AIM Listing

Celtic Resources Holdings PLC 17 September 2002 Celtic Resources Holdings Plc Celtic Resources to join AIM after raising up to £8m through a £5m placing and a £3m open offer Highlights • A fundraising of up to £8 million through the issue of new ordinary shares consisting of a placing of £5 million and an open offer for up to a further £3 million • A placing and open offer of up to 5,925,926 new Celtic Resources shares at 135 pence per share following a 1 for 10 share consolidation. The Open Offer is on the basis of 1 New Share for every 116 Old Shares and 10 New Shares for every 58 Preference Shares • £5 million of the new Celtic Resources shares have been conditionally placed principally with new institutional shareholders • Placing and open offer is conditional on the passing by shareholders of resolutions at EGM and admission to AIM • Withdrawal from the Exploration Securities Market of the Irish Stock Exchange (ESM) • Proceeds largely to be used to manage continue to develop its gold resources estimated at over 30 million ounces of gold • Trading expected to commence 14 October 2002 Celtic Resources Holdings plc, which aims to become one of the largest gold producers in Russia and Kazakhstan by 2007, today announces that it is proposing to raise up to £8 million (£6.86 million, net of expenses), by way of a £5m Placing by brokers Williams de Broe Plc and a £3m Open Offer to shareholders of 2,222,222 new shares following a 10:1 share consolidation. The shares are expected to be admitted to trading on the Alternative Investment Market of the London Stock Exchange on 14 October 2002, giving a post float market capitalisation of up to £39 million at the issue price. At the same time Celtic Resources will withdraw the trading facility for its shares on the ESM of the Irish Stock Exchange. Managing Director, Mr Kevin Foo, said today that the company , which is already currently listed on the ESM (Code CER), intends to "use the funds raised, together with the proposed US$12million Standard Bank Facility, to accelerate gold production principally at our Nezhdaninskoye mine. Part of the proceeds will also be applied in the repayment of debt and the development of other interests as well as general working capital requirements." "We aim to enhance shareholder value further by continuing to develop our existing large resource base and pursue attractive natural resource acquisitions using our significant experience of operating in the FSU, an area abundant in natural resources" added Mr Foo. The 50% owned Nezhdaninskoye gold and silver mine in Yakutia is a key asset of the company with Measured, Indicated and Inferred Resources (Western JORC standards) of 13.9 million ounces of gold from only 37 of the 119 ore bodies and 100 million ounces silver (Russian Classified). Celtic also owns 100% of the Suzdal gold mine in Kazakhstan, where Measured, Indicated and Inferred Resources (Russian standards) amount to 1.5 million ounces of gold. The company has a 65% interest in the large Shorskoye molybdenum deposit in Kazakhstan, interests in other base and precious metal projects in Kazakhstan and, a 90% interest in the Tamdykol oil project in Kazakhstan as well as minor interests in UK offshore and onshore oil and gas exploration prospects. An EGM will be held to obtain shareholder approval for the consolidation and share capital changes, the issuance of Ordinary Shares pursuant to the Open Offer and Placing and limited authority to issue further Ordinary Shares for other purposes. Expected timetable of principal events Record Date for the Open Offer Tuesday, 10 September 2002 Date of Issue of the Prospectus and Open Offer Application Forms Tuesday, 17 September 2002 Latest time and date for splitting Application Forms in respect of the 3.00 pm Thursday, 4 October2002 Open Offer Latest time and date for receipt of completed Forms of Proxy for the Annual General Meeting 10.00 am Tuesday, 8 October 2002 Latest time and date for receipt of completed Forms of Proxy for the Extraordinary General Meeting 10.15 am Tuesday , 8 October 2002 Latest time and date for receipt of Application Forms and Payment in full under the Open Offer 3.00 pm Tuesday, 8 October 2002 Time and date of Annual General Meeting 10.00 am Thursday, 10 October 2002 Time and date of Extraordinary General Meeting 10.15 am Thursday, 10 October 2002 Date of Admission to AIM and cessation of dealing on ESM Monday, 14 October 2002 CREST Stock Accounts credited for Open Offer Shares in uncertificated Monday, 14 October, 2002 form Definitive share certificates in respect of Open Offer Shares despatched Friday, 18 October , 2002 by For more information please contact Kevin Foo / Claire Bolton Celtic Resources Holdings Plc Tel: + 44 (0) 20 7593 0001 londonoffice@celticresources.com Joe Nally Williams de Broe Plc Tel: + 44 (0) 20 7972 9280 joe.nally@wdebroe.com Eugenee Mulhern Davy Corporate Finance Ltd Tel: + 353 1 679 6363 dcf@davy.ie Leesa Peters / Cindy Dennis Capital PR Tel: +44 (0) 20 7618 7889 / 0781 215 9885 leesa@capitalww.com Nigel Heneghan Heneghan PR, Dublin Tel: + 353 1 660 7395 info@hpr.ie BACKGROUND PLACING AND OPEN OFFER Qualifying Shareholders have the opportunity to subscribe under the Open Offer for the New Ordinary Shares at the Issue Price, free of expenses, and will have a minimum entitlement calculated pro rata to their existing shareholdings on the Record Date on the basis of 1 New Share for every 116 Old Shares and 10 New Shares for every 116 58 Preference Shares., and so in proportion for any greater number of Old Shares or Preference Shares then held. The Placing and Open Offer are subject, inter alia, to the following conditions which must be satisfied by 3.00 pm on the day prior to the day of the EGM (in the case of paragraph (a) below) or by no later than 14 October 2002 (in the case of the other paragraphs) or (in each case) such later date as the Company and Williams de Broe may agree (being no later than 18 October 2002): a. not less than £5 million having been received in respect of subscriptions under the Placing or the Open Offer; b. the Resolution having been passed at the EGM; c. the Placing Agreement having otherwise become unconditional in all respects and not having been terminated in accordance with its terms; and d. admission of the Company's issued share capital to trading on AIM. THE COMPANY Celtic Resources Holdings plc (incorporated and registered in Ireland in 1994) is a natural resource company which holds a portfolio of producing and developing mines and hydrocarbon properties in Russia and Central Asia and minor oil and gas interests in the UK. The Company manages resources estimated at over 30 million ounces of gold and operates two producing mines, Nezhdaninskoye in Russia and Suzdal in Kazakhstan. Celtic's management team has many years of experience in these areas and have demonstrated the ability to find, develop and operate successful projects at low cost. Celtic also has interests in the oil and gas sector in the FSU and the UK and has additional valuable assets in base metals and specialty metals assets. This spread of assets and countries is planned and is part of the overall aim to build significant portfolios in three sectors - gold, base and specialty metals and hydrocarbons. PROJECTS The principal interests of the Group are summarised below. Property % Group Interest Metals and Minerals Status Russia Nezhdaninskoye 50 Gold, Silver Early stage Operational mine Kazakhstan Suzdal 100 Gold Operational mine Kentau 100 Gold Exploration Abyz 60 Polymetallic Pre-feasibility Auliye 75.8 Gold Exploration Mykubinksk 80 Precious/base metals Exploration Shorskoye 65 Molybdenum Pre-feasibility Tamdykol 90 Oil Exploration UK North Sea 5 Gas Exploration Nezhdaninskoye Gold Mine (Celtic 50%), Russia The Nezhdaninskoye gold mine (50% owned by Celtic) is located 450 km east of Yakutia and is one of the largest in Russia. The mine is substantially developed with 110km of underground development, a 250,000 tpa processing plant, a boiler house, a power house and numerous buildings and other infrastructure. GBM Mineral Engineering Consultants Limited, in its study conducted in 2002, confirmed the possibility of treating 250,000 tonnes per year of ore from the quartz vein ore bodies. This ore is high grade, averaging in the region of 10-11 g/t Au, and is metallurgically simple. Preparations for expansion of the operations to 600,000 tpa are underway, which will be financed partly by drawing upon the proposed Standard Bank Facility and partly out of the proceeds of the Issue. The Mine has Russian classified reserves and other resources exceeding 28 million ounces of gold and 100 million ounces of silver. SRK have audited and converted the Russian Category B, C1, and C2 resources to Western JORC standards and the results are set out in the table below. Only 37 of the 117 ore bodies identified to date have been explored in sufficient detail for them to be classified as "Mineral Resources" as defined by the JORC code. Consequently, there remains potential to confirm additional ore reserves and resources from the Russian Category P resources. The table below shows only the stated gold grades and content. The average silver grade ranged from four to six times the average gold grade. SRK Audited Mineral Resources Average Contained JORC resource class Tonnes gold grade gold ounces (millions) (g/t) (millions) Measured 3.1 6.7 0.7 Indicated 34.6 5.2 5.8 Inferred 40.2 5.7 7.4 TOTAL 77.9 5.5 13.9 SRK Audited Mineral Reserves Average Contained JORC reserve class Tonnes gold grade gold ounces (millions) (g/t) (millions) Proven 1.2 7.4 0.3 Probable 13.8 6 2.6 TOTAL 15.0 6.10 2.9 As Nezhdaninskoye is a very large mine, staged development is deemed appropriate. In broad terms a three stage plan is envisaged with Stage 1 leading to production of 150,000 oz/yr of gold over the 2 yearsin the third year following the first drawdown from the proposed Standard Bank Facility. Stages 2 and 3, which would require further financing, should increase production to a rate of 300,000 oz/yr during by 2006 and result in an ultimate production rate of 500,000 oz/yr. The extensive metallurgical test work recently completed in UK and Australia supplements the historical Russian work and confirms that Nezhdaninskoye ores are treatable by conventional and available technology. Expected recovery of gold from vein ores is more than 90% and 75% from the lower grade breccia ores. Current plant operations and experience over the last six months have supported these projections. Estimated Stage 1 project economics show a NPV of $70 million at a 10% discount rate and a project IRR of 106% at a gold price of $295/oz. The Board believe that Nezhdaninskoye is an outstanding project with excellent potential for high levels of gold production at low operating costs, which will underpin significant growth in Celtic. Suzdal Gold Mine (Celtic 100%), Kazakhstan The Suzdal gold mine is located 75km south west of Semipalatinsk in northern Kazakhstan. The licence was granted to the operating company Alel in 1995 for 22 years and covers an area of 28km2(2). The operations have run continuously since late 1999 and in 2001 produced approximately 43,000 ounces of gold. Since July 2000, Celtic has progressively increased its ownership in Suzdal from 15% to 100%. Celtic purchased Suzdal not only for the residual gold oxide resources but also for the underlying gold sulphide ores that make up the bulk of the mine's resources. As at 31 December 2001, Celtic and Alel geological staff have estimated the remaining classified oxide resources as 936,000 tonnes at 3.1 g/t containing 93,280 oz of gold. Additional oxide dumps at Suzdal, estimated to contain 14 million tonnes at 0.8 to1.0 g/t Au, may be able to be economically treated and internal studies are being completed on this project. However, these resources are not included in the reserve or resources statement. Total sulphide zone resources are estimated at 5.76 million tonnes averaging 7.82 g/t Au containing approximately 1.45 million ounces of gold. Promising intersections were discovered during a recent programme of shallow diamond-drilling of primary ore with results indicating higher primary ore grades than previously used in the above Soviet ore reserve estimates encountered. Celtic plans to continue mining and treatment of the oxide ores at Suzdal to produce at a rate of at least 35,000 oz/yr of gold until late 2004. The low-grade dump material will be fully assessed to determine if a dump leach operation is viable. If so, this could extend oxide operations for up to 10 years. Celtic has initiated an internal study on the sulphide ores that will result in a development plan and detailed budget for these resources. The aim is to complete this study in late 2002 and to assess financing options for the project. Preliminary economic and technical studies have determined that the sulphide ores can be mined by open pit initially and then underground. It is expected that sulphide ore production would build up gradually to 500,000 tpa and ultimate production from the sulphide plant is expected to be 130,000 oz/yr gold. The sulphide ores are refractory and will require metallurgical processes such as flotation and bacterial leaching to recover gold, however overall estimated gold recoveries will be about 80%. Capital expenditure for the sulphide plant is estimated to be $12 million and first production from the plant is targeted for mid 2004 subject to financing with operating costs ranging from$130-160/oz. Shorskoye Molybdenum Project (Celtic 65%), Kazakhstan This deposit is near the Balapan coal mine, about 90km south-west of Semipalatinsk. The deposit is a molybdenum porphyry with mineralisation in stockwork that is open at depth. Only preliminary estimates of resources have been made so far with grades ranging from 0.24-0.35% Mo and 0.5-3.2 g/t rhenium. Tonnage and grade for the main zone are estimated at 315 million tonnes averaging 0.24% Mo for a contained molybdenum content of approximately 750,000 tonnes. Mining would be by open pit with strip ratios about 1:1. A benchmarking study conducted by Saint Barbara Consultancy Services in November 2000 concluded that the Shorskoye grade, if substantiated, would rank the deposit amongst the highest grade molybdenum deposits in the world and that, if contained metal tonnages were substantiated, Shorskoye would be the largest known deposit in the world by a large factor. Celtic intends to confirm the extent of the mineralisation, with additional drilling aimed at defining and quantifying an inferred resource. A pre-feasibility study based on annual production of 20 million pounds of molybdenum is expected to be completed by 2003. Abyz Polymetallic Deposit (Celtic 60%), Kazakhstan This deposit is south-east of the town of Karaganda in Central Kazakhstan. Extensive drilling and ore reserve estimates have been conducted on this deposit by its former owners and Celtic. A feasibility study completed in 1996 confirmed a Mineral Resource of 9.13 million tonnes at average grades of 4.3g/t Au (1.25 million ounces), 41g/t Ag, 1.36% Cu and 3.57% Zn. Kentau Exploration Property (Celtic 100%), Kazakhstan This is in the southern part of Kazakhstan and runs from the Uzbekistan border through the Kentau ridge. Celtic holds 3 licences in this district, covering a total of 6,300km2, which were granted in 1997 for a five year period with extensions possible. The previous owners spent $5 million on this property from 1997 to 1999 identifying more than 28 gold and base metal deposits. SRK conclude that Kentau is a large and highly prospective area from which large volumes of geological data, including BLEG sampling, trenching and drilling have been collected. However, SRK suggest that Pproper analysis of this data is required in order to focus further exploration activity and management is currently considering whether to extend or relinquish one or more of these licences. Mykubinsk and Central Kazakhstan Exploration Property (Celtic 80%), Kazakhstan These are two late stage exploration properties in Central Kazakhstan in which two licences covering a total of 28,957km2 were granted in 1995 for a period of 25 years. No mineral resources have yet been delineated on these properties, but SRK has stated that the proximity to already located occurrences gives this area credibility and increases the likelihood of deposit potential. Auliye Gold Property (Celtic 75.8%), Kazakhstan These licences are in southern Kazakhstan along the Kyrgyzstan border where exploration and drilling has been undertaken by previous owners. Work has focussed on mesothermal, epithermal and porphyry targets with geochemical sampling, trenching and drilling work reporting grades of 3.5g/t and 7g/t gold, although no mineral resources have been delineated to date. Tamdykol Oil Project (Celtic 90%), Kazakhstan Celtic has an exploration and production licence over the Tamdykol oil deposit in north west Kazakhstan. Two appraisal wells, 1A and 2A, were drilled, completed, and tested during late 2001 but, despite indications of oil, both proved non-commercial. The wells were drilled through the base of the Lower Jurassic interval into the top of a saltdome to depths of 162m and 128m respectively. Celtic is now undertaking a high resolution 2D seismic survey across the field in an effort to determine the potential of oil accumulations in the deeper Jurassic intervals. Recent reprocessing of regional seismic surveys shot in the area, in addition to local interpretations of existing log data, has also uncovered a further prospect on the north side of the Tamdykol salt feature that appears to be a salt overhang. Salt overhangs are a highly prospective means for trapping and sealing hydrocarbon reserves and salt overhangs within a 150km radius of Tamdykol have produced at least 200 million barrels of recoverable oil reserves in the last 14 years. UK oil and gas interests The Group holds 5% interests in United Kingdom Seaward licences P846, P847 and P848 covering Southern North Sea blocks 49/1c, 49/2b and 49/2c. The interests in the first three licences have been farmed out and are operated by GDF Britain Limited ("GDFB"). GDFB is a fully owned subsidiary of Gaz de France, which has been involved in exploration and the production of gas in the UK North Sea since 1998. GDFB is currently assessing data from a 3D seismic survey over the licence areas with a view to identifying a drilling target before the end of 2002. Celtic's interest in the three licences will be diluted to a carried 1.11% if GDFB exercises its option to drill a well. THE BOARD Peter Hannen, (Non-executive Chairman) aged 49, had a 14 year career in all aspects of physical commodity trading - shipping, finance, hedging, trading and options, before setting up a partnership in 1991 to advise and oversee family interests in asset allocation with particular emphasis on resources. His experience is wide ranging from Texas natural gas, to agricultural and wool interests in Australia. Kevin Foo, (Managing Director) aged 52, is a graduate in metallurgy from Ballarat School of Mines and holds an MSc and DIC from Imperial College London. He is a member of the IMM and the American Institute of Mining Engineers. He has had a 30 year career in all aspects of mining, including technical, operational, project management and running public companies with Aberfoyle Limited, Minproc Engineers and Bakyrchik Gold Plc. He has worked on five continents including 12 years in Kazakhstan and Russia and is a specialist in the development of mines in the FSU. Michael Palmer, (Finance Director) aged 58, is a chartered accountant. In 1983, he co-founded Gallagher & Co, a business consultancy based accountancy practice, where he remains a senior partner specialising in providing financial advice to small and medium sized enterprises. He holds a number of directorships in private companies. Euan Worthington, (Executive Director, Corporate Development) aged 47, is a geologist with an Msc MSc and DIC from Imperial College, London and over 20 years experience in the City, initially as a mining analyst with Hoare Govett, Shearson Lehman and then SG Warburg Securities. In 1991 he moved into the SG Warburg mining corporate finance team and from 1998 to 2001 was head of the metals and mining corporate finance team at ABN Amro Bank. He is a Fellow of the IMM, Member of the Society for Mining Metallurgy and Exploration Inc., a Chartered Engineer and past Chairman of the Association of Mining Analysts. Michael Nesbitt, (Non Executive Director) aged 61, has a BA from Trinity College, Dublin. He worked in London for six years in technical management and supermarket design before returning to Dublin to join Arnotts Plc, which at the time was a group of some fifteen companies involved in retailing, wholesaling and garment manufacturing. On his appointment to the post of managing director he commenced a process of rationalisation and development of core activities and retired when this was complete. He was a member of the Irish Goods Council and founder member of the City Centre Business Association. He was on the board of Jervis Street Hospital and chairman of the Rowland Hill Benevolent Trust. He is director and secretary of Art Plc, a private investment company. Neil McDermott, (Non Executive Director), aged 52, has a variety of business interests. He is involved in property development in Dublin, most recently Fiat's headquarter offices in Dublin. He also farms extensively in Estonia, both dairy and arable, on approximately 10,000 acres and employs 53 people. Additional Information Further details of the Placing and Open Offer and the terms and conditions on which it is being made, including the procedure for acceptance and payment, are contained in the prospectus dated 17 September 2002 and on the accompanying Application Form that accompanies the prospectus. The prospectus is available from the Company's registered office 14 Upper Fitzwilliam Street, Dublin 2, Ireland and the Company's UK representative office, EntrepriseEnterprise House, 59/65 Upper Ground, Blackfriars, London SE1 9PQ. The Prospectus and Application Form will be posted to Qualifying Shareholders later today. 17 September, 2002 This information is provided by RNS The company news service from the London Stock Exchange

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