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FIRESTONE SIGNS KEY INVESTMENT AGREEMENT WITH ARIONA
Firestone Signs
Key Investment Agreement
25 July 2012
On 7 May 2012 the Board of Firestone Energy Limited (ASX/JSE: FSE) (the
“Company” or “Firestone”) announced that it had entered into a conditional
termsheet for the provision of A$30.7million of funding by Ariona Company SA
(Ariona). Firestone is now pleased to announce that the Company has executed
an Investment Agreement with Ariona to provide funding to the Company for the
increased amount of A$40.7million.
Ariona is a special purpose vehicle representing a consortium of international
institutional and private investors focusing on global resource opportunities.
Funding Facility
Through the execution of this agreement, Ariona will provide A$40.7million to the
Company under a secured convertible note facility replacing the current
convertible notes. As previously announced on 7 May 2012, Ariona will provide
this funding to Firestone with an initial A$30.7million by way of a replacement of
the current convertible note facility. An additional $10million convertible note
facility will also be made available to the Company on the same terms as the
initial facility.
JSE: FSE
With this increased facility, and based on current Budgeted expenditure,
Firestone is fully funded up to and including the completion of the Bankable
Feasibility Study (BFS). Post the finalisation of the BFS, project funding will be
required to undertake development and operation of the Waterberg Coal Project
and Ariona have undertaken to procure funding of up to US$400m for this
purpose.
It is confirmed that the terms of the convertible notes will be:
Term 4 years
Coupon 8.0% pa
Interest Payments Payable half yearly. For the first 24 months interest
is to be paid in cash or capitalised at the election of
FSE and after the first 24 months interest to be
paid in cash or capitalised as agreed by the
Company and Ariona.
Conversion Price A$0.025 per share
Conversion Terms Convert into ordinary shares at the election of the
noteholder.
The Funds raised will be applied in approximately the manner set out below.
A$
Million
Redeem existing convertible notes (ECNs) at face value 21.30m
Pay outstanding interest on the ECNs 0.85m
Working Capital 16.65m
Expenses of the transaction (estimate) 1.90m
Total A$40.70m
The new convertible note facility is subject to certain conditions precedent, the most significant of
which are:
1) completion of technical, legal and financial due diligence, satisfactory to Ariona;
2) Obtaining all necessary regulatory approvals in Australia and South Africa; and
3) Obtaining Firestone shareholder approval to the issue and for the conversion of the new
convertible notes to be issued to Ariona.
Other significant terms are:
• Ariona will now be entitled to nominate up to three directors to the Board of the Company;
• The Company will, subject to necessary shareholder approval, offer those existing convertible
note holders who agree to the early redemption of their notes, incentive options exercisable
over 2 years at a price of A$0.025 per share. The number of incentive options to be issued to
an accepting ECN Holder shall be pro rata to its holding of ECNs on the basis that 300 million
incentive options would be issued in the case of 100% acceptance of early redemption of
ECNs; and
• Until completion of the transaction, the interest payments on the ECNs will be calculated on a
monthly basis and at the election of the ECN holders, either converted into shares on a
monthly basis at a 10% discount to the 5 day VWAP or capitalising the interest until
completion of the transaction.
As a result of this transaction and a separate transaction between Ariona and Sekoko Resources Pty
Ltd (as announced to the market on 29 June 2012), Ariona will become Firestone’s largest shareholder
initially holding 25.69% in Firestone Shares (and up to approximately 50.00% on a fully diluted basis)
and Sekoko Resources will now maintain an interest of 8.1% in the Company. The ownership of the
Waterberg Joint Ventures will be:
FSE 60%
Sekoko 40%*
*Includes an indirect 10% interest in the Joint venture for Ariona
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Shareholder Approval
There are several aspects of the transactions which will require shareholder approval including, Ariona
acquiring more than 20% of Firestone, as an exception to Ariona making a formal takeover offer for
Firestone. As advised the Company will convene a general meeting of shareholders in Q3 to approve
the transactions. The Company will commission a report from an independent expert to assess
whether the transactions are fair and reasonable for those shareholders of the Company not
participating in the transactions. The independent experts report will accompany the notice of
meeting and information memorandum to be sent to shareholders.
David Knox, the CEO of Firestone commented that “This transaction marks a significant event in the
development of both the Company and the Waterberg Project.”
Firestone’s corporate finance adviser is BBY Limited and Kelly & Co are its corporate lawyers.
Yours sincerely,
David Knox
Chief Executive Officer
david.knox@firestoneenergy.com.au
www.firestoneenergy.com.au
Tel: Australia (+61 08 9287 4600)
South Africa (+27 11 706 3542)
About Firestone Energy
Firestone Energy Limited is an independent, Australian exploration and development company listed on the
Australian Stock Exchange Ltd (ASX) and the Johannesburg Stock Exchange (JSE).
Firestone Energy has entered into a Joint Venture with Sekoko Resources (Pty) Ltd through which Firestone
Energy has acquired the right to 60% participation interests in the Waterberg Coal Project located in
Lephalale area, Limpopo Province, South Africa.
The first stage of the project is to develop the Smitspan mine which has a substantial measured thermal coal
resource and to develop the Vetleegte mine which is a substantial metallurgical coal deposit.
Firestone Energy is committed to becoming a profitable independent coal and energy producer at its projects
in South Africa, thereby making a substantial contribution to the social and economic development of the
Lephalale area and South Africa.
Corporate Details
ASX: FSE
JSE: FSE
Issued Capital:
3,114 million ordinary shares
Major Shareholders:
Sekoko Resources (Pty) Ltd
Linc Energy Ltd
BBY Nominees Pty Ltd
Bell Potter Nominees Ltd
Directors and Officers
Non Executive Directors:
Mr Tim Tebeila (Chairman)
David Perkins (Deputy Chairman)
Dr Pius Kasolo
Ben Mphahlele
Kobus Terblanche
Officers:
Mr David Knox CEO
Mr Jerry Monzu Company Secretary
Contact:
Suite B9, 431 Roberts Road, Subiaco, Western Australia 6008
Tel: +61 (08) 9287 4600
Web: www.firestoneenergy.com.au
About Sekoko Resources
Sekoko Resources (Pty) Ltd is a South African-based black-owned energy and minerals company developing the
coal, magnetite iron ore and PGMs Projects in the Limpopo Province of South Africa. This includes a significant
exploration program and development of the Waterberg Coal Joint Venture Project based on significant Coal
Zone Resources.
Johannesburg
25 July 2012
Sponsor
River Group
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