Yorkville is taking a 14.2% stake in CEB Resources.
A placing with YA Global Master SPV will raise £200,000 at 0.725p a share and a further 5.52m shares will be issued to the investor to pay fees and expenses. CEB has entered into an equity swap over £100,000 worth of the placing shares that lasts 12 months. Yorkville will make a base payment of £8,333 each month although this will depend on the market price each month. The issue price of the shares will be based on the difference between the market price and the benchmark price which is 10% above the placing price – 0.7975p a share. If the market price is higher than the benchmark price then the price per share will increase by the same percentage difference but if it is lower than the issue price will be lower than the placing price.
For example, if the market price were 0.85p a share for one month then CEB would receive £8,882 in that month, but if it were 0.725p a share, then £7,575 will be received that month. The current share price is 0.71p a share, which values CEB at £1.65m.
CEB is developing the zinc-copper Peelwood project in Australia and the thermal coal Mariola project in Poland.
Equity swaps only work for a company when the share price is rising. What could make this an attractive proposition for CEB is that it expects positive news about a JORC compliant resource from its Polish coal interests in the coming months. That could spark a rise in the share price and that could mean that CEB receives more than £100,000 over the 12 month period of the equity swap.
An annual production target of 3m tonnes a year is anticipated for Mariola and local coal sales should yield a net operating profit of $25-$35/tonne based on current coal prices and assuming the costs of production are similar to nearby coal mines. That suggests a $75m plus annual operating profit when the mine is fully up and running.
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