Rose Petroleum plc

Issue of Equity

6-September-2010

Issue of Equity

VANE today announces its intention to raise £2.1 million by way of a placing.

Summary of the Placing

  • The Company proposes to raise £2,145,200 (before expenses) by way of a conditional placing of 107,260,000 New Ordinary Shares of 0.1 pence each at a price of 2 pence per Share
  • Capital reorganisation to be undertaken by the Company so that the Company is able to issue New Ordinary Shares at the Placing Price which is below the par value of the Existing Ordinary Shares
  • Placing Shares have been conditionally placed with institutional and other investors and certain Directors, subject, inter alia, to completion of the Capital Reorganisation, the passing of the Resolutions at the General Meeting and Admission
  • Subject to approval by shareholders at a General Meeting to be held at 10.00 a.m. on 6 October 2010
  • The net proceeds of the Placing will be used to expand current operations in Mexico, bring on line the new projects acquired through the recently signed joint venture and double the capacity of the SDA mill. Additional funds will be used to fund the exploration of the Company's uranium and porphyry copper assets
  • Appointment of Allenby Capital as joint broker
  • Interim results for the six months to 30 June 2010 announced today

Steve Van Nort, CEO, commented: "I am delighted that we are able to announce a proposed placing of £2.1 million. The financing will allow us to increase the mining capabilities in Mexico and allow us to ramp up the next stage of exploration of our sizeable uranium and porphyry copper assets portfolio."

Arbuthnot Securities Limited ("Arbuthnot"), which is regulated by the Financial Services Authority, is acting as nominated adviser and joint broker to the Company in relation to the Placing and Allenby Capital Limited ("Allenby") which is regulated by the Financial Services Authority, is acting as joint broker in relation to the Placing. Neither Arbuthnot nor Allenby will be responsible to any person other than the Company for providing the protections afforded to their clients or for advising any other person on the contents of this announcement or any transaction or arrangement referred to herein.

This announcement does not constitute an offer to sell, or the solicitation of an offer to buy, shares in any jurisdiction in which such offer or solicitation is unlawful and, in particular, is not for distribution into the United States, Canada, Australia, the Republic of Ireland or Japan.

This announcement contains forward looking statements that involve unknown risks, uncertainties and other factors which may cause the actual results, financial condition, performance or achievement of VANE, or industry results to be materially different from any future results, performance, developments or achievements expressed or implied by such forward looking statements.

Placing of 107,260,000 New Ordinary Shares of 0.1 pence each at 2 pence per New Ordinary Share

1. Introduction

The Company proposes to raise £2,145,200 (before expenses) through the issue of 107,260,000 Placing Shares at 2 pence per New Ordinary Share. The Placing Price represents a discount of approximately 30.5 per cent. to the closing mid-market price of 2.88 pence per Ordinary Share on 3 September 2010, being the last dealing day prior to this announcement. Having considered the price at which the Ordinary Shares are currently traded, and other market factors, the Directors have resolved that the Placing Price is appropriate. The Placing Shares will represent approximately 36.1 per cent. of the Company's Enlarged Share Capital.

Pursuant to the terms of the Placing Agreement, Arbuthnot and Allenby, as agents for the Company, have agreed to use reasonable endeavours to procure subscribers for the Placing Shares at the Placing Price. The Placing Agreement is conditional, inter alia, upon completion of the Capital Reorganisation, the passing of the Resolutions at the GM and Admission becoming effective on or before 8.00 a.m. on 7 October 2010. The Placing Agreement contains provisions entitling Arbuthnot and Allenby to terminate the Placing Agreement at any time prior to Admission in certain circumstances. If this right is exercised the Placing will not proceed. The Placing has not been underwritten by either Arbuthnot or Allenby.

The Directors are also seeking shareholder approval at the GM for the authority to allot equity securities for cash outside the shareholders' statutory pre-emption provisions in respect of the Placing Shares and to adjust the existing share authorities to a more appropriate level in line with the nominal value of the New Ordinary Shares.

A circular containing the Notice of GM is due to be sent shortly to Shareholders seeking Shareholder approval to effect these proposals.

2. Background to and reasons for the Placing

The Directors believe that VANE is at a turning point and that the next twelve months will be an important transition period for the Company. In Mexico, VANE has signed a binding memorandum of understanding to form a joint venture to enable the Company to grow its existing milling operations and expand its mining operations. The joint venture has four new additional projects, one of which, the La Colorada Mine, is already in production. The maiden run of La Colorada ore through the SDA Mill (which is wholly owned by VANE) has encouragingly produced head grades which have exceeded the Directors' expectations.

The Directors believe that this additional higher grade ore will enable VANE to reduce the requirement for blending of low-grade ore from Diablito by substituting La Colorada ore with effect from this month. The Directors believe that this should support the reversal of the decline in Diablito's revenues, which have also been adversely affected by the closure of one of Mexico's two smelters. The Directors believe that this closure is likely to result in an increase to the operating cost base and the Company has therefore commenced construction of a cyanide leaching and Merrill Crowe processing plant at the SDA Mill site. When added to the existing crushing and flotation capabilities, VANE will be able to produce high-grade silver/gold precipitate which, the Directors believe, will be widely marketable and therefore eliminate the need for a smelter and reduce operating costs. The Directors believe that these improvements will also make VANE's Mexican milling and leaching capabilities attractive to other local miners.

On the back of this potential investment, the Company is reviewing additional prospects in the region and hopes to be able to add further projects in due course.

With regard to the uranium exploration programme in northern Arizona, VANE has added to the Uranium One joint venture properties through the addition of significant breccia pipe targets on state lands, which now total 126 pipe targets, with each having the potential for between 1 and 6 million lbs of U3O8. Operations on state land are not impacted by federal government interference. At present, VANE has two drill rigs operating. The results of the last hole at the Wate pipe, which were announced in early July, were very encouraging and the Directors believe that these will result in an expansion of the NI43-101 inferred resource announced previously. The other rig is drilling at the Tank 4½ pipe, where VANE has historic drilling data showing a +1% eU308 intercept. With uranium production from pipes commencing in the area earlier in the year from Denison Mines' Arizona One Mine, the Directors believe that this is the start of the regeneration of this historical producing area of high-grade uranium supply to US utilities and the Directors believe that, going forward, VANE has the potential to significantly grow its production of uranium.

Within VANE's copper portfolio, in addition to the Freeport-McMoRan database, the Company has recently gained access to a small number of additional key data sources, which include some proprietary and exclusive-use files. Amongst these data sets are the "CAP 1 and CAP 2 Programmes" provided by a copper explorer which Clark Arnold and Steve Van Nort worked with for a number of years. The multi-layer Geographical Information System (GIS) that VANE has created has now identified more than 24 potential porphyry copper targets within the southwest USA porphyry copper region. Of these, VANE has already secured three and the Company intends to prioritise the remainder. Of the three targets currently held, Granite Gap will be the first to be tested using some of the funds deriving from the Placing. VANE's geological team believes that all the indications derived from a combination of data and follow-up field work show a potentially large copper porphyry in the area. The Board is therefore eager to commence a drilling programme as soon as possible.

The Directors believe that the next 12 months look particularly encouraging, as VANE endeavours to capitalise on the opportunity in Mexico with the development of the additional feed for the milling plant, as well as progressing the uranium breccia pipe portfolio and the copper porphyry exploration programme, both of which the Directors believe have the potential to create value for shareholders.

The placing funds will enable the Company to progress its planned expansion of operations in Mexico with regards to both capital and operational expenditures. The Directors believe that this expansion has the potential to generate additional revenues, which are anticipated to cover the ongoing group exploration expenditures. In addition, the Directors believe that the proceeds from the Placing will provide sufficient funds to advance both the Company's uranium and porphyry copper exploration programmes until such time as the Mexico operations are able to generate sufficient funds to support these programmes and the Company's overheads.

The Directors believe that the Placing will give the Company sufficient working capital for the next 12 months. However, exploration costs are difficult to predict and if they prove to be higher than anticipated, or in the event of unforeseen circumstances, further capital may be required. There can be no certainty as to the terms or availability of such funding.

3. Capital Reorganisation

The par value of each Existing Ordinary Share is 10 pence, which is the minimum price at which additional Ordinary Shares can be issued. As the Existing Ordinary Shares are now trading at below this price and have been trading at these levels for quite some time, in order to proceed with the Placing, the Company is proposing to undertake the Capital Reorganisation so that the par value of the Ordinary Shares is reduced to below the Placing Price. The proposal would, if passed, involve splitting each issued Existing Ordinary Share into one New Ordinary Share of 0.1 pence and one Deferred Share of 9.9 pence, and splitting each unissued Existing Ordinary Share into 100 New Ordinary Shares of 0.1 pence each.

The New Ordinary Shares will have the same rights (including as to voting, dividends and return of capital) as the Existing Ordinary Shares.

The rights attaching to the Deferred Shares will be set out in the Notice of GM. The Deferred Shares will be effectively valueless as they will not carry any rights to vote, or any dividend rights. In addition, holders of Deferred Shares will not be entitled to a payment on a return of capital or on a winding up of the Company. The Deferred Shares will not be listed on AIM and will not be transferable. No share certificates will be issued in respect of any of the Deferred Shares. The Board may further appoint any person to act on behalf of all holders of the Deferred Shares to transfer all such shares to the Company (or its nominee) for an aggregate consideration of 1 pence.

It is not intended that new share certificate(s) will be issued to the holders of the New Ordinary Shares following the Capital Reorganisation. Pending the issue of a new share certificate, Shareholders' existing share certificate(s) will remain valid for the same number of shares but with a different par value of 0.1 pence. Following the Capital Reorganisation, should Shareholders wish to receive an updated share certificate they should contact the Registrars.

4. Admission and dealings

Application will be made to the London Stock Exchange for the Placing Shares and the New Ordinary Shares replacing the Existing Ordinary Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in the Placing Shares and the New Ordinary Shares on AIM will commence on 7 October 2010.

The Placing Shares will rank pari passu in all respects with the New Ordinary Shares, including the right to receive all dividends and other distributions declared following Admission.

5. Director's participation

As part of the Placing, Matthew Idiens, Commercial Director, has agreed to subscribe for 10,000,000 Placing Shares at the Placing Price. Following admission, Mr Idiens will be interested in 13,305,880 New Ordinary Shares, representing approximately 4.47 per cent. of the Enlarged Share Capital.

In addition, Sir Richard Needham, Chairman, has agreed to subscribe for 500,000 Placing Shares at the Placing Price. Following Admission, Sir Richard Needham will be interested in 750,000 New Ordinary Shares, representing approximately 0.25 per cent. of the Enlarged Share Capital.

The other Directors wished to participate in the Placing, but were unable to do so as participation in the Placing was not offered to individuals residing in the United States of America and certain other jurisdictions.

6. Recommendation

The Directors consider that the Proposals are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Directors unanimously recommend that Shareholders vote in favour of the Resolutions to be proposed at the GM, as they intend to do in respect of their aggregate interests of 20,421,880 Ordinary Shares (representing approximately 10.74 per cent. of the Company's current issued Ordinary Shares).

7. Shareholder circular

The circular due to be sent out to Shareholders shortly contains the Notice of GM at which the Resolutions will be proposed for the purposes of implementing the Placing and Capital Reorganisation.

Copies of the circular incorporating the notice convening the GM will be available for collection from the offices of Arbuthnot Securities Limited, Arbuthnot House, 20 Ropemaker Street, London EC2Y 9AR for a period of one month from the date of posting and will also be available at the Company's website, www.vaneminerals.com

8. Appointment of joint broker

The Company is pleased to announce the appointment of Allenby Capital as joint corporate broker to the Company with immediate effect.

Placing Statistics

Number of Existing Ordinary Shares in issue

190,108,108

Number of New Ordinary Shares in issue immediately following the Capital Reorganisation

190,108,108

Number of Deferred Shares in issue immediately following the Capital Reorganisation

190,108,108

Placing Price per New Ordinary Share

2 pence

Number of Placing Shares being placed on behalf of the Company

107,260,000

Number of New Ordinary Shares in issue following Admission

297,368,108

Number of Placing Shares as a percentage of the Enlarged Share Capital

c.36.1%

Estimated net proceeds receivable by the Company

£2.0 million

Definitions

The following definitions apply throughout this document, unless the context requires otherwise

"Admission"

the admission of the Placing Shares and the New Ordinary Shares to trading on AIM becoming effective in accordance with the AIM Rules.

"AIM"

the market of that name operated by London Stock Exchange.

"AIM Rules"

the AIM Rules for Companies and the AIM Rules for Nominated Advisers.

"Allenby"

Allenby Capital Limited, the Company's joint broker.

"Arbuthnot"

Arbuthnot Securities Limited, the Company's nominated adviser and joint broker.

"Board" or "Directors"

directors of the Company.

"Capital Reorganisation"

the reorganisation of the share capital of the Company.

"Company" or "Vane"

VANE Minerals plc.

"Deferred Shares"

the 190,108,108 deferred shares of 9.9 pence each to be created pursuant to the Capital Reorganisation.

"Enlarged Share Capital"

the New Ordinary Shares in issue immediately following Admission.

"General Meeting" or "GM"

the general meeting of the Company to be convened for 10.00 a.m. on 6 October 2010.

"London Stock Exchange"

London Stock Exchange plc.

"New Ordinary Shares"

the ordinary shares of 0.1 pence each in the capital of the Company to be created pursuant to the Capital Reorganisation.

"Notice of GM"

the notice convening the GM.

"Ordinary Shares" or "Existing OrdinaryShares"

the 190,108,108 Ordinary Shares of 10p each in the capital of the Company in issue.

"Placees"

subscribers for Placing Shares.

"Placing"

the conditional placing by Arbuthnot and Allenby (as appropriate) of the Placing Shares with the Placees.

"Placing Agreement"

the agreement dated 6 September 2010 between the Company, Arbuthnot and Allenby relating to the Placing.

"Placing Price"

2 pence per Placing Share.

"Placing Shares"

the 107,260,000 New Ordinary Shares to be issued pursuant to the Placing.

"Proposals"

the Capital Reorganisation and the Placing.

"Registrars"

Capita Registrars Limited, the Company's registrar.

"Resolutions"

the resolutions set out in the Notice of GM.

"SDA Mill"

The San Dieguito de Arriba Mill sulphide flotation plant.

"Shareholders"

holders of Existing Ordinary Shares and following the Capital Reorganisation, the holders of New Ordinary Shares.

"United Kingdom" or "UK"

the United Kingdom of Great Britain and Northern Ireland.

Kristopher K. Hefton, Chief Operating Officer of VANE Minerals (US) LLC, BSc Geology, who meets the criteria of a qualified person under the AIM Rules - Guidance for Mining, Oil and Gas Companies, has reviewed and approved the technical information contained within this announcement.