29 August 2024

VSA Capital Group plc ("VSA" or the "Company")

New Strategic Partnership

Initial Subscription of 4,500,000 new ordinary shares at 9p to raise £405,000,

Issue of Warrants

and

Appointment of Non-Executive Director

New Strategic Partnership

VSA (AQSE: VSA) and Drakewood Capital Management Limited ("Drakewood") (together, the "Parties") are pleased to announce a strategic partnership to support each other across commodities trading, commodity fund management and commodity investment banking and broking ("Strategic Partnership").  VSA expects the Parties' collaboration to lead to a compelling and unique advisory, fundraising and capital services offering for junior mining companies.  

Both Parties believe we are in a commodities bull market and recognize that junior mining companies have faced difficulties raising capital. VSA anticipates that the Strategic Partnership combined with the additional capital subscribed by Drakewood will allow VSA to attract more junior mining companies as corporate clients, recruit experienced professionals and offer junior mining companies capital for growth opportunities.

Subscription

As part of the Strategic Partnership, VSA is pleased to announce an initial subscription ("Subscription") by Drakewood of 4,500,000 new ordinary shares in the Company at a price of 9p per share ("the Initial Subscription Price") raising gross and net proceeds of £405,000.

The Initial Subscription Price represents a 50 per cent premium to the closing mid-price of the Company's shares at 28 August 2024.

Following the completion of the Subscription, Drakewood's shareholding will be 19.9 per cent of the Company's enlarged Total Voting Rights.

Warrants

The Company currently has approximately 6.9m warrants in issue to Directors and certain senior staff members, exercisable at 2.33p per share.  Drakewood have been granted 1,750,000 warrants ("Warrants") to subscribe for new ordinary shares.  For the first 30-month period (ending on 28 February 2027), the exercise price of the Warrants will be 2.33 pence per share.

In the event that the Warrants are exercised after this date, the exercise price will be 9 pence per share, provided that either one or both of the following conditions ("Conditions") applies/apply:

i)          the closing mid-market price of the shares on the day immediately prior to exercise (the "Day Prior's Closing Mid-Market Price") is a minimum of 9 pence; or

ii)         the latest monthly management accounts prior to exercise indicate that the NAV per share, plus 20% (the "NAV per Share-Plus 20% Amount"), amounts to not less than 9 pence.  

In the event that neither of the Conditions is met, the exercise price per Warrant shall instead be the lower of such Day Prior's Closing Mid-Market Price or NAV per Share-Plus 20% Amount.

The Warrants can only be exercised at the same time as existing warrants or options in the Company are exercised so as to enable Drakewood to maintain their percentage shareholding in the Company.  The Warrants have no expiry date. 

Grant of option by Andrew Monk

Subject to any applicable legal and regulatory considerations, Drakewood and Andrew Monk will agree to the terms of an option agreement ("Option Agreement") in respect of Andrew Monk's ordinary shares, and any warrants and options in VSA that Andrew Monk presently holds or is hereafter granted in VSA or its affiliated entities ("Holdings").  The Option Agreement is to provide that should Andrew Monk cease to be employed by VSA, Drakewood will have the right to acquire Andrew Monk's Holdings at a price equivalent to NAV+20% for a period of six months from the date of his termination of employment or other separation from VSA.

Drakewood will also have the right to match any offer received for Andrew Monk's Holdings at the same price, or alternatively to tag along with Andrew Monk to such a buyer of some or all of the Holdings at the same price.

Board appointment

As part of the Strategic Partnership the Company expects to appoint Mark Edward Thompson (52) to the Board as a non-Executive Director.  Mark has 30 years' experience in metals and mining markets and has previously held senior roles at the Trafigura Group and Apollo Management International LLP.  As a representative of Drakewood on the VSA Board, he will endeavour to support VSA's intended growth strategy in the junior mining sector by contributing his extensive metals and mining expertise and valuable industry connections. Mark Thompson holds no ordinary shares in VSA Capital. The names of companies and partnerships of which Mark Thompson has been a director or partner at any time in the previous five years reflect his experience and expertise and are set out below for this purpose. The appointment is in process and a separate announcement with all disclosures required pursuant to Rule 4.9 of the Aquis Access Rules for Companies will be made in due course.

The names of all companies and partnerships of which Mark Thompson, has been a director or partner at any time in the previous five years are set out below:

Admission of new ordinary shares to Aquis Growth Market

Application will be made for the 4,500,000 new ordinary shares to be admitted to trading on the Aquis Growth Market ("Admission").  It is expected that Admission of the new ordinary shares will become effective at 8.00 a.m. on or around 4 September 2024. The new ordinary shares will be issued credited as fully paid and will rank in full for all dividends and other distributions declared, made or paid after Admission and will otherwise rank on Admission pari passu in all respects with the existing ordinary shares.

Total Voting Rights

Following Admission, the Company's issued share capital will comprise 23,928,966 ordinary shares with voting rights. The Company holds 1,337,400 ordinary shares in treasury.  Therefore the figure of 22,591,566 ordinary shares, being the total number of voting rights in issue, may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

Director Shareholdings

Following the Subscription and the increase in Total Voting Rights, the shareholding percentages of the Directors will be as follows:

Andrew Monk, CEO of VSA commented:

 "Due to recent pressure for all players in Investment Banking in London and a prolonged funding drought for the junior mining sector, the junior mining sector offers a unique opportunity for VSA in collaboration with Drakewood to capitalise on this situation and become a much more dominant player in the junior mining sector.  By providing a compelling, unique offering, we expect VSA to attract a larger client base, increased deal flow, and ultimately, achieve significant success. The junior mining sector is probably already in a bull market phase, and we expect it to experience growth similar to the commodities boom between 2000 and 2008. For those positioned correctly, the potential rewards could be substantial."

David Lilley, CEO of Drakewood commented:

"Drakewood is a leading investment manager bringing metal sector opportunities to institutional and other types of investors. We build and manage specialised investment solutions targeting complex opportunities across the global metals value chain.  We believe this investment positions us well to take advantage of the evolving opportunity set across the metals and mining ecosystem and expect to realize several shared benefits that will support our ability to deliver attractive investment returns for our investors, including supply side market research and analysis and a broader set of local operator relationships. We have enjoyed the opportunity to develop a great relationship with the VSA team and believe they will bring impactful synergies to the Drakewood platform and strengthen our position as a creative solutions provider to investors seeking differentiated exposure to our markets."  

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