Pembridge Resources (LSE:PERE) (“the Company”) is a mining company led by an experienced team of mining professionals. The Company has conditionally raised £1.29 million at 1.6p per share via a placing (“the Placing”) and has an open subscription to raise up to £1,202, 470 (“the Subscription”) of which £872,000 is conditionally committed. The Placing and Subscription are subject to shareholder approval at a general meeting of the company on Friday 18 August 2017.

** Users of the Teathers App may now subscribe for shares in the Company at 1.6p per share. By subscribing for shares investors also receive 1 for 1 warrants, exercisable at 3.2p per share valid until 08 August 2019. 20,654,375 shares (to raise up to £330,470) are being made available by the Company through the Teathers App. This deal is subject to shareholder approval at the Company’s General Meeting on Friday 18 August. The deal will open on the Teathers App at 1700 on Friday 11 August and will close at 1700 on Wednesday 16 August. Settlement will occur on Monday 21 August and contract notes will be issued on completion of the deal. As the number of shares available is limited to 20,654,375, orders will be filled [on a first come first served basis/subject to scale back if the threshold is exceed when the deal closes].**

Pembridge is currently listed on AIM but its shares are suspended pending the shareholder meeting and the move to the Main Market. The Company plans to move to the Main Market expects trading to commence in its shares on Monday 21 August 2017. The Pembridge directors have in-depth understanding and expertise of the mining industry covering geology, engineering and project appraisal as well as a track record of delivering mining projects. The directors of Pembridge are appraising a number of acquisition opportunities to grow the Company and create significant value for shareholders. To achieve its stated aims, the Company felt it appropriate that admission to trading on the Main Market would increase its profile and attractiveness to a broader range of investors as it implements its investment policy in advance of a significant acquisition.

Investment strategy and rationale

Given the current macro outlook for mining and mining investment, the directors believe an opportunity exists for Pembridge to take advantage of current asset and project valuations in this stage of the mining cycle. It is the Directors’ belief that base and precious metals offer significant opportunities to invest in orphaned projects, where existing management teams have been restricted of capital. The Company believes that there are a number of projects available for investment that may require not only cash but also technical and financial expertise.

Coupled with a disciplined fund management approach, the directors believe that Pembridge will offer exposure to the next forecast ”up cycle” and compete with private equity funds. In addition, the Company aims to offer investors a prospect of liquidity unavailable in a private equity/hedge fund structure. As set out above, the Company will focus on projects located in North and South America, sub-Saharan Africa and Europe. The Company will only invest in countries within these geographies that have established mining regulations and existing mining operations. The purpose of this focus is to minimise sovereign and regulatory risk of the investments that the Company makes.

The Company is targeting Base and Precious Metals for a number of reasons. First, the Company will only invest in commodities in which has expertise and a track record of success. Secondly, given the initial resources available to the Company, this precludes any material investment options within the bulk commodity space (e.g. iron ore and coal) where typical investments require a scale in the order of US$1bn+ to be cost competitive and successful. Thirdly, for the stages in the mining cycle that the investing strategy focuses on, the directors believe Base and Precious Metal projects typically have the most value-add potential. Finally, the directors believe that the timing is right for base and precious metal investment, where most of the commodities in these categories have bullish consensus price forecasts for the medium-long term.

The directors’ longer-term aim is to create a portfolio of projects that are diversified along the mining cycle, targeting, in particular undervalued assets in the development and/or production stages. The directors define Orphaned Assets as those that exhibit a transactional value proposition or have a large potential upside in value, but for whatever reason the development of the asset has been stalled either through undervaluation by markets and investors, failure to raise sufficient capital, or have been stigmatised by unmerited ”deal fatigue” as a result of unfavourable macro-events. The Company’s primary target is on production or near production assets with a secondary interest in newly defined resource exploration projects, further details are set out below:

  • Production assets are mines that have recently commenced production either as a new development or a past-producer which has gone through a period of shutdown;
  • Near production assets have gone through the typical mining stages of development and are nearing the point of final investment decision and require funds in order to complete development to first production; and
  • Newly defined resource exploration projects are those that are at an advanced stage of resource definition, with most of the necessary permitting and tenure in place.

With any of these types of investments, the Company commits to only investing in projects where it can add value to the project. This can be achieved through either updating or changing the mining methods processes, personnel, logistics, arranging capital to assist the project in expediting development, and/or through acquiring undervalued assets and creating transactional value. Where the, the Company may bring in new management in order to help generate value.

Potential applicants should read the full text of the Prospectus and particularly the section headed “Risk Factors” beginning on page 17 and the section headed “Important Information” set out on pages 28-30. In particular applicants should note the categories of potential investor who may participate in the Subscription (which is limited to persons falling within Articles 19(5), 48, 49(2)(a)-(d), 50 and 50(A) of the Financial Promotions Order).

Links

RNS 21 July 2017 Conditional Placing, Subscription & Notice of GM

Prospectus

Pembridge Resources Website

Stock specific risks

  • The Company will be subject to typical mining production, exploration and development risks. There is no guarantee the company will be able to define economically viable resources.
  • Any delay to the development timeline would disappoint the market and sentiment towards the shares.
  • Commodity prices will fluctuate, which could affect the economic feasibility of the project.
  • The Company will be subject to sovereign and regulatory risk.
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