Caracal Gold PLC, LSE:GCAT has published a corporate and operational update regarding its activities in Kenyan and Tanzania. This was in response to the passing of all resolutions at their AGM on Monday 24th January 2023.
Caracal currently has more than 1.3mln ounces JORC-compliant resources in place. It is focusing on two projects: the Kilimapesa mine in Kenya and the Nyakafuru project in Tanzania.
On 10 January 2023, the company made it clear that OCIM Minerals and Mining SA would not continue with their previously announced funding. Philoro Global Trading AG didn’t advance the funding as expected by 31 December 2022. Philoro asked for revised financial and operational plans that took this into account. This work was completed and presented to Philoro.
Caracal was informed by Philoro that he is still committed to financing the project and that he is working with existing shareholders and other institutions to agree a financing package to replace the prior funding.
Caracal entered into a debt financing arrangement with Mill End Ltd., valued at US$1.5mln, on 22 June 2022. The amount due under the Mill End Financing was dependent on the company’s ability to repay it.
These funds were to be repaid from the proceeds of recent financings. It was necessary to renegotiate terms of Mill End Financing due to the delays and withdrawals of OCIM from previously planned financing.
Renegotiated terms of the Mill End Financing were intended to include an equity component. However, the company was unable issue shares due to lack of headroom.
Robert McCrae, the chief executive, borrowed 17,208.742 shares from a shareholder to enable the renegotiation. Mill End received the borrowed shares.
McCrae agreed to repay shareholder 17,208,742 shares and an additional 1,720,874 share, which will be an additional 10% at a later date.
McCrae has also been asked to transfer 25,000,000 shares from Mill End. This transfer is expected to occur soon and McCrae will be repaid for these shares.
The company is currently seeking to appoint Simon Grant Rennick to be its executive chairman. However, this will require some final commercial negotiations as well as legal formalities. Rennick graduated from the Cambourne School of Mines. His experience includes not only mining and minerals, but also metals and agriculture. He has been a manager of mining companies in Uganda, Malawi and Kenya, Mexico, Botswana and the UK, as well as metal trading firms in Bermuda and the UK.
The board has requested the chairman designate, in light of identified weaknesses, to conduct a thorough review of its corporate governance and regulatory compliance policies. This will help strengthen internal procedures.
It is expected that this will be a broad-ranging review. This will include a review on the board structure including the mix between executives and non-executives and any requirements for different skills sets to ensure a strong and efficient board structure. A review of all corporate governance-related practices, policies, and matters will also be done.
The company’s flagship Kilimapesa mine continues to produce gold. It realised 806 ounces of gold sales in the third quarter, and 835 in the fourth quarter. Other exploration and drilling work are also ongoing.
McCrae stated that the company welcomed Mr Simon Grant Rennick’s appointment as Chairman Designate. He also expressed his delight at the prospect of him taking over the role of executive chair. “Simon’s vast experience in Africa mining and exploration projects, as well as his past as Chairman of several listed companies, will greatly strengthen the Board.”
He added that he looked forward to his leadership as he conducted the internal reviews. Caracal advanced several work programs at its flagship asset, Kilimapesa Gold Mine, Kenya. In this area, we are focusing on increasing our mining and processing capacities to increase production to 24,000 ounces per annum. Q3 and Q4 were a busy quarter for Caracal. We are still working on the mine plan, the construction of the new processing plant, and analysing the results of regional exploration programs to expand our resources and strengthen the economics of the project.
McCrae also highlighted Nyakafuru’s potential: “The Nyakafuru Gold Project in Tanzania has proved high-grade, shallow, gold resources that are amenable to traditional open pits with the potential for producing 50,000 ounces an year. We are thrilled to have completed the acquisition and to continue our targeted drilling programmes to validate historical positive drill results, as well as expand the current JORC compliant resource of 658.751 ounces at 2.08 grams per tonne.