value of £165,000.  The total nominal value required for
the restructuring, including interest is £254,308, therefore the funding will
be completed in 2 tranches. Tranche 1, using existing authorities requires a
nominal value of £156,801 and for Tranche 2 the Company will propose a
resolution at the 2024 AGM, expected to be held at the end of July 2024
authorising the Directors to issue shares for cash up to a maximum nominal
value of £97,507 (which includes £36,924 for interest accrued over the 4
year tenure).

 

                        Convertible Loan  Shares      Nominal (GBP)
 Tranche 1 (Principle)  £431,203          15,680,125  £156,801
 Tranche 2 (Principle)  £166,601          6,058,230   £60,582
 Sub Total              £597,805          21,738,358  £217,384
 Tranche 2 (Interest)   £101,542          3,692,446   £36,924
 Total                  £699,347          25,430,802  £254,308

 

Related Party Transaction

 

Russell Lamming, Graham Stacey, and the Diane H. Grosso Credit Shelter Trust
(an associate of Christopher Grosso, a substantial shareholder in the Company
as defined under the AIM Rules for Companies (the "AIM Rules")), are
considered to be Related Parties of the Company as defined under the AIM
Rules, and the provision of the Convertible Loan and Loan set out above are
therefore deemed to be Related Party Transactions pursuant to AIM Rule 13 of
the AIM Rules for Companies.

 

The Directors of the Company independent from the Convertible Loan and Loan,
being Brian Moritz and Claire Parry, consider, having consulted with the
Company's Nominated Adviser, SP Angel Corporate Finance LLP, that the proposed
terms of the Convertible Loan and Loan are fair and reasonable insofar as the
Company's Shareholders are concerned.

 

Graham Stacey, CEO of Keras, commented, "The restructuring of the Company's
short term liabilities into a 4 year loan and convertible loan, which reduces
the shareholder dilution associated with a simple equity raise is significant
for the Company as it matches its debt structure to the growth profile of our
growing high grade phosphate business and specifically to the initial term of
the Phosul Utah LLC joint venture announced in January 2024.  The
participation of Company directors and the continued support from Chris Grosso
is a further endorsement of the Company's achievements over the past 12 months
as it has transitioned into a fully focussed North American business targeting
the robust organic fertiliser market.

 

I look forward to updating shareholders on progress at our newly acquired,
stand alone processing facility located in Delta, Utah as we now move towards
the final commissioning phase of the integrated milling and granulator plant."

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under Article 7 of the Market
Abuse Regulation (EU) No. 596/2014 (as amended) as it forms part of the
domestic law of the United Kingdom by virtue of the European
Union (Withdrawal) Act 2018 (as amended). Upon the publication of this
announcement via the Regulatory Information Service, this inside information
is now considered to be in the public domain.

 

**ENDS**

 

For further information please visit www.kerasplc.com
(http://www.kerasplc.com/) , follow us on Twitter @kerasplc or contact the
following:

 

 Graham Stacey                         Keras Resources plc             info@kerasplc.com

 Nominated Adviser & Joint Broker      SP Angel Corporate Finance LLP  +44 (0) 20 3470 0470

 Ewan Leggat / Caroline Rowe

 Joint Broker                          Shard Capital Partners LLP      +44 (0) 207 186 9900

 Damon Heath / Erik Woolgar

Notes:

Keras Resources (AIM: KRS) wholly owns the Diamond Creek organic phosphate
mine in Utah, US. Diamond Creek is one of the highest-grade organic
phosphate deposits in the US and is a fully integrated mine to market
operation with in-house mining and processing facilities. The operation
produces a variety of organic phosphate products that can be tailored to
customer organic fertiliser requirements.

 

The Company is focused on continuing to increase market share in the
fast-growing US organic fertiliser market and build Diamond Creek into the
premier organic phosphate producer in the US.

 

Appendix

 

 1.  Details of the person discharging managerial responsibilities/person closely
     associated
 a)  Name:                                                         1.     Russell Lamming

                                                                   2.     Graham Stacey

 2.  Reason for the notification
 a)  Position/status:                                              1.     Chairman

                                                                   2.     Chief Executive Officer

 b)  Initial notification/amendment:                               Initial notification
 3.  Details of the issuer emission allowance market participant, auction
     platform, auctioneer or auction monitor
 a)  Name:                                                         Keras Resources plc
 b)  LEI:                                                          213800OZFKFM2N4R4F47
 4.  Details of the transaction(s): section to be repeated for (i) each type of
     instrument; (ii) each type of transaction; (iii) each date; and (iv) each
     place where transactions have been conducted
 a)  Description of the financial instrument, type of instrument:  Ordinary shares of 1 pence each

     Identification code:                                          ISIN:    GB00BMY2T534

 b)  Nature of the transaction:                                    Issue of Convertible Loan
 c)  Price(s) and volume(s):

      Prices(s)   Volume(s)
                                                                   1.          2.75 pence  1,425,466

                                                             2.          2.75 pence  1,425,466

 d)  Aggregated information:

      Prices(s)   Volume(s)
                                                                   1.          2.75 pence  1,425,466

                                                             2.          2.75 pence  1,425,466
     Aggregated volume:

     Price:
 e)  Date of transaction:                                          24 May 2024
 f)  Place of transaction                                          Outside a trading venue

d)

Aggregated information:

 

Aggregated volume:

 

Price:

 

             Prices(s)   Volume(s)
 1.          2.75 pence  1,425,466
 2.          2.75 pence  1,425,466

e)

Date of transaction:

24 May 2024

f)

Place of transaction

Outside a trading venue

 

 

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