Underground in the Vatukoula Gold Mine near Tavua. Photo: The Advertiser
By RACHNA LAL
Additional Information: PROACTIVE
INVESTORS
Vatukoula Gold Mines will receive £4.5 million (FJ$12.6 million) from SCD Energy Inc in exchange for a 19.2 per cent stake in the company.
SCD Energy, a subsidiary of Chinese oilfield services group DRK Energy, will take possession of 30 million shares at a price of £0.15 (FJ$0.42) to raise the $12.6 million investment.
The agreement will be broken down into two payments of £2.25 million (FJ$6.3 million) each over the next 30 days completed by June 17.
Debt financing
As part of the agreement, DRK Energy has also agreed to work in conjunction to source the required debt financing to fund the company’s planned expansion programme.
Should this happen within 120 days of a value not less than £$26.3 million (FJ$73.8 million), then DRK energy would have to option to acquire additional 24 million shares at the same price of £0.15 (FJ$0.42) per share.
The additional new shares would represent another 13.3 per cent of the group taking the total holding for DRK to 29.9 per cent.
Appointment of directors
Also, Vatukoula Gold Mine has entitled DRK Energy to nominate two directors for appointment to the board once the first investment of 2.25 million (FJ$6.3 million) is made.
However, their appointment would be subject only to approval by relevant regulatory authorities.
The plan is to initially have both of these directors hold non-executive positions on the board.
This would be until a ‘suitable’ and ‘properly-qualified’ candidate is identified.
One of DRK Energy’s nominee non-executive directors would resign and this candidate would be appointed as an executive director and chief operating officer.
The funds raised from the agreement will be used for working capital purposes while Vatukoula Gold Mine works to secure the debt financing.
DRK Energy offers engineering construction, technology services, chemical engineering and oilfield development services. It has businesses in Africa, South America and Middle East Asia.
Vatukoula shares double
Shares in Vatukoula Gold Mines doubled on Monday after DRK Energy bought the 19.2 per cent stake.
Vatukoula Gold Mines said DRK came to see the mine in January.
DRK Energy’s presence on the share register, along with that of Zhongrun, will give it access to Chinese capital for the US$40 million (FJ$73.6 million) needed to proceed with the planned mine development at Vatukoula.
This development will see it open up deeper higher grade areas at the mine.