-- Posted Wednesday, 7 October 2009 | Digg This Article
| | Source: GoldSeek.com
Hochschild announces proposed Equity Placing and Convertible Bond Offering to raise up to $250million
Placing of up to 30.735 million ordinary shares of 25 pence to raise approximately $150 million
Convertible BondOffering of approximately$100 million
Expected combined gross proceeds of up to $250 millionwill provide Hochschild with the financial resources to
Pursue further acquisition opportunities in key mining districts
Allow further investments in Lake Shore Gold and Gold Resource Corporation
Fund value-added investment in existing operations and exploration projects
Pre-pay $85 million of the Company's $200 million syndicated loan facility
Hochschild Mining plc ("Hochschild" or the "Company") today announces its intention to place up to 30.735 million new ordinary shares (the "Placing") and raise approximately $100 million through an offering of senior unsecured Convertible Bonds (the "Convertible Bonds") due 2014 ("the Bond Offering"). The proposed Placing and Bond Offering (together "the Offering") are expected to raise up to $250million and the proceeds will be used to advance the Company's growth strategy and to refinance existing debt.
As disclosed in the Interim Results in August 2009 and the Interim Management Statement ("IMS") published today, the Company continues to deliver strong operational and financial performance. Production for the 9 months to 30 September 2009 is up 18% year-on-year to 21.4 million attributable silver equivalent ounces and the Company confirms that it remains on track to achieve its full year production target of 28million attributable silver equivalent ounces.
Miguel Aramburú, Chief Executive Officer commented:
"Since our IPO in 2006 we have consistently delivered on our strategy of organic growth, exploration and selective acquisition while maintaining a rigorous focus on cost and cash management. We are well positioned to benefit from further investment in our asset base as well as further selective M&A opportunities and have therefore decided to raise additional capital to provide the financial flexibility to consolidate our position in key mining districts and develop our project pipeline. We are optimistic about the value that we have already generated by our investments and we are committed to working closely with our partners to deliver further value to our shareholders."
The Placing
Under the terms and conditions of the Placing, Hochschild intends to place up to 30.735 million ordinary shares of 25 pence each (the "Placing Shares"), representing approximately 9.9% of the Company's existing issued ordinary share capital, to raise up to $150 million. The Placing is being conducted through an accelerated bookbuild (the "Bookbuild") which will be launched immediately following this announcement. Goldman Sachs International ("GSI") and J.P. Morgan Cazenove ("JPMC") are acting as joint bookrunners (the "Joint Bookrunners"),(JPMC is a marketing name for the UK Investment Banking business of J.P. Morgan Securities Ltd).
Eduardo Hochschild, the Company's majority shareholder and Executive Chairman, will be committing a total of $5 million to the Placing and will be diluted as result. The Company's freefloat is also expected to increase as a result of the transaction.
The number of Placing Shares and the price at which the Placing Shares are to be placed will be determined at the close of the Bookbuild process and will be announced shortly thereafter. The timing for the close of the Bookbuild, pricing and allocations is at the absolute discretion of the Joint Bookrunners. Preference in allocation of the Placing Shares will be given to existing shareholders of the Company.
The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing ordinary shares of Hochschild, including the right to receive all dividends and other distributions declared, made or, paid after the date of the issue. Application will be made for the Placing Shares to be admitted to the Official List of the Financial Services Authority (the "FSA"), and to be admitted to trading by the London Stock Exchange plc (the "London Stock Exchange") on its main market for listed securities (together "Admission"). Settlement of payment for the Placing Shares issued pursuant to the Placing, as well as Admission, is expected to take place on 12 October 2009 (the "Closing Date"). The Placing is conditional on Admission becoming effective.
By choosing to participate in the Placing and by making an oral and legally binding offer to acquire Placing Shares, investors will be deemed to have read and understood this announcement in its entirety (including the Appendix) and to be making such offer on the terms and conditions and providing the representations, warranties and acknowledgements, contained in the Appendix to this announcement.
The Placing is not conditional on the Bond Offering. Your attention is drawn to the detailed terms and conditions of the Placing described below.
Convertible Bond Offering
The Company is offering approximately $100 million of senior unsecured Convertible Bonds due 2014 which will be convertible into fully paid ordinary shares ("Ordinary Shares") of 25 pence each of the Company. Prior to shareholder approval being obtained, the holders of the Bonds will receive cash instead of Ordinary Shares upon conversion of the Bonds. The final size of the Offering will be determined at the time of pricing, which is expected to be later today.
The Bonds are expected to have a coupon of 5.75% to 6.5% per annum payable semi-annually in equal installments in arrears save for the first and last short coupons. The initial conversion price is expected to be set at a premium of between 30% and 35% to the clearing price of the concurrent Placing price.
The Convertible Bonds will be issued at 100% of their principal amount and, unless previously redeemed, converted or purchased and cancelled, will mature on the fifth anniversary of the issue of the Bonds in 2014. The final terms of the Convertible Bonds are expected to be announced today and,subject to shareholder approval at an EGM expected to be held on 27 October 2009,settlement and delivery of the Bonds are expected on or about 20 October 2009. GSI and JPMCare acting as Joint Bookrunners.
Application will be made to the FSA in its capacity as competent authority (the "United Kingdom Listing Authority") under the Financial Services and MarketsAct 2000"FSMA") for the Bonds to be admitted to the Official List of the United Kingdom Listing Authority and to the London Stock Exchange for the Bonds to be admitted to trading on the London Stock Exchange's Professional Securities Market. Listing particulars will be prepared in connection with the listing of the Bonds.
Rationale and proceeds
Thenetproceedsfrom the Placing and the Convertible Bond Offering will serve to reinforce the Company's balance sheet after a successful period of value added investment and acquisition and provide increasedfinancial flexibility to:
Pursue further acquisition opportunities in key mining districts
Allow further investments in Lake Shore Gold and Gold Resource Corporation
Fund value-added investment in existing operations and exploration projects
Pre-pay $85 million of the Company's $200 million syndicated loan facility
Following an extremely active 18 months, in which the Company has spent approximately $340 million on acquisitions and investments, the additional funding will enable Hochschild to pursue further opportunities in key mining districts within the Americas.
On 27 August 2009, Hochschild's strategic partner, Lake Shore Gold, announced a definitive business combination agreement to acquire all of the outstanding common shares of West Timmins Mining Inc. ("WTM"). The transaction will create the new large-scale, wholly-owned Timmins West Gold Mine Complex, an extension of the world class Timminsgold mining trend which has supplied approximately 70 million ounces of gold over the last century.
As a result of the business combination, Hochschild's 40% stake in Lake Shore Gold, which is currently valued at over $600 million, would be diluted to approximately 27% on completion. The Board of Lake Shore Gold has committed to look at ways in which Hochschild can return to a 40% shareholding in the enlarged company. Hochschild remains committed to the strategic alliance with Lake Shore Gold and will evaluate the merits of these options. Under the terms of the existing agreement with Lake Shore Gold, Hochschild is unable to increase its holding above 40% until November 2010.
The growth prospects for Lake Shore Gold are impressive with current production targets of 30,000 ounces of gold by the end of 2009, increasing to 100,000 ounces in 2010 and 200,000 ounces in 2011. The new Timmins West Gold Mine Complex will consist of Lake Shore Gold's 100%-owned Timmins Mine with existing mine infrastructure, the Thunder Creek property, where high-grade intercepts have been reported within 800 metres of the Timmins shaft, and an extensive land package of adjacent exploration properties, giving Lake Shore Gold a leading position in this highly prospective area.
Additionally, Hochschild has the right to increase its stake in Gold Resource Corporation ("GRC")from 24% to 40%, with the full support of the GRC board. GRC, which has a current market capitalisation in excess of $315 million, is a precious metals mining company with a number of 100% owned, high grade development projects in southern Mexico including the El Aguila project. This project is scheduled to begin production by the end of 2009 and the company expects to produce approximately 70,000 ounces of gold (4.2 million silver equivalent ounces)in its first full year of production. Hochschild is extremely confident about the long term potential of this investment. After the standstill period ends in February 2011, Hochschild can purchase additional shares in GRC without restriction.
The Company is focused on producing profitable ounces and continues to identify and invest in projects which increase long term operational efficiency. In the past year, the Company has completed plant expansions at three of its operations which increased production capacity by 29% and also the construction of new power lines in Peru and Argentina ensuring a cost effective and reliable supply of energy. Furthermore, in June 2009, the Company announced the project to convert Arcata's production to doré which will improve operational efficiency, maximise revenue, lower working capital requirements and allow the Company to benefit from more stable commercial terms. The project is on schedule for completion in 2010.
Proceeds will be also used to pre-pay the first three instalments (totalling $85 million) of the Company's existing syndicated loan facility of$200 million in order to extend its debt maturity until 2014 and provide increased financial flexibility in 2010.Following this transaction, the next repayment will not be due until July 2011. The remaining, reduced level of term debt is due to be repaid by early 2013 under the terms of the original agreement.
As stated in its IMS announced today, the Company's production continues to grow and the financial flexibility provided by these proceeds will allow it to further invest in existing operations and exploration activities to enhance its portfolio and add long term value for shareholders.
-----------------------------------------------------------------------------------
Enquiries:
Hochschild Mining plc
Isabel Lütgendorf+44 (0)20 7907 2934
Head of Investor Relations
Finsbury
Robin Walker+44 (0)20 7251 3801
Public Relations
__________________________________________________________________
About Hochschild Mining plc:
Hochschild Mining plc is a leading precious metals company listed on the London Stock Exchange (HOCM.L / HOC LN) with a primary focus on the exploration, mining, processing and sale of silver and gold. Hochschild has over forty years' experience in the mining of precious metal epithermal vein deposits and currently operates four underground epithermal vein mines, three located in southern Peru, one in southern Argentina and one open pit mine in northern Mexico. Hochschild also has numerous long-term prospects throughout the Americas.
This announcement is for information only and, save as expressly set out herein, does not constitute an offer or invitation to underwrite, subscribe for or otherwise acquire or dispose of any securities or investment advice in any jurisdiction, including without limitation, the United Kingdom, the United States, Australia, Canada, South Africa or Japan. Persons needing advice should consult an independent financial adviser.
This announcement has been issued by and is the sole responsibility of Hochschild Mining plc (the "Company"). Goldman Sachs International, J.P. Morgan Cazenove Limited and J.P. Morgan Securities Ltd (together, the "Banks"), which are authorised and regulated in the United Kingdom by the Financial Services Authority, are acting for the Company and for no-one else in relation to the Placing and Bond Offering (together, the "Transaction"), and will not be responsible to any other person for providing the protections afforded to each of its respective clients nor for providing advice in connection with the Transaction. No representation or warranty, express or implied, is or will be made as to, or in relation to, and no responsibility or liability is or will be accepted by the Banks or by any of their respective affiliates or agents as to or in relation to, the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any liability therefore is expressly disclaimed.
The distribution of this announcement and the placing of the Placing Shares and the Convertible Bonds as set out in this announcement in certain jurisdictions may be restricted by law. No action has been taken by the Company or the Banks that would permit an offering of such securities or possession or distribution of this announcement or any other offering or publicity material relating to such securities in any jurisdiction where action for that purpose is required. Persons into whose possession this announcement comes are required by the Company and the Banks to inform themselves about, and to observe, such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
This announcement is directed only at persons (i) having professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act (Financial Promotion) Order 2005 (the "Order") or (ii) who are high net worth entities falling within Article 49(2)(a) to (d) of the Order, and other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as "relevant persons"). This announcement must not be acted or relied on in the United Kingdom by persons who are not relevant persons.
This document is not a Prospectus but an advertisement and investors should not subscribe for any securities referred to in this document except on the basis of the information contained in the IMS or otherwise in the public domain. The content of the Company's website accessible by hyperlinks on the Company's website neither is incorporated in, nor forms part of, this document.
This announcement contains certain forward looking statements, including such statements within the meaning of Section 27A of the US Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended. In particular, such forward looking statements may relate to matters such as the business, strategy, investments, production, major projects and their contribution to expected production and other plans of the Company and its current goals, assumptions and expectations relating to its future financial condition, performance and results.
Forward-looking statements include, without limitation, statements typically containing words such as "intends", "expects", "anticipates", "targets", "plans", "estimates" and words of similar import. By their nature, forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Actual results, performance or achievements of the Company may be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Factors that could cause or contribute to differences between the actual results, performance or achievements of the Company and current expectations include, but are not limited to, legislative, fiscal and regulatory developments, competitive conditions, technological developments, exchange rate fluctuations and general economic conditions. These factors, risks and uncertainties are referred to in the section of this announcement entitled 'Risks' which, in turn, refers to matters disclosed in the Risk Management section of the 2008 Annual Report. Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.
The forward looking statements reflect knowledge and information available at the date of preparation of this announcement. Except as required by the Listing Rules and applicable law, the Board of the Company does not undertake any obligation to update or change any forward looking statements to reflect events occurring after the date of this announcement.
The Placing Shares have not been, and will not be, registered under the Securities Act or under the laws of any state or other jurisdiction of the United States and may not be offered, sold or transferred, directly or indirectly, within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.
The Bonds and the Ordinary Shares to be issued upon conversion of the Bonds have not been and will not be registered under the Securities Act, and the Bonds, which are in bearer form, are subject to U.S. tax law requirements. The Bonds and the Ordinary Shares to be issued upon conversion of the Bonds may not be offered, sold or delivered within the United States or to U.S. persons (as defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended) except in certain transactions permitted by U.S. tax regulations and the Securities Act.
Subject to certain exceptions, this announcement does not constitute an offer to sell or issue or the solicitation of an offer to buy or acquire securities of the Company in the United States, Australia, Canada, South Africa or Japan or any jurisdiction in which such an offer or solicitation is unlawful. No money, securities or other consideration is being solicited and, if sent in response to the information herein, will not be accepted. There will be no public offer of any securities of the Company in the United States or elsewhere.
Any indication in this announcement of the price at which ordinary shares have been bought or sold in the past cannot be relied upon as a guide to future performance. No statement in this announcement is intended to be a profit or production forecast and no statement in this announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.
Contact for Gold Resource Corporation:
Jason Reid
VP / Corporate Development
303-320-7708
http://www.goldresourcecorp.com/
-- Posted Wednesday, 7 October 2009 | Digg This Article | Source: GoldSeek.com
